How the Banking System Makes us all Fools
“The inescapable truth in that there are just too many banks in this country chasing too few customers.” — Dick Rosenberg, former CEO of Bank of America
You work long hours and are about to faint due to over-fatigue. You spend sleepless nights to complete the project on time. This is a usual situation for ordinary employees who work hard for an honest living. As a reward, the poor souls get some money at the end of a month as a salary. But do THEY really get that money?
According to Coinnounce, the cruel truth behind this is that your bank really receives the loot, not the hard workers. These days we all depend on banks for the money we’ve earned. Though it sounds absurd. In very deed, banks should depend on us, not we.
Right here, right now we’ll take a close look at the full-of-frauds banking system. We’ll expose its secrets and demonstrate the tricks bankers play on folks to get hands on their money.
All banks really don’t have money
Since their foundation, all banks don’t have money at all. Every single asset they “possess” they get from their clients.
They say, banks earn interest on money we deposit. Still, the money earned in such a way is too small to give loans to clients. So, where do banks take money then?
Fractional Reserve Banking
One of the biggest bank frauds is offering more money than those guys actually own. Financial experts call this phenomenon Fractional Reserve Banking.
As we mentioned above, banks really possess quite limited money supply. So, when people need loans, they get the money other people deposited with the financial institutions. The trick is that banks give our money away as their own. Actually, all credits they offer are not secured by money even by half.
False credits – False money
Now, let’s see how banks create false money. Suppose, you deposited $1000 with the bank. The latter saves 10% of it as a cash reserve. The remaining 90% it uses as if it owns the money itself. Now, the bank has your money – $1000 (the money it actually owes you). Besides, it gets $900 as if its own money. So, the total sum of money from the bank’s point of view increases up to $1900.
Suppose, you’ve decided to take back your $1000. What will the bank do? It will give you back the money deposited by other customers and that’s all. You will be surprised but such a hollow scheme underlies most banking procedures. And it is usually repeated endlessly.
The Central Bank + the printing press
However, the biggest banking system fraud is related to central banks. Their greatest economic deception is printing money. It is so called deficit financing.
Each time when money supply in the economy reduces, banks use deficit financing and print more money. Still, the actual amount of goods and services in the economy remains the same. That’s why when we pay $200 instead of $100 we can’t buy more products because the total production hasn’t increased. The amount of paper money just can’t double the amount of stuff produced.
The economy really grows when the total production increases, not the total amount of money.
There are many other fraud schemes the banks use to fool deluded folks. But, for now, we are sure, these few we’ve described are enough to get the point of the banking system.
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