Fractional Reserve Banking Quotes

New Golden Rule of Fractional Reserve Banking: He who creates the "fool's gold" controls the fools.

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted notto debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.

This is called fractional-reserve banking, and it’s how the vast majority of money in the world is created.

We all know that 97% of the money in the world doesn't exist and that's thanks to Fractional Reserve Banking, or should I say fictional reserve banking." He grinned at his own joke, his smile partly hidden by his hair, "Money is no longer attached to the Gold Standard, therefore, it isn't based on anything. So when it says, 'I promise to pay the bearer on demand ten pounds,' I have to ask, ten pounds of what?" Silence. "The world is owned by the rich shareholder, the rich superstar, the rich industrialist, the rich aristocracy." He was now marching around the stage, "It doesn't matter who or what they are, if they're rich then they own a part of the world, but they only own it because they've got lots of money. Which means they own part of the 97% of the world’s fictional money, the pretend money that only exists on a computer." He stopped abruptly and stared out at the audience, "Which means that if they cashed in their fictional nonexistent money they'd get something like this ten pound note offering to pay the bearer the sum of ten pounds of nothing." He held the note aloft, "Which means the rich have managed to buy the entire world with paper nothing that has a value of nothing and we've let them do it.

The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted notto debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

This all sounds pretty ominous, but you haven’t seen anything yet. You must add the “multiplier effect” of bank lending practices. Practically no one is aware that, when you make a deposit of $1,000 at your favorite bank, they can now lend out $10,000 as a result of your deposit. It is called the “fractional reserve lending system,” that is, they are creating money out of thin air. (My own description of what they are doing is the world’s largest con game). It is all predicated on the theory that “everyone is not going to withdraw their money at the same time.” For a complete treatise on what is going on in banking I suggest, no, I beg you to read The Case Against The Fed, by Murray Rothbard. You can get it at the Ludwig von Mises Institute located in Auburn, AL.

The fall of the Roman Empire was caused by what will eventually cause the fall of the United States of America - 'Fractional Reserve Banking'.

Stockholms Banco issued Europe’s first banknotes but got carried away and issued more than could be redeemed, a money creation technique known as fractional reserve banking.

most new currency is created from either 1) monetized government deficit spending, or 2) an increase in fractional reserve bank lending.

In the nineteenth century the global economy was worth a little more than $1 trillion, in today’s money. That means each year capital needed to find new investments worth about $30 billion – a significant sum. This required a huge effort on the part of capital, including the colonial expansion that characterised the nineteenth century. Today the global economy is worth over $80 trillion, so to maintain an acceptable rate of growth capital needs to find outlets for new investments worth another $2.5 trillion next year. That’s the size of the entire British economy – one of the biggest in the world. Somehow we have to add the equivalent of another British economy next year, on top of what we are already doing, and then add even more than that the following year, and so on. Where can this quantity of growth possibly be found? The pressures become enormous. It’s what is driving the pharmaceutical companies behind the opioid crisis in the United States; the beef companies that are burning down the Amazon; the arms companies that lobby against gun control; the oil companies that bankroll climate denialism; and the retail firms that are invading our lives with ever-more sophisticated advertising techniques to get us to buy things we don’t actually want. These are not ‘bad apples’ – they are obeying the iron law of capital. Over the past 500 years, an entire infrastructure has been created to facilitate the expansion of capital: limited liability, corporate personhood, stock markets, shareholder value rules, fractional reserve banking, credit ratings – we live in a world that’s increasingly organised around the imperatives of accumulation.

Although it performed the same functions as the Dutch Wisselbank, the Riksbank was also designed to be a Lanebank, meaning that it engaged in lending as well as facilitating commercial payments. By lending amounts in excess of its metallic reserve, it may be said to have pioneered the practice of what would later be known as fractional reserve banking, exploiting the fact that money left on deposit could profitably be lent out to borrowers.

Napoleon was convinced his system of sound money could defeat the vaporous credit creation of the British. He felt that people would reject a paper currency in favor of gold backing. His defeat made clear the awesome power of fractional reserve banking, a point not lost on bankers.

The Law thereby prohibits three contemporary monetary phenomena that have contributed so heavily to the economically precarious position of modern nations: fiat money, fractional reserve banking, and deficit spending.

In Hayek’s monetary theory of the cycle the upswing is generated by monetary expansions that cause an excess of investment over volun- tary saving and a shift in the structure of production toward more time- consuming processes. This structure, created by a depressed money rate of interest, cannot be sustained. Monetary expansion, then, will not pro- duce an everlasting boom, and when the expansion eventually stops, crisis and depression follow. With regard to the sources of monetary expansion, while others like Mises put the blame on the misguided (“inflationist” or “cheap money”) attitude of the monetary authorities, Hayek pointed to the endogenous process of money creation by the banks, in particular in a sys- tem of fractional reserve banking (see, e.g., Hayek 2012a [1933a], chap. 4, vs. Mises 2006b [1928]).

Banks today do what the British goldsmiths did almost four hundred years ago: when you deposit money, the bank turns around and lends some of it out to someone else. That money—your money—is now in two places at once. It is your money, in your account at the bank. It is also the borrower’s money. The borrower can deposit her money at another bank, which can then lend some of it out to yet another borrower. The same dollar is now in three places at once. This is called fractional-reserve banking, and it’s how the vast majority of money in the world is created.

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Bankers, not just rouge bankers but all bankers, even the best, the most honourable and the most honest, do things which would land the rest of us in jail. Near my house in France is a large grain silo. After the harvest, farmers deposit grain in it. The silo gives them a certificate for every tonne of grain that they deposit. They can withdraw that amount of grain whenever they want by presenting that certificate. If the silo owner issued more certificates than the grain he kept in the silo, he would go to jail. But that is effectively what bankers do. They keep as reserves only a fraction of the money deposited with them, which is why we call the system the fractional reserve banking system.

I believe that fractional-reserve banking is disastrous both for the morality and for the fundamental bases and institutions of the market economy.

One could slash private debt by 100pc of GDP, boost growth, stabilise prices, and dethrone bankers all at the same time. It could be done cleanly and painlessly, by legislative command, far more quickly than anybody imagined. The conjuring trick is to replace our system of private bank-created money -- roughly 97pc of the money supply -- with state-created money. Specifically, it means an assault on "fractional reserve banking". If lenders are forced to put up 100pc reserve backing for deposits, they lose the exorbitant privilege of creating money out of thin air. The nation regains sovereign control over the money supply. There are no more banks runs, and fewer boom-bust credit cycles. So there is a magic wand after all.

It's called fractional reserve banking. Before

the Knights Templar were pirates and thieves who secretly excavated Solomon’s Temple in the first century A.D. under the disguise of protecting travelers from being attacked by Muslim armies. The Templars, who many believe were the creators of Freemasonry (and later the Illuminati), became the first international bankers and used the treasure they essentially stole from the ruins of what was Solomon’s Temple (along with the knowledge of fractional reserve banking) to become the wealthiest organization of their time.

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