Second Chance

The American economic system is based on inflation and robs people of their wealth.

The phrase “The poor get poorer and the rich get richer” might sound like something from a cowboy film but in the United States it’s never been more true.

Regular people are robbed of their wealth because the system is based on inflation. Inflation is certainly bad for the average person – it means the money they’ve worked hard to earn is suddenly less valuable. To make matters worse, inflation encourages people to put more of their money into their savings, but that’s actually another cause of inflation. Here’s why.

When you deposit your savings into a bank, the bank then lends your money out to debtors. However, banks lend out much more than they receive in deposits.

Prior to the crash of 2007, banks had a lending limit of $34, meaning they could only lend out $34 for every dollar they actually had. But that increase in the money supply causes inflation, making your one dollar worth much less.

This sort of wild lending periodically results in financial bubbles, which the monetary system then answers with bailouts. Bailout money is taken from taxpayers, meaning bailouts are actually built into the system. That’s another way the current monetary system creates poverty.

However, bailouts and a system of inflation are only harmful to the people who work for a paycheck: employees, freelancers, small businesses and specialists. These are the groups that pay the highest taxes and tend to keep their savings in the bank.

This is why the middle class is shrinking so quickly. In 1970, 50.3 percent of Americans earned a middle class income, but by 2010, that figure had decreased to 42.2 percent.