Cash, Charge Cards and Credit Cards - Unpacked

This is my fourth book, I think on money. They're six in the series I've done, and the last one of financial literacy for all. By the way, bestseller number one is Business Plans, a year after publishing Mixture. You go get that. But the book, the memo I wrote essentially said, we're not dumb and we're not stupid. It's what we don't know that we don't know this killing us. But we think we know ever told gave us a memo,

No one ever taught us how money works. So we we think that money is a thing we want to I we get that bag and we'll get that cash, We'll get that dollar, we get that get that you know again, that bag, as if that's something. Literally, money is just simply a means of exchanging value. And we over value no punt intended money itself. The reality is you can run out of it, and most people who are not financially literate do. When your outflow it sees

your inflow, then your overhead will be your downfall. And that's why they call it making a living, not building a life. So you get paid, you're making a living, and typically you're only getting paid enough to subsidize a lifestyle that you have developed for yourself. Or put another way, your lifestyle tends to track how much money you make. So you got to find a way to build wealth separate from making a living. You get that. My brother Tony Wrestler taught me this lesson. He owns the Atlanta

Hawks and build a bunch of companies. And I'm always learning from my friends. I'm just very nosy. Hopefully they're learning a little bit from me. I'm certainly learning from them. But one day he told me, you make money during the day, John, you build wealth in your sleep. Very

simple message, but very powerful. And it's compounding stocks, bonds, home ownership, equity, real estate, in general, businesses, entrepreneurship, things that I think I personally believe education compounds, right, So let's get into these things that no one ever taught you, and supposedly, somehow we're just supposed to magically understand. And before I get into the definition of money, first, let

me hit you with a newsflash. Total credit card debt right now because of massive financial illiteracy in this country, the biggest economy in the world, and because people have got too much month at the end of their money, they're literally living beyond their means, by no fault of their own. The you know, the rate of inflation, the rate of costs increases, the cost of living has out paced their ability to make a living. Middle class incomes have not since World War two, well not World War

to be unfair, the seventies. You know, middle class incomes have not kept up with the cost of living of all people. By the way, it's just when main when mains in America has a headache, black and brown folks have a pneumonia. But we're all sick. And you know, it doesn't matter whether you're white, black, red, brown, and yellow. Everybody wants some more green can again an a man. It's the church of what's happening now? And what have

you done for me lately? So credit card debt. We're gonna again get into I'm going to demystify and unpack all this stuff because people are just like a shamed to admit they don't understand this stuff. I believe financial literacy is a civil rights issue of this generation, and AI literacy is the silver rights issue sil v e Er the civil rights issue of this generation. And I will get into what I call what I define a why. I picked on civil rights as my moniker during the podcast.

But credit card debt right now stands at one point two trillion dollars. Again, I think financial literacy is the civil rights issue of the generation. Is just as important as the right to vote. And understanding financial literacy and understanding your credit score and managing it has a lot to do with your quality of life and whether you are a happy camper or you end up upside down. You know that you may not know this. The number

one calls for divorce in America is money. Number one calls for a domestic of use calls to the police is money. Number one reason that police officers get hurt on the job is our domestic abuse calls. Number one calls for heart attacks, So says the American heart association is stress. Number one calls for stress is money, and we don't understand money other than wanting to spend some about forty Ever, take of Americans in this country don't

have four hundred dollars of their own money. Actually, yeah, forty dollars of their own money, pure cash for an unplanned event in emergency. The number, I think is generous. I think that that number, that's a Federal Reserve report, but I don't think it. I think it factors in your ability to access a credit card. That's not your cash. That's as I'll get into it is borrowed money. I think that if you looked at just the ability to get your hands on cash like you is your money.

I think the percentage is much higher. I think it is as high as sixty some percent. But even the Fed or Reserve number of thirty seven, thirty eight to forty percent is shocking. In the biggest economy in the world, and seventy percent of the biggest economy in the world, this economy, the United States of America, is consumer spending. Let's go back to this credit card number, because it's really important to understand why I'm unpacking all this stuff.

So you can take care of your like not getting this. It's like there's a cancer flowing through your body. There's something affecting you, disease could be in many cases, disease, and you don't know what it is. It's something chasing you. There's something burdening you, and you don't realize what it is. It's got you burned down, weight downs. You're sitting in your car right now, going yeah, that's me. And you don't know what it is. And it's this money thing

and you don't understand it. And maybe you do shopping. Maybe you shop for therapy sometimes because you're swiping a credit card because it makes you feel good in the short term, but then you get a sugar high. It feels good for a minute, then you get that bill. Right, And so I want to empower you. I want to give you the tools to take your life back. Go to Operation Hope. Get my book Financial Literacy for All.

Go to Operation Hope, get coaching and counsel and I'll give you one thousand dollars one year scholarship for coaching and counseling and Operation Hope. Just tell them I sent you. Go to download the Hope and handapp but I'm getting ahead of myself. Let me get to I'm so excited about this topic. Of course, I'm already jumping around. It's and there's so much to cover, So let me get all this in in forty five minutes or so again.

Current credit card debt in this country about one point two one one trillion dollars, is up from one point one six six trillion dollars in the third quarter of twenty twenty four. This is being recorded in the in February twenty twenty five. This marks the highest balance since tracking began of credit card debt in nineteen ninety nine. Ever, right, and student loan debt's about one point seven trillion dollars,

give or take, so this is right behind it. Right, and the average individual American has carries a credit card balance of about sixty three hundred and eighty dollars, and balances are continuing to rise. Credit card debt increased by forty five billion dollars during the fourth quarter of twenty twenty four, a four percent rise compared to the same

period the year earlier. Interest rates have it helped. Interest rates have climbed as we all as we all know, But what you may not know, and hold on to your seats. Here the average credit card interest rate, the average credit card interest rate, the average not for Puki and them not not Jojoe, not not Booboo in the hood. The average interest rate for credit cards in America, for the average American is twenty eight point six percent. Did

you hear me? That means that for every dollar you charge on that beautiful slick credit card that was giving you by that department store, pick the one you want to pick on here, that for every dollar you charge, you're paying a bait about twenty nine cents on that dollar in pure interest. Right. Wow, Just think. Let's let that sink in for a minute. And when we go get auto loans or go shop, you know, we often ask certain we go get it all loans. What we

don't ask? We asked what's the payment? Right? And you don't ask what the payment is when there's an interest rate attached. You don't ask just what the payment is with an interest rate attached. It's a financial literacy lesson there for you tell everybody when you go get a I'll do a whole thing just on. In fact, I did a thing on the auto business. I'll do something on getting a great car loan. That's part of this series this year. Go back and watch the episode I

did with Tony Mazulo on the car business. He's somebody you could trust. But oftentimes people show up and it's a lot. The more financially illiterately there are, the more misleading question they ask, or the wrong question they ask again what's the payment, not what's the interest rate. And

this interest rate can knock you over the head. You go to a B car lot, BFC car lot, me a non prime car lot, and someplace that carries there on paper as they say, and you get a Mercedes from these one of these B lots, your credit score is tow up from the flow up, and they give you an eighteen percent interest rate on that car loan on a seventy thousand dollars car. Right now, we're not talking about it now, we're not talking about it six

seven thousand dollars credit card balance. Right now, we're talking about, you know, a seventy thousand dollars automobile, and you don't. You're not driving a Mercedes, you're driving Mercedes payments. And that is an automotive bomb. It's going to explode on you while you're driving on the street. They just can't wait for you to bring that car back. Because car dealerships make their money actually not on the sales of

the car. They make it on maintenance and finance. Or should I say that the finance department and the maintenance Apartment's three businesses within most automobile dealerships. Its sales, it's finance, and it's maintenance. Again, go back and watch and listen to the podcast I did on Money and Wealth in twenty twenty four on this topic. It was one of the most highly rated episodes of the year. Actually, okay,

it gets worse on this credit card thing. Delinquencies. Credit card loan defaults have surged with over forty six billion dollars in seriously delinquent loans. That means they chasing you right, just to translate that written off in the first nine months of twenty twenty four, a fifty percent increase from the same period in twenty twenty three, in the highest

level since twenty in twenty ten. That should tell you a whole lot about where we are in the financial stress that people are under, and why people are making decisions that they are making. Even around the nation's politics. I think that people are just financially stressed out. As in President Bill Clinton once told me something prophetic. He said, it's hard to get somebody agreed to the truth when the lie is paying your paycheck. Can I give an amen?

Forty six percent of American households held credit card debt in twenty twenty two. This is actually mostly higher middle income holders who have credit cards. By the way, credit card debt and the implications for this though of credit card debt with lower income people is actually more problematic because it's very expensive to be poor. So why is this topic important? Because if you're days out about God,

or of your day is about money. Anybody heard follow me, You've heard me say this that, like, whatever the topic is, you can bring it back to the topic of money. Even marriages and even divorces. Like if two broke people to hobos are getting divorced, it's really quick. It's faster than the divorce ceremony. Right, sorry, faster than the marriage ceremony. The divorce ceremony is just as quick because they're broke. The only thing that keeps something going forever in the

courts is because of money. You know, child support. At the end of the day, it's about money, maintenance payments, you know, alimony, all that stuff. At the end of the day, it's arguing about this, arguing about that. But at the end of the day, it's about money. So let me now get to money. Are you with me so far? Again the amen or at least a continue on the evolution of money. This is going to start

really getting really sexy. Hold on a minute. The evolution of money started about three thousand BCE, which is, I would translate that before Christ's era. There's a spiritual way of saying this, and then there was a secular way of saying this. So I'll say BCE is before Christ. Some others would say it's the common era, right, but it's a prehistoric times before Christ three, so three thousand years before Christ, right, people traded goods and services directly.

The system was inefficient though, because it requirement was called a double coincidence of once. In other words, I've got a want the same thing that you want at the same time in order for that to make any sense, and so that system will existed. But then it was quickly replaced by a commodity money. And these are things like gold and silver and shales and livestock as a medium of exchange because it was, you know, more asset based.

And one of the problems I have with modern cryptocurrency blockchain think is a brilliant technowledge you, by the way, but most cryptocurrencies, Bitcoin is the exception right now, they have no asset based to them. There's like a gym membership that's that's popular something they're valuable because people hype them up. So just you know, I'm not saying cryptocurrency is not real. In fact, some of it is very real, and certainly digital currency is one hundred percent real. Most

money today is digital. I'm just saying, don't invest, don't quote invest, because really you're speculating it. On the twelve thousand plus cryptocurrencies, it went poof, it just exploded, went away thinking you're gonna get your money back because if somebody calls it the currency, it's really just speculation. You can win big, you can lose big. Don't use your rent money back to this. The people have made it big, by the way, So but again, just know what you

know what you're doing, because it's it's speculation. Commodity. One of my billionaire friends was in a meeting and he said, if somebody could tell him how cryptocurrency goes up value and how it goes down, he'll buy some. And no one said anything in the meeting, and so he just said, oh, thank you. Commodity money between six hundred, well between three

thousand and six hundred before Christ. So the years went from bigger to smaller as we get to year one in the period that was AD, which is in the life of the Lord, a year the year of the Lord. It makes me after someeople say after death, but it's after Christ's birth. Isn't it cool that Christ defines before and after dates of the world. I think that's pretty cool. So three thousand BCE to six hundred BZ societies began using these valuable commodities, all right. Then metal coins came

around six hundred BCE. First standardized metal coin were minted in modern day Turkey. This made trading easier and more reliable. Modern money, okay, was the seventh century in the Tang dynasty in hold on now China. Yeah, China's very old China introduced paper money backed by precious metals, a concept that spread to Europe by the seventeenth century and the gold standard nineteenth century to the twentieth century. Many countries pegged their currencies to go. This system lasted until the

twentieth century when fiat currency, government back currency took over. Now, before I go here, let me back up, because I've just jumped over. I'm justing over a lot of stuff coming on the ground in forty five minutes. And you can in comments in social media, you can tell me what things you want me to go deeper on. If you want to carve this out and create one a separate podcast just on a topic. Right, I'll go deeper. But before gold was used as a standard in the

US for money to back it, silver was. And I like silver because it's like the common man's current. It's a common man's precious metal. And silver was used all around the world, not just in the US. In fact, it was used in Africa get to that in a minute. But it was used in the US before gold was used. But then in nineteen seventy one, really the present, you've had what people call fiat currency, and they say it in a sort of a sly negative way, as if

you know fiat currency some negative thing. It's actually pretty Gangster's official officially abandoned the gold standard under President Nixon. Today is money's values determined by governments to create and trust in financial institutions. And it's quote literally backed by the full faith and credit of the United States government. Now this is pretty gangster because this is the biggest economy in the world, about twenty nine trillion dollars and

we can issue a dollar. And by the way, it is the flight to quality of this day in the world. Don't don't don't listen all this noise out here by people saying there's a new currency in China. There's a new currency here there Russia wherever. Russia's currency is exploding. Actually, but the people keep talking about Russia. Russia is a rounding error to the US economy. It's like ten percent of the US economy for anybody who's really interested. So

it's really not a serious threat. They just threat us, They just threaten military and all kind of other things. And they got a gangster economy, a negative connotation of gangster, not the one I just used, just like North Koreas. But anyway, currency is when somebody just says, hey, take me on my word, and China Russia, all these olive guards, all these people in these countries, the country, these countries are talking all kind of badness about America, Iran, all

these places. Guess where their leaders and their business leaders are trying to put their money, trying to make their investments. They want us currency and they want us assets. It's we're Americas are called what's in financial terms called a

flight to quality in the world. So it may change, but at the moment, and we got to make sure we're managing our death of this country is the defenitis ballooning, and we're not doing a good job of managing it and investing in the biggest asset that we've got for the next economic boom, which is our people. That's another podcast for another day. But at the moment, if you have currency is pretty positively stated gangster. We've done it. Amazing, everybody.

We're a quarter of the world economy and we're only we're fractioning the world's populations. Eight big people in the world, give or take. In America's about three hundred and fifty million people, give or take. So check that out. Okay, now it gets interesting. I'm gonna get I'm gonna summarize these things, and I'm gonna go back and tell you some cool things about Africa, and then some suggestions for you, and tell you about me and how I used these

things and in some cases screwed it up. Charge cards this is the first cash list credit system, all right now. Early forms of charge cards were started in the nineteenth and twentieth century. Wealthy individuals and businesses use credit coins and charge plates issued by retailers for store purchases. Now I'm not this old, but I did have a charge account at the Four Seasons Hotel on Dohini or the Four Seasons Los Angeles at Dohini, or Four Seasons Los

Angeles at Duheini, Beverly Hills, whatever they call it. And when I was twenty years old, I used to go there after I left my office, and I didn't tell them I didn't have any money. I was going to have some money, but I didn't have the money at

that day. I was managing cash flow as every entrepreneur does, and I was it was twenty years old, twenty one years old something, and I used to sign a document, a book, I signed an invoice with my signature and they would carry the balance for me, and I'd pay it off once a month, and so they would carry an in house my charges on in house books, and once a month or once every other month, I'd write

them a check back. Then it was checks and pay off the balance after I floated their money for a month or two doing other things with it, like making other money. By the way, do you know that a check is nothing more than a form of removing value?

For those who still use checks, you know, you could take technically the back of somebody's T shirt right paid to the order, write a routing number and an account number and a few other things that makes it legal, and sign it pay to the order of and you could and technically, you know, you get into a big fight with the bank. But technically you can take that person's T shirt and go to the bank and challenge them the cash your or their T shirt, and they're cool.

It's you know, it's just it's just pretty cool. Just to understand these things. Okay, So credit cards started with diners Club in nineteen fifty, now not eighteen fifty. Nineteen fifty. Show you how big this economy is and how fast has grown, and why I want you to teach treat financial literacy like it's like it's breathing, because you've this

thing is just a while. The world is five billion years old, and you know, American is you know, goes back to you know, the sixteen hundreds and all this kind of stuff, but really like fifty three or one hundred fifty three dollars of acid value of sorry, net worth today in America was created since the year two thousand. That's last twenty five years. That's another document, another podcast

part of the time. But I want you to understand how quickly this stuff compounds and bills in each other, and it can just run away from you and get away from you, and you don't understand anything, and you end up with I was with a credit card that paid twenty nine percent, with too much month into your money, and try to figure out where did all your money go? With somebody smarter than you separate you from your wallet.

That's what happened. So in nineteen fifty to the modern charge card was launched by two entrepreneurs allowed users to pay for meals at participating restaurants and require full payment each month. This is very important because the next credit card was created in nineteen fifty eight is called the American Express, one of my favorite cards. And I have the AMEX, the vaulted Ames Centurion Card, the Black card they call it, which you cannot apply for. They've got

to give it to you. Which technically I could purchase the hotel I'm staying in, or walk into a car dealership lot and put my credit card down and buy a Ferrari technically, but the thing about a and so the AMES was created initially for traveling, and it evolved into a much more premium product. It was created in nineteen fifty eight. But it requires also you to pay the full bill in thirty days. So these two cards, Diator's Club Card and the America Express Card are two great

examples of a charge card. It's not a credit card. You must make the payment full payment every month. So I'm not gonna get you to my business. But I run a very big business and I travel a lot, and I will put business charges. Well, I put all charges on my card. I'll be reimbursed. I don't want an expense account. You don't want to do that. If you're running a nonprofit, by the way, for sure, you don't.

You don't want to expense account. You want to expense report, right, so expense account, which means they just give you some money and say spend it and tell us how you spend it. I think you're asking for trouble report, which means I put it on my own card. And then the expenses that are related to Operation Homee are related to Brian Grew Ventures or Brian Group Advisors or Brian Group real Estate or Promise Homes Company are the other

ventures I'm associated with. They reimburse me based on a written report that I give them of my It's called an expense report. Okay, but but I charge a lot every month and I get reimbursed, and I pay the whole bill every month. And if I really thought about where I was twenty years ago, I would have a heart attack. Knowing twenty years forward, if I was thirty years old and I look forward to see what I'm paying for my credit card bill every month, I would

have a massive heart attack. But I manage it just fine, and they've never missed a payment. I also do this because I get points. So when I go to if you see me in Maui or you see me in Turks and Caicos, I'm not paying for it. Turks and Caicos pays for itself. That's more complicated the explanation, but it pays for itself, the phone, the phone bill, the airplane tickets or reward tickets. So you see me, you see me sitting me and my wife sitting in first

class going to Turks and Kkos or Maui. That was because of points, AMEX points. You see me in a rental car, points free hotels. Often if you see me on a non business trip, why do I stay at the same hotels versus trying to floss and stay at these boutique places. I stay in the same brands all

the time because I'm building up my point balance. And so when I'm ready to go on vacation or whether we reward my assistant Tina Fair or run to reward somebody on my team with a vacation someplace, or allow my wife to go on vacation or my family members,

I don't give them cash. I can give them the points for a hotel state and then points for a rental car, and then points from my AMEX card, which is just like cash by the way, to pay for miscellaneous And I have points from the airlines so I really treat credit cards like a partner to me in cash flow and benefits management. I could stop the podcast right there. There was a lot of benefit for you.

I hope you got that. Credit cards. Now, the birth of revolving credit Bank of America, this is deep now nineteen fifty eight. Why you're saying, why you mentioned the Bank of America, because that's where the first credit card came from, the first revolving credit card compete created, I believe to compete with American Express. In nineteen fifty eight. The first revolving balance credit card came from Bank of America, and this later became hold on Visa. I've got except

of my wallet. You got them in your wallet. And then in nineteen sixty six, the year I was born, MasterCard was born by a group of banks. They created MasterCard now sorry, they created master Charge. Sorry that later became master Card, and they created that to compete with the Bank America card. Did you hear what I said? It was not called originally Visa. It was originally the

Bank Americ Card, right that rosimately became Visa. And then and then these other bankers created this and that was created to compete with America Express, right, which got there in the americanpress, got their idea from the from the diners Club. See how this competition in capitalism and then most best good things in life are copied. I mean, Steve Jobs and Bill Gates got a lot of their brilliants from looking at what Xerox Park was doing in IBM,

and they don't, you know, just IBM. Xerox Park did great things, but weren't as great marketers as Bill Gates and Steve Jobs were. And likewise, these you know, Visa, MasterCard and Amex sort of have emerged as the global winners from this competitive explosion in credit cards that happen in the twentieth century. Discovering other innovations arrived in the nineteen eighties and to present, discover entered the market in nineteen eighty five, offering no annual fees and cash back rewards.

Credit cards evolved with magnetic strips and chips and contentless payments, and it's still evolving, right, And of course we have debit cards, and I hope you know what a debit card means, Otherwise you're going to go broke. A debit card literally means it's going to debit directly out of your account. It doesn't matter if it says Visa a MasterCard on it. Those are just payment platforms and databases and systems. When you swipe that card, it's taking the

money out of your account. It's not like the old days with a check, where you write it and float the check for three or four days and you can run around trying to find the money before that check hits the bank and gets processed, and then you could put the deposit in and catch it as it's some The joke was, I can't be broke, I still have checks left. That day is over. Debit card swiping is immediate origins of money in the world. Money in its

early forms originated in Mesopotamia. I got to say that slowly our modern day hold on Iraq again around three thousand BCE before Christ and the Sumerians and the Babylonians developed one of the first recorded monetary systems using silver. Hello, I told you that in grain it's units of exchange. They use standardized weights of silver shekels they call and stored grains to facilitate trade moving beyond barter. Now, as all these pieces starting to right try to link together,

are right. Now, Let's fast forward. Now. I want to cover a lot of history now in a short period of time. I hope you're enjoying this. Let's talk about Africa. Africa played a significant role in the history of money. I don't know how people are talking about Africa the dumb or stupid or lazy. I don't know where they get that from. Africa is the biggest, the most the biggest untapped natural resource in the world to this very day is the African continent. The first human being walked

upright in Africa. I'm gonna do a whole podcast on this, really inspired by the Black Space genius Neil Tyson I thing is his name, where we talked about DNA and all that stuff. So I'm gonna do a separate podcast on that. But Africans were geniuses and they were involved in the early development of money. They both went early trade systems and the development of early currencies, and specifically

before coined money. African civilizations use commodity money. And this starts like in three hundred, you know, after three you know, the year three hundred, after crisis death. So the first one they used to know about calorie shells. They were used widely in West Africa. Cowori were one of the most recognizable forms of currency for centuries. Then gold dust and nuggets used extensively in West Africa, particularly in the Ghana,

Mali and Songhai empires. That's around three hundred to sixteen hundred common era or after a d right after crisis death saw bars. Yes, I said salt sawt bars. And by the way, everybody's saying capitalism is evil, and you know, we get people deal with capitalism and free enterprise and money since the beginning of time. Right, the Bible talks about money than any one thing. Hello, I think over

two thousand references. Sometimes Jesus got upset is when he turned over the tables of the money changers in the Bible. So like, get with the system, because it is gotten with you, whether you like it or not. Like this again, this is as important as the right to vote. It's almost important as breathing. I want to remove your stress movie from a surviving mindset. This is my book up from nothing to a thriving mindset, to a winning and building mindset that means that all this stuff is important.

Salt bars in the trans Saharan trade, salt was so valuable that it was used as currency, particularly in the Sahara in s held areas copper, iron, and brass rods. Many African societies use metal as a form of currency, especially in central and South In Southern Africa, the gold trade. West Africa was a major supplier of gold to the Mediterranean in European economies from eight hundred to year few

teen hundreds. Did you hear me? It gets deeper. Empires like Ghana and Mali and Songhai controlled vast gold mines and traded with North African merchants, influencing global markets. This one's a famous example from the fourteenth century. The mansa of Mansa Musa is what a cool name, Mansa Musa. We got you know, don't go name of your child Mansa Musa. Now right? I want to be to get a job, right, Mansa Musa? That was a good joke. Sorry.

The ruler of Mali in the fourteenth century famously disrupted the Egyptian economy with his lavish distribution of gold during the pilgrimage to Mecca in thirteen twenty four, just completely toe up. The inflation ran amuck because he was just distributing. He was intentionally distributing as riches everywhere and inflating everything around him. Today we'd say, let's say say it's like twenty five percent inflation, all right, where we're arguing about

two and four and five percent inflation in America. African kingdoms and the use of coinage. Some African civilizations minted their own coins, by the way, the US did the same thing. I'll get to that in a minute. The Oxumite Empire, which is modern day Ethiopia and Eritrea, by the way, you know those people, those two groups are related, right, They had been worn with each other. It was for the longest it was two cousins fight and Eritrea and Ethiopia.

You look at them like, yea, all the same people. What's what's going on? Okay? Anyway, the Oxumite Empire produced gold, silver, and bronze coins as early as two seventy CE. This is the common era after Christ's death. The Sultanite of Kilwa modern day Tanzania, I've been to, I've been to the African African countries. Is Tanzania is fantastic. They minted their own coins and eleventh to the fourteenth entry facilitating Indian Ocean trade African gold was a primary driver in

the European Renaissance financial system. The gold from West Africa supplied European mints and helped finance banking families like the medicine in Italy. You heard all about the medicine. You don't hear about where they got their gold from. That that back door there their new monetary and financial system and credit system. It was from Africa. Portuguese, Dutch and

British traders established commercial relationships with African kingdoms. I'm about to get a little controversial here, but it's just the facts, exchanging goods, firearms, textiles for gold, ivory and slaves. Yes, black Africans were also in the slave trade. They didn't know they were pushing them off, sending them off to than on American transgressions and world horror. But you know, you got folks to the coast. And that's a whole nother story for another time. I will do a special

piece this year on Africa. Okay, So there's good capitalism, by the way, in bad capitalism. Good capitalism is where I benefit in somebody else benefits more, and bad capitalism is where I benefit somebody else pays a price for it slavery is an example of bad capitalism. Am I going too far? Am I going too fast? Going too far? With you? I hope not, because we've covered a lot of ground so far and we're heading it here to

the home stretch. Okay, let's talk about the US and then we'll start talking about how entrepreneurs and business people can use good credit and what use some examples for you. The development of money and currency and credit in the United States has undergone significant transformation since the colonial They are shaping the nation's economic landscape. In sixteen nineteen, a company, not a government, by the way, Institution's Bay colony. By the way, do you know that the first democracy was

a company? Do you know the first government was a corporation in America? Don't trust me on any of this. Check it out yourself. The sixteen hundreds, the Massachusetts Bay Cup Colony. And I just like throwing this in just because just fry your brain. And somebody said, what what did you say? Go deeper on that. The word white, the racial word white, completely made up. It's not real.

After five billion years in the world, four billion years of organism life, two hundred million years of the Neanderthal life, a couple hundred million years of a modern American, a modern human being life, three thousand years of life in the enlightenment, you know, post Christ. The word white was created about four hundred years ago just in North America for political power and economic reasons. And I will white people and Backo, who used to be friends when they

were both in dentured servants. Again, it was all about money, and I deal with that when I deal with my podcast on slavery that I'm going to do, which is going to be not emotional, just the facts. So the masters Is Bay Colony issued the first paper money in the American colonies to fund military expeditions, right right, That was sixteen nineteen. In seventeen seventy five, during the American Revolutionary War, the Continental Congress began issuing their own currency.

They were called continentals. But they went too far and they became counterfeited. They printed too much of it. It severely depreciated and it became worthless basically by the end of the war. So in seventeen eighty five there was a first attempt to create an official currency by the Continental Congress. In seventeen ninety two, there was a Coinage Act,

you know, introducing basically denominations and standards. There's a free banking era now between eighteen thirty seven eighteen sixty three, but basically everybody just did their own thing. So you had again picking on boomboo and Pookie and then but you had you know, the corner store, you had individual banks, you had individual companies. Think about a car dealership issuing their own currency, their own you know, cities and states

issued their own currency. It was wild, it's crazy. It was no you know, super it was just a wildcat era. It was like no supervision whatsoever. And you should, you know, for kissing, kissing and giggles, go buy some of his old currency and frame it and put in your wall. Some of it will be worth a lot of money at some point. In nineteen started eighteen sixty three, after the Civil War, there was a National Bank Banks Act that tried to make sense out of this chaotic currency

and create some standardization. And then you had the National Banking Act, you know. The National Banking Act was followed by the Federal Reserve in nineteen thirteen to ablished the Federal Reserve System as a central bank for the United States, aiming to provide a safe and more flexible monetary and financial system. That's just nineteen thirteen. And then I've already talked to you now brought you up to speed to

the evolution of credit. I talked about, you know, shopkeepers extending their own credit boo, their keeping their own books on the ledger, is what I did with four Seasons Hotel. I talked about the nineteen fifties and credit cards, and the Franklin National Bank of Long Island issued the first modern credit card. Well, b of a might might argue with them, but that's actually probably true in nineteen fifty one, nineteen fifty eight, be it they issue that fancy a card.

I've already mentioned that the card that happened in the nineteen It was a lot of people competing for credit at this no politic for credit. By the way, the word credit comes on the Latin route word credit till, which basically means credit. And I've already talked about the modern credit uh credit era. Okay, So now I brought you up to speed, and let me now talk about businesses and entrepreneurs in the use of credit and and talk about you. So I'm a businessman, I'm an entrepreneur. Also,

those two things are different. Businessman, a businesswoman has a standard business plan, and an entrepreneur is crazy like me and create something out of whole cloth that's completely new and different, never been done before. And oftentimes we know we don't when we're starting. We don't have backers. We don't have You come from the hood where I came from, you don't have backers. So I use pet boys for my my my auto expenses, I used Sears credit card.

But I needed to buy office supplies and furniture and some clothes, I used Radio Shack. You guys remember that for my computers and my electronics. And my mobile phone had a phone that was like a brick that went over my shoulder. It paid, weighed like thirty pounds, and it was like forty five cents a minute. It was analog phone calls before digital sailor phone calls. You guys remember this. It was forty five cents a minute, and the phone itself cost three to five thousand dollars to

ten thousand dollars, depending on your brand, your model. I remember I was thinking I actually have a credit a phone in my car at a nineteen sixty seven Mustang in the hood, and I couldn't afford a mobile phone. But you can go to radio shack and buy a fake mobile phone kit, which was a fake phone receiver, a cord that would go under the dashboard, a fake and tend I remember the antenda that had the swirls

on it. Yes, there were actual intendance for anybody who's a millennial, and the tenor would go on the you tape it two sided tape, go on your windshield. And sometimes you really want to show you were a big bos you had two antennas in your car, four antennas. You saw brothers with six intendas in the car. If people have big they would drill holes in the car, would put huge intendas. The bigger your antenna, supposedly the more power you had. A lot of this stuff, which

is like me just a profile. I remember one day I had a date in the car and I was driving down the street and I was turned the corner so it was supposedly was on the phone profiling and moved the wrong direction and the cord popped out from under the dashboard hit me in the head. So yeah, I had nothing to do with the story. But I use credit cards episodically to facilitate the different things I needed because I didn't have any any equity. Capital. So

just so you know, capital is debt and equity. So equity is you know, money that you own that's either you've gotten yourself, somebody invested with you that equity, you know, to make payments on it. That's equity. Debt is a form of obligation also capital, but it is a form of obligated capital. You have to pay it back and it's typically payments tied to it. I do lines of

credit things like that in another podcast. But oftentimes, if you're from the hood, you don't have equity, and you don't have inherited wealth, and you don't have wealthy parents at least nobody none that will to give you a dish of their shekels. See their shekels we use in these phrases today or even tho where it comes from,

give me some shekels, man, you have some shekels. And and so if you're in from the hood and you have bad credit, you're you know, one of the reasons that people in the hood have these underground businesses is they're going to Pooky and them Luigi or whatever around the corner and getting very expensive debt as a loan, and only we can pay back this loan that's thirty eighty one hundred percent injuries and sometimes is with illegal enterprises.

So they're matching the expensive debt with with illegal ways to pay it back. And you reduce your you increase your credit card, you increase your financial fluency. You can now go to the bank and get prime credit and just engage in a regular business that will actually live to allow you to live, and it will last a lifetime versus these businesses tied to legal activity. It's probation, prison, parole,

or death tied to it. So businesses, you can, if you have a choice, get a business credit card, but I use a personal credit card and just assigned the

business purposes. I would encourage you to understand the difference between a credit card and a charge card when you get these cards, because if you get an American Express card in business, and you've got an invoice that doesn't pay for sixty or ninety days based on terms, but you have a credit a charge card that requires you to pay back in thirty days, and you're putting the expensive So here's one lesson in business, you don't want to typically finance long term equity with short term debt.

You don't want to finance. I mean, it's a long term obligation with a short term credit facility that requires payments right now. I know I'm covering a lot in the short period of time. But you're smart and I know you can get this. You can also hit replay and play it over and over again and take notes until you get it. Get all your buddies together, ladies together, get your girls together, and have a conversation about this and talk about it amongst yourself. There's no dumb here.

There's no dumb answer. Nobody taught you this stuff, so how could there be a wrong answer? Is just to what you have didn't know? Right, So you want to align up your terms of your repayment with the terms of your payments. That's the easiest wa ickon and that's called cash flow management. I've already talked about reward benefits.

That's a big reason why I use credit cards. I also like using credit cards because it allows me to monitor my expenses because credit card companies will send you detailed particularly MS will send you detailed printouts of which categories are spending. They will help you basically create a budget with cash flow management. It allows you to also

monitor employee expenses. And my suggestion is you look at these expenses every week, no less than every month, right, and you should pull your credit at least once a quarter. I think you should pay it, pull it every month. I look at my credit report every couple of days on the outside. If you do this the right way, doing a business credit card will help you all out. Ultimately get a business credit facility and a business credit line.

I want you to be mindful of fees and interest rates, which I've talked about already, and I want you to make sure you're complying with the law when you're using all these facilities. And I remember that al Capone, who's the famed or infamous gangster. They couldn't catch them on murder in Mayhem, but they got them for tax evasion. I'd rather owe my mother money, God rest your soul, and old the federal government a dime. They they ain't playing you don't. You don't want to use it. You

want hardcore interest rate payments. Oh oh, the I R s of money and see how painful it is, how much interests they're charging, and they're not trying to hurt you. They're trying to discourage you from having them as a lender. They want to be the lender of the irs, wants to be the lender of last resort. But if you have a choice between a payment arrangement with with I R S, which they become now, they become your credit facility,

your credit your your credit card. Uh, that's not a charge card, that's a credit card in an example, because you want payments in there monthly. Uh. If you have a choice putting owe them money, not paying them, or putting them on a credit payment plan, do the latter. Do not blow them off, even if it's very painful. When I've done it, I've owed them money, I've had payment plans and had to pay them back. But it was a time value of money, time value opportunity, cost

of money. Write that down time value opportunity cost of money, and you mix and match the credit card or the credit line or your cash is available with the credit facility that you have. I'm gonna give you a little bit of a rich person's twist here. There is a credit facility, by the way, that is the bank of you now. I don't want you going crazy with this A right, you know. I want you to come to me telling me that, oh, John, you gave me bad advice.

This is a sophisticated thing I'm about to tell you. I want you, ultimately to get. I want you to do four one K right with your employer. If your employer has giving you employee matches free money, take as much money as there is available matches to the maximum. I want you to get your earning come task credit from the federal government. I want you to do all that stuff. I want you to buy a house. I want you to have a will and an insurance plan, all that stuff right, life a term, our whole life

insurance policy, so on and so forth. I want you to use credit cards and charge cards responsibly. Okay, good. I want you to open a stock account and do it conservatively, right, no fancy stuff. Don't invest in cryptocurrency and call that traditional conservative investing. It's not. It's speculation. That's a place in your portfolio for it, but it should be no more than ten percent in my opinion, when you get a stock account with strong assets in it,

not flaky stuff. Let's assume you have a stock account now that has ten thousand dollars ballance. I'm just picking a number, right. You can get what's called a margin account.

Once you're there and you have an established relationship with your brokerage, you can get a margin account against your marketable securities that's in that account, and you can borrow from the bank of you up to x percent, fifty percent to seventy percent, depending on the securities in the account and how marketable they are, how institutional they are, right,

blue chip they call it. So if you have one hundred thousand dollars securities account, this is not your four to one K. This is a This is you're investing in the stock market. Right. If an account value at one hundred thousand dollars in this example, you could borrow from yourself at typically better rates than the bank up to seventy thousand dollars. In that example, you got to pay it back. And here's a downside if those stocks ever go down to a concerning point. Let's say the

easy example here is they go down. Let's say you have one hundred thousand dollars account and you borrow fifty thousand dollars against that for whatever business or home purchase. By the way, it's your money, do as you will. And by the way, you get to write off the costs of the debt on your own bank of you account off your taxes. Sometimes tech your tax pro to or say that John Brant told you this. Your tax provided situation is different. But this example, you owe fifty

thousand dollars against one hundred thousand dollars margin account. Okay, this is your stock, so it's your money you're borrowing against yourself. You want to pay that back, so you want to plan to pay that back. If you don't pay it back, and if that stock portfolio you got was flaky and that value goes down to I'm making up now sixty five thousand dollars versus one hundred thousand. I don't think this is what happened, but it might.

That could be what's called a margin call, where they say, look, you're over leveraged. You've got to now payoff this fifty thousand dollars. We're uncomfortable that your value's now gone from one hundred thousand down to sixty thousand dollars. This happened in silicon value. By the way, all the time the startup companies where the stock goes up to a billion,

that goes down to one hundred million. The person has done all this lifestyle purchase stuff and they got a credit line of two hundred million dollars against a billion dollars of stock, and now it's only worth I'm making this up one hundred and fifty million dollars with the stock, and now they're upside down. The bank goes and takes all their stuff. I don't want that happening to you, so don't get overleveraged. But it is a tool, all right.

This is John O'Brien. I'm tired of hearing myself talk. This was an exciting episode. Let me know what you learned, whether this is valuable, let me know what I missed out, or what else you want to know, and I'll do it on the EPP the next episode or one of them coming up. I do listen to all of your comments and suggestions. I do read the comments myself between all my business activities and traveling. I love you very much. I want you to win. This is a silver rights movement.

SI l V E er from the streets to the suites. This is John O'Brien. This is Money and Wealth. Go get my book bestseller, Financial Literacy for All. The book before that, Up from Nothing, the book that the money, the memo how the port said, capitalism, love, leadership, banking our future. But I really think you shoul get incial Literacy for all and sit down with your family and

talk about money. I want you to go take this thousand dollar offer I've given you of a one year coaching credit with Operation Hope to get your credit score right, get your budget right, get your life right, take control of your life. Tell him I sent you. What else do I want to give you? Oh? Some advice? Go tell all your friends to follow Money and Wealth. It's growing like nobody's business, and we're on for a new movement to help set our people free through financial literacy.

That's my rap. It's like Jay Z said in his four four four album, This is a million dollars worth of game for nine ninety nine. This is none ninety nine because it didn't cost you a dime, Just my time, all right, Love and light child Hope. I'm out. Money and Wealth with John O'Brien is a production of the Black Effect Podcast Network. For more podcasts from the Black Effect Podcast Network, visit the iHeartRadio app, Apple podcasts, or wherever you listen to your favorite shows.