The Truth About Inflation: How the Government is Quietly Stealing Your Money! | Tom Bilyeu

In this Special Report I dive deep into the topic of inflation, exploring why it seems impossible for many to get ahead despite doing everything right in life. I discuss how inflation, as a silent force, erodes purchasing power and facilitates wealth transfer from the poor and middle class to the wealthy. I also describe inflation as "government approved counterfeiting" and explains how each dollar loses value when money is printed out of thin air. By breaking down complex financial concepts into relatable analogies, I shed light on how inflation affects everyday life and offers insights on protecting personal finances. Throughout the episode, I emphasize the importance of understanding the game of inflation and adopting strategic financial approaches, such as investing in inflation-resistant assets, to keep up and potentially get ahead. SHOWNOTES 00:00 – Intro – Why You’re Still Struggling Even When You Do Everything Right 02:15 – What Inflation Really Is (And Why It’s So Dangerous) 05:42 – How Money Printing Steals from the Middle Class 09:15 – The American Dream is Being Stolen – Here’s How 12:30 – Why Assets Are the Only Way to Beat Inflation 16:00 – The Debt Trap – Why Inflation Keeps You Poor 20:20 – Why the Government Can Print Money but You Can’t 24:15 – How the Rich Use Inflation to Get Richer 28:30 – The Stock Market is a Rigged Casino – But You Can Still Win 32:40 – The Future of Inflation & What You Should Do Now CHECK OUT OUR SPONSORS Range Rover: Range Rover: Explore the Range Rover Sport at https://landroverUSA.com https://landroverusa.com Audible: Sign up for a free 30 day trial at https://audible.com/IMPACTTHEORY https://audible.com/IMPACTTHEORY1 Vital Proteins: Get 20% off by going to https://www.vitalproteins.com and entering promo code IMPACT at check out. iTrust Capital: Use code IMPACT when you sign up and fund your account to get a $100 bonus at https://www.itrustcapital.com/tombilyeu Tax Network: Stop looking over your shoulder and put your IRS troubles behind you. Call 1-800-958-1000 or visit https://tnusa.com/impact Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact Found Banking: Try Found for FREE at https://FOUND. COM/IMPACT https://found.com/IMPACT American Alternative Assets: If you're ready to explore gold as part of your investment strategy, call 1-888-615-8047 or go to https://TomGetsGold.com https://tomgetsgold.com ITU: Ready to breakthrough your biggest business bottleneck? Apply to work with me 1:1 - https://impacttheory.co/SCALE ************************************************************************************ What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business: join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business: see if you qualify here. https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox: sign up here. https://tombilyeu.com/ ************************************************************************************ If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. ************************************************************************************ Join me live on myTwitch stream https://impacttheory.co/4fitmnJ. I'm live daily from 6:30 to 8:30 am PT athttps://cms.megaphone.fm/organizations/0482bfe8-8502-11ed-af5d-3bdc320068d7/podcasts/0a41f61a-9ddf-11ed-9eb7-dbb3a40775f5/episodes/8ac68366-8a85-11ef-bb65-abca3ffdcf54/www.twitch.tv/tombilyeuwww.twitch.tv/tombilyeu https://impacttheory.co/4fitmnJ ************************************************************************************ LISTEN TO IMPACT THEORY AD FREE + BONUS EPISODES on APPLE PODCASTS:apple.co/impacttheory http://apple.co/impacttheory ************************************************************************************ FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

  Let's talk about the moment your side hustle becomes a real business. Now, I see way too many founders stay stuck running their business like it's a hobby, and then they wonder why nothing ever feels real. It doesn't feel real because it's not. I've helped thousands of entrepreneurs build real businesses through Impact Theory University, and the first step in the path to building a legit business is registering it. And Taylor Brands will help you do just that in a few clicks. An LLC, a limited liability company, is an official business structure. It's inexpensive to form and very simple to maintain. It's how you open a business bank account. It's how customers know they're dealing with a real company. And Taylor Brands doesn't stop at the filing.

• 0:45Tom Bilyeu?

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Taylor Brands and get started on your business today. This is a paid advertisement. You've done everything right. You went to college, you got a good job, you've worked hard and gotten promoted, but you're still living paycheck to paycheck. And the same is true for most of your friends. And all of you want to know why in the hell it seems to be impossible to get ahead. How can it be that the American dream is dead? How is it possible that the boomers could buy a house with a stick of chewing gum

• 1:29Tom Bilyeu?

  and some matchsticks, and you've been forced to give up on ever owning a home? Welcome to the world of inflation, where your money is worthless every year, no matter how hard you work. I am Tom Bilyeu, and today I'm going to help you understand why inflation feels like your wallet is being dry humped by the Grinch, and, most importantly, what you can do about it. And what you can do about it is the important part here, because even if the game is rigged, you can learn how it's played, and you can still get ahead. First, a definition. What is inflation? Simply put, inflation is prices going up over time. But while some would have you believe inflation is good or a natural law of the universe,

• 2:10Tom Bilyeu?

  the reality is that long-term inflation rips countries apart from the inside by stealing your purchasing power and incentivizing the accumulation of debt at the individual and governmental levels. It is the great deranging force that makes you want to adopt a boomer just to drown them in the bathtub. Now, I'll explain how in a minute, but I'm telling you right now, once you see that inflation is the primary method by which wealth is transferred from the poor and middle class to the wealthy, you cannot unsee it, and that's why I talk about this on an endless loop. Now, listen, inflation is not the only problem, but it is the biggest problem, so it's going to be my focus today.

• 2:51Tom Bilyeu?

  Now, if inflation is the price of things going up over time, why do I call it government-approved counterfeiting? Because of the underlying thing that causes the prices to actually go up. And what is that underlying thing? The government printing money out of thin air so that they can spend more money than they bring in in taxes. Now, why would they want to do that? Because then politicians do not have to get you to vote for a tax increase when the bill comes due for all the things that they promised to give you. Politicians by nature are in the business of both governing and getting re-elected. And to get re-elected, they have all universally, all throughout human history, realized that

• 3:36Tom Bilyeu?

  promising to give you free stuff is the very thing that's going to get them re-elected. The bad news is that there really is no free lunch. But what you're living through right now is that you really can make someone else pay for a huge portion of that lunch. Here's how it works. When the government prints money out of thin air, each dollar becomes worth a little bit less. Think of it this way: it's like pouring some coffee into a giant mug. Every bit of water you add to the mug dilutes the coffee. That's why the government can't just print a ton of money and make everyone a billionaire. That would be the equivalent of pouring a tsunami of water into a thimble full of coffee. It's what's known as hyperinflation, and it makes money worthless. Just as too much water would make it impossible for you to taste the coffee,

• 4:21Tom Bilyeu?

  too much money makes it impossible to buy anything. It is the great irony of this grand counterfeiting. The money ultimately has no remaining value. You can think of it another way. If there is one pizza for sale and everyone has a hundred dollars, maybe people are willing to pay ten dollars for the pizza. But what if there is only one pizza still, but everyone now has a billion dollars? How much would they be willing to pay for that same pizza? Millions? It's certainly possible as a percentage of the money that they have. And that's why you can't print more money unless at the same time you add a corresponding amount of things that people want to buy. Now, I can hear you saying, "Yeah, but Tom, we're only talking about 2% inflation. Why should anyone be scared of that?

• 5:06Tom Bilyeu?

  If I get all of my free stuff promised to me by the politicians in their bid to get reelected, why should I care about the government printing 2% new money?" And the answer is, very simply, compounding. Compounding interest has been referred to as the eighth wonder of the world. Here's why. 2% annual inflation in just five years will steal almost 10% of your purchasing power. In 10 years, that number jumps to nearly 20%. So while you'd still see a hundred dollars in your bank account, that one hundred dollars after just 10 years would only buy eighty dollars worth of stuff. Also, 2% is just the target. According to Trueflation, the real compounded interest rate over the last five years alone

• 5:51Tom Bilyeu?

  was over 25% thanks to unprecedented deficit spending in printing by the government. To all of the people that will have you believe that money printing is not the cause of inflation, I say this. There are studies that show a 0.9 correlation between money printing and inflation. One would be perfect correlation. We're at 0.9. So we are but one tenth of a point off from there being a perfect correlation between money printing and inflation. I think we have found the smoking gun. More money in the system means higher prices, period. Before I explain how inflation exactly facilitates the great wealth transfer from the poor and middle class to the wealthy and from the young to the old,

• 6:35Tom Bilyeu?

  another fascinating side effect, let me give the devil its due. Inflation really does have an upside. Like all bad things that manage to stick around, it really does just enough short-term good that people cannot stop themselves from doing it. Think of it as a cocaine bender pre-fentanyl. Once in a while, probably isn't going to kill you, but get addicted and you are toast. And as a society, we are officially addicted to the upside of inflation. And that is a two-fold problem. Inflation creates momentum in the economy. That's number one, because your money is going to be worth less than a year. You're incentivized to spend your money and not save it. That gets the economy humming and that is a very good thing. And when you keep inflation to roughly 2% a year,

• 7:19Tom Bilyeu?

  people cannot figure out why they're having trouble getting ahead. Inflation also allows capital to be aggregated. That is number two. People being willing to amass a large amount of money isn't actually bad. It is a good thing. You would not want to live in a world where capital couldn't be aggregated. It's beyond the scope of this video, but I'll just say this. All of the cool stuff in your life, like your computer, the AC that's keeping you right now either warm or cool, your iPhone that you're probably listening to this on, and the internet itself are all the result of someone making enough money that they could take some crazy risks and fund insane projects that have on mass led to good things. Now, those things sound pretty good, I assume. So what's the problem, right?

• 8:04Tom Bilyeu?

  That's the question. First and foremost, it is immoral to secretly take people's money. Taxes are one thing, vote for what you believe in, but it's something else entirely when the government prints money, racks up huge deficits, which is the same as raiding the bank accounts of future people, and then distributes the raided funds in a way that makes the rich richer and the poor poorer. All right, we've now reached the point in the story where I'm gonna have to explain exactly how inflation, your government legally counterfeiting money, so they can secretly siphon off your purchasing power to supposedly give you free things, which in the final analysis, aren't actually free. They're just reaching into your wallet and taking the money without having to ask your permission.

• 8:47Tom Bilyeu?

  Imagine this: your rich friend, let's call him Gov. Your rich friend Gov invites you out to this incredible free lunch. He likes you, really wants you to like him, so he says he's going to throw a lavish bash in your honor. It's going to be insane, you do not want to miss this, absolutely decadent. And did he mention that it's all free? He's gonna pick up the tab, you don't have to worry about anything, all you have to do is show up and enjoy yourself. You go, and it really is amazing. It's like a Roman feast fit for a king. You wonder to yourself, how on earth is he going to pay for all of this? Sure, you give him some money every year to help him do cool stuff for you, but nothing like this. At the event, Gov gives an incredible speech. He calls you out, he says this is to honor you and the other attendees at the party,

• 9:31Tom Bilyeu?

  that you guys deserve this kind of lavish treatment, and it's all free. The bad news is, during that speech, a hacker goes into your bank account and steals from everyone at the party equally to pay for the feast, and there's nothing you can do to stop them. Whatever, it's only 2% of your money, right? And that was a pretty epic party. Wrong. The problem is, this is where we have to let go of the analogy, because the government doesn't actually steal your money, they counterfeit it, and that steals your purchasing power. Remember, it's like diluting your coffee with a bunch of water. And here's the kicker: someone is going to receive those counterfeited dollars. This is the part of the heist that everybody misses.

• 10:16Tom Bilyeu?

  The counterfeited dollars might not be worth a full dollar, but they're still worth a lot, and someone is going to benefit from those, and it's going to be unevenly distributed. But why the rich, right? Is it just because they're friends with the politicians and the bankers? Certainly part of the story, and I'll explain that in a minute, as we get into debt, but it's not the full story. This is where we have to talk about what happens when the money is counterfeited, at scale. You lose your purchasing power, as we've discussed, you're incentivized to spend rather than save, people start accumulating debt, more on that later, prices go up on the things you want to buy, again, as we've discussed. But, and this might be the most important,

• 10:59Tom Bilyeu?

  what we haven't discussed is that the price of the things you own and could sell also go up. Now, if you own what are called assets, you're in great shape. As the government inflates the money supply and prices go up due to inflation, you've got a bunch of cool stuff that people might want to buy, and you can now sell them for higher prices. In fact, the prices of what are known as inflation-resistant assets go up roughly the same amount as inflation. It's never exact, but it's close. Now, what are assets? Things like stocks, bonds, real estate, precious metals, gold, silver, bitcoin, art, things like that. Okay, cool, but, one more time, how does this make the rich richer and the poor poorer?

• 11:44Tom Bilyeu?

  Fun fact, not everyone who owns assets is rich, but basically, every rich person owns assets. It is like rich person 101, and I am not joking. The second I made my money, money managers came out of the woodwork, offering to help me manage my money. And lesson number one: buy assets. That was the thing that they were drumming into my head. And here's why. When the money supply is inflated, the price of assets go up. So if you know the government is going to print money, and they are, then you need to own assets as a way to protect yourself against that inflation. Now, here's a breakdown of exactly the way that this happens. Because there are only so many valuable assets available in the world, they retain their value as the dollar gets diluted.

• 12:29Tom Bilyeu?

  Whenever people have more money, but the number of things available to buy stays the same, prices go up. Remember that pizza? So, rule number one of beating inflation is to buy things, AKA invest, or in my words, gamble, on things you think will go up in value by at least as much as the money supply is being inflated. So, anyone holding inflation-resistant assets is going to see their net worth go up as the money is printed. It's not technically that the assets have gone up in actual value, it's just that the dollar has gotten weaker. Going back to the coffee analogy, if caffeine is what you really want, and I pour a bunch of water into your coffee,

• 13:11Tom Bilyeu?

  it takes a lot more mugs of that watered-down coffee to get the same caffeine buzz. So it is with asset prices. It's not that your 401K actually went up in value, or that your house even went up in value. It's that it takes more of your weakened diluted dollars to get the same purchasing power. Now, guess who's savvy enough, or able to pay savvy people to advise them to own assets? Wealthy people. That's the first part of how the rich get richer. We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. Luxury brands are not charging you more for better cashmere. You're paying for the storefront, the ad budget,

• 13:53Tom Bilyeu?

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• 14:34Tom Bilyeu?

  Get free shipping on your order and 365-day returns. It's now also available in Canada and the UK. And when Quince asks where you heard about them, make sure you tell them that it was on Impact Theory. That's the best way to support the show. I'll call you back? That's the most expensive sentence in business. You mean it when you say it, but by the time you remember, they've already found somebody else. That's why today's episode is brought to you by QUO, spelled Q-U-O. The business phone that's built so you never miss a call or a customer. QUO writes up your calls for you, and one click turns any of them into a task with a name and a due date. The follow-up actually happens instead of living in your head.

• 15:17Tom Bilyeu?

  When you can't pick up at all, QUO's agent does. It answers questions, gets the details, and texts them a link to book an appointment. By morning, you've got the summary and you can Jump right in. It's also an official connector in Claude and ChatGPT. Ask who called while you were out and it's handled. QUO is the number one rated business phone on G2. It's trusted by over 90,000 businesses. When money is on the line, always say hello with QUO. Try QUO for free plus get 20% off your first six months at quo.com/impact. That's Q U O dot com slash impact.

• 15:58Tom Bilyeu?

  We're back. Let's dive right in. Now, guess who's savvy enough or able to pay savvy people to advise them to own assets? Wealthy people. That's the first part of how the rich get richer. They don't have to be corrupt to beat inflation. They just need to know how to strategically own assets to at least match inflation. The second part of how a very small number of the rich get richer is that when the government is injecting printed money, counterfeited money, into the system, they do so mostly through buying debt, both governmental and corporate. But that means that the government has to decide, has to make a decision whose debt they're going to buy. They are literally picking winners and losers.

• 16:44Tom Bilyeu?

  Now, it is very important to note that there's a very complex interplay between the Fed, which is technically not an arm of the government, and the government itself, for how much money is printed and where it goes. But that is beyond the scope of what we're talking about today. So I'm not going to be going into all that as I am convinced that people hide the truth of money printing and inflation in the complexities. They want you to get lost in how complex this is and the nuances. That stuff doesn't really matter. When you lay it bare, it's pretty easy to follow and it is extremely shocking what's happening. Speaking of shocks, let's have our final shock before we talk solutions. Inflation triggers a massive accumulation of debt.

• 17:28Tom Bilyeu?

  Just like a lot of salt makes you thirsty, inflation encourages both people and the government to take on debt. A lot of debt. Why? The reason is twofold. One, if dollars are going down in value over time, then borrowing 20K now is like having only borrowed, say, 10K at some point in the future. And given that that's true, savvy people use debt as leverage to buy assets that their betting will go up in value as the value of the borrowed dollars decline. So, as people just trying to save their money get hammered by inflation, savvy investors using debt to buy assets not only have a good chance of keeping up with inflation,

• 18:13Tom Bilyeu?

  but the really savvy ones can make a return that far outpaces inflation, making them wealthier over time. The second reason that people take on debt in an inflationary environment is that because for the average person, debt is the easiest way to get access to more capital when saved money is losing its value. This is doubly true if wages in real, AKA inflation-adjusted terms, are not going up. Okay, that's inflation in a very small nutshell. Now, what do you do about it? Here it is. First, understand the game you're playing. Rewatch this video. Pursue a deeper understanding of how money printing, assets, debt,

• 18:55Tom Bilyeu?

  and the social unrest that people are feeling right now because they cannot get ahead, all work together. Next, remember, your money is being inflated away. It does not matter how many dollars you have in the bank. It matters how much stuff you can buy with that money. Always think of your money in what's known as real terms, not nominal terms. Real terms just means adjusted for inflation. Nominal means not adjusted for inflation. So, yes, you have $100 in your bank account, but it only buys $80 worth of stuff. A really good calibration is the cost of energy in dollar terms. Energy is arguably the most important thing you will buy that isn't directly related to your safety and survival.

• 19:40Tom Bilyeu?

  And honestly, many of the things related to your safety and survival are tied to energy. If you benchmark your purchasing power against, for instance, how much oil it will buy, you'll have a very good barometer of where things actually stand. I know most people won't do that, but it is a good reminder that it doesn't matter if you have a thousand dollars in your bank account if the cost of gas is too high, as that affects virtually everything else in the economy. You need to shift your thinking from assets are a nice to have to assets are a must. You have to find a way to save money that won't be devoured by inflation. Or, as savvy people say, you need an inflation-resistant way to store your wealth. Get involved in the stock market. But remember, it's risky.

• 20:25Tom Bilyeu?

  Investing is best understood as gambling. Now, people absolutely hate it when I call the stock market gambling, but it is indeed gambling. I'm not saying it's bad, it's great! The financial markets are incredible, they're a miracle! All I'm saying is that when you invest in the stock market, or any asset class, you're taking a risk. You're placing a bet that its future will be better than its present, and someone will buy them from you for more than you paid. If that was guaranteed, though, the system wouldn't work. In fact, the only reason you get a return on your investment is because you are taking a risk. If you weren't, there would be no return.

• 21:05Tom Bilyeu?

  And to my point, that the stock market is best understood as gambling, the literal Oxford Dictionary definition of gambling is "to take risky action in the hope of a desired result." To push it even further, investing in the stock market is gambling at two levels. One, as the definition says, you're taking a risk for a desired result. And two, public company stocks are not based on fundamentals.

• 21:33Tom Bilyeu?

  I don't care what anybody tells you. They're priced based on human sentiment. Recently, the stock market saw the biggest single-day swing. It moved by a trillion dollars in a single day based on news, just news, that DeepSeek, an AI company, may indicate that Nvidia won't be worth the same in the future as it is today. Nothing changed in the fundamentals of Nvidia's business. It was pure speculation about the future of Nvidia's business. And not even quite that. It was pure speculation about how people will feel about Nvidia's future business, which is another way of saying that the sentiment changed.

• 22:14Tom Bilyeu?

  And the stock market is all about placing bets on which way the sentiment will change. Because, believe it or not, you can actually make a lot of money betting on a company doing worse in the future. But that is definitely a story for another day. I want to say it one more time. The stock market is incredible. I love it the most. I am very, very glad that it exists. I believe strongly that not only should people be able to invest in the stock market, they should be able to gamble on any legal activity that they want. I further believe that the US stock market has contributed massively to America's economic might. I just don't think people should be put in a position where they're forced to place bets on any asset in order to keep up with the government stealing their money through

• 22:59Tom Bilyeu?

  inflation. Now, if you're looking for the lowest-risk way to store your wealth, that's short-term US treasuries. As long as the yield that they provide is close to the rate of inflation, you can keep up by owning an asset backed by the US government. The treasury yield, in fact, is literally known as the risk-free rate of return. If you're looking for a simple, manageably risky way to store your wealth, index funds can also be useful. If you really want to get fancy and try to capture more upside, have a chance of significantly beating inflation, but still you want to keep your risk tolerable, read up on Ray Dalio's all-weather portfolio. The TLDR is to hold assets in 12-ish uncorrelated asset classes.

• 23:44Tom Bilyeu?

  He makes it sound pretty simple, but I think the average investor is not going to learn enough to pursue this strategy, but Ray has been insanely successful in the markets. And this is a strategy he said he would recommend to his own family if he wasn't around to help. All right, for those of you wondering what I personally do, I'll tell you, but this is aggressively not financial advice. I'm good at making money, but very dubious at investing. It's also important to note that this is a snapshot as of the moment when I recorded this video. I may change things at any time, but for now, the bulk of my investments fall into the following five asset classes. One, short-term treasuries, for reasons I explained previously. Two, equities, AKA the stock market. Three, Bitcoin. Four, real estate.

• 24:28Tom Bilyeu?

  And five, my businesses, which has been my most lucrative investment to date, betting on myself. All right, that is the truth about inflation. It's government-approved counterfeiting that slowly drains your wealth, forcing you to gamble just to stand still. Yes, the game is rigged, but once you learn how it works, you really can play to win. All right, not everyone is going to agree with everything that I've said, so I want to address some of the most frequently asked questions and challenges that I get.

• 24:55Speaker 01

  There has never on the history of anything been 0% inflation. It happens in literally every country everywhere and is simply part of any system that uses currency. How much inflation happens is where the argument should be.

• 25:07Tom Bilyeu?

  That is literally not true. So if you look at Japan, you don't have to go back very far to see that there was a period recently where they had negative inflation, AKA deflation. Now, if you're saying that this is all a spectrum and that it's either going to be deflating to inflating, and some people are going to claim that deflation is worse, which again, also is only true if you're looking at crisis-borne deflation, because technology is inherently deflationary. We never notice it because the government is so busy inflating the currency that they are gobbling up what would otherwise be driving costs down. But it is admittedly very difficult to find that sweet spot.

• 25:45Tom Bilyeu?

  But when you look, meaning even gold inflates because we're going out, we're mining, we're finding roughly 2% more in the gold supply, so that's going to go up. But if you look at Bitcoin, Bitcoin is literally designed to be what's known as sound money, something that is not inflating. Now, there have been periods of time where we get closer to sound money. When you, if you go back and look at the Dollar was originally on the gold standard, so it inflated, but very slowly in a very controlled way, where you actually had to go out and get more gold in order to peg the dollar to it. But the reason that you're seeing the rise of Bitcoin is because it is a truly non-inflationary asset. And so people are investing in it precisely because it can't be inflated.

• 26:29Tom Bilyeu?

  So this, people really have to break this idea that this is an inviolable law of nature, that something is going to inflate. It does not have to inflate. Prices do not need to go up, that it really is mechanistically cascading down off of more than just inflation. I understand that, but again, looking at that point, point nine correlation, they are so tightly correlated that over time, it is far simpler and far more accurate, quite frankly, to say as we counterfeit the money, as we print money, as we inflate the supply of money, that prices are going to go up accordingly. I think that's the right way to look at it. Now, again, there are complexities here, but I think it is far wiser to strip those away and ask,

• 27:15Tom Bilyeu?

  why are people so excited about a non-inflationary asset like Bitcoin? What is it that it allows you to do? And what it allows you to do is stop people from abusing that privilege of being able to reach into your pocket and steal your purchasing power. That is the real key. Once you understand that it is an invisible tax, inflation is an invisible tax. Once you ask yourself, why is it okay for the government to counterfeit money, but I can't counterfeit money? You begin to understand why this is a problem. Once you start asking, why can't they just print a billion dollars and give it a billion dollars for everybody and give it to them? Why do they need to take in tax money if they can just print? Why do we run up these huge deficits if we can just print money?

• 27:55Tom Bilyeu?

  Because it is, it is impossible to avoid the consequence of inflation if you're not increasing productivity. And really what the government is trying to do is they're trying to pace that productivity by gobbling it up and printing money. Taking a short break, but there's more Impact Theory after. Stay tuned.

• 28:19Tom Bilyeu?

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• 29:02Tom Bilyeu?

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• 29:22Tom Bilyeu?

  All right, let's pick up where we left off.

• 29:24Speaker 01

  How that takes an account government bonds? Why has he not mentioned that private banks are also responsible for increasing the money supply whenever they lend money? Not trying to defend the government, but that level of simplification always leads to falsification.

• 29:36Tom Bilyeu?

  I love that and thank you for giving me a chance to say one of my favorite phrases, which is "the Tao that can be spoken is not the eternal Tao." If you've ever read the book The Tao Te Ching, one of the, I can't remember if it's the opening paragraph, but it talks about that. What it's, the Tao translates as "the way." So you could take that phrase to mean the path that can be explained is not the actual path. So for sure, in simplifying this enough that it can actually be spoken out loud and that people can understand it, you are for sure lopping things off and making it.

• 30:08Tom Bilyeu?

  Not literally true, but it allows people to navigate. And I value an idea's merit based on its utility. And so when I think about the world as, okay, as they inflate the money supply, I'm going to need to be in assets that are inflation resistant. That correlation is point nine, that acting in accordance with that, it works perfectly. But you are correct that another way that the money supply is inflated, but again, it's still just the inflation of the money supply, is the way that fractional reserve banking works. And we could do a whole thing on fractional reserve banking and how deeply problematic it is. Because I'm not saying, hey, fractional reserve banking is wonderful, but other ways of inflating, that's terrible. They are all problematic. Every bank is insolvent.

• 30:53Tom Bilyeu?

  And if you did a quote unquote run on the bank, you would expose that they hold, I think it's less than 10% of your money they actually have. Crazy, but true, which means if people moved on the bank, you'd only be able to get a little bit less than 10 cents on the dollar. And quite frankly, it wouldn't work like that because what they would do is they give it to the first people that asked. And this is why people run on the bank. So yeah, welcome to another dark corner of how money works. Still inflating the money supply.

• 31:20Speaker 01

  What about private businesses price gouging?

• 31:23Tom Bilyeu?

  Private business price gouging. This feels like a totally unrelated thing, but I know that people have this sense that the real battle isn't the government making decisions to print the money, that the real battle is with corporations being greedy and not paying their fair share. All right, first of all, capitalism, because of something known as regulatory capture, because of the inflation of money supply, there are things that must be addressed. There's no doubt about that. If you were to remove the government in there trying to intervene and trying to outsmart the market, trying to make sure that everything is sort of this eternal flat line.

• 32:06Tom Bilyeu?

  But if you think about it, it's an eternal flat line that's going like this. It's degradating everybody's value in terms of the money that they hold. So yes, it's a smooth, slow decline into oblivion. But as Ray Dalio says, every country ever has printed so much money that the money ends up hyperinflating. Literally every currency, every reserve currency ever throughout human history, all the way back, they've all done it. They end up printing too much money. That inflation of the money supply causes that debt accumulation that I was talking about. The debt accumulation gets to the point where you can no longer service the debt and it either ends with people internally fighting and you have a civil war,

• 32:49Tom Bilyeu?

  you have a war with another country, but it almost never resets without bloodshed. So just to be very clear about how the game plays out. Okay, so now to actual corporate price gouging. The reality is that the market will bear what the market can bear. And in a time of emergency, if you try to go in and layer over the top of it, that we're not going to let the market set the price here. We're going to tell people how much they can change it. That might feel good morally, but I'm recording this not too long after the historic fires here in Los Angeles, where they're talking about putting price caps on the people that will come in and rebuild these homes. Now, by doing that, what you're saying is we're going to make this take a lot longer

• 33:30Tom Bilyeu?

  because the price that somebody is willing to pay for it is a proxy for value. And so if you want people to come in and say, oh, I value my time here in Los Angeles building homes more than I value my time in Denver building homes. You let people raise their hand and say, I value this construction here more. And as I want to, as the home builder, I want to capture that value. I'm going to go there and I'm going to say these houses, from a timing perspective, are more valuable to build. And so now you're able to draw in people from all over the world to get them to build houses in this one area. When you don't let them do that, you derange the market. It ends up taking way longer and you're not able to get that talent from everywhere to come and address this. It's like surge pricing in Uber.

• 34:15Tom Bilyeu?

  The second you don't let them do surge pricing, now there are just going to be times where you can't get a car. And so now somebody trying to use that service is like, hey, I would very much like this price to quote unquote gouge me so that I could get home. And I will plan if I want to avoid these high-traffic times. But at least I now have an option.

• 34:32Speaker 01

  Why do I still feel just as doomed and lost after what I experienced was just validated?

• 34:37Tom Bilyeu?

  So the bad news is that you still are in the situation that you're in. If you've not yet gotten your life organized such that you can begin to accumulate wealth, it is going to be very disheartening. And there's a really fascinating way to think about what money is that I think will bring this home. Money is the thing that allows you to concretize the output of your time. Meaning, you go do a thing. Now, what is the proof of work? You get money for it. So that proves that you spent that time wisely.

• 35:17Tom Bilyeu?

  Now, when you spend that time wisely, you get that money, but it's devalued over time. You're never able to get ahead. And so there's a sense of like, this is futile. Why am I working this hard? Why am I trying to be smart? Why am I being disciplined and dedicated? This doesn't make sense. Like, no matter how hard I work, I'm getting myself in trouble. And don't get me started on education and debt for education and all that, which puts people behind the eight ball before they even begin. But all of that is the thing that leads people to feel like, yo, this is futile. Because the, I am not able to capture the value of my own time. It's, I'm putting it into a leaky bucket. And once you start rearranging your life and saying, okay, look, I don't like the way that I feel right now.

• 36:01Tom Bilyeu?

  The system feels very broken. But I'm going to set that emotion aside. Because there are structural things that I can do with my life that I just outlined in the previous section of the video, to make sure that I'm transferring that proof of work into an inflation-resistant asset that over time is going to allow me to sidestep the ravages of inflation. So instead of buying what are known as unproductive assets, things that are fun to have, going on a vacation, a lot of fun. But the reality is if you took that money and you put it into an asset, if you're savvy enough in the way that you gamble, and it is gambling,

• 36:45Tom Bilyeu?

  then over time, you're able to amass wealth that will let you live. Instead of off the principle, you're able to live off of the interest that you're accruing. Going back to this idea of compounding interest is the eighth wonder of the world. It really adds up when you're doing it well. And now, if you do it well, you can outpace inflation and you're able to grow your wealth over time. Now, when you get into that loop, it feels a lot better. But if you're hearing this at like thirty-five, forty-five, it hurts, man. It stings, but this is the reality of the world that we live in. Now, for better or worse, this stuff moves in cycles. And that's why, if you're paying attention, you feel something is happening to the American psyche right now.

• 37:28Tom Bilyeu?

  And that's because we are, we're at the phase of the debt cycle where we have accumulated so much debt that we are having to inflate our currency so rapidly. In fact, look at your screen right now and you will see a graph of how much we have inflated the currency just in the last five years and how rapidly we're accumulating debt. It is insane. And so we are going to need something called a debt jubilee. Now, that has a really great name, but that's the thing that people die over. This is the thing that causes blood in the streets. Because if you owe somebody money, that's somebody else's asset. That debt, they own your debt, that's their asset.

• 38:13Tom Bilyeu?

  When you don't pay that debt, they just get wiped out. Great for you, bad for them. Flip it. If you're the one that owns the asset, then you get wiped out. But this is why young people especially have this burn-it-all-down energy. Because they're like, hold on a second. You're telling me if there's enough bloodshed in the streets that I can get rid of my debt? I'm here for that. And that is how this all ends up, just in heartbreak, devastation. And look, I don't want to fear monger, but I'm just telling you throughout history, the number of times the cycle is played out and it ends so frequently. It's not a hundred percent of the time, but boy, oh, boy, is it frequent that it ends in civil war,

• 38:55Tom Bilyeu?

  external war, um, bad things, or cataclysmic debt restructuring via a massive recession or depression. Now, a recession would be far preferable to kinetic war. Uh, but you don't get to the other side of where we're at without one of two things. And here is your ray of hope. The pain or productivity. Remember I said that?

• 39:27Tom Bilyeu?

  The reason that the pizza ends up going up in cost is because people are getting more money, but they're not getting more pizzas. But what if you created more pizzas? What if instead, if there's four people fighting over one pizza, we give them a bunch more money, but let's say that we give them 10 times more pizzas than we give them money. Now the cost of the pizza actually goes down. So that is the promise of innovation. This is why I'm obsessed with two things. Finance and how money really works and AI.

• 40:02Tom Bilyeu?

  And I'll throw in deregulation just for spice. If we can get the US economy, if any country can get their economy growing at a level of say, instead of 2%, you're growing at a level of 4 or 5%. Now all of a sudden, you can drive your debts down because you're so productive. And so AI really is the great hope for this generation. That AI makes good on the promise and all the hype that we believe. Because if AI can come in and drive energy costs down, if AI can come in and make goods of basically every ilk cheaper and cheaper and cheaper. Now all of a sudden, we can really get the economy humming. Things cost a lot less, people's quality of life goes up.

• 40:46Tom Bilyeu?

  So you deregulate, you get businesses far more productive. You get the economy humming, you get innovation from AI driving energy costs down, driving labor costs down. And now all of a sudden, you could have, you could be one of those few societies that managed to get that debt jubilee, not through violence, but through innovation. And that is my hope. And that's why, man, if you hang on in this channel long enough, you're going to hear me talk about those two things on a loop. Those three things, you're going to hear me talk about finance, the regulatory environment and the grand hope of AI. All right, everybody, stay safe out there, boys and girls. Lean into innovation, learn how the game works and play to win. Until next time, my friends, be legendary. Take care.

• 41:42Tom Bilyeu?

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• 42:27Tom Bilyeu?

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