Here’s a solution to avoid being destroyed by the silent killer.
Listen to learn how owning and controlling the means of production can defeat the “silent killer”.
Hi, Jay Massey with the CashFlowDiary.com with another quick tip about real estate and business.
Today we’re going to talk about inflation.
Have you ever wondered what is inflation? Why is it so important? Many people have called it the silent killer. Why is that the case? What is so deadly about it?
Let me give you a quick example. Let’s suppose for a second that your business makes widgets or even better water, bottled water.
Here’s the point. The point is your business is getting used to, say, producing a hundred units of water or a hundred units of widgets every month, every year. That water is what you use to be able to earn income.
We call it currency.
You charge a certain dollar value for it and therefore you earn money and pay your bills, pay your employees, etc. Here’s the question. If on day one, you’re selling your bottles of water for $10, but on day two you get the privilege of selling them for $100. All there’s been is one day. Does it mean your bottles are therefore more valuable?
The question is it depends.
A better way of looking at this is when you look at it over multiple years, you really begin to see this magnification of effects. If you start your business and your bottles of water sell for $10 and then all of a sudden they’re selling for $100, but that’s 10 years down the road, the question you have to ask yourself is does that $100 actually buy you more if you’re still producing the same number of units. Many people would say, “Yes.
Your business has grown,” but I would say no, absolutely not. If you’re still producing the same number of units, you haven’t become or provided any more utility to the marketplace, and most likely that $100 doesn’t purchase any more than it did when it was $10.
Some of you may remember when candy was a nickel. Today it’s not. You may even remember when soda was really, really, really inexpensive. Here’s a good one. What did your grandmother pay for that house, that house that’s around the corner that you might have visited her in? Is that house anywhere near the same price as measured in dollars today?
Here’s the question.
Did the house become more valuable? Did it actually go up? Does it have more utility?
The question is probably not. What is the answer? The answer is learning how to own and control what’s called the means of production. As you learn to own and control the means of production, you can take advantage of the silent killer of inflation and wrestle with that whole demon and never have that problem again.
If you like information like this and you’d like more of it, feel free to check us out on the CashFlowDiary.com. More importantly, you probably want to hear us on iTunes and take advantage of our complimentary course, Cash Flow Foundation.
It’s step number one in our cash flow creation system that teaches you how to create your own personal cash flow pipeline that comes straight to your door.