CW 953 FBF - Arbitraging Inflation and the Fed with Financial Author Dan Amerman

Today's Flash Back Friday comes from Episode 259, published in May 2012.

Jason Hartman and returning guest, Dan Amerman discuss federal policies and interest rates, which hurts the savers and fixed income folks. The artificially low interest rates are not working and create higher prices through inflation.

They also discuss inflation rates, in which the federal numbers are glossed over and do not match true inflation as experienced by the American citizens through food, fuel, and utilities. Manufacturers hide inflation by making products smaller.

Jason and Dan then talk about rental housing and how to arbitrage the inflation. Dan explains how to turn the fed policies around to our advantage. It starts with understanding cash flow investing and setting your safety margin. When looking at cash flows, rather than being all about the price, it’s more about the interest rate when it comes to a mortgage. In the process of creating non-free-market interest rates for banks and for the federal government, the federal government has accidentally made available subsidized mortgage rates that are available if you can get the lending.

It goes directly to your bottom line as the investor, resulting in much higher cash flows than you would see in a free market.