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12/4/11: Infinite Banking – The Broken Banking System and What You Can Do About It

Today’s banking system is a far cry from George Bailey’s Bailey Building and Loan in the classic film It’s a Wonderful Life.

Back then, savers put money in local institutions where local bankers lent it out to local borrowers.  It was very community focused.

Today, everything funnels through Wall Street and the Federal Reserve, and the last few years have shown that when deals get made too far away from Main Street, weird stuff happens –  like meltdowns and bailouts.

But where can you store your cash, if not banks?  Do you have any choice?

Well, “Yes!”  according to the authors of How Privatized Banking Really Works (a book that we read, enjoyed and recommend).

Privatized banking is a concept we’ve explored in previous episodes, so when the opportunity came along to sit down face to face with the authors, we happily grabbed it.

Behind the old fashioned microphones for yet another informative episode you can bank on:

  • Your host with a wonderful life, Robert Helms
  • Your co-host who needs to  get a life, Russell Gray
  • Special guest, economist and author, Robert Murphy
  • Special guest, management consultant and author, Carlos Lara

It seems like everyone from Occupy Wall Street to Congress to the GOP presidential hopefuls (not to mention the millions of people without jobs or in foreclosure) have figured out that the banking system is broken – or at least not working very well.  “Duh” as they say.

And with all the rhetoric and finger pointing, it’s easy to just throw up…your hands, that is…and say, “What can I really do about it?”

However, this episode isn’t about overthrowing the Fed, prosecuting bankers, or protesting foreclosures.  There are lots of people busily debating what needs to happen to fix the system.

Rather, the privatized, or “infinite” banking concept is really about “opting out” of conventional banking – or at least, de-funding it to a large degree – not through legislation or litigation, but simply by personally using a little known alternative to banks for holding your cash.

Sound radical?  It really isn’t.  It’s more about getting back to a “closer to home way” of managing your savings.  Plus, we hear there are some real tangible financial benefits that come with doing it.

We’ll let our guests describe the details, but as real estate investors,  we should have an ever growing pile of cash that we’re managing.  These funds  include profits from operations and transactions that is waiting to be re-deployed, and cash and contingency reserves.  The more properties you have, the bigger you stash of cash gets.  So cash management is part of your responsibility as a real estate investor.

But before you just park all that cash in a broken banking system, listen to Robert Murphy and Carlos Lara explain an alternative which provides direct current benefits to you, while circumventing the fractional reserve system that they say contributes to the problems the current system causes.  VERY interesting stuff!


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