The Power Of Inflation (Radio Interview)

December 19, 2019

On The Ride with Mac & Chad in Oklahoma City, Karl Eggerss was interviewed and discussed the power of inflation over time and the importance of investing for the long-term in order to outpace inflation.

Mac & Chad:                     Welcome back into The Ride, 95.3 FM, 1520 AM, we’re KOKC. Mac, Chad, producer Ryan, intern Jordan, and on the phone, Karl Eggerss. Karl’s from Well played, producer Ryan, with the music coming in.

Ryan:                                   I do what I can.

Mac & Chad:                     A little Pink Floyd there, because we are going to talk about finances. Karl is a senior wealth advisor and partner, but not only just finances, I love how we’re going to put it in perspective for the people like myself that, I don’t know how to play stocks, man. I don’t know any of that stuff, what it means. All I need to know is, how can I work towards making sure that everybody depends on me is financially set and taken care of? So hey, Karl, how you doing, man?

Karl Eggerss:                      Good, the term “play stocks,” that’s …

Mac & Chad:                     Oh, is that bad?

Karl Eggerss:                      Yeah, that’s bad. That’s bad. It’s investing, it’s investing.

Mac & Chad:                     Okay, well, I’m glad that you … We’ll start there, investing. How do you get someone who’s not familiar with it or doesn’t even know how to invest in the stocks? What kind of questions do they come to you and they ask?

Karl Eggerss:                      Well, I think just what you said. People sometimes think it’s gambling. And you have to realize, when you invest in stocks or mutual funds or exchange traded funds, which are baskets of stocks, you’re invested in companies. These are real companies, just like you would invest in your own company. And so how much profits do they have, and all of those types of things. But generally when people are starting out, whether it’s in a 401k, whether it’s just individually, probably starting with a basket for spreading the risk and diversifying is the best way to do it. And I would say nowadays there’s so much information available that, really, the listeners really need to just educate themselves first before they do anything. There’s always going to be something to invest in. And educating yourself first is the first thing you’ve got to do.

Mac & Chad:                     Right. Yeah, yeah, because if you’re going to do it then you’ve got to make sure you know what you’re doing. You definitely wouldn’t want me to take out a Sharpie and look at a newspaper and do it that way. Buy, sell, trade, hold. Yeah, no.

Speaker 4:                          You know, we’re seeing a lot of advertisements right now, too, for cryptocurrencies, that talk about cryptocurrency markets, that talk about different countries that are starting their own cryptos, or banks are going to start doing their own cryptos. What do you think about this whole cryptocurrency environment?

Karl Eggerss:                      You know, it reached its peak in late 2017, I think, early ’18. And I had literally friends of mine, and their kids, their high school kids were saying, “Hey, I’m trading cryptocurrencies, I’m making all this money,” and I thought, “This probably isn’t going to end well.” And sure enough, they fell about 90%, some of them are down 95%, 98%. And the idea behind cryptocurrencies, of getting away from countries being able to print their own money and devalue it, the idea of that and having a secure currency, is great. The problem, as you’ve seen, is that number one, it’s been used for a lot of fraudulent activity. Number two, there’re tons of them around, and most of them will fail. And number three, if you invested in, hypothetically, let’s say Bitcoin, you said, “That’s the one,” what’s to stop the government, any government, the US or any other government, from saying, “You know what, we’re going to just deem that illegal and we’re going to create our own.”

And so you’ve already seen other countries create their own.

Speaker 4:                          Right.

Karl Eggerss:                      And so it’s kind of an oversupply, not enough demand type of situation. But really the issue is, in a currency, when you keep your money in the bank, you’re invested in dollar bills, that’s what you’re investing in, and you trust that, yes, it moves a little, it can buy less or more, but when you take it out, you know that it’s going to be there. With a cryptocurrency that’s not the case. So for it to be called a currency, to me, is just way too early. Nobody’s going to put their money in a bank in cryptocurrencies, come back out and have it be down 30% or 40%. That’s crazy.

Speaker 4:                          That’s one thing I’ve kind of thought, is when I saw the [inaudible 00:03:59] cryptocurrencies, I don’t know what you do about wealth management, but I know a lot about government. And when they see billions or even trillions of dollars being moved around, they will get their hands on it. They’re not going to let that move around forever without getting their hand in it.

Karl Eggerss:                      Well, that’s why you’ve heard about, “Well, we should have one global currency.” That’s never going to happen, because countries use their own currency for their own benefit. So for example, if the US wants to really improve things, they depreciate their currency. They actually want it to go down, because it makes them more competitive. So countries manipulate their currencies all the time.

Speaker 4:                          China.

Karl Eggerss:                      Yeah, China. And you’re seeing that with the Euro. The Euro has been a disaster, because all these countries said, “Let’s just put it all together.” And what happens, in the European area you have good countries and bad countries, and the good ones are being mixed in with the bad. And so they really would prefer to have their own independent currencies again. And that’s why I don’t think we’ll ever have a global currency.

But that type of stuff is really complicated for most people listening. They’re sitting there going, “Wait, what does this all mean?” As an American, it means if you put your money in the bank, if you’re holding dollar bills, you’re still losing money every day, because the dollar depreciates very, very little. In other words, how much can you buy with that dollar bill?

Speaker 4:                          Right.

Karl Eggerss:                      And we know every day that goes by you can buy less and less. That’s called inflation. And that’s really, Mac, why you invest at all, is because you’re trying to keep your money somewhere, have it grow, and usually stocks will outperform that inflation, so that when you go get it later, you can buy more stuff with it later on. And unfortunately, when people are too conservative, thinking they’re being safe by keeping it in the bank, they actually end up falling behind a little bit and not really getting anywhere, because it’s not growing fast enough, frankly.

Mac & Chad:                     Gotcha. Our producer, Ryan, was telling me earlier he invested in MySpace, he’s going to buy stock in a thing called MySpace.

Ryan:                                   It’s in my top five.

Mac & Chad:                     Is it? Yeah, nice.

Ryan:                                   Top five.

Mac & Chad:                     Karl Eggerss-

Karl Eggerss:                      I want to know the other four.

Mac & Chad:                     Karl Eggerss from joins us. You know, I was thinking, here we are, of course, the holiday season. Everybody, in my opinion, man, you can look at the statistics, people spend way too much money on others for Christmas and all that stuff. But as you guys are sitting there talking about it, I was reading other statistics, that actually the population in the United States, there’s a surprising percentage that don’t use banks at all. And so I was thinking, what’s your info to somebody, they go, “Oh, I don’t use banks at all. I feel better with it Ziplocked and under my mattress.”

Karl Eggerss:                      Well, obviously a bank is supposed to be secure. 2008 kind of put a little pin in that theory, and they’re probably much more secure than they were before ’08, because the legislation and the rules have gotten even more strict. But you’re supposed to put it somewhere where you can earn a little bit of interest, right? And again, when you stick it on your mattress, you think that dollar bill is worth something, the same as when you pull it out a month later. If you go back and look from the 1800s until now, a dollar bill will buy you about a nickel’s worth of stuff, generally speaking. So it’s still a paper dollar bill that looks the same as it did 100 years ago. Unfortunately, it’s what can it buy?

And that’s why it’s kind of like being born in an escalator. You think the whole world’s moving, and it’s really you.

Mac & Chad:                     That’s funny.

Karl Eggerss:                      And same thing with a dollar bill. You’re sitting there holding a dollar, and you think, “This thing is going to be worth a dollar in a few years from now.” And it’s just not. Go look at a top-of-the-line truck back in the 1960s and tell me what you would have paid for it, and go look at a top-of-the-line truck in 2019. That’s inflation.

Speaker 4:                          Or let’s say today you’re making the median income in Oklahoma, and you don’t get a raise for 10 years. You won’t be making the median income in Oklahoma any more. You’ll be probably $10,000 behind.

Karl Eggerss:                      Exactly.

Mac & Chad:                     Right, right, yeah.

Karl Eggerss:                      Well, look, and we talked about it last week, people have not been getting raises for a long time. In the last few years they are starting to get raises again. You’re starting to see what’s called wage growth actually increasing a little bit. And that’s an awesome thing, because the listeners driving right now, you all are the ones that are moving the economy. It’s not the government. 70% of the economy is because of consumers and spending. They’re getting raises, they’re going to go spend it, or save it and invest it, but it helps the economy.

Mac & Chad:                     Hey, Karl, when you were talking about out how the dollar could actually do about a nickel’s worth, Chad was sitting here thinking, “Wait, when I was younger in high school, a dollar bought me about a dime’s worth.” All right, Karl Eggerss from Man, thank you so much for joining us again, brother. I look forward to talking to you, continuing on Wednesdays, and have a great holiday. Have a great Christmas, man.

Karl Eggerss:                      Hey, thanks, guys, take care.

Mac & Chad:                     You got it, brother, talk to you soon. All right, again, the website is Thanks again, Karl Eggerss.