Does Saving Money Kill Or Protect Its Value?
Saving money has always been advocated by many financial gurus as a good way to preserve and build wealth. However, in times where high inflation is expected, I don’t think it is a wise way to save. Instead, saving money today would accelerate the process of losing wealth. As many of you know, banks earn money from money you save and pay you interest for saving money. Initially, it might seem fair because both sides benefit. However, with the fractional reserve system in banking, the rules of the game instead favors the bankers more than savers, with them being the ultimate winners. With the fractional reserve ratio at 10 to 1, banks can lend out $10,000 for every $1000 they have. Here, they can easily earn money by collecting 5% on the $10,000 while giving 1% interest on your $1000. In this process, they earn a net $490. However, what’s worse is that the money supply has expanded, leading to inflation which dilutes the purchasing power of money you own. Here, savers unknowingly cause
