When I was 5 years old, my dad took me to the Canadian Imperial Bank of Commerce to open my very first bank account. It was a big deal for me.
I had been to the bank many times before with my dad. I loved those trips.
I was fascinated with the little passbook that the bank teller updated every time you made a transaction.
When I was a kid, this was how you kept track of where your bank balance was. You would go into the bank, and the teller would update your passbook with your recent transactions.
I was so excited to get my own passbook.
Every month, I looked forward to going to the bank and getting my passbook updated. With each update, I could see how much interest I earned on my savings account.
Even as a kindergartener, I got a thrill from seeing my money grow on its own. Those monthly interest payments were a great incentive to keep depositing my allowance in the bank.
21 Growth Stocks For 2021
And in the early 1980s, that savings account kicked out a nice return on my little principal balance. We actually got paid for keeping our money at the bank.
My kids are never going to see a passbook like mine. That makes me a little sad.
But what makes me really sad is that they’ll never see their savings accounts reward them with interest income.
Because of that, they have no incentive to save.
That is a dangerous lesson for their generation – a lesson created by central bankers who, with their low interest rates, are clearly determined to turn us all into spenders, not savers.
The Lowest Interest Rates in 5,000 Years
We are starting to get used to the idea that our money in the bank earns nothing.
We have had a pretty steady diet of near-zero interest rates since the financial crisis more than a decade ago.
But this isn’t supposed to be normal…
A couple of years ago, the Bank of England’s chief economist made a speech that included a chart similar to the one below.
This chart shows that interest rates are now the lowest they have been in more than 5,000 years!
Central bankers have broken all financial norms so that they can reward spenders and punish savers.
They have loaded our societies up with so much debt that interest rates have to be absurdly low.
Putting our money in the bank is no longer an effective way to grow our wealth.
My dad taught me about passbook savings accounts and adding money to my account on a regular basis. It was a great lesson on the importance of saving, but the investment vehicle is no longer useful.
Central bankers have changed the rules of the game.
Those of us trying to build our wealth may not like the new rules, but if we want to win, we need to adjust to them.
Do You Own ANY 5G Stocks? [sponsor]
CNN calls 5G "the lifeblood of the new economy."
If you don't invest now, you'll regret it later.
Click here for details on the top 5G stock.