The Banking Function: What Nash Really Meant

“When you know what’s going on, you’ll know what to do.” — Nelson Nash

The Invisible Shackles

Most people don’t realize they’re in financial bondage because it’s all they’ve ever known.

You were born into a system designed to extract wealth from your life through the banking function. And because this system has been normalized across generations, you think it’s just “how money works.”

But Nash discovered something that changed everything: You’re already performing the banking function in every single transaction you make. The only question is whether you control it — or someone else does.

Here’s what Nash meant when he said you finance everything you buy:

Every purchase is financed. Period.

When you buy a car with cash, you financed it. You gave up the interest that cash could have earned elsewhere. When you buy a house with a mortgage, you financed it. You pay interest to someone else’s banking system. When you buy groceries with a credit card, you financed it. The interest clock starts ticking.

There is no third option.

The banking function exists whether you recognize it or not. Someone will profit from it. Someone will control the terms. Someone will capture the interest. The question isn’t whether the function occurs — it’s who performs it.

The 34.5% Headwind You Don’t See

Want to know why you feel like you’re working harder but getting nowhere?

Nelson calculated that 34.5 cents of every dollar earned by the average American goes to interest payments. Not to taxes. Not to living expenses. To interest on things they’ve already consumed.

Car payments. Mortgage interest. Credit cards. Student loans. Appliances. Furniture. Vacations. Equipment. The endless cycle of borrowing to consume, then paying interest for the privilege.

Meanwhile, the financial industry has you obsessed with getting an extra 2% return on the tiny fraction you manage to save. You spend coffee breaks debating whether your 401k earned 8% or 12% last year while bleeding out 34.5% of your income to someone else’s banking system.

Nash uses a brilliant airplane analogy to illustrate this madness:

You’re flying at 100 mph airspeed toward your destination. But you’re flying into a 345 mph headwind. Your ground speed isn’t 100 mph forward — it’s 245 mph backward. You’re going to Cuba when you wanted to reach Chicago.

That headwind is the banking function working against you.

Every car payment is thrust in the wrong direction. Every mortgage payment is mostly interest for the first decade. Every credit card balance is wind resistance. You think you’re making progress because your airspeed indicator (your income) keeps climbing. But your ground speed (your actual wealth accumulation) is negative.

The Golden Rule of Money

Here’s the uncomfortable truth about the money game: Those who have the gold make the rules.

If you don’t control capital, someone else controls you.

Banks don’t lend their own money — they lend yours. Your deposits, your savings, your 401k contributions. They pool your capital, lend it back to you at markup, and keep the spread. You’ve been financing the very system that charges you interest.

Nash discovered this during his financial crisis in 1980. Interest rates hit 23%. He owed half a million dollars. He was trapped by rules made by people who controlled capital he had supplied.

But he also realized he’d been building a solution for years without recognizing it. His whole life insurance policies gave him contractual access to capital at 5% to 8%. Guaranteed. No credit check. No 90-day renewals. No begging permission from loan committees who could change the rules overnight.

The moment Nash saw this, everything changed. He wasn’t just discovering a financial strategy — he was recognizing the path to financial sovereignty.

The Grocery Store You Already Own

Nash often used the grocery store analogy to help people see how absurd their financial behavior had become.

Imagine you inherit a fully stocked grocery store. Prime location. Great inventory. Profitable operation. But instead of shopping there, you drive across town to buy groceries at someone else’s store — at full retail markup.

When your friend asks why you’re doing this, you shrug and say, “I’ve always shopped here. It’s convenient. Besides, I don’t really know how to run a grocery store.”

That’s exactly what you’re doing with the banking function.

You’ve been capitalizing someone else’s banking system your entire life. Your checking account, savings account, 401k, IRAs — all of it flows into institutions that use your capital to finance loans to other people. Including you.

Then when you need to buy a car, you go to the dealership and finance it through the very system you’ve been capitalizing. You’re buying groceries from the back door of your own store.

Nash realized that banking is simply a business. Like any business, it requires inventory (capital), it has costs (operating expenses), and it generates profit (the spread between what they pay for money and what they charge for it).

The business model is elegantly simple: pool capital from many sources, lend it out at higher rates than you pay for it, manage the risk, keep the difference.

But here’s what most people miss: You can perform this function yourself.

What “Becoming Your Own Banker” Actually Means

Nash wasn’t suggesting you start a bank or get a banking charter. He wasn’t talking about cryptocurrency or alternative currencies or precious metals. He was talking about controlling the banking function in your own life.

When you become your own banker, you:

• Recapture the interest you’ve been paying to others
• Control the terms and timing of your loans
• Create a system where your capital compounds while you use it
• Break free from the approval process of third-party lenders
• Generate wealth through the banking function instead of being consumed by it

This isn’t about earning higher returns on investments. It’s about recognizing that the banking function is occurring in your life whether you control it or not — and choosing to profit from it instead of being enslaved by it.

Nash put it bluntly: “We’ve abdicated our responsibility to perform the banking function in our life. Someone else will perform that function — and they will profit. Control is sometimes worth more than returns.”

The Airplane Turned Around

Remember the airplane analogy? Here’s where it gets powerful.

Most Americans are flying 100 mph into a 345 mph headwind. Ground speed: negative 245 mph. They’re hemorrhaging wealth through the banking function and don’t even realize it.

But what happens when you control the banking function? When you turn that airplane around?

Now you have 100 mph airspeed plus a 345 mph tailwind. Ground speed: 445 mph in the right direction.

The difference between you and everyone else isn’t just 345 mph. It’s 690 mph. You’re moving forward at 445 mph while they’re moving backward at 245 mph.

This is why Nash said the Infinite Banking Concept creates velocity. You’re not just stopping the wealth leak — you’re reversing it. The same financial forces that were working against you are now working for you.

Now You Know What’s Going On

Nash spent 30 years teaching one fundamental insight: The banking function is occurring in your life whether you recognize it or not.

You’ve been unconsciously financing everything you buy while consciously obsessing over returns on the fraction you save. You’ve been stocking someone else’s shelves while shopping at full retail. You’ve been flying into a financial headwind so strong it’s pushing you backward.

But once you see it — really see it — the solution becomes obvious.

You don’t need permission to control the banking function in your life. You don’t need to wait for better market conditions or higher interest rates or government reforms. You don’t need more income or a different job or better investment returns.

You need to recognize that you’re already a banker. You’re just banking for someone else.

The chains aren’t locked. They never were. They were just invisible.

Now you know what’s going on. You know what to do.

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Next in the Freedom Seeker’s Path: “The Compound Interest Lie: Why Time Isn’t Your Friend”