Jason Hartman starts the show looking at the Spanish Flu and economic recovery post-flu. He examines the economy just before the Spanish Flu pandemic and how paper money is changing globally. He compares this history with our current pandemic. In the second segment of the podcast, Jason discusses the larger wealth transfer in history. 30 trillion dollars will be passed down over the next couple of decades. Baby boomers will pass their wealth to millennials. Jason discusses how they might use it.
Announcer 0:01
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Announcer 0:11
Welcome to the holistic survival show with Jason Hartman. The economic storm brewing around the world is set to spill into all aspects of our lives. Are you prepared? Where are you going to turn for the critical life skills necessary to survive and prosper? The holistic survival show is your family’s insurance for a better life. Jason will teach you to think independently to understand threats and how to create the ultimate action plan. sudden change or worst case scenario. You’ll be ready. Welcome to ballistic survival, your key resource for protecting the people, places and profits you care about in uncertain times. Ladies and gentlemen, your host Jason Hartman.
Jason Hartman 0:59
So Today we have got several good things to cover. Number one, let’s look at history a little bit and talk about the economic recovery after the Spanish Flu 102 years ago, we had another pandemic, actually, we’ve had some other things between between that and COVID 1984. But we need to look at an analyze how and why there was recovery after the Spanish Flu of 1918. So we’re going to do that. We’re going to talk about the biggest wealth transfer in history. And I am so glad that somebody else is finally talking about this, because I’ve been talking about it for a few years now. And no one has really looked at this mature, talked about it or published any statistics on it that I’ve seen. I mean, when I say nobody, of course, it’s a figure of speech. I’m sure there’s somebody The 7 billion people in the world that have done that, but it’s been largely a secret. But today, we will explore Today we will explore. And I want to remind you that this Saturday, we have for meet the Masters attendees, we have our follow on, we’ll call it an extension class on asset protection, a deep deep dive into asset protection. And that will be on Sunday that is a live class with our asset protection specialist attorney. And he’s going to be going into a much deeper look than the webinar he did for us a couple of months ago. And we’re going to be discussing some advanced techniques and some other options outside of the usual you know, most of you have heard the usual by now, but we’re going to talk about some stuff that’s kind of the next level the next level of asset protection. So if you attended meet the Masters, you got an email a text message or maybe both about this. And it starts at 8am, Pacific 11am, eastern time on Saturday. And then of course, Sunday we have a live stream, where we’ll be talking about becoming an empowered investor. But let me share with you a few things that relate to becoming an empowered investor before we start on all of this other great stuff. Number one, let’s talk about some beliefs, some beliefs. What do we believe in? You know, it’s been said that the history of the human race is nothing more than the history of belief. And if you think about that, Isn’t that the truth? The history of everything in the human race is simply the history of belief. And it is so incredible how powerful beliefs are, and how they can really fool us because a lot of these beliefs are hidden below the surface. And they cause us to think and act in certain ways that we don’t even know we don’t even know we’re being influenced by these beliefs. So for those of you who have been following my work for a long time and attended live events back in 2004 2005, on up to about 2009, when we used to host events at our office in Newport Beach, and then later our office in Costa Mesa, California, and we had a smaller office after that, as we were getting to be more virtual, more remote. And that was an office in Irvine, you probably never visit us at that office, you might have if you just had an appointment with one of our investment counselors, but not for an actual conference because at that time, we were doing the conferences in hotel facilities. So we used to have these tiles on the wall. They’re literally porcelain tiles. And it’s an old saying, and it is so good. It is so valuable as to what it talks about belief. So I literally just pulled the tiles off my shelf here. You can hear them that claim plank. These are actual tiles I’m reading from Yes. You know, it’s like some ancient tablets, right? Or scrolls or something like that, right? It’s like the, it’s like the 10 commandments, you know, written in stone. So here it is. These are such great words. Watch your thoughts. They become words, Watch your words. They become actions. Watch your actions. They become habits. Watch your habits. They become character. Watch your character. It becomes your destiny. Wow, isn’t that good? That’s so good. It’s worth rewinding and playing that again. Isn’t it? Okay, so what are some of the beliefs of an impact investor. Number one, and there are many. So I’m just going to go through a couple of them today a few. We believe in ratios. We believe that ratios are much more important than absolute numbers. Why? Because ratios answer the Jason Hartman question, compared to what? A ratio a percentage, much more important than an absolute number. You know, many of these, you’ve heard me talk about them. You’ve heard me say them in other ways. They’re woven into the core of the philosophies we’ve been teaching for the last 1617 years. Okay. We believe in the theory of relativity, as it applies to investing. No, not Einstein’s theory of relativity, not equals mc squared, the theory of relativity as it applies to investing. And that really is about compared to what it’s about the size of the economic pie. It’s about relative To asset prices in any given market, so just understand that it’s all relative. We also believe that nothing can take the place of persistence. There’s that great quote, you know, nothing can take the place of persistence, talent will not genius will not etc, etc. I don’t have the quote in front of me, but read Richard Nixon’s book in the arena. I know, this is old school stuff. But that is a brilliant book by tricky Dicky, or late President Richard Nixon. It’s a really good book. He was he was a good writer, and someone who has been through all the stuff that he had been through in his life really can teach us something I’m not, you know, endorsing him or saying anything. But you know, he really did become a great elder statesman in a way and has some great advice to share in that book, in the arena about persistence, and about what it takes to get through tough times. And we’re all going to go through them. In one way or another, we believe in alignment of interests. And that is critical to success. Now, that’s what I really talk about. When I talk about being an empowered investor. And on Sunday’s livestream, both on YouTube and Facebook, you will hear me talking about becoming an empowered investor. And some of the ways you can do that. And we also believe that it is an amazing time to be alive. It really is an amazing time to be alive as is bad as so many things are in the world. There are so many amazing things at the same time. We believe in the long game, and the big picture, the long game and the big picture. We don’t look at day by day stuff. We look at the big picture. Now we live successfully every day. But that daily success is just like putting One more brick in the building that you’re building. Each of those days, each of those bricks come together to make a great month. A great year, a great life. Okay, so those are some important beliefs of the empowered investor. So we’ll get to more of that stuff as time goes on. Okay, now, let’s talk about the biggest wealth transfer in history, and why it is upon us. Now, this is a great clip from economics explained, I absolutely love these guys. I support them on Patreon. They do a great job and have some great content there. You can find their YouTube channel. And then I want to talk about the Spanish flu. And take a look back in history, see what happened and how the world recovered from that. And what am I tell us about current day? So let’s first take a look at this video. wealth transfer, again, something I’ve been talking about for quite a while. And really just nobody’s talking about this. And so this was the first I saw of it. And they really did a good job talking about it. So let’s dive in,
A Clip from “Economics Explained” 10:16
prove the laws of a new wave of middle class workers.
Jason Hartman 10:19
So what they’re talking about here is, as the now called baby boomers came back from World War Two, and the US was really the, the country that had the industrial powerhouse left, you know, Japan was destroyed, Europe was destroyed. And the US was the the sole in big industrial actor in history. That was a very powerful thing that led to waves of ongoing prosperity. But we know that it led to a lot of other things that weren’t always so good.
A Clip from “Economics Explained” 10:54
It’s all coincided with a massive spike in birth rates, because well, people would lose three years years of grueling conflict and they were ready to start families. The generation formed by this boom and new babies needed a name, but the jury’s still out on what that will be. generational naming conventions aside these posts, all babies are coming up against some harsh realities, sad guarantees in life or death and taxes. We will actually cover both of those here. But the important one for now is that the wealthiest generation in history is starting to retire and die. In doing so they will be responsible for the largest wealth transfer in history as they pass along a collective $30 trillion to their beneficiaries over the next few decades in the United States alone.
Jason Hartman 11:41
Okay, so, you know, the concept of these demographic cohorts whether they be the silent generation, the greatest generation, the baby boomers, the Gen Xers, my generation, the generation, why are millennials and now the Gen Z ers right? Those really Not completely even across the globe, of course, we’re only really looking at them in terms of the US. Okay. And so the baby boomers, about 76 million Americans depending on who you talk to and how they’re doing the math in terms of the exact birth here and, and such a demographers disagree on this stuff slightly but, but that’s the gist of it. This equates to about 10,000 people turning 65 every single day now at this rate, and it is truly startling as we’ve watched this group move through the economy. It is absolutely amazing the impact they’ve had. And you know, this is why I say, watch old movies, watch old TV shows so you can understand how they think. Maybe you are one of them. And you already know how your generation thinks Okay, fine. But sometimes you even need to be reminded, you know, that’s why I say watch a movie or a doctor. documentary about the famous Woodstock concert in 1969. Okay, in Woodstock, New York that really tells you a lot about the formative years of this generation, as they were coming of age. It’s very, very enlightening. Last week, or maybe a week before I watched the doors movie, you know, I had originally seen that movie years ago when it was in the theater. And I watched it again, you know, other than thinking the music of the door, some of their music is quite great, really good stuff. You know, it’s just really interesting to watch that movie and see what it was like back then. Of course, a movie is never a perfect depiction, I totally understand. But it gives you a sense of it, and nothing really does that better than a movie, TV shows. Second, the book third, you know, reading old newspapers, things like that. But it’s really important to understand how these generational demographic cohorts influenced the world and how they think of capital movement. is going to have some extremely significant impacts on the economy, some of which we’re already starting to feel. So what is actually being passed along? Will this stuff maintain its value in the hands of its new owners? Should we tax it? And finally, how might this actually be a huge economic problem? So we’re talking Remember, we’re talking about $30 trillion, with a tee. This is hugely significant. So for all of you who have heard and are thinking, Well, you know, the millennial generation as a bunch of slackers, what are they gonna do? They gotta get their act together. It’s not all their fault. They sort of came of age in a bad economy, some of them not all of them, but some certainly did. Some are graduating college around the time that the economy was in the Great Recession. And it’s all different because it’s many years right. There are millennials that are turning 40 and then there are millennials that are younger, so it varies. But most of this wealth transfer goes to the millennial generation. So get ready folks, because everything is going to change as this transfer occurs.
A Clip from “Economics Explained” 15:12
Beanie Baby collections share portfolios and houses. All of this money changing hands is bound to give a boost to the wallets of a younger generation, which has famously been saddled with economic headwinds like student loan debt, stagnant wages and turbulent job markets. You might be forgiven for thinking this is great is finally going to give them millennials the healthy financial boost that they need to get into homes or unsettled themselves have debt or just become bigger spenders in the economy. And while there are definitely going to be some good things that come from this transfer, it may not all be good news, but from the top. The first impact this will have is an upward pressure on demand. A paper published by the American Economic Review found that around 70% of households who received an inheritance windfall and spend all the money we In the space of five years,
Jason Hartman 16:02
you know what they say it takes one generation to earn it and one generation to blow it. And then it circles back again, the next generation earns it, and then the next generation blows it. This is a historical fact. It just happens throughout history, right? So can you imagine someone inheriting this kind of wealth and just frittering it away inside of five years rather than investing it? And hopefully, that won’t happen. But we’ve all heard the stories of the lottery winners who are broke two years later. So we’ll see. Let’s hope that the millennials do a better job with their inheritances. But, you know, I’ll tell you something to the millennials credit. A lot of them are pretty frugal people. Now, I’m not you know, maybe some are overly frugal, but they have just found ways to get by and keep your expenses low. And some of them are pretty pretty, you know, they’re not like I guess like, my generation might generation was bad, even though probably nobody noticed. But my generation during that bit came of age kind of in the womb, depends what part of my generation, but some of my generation, some of every generation, and certainly some of the baby boomers were really showy with their money. You know, they’re buying expensive cars, they’re buying trophy assets or not assets, trophy lifestyle, perks, designer clothes, yachts, whatever private jets, etc, etc. And some of them are just more prudent with the money. But I think Millennials are pretty, pretty cautious, prudent generation, of course, you can’t can’t stereotype completely with anything, but we’ll see. And, you know, what does this mean for the economy? What does it mean for the real estate market? These are all big good questions to be asking
A Clip from “Economics Explained” 17:49
financial management on their behalf but for the wider economy that frivolous spending will create jobs and business opportunities for people from the people in the jetski industry and it is worth quickly noting that this paper and its findings are old. He was originally published in 1959 and then revised in 1961. But since then consumers Marginal Propensity to Consume has only risen, meaning that for every extra dollar people are receiving, they are spending a larger portion of it rather than saving. Also, more recent, but less comprehensive studies are still finding the same figures, this interesting phenomenon and there are a few things to pull apart from these transfers. For starters, smaller inheritances are more likely to be squandered. Now, obviously, it is easier to spend less money than it is to spend up more money, but it actually has more to do with what this money can do. And inheritance of less than $100,000 is not necessarily life changing for most US citizens. Don’t get me wrong. It’s a lot of money, but it won’t let the average person quit their job and it probably want to call it I have purchased item.
Jason Hartman 18:57
Okay, now, let’s switch gears here. Okay, and we’ll we’ll switch back and forth for a moment. I want you to consider the recovery from the 1918, Spanish flu. I’m going to play a clip for you. That explains it. This is just part of a channel called history time. Okay, just a very small clip. And I want you to consider what happens if this type of recovery occurs. And it is combined with this huge wealth transfer. What does that mean to the economy? What does it mean to the real estate market? And all of this considered in the backdrop of the Jeremy Siegel, Michael Milken article that I was sharing in my creating wealth seminar back in 2004. And I’ve mentioned it here on the show several times over the years. And it is the article where Jeremy Siegel says There will be a huge asset shortage. He says, with all the people coming out of poverty into the middle class at that time, by the way, it was much lower number, because he was talking about how 270 5 million people have been pulled out of poverty and into the middle class around the world. Okay, so that’s 270 5 million out of, you know, 7 billion plus a very significant number. Because already a lot of people around the world we’re in the middle class, you know, this is if you’ve got the 3 billion in the lower classes 270 5 million is nothing to sneeze at. That’s very significant. And it’s only become more so since then in the last 15 years. So think about that. Think about this is Jeremy Siegel put it, the looming asset shortage and listen to this
A Clip from “History Time” 20:56
in the US at least in a shortage of Workers, those who’ve lost their jobs, it’s small or an essential businesses that have been shut down during the pandemic found new work with factories and assembly lines where the demand for workers skyrocketed, and the qualifications required for minimum. For the most part, those who wanted work could find it. And sometimes it’s the power of unions grew. They could demand more for their services than ever before. increasing social mobility and eventually leading to the establishment of the American middle class.
Jason Hartman 21:44
Remember, they didn’t call it the roaring 20s for nothing. Okay, so you’ve got up into the beginning of the Great Depression, which most people kind of consider to be 1929 stock market crash that wasn’t really the start. But we’ll go with AP just because that’s how most people commonly look at it. But between there, there was a boom time that wasn’t replicated until the post World War Two era when the baby boomers came back and America had its love affair with television and the automobile and home appliances, which they really weren’t a thing until the baby boomers. They were a little bit of a thing in the 20s. But they really got big after World War Two.
A Clip from “History Time” 22:30
a shortage of labor due to the pandemic in due course gave rise to escalated workers wages, meaning that is the roaring 20s dawn. For the first time, many US citizens could spend a portion of their paycheck on astounding new consumer devices like vacuum cleaners, cars and refrigerators, cutting edge appliances for the 1920s
Jason Hartman 22:56
now, you know I’ve talked to you many times about Edward Bernays and the beginning of the materialism era, and the birth of Modern Marketing, modern advertising and the whole concept of public relations. It’s right here at this time in history. Isn’t that interesting?
A Clip from “History Time” 23:20
Working Capital poured into post war you’re, there’s prosperity to a certain extent filtered in there to even Germany enjoying a brief period of economic food, social freedom.
Jason Hartman 23:33
Now, of course, that was Germany before the Weimer Republic inflation disaster, where literally, it was a word wheelbarrow full of currency to buy a loaf of bread. Unbelievable. In fact, pardon me when I repeat myself, I often do but if we’ve been doing this a long time, there’s a lot of episodes so you got to repeat yourself a little bit. But there was one story in the Weimer Republic Germany when I A person had their wheelbarrow full of currency full of stacked up paper currency, right worthless paper currency. And they couldn’t get the wheelbarrow through the door of the shop. And so someone came along the thief and dumped all the cash out of the wheelbarrow sitting outside and ran off with wheelbarrow because it was more valuable than the currency was in the marks. So think about that. What has intrinsic value, commodities have intrinsic value, and that’s what we invest in, especially in the form of packaged commodities. That’s what we call income property packaged commodities investing.
A Clip from “History Time” 24:45
As demand for fuel skyrocketed. Texas became rich from the oil industry. new roads were built to accommodate cars, resulting in greater mobility and in turn better job opportunities.
Jason Hartman 24:58
Remember how I’ve said to you over the years, the best thing you can have on a resume is mobility. There you go. greater mobility equals better jobs, which means people should not necessarily own the home in which they live, they should rent it. So they have greater mobility to go to where the best jobs are now granted with the remote working revolution, that’s less important. And by the way, I was reading an article this morning about school districts. And you’ve got to ask yourself, not just for career and work, but what about for school districts? How important is a school district when your kid is going to school online? Something to think about for sure. Maybe that structure is being diminished and torn down as well as it should be? I mean, the whole school district thing I always thought that was just ridiculous. Why are you destined to go to one school or another, depending on you know what block you live on. That’s just silly. It’s an old, archaic, public school idea that just doesn’t make any sense as most of the public schools don’t make any sense in the modern era, but it is what it is. That’s, you know, every everything evolves,
A Clip from “History Time” 26:16
funding steadily surged upwards. For the first time in US history, more people lived in urban centers than in the country, giving rise to better health care access for millions of people, better work opportunities, and the chance to indulge in newly invented technology.
Jason Hartman 26:35
So you see how that model is his reversing a bit right? Where you don’t need to live in the city obviously, you can live in the burbs or the country as long as you have a good internet connection and work remotely.
A Clip from “History Time” 26:47
So as an unusual side effect of Spanish Flu workers wages soared. Increased investments are made in scientific research and technology, better healthcare systems put in place greater levels of consumer spending and ever before the US became a lender for the first time, rather than a debtor.
Jason Hartman 27:11
Which, by the way, I was reading a book this morning about debt, a debt to GDP ratio. And I couldn’t believe how this author’s thoughts mirrored my own about how the debt really isn’t that high. And you’ll remember I’ve talked to you about that in the past, I compared the typical debt of a country, compared to the income of the country, the GDP is considered the income and then comparing that to an individual or a family. Typically, they’re going to buy a house to live in, that is maybe three times or four times their annual income. That’ll be the typical thing. And so why is it so significant? That if a country has a 100% debt to GDP ratio that’s so bad. I mean, I’ve always thought that these debt hawks are just going overboard on that. It just doesn’t seem that significant to me. But you know me, I like leverage. I like good quality, long term fixed rate, debt, and pay, especially if you have a reserve currency and you get to inflate your debt away. That’s a pretty awesome deal, pay your debt back in cheaper dollars.
A Clip from “History Time” 28:28
But perhaps most of all, the influenza pandemic of 1918 to 1920 gave people a change in perspective towards their own lives.
Jason Hartman 28:39
Now, this is important. This is the psychology in a post pandemic world, the PTSD that post traumatic stress disorder has different effects. And one of the effects and I’ve certainly noticed it with myself in the post 911 world in the COVID world, one of the effects is this slight feeling. I mean, it’s only slight in me, maybe it’s bigger than you, but I’m sure it’s crossed your mind is Hey, live for today life is fragile. Nobody knows how much time they have left. So enjoy yourself. And that’s exactly what happened in the post Spanish Flu era,
A Clip from “History Time” 29:22
encouraging them to go out and enjoy themselves while they could. Unfortunately, this heedlessness towards the dangers of economic instability, much like the events leading up to the 2008 financial crash would create a massive economic bubble. What goes up, must come down.
Jason Hartman 29:48
So that would be like the 80s into the 90s. You know, the 60s into the 70s that just that cycle just repeats itself over and over again, the early 2000s Late 90s, really into the.com bubble. And then that being fixed by Alan Greenspan, the maestro, and I say fixed very sarcastically, because he didn’t fix it. He papered over it with money with with easing the money supply, and then you went into the Great Recession. But then coming out of that, well, we all know because we all just live that the last 10 years right or 12 years depending on how you look at it.
A Clip from “History Time” 30:27
In 1929, much of the progress wrought as a result of unbridled laissez faire capitalism would be undone when the New York Stock Market suffered its worst collapse in history, ultimately, leading to intense poverty and hardship in places like Germany, that have been propped up by us investment, where for a time wheelbarrows full of cash needed to buy a simple loaf of bread.
Jason Hartman 30:55
Hey, I think I just said that right. If you go to Wikipedia and you look up the word inflation, you’ll see a picture of a woman in the Weimer Republic, basically throwing the Deutsche Marks into the furnace, because they were more valuable that paper currency was more valuable to yield heat and actually spend it. Can you imagine burning $20 bills, burning stacks and stacks of $20 bills to stay warm? That was actually a worthwhile equation back then, because the inflation was so rampant, that the money just became totally worthless. And of course, this led to the rise of a tyrant, and you know what his name was ate off,
A Clip from “History Time” 31:42
as well as American Midwest farmers who stopped to death in droves.
Jason Hartman 31:46
And what did that lead to that led to the mass migration and The Grapes of Wrath, john Steinbeck’s novel
A Clip from “History Time” 31:54
for the 1930s partly as a result of this economic depression fascist on the rise, another intensely difficult error down. But that’s a story.
Jason Hartman 32:08
And let’s not forget about Mussolini either. Anyway, we better wrap it up. I hope that helps. I just wanted you to think about those converging trends, okay, these converging mega factors, if you will, the pandemic recovery, the inheritance, this giant wealth transfer, the biggest that has ever happened ever in human history is upon us. 10,000 people a day, becoming 65 years old, only in the US the graying of America, the graying of Europe, the extinction literally, of Western Europe, Russia, Japan, and this PTSD. If it hasn’t set in yet, it will set in and people react to that differently. In many ways. I think, you know, I’ve talked about the modified square root recovery, right that if you look at the square root Sine, it won’t be like the typical square root sign where you’re coming along, it goes down, and then it goes way up. This will be the opposite. In my opinion, I think we will wake up into a smaller, more conservative economy. But when those wealth transfers, those estate transfers start hitting, it’s anybody’s guess, how will the millennial generation react to their inheritance? Now, certainly a lot of them won’t inherit anything. Because, you know, we know that so many Americans, if they had a $1,000 emergency couldn’t come up with the money. So that’s a problem, too. It’s uneven. But suffice it to say, there’s a lot of money sitting in the wings, that is going to transfer between the generations. And that is going to have profound effects on the economy, on the real estate market on the asset shortage that Jeremy Siegel and Michael Milken talked about wrote about so many years ago, I get that article so I can share it with you again. I haven’t looked at it in years. I just remember it because it was a very profound statement. No question about it. Anyway, we better wrap it up for today. I will see you meet the Masters people Saturday morning for our extension class Saturday morning. 11am. Eastern. We’re back on the online meeting for that meeting virtually. And then all of you all of you are invited Sunday 8am Pacific 11am. Eastern for our live stream on YouTube and Facebook. Join me get your questions answered. Live q&a asked me whatever you like. I love getting your questions, and we’d be happy to answer them but we are going to talk about what it takes to be an empowered investor. Until then, happy investing.
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