The Difference Between Gold Standard & Fractional Reserve Banking

The Difference Between Gold Standard & Fractional Reserve Banking

Do you know that There is a huge difference between getting rich in the Industrial Age in the era of Gold Standard (Before 1971) and in the Information age means in the era of Fractional Reserve Banking (After 1971)?

Well, Yes. If you know the history of Money and the Gold Standard than you will understand and realize better that you can not be rich today in the era of fractional reserve banking by following the principles and personal finance advises of the Gold Standard.

Here are the few financial advises of the gold standard which are no longer effective to ensure any kind of financial success in your life and in fact, if you follow them today in the era of the fractional reserve banking than you will surely meet the financial disaster.

- Save Money

- Work Hard

- Get Out of Debt

- Earn More Money

- Invest in Mutual Funds & Diversify

- Live Below Your Means

The above are the few financial advises which were very effective to become rich and financially free before 1971. But today the rules of money have been changed.

In fact, if today you will save money and keep it with you than you will definitely become poorer. This is because today the money is no longer backed by gold anymore. But it is just a piece of paper without any intrinsic value in it.

The governments from all around the world can print as much money as they want. Take the Example of US Government. Since 2007 to 2010, The US Government has printed literally $ 1200 Billion ($ 1.2 Trillion) out of thin air only and shoot up it’s monetary base (Money Supply) from $ 800 Billion to $ 1.2 Trillion.

Thus, people who are depending on their saved money or pension plans proved fool. This is because money is worthless now. Every time when your government will print more money, the purchasing power of your hard earned saved money will go down markedly and makes you poor.

Another age old great financial advise is, Get Out of Debt. Getting out of debt was really useful in the Gold Standard era if you really want to become rich. But today it is the era of the fractional reserve banking means whenever you borrow money from your bank, the new money is created in the economy.

Thus, today you have the power to create your own money by borrowing money from the banks. And if you know the difference between assets and liabilities and know how to read the financial statements very well than you can use this debt to acquire more assets to get rich.

Today rich people from all around the world go in more and more debt (Good Debt) to acquire more and more assets to get richer and richer.

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