Jason Hartman only wants mortgage debt – and he will take out as much as he possibly can. He has been investing since he was 20 years old and learned how inflation is the enemy of home equity but the golden goose of real estate income property owners (my words, not his).
We first have to understand how inflation plays into this investment strategy and what “Inflation Induced Debt Destruction” is.
Concepts covered in this conversation with Jason Hartman
Jason says the classic definition of inflation is “too many dollars chasing a limited supply of goods and services, causing prices to rise”
- Raised prices are not the same as inflation, as we are led to believe
- The CPI (Consumer Price Index) is a basket of goods on which the government measures inflation
- Jason also describes Fractional Reserve Banking and Lending
Six ways the government can deal with the national debt
- Default: Unlikely to occur because it is politically unpopular
- Raise Taxes: Impossible to raise taxes high enough to pay off debt (even at 150%)
- Sell off America’s assets: Some of this is already happening (like toll roads)
- Use the military to steal: For the natural resources, history has shown this is to be true
- Technological innovation: Best option – but not the government’s first choice
- Raise inflation gradually: Most likely solution as it devalues the value of currency
“Inflation is an insidious hidden tax. It’s a robber and a thief that destroys our purchasing power. It destroys the value of savings, of stocks, of bonds, even of equity in real estate. But thankfully, it also destroys the value of debt.”
Jason goes on to share examples of how a $100 bill decreases in value and how it works in favor for a real estate investor.
Borrowing to the Hilt
“Inflation is the most powerful method of wealth distribution known to man“.
Jason only likes one kind of debt: Fixed rate, long term debt in the form of an income producing real estate property.
He tells the story of a couple who buys a house in 1972 with a 30-year mortgage [33:22]
The mortgage rate for a 30-year mortgage was 7.37%. If you put down 20 percent on an $18,000 home in 1972 then you would borrow $14,000 and the payment would be about $100 a month.
However, the dollar deflates to about 40 cents by 1984. This means the couple was only paying $487 per year (about $40.58 per month) in an inflation induced economy – even though the checks written to the mortgage company remained $100 a month.
Find more about Jason Hartman at JasonHartman.com
Disclaimer from Steve
This is not an endorsement nor is it a dismissal of Jason’s investing philosophy. Seek the advice of a professional before making any decisions that could impact your financial future.
Announcing: The Midwest Mastermind Event
This is a real, in person mastermind experience. Only the those with dedication and desire should attend. [23:45]
Morning and afternoon meals are provided for you and $450 in bonuses will be provided by your hosts.
HURRY! Early Bird tickets won’t last