2 Reasons Why You Should Not Save Money in Banks

This knowledge that I am giving you needs your action this coming year.  The more you know, the  more you need to plan for the coming year. 

In the first article, I told you that inflation is not what it is as it seem.  The Philippines may be having 4 – 5% of inflation each year, but real inflation really is an average of 20% per year.

Now, let me, explore the reasons for that and here are the 2 Reason what I did find out:

1. Our current paper money, specifically the USD (US Dollar) was taken out of its gold backing

Previously, our money is backed by Gold.

The gold standard is a monetary system where a country’s currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price. (Investopedia)

The gold standard is not currently used by any government. Britain stopped using the gold standard in 1931. In 1971, President Nixon took the U.S. Dollar off the gold standard.

The gold standard was completely replaced by fiat money.

Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it as is the case for commodity money. (investopedia)

The first reason why prices have risen since 1971, simply because the United States now have the power to print more money to pay its bills without anything backing it up.  The more money they print without a real value backing it up, the more the purchasing power is being lost.

Since 1971, US dollars have lost 97% of its value when compared to gold.

If you have an ounce of Gold last 1971, it is worth $35, but now, that ounce of gold is now worth $1,280.  That means, 97% of the power of dollar lost.

And why is this important to Philippine Peso?

Because our money is closely related to dollar because our economy prime movers are Dollar Earners, the OFWs.  As US government print more US dollar, being a global currency, it also affects all currencies in the world.  More so, Philippines respond the same way with economic woes and also print more money.

2. We have a growing debt

Our world is running on debt.  As of the writing of this article, the world debt is around this much.

If you want to know how much it is now, you can look up the real time global debt here: https://commodity.com/debt-clock/

We are literally on the edge of the cliff, a bubble about to burst any time. This only means, we are all living in debt.  So, what will happen if this bubble burst?

According to Lorimer Wilson, when the debt bubble bursts we are going to see economic chaos. 

Never before has the world faced such a serious debt crisis.  Yes, in the past, there have certainly been nations that have gotten into trouble with debt, but we have never had a situation where virtually all of the major powers around the globe were all drowning in debt at the same time. Right now, confidence is being shaken as debt levels skyrocket to extremely dangerous levels.  Many are openly wondering how much longer this can possibly go on.  With this, we should be getting ready.

This also means, if most of your money is in the financial system, especially, in the banks, your fiat money is not safe.

Truth is, we save money in banks, our banks use our money to gain more money for them and not for us.  If our government print more money and creates more inflation, it’s our money who loses its purchasing money.  

In fact, if you have Php 1,000,000 in the bank, this will be its real value after  5 years.

1st year – 1,000,000
2nd year – 800,000
3rd year – 640,000
4th year – 512,000
5th year – 409,600

The value of your P1,000,000 will now be only P409,600 after 5 years, if we factor in the real inflation of money. (Read part 1 of this article)

But what if this bubble burst? 

This is what the financial gurus of our time are all telling.

Let me give you a graphic example of an economic hyperinflation.  This is how much money you need to buy 7 tomatoes in Zimbabwe.

Hyperinflation of money in Zimbabwe (Business Insider).

When this bubble burst, the world will see depression, inflation and economic chaos.  Be ready for the debt bubble burst.  The real storm has not hit yet, and if it did, there would be chaos.  Your paper money (if that’s all that you have), even if it is worth millions in banks could suddenly become worthless. 

This meme basically sums up what could happen, so we have to be ready.  Buying I loaf of bread in Zimbabwe.

Want to know how to be ready?  To keep yourself updated, make sure you have subscribed to my blog and receive free SSS Retirement Calculator for free and like my FB page.

For your Financial Health,

Read more:

• The Shocking Truths You Didn’t Know About INFLATION – Part 1
• 5 Reasons Why You Need To Have Green Book For Doctors (Second Edition)
• 52-Week Money Saving Challenge for those with Inconsistent Income/Expense
• How to Build Your Wealth Using Other People’s Money

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Pinky De Leon-Intal, MD, RFC

Doc Pinky is a licensed Medical Physician, Internationally Registered Financial Consultant, Certified Investment Solicitor and Associate Wealth Planner and Estate Planner of the Philippines. She loves to educate and spread financial literacy. She is a Lactation Consultant. She loves to travel. She is a devoted wife and mother.

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