Hello, everyone and welcome back to an all-new episode of The Financial Confessions.

It is I, your host, Chelsea Fagan. I am founder and CEO of The Financial Diet.

I'm also a person who loves talking about money. And an interesting thing happened yesterday. A person reached out to me to do their podcast.

They're also a YouTuber. They have half a million or so subs. They have a really cool channel, also about money.

Different, but still very cool. And he reached out and he was like, I'd love you to do my podcast. And I was like, double-reverse uno.

Do my podcast. I am going to do his podcast, too. But we happened to be filming today another podcast episode.

So I was like, can you do tomorrow morning? And he's like, yes, I can. We love an available [INAUDIBLE]..

And thanks to PolicyGenius for supporting this episode of The Financial Confessions. PolicyGenius is your one-stop shop to find and buy the insurance you need. Head to policygenius.com/tfc to get your free life insurance quotes and see how much you could save.

All of this is to say, we have this YouTube guest on, who I actually must admit, I was unfamiliar with before. But I binged. As soon as he reached out, I looked at his channel.

And I was like, I love this. This is great. I've been binging episodes since yesterday.

I have so many questions for him. He's very, very cool. You guys should check out his channel.

His name is Richard Coffin. He is a chartered financial analyst and a Certified Financial Planner. He actually works in investment management himself.

But he hosts a YouTube channel called The Plain Bagel that talks all about money, investing, economics, the broader picture of money, and the smaller, more individual one. His stuff is great. He is very cool and very prompt.

And here he is right now. Hello, Richard. Hi, thank you for that immaculate introduction.

I'm flattered and honored to be on your podcast on such a quick turnaround. [LAUGHTER] It was great. We love it when it works out, don't we? So that was obviously an extremely top-line summary of your channel.

Can you give a little bit more of an explanation of what you do? Yeah. So I started the channel with the objective of doing a high-level overview of investing from A to Z, just so that people who are entering the field have some baseline for getting started.

I work in investments, so all of this is familiar to me. But I'm well aware that most people don't get to learn about everything from stocks to bonds to types of registered accounts and things like that, even in schooling. So that was the initial objective.

And now that I've been going at it for three, four, five years-- I don't even know how long it's been. But it's branched into other topics as well. So now, it's high-level economics, finance news, and things that happens, and that sort.

But I always try to go back to the roots of explaining basic financial concepts so that it's trying to be beginner friendly without all the jargon and stuff you typically see in the investing field. I love it. It's easy for me to understand, which is the hallmark of a good channel.

I appreciate that. The eagle-eared listeners at home might have noticed him saying an exotic "zed" instead of Z. Am I right that you're in Canada?

Yeah. Yeah, this is a true north Canada. I'm located in the capital city, actually, so Ottawa, Canada.

And so I know that there are differences in the systems. But is most of what you do speaking to an American audience and about the American financial system? Yeah.

I mean, at a high level when you don't get into taxes and stuff like that, a lot of the stuff is the same. And in fact, a lot of Canadians-- I wouldn't say the majority of their portfolio. But a very high percentage of investment portfolios for Canadians is American in terms of American companies and American stocks.

And that's honestly a global phenomenon. You can talk to people from Australia, from Europe. And you'll see a lot of them have a high percentage of their account in US companies.

So a lot of the channel content-- even though I am based in Canada and I have that bias, I guess you could call it, it's all intended to be generic so that people in America-- but also, people even from Europe. And we have a lot of viewers from Europe, from Australia, and other countries around the world. It's all very general information that should help you, regardless of where you are.

And then whenever I dive into an example, it is usually US based. Because the fact of the matter is the US economy is the biggest in the world. It's the reserve currency of the world, so it's an important economy.

So even if you aren't an American, it's worth using those American examples. For better or for worse, the largest economy. Sure.

Yeah, for better or for worse. So I'm going to start off with a really light hearted, easy to answer question. Are we headed for another recession soon?

Oh, yeah, of course. [LAUGHTER] The easy answer would be yes. But in terms of the time frame, that's the part that no one gets right. So when you think of the economy, it's a cyclical pattern.

Or at least it's been theorized to be cyclical in the sense of you have a boom and then a bust. But the problem is no one has a way of determining how long those booms and busts lasts for. So, sure, you could say, yes, a recession for the economy is going to come at some point.

But I don't worry myself too much about trying to predict when that's going to happen. A lot of people try, and a lot of people don't do well with that. It's shown over time.

It's near impossible to predict that kind of stuff. Is it fair to say that-- I mean, obviously, the contributing factors each time are going to be a little bit different, and the shape that it takes is going to be a little bit different. Are there contributing factors towards economic downturn that you're seeing right now that are of particular concern to you?

Well, if you read the news, obviously the biggest concern for a lot of people is inflation. And that's true here in Canada. But the US stories are really the big headlines that we're seeing.

That's probably the biggest factor. If you ask anyone what the cause of the next recession will be, that's probably going to be the top answer that people say, is inflation. So obviously, as inflation rates rise, it's not inherently that the inflation itself will lead to a recession.

But the problem is that usually to rein in inflation, governments and central banks need to step in and do something to preserve the value of their currency. And it can be those actions that can cause a recession. So there are some people who are theorizing a recession might come soon, because we have these risk factors at play where we have high inflation.

And we're obviously seeing talk about interest rate hikes. I think it's pretty well been publicized that a lot of central bankers are looking to do that. And the Federal Reserve is looking to height rates, possibly as early as March.

And that cools things down. And if it's done too quickly, because economies have become reliant on cheap debt and things like that, that could lead to recession-type things happening. It's just whether that will happen or not.

People said the same thing in 2018 and when we started to see interest rates starting to hike up and things like that. And people expected a recession. Now, we had the pandemic, so that played a role.

But it all goes to show that even if you see those factors, it's not to say that there's a one-to-one correlation, that just because interest rates are expected to be hiked, they are going to see a recession. But, yes, it is a risk factor, I guess, that you're seeing in the current economy. For people listening at home who may not be as familiar, can you speak a little bit to why we're seeing this increasing inflation and why it's a bad thing?

So the biggest factor that at least central bankers have really talked about is supply chain constraints. There are other factors, though, that have played a key role. So to the supply chain constraints part, obviously with the pandemic we've had factory workers, warehouse workers who haven't been able to go to work at times, border closings that have impacted the transportation of goods.

And if you describe inflation as the rising of prices, I think a really good definition for inflation is too much money chasing too few goods. So if you have those constraints on the good side, on the supply side where you're not able to produce as many things, that will lead to prices rising. I think automobiles was a key example of that, we saw with semiconductor shortages and things like that.

Vehicle prices went up quite a bit in the US as a result of that. And that was actually a key contributing factor to rising consumer prices. So that's one side of it.

And then on the other side is the money supply. If you look at the other side of the inflation definition of too much money, there's also been a lot of monetary stimulus that the central bank did during the pandemic to carry people over. We had stimulus checks.

We had lower interest rates, near zero interest rates in the US. And that stuff, interest rates, actually expands money supply. On top of that, there were things like quantitative easing.

You could really go further down the rabbit hole. But at the high level, you could say on the one side, it's money supply and monetary stimulus that heated up demand, if you will, in the economy. And on the other side, you have persisting supply chain kinks that kicked off the inflation and are still lingering in the background.

And why is it bad for the average person and for the economy more generally? So I'll start with the economy, just because it's higher level. But the problem with inflation is, theoretically, when you have inflation, yes, prices will go up.

But wages will go up, too, at some point. So you would assume it's a wash. The problem is that there's a lot of friction costs with inflation.

So there are costs associated with prices changing. And there's also a lot of mismatch, if you will. So wages might not necessarily increase at the same time that costs increase.

So you could have a year, two years, or many years where costs are higher than wages that people are being paid. Or that costs are growing faster than wages that people are being paid. Because inflation is a really messy thing.

It's not across the board and even. It affects different areas differently. And that leads into why it impacts the individual person, outside the fact that it deteriorates the value of savings, which is probably what people hate the most about it, is that the money that you've saved in the past-- as prices rise, the purchasing power of that money decreases.

So it effectively deteriorates your wealth of the savings that you've accumulated up until this point. So that's one part of it. And then the other part is that your wage, how much you're paid today, might not necessarily increase at the same pace as the costs that you're facing.

So clearly, that can be very painful for a lot of people is if you see this mismatch where your income or your wealth isn't growing at the same pace as the costs that you're paying. So if I'm an average person, which I'm not-- I'm kidding, kidding. But to ask for the theoretical, when I say average, I mean someone listening to this who's near maybe the median income, has maybe a job that's not throwing cost of living raises at them, whose day-to-day expenses they're seeing increase, and so on, and so forth.

What should they do in their immediate day-to-day life to, as best they can, offset some of these effects? It's a tough question. And I think that's the tough thing about inflation is that there's no clear answer.

Some people would tell you-- there are some gold enthusiasts and stuff like that who would tell you, oh, just put your money into gold. Or crypto enthusiasts might say, just put your money into Bitcoin, because it will grow with inflation. The problem is that those haven't necessarily checked out on a year-to-year basis.

So there have been years where those things don't move in line with inflation. So unfortunately, just buying something that you assume will grow with inflation, every now and then those things don't actually correlate. I think one of the better approaches is, hopefully, if you're in a position where you are able to invest and you've accumulated enough wealth where you can invest your money, is to diversify your assets across a number of different things, including things that should grow with inflation and things that shouldn't.

In terms of the day-to-day costs, that's a tougher thing. And I think, like I said, that's one of the real pain points of inflation is there's no immediate answer aside from someone might say, oh, just work more or get a higher paying job. Well, those are tough things to do.

And it would be great if we could do that for everything. But that's really the tragedy of inflation is there's no easy answer for avoiding it. it's just about doing what you financially can in that situation to set yourself up for the future. And I think investing plays a really important role there.

Well, you brought it up. So could I get your top-line thoughts on things like cryptocurrency? Sure.

I actually tend to avoid talking about specific things. So even though I've touched on Bitcoin, because it was such a big topic, I generally avoid giving a recommendation, I guess is what I would say. I do that for my day job.

But on YouTube, I just don't think it's the place to tell people what to buy and the next big pick. But I'd say the high level-- I mean, the way I would put is I'm a stock analyst. And I see a lot of opportunities I like within stocks.

And I understand stocks. There are models I can use that have been tried and true over time. And there's a lot of stuff that's easy to understand.

A stock is a productive asset. It's something that when you put money into, the company that you're investing in is going to take that money and then try to make it grow. It's going to try and earn profits and make more money from the money you put in.

A lot of cryptocurrencies are not a commodity. But they're a thing that you're buying for the sole idea that it might increase in value in the future. And that's a lot tougher of a game to play.

It's what I would call a speculative asset. So it's something that it's only worth as much as people say it's worth. And there's no fundamental reason for that outside of there's demand and supply.

So I've always been critical of the space. It doesn't mean that I think that there will never be a future for cryptocurrency. I think it's great that we're seeing people try different things and trying to build different ecosystems.

But a lot of the promises of skyrocketing returns-- it goes against the whole idea of Bitcoin being a stable asset or whatever you want to call it. So there's a lot of issues in the space, I would say. And I'm very happy to sit on the sidelines and see what comes of it.

I'm not one to chase those trends, I guess. I really respect your moderation in this and also your-- I assume, in part, you are certified on a couple levels. So you do have somewhat of an ethical obligation to be incredibly measured in the specific recommendations or discouragements that you give on a space like YouTube where you're not working with a client in a formal capacity.

I don't have any of those compunctions. So let me just say, to reiterate that not only do I think that 99% of what we call cryptocurrency and what we're talking about is incredibly dangerous to the average person and actively pre-dating on a lot of lack of knowledge. The things that he just said-- I think if you guys watched our interview with Dan Olson or if you've heard us talk about it in the past, I very much agree with those things.

And he has the background knowledge and contextual understanding of these "assets" to analyze them as he would any other potential financial instrument. Most people don't. And moreover, I think many people, in addition to being tempted at the idea of really incredible returns, which to his point very accurately, if you're able to realize incredible returns on it, it is by definition not a functional currency.

But they are really tempted by that. But I think a lot of people are also incredibly snowed by the technology that they don't understand and feel. Because they don't understand it, either it must be good and impressive, which is not always the case or, B, that there must be some inherent value in it.

Ultimately, we make no secret at TFD of the fact that especially in America-- I can't speak to the Canadian system. But in the American system, the absolute last thing that we need is fewer consumer protections and regulations on the financial industry. But moreover, if you as an individual are seeing all these crypto commercials on the Super Bowl and are thinking, well, my cousin is into it, I should get into it, please don't do that.

I know the regular stock market is boring, especially the well-diversified funds you should be buying into if you're investing intelligently in the stock market. But when it comes to money long term, boring is good. I apologize for my rant.

No. And you know what? Even with you describing my answer as being measured, I think I could agree with a lot of that.

I think you would have that with anything. We even saw that with the dot-com bubble of 2000. The internet, of course, was a beautiful technology that emerged from there.

You still had about 90% of those companies that went bust, even as promising as the underlying technology was. And I also agree when you talk about the tech being difficult to understand and new, if you will, and therefore, it must be good. I don't know if it's properly called this.

But I did have a professor once call that the engineer problem where you can have engineers come into a room and build something beautiful, and mathematically complicated, and intense. And it will be worthless. Because the end user, the end consumer, if you will-- they really only care about what it does, what the end result is, not how it works.

And so you can make something that works beautifully internally. And the system is perfect or whatever and beautiful. It might not matter.

Because at the end of the day, people care about how they save their money, and how they get a loan, and things like that. And I think we've seen that with cryptocurrencies. There are still a lot of issues with those types of activities.

Like I said, I'm cautious to say that there's no future in the space. Because I'm happy to see what happens, like I said. But I am critical of, like you said, the get rich quick things.

And I think if you're in crypto for the purpose of earning high returns and that's it, you're setting yourself up for disappointment. Because the people who started crypto-- they did it out of enthusiasm and out of an interest in technology, which is why you have a lot of people talk about the jargon and stuff. And I also think the idea of investing in what you know is really important.

And so investing in something, because you heard someone else is investing in it is probably the worst reason to invest in something. And it's really what leads to things like bubbles and stuff like that. So if you stick to investing in what you know, which for most people is companies and businesses that can earn money and stuff like that, you'll likely do better in the long term.

Yeah. And I mean, I agree that many of the initial creators and adopters were tech enthusiasts. But I mean, quite explicitly, many of them were also incredibly libertarian economically.

Sure. Yeah. And the fundamental premise is we want a system that has no oversight, no taxation, no regulation, no consumer protection.

And I mean, listen, the history is long. And hopefully, the arc of it bends toward justice. But at least in the past 30 years in America, a lot of it has bent toward incredible levels of financial deregulation.

And at least from where I'm sitting, that seems to have not worked out very well for us. Yeah. I think if you get into the philosophical discussions of cryptocurrency, I think there are a lot of inconsistencies with some of the stuff there.

So I think when it comes to the idea-- let's say, for example, the idea of taking money away from Wall Street and stuff like that. At the end of the day, when it comes to crypto, the people of Wall Street are still the ones still driving forces in that space. So I don't really-- and I think if you're investing in crypto for those high-level ideals, if you will, again, that's not really what you're accomplishing with this medium, if you will, so definitely some valid criticisms there.

Because I think as much as people like to put their money where their values are, there's still a lot of issues in that space. Yeah. And when it comes to the tech question, I mean I think one thing that, for example, Facebook has taught us so clearly in the past decade or so is that the ability of people to build incredible tech products and be incredible engineers and designers does not make them ethicists, nor does it make them specialists in human behavior.

And you and I both work on what is ultimately YouTube as a social media platform where what is listened to, what's popular, what is trusted is in many ways driven more by the algorithm than anything else. I mean, obviously with things like public health in the past year, we've seen a total implosion of what it means to be an expert. But one thing that you do on your channel that I really like is you react to the incredible proliferation of bad money and specifically, bad investing advice that's out there on the internet now, especially on places like TikTok and other social platforms.

So can you talk a little bit about what you see when you look at the social media landscape and how the conversation of money has evolved on it? So I would say, first of all, obviously, more people are talking about money than they have in the past. And I think if you were to ask me five years ago if that was a good or a bad thing, I would have been really excited.

Because I think when I started the YouTube channel, the objective was really to increase discussions about investing and things like that. I think the problem is that with-- you touched on it with things like TikTok and YouTube. It's a very tricky medium for sharing that information.

Because like you mentioned, it's algorithm based. So that inherently means that the stuff that people see is not necessarily what's true or what's the most helpful. It's usually what's the most, I guess, emotion driven or what's driving the most views, the most attention, the shocking stuff, or the high, I guess, claims about what an investment will do.

This stock will triple in value by tomorrow or whatever you want. So I think when I look at social media with investing, I think, on the one hand, we have seen a lot more discussions open up. And I think we're making some progress towards more people understanding investing.

But it's also led to this ugly side of it where there's almost been this overconfidence, I guess, is what I would call it where you have some creators. And I always like to preface that. There is some creators.

There are people who talk about investing who do a really good job of it. This isn't everyone in the space. But there are some people who seem to have some overconfidence.

Because they haven't had the experience, and they haven't had the education. But they're still going on and telling people what their top picks are and taking that influencer, I guess, profile into the investment space, even when they probably shouldn't be. And that's causing people to buy what they buy and get interested in the things they're investing in, even when it's not really based on sound principles or sound research.

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So head to policygenius.com/tfc to get your free life insurance quotes and see how much you could save. Can you speak a little bit? I'm actually-- I think, in general, probably the phenomenon of like, here's my portfolio right now, here's what I'm looking at, that kind of stuff-- I just don't think it gets marketed to women as much.

I think it really targets men on these platforms. So algorithmically, I tend not to see as much of that. Are you seeing in the investing advice that people are giving-- is it what we've had forever, the very general get rich quick?

Here's the shortcut to success type of stuff? Or are you seeing new types of advice and new approaches that are maybe driven in part by these platforms? I would say both.

To the latter in terms of new approaches, you've definitely seen a lot more, I guess, late on details recommendations, especially when you talk about TikTok. I mean, TikTok-- you have a 7 to 30-second video. And someone is trying to tell you what stock to invest in, or what crypto to buy, or their top picks.

You just can't give that topic due diligence and share proper research. And at times, I've seen teenagers yelling at me about cryptocurrency is going to blow up next year. So you could say that's a new approach that I haven't seen before.

But there's also the old stuff. And I think I always talk about social media. Because that's the platform that a lot of people my age and our age are using regularly on the daily.

There's always been issues even on mainstream media and normal news outlets. CNBC famously has a lot of pundits go on and talk about picks, and stock picks, and stuff like that. And much of it's similar to what we're now seeing emerge on YouTube where people are sharing their portfolios and stuff like that.

So there are obviously issues with even the older way that people used to share stock picks and stuff. But you do see the same thing where a lot of amateur investors on YouTube and the biggest videos and channels-- they all focus on the cutting-edge stuff. And you touched on it earlier with boring is usually good.

I really agree with that. And it's not just that boring-- you're less likely to avoid scams and stuff. It's that when you actually, fundamentally research a stock and you consider its valuation, how much you're paying for that stock, that valuation or the price you pay tends to be higher for higher buzz items, things like electric vehicle companies, and AI companies, and those kinds of firms.

So when you focus on other areas, you can get a better deal with certain stocks. But the problem is that when you look at YouTube videos, a lot of them focus on those high buzzword industries. I very rarely see a YouTube video talking about utilities, or railroad companies, or those boring industries.

You never see it. It's always Tesla. And Palantir is a popular one.

It's always the high buzzword. And GameStop, obviously, was a huge one for a bit there. And again, it's the algorithm.

People don't want to hear about what investment will earn them a modest 12% return annually. They want to hear, what stock is going to triple in value? And you're only going to see those stories in that cutting-edge technology space.

I mean, for context, 12% is amazing. 12% is amazing. And if I could lock in 12% for the rest of my life, I would happily do so. It is nothing to scoff at.

But the last few years, I think, have muddied the waters in terms of expectations. And I think a lot of people lose sight of the fact that historically, you're not likely going to earn that high of a return over the long term. We've had a couple years where people have seen positions go up thousands of percentage points.

And they assume, oh, well, therefore, I should be able to do that next year or five years from now. But it's really been a very rare situation. And I think people need to recognize that.

I very much agree. And having been in the personal finance space online for seven years now, which is pretty long in the scale of social media, I feel like I've noticed, especially in the past maybe two or so years, I think partially driven by platforms like TikTok, which to your point, leave very little room for nuance and partially driven by the pandemic where so many people are bored, isolated, maybe have lost their primary jobs, or have more free time and are generally not able to direct their energies in places that they usually do, I feel that I've felt a very acute increase in the gamification of money. Obviously, I think things like cryptocurrency and very trendy, flashy individual stock picking is a part of that.

And I really like your point that no one is talking about. What is-- I don't know-- steel going to do? What is lithium going to do?

All that stuff. No one talks about this. What about this toothbrush company or whatever?

Exactly. Yeah, it's only products that people either like to use themselves and show off on Instagram. Or it's whatever they're hearing about from Elon Musk's Twitter.

But I also see a lot of it in things like real estate and even the gamification of-- I've seen a lot of TikToks of people saying, go on Upwork and get this job doing data entry or something where you're being paid $20 an hour and then outsource 100% of your work to someone in the Philippines who you pay $1 an hour, which someone on Twitter said this about that one. They were like, how are you out here giving this advice with your whole face and screen? That is so evil.

I can't even imagine that. But the real estate ones will be, you get this piece of real estate, you flip it into a bunch of Airbnbs, you manage it this way. This is how I make $1 million a year as a real estate investor.

And I think part of it is the gamification aspect, which I think maybe speaks to this is a generation that loves video games. But also with the time and being behind your computer a lot, it lends itself to that. But I also do feel-- and it's hard to tell whether or not this is true or if this is just my feeling.

It almost in some ways feels like an even further move to a very, very hyper-individualist view of money, very much about what I'm individually able to do, very little sense of the broader community or even the broader markets within which these decisions are interacting. For example, if you are gamifying a ton of real estate, where are people in this city going to live if they actually need to rent an apartment and aren't just Airbnb-ing it? So are you also feeling a sense of hyper individualism, hyper gamification?

Or is that me? I would definitely agree on the gamification. I think that's easy enough to see.

And we talk about things like NFTs and a lot of these cryptocurrencies where a lot of their, I guess, value or I guess their brand, I guess you would call it, is like the image, the dog variants, and stuff like that, or Dogecoin variants, I should say, and how a lot of their community is all driven by this art and stuff like that. That's inherently more gamified than buying a company based on its profits. So I think on that side, definitely cryptocurrency and stuff like that has increased that.

And we talk about TikTok and things like that. I agree there, too. And I think one of my biggest gripes with social media platforms is I really don't mind when people give analysis about stuff.

Or even I have some criticisms about the types of recommendations. But I'm not saying people can't say, I've done this research and this is what I think about this stock. I think the problem I see is a lot of people don't talk about the risks.

And I think real estate is a great example of that. You can you talk about how you can buy this property, and Airbnb it, and how that will make you a lot of money Sure. That might be an approach that's worked for some people.

It's also pretty high-risk strategy. This is not a guaranteed business plan. And I think that's always been my biggest issues.

Even with investments with high buzzword stocks, I don't see enough people giving the caveats of the risk. Yes, this company is promising and this and this and this. I think you should also say, by the way, just so you're aware, because you're someone who is going to be putting their money into this thing that could impact your livelihood, you should know these risks.

You should know that this historical growth rate might not continue. You should know that there's this competition or whatever. And real estate is a great example of that.

Because, hey, if you buy a property, that's usually going to take up a lot of your capital to do so. So there's a lot of risk involved with that. You're putting a lot of your money into one property.

It's not to say that all real estate is inherently high risk. But you're leveraging all the stuff. And I think those risks should be touched on a bit more.

These aren't get rich quick guaranteed schemes, if you will. In terms of individualistic, I could definitely see that, especially with social media again. There's been a lot of this attention about what I'm doing with my returns and stuff like that.

And I live in Ottawa, Canada, which I'm not sure if it's well known. But we're starting to see our housing market get to pretty crazy levels. And I actually purchased the house I live in three years ago, I think.

Two years ago. And even as a house owner, I quite frankly hate seeing how high prices have risen. Because sure, real estate-- the problem is that real estate is a very lucrative investment when there's just so much demand for it.

And so the entrepreneurial individuals who have the capital to buy real estate-- they're going to if they know that they can-- if it's going to go up in price 20% next year, even though at its core, it's a necessity for people to live in a place. So I guess-- yeah, I don't know if I have enough backing to say that's individualism growing. But there's been problems that have resulted from this focus on high returns and stuff like that.

Yeah, I mean, whether it's individualism and the more psychological sense, I think you really nailed it with the thinking in terms of wanting these high returns in every decision you make. Because to your point about real estate, that's a perfect example of needing these investments to all be super high return, is at some level, a bit of a zero-sum game, especially-- so you use the example of real estate. So as someone who owns real estate in the city that's going through the roof in value, in theory you stand to benefit.

But at the same time, if the overall health of a city depends on young, newer people in the workforce being able to enter into that housing market and it only being able to be purchased by developers and people who have massive amounts of property, you're talking about a real estate market that is not in a death spiral, necessarily. But it's definitely trending toward a direction where normal people can't participate in it. And maybe that's OK in the very short term.

But what happens when you have a city that's entirely full of developers who are looking to flip properties for short-term leases or no one but those people can own the housing stock? And similarly, so let's say they invest in a house. They want to keep the value of that property high.

Well, they're going to be the same people who say, no, don't build any new developments to increase the housing stock. And we talked about this actually in a video we recorded yesterday. I think the real estate thing is a particularly interesting one.

Because for previous generations in America, they were such a massive element of long-term wealth building. But now, we're in a situation where in order for the people who bought their homes in the '70s and early '80s to be able to retire with this cush retirement, they need to sell their homes for such a high price, that basically no one can afford to buy them. And so when you look at those trends of needing the high returns, I think it's a really valuable question to ask yourself, well, if I'm getting these really high returns, who's paying for them?

Yeah. And again, this is Canada, I guess, focus. But in Canada, it's interesting, too.

Because a lot of our GDP growth is tied to real estate. So it's a catch-22 where if you try to resolve the housing prices, there's this impact that it could have on economic growth. But I think in terms of-- I think when you try to dissect why it's happening, it's not to say that it's just people have a lot of money and are greedy.

Sure, that's a factor. That's always been a role in a lot of stuff. But at the same time, I think part of it has been the market we've been in.

We've had very low interest rates for a long time. That's made mortgages dirt cheap in a lot of places. And I think if you have only been investing for the past few years, you aren't familiar with the fact that mortgage rates at times were double digits in terms of the interest rate you had to pay for a house.

And I do think-- or at least I would hope that as we see rates rise, to tackle this inflation, bring it all back to the first topic we discussed, I do think that most economists would agree that should have downwards pressure on housing prices. It doesn't mean that housing prices will necessarily fall. But it's to say that should help cool things down.

But at the end of the day, supply is a big part of that as well. The fact of the matter is if you have so many people in the city and only a finite number of houses, there's going to be that surge in demand and prices. And so it's not just an investor problem.

It's really a city issue in the sense of getting more houses built and more space and stuff like that. And it's a tricky problem. When you talk about zoning, and the laws, and stuff like that, it can be a tricky issue to tackle.

But it seems like a lot of the time, the reason we see prices skyrocket-- a big factor of that has been either poor expansion of supply or poor planning around real estate in the city. So it's a complicated issue. I do think rising interest rates will help a little bit.

But like I said, I'm more of a stock analyst. So at the very least, I focus in that area. But it's selfish in the sense that-- but I also want to see my friends and family be able to afford houses.

And I think a lot of people are in that spot, too. So, sure, it's great that I might have made a bit of a profit. I'd like to make sure some others can get in on that, I suppose.

Totally. I mean, real estate is a particular example. But I mean, we're seeing it in almost every aspect of what is considered a, quote unquote, "normative participation in the economy." I'm sure a lot of your audience is feeling the way that a lot of our audience is feeling, which is really borne out by the data, which is that young people are increasingly not able to participate in the economy the way that their parents' generation was able to.

And they're not able to hit these life milestones. They're not able to afford children. They're not able to buy homes.

And at the end of the day, there are some nuances. But for the most part, the formula is not complicated, right? Wages have not kept up with cost of living.

They've not kept up with inflation. Many of these things like homes have in-- and especially in America, things like education have way outpaced inflation and way outpaced wage growth. So we've created a situation for this younger generation where so much of what they were taught was normal, expected participation in the economy and in their adult life.

And on a more macro sense, what is necessary for an economy to thrive, and to grow, and to have consumers is not available to them. What do you say to people in your audience or otherwise who express that frustration? So I would say that absolutely valid frustrations.

And I think I was reading an article not too long ago about how the tried and true wisdom of just saving your way to wealth has been challenged recently, because of those rising costs and stuff like that. And you're right. The economy our parents grew up in is not the economy we face today.

There are a lot of other challenges that we face in terms of education, in terms of housing. These are things that our parents, in many cases, didn't have to deal with. So those are all very valid issues.

And the tough thing is I think that leads some people who are disgruntled with this system to possibly chase those high returns we talk about. Because for some, that looks like the exit. That looks like the only way is, hey, if I can't save my way to wealth, then, heck, I'm going to have to triple my money on this crypto or this NFT to keep pace, if anything.

I think, however, that when you think about what's going to set you up best for the future, some of the principles are still the same as what they used to be in the sense of it's still about being diligent with your money. It's still about investing in a broad based set of tools. And fortunately, things have-- with better education about investing in fees and things like that, there have been ways to improve upon what our parents might have done.

I think a lot of people back in the day used to rely on very high fee mutual funds. Not all mutual funds, but the highest fees of mutual funds out there, like 3% losing in their return every year. Well, if you can invest at a lower fee, well, that's more money you get to keep yourself.

So there have been some added tools, I guess. But it is a tricky situation. And I think at the end of the day, it's trying to maintain your competition, I guess.

It's always looking to expand your salary, looking to save where you can, and looking to invest your money. And I think if you're able to invest better or more than people-- and not necessarily in terms of beating the market and stuff, but just starting earlier is, I think, what I mean there. You're able to start earlier and educate yourself earlier.

You'll at the very least be able to tackle that a bit better. And like I said, avoiding the promises of get rich quick schemes. Because I do think they feed on that anger, I guess.

That frustration people have with the market is, hey, the old system is screwing you over. Check out what we have. It will triple your money or whatever it is.

Just because the old system is bad does not mean their system is better. That is-- And that's a good way to put it. --fallacious thinking. So, OK.

So we talked a little bit earlier about the collapse of expertise driven by social media, which I think is a huge problem when it comes to money, not only because people are listening to all kinds of grifters or people who don't know what they're talking about. But also, because people, I think, really don't even know how to assess what is legitimate anymore. Even if someone may not be actively seeking this misleading information, they often don't even have necessarily the tools to parse out someone who they feel that they can trust or they can't.

That being said, with things like public health, it's a little bit different. Although, I do think there are some nuances there with things like-- let's just say harder sciences. I think there's a much more clear argument for understanding what is expertise and listening to expertise.

The thing about money and particularly about economics is that-- and I actually don't know how you feel about this. But I personally believe that economist is one of the most complicated and not clear-cut kinds of experts out there. Because at least from my perspective, economists and to some extent economics as a study, but particularly individual economists are ultimately, incredibly political figures.

They come to the study of economics with underlying philosophies. Obviously, we talked earlier about the libertarian origins of something like decentralized currencies. But there are economists who really take all different kinds of views.

I'm a fan of Thomas Piketty which, listen, I love the man, but he clearly has a perspective. And there are other economists who come at it from the exact opposite perspective. So how do you feel about the politicization of the study of economics?

And how do you parse out who you can listen to? Yeah. Economics is a really tough area.

And I think, actually, I have a friend who works at the Bank of Canada. And he gave me a good tidbit that I've always held on to, which is that economics is a social science. And it's always made it very difficult to prove anything in economics, which is probably why it's been such a breeding ground for politics.

Because really, philosophy is all you have, like theories. And you can back stuff up with research, but things are ever changing. And you can find some periods that justify some relationships and some periods that justify other relationships.

So it's a perfect ground for politics and stuff. Because it's all a war of words rather than being able to prove much. And when you talk about expertise, yeah, I definitely agree.

Compared to a doctor, you know a doctor can tell what a good ear looks like or what a good eye looks like. But an economist might not be able to tell, based on whatever philosophy they subscribe to. And so I think that's definitely true.

And when you talk about politics, I think in economics it lends itself to the different schools of thought. And I think the way to approach it is-- even with politics is to listen to all the theories and to try and digest what they have to offer, but also, reasoning what supporting evidence, if any, they have. It's tougher in economics, for sure, than it is in medical journals.

I think it's pretty easy to tell when something helps or inhibits something when it comes to health. It's a lot tougher when it comes to economics. But I think that's always been my approach.

And I think if you subscribe to a single school of economic thought, you'll probably become victim to some of its shortcomings. Because every school of economic thought has its shortcomings. And I think, really, a balanced approach is the best approach, taking a bit of every theory you hear with a grain of salt, but also listening to it and hearing all of the thoughts about it.

Because then you can at least ascertain what the general consensus about a lot of stuff is. And we have some topics. A general consensus point in economics is usually that interest rates and inflation have a negative correlation.

Most schools of thought can agree that that's typically a thing. So there are lessons you can learn at a high level that can be pulled by looking at all these schools of thought and same as politics when you get into the more nuanced subjects, that you start to see the vision and the views change pretty dramatically. But it is tough.

Economics is a really tough area. Because it is a social science. It's an area that can't really ever be proven one way or the other.

So people are going to subscribe to different frameworks that explain it in their eyes. As a closing thought, again, as someone who is pretty far left of center, especially for this space and who subscribes to the general perspective of people like Thomas Piketty and what have you, obviously I'm a little on the more cynical/less optimistic side about where a lot of these trends are headed over the next several decades. I mean, listen, we're just going to take climate change, put it right out to the side.

Yeah, we'll pretend. We'll just ignore that piece. Yeah.

I mean, obviously, climate change is going to be a humongous, humongous factor in a lot of these more financial questions. But even putting that to the side, even just about the pure financial system that we're operating in and the political context that's overarching it and guiding it, I do feel a little on the pessimistic side about things. And maybe it's just because you're Canadian and so friendly.

But it seems like you're a little more optimistic. How do you feel about the next few decades? Well, I appreciate that I'm coming off as optimistic.

I definitely think there are challenges and there are risks. And I touch on inflation. I tend to have a pretty calm tone about inflation.

But it's a real risk and a real concern that we have. And I think when you have a market that's done so incredibly well over the past decade leading, moving towards the average would just dictate that you would expect things to slow down or not be as good in the future. And I do think, unfortunately, that real progress-- a lot of it, especially when it comes to regulation and stuff-- only typically comes from pain.

You usually only see things happen in terms of rule changes and system changes when, for example, 2008, when we have this big collapse of things. That's really only when we see a change in the system happen to hopefully prevent that from happening. And even there, we've seen some unwinding of those changes.

But in terms of where I view us in the next few decades, I mean I've never really tried to play the forecasting game. I couldn't tell you if the economy will be stronger or much weaker. Or maybe we'll all be in a Mad Max style world where we're all fighting for water supply and I have my own cool-looking trailer and truck that spits out fire.

But I really don't know. I do think that what you can do, regardless, at least on a personal level is the strategies. Regardless of what the future holds, if you aren't trying to play the game where let's say you put all your money in gold just before everything collapses or you buy a bomb shelter, things like that, I think the more moderate and the best approach in most situations is just to make sure that you're financially doing well, to save where you can, to control or at least monitor your spending.

I think that's a really helpful tool that most people can do, and invest, and learn how to properly invest as early as you can. And regardless of whether the economy is good or bad in a few years, that should help you to be in a good spot. I am not at the total end of some people where I think there's going to be a total collapse of the American economy and stuff like that.

So I guess that's optimistic in some regard. But I also don't put much merit in where I think the future will go. Because I guess only time will tell.

I want to say it was Chris Rock. There was one comedian who had that bit about people talk about living like there's no tomorrow or you die tomorrow. He's like, that's the worst possible advice.

There probably will be a tomorrow. And it will probably exist within roughly the same context as today. And I think that is the-- I agree with you.

The overarching advice that we do give is that, yes, a lot of these concerns are real. Yes, some of these worse outcomes may come to pass. But it is always your responsibility to yourself and to your future to make the best possible decisions within the context that you live and plan for a future that is understandable to you and that you will want to be prepared for.

And you mentioned gold. And it's always so funny to me, the people who talk about investing in gold who have these apocalyptic predictions about the economy. It's like, I'm sorry.

So in the Mad Max scenario you're describing, you want to have a ton of a physical substance that's incredibly heavy and that no one is going to want from you? There could not be a less adapted thing to have a ton of in a system where we're all fighting in the streets. I guess you could hit people with gold bricks.

But other than that, I don't really-- I don't know what you're doing with them. So it has been such a pleasure. It's funny.

Because like you said, you do have some more bleak takes on things. But they're framed in such a calming way. I feel so much calmer just having spoken to you.

So where can people go to find more of what you do? So my YouTube channel is the biggest thing, so The Plain Bagel. I also do have a Twitter and a Facebook page, although very small followings on there.

YouTube is the main thing. And I'll even post community and post there as well. And I have a website if you want to learn more about the channel and stuff-- theplainbagel.com.

But aside from that, YouTube is my main venue. And if you want to learn about anything from investing to economics, to even just money management, I try to touch pretty broadly on stuff in a pretty beginner friendly way. So you can always come check it out and see if you like what you see.

Excellent. And as I mentioned, I will be on there soon. Yes, very soon.

I'm doing his podcast, so look out for me there. We'll link you guys when it's up. And thank you again so much, Richard, and thank you guys all for tuning in.

We will see you next week, next Monday, in fact, on an all-new episode of The Financial Confessions. Goodbye. Thank you very much.

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