So in today's video, we're going to talk about three reasons
why saving money will make you poor.
And be sure to stay to the end, because we're going to talk about an
action steps and things that you can do in order to get on the other side of this.
Reason number one is banking is a business
no different than Apple or Amazon.
It's a business.
It's a financial services business.
So how exactly do banks make money?
The first way is, of course, they take your deposit
your hard earned money from however you make it and you put it into the bank
and they pay you, let's just say 1%.
But you guys all know it's much lower than that at the moment.
So now your deposits are in the bank right here.
And at this point, if you think about it, your money is actually
a liability to the bank because they actually owe you 1%.
So you're essentially loaning the bank money
and they're paying you 1% or less for the right to have that money.
And is it actual expense of the bank?
So now that your money is an expense to the bank, the bank
now has to lend that money out in the form of a loan to other people
that are borrowing and they are now the lender of your money.
And let's say that they lend it out at, say, 5%.
Now, I'm not that great at math, but I can tell you
that if I get your money and give you 1%
and I lend your money out at 5%,
then I'm making now 4% on your money.
Not including fees and all the other things.
So just remember that banking and the financial services
industry is a massively big business, but they're taking your money
and putting it to work and making money off of your money.
Item number two, inflation is a tax.
Now it's a hidden tax, but it's a tax.
It's robbing you from your net worth.
How exactly is inflation a tax on you?
Again, you have your 1% of deposits that you earn on your money.
So while your money is sitting in the bank, inflation in 20, 21
went to 6.8% in the United States.
So the difference between 1% and 6.8% is 5.8%
that you lost on your money and purchasing power for all of last year.
So this is exactly why in rich dad,
poor dad says savers are losers not because you're a loser,
but because your deposits are losing money against inflation.
So I thought what would be fun
is for us to take a look at inflation over about 100 years.
So on the left side
here, we've got inflation over the years and there's booms and busts.
As you can see as they're going to be in the future.
But the green area is basically inflation and the rest is deflation.
As you can see, we haven't had deflation for a very long time.
On this chart on the right side here, is the price of Campbell's tomato soup.
And the reason I took this is because there's not very many products
or services have been around in the United States for over 100 years.
And as you can see, for the longest time, it was right around $0.10.
And then when the dollar came off, the gold standard, which is right
around here, that's when we started to see all of this inflation.
Now, I think actually the price of a can of soup is actually more than $0.85.
But this, of course, just went through 2020.
And I thought it was a good reflection of where things are heading.
The point of this chart is not of course, that soup went up so much.
The point of this chart
is that from the seventies, if you were holding dollars,
then your purchasing power went down because things got more expensive.
Does that sound a little bit like what's going on today?
Just remember that inflation is a tax.
It's just very hidden.
As things become more expensive and you hold dollars,
you're going to be able to buy less.
The third reason why saving money will make you poor
is that your money is being diluted.
So you guys should know by now that basic supply and demand is
if there's too much of something it's going to sell for less or be worth less.
If there's not enough of something, there's going to be more of demand.
And of course, it's going to go up in value.
That's how the law of supply and demand work.
Money is no different.
So the Federal Reserve's job is to manage the economy.
And one of the things that they do is to print money to be able to do that.
So if you're holding money, then
of course, your money could potentially be diluted.
So now let's take a look at how the Fed increase the money supply.
So this chart is the monetary base, the total monetary base.
Now, we're not going to get into a lot of detail about M1, M2 and M3
but you can go on this website and take a look for yourself
and I'll explain everything.
What I really want you to pay attention to is this gray area here.
And this is a recession And as you can see, what happened here
is during this recession from the last housing crash
that I went through, they started to print money to infuse
now consumer spending into the economy, which worked and people did.
Then it tapered off, as you can see.
But then right around and here is when we had the pandemic and COVID hit.
So that's when, of course, we started to really increase the money supply.
And this is what everyone is blaming inflation on right here.
This and, of course, additional government spending.
But this is exactly what can happen if you're holding dollars here.
Then, of course, there's more dollars in the economy,
more money supply, as shown by the government's own chart.
They're increasing the monetary base whenever you increase
supply of something, your money is diluted.
So as you can see, as total assets go up and the total savings deposits go up here
Then, of course, because there's now more money in the economy,
more monetary base from the last chart we just saw,
the purchasing power has continued to go down of the consumer dollar.
Those are your dollars.
So if you're saving during this period of time, then your dollars are buying less.
Once again, your money is being diluted.
Okay, so now there are four things that I want you to pay attention to that
I think you could do to take action to be able to be on the other side of this.
The principles here.
The principles and rich dad. Poor Dad.
This is the entire point of this channel.
Number one, recognize it I'm telling you right now,
this is not something that your family and your friends are going to understand,
and they're
certainly going to be argumentative and they're just not going to believe you.
This is what I would call complacency
or being overly satisfied or comfortable with an existing situation or condition.
Often while unaware of some potential hazard or danger.
This is complacency.
This is where most people will sit today to just
watch one YouTube video on this subject a week.
That's all I ask.
Just go get educated, go anywhere, and just do what, a week?
Three. Talk about it with somebody.
After you're watching videos, you're now going to have a little bit of content.
You're now going to have a lot of confidence,
and you're going to now start studying the subject
and you're going to start to recognize more and more things.
And now you'll be able to speak about the subject a little bit more forth.
Take action. Build the plan brick by brick.
Don't get overwhelmed.
Just pick one thing that you can do to be on the other side of inflation.
Pick one thing you can do so your savings does not erode and get diluted over time.
Pick one thing you can do to change your life and your wealth forever
by building your plan brick by brick.
Just start small brick by brick and you can get on the other side of it,
just like so many other people have by first, just recognizing it.
If you guys are interested in more information
on how to get ahead of this, go to some of my other videos.
Hit like Subscribe.
Pass this on to some of your friends.
I'm enjoying these videos.
I'm having a blast doing it, but this is your first step to financial freedom.
So thanks again for watching.
We'll talk to you soon.