How does inflation impact our journey to creating wealth? What can we do to mitigate it? Rabbi Daniel Lapin is back for part two on how to prosper financially in business. Rabbi Daniel, known widely as America’s Rabbi, is a noted rabbinic scholar, TV host, and author of Thou Shall Prosper: Ten Commandments for Making Money. In today’s show, he provides an illustrative analogy of inflation that highlights the impact and cause of the phenomenon in society and in our wallets. Rabbi Daniel also discusses the only thing you can do to overcome inflation: increase revenue. He emphasizes the importance of understanding the value of money and the value of what you bring to the table for business. Listen to this episode and get valuable money lessons from a guru and expert.
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Thou Shall Prosper with Rabbi Daniel Lapin
I’m excited to have our special guest back, Rabbi Daniel Lapin. We introduced him last time. He’s an amazing, inspirational bestselling author of several books. He has also been on Fox News and Glenn Beck. He has his own radio show as well as has been on TV and featured everywhere. If you hadn’t been in the last episode, I recommend you do so because some of those principles he gave are nuggets.
Although someone might argue saying, “Where’s the strategy?” the truth is that was all of the strategies. That was practical advice because those principles are practical. If you make them a part of who you are, the strategies naturally emanate and become part of your being. It becomes easy to be able to create, not just more money from the income side but even to become a better investor, a better person in general. Rabbi, I’m so glad to have you back again. Thank you for joining us.
Thank you. I so much enjoyed talking with you. I’m sure you know this as well. You do interviews, and I do interviews. Some interviews are grueling. I’m constantly peering out of the corner of my eye at the clock, “How much more of this torment I’m going to have to endure?” That’s usually what happens when people are not masters of the subject themselves. They will sometimes say, “Your fourth chapter is entitled this. Could you talk about that?” I was delighted to come back with you because it’s fun chatting with you because you are as much a master of this topic as I am. I’m learning from you as well. Thanks for the opportunity to chat.
I’ve learned a lot, even from the first part of our interview. I’m excited about the second part as well. As I closed out the last interview, I talked about a lot of noise. One of my friends, Alistair, would often talk about how information has to be a surprise. Otherwise, it’s not information. It has to be something that we don’t already know. The truth is whenever you turn on the news channels, and you have been on those news channels, it’s usually just noise. It’s rehashing something. It’s a lot of speculation.
There’s not a lot of real fundamental truth. They are just talking. What’s your advice for people, especially with the way the media is going, and there a lot of polarization happening and everything else? I would even say even specifically on the financial or the business side of things. What’s your advice for people that are seeing this happening around them in the world nowadays?
I know where you are heading, and I hope I’m right on this. I can’t think of a more significant feature of the present financial times than inflation. If I had believed Treasury Secretary Yellen, Senator Elizabeth Warren, or for that matter, the president of the United States when they all used that humorous word transitory, “Inflation is only short-term. It won’t be with us for long,” if I believe that, I wouldn’t want to talk about it now because people will think, “He’s talking about inflation. That was years ago. We haven’t seen that around.”
Unfortunately, I don’t think it’s transitory. If you keep the show in the can for several months, you can still release it if we talk about inflation because that’s still going to be there. I know that you like creative real estate deals. For people who can be guided into that investment, that is wonderful. At some time or another, I would love to chat with you about crypto because you may have delved more deeply into that than I have. I would say this for everybody.
Inflation is caused by only one thing and that is a dishonest government. Click To TweetFirst of all, inflation is not caused by a war in Europe. Inflation is not caused by climate change in Australia. I promise you. Inflation is not caused by the prime minister of Finland making a statement. Inflation is caused by only one thing. You don’t have to believe me. Brilliant economists like Milton Friedman and many others say, “Inflation is caused by only one thing. That is dishonest government.” How does that work? What’s that about? The key thing to relate here is that the printing of money, which is a symbolic representation of value, has to be in accordance with how much value has been created in the society serviced by that currency.
In the example, the last time we spoke, I spoke about how I benefited by $20 when I bought a pair of shoes and how the store owner benefited by $10. The aggregate economic increase in the consolidated balance sheets of both entities was a total of $20 plus $10 or $30. Ideally, at that point, an inspector from the treasury ought to have been standing behind me with his notebook and have written down $30, and he then should telephone up to the mint, saying, “You can go ahead and print a $20 and a $10.” That’s how it should work.
If the guys there don’t listen to him and print three $20s, they are causing inflation because, little by little, we are all going to realize that the money is worth a little bit less. A way to think about this is I wake up one morning, open the door, and see a duffel bag on my doorstep, “What’s that doing there?” I see there’s a label that says, “A gift to you from the White House.” I opened the duffel bag and riffled through it. To my astonishment, there’s $1 million.
I’m so excited. I start thinking to myself, “It’s time for me to get a new Series 7 BMW. I have been waiting for. This is the time. This is great. Before I rush off to the dealership, I got to call my friend, Chris.” I dial you up, and you answer the phone. I’m about to say, “Chris, you won’t believe what happened to me this morning. I didn’t know if it was a drug deal gone bad.” Before I could get the words out of my mouth, you say to me, “I’ve got $1 million arrived on my doorstep this morning.”
I should be happy for you because now it’s not just me. It’s my friend and me. We both got $1 million. I say, “Can I put you on hold? I want to call my aunt Agatha.” I called my aunt Agatha. Before I say a word like, “It’s your favorite nephew here,” she says, “Would you like a present? I’ve got $1 million this morning from the White House.”
I come back to you and say, “Chris, I got bad news. It’s not just you and me. If it were just you and me, I would be delighted but everyone in the country got it.” Both of us know the implication of that. I say, “I will give it a shot. Maybe I’m still early enough. I’m going to run to the BMW dealership. I will tell you later what happens.” I run to the BMW dealership. It’s like I’ve never seen it before. People are standing in line out of the door. I get in line and start asking, “What’s going on?” Everyone said, “We are here for the top-of-the-line BMW.”
A little while later, a guy with a clipboard comes down the line and says, “I’m a salesman with the dealership. My boss sent me to ask you. How much would you be willing to pay? We’ve only got 11 Series 7 there.” I say, “I know the price for the model I want is $89,000. I will give you $89,000.” He says, “That’s not going to work. We’ve only got eleven of them.
We’ve got about 70 people in this line who want one. You are going to have to show how much you want it.” I’m pretty soon going to realize that the price of my Series 7 went up by exactly the same amount by which the government inflated the currency by handing out all that money. That’s the only way inflation happens.
What we are looking at has nothing to do with the war in Ukraine or Saudi Arabia cutting back on oil production. This has to do with printing a vast amount of currency, so much so that when you are spending other people’s money, you can easily become intoxicated. $40 billion was sent to Ukraine. Sorry as the next guy for Ukrainians being killed but I’m also sorry for the farmer in Kansas trying to make a living and whose money is now being devalued because the president decided to send $40 billion to farmers in Ukraine. That’s called inflation.
In 1994, the government Speaker of the House, Newton Gingrich, modified the method of calculating CPI, the Consumer Price Index. They did that to lower the annual increase given to the Social Security recipients. That’s downright evil. I’m not going to go into the math of how they did it but you know it as well as I do. They modified it. If we use the same system of calculation now that we used in 1992, the inflation rate would be over 15%, not the 8.5% that the government acknowledges. That is a much more accurate figure, and it might be more than that as well.
In dealing with inflation, there’s only one thing to do. That is, you got to make more revenue, increase your income, develop passive streams, open a side gig, open a hustle, and do something out. You’ve got to increase your revenue by the amount of inflation. Otherwise, you are losing ground. If you increase it by that much, at least you will hold your place on the downward escalator. If you can do better than that, you will even be able to climb up the downward-moving escalator.
Even those people that say, “I got a 5% raise this year, even 10%,” still don’t realize they didn’t. You lost again this year because of what has been happening. You described what was more apparent to people in the last years but you are right. This has been happening even before 2020. This was way before.
It’s also a sneaky way of the government to boost people into higher income tax brackets.
That’s why I tell people deferring on an IRA could still work often if it’s pushing people’s inflation sky high. Even just to live, you have to be in a higher tax bracket down the road. I agree with this. I did a show that the best inflation hedge is to increase your skills and the value you provide to help with the inflation hedge. What other things should people be watching out for? As you said, there’s a lot of noise in the media about Ukraine and oil prices but it came down to this fundamental principle you said, which was we watered down the orange juice. It might look like a bigger glass but the nutrition is still a half glass versus a full glass of orange juice.
Dealing with inflation, there's only one thing to do: You've got to increase your revenue by the amount of inflation, otherwise you're losing ground. Click To TweetIn addition to what you’ve said, we also have shrinkage on the grocery store shelf. What used to be a 64-ounce bottle of orange juice is now a 50-ounce bottle of orange juice, the same price as it used to be. They say, “We are not raising our prices. We are just giving you less for the same amount of money.” That’s another aspect of inflation that doesn’t find its way into the CPI measure.
Going back to Jewish tradition, we know the government artificially influencing this. Did you ever see inflation before if we were to go back hundreds or even thousands of years? Was that in the conversation?
You remember, even Germany, until Bismarck in the late 1800s, was a patchwork of many city-states. What happened is there were several currencies. Some of them were over several regions. Some were unique to one region. The ruler, baron or bishop of that region issued the currency. It was what we might say nowadays that it was his full faith and credit that backed that currency. That was why people trusted it. One of the very early German reliable currencies that were issued and backed by a highly integrity-filled leader was called the thaler. His name was Thal. That is the origin of the word dollar as it comes down to us.
Coins were made out of gold and silver. The way the bad guys used to do it was they used to trim off some of the gold around the edges. They are giving the peasant face value that would appear for the produce they are buying from him but the actual value has been diminished. They’ve debased or deflated the currency. That’s one of the reasons to this very day. Even though the metal we make coins out of is valueless, we still mill the sides of the coins. We put those little vertical cuts to make it harder for the baron to trim the edges and take off some gold or silver.
We could talk for hours. You mentioned Milton Friedman, which is one of my heroes as well when it comes to economics. He’s someone that most people haven’t heard of if they are younger generation. The thing you are saying is to focus on things that have real value. Our skills and ability to create value is one but even assets that can hold and retain that value because regardless of what they do with the dollar, it still has a value that people will exchange and pay for.
This is important in the present circumstances when it may be what you have to do, as you said. You’ve increased your skills. You figured out a way to be more useful to your employer. The tough part is you’ve got to persuade the employee. You’ve got to knock on the door, go into his or her office, and say, “I need a raise. I want a raise.” You’ve got to justify that.
Here is a very important principle that needs working on. It’s not a trick. It’s not as if I can tell people, “Here it is, so tomorrow you go out and do it.” It takes real work and practice. Here’s what I’m talking about. Have you noticed how everybody over the years always talks about how CEOs are overpaid? Why don’t they say that NFL quarterbacks are overpaid?
Some probably think about that in general about sports figures but not as much as CEOs.
They don’t say it as much. Do you know why? The answer is because I know beyond a shadow of a doubt that if I were out on the field and managed to catch the ball, I would not be able to do what he did. I look at him as, “He can do something not everybody can do.” If I see a movie star, ideally one that can act as well as look pretty. I look and say, “I got a robust ego but even me cannot persuade me that I’m that good-looking.” I get it. He or she is exceptionally delightful to look at or I look at the acting. I saw Robert DeNiro do something before. I thought to myself at the time, “This guy is plausible. He is who he is being. I couldn’t do that.” I don’t care how much they pay him because he does something that only a few people can do.
When it comes to the guy sitting in the penthouse suite in the big corporate building with a name on the roof, we find out how much he’s making. Most of us say, “He sits there and talks on the phone. He tells people what to do. I could do that.” Nobody understands what goes into business. Nobody understands that. When Warren Buffett became the CEO of Salomon Brothers when they were about to go down the tubes and take an awful lot of people with them in the ’90s, he became the CEO the very same afternoon. The treasury rescinded its former bond on treasury tradings for Salomon Brothers.
On what basis? It’s because this man, in the course of a lifetime, has built a reputation for savvy transactions and total integrity. The treasury said, “We don’t like what the Salomon people were doing. They turned into a bunch of scam artists but if Buffett is sitting in the top CEO position, it will be fine. We will resume.” The company is saved. Not everybody could have done that. It did take a Warren Buffett or somebody equivalent. That’s what people don’t understand. The strategy I’m talking about is to deeply absorb and wrap yourself around the idea of the value you bring to the table in business.
Don’t be the last babysitter we hire. We came home, the dishes were washed, the kids were asleep, and everything was fabulous. I said, “How much do we owe you?” What she did was her eyes went down and looked at her feet. One of her toes started drawing pointless patterns on the carpet. She went all bashful. She couldn’t tell me how much money to give her because she had been indoctrinated by the culture to believe that it was bad to take money from people.
Eventually, I had to prod her. I had to say, “We spoke about the numbers. Look at the time. How much would you like?” She said to me, “Would $25 be okay?” I said to her, “I’m sorry, but it wouldn’t.” She said, “How about $20?” I said, “No, $25 isn’t okay because we want to give you $40.” She looked up, completely startled, and said, “Why?” I said, “It’s because the value you deliver to us, giving us a night out without any worries and coming home where everything is good, is worth $40 to us. We want to be able to call you next time. We want you to be able to say, ‘I would love to come work for you again.’ That’s why we want to pay you $40.”
It was a lesson to her as well. This is very important. Don’t forget. We have all been indoctrinated into this. Talking about the corporate building, when the camera in the movie shot or the TV primetime drama pans into that top-floor window, we see this evil guy sitting behind the desk. It’s always a guy. It turns out that his company has been ruining the environment. He’s being confronted by this defiant young heroine who is accusing him of what he has rightly been doing. He opens the top right-hand drawer of his desk. What do all of our successful business professionals keep in the top right-hand drawer of our desk? That’s a 357 stainless steel revolver.
Deeply absorb and wrap yourself around the idea of the value that you bring to the table in business. Click To TweetHe’s about to shoot the heroin when the United States Marines come through the door, the credits begin to roll, and everything is good. We all know the businessman is the bad guy. As a matter of fact, some friends of mine did a survey of primetime television and discovered the overwhelming majority of murders on primetime television are committed by business professionals, not thugs, hoodlums or drug dealers. It’s business professionals. It has no relationship to reality at all but everybody is willing to see the business guy as the evil guy.
How often do we hear people saying, “He’s doing it for the money?” I love when people are doing it for the money because I don’t have to start figuring out what the ulterior motive is. We must recognize that we have all been conditioned to feel that making money is not a noble and moral activity. You’ve got to get yourself over that. Otherwise, you will never be able to sell your value effectively.
Rabbi Lapin, this has been a wonderful interview. Thank you so much. I guarantee we are going to have to have you back on for another show at some point.
I look forward to that, Chris.
I love our discussion. This is exactly what people need. It does come down to these real core principles that allow us to take action accordingly. It’s the perspective that when it’s off, that’s why we make bad mistakes. That’s why we do things that are counterproductive to our welfare and money. Thank you so much for your time.
I thank you for having me on. It was a pleasure being with you.
To everybody else, thank you for joining us. Remember, it’s not just about being a hero of this world. It’s about being a doer as well. Take and internalize it. Understand that these principles are the meat and potatoes that allow you to feast on this good wealth. As always, I want to wish you a wonderful and prosperous week. We will see you next episode.
Important Links
- Rabbi Daniel Lapin
- The Best Hedge Against Inflation – Previous Episode
About Rabbi Daniel Lapin
Rabbi Daniel Lapin, known widely as America’s Rabbi, is a noted rabbinic scholar, best-selling author and TV host. He is president of the American Alliance of Jews and Christians, author of America’s Real War, Thou Shall Prosper and other best-sellers. A frequent guest on Fox News, WallBuilders Radio, and Glenn Beck TV, he hosts his own popular radio and podcast programs with audiences world-wide. With his wife, Susan, he hosts the weekly television show Ancient Jewish Wisdom on the TCT Television Network. Pairing his inheritance as a descendant of a multi-generational rabbinical family with his background in science and business, he teaches ancient Jewish wisdom in an unparalleled manner.