| Note: This is Part 2 in a 6 part series called "The Retirement Conspiracy." Go to www.RetirementConspiracy.com to read the full series.
Part 2: INTEREST RATES
Yesterday in Part 1 of this series (Go Here if you missed it) I explained how The Retirement Conspiracy really stems from "The Powers That Be" removing your incentive to save money and plan for the future.
The reason is simple – they don't WANT you to save money. They want you to spend it.
Part of the way they incentivize this is through making your money the equivalent of a melting ice cube.
If there's no point in holding long-term, you may as well spend it. Because in this scenario, "A dollar today is worth more than a dollar tomorrow."
But this is far from the only aspect of this sinister conspiracy against your retirement.
Because it's not enough for them to put an expiration date on your money – they must also close off your options for preserving your wealth and seeing it provide you a usable return.
Think about it – if there is a mechanism out there that allows you to take your inflationary currency, save it, and see a return greater than inflation outside of the stock market…then there is an incentive for you to save your money!
That's why the Fed has essentially Nationalized and price-controlled Interest Rates.
Interest rates are the cost of money.
In a free, open market, borrowers and lenders set the cost of money.
If you, being a responsible acquirer of capital, lend money to an individual so they can start a business for example – you are essentially investing in them.
First you'd want to know if they were credit worthy. They would need to demonstrate certain important characteristics that made you assess their credit worthiness.
Then you'd set an interest rate – what the borrower needs to pay you back in addition to the original sum of the loan.
For normal every-day folks seeking to get their money working for them in the background a Savings & Loans Bank was a great option.
They deposited their money in the bank and the bank loaned it out.
In return for allowing your money to be loaned out – you received a portion of the interest payments collected.
Sometimes the interest rates were higher, sometimes they were lower.
However, these rates were determined by basic laws of supply and demand. If more people were looking to borrow money than there were banks willing to lend it – they had to pay a higher premium on those borrowed funds.
If there were less people willing to borrow money, banks would lower the interest rates to drum up more borrowers.
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For the average saver, this meant you could effectively save a portion of your money in the bank and see its value compound.
Even with an inflationary currency, this rate of interest was traditionally higher than inflation, which meant it also served as a great way to save your money and preserve it.
In fact, you could LIVE off the interest banks paid out.
For example, prior to the Federal Reserve in 1913, the market-dictated interest rate in the United States was about 3.5%.
In 1900 the average annual salary in the United States was $449.
If you saved half of your salary for 30 years you'd have $6,735.
With a 3.5% interest rate in the bank, that'd make you $235.72 a year – so you'd be able to live on the interest income from the money you saved in the bank.
Simpler times, right?
In 1981 when Fed Chairman Paul Volcker declared war on inflation by raising interest rates to 15.8%, you could live off the interest in your savings account as well.
Even with inflation at 10.3% at the time, you would have received 5.5% over that.
At that time the average salary was about $22,390 and if you managed to save half of it over 30 years and simply put it in a savings account at that time with those rates, you'd have been able to generate $19,470.30 a year in retirement income.
Nearly your entire salary from just saving your money in the bank.
However, Today The Fed Price-Fixes And Manipulates Interest Rates To Control Your Behavior
There is no longer any free market when it comes to the "Cost of Money" or the "Cost of Borrowing."
The Fed has 100% complete control.
They decide to raise interest rates or lower them.
They play God with the entire economy.
And all they've done over the past 40 years is lower interest rates.
Today, the absolute highest yield savings account in the nation is Sallie Mae's SmartyPig account, which pays out 0.7% per year.
Believe it or not – that is 15x higher than the FDIC's national average for savings accounts (which is .06%).
In other words, you are being CHARGED for saving your money in the bank.
Because the absolute highest yield in the United States is less than 1%, it does not even begin to keep up with inflation.
It's only slightly better than keeping your money under the mattress.
Yet in Europe, Scandinavia, and Japan they have actually begun implementing negative interest rates.
Which means you are CHARGED money (on top of inflation) to keep your cash in a bank.
All Of This Comes Down To Removing Your Incentive To Save
First, inflation eats away at the value of every dollar you own, making simply saving your money in a coffee pot useless.
Secondly, the Fed price-fixes interest rates to manipulate the market and influence human behavior – destroying your incentive to save money in the bank.
Now, for the privilege of allowing the bank to loan your money out to increasingly speculative and non-credit worthy borrowers, you receive nothing back in return.
And in fact, in some places (and probably in the United States soon) you'll be charged for it.
This is yet another attempt to make saving money pointless and fruitless.
Another attempt to push you toward the only direction "they" want – which is to work forever until you die and spend money as fast as you can.
But What If You Could Be Your OWN Interest-Bearing Savings Account?
What if there was a way for you to save your money and have it return a greater amount of interest than any bank on the planet?
In fact, what if you could get more interest on that money than banks have EVER paid out in history?
I'm talking about 3%....5%....10%...even 15% in a single month?
Up to 50% every year?
What if you could self-generate monthly interest payments of $831.50…$1,663….$3,326?
This is the solution I'd like to share with you. I call it my 70/30 Cash-on-Demand Income Formula and it allows you to BEAT the Retirement Conspiracy…
Go here now to get on the waiting list and receive VIP perks.[retirementconspiracy.com/access-the-solution]
Tomorrow we'll talk about yet another form of fixed-income generation – Bond Yields.
Trade Wisely,
Jon Lewis
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