One of the biggest talking points in 2021 has been inflation with government reported CPI at numbers not seen since the early 1980's. Will inflation be "transitory" as Fed Chairman Jerome Powell stated or is it here to stay? More importantly for Infinite Banking, does IBC still make sense going into 2022 and beyond if inflation persists?

We tackle why IBC still makes sense in a world with rising inflation so you'll want to take a listen to this episode. As we continually remind listeners, you'll never be in a worse position by having access to cash, especially in a world with so much uncertainty!

For more information on getting started with Infinite Banking or if you have specific questions we can help answer in future episode, get in touch with us at www.TheFifthEdition.com.

- In a move against inflation,

the president has just refused a collect phone call

from Henry Kissinger.

Mr. President, why didn't you pay for the call?

♪ Oh, Oz never did give nothing to the Tin Man ♪

(doorbell dings)

- There's the doorbell.

Why it's Henry Kissinger.

How did you get here so fast?

♪ I straddled that Greyhound and rode into Raleigh ♪

♪ And on across Caroline. ♪

Mr. Kissinger, what are people

in the rest of the world saying about inflation?

(soft oldies music plays)

- All right, welcome to episode 43,

titled "Infinite Banking and the Fear of Inflation".

Think we have a fun one.

I know this topic definitely gets me fired up.

We're going to be talking about

how the Infinite Banking system works,

even when we are dealing with rising inflation.

We have gotten questions

as the numbers, the CPI numbers

have been creeping along this year,

and the questions that we get pertaining to IBC is,

does this still work when inflation is 6%, 8%,

or whatever the government tends to report CPI at?

And with all the printing that's going on and the fiscal

deficits that's going on,

you know, how does, how does IBC work

when the world is

seemingly getting more expensive every single month?

So we're going to discuss how IBC works in the macro,

given the state of things with inflation,

and we're also going to talk a little bit about

what exactly inflation is, because, let's face it,

we don't learn this stuff in schools,

you can get a four year degree and you still don't

really understand what causes inflation.

So we'll talk a little bit about that,

and try to keep this reigned in to IBC too.

But just to forewarn you,

I may go on my little rant because

inflation is definitely something that fires me up.

And hopefully by the end of this episode,

it fires you up too, because

if you really understand what's going on,

well, like Nelson used to say,

you'll know what the solution is.

So, John, let's get this started.

- Sounds good.

I mean, you know, inflation is a,

it's one of those things that

I bet a lot of people that listen to this podcast

are probably tracking the effects of inflation,

but there are so many people out there that really

just consider it something that just happens.

Like they think it's just a natural phenomenon almost, like

why does the,

why did the prices of things keep going up?

And it was funny.

So we had a little recording snafu

when we first started this.

And so we decided to take a quick break

and wait for the disruption to end.

And while I was doing that, I was on my Twitter

and Thomas Sowell came up on my Twitter feed.

If you're, you know, a lot of, again,

a lot of people might know who that is,

but if you don't look him up.

And it was right on the topic that we're discussing today.

And he said, you know, one of the biggest taxes is one

that's not even called a tax, it's called inflation.

When the government spends money that it creates,

it's transferring part of the value of your money

to themselves.

You know, I get into

political discussions and things like that,

and, you know, I guess social discussions and when,

when we start talking about things

that aren't working the way we hope they would,

it almost always ends up with a discussion of inflation,

because it ends up getting, you know,

where, if you're talking about disparities in the,

in the world of economics,

if you start with the very fabric

of what our economics society is built on

and you start affecting that and making it,

making the denominations of that fabric less valuable,

well, you can start to trace a lot of,

a lot of the effects of what's going on, back to that.

But it's such a crazy big discussion that a lot of people

just don't even want to get their heads around it.

So I think it'll be fun to talk about today,

in terms of, you know, how it affects Infinite Banking.

- Yeah, absolutely.

I think this is a

topic that easily can go in so many different directions

and, yeah, the challenges.

Well, let's, let's try to reign it in

specifically for IBC because that's why

everyone is listening to the show.

They want to know, well,

how does inflation affect our IBC policies?

And the biggest argument that I want to lay out

for everyone

is that

look, we're, we're basically living in this fishbowl

where everything that we do is denominated in dollars.

What's happening, what the Euro, the pound,

Canadian dollars.

It doesn't matter.

If you're in the United States,

we're all dealing with dollars

and we're in this rat race,

we're on this hamster wheel

and we're trying to get out of it.

And the, the problem with

the system

is that

we're constantly being pushed further and further

on the risk spectrum.

And for most people out there,

and I say most it's like 99.9% of the people,

what everybody tends to do, because

there is no reward for saving money these days,

everything gets skipped right along to,

to the investing side of the spectrum.

And that's what I mean, you know,

people get pushed out further on the risk spectrum,

where they're having to take so much risk with their money

to just do what, stay ahead of inflation,

because we all inherently understand that

the value of our dollars is decreasing every single year.

Well, Infinite Banking

gives us the ability to have a monetary system,

a financial system that is completely under our control,

and we're not tied into

automatically having to go out

further and further on that risk spectrum

in order to stay ahead of inflation.

What I mean by that, those who practice IBC,

don't have all their assets

in

401ks,

or in IRAs, which basically limit you

to basically choosing for the most part,

what wall street based products,

where you're buying security stocks, mutual funds, ETFs,

all

to do what?

Take more risk and try to stay ahead of inflation.

With the IBC system,

we have a financial system

that allows us to accumulate

what I call a base layer or a foundation

of cash

that is growing.

Now, it's growing conservatively, we, we all realize that,

but it gives us the power to do something

that if all you do is a 401k, IRA,

or maybe you have a brokerage account where you're,

you're investing in securities and mutual funds

and things of that sort,

you don't have any true liquidity

because all your investments are basically tying up

what you're putting aside.

With Infinite Banking,

you have a base layer of money

that allows you to choose other investments

that can potentially help you outpace inflation.

So you're basically taking ownership and control

over a pool of money

that is growing conservatively each year,

but more importantly, you have the ability

to take loans, borrow against that cash value,

or what we call leveraging in and out of the policies

in order to acquire other assets

that will help you stay ahead of inflation.

Let's take a little bit more into that first point there,

because I think it's really important to

discuss how IBC really gives you the freedom and control

that you otherwise wouldn't have

in our battle to stay ahead of inflation.

- Yeah, and you touched on

a lot of really important points, and if I could,

you know, go back and maybe reiterate a couple things.

So when you talk about pushing people out

on the risk spectrum, the risk spectrum,

we could kind of break it down like this.

If you, if you look at people who are saving money,

the inflation

is a negative to savers

because people who are saving

their money because we're making more of it

and creating more dollars out there,

devalues the dollars already in existence.

And so what we're taught,

and the reason this is important

is your dollars are worth less year after year after year.

And so we're taught by the financial institutions

that in order to counteract that,

you know, supposedly just natural phenomenon,

they don't, they don't

recognize the fact that it's the money printing

that actually does that,

in order to counteract that we're taught to

take risk by putting our money into like the stock market

and try to get a high rate of return

that outpaces inflation.

Just another way of saying what John Montoya already said.

And I think the crux of the problem,

or the crux of the matter is that,

when you do that, you give up control

over what's happening in your financial life

because the second you put all that money into your 401k

or into a brokerage account or whatever it is,

you put your money into something where you have no control,

you have no collateral, you take all the risk,

and you're just kind of hoping that it's all gonna work out.

And we're taught that if you just put your money in there,

you'll definitely get an 8% rate of return over the long run

or 10% or 12%, whatever they're telling you these days.

And that's, that's how we're taught to deal with inflation.

And so the trade-off is again,

giving up control and taking all the risk.

So what I think what we're saying with Infinite Banking

is that we're now strategically accumulating capital

in a way that allows, that gives us options.

It gives us control.

It gives us guarantees.

And then because of the strategies that can fit around that,

the Infinite Banking Concept, it gives us some options

that we can do other things with our capital

rather than give up control and take all the risk,

and still outpace inflation.

- Yeah, and that's the reason why we call it

the "and" asset or the "more" asset,

because we have the ability to do more with our capital.

If our capital is tied up in qualified accounts,

controlled by the government and our employers,

we, we don't have that control.

And we can't leverage into other assets that are going to

outpace inflation.

So some examples of asset classes

that have historically stayed ahead of inflation,

real estate, gold, Bitcoin,

and in the notes, I have Bitcoin, not crypto.

And if you don't understand the difference between

Bitcoin and crypto,

I highly encourage all of you to check out

"Bitcoin Audible" by Guy Swann.

You can listen to that,

probably the same place where you listen to our show.

But if you want to learn more about specifically Bitcoin

and how it's not crypto,

I definitely recommend checking out that podcast.

But those are three different asset classes

that can help you stay ahead of inflation.

And these are all assets

that you can acquire using your Infinite Banking system,

because the IBC system is an "and" asset.

It is a "more" asset.

It allows your money to work in multiple places

at the same time.

And the nature of this game of building wealth,

and you kind of have to treat it like a game, is that,

you want to give yourself more options.

You always want to have more options.

The more options you have,

the better off you're going to be.

When it comes to growing your net worth,

there's definitely more options out there

than what we get rained on with when it comes to,

you know, the, the typical average portfolio, which is

again, 401ks,

mutual funds, ETFs,

everything that wall street wants to sell.

And I'm not saying all those things are bad things,

they're not, but you have to realize that,

you know, the old saying

you don't ever want to put all your eggs in one basket.

Well take a look at how you're quote unquote, saving money.

If you're investing

and all your assets are wall street based,

you essentially have all your eggs in one basket.

And even worse,

if all your eggs are in a 401k basket, or an IRA basket,

that's a basket that's controlled by Uncle Sam.

When we're talking about inflation,

well, who creates inflation?

The government. Politicians. Why?

Because they have the most powerful weapon

in existence.

It's the power to create and issue money.

And it destroys our capital.

And that's what really fires me up is, is that

we work so hard to earn a living,

and we get paid in dollars,

and these dollars get devalued every single year.

Now, the, the stated

inflation goal or mandate is 2% per year.

And so it's small enough that we don't really

get too fired up about it,

but over a generation, two generations, I mean,

you're essentially losing half the value of your money.

So not only is it harder and harder to

earn a living these days,

but once you do earn that living,

guess what happens to that money that you do save?

It starts to erode.

Michael Saylor,

the CEO of MicroStrategy calls it a melting ice cube

when referring to dollars.

And if you're not aware of this, I mean,

you really should be asking the questions about

what is money?

how is money created?

It's what really got me started with this whole,

you know, rabbit hole of, you know,

what can I do to somehow address

this innately,

inherent,

just unfair system that we all have to live with

and just accept.

What can we do to take more control over our dollars,

so that we can

ensure a solid foundation, but also a solid future

for not only ourselves, but for our kids too.

And so IBC helps to address that.

I'm going to turn it over to you, John,

'cause I don't want to keep going on my, on my rant,

but maybe you want to continue on from there before I

keep going.

- No, I mean, you're, you're

hitting the nail on the head and I mean,

inflation, penalizes savers.

And if you want to look at discrepancies in the economy,

you know, people talk about the 1%,

you know, it's like

if the Fed's mandate is 2%, why is it 2%?

You know, why isn't it, why isn't it more?

You know, why isn't it less?

And you know, if,

if you look at most of the people out there,

most of the people are regular people

who are working for a living

and it'd be great for them to be able to just save money

and not take on risk

in order to make their wealth grow.

But when you have any inflation percentage,

like John's saying, it starts melting the ice cube.

But what people don't understand is

the people that get that 2% first,

they are the one or 0.1%.

Those are the people who get that inflated currency,

that new currency that comes out, they get it first,

they get to create more and more wealth with it

while the other people,

the rest of the, you know, by the time it gets to them,

it's already been devalued.

And so that's where the that's sort of where that

idea of like a hidden tax or the inflation tax comes in,

that idea.

By the way, I fall victim to the same thing.

I want to just, you know, kind of harp on inflation.

But I think the, the point of this podcast is to talk about

whether or not IBC still works

in an inflationary environment.

We're seeing some crazy,

you know, short-term anyway, inflation right now.

We don't know what that,

how that's going to pan out in the long-term.

But I think just getting back to the strategies to

get away from this, you know, like John said, we're all,

we're all working in US dollar.

So, you know, unless you're going to start getting into,

you know, different types of currencies

and things like that,

we're going to be working in US dollars.

That, that's it.

So what can we do to combat the effects of inflation?

And one of them, as John mentioned,

John Montoya mentioned, is we can

have money in assets that beat inflation and that's good.

And that's sort of like what people try to do

in the stock market.

And again, we're not bashing stocks and all those things,

but it's really do you have something

that will allow those to perform in a more guaranteed manner

and get more out of them over the long-term,

instead of trying to just beat inflation with assets,

another way to beat inflation

is by buying assets that create an income,

because if you can create an income

that's coming into you every month, every year,

all of a sudden inflation is hitting you less and less,

especially when you, if you're working,

if you're creating like a quote unquote passive income,

there's no such thing as a real, a true passive income.

Everything's gonna take a little bit of work, but, you know,

people that are going out there and buying,

as John mentioned,

real estate assets that are creating income for them,

that supplemental income is something that

will probably do more for anybody

in an inflationary environment

than trying to actually beat the inflation rate.

- Yeah, one more asset class

that helps to maintain against,

maintain value against inflation.

And this is a really big one and I should have added it to

what I had listed; real estate, gold, Bitcoin.

It's businesses.

Because if you think about it,

what is the sole purpose of any business?

It's to turn a profit, right? That's capitalism.

In order for a business

to stay in business, it has to be profitable.

And what are we doing with a whole life policy?

As Nelson would say, we're starting a business from scratch.

And this is a business that is guaranteed to turn a profit.

What type of business is it?

It's a financial business. It's a money business.

You are taking control of the banking function,

giving yourself the ability to control your own capital.

And what are you going to do with this business,

if you have an employer mindset,

not an employee mindset

where you just let it sit and do nothing.

Well, if you're thinking like a business owner,

you're going to deploy that capital to acquire assets.

So you're going to borrow at 5% simple interest

to deploy that capital so you can earn

8, 10, 10 plus percent who knows what.

The idea is, you're going to make that capital work for you.

And you're going to earn a higher rate

than your borrowing rate.

When you are able to do that,

you have a profitable business

and the contract itself is already guaranteed

by the insurance companies to be profitable.

But now you are multiplying that wealth effect.

The question that we're asking here,

does IBC work with rising inflation?

Yeah, it absolutely does.

If you do it the right way.

If you have the right mindset

where you're deploying that capital to acquire more assets.

So think like a business owner.

Get out of that mindset where

everything that you're doing is

market-based with no control,

because that's how people typically have their portfolio.

It's being managed by someone else.

And it's controlled by someone else.

If you adopt IBC,

and you adopt the right mindset,

where you're going to acquire assets

with the cash values that you accumulate,

you are going to stay ahead of inflation.

- That's a great point, so

Infinite Banking allows us to get in

allows the regular person,

anybody that can get into the business of banking in quotes.

But now I've been kind of explaining it

to clients like this, you know,

Infinite Banking kind of has like two sides of the coin.

There's the first side, which is the, you know,

we use life insurance to strategically accumulate capital.

And then there's the other side, which is the growth side.

What do we do with that capital?

What kind of assets are we buying?

What kind of arbitrage are we finding out there where we can

leverage life insurance, cash value to create

and build wealth on the other side of it.

And that, that same idea, like,

I wouldn't say that we would leverage life insurance,

cash value to go out and buy stocks,

I wouldn't.

I also, we might even get in,

maybe we'll have an episode where John

and I can talk about where we, where we don't agree.

I don't, I don't actually,

I'm not as huge of a fan of Bitcoin as an asset,

just because I still think it's a little untested, John.

And I like to argue about this one offline.

- (laughs) Yeah, we do. - So we'll make a fun episode

about that.

So, but my point is

I own Bitcoin, by the way, so like, you know,

I'm not, I'm not bashing Bitcoin,

but what I'm saying is like,

I wouldn't recommend going out

and taking a loan to buy Bitcoin or to buy stocks.

But what it does is if you have it

and you have that guaranteed asset available,

all of those other things, your stocks, your Bitcoin,

all that other stuff,

you can get more out of it in the future

because you don't have to try to time the market to,

you know, whatever other life events

are going to be happening in the future.

So regardless of what you think about any of those things,

having both of them is going to,

is going to make everything go that much more efficiently

and that much safer.

- Yeah, I agree with everything you said there and,

except for the Bitcoin part,

which I think it would be fun if we had another episode

in the future, specifically talking about how

to utilize IBC, to acquire assets.

I know we mentioned, or you mentioned

possibly doing our next episode about acquiring real estate.

And I think that'll be a really good one.

Maybe a followup to that would be.

- Yeah, stay tuned for that one.

- Yeah, acquiring Bitcoin through IBC as well.

I think that would be pretty powerful, cause I consider

Bitcoin to be the anti-fiat,

and what are we dealing with?

Fiat. You know, that's the whole discussion about inflation.

So I think that would be pretty powerful for listeners.

But speaking about the power of money and

the problems that persist in a world

where there's constant inflation,

I do want to mention that

on the other end of the spectrum

is deflation.

And now we don't really hear too much about

deflation, because

for the government,

it's the enemy of what they're trying to do,

which is constantly grow GDP and grow their tax base,

so they have money to fight endless wars and

have endless programs to fund

either through taxation or the silent

taxation as you refer to it, which is inflation, of course,

but deflation is also something

that should be discussed because,

you know, what happens

when there is a restriction in the money supply?

Well, we get the end of the business cycle,

and we get what happens

when money is basically taken out of the system.

Well, bubbles get popped when that happens.

We enter recessions when that happens.

And so there, there really isn't any talk about deflation,

but there was a book I read in the past month

called "The Price of Tomorrow" by Jeff Booth,

which I think

should be

a mandatory reading on your book list,

if you're a book reader,

or even on audible, listen to it on audible,

it really makes a strong case

for potentially

a huge deflationary pressure

that we could be running up against

here in the next five to 10 years,

because of the power of technology.

We all realize that,

you know, the price of TVs

come down seemingly every single year,

especially around this time of year,

Thanksgiving and Christmas,

but technology in general.

I mean, we're,

we're able to do so many more things

because technology is constantly advancing

and the pressure that it puts on prices

and the ability to basically get more productivity.

Well, it could lead to a lot of deflationary pressure

and it's something that we don't even think of

kind of like, money.

You know, we're just living in a world with US dollars.

We're also living in a world where technology advances

and, well, what happens when artificial intelligence

continues to advance

at a fast pace, even an exponential pace?

Well, there's going to be deflationary pressure.

So there's that concern too.

- And the important thing to remember

about deflationary events,

when there's blood on the street,

cash is really essential.

And,

when these bubbles burst,

the people that are able to prosper,

are the people who have access to cash

because they can take advantage of buying assets

for nickels and dimes, relative to their prior value.

So I know inflation is a hot topic, but let's remember too,

we live in this world

that is artificially constructed

to create inflation, but it comes in cycles.

And when does a bubble burst?

We don't know, but we want to have access to cash,

which our IBC policies allow us to do

so that we can take advantage of the next cycle.

So something to keep in mind.

- I think that's interesting. I, you know,

I have not read that book.

That could be another good debate for us

about deflation.

I think it's all super interesting and it just gets back to

having control so that you can take advantages,

take advantage of changes in the future

rather than react to them.

And I think most of, most of the people out there

are in a position

where they're just going to end up

with whatever they end up with,

and, you know, like by the time they get to retirement

or by the time you get to,

if you're not planning on retiring,

if you just, you know,

if you're going to keep working and maybe be, you know,

maintain and be an investor,

it's like,

how do you take advantage of some of the changes

that are coming your way,

if all you have is things that can go up and down.

And it's really a matter of adding

to your overall financial picture

to give you the ability and the power

to have options and control

so that you can, you can do what's best for you at the,

at the time when you want to do something.

And so most people don't have that power.

They just, they just have, you know,

a brokerage account and maybe some real estate, and,

you know, I don't know about you, but

I was around in 2008 when all of that stuff got affected,

and a lot of people had to sell

and a lot of people had to start over.

How many more times can, can you do that?

You know, I'm in my late forties now,

I was around in 2000 and I was around in 2008.

How many more times can the market reset before

my invest for the longterm strategy

stops working for me?

And if that, if that's all I'm doing.

So I think, you know,

just circling back to the control and use,

if you have that set up,

you can beat inflation

by having the ability to take advantage of strategies that

you control, and that create income for you,

not based on whatever the performance is of, you know,

some company that you don't even know who the CEO is,

but based on assets that you own and control,

and you can grow that and grow that and grow that.

And you'll definitely be able to,

to beat the inflation side.

- In a nutshell,

you'll never be in a worst position

by having access to cash.

And that's what IBC allows you - That's it in one sentence.

Yeah, you have access to cash

completely under your control.

You'll never be in a worst position

by having access to cash.

So, IBC does it fit?

Yeah, it absolutely does.

I can't think of a case, inflation, deflation,

where you aren't in a better position

because you have access to capital.

If that's the one takeaway

that you can leave this episode with,

let it be that.

- There you go.

- All right, I think that wraps up this episode.

Episode 43 "The Fear of Inflation",

if any of this resonated with you,

or if you have any questions,

feel free to check out our brand new website

at thefifthedition.com

right there, you can, you can contact us,

you can email us,

You can book an appointment with us right there on the,

on the website.

And we have our brand new Soup to Nuts course

on whole life insurance.

It's an online course.

That'll give you everything you need to know

about whole life, and you can get a,

a 50% discount code right there on the front of the,

on the front of our website.

Looking forward to talking to y'all guys next time.