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Fractional-Reserve Banking is Pure Fraud, Part IV
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Fractional-Reserve Banking is Pure Fraud, Part IV
Written by Jeff Nielson (CLICK FOR ORIGINAL)
Part I of this series explained how most of what we call “banking,” and in particular “fractional-reserve banking,” is inherently criminal and fraudulent. What the banks call “business” would be a crime if perpetrated by any other entity in our societies.
Part II of this series noted how after the Big Banks blew up our financial system in 2008 (with their reckless gambling and systemic frauds), both the Big Banks and our corrupt governments promised “never again.” They agreed to reduce the insane “leverage ratio” (i.e. fraud ratio) of the Big Banks back to quasi-reasonable proportions.
What they actually did was the exact opposite. Instead of requiring more than the microscopic capital reserves of the old “Basel II” rules, the new “Basel III” rules effectively allowed this financial crime syndicate to operate with near-zero reserves. “Fractional-reserve” fraud has now become no-reserve fraud.
Why would the tentacles of this financial consortium even want to operate with virtually zero reserves? As they march our markets higher and then lower, these corrupt organizations will absorb some losses ontotheir own balance sheets. The response of the Big Bank crime syndicate is simple: “who needs reserves when we can steal as much as we want , any time we want?”
What happens when a Big Bank suffers a supposed “catastrophic loss?” It runs crying to one of our corrupt governments for a bail out. Of course, the banks have already looted every penny out of our public treasuries, with the $10s of TRILLIONS they extorted from our governments at the end of 2008.
Now, when the banksters want to steal capital to cover the losses from their gambling and illegal frauds, they demand a bail- in. This is another example of their euphemistic liar-language, which simply meanstaking other peoples’ property (to which they have no legal claim, whatsoever) in order to cover their own losses.
Part III of this series pointed out the obvious truth that we don’t need any of this. Fractional-reserve fraud is not a necessary tool of economic development. Rather, it is a reckless short-cut, guaranteed to sabotage our economic development over the longer term.
Today, attempting to produce a slightly higher rate of growth (through the borrowed capital of fractional-reserve fraud) comes with a guaranteed cost: it will lead to lower growth when either the debts must be repaid or the whole system simply implodes ( i.e. Debt Jubilee ). When we attempt to “have more” for ourselves today, we do so by mortgaging the future of our children.
At this point, many readers may be thinking to themselves that it can’t get any worse. We have a financial crime syndicate which sits legally above our governments, dictating the rules of a “system” (i.e. organized crime) which transforms our entire markets and economies into a playground of crime. Here, the criminals fleece their victims with reckless, rapacious impunity because they know they will never be punished – no matter how many times they are caught breaking laws.
Worse still, with a “leverage ratio” (fraud ratio) which is becoming limitless, this crime syndicate can conjure, out of thin air, near-infinite quantities of funny-money to fuel their financial crimes. We see this demonstrated with what bankers call “the derivatives market”: a private, illegal, unregulated, crooked casino, where the quantum of the bankers’ gambling exceeds twenty times the size of the entire, global economy.
However, we still have not seen the pinnacle of this criminalized, financial insanity. In order to make this corrupted system infinitely worse, our governments have allowed the Federal Reserve racketeers to impose an additional element of infinite fraud: 0% interest rates.
There is no such thing as “a 0% loan.” Just ask the Tax Man. Try giving or receiving any 0% loans in your own financial affairs, and before the ink is dry on your virtual tax return, the tax enforcers will be knocking on your door.
They will tell you that your 0% loan is a sham transaction, prima facie fraud. They will tell you that the transaction is legally null-and-void, and that they will treat the so-called “loan” as what it really is: a gift. Yet in the ultra-fraudulent realm of our financial system, once again what is totally illegal for ourselves is just “business as usual” for the One Bank.
When the Federal Reserve claims to have “loaned” countless billions or trillions to the One Bank (we don’t know how much, because it refuses to fully disclose these activities), it has actually been giving these billions/trillions to the crime syndicate. It is free money, in every sense of the word.
Meanwhile, when our local or provincial/state governments need financing to help people survive the economic penury inflicted upon them by the One Bank, every penny of their money is always borrowed –really borrowed, at a real rate of interest.
How do these governments pay the ever-increasing interest payments on this debt? More and more, we see these governments do so by selling off assets: the assets of the People. Generally it is our best assets, and generally the asset-sales are at pennies on the dollar, because these governments are desperate. It is a distressed liquidation.
Who is the receiver of the ever-growing interest payments on these debts? The One Bank. And who is the buyer of most of these choice assets? The One Bank. It buys the best assets of the people (at pennies on the dollar) with its mountains of free funny-money, which starts with the 0% gifts from the Federal Reserve. This is a violent economic violation.
However, we still haven’t reached the culmination of these fraudulent, financial atrocities, which is combining “fractional-reserve” fraud with “0% interest” fraud. This is best illustrated through a simple numerical example. We’ll pretend the system is less-fraudulent than it is, and pretend there are less of these Big Bank tentacles than there are, in order to maintain more comprehensible numbers.
Let’s start with the $800 billion or so in new, official funny-money which the Federal Reserve was cranking out – each year – between 2010 and 2014. Every penny of this money was handed, for free, to the One Bank.
Let’s assume that there are only four Big Bank tentacles in this crime syndicate (in reality, there are dozens). Let’s assume that the actual leverage ratio/fraud ratio is the most stringent number officially on the books in the “Basel III” rules: 16:1 (rather than the de facto no-reserve fraud which these Big Banks are actually allowed to perpetrate). To make it even simpler, let’s assume that the Fed hands its entire free of $800 billion to a single tentacle: Big Bank A.
What does Big Bank A do with that $800 billion, all free money, from its 0% loan? It “loans” all of that money at 0% to Big Bank B, except multiplied by the 16:1 fraud-ratio of our fractional-reserve system. Suddenly, the mere $800 billion in free crime syndicate money becomes $12.8 trillion in the hands of tentacle B. All loaned at 0%; all free.
What does Big Bank B do with its free windfall of $12.8 trillion? That’s right, it loans it all to Big Bank C, at 0%, except once again multiplied by the 16:1 fraud ratio. Now the $12.8 trillion becomes $204.8 trillion, but why stop there? Big Bank C then loans its $204.8 trillion to Big Bank D at 0%, again multiplied by the 16:1 ratio. What began as a paltry $800 billion of free money in the hands of Big Bank tentacle A has become an insane mountain of free, conjured paper totaling $3.3768 QUADRILLION (or $3,376.8 trillion), in the hands of Big Bank D.
Remember that this ocean of funny-money, in the hands of history’s most-rapacious crime syndicate, would come from just one year of Fed money-printing. This was the subject of a commentary in April called The Multi-Quadrillion Dollar 0% Interest Scam. That commentary drew little reaction at the time, showing how numb people have grown to the rapacious frauds of the One Bank.
As a reminder; the numbers used in the previous hypothetical example were not real. In reality, the One Bank is not comprised of a mere four Big Bank tentacles, but rather dozens. In reality, the current fraud-ratio in our “fractional-reserve” system is not 16:1, but rather near infinity. Thus the reality is infinite mountains of free, fraudulent, funny-money.
We have a word for currency conjured out of fraud: counterfeit. Our official “fractional-reserve” monetary system, with official 0% lending rates, essentially zero regulation, and literally zero law enforcement is a system of institutionalized counterfeiting. The crime syndicate that sits atop the system is legally allowed to counterfeit all the money it could ever desire to finance its Empire of Crime.
Naturally, conjuring infinite quantities of funny-money can have only one outcome: hyperinflation. This is the near-infinite dilution of a currency, as its corresponding exchange rate plummets to zero. Thus the One Bank isn’t finished. It has declared an unofficial War on Cash, pressuring its puppet governments to “ban cash” in our (supposedly) “free societies.”
In our current system of fraud, we voluntarily “deposit” our wealth into the hands of criminals. They then use that wealth as a financial tool to control and mistreat us, and then they simply steal that wealth. Instead, the One Bank wants a system of absolute coercion. We would all be forced to place all of our wealth into the hands of history’s most-rapacious thieves – except for what we (prudently) protect in the form of “hard assets,” such as gold and silver.
Whatever wealth we choose to shelter in history’s most reliable wealth-preservation vehicles is immune to the banksters’ rapacious, paper system of infinite fraud and infinite theft. This is why the One Bank relentlessly attacks the precious metals market. It attacks these markets with relentless (and illegal) price-suppression. It attacks these markets with relentless (and absurd) propaganda, attempting to discredit these wealth-preservation vehicles to an unknowing general public.
We live in a system of infinite financial fraud: the fraud of “fractional-reserve banking,” multiplied by the fraud of 0% lending. The goal of this institutionalized fraud is nothing less than the theft of all of our wealth. The only answer to such infinite fraud is the absolute protection afforded by history’s ultimate safe havens: gold and silver.
A fractional-reserve fraud system, in any form, could never be justified in any legitimate society. However, we have today something much, much worse than mere “fractional-reserve banking.” Instead, we have a system of infinite debt, infinite gambling, infinite counterfeiting, infinite fraud, and infinite crime. A criminal bankers’ paradise.
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Fractional-Reserve Banking is Pure Fraud, Part IV
Written by Jeff Nielson (CLICK FOR ORIGINAL)
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For measuring electrical power the meter on the side of my house does work well enough for both parties.
For diesel fuel an old school diesel motor is tuff to fool. The tach will show at idle how energy rich the diesel fuel is.
100 proof vodka burns below that point it does not.
Those three measurments should work well enough to do the trick. Perfection is not nessasary rough but consistant will do. What we have now is completly subjective to the use of force crowd.
The measuring of human labor is also not very accurate. Mostly because the people themselves dont work at the same pace. Take two people and dig two holes for one hour. Then put the dug dirt on a scale. The numbers will almost never match up perfectly. Not that they must. But as far as being accuratly measured I will go with the values given by my Fluke multi meter. They have a proven track record of being close enough for me to make things work right.
PS Thanks for the great responces and feedback.
PS Thanks for the great responces and feedback.
You're welcome. Thanks for asking.
For reflection: An hour of unskilled labor has two components.
One is time. We have accurate simple methods for measuring time going back through all recorded history (and obviously before).
The other is skill. We're not talking about how much here, but about how little. No one has a complete absence of skill. They don't even have a complete absence of skill as applied to an appointed task. But in all recorded history and currently, we have a pretty good capability of differentiating skills. In my day, it was $1.50/hour to people for whom I was putty in their hands. Today, it's about $9. Way way back it was some amount of dinars or sea shells. In the end, it's about creating a hole in the ground and is not related to any fiction.
Both of these measures required are vastly more simple to determine than energy. Technology is giving us easier and easier ways to measure energy. But we get into real trouble when we try to relate observations of spectral density to tree rings and ice cores. We don't have such a problem with time and skill.
Its an interesting idea for sure. Way better than the trillion dollar coin idea from the Krugster. Or the slave coin we use now.
That said. The fixing of a real value to MOE is a must. One of the reasons I prefer the energy coin is a simple still for making booze. Its a very simple process to make booze. Requiering a fixed amount of effort to produce a certain amount of booze. Thereby setting a minimum value to labor. If it was legal to make and sell it of course. Producing energy is not all that hard and is measurable.
The fixing of a real value to MOE is a must.
I disagree. Traders fix the "value". Physics fixes the units. Simple as you say the process of making booze is, the process of making a hole in the ground is far simpler.
Let's say we somehow come to agreement that a HUL is a good natural unit of measure. Let's say we somehow come to agreement that the MOE management process I describe is superior to what we're doing now (by guaranteeing a zero leak rather than a 4% leak and putting a stop to government counterfeiting.)
So now we install it. How is that done?
Well, just as people can't relate value of things to gold without going through the two step process of relating it to dollars, and then dollars to gold, a move to a HUL will take the same work. It's no different than moving from the English measurement system to the Metric measurement system. In time traders will be thinking in HULs and not in dollars.
What is neat about it is that anyone (better, any group ... like a mutual insurance group) can do it any time. There is "nothing" that can stop them. Once it gets a foothold, it "will" take over.
The booze thing is easier and we get something to drink with the girls. I prefer makin booze to digging holes any day.
All kidin aside the competition for my labor can be assured by me making a legal energy/comodity. Then I myself can have some control of my labors value. At least in setting a minimum value of it.
Doesn't get any more convincing than that I suppose... but I have no clue what you're suggestion is.
A barter system from the ground up. The sucky part is it might just come to that.
A barter system from the ground up. The sucky part is it might just come to that.
Presumably you mean a system without money (even in the ridiculous form of gold). Such a system will make trade over time and space very difficult and expensive. The capitalists will love it though. If you want to make a trade over time, you have no choice but to get a capitalist involved.
Na gold and silver would be tops of any barter system.
Why should trading over time and space be easy? Globalism kinda sucks so far and I doubt it will be getting better in this system.
Na gold and silver would be tops of any barter system.
"Na" is not a very good defense. I have illustrated that any PM system can not possibly guarantee perpetual balance between supply and demand for the MOE. I have illustrated that there is not enough of the MOE and it can never be in free supply. I have illustrated that MOE itself must exhibit zero inflation ... PM can't do that. I have illustrated that PM is inefficient from a handling and certification perspective and presents storage issues.
You present no similar defense ... just "na".
Fine. Install both. The PM will disappear out of disuse. It's just not competitive.
lol
Yep, but running our system of magic money, money actually appears and disappears out of nothing. Under gold, if a market crashed the money went into hiding, but it never disappeared......
money actually appears and disappears out of nothing.
Wrong. You, a trader create it by making a trading promise (to be delivered at a later time and place). Money enables simple barter trade over time and space. You, a trader, destroy it on delivering your trade as promised. In the mean time it circulates as the most valued object of simple barter exchange. That's how and why it was invented.
Your confusion is brought to you be an elite clique we call bankers and money changers. They are a fiction of their own imagination.
The confusion comes from force. Our current MOE is a product of force, legal tender laws, etc...
Confusion comes from propoganda and lies. It originates from corrupt men coveting power of others and finding the power behind marble walls, protected by dogma and pride.
A MOE working off of force is not an MOE, its an usury on monopoly money.......a moral issue best left for individuals to determine, individually.
Gold and silver are preferred because they are
1) Recognizable
2) Portable
3) Divisuble
4) A more honest store than the monopoly script.
A MOE working off of force is not an MOE, its an usury on monopoly money.......
Correct. But right now I can contract with anyone to exchange anything ... gold, sea shells, FRNs, Pesos, etc. I am not forced to use any particular MOE except when I contract with the government (such contracts I cannot refuse to enter into and they dictate FRNs).
All compete for simple barter exchange. In the USA the FRNs win out. Not because of force but because they are the only game in town. BitCoins attempt to compete (and do compete with cash for covert trades), but they are deflationary by design. Gold, widely touted here, can never compete. The process management is way too expensive and the supply can never be made to perfectly and perpetually match demand.
This does not preclude someone with stroke (like a Warren Buffet or a Bill Gates or a Donald Trump) from creating their own MOE. Employing the proper process they would incur no risk in doing so ... just as they would incur no risk in creating an insurance exchange if they chose to do so. That's how Buffet funds his acquisitions.
It's all in the process employed. The three people I enumerate (and not an exhaustive list) bring legitimacy to the process ... legitimacy our government should bring but doesn't because it relies on counterfeiting for sustenance.
1) Recognizable
Gold is "not" recognizable. People all the time buy worthless gold looking Rolex watches.
It is very very expensive to make gold certifiable.
People all the time get duped by the Buffetts and gates of the world. People get duped buying an orange.......People are fallable- thus no perfect system.
What you refer to is fraud - does your MOE make man moral and just ?
Or is it that your MOE is not used on the street in the so called black market ?
How does one deal in illegal drugs with your registered MOE ?
What you refer to is fraud - does your MOE make man moral and just ?
In the case of the Rolex watch, you are correct, it is fraud. In the case of gold coins, the refining, certification of purity, and weight are expensive on their face. Then you have the fraud of shaving ... and the fraud of gold plating tungsten.
The MOE process I describe is open (transparent). It is a formally written contract where certificates are issued to a publicly known individual (e.g. your name on a mortgage agreement) and the promise (and repayment schedule) is recorded. Interest is collected in an objective actuarially explicit fashion. If the certificates are not returned as scheduled it is a DEFAULT event.
Morality is not an issue. The process is purely objective. And yes ... the process is just and actuarially sound. But it doesn't make the man that way. The man must be that way to make most efficient use of the process (i.e. drive his propensity to default to zero and thus incur zero interest load).
How does one deal in illegal drugs with your registered MOE ?
Same as is done now. The money is laundered. But the origination of the money in the first place is open to intense direct scrutiny with no anonymity. After that the trading in the money (i.e. circulation) is totally anonymous ... just as we're used to.
I agree on that point for sure.
You are both wrong.
Money is what makes you die when you don't have any of it...PERIOD.
So get some or get dead.