The Real Estate Ripple Effect of Soaring Inflation

Speaker 1: [0:00] Really quick before the show starts, in case you haven't heard, we have a growing community of investors called the scale community, which is full of people learning to make massive income with their real estate businesses so they can reach financial freedom a little bit faster than building a rental portfolio solely over time, because honestly, that takes decades, and who has time for that? So if you're an investor who is serious about growing and creating a scalable business without needing to be a slave to it twenty four seven, then go to collectingkeys.com/scale and apply. And if you're a good fit, we would love to have you join the community. So, again, collectingkeys.com/scale. Go ahead and apply, and we'll see if you're a good fit. I got a a tax assessment for one of my properties yesterday, and I'm increasing by $300 a month again. The thing has increased by over $1,000 a month in the last two years. What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. This is the show where you should make massive income, not just passive income with your real estate investing business. If it's your first time here, I am Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. And on these kind of long form shows, we dive into real estate investing business and whatever else we feel like for the week. We should probably change around that intro because we are changing around the show a little bit, and this is gonna be more of like a general business talk and, like, overall news show that we do, and then we're gonna do more focused stuff on the Friday folks episodes. But it's just so habitual because you've been doing this for three years and a bit. I know.

Speaker 1: [1:35] Yeah. What would we say? We've done over 500 episodes, Dan. Did you know that? Really? What is this? Yeah. I'm looking my watch. Like, I have a counter on my watch of how many episodes. I'm like, yeah. We've done 512. I think we're at over 500 if we check the or maybe my mouth is wrong. I checked the Mike and show or just in general with Friday Focus and everything. Oh, with the Friday Focus. Yeah. I guess that would make sense. That would be ten years if it was just Mike and Dan show. Oh, wait. My my math's wrong. Over 400. So Over 400. That's so pretty good when the average person does, like, they'll record 10, maybe post one. I shouldn't say average person, like the average podcaster. But, yeah, I'll think about how to how to change that up so that you guys know what you're gonna get into when you hop on for today. But either way, on these shows, the three of us are here, we kinda dive into our businesses, what's going on with real estate as a whole, what you can expect, and things like one of the Mario brothers taking out a corporate CEO, mister YLG. What a terrible transition. I'm sure he's been so sick of that joke for his whole life. Speaking of murders. But it's funny. This is one of those things I wasn't even sure if I wanted to dive into this because by the time this episode comes out next week, so much will have probably changed.

Speaker 1: [2:41] But I'm fascinated with the story, mostly just because it's interesting to see so if you guys are out of the loop, this CEO of UnitedHealthcare got essentially assassinated. I don't like the term assassination because that means political, but he got murdered on the streets of New York, and it was a whole thing. You go find all sorts of videos about it. And they have found a suspect who they have charged with the murder. Luigi And he didn't get killed? Yeah. He has not been killed yet. Luigi something. That means he might have acted alone. Yeah. And he's like a young guy. Like, there's all sorts of conspiracy around it. But the fascinating thing has been the general public's rally around the murderer and how open so many people have been around like, fuck this UnitedHealthcare guy. I've been seeing memes cause I didn't know. I haven't done much research on this, but I saw a meme posted from the wall wall street bets channel. It was trying to compare the dude who tried shooting Trump and that guy, and he's like a super sexy looking dude versus the guy that tried to assassinate Trump. And they're like and then I don't remember what like arguments. Like, our killer, like, as far as, like, politicizing, like, red versus blue is something like our killer is super sexy, and I can't remember which side they were, like, voting for, but I was like, this is getting crazy. Though the thing is that's interesting, honestly, is the only people that I've seen that seem to be coming out, like, openly in favor of the CEO are other super rich people. Right?

Speaker 1: [4:04] And a lot of the general political commentators that I've seen out there, go and look up, especially conservative people, that their whole message is around sort of creating division, and this is what the libs are doing. They have been creating this stuff about, like, why the left is so supportive of the murderer in this. And the thing that's been very interesting is so many people that fall on the red side of the aisle are coming in and say, hey. This has nothing to do about left or right. I guess I'm left now according to you. This is purely based on wealth inequality that they are experiencing, how they are perceiving the, you know, UnitedHealthcare system and health insurance specifically as completely making this nightmarish health care scenario in The United States. And what's been so interesting is also there's like this unification that is happening amongst those of us that are not the ultra, ultra wealthy. It's kind of like a I don't know what's gonna lead to by the time this episode comes out next week on the seventeenth, I have no idea what it's gonna look like. He will hang himself in jail. Probably. Yeah. Who knows? Hopefully not.

Dylan Koch: [5:10] The number one comment, like, media channels was like, sorry. Prior authorizations needed for prayers and remorse. I don't know if you know, like, prior authorizations are, but it's like when you your claim gets, like, denied or, like, you have to go through special coverage.

Speaker 1: [5:23] Oh, that's pretty funny.

Dylan Koch: [5:24] And it's just like that's kind of the, I don't know, the feeling and culture around some of this right now.

Speaker 1: [5:29] The insurance Yeah. That Mike and I chatted about this the other day. The insurance thing is scummy. It's shitty. We all know that. Dylan, you're probably the most experienced with this just with your medical background. I don't know where I fall because like I said, I haven't been following this, but my my belief is is like, yeah, fucking insurance sucks. I don't really I think that there needs to be some massive reform there. It's become more complicated than any of us can even imagine.

Dylan Koch: [5:53] It's complicated on purpose.

Speaker 1: [5:54] Probably, but it's even then, it's so much more complicated to do, and it's not as easy as probably most people think. I definitely think that it's like it's reminiscent of a third world country when you're okay to support assassinations of people, even if they're rich, wealthy people. I mean, I wouldn't support, like, murdering poor people either versus murdering wealthy people. The guy's definitely an asshole. Maybe they should have beat him up instead. That's more accepted in my book, but murdering is kind of like a

Dylan Koch: [6:22] I think the weird part is, like, the suspected, you know, alleged murderer is from a wealthy affluent family. You know? That's right.

Speaker 1: [6:28] Yeah. But he's like, fuck those rich people.

Dylan Koch: [6:31] Yeah. This does something's not lined up. But, you know, like like Mike said, everything will change, you know, a week from now.

Speaker 1: [6:35] Yeah. Totally. If he's not dead yet, I have a sense that he acted alone. And what I mean by that is like with like the the most recent one, like the Trump assassination, you could make an argument that that kid that tried to shoot Trump at that rally was being influenced or radicalized by the government. And the only reason you can say that is because he's dead. Cause of course that's what somebody would want to do is they would want to kill him off. And so in this case, this guy's still alive. Maybe it's because he did act alone, and maybe he's just really passionate about insurance. Yeah. Either way, the every time something like this comes up that sort of captures the attention of everybody and there's so much media behind, there's all these different things, I always go, what else is happening that they don't want us to be focusing on right now? Yeah. Like over in Syria, they had the fall of Assad and like that entire thing just disappeared. That's pretty wild. His plane just disappeared off the face of the earth while it was mid flight, and, like, they have it on a flight track. They're basically doing, like, a rapid deceleration. Like, all this sort of stuff has happened. That would not have been an assassination for sure. Definitely not an assassination. Yeah. Definitely not not Putin fucking hitting that.

Speaker 1: [7:47] No way. I'm being facetious here. Somebody that whole Syria thing is wild. Like, just in general, like, why and what's going behind it? Oh, yeah. You have, like, that scenario going on. You have South Korean president trying to declare martial law and basically an attempted coup by the military there. I don't know if you guys saw that video of that lady. She's one of, like, the senators or whatever their version of it is. But the dude literally has their gun on her chest, and she's, like, shoving him away and just, like, yelling at him. I was like, none of our fucking people would do

Dylan Koch: [8:18] that. Wild.

Speaker 1: [8:19] No way in hell. Can you imagine, like, our reps, if, like, there was some point that got at them, they would fold in two seconds.

Dylan Koch: [8:25] Oh, yeah. You know? A 100%.

Speaker 1: [8:27] You have, like, stuff like that going on. You have all the shenanigans going on with, like, Musk and all the fucking billionaires that are just putting themselves in these weird positions, you know, to start influencing things.

Dylan Koch: [8:38] I mean, it's like there's an underlying theme of, like, the wealth inequality because it's at, like, how worse it's been in really, like, thirty to forty years. And they're like, there's that k shaped recovery we've talked about on the show before where the rich keep getting richer and the poor people who are still, like, getting tighter and tighter. I guess the moral of the story is I don't really see it getting any better anytime soon.

Speaker 1: [8:58] No. I don't. And, you know, and, like, big picture for those of us that and this is the thing that I think is an interesting point to remember for people that, like, are listening to this show that are trying to, like, build real estate business and do these other things, is we can look around at, like, people that are in our general circle and be like, you know, we have more more money than them, more opportunity. They need to kind of free these things out. Big picture, we are closer to those people than all of the ultra wealthy. Right? So I see this a lot with, like, GoBundance guys. They tend to be super supportive of, like, kinda like the ultra successful. Understand that, like, just because you're worth a few million bucks, you're nothing compared to the people that are worth billions of dollars. Like, they will yield Billions of like a rounding error in their books. Right? So, like, when these people are doing weird stuff, like, it'll affect us very heavily. What's that? Why do you even try that? That's a good question. Like, if you're just surrounding here. 100. Why should you try? Like, honestly. Well, I think it's because if you like like, there is a point where if there is a massive fluctuation in the US dollar and The US economy and, like, general infrastructure and things, you know, opportunities out there.

Speaker 1: [10:08] If you're starting from a higher level and things go off a cliff, you will be able to catch yourself. Right? Versus those that are, like, in the middle class that are already kinda scraping by, they're the ones that get fucked, honestly. And, like, I've always kind of led with the general goal to try and be, like, wealthy enough that you don't have to worry about the big picture quite as much. But I think that realistically to make it so that the big picture literally doesn't matter at all is such a level of wealth that most people can't even fully understand that. Yeah. I would say the maturity in life is recognizing that what you thought as a kid, the amount of wealth you needed to have the things that you're envisioning in your wild mind is so much more than you think. So much. And when I say so much more than you think, that is different number for everybody, but it's still like 10,000,000 is not a lot of money to do the things that you think you wanted to do. You're not flying on a private jet with 10,000,000. Totally. Which is crazy. And, like, how fast $10,000,000 could go if you're doing dumb shit and how hard it is to have a net worth of $10,000,000. I think we could all say that that is a 1% thing. Like, 1% of people trying to make 10,000,000, make 10,000,000.

Dylan Koch: [11:16] I remember doing the I'll have to pull it back up. Maybe I can do it while we're talking. But, you know, like the millionaire term, it was like really coined like the seventies. If you like just do the government data, like a million dollars in 1970 to 2025, it's literally like $8,500,000 today.

Speaker 1: [11:31] So, yeah, when you adjust for inflation.

Dylan Koch: [11:33] Just so can compare the difference. Yeah. And like that's if you trust the government's inflation numbers.

Speaker 1: [11:38] Like Yeah. It could be way more.

Dylan Koch: [11:39] 10,000,000 is is really not that I don't know. I guess you couldn't sit back and probably do nothing if you had 10,000,000 and maybe make it with your dream lifestyle.

Speaker 1: [11:46] Like, there's an argument that's actually pretty sound that if you invest in S and P 500, your money is essentially worth the same adjusted for inflation as in twenty years, thirty years, or whatever over time. You're just keeping up with inflation. Yeah. So that's kinda where I was gonna go is how much of that, like, increasing cost and inflation, though, is purely just like the feds or is, like, the capitalistic profit driven cycle that's based off of stocks. Right? And as more and more people push their money into that, more and more people have more money. The people that drive these companies that are saving record profits every single year, to do that, you have to keep increasing prices and do these other things. People have money. They're willing to pay more for stuff. That almost like forces like its own sort of artificial inflation outside of just high demand. Well, certainly there's there's a huge a huge chunk of how can you have a company stock price continuously increasing as they decade after decade, like, mark losses. Like that's an Amazon, right? Like marking a loss, but it's because the perceived value for the future is so high. The cash flow value of that is so high. Whether they realize that ever or not, like who knows?

Speaker 1: [12:54] But like, you're right. Like, there's this, like, capitalist driven markets with equities that, a person could make a ton of wealth betting on a company that actually never booked a profit, which is kinda crazy to think. I mean, it's kinda like thinking, like, in real estate terms, you could buy a house with have equity and lose money on it every month. It sound, it makes sense that it could happen, but it is kind of crazy. And that could drive some some additional inflation because it is feels like it's pumping more and more money, it feels like, into the economy that isn't actually being used as production or or being produced by anything valuable.

Dylan Koch: [13:29] Do you remember, Dan, when the ZERP was coined, that zero interest rate policy? Like, even other countries even had, like, negative interest rates.

Speaker 1: [13:36] Yeah.

Dylan Koch: [13:36] But a lot of the, I guess, how you say unprofitable companies kind of came to fruition around that time because the cost of capital was so cheap. If they had any, sense of normal interest rates, five or 6%, that business probably doesn't last as long as it does. Right? Or they can keep refinancing their debt to lower and lower rates and just kicking the can down the You can't do that anymore. And so I think you're starting to see, I guess, less and less than that than you saw in probably the early 2020s.

Speaker 1: [14:04] Yeah. Yeah. And so I guess what does that mean for business owners or for people trying to, you know, grow anything for themselves? Like, as Dan said, why you can try? What do think, Don?

Dylan Koch: [14:17] There's actually we rip on the or at least I do. I rip on the Better Life podcast every once in while. I like to listen to the one today, though, and it was I forget the guy's name, but he has a title barista to billionaire, because at one point, he was worth a billion dollars. And they actually had a good discussion around, like, wealth on it. And it's basically, like, once you get to a certain threshold, which, like we said, everyone's number is different, money just serves as, a life lubricant, which basically means things get easier. You know, if I have to go change my flight, I'm not worried about changing the flight because it's a couple extra $100. But at a certain extent, your life doesn't materially change. And in fact, you're like things like relationships might be a net negative because people know that you have a fuck ton of money.

Speaker 1: [14:52] Yeah. And you're not just giving it to them. It sounds

Dylan Koch: [14:55] like Exactly. Yeah.

Speaker 1: [14:56] Yeah. I heard this on a Hermosy one this morning is the definition of wealth is the difference between how much money you have and how much money you spend. And so you can have a lot of money, but you spend a lot of money and you're not wealthy. What gets tricky is when you are being forced to spend more and more money all the time, but the money that you have doesn't necessarily increase. K? And I think that's what we're starting to see a lot right now is, like, across everything, stuff is just getting more and more expensive. And there's a lot of people that don't have any ability to increase how much money they have because they're relying on a w two, and they have no control over their own income. And that's where it gets kinda scary. Right? So, like, you're looking at some of the stuff that you sent over Dylan for this talking about, like, you know, profit managers going sideways and some of the issues that are coming from things like that. Right? Those are issues that you could previously have dealt with. But now even as someone that has money and has opportunities, that becomes a much larger problem because things are more expensive to deal with. Or mortgage rates, like looking at being average, which says 6.7% on thirty year fixed is the average right now. That's creating like a forced expense for people that are significantly higher than they were.

Speaker 1: [16:08] And then even people that are, like, kinda well off, they're becoming less wealthy just by basically forced increase in their expenses. I mean, I got a a tax assessment for one of my properties yesterday, and I'm increasing by $300 a month again. Yep. The thing has increased by over $1,000 a month in the last two years.

Dylan Koch: [16:26] I have a 13 unit mixed use building, and I just got noticed, I think three days ago that my insurance company is like no longer renewing. There's like, basically, we don't want to insure this building anymore. No other reason other than we just don't want to. And so I've been getting quotes ever since. And at a minimum, I'm gonna have a 40% increase in insurance premiums. That's like kind of all over the board, right? And the property management one is like, you know, in theory, you make a good business decision, like, okay, if I don't have to do property management, I can spend more time on business, I can spend the time making calls and make $10.20000 assignment fee. But now I have to dive back into the property management side. Have a $400,000 hard money loan that's cost me $4 a month since July. Okay? So what's that? Five months? That's $20 is an extra cost that been sitting there because they're they're filled yet.

Speaker 1: [17:13] Yeah. See, and that's crazy. And so like it happens every everywhere, right? Like, you know, like the property taxes, we had the big increase in my neighborhood. Was it a year ago, two years ago? And all a sudden, like half the house went up for sale, because they were in new builds. Right? And they all got assessed that their true market values were much higher than people bought them for a couple years ago. And all of a sudden, have these people that are facing six hundred, seven hundred dollars a month increase in monthly expenses just on property taxes, they can't afford that. Yeah. They're already stretching probably to buy it.

Dylan Koch: [17:43] Okay. But if you're building a house, wouldn't you know that you're gonna get reassessed at a higher value? Maybe not to that extent. No. But

Speaker 1: [17:50] Yeah. And you never know. If they committed to the house in 2020, they weren't expecting the house value to increase 40% in three years.

Dylan Koch: [17:57] I guess I'm clarifying question. They were getting assessed on land value before it was built on property taxes, and then the house was built, and now it's for, like, the property taxes.

Speaker 1: [18:04] I think it's because some of them were built, like, in say 2020, and it cost them $700,000 to build it, and then it gets assessed for 1,200,000.

Dylan Koch: [18:12] Gotcha. Right?

Speaker 1: [18:13] Yeah. That is the huge increase in valuation of the property and the county and the county, you know, where we're at, they're only incentivized for taxes to go up. Because as we know, the government only gets bigger, never gets smaller. Once So they get used to spending that money, there's no way it's ever coming back down. Yo. If you don't follow me on Instagram, which is that Mike underscore invests, by the way, then you might not know that we officially have a new mission as a brand, and that is to help 2,000 real estate investors build million dollar businesses. Obviously, to do that, we need to get in front of as many people as possible. So quick little ask to help us reach that goal. First, shoot me a follow on Instagram at Mike underscore invests. Second, follow collecting keys podcast on Instagram. That's at collecting keys podcast all written out. And third, every time the algorithm is kind enough to show you a post from either of us, share it on your story or in your post and tag us. If you do that, I'll DM you, and we can have a little DM conversation about what is preventing you from having that million dollar business that everyone is seeking. And we can see if we can come up with a plan to help you make that massive income, not just passive income. So again, if you see any of our posts, just go ahead, reshare them, tag us, and let everyone know that you enjoy the content we produce.

Speaker 1: [19:28] It will help us a ton, and then we'll be happy to help you as well.

Dylan Koch: [19:31] You see this a lot with, honestly, some of the deals that we get in the off market business is elderly people who are on a fixed income and their property taxes and insurance go up and they can't afford to stay in their house. They've been in for forty years. And because they haven't done any upgrades, you can't really pay them a lot for it.

Speaker 1: [19:46] I think that is something that places like California have gotten right. People like to rip on California in real estate for whatever reason. I don't know why. There's, like, tenant stuff, whatever. But in the state of California, you do not have tax assessments until there's a property sale. And so you have people that live in Irvine that bought a house in the nineteen eighties for $200, and the house is now worth $3,500,000 just because everything there is like that. And they're still paying property taxes like they were when they bought the house. Did they change that this year, or is it phasing out now though? I don't think so. I can't remember if they're because, like, they used to people were used to just, like, if it stayed in the family, you would never have, like, a property tax increase. Like, if your parents will do the property, I know they got rid of that or they're phasing that out. Yeah. To where now if you live in it, you're the last generation of your family that can get away with that. Because you'll have people that live in Malibu and they have a $40,000,000 house or something crazy because they kept you know, remodeling and building and they would just keep one wall of the house Yeah. And keep building it, and then they would never have to pay major property tax on it.

Speaker 1: [20:54] Yeah. So, basically, they had the they enacted the state board of equalization, which whenever there is a change in ownership or a completion of new construction on the property. So you can't do it with land either. Okay. So I guarantee those people that had land that were like, we're just gonna build a house and get taxed just on the land. On the land. Yeah. You can't you can't do that anymore. So they eliminated that. But so if somebody dies, that makes sense, which I also don't I mean, I agree with that, honestly. Like, if your grandparents have a $3,500,000 house and the kids are a deadbeat, they should not get to just inherit $3,500,000 house and not have to taxes on that. That's ridiculous. Yeah. That's what a lot of people were doing. Right? And they would just keep it in the family. Yeah. I think there's probably a good blend of, for sure, we should protect our elderly, and they should not have tax increases. And I feel like if you're 65 or something like that across the board, you should just still pay property taxes. There should just be some sort of exemption as far as like increases in those sorts of things.

Dylan Koch: [21:51] I mean, Social Security is supposed to go up with inflation, but it's not going up to the same extent that their property taxes and the insurance is going up. That's the problem.

Speaker 1: [22:00] But nobody that only survives on social security lives in a house that they own. When can we stop paying that and just admit that none of us are gonna fucking get it? I feel like I'm getting robbed now. Yeah. Honestly.

Dylan Koch: [22:11] Mike, to your point of like, I think most people's frustrations, including my own when it comes to like the tax thing, because you get taxed on literally everything, income, sales, when you die, gift, everything, is that the government is bad stewards of money. And if even if you took all that tax money and just put it somewhere in an endowment or, you know, an s and p 500 fund, it would greatly outperform the people who are in charge who allocates those dollars.

Speaker 1: [22:36] Yeah.

Dylan Koch: [22:36] I think that's a lot of people like.

Speaker 1: [22:38] Between regulation, corruption, just wasteful things. Right? And they always seem to just like I said earlier, as the government gets bigger, never smaller. So once a tax is enacted, it doesn't usually go away. It only gets bigger.

Dylan Koch: [22:51] Well, let's see what Trump promises in 2025. Right? They wanna I think most of it's talk, obviously.

Speaker 1: [22:57] Of course.

Dylan Koch: [22:58] Of course it is.

Speaker 1: [22:58] He already had four years of fucking talk. Yeah. But I mean, if they can get rid of some of that regulation, where you put your money where your mouth is. I mean, taxes and stuff, yeah, they can adjust federal income tax. So you can do that all day. We've seen that. But we're talking all the other bullshit that, know, Social Security, Medicare, like how that stuff's regulated and allocated. That's where the cost savings at is getting rid of regulation.

Dylan Koch: [23:17] If you take I forget the actual statistics. But if you take basically like veteran and like Medicare, Medicaid essentially, defense and our interest expense, it's like 75% of tax receipts.

Speaker 1: [23:29] Isn't that crazy?

Dylan Koch: [23:30] So they have all the taxes we take in three categories take up 75% of that.

Speaker 1: [23:34] Just insane. And like the Medicare and Social Security stuff, the thing that really sucks is there's so many of us that are paying into that, they're never gonna get it. So it's like literally just theft at that point. Just wasteful spending on all those. I mean, go to the DOD. The DOD is like the biggest single line item, and that's still very there's a lot of wasteful spending in there. That's why they're all the, people that build missiles to kill to kill Russians, you know, business headquarters are near DC. And just because they're lobbying to build more missiles to kill more people.

Dylan Koch: [24:03] I think the top five, wealthiest ZIP codes are all within Washington DC, like, capita.

Speaker 1: [24:08] I can see that.

Dylan Koch: [24:08] I mean, it is what it is.

Speaker 1: [24:10] Anyways, yeah. I think that talking about all this kinda, like, macroeconomic stuff, honestly, a lot of these things are why I'm not, like, big into the the real estate forever kind of mentality. Like a lot of people when they buy investment properties and they're like, I'm gonna hold on to this thing for the next thirty years, is because you're anticipating things being exactly the same in thirty years as they are right now or fundamentally being, like, significantly better. And maybe maybe it's my cynical view. Yeah. I just don't think that makes sense. Well, I was gonna say, I wanna ask you this because I wanna probe on your view a little bit because the people that bought real estate thirty years ago are pretty happy they own real estate today. Absolutely. Yeah.

Dylan Koch: [24:51] They've had forty years of declining interest rates since the eighties, though.

Speaker 1: [24:54] Yeah. And so what I guess what I'm saying though is is like, when they were buying them in the eighties, though, that wasn't that wasn't easy. Thirty years ago was '94, guys. So that's crazy. Right?

Dylan Koch: [25:04] That holds true. The statement is still correct.

Speaker 1: [25:06] The statement is correct, but it's because in the eighties, it was, you know, it was hard. Right? There's a lot of high interest. There's a lot going on. I guess what I'm saying my point in this is do you think the next thirty years are different than the last thirty years? It's a hard thing to say. Right? Because, you know, we can always look in the past. In the nineties, was there a general optimism around the future of The United States?

Dylan Koch: [25:26] The answer is yes.

Speaker 1: [25:27] I don't know. I was nine years old in '94. Absolutely, there was. I don't think any of us could say that. How old were you in 1990, Dylan?

Dylan Koch: [25:33] 1990, I wasn't born.

Speaker 1: [25:35] Yeah. '92, baby. Yeah.

Dylan Koch: [25:36] But doesn't mean that it's not true. I mean, the nineties, like, decade, like, we just, what, defeated quote, unquote, defeated Cold War USSR, and everyone's, like, American patriotism was, like, on the, like, the culture that was going around at that time.

Speaker 1: [25:47] Yeah. I would say there was a general optimism around The United States. I all through the nineties. I think in 2001, right, when there was 09/11, things kinda took a little dip, but there was still, this strong American patriotism. You know, everyone has the memories of all the American flags, and everyone was like, yeah. We're gonna go kill Osama bin Laden. Like, that was like a huge thing when I was in college, right, when we got Osama bin Laden. And then over the last decade or so, it's kind of started to trend down. Mean, I really since, like, honestly, 2008 has probably had a little bit of, like, a downward projection. But we've obviously made a lot of money in that period of time. But it's like, is it realistic for that to happen again? I don't know. Like, nobody knows the future. You can make your own opinions on it. I think the biggest difference now versus, like, the nineties is thanks to the Internet and everything else is things can change significantly faster. Right? Because, like, honestly, how many freaking cycles of whatever have we had since, like, 2018? Like every year is different.

Dylan Koch: [26:49] There's so many threads that this can that can this can touch on because you can talk about like the culture, but it's like a chicken or the egg, what comes first?

Speaker 1: [26:56] Yeah.

Dylan Koch: [26:56] Because a lot of economic people would say, hey, ever since 2008, the great financial crisis, and we gave the Fed and the Congress so much authority over the money system that the reason why we have more and more cycles every year is because they're fucking with it.

Speaker 1: [27:08] Totally.

Dylan Koch: [27:08] Like, QE wasn't a thing. Quantitative easing wasn't a thing until 2008. Right? So now they're messing with all these policies trying to manage it and get it right and get it correct. And I think that's an unsolvable problem. Right? And the more they interfere, the more of these, like, peaks and troughs we're gonna have, which, therefore, that goes into, like, the culture and the nihilism that I think you're that you're alluding to, like, why don't why I care about anything else when I can I can't even afford to live myself? Right? Like, it's kind of the ethos that's out there.

Speaker 1: [27:35] I think another big difference from the nineties versus now is it's not even just, like, the American optimism, but generally, was a lot more stability in a lot of the others for, like, developed countries that we are we have relationships with. Right? Versus now where a lot of the countries that have gone through, like, the same sort of rise and fall of, you know, having quantitative and all sort of stuff. They had the collapse in Europe where they had to bail out Spain and Greece and all these sort of things. All that stuff is a problem that still exists that did not happen in the nineties. They were fresh out of the worst at that point. You know? Sure. Although, like, the Balkan conflict all stuff had ended, they were on, like, the postwar frenzy, and that's all now gone. So here's here's my opinion. Because if it gets as bad as the trend, right, it's like America's going down is what I'm hearing. And if it gets bad enough to that point, it's like, doesn't matter if you got $15,000,000, you're out on your ass. Right? Absolutely. If it happens in the next decade, decade and a half, I still got it. Like, I will win. I will make sure that I take mine and get mine from other people. You know, when it's, like, apocalyptic, I feel confident. Like, I'm good. I'm skilled.

Speaker 1: [28:42] I'm also, like, willing to do some messed up shit. So, like, you know, I'll I'll fight for my family.

Dylan Koch: [28:48] I'm staying in your bunker, Dan.

Speaker 1: [28:50] I'm going on the offensive. Right? I live two minutes from Dan, so I can just pop over there. Right. So my my point is is if that's the only other alternative, then why not be bullish on maybe not just real estate specifically, but bullish on on America because the alternative is actually pretty bleak. So I'm just gonna believe in optimism and say we're gonna do pretty good shit. Like a good example like of American, we still got it, is you probably don't even know this, but Elon Musk built the largest supercomputer in the world just this year. Like, doing stuff that people were saying is impossible. The physics of it aren't possible. And Elon Musk was just like, okay. Cool. And so he spent this year solving the problem and and a 100 x what people thought was possible with a supercomputer. And that's just one dude randomly doing shit. Imagine a company like NVIDIA being like, holy shit. It is possible. And that you know what I mean?

Dylan Koch: [29:41] So the capitalism is still, like, heats at innovation, which I think is kind of what you're hitting at, which is good. Right.

Speaker 1: [29:46] We still have people able to do it.

Dylan Koch: [29:48] Right. And the other, like, what economists would say is, the economy today, one is so much bigger, there's more money sloshing around than there's ever have been before. And it's still it's more global than it ever has. Yes, there's a trend toward deglobalization now. But America, it's a relative game, is still like, quote unquote, the cleanest dirty shirt. Right? So, like, yeah, it sucks here, but it sucks worse than everybody else. Right? And so where are people looking to put their capital? It's it could be still in The United States.

Speaker 1: [30:16] Yeah. And that's honestly a thing that I always get mind blown as people talk about how much it does suck here. We have problems. Travel to anywhere in the world, and The US is pretty damn good.

Dylan Koch: [30:26] And let me clarify. I don't think it sucks. But

Speaker 1: [30:28] No. No. But the problem is is when you have economic and government policy that's just determined to try and, like, make things more challenging, right, is when it turns into a problem. That's like the issue is stuff's too good here that people like trying to fucking make problems. It's been too good for too long. Right? Like, I think that's the problem, right, that we have. I would be curious to know like, I'm looking at your your graph that you sent Dylan, which is the household debt to disposable income, and it has Australia and Canada way above their you know, like, right now, Australia's at a 184. Canada's one seventy five. The US is still 97. Like but we talk about, like, debt to house disposable income, like, is kind of a problem in The US, and it may be a problem in The US. And the question is, is is it more of a problem elsewhere? And so then that leads me to wonder, it's like, is it still easier from a pure investment standpoint in US companies to in being an American to get wealthy than being in another developed country?

Dylan Koch: [31:26] I think the answer is a 100 yes.

Speaker 1: [31:28] Absolutely.

Dylan Koch: [31:28] And I think I'm gonna Mike's gonna lead into this next part. But US is actually one of only countries that has thirty year fixed rate debts. Right? And so you think it's bad here. Like, Australia, Canada, they're five years, maybe max arms. I mean, only the 1% own property there. Right? And that's the other thing that we can get to is, like, The United States actually has pretty good property rights and separation of powers where other countries don't have. But so the question we should ask yourselves is why can't our US graph look like those other ones? Right? Why can't it go up another 80%?

Speaker 1: [32:01] It's because we have 40,000,000 people and a lot of general subsidies. Right? Like, that's kind of the challenge with it. Sorry. We have 400,000,000 people and 40,000,000 people. We have a huge population, and we have a bunch of microcultures. And there's a whole bunch of reasons for people to not have to do anything, which is an issue, which do exist at other places. I think the difference is that the general cost to have, like, a decent life in a lot of places is also a lot less. But I will say if you're a capitalistic person and you wanna, like, make money, The US is absolutely the best place to do it. I've learned this from traveling around the world a lot over the past couple of years and meeting people, but also going to the Hormozi conference that I when I went to, like, their level one and then also being part of their level two ones and meeting people from Australia, from Asia, from Germany, from France, from The UK, from, you know, all over the world, right, that are similar mindset in the way that they wanna build business, they wanna make money, they wanna do all the same stuff that everyone listening to this show does. And without fail, they're all like, goddamn it. You guys are so lucky that you live in The US with how easy it is for you guys to do stuff. Right? Yep. And that's something that a lot of us take for granted.

Speaker 1: [33:17] But the problem is is that if you're not that kind of person, it's a pretty rough place to be in The US because you are kinda left out on your own. Is it rough, or is it just not as cool because you're standing next to the cool kids? You just aren't a cool kid. That's a very valid point. Right? Maybe that's it. Because it's like the contrast. Right? It's like because I strongly believe that there's nobody going hungry in The US. That's true. There's food insecurity because some people, especially children, don't understand how to get access to many of the things that they need access to. But if you really wanted to, you could gain access. I think rural areas are like a big area where food insecurity is a big part because they don't have the same social services as a city. However, like in general, like the homeless people aren't going hungry in our country, but you go to other countries, there's actual people starving. Like, at the bottom threshold. Right? Like, there's people that, like, aren't eating much. So I think we're pretty high up on the totem pole here.

Dylan Koch: [34:09] If you're in, what, India and you and you don't make a a living for yourself, you starve. Whereas you're if you're in The United States, you go to the food bank.

Speaker 1: [34:17] You don't even need to go as extreme as that. You go to other developed countries, and you'll see it. Right? You go to parts of Europe, you'll see that.

Dylan Koch: [34:23] Yeah. And you're probably the best person to answer that, Mike. You're probably more travel than most.

Speaker 1: [34:27] Yeah. You'll go to Europe, you'll see that. I think the only country I've ever been where it's been like, oh, you don't really see that at all is probably Japan. But it's also because there's no homeless people, like, at all. They have, like, the lowest homeless rate in the world, I think.

Dylan Koch: [34:39] Do you ever go to places that are maybe a little not third world, I guess not as developed, And the exchange rate is so that, like, $5 is like $500 in US dollar. Like, do you ever have that kind of experience when you travel?

Speaker 1: [34:53] Yeah. So all through Southeast Asia, dude. You're just in Cambodia and Vietnam. I was gonna say it's probably like

Dylan Koch: [34:58] Oh, yeah. Vietnam isn't like a the dong? Isn't that

Speaker 1: [35:00] the The Vietnam is so high compared to the dollar. When I was just in Laos, it's even worse. So Laos is literally one of the 30 poorest countries in the world. Right? And their money's worth nothing. And we were, like, in this little village, and I went to, like, buy a bottle of water from this little store. And the guy comes out, and all I had was a bill, like, larger bill that was worth, like, $3. And he wanted, like, 30¢ with a bottle of water. And so I give him the this bill, and it's all I had. And he's, like, going looking for change. And he's, like, digging through, like, this little bucket that he has that has, like, money, and he doesn't have enough to give me change. And I was like, bro, just just keep it. It's a bucket of money of literally, like, with, like, so many zeros, it goes off the the note. Right? And he's like thinking his eyes, oh, I don't have enough to, like, give you. And I'm like, bro, don't even worry about it. Like, I'll just take my water. And he was like, oh my god. Thank you so much. It was like a huge deal to buy this bottled water for, like, the was, like, $3, man. It was insane. 300,000,000 whatever last dollars are? Yeah. I forget what their Exchange. Their money's called there.

Speaker 1: [36:06] But and their their money's so weak that you have to spend it all before you leave because no exchange company will take it back.

Dylan Koch: [36:12] Will take it back. Yeah.

Speaker 1: [36:13] Right. They're just like, I don't even want it. Yeah. So Yeah. The Viet the dong in Vietnam is pretty small. Right? Yeah. Yeah. It is very small. I've seen it. Go. There's little little dongs stands all about small dongs in Vietnam. It's a small fraction of the dollars. Dollars. Right? Because dollars are big money over there.

Dylan Koch: [36:31] Call them BDE for a reason.

Speaker 1: [36:33] Yeah. I know Dylan's gotta go and hit baby duty. Well, anyways, guys, thanks for listening to three white dudes talk about our opinions on the world, mansplain our bullshit to you on the Internet. So guys, I think the main takeaway is that you should do everything you can to get out of, like, the lower echelon. So that way if things do go up and down, hopefully, you can you can hang on a little bit stronger. And ultimately, assets are typically gonna be the best thing to be. And if you are not bullish on The United States, I don't know. Spore investing other places. Buy Bitcoin. Do things that will delever you from The US a little bit. And there's no harm in that. But right on, guys. Thanks for listening. We'll talk to you guys next week.

Dylan Koch: [37:12] See you.