The rules of money have changed. But how did we get here?
Here is a brief timeline of events that have led the U.S. to be in the financial position that it’s in, and how it’s affecting you.
1913: Federal Reserve Bank Established Federal Reserve History
- This non-government, non-U.S., privately held bank would now control the monetary system.
August 14, 1935: Social Security Act signed into law
- This is the greatest pyramid scheme ever created. The idea was to provide workers with pay to help offset the expense of old age. The age to get full benefits was 65 when the law was first passed; in 1961, an Amendment lowered the age to 62 to get partial benefits.
1943: Automatic Payroll Tax
- The Federal Government needed money to fund WWII. In order to raise money, a law was passed that allowed taxes to be taken directly out of employees paychecks. This ensured the government got paid first before any wages could be taken home and spent on other things.
1971: Gold Standard Abandoned
- Under President Nixon, the U.S. is taken off the gold standard. No longer is our money backed by anything of real value. It is now a currency , subject to the ups and downs of the marketplace. The only reason it still holds "value" is because we all believe that it does. This will continue as we all play musical chairs…and the person left standing when the music stops will be the one holding a bag with worthless cash.
Watch an interview with Congressman Ron Paul about the monetary situation in the U.S. as a result of this decision: Ron Paul Interviewed by Mike Maroney
1974: Establishment of the 401(k)
- Workers longer life spans began to weigh heavily on the balance sheets of companies. They could not keep financing the lives of people for 15 or more years beyond their retirement. The Employee Retirement Income Security Act (ERISA) was passed to handle this challenge. Workers were now responsible for their own retirement planning: there were no more pensions to bank on. The problem? No financial education in school. This low financial intelligence has lingered through today, as our parents gave many of us old, outdated advice on the subject of money.
- The problem with 401(k)’s is that they are administered by financial institutions that diversify your investments in mutual funds as a "safe" long-term investing strategy. The problem is, not only are your investments not safe (they are only "diversified" amongst one type of asset class: paper assets), but they are taxed at the highest rate: earned income. So when you get to your retirement day and you think you have a big nest egg: wave goodbye, cause the government needs it’s share of your pie.
Stay up-to-date on here and listen to the financial news to know of what new law changes and other policies are put in place that can affect your money.
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