Joe Withrow, Author at Zenconomics

Answers to the Top Survey Questions Part Three

Today we’ve got part three of our ongoing Q&A series:

Q. How do we create financial freedom outside of the corrupt monetary system?

A. I love this question. It’s clearly coming from a libertarian angle. And in a world where price inflation is raging, it’s more important than ever before.

My answer here is a little bit nuanced. It starts with a strategic asset allocation model that includes both gold and Bitcoin.

I see both gold and Bitcoin as market-based money. Both are outside of the control of government and the central banks of the world. Nobody can duplicate or debase them.

Now, the powers that be can certainly manipulate the dollar-based price of both gold and Bitcoin. And they do. But if we hold both assets in self-custody, nobody can stop us from using them.

Answers to the Top Survey Questions Part Two

Today we’ve got part two of our ongoing Q&A series:

Q. What is the minimum amount that you can start with in your system?

Q. How to generate passive income when you don’t have a lot of money?

Q. How fast can you start making passive monthly income? Can I start with $500 and start getting $10 a month in passive income in the next month?

A. All great questions.

Lenders require us to put at least 20% down on rental properties. So the minimum amount we need to start depends on the purchase price of the first property we want to buy.

To quantify this, we have properties available anywhere from $80,000 to $750,000. We can get started with properties on the low end of that range for somewhere between $16,000 and $20,000.

That said, we also have strategies we use to help us produce income while we are saving up for real estate down payments. I have used one of these strategies to consistently generate an annual return of 9.2% with no market risk.

Starting with $500, this rate of return would throw off $4 in passive income in the first month. Then it would compound from there.

Answers to the Top Survey Questions Part One

Friends,

Just a quick follow-up on our passive income discussion this week.

We had some great questions come in through our passive income survey a few weeks ago. These are items we will address in our upcoming workbook series. It’s called How to Go From $0 to $10,000 a Month Passive Income.

But I would like to answer some of the top questions that came in as well. I’ll list them Q&A style below.

And by the way, I’m happy to answer any additional questions you may have. If you have a question that we haven’t addressed yet, just reply to this email and ask away.

Q. Can you make the system clear? I lose my way in complexity… thank you.

A. If I had to describe our approach in three steps, they would be:

Understanding
Financial Security
Passive Income

My Two Favorite Holiday Traditions

The temperature has dipped below freezing up here in the mountains of Virginia. The first snow flurries of the season will happen in the morning. And Weather.com tells me that tomorrow night’s low will be precisely zero degrees Fahrenheit.

That can mean only one thing. The holiday season is here.

And in the holiday spirit, I would like to share with you my two favorite holiday traditions. They involve gold and spiked eggnog.

Every year at this time I buy my two kids physical gold and silver coins. And I write each of them a heartfelt note to go along with the gifts. The note is dated so that maybe one day they will come across them again and have fond memories of their childhood.

The Most Important Battle of Our Time

We talked about the Fed’s silent coup yesterday. It stems from the battle between the New York banking interests and the old-world European power structure.

What this battle is really about is control over the engines of finance.

As the Austrian economists have pointed out, the fractional reserve banking system allows the commercial banks to pyramid credit on top of base money at a 10-to-1 ratio.

This effectively gives the commercial banks the ability to create money from nothing as well. The central banks aren’t the only money-printing game in town.

And this allows the banks to determine what gets financed and what doesn’t. There’s an immense amount of power in this.

For example, should we finance oil exploration and small-module nuclear reactors… or acres upon acres of windmills and solar farms?

Should we finance small local farms… or push all agriculture into a few multinational corporations?

The ability to aggregate and allocate capital is absolutely critical to modern civilization. Those who control the engines of finance have an outsized ability to shape our world.

The Fed’s Silent Coup… And What It Means for Our Investment Strategy

The Federal Reserve (the Fed) executed a silent coup this year.

Fed Chair Jerome Powell and President of the New York Fed John Williams successfully replaced the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR) here in the U.S.

SOFR is now the benchmark interest rate for dollar-denominated loans and derivatives. That means it influences other dollar-based interest rates.

LIBOR previously held that role. And the key here is that LIBOR was heavily manipulated. We know that definitively thanks to one of the investigations into the 2008 financial crisis.

So for as long as U.S. rates were tied to LIBOR, European banks had some influence on monetary policy in the U.S.

In other words, the Fed was trapped in a box. If it tried to raise rates while LIBOR was still the benchmark, the European Central Bank (ECB) and the large European banks could have manipulated LIBOR lower.

That would ensure long-term rates could not rise too much, regardless of where the Fed set its target rate. Thus, the Fed wasn’t in the driver’s seat.

That’s why what happened this year was a silent coup. The Fed was determined to raise rates. And ousting LIBOR was the only way to do it.

Of course, this begs the question – why?

What AI Can Tell Us About Passive Income

The invasion of artificial intelligence (AI) is upon us.

The tech industry is buzzing about an AI called ChatGPT right now. This is a conversational AI that can also write stories, essays, and emails upon command.

Naturally curious, I gave ChatGPT a spin. To see what it could do, I asked the AI to write an email comparing real estate investing to investing in the stock market.

Here’s what it came up with:

The Cash Flow Vision

The Rich don’t work for money.

That was one of the key lessons from Robert Kiyosaki’s popular book Rich Dad, Poor Dad. And it made perfect sense to me…

I first read Rich Dad, Poor Dad about twenty years ago. I was living on the sixth floor of a college dorm at the time. And I got the book from a guy right down the hall. He told me I absolutely had to read it.

He was right. The book opened my mind to an entirely new world of possibilities.

After all, Kiyosaki made it sound easy. Don’t get a job. Buy rental properties and build passive income instead. What’s not to like?

But there was a problem…

What Black Friday Gets Wrong

I’ve got a bone to pick with Black Friday.

I spent the weekend wading through all the marketing emails that hit my inbox. I bet you did too.

Black Friday early sales… day-of sales… last chance sales… I lost count of how many there were.

Then, at a certain point, the headlines flipped. Now it was time for Cyber Monday sales. So I waded through all those emails too.

Of course, I don’t have any problem with these emails. I understand. I try to send out a couple emails every week myself.

But here’s the thing – the whole concept underlying Black Friday is a problem. That’s because it perpetuates the most common misconception we have around money.

It’s the consumerist view of money. The idea that the whole point of making money is to spend it on stuff. And then if we can make “good money”, we can buy even nicer stuff.

So many people view money in this way.

And as a result, they live their life on a treadmill. Constantly working for money… buying stuff… and working for more money.

I think it’s time we flipped the script.

Two Ways to Counter Educational Malpractice

“Education is what remains after one has forgotten what one has learned in school.”

That quote comes from Albert Einstein. He also said it’s a miracle that curiosity survives formal schooling.

So the guy who we often associate with brilliance was no fan of school. There’s a good reason for that.

The educational system that’s been in place over the last century isn’t about enlightening and empowering individuals. Quite the opposite.

It’s the factory model here in the U.S. In Germany, they originally referred to it as the gymnasium approach.

The system is designed to produce good soldiers and good workers. People who will be punctual and follow their orders reliably.

This is why the modern education system neglects the subjects of money and finance. It’s also why the history and economics we get is overly simplistic. And these days hyper-politicized.

To me, this is educational malpractice.

Fortunately, there’s a solution. Two solutions, actually.