How Saving Money Will Make You Poor Pt1

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Welcome back to the Empowering Her Business Podcast Show – newly titled “Her Prosperity” on iTunes.

Today’s podcast is Pt1 to a series on How Saving Money Will Make You Poor – It’s so important for us to know how money works and how it works in todays world.

If you could please give me grace as I speak on 3 sadly taboo subjects of Money, Politics and God.

So why is it important for us women to learn about money?

+ It Helps to know the rules when you’re playing in the money game.

+ It gives you an understanding of where we’ve come from to give you a good chance of building you’re own prosperity.

+ Helps you understand politics so you can understand how the rich look after their own and to make decisions for elections. (Having influence in our community)

+ God teaches us to seek knowledge and wisdom, to do that we must learn.

So, in todays world there are 2 rules of money:

1. People work for money
2. The rich print out money

Through this podcast/article you’re going to learn why so many parents teach kids to save (if they teach them anything at all) how this is not the way to build wealth. This is easiest done through a time line so you can see and understand. **Please note I not a qualified financial advisor, this is just going off what I have learnt from life, books and research.

US Banking history:

1791 – 1811 – The first bank of US was formed

1817 – 1836 – The second bank of the US was formed

+ Each had 20 years charter

+ Each bank issued currency, made commercial loans, accepted deposits, purchased securities.

+ US Government was required to buy 20% bank capital stock shares and to appoint 20% of the board members. Each banks majority control was placed squarely in the hands of wealthy investors who purchased 80% of the stock.

+ A fellow called Andrew Jackson vetoed legislation to re-new the second bank of the US to start a period of FREE BANKING.

FREE BANKING: Refers to a monetary arrangement in which banks are subject to no special regulations beyond those to most enterprises and in which they also are free to issue their own paper currency (bank notes).

President Andrew Jackson quoted, “Every monopoly and all exclusion privileges are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which is act proposes to bestow on the stockholders of the existing bank mist come directly or indirectly out of the earnings of the American public.” 1832

Bringing you forward to 1900’s.

1910 – Aldrich, J.P Morgan, Rockfeler, Kuhn, Loeb & Co secluded themselves at a Island called Jekyll Island in Georgia to try and “solve the banking dilemma” to make sure when something happens to the banks, that the rich and banks are covered. These gentlemen basically put themselves in a Island to discuss how they could better protect themselves when a financial crisis hit, they new their money wealth would be safe. And to make sure that it would be the public who pays for their mistakes.

The plan provided for one great central back, The National Reserve Association (which isn’t a bank, it’s an association that can print out money) with capital of $100 Million Dollars.

The National Reserve Association would issue currency, based on gold and commercial paper, that would be liability of the bank not the government. What does this mean? It’s means that the Fed Reserve as we know it today now would have to power to print out money as long as it matched up to gold and commercial notes they could keep printing money to help banks… well… make more money. But they purposely kept out the government to save them from being penalised (protecting their assets).

This was a fight for private monopoly money with little government influence.

1913 – The Federal Reserve Act passed under President Wilson.

Around this time Henry Ford was starting to make his fortune and change the world into a manufacturing producing machine! Henry Ford struggled to get workers to do the monotonous work of the production line so decided he would need to pay people more money and so the middle class was born in the US. (This is the age of consumerism which i’ll touch on a little later)

1915 – Operations began and the funding of the war.

1914 – 1918 – WW1 (funded by printing money and tax payers depending on which country you’re in) Ford became more wealthy by providing army vehicles and aeroplanes.

1929 – 1939 – The Great Depression (This type of depression means money is worth a lot because it’s scarce, and you need to hold onto what you can as the value of money will keep rising)

1939 – 1945 – WWII

1945 – 1971 – The Golden Age of Capitalism… A few things happened in this time…

+ The British pound was created in replacement of gold but the UK economy wasn’t good enough to be/keep the reserve.

+ Brenton Woods made an effort to save the monitory system and saving the economy by linking the US Dollar with gold.

+ The American economy at this stage was booming (thanks to Ford creating a middle class and production lines we now have people working, having extra money because they have just come out of a depression, more things were made affordable, including cars, fridges etc)

+ At this stage the the US dollar matched gold and got to a point where it was worth more then gold! This is where the term “As good as gold” comes from. Because the US was so strong, other currencies would now need to peg their currency against the US dollar.

+ The US dollar was the currency with the most purchasing power and the only currency back by gold.

So we see that in 1960’s it was a great time to save money, money was backed by gold, so you could only print money to what gold you have AND money value was going up in the US.

This is the age where most of our Grandparents grew up and had our parents so teaching their kids to save made sense… After 1971 we see another BIG change in the world which makes this no longer viable.

I recommend that you do extra research into the names I have put in this article and you can see for yourself how they have influenced the world.

I would love it if you could please share this podcast and article with your friends. Hit the share button below or follow me on iTunes CLICK HERE.

Speak soon!

SJ xx

If you like SJ to mentor you to help you reach your goals in finance or business click here or would like SJ to speak at your event or church simply fill out a contact form and we will get back in contact with you.

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