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| Banks Banks and banking - high street banks and online banks, personal accounts, and savings accounts. |
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Banking and Legalized Fraud
Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since. In the 16th century as the gold and silver the Spanish had taken from America poured into Europe, coins grew larger, more plentiful and heavy. Merchants needed a safe place to keep them when they weren't needed. The goldsmiths had large safes and fierce dogs and it became customary to leave coins on "safe deposit" with them. Next people saw that a "gold certificate" or warehouse receipt signed by the goldsmith was more convenient to circulate than those heavy coins made of soft metals that quickly wore out if they passed hand to hand. So the smiths printed up receipts in convenient denominations promising payment in gold to whoever presented the receipt. Some people took to writing notes to the smith ordering him to transfer the ownership of some of their coins to someone else. Thus the personal check was born. Then one day one of the smiths had a brilliant, and wholly dishonest, idea. He noticed that people so much preferred his paper money to its "gold backing" that the gold in his vault hardly circulated - some of it hadn't moved in years. So he thought, "I could print up some extra gold certificates and lend them out to gain the interest.” The idea was irresistible, and thus banking was born! Consider this….. $1,000 dollars on deposit at the bank. To make money with your money the bank loans out the $1,000 dollars. Now there are $2,000 dollars in the monetary system. $1,000 in the bank and $1,000 out in the street. Once loaned out, the amount of money in the system is inflated. If that money is not paid back, then paper money becomes worth - less until the loaned money out in the system is destroyed or PAID BACK. When the $1,000 loan is paid back, all is well, and the system is even with only the original $1,000 in the bank. These are basic facts of money. Enter, Wall St., October 2008. Too much of your money was loaned out by banks over the past 10 years and since that money is NOT being paid back the system demands that money be destroyed. The banks made bad loans, sold the bad loans to Wall St. who in turn packaged and sold them on the open market. With those loans not being paid back the borrowed money has to be destroyed. The money supply has to shrink. This is why the market is in a free fall and will continue until all the inflated money out in the system is destroyed.
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Gary Spicuzza, *SAFE Copyright 1956. No Rights Reserved. *Self Appointed Financial Expert |
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