YouTube video by Jayson Lowe explaining the origins and practical benefits of the Infinite Banking Concept (IBC), using Nelson Nash’s experience in the high-inflation/ high-interest early 1980s as a case study. Lowe recounts how Nash, facing mortgage debt above $500,000 when interest rates peaked (~21.5%), used accumulated cash value inside dividend-paying participating whole life insurance policies to borrow from insurers at about 8%, took 13 years to eliminate his bank debts, thereafter avoiding conventional banks, and died in March 2019. The video frames IBC as a way to control the banking function and reduce exposure to rising interest rates.
Questions this video answers
21.5%
Over $500,000
About 8%
13 years
March 2019
Chapters
There are many financial gurus, many financial professionals out there who are talking about the strength, the advantage in leverage. You can create a bunch of leverage. Just go borrow someone else's money, go buy real estate. Real estate only ever goes in one direction up. But nobody ever told Nelson what would happen if the interest rate lever went up, if it went the other way, and it went the other way and he was in a really bad situation. What he didn't realize is that he had the solution to the problem right in front of him.
Now it's important to understand a little bit more detail about how the infinite banking concept began. We've been getting a lot of questions, especially lately. You may have heard all the buzz in the financial marketplace about inflation's on the horizon, inflation is coming. Well, in the early 1980s, inflation skyrocketed and interest rates peaked at 21.5%. Now what happened for many homeowners, for many business owners, they simply had to abandon their property because they could no longer afford the payments. Now this created opportunity for people in the marketplace who could buy businesses, buy property at fire sale pricing. But what Nelson Nash found himself in a very difficult situation. He owed over a half a million dollars in mortgage debt during that time. And if you find yourself in a position where you owe a half a million dollars to the bank at 21.5% interest.
Plus additional points because Nelson wasn't a prime minister customer, he thought to himself, how am I going to get myself out of this predicament? At that time, and true to this day, there are many financial gurus, many financial professionals out there who are talking about the strength, the advantage and leverage. You can create a bunch of leverage. Just go borrow someone else's money, go buy real estate. Real estate only ever goes in one direction up. But nobody ever told Nelson what would happen if the interest rate lever went up, if it went the other way and it went the other way and he was in a really bad situation. What he didn't realize is that he had the solution to the problem right in front of him. He had already accumulated large pools of cash value inside of his dividend paying, participating whole life policies. He owed the banks money at more than 21.5%. He could borrow capital directly from the life insurance companies at 8%, take control of the banking function. It took him and his wife Mary 13 years to get rid of those snakes and dragons as Nelson referred to them as. And from that point forward, him and his wife Mary did not see a conventional bank for anything other than the convenience of debit for the rest of Nelson's lifetime, who sadly passed away in March of 2019. Now that creates a very peaceful, stress free financial existence when you no longer have the bankers in your life. Now, he did have choices at the time he could have chosen to file for bankruptcy. He was taking advice from a number of friends and associates who were saying, Nelson, just sell the real estate. And Nelson thought, what fool is going to buy these properties for me when they have to borrow money at such ridiculously high rates of interest? Now, one of his joint venture partners actually did file for bankruptcy. And not only did Nelson avoid insolvency, he also paid off his joint ventures partner share of the real estate projects that they were involved in together.
