What problem does Infinite Banking solve?

The answer can be quite lengthy so I'm going to attempt to simplify for purposes of readability and ease of understanding.

Golden Rule: Money Must Reside Somewhere

Wherever you choose to park your money, ideally you want to make sure it is ultra-safe, ultra-liquid, and always growing.

Typically, Americans think the best option is a traditional bank because that's what we accept as common knowledge and if everyone does it, why question it, right? In fact, you probably learned about traditional banking from the most trusted source you have: your parents.

That's fine because banks do provide a very small economic benefit. However, when the curtain is pulled back (think Wizard of Oz), you'll learn bank money is very quietly a destroyer of your wealth and banks are the biggest contributors to endless wars and unlimited government.

The Problem With Keeping Money At The Bank

The best economic benefit bank money provides is liquidity. However, access to your money is not quite as liquid as you might think and because it's not as liquid as you would think, that means it's also not as safe as you're led to believe.

Also, (WEALTH DESTROYER ALERT) eventually bank money is withdrawn and used elsewhere interrupting its growth. _{(I'm going to ignore that banks pay almost no interest these days and whatever interest that is paid is taxable each year but these are certainly two additional strikes against maintaining unnecessary bank money.)}

_{The penalty of saving money at the bank: Opportunity Cost.}

Here's the liquidity/safety problem with bank money. Keep in mind this is a major problem that is difficult to grasp at the individual level so we will have to adjust our thinking to a macro level.

Your deposits actually make you a creditor to the bank. Once you deposit money at your bank, that's the bank's money and you just have a claim to it when you want to get it back. The bank will use your money to lend it at interest to a borrower who wants a loan for cars, credit cards, business loans, etc. (Sometimes this borrower is you!)

Now multiple your checking and savings account by 250-300 million other Americans who also keep bank accounts with excess amounts of cash doing nothing. Right now there is over $10 trillion sitting in bank accounts. _Source

In times of economic crisis, or maybe your own personal economic crisis, try running to the bank to get all your money in cash. You'll find out the hard way that your bank doesn't actually have your money anymore because they lent it out to someone else. Hence "run on the bank" when financial panic sets in and people come rushing to cash out.

The Business of Banking

Banks are in the business of making money on the USE of money. It's a phenomenal business because the way the banking system is currently set up, bankers take none of the risk. Depositors and tax-payers take all the risk. It's a moral hazard because banks know they are too big to fail. Massive bank failure sets off cataclysmic and widespread economic ruin.

Without actually realizing it, people who keep more than absolutely necessary (2-3 months of expenses is a good rule of thumb) with a bank are actually contributing to the economic problems in the world that are all caused by banks.

At a macro level, banks cause inflation through the creation of new money which makes the money you hold, along with your income, worth less with each passing year. When you read about government inflation numbers reported at 2% over the past year (it's really higher by the way), this actually means you've lost 2% of the value of your money. It a silent tax on your money that does not discriminate. In fact, it hits the poor and elderly the hardest.

At the micro level, by outsourcing your banking function to your traditional bank, you give up the control of your money allowing the bank to interrupt the growth of your money through Opportunity Cost. You either pay interest to the bank to borrow money to finance your life or you give up the ability to earn interest by spending your bank money.

The Infinite Banking Solution

There is a better way not only for you and your family that will not help you to safely grow your own Family Banking system but this strategy also creates stability for the economy while reducing the power of bankers and government politicians.

This idea, first conceived by R. Nelson Nash in his first book Becoming Your Own Banker, also helps to eliminate the moral hazard of traditional banking and inflation.

By educating yourself on free market ideas, Austrian Economics, and Infinite Banking, you are helping your own financial situation and also taking part in a solution to combat the incestuous relationship between bankers and politicians that cause the majority of the world's problems (neverending wars and unlimited government spending).

“It is no coincidence that the century of total war coincided with the century of central banking.” ― Ron Paul

Implementing the Infinite Banking strategy not only makes senses on an indivudal wealth building level but it is also a noble pursuit. The solution exists ready for you to do your part by building your own warehouse for wealth away from traditional banks.

Check out the Recommended List on my site to learn more. You can also connect with me to ask questions Here. And if you enjoyed this post be sure to follow me on Steemit for future blog posts on Infinite Banking and other freedom inspired ideas.