Why can the bank make a profit from a commodity that they created from nothing?
With fractional reserve lending, we pay interest to an industry that produces exactly nothing. How can people who actually produce commodities be in debt to a bank that produces only debt?
A farmer grows vegetables from the ground and sells them or trades them.
As we all know, money doesn’t grow on trees. It is created out of thin air.
If you think the bank is in debt right along with you the lender, you don’t understand fractional reserve lending.
To Paul McDonald: You do need a rich banker to do it.
Am I right?
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September 27th, 2010 at 5:05 am
THat’s the magic of free enterprise! HINT: You don’t have to be a rich banker to do it, either!
September 27th, 2010 at 5:05 am
Our "money" started by being backed with Gold.
You were permitted to take your bill into a bank and receive an equivalent amout of the metal for it.
That was followed by silver. The "Silver Certificates" could be taken into any bank and in return you could receive an equivalent amount of Silver. Quarters and dimes were made of silver until the early 1960s and pennies were made from pure copper.
Since then the paper money that is in circulation is called "Federal Reserve Notes" which is really worthless because there is nothing behind it. We are a debtor nation. Even the Social Security System has failed in their Fiduciary responsibilities to safeguard the money that they have been taking out of our paychecks for our retirement. They took the cash and bought US government bonds. You know how much those are worth.
The banking industry has changed just as dramaticly. It started out where you could open a savings account with your money and you would receive interest. The bank would/could lend that money out and charge more interest to the borrower. Some of the interest was used to cover the costs of the bank and the remainder was used to pay to stockholders and the interest on your savings account.
The money would be kept local. Pretty soon the States approved regulations for banking and they bought up the smaller local banks. Then the federal government made regulations for National Banks. National Banks do not have to answer to the State government, agencies, nor the courts.
With the use of computers and the US Supreme court I have been vicimized by banking fraud as well as have investigated and had been in litigation with a National Bank for fraud.
The only place that you can file a complaint about anything that a National Bank does is with the Office of the Controller of Currency, which is funded by the National Banks.
State Banking departments and/or agencies will not accept a complaint neither will better business bureaus.
One of the National Banks was found to be guilty in a Conneticut State Supreme Court in one case and was ordered to pay mega-bucks in dagages. It involved a local branch of that National Bank that was doing business in more than one location of Conneticut.
The National Bank went to the Federal Supreme Court and appealled the ruling on the grounds that the Conneticut Court did not have jurisdiction to rule on a matter that involved a National Bank.
The US Supreme Court ruled that the State of Conneticut did not have jurisdiction in the case. They did not agree that the decision that the Court arrived at was wrong they just said that the Conneticut State Court did not have the authority to tell a national bank how to run thier business within the State of Conneticut.
The US Supreme Court also ruled that the lawsuit would have to be retried in the National Banks home state, which was in this case North Carolina.
More legislation has been passed where National Banks can form mutual funds which are not subject to any legislation, stay away from them. They aren’t even FDIC insured.
I settled my case, in New Jersey, shortly after reading the Appelate decision of the Supreme Court as soon as possible. My case was in a New Jersey Court. I had already spent a great deal of money for legal fees in New Jersey which I would not have been able to recover under New Jersey law.
September 27th, 2010 at 5:05 am
rob paul to pay peter.
September 27th, 2010 at 5:05 am
"As we all know, money doesn’t grow on trees" but people grow the trees to make the money.
September 27th, 2010 at 5:05 am
banks have access to your account and can grab anything they need and charge you for eerything they say they do for you, remember the first banker of the world was JUDE JESUS’S betrayer, they havent changed a bit, after jude was the roman empire, still have their claws on your dough
September 27th, 2010 at 5:05 am
As with most of the the U.S. economy, banking is part of the service industry. Like all service industries, they make a profit for the service they provide, not for any tangible product they produce.
Fractional reserve banking just means that the bank can lend out a portion of their deposits to create income, and be able to pay interest to their depositers.
By contrast, 100% reserve banking requires the bank to keep all the depositers money in their vaults at all times. Under such an arrangement, you would not make any interest and would end up paying the bank to safe-guard your money.
If you personally don’t like fractional reserve banking, you can opt out and use 100% reserve. Just go down and rent a safety deposit box for your money. Of course, instead of interest earned, you would lose money from the safety deposit fees.
Give it a try! Live by your principles.
- Edit -
Re "If you think the bank is in debt right along with you the lender, you don’t understand…"
Perhaps there is a misunderstand on whay you mean by debt.
As a matter of accounting, a bank deposit is considered a liability on the bank books. The bank is legally in-debt to the depositor.
September 27th, 2010 at 5:05 am
It is always about the promise to make good on the debt. The bank is in debt to others and you’re in debt to the bank.
September 27th, 2010 at 5:05 am
smart banking.
September 27th, 2010 at 5:05 am
This is concerning, the US continues to go further and further into debt. As long as we have cash flow it seems as if our credit is more or less infinite, but if there is ever a hick-up in the economy that prevents us from making payments on our debt we will be in trouble. Rapid inflation, and huge unemployment could result.
The USSR fell because of bad economic management, and it looks possible that economic mismanagement by the government could bring down the USA too.
September 27th, 2010 at 5:05 am
if you dont like it then move to Afganistan
September 27th, 2010 at 5:05 am
"A fool and his money are easily parted." – P.T. Barnum
Once upon a time, money was printed by the banks, and was trade-able for Silver or Gold. Then the US Treasury began to mint and print its own money, which took the responsibility of the cash from the banks. It wasn’t until the 20th Century that the US Dollar was no longer traded for gold or silver, and then later was disconnected from the Gold Standard Dollar. Since then the value of the American Dollar has plummeted, while the Gold Standard, for the most part has increased in value.