Peter Schiff takes on the status quo and explains why the Government is to blame for our current mess. Unlike most so-called defenders of Capitalism, Schiff is willing to explain that the Federal Reserve, and their arbitrary creation of debt, is a major cause of inflation and of the economic problems we are facing right now.

It is the Government intervention into the financial markets which caused the markets to fail. What does this mean for financial planning and your financial plan for 2009? It means that while you may want to allocate some of your savings to precious metals like gold and silver, you also will want to take part in a free market solution to this economic problem. If you are a regular reader of my blog, you'll know that my view of a sound savings plan involves the use of high cash value life insurance contracts. I've given many reasons for this in the past.

One of the reasons I haven't given is the essence of why life insurance companies are in a perfect position to help kick-start the economy using economic muscle (as opposed to political muscle). Life insurance companies, especially conservative mutual companies and some well-run stock companies, invest a substantial portion of their general investment account into bonds and high quality mortgages.

Bonds are debt instruments. They are loans given to either a corporation or to the Government. If the life insurance company is allocating substantial assets to high quality bonds, this means that good companies with good credit ratings have more money to expand their businesses. The more money that flows to these life insurance companies, the more money they can invest - in the same types of conservative investments as they are already holding.

In essence, the more high cash value life insurance you purchase the more money gets reinvested back into the economy into good, quality, companies. The American people don't need a "Government stimulus" - which could easily be replaced with the word "inflation" - to get us out of this recession. What is needed is a commitment by more Americans to get out of debt and save money and to put that money with financial institutions - like conservative life insurance companies - that reinvest that money and give you a strong, healthy return on your savings.

While not all life insurance companies are the same, it is a good place to start looking in 2009 if you want safety, strong long-term growth of your savings, and you want to "stimulate" the economy with your savings instead of your current and future taxes.

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This entry was posted on January 9th, 2009 by David C Lewis, RFC. Edits may have been made to keep this entry current. · No Comments · Budgeting & Money Management, Insurance & Savings, Retirement Planning