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In an era where digital transactions increasingly dominate our financial landscape, concerns about the implications of fully digitized currency have become more pronounced. From governmental control to personal freedom, the shift toward digital money carries profound implications for our economic independence and financial security.
Recent statements by high-ranking economic officials have revealed concerning gaps in understanding about monetary operations. Jared Bernstein, Chief Economist and Economic Advisor to President Biden, demonstrated notable confusion when trying to explain monetary policy, stating that “the US government can’t go bankrupt because we can print our own money.” When questioned further about why the government borrows if it can simply print currency, Bernstein struggled to articulate a coherent answer, eventually admitting, “I don’t get it. I don’t know what they’re talking about.”
Such confusion at high policy levels raises legitimate concerns about the direction of our monetary system. This lack of clarity comes when financial experts like Grant Cardone are warning of potential market corrections. Cardone points to historical patterns in the yield curve that have previously signaled major economic downturns. In the past century, an inverted yield curve lasting over 500 days has occurred only three times—before the crashes of 1929, 1974, and 2009—each resulting in market collapses exceeding 50 percent.
The combination of market instability and inflation, which has already reduced the dollar’s purchasing power by approximately 20% since January 2020, creates a precarious financial situation for many Americans. These economic pressures exist regardless of whether we transition to a fully digital currency system.
The influence on economic policy extends beyond elected officials and central banks. Non-profit organizations that accept substantial donations from non-American sources can redirect these funds to specific political entities, circumventing laws to prevent foreign interference in domestic affairs. Organizations like Arabella Advisors collect billions from worldwide donors without accountability to American citizens. Current regulations don’t require these non-profits to disclose their donor lists or how they allocate funds to influence American policy. This lack of transparency contradicts the democratic principles upon which America was founded.
A fully digital currency system under heavy regulation presents several concerning scenarios for personal freedom and financial autonomy. Such a system could enable authorities to:
When these concerns are raised, critics often dismiss them as conspiracy theories, partisan fearmongering, or simply “despicable” points of view. These dismissals fail to address the legitimate questions about personal autonomy within an increasingly digital financial ecosystem.
If we are approaching another economic downturn comparable to those of 1929, 1974, or 2009—or perhaps even more severe—we would be wise to study the strategies of those who successfully navigated previous financial crises.
James Cash Penney provides an instructive example. In 1922, Penney held one of the largest life insurance policies of his time, valued at $3 million (equivalent to approximately $55 million today). When the 1929 market crash decimated his stock holdings and net worth, Penney suffered a complete financial and personal breakdown, ultimately checking himself into a sanitarium.
While there, Penney heard the hymn “God Will Take Care of You” being sung in the chapel, which reminded him of his life insurance policy. By borrowing against his policy’s cash value, Penney was able to rebuild his financial standing and eventually return to his position as chairman of the board at his department store chain.
Years later, a young Sam Walton, working at one of Penney’s stores, learned valuable lessons about efficiency and economy from J.C. Penney himself. Penney taught Walton how to wrap Christmas presents “with a little twine and a very little paper and still make it look nice.” Inspired by Penney’s approach to business, Walton eventually founded his own retail operation—Walmart—which would grow to surpass J.C. Penney’s stores in number and sales volume.
The insight from Penney’s story is how access to capital through life insurance cash values prevented him from becoming a casualty of the Great Depression. The economic conditions that created that crisis bear striking similarities to challenges we face today, including questionable monetary policy, political influence, and foreign interference.
As the writer of Ecclesiastes observed, “There is nothing new under the sun. What has been will be again. What has been done will be done again.” Our current economic challenges, while appearing novel, echo patterns from the past. The danger lies not in history repeating itself, but in our failure to remember historical lessons and the strategies that helped previous generations survive and thrive through economic turmoil.
Throughout history, countless businesses, families, and individuals have leveraged their life insurance cash values to meet financial obligations during difficult times—paying mortgages, eliminating debt, meeting tax obligations, expanding businesses, or making strategic investments. As we prepare for economic hardship characterized by employment scarcity and persistent inflation eroding the dollar’s value, one strategy stands out: maintaining well-funded cash values in participating whole life insurance policies.
Those who implement this approach will likely navigate economic downturns more successfully than those who don’t, even thriving during challenging periods—just as J.C. Penney and many others did during the Great Depression.
The principle behind this approach has been formalized as the “Infinite Banking Concept,” developed by R. Nelson Nash in the 1980s. During that period’s high-interest environment, Nash discovered he could access money through his whole life insurance policies at rates of 5-8%, while banks were charging up to 23%. By transferring his debt from traditional lenders to life insurance companies, Nash gained flexibility in repayment and benefited from better interest rates.
What began as a strategy for managing high-interest debt evolved into a popular concept of using whole life insurance values as a reserve from which to finance purchases and investments without relying on traditional banking systems. This approach provides individuals greater control over their financial resources while maintaining growth potential through the insurance policy’s cash values.
Whole life insurance offers distinct advantages as a financial tool, especially when compared to term life insurance or universal life insurance products. Unlike term insurance, which provides only a death benefit for a specified period, whole life insurance builds cash value while providing permanent protection. This cash value component creates equity in the death benefit the policyholder can access through policy loans.
The cash value in a participating whole life policy grows through guaranteed increases and potential dividends from the insurance company. As the policy matures, the cash value eventually equals the death benefit, meaning the policyholder fully owns the coverage. This contrasts with universal life insurance, where cash values can be depleted by increasing insurance costs over time.
A well-designed whole life policy for the purposes of financial management will:
The beauty of using whole life insurance as a financial tool lies in its independence from the traditional banking system and its resilience against potential restrictions that might come with fully digitized currency. While a central bank digital currency (CBDC) could theoretically allow for unprecedented control over individual spending and saving, the cash value in a whole life insurance policy remains accessible through policy loans regardless of external financial conditions.
These policy loans represent a contractual right that cannot be easily altered by changing regulations or economic policies. The insurance company is obligated to honor loan requests against cash value, providing a measure of financial freedom even in restrictive economic environments.
Beyond protection against economic uncertainty, this approach allows individuals to create free cash flow—money that can be redeployed multiple times to build wealth. By borrowing against policy cash values to finance purchases or investments and then repaying those loans on a schedule that works for the policyholder, individuals can recover interest they would otherwise pay to traditional lenders.
Jeff Bezos, founder of Amazon, understood the power of free cash flow over profits. While Amazon maintained slim profit margins for years, Bezos focused on generating strong cash flow that could be reinvested to acquire assets. This principle also applies to personal finance—generating and controlling cash flow provides greater financial sustainability than pursuing higher investment returns.
For those concerned about the implications of a fully digital monetary system, implementing the principles outlined here offers several practical benefits:
Consider these examples of individuals who have successfully applied these principles:
The Business Owner: A small business owner used policy loans to finance inventory expansion during a supply chain disruption when traditional lenders tightened credit requirements. By maintaining control over repayment terms, the business thrived while competitors struggled to secure financing.
The Real Estate Investor: Rather than relying on bank financing for property acquisitions, an investor leveraged policy cash values to make cash offers on distressed properties. This approach eliminated the need for bank approval, enabling faster closings and better purchase terms.
The Family Preparing for Education: Parents established policies for their children, creating a funding mechanism for future education expenses that wasn’t subject to market risk or affected by changes in federal student loan programs.
As we move toward a more digitized monetary system, those who establish alternative financial resources will be better positioned to maintain autonomy and financial security. The elements of preparation include:
While digital currency offers convenience and efficiency, maintaining financial options outside purely digital systems provides security and autonomy. The goal isn’t to reject technological progress but to make sure that advancement doesn’t come at the cost of personal freedom and financial self-determination.
A balanced approach recognizes the benefits of digital currency for legitimate transactions while maintaining alternative resources for preserving wealth and financial flexibility. This hybrid approach provides the best of both worlds—the convenience of digital transactions and the security of traditional financial instruments.
As we navigate the potential transition to fully digital currency, wisdom suggests maintaining diverse financial resources. While critics may dismiss concerns about digital currency control as unfounded, history repeatedly demonstrates that economic power often leads to broader social and political influence.
By studying those who successfully weathered previous economic storms, we gain valuable insights for our own financial planning. The strategies that enabled J.C. Penney to recover from financial ruin during the Great Depression remain relevant today, albeit adapted to modern financial instruments and regulations.
In times of uncertainty, those with liquidity, flexibility, and financial resources outside conventional banking systems tend to fare best. Participating whole life insurance, properly structured and managed, provides these advantages while offering protection against economic downturns and restrictive digital currency controls.
As we move forward into an increasingly digital financial landscape, the wisdom of balancing technological convenience with financial autonomy will serve individuals and families well, regardless of how monetary systems evolve in the coming decades.
Tomas P. McFie DC PhD
Tom McFie is the founder of McFie Insurance and co-host of the WealthTalks podcast which helps people keep more of the money they make, so they can have financial peace of mind. He has reviewed 1000s of whole life insurance policies and has practiced the Infinite Banking Concept for nearly 20 years, making him one of the foremost experts on achieving financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.
This free binder has the information to build your own Infinite Banking system.
