As we continue in this period of market volatility, or continue along the precipice(?), I want to reiterate the need to understand how our financial system works. And how you and I are the ones to suffer when it goes south. My handy picture of how money (currency) is made is there to illustrate this point*. The government and the major financial institutions are those that the system is designed to benefit. And the Fed is more than willing to admit that.
There’s plenty of advice on how not to lose all your money when the market finally does tank. Using Debt Responsibly- Saving for Retirement is my take on it. Regardless, the point I want to impress upon you is that the system is rigged against the middle and even upper-middle class. It is designed to slowly siphon away your wealth through inflation and your own apathy toward investing – we are trained to hand money to the black box of our financial advisor.
So do something radical; stop playing the “get rich or die trying” game by gambling every extra dime you get in the market and make a difference in the here and now.
I’m not saying to stop saving for retirement; I’m saying to stop saving for retirement like it’s your chance to finally live it up. Because odds are you will be on the losing side of the money game the Fed and banks are playing.
Be cautious with money in the market. Put only what you need in it. And know what you’re investing in.
*Bonds can and are sold to us (people) and foreign governments. The effect is a bit different since people and other governments buy them with existing dollars and can’t sell to the Fed (its more like the bottom half of the chart). The system I outline is the mechanism for creating and maintaining the currency supply – it needs the Fed to hold bonds in order to manipulate/maintain the supply and rate of currency expansion.
The Way of Humble Living 