A Psychotic Tale
A Psychotic Tale
Now is the time to talk of a psychotic tale. Ironically, I used to talk about how it is important to obtain a job, like a plumber. I was so huge on making sure you obtain a job that you want and are good enough for. I used to think that only people who were lucky could obtain wealth that I always saw on television and movies. I believed that only those who were born into fame, made a risk in business, or won the lottery would I finally be able to obtain the money needed to live in luxury. I used to believe that the best thing in the world to do would be to go to school, get good grades, get a good job, and then save money.
That advice was very sound when it was for pre-1971, because the dollar was bound by the gold standard. No new dollar could be created to handle any debts if there was not enough gold present to back it up if someone wished to withdraw gold. Therefore, there was actually a physical cap on the amount of dollars present, so when money was saved, it was actually worth something. Can you imagine that money saved in the bank used to earn 15% in interest! If you saved one million dollars, you could easily make $150,000 in interest every year! That is a smart, because that is a livable income! That interest is something you could live off of. However, because the gold standard is not holding the dollar down, there can be an essentially unlimited amount of money being created, which is why dollars become less and less valuable. It is important to note that the reason interest rates were 15%, were because the money was loaned out at interest that was higher than 15%, to investors, such as those in real estate who would have to make deals work out where the tenants can pay the mortgage.
Nowadays, people can usually expect not even a 1% interest rate on their money. Therefore, one million dollars would not even garner even $10,000 in interest for a year when the same money would garner $150,000 back in 1970. Since the United States can print whatever amount of money they want, chances are the interest rates will most likely decrease. Since there is so much money floating around (“funny money”), the interest rates will most likely deplete even further. Since so many people are being pushed to save more and more, there will be even more money that is going to be available for people to burrow. Because there is so much money in savings accounts, and since the banks profit by loaning out ten times the amount you save, called fractional reserve fracking, all this money is available, which means there is going to be a drop in the interest prices to make people willing to take a specific bank’s funny money. Basically, there is more money floating around than is necessary, so interest rates will continue to drop and the investor will be able to profit with all this cheap funny money. The investor needs to learn how to profit with all this funny money, because if they do not, they will accumulate dollars that are literally worth less and less every single year. Inflation stays high, so each dollar gets worth less. You could always save more money. Just know that your money will not accumulate in value through traditional savings methods at the rate of inflation.
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