The Entitlement Society With Author Dr David Kelley, Part 2

Jason Hartman and Adam begin today’s episode with a discussion on interest rates allowing more people to refinance. They also talk about how federal mandates are allowing them to pull less money from their homes. Naturally this effects the economy and keeps it safer than the period before the Great Recession.
On the second segment of the show, Jason finishes the second half of a two-part conversation with Dr. David Kelley, founder of The Atlas Society and current Chief Intellectual Officer for the society. They continue discussing the degradation of our society and the creation of a more entitled society.

Investor 0:00
Thanks for your support. Jason, I appreciate your support and your whole network. It’s really been very beneficial to me and, and a whole lot of others. I encourage everyone to use your resources that you have. But thanks. Thank you.

Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:01
Welcome to Episode 1255 1255. Thanks for joining us today. We’ve got the second half of yesterday’s interview, talking about the Atlas society and the value of labor versus capital and what that means in the economy. today. We got a few things to talk about before we get to part two of that. I’ve got Adam back with me, Adam, welcome. Good to be back. So we’re going to talk about refinance eligibility, cash out refinance, what that means to the overall market. But first, I want to talk about microscopic creatures. very real estate

Adam 1:40
specific stuff here is

Jason Hartman 1:42
this has very little to do with real estate. But I was fascinated by this. And I just have to share it with our listeners. So did you know dear listeners before we get to the new refi rules and refi eligibility And we talked about money that there are these microscopic creatures. And I believe they’re called tardigrades, What a weird name. And they can live almost anywhere. In fact, in Israeli probe that landed on the moon took a bunch of these with them, and left them on the moon. And apparently, these things, these creatures, they think they’re still alive living on the moon. I think they’re the only creature that can live on the moon. Adam, this is crazy.

Adam 2:39
Yeah, but they say they can’t colonize because they need atmosphere and liquid waters. They’re just gonna kind of hang out.

Jason Hartman 2:46
Yeah, they can. They can hang out and live, but they cannot procreate.

Adam 2:52
So I love this quote, it said, but it could be possible to bring them back to earth and then add water.

Jason Hartman 2:58
I know. This is like Suddenly This is the craziest creature ever right? Okay, this microscopic creature kit so the article says when humans returned to the moon they may find other living creatures waiting for them the cargo on an Israeli private lunar lander private By the way, not a government lunar lander. It’s called bearish sheet I guess that crashed into the moon surface in April okay included a box full of a few thousand dehydrated party grades. The microscopic creatures considered one of the toughest animals on the planet well, and now on the moon, okay, are the only known living things thought to be able to survive in outer space per Newsweek point Newsweek still around I thought they went out of business. I guess they’re still around

Adam 3:53
anymore. It’s just website. Yeah.

Jason Hartman 3:55
Okay. And they may be doing that now. It says quote, our payload Maybe the only surviving thing from that mission, the founder of the US based organization that put the lunar library on, bearish sheet, including the tardigrades told Wired Magazine, right, okay, so they could live there for years party grades can survive pressures comparable to the ones created when asteroid strike Earth and expert tells the guardian. So a small crash, like this has nothing to them. Okay, Adam, what else does it say?

Adam 4:31
I mean, they can go up to 304 degrees Fahrenheit,

Jason Hartman 4:35
so they can live in 304 degrees Fahrenheit. That’s totally amazing.

Adam 4:41
Okay, they just get rid of all their water and hang out apparently. I mean, that’s, yeah. So if you can survive an asteroid strike, I think you’re, you’re gonna be just fine.

Jason Hartman 4:50
You’re pretty good. So you know, we’ve all heard about cryogenics. Right. And I actually on my longevity and biohacking show, I interviewed two companies, two different companies on two different episodes that actually freeze people and they think one day they may be able to bring them back to life. Right? We can’t do this yet. And the reason why is because our bodies have so much water in the cells, right? And once the water is frozen, now I I’m no scientist, okay, I’m just a layperson. But the basic idea is, once the water is frozen, including the water in ourselves of our bodies, right? It changes its whole nature and cannot be brought back. It’s a different it’s a whole different ballgame then. Right? But these little creatures can be frozen. It says one survived being frozen for 30 years. Okay, for 30 years it was frozen. That’s because they can expel all of the water in their cells and continue living in a dormant what’s called a ton to us. state with their metabolic processes switched off until rehydrated like you said just add water like a chip that right? The hydrated inactive tardigrades have been rehydrated and revive up to a decade later possibly even longer. Still, they won’t be able to multiply on the lunar surface. They cannot colonize the moon because there is no atmosphere and no liquid water. The expert says that just means

Adam 6:29
we haven’t been up there long enough yet. Yeah,

Jason Hartman 6:32
it could be a chance. But listen to this could be possible to bring them back to earth and then add water and they should resurrect.

Adam 6:40
Wow.

Jason Hartman 6:42
I just had to share that because I thought it was quite fascinating.

Adam 6:44
And it’s okay. They’re likely to see the Sunday so they’re going to be around a while.

Jason Hartman 6:48
Yeah, yeah, that’s they they’re the only creature that will live long enough to see our son eventually. Die. Wow. crazy story. Okay, Adam in other News.

Adam 7:01
In real estate news.

Jason Hartman 7:02
Yeah, this is a real estate show, right? What’s that have to do with creating wealth? I don’t know that had to share?

Adam 7:08
Well, let me guess it could have something to do with creating wealth. Because if you get to travel to the moon with Elon Musk or anything like that, you can go hang out and go surfing and find any of them.

Jason Hartman 7:16
That’s right. And will that be before after the Tesla bankruptcy, the upcoming Tesla bankruptcy

Adam 7:22
will save the money.

Jason Hartman 7:23
Yeah, he’ll have the money. That’s true. And he’s got his other companies. But yeah. Okay. So let’s talk about refinancing the lower interest rates, hugely significant, the lower rates have already made another 8.2 million eligible for refinance. And if if the rates drop another eighth of a percentage point, it would push that total to 9.7 million. This is according to housing wire.

Adam 7:53
Tell us a little more Adam. So essentially, as the rates continue to go down, people become more and more incentivized to actually read Finance because, you know, with rates where they were before, you know, as they were going up people who had 4% rates three and a half percent rates, it didn’t make any sense for them financially to do it. But as the rates continue to going down, at some point, you get to the, the rate where even if it’s not the exact same rate, it still makes sense financially because you can pull your money out and use it somewhere else. And so, as it gets down as more and more people are becoming eligible for it, and taking advantage of it,

Jason Hartman 8:26
so here’s the thing, I always talk about my trademark idea of refi till you die refi till you die slaying in the refi till you die plan I was illustrating back in 2004 2005 2006 a 12 year plan for refi till you die. So, it’s now 2019. So, if you bought a property from me back in 2007, you went to my creating wealth seminar and you thought that reef it Die plan looks good. It’s 2007, you’ve stuck with your properties in your portfolio. And now it’s 12 years later, just like I talked about on the plan. Okay. And you know, what would be interesting is to do a real history of that and look at the rates then. And the rates now, the prices then and the prices now, and see if that plan really came true. I think it did, it probably came through much better than I thought, actually. And so you now refi those properties, you do cash out, and we’re going to get to talk about cash out and just a quick moment, because the rules have changed on that, which I think are actually quite good. You can follow that exact plan that I outlined starting way back in 2004. Okay, 15 years ago, and take advantage of this. And I mean, these low rates are nothing but incredible. It’s amazing,

Adam 9:56
and they’re expecting total originations to rise 700 percent year over year in 2019. And that means loan origination right. And they’re expecting refinances to account for 32% of that this year, which is up from 29% in 2018. So you’re looking at a 10% increase in loan originations, just due to the fact that more people can refinance.

Jason Hartman 10:20
Now, don’t underestimate dear listeners, the impact of that on the overall economy that pumps a lot of money into the mortgage market. So all those mortgage reps, all those people connected with the mortgage industry, the appraisers, the closing agents, the title companies, etc, etc, etc. They’re making money off those refinances. That is hugely significant. That money flows into the economy, and a lot of stuff happens and then if the owner of the property took cash out, that money has a hugely stimulative effect as well. They might remodel, they’ll spend it somewhere, okay, or invested somewhere. So that’s really incredible. But it’s not back to the crazy point that it was before the Great Recession, where people are using their houses like ATM machines, because the rules are considerably tighter than they were before. So this is much more prudent refinancing activity than we saw the last time around. With that, Adam, I know you wanted to talk about how FHA change the rules on cash out refinances, right.

Adam 11:34
Yeah. So before I think back in the Great Recession time, I believe the loan devalue had you can pull out up to 95% of your money that was in your you know, if your equity, but now, it’s currently 85% and they’re changing it to 80%. So more people are eligible for reifies at this point, thanks to the economy, but people are going to be able to take out less money which hopefully provide a more stable housing market as people have more skin still in the game and hopefully don’t walk away from their mortgages as much.

Jason Hartman 12:08
I think that’s absolutely right. You know, that’s good. It’s prudent in the refi t di plan, we only discuss going to an 80% loan to value for cash out refinance. That’s exactly the way we’ve illustrated that plan. You know, I was showing that way back in 2004 15 years ago, and the interest rates are considerably Well, they’re much lower than they were then. And just super desirable mortgage climate. So hey, longtime clients and listeners refi till you die. It’s a great plan. Now when you refi you don’t get to take advantage of the big boring idea which we presented at the last meet the Masters in Newport Beach, California. It’s one or the other. You are getting the advantage of that up until the time you refi till you die. But only up until then. So if you don’t do the refi, if for some reason your situation doesn’t make sense to do the refi to die plan, at least not at this juncture, then you’re automatically taking advantage of what we call the big boring idea. Another one of our trademark terms, the big boring idea, which is amortization, something that really becomes quite significant later in the game, certainly 12 years in, it’s very significant. And I illustrated that from stage at meet the masters. And by the way, we’re about to announce dates for our profits and paradise event in Orlando, Florida. So if you want to take a trip to Disney World, or Epcot Center, and learn how to make profits in Paradise, it’ll be our very our only our second profits in paradise event. We launched that event last year in Hawaii. It was just a beautiful event little far away for sure. This one’s a lot easier. A lots of direct flights to Orlando. Very easy destination. And we’ve got just such a great hotel venue. I think we haven’t signed the deal yet with the hotel, but I really liked this venue quite well. So look for more info on that real soon. We’re very close to making an announcement and offering some early bird tickets. And of course, before that, we have our cruise, our beautiful New England and Canadian cruise coming up in October. So go to Jason Hartman, calm it’s right on the front page. Or if you want the direct link, it’s Jason Hartman. com slash cruise. So join us for that. Adam, are we ready to go to the second half of yesterday’s interview?

Adam 14:41
finish it up?

Jason Hartman 14:42
All right, let’s do it. Here we go.

Adam 14:46
How much should capital be rewarded? versus how much should labor be rewarded? It does seem to me that capital was rewarded pretty highly nowadays in at least in the US and You know, those on the left would say labor doesn’t get enough reward. You know, why are people at Walmart only making minimum wage versus the, you know, I heard Bernie Sanders yesterday yelling about the Walmart family is, you know, they had a company worth $180 billion, and people are making $11 an hour, blah, blah, you know, where do you how do you rationalize that? If we were talking about a genuinely free economy, people who invest and have the insight and risk tolerance to create a business in the first place, they are creating the opportunity for other people to work and earn money by in the form of salary or a wage. And that’s something that didn’t exist before the business created and the investors behind it created the organ company in the first place. So, you know, people get used to saying, Well, you know, there ought to be a job for everybody. Well, wait a minute, who creates those jobs. So the people who are working at Walmart, they chose to work there. They could leave. The Walmart family is not going to their house with guns and dragging them in right making them work at gunpoint. sure they’re choosing to do. Right now, the way an economy works is it’s competitive. There’s the competition among businesses, to get survival businesses, right consumers. But there also is competition for workers. Absolutely. And it ends up being supply and demand.

Jason Hartman 16:23
The funny thing that’s happened in today’s world is somehow this country has degraded to the point where people think these what should be transients, minimum wage jobs are like permanent careers. Since when did that then it wasn’t that way. When I was a kid, no one thought that, hey, I’m going to go to work at Walmart or McDonald’s for the rest of my life or being food service. These were transitional things that, you know, young people did to get their life going, you know, somehow it’s considered a career. I don’t get it. What happened?

Adam 16:58
Well, the more people Adopt an entitlement mentality, the more they think they’re entitled to the status. The other thing. I mean, we have entitlement programs like Social Security, Medicare, Medicaid, welfare, etc. But the entitlement mentality is broader than that. It’s the idea that it’s somebody else’s responsibility to create a job that will give me a salary, I’m comfortable that no, you’re not entitled to that. People will offer it because it’s a good deal. If you are willing and able to work, I can tell you as as having created and run the Atlas society for almost 30 years, I was desperate for good people. When I found someone who could do almost anything for them within the realm of financial possibility. And I think I mean, especially today, a lot of people in business are saying, you know, they’re scrambling to find workers any way they can. So, you know, going back to the entitlement mentality, people are, we’ve partly created that entitlement mentality through government programs that offer a lot of integrity.

Jason Hartman 18:01
Things like the minimum wage right now, and also a really awful aspect of the mixed economy today is the kind of mostly municipal licensing that makes it extremely difficult for very poor people, especially, you know, minorities, blacks in New York, Hispanics elsewhere. They can’t just start a business on the delegate is that life? Yeah, absolutely. Absolutely. You see, in developing countries, you see people selling stuff on the street. Now, granted, those countries have a capital formation problem. And that’s why they’re selling stuff on the street rather than buying a franchise and opening a real store, but at least they can be entrepreneurs. The regulation here prohibits people from doing that you get arrested if you open a lemonade stand, you know, the minimum wage causes unemployment, because when the government gets in the middle of a transaction that two parties want to do, but the government says no, you can’t do this because we’re making it illegal. Then you have no meritocracy, right? If they’re really low skilled people want a job, and you want to pay them five bucks an hour versus 10 bucks an hour. What this is the government to get in the middle of that? Yeah. Where does that come from?

Adam 19:18
labor. I mean, in purely economic terms, labor is like any other commodity, there’s supply, there’s demand. And the demand for labor on the part of those who have jobs to water is a demand that’s based on what can this person produce? That person has to be able to produce? You know, enough to cover the wage that is the Pam. I’m the owner. So the minimum wage people that’s even if you have to start at a regular salary, like your $5 an hour, if you’re any good, you’re not gonna stand you’re gonna go on? Yeah, you’re gonna rise? Yeah, yeah, absolutely. I know. I mean, I started working at 16. You know, picking up trash in the city parks dollar, I think was about 15 hours. Right? Right. Right. I didn’t do that for very long. Right, exactly. Not just because I mean, I had lots of advantages. So I’m not comparing myself. Sure. Yeah. Who are much worse situations, but that’s the universal trait. Well, I wasn’t I didn’t, I didn’t have

Jason Hartman 20:15
some advantages. And I somehow figured it out. And you know, everybody starts off with, you know, rich parents, poor parents, tragedies, some people rise above them, others don’t. We’ve all heard this stories, Horatio Alger rags to riches stories, look at there’s more socio economic mobility in the US than probably any other country on Earth. So the point is, if we have this embedded mentality in our culture of entitlement

Adam 20:43
that is toxic, because everybody is just going to act like they have a chip on their shoulder, and they’re never going to do anything. It’s so disempowering, isn’t it? It is. It’s really appalling today, because the depolarization that everyone talks about is it’s partly political, and that’s one domain but there’s Also just kind of much wider sense and that tagging ism among people that I’m seeing everywhere I’m seeing on campuses and seeing workers in to some extent in the metoo movement. Although there are many cases there are many valid points of the feminists made there. But still, I would say there are two things that people are just not getting. One is that when you make a trade, it’s when when, if you’re free to make that great or not, you’re not going to make it unless you think what you’re getting is better than what you have to give up. And that includes saving for the future, which is also brings in the second point. You know, that’s an exercise of rationality. That’s one of the reasons you know, I’m so big on Iran, because that’s one of our core virtues is being rational. And the whole idea that you can just not even think about the future is irrational. Yep, absolutely. Okay. We’ll wrap this up for us if you would, and just answer one more question, what is the difference between closed objectivism and open objectivism. I’d never heard that before. There’s some distinction there, right? Yeah, this was back to the conflict that was having back ladies 90, which led me to found the my organization, a conflict with the Iran Institute. The idea of closed objectivism as I understand it is that objectivism as a philosophy is all but only what Iran said or wrote or endorsed, while she was alive. That is, it’s a fixed closed systems, nothing will be added to the philosophy. It is complete. And all we can do is expound what ran said to me as an intellectual, as a philosopher, that struck me as crazy when I began to realize that that was part of the operating policy. I think of objectivism as a body of knowledge like any other body of knowledge. I mean, I use Darwin as as an example of Darwin, you know, was a genius who created the theory of evolution but the theory of evolution didn’t stopped with Darwin Darwinism, you know, we could say keeps expanding by people who biologists or adding to his insights standing on his shoulders and say the same thing. But, you know, physics in Isaac Newton, or Einstein. So I think there’s a lot of questions in philosophy that Iran did not address. I’m it’s amazing the number that she did, um, she was a genius. But there’s still lots of questions that we’d like to develop good and solid answers to. And so that means, the idea of open objectivism is that the philosophy is open to expansion to possible revision, I doubt that the things have to be revised, not the core principles, it does have a core set of ideas. If I believe that those were false, I would certainly not call myself an objectivist. But I think there are lots of things that are not at the surface. And that’s what I do as a philosopher is explore and write about those issues. And I think I’ve advanced the philosophy in various ways. Good, good. Wrap up the discussion. We were having And give out your website for us. So just go back to the discussion and just give us a closing thought on that and give out your website, if you would. Our website is Atlas society dot orgy. We have a huge library of articles going back over 30 years about the philosophy. We also have lots and lots of videos, audio courses. And we also have now a very active Facebook page. So you can just search for Atlas society. On Facebook, we have one of our things that we do a lot of is the graphic memes, you know, just a picture and a saying and to make a quick point, you know, a quick point yeah. But they’re they’re very effective. I urge your listeners who might be interested or who are already familiar with nine ran to take a look at the site. And I think what you’ll find there, among many other things is much more discussion, other kinds of issues that Jason you and I’ve been talking about. Especially you know the difference between crony capital realism and real capitalism, the role of the effects of government intervention on the economy in all the different ways it does everything from Social Security to minimum wage to excellent additional licensure right down the board. These are very important topics. So go check out Atlas society.org and Dr. David Kelly, thanks again for joining us

Dr. David Kelley 25:22
back at my pleasure.

Dr. David Kelley 25:25
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