THE MONEY GAME: When Do WE Get To Play?
Hey everyone, Cole here.
Lately, I’ve been deep-diving into the mechanics of the real economy. Not the college - paycheck - mortgage till death system that MOST of us live in… I’m talking how the ACTUAL system works. I think we see what most bankers, investors and ultra rich want us to see - because its necessary to support the system and keep the music playing.
I’ve been studying the philosophies of folks like Robert Kiyosaki (who is a little out there but shed some light on some very interesting topics that not many people as as candid about), and reading books like “The Psychology of Money - by Morgan Housel. What I’m discovering is that there is a silent operating system running in the background of our lives. The system is set up to benefit those who understand it, while regular people (like me and maybe you) are kept on the outside, actively steered toward becoming cogs of the system.
Here is what I am learning about stepping out of the machine and becoming an active participant in your own wealth.
The Kiyosaki Mindset: Cogs vs. Owners
I was taught that wealth was built by finding a good job, working hard at that job for 30-40 year and then (hopefully) retiring… Yes I do believe that it hold a lot of truth. However, the reality is that the waters are much deeper and more complex that we are made to believe. “The system” is fundamentally designed to keep regular people working for wages (which are taxed at the absolute highest rates) to BUY liabilities that they think are assets (like your home. The main pillars of the American financial system is built on the fact that the public/consumer will continue to work and spend (most if not ALL) of their money each year. And, people with a little bit more money (middle class) will stash away as much capital as they can into their IRAs and public markets (aka stock market) - which helps support the business that the people creating real wealth own and or controll.
When a "cog" buys an asset that goes up in value, their first instinct is to sell it, cash out the profit, and celebrate. But the moment you sell, Uncle Sam steps in as the referee, takes a massive 15-20% cut in capital gains taxes, and sends your wealth journey right back to the starting line. The wealthy (the people who are actively creating the system we are operating in) play a completely different game. They don't fear debt; they fear taxable events. They don’t think of their home or their car as their main “assets” - they build businesses and buy assets that appreciate, defer taxes and create CASH FLOW.
The Fiat Trap: Why "Savers are Losers"
Most of us are taught: work hard, save your money, pay off your house and pack money into your IRA. THAT was the secret sauce to building wealth and financial responsibility. But as I started to learn more about the GLOBAL financial system, fiat (Paper MONEY or currency) and surging national debt levels, things start to get a little more confusing…
In 1971, the U.S. dollar was officially taken off the gold standard. It became "fiat" money—currency backed by government decree rather than a physical asset. Because fiat money can be printed endlessly, the natural byproduct is the continual devaluation of the dollar, otherwise known as inflation.
Here is how the two sides experience this reality:
The Cogs (Wage Earners): The system trains regular people to trade their time for a paycheck (W2 employees) and park whatever is left in a traditional savings account. But as the government prints more money to service its own national debt, the purchasing power of those saved dollars actively shrinks. As a wage earner, you are working harder to earn money that buys less every single year. You aren't just fighting taxes; you are fighting the mathematical reality of a devaluing dollar.
The Participants (The MONEY MAKERS): The inner ring doesn't stockpile cash. They immediately convert their fiat dollars into real, tangible assets (like real estate, businesses, commodities, and index funds). More importantly, they use debt to acquire them. In a fiat system, inflation is actually a wealth-building tool if you hold fixed-rate debt. As the currency devalues, the asset's nominal price goes up, but the relative cost of the debt shrinks.
The Math Behind "Cheaper Dollars"
To understand why "savers lose" in a fiat system, we have to look at the math of a 30-year fixed mortgage.
Imagine you buy a $500,000 rental property using fixed-rate bank debt. Because the loan is fixed, your principal and interest payments are locked in for the next three decades. But because the government continuously prints money, the value of the dollars you use to make those payments drops every single year.
Let's look at how this plays out assuming a historical average inflation rate of 3%:
Year 1: You take out the loan. You are making your monthly payments using dollars that have their current, full purchasing power.
Year 15: At a 3% annual inflation rate, the dollar has lost roughly 36% of its purchasing power. Because you own an asset, your rental income and property value have likely increased to pace with inflation. However, your mortgage payment stayed exactly the same. You are now paying the bank with dollars that are significantly easier to earn.
Year 30: By the end of the loan, the compounding effect of 3% inflation means the purchasing power of the dollar has been slashed by almost 60%.
This is the ultimate cheat code of the inner ring. By Year 30, that original $500,000 debt burden feels more like a $205,000 burden in today's money. In a fiat system, inflation is actually a wealth-building tool if you hold fixed-rate debt. As the currency devalues, the asset's nominal price goes up, but the relative cost of the debt shrinks.
The wealthy are essentially paying back yesterday's loans with tomorrow's cheaper dollars.
Understanding this shifted my entire perspective…And this it how it has impacted my choices:
I have two mortgages that were taken out in 2020 for a 2.5% interest rate. WHY ON EARTH would I want to pay these off right now? The assets behind those loans are appreciating at a rate that is equal to or higher than the inflation rate. They have debt rate that is far lower than the inflation rate and I can write off the mortgage interest against my taxes every year (making my actual rate closed to 1.5%). If I used my extra funds to pay off these early - I would like the liquidity to INVEST in assets and grow wealth.
The wealthy don't pay off their mortgages just endure the system; they position their assets and liabilities to directly benefit from the devaluation of the currency.
When I began to understand how lending and investing actually happens at the highest levels, I stopped playing the game by the rules designed for the cogs.
We don't have to stay on the treadmill forever. Let's get to work.
-Disclaimer: The content provided in Cole THINKS is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. I am sharing my personal experiences, research, and frameworks for lifestyle design and wealth building. I am not a licensed financial advisor, planner, or fiduciary. Every individual's financial situation is unique, and all financial decisions carry inherent risks. You should always conduct your own independent research or consult with a certified financial professional before making any financial decisions. Cole THINKS and its publisher assume no liability for any actions taken based on the information provided.