i'm currently trying to take on as much fixed-rate debt as the banks will let me because i see the writing on the wall that this post explains nicely. everyone should read "the debt millionaire", it's a book about why you should use large amounts of debt to gain ownership over productive assets (assets that at least pay for the cost of servicing the debt, preferably more) and become wealthy. outside of starting a business, it's really the only way to get rich these days.
nobody pays off their debts anymore because they know inflation will just erode it away over time. 30-year fixed rate mortgage taken out in 2020 at 4% will be meaningless in 2050 when it comes due.
Why take on debt at roughly peak interest rates? You’re essentially saying the Fed will need to hike much more, given that their goal is bring down inflation.
i believe rates will probably stay elevated for forseeable future, because inflation will also be sticky around 3-4% for the forseeable future. boomers retiring and the developing world sucking up more commodities will see to that. also, the debt i'm taking on is primarily mortgage debt on rental properties, and rent always rises to match interest rates so it balances out.
Well I guess in most markets (although in Austin I heard it is), rent never really goes down. So if you have the funds to ride out reasonable landlord costs - probably makes a lot of sense
Rich people in billionaire bunkers in the mountains.
I think I remember reading this somewhere:
Revelation 6:15-17
15 Then the kings of the earth and the great ones and the generals and the rich and the powerful, and everyone, slave and free, hid themselves in the caves and among the rocks of the mountains, 16 calling to the mountains and rocks, “Fall on us and hide us from the face of him who is seated on the throne, and from the wrath of the Lamb, for the great day of their wrath has come, and who can stand?”
I don’t get why people think this is common. They are smart and realize they won’t be able to survive. Medical care, food, etc. And if SHTF, the people who they hired to protect them will just steal from them to survive themselves. Nobody is an island in our modern world. Maybe 1000 years ago - yes.
The target ~2% inflation is actually more like 5%!
In capitalism/competition - technology and logistics improvements mean that products can generally be produced for a little cheaper every year. Say “-3% deflation”
Some things like TVs have really outpaced this so we have seen them get cheaper.
When you see prices rising at 2% know that is really represents a 5% “hidden tax” by the government. The gains of society are stolen to pay the forever increasing debt.
Thanks great article. The other dynamic I would add is the thing with there being ‘surplus elites’ too who are going to get made redundant not just the plebes - people who feel entitled to do well because they have a law degree etc. - can be quite volatile - Peter Turchin’s book End Times is worth reading on this
Hopefully there will be countries that manage a smooth transition from a fiat based system to a Bitcoin standard. All these trends will probably only accelerate over the next few years.
Insane how "The sovereign individual" predicated most of this 25 years ago
Very much so
Nice to be a degen John - Matthew 25:29
i'm currently trying to take on as much fixed-rate debt as the banks will let me because i see the writing on the wall that this post explains nicely. everyone should read "the debt millionaire", it's a book about why you should use large amounts of debt to gain ownership over productive assets (assets that at least pay for the cost of servicing the debt, preferably more) and become wealthy. outside of starting a business, it's really the only way to get rich these days.
nobody pays off their debts anymore because they know inflation will just erode it away over time. 30-year fixed rate mortgage taken out in 2020 at 4% will be meaningless in 2050 when it comes due.
Wouldn't go that far as to say as much as possible, there is certainly a hurdle rate and you need to survive downturns.
Conceptually though yes, if you are borrowing at 3% and inflation is 6% it's beneficial as long as you can hold it to max duration.
Maximum Degen would be copying the guy who used his CC to buy BTC.
Use CC to buy ETH, have it yield, then slowly pay off the debt.
ETH's gonna have an infinite money glitch somewhere
Why take on debt at roughly peak interest rates? You’re essentially saying the Fed will need to hike much more, given that their goal is bring down inflation.
Depends on what returns you are able to generate.
Exactly. Plus you can often find "transfer for 0% interest" deals and pay a flat fee (or nothing) for the cost of borrowing.
i believe rates will probably stay elevated for forseeable future, because inflation will also be sticky around 3-4% for the forseeable future. boomers retiring and the developing world sucking up more commodities will see to that. also, the debt i'm taking on is primarily mortgage debt on rental properties, and rent always rises to match interest rates so it balances out.
Well I guess in most markets (although in Austin I heard it is), rent never really goes down. So if you have the funds to ride out reasonable landlord costs - probably makes a lot of sense
This will not end well.
Rich people in billionaire bunkers in the mountains.
I think I remember reading this somewhere:
Revelation 6:15-17
15 Then the kings of the earth and the great ones and the generals and the rich and the powerful, and everyone, slave and free, hid themselves in the caves and among the rocks of the mountains, 16 calling to the mountains and rocks, “Fall on us and hide us from the face of him who is seated on the throne, and from the wrath of the Lamb, for the great day of their wrath has come, and who can stand?”
I don’t get why people think this is common. They are smart and realize they won’t be able to survive. Medical care, food, etc. And if SHTF, the people who they hired to protect them will just steal from them to survive themselves. Nobody is an island in our modern world. Maybe 1000 years ago - yes.
The target ~2% inflation is actually more like 5%!
In capitalism/competition - technology and logistics improvements mean that products can generally be produced for a little cheaper every year. Say “-3% deflation”
Some things like TVs have really outpaced this so we have seen them get cheaper.
When you see prices rising at 2% know that is really represents a 5% “hidden tax” by the government. The gains of society are stolen to pay the forever increasing debt.
Yep. Bitcoin improves logistics by removing it entirely.
Thanks great article. The other dynamic I would add is the thing with there being ‘surplus elites’ too who are going to get made redundant not just the plebes - people who feel entitled to do well because they have a law degree etc. - can be quite volatile - Peter Turchin’s book End Times is worth reading on this
How to prep for populism?
Stay low profile, do not buy expensive flashy products.
As much as possible, buy assets that you can carry with you in case of emergency. (Stocks, Crypto, Watches, Trading Cards (?))
Avoid assets that can be seized by government entities (Real Estate, apart from own house)
Under what scenarios would we experience hyper deflation? I've been hearing this come up a bit as well.
Hopefully there will be countries that manage a smooth transition from a fiat based system to a Bitcoin standard. All these trends will probably only accelerate over the next few years.
So what happens with unemployed or underpaid with high testo and ambition?
Imo lot of social strife coming in accross the west
Video games and porn are used to mute this in young men.
You forgot sports betting.
Was watching a YouTuber sometime ago talking about how Digital Money (CBDCs) could actually be anti-inflation too
He argues that with CBDCs, banks can just "delete" the extra currency from the system that causes inflation
It's an interesting thought process.
They could delete the money in computers now but they dont,so I dont think thats a possibility