and today they're going to crash it's going to take people down and now it's here Office Buildings will soon be homeless shelters oh I took your advice I bought a house I'm going to make some money I said at the top of the freaking Market don't listen to your stupid real estate agent who tells you that oh the price of real estate always goes up because it doesn't when I hear people coming up to me oh the price of real estate going up and they're jumping into buy real estate right now I don't say anything
and the reason is is that people are just getting into the hype all this credit it's actually debt credit and debt pumping into its economy trying to prevent this crash and if inflation keeps going I get richer I am extremely happy and I think Biden I'm not Republican or Democrat he intentionally wants inflation that's why he shut down the XL Pipeline that's why he stopped drilling to get oil prices up when oil prices go up here all these truckers in Ottawa screaming they can't get food to the table and all this prices of food go
up inflation keeps going up regardless of what's going on just because the policies shutting down the EXL pipeline stopping drilling of oil so the price of oil goes up I watch all this and meanwhile these people are jumping out and buying real estate like there's no tomorrow and I can't even talk to them we're on a turning point But please understand ladies and gentlemen inflation makes the rich extremely rich the middle class will pay higher taxes and the poor will get poor because they're the ones who can't afford that $25 wagu steak that my friends
are selling so that's why it's one of the biggest critical turning points and that's why I don't know how many years ago when I walked past Richard book and borders and it's the dollar crisis if you understand what's going on the problem is the US dollar cuz in 1944 it stopped being money it just became the reserve currency of the world and then 71 Nixon took the dollar off the gold standard we're being set up right now one of the biggest changes in world history and so oh I bought a property what do you think
I I can't even talk to him because this to me is 2007 all over again and then the repo Market collapsed 2008 the market collapsed and back in 2008 this guy named bakia I believe it was could print money and this is where we are today you've got to wake up ladies and gentlemen cuz otherwise you're just this stupid little hog just driving to slaughter so America is one of the we're at not just America one of the biggest turning points in world history and like there was Rockefeller one of those guys said is when
Sho shine boys are giving you stock chips time to get out and I was in Safeway the other night and these people are coming up me I did what you said I did what you said I bought a rental property I bought a rental property and I came back back home and I said to Kim time to sell it is so dangerous but you can't talk somebody out of it because they drank the Kool-Aid so that's why I'm really honored to have a dear friend Richard Duncan been friends for years he helped Kim and I
time the last turn back in 2008 we made fortunes because what everybody was selling we were buying and that time has come again and so that's why please listen to what Richard Duncan has to say a few months ago the Fed was still creating $120 billion every month month and then in November they said they were going to start tapering that reducing that by $15 billion a month but the very next month in December they said they're going to double that and reduce it by $30 billion a month and that meant that it's going to
come to a complete stop the money printing is going to end totally early next month no more printing next month no more printing and then the real blow came they started letting it be known that they were planning to do the opposite is it a printing a lot of money through quantitative easing they're going to start destroying a lot of money through quantitative tightening now when they print money that pushes asset prices up when they destroy money that tends to make asset prices fall and the stock market how do they destroy money well they destroy
money because when they print money they buy bonds with it money and normally when the Bonds mature they just roll them over and buy a similar kind of bond but they destroy money by by essentially selling those bonds and when the FED what happens is the Bonds mature and the FED doesn't roll them over someone else has to buy the bond so the FED gets its money back and when the FED gets money back that money just evaporates the FED doesn't need to keep any money because it can make all the money it wants anytime
it wants to so it's a bit complicated to explain in just a few sentences but the bottom line is it's the opposite of quantitative easing quantitative tightening destroys money and that tends to make stock prices fall and we're about to get a heavy dose of quantitative tightening coming into effect within the next couple of months and it's going to make it harder and harder for Mom and Pop to go buy that house or expect they're going to flip and isn't that going to drive inflation through the roof well they think the opposite when they instead
of printing money that's the thing that normally causes inflation it stimulates the economy it creates growth but when they destroy the money that tends to make asset prices fall like stocks and property so people are less Rich so they spend less money and if they spend less money then prices tend to fall so that's why they're doing this they're worried now that the inflation rate has moved up to 7% and they're taking steps to bring it back down but what they may find is this could cause a significant stock market crash and some of the
high flying stocks got hit a whole lot harder than that look at meow or what Facebook whatever those else I call now they tanked destroying $230 billion of American Wealth there goes your for 401K sweethearts and that's why I spoke out against 401ks forever you know and all you guys are going you're planning on renting your property people won't be able to afford the rents that's what it means well so total credit is equal to total debt because one person's loan is another person's debt right so the two have to equal each other so one
way of thinking about this easiest way to think about it is all the debt in the country government debt household sector debt corporate debt financial sector debt all the debt it first went through $1 trillion in 1964 when I was 4 years old now it's $90 trillion from 1 trillion to 90 trillion during my lifetime and this credit explosion which would not have been possible if we had remained on a gold system where dollars were backed by gold but this explosion of credit has transformed the world wait Richard hang on hang on you're speaking like
an econom again credit is what the fed and the treasury allow people to get to the big Banks like Wells Fargo and all that and that credit then allows people the banks to send out debt so then corporations and individuals come in and they take credit and they turn it into debt but the same thing so by creating credit debt could explode am I correct on that or incorrect no I think you put that exactly right yeah credit is not a word people use they use credit card but they think about debt their household debt
so that's that's what I'm saying we don't teach Economist you know we teach everyday mom and pop who's trying to speculate on their 401k or their house the reason I tend to use credit is because I say this system that we have now is not capitalism it's creditis Yes creditis sounds better than deism I try that crtism works capitalism to creditis growth drives economic growth now we're dependent on it yeah what Richard is saying is the way America grew was because we produce products now we don't produce products they create credit or debt am I
correct on that one that's right instead of our economy being driven by investment and savings as it used to be it's now driven by credit creation and consumption and more credit creation and consumption and that's been great the problem is it requires credit growth to survive if credit contracts we have a depression and that has made us dependent now on government borrowing and government spending to keep us out of depression so if you're going to buy you know how mean I know how many people oh I took your advice I bought a house I'm going
to make some money I said at the top of the freaking market and what about all these guys in this 401 case 401ks came into existence in 1974 it was called aressa and I to speak out against 401ks because I look get censored with this one but 401K is like a condom it gives you a false sense of security while you're being screwed do you know what I mean and if this Market crashes when they raise these interest rates if they do you know your 41k turns to 201k just as you get ready to retire
all you old guys like me hear what I'm saying if they raise interest risk CU they're going to stop inflation your 401k may be toast I'm not saying it's going to happen or if you're a millennial and you got Mom and Dad who are living in la la land with their two 401ks you might be in serious trouble a very important subject and the subject is real estate basically it's important simply because it's real estate parts of it are serious serious trouble right now but when things are bad also as good opportunities are things how
many places of the world have we gone to it's been all over the place yeah we travel the world we're talking about real estate because number one real estate uses debt and you may or may not know this but the US dollar is debt and there words money cannot exist unless somebody borrows it and so all these guys our friend Dave Ramsey this is live debt free I go you got to be crazy but I'm going back Dave up if you don't know how to handle debt definitely live debt free right Kenny yes that's right
I agree if you don't know what money is and how to use it then he's right on I met Dave a Resturant up the street here and uh he's a great guy and his advice for most people is cut up your credit cards get out of debt and all this but Kenny what's happening in the real estate market today's interest rates go up and all this stuff I just heard Richard fiser the Dallas fed chairman he said a unit that could be wrong the numers 3,500 units one apartment complex went down well that's a lot
prop and black Zone defaulted on debt in New York on a set of buildings I call it we're in the first inning and I'm afraid it's going to get worse you don't have to be afraid about that it's happening already it's definitely happening the issue this year and next year is going to be what we call maturing debt debt that's maturing another thing to understand there different types of real estate some of the worst properties are The Darlings called Office Buildings here with oh I'm going to own an office building in Manhattan and all this
and today they're going to crash it's going to take people down I just read an article today Robert that the cities and counties are actually throwing money at developers to convert Office Buildings into Apartments they already know that those buildings those Office Buildings are going to be eyes soures at some point I was a student of Dr R bck Min Fuller they call him the friendly genius you know John Denver call him the grandfather the future the futurist and years and years ago in the 80s I heard him say Office Buildings will someday be homes
for homeless people I went what you know that was sacrilegious for me back then and now it's here that's quite a prediction too that was what how long ago was that 50 years 50 years ago I'm listening to this guys's Office Buildings will soon be homeless shelters and you look at the number of homeless is exploding I don't want to be an owner of a homeless shelter as you know it's either going to be the worst of times for Real Estate or the best of times right the reason living debt-free makes no sense simply because
the fiat currency called the US dollar the Yen the pay of the Euro they're debt they're instruments of debt like a bond is instrument of debt debt and that's why d r say living debt free it kind of goes Contra indicative how can that be if it's debt but the good thing about debt is it's debt and on top of that the more debt you use the less tax you pay it's not obvious to a lot of people just do what the fed's doing yeah it's the strangest markets we're in serious serious world econom is
in serious trouble but it's also a great opportunity time we use debt all the time 100% debt and it tell you it is a game of debt we're borrowing it less than inflation so that's when when we talk about money that's how you do it another good thing too is the amers are now floating to the surface as they say I feel terrible for people because people come up to me and they go oh I took your advice I bought real estate I'm going holy moly real estate's not like a stock you don't just buy
real EST like you buy Apple difference is if you buy Apple stock and let's say it's 10 bucks and it goes down to six you can get out of it really quickly but with real estate it's not that liquid and that's why you've got to be smarter and why I cringe when people say oh I just jumped into real estate oh my God that's like jumping off a moving trainer or something you know so much is going on in real estate what happens is guys like you or I would say anybody over 50 has seen
it has seen it they've seen the Cycles they've felt the pain if they made it but a lot of people are pretty delusional about and it has been for years next year is going to be better than last year it's just not the case no what happened since 2008 they kept lowering interest rates and the whole world economy went into a bubble correct was a real estate bubble a bond bubble and a stock bubble and so everything got inflated but as it started to lower interest rates in 2020 or high raise interest rates in 2020
a lot of those bubbles are bursting so it's good news and bad news and all of us are old guys the people I caution that you have a financial planner that's a 35 let's say that financial planner is only known a boom Market you know because as a dropped interest rates the market kept going up so I meet some of the young women and men they oh yeah yeah yeah all they know is a good Market but the biggest opportunities float when the body start floating you know the body started floating to the surface you
go oh my God I can't believe that came up oh my God look at that you there was so many deals coming up when the fish start to float and it goes to the saying your profit is made when you buy not when you sell so the cash flow versus Capital gauge strategy that you laid out in Bridge Tad ported this is the time where you're going to start to realize that philosophy that's been our philosophy all along everything I have cash flows and that's just not the case for a lot of people a lot
of people bought big big assets on a capital gain strategy and guess what that gain is not there so capital gain strategies we call it flipping when I first met Kenny 20 something years ago everybody listen to flipping you know show flip this house and all this so you buy a property for let's say 10,000 it goes up to 15,000 you flip it net five but you pay capital gains and we don't do that I'm chuckling because the world's full of real estate gurus if you're a housewife or a house husband and you bought two
real estate properties you're now Donald Trump as far as you're concerned right but there's some of these charlatans on YouTube I've got into arguments with some of them this guy says the way you get rich just go out and buy a 200 unit apartment house and I said you don't start with a 200 unit apartment house that's suicide but that's what he was selling and I know the trick is called a bait and switch so you go there he shows you how you twoo can buy a 200 unit apartment house for like nothing down and
all this other stuff but you're on the hook for millions and then you go roaring off and try to do it his real gimmick is to sell you what he's selling oh you can't do it I can do it for you yes exactly yeah it's frightening times but it's also exciting times always remember your profit is made when you buy and one of the things I really get kind of sad about people you know when Real Estate started going up everybody started jumping in and that's not when you jump in not when it's going up
you want to ride that roller coaster down and then buy when there's a line out the door of people trying to buy the asset that means it's over as many of you know the economy is on shaky grounds you know banks are failing all over the place and the question is what do you do about it and I get really really excited because your profits are made when you buy and as prices of real estate crash it's actually the best time to be a buyer but as I say it again I meet people who are
amateurs of this business they weigh you know the price on that 100,000 went up 200,000 oh we got buyers lined up for the property and that's when people jump in you should be getting out other thing too is that people say I don't have money and all this when the real estate market crashed it's crashed several times and I had no money and I saw I trying to put a deal together with interest rates worth 12% and today's what what percent are they today yeah it's more like six 5 to six and people come oh
you know I would have killed back then for a 5 to 6% interest rate that's always a good time but you have to know what you're doing with real estate my said always said only lazy people use their own money I know gosh that was such a great statement it's true yeah people don't realize like when you put your money with an insurance or a pension or even in a bank it's a liability for those institutions period they owe you expense you know in the form of Interest that's a problem for them so they have
to lend it to guys like us and that's called OPM or other people's money and always remember this the US dollar or the Euro and all these the currencies they come into existence only by people borrowing it yes and that's why our friend Dave Ramsey says live debt free and that's good advice if you don't know what you're doing I I still remember putting deals together interest rat were 12% you have to get smarter that's all it means it's the bubble went up now what's coming down right the people that are in trouble the people
who jumped in late they were the top of the market it's going to keep going up that's a big lie Is that real estate always goes up that's not true at all no my gosh it's delusion it's that herd mentality right everybody's jumping on I'm going to miss out and next year is going to be better than last year that's not how real estate Works no we also practice what we preach we study also we we just in Dallas outset of Dallas and we call the place called the ranch and the instructor said that the
reason people are poor is because they're farthest from the truth yeah that really hit me the truth is what the truth is period and then you got people's realities which is typically further from the truth not always but the further from the truth you get the poorer they are yeah so ever since the last couple of weeks I see poor person I said wonder what truth they're away from there's something they're not seeing when wrote Rich Dad Port 25 years ago said your house is not an asset I know got crucified on the cross for
that one yeah now everybody says it way ahead the game do you know I mean there's nothing worse than hang out with a toad no do you know what I mean like oh I told you real estate was better crashed oh I told you know I don't want to buy real estate cuz get the clean toilets and all this stuff I hear all of that stuff but that's what we learned last week in Dallas the poorer you are is because you're furthest from the truth and when they tell you get out of debt that's really
not the truth but it was interesting cuz remember we were down there with Dr Nicole and she said you know it's the same with health the further you are from the truth around Health the worse condition you're in so the truth it's a very interesting thing in the reality or your perspective or even your opinion can be very far away from the truth right and some of the truths reason people are poor is well I don't have any money I can't afford it that is not true that's your opinion of your measy little self y
you have the power to do what you want to do I definitely don't think that we're going to be able to fix inflation for a while no so that's number one you got to be really careful you know we never really had to think about that too much right inflation's been low and it slowly eroded our purchasing power but now it's different the gloves are off so you can't just put your head in the sand because if we're going to be at 5 6% inflation I mean you're talking about 15 20 30% reduction of your
purchasing power in just a few years so you have to figure out how can I hedge myself against inflation and that could be lots of things you know what's going to grow with inflation it doesn't necessarily have to be real estate it can be anything thatt is certainly one of those things I thought there was going to be a big problem in real estate but Kim and I had a property and we up for sale for 9.75 million realtor says it'll never sell it's sold immediately and the reason is is what happens with inflation your
cash becomes trash but also the reason the realter finally said oh we misjudged this Market you know $10 million it's a residential property it's pretty nice one in Hawaii and there is the person bought it is they'd rather have their cash sitting in a piece of real estate than in the bank you got it what does that tell you yeah farther from the truth you are the poorer you were and the biggest lie ever told is it takes money to make money that is not true you know don't worry about being the skipper of the
Titanic I've been the skipper a number of times but it's always a good swimming experience that's how you get smarter right and I W say this much I've never lost money in real estate I got in trouble but when you scramble and you do what you have to do you get smarter and smarter and smarter and you go man I'm really glad I got into this trouble cuz I got smarter the reason I say that the average person is drinking the Kool-Aid is just go to school get a job save money get out of debt
and invest in a 401k or an IRA you don't learn anything that way you don't learn anything so by jumping in as an idiot investor you get smarter pretty quickly right keny I love Buffett's quote you know he's like when the tide goes out you see who's swimming naked and the tide is going out right now my friends and there's going to be a lot of opportunity yep you can't Leverage gold the same way you can leverage real estate can you you're brilliant that I use real estate as leverage to buy this so what I
do is I'll borrow let's say $20 million the cash flow buys this you're using government printed money for your own assets buy this and then the income from the assets you convert into Golds this is God's M this to be flushed on their toilet and that's what they're doing with it but oh I made this much this month new
