Infinite Banking & Personal Economics

Notes de l'éditeur

1. You must first see how, why, and where Wealth Transfers are occurring in your cash flow. The good news: this gives you a great opportunity to exponentially increase your wealth and financial security with money you are presently giving away unnecessarily and almost certainly unknowingly.
2. We participate in a “Financial System” created by the financial industry. This is an automatic and major conflict of interest. Their interests and our interests are not the same.It’s this simple; their best interests are control and profit: Control Over Our Money= Maximum Profit. Their profits can only be one thing - Our Costs. Our best interests are also control and profit. Both parties cannot have control at the same time. We need to understand we are in that battle and that much of our wealth potential is at stake. This “Financial System” is like a shopping mall composed of different financial institutions hawking a huge array of separate and distinct financial products and services. The products include various types of savings and investment plans, retirement plans, insurance plans, and loans. We call this “The Box System”, where each financial product or service is like a “box” you have to put money in, in order to receive a specific benefit. However, like any “shopping trip”, we know we can’t go home with everything. We have to make choices. This “Financial System” is a “stacked deck” that creates financial problems and serious unseen risks.
3. Three Problems Magnified by the “Box System” Approach to Personal Finances   Scarcity of Money Risk, and Wealth Transfers
4. Problems Magnified by the “Box” Approach to Personal Finances$ Income $Less: Tax (Federal, State, and Local) and Basic Expenses (food, shelter, clothing)= Discretionary Income that must be divided among competing wants and needs.
5. Problem 1: Scarcity of MoneyWhat we want competes with what we need. Important needs compete with each other. Most “boxes” (financial products and services) have one specific purpose or benefit. We need and want a broad range of “boxes”, and the benefits they offer. The economic “Law of Scarcity” dictates that money supply runs out before all the needed and wanted “boxes” can be properly filled... or even started. Each “box” includes the cost of the product or service you choose plus service fees and profit for the provider. Multiply those costs by the number of “boxes” you need and want. Because of a limited money supply, those additional costs soon begin to reduce the number of “boxes” we can choose; they powerfully affect which “boxes” are chosen; and, they limit the extent that each “box” we choose is filled. In this way, the “Box System” aggravates the “scarcity” problem by stealing money from you that could be used to build personal wealth and a broader and stronger financial security. (Note: The term “Scarcity of Money” defines money as being a limited quantity to everyone, relative to their income or wealth level. While his options are far different from most, Bill Gates must also deal with scarcity. He probably can’t afford to buy Canada and Argentina, too. Choices must be made.)
6. The “boxes” themselves create additional costs; and, they impose limitations that lead to other hidden costs. These costs steal money that could solve problems. We are lifetime consumers with constant need for money.The way we save and invest typically involves “boxes” that lock up our money with taxes, fees, and penalties. We give up the use of that money, thinking that hoped for growth will take care of the future. If there is growth, that stays in the box, too.
7. So, with our money locked up, we are forced to use credit cards, car loans, equity loans and other loans to finance what we need and want (at least the bigger items). Then, what we pay in interest, excess taxes, fees, and certain insurance costs takes away money that could be used to save and invest and to provide protection against a broader range of risks that will steal everything when they occur. The “boxes” themselves create costs that make the scarcity problem worse. The “bottom line” is commonly negative. For most, the total of financial costs equal or exceed the total of financial gains. The “Box System” cannot win. Our only hope is to make so much money it doesn’t matter.The “Box System” mentality is a costly trap. Some earn enough money to disguise the problem and overcome the costs, but the costs still exist and severely diminish what could be. Solving the problem requires a different approach to finances.
8. Economic Fact: Locks on Your Money = Loss of Use of Your MoneyThrough the use of penalties, it seems the promoters of government-sponsored plans are saying to us: “We want to gain and keep control of your money. So, we will tax you, up to the highest bracket, and penalize you if you take your money out of our control.” (We should recognize that there is no legitimate economic reason for a penalty other than governmental and corporate greed.) For example: You earn $75K and need to take $50K from your government plan for some unexpected reason dictated by the vagaries of life (maybe a divorce, a health issue, a setback, or perhaps a business or other opportunity). The 50k withdrawal is treated as additional taxable income, which now totals $125k. Since you’ve used up your deductions on your “base” income already, the extra $50K is fully exposed to a higher tax rate plus penalties.So, you may decide to forgo the withdrawal and finance your cash need instead. Either way, the government or the financial industry is going to make a bundle on your problem. On the $50K withdrawal, the tax and penalty can be $21K or more; the interest on a line of credit can be $18K or more – if you pay it off early. (You do get to choose your poison: Taxes and Penalties or Debt Interest.) So, what caused the problem in the first place? “Loss of use” of your money you say? Go to the head of the class.
9. Economic Fact: Locks on Your Money = Loss of Use of Your Money = Debt, Debt Interest Expenses, and Lost OpportunitiesDebt, interest cost, and lost opportunities are a direct result of “loss of use” from locking up your money.The economic impact of “loss of use” of your money is huge; but, while it is felt financially it is unseen. Being unseen it is unmeasured. Being unmeasured, we accept it and don’t seek alternatives.The “loss of use” factor is ignored at tremendous cost; typically, cost greater thanBox A can produce in gains. Even if the costs and gains are equal, the net gain is zero. How will your future look at zero true gain? Inflation alone requires at least 3% growth per year just to stay even. Yes, you will have money if you “participate.” You will have your deposits plus any growth the investments may generate. You will see the evidence in your statements. The growth inside the “box” is seen, which makes you feel good. That is the second “attraction” of these plans.But, is what you “see,” what you actually have; or, what you get? NO. A large part of what you “see” in the statements is not yours at all – it is the unpaid tax that belongs to the government. It was never yours and will never be yours. And, you have not yet accounted for the “unseen” part. The costs created from “loss of use” aren’t shown on the statement. Because of what you don’t see, there are little or no real gains. You may certainly choose to participate for reasons of your own. Our purpose is to ensure those reasons are factual and not false perceptions created by government-sponsored plan promoters. It is our recommendation that you carefully consider and measure your specific factors prior to participating or continuing participation. There is a lot of your money at stake with your decision.
10. How We Gain & How We LoseThe systematic transfer of your wealth to financial institutions and government through excess taxes (paid either now or later), interest paid, interest lost (not earned), fees, and certain insurance costs. The “Financial System” as devised by the financial industry forces you into Wealth Transfers. What comes in the “front door” is taken right out the “back door.”
11. Without exception, economics is present in your every financial action, large or small-- and the effects are unavoidable. But, the ancient laws of economics are unknown or ignored in today’s personal finance, so financial drains go unrecognized -- are often never seen -- or, are wrongly accepted as normal “costs of doing business”… at a huge accumulated cost.  The “cause” may be unseen; but the damaging effect is undeniable. When you don’t connect cause to effect, powerful economic forces take out the back door what you bring in the front door.