Good morning and welcome to another edition of The Speed of Money. This is your host, Jason Hartman, and today, I want to talk about the ultimate inflation shield. How do we protect ourselves from probably the biggest economic story of our lifetime? Now, I know in the past week, you were seeing some prices fall in terms of commodities and oil and so forth. But the future is inflationary, so how do we protect ourselves?
Well, the best inflation shield for the normal middle class person is debt, especially high quality, long-term, investment-grade, fixed-rate debt, tied to a high-quality piece of rental property. Why do I say this? Because when we borrow money, we are in a very enviable position. When we borrow, we get to pay that debt back in forever-cheaper dollars. The dollars we repay are declining in value over time. This concept is known, as many of us already know, as the time value of money. Remember inflation transfers wealth from creditors to debtors. The debtor is actually the person who benefits in inflationary times.
So what we want to do is start thinking of our mortgage on our property as an asset. Now, I know this may sound crazy in our current, present day. Many people have gotten themselves into real trouble with debt. But what I’m talking about is the prudent and successful use of debt to increase wealth and protect wealth. Lest you think using a mortgage asset is some theory and some ethereal concept out there, it is not. Next week on The Speed of Money, we’ll explore an actual example that happened to tens of millions of Americans and how they actually got paid to borrow money. Visit www.jasonhartman.com and join me next week on KABC 790 on The Speed of Money.
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Duration: 2 minutes