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Jul 31, 2026
The Man Who Engineered Your Spending Habits
The Man Who Engineered Your Spending Habits
00:00
14:35
Transcript
0:00
[ on-hold music] In 1920-- 29, one man figured out how to make millions of Americans buy things that they didn't really need.
0:16
His name was Edward Bernays, and the system he built is really one of the big reasons why high income earners today have oftentimes nothing to show for it.
0:27
Let me tell you the story of Edward Bernays, and you may already know it. He solved a problem that big producers of cigarettes at the time, first and foremost,
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needed solving, and that was they couldn't sell enough of their product. They couldn't grow fast enough because the demand was somewhat utilitarian. Before this, i-in America, everyone has their wishes.
0:51
Everyone has this hedonistic, um, vibe, right? You want something beautiful, something lasting, something, whatever.
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But largely, a lot of purchases, while we conquered the West and settled the nation, a lot of the purchases were just utilitarian. If something wore out, you needed something new. Your ax broke, you need a new ax.
1:13
Your flannel shirt wears out in the, in the, uh, elbows, well, you gotta get a new shirt. And Edward Bernays came along. Edward Bernays, by the way, is the, uh, nephew of Sigmund Freud.
1:25
So he took a lot of Freud's psychology, not so much the philosophy, the psychology, and applied it to selling goods and services, specifically cigarettes first. It was interesting.
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So in 1923, only five percent of women in the US smoked cigarettes. It was just considered something that they didn't do, and many of those didn't smoke in public. Until Bernays, he didn't sell a product,
1:50
he sold an identity change. What he sold was, "This is transformative. It will keep you slender as opposed to eating sweets. It is a torch of freedom."
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Literally, they had marches [clears throat] organized, uh, with torches of freedom, and it was a symbol of, "I am now free. I am free to do what I want." And the, the media took care of the rest, right?
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All it takes is one big march and the media steps in and you have free advertising at that point and free publicity. And he took advantage of it.
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Smoking by women in public went from about five percent of the population to twelve percent of the population between 1923 and the end of that decade.
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And with thirty million adult women in the US at the time, well, that's about two point one million new smokers. And that is a lot of cigarette sales, I gotta tell you. But it wasn't just cigarettes.
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What he sold was identity and emotion, and that then carried over to a lot of other things, right? Bacon and eggs became the staple for breakfast.
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We all bought cars, not because we could afford them cash, but because GMAC came out and financed the cars, and the car became a status symbol of making it in the American dream, right? Making it.
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That really shifted to where having stuff became a status symbol for an American. It became the American identity, just buying stuff.
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Well, World War II happened, and aft-- and we all coalesced as a nation and everyone pretty much pulled for the same cause, which is a very valiant cause.
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But then the war ended and everyone came home, and there was a lot of pent-up everything, right? Pent-up demand for just settling down in the suburbs with the white picket fence, with your own house and your car
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and pent up for, you know, living the American dream all of a sudden.
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But the American dream shift a little bit because the factories went from making tanks to making televisions and refrigerators and the latest and greatest things, and everyone wanted them.
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And you could buy them now on layaway, on credit, right? And so you could extend your life beyond your life. You have goods, right? Your status, if you will. You could extend it beyond what you could afford in cash.
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[laughs] And that made a huge difference in the American culture. We went from largely a culture of explorers and producers to consumers, right? Seventy percent of the GDP is consumption [laughs] these days.
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And I'm not saying that's wrong, I'm just saying it's something to be recognized. I think that's important to recognize, especially if you want to kind of break out of that a little bit and become something else.
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Because a whole generation, therefore, more than one generation of higher earners have built their lives on a system that is designed to keep us spending, spending more, bigger houses, bigger cars, bigger whatever it may be, greater lifestyle, better vacations with almost no assets.
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Therein lies the key. We end up, even though we're high earners, right? You earn hundred and fifty, two hundred, two hundred and fifty, three hundred thousand dollars a year, that's a high income. But we end up on this
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income cliff where if the income were to stop, we fall off. Bank of America says that twenty-four percent of Americans live paycheck to paycheck.
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And their definition, their strict definition is that ninety to ninety-five percent of the paycheck goes to necessities, and therefore there's really nothing left over to do anything else with.
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Now, the broader definition says, well, actually two thirds, sixty-seven percent of the country lives paycheck to paycheck.
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And that's defined as we need the next paycheck to pay that month's bills because there's nothing in reserves. And it's not a very pleasant way to live, especially if you're worried about, like right now, AI is coming.
6:00
We, we saw that Broadcom, which was, um- Uh, the owner of Twitter before, uh, started Broad.com, he laid off 40% of his staff because largely he doesn't need them because AI is taking over.
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Meta is laying off 20% and you've seen it over and over and over, all the layoffs, and there may be more coming, right? Ray Dalio says, "Get ready. There's more coming." And that's the cliff I'm talking about. So
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if you earn, I don't know, $30,000, $40,000 a year and you lose your job, it's not that difficult to replace the $30,000 or $40,000 a year with another job pretty quickly usually, if you have, you know, a, a good work ethic and all that.
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However, if you earn $200,000 a year and you lose your job, it can be a lot more difficult to maintain that same lifestyle and replace that income quickly. So what do we do about that? That's the income cliff.
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If it falls, it falls quickly and deeply. It's a long way down, right? Think Wile E. Coyote. Something like that. By the way, there's nothing wrong with what Bernays did, right? It's, it's marketing, marketing 101.
7:13
I mean, and think, um, Lucky Strike, right? They're toasted. That... Think, uh, Mad Men. Uh, I actually never saw that show, but Mad Men, you know, they're toasted. Wait, they're toasted?
7:25
It's like everyone toasts their tobacco for cigarettes, but no one says it. They're toasted. And it's marketing 101, and we have books like, you know, we have Alex Hormozi, 100,000... $100 million leads,
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how to get strangers to wanna buy your stuff, right?
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Alex Hormozi's doing some really, really neat stuff and helping a lot of people and building a really big business at the same time, building assets for himself at the same time, using what Bernays and Sigmund Freud started and just developing that, and he's not the only one.
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There's tons of marketing books that are excellent. So I'm not saying any of that's bad necessarily. I'm just saying we need to recognize it and adapt in our own lives, right?
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So instead of just earning, let's adapt and go to owning assets. Assets are the only thing that that pay us if the job, if the earning starts to wane or goes away, or we get sick, or we get old, or we... You name it.
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Something happens where we have to reduce the income for a while. If we own assets, cash flowing assets, that's the key,
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then over time, we can build up enough to support our lifestyle and, and that's what I'm inviting you to do. It's not that difficult.
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It's just an entire mindset shift from status is in stuff to status is in owned assets that cash flow, and that's what I want for you. That, that's, that's the key. Earned assets that cash flow. Now, how do you do that?
9:03
Well, it's, it's pretty simple. The first thing is take stock of what you own, and if it's a depreciating asset that you can kinda live without, maybe consider living without it for a while, right?
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If you've got that $1,700 a month car payment, do you really need that on a depreciating asset, or can you live with something that you could pay cash for for a while?
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Probably the latter, even though it means a status demotion among friends. We think people think about us a whole lot more than people actually think about us. [laughs] That's just a fact.
9:40
So sometimes it's a matter of taking a step back to take two steps forward. Sometimes it's a matter of we have debt, 'cause we're...
9:48
I mean, GMAC started it, then layaways, and then credit, and then now we have credit cards, and we've run up 50,000 or 60,000 in credit card debt, and we're like, "Huh, I don't even know what I spent that on." So
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a lot of us have home equity. Why not eliminate that 23% debt and convert it to fixed rate, you know, 6%, um, fixed rate equity that we, that we pull out and free up... I've done other videos on this.
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I'll link to one down below. I... And free up a lot of cash flow every month. What do you do with the cash flow then? Now that you've freed it up and you wanna own things, well, start owning things.
10:29
Um, start owning rental properties that cash flow, and it is possible to get that today. I've done another video on that as well. Uh, dividend-paying stocks. Now, are they gonna support your lifestyle from day one? No.
10:42
Neither is one rental property. One single family rental, probably not gonna support your life for, for now on out. However, that's the first step. Then you take another and another and another, and it's surprising.
10:55
Oh, and a small business that you own, right?
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That runs without you if need be, because you've got the employees trained that, hey, if something comes up, and a family member is ill and you have to attend to them for a while, okay, it runs without you.
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Those are the cash flowing assets. That's what ownership looks like, and that's what I want for you, is ownership. Now, I realize it doesn't happen overnight.
11:21
It's much more comfortable to walk into, I don't know, the BMW dealership. Or I want a Genesis. I, I'll admit, I'm not really a car guy, but I got my eye on a Genesis GV80. It's their SUV.
11:33
It's a really pretty car in my opinion, and I can walk in there tomorrow and they would finance it for me and I could walk out with a Genesis. It's immediate. That's the key. It's immediate gratification.
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Whereas owning assets that cash flow is not immediate. It's step by step by step by step. It's little by little by little. You can really build a nice cash flowing asset and support your entire lifestyle.
12:01
So I said first, take stock of what you have, and if it's a depreciating asset you don't need, maybe think of downsizing, getting rid of it for, for a little bit at least.
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And then do the number every month just to pay the utilities and the mortgage and whatever else is there, your Netflix account.
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How much do you need on groceries, of course, because that keeps increasing every week it seems. Um, how much do you need? Find out the number. I mean, really do the number. It's amazing.
12:33
It's oftentimes, especially if you don't have car payments or credit cards or anything like that, if that's all eliminated, even if you use home equity to eliminate it, that's fine. Get rid of that.
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Then it's amazing how small that number is. The next step, start building toward that number. Maybe it takes you a year. That would be really quick, by the way. Maybe it takes you five.
12:54
Maybe it takes you 10 to build up enough cash flowing assets and maybe even some more so that you can then travel, but not on credit cards anymore. Don't even care about the points. Maybe you do. I don't.
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You get the point. Maybe you have enough cash flow that covers your living expenses and allows you to travel without having to work. I'm a big advocate of work. I think it's important.
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I think it's important to find something that gives you meaning, that helps you to constantly become something else, right? To constantly stretch yourself, to learn more, to do something more.
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But maybe that right now at the moment is just building up your ownership of assets, the cash flow, so you can live your life. So we thank Edward Bernays for everything he did.
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Over the course of the last century, he was a catalyst for changing the entire face of this nation, the entire economy of this nation. And that's had some very, very good effects. It's made some very wealthy people.
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I want you to be among those over time, building your assets, building your cash flow. So we talk more about individual ways to do that. And so
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please subscribe to the channel, come back, let's watch, let's grow on this together.
14:16
And if you like this idea of owning versus earning, think about subscribing to my free weekly newsletter, Asset Accelerator, down below. Awesome. Have a great day, guys.
14:30
[outro music]
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