it was only paying 2.75 % and my finacial advisor said I was crazy, well my total losses are 0 when a lot of people have lost over 40%.
Not trying to be snide by any means and I agree with your premise. Owe no man. Unfortunately for me I still have a mortgage, but other than that I have no debt. In the area where I live, it really is cheaper to own than to rent. Unfortunately for you that 2.75% has not been keeping up with inflation, so you are actually paying more inflation tax than your small return.
Let's have a look at inflation from the inception of this country until 2005.
Take note of how inflation remained relatively stable until the Federal Reserve took over the money supply in 1913. I hate to sound like a broken record but here we go;
*The Federal Reserve pays a 6% dividend to the member banks who are owned by U.S. citizens (Rockefeller's,ETC.) as well as foreigners (Rothschild's, ETC). It is a for profit institution that has never been audited by the U.S. government
*The reason the government can spend money like it is going out of style is because the treasury prints bonds and then sells that humble paper to the Federal Reserve for dollars. In other words the Federal reserve monetizes the debt created by the government.
*As the government goes further into debt, more dollars are created which increases inflation, the invisible tax. Most of the simpletons in Washington D.C. do not understand how money is brought into being.
*When the government spends the dollars that it just received from the Fed, to entities like, foreign countries, the military industrial complex, bailed out banks, car companies, ETC. Those entities then put that money into smaller banks that are still a part of the Federal Reserve system. Those smaller banks then are ruled by fractional reserve banking laws. In essence, fractional reserve means that the banks only have to hold a fraction of the money that they have lent out to you, the "consumer". That fraction is continuing to get smaller by the day. In this manner the banks create money out of thin air. Whenever anyone takes a loan, that in turn increases inflation. When the "consumers" can no longer to afford to take more loans the "credit freezes up" and the money supply no longer grows resulting in deflation. That is where we are today. However with the government creating money and throwing it at any large bank or car manufacturer who can offer the proper political motivations inflation should rear it's ugly, "invisible tax" head again. The banks like you to think that when you take out a loan you are borrowing another persons hard earned money but you aren't, or at least not very much.
Currently the Feds open window interest value to other banks is set at 1%. The smaller banks (by smaller I mean Citi, BoA,Wachovia on down to the smallest) borrow money from the fed at that rate when they need it in order to keep their reserves above the minimum fraction. Let's say the minimum reserve requirement is 4% of outstanding loans and a small bank has dropped to 3% reserves they must then borrow money from the fed to get back above water. That small bank pays the Fed 1% for the money it borrowed while it is charging 10% to the "consumer" (I hate that word), and paying account holders about 2%. so the bank make a nice little 7% profit on the loan.
Back to the fractional reserve system I'll let this guy explain it because he does it much better and it has visuals to help people conceptualize what is happening to this country. I'll start you off at chapter six as it strongly pertains to this conversation but you'll also have to watch chapter seven to get to the debt part and then chapter eight to understand why I rail like I do. All told it will take you about twelve minutes to understand high finance. It's so simple that you will want to puke.http://www.chrismartenson.com/crashcour ... what-moneyhttp://www.chrismartenson.com/crashcour ... y-creationhttp://www.chrismartenson.com/crashcour ... y-creation