hyperinflation massive inflation is

coming your way and that's what most of

the youtube videos are warning you about

now you guys know i'm a contrarian i

tend to think

and do the opposite of everyone else so

in this video i'm gonna argue why i

don't think

we're gonna have massive inflation now

we are gonna have

slightly higher inflation than where we

are right now but not massive inflation

so in this video i'm gonna break down

the best

assets to own it's gonna build your

wealth as we go from very low inflation

to

normal inflation in the next few years

what is inflation is the rise of the

price of goods and services and it's

something natural something we

experience

all around us like when i was a kid it

cost like

a dollar fifty to watch a movie uh today

a movie ticket cost 12 to 15

my younger days it costs just 30 dollars

for a nice

meal at a restaurant with my family

today it costs at least 150

so that's inflation for you now we

measure inflation by the percentage

change

in what is known as the consumer price

index or cpi

so this index is a basket of

the usual household goods that we

purchase if you take a look at the last

30 years from 1990 to where we are today

you can see by and large inflation has

been moderate

which is below 3.3 so inflation between

2 to 3.3 percent is moderate inflation

and that's where we've been

in fact currently inflation is

considered very low at only 1.8 percent

so what's the concern well the concern

is with all this recent money printing

where the government in the u.s they are

pouring trillions of dollars in the

economy

that could create too much money supply

and that could create hype

inflation back in the 70s and 80s what

happened then right you can see in the

70s and 80s inflation went through the

roof it went up to 7

10 12 inflation so could this happen

right now i don't think so even with all

this money printing

why not by the way money printing is not

something new

the federal reserve has been doing it

for the last

10 years they started with qe1

quantitative easing one where they

printed lots of money

during the financial crisis so that was

2009

they did qe2 in 2010 qe3 in 2014

and recently qe4 in 2019

so despite all that money printing and

bringing interest rates to

zero inflation didn't really go up in

fact

inflation remained 2.5 percent

and in fact like i said right now

inflation's at 1.8

which is really low so why isn't all

this money printing creating inflation

because there's another powerful force

that's pulling inflation down

so what's this powerful force well

that's what i'm gonna explain

in this video but before i explain it

you have to

understand first and foremost what

causes inflation

the first thing that can create

inflation would be an increase

in the money supply so when the central

bank like the federal reserve they print

money and they inject into the economy

what happens that's right more money in

people's hands

more demand for goods and services

increases the price of goods and

services

so if we take a look at how the money

supply has increased

it's been really crazy in fact since

september 2020 the federal reserve the

u.s central bank has printed and

injected nine

trillion dollars into the u.s economy

nine trillion

if you take nine trillion and you divide

it by the total u.s

population of a 328 million people that

is about 27

000 per person so what happens when

people have more money

again they will bid up the prices of

goods and services and theoretically

inflation should rise in fact in the

last 12 months

20 of all the us dollars in existence

have been printed in the last 12 months

so you get

theoretically too many dollars chasing

the same goods and that

creates inflation so many people are

saying that

this sudden increase or this massive

increase

in the recent money supply in the last

12 months is going to create

hyperinflation seems to be logical right

but they're forgetting one thing

it's not really the money supply that

causes inflation

it is the circulation of that money

and what's really interesting is that

although money supply has increased but

the circulation of the money has

actually fallen

so if you take a look at this chart over

here you can see that money supply has

been increasing and like i said this

happened

in the first qe back in 2009 over here

you can see there was a spike in

the money supply the fed printed money

into the economy in the financial crisis

happened in 2009 2010 uh 2014 2019 so

as the money supply increased inflation

didn't go up

why because take a look at this thing

which is called

the velocity of the money supply or the

money stock so

velocity measures the actual

circulation of the money that means are

people actually using it to buy and sell

goods and services and you can see that

in

actual fact since 20

uh the year 2000 the velocity of money

has actually collapsed

so why is this so where's the money

going

so the money being printed is not going

to the hands of people

that are actually buying goods and

services all that money that is being

created printed by the federal reserve

is only going

to the banks and the financial

institutions that are

hoarding the money right they're not

spending holding it

and also a lot of the money that's

created this wealth created is only

going

to the wealthiest one percent of people

in the us and in the world so the thing

is that money is there but the

wealthiest one percent they're not

spending the money because they already

have so much money they're just keeping

that money now think about it right so

you've heard that because of the

recession and pandemic the rich are

getting richer

and the poor are getting poorer but the

rich are only the top one percent

so as a rich person i could be a

thousand times richer 10 000 times

richer but does it mean i'm gonna eat

ten thousand more bowls of food

no i still eat three meals a day so a

lot of that money is

saved and invested into assets

and that's why you see stock prices keep

going up real estate prices keep going i

mean even

speculative air sites like

cryptocurrency non-fungible tokens and

specs they keep going up

whereas the majority of the people out

there the 99 they're not getting the

bulk of the money supply to

spend on essential goods and services

and that's why the cpi the consumer

price index

which is based on these household goods

and services

isn't going up that much and hence

general price inflation

has been low to moderate so you can see

that

increasing the money supply itself may

not cause much high inflation

but what else causes inflation there are

two other things demand

pull factors and cost push factors

so the second thing is what we call

demand pull factors which is basically

the increase in demand

for goods and services which exceeds

production capacity remember it's all

about demand supply so if there's more

demand for

goods then supply prices will go up

so could that be an increase in demand

that outstrips supply

well possibly yes in the short term

because of

the global economic reopening so as more

people get vaccinated people want to go

out and they spend money so there's a

lot of pent up demand

for traveling pent up demand for

entertainment and there's what we call

revenge shopping on the go

and spend spend spend right so if a lot

of people want to go out there and spend

a lot of money and again the demand

exceeds the supply that will cause

inflation but again

this is going to be very short-term and

transitory it's not going to be

long-term so why is there not going to

be long-term increasing demand

uh that's going to outstrip supply well

because of technology what a lot of

people don't realize is that technology

and innovation is actually deflationary

to the economy in the long run

why because technology and innovation

reduces the buying power for goods and

services

among the masses as you get more and

more technology

technology creates automation and with

more and more automation this

eliminates millions of jobs in the

economy

reducing the demand for labor and hence

the amount of wages that are paid out to

the masses

i mean think about it because of the

invention of amazon

one company it has eliminated millions

of jobs in the retail sector

right millions of people have lost their

jobs as cashiers in on in malls

in grocery stores eliminated jobs in

of retail sales people of security

guards that it used to be malls again

right

store managers uh data center engineers

their jobs have been lost because of

amazon

web services that have taken over their

jobs

in companies um what else you think

about

right the invention of zoom has

eliminated millions of jobs

in the conference and meeting industry

like in my company i used to spend

lots of lots of money running seminars

in exhibition halls and all those things

but because of zoom it has eliminated

the need to

hold events physically and eliminated

millions of jobs that i used to pay for

running my physical events so with all

these people losing their jobs

oh by the way robots are also expected

to replace up to 20 million

factory jobs by 20 20 30 right so if all

these

wages being lost by these people this

will reduce the buying power

of millions of consumers as a result

this deflationary effect

will reduce the effect of the short-term

inflation caused by

the global uh reopening or the economic

growth because of the pent-up demand so

like i said short term there'll be

inflation

but in the long run because of this it

would reduce

inflation in the long run and hence it's

unlikely we're going to have that hyper

inflation that people are

talking about third and last thing that

could create inflation would be

the increase in production costs that

goes into the making of

goods and services and hence reducing

the supply of goods and services

so for example if there's a global

supply chain disruption because of

global warming right this could increase

commodity prices

or raw material prices that increases

the cost of businesses

and they then have to raise the price of

goods and services and creates inflation

or historically whenever the economy

reaches full employment

there's a labor shortage and this

increases wages

but will this happen now no again like i

said because of technology

automation this is no longer happening

it is

eliminating millions of jobs and because

of that

the wages are not going to increase as

much as they have in the past

at the same time technology actually

reduces the cost of production

of goods and services in other words

technology allows companies

to produce goods and services at lower

and lower costs

and allows companies to increase the

supply of goods and services

to meet any kind of demand so when that

happens there's no way you can have high

inflation because whatever demand people

have

companies can scale up the supply to

meet the demand bring

down prices so let me give you a few

examples

number one technology has reduced the

cost of media consumption

and increased the supply of media to

the masses so with netflix now with

just 10 dollars a month you can watch

unlimited number of movies so can you

see if you compare today

from many many years ago now it costs

less

to watch more movies so that's not

inflation that's deflation

second example would be um if you were a

recording artist

years ago if you wanted to record a

studio quality album you would spend

thousands of dollars renting a studio

getting people to

manage the studio and you have to get a

producer to

distribute your songs but today you can

do it all for free

a free app called garageband from mac

plus with youtube you can produce studio

quality albums

and distribute the songs to millions of

people

within a few hours is that inflation

that's deflation so now it costs you

less to achieve more again third example

would be zoom another very good example

now i've been running my education

company for

18 years in the past i had to spend

easily fifty to sixty thousand dollars

to run a physical event

to hire the venue to hire operations

staff to manage the people and all those

things today i run the same event

online with zoom at almost zero

cost so again can you see how technology

reduces the cost of business reduces the

cost of production

and it's actually deflationary to the

economy

so in summary even if all this money

printing money supply even if the global

economy reopening

we are not going to have hyperinflation

why because of technology because of the

fact that the majority of the money

supply is

concentrated in the hands of the richest

one percent of the banks and financial

institutions

and the money is not circulating we are

not going to have hyperinflation

but we are going to have slightly higher

inflation

than what we've had in the past again

currently our inflation is about 1.8

i expect it to go up to maybe at the

very most two to three percent which is

pretty moderate inflation so while we

won't have hyperinflation we will have

slightly higher inflation so question is

inflation good or bad

the answer is it depends inflation is

good news

if you're an asset owner if you own

assets you own shares of great companies

in the stock market you own real estate

why because inflation means higher

prices

which means the companies you own can

raise their prices

you can bet in the future nike would

price their shoes

higher than today apple price their

products

iphone 15 iphone 20 a lot higher than

today

so as companies raise their prices their

revenues increase

their profits increase earnings per

share increases

and hence share price will increase so

inflation

guarantees higher prices in the stock

market

it also means that if you own real

estate you can charge

higher rents over time with inflation

with higher rents

your property values your land values

will increase as well so again inflation

is great

for people who own assets but inflation

is bad if you don't own

assets and you're only a wage earner if

you only earn

active in-country or employment because

your

wages are going gonna buy less and less

goods and services over time

i mean years ago twenty dollars could

buy an entire month of groceries today

twenty dollars could just buy you a

couple of bags of chips and some tic

tacs

so i advise people all the time to learn

to create multiple

sources of passive income whether to

create an online business

or to learn to trade the financial

markets or to invest into

assets like stocks of great companies or

real estate investment trust

that's going to create passive income

for you now inflation is also bad

if you only save and hold cash

because of inflation your cash is losing

value every single day

month and year think about it a two

percent inflation

rate means every year your

currency your cash is losing two percent

of its value every single year

if you compound that that's kind of like

losing

34 of your wealth every 20 years

i don't know about you but this scares

me to death and that's why i always

ensure that

every time i've got surplus cash extra

cash i'm always investing that cash to

grow

because if it's not growing it's

depreciating so the point is there's

always going to be inflation

we can't stop inflation but we can

either allow inflation to work

for us or against us

if you own assets inflation works for

you if you don't own assets

inflation works against you so you got

to learn how to invest

now a lot of people are afraid of

investing they say you know but isn't

investing

risky well everything is risky if you

don't know

what you're doing but i tell people this

the riskiest thing

you can ever do for yourself and for

your family is to not invest

not investing is the riskiest thing you

can ever do why because again if you

don't invest and you just hold cash

you're guaranteed to lose 34

of your wealth every 20 years some

people think that holding cash is the

safest thing that you can do

in today's uncertain environment wrong

holding cash

is the worst investment you can ever

make because holding cash is a

guaranteed loss you're guaranteed to

lose money when you hold cash

if you take a look at the us dollar for

example in the last

100 years since 1913 the us dollar has

lost over 95

of its value now it's not just the us

dollars

any currency that you hold whether

you're hauling euros

or singapore dollars or japanese yen

it's the same thing

you're losing money every day you're

holding cash and that's why ray dalio

one of the

top fund managers is a famous thing that

says cash

is trash now let me clarify that

i'm not saying that you don't hold any

cash you gotta have enough

cash to pay your expenses

for your daily needs you need cash for

emergencies

what i'm saying is surplus cash so i

tell my students i say always ensure

that you've got enough

cash to pay for at least three

to six months off your expenses

now of course you gotta have a job to

keep the cash coming in

but what i'm saying is beyond your daily

expenses

cash that you don't need for the next

two years

surplus cash you got to invest that you

got to invest it to grow that

to be financially free and financially

secure so that's what i mean

now so the question would be what do i

invest that surplus cash in that's gonna

not only beat inflation

but it's gonna grow my wealth so i can

be eventually financially

free financially secure out the rat race

now there are many assets that can beat

inflation and build your wealth but out

of all the assets my favorite asset

and to be the best asset to invest in

would be stocks

investing in the stock market now again

when you buy stocks remember that you're

not buying a lottery ticket that you

hope is gonna go up

you're buying a piece of a business so i

like to use the word stocks and

businesses interchangeably and to me

investing and owning businesses are the

best assets to own

now if you don't know how to pick the

right business the right stock if you

simply buy the index the s p

500 index etf which means you're buying

a portfolio of the 500 biggest companies

in america

you will definitely beat inflation and

grow your wealth in the long run

so from this chart you can see this

green line

down below that's the consumer price

index or the cpi that measures inflation

so you can see that

in the long run prices of goods and

services rise

by about roughly again two to three

percent a year

on average and this orange line that you

see there

that's the s p 500 so again without

timing the market

without picking individual stocks just

buying the index

over the long run even though in a short

term it goes through ups and downs but

in the long run

you beat inflation by a wide margin

on average the s p 500 index

returns on average in the long run about

10

per annum so that's that beats inflation

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the markets

be with you