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Master Money. Don’t Let It Master You.

There’s a dark secret to money; until you recognize it, you’ll always be a slave to it. This dark secret was exposed after the pandemic when inflation ran wild. 

Consumers saw the effects of inflation these past couple of years, but many didn’t understand the causes. All they knew was that everything cost more. They weren’t making any more money, but the prices on everything from food to services to gas, entertainment, housing, food, and everything else seemed to be rising at high rates. Their buying power was being diminished, but they didn’t realize that the forces behind inflation were the same forces purporting to be acting in the public’s best interest.  

The government, elected officials, and central bank all claimed to have Americans’ backs by flooding them with economic stimulus checks to help them in a time of need. Still, the effect was undermining their economic welfare. And in some dark government circles, the end game was to create public dependence on government handouts for their financial well-being. 

It worked on the millions of Americans who refused to return to the workplace post-pandemic – preferring instead to continue to rely on government assistance. It’s the reason so many businesses are understaffed and desperate for employees. 

Why work for petty wages that don’t go that far anymore? Might as well collect federal assistance or unemployment without the effort.

Inflation exposes the dark secret of money that 99% of the public doesn’t know about, and the dark secret is this: Banks and the government are wrecking your net worth. That’s because the government and banks are continually undermining the value of your money, and until you recognize that, you’ll be susceptible to this continued devaluation of money and your net worth. 

Until you become a master of money, it will always master you.

So how are the government and banks undermining your net worth? 

Before 1971, the United States dollar was tied to the gold standard – meaning the central banks could only print as much currency as they had gold to back it up. This gold was supposedly stored at Fort Knox. However, in 1971, the government did away with the gold standard. This meant currency no longer had to be backed by a tangible asset like gold. 

If the government needs money today, the central banks can print as much money as it wants, devaluing the currency already in circulation. That’s why when stimulus money flooded the markets, the value of money diminished – boosting the cost of goods to compensate for this devaluation. That’s one way the government can wreck your net worth. If you have $100 in cash and the inflation rate is 12%, the value of that cash will be $88 after a year. That’s why I don’t think of inflation in terms of the rising price rate but more of the devaluation rate of assets.

Another way the government and central banks wreck net worth is through debt. Tangible currency in paper and coins only makes up 3% of the world’s currency. The other 97% consists of debt. Think about it this way: 

When you borrow money, cash doesn’t exchange hands. The money is created for you to borrow. When a bank lends you money to buy a house or a car or lends you money through a credit card, the bank doesn’t transfer you tangible bills or coins. It’s created by the bank and lent to you for your needs, which then is injected into the market when you buy your house, car, or anything on your credit card. Why is this relevant? Because the money the banks lend you is printed out of thin air.

When the government needs money, the central bank gives them money printed out of thin air in exchange for government bonds. This newly created money floods the system and devalues existing money. So, even as the government and central banks devalue your existing cash, they diminish your buying power through interest payments due on the debt they offer you.

Until you recognize that the government and banks are undermining your financial well-being and hope for financial independence, you will always be a slave to money. 

It will always be your master, and you will always be trading time for money at a job you may not like. Once you recognize that outside forces continually diminish your money and net worth, you’ll want to do something about it. But how? 

Take a page from the banks’ playbook and leverage debt to your advantage instead of a detriment:  

STEP 1 –

Banks hold assets and money just like individuals do, and they know that when they flood the market with money, they’re diminishing their assets and balance sheets. To counter this effect, banks invest in assets that make their money work for them to compensate for inflation and diminishing values. 

Assets that generate passive income help counter the effects of inflation, and it’s the same strategy you can use to counter bank and government-induced inflation. Cash-flowing assets like commercial real estate and investments in income-producing private companies are how the 1% fights the banks’ game.

STEP 2 – 

Fight fire with fire. Don’t let bank debt drag down your net worth in the form of interest expenses. Use bank debt for good instead of bad. 

Leverage real estate and business financing to acquire productive assets that generate returns that outpace interest expenses. 

Instead of acquiring one asset entirely with cash, use that cash for down payments on multiple mortgages to acquire 4-5 properties that produce 4-5 passive income streams instead of just one.

Don’t be a victim of bank and government monetary policy that diminish your net worth. If you let them shrink your savings and buying power from your wages, you’ll continually be trading time for money and relying on banks to buy things. 

Free yourself by making your money work for you instead of the other way around. Turn to passive income-producing assets that work 24-7 and that counter the effects of inflation. This is how you will master money and stop it from mastering you.

MIKE AYALA

MIKE AYALA

Mike Ayala has owned and operated mobile home parks since 2007, and has been active in construction and management since he was 15 years old. He graduated from the Associated Builders and Contractors 4-year project management program at age 22 and then became a licensed instructor. He is also the host of the Investing for Freedom podcast.