Suppose that ten men go out for lunch every day and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men ate at the sandwich shop everyday and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily lunch by $20.” Lunch for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six men; the paying customers? How could they divide the $20 windfall so that everyone would get his fair share?’ They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to eat his lunch.

So, the owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man, like the first four, now paid nothing (100% savings)

The sixth now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 ( 22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a Dollar, too. It’s unfair that he got ten times more than I!”

“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!” The nine men surrounded the tenth and beat him up.

The next day the tenth man didn’t show up to eat, so the nine sat down and had lunches without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start eating overseas where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible

An economics professor at a local college made a statement that he had never failed a single student before but had once failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on socialism. All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. The Class agreed!

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.

As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little. The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F. The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

If you recall our previous story about Jack and Jill, you may recall that Jack discovered he has been borrowing money on one end, while simultaneously investing in those same companies. He has been paying high levels of interest, and getting mediocre, risky returns. However, coming to a realization of all the additional middle men he has placed into his financial situation has led him to the discovery of one of the most impressive concepts he has ever learned of…banking. Here is the rest of their story.

Jack and Jill have decided that they want to relieve themselves of all the unnecessary middlemen that have crowded their financial plan for so many years. They sit down with a very nontraditional financial planner, who understands wealth and its process, and who simply uses products to compliment or enhance the already correct process.

Jack and Jill, following the discussion with their new and improved financial planner, decide they like the control of their money, they don’t ever want to lose it, and they would like some tax advantages as well. They decide to begin creating their own banking system by utilizing an overfunded and maximized participating permanent life insurance policy. They have learned that if they correctly overfund the policy they will have a fully functioning bank after 3 years, wherein every dollar deposited is fully accessible. They have also discovered that they will be able to capitalize their bank in five years, with their total contributions equaling their available cash value, or in other words, they will have a created a very efficient savings account with a death benefit on the side.

Jack and Jill have decided they are going to start redirecting their debt back to themselves and become their own bankers. They begin using the money to redirect all their debt back to themselves, and are now getting the full 11% and 7% they were unnecessarily giving to HSBC and Bank of America in the form of credit card debt and car loans. If you can recall, they were investing in mutual funds returning them 5%, taxable growth, which consisted of the same companies they were indebted to. They have increased their returns dramatically, eliminated all the risk, and within their policy the money will have additional growth and grow tax free. They couldn’t be more pleased.

Jack and Jill also realize that by using their bank they are actually recapturing the principle and interest over time, and that they are dramatically increasing their wealth. They have been borrowing about 15,000 dollars every 4 years for the last 44 years, and they have accumulated nearly 700,000 dollars of cash value. Money they would have lost had they continued on their original path.

“Becoming your own banker” is a very powerful concept about controlling wealth and learning how to maximize the accumulation of it. It is a large misconception that you have to risk money to create wealth. This is incredibly false. By understanding the principles of banking, and using the correct vehicles, you can be in control of your money, and never have to take risk again.

Please watch our video about how to become your own banker, or contact us directly.

Is it just me or do you get the feeling that the feds rewrite their money policy almost on a daily basis? It seems reactionary at times, but it’s the reaction caused by a previous policy blunder that creates a different reaction and a different blunder to follow….it’s a vicious circle!

So what do the feds actually want? It appears now that they want INFLATION! What? I thought inflation was bad. Well it is if it takes off at ground level, but the economist say we are now experiencing deflation, so the feds need inflation to compensate.

Maybe a short economics discussion is in order. Let’s look at the variables in very basic terms.

M=money supply – how much money is available

V=Velocity of money – how fast money moves through the system

P=Price of money – either inflation or deflation

Q=Quantity of Production – GDP

If you reduce V velocity (which is happening today) and if you don’t increase the M supply of money, you are going to have deflation. We are watching the velocity of money slow. People are getting nervous, they are not borrowing and spending as much, either because they can’t or for obvious reasons are using discretionary income to pay off debt or increase their savings. You would think this is a good thing for the family, reduce debt and save more, but not if you’re the government. This entire economy has been based on credit, borrowing, and spending…..velocity….which increases GDP, but this growth has been fictitious because we weren’t spending our money, we were spending our future earnings through debt. You knew it was just a matter of time before we would “max-out” our borrowing power.

The probability of deflation is ever increasing. When we increase M the supply of money and V, velocity stays the same, and if GDP does not grow, that means we’ll have inflation. More money chasing fewer goods…..it’s the old supply and demand equation.

As I said earlier we currently have slower velocity of money and thus slower growth of GDP. Keep this in mind: earnings equal growth. Without spending companies have little to no earnings which results in slower or stagnant growth or what we are experiencing now…..deflation. This scares the FED, so what is there answer? They have to keep printing money M until V velocity kicks in and we begin to see inflation. The feds are calling it “quantitative easing.” They announced $300 billion of easing last week. This will happen every quarter, $300 billion, $500 billion etc….until their achieve their desired result…..inflation. This could become a really big number and a side effect may be another asset bubble in the stock market. One economist said it may take $2 trillion of “easing” to achieve the desired result. However, will this cause the pendulum to swing in the opposite direction and double digit inflation will rear its ugly head? There has to be such a supply of cheap money to encourage lenders to lend and borrowers to borrow to induce a spending to produce inflation. This could take years to accomplish……and I don’t think we’ve hit bottom yet. Bill Fleckenstein is a very famous short trader. He closed a short fund a couple of months ago. He says he doesn’t have as many good opportunities, and basically he’s scared of being short with so much stimulus going on.

Another unintended consequence of printing so much money will be a weaker dollar…..this is an entirely different discussion but can we afford to have a weaker dollar globally? Who will buy our debt?

The real answer is staring us in the face, but we seem to overlook it. We have to get the FED’s out of the equation. Let the markets dictate interest rates, velocity, price, and growth. We can’t keep manipulating the country’s economy. It doesn’t work, hasn’t worked and will not work long term. This stimulus “fix” will probably end up being more of a disaster and make for a harder landing then would have otherwise been by letting the markets run their course. We will experience deflation followed by inflation followed by more manipulation so put on your neck brace because this economy is going to make your head spin!

Most of us are hearing about the government spending a Trillion Dollars, but to the average American it’s just a word.

Some of you may have seen these graphics floating around the internet lately, but if you haven’t you need to take a visual look at a Trillion dollars.

First off a Trillion is a 1 with 12 zeros, it looks like this: $1,000,000,000,000. Okay, so it’s a big number, but let’s put it into perspective.

Before we get to what a trillion dollars looks like visually, here are a couple of interesting statistics:

1. If the printing presses ran from 8-5 every working day, 5 days a week, it would take 72 years to print 1 trillion dollar bills.

2. Stacked on top of one another a trillion dollar bills would be 70,000 MILES high.

3. If you could have spent 1 million dollars per day since the birth of Christ (2009 years ago) you would still need another 740 years to spend a Trillion dollars.

4. One million seconds ago was 10 or 11 days ago
One billion seconds ago was during the Nixon administration
One trillion seconds ago was 30,000 years BC…..wow!

5. To count out One Trillion ($1,000,000,000,000) dollars nonstop without sleeping or eating it would take Thirty-Nine Thousand (39,000) years.

6. If your annual salary or wage is $50,000 it would take you 20 million years to earn a trillion dollars.

7. We could wrap the earth about 4700 times with a trillion one-dollar bills laid end to end around the globe.

8. Assuming there was a roll of 1 trillion – $1 dollar bills, it would take a military jet flying at the speed of sound, reeling out dollar bills behind it, 14 years before it reeled out one trillion dollar bills.

So there’s a little “Trillion Dollar Trivia” for you!

Okay, now let’s look at a Trillion dollars visually.

Here we have a man standing next to 1,000,000 (1 million bucks!) You could put a million in your backpack and have lots of fun!

Notice how small it is compared to an average man.

Next we have $100 million dollars. This can be neatly stacked on a pallet about 4 feet high.

Now we have $1 Billion dollars. This is 10 pallets of $100 million each. This used to be a lot of money…..but to congress a billion dollars falls out of Uncle Sam’s pockets like change.

Although a billion would be a lot of fun to spend……how does it look compared to 1 trillion?

HERE IS 1 TRILLION DOLLARS!

Look at this……what we have here is 10,000 pallets (double stacked so they are about 8 feet high) and each pallet has 100 million dollars on it.

Can you see the little man now in the bottom left corner?

So maybe now we can get a glimpse of the burden government is putting on us in terms of long term debt for this “stimulus” package. Anyone want to run a credit check on the borrower? Oh I forgot, most of the borrowers aren’t even born yet!

Ever wonder where your investment dollars end up? Jack’s story reveals some very interesting truths about your investment dollars.

Jack is a middle aged guy who works hard to make a living. He is happily married to his wife, Jill, and they have 3 children. They live in an average home, with an average income; they have 2 cars, and some consumer debt. Jack and Jill are who you would call the average American family.

Every other week when Jack gets paid he automatically deposits 300 dollars into his savings account. After a couple years of saving, Jack and Jill decide that it’s time to do some investing; they’ve grown a substantial amount of money, and want to put it to use. They sit down with a financial planner to discuss what they should do, and he points out that there are some mutual funds he knows of that are doing very well. He also indicates that “diversification” is key, and suggests bonds as a great place to allocate some dollars. Does this discussion sound familiar?

Following their meeting with their financial planner, Jack and Jill are convinced that “diversification” is what they need, it makes them feel all warm and cozy inside, as if nothing could ever go wrong. Now instead of getting sidetracked here, discussing the absolutely incorrect principles of traditional financial planning based on “diversification,” “buy and hold,” or “dollar cost averaging,” and their false sense of comfort, let’s realign ourselves with the story at hand, following Jack’s dollars. We will discuss these issues at another time.
Jack and Jill find that they are getting 5-6% returns on their mutual funds (again, a discussion for later on the realities and falsehoods of this generous assumption), coming out to 4-5% after taxes. Not bad right? Something in those mutual funds is producing some strong growth for Jack and Jill’s future retirement. Jack, being very curious, decides to investigate a little more into these mutual funds, and recognizes the two following investments as a substantial part of these funds:

• HSBC Finance Corp
• Bank of America Corp

This find has left Jack a little perplexed, and even more curious, so he decides to further his investigation. He pulls out his bills for the month, and finds one of his credit cards. He reads through the fine print and realizes that he has been paying almost 11% interest on his debt, which doesn’t surprise him, until he realizes why he was so intrigued with the two finds in the mutual fund portfolio… He makes his payments to HSBC! He’s been paying 11% to get 5%!

But it doesn’t end here, Jack still has his car loans to look over. He looks at his payments and finds that he has been paying 7% interest on those loans… to Bank of America! He has been paying 7% to get 5%! What a rip!

Hundreds and thousands of people do the exact same thing as Jack on a regular basis. After all, what are a large majority of the investments out there anyway? Someone else’s debt… or our own! Many search for investments when they have most of the investments they will ever need in their very own financial situation. They risk their money, hoping others will make debt payments in order to satisfy these investments, they get smaller returns, or losses, and in economic times such as these, they lose both money and sleep.

Continuing the story…

Jack realizes that he has a problem. He has created unnecessary middle men in his financial plan. He pays
fees, taxes, and incurs risk unnecessarily. So Jack decides to investigate a little more into his situation, and realizes that if he would eliminate the middle men, invest his money directly into his own personal debt, he will substantially increase his rate of return, never incurs taxes on that growth, eliminate risk, and be in complete control of his money. He seriously thinks it over and wonders why he never realized this before… Have you?

Upon finding more information about the best way to become his own banker, Jack learns that there are also particular vehicles that will allow him to create a pool of money in which he will have additional growth, tax benefits, and the ability to pass on wealth in a most efficient manner.

Jack and Jill now have the relief of knowing they are in complete control of their money, because they are their own bankers. They are at peace knowing that the market environment will not affect their financial future.

Understanding true principles of money is very important when making preparations for your financial future. Wealth is not a product, but is a process. Please be sure contact us for more information about these concepts.

Please watch our free video on how to become your own banker!

(We will email you the link!)

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You will learn how to become your own banker by:

Creating your own banking system to recapture the interest you would normally lose to banks and other financial institutions.

Using available savings and cash flow to build your own “bank,” while getting your dollars out of the tax loop at the same time.

Capitalizing and establishing your plan to maximize growth with absolute safety and predictability.

Using the method to finance your automobile purchases and even to finance your home.

Expanding your system to accommodate all income through a system of banks to increase your personal wealth.

How a business can use the concept for equipment financing.