What is Modern Feudalism and Are We Living in It?

Message from Tom & Nick

Maybe I really am getting old.

See that picture? That’s our dog, Millie, at a dog party.

Yeah, you read that correctly.

Our dog got invited by another dog to a party. I wasn’t invited, but our dog was.

We didn’t have a dog growing up but I’m pretty darn sure this wasn’t a thing when I was a kid.

As a member of Generation X, not only did we not have dog parties, we barely had parents! We were left to fend for ourselves, for hours and hours, maybe days, sometimes weeks at a time even. LOL!!

So to have our daughter bring our dog to its own party was a little startling for me.

The dogs had balloons and plates and special treats. Wild.

Today's dogs are living the good life.

I wonder what I’d find if I added up all the money we’ve spent on our Millie over the last 3.5 years…

…and put it into a spreadsheet to see how much it would be worth if I dollar cost averaged that money into Bitcoin.

Just the thought of what I’ll find is so scary that I refuse to do it.

Who is running the show here exactly? Our family or the dog? LOL!!

And speaking of running the show…

This image has been making the rounds on the socials lately:

The Fraser Institute has calculated that in 2022 Canadian families are spending 45.3% of their income on taxes and 35.6% on the necessities of life: shelter, food and clothing.

This is insane to me.

Can’t wait to see what the 2023 numbers look like.

And it got me thinking.

As a part of Generation X, growing up in the 70s, 80s, and 90s there was this belief that you could go to school, get a good job and earn enough to live a good life.

Heck, there were even ads on TV about “Freedom 55”…that’s right, there was this idea that we could all retire at 55.

And maybe, just maybe, this was a brief moment in history where someone coming from not much, could go to school and create some real net worth for themselves based solely on their “job” and an income.

Heck, I know people who did this. Some of the software sales guys I worked with in Chicago were making $600K - $800K USD a year back in 2003. It was jaw dropping money.

Here in Toronto I saw super high incomes back then too.

They weren’t everywhere of course. You had to be in the right industry, riding the right trends. But those jobs existed.

And they still do. I don’t want anyone to think they don’t…they do. 100% they do.

But here’s what’s changed and changed greatly.

The cost of life.

In 2002 we put a down payment on our first family home...it was $268K for a Mattamy 4-bedroom, 2 car garage, home in Mississauga.

That’s right, $268K.

So although I wasn’t making those big dollars…together with Carol, we could save up a decent down payment.

Today, that $268K IS THE DOWN PAYMENT on that same house.

That house now sells for just under $1,500,000.

Then you pay insurance, property taxes using your income that was also taxed and sent to the government…who then spends more money than it collects…so it creates deficits often funded by newly created dollars which debase the purchasing power of your income and any savings you may have.

Incomes are roughly the same as they were back in 2002.

Unfortunately, houses and rents are not.

And I’m sure everyone is looking at their grocery bill in a mild state of shock and awe lately.

We bought a week’s worth of groceries for our family back in the early 2000s for $120. I kid you not, a whole week’s worth!

I swear I went to the checkout last week with some eggs, butter, olive oil, dark chocolate and a few steaks only to feel like I had to see a loan officer to pay for them.

It’s almost like we’re back in a feudal system.

A modern feudal system if you will.

We aren’t quite “working the land” to pay the “noble landowners” but it’s starting to feel darn close.

And it led us to conclude this…

The quality of your financial future will highly depend on the quality of assets you own. Not the income you earn.

And before anyone dismisses this as “sure, invest, buy some stocks and move on”…we’d like to give you some pause.

If you map the stock market gains for the S&P 500 against the debasement of our dollars, it’s almost an exact match.

Very few are “getting ahead” investing in the stock market.

It’s why some of us were driven to real estate…the leverage of real estate that allows you to “get ahead” financially. It’s definitely not the real estate in and of itself.

Without the leverage, real estate prices also simply match the debasement rate of the currency very closely.

It’s why people don’t move when they discover their house is worth $1.5M…that $1.5M doesn’t really get them what they thought it would anywhere else!

It’s also why now some of us are interested in Bitcoin. With a 44% compound average annual growth rate over the last 4 years, it’s obviously a very interesting thing to own.

Maybe we never left feudalism at all.

I like to believe we did.

But that ship has now sailed.

It’s unfortunate but true.

With a good education and an income you’ll make enough for shelter and food and that’s about it. There will be no “Freedom 55”.

Sound harsh?

I don’t care. We would rather you saw reality for what it is.

And a modern feudalism seems to be the most accurate descriptor for most.

It’s time to figure out what assets you want to own in your life and figure out a plan on how you’ll come to own them. Without that you’re not going to be able to live life on your own terms.

That’s the bad news.

The good news is with some good choices there are great opportunities to outrun this financial madness.

Before you invest in anything, ANYTHING, ask yourself if that asset grows faster than 8.5% per year, every year, compounded.

Because if it doesn’t, you’re barely outpacing the devaluation of your income and your dollars by the Bank of Canada and the Canadian government.

8.5% should be your personal hurdle rate to beat.

That’s the rate of return you must match to stay even. And you need to beat that to “get ahead”.

So if you’ve dismissed investment real estate in the past then check it out. And we know that sounds self-serving so you definitely don’t have to check it out with us.

If you’ve dismissed Bitcoin in the past, it’s time to check that ego and take another look. Take a hard look at its compound annual growth rate over 4 years, 6 years, and 8 years.

Dig in, do some research, don’t stay too busy “earning a living” that you don’t make any real financial returns.

OK, enough with this…hope I wasn’t too negative today!! LOL.

Just trying to be helpful we promise!

As we wrap this week, let’s focus on these two things instead:

  1. Dogs are having parties in 2024.
  2. We’re doing a contest on Instagram to celebrate 20K followers!! We’re giving away an Apple Watch and a legendary YLYT t-shirt!! Visit our Instagram page @rockstarinnercircle to check out how to enter!

Have a great week, everyone!!

Tom & Nick

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