If YOU Are 'Saving' Money, You NEED To Stop! — Transcript

Full transcript

1. 0:00If you've got a big chunk of your savings  sitting in a bank account... you're losing money.
2. 0:03Your balance might look the same, but your buying  power isn’t. You worked hard, played by the rules,
3. 0:09kept your money safe and waited for a rainy  day. But here's what almost nobody told you...
4. 0:14The moment your cash earns less than  inflation, your savings start to disappear.
5. 0:18The banks know this. And they say nothing. So how did the safest place for your money
6. 0:23become one of the easiest ways to lose wealth? In 2022, the average American savings account
7. 0:28paid just 0.06% interest, while inflation across  the country soared to just over 9%. That means
8. 0:35if you had $10,000 sitting in the bank, a  year later it could only buy what roughly
9. 0:40$9,100 bought 12 months earlier. That’s  $900 gone without you spending a dime.
10. 0:47This was the year people began paying attention.
11. 0:50But it wasn’t a one off.
12. 0:51For almost 15 years, the Federal Reserve  kept benchmark interest rates near zero,
13. 0:56and banks followed. If you did everything  financial advisors recommended,
14. 1:00built an emergency fund, avoided debt,  and kept 6 months of expenses in cash,
15. 1:04you got rewarded with a national average  savings rate hovering around 0.1%.
16. 1:10Put another way, you could leave $100,000  in a savings account for a full year and
17. 1:14earn enough interest to pay for a nice  dinner, assuming nobody orders wine.
18. 1:19Rates did eventually move. When the Fed  spent 2022 and 2023 hiking aggressively
19. 1:24to fight the inflation monster spawned by  the pandemic, banks followed. For a while,
20. 1:29savings yields climbed to levels  nobody had seen in over a decade.
21. 1:33But better is relative. Today, the  national average sits at 0.61%,
22. 1:38nearly 10 times the 2022 low, and  still nowhere near enough to keep
23. 1:43up with anything but the mildest inflation.  The rate moved, but the numbers don’t track.
24. 1:48You wouldn’t call this a full-blown economic  crisis since things like this don’t tend to
25. 1:52make the headlines. This is more of a slow bleed,  something too gradual to set off any one alarm.
26. 1:57Economists have a name for  what was happening: the money
27. 2:00illusion. It’s the habit of judging your  financial life by the number printed on
28. 2:04your bank statements instead of what  you can actually buy in real terms.
29. 2:08It’s when a 3% raise feels like,
30. 2:10well, a well-earned raise, even though  prices have climbed 4% in the same time.
31. 2:15The brain keeps score in nominal dollars, while  reality keeps score with what those dollars are
32. 2:19actually worth. The two scoreboards only  agree when inflation happens to be zero,
33. 2:24which it is… zero percent of the time.
34. 2:27The losses don’t feel like losses.
35. 2:29When you find a flaw in your home security that  could get your house robbed or your car stolen,
36. 2:33you fix it. But when that same  risk is stretched across decades,
37. 2:36it feels so detached that most people  stop worrying about it altogether.
38. 2:40That’s the savings crisis in a nutshell.
39. 2:432022 accelerated a process that had  been happening for years. Only now,
40. 2:47several years later, are people beginning to  feel what had been happening to them all along.
41. 2:52In April of 2020, Americans did something  they’d never achieved in any measurable
42. 2:56sense before. They saved 33.7% of every  dollar that came into the household.
43. 3:02That was more than three times the historical  average. Higher than during the 2008 financial
44. 3:07crisis, higher than the stagflation of  the 1970s, and the highest monthly saving
45. 3:11rate since the Bureau of Economic  Analysis began tracking it in 1959.
46. 3:16It sounds like Americans suddenly became  incredible savers. They didn't. To understand why,
47. 3:21it's worth knowing how a saving  rate actually gets calculated.
48. 3:24The Bureau of Economic Analysis measures it as  income minus taxes and spending. In April 2020,
49. 3:31the month everything hit the  fan during the global pandemic,
50. 3:34income actually spiked with the largest jump on  record. It was almost entirely because CARES Act
51. 3:40stimulus checks and expanded unemployment  benefits landed in accounts all at once.
52. 3:44In that same month, spending collapsed since  entire national economies were suddenly welded
53. 3:50shut. All the restaurants got closed, the flights  were grounded, and retail was shuttered. There
54. 3:55was, quite literally, nowhere to put the money. So 33% got saved and now we know why.
55. 4:01Government checks arrived, and with the  future suddenly uncertain, people did what
56. 4:04they always do in a crisis: they prioritized  liquidity. Because in a genuine emergency,
57. 4:09a dollar you can access in 10 minutes  is worth more than one locked away in an
58. 4:13index fund you'd have to sell at a loss. And by conventional financial advice,
59. 4:18that’s completely rational. Build an  emergency fund. Keep cash on hand. The
60. 4:22problem isn't saving the money, it's what  happens to it after the cushion is built.
61. 4:26Behavioral finance has a name for this instinct:  the flight to safety. When uncertainty rises,
62. 4:31people move toward the assets that  feel safest and are easiest to access,
63. 4:36even if they aren't the ones most likely to  hold their purchasing power. Traditionally,
64. 4:40that means things like gold or government bonds. But the asset doesn’t have to be financial.
65. 4:45In March of 2020, this reflex sent  Americans sprinting toward an asset
66. 4:49with genuinely bizarre investment fundamentals…
67. 4:52Toilet paper.
68. 4:53Store shelves emptied within days because  everyone assumed everyone else was about
69. 4:57to panic. The only rational move then was to  out-panic them first. People who’d never in their
70. 5:02lives given a moment’s thought to bath tissue  liquidity were suddenly hoarding 48 packs like
71. 5:07they’d just gotten inside information on a market  squeeze. Nobody needed a 12 month supply of TP,
72. 5:13but they did need to not be the one household  that ran out while everyone else had some.
73. 5:18That’s flight to safety in its purest form.
74. 5:20Cash works on similar logic. Nobody needs $30,000 sitting in
75. 5:24a 0.06% savings account, collecting less over  a year than the extra charge on a few vending
76. 5:30machine purchases. But they do need enough cash to  survive when life stops going according to plan.
77. 5:36The irony is that the same dollars  people viewed as their safety net
78. 5:39in April 2020 became the asset hit hardest  by inflation. Every other major asset had a
79. 5:44way to adjust. Stocks could reprice overnight.  Real estate could reset within a season. Wages,
80. 5:50slowly and unevenly, could rise as workers moved  into a labor market suddenly desperate for them.
81. 5:56Cash had no mechanism at all. It just absorbed  whatever inflation showed up that year.
82. 6:01The idea makes sense on paper. But paper
83. 6:03doesn’t show you what happens  to your money year after year.
84. 6:06Imagine you drill a hole in a bucket small  enough that anything inside wouldn’t gush
85. 6:10out. You pour water in from the top at a rate  just slightly slower than it’s leaking out,
86. 6:16and then you walk away. When you come back  in an hour, you won’t be surprised to find
87. 6:20that the bucket holds less water than when  you left. You don’t need a physics degree to
88. 6:24figure it out. Every person watching that  bucket knows what the outcome will be.
89. 6:28Hand those same people a savings account instead,
90. 6:30and somehow the identical outcome  gets treated as a mystery.
91. 6:34The Federal Reserve sets a number called  the federal funds rate. That’s the price
92. 6:38of borrowing money overnight.  That number determines what
93. 6:40your bank is willing to pay you for  the privilege of holding your cash.
94. 6:44From March 2020 to March of 2022, the  Fed held that rate at essentially zero.
95. 6:49During the same 24 month span, prices didn’t sit  still. Inflation was positive every single month,
96. 6:55and by the back half of that window, it  was accelerating hard on its way to that
97. 7:009.1% peak. Do the subtraction of what your  savings account paid you, minus what prices
98. 7:06did to your money for any month of that window  and the answer never once comes out positive.
99. 7:11This is the bucket.
100. 7:13The Fed is the tap, and it was  set deliberately to trickle.
101. 7:17Inflation is the hole in the bottom, and  for 2 straight years, the hole was open
102. 7:21wider than the tap was flowing. This wasn’t  any secret. It was in all the Fed statements,
103. 7:26covered by every financial outlet. But  nobody looked or cared, because the bucket
104. 7:30just weighs slightly less at the end of the day.  It doesn’t announce it’s actively losing water.
105. 7:35The whole process is known as a negative  real interest rate. It’s when the return you
106. 7:40were promised is smaller than the amount those  dollars lose in purchasing power over the same
107. 7:44stretch. So while the market looks healthy, your  statement balances are going up penny by penny,
108. 7:50and nobody is selling anything at  a loss, the drip is still there.
109. 7:54When it doesn’t stop for years on end,
110. 7:56it starts to feel less like a fluke of  bad timing and more a deliberate policy.
111. 8:00When the Fed expands the money supply,  it’s doing exactly what a concert venue
112. 8:04does when it prints an extra 35,000  tickets for a 10,000 seat room.
113. 8:09In the process, each ticket that existed  before that got a little less valuable.
114. 8:13Nobody had to touch the one you already  owned to make that happen. There just had
115. 8:17to be more of them in circulation. That’s what happened with the U.S.
116. 8:21money supply. From 2020 to 2024,  it grew from about $15.4 trillion
117. 8:26to nearly $20.8 trillion, an increase of 35.1%. The problem is, the economy didn’t produce 35.1%
118. 8:35more goods, services, or places to spend that  money. But the number of dollars chasing those
119. 8:40things still increased all the same. Why?
120. 8:43Because a government that just spent  trillions of dollars it didn’t collect
121. 8:47in taxes still has to pay for that  spending somehow. Printing extra
122. 8:51money is a much less painful option than  the alternative, which is raising taxes.
123. 8:56When COVID hit, Washington needed money  immediately. Stimulus checks, expanded
124. 9:00unemployment, forgivable loans to keep small  businesses afloat. And it needed it right away.
125. 9:06Governments that need cash they haven’t  collected yet all tend to do it the
126. 9:10same way. They just borrow it, selling  bonds to whoever’s willing to buy them.
127. 9:14When there aren’t enough outside buyers willing  to absorb all the debt the U.S. is issuing at the
128. 9:19price it wants, the Federal Reserve steps  in. It buys a large portion of it itself,
129. 9:24using dollars that didn’t exist until  the moment that transaction happened.
130. 9:28It’s known as quantitative easing.
131. 9:31Functionally, it’s the government handing  out extra money and the Fed writing the
132. 9:35check to cover them. Naturally,  the check clears because the Fed
133. 9:38is the one institution in the country that's  allowed to write a check that never bounces.
134. 9:42This was all by design.
135. 9:44The emergency plan.
136. 9:45If you flood the system with cheap enough  money in a way that keeps the credit flowing,
137. 9:49you can keep businesses from collapsing  and save the economy. In the short term,
138. 9:53it worked. The post-COVID recession that  could’ve rivaled 2008 lasted only about 2 months.
139. 9:59But every extra dollar that got printed  was enacted at the expense of the money
140. 10:03already sitting in people’s pockets.  Nobody noticed, but the bill for the
141. 10:07emergency rescue came hiding in plain  sight after years of the same old same old:
142. 10:12The highest inflation in 4 decades.
143. 10:14By 2023, the Fed’s rate hikes had pushed savings  yields to levels nobody working today had ever
144. 10:20seen, with some banks paying close to 5% just to  hold your cash. For a brief, beautiful moment,
145. 10:25saving money actually beat inflation. It  felt like the leaky bucket had been repaired.
146. 10:30Then two doors started closing on savers at once. Neither had anything to do with the other.
147. 10:36The first was when banks started walking that  ceiling back down and the Fed cut its benchmark
148. 10:40rate 3 times at the end of 2025. They did  this on the theory that inflation had been
149. 10:45beaten and it was safe to loosen up again.  Savings yields followed the same rope back
150. 10:50down they’d climbed a year earlier, because  that’s the one lever savers never control.
151. 10:55The second door was closed on  the other side of the planet.
152. 10:57In February 2026, the U.S. and Israel struck  Iran. The fallout choked off the Strait of Hormuz,
153. 11:03the passage roughly a fifth of the world's oil  physically has to travel through to reach a buyer.
154. 11:08Oil markets don't care whose war it is or  why it started. They reprice immediately,
155. 11:14everywhere. Gas at the pump followed  within days, and the average household
156. 11:17ended up bleeding out several hundred  extra dollars over the following months.
157. 11:21By the middle of 2026, savers found themselves  standing between these two closing doors at
158. 11:26the same time. The yield on their account was  heading down because policymakers had decided,
159. 11:31based on old data, that the danger had passed.  The price of literally everything trucked,
160. 11:36flown, or shipped was heading up  because of a war nobody saw coming.
161. 11:40Inflation, which had cooled all the way  toward the Fed’s target the year before,
162. 11:44spiked back up to 4.2% in May  2026, its worst reading since
163. 11:482023. It eased slightly to 3.5% in June  as fighting settled into an uneasy pause.
164. 11:54The crazy part is that most Americans are  learning the hard way that these things
165. 11:54are completely out of their control.  None of them voted to start a war with
166. 11:55Iran that made gas cost more. None of them  voted to slash what their savings pay out.
167. 11:55Their balance absorbs both consequences anyway,  automatically, through no fault of their own.
168. 11:55None of this is hard to fix.
169. 11:57According to Bankrate’s most recent survey on  the subject, the average American has kept the
170. 12:01same savings account for 17 years, and the same  checking account for 19. Few of these people
171. 12:06did any real calculations to land on their bank  of choice. They just picked one close to them,
172. 12:11one they’d heard of, maybe ones  their parents used and that’s it.
173. 12:15When Bankrate asked people directly  whether they’d be willing to switch
174. 12:18to a better-paying account if  it cost them absolutely nothing,
175. 12:21two-thirds of savers still said no. When it comes  to hard-earned savings, people, for some reason,
176. 12:27are not in the business of weighing the effort  of switching accounts against the reward.
177. 12:31Scripps News recently profiled a woman who’d  been quietly setting money aside for her child.
178. 12:35Ordinarily, responsible saving would be the order  of the day. Years passed without her touching the
179. 12:40account, precisely the type of behavior  a savings account is supposed to reward.
180. 12:45Instead, her bank flagged the account as  dormant, closed it, and forwarded the balance
181. 12:50to her state’s unclaimed property office. It’s a  legal process called escheatment that every state
182. 12:55in the country runs in some form. When she went  looking for the money, the state’s own database
183. 13:00didn’t show it either. It simply fell into the gap  between one system’s recordkeeping and another’s.
184. 13:05Banks are required to try to reach an  account holder before handing over the
185. 13:09balance to the state. They usually send  a letter to whatever address is on file,
186. 13:13or try the phone number a few  times. If those don’t work,
187. 13:17the account gets treated as abandoned whether or  not the person who owns it is alive and employed.
188. 13:22State treasuries are currently holding  an estimated $70 billion in unclaimed
189. 13:26property from dormant savings  accounts, uncashed paychecks,
190. 13:30forgotten security deposits,  and old investment holdings.
191. 13:33Roughly 1 in every 7 Americans has money  sitting in that pile right now without
192. 13:37knowing it. California alone is sitting  on more than $15 billion of it. In the
193. 13:42most recent fiscal year on record, states  managed to return only about $4.5 billion
194. 13:46of the total back to its rightful owners,  a fraction of what's actually being held.
195. 13:50Most bank accounts get flagged as  dormant after just 3 to 4 years
196. 13:54of zero customer-initiated activity. Even crazier,
197. 13:58the interest posting to the account  automatically doesn't count as activity.
198. 14:02In other words, the bank crediting you  a few cents a month isn't enough to keep
199. 14:05the account alive in the eyes of the law. It  has to be you, logging in, making a deposit,
200. 14:10doing something the system can attribute  to a living, paying-attention human.
201. 14:15Cash losing value to inflation is a slow leak  nobody notices because the number on the screen
202. 14:20keeps getting bigger. An account escheated to  the state disappears in a completely different
203. 14:25way. The balance disappears, replaced by a  record sitting in a government database you
204. 14:29probably never knew you needed to search. The threats are different, but the mistake
205. 14:34is the same: assuming money left alone  is automatically protected. It isn’t.
206. 14:38Money that nobody actively manages is under  threat from inflation shrinking its value or
207. 14:43inactivity rules that take it away entirely. The most dangerous thing you can do with your
208. 14:48money isn’t spending it. It’s  not paying attention to it.
209. 14:51No matter how much you save or earn, it’s  clear the system is against you. Find out
210. 14:56why in ‘The game is rigged. You will  NEVER be rich.’ Or click on this video.