Fractional Reserve Banking

Excerpt-Please reply to [email protected] for more info With (1) the rapid increase in the number of countries "joining" together under the financial jurisdiction of what are becoming bigger, multinational (privately owned) central banks, and (2) the nationalization of American central banks as of recent (with talks for more bottom dollar buy-outs and industry-wide assumptions), it is important as citizens of the most economically powerful nation in history we understand the threat this poses to economic sovereignty+ and prosperity++. American media networks are chock full of opinions and false controversy. (Ex. Who to help? Auto Industry? Homeowner? Wall Street?) The writer will not pretend to know aspects of this problem or to divulge or digress on things which are better left to more educated individuals. This paper was not written to scrutinize or give opinion; merely to accurately redirect the reader’s attention to the source of the problem. American attention is NEVER directed to the basic practice of the PRIVATE BANK congress authorized to PRINT our money 95 years ago, that, if corrected, would improve ALL commerce and industry. Interest, and interest-reliant, fractional reserve banking, if outlawed, would help all industry more than one can imagine. The writer would like to aim your attention at INTEREST. It is not difficult to grasp the basic principles of fractional reserve banking, but very few people can tell you how it works. This paper has chosen the writer’s own historical example, but if one thinks my interpretation is an oversimplification, or biased, I challenge one to look up any history of central bankers. Indeed, Henry Ford once said in regard to these policies "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. " Fractional reserve banking, the origins of which are inherently unknown, can best be explained by the example of the goldsmiths of medieval England. It was here that fiat money, or paper money, probably saw its origins. (A paper money system is not necessary to practice fractional reserve banking, just simplest to explain) After depositing gold into the trusted goldsmith’s vaults, one received a piece of paper from the goldsmith denoting the amount deposited. Eventually, these notes lost their ties to any specific, identifiable deposit of gold. It was simply more convenient to make payment via

the receipt from the common goldsmith. Unwittingly to most, this entrusted the goldsmith with enormous honesty. It was not long before the goldsmith realized he could create more notes than he had gold. This was because the people never came all at once to collect their gold. This effectively lessens the value of other’s notes. On top of excessive receipt creation, they began loaning, at interest, as much as ten times as much as they had in their vaults, and this was the birth of fractional reserve banking. Paying depositors, for example, six percent interest, accounted for only ten percent of their net business. They had loaned, at the same six percent, ten times as much as they had deposited. In this example, they are making sixty percent interest on depositor gold, already lessened in value. Furthermore, by controlling loans issued (or lack thereof), the money supply can be manipulated to produce what we know today as "boom/bust" cycle, which in both cases, inflation or depression fattens the usurer. If loans are no longer issued in the fractional reserve system, it results in a calculable number of debtors unable to pay back loans, and with the concurring contraction (or depression) in the money supply that also results from no loans, assets of the debtor can be assumed at pennies on the "dollar". For more information on the almost globally accepted (and growing) policy of fractional reserve banking, (and how the Federal Reserve created/exacerbated the depression betwixt wars) please refer to the work of the late Milton Friedman. The Federal Reserve has only been around for ninety five (95) years. Despite the deceptive "federal" in the name, it is defined as "quasigovernmental and privately owned", with less than half of its board presidentially assigned every 14 years. What most Americans don't realize is that control of our money supply is not a new battle, and it has changed hands 8 times since the American Revolution. Presidents who fought to establish interest-free monetary policy include James Madison, Andrew Jackson, Abraham Lincoln, James Garfield, and John F Kennedy. What was the reason for the American Revolution some may ask? According to knowledgable Diplomat Benjamin Franklin, it was the authority to print money. In his autobiography, Benjamin Franklin states that "The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which

created unemployment and dissatisfaction. The inability of the colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the prime reason for the Revolutionary War." If you've been wondering about the recent "bail-outs", I'd say your interest is justly piqued as an American citizen. Why has the first post-9/11 "depression" seen the government nationalizing industry? The Federal Reserve is currently holding Fort Knox against the 9 trillion in interest we owe them. How deep does the rabbit hole go?

Jim Harkins, citizen of the United Socialist States of Usury

What usury enables--"fractional reserve banking" Ex. DEPOSITS-at 6% interest, 10 people deposit $100 = Bank has $1000, next month they owe $60 (+$1,000 original deposit) to depositors. LOANS-at 6% interest, 100 people borrow $100 = Bank prints $9,000, next month they are owed $600(+$10,000 original loan) by creditors. This example is of a somewhat conservative fractional reserve system. They have been known to loan 100x the amount they have in reserve. THIS IS WHAT HAPPENS WHEN YOU BUY BONDS.