What Is Happening to the Dollar? – Episode 489

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, on this episode of the podcast, we’re going to be talking about the dollar, the strength of it, and interest rates. I would say these are conversations that we’re hearing in almost every single circle of people that are awake. We’ll call it that. Well said. Yes. So, Kim, this came about because you and I were talking in terms of what you’re hearing from clients, what you’re hearing from associates. So I want to get your take on it. And then I have a little bit of a unique perspective that I’ll try to add in as well. Sounds great. Well, we’ll let you do your story between the two conversations. Perfect. We’ll start with the dollar. You know, it is a very common question. What are we going to do if the dollar crashes?

[00:52] And, you know, I don’t know, actually. That’s my answer. Like, if the dollar crashes, I think we’ve got a lot of messes on our hands, and we’re probably going to be a little more concerned about where our next meal is coming from than what the dollar is doing. Nevertheless, I believe also that that is quite a ways out ever. There are so many countries that use the dollar as their foundational currency. There are so many places where it is the only means of measuring things. And I believe that there’s every good reason that the government and the powers that be and the central banks would do what they did to prop it up. Nevertheless, we are in a very unusual environment. I will readily grant that.

[01:41] And so who knows? We may wake up one morning and be like some of those third countries where they wake up and their currency is literally not worth the paper it’s printed on and or the form that it’s in. You know, the shells or the whatever they are, the stones. So I think it’s super important to focus on what we can control. And I do believe that, of course, inflation is impacting the dollar right now. But even that is a temporary thing. You know, inflation is always in our lives. But the big, big impact that it seems to be having right now, I don’t really see as long term. That could be wrong as well. There are lots of times in our history where inflation has gone on for quite some time. And so one of the things that people need to realize is that one of the biggest ways to overcome inflation is to keep working.

[02:36] And it’s why I have for so many years really counseled people to abandon the societal construct called retirement. It’s just very detrimental and in particular as it relates to inflation. And yes, I know Social Security just went up by eight point whatever, but that’s not the point. Everything else went up too. So it’s almost irrelevant. And these things are all interrelated, of course. But again, focus on what you can control. And right now, everything that we deal with is in dollars. So it doesn’t behoove you unless you have, I would say, probably a worth of over 10 million. It doesn’t really behoove you to try to move things offshore or, you know, some of the more extreme measures that you hear about.

[03:22] I believe that we need to store things in dollars. And there are other things that we can store, like real estate, that can be more peace of mind oriented. And that’s why a lot of people are buying farms and land and that kind of thing. So, again, going back to the focusing on what we can control, to me, it’s more where are you going to store your dollars than whether or not the dollar unit of currency or a measurement of money or even a measure of progress is going to fail. And as we know, I am very partial to storing dollars in mutual life insurance companies and credit unions, because I believe that those financial institutions are going to weather whatever odd storms we have coming. And so I believe that that is a better focus than the what do we do if the dollar crashes focus.

[04:19] Yeah, absolutely. The dry powder example of what we’re hearing right now of where to store money is something that I’m hearing across the board. Be it from business owners. And have you noticed this as well? Most business owners, even if they have a successful business, they tend to still do other things. You know, I have friends that are very successful. And, you know, as a hobby, they go out and, you know, they’ll see a car on the weekend, drive by and they’ll go buy it. And maybe they’ll drive it for a while and sell it or, you know, whatever it could be like that happens. And so that leads us to another piece, which is getting access to cash going to the bank and actually pulling out cash is in some cases.

[05:09] They don’t even have it right. It’s insane. You see signs of please use your credit card. Don’t don’t give us change or can’t give you change back because there’s a change shortage. Yes, those are it is December 13th this year. They’re scheduled to have a digital currency released in the United States. So I don’t know what that means. And I think you set the stage really well. I’ll give a personal story from me that has given me a perspective that I’ve used for decades now. So in the late 90s, I lived in a South American country. And when I got there, a dollar was equal to I think it was five thousand five hundred sucres of their currency. Within six months, one dollar was worth over twenty five thousand five hundred of those sucres.

[06:12] At that point, I remember waking up one day and the currency collapsed. Every single bank account in the country was frozen. Even us as Americans, our accounts were frozen and it became just complete chaos. It was pandemonium. I don’t think that the U.S. is going through that. And I’m not wearing a process. I’m trying to wear that prosperity lens myself. I don’t think we’re going there. But I do think that it’s important for us to have cash and which is the next piece you were talking about of interest rates or where to put money. And I remember in the past, you’ve mentioned that anything below eight percent were actually doing OK. So can you talk deeper into that because you’re in the trenches right now?

[07:01] Yes. So the rising interest, particularly around mortgages, has caused people concern. And it’s because we are way out of perspective. And so if you back up and you look at the history of interest rates, and this is supported by my husband, Todd Langford, who did way more research on that kind of thing than I do. Eight percent is a good dividing line between what you could call efficient debt and inefficient debt. So if you can get debt at eight percent or less, that’s efficient debt. And mortgages in particular are very efficient debt. They’re affiliated with a particular piece of hard either asset or building or home or what have you. So there’s that association. And then they are also then fixed, which is very, very valuable in today’s world to take on a six or seven even percent fixed 30 year loan would be a fabulous and efficient act of confidence and capability right now.

[08:09] And yes, we could argue, you know, maybe you’re not going to stay in that home that whole time, but still a lot of people will or maybe they’re buying a property that they want to next generation. And so they know they’re going to hold on to it for that length of time. So having that perspective really takes a lot of pressure off because if you’re working towards a mortgage closing and, you know, the rate is going to be six and a half instead of six or what have you. Yeah, it’s a little bit higher payment, but long term, especially if you can get it fixed, that is not an issue at all to be overly concerned about. And I think just having that perspective will really, really help people. The other side of that and of course is what are savings accounts and our money markets are liquid dollars earn.

[08:54] And so it’s nice to see savings accounts that were at basically zero taxable rise to one or even two or, you know, I’m starting to hear threes and even fours again, still taxable. Nevertheless, that will be valuable. And this is an important time to bring in the dividends from a mutual life insurance company. So they’re often referred to as interest, but they’re technically not. They’re technically called dividends, but we speak of them in terms of the interest equivalent. So dividends at life insurance companies are gross at five and a half or so now netting to three and a half or four without tax. And they too will rise as our country’s economy’s interest rates rise. So the dividends from the insurance company don’t have anything to do with the stock market, nor do they technically really have anything to do with what’s going on, you know, who’s in the president’s office, what’s going on in the more nuanced financial economy.

[10:02] But they do have something to do with the overall economy. And so without it out, a dividend is reset every single year and these insurance companies pay their dividends from their business model, not necessarily from the investments that they make that impacts it some, not a lot. And their business model, actuarial science, been around a long, long time, like we’re talking centuries. And so they pretty much have it down and they adjust their dividends every year based on that business model and the dividends will rise over time if interest rates in our economy continue to go up. And so these are things that we can, again, step on, have a prosperity lens about, a prosperity perspective on, and enable us to have so much greater peace of mind and confidence in what we’re doing.

[10:57] You know, I have three little sayings that I like to give all the time and it’s, simplify savings, automating your assets, and installing faith in your finances. And if you can do those three things with at least 50% of your net worth, then that leaves the other 50% to be speculative and have fun with and do cool things like buying and selling cars and motorcycles and guns and ammo and water. You know, the various things that people find and have fun with and cryptocurrency maybe will be a part of that. And it will enable you, again, if you’ll keep kind of like the 50% in dry powder space where the savings are simplified, the assets are automated, and you have faith in whatever those things are, then it enables you to have a lot less consternation about whatever else is going on.

[11:53] That is so concise. I love that, Kim. That’s really good. As you mentioned that it made me think of what’s happening with friends and other people I know. So the speculators, those that got lucky and they didn’t know they were lucky, or the ones that rode a wave, they’re very scared right now. And they may be selling when they shouldn’t because they’re scared. They’re driven by emotion. Whereas the people that have developed a skill set, they’re principle based, they’re being selective, but they’re still doing deals. They’re still doing things because they have that foundation, as you mentioned. Yep, and it really lends so much to the economy when skills are applied. And so apply your skill.

[12:45] Be of service or be in service. And that act of getting up every day and serving will help you mentally so much. And generally that moves money around. You know, serving then enables you to get paid, which enables you to pay somebody else for their skill set. And that is part of the seven principles of prosperity is the movement of money. And when money moves, money multiplies or expands. And it’s literally that ability for me to provide service to a painter who then goes and buys paint at the paint store and then comes and provides his service to me. And then the paint store takes that same dollar and buys ladders. And, you know, that’s movement of money and the multiplier effect, which is the seventh principle that happens when money moves.

[13:40] And if we focus on that and just putting our good and our God-given talents and our service out in the marketplace, maybe sometimes it’s not for money. You know, one of the things back to that Plan B conversation that we had on the earlier podcast that those guys talked about is learning how to barter. And there’s actually an event in Elyse where you’re headed where they are taught how to barter and they spend a whole day bartering and learning the act of that. So, you know, maybe that’s our next form of monetary transaction. Time will tell. Yes, time will tell. If that is the case, we have the prosperity community. And I couldn’t think of a better group of people for us to be connected with.

[14:25] So that totally makes sense, Kim. This is a wonderful episode. It’s one of those where it could have gone south. It could have been negative, thinking the dollar is going to crash. Oh, my gosh, the interest rates, the inflation. And you approached it in a way where we were edified. Thank you. Thank you. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.