5 Modern-Day Secrets of the Financial System
And how to use it to your advantage
Anyone who tells you that the secret of making more money is doing work is probably stuck in the medieval era. Even in those times, wealth was largely determined by the family you were born into. We like to believe things have changed. But have they?
You don't work hard to get rich. The hardest-working people are often the poorest. The wealthy have always been in a class. If you do not belong to that class, it is extremely hard to become rich unless you join that class.
There are three ways to break into the wealthy class. The first is to be lucky - which is totally random. The second is to get money to push yourself through. The third is for someone in that class to bring you in.
I am always appalled by successful people who say, "I worked hard to get to where I am". I am not disputing the fact that they worked hard. But the attribution of the hard work to the success is just false.
I advise people to work hard after they become successful. If you haven't known any success, you need to work smart. And you need some luck. And luck is a skill. This means that you need to discover the activity that drives luck for you.
There are 5 modern secrets of the financial world that you should know:
1. Being rich is NOT about having money, it is about having ACCESS to money
When you put your money in a bank, it is no longer "your money". It is muddled up with all the money in the bank and loses any attachment to you. In fact, it was never your money even if you have it in cash.
I have seen lots of cases where people have money in the bank and the bank refuses to give it to them. And some people don't have cash, but they know where to go to get the money.
Most people are misled into thinking that getting money is the answer to breaking out of poverty. The answer is getting access to money.
What you need is access. You need that access and channel available every day and night. We live in a world where there is no difference between someone who has 1 million in cash and someone who has 1 million line of credit.
I would rather have 500 million in line of credit than 50 million in cash. Interestingly, people who get that kind of line of credit are those who have the cash too.
They don't spend their cash. They invest it. Then, they spend their line of credit on everything.
Cash is not king. Access to cash is king.
2. The financial markets and the real economy do not correlate
The media makes it look like they correlate, but they don't. This is especially true in the short term. In the long term, there is probably some correlation. But in the short term, there isn't.
Why is this important? I have seen people make huge bets because of a correlation they see between the financial markets and the real economy. And they thought that correlation should continue, only for the financial market to take another turn in another direction for no reason.
The financial market is more like a casino. It's good for you to see it that way. What is happening there doesn't reflect what is happening in the real economy. However, over the long term, what is happening in the financial market is often a reflection of what investors think about the real economy.
3. Spending money is rewarded
Ask yourself, why is there a credit score system? In most countries, credit score is how the average person gains access to cash. That is what determines how much cash a person can get from the bank.
In countries like China, it is even more profound. They have a social credit score that determines a whole lot more than access to cash.
And in most cases, your credit score is shaped by how spend money. They don't want you to spend your money. They don't like you spending your money. They want you to spend credit. So, the financial system is designed to incentivize you to spend credit. They want you to participate in the credit bubble.
Is that a good thing? Well, it depends on how you play it. Most people don't play it well though.
If you are going to be spending credit, spend credit to buy assets. And an asset is something that puts money in your pocket. An academic degree is not an asset. The house you live in is not an asset.
4. Saving money is punished
Right now, the interest rate is going up, incentivizing people to save money. But spending habits don't just die out like that. Plus, banks don't even really want the money because of the interest they now have to pay.
In a financial system driven by credit, saving is losing. They are devaluing your money at a faster pace than the interest rate. This is called inflation.
How much your money can buy grows weaker and weaker by the day. So, even if the interest rate is high, inflation stays strong.
Don't save money. Put your money to good use. Make your money work hard. Make your money sweat. Produce with it or invest.
5. Making money is discouraged
The bigger your business, the less you care about making money. Only small and medium-sized businesses care about making money. When you join the league of big business, you care about something different.
Big businesses care about GETTING money. You may ask, what is the difference between making money and getting money? There is a whole lot of difference.
Making money is trying to make profits from the operations of your business. Getting money includes getting capital, selling bonds, revenue generation, getting grants, government subsidies, making profits, etc.
Making money (or profits) is only a tiny fraction of getting money. There are countless ways to get money. If profit is the only way you know to get money, you are playing a low-level game.
This world doesn't operate capitalism. It operates creditalism. The one who has credit wins. And credit is access to money. Credit is unlimited money.
The modern financial system is a game. It is a puzzle. Learn to play the game and find winning patterns within the puzzle.
Think about these things.