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Mike Hananel Pt. 2 | Understanding the Dollar and How To Survive the Upcoming Crisis

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Hosted by
Mike Ayala

On this episode of the Investing for Freedom podcast, Mike welcomes back Mike Hananel for part 2 of their conversation. If you haven’t listened to part 1, go back and check it out. Mike talks about investing in precious metals, why all other investments are in a bubble, and much, much more!

“If you own hard assets, gold, silver, real estate, when the inflation finally comes back, that’s one way to protect yourself from a falling currency.”

HIGHLIGHTS:

0:00 – Intro and a recap of the previous episode
2:52 – Most of Mike’s wealth is generated through real estate and he explains why
4:24 – You should understand what a dollar measures
5:17 – Are banks actually printing money?
9:57 – The federal reserve has private shareholders
11:52 – With a centralized bank, comes a centralized power
14:36 – The best form of currency is one that holds its value over a period of time
15:19 – The long term trend in America is inflation
16:42 – Free markets are the best markets
22:44 – The unravelling of the U.S. dollar will be slower than smaller currencies
28:21 – The intention for fiat currency is ever increasing asset values
31:56 – All assets are in a bubble, except gold and silver
35:57 – Mike thinks Stock and housing prices will fall and ultimately bond prices will fall too
39:45 – Mike recommends buying gold and silver with your cash
43:03 – Investor net worth may go down in this crisis, but if you’re paying attention, you could double your worth on the other end
49:28 – Could we ever go back to the gold standard?
51:50 – Mike has around 20% of his investible assets in metals
1:02:25 – Never ever quit, these will be trying times but you have to keep going

FIND | MIKE HANANEL

Website | http://strategicgrowthre.com/
Email | mike@strategicgrowthre.com

FULL TRANSCRIPTION:

Mike Ayala: Thank you for joining me on the investing for freedom podcast. We are so fortunate to have Mike Hananel in episode number two. In the last episode he just did such an amazing job of building the platform of where he came from. You know, some of the things that he talked about, the ability to reinvent himself. I think a lot of times in life, we get so focused on this one-track mind that you know, we’re not able to flex and adjust. And Mike said that’s probably the key to some of his success. A couple other things that I think were just brilliant. He said don’t be too premature in investing. This next cycle could be three years or even longer. Some of his advice was, you know, you probably should consider not buying something right now. He also said that we are probably at the edge of probably not a great depression, but possibly the greatest depression. But also on the other side of that, we talked about, you know, being opportunistic and potentially the greatest opportunities that are coming. This is what I really loved, and this is what I want to start with today.

The number one way to build wealth and is to build a business and the number two best way to build wealth is through real estate. And so, Mike wasn’t in any way you know, saying that he doesn’t believe there’s opportunities in business or real estate, they’re just slimmed down. But we’re really going to get into the machine. The federal reserve, the Fiat currencies just our whole monetary system. I really want to get into Mike’s brain about this, and I think it’s going to be valuable. So, Mike, thank you for being on the show. Thanks for coming.

Mike Hananel: Absolutely pleasure. I enjoy every minute of it. Thank you so much for having me.

Mike Ayala: Yeah. And I don’t think there’s ever probably in my opinion, at least in my lifetime, I don’t think there’s been a more important time to be having these types of conversations. Again, we kind of discussed it on the last show, but so many times you know, we’re the eternal optimists and we just see opportunity everywhere. And I talked to a lot of people, it’s my platform, really multiple streams of income and, you know, we’re teaching people mindset and we’re trying to get them thinking about other things and it’s working, we’re getting them excited and they’re thinking about other things, but now all of a sudden we’re in this like apex, like no man’s land. So, I think it’s really important too, that we sound the alarms and bring a perspective on that you’re going to, I think, bring to us today.

Mike Hananel: Yeah, I’d say an interesting times you know the markets, especially, you know, we’re in real estate primarily and know I’ve built the bulk of my wealth I’ve created through real estate. So yes, I’ve started some businesses. I’ve had some business success, but by far the biggest growth to my net worth has been investing in real estate. And the reason for that is because of the fiat currency, monetary system that we all live within and people don’t understand the importance of that.

One of the things I like to say is that if you’re going to watch, for example let’s say a football game, but you don’t know anything about the rules of the football game or how it works. It’s just going to look like a bunch of guys and tights running around, hitting each other on the button. Like you wouldn’t have a fucking clue what they’re doing, right. It doesn’t really make a lot of sense. If you didn’t understand the rules, it wouldn’t be that interesting. And you wouldn’t really know how to play, and you certainly couldn’t possibly function in the league, right? If you didn’t know the rules. The same thing is true with money. If you don’t understand the money game, if you don’t understand the rules of money, how it exists, why it exists, who created these rules, where they came from, then how can you expect to be successful in the money game? Like the game of creating wealth, because what is wealth? What is network? Well in America, we value that based on dollars, right?

We look at US dollars and we look at values of our assets and we add it all up and then we can do a spreadsheet and show what our net worth is. But if you really examine it more closely and you’re measuring it in dollars, you should really understand exactly what a dollar is. If that’s your measure of currency, if that’s your measurement, your unit of measure, you should understand what your unit of measure is. You understand what an interest is and how that relates to a foot and how that relates to a yard. But do you understand exactly what a dollar is? I’m not sure most people really do. You know, nowadays it’s become widespread knowledge that the banks, the central banks are printing money.

You know, I would argue 10 years ago let’s say in the year, no more than that. Let’s say 12 years ago, 2008 and before most people wouldn’t even have understood what money printing even means. And still, they don’t understand that, but at least now it’s being used so much in the media that people hear oh, the Fed’s printing money, but people still don’t quite understand exactly that means. And how can they actually print money? Are they actually printing the money? Most money today is not printed in terms of like a hundred-dollar bills, although since the Covid crisis began the fed has printed, actual massive amounts of hundred-dollar bills. Are they actually printing the a hundred-dollar bills? Most money today is actually not printed in a hundred-dollar bill format. It’s digitally created. It’s literally just a few keystrokes in the central bank, the federal reserve, which is our central bank in their computer system and then poof dollars appear in an account somewhere, right? Mostly what the fed is doing now, when they’re printing money is, they are, the United States treasury needs money because we’re operating an unbelievable deficit, which is also important to understand how big these deficits are.

I think in June or July, the deficit was like $900 billion in one month. I mean, that’s absurd. That’s normally a whole year’s deficit would be 900 billion or a trillion dollars. I mean, you know, Trump was running trillion-dollar deficits early in his presidency while the economy was doing supposedly really great. But if we were doing so great, why are we spending a trillion dollars more a year than we’re bringing in. Now we’re spending a trillion dollars almost a month, more than we’re bringing the government’s bringing in. So where does all that extra money come from? Well, the treasury issues treasury bonds, and they send them over to the federal reserve. And the federal reserve basically just transfers out of thin air digits into the Treasury’s bank accounts. And now the treasury has, let’s say a hundred billion dollars of new currency and the hundred billion dollars of treasury bonds goes onto the Fed’s balance sheet. So one way to know how much money is being printed is to just look at the Fed’s balance sheet, the Fed’s balance sheet if you go back to 2008 before the last crisis, the Fed’s balance sheet was $800 billion. So that means that’s basically like the M1 money supply, $800 billion.

So, to understand what a dollar is, just pull out a dollar bill and you look at the top and you’ll see it says federal reserve note, right? So, our money now is actually a note. A note is a loan, as you know, it’s not a, it’s not really an asset per se, although it’s an asset on one person’s balance sheet, it’s a debt on the other person’s balance sheet. So, when you have $100 bill, you have a hundred dollars of an asset on your balance sheet, but it’s really just a debt on the federal Reserve’s balance sheet. They owe you the whatever value 100 bucks is of course, that value is eroding very quickly. The more of these hundred dollars bills they print the lower the value of the currency is overall. So, in 2008, the fed had 800 billion on its balance sheet. And then we have the crisis, the housing crisis. So, then they started printing money and they call it a quantitative easing.

Now what people should understand is that’s just a fancy term for monetizing your own debt. And it’s not something that most countries ever want to engage in. And in fact, it’s only the kind of thing that a banana Republic dictatorship type country might engage in, right? So, like if you’re Venezuela and you’re running out of money, you’re just going to print more money. Now, eventually people realize your money is worthless, because you just keep printing it and it has no value as they have hyperinflation. I’m not suggesting we’re going to see that kind of hyperinflation. I do think we’re going to see inflation and it might be hyperinflation, although not Venezuela hyperinflation. Cause you know, that would destroy the world since the world is primarily using the dollar as its reserve currency. It would be a worldwide problem, right? If there’s a hyperinflation in the dollars, that’s why I believe this will be the greatest depression of all, because I do foresee that there will be a crisis in the dollar coming with all the money printing, but just to put this into perspective. So, in 2008, there was 800 billion on the balance sheet of the fed. Then quantitative using one, two and three happened over a six-year period, right? So over six years, which is a pretty extended period of time, the balance sheet went from 800 billion to 4.5 trillion. That means they just printed all that extra money out of thin air, bought mostly a treasury bond with it. They also bought a lot of the subprime mortgages that were defaulting and was killing all of wall street. It was literally killing banks. Layman brothers blew up, bear Stearns blew up. And a lot of other banks would have blown out if they didn’t save the banks and print all this currency. Of course, in my view, I would have preferred that they did let all the banks blow up because you know, the best boom economies come from the ashes from after letting things finally collapse, but they don’t want to let them collapse.

Why don’t they want to let them collapse? Well, who are the owners of the federal reserve? And yes, the federal reserve does have private shareholders. People don’t realize this; they hear the word federal. This was done on purpose. And it’s designed to deceive people to make you think as part of the federal government. Yes, it is created in 1913 by the federal reserve act. So, it was an act of Congress that created the federal reserve. So, you could say that it’s sort of part of the government wouldn’t exist if the government didn’t create it. But what the government created was a monster. That’s why G Edward Griffin called it a creature, the creature from Jekyll Island, this monster they created of the federal reserve. It is a private institution that has private shareholders, who are the shareholders? Well, there’s 12 branches of the federal reserve bank. Now again, why did they do that? They wanted so if you go back, you have to understand a little bit of US history here to understand this. Cause it’s really important to understand this because this is the foundation of the money game. If you want to create wealth and know what money is, you need to understand what it is, how it was created.

Back in the United in 1776, when we got the declaration of independence and then eventually, what was it? 10, 20 years later, they created the constitution of the United States, right? Late 1700s. The constitution is very clear in that no state was allowed to create any money that was not made from gold and silver, the money, how to be gold and silver. Thomas Jefferson was insistent upon this. Of course, the person who fought the most was Hamilton, Alexander Hamilton. They made the whole Broadway musical about the guy and sort of glorified him a little bit. He was sort of the first central bank proponent and Thomas Jefferson was the guy vehemently opposed to a central bank. And the reason for this was because they said that it was the bank of England that gave the monarchy and the King of England. And now of course, the queen of England, all the power that they had came from a central bank. And by having a centralized bank and a centralized money for a country, you centralize power. When you centralized power you know, the old saying that power corrupts, and absolute power corrupts absolutely. So, you give absolute control to a few people to control a country’s money supply, which is what a central bank is. You always create absolute corruption, meaning all the power now goes to the very top few people. And all the rest of us are subjected to their power structure. That is why this country was founded on freedom and liberty and sound money and sound money, meaning our money, had to be made from gold and silver. And it was, or at least it was backed with gold all the way up until even 1971. I mean the gold standard, obviously it had changed a couple of times throughout history, but there was still a gold standard. And our currency was still backed by gold all the way until 1971.

Going back through 5,000 years of recorded history, every major empire, most ruling empires of their day, you can go back to the English empire, the Spanish empire, the Ottoman empire, I mean, on and on, there’s been some of the Chinese empire, every empire usually was developed and created through a hoarding of wealth, a creation and a centralized, you know, hoarding of wealth, right? Maybe it was done through taxation or maybe it was done through having a military to physically control by force, land. And so, the wealth creation and wealth accumulation allowed them to pay more soldiers to create a bigger military, to continue to expand their empire. So, the wealth is always what has created these empires. And the wealth has always been gold or silver or diamonds or jewels or things like that, but primarily gold.

And the reason gold and or silver have always been money is because there is a, there’s actually eight different. I’m not going to go into right now, but there’s like eight different definitions of what money is. One of the most important things that money needs to be is a store of value. The whole reason money was created instead of barter is because barter was extremely inconvenient, right? If I raised sheep and you want lumber, I don’t have lumber, but I have sheep. Okay, well, you need lumber and I have sheep and we want to do a deal because I’d like to get some lumber, but you don’t want my sheep. Well, let’s see. How about if I get this other product that you want, and now I have to get another person, it’s too complicated. If we can all just agree on a medium of exchange, that I can take my gold and buy your lumber and you can take your gold and buy my sheep. And we don’t have to worry about trading lumber for sheep. So, money is really important for economies and societies to thrive. And the best form of money is a form of money that holds its purchasing value over time. Because if you work really hard, let’s say to earn a million dollars today, and that million dollars can buy a really nice house though I would say, in this particular neighborhood, just because you choose not to buy that house today, doesn’t mean used to be penalized and not be able to buy that house for five years from now or 10 years from now, if we have a sound money system, like we used to have it in the United States, that gold coin I could buy the house today. You could still buy five or 10 years from now. Yeah, there was some inflation and some deflation, but it was very moderate. It wasn’t this launch steep decline or increase of inflation.

If you look back since the federal reserve we’ve had continual inflation. It goes up, it goes down, it goes up. But the long-term trend is inflation, which means that since 1913, the dollar has lost 97% of its purchasing power over the last hundred and one odd years. So, it’s lost all the purchasing power because the influential never, you know, the whole idea of the central banking system is to never have deflation. That’s what they’re terrified about. So that’s why they’re printing all this money right now. They’re trying to avoid the deflation that’s coming. They won’t be able to stop it. The deflation is going to come anyway. They’re just trying to make sure that banks don’t crumble in the process and that the system is still exists. They’re trying to maintain the system. That’s why they’re printing all this money right now. The problem is that when you get to the point of printing money to buy your own country’s debt, it’s like the left pocket, just putting it into the right pocket. You’re just play, basically it’s a shell game and it’s kind of like, you’re moving deck chairs around on the Titanic, right? It’s not really going to change too much because the whole Titanic’s going down no matter what you do. And that’s where we are now with the dollar. And it really just started in 2008, 2009, 2010, when they did quantitative easing, they came up with a fancy term, but all it means is we’re going to print money and buy our own debt. That’s very dangerous.

The market should determine what the value of every asset is. And free Markets have been proven over history to be the best of markets in terms of, you know the invisible hand that basically says, here’s how much money should be worth. Here’s how much interest rates should be, let the market determine that not these 12 federal reserve chiefs sitting in a room in Washington DC and making the decision for the world’s money. So, let me just finish back with the balance sheet, and then we can kind of, I’ll send it back to you. So, the fed printed from $800 billion on their balance sheet. So, four and a half trillion to get us through the last recession, then they stopped printing money. Now, the plan was always, the fed was going to lower their balance sheet, they’re going to normalize they called it the balance sheet, and they’re going to normalize interest rates because they also lowered interest rates to zero during the last crisis. And they printed all this money over six years. Boucherie went from 800 billion to 4.5 trillion then, and starting, I think, 2015, 2016, maybe it was 2017, they started to actually raise interest rates a little bit. Then the market had a big reaction. So, they stopped and then they didn’t raise interest rates for a while. Then they tried it again, and then they stopped. And then they raised the rates a few times, and then they started selling off some of these houses from their balance sheet. They got the four and a half trillion-dollar balance sheet down to 3.8 trillion over a couple of year period of selling off. But 3.8 trillion is still far cry from 800 billion where they started. And then all of a sudden, they realized, oh shit, we can’t do anymore. We can’t raise interest rates anymore. We can’t sell any more assets off our balance sheet.

And the crisis that we’re in now actually started in September of last year, September of 2019, if you’re paying attention, which, you know, again, I read all this stuff on a daily basis. So, I saw the red flag. The markets were telling us that, Oh, we have a very big problem in the banking sector. And it was in the repo market, which was the overnight lending market in 2019 September. Suddenly the interest rates, which the fed fund rate, which is the short-term overnight lending rate is supposed to be the rate that banks charge each other to loan money overnight. The reason they do this, just because every night they have to make sure their balance sheet has enough liquidity to meet their reserve requirements. So, at the end of every day, the banks will look at their balance sheet and say, Oh, we need an extra 4 billion in cash. So, they’ll go over and call their buddy at Citibank, Hey, we need a $4 billion overnight loan. I’ve got these 8 billion in treasuries I can use as collateral. OK, great. Put up the 8 billion in treasuries. Here’s our 4 billion and they’re supposed to charge you the interest rate, which at that time was 2% that the fed funds rate before. Of course, now it’s down to zero, but back then it was still 2%. Well, suddenly in the middle of September, nobody wanted to make those loans anymore. So that tells you one of two things is happening. Either the banks now don’t trust each other, that they don’t have enough liquidity, that they’re going to get their money back. So, they don’t want to make the loan or two they don’t have enough liquidity themselves if they can’t give up any cash, either is a big problem. Especially considering that everybody in the government says we’ve done all these stress tests. And these banks are sitting with record liquidity. Everything’s fine, no problems here until all of a sudden there’s a problem. And the repo market blowing up the interest rates that night went from 2% to 10% suddenly because nobody wanted to take that loan. And they’re like, all right, I’ll do it, but you got to pay me 10%. So, then the fed had to step in and say, Oh, wait a minute. No, no, no, no, we want rates at 2%. We can’t let rates go up 10%. So, they had to print money and basically start lending to whatever banks needed money overnight.

Again, it’s like fake goosing the system because the people that make the money are now just printing the money and giving it to their friends at the banks. Again, it’s not their friends and they’re actually bailing themselves out. I had mentioned a couple of times, but I never finished the thought. So, the 12 branches that we have of the federal reserve, the reason they set this up is to make it seem like it was a national thing and not all just controlled by Washington DC. Of course, it’s really controlled by the New York fed. That’s really the most powerful fed of the 12 branches, but they put these 12 branches around the United States. And then they allowed the biggest banks in each of those cities, like San Francisco, for example, or Chicago, to own shares of the federal reserve. So not only do they own the shares as the federal reserve of their local branch, they also get paid a dividend for their shares by based on the federal reserve act. So even if the banks are all losing money, and even if everything’s going to crap, even during 2008, 2009 and 2010, when they had to print all this money to bail on the banks out, they’re still getting their 6% dividend on their shares of the federal reserve. They’re still making money because they own the bank that prints the money.

So that’s why whenever there’s a downturn, the banks always get bailed out first. Cause the people who print the money are the same people that own the banks that need to get bailed out. So, if you own your own bank and you’re struggling, you’re going to print the money to bail yourself out. They make it the whole big to do about it with a political, you know, show that they put on. But in reality, it’s always going to happen as long as the system stands that we have today. So now the federal Reserve’s balance sheet since this crisis, and this has only been in five months, has gone from 3.8 trillion to over 7 trillion. So, it took them six years to print $3.5 trillion. And now it took them five months to print the same amount of money. That’s a huge difference to spread it out over six years versus over five months. And they’re not done printing money. Shows you, this is a way worse crisis than the one 10 years ago. And the problem is, and this has been proven through history. Once you start monetizing your own debt, once you start printing money to pay off your own debts, that you’ve screwed up and you couldn’t pay off, it’s the beginning of the end of your currency.

Now of course, because we are the world’s reserve currency, we are the deepest, most liquid currency on the planet and most countries, and most wealth funds hold our currency. The unraveling of the dollar may go slower than if you were a separate independent country that wasn’t the reserve currency, because you have to unwind all of these dollar denominated debts all around the world. The problem is that if that starts to happen, which it is already happening now that the fed is monetizing its own debt. It means that China can start selling off the treasury bonds they’re holding, US treasury bonds. Japan can sell off their treasury bonds. So, a lot of countries are starting to sell off their treasury bonds because the Fed’s buying them while they can. So that’s pushing interest rates even lower now into negative territory. And so, what that’s doing is giving an incentive for more of these countries to keep selling. So eventually if the fed is the only one left holding treasuries, the whole thing, implodes. Because it’s not a real market anymore, right? Treasury bonds need to be sold to investors, to other countries, to other people, not to the bank that produces its own currency. That’s what banana Republic do. And that’s what now the United States has been engaged in pretty much on and off for the last 12 years, which is why I know ultimately, they will fill the currency.

It just means the currency will take a different form. There’ll still be dollar, when the English pound was the world’s reserve currency, right. They were the most powerful country in the world. And then the dollar took over. England is still there, right? The United Kingdom still exists. It’s still a great economy. You know, they’re suffering a little bit maybe now because of Brexit, but they’re still a great country, the pound Sterling is still existing. It’s just not the reserve currency anymore. So that’s kind of like what America will look like in the future. I don’t know when, but it’s happening for sure. We won’t be the reserve currency forever. The days are definitely numbered. It’s probably sooner than most people realize. But you know, in that process, you can make a lot of money because there’s going to be inflation eventually. And the things that inflate the most are asset prices and especially hard assets. So if you own hard assets, gold, silver, real estate when the inflation finally comes back and it might be the other end of this deflation we’ve been talking about, which could be two, three, four years out in the future, but eventually there’ll be an inflation and it could be pretty severe. If you are holding hard assets, you know, that’s one way to protect yourself from a falling currency.

Mike Ayala: And I want to circle back to, okay, so let me just say this first and foremost, this is kind of why I set this up because you know, we’ve probably got people out there that, you know, if this had been 10 years ago you know, people be picturing Mike Hananel in a tinfoil hat, but nothing that you just said is conspiracy theory. Like this stuff is real. And even just back to 2008, like we thought that was the greatest, you know, disaster that ever happened. The average everyday American was like, Oh God, the sky’s falling, $800 billion in debt at that point in time, we’re printing more than that now. I mean, even in the early months of this year, we were printing more per month than what 2008 was. So, this thing has just really blown up. And I don’t think that anybody could argue with anything that you just said, that’s just pure reality. You did not make up some theory that you think is coming or going to happen or anything else. And that’s why I wanted to have you on here.

But to pull this back together, you are an opportunist. The panel that you were on was, you know, the question was, is cash King or is cash trash? And I heard you say, I think it was in the previous episode. I think it was in episode one. Cash flow is King. So, you just said investing in hard assets. I really want to pull this together. You know, some takeaways in the next 15 minutes, if we could, on what the everyday person can do, whether, you know, you have no money in the bank or whether you’re worth a million dollars or $10 million, it all kind of comes back to the same core conversation. So, all this is inevitable, it’s coming one way or another as much as the fed. And let me just say this, I want to circle back to something I heard Richard say at one point in time, it was actually in aftermath, one of his most recent books, and he was talking about going through the street and I can’t remember the two Greek mythological figures, but basically there you go this way and there’s one option. You go this way and there’s another option. And they chose the option of, you know, that maybe they were going to lose five or six sailors, but at least they wouldn’t lose the whole Armada of ships. And he kind of brought this back to what the fed was doing in 2008 and the treasury and all that kind of stuff. And they had to pick the lesser of two evils, right?

So, we went on with this money printing and he said something that I want to pull together and just get your take on this. And then I’ll let you tell what we should be doing with cashflow and everything else. But he said something then that in 2008, the treasury, the fed and the treasury worked together to start buying the treasury notes. And what that really did was lower, whether that was the intent or not, I don’t know, but what that did was lower the perceived value of the treasury notes, which moved us out of bonds and T-bills and all that stuff. And it made a lot of investors move into real estate and other types of assets, including the stock market. And so, we went on this artificial real estate bubble, really. So as investors moved away from T-bills and moved into the stock market and into real estate his whole take was that that was somewhat intentional. Do you think that was the case or was that just something that they…?

Mike Hananel: You know, the overall intention for the fiat currency game that we live under is ever increasing asset values all across. So, whether it’s bonds, stocks or real estate, the purpose is ever increasing asset values. And why is that? Because all currency creation in this system is done via debt. So, the money mostly is created by debt. If you notice all the, even the 2.3 trillion cares act, right, it was all loans. Now, of course, some of the PPP money will end up being a grant and forgiven. They had to give some of it away. Of course, when people got their $1,200 stimulus checks, that’s not really a stimulus, but that’s what I like to call them. But the reality is that most of the new money that was created was created in the form of debt. It was either buying bonds, corporate bonds. So first the fed was buying grade A corporate bonds, which are investment grade bonds. And then they even came in to say we’re also going to buy junk bonds, which is again, more malinvestment because all that’s going to do is keep companies that really should be going out of business afloat longer, the zombie companies, I like to call them. And there’s more and more of these zombie companies with all this money project. And it’s just going to delay the inevitable and make the crash even worse when it finally comes.

So, the reality is that the intention is to keep asset prices higher because all the debt is based on the assets, all the debt, all of them. And it’s the banks that have the debt, right? It’s based against collateral, whether it’s real estate, collateral, or margin debt against stocks, or whether it’s corporate debt like bonds, we’re talking about junk bonds, all those debts. So, the problem is that it’s not going, there’s an end game, right? It used to be that for every $1 of debt they create, it created $5 of prosperity in the economy. Now it’s the opposite. Over the time took $2 to create five. Then it took three, now it takes $5 of debt to create $1 prosperity. So, if you look at the curve of the debt and the growth of the GDP, GDP has gone like this, and debt’s going like this, okay, that’s not sustainable. All the debt is based on the GDP of the country.

And so, but the Fiat currency game requires ever increasing asset prices because that’s where new debt can. You know, if your value of your real estate goes up and you refinance it and you pull out $200,000 in cash, that $200,000 in cash is brand new currency that was created out of thin air. Most of the currency, we were talking about the balance sheet of the fed. That’s actually not where most of the dollars in the world are created. Most of the dollars, new dollars that are created are through the banking sector, under fractional reserve banking. And if you just think about it, for example, let’s say I’ve a hundred thousand dollars and I put it in the bank. Well, the bank has to have a 10% roughly actually now I think the reserve requirements are zero, which is very scary, but they used to have to have 10% reserves, right? So, if I put my hundred thousand dollars in the bank, now the bank can go out and loan someone else a million dollars, because they have my hundred thousand as their reserve. So, the other 900,000 was created out of thin air, just like the fed creates money out of thin air, banks create money out of thin air. That’s where most dollars are created. Therefore, in order for these debts to continue to grow, meaning currency supplies continue to increase asset prices of all types have to keep going up.

So yes, the entire system is a bubble. Stocks, the only thing that’s really not in a bubble, honestly, of all assets that I’ve studied is gold and silver. It’s the only thing that’s not in a bubble. All assets are in a bubble. Bonds are in an all-time high bubble, because if you just look at the long-term chart of interest rates, they peaked out in 1980, there was a guy named Paul Volcker who was the head of the federal reserve back then, who was a very brave soul. And he did a very unpopular thing, but it was because we had hyperinflation. We had big inflation on the verge of, out of control hyperinflation in the late 1970s. And of course, that was because we went off with the gold standard in 1971. It took, you know, a few years of people realizing there was nothing backing our currency anymore. Oh, what are we going to do? And so, we had inflation late 1970s.

So, people who, you know, who are younger than me, I was born in 1968, but I was still a young kid in the seventies, but I remember gas lines. And I remember prices going through the roof. And I remember shortages and price fixing and all these things, which I believe are in our future again. But that’s what happens when you have people losing faith in their currency. So, what Paul Volcker did to restore faith was he raised interest rates, ridiculously high. I mean, treasury bonds were like 18%, mortgages were 20% interest on a mortgage. Imagine today, if you had a buy pay 20% on a mortgage, right? So of course, that destroyed the stock market. It destroyed the real estate market. However, it saved the bond market. And at the end of the day, the bond market, the us treasury bond market is the biggest, most important market of all markets, because it’s the market that determines the value of our currency. It’s the market that determines interest rates. It’s the market that then determines the value of real estate and stocks and all other markets. So, the bond market’s really important to watch.

So the problem with this is that from 1980, when the rates were up here, today where the rates are at zero, the way bonds work is as interest rates go down, Your existing bond that you got, let’s say a year ago at a higher interest rate becomes more valuable because people want that bond because it has a higher rate than today’s rates. So the value of people’s bond portfolios is now sitting on all-time record highs because interest rates have been pushed by the fed down, down, down to now zero, and actually real are negative zero negative, you know, negative rates below zero which is a whole crazy concept. There’s more government bonds trading at negative rates now around the world than ever. And that’s a very dangerous thing because honestly, why would you want to even give your money to a government that’s broke that is going to promise to pay you less over time? Like, why would you even take that risk? Really, the only people who are investing in these negative yielding bonds are huge pension plans and government you know funds that are required to have an investment and have to invest it somewhere. And they don’t want to sitting in a bank account. Cause if the bank goes under, they’re screwed, right? So, they have to put it in treasury bonds. Cause it’s safer than sitting in a bank account, even though they’re losing money, holding it in a treasury bond.

Mike Ayala: So, they are Basically just limiting their losses. I mean, that’s what negative interest rate is.

Mike Hananel: The value of the bonds has gone up. So, you got bond sitting at a record high values cause of record low rates. You’ve got now stocks back to new, all-time highs, even during a worldwide pandemic, even with, you know, 64% of restaurants saying they’re never going to open again. And all these businesses shuttered, and yet still socks are all time high. Again, it’s inflated because of this bad money printing and real estate, same thing, all time, high prices in many markets. I mean, there’s some markets like Vegas that still hasn’t even gone back to the highs of before the 2008 crisis. That’s how bad the housing crisis was. But in places like LA, our prices are all time high, a lot of markets all time high again. So, we’re sitting at the top of precipice of all-time highs of all major markets, bonds, stocks, or real estate. And there’s really nowhere to go. But down. And the fed is doing everything they can to print money endlessly to prevent that from happening. I don’t think they will be able to win the battle. I do think that we will see a fall in real estate prices. I do think we will see a fall in stock prices and ultimately bond prices are going to have to fall as well. And it’s not going to be the fed voluntarily raising interest rates. It’s going to be the market forcing rates up. Typically, the fed is actually following the markets. The markets are usually a smarter than the fed and they’re pushing the fed. So, if the markets start pushing the long-term yielding treasury market interest rates higher, the Fed’s going to have to start raising the fed fund rate, which is the short-term rate also higher. They’ll only do this because of inflation because inflation gets too out of control.

Now, I don’t know if it’s out yet, but I’ve been reading this week. There’s the Fed’s going to come out with a whole new stance on inflation. They’re been saying for years now, when I was young, they would never talk about, we want 2% inflation, right? Because when you come right out and tell people you want inflation, you’re telling me the average person in America, we want prices for you to go higher. Even though you’re not getting a raise at your job, we want everything you have to pay to go more and more higher. Like they’re telling us outright. They want everything up 2%. And by the way, when they talk about inflation, they’re only talking about consumer price index, which is not including housing. It’s not including education. It’s not including healthcare or gas. You know, think of course gas is low, but pretty much everything else is higher, right? And they’re not even including that. So, it’s kind of a fake number, right? If you look at real costs for most people, prices are going up on average 10, 12%. When you include housing costs, education costs, healthcare things people actually need and use, real inflation is 10 to 12%. I forget the name of it, but our buddy Sergio knows this source where you can look up real inflation rates, where they include everything that people actually need.

Mike Ayala: Yeah. I’ll go ahead and get that from him. And we’ll put it in the show notes so people can see it.

Mike Hananel: Yeah it is a good thing for us to have as a resource and put to your list, to give to your listeners to look at. So, if the real inflation rates are so high, let’s say 10%, 12%, and you’re not getting a raise of 10 or 12% of your job or your income isn’t growing up by that amount. Then every year you’re losing ground. And the fed is basically saying, yeah, that’s what we want. We want 2% inflation. They used to be embarrassed. And wouldn’t tell people that, that we want that because what that also means is even if it is just 2%, they’re stealing 2% of your wealth every year if your money is sitting in the bank, right? Because your cash isn’t earning 2%, it’s probably earning half a percent or less. And the real inflation rate let’s say, or their inflation rate is 1.5%, right? So, if you’re making half a percent and the inflation, they’re saying is 1.5%, you’re already losing 1% just on your cash in the bank. And that’s based on the fake inflation number. If you use the 12% inflation number, which is more realistic, you’re actually losing 11% of your money every year by leaving it in the bank. So, it’s dangerous to have cash in the bank. You are losing money. It’s not a store of value. It’s not.

Mike Maloney, who I mentioned is, you know, one of these gold and silver gurus who I followed for many years, he does a lot of YouTube videos and he’s fantastic commentator on the market. You know, he likes to basically say that if you have your, if you have dollars in a bank and you consider that money, he goes, he actually doesn’t call it money. He actually says, you really need to call it currency because money, one of the definitions we talked about earlier is it has to be a store of value. And since the fed is telling us, they don’t want it to be a store of value, they want inflation. The reality is your money is really, your currency, your dollars is really not money. It’s you know, it’s a shell game that they’ve created. So, the best thing you can really do, and you know, sort of taking it to where we are today and what I would recommend for most people. Number one is buying gold and silver with your cash. If you’ve got some savings, I definitely think it’s dangerous to buy real estate right now. Like you said, opportunistically sure, I mean, if you’re in the market and you know what you’re doing and you know a good deal when you see one and priced in a downturn and you still underwrite it and it still makes sense. Yeah, of course. Like you said, there’s always opportunities in any market. There’s just a much fewer right now.

Mike Ayala: It might be one in a hundred.

Mike Hananel: It’s very hard to find. I mean, we’re in the business and we can’t find, you know, we’re looking every day,

Mike Ayala: Our acquisition target from 15 deals this year down to three.

Mike Hananel: Yeah. Yeah. That’s a realistic expectation. You should still find those three deals. They’ll still, you know, they come up, there’s opportunistic, like you said. But they’re hard to find and they’re usually off market and you got to have your network in place and have been doing it for a while to have those deals come to you. So, but for the average person, I would say, you know, I used to tell people that I think investors should have up to 10% of their investible assets in gold and silver. And the reason I said 10% is cause that’s a nice hedge, right? Hedging usually, you put 10% in a hedge to protect your other assets. And I truly believe it is a protection because if we do find ourselves in inflation a few years in the future, and if interest rates then do go up, which is the only way you can combat inflation then all these other assets are going to go down. Stocks, bonds, and real estate could all go down at the same time. It’s a very dangerous situation. The only asset that would be going up in that scenario is gold and silver because it’s kind of like the anti, it’s like, you know, they call it the safe Haven bed. It’s to go when you want risk off, you go to golden silver just to protect your assets. So, I believe it’s a great investment right now on top of it being a hedge, it used to just be ahead. It used to just be insurance to protect their assets. The way I would look at it as this over the last hundred years, gold has had an average return for each bull market that it’s been in of 700% from beginning to end of each bull market, right? There’s been some bull markets where gold went up 1500%. There’s been some bull markets where gold went up 300%. So, if I just take an average over the last hundred years of gold bull markets the average is 700%. If I put 10% of my net worth in gold and silver, I’ll be talking about silver in a second, but let’s just say 10% in metals gold let’s say, silver, I think it could do better than gold, but let’s just say it’s all in gold. So, if your other 90% of your assets are in cash, bonds, stocks and real estate, let’s just say right. And if those were to drop in half, which would be very devastating. I mean, that would be very bad. I’m hoping it doesn’t happen, but I’m just, I like to be devil’s advocate, worst case scenario, maybe it happens. So now you’ve walked half of your 90% of your net worth. 90% went to 45%, 10% goes up 700%, right? So now that’s 70%. Plus, your 45%. You’re basically at 115%. You’re a slightly above where your net worth was before the greatest depression of all, if what this ends up being whereas every other investor for the most part, or is he going to their net worth cut dramatically.

I mean, my net worth went down during the 2008, 2009 crisis. So, I expect my net worth could go down in this crisis. Now the good news is if you’re prepared and you’re ready for it, your net worth then easily on the way out, which is what happened to me on the other end of it. When it comes out of it. If you’re paying attention and you’re making the right decisions along the way, your net worth doubles. I like to think of it Like, if you study rocketry and rocket travel, right? There’s this concept of like a boomerang, if you can, if you need to go far out into the universe, but you need to gain some speed. If you go around a planet and use its gravitational pull as a force, it boomerangs you out faster, right? You use their gravitational force to boomerang you out to gain some speed, that’s what it’s like coming out of a depression or recession or whatever this ends up being.

If you’re positioning yourself appropriately. Yeah, your net worth may go down a little bit in the, but coming out of it, it should more than double, you know, you’ll get this momentum coming out of it. Kind of like a rocket does using gravitational pull. It’s an interesting time and it’s also a dangerous time. People who were the eternal optimists and it just kept doing every deal as if it was a normal market all the way up until now and leveraged it up to the hilt might get into trouble in the next couple of years. Many of those people did lose everything in 2008 and 2009. I had friends, clients, people I knew they just kept leveraging it up. They were, you know, building their next bigger project or, you know, scaling up to their next biggest deal and then got left holding the bag. When the music stopped at the end of the last cycle, this cycle has to be bigger and it has to be worse. Why? Because in 2008, when it started, the world had $112 trillion in debt, total, worldwide debt, including government debt, mortgage debt, personal debt, 112 trillion. Now we’re over $250 trillion only 12 years later. So, the way they got out of, got us out of their very recession is they doubled the world’s debt. So now we have double the world’s debt and we have massive shutdowns and, you know, economic contraction. So, the end result here is unfortunately it’s going to be a lot worse economically, but it will create the best opportunities of all time. So, by putting your money in gold and silver, you’re protecting your cash. It’s extremely liquid.

People are like, well, but we want to have the cash available to buy real estate when it’s cheap in a couple of years. Yeah. So, do I, but I’ll have a lot more cash available. Cause my gold will have gone up so much. My silver will have gone up so much that then I’ll just, you know, you can trade it in and get your money the same day. It’s a very liquid environment for gold and silver. There’s dealers all around the world. With the internet You could literally walk in a price one day. Even if you have to ship your gold or silver overnight, you know, you’ll get your money the next day. So, there’s plenty of time to react in the real estate market, which moves very slowly. And that’s why people get caught up thinking, Oh, this bull market and real estate is still going up. Prices are still going up. This is great. No, it’s not great. This is very, very temporary it’s because there was a little bit of pent up demand during coded shutdowns. Also, because interest rates are still low, it’s actually pushing cap rates to go even smaller, which is crazy. Right? Cause that’s your return. So, the best thing most people can do is buy gold and silver. Now the reason I say silver, silver is a multiplier of gold. It is more volatile than gold and you have to have the stomach for the volatility, but it also is an accelerator. So, gold goes up 1% in a day. A lot of the times silver will go up 3% or 5% that same day, you know, but also works in reverse. If gold goes down 1%, one day silver could go down 3% to 5% in the same day. So, it’s very volatile.

The main thing I look out between gold and silver is the ratio. How many ounces of silver equals one ounce of gold? And during COVID March 18th, when we had that first drop in the Markets and everything was crashing, it pushed gold and silver prices down as well because there was a market meltdown. And when there’s a market meltdown, all these margin calls occur. People have bought all these stocks on margin. Now they have to pay back the loans and the margin calls forced them to sell any assets they have, and they might have owned some ETFs or some gold or silver mining stocks. So, they’re sort of forced to sell with a generalized sell off in the markets. So you know, those are great buying opportunities back on mid-March 18 when silver dropped to just below $12, I literally like backed up the truck and bought thousands and thousands of ounces of silver through, you know, by the thousand ounce [49:23 inaudible] bars and store them in a big warehouse in New York. Because I knew it was a short time or drop. And of course, that was, you know, only a few months ago now silver is around $26, $27. I think Silver’s going to go, you know, beyond its all-time high, which was $50 back and hit $50 twice. It hit $50 in 1980, which today equals $300 if you adjust for inflation. So just to get back to what it hit in 1980, silver would have to go to $300 to be equal to that $50 in 1980. It also hit $50 again in 2011. So, it’s definitely going to hit $50 again on this cycle. I think it’s going to go beyond that. My guess and my prediction is silver is going to go to at least a hundred bucks by the end of the bull market, could go far higher, but it’s definitely gone at least a hundred bucks, at least in my mind. And gold is going, no question’s going to $4,000 to $5,000 eventually, but it could go as high as $8,000 to 10,000 depending on what happens with the dollar. If we really started seeing real inflation or hyperinflation, $12,000, $15,000, gold is not unrealistic.

I think James Rickards nowadays has calculated $15,000 Gold is where the gold price would need to be if you just look at the amount of money printing that are ready has occurred. A few years ago, he was calling for $10,000 gold, but he didn’t expect they were going to print all these trillions of new dollars out of thin air. Now that they’ve done that the gold price is $15,000 just to equate. So, a lot of people say, well, could we ever go back on a gold standard to regain confidence in our currency? Yes, you could. It’s very easy to do. Oh no, there’s not enough gold in the world to have gold standard. Of course, there is, you just have to adjust the price, right? So, you’re just apprised of $10,000 or $12,000 or $15,000. There’s plenty of gold to back a currency. It could be the dollar. It could be, you know, some people, James Rickards talks about the special drawing rights, which is international money that could become the new reserve currency.

I do think the Chinese currency is going to become an important reserve currency more and more so. They certainly have a lot of gold and probably a lot more gold than they publicly announced. All the gold mined in China is never allowed to leave China. So, and they’re the largest gold miners in the world. Plus, they’re massive importers of gold as well. So, I think China has way more gold than they’re reporting. Allegedly America still has 8,000 tons of gold on our balance sheet. Hopefully it is still there. Some conspiracy theorists, Oh, they sold all the gold out of Fort Knox. It’s not there anymore. Who knows, hopefully it’s still there. We haven’t, they have an audit that. The last time anybody even went into the Fort Knox public official, went into Fort Knox to look at the gold was in like late 1970s. And it was like a media stunt. And since then no one, you know, no public or official or auditor’s allowed into Fort Knox. So, we don’t really know if the 8,000 tons is there, hopefully it is. If it is, that still puts America in a very strong position, if there is a dollar reset or a dollar collapse, and we needed to go back to a gold standard, we actually have a very large stash. Hopefully the 8,000 tons is there. The next largest is Germany. And I think they only have like 3,500 tons or something like, so compared to any other ones, country, US still has the largest quarter of gold by far.

It’s funny because central banks like to disparage gold, even Warren buffet called it a pet rock and called it a, you know, it’s unnecessary. It’s just you dig it up out of the ground and then you put it back underground and you’re safe. You know, it just sits there, it is a pet rock. Meanwhile, Warren buffet just bought a half a billion-dollar stake in Barrick gold, the largest gold miner in the world. So, he may say it’s a pet rock, but his actions speak differently. He believes gold might have some room to run or else he wouldn’t have just made that investment recently. So my advice is put, you know, at least up to 10% of your investible assets in metal, now that we’re in the, now that we’re in the middle of the bull market for the metals, I’m growing my metal stash, I think I’m close to 20% now around 19%, every time it dips, I buy a little bit more plus of course the price depreciation. So, my plan of the 10% of my net worth going to 70% is already playing itself out. I’ve already gone from 10% to nearly 20%. And I still believe we have a long way to run. And so, I think the 10% hedge, which now, like I said, I’m growing will end up being, you know, what takes me through the next few years. And hopefully it put in a position to really capitalize on great deals in real estate in a few years when they’re available.

Mike Ayala: So, this is not something that you see out in the future, like 5, 10 years down the road. And so, I just want to kind of pull this together. For average, everyday people. I mean, I kind of think about this. Here’s the question I asked. I was on a panel at and one of the things that I weigh my decisions through is what if I’m right and what if I’m wrong? And so, looking at this you know, you might be sitting here as a listener, listening to everything that Mike just said. And I would encourage you to look at this entire conversation and maybe go back and listen to it again, because he’s said a lot here. That’s very valuable. And again, 10 years ago, it might’ve been tinfoil hat stuff. But if you just, just look at everything that he said through that lens, what if he’s right? And then what if he’s wrong, if you do what he’s saying and he’s wrong, what did it hurt you? Maybe we missed out on some, you know, I’m actually in a circle of real estate guys in our pod, and we’re constantly wondering if we’re going to miss, you know, an opportunity because people are still out there buying and we’re sitting on the sidelines and we’re like, well, what’s the worst case scenario. So, you know, we’re two years down the road and nothing’s happened. I can’t even fathom at this point in time, us being two years down the road and something have not happened. But worst-case scenario, we missed out on some opportunities, right? Well, what if Mike’s right and we don’t do anything.

So, for the average everyday person, I heard you say earlier, like cashflow is King. You’re not saying Cash is King, but cashflow is king. And what that really means to everyday people is, and I’d love to just get your thoughts on some simple things that people could do, but maybe decreasing expenses, trying to figure out how to increase your income. You know, you said the best way is business. So maybe getting a side business going, figuring out ways to nobody’s job is safe today. I hate to say that, but nobody’s job has ever been safe, but today more than ever, even with all this money printing and the stimulus in air quotations, nothing’s been stimulated. We’re just making up the difference of what’s been lost in the economy over the last few months. We’re not even, we’re not even back to, you know, what should be existing because we’re just propping this thing up. Nobody’s selling anything. Restaurants are closed down. Like you said, entire shopping malls, the nicest mall in Phoenix just reported that they’ve missed two mortgage payments, the fashion square mall in Scottsdale they haven’t been able to make their payments for two months. So, all this stimulus is really just getting us and we’re not even back to the level of GDP we should be at. So, I can’t imagine this ending well. So, what should the everyday person do? You already said, you know, try to get 10% of your net worth into gold and silver. But I would argue too that maybe we need to, you know, just like fortify. I mean, if this was old school and we were sitting in a kingdom and we knew that we were about to get attacked and I love Rickard’s perspective on this, we knew we were about to get attacked. We would be fortifying. We would be saving up; we would be decreasing our expenses and we would be trying to figure out how to make more income. So, what should the normal everyday person do?

Mike Hananel: Yeah, a hundred percent agree with that. I mean, when this all started back in March, you know our GoBundance tribe, that we’re a part of, we all came together and did a lot of zoom calls around, Oh, what the hell is going on? And what should we do? And what a lot of us were saying, especially some of us are a little older, I’m in my fifties. So, I’ve been through a few cycles. And that is right now, it’s about survival, not only survival, but like you said, fortify your base. Certainly, there’s a lot less to spend money on. I mean, even if you’re not trying to save, we’re saving money in our house, which is shocking. I mean, I live in Los Angeles. I have two kids in private school, you know, our overhead and our expense. And we travel. I mean, we used to travel I mean, it’s nuts how much money we spent. I mean, I was looking at my credit card every month and I’m like, how can we spending this amount of money? It’s so crazy to me, but now because there’s no restaurants open and there’s nowhere to really travel to like, I mean, I’m forced to save money and I feel like everybody should use this opportunity to be saving money. So, there’s no question saving money is the thing.

How do you earn more money? Like you said, creating new businesses. This is an opportunity of massive shift of society, societal preferences, what people want to do versus what they used to want to do, it is going to be different now. And so, there’s going to be a whole new crop of businesses that come out because of this. Like you said, maybe you acquire a business, or you start a business or, you know, it’s not easy to do. I mean, I do think that’s one of the hardest things that people can do is if you haven’t done it before, like I said, you know, you want to really work on yourself. You want to grow your personal skills. John Maxwell has a lot of great books on leadership and he has the 21 irrefutable laws of leadership. The first law he says is the law of the lid. And your organization will only grow as much as you grow. And if you’re stuck at a certain point, so will your organization or your business, it won’t ever grow beyond you if you’re not growing. So, the number one thing you can do here is to learn, educate yourself, continue to work on yourself so that you can be better at helping others and working with others and growing through others. That’s what businesses are. It’s using leverage and people to accomplish great things that can’t be done by one person. I mean, that’s, you know, the human effort, anything great in human history. There might be one person that may be stood at the top and took credit for it or gave some great speeches. But there was a lot of people behind that person that made those things happen. Nothing happens in a silo by yourself. Nothing, no business can happen by itself. Even if you’re a sole entrepreneur, you still need, even if it’s contractors or service providers or people you work with, there’s always other people involved. It’s a team effort. So, growing your skills in that area is probably the most important thing you can do because it will serve you.

Well, if you do want to get into the real estate investment game, if you do want to start a business or buy a business, let’s say that struggling and repurpose it for today’s economy. Those are great opportunities. Or even if you just stay with, if you have a job and you’re, you know, you’re earning money, like you said, saving money right now. So that you’ll be able to be in a point of freedom. Most important thing I think people are learning through all of this is it’s dangerous to rely on someone else for your job. It’s dangerous to rely on the government for any help, because even if you got your extra 600 bucks, guess what? You don’t got it anymore. And so if you’re doing either save it or do something to protect yourself or your family beforehand, you know, that thing just run out, maybe now there’ll be another 300 or whatever, but it’s going to disappear. You can’t rely on that and you need to be self-sufficient. So, I’m really hoping that crisis actually creates a spiritual awakening of people understanding that you need to go inwards. You need to work inside yourself, get yourself straight, get your head straight, your mind straight, your heart straight. And you can then become available to create abundance in your life by creating abundance rather because as you know, the only way that you are successful in business or in life is by creating massive value for other people. That’s really hit the bottom. That’s the secret to life. The more you give and the more you create a value for others, the more your life will be abundant. And it’s hard for people who haven’t had that mindset or live that way or were taught differently by their parents to change that mindset. But it is a mindset that once you understand that and you make that shift, a lot of things open up in your life. And this is the time to do it, because these next few years will be very difficult and challenging for most people, unfortunately. But it does, like you said, create opportunities and we’ll also see the greatest opportunities we’ve ever seen. I think the word crisis comes from an old Chinese two symbols, two Chinese characters not doing it justice, but crisis, cri and sis one means danger and one means opportunities. So, the actual word crisis comes from two Chinese symbols. That mean danger and opportunity, which are the yin and the yang. They both equal. So, while it is dangerous and scary, it also is great opportunities for people at the same time. So, it’s hard for people to wrap their heads around that, but the way to do it is to get out of a fear mindset. Don’t let the fear, we all have fears. You know, don’t believe that anybody who’s super successful or confident doesn’t have fears. We all have fears, but the key is having them and doing it anyway, getting past those fears and realizing you need to start taking care of yourself right now, the government going to do it, your employer, isn’t going to do it as much as we would love our employees, the employees that are the most successful of the ones that are taking care of themselves the most, and those are the ones we are helping the most. Because we love, you know, even if it means your employee leaves and starts their own company, you know, we still do it anyway because that’s the pleasure of life, right? I mean, the best part of life is what you can do to help others. Because at the end of the day, that’s the legacy that we leave here.

We’re here for a short period of time. We have a lot to do. I do believe we’re here for a purpose. I do believe we chose to be here. And you may not know that, but you made a choice to be here. And you’re here. So now, your job is to do what you were meant to do whatever that is for you. You know, it doesn’t have to be real estate or investing. It could be anything you have a passion for, but something that you really believe in because that’s what’s going to drive you in the difficult dark days. There will be difficult dark days, no matter what you try to do in life, your passion and your excitement for what it is that you’re trying to accomplish is what will get you through that. And that’s why I come back to this. Never, never, never, never, never quit. You got to keep on going through it. And these will be some very trying times, but those of us that can make it through the other side, I do believe we will be so much stronger on the other end of this.

Mike Ayala: That is an amazing place to pull this together. You know, I was really excited to have you on the show because I knew that you were going to just enlightened us and just share a ton of wisdom, but I love the way you pulled it together. And something that you said in episode one, the best boom economies come from the ashes. And so, this isn’t, again, you’ve got to look at this through the lens of, you know, what, if Mike’s wrong, what if Mike’s right. And if nothing else just start questioning everything. Take this, go back and listen to it again. And just constantly digest, like, how does this apply to me? How does this affect me? How do I apply what Mike is talking about? And worst case scenario, he’s wrong, which is probably not a worst case scenario, but in your mind, like if you prepare for some of this worst case scenario, he’s wrong and you spend all this money on, you know, gold and silver or whatever, but the actual real worst case scenario is he’s right. And you didn’t do anything about it. So, I would encourage you to just go back, listen to this again, and just remember the best boom economies come from the ashes. Mike, I appreciate your time. Tell us one more time. How do people get in touch with you?

Mike Hananel: You can email me mike@strategicgrowthre.com. You can check out my website, email me, and I’m happy to chat with anybody, especially anybody in the Los Angeles area that’s thinking about investing in real estate or investing in general, or just wants to chat or grab launch, happy to do it. I love talking about this stuff so I can just go on and on for days, don’t feel free to reach out.

Mike Ayala: Yeah. And, you know, Mike brings up a great point that I just kind of want to close on. So, there’s obviously a lot of heavy stuff in front of us. A lot of this is out of our control. So, what can you control in your own life. And I love that, you know, Mike pointed us toward the hard assets, the precious metals, even real estate business assets. But Mike just brought up something that I feel like, you know, I should point back to if you’re not a real estate expert or you’re not an expert in buying businesses and you love your W2 job, or you’re a high net worth doctor or any of that, you don’t necessarily have to quit your job. Let’s just say you’re a plumber like I was you know; I made a good living as a plumber. I don’t necessarily have to quit my job. I need to fortify. I need to lower my expenses. I need to put some money in gold and silver because cash is trash as Mike would say. But the reality is, you know, if you got some cash on the sidelines and you want to come alongside and there’s people out there that are experts like Mike, that you can invest alongside of too. I know plenty of people that do very well in their job, they’re happy in their job. They don’t want to quit. And they just invest with people in real estate, or they invest with people in businesses. So, there’s other opportunities out there. You don’t have to quit your job, but I think Mike’s the key takeaway for me. It’s time to invest in hard assets, gold, silver, real estate businesses, something that’s going to continue to provide you a cashflow income or in the case of gold and silver, some form of security, which actually is probably going to be skyrocket, but that’ll be left to be seen.

Mike Hananel: Exactly. Awesome.

Mike Ayala: Cool, thank you for your time, Mike. I really appreciate it.

Mike Hananel: For sure. Pleasure any time.

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Episode 61