Should You Save Your Money or Hide It Under The Mattress?

Should You Save Your Money or Hide It Under The Mattress?

by Bill Sardi

Recently a woman in Sydney, Australia unwittingly baked her family’s entire life savings ($15,000 of Australian dollars) that her husband placed in the oven for safekeeping after selling an automobile for cash. While your banked money isn’t being burnt to charcoal like this woman in Australia, due to hidden inflation, most Americans should consider their money has been placed in an oven and the temperature set on "slow bake."

Mattress Banking

Oh, there are a lot of articles planted by the banking industry urging Americans to save more, but all that Americans are doing is recapitalizing their banks for free while experiencing erosion in the value of their banked money. In fact, American banks are so audacious in their back-door robbery of your money that they are rewarding their stockholders with dividends while depositors experience hidden decay of their life savings.

In case you hadn’t noticed, most American banks are paying less than 1% interest on savings accounts in the face of a nine-times-higher rate of inflation. Oh Mr. Ben Bernanke, chairman of the nation’s central bank – the Federal Reserve – says inflation this year (2012) will fall between 1.2 and 1.7 percent, under its 2.0% target rate. The nation’s news media allows this bearded sage of finance to get away with this propaganda.

But according to economist John Williams writing at ShadowStats.com, the way inflation is calculated was altered in 1980 and then again in 1990 to provide a skewed number. If you revert back to the earlier way of calculating inflation, the purchasing power of Americans’ saved money is losing value at the annual rate of -9.3%. Over the next five years if nothing is done to correct this, the estimated $10 trillion in so-called time deposits will lose nearly 40% of its value. Americans might as well go back to stashing paper money under their mattress.

Most Americans are oblivious to this slow form of bank robbery. The internet allows savers to search for the best interest rates offered on banked money. However, the most popularly advertised website dedicated to that purpose posts an obscure disclosure which says "This website may be compensated by companies mentioned through advertising, affiliate programs or otherwise." In other words, it is a shill for the banksters.

Interest rates: global comparison shopping

Being curious about this inflation vs. interest game being played at banks worldwide, I searched to determine if better interest rates can be obtained by depositing money in foreign banks. I created the chart below which compares estimated rates of inflation from three different sources against the best interest rate available (average percentage yield or APY) in 31 countries. Only nine of thirty-one countries offer depositors a significantly higher rate of interest than the rate of inflation.

~	Inflation	Inflation	Inflation	Interest	Interest rate exceeds inflation
Source	Trading Economics	Inflation.eu	CIA Factbook	International Deposit Interest Rate Exchange**	~
Period	2012	June 2012	2011	2012	~
Argentina	9.9%	2.2%	22.0%	10.08%	~
Australia	1.2%	--	3.4%	5.10%	X
Austria	2.2%	4.9%	3.3%	2.00%	~
Brazil	4.9%	--	6.5%	6.17%	~
Canada	1.5%	1.2%	2.8%	1.40%	~
Cayman Isles	--	--	3.4%	0.70%	~
Chile	2.7%	--	3.3%	5.52%	X
China	2.2%	--	5.4%	3.50%	~
Finland	--	2.8%	3.4%	0.15%	~
France	1.9%	--	2.0%	0.48%	~
Germany	1.7%	--	2.2%	2.25%	~
Great Britain	2.4%	--	4.5%	3.75%	~
Greece	1.2%	1.3%	2.9%	1.00%	~
Hong Kong	3.7%	--	5.3%	0.93%	~
India	7.2%	10.1%	6.8%	9.25%	~
Ireland	1.7%	1.7%	2.5%	3.25%	X
Israel	1.0%	--	3.2%	1.60%	~
Italy	3.3%	3.3%	2.8%	3.50%	X
Japan	3.3%	0.2%	0.4%	0.30%	~
Mexico	4.3%	4.3%	3.5%	4.55%	X
Norway	0.5%	0.4%	1.4%	3.40%	X
Peru	4.0%	--	3.4%	3.00%	~
Romania	2.0%	--	3.1%	4.00%	X
Russia	4.3%	3.6%	8.9%	8.00%	~
Singapore	5.3%	--	--	0.35%	~
South Africa	5.5%	5.5%	5.0%	6.15%	X
Spain	1.9%	1.9%	3.1%	1.75%	~
Sweden	1.0%	1.0%	2.5%	2.95%	X
Switzerland (UBS)	-1.1%	-1.0%	0.4%	1.25%	X
Turkey	--	8.8%	7.8%	9.75%	X
United States	1.7%	1.6%	3.0%	1.17%	~~
~	9.3% ShadowStats.com			~	~
~	~	~	~	** annual percentage yield (APY), best rate available	~

Noticing that India currently offers a 9.25% rate of return on banked money, when traveling in India this year I inquired of a banker there if I could park my money at the Bank of India which is offering this rate. I was informed foreigners cannot place their money in a savings account in India. I wonder about East Indian nationals who live in America, whether they can place their U.S. money in a bank in India and gain higher interest rates than offered in the U.S?

Another item of interest is the wide variance in interest rates within a country. Here are some examples:

Country Variance in interest rate (annual percentage yield or APY)

Germany	0.90% to 2.25%	2.5 times difference
U.S.	0.05% to 1.17%	23.4 times difference
Britain	0.06% to 3.75%	62.9 times difference
Hong Kong	0.01% to 0.95%	95.0 times difference
Australia	3.25% to 5.10%	1.56 times difference
Canada	0.65% to 1.40%	2.15 times difference

Source: International Deposit Interest Rate Exchange


Financial literacy


A major problem is that Americans grew up without significant training in how to handle money. This appears to be planned. Ask any American if they know what fiat money, debt-based money or fractional banking is and they are usually clueless. This makes it easy to fleece the public of their wealth.

School curriculums are so pitifully poor in teaching American students about money that most kids getting out of high school have never balanced a check book. And what about putting students through an exercise in filling out a federal tax form or reading and deciphering a home mortgage, all documents they will face in adulthood, before they graduate? The current practice is to leave them financially illiterate.

Oh, the Minneapolis Federal Reserve Bank did conduct a financial literacy test over a decade ago and asked this question: "If your annual income rises by five percent while prices of the things you buy rise by ten percent ...Read more>> Should You Save Your Money or Hide It Under The Mattress? by Bill Sardi