How Secure Is Your Money?
IN MOST countries money is a unique piece of paper recognized by its words, pictures and numbers. Or it could be coins stamped in a special way to denote value. The paper money is remarkable because the mere changing of a number, picture or set of words can change its value.
Money has a dramatic effect on everyone’s life. Many people work long and hard to get it. Some gamble for it. Others kill for it. Many marriages succeed or fail because of it. And often mental and physical health problems result from it.
Yet, when people get money, few can keep much of it. They usually spend it quickly. As an example, in a recent year the average American family saved only 3 percent of its income. Many saved nothing at all. Others went deeply in debt. One reason for this is inflation.
Inflation a “Thief”
Inflation steals money from people just as effectively as a thief taking it out of their pockets. And the average person can do nothing to stop it. If let go to an extreme, inflation can destroy governments and cause enormous upheavals in nations. Yet today inflation is reaching epidemic proportions in many countries and is highly contagious. No one seems to have perfected a cure for this financial “disease.”
As a result, millions of people throughout the world are constantly pushing themselves to earn the money that is so quickly passing through their fingers. In spite of this, in many, many cases they are losing ground. The chart on the next page, published in U.S. News & World Report, shows what has happened to prices due to inflation in the period from 1975 to 1980. And it is only a partial list. Many other countries, as in Latin America and Africa, have had inflation rates of over 100 percent a year recently.
True, many workers receive raises during the year. But not all get enough to compensate for inflation. If, for example, you received a 7.5 percent raise in pay, but the inflation rate was 13 percent, what would happen? Before your raise, let us say you were making $12,000 a year. After your raise this came to $12,900. But when the inflation rate is calculated, the purchasing power is now only $11,223. That is a loss of $1,677. So not only did this cancel out your raise of $900 but it cost you another $777 in purchasing power. Too, the raise could put you in a higher tax bracket, causing an even greater loss.
Also, many people tend to increase their spending when they get more income. But, under the above circumstances, it would be a bad time to buy a new car, take an expensive vacation or move into more costly housing. Indeed, this worker who gets the $900 raise should do all he can to spend less. Otherwise, he will surely get into deep financial trouble.
Too, it is obvious that any money in the bank that collects less interest than the inflation rate will also lose purchasing power. But what if you have $1,000 in savings at 6 percent simple interest, and the rate of inflation for that year is also 6 percent? Have you maintained your position? No, and here is the reason. Six percent simple interest will earn $60 in one year. But the 6-percent inflation rate on the $1,060 you now have is $63.60. Subtract that from the $1,060 and the resulting purchasing power is only $996.40. Also, in some lands you may be taxed on the $60 interest you earned, resulting in even less purchasing power.
Thus, it is easy to see that inflation robs money of its worth. But the security of money is threatened in other ways.
How Safe Are Banks?
Many people put money into banks. In turn, the banks lend the money to other people or businesses that want to borrow it. What is left is kept in cash or is invested in buildings, equipment and securities (usually government securities). The portion kept in cash is usually a very small percentage of total assets.
What would happen if bank depositors in great numbers went to their banks and asked for their money back in cash? If that happened on a large scale, the banking system would be unable to honor its obligations; nor would any government insuring agencies.
Aside from such a possible catastrophe, most of us presume that we can get our money back at any time by merely asking for it. But many banks can legally withhold money for 30 days. A typical regulation of this kind may read: “The bank may allow monies to be withdrawn from savings accounts at any time without notice, but it reserves the right to demand notice of withdrawal not to exceed thirty days on any or all accounts.” So, in difficult times, your money would be unavailable for 30 days. Yet, at present, banks are generally as safe as most places to keep money.
The Tax ‘Bite’
In recent years, most governments have raised their spending for military, economic and social needs. The usual way to pay for these is to raise taxes, over which you have no control.
Also involved in taxes are social welfare payments, such as the Social Security system in the United States. Millions of people rely on government retirement checks. When these individuals worked, they reduced their paychecks by contributing to Social Security, and now they get back retirement payments. However, the Social Security program is having difficulties. The government continually raises the contributions of workers to cover the payments of the growing number of retirees.
If this program continues in its current direction, the possibility of bankruptcy exists. To help remedy the problem, officials have talked of lowering the cost-of-living increases that are added each year. In addition, it was suggested that the age for full retirement be advanced from the present 65 to 68.
If an economic crisis were to occur and these monthly checks abruptly came to a halt, millions of people would have little or no income. They would surely lose faith in their government, and the result could be disastrous not only for them but for the country.
Crime Adds Insecurity
In most countries of the world today, crime is increasing to epidemic proportions. Homes are being broken into. Businesses are being robbed, some even in broad daylight. Individuals are being mugged in the streets, in shopping centers, in almost any location. Why?
The main reason is that the perpetrators want your things of value, preferably your money. Money is easy to spend, does not bear your name and is difficult if not impossible to trace. While there may be other reasons for their stealing from you, the basic one is that they want more money to spend on their personal desires or needs.
As economic difficulties increase, with inflation reducing the value of money, and with unemployment rising, it gets harder to make a living. Add to this the increased debt that many experience, and also the heavy spending on drugs, alcohol or gambling. All these people have something in common: an ever-increasing need for money. Some are willing to work extra hours to earn it. But a growing number are not; so they steal. And not just hardened criminals or the unemployed do this; many businesses today find that most theft comes from their own employees, many of whom hold responsible positions.
All these things mean that your money is less secure today. But this is not surprising, since Bible prophecy foretold that in the “last days” of this system of things there would be “critical times hard to deal with.” (2 Tim. 3:1) So do not count on these trends being reversed. It is not at all likely that your money will become more secure in the future. Instead, as this system moves toward its end, greater economic insecurity is likely to prevail.
In the meantime, you need to be realistic about your way of life and your expenses. Live within your means. Do without some things if you have to, rather than plunging deep in debt with all its problems. When credit becomes necessary, use it wisely. And educate your children, by both instruction and example, on the value of money and the need to conserve.
Also, avoid the trap of trying to work longer and longer hours, or even at two jobs, to keep up a higher standard of living. While that may help compensate for the inflation “thief,” it will rob you of the vital time needed to care for your responsibilities toward your Creator and your family. Only God, in his new order, can solve mankind’s economic problems. And this he will. So before long the present uncertainties of life will be forever things of the past when God’s “new earth” is realized.—2 Pet. 3:13; Rev. 21:1.
[Chart on page 25]
CONSUMER PRICE INCREASES 1975-1980
Switzerland ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 12.2%
West Germany ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 22.3%
Austria ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 29.4%
Netherlands ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 33.8%
Belgium ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 36.0%
Japan ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 37.2%
Norway ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 49.7%
Canada ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 52.0%
United States ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 53.1%
Denmark ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 64.0%
France ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 64.1%
Sweden ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 65.0%
Australia ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 65.4%
Finland ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 66.0%
Ireland ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 93.3%
Great Britain ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 95.6%
Greece ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 112.6%
Italy ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 115.7%
Spain ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 134.3%
Portugal ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 151.1%
Turkey ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ 568.4%
[Picture on page 24]