As it turns out, the answer is yes: this is a rigged economy, just not by the usual suspects. Wall Street isn’t the culprit. Neither is Washington D.C. Corporate America isn’t to blame, either. So who is? Who are these people who have gamed the system, and stacked the cards against the common man?

Behind the Curtain

There exists in this country a group of individuals who are probably very nice and sincere about their love for country. But much like peanut butter and pizza, two things that are separately decent and good can be destructive when brought together.

What I speak of are central bankers, and specifically those of the American variety. Janet Yellen, et al. who make up the Federal Reserve (Fed) Board of Governors are probably very amiable individuals. I’m sure their families and friends love them. However, when these twelve individuals meet to discuss the US economy, what results is “policy”. The official kind.

This rate policy determines the level of interest that banks and other entities levy on virtually everything. In this way, these twelve individuals hold an unparalleled amount of power over the US economy – a power that a president Obama, Trump or Clinton could only dream of.

Where Are the strings?

This system of control may sound complicated, but its actually quite simple. In a truly free market, prices are a result of millions of individual decisions to exchange money or goods – a balance between supply and demand. This includes the price of money (i.e. interest rates).

But in a “free” market like the US, the price of money is heavily influenced by the Fed. In other words, the US “free market” is like a dish of capitalism with just a pinch of communism. But adding curry to anything makes it taste like, well, curry. And like a complex scheme of dominoes, the Fed’s artificial influence cascades through the economy – effecting the prices of everything from socks to stocks. Subtle though it may be, what we’re speaking of here is price controls.

The Fed has spent the last six years holding interest rates on everything to the floor, literally. This is why rates on cars, mortgages, credit cards, etc. have dropped significantly. In the case of cars, new auto loan rates are routinely at or near zero. Why is that? Was the car dealership was just being nice? Ha! No. The low rates are a result of the policy coming out of the Fed. A low rate on banks to borrow their needed fund translates to a lower rate that they charge to the customers.

Why It Matters

But with rates on cars, mortgages, and credit-based consumables being low, middle and lower class Americans are now able to afford more stuff. Isn’t this a good thing? The Powers That Be and their minions in the media would like us to think so. But like a spoonful of vanilla, the smell of low interest rates is deceiving.

Low interest rates have led Americans to buy new cars and homes, adding massive amounts of debt. Breadwinner jobs (i.e. jobs that can support a middle to upper-middle class family) are harder to find now than at the turn of the century. And retirees are finding that with low interest rates their retirement savings just doesn’t produce income like it used to. In other words, the average American worker and retiree is further in debt with lower income. And this, we’re told, is a good thing.

In a moment of rare candor, one of the Fed governors shared on Bloomberg recently (skip to 3:22 mark) the real reason for low interest rates. In a phrase, its good for investors. Those individuals and mom and pop business owners who have worked hard, saved, and now want to retire on their savings are getting sacrificed on the alter of low rates. They no longer can earn a decent return on their investments. They are having to cut their budgets, delay retirement, or go back to work. This, so that the big bankers and corporate America can benefit.


Occupy Wall Street and the Tea Partiers certainly have a reason to be upset. But until Americans identify the man behind the curtain – the Federal Reserve System – they will be demanding changes to political and business entities that cannot deliver the goods.

If you’d like to know more, or discover how we’re protecting our clients and their assets in light of this growing problem, give us a call. We would be happy to discuss with you the Plan Financial difference.


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