Cash, Charge Cards and Credit Cards - Unpacked

In this episode, John explains different payment methods and the pros and cons of each. 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Welcome the Money in Wealth with John Hobryant, a production
of the Black Effect podcast Network and iHeartRadio. Yo Yo yo.
This is John Hope Bryant and this is Money and
Wealth on the Black Effect Network. And I am talking

(00:22):
about cash, money, charge cards and credit cards unpacked. I'm
going to demystify all these things. You know, people who
are underserved black and brown folks who never got the memo.
This is my fourth book, I think on money. They're
six in the series I've done, and the last one

(00:43):
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

(01:04):
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

(01:29):
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,

(01:52):
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.

(02:13):
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

(02:36):
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

(02:57):
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

(03:17):
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,

(03:41):
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

(04:05):
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

(04:28):
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

(04:49):
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

(05:11):
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

(05:33):
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.

(05:53):
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,

(06:15):
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,

(06:40):
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

(07:02):
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.

(07:23):
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

(07:47):
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,

(08:10):
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

(08:33):
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

(08:56):
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

(09:19):
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

(09:42):
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

(10:02):
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

(10:24):
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.

(10:48):
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,

(11:12):
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

(11:33):
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

(11:54):
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

(12:16):
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

(12:37):
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,

(12:59):
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

(13:23):
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

(13:44):
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

(14:05):
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

(14:28):
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.

(14:52):
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

(15:16):
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

(15:41):
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

(16:04):
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

(16:25):
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

(16:48):
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.

(17:09):
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

(17:33):
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

(17:55):
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.

(18:18):
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,

(18:39):
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.

(19:03):
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.

(19:24):
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,

(19:45):
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,

(20:07):
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

(20:29):
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

(20:49):
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

(21:11):
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

(21:34):
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

(21:56):
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,

(22:17):
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

(22:38):
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

(22:59):
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.

(23:19):
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

(23:39):
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

(24:00):
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

(24:23):
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

(24:44):
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

(25:07):
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

(25:28):
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,

(25:51):
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

(26:16):
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

(26:39):
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

(27:02):
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

(27:24):
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

(27:47):
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

(28:11):
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

(28:32):
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

(28:52):
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

(29:14):
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

(29:36):
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,

(29:59):
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.

(30:20):
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

(30:42):
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

(31:03):
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

(31:26):
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.

(31:47):
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.

(32:10):
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,

(32:30):
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

(32:54):
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

(33:19):
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

(33:44):
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

(34:04):
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

(34:26):
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,

(34:46):
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

(35:08):
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

(35:30):
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.

(35:53):
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

(36:13):
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.

(36:34):
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

(36:54):
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

(37:15):
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

(37:35):
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,

(37:58):
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

(38:20):
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.

(38:44):
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

(39:08):
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.

(39:32):
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

(39:56):
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

(40:19):
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

(40:42):
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

(41:03):
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,

(41:28):
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

(41:49):
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

(42:11):
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

(42:32):
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

(42:53):
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

(43:13):
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

(43:38):
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

(43:58):
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

(44:19):
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,

(44:43):
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

(45:05):
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,

(45:29):
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

(45:50):
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

(46:10):
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

(46:31):
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.

(46:52):
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

(47:13):
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

(47:37):
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

(47:57):
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,

(48:17):
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

(48:39):
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

(49:00):
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,

(49:23):
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

(49:45):
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,

(50:07):
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

(50:29):
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.

(50:51):
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

(51:11):
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.

(51:32):
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

(52:00):
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

(52:20):
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,

(52:41):
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

(53:04):
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

(53:26):
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

(53:48):
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

(54:08):
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

(54:29):
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

(54:50):
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,

(55:10):
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

(55:33):
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

(55:57):
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

(56:20):
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

(56:40):
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

(57:03):
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.