As Congressman Ron Paul says, easy credit and the current fiat currency system are simply “a tax on the poor and the middle class.”
I hate to tell you this, but the currency system is stacked against you. If you are an average American who works hard and saves your cash in the bank, you are the biggest loser in this system. The biggest winners are the financial sectors that create the new currency. They grow richer as you grow poorer. The reason the financial sector is so wealthy is simple. Whenever anyone counterfeits currency (whether illegally, or in the case of the banking system, legally), value is effectively taken from the existing currency and transferred to the newly created currency. When new currency is created, its maximum purchasing power is conferred to its creator because it didn’t cost the creator anything to make the currency. Even more, when the creator loans out the new currency it requires the return of the currency plus interest. So, the currency creator makes currency for nothing by
stealing the value from your currency, and then loans out that currency to others and requires yet even more currency to be returned to them.
Borrowers who just finance their own home or car, and especially those who use cash-out refinancing, however, make themselves poorer by merely transferring their wealth from themselves to the bank.