Hey there this is Rajat here from Startup Frat today I want to talk about are the rich getting richer why am I going to talk about it because I watched a news article that had some very interesting information on it and I want to share that with you and then I want to share my thoughts around that.
So, question number one is even if the rich are getting richer through time or in the past or in the present how does it affect us you know you may be somebody who may be thinking well you know we just went through a slowdown lockdown whatever and you know I ended up I did not end up losing my job. so, I’m safe I just want to chill and relax why should I worry about the rich getting richer because it does not affect me okay.
So, there will be probably another couple of classes after this. So, this would be a two-to-three-part master class so make sure that you like and comment on your takeaways from this video at the end. Because if you don’t then the algorithm may not show you future videos. So, let’s get started recently I read about this uh news during the lockdown there was something that the US government did which was called quantitative easing quantitative easing.
Which is uh you know in the western country they have a lot of welfare schemes. They want to give a lot of you know money to the people who probably need it during the slowdown. They’re out of a job they cannot afford their health care. So, you know if you remember Donald Trump was giving out social security cheques to people and they have a social security system but in addition to that, they were you know building out a lot of money to the people who needed it.
Amazing stuff that happens in the western world yeah. Now what happens is that uh at certain points in time because of the intensity of this financial uh you know shock that the government took uh what they needed to do with it they actually ran out of money and they said Well we need to print more money in order to support these welfare causes or whatever it is right.
So, they ended up actually printing dollars okay and these dollars are always being printed or the rupees for example any currency any country keeps on printing currency. Now and again but the currency has to be the amount of currency in circulation is a direct proportion to the amounts of goods and services that currency supports. So, for example, if you know the US dollar can buy a lot of things around the world, and thus the strength of us dollar or the number of US dollars in circulation is directly proportional to how much of products and services that country supports.
Similarly, Indian rupees a lot of things are not a lot of things globally are not traded in Indian rupees. So, the value of the Indian rupee kind of represents the amount of value that it brings to the table among all the different currencies. Now US dollar is not the only not the strongest currency in the world. But you know the number of uh it is the currency of choice. So, if you ever go international, if you’re carrying dollars on your prediction they’ll be accepted in every country of the world on top of that oil okay.
The number one most valuable resource is on which wars are fought and things like crude oil are traded in us dollars. So, it makes it a very important currency. So, what happens is that whatever happens to the dollar impacts every other country on the planet regardless of whether you like it or not yeah. So, what they did was assuming that they had eighty dollars in circulation they ended up printing another twenty-five percent more thus they printed another twenty percent dollars or twenty dollars for every eighty dollars that were existing, and today out of every hundred dollars that it exists on the planet 20 were printed last year.
Because US government says I need more money in order to supply you know all of the people who need it which primarily means the poor people’s social welfare right. So, I need more money from the federal reserve which is the central bank that prints more money. Now this money is being printed in excess which basically means it does not reflect the number of goods and services that are available.
If there was a lot of invention a lot of industrial growth, uh you know and there’s a lot more products and services in the market then probably a lot of dollar printing would support that, but this dollar printing was unsupported which basically means, what did you learn in your startup launch program? If your part of the startup university is all business is a function of demand and supply okay.
All business is a function of demand and supply okay. So, because there are not a whole lot of the products and services in circulation are not expanding yeah. The demand for dollars is less yes the poor need the money to afford health care but in general, the products and services have not expanded the money has expanded.
What does that mean? What does that make the value of money with regard to products and services? Money is actually overprinted which basically means everything else which is products and services in the market will cost more. So, the money loses value okay. Every time there’s an excess of money in circulation money loses value yeah. Remember when an economy is growing everything is becoming more expensive why because more money reaches tier one and tier two cities people’s salaries expand and in the bargain the cost of multiplex decades the cost of cars motorcycles cost of eating out everything increases over time liquor beer and everything right.
So, what happened was these twenty dollars were printed in excess that means if you were the holder of these eighty dollars or rupees or whatever so if you were like me you know uh last year you know business was decent there was not a whole lot of losses etc so you thought okay. I’m immune thank God you know I got saved from the coronavirus slowdown I have not had a financial impact etc.
Then what happens is you suddenly realize that your money today is worth 25 less than it was yesterday which means when you go out to spend it in the market you will be able to afford less and less of whatever good stuff it is right. Now in India specifically India is not a major producer and the major production in India happens around agriculture. So India is relatively immune today to food inflation which basically means the food prices have not gone up.
But if you look at global commodities things that require raw materials from abroad things that require the things that actually are coming from abroad like oil for example oil prices are going high oil prices are growing high the crude oil prices have grown 10 to 15 from the middle of the lockdown last year to today okay. Even they’re touching actually last year’s high and all that and inclusive all the taxes and all petrol is touching 100 bucks.
Now that affects you directly okay. Think about other things that where the raw materials are coming from abroad you have car production motor vehicles the price of motor vehicles are going on increasing although the value of motor vehicles is decreasing okay. There are fewer people traveling today fewer people getting out of the house a lot of people working from home.
If you go out onto the road you will see 30 to 40 percent less traffic today than existed before the lockdown. But motor vehicle prices today are 25% more expensive you look at any car today is 15 to 25% more expensive than they were yesterday, especially newer cars coming in and all these different foreign brands like Kia and all that. You see every car today you know every decent car is upwards of 10-15 lakhs all the SUVs are upwards of 24-25 lakhs and that was not the case 15 to 18 months ago right.
So, because of this demand-supply mismatch what happens is that the price of everything goes up which is point number one okay. It’s written over here your money is worth less 25 less by 25 your money is worth less by 25 okays. Now you may say okay let us talk about America the poor the people who got handed all that newly printed money for social welfare you know health care social security etc have more money so the prices go up.
How does it matter the poor and middle class are well taken care of right? The poor and middle class are well taken care of well news flash the news item that I read that basically boggled my mind was in the last eight months which is between June and February of this year between June 2020 and February of this year. What has happened is that 14 out of 20 dollars were printed as 74 of all of this money that was newly printed for social welfare.
14 out of these 20 dollars printed have now found themselves in the hands of uh billionaires which means the worth of billionaires has grown well the poor and middle class is still where they are okay. So, what they say is that quantitative easing or the money printing and the money given out to the poor and middle class in the US also affects us. Because the US dollar circulation actually impacts the price of everything else globally yeah.
So, we talk about the US but remember it’s also affecting you yeah. Because petrol is 100 bucks today. So, what happens is that the money comes into the hands of the poor and middle class okay. What are the poor and middle class doing today? They go out into the market and they buy essentials like groceries and services like health care services and things like that. And who are the people who are supplying those services in the market today it’s all the big industrialists the big industries etc yeah?
Now before you start saying you know all the big people are looting the poor people it’s not like that. Let me give you a quick example there are three types of people in the world. People who sell their time for money are okay. Then there are people who create products and services okay. You who use their time to create products and services and sell them for money okay. so they have a little more control this category has a little more control than the first category.
Because they are able to control how much they pay for raw material and back-end services and then they’re able to control the price a little bit like the car company. They’re raising the price of the car right. So for people who create products and services and then they sell them for money now what happens is who are these people the corporate employees yeah, the people who sell their time for money corporate employees regardless of what your rate is yeah.
You may be paid 5 lakhs a month 10 lakhs a month whatever it is it doesn’t matter you’re selling your time for money okay. Then there are people who are you know who are basically creating products and services these are the small business owners yeah. The small business owners or they’re sourcing the products let’s say a grocery or a chemist the small business owner they source the products from somewhere and then they sell it right and that’s how they make their margins.
So, the scale actually determines how much money they make, and then there’s a third type of person. The people who create business systems. What are these business systems these people create organizations or processes which basically figure out how to create Products, which figure out how to sell products, and which figure out how to deliver products okay?
We figure out how to create products which figure out how to sell products and we figure out how to deliver products. Now, what are these products look at big billionaire amazon okay? They figured out how to source anything that you want from every corner of the globe at a price that is cheaper than your Kirana Wala and have it home delivered to you within 48 hours from anywhere around the globe okay.
So, they have figured out how to create or source products they figured out how to sell products to you. This means today Amazon is the go-to place for choice for buying anything that is related to household items or electronics or whatever right. Then they figured out how to deliver it over to you so that they are the supplier of choice today. If any money gets released into the market and it goes into anybody’s hands whether it goes into a poor person’s hand, a rich person’s hand, middle-class person’s hand at the end of the day it’s gonna sooner or later find itself with amazon right.
So let’s later find itself with amazon. What is let’s talk about vaccines a lot of people spending a lot of money on vaccines a lot of countries buying all these vaccines the people who create the vaccines are the big industrialists who are you know adding that value to society. I’m not saying they don’t deserve it but they figured out how to add huge value to society. Now, what is the difference between these billionaires and people like the US? The difference is that they have added huge value to society and they have figured out how to package this value.
How to package this value so that regardless of whether you have food money or medicine money or whatever kind of money wherever you go out and spend it some billionaire is going to collect it from you right. They sell apparel they sell watches they sell cards they sell medicines they sell vaccines yeah all of these essentials they sell insurance all of these guys have figured out how to get into the hot markets. Hot evergreen markets and they figured out how to create value out of whatever they do and they’ve created so much value that 14 out of every 20 dollars printed will reach their pocket sooner or later this time.
It’s done in six to eight months yeah. Now, why am I interested in this news is because the same thing happened in 2008 when I was working in a Silicon Valley company I told you right and what happened was the housing market crashed you know the money evaporated and suddenly the US government had to print loads and loads of money for the next two to three years together and after five years what happened was, they realized well all the big billionaires their net worth has increased poor and the middle class is still over there even worse.
Because there’s so much now money in the market what has happened is that the poor and middle class are now having to buy the same things more and more expensive there were countries entire countries have gone bankrupt by trying to solve their problems this way countries like Zimbabwe or country like Argentina just do some google search on how Argentina went bankrupt. Because there’s so much money being printed uh to solve a crisis that very soon the money had no value it had no value left-right.
Now, this particular problem affects all of us because like I said everything is going to get more and more expensive for us regardless of whether you live in India and you think I’m going to be immune you’re not going to be immune okay. So what is the takeaway from all of this are the industrialists bad are they evil people because they’re making vaccines for you and things like that the answer is NO. They’re not bad they’re not evil. So, what is the takeaway from all of this?
The takeaway is very simple my friend you need to figure out how to get from here or here to here okay. If you want to play in the big leagues is there ever going to be a time on the planet when there’s going to be a level playing field when everybody is going to have the same opportunities and regardless of the crisis everybody’s going to hurt equally or everybody is going to recover equally never has there been a time in history when everybody gets hurt equally or everybody recovers equally.
If you saw Schindler’s list, yeah Schindler’s list is based on a true story the person who had the money also had the power, yeah to save his own family and then hopefully also save other people’s families as well yeah. So, whoever is the smart guy or whoever has figured out the code will always be in a position where they are less immune to tragedy yeah less immune to tragedy. So how do you do this if you’re like me you must be thinking okay, I cannot be like an industrialist because I don’t have a lot of money and I don’t have a lot of business knowledge right?
I’m already 10 years into my career 20 years into my career and you know this is how it’s always going to be yeah. Let’s do the best with whatever we are doing and let’s not think outside the box yeah. So, what I’m going to do is I’m going to follow this up with two more classes how on how you can actually utilize some of the secrets of these billionaires in your current life without spending a whole lot of money and without having a whole lot of business expertise.
How you can utilize whatever you have in your mind whatever you’ve learned whatever resources you have into creating product packages where with a significant amount of footprint you can enter the market and start collecting this money and over a period of the next few years you can really expand your footprint and hopefully be in this position. If not a billionaire, then at least a millionaire right. So, at least being in this position in the next five years is probably okay and the decision needs to be taken now.
Because just as always right after the slowdown right after the tanking of the economy the best time to start putting your footprint out there. Because the market is all destroyed this is the time for the small people who can take their place and who don’t have a lot of competition and who don’t have to compete with the big brands because the big brands are also hurting somewhere or the other right.
If you’ve seen people big industrialists like Anil Ambani and all of that they’re also hurting. So, this is the time to think ahead the market is in flux all of the old business models you know they’re kind of getting hurt somewhere or the other and this is the time to take your place in the sun provided you want to be at a different place in the next slow down. There’s always going to be a next slow down every seven to 10 years yeah.
This quantitative easing that I spoke about this is the second time it’s happened after 2008 yeah so from 2008 to 2010 there was significant quantitative easing it again happened another five to six years down the line and now it’s again happened right. So these crises keep happening every seven to ten years. If you’re smart enough you will take another maybe five to ten years, uh to totally reposition yourself but the decisions need to be taken now, and uh the journey will not the take-off is not five years the take-off can be maybe a three-to-six-month period.
Which will get you repositioned and then after that, you go from there okay. So, if this interests you what I want you to do is I want you to put your comments in the comments box below and what I want you to do is watch out for the next video which will come tomorrow or the day after, and then we gonna we’re gonna go like this for the next two or three classes okay. So did you find anything valuable just let me know in the comments below and I’ll see you in the next class bye?