The first step to understanding the Infinite Banking Concept and how to become your own banker is to identify the problems that prevent us from understanding and implementing IBC. As I see it, there are three "layers" to the problem that we need to open our minds to. I will address these areas from a stand point as to what is most identifiable to least identifiable. This article will address the most obvious problem which is TAXATION. The "Government" Layer!
Almost everyone understands that taxation is a problem. It is easy to identify. Nelson Nash tells this story in his book, Becoming Your Own Banker:
Who is the biggest thief in the world? If you answered the Internal Revenue Service, you are correct! Most people have this feeling but lack the ability to explain that it is indeed, theft. I explain it this way. Let’s go to a shopping mall or some such place where there are lots of people to witness what I am about to do to you. At this point I pull out a gun and place it against your head and direct you to "give me the contents of your wallet or I will blow your brains out!" I can predict with certainty that those who saw this act will describe it as theft—and call for my punishment. But—if you will allow me to gather that same crowd for about an hour before you show up—and let me talk to them about how we are going to divide the contents of your wallet and distribute—among them—now they will call the act "democracy in action!"
Frederic Bastiat, a French economist from the early 1800’s, introduced the term "Legal Plunder." He explained how to identify "legal plunder" in this way:
See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.
Let’s step back into our little worlds for a moment and examine all the taxes that we pay. We pay taxes on our income, taxes on our property, taxes on our gasoline, taxes on our purchases. . . .when you add it all up, we pay a lot of taxes. Excessive Taxation! Inflation is similar to a tax because it destroys the purchasing power of our money and carries the same effect as if the money was taken directly from us. TAXATION will represent the largest wealth transfer away from us over the course of our lives and it occurs in two ways--by taking it from us directly or indirectly.
Fortunately, we can fight against excessive taxation! It’s very simple—MAXIMIZE your contributions into as many TAX FREE plans as possible. Currently there are two such plans we have access to—A Roth IRA and a Dividend Paying Whole Life Insurance Policy.
Unfortunately excessive taxation can destroy personal savings and the ability to accumulate wealth, which is why TAXATION represents the first hurdle to Becoming Your Own Banker. How can you create a pool of money when money is taken from you? My next article will discuss how people unknowingly and unnecessarily give away their money every day of every week of every month of every year. This layer is not as easily identifiable and I refer to it as the "Corporate" layer.