We’re entering a new decade full speed ahead! But we have to be on the lookout for investment landmines.
Problems and instability are nothing new … every generation must face them. That’s why we are discussing chaos and opportunity.
We sat down with Dr. Chris Martenson from Peak Prosperity to take a look at what’s going on at the ever-so-important Federal Reserve … and what it means for real estate investors like YOU.
In this episode of The Real Estate Guys™ show, hear from:
- Your reserved host, Robert Helms
- His fed-up co-host, Russell Gray
- Co-founder of Peak Prosperity, Dr. Chris Martenson
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Finding the flipside of chaos
We’re facing a brand new decade … and it’s a great time to be alive!
But there’s also turmoil and chaos and opportunity. How do we make sense of any of it?
As real estate investors, we operate in a system … and that system is a financial system. It’s also a political system … and some of it is mechanical while some is emotional.
The system is affected by how people are responding to what’s going on in the world … namely the instability of the financial system.
Statistically, a recession should be hitting the United States of America at any time.
There’s record debt around the world. The Fed is doing things it has never done before … and at a scale that has never been done before. There is also geopolitical unrest that affects the economy.
Even the lowliest main street real estate investors need to pay attention because these things can affect credit markets and interest rates … two things real estate investors rely on.
But anytime there is chaos, you get the flipside … and the flipside is opportunity.
Printing money like crazy
Dr. Chris Martenson is a PhD. He’s a scientist … and really just a brilliant guy.
As the co-founder of Peak Prosperity, Chris makes the point that you can’t continue to base your decisions on a never-ending increase when we live on a planet of finite resources.
“It’s going to be an interesting year,” Chris says.
Our world today is a world of buy-in for the central bankers. They got themselves into a lot of trouble with the bubble back in 2000, and they bailed themselves out.
That gave us the housing bubble … which, of course, blew up.
We got back down to 0% rates … but this time it was globally coordinated. All the central bankers had this emergency … but it never went away.
There was a little dip in stock prices in 2011, and that scared them again. So … more money was printed.
Then there was a little emergency in 2013 because stocks were going to go down again and … oops … more printing.
Most people aren’t aware of this, but the largest printing in the series took place in 2016 and 2017 … they were still printing at an emergency level.
That leaves people like Chris asking, “What’s the emergency?”
The emergency seems to be that the central banks never want to let markets move backward … which naturally they do and then move forward again.
The result is constant inflation … an amazing amount of money printing … and not just US dollars. Virtually, all the central banks are printing like crazy.
When the Federal Reserve was established in 1913, it was established by an act of Congress.
It’s not a federal institution, even though it’s called the Federal Reserve. It is a private banking cartel that has a government-sponsored entity.
Similar to Fannie Mae or Freddie Mac … you wonder, is it the government or is it private? And it’s kind of both.
The issue is that the Federal Reserve is now directly monetizing US government debt. Our central bank is directly monetizing debt, and nobody’s talking about.
The question we have to ask ourselves as investors is why? Why does the Fed feel like it has to be buying what amounts to 40% of all new government debt coming hot off the presses?
We’re being told that markets are stable, stocks are rising, and that the bond markets are quiet. But that’s not the story underneath it all.
The Fed is eventually not going to be able to do enough to keep things afloat … but it’s inflate or die. That’s what the Fed is afraid of.
What can you do?
As real estate investors, our product is based on the ability to borrow.
Certainly, you can buy real estate free and clear … but the fact that you can leverage real estate is one of its biggest attractions.
Now, nobody knows how much things are actually worth, which makes it difficult to plan and make wise decisions.
How do you protect yourself?
“Get out of that paper money game, and make sure you’re really tight on the hard assets game,” Chris says.
You can also make sure your cash flows are good and that you have a bit of a buffer … don’t ride things out on the edge.
Buy in prime places only. Now isn’t the time to take a chance on a strip mall far from the city center.
You can’t do much about what your nation intends to do about growing its debts faster than its income … but you can personally understand that those actions are going to impact you at some point.
Develop multiple income streams. You don’t want to be that person who has only got a single paycheck.
And don’t forget about social capital. Your relationships can really be an asset for you in tough times.
By doing so, you can prepare yourself to be in a better position when chaos comes … and be ready to take advantage of the opportunities that come with it.
For more ideas from Dr. Chris Martenson … listen in to our full episode.
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