 |
 |
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
 |
|||
|
|||
 |
|||
|
|||
 |
|||
|
Borrowing from Peter to Pay Paul: The Wall Street Ponzi Scheme Called Fractional Reserve Banking
- Text size
Ellen Brown
Web of Debt
December 30, 2008
Cartoon in the New Yorker:
A gun-toting man with large dark glasses, large hat pulled down, stands in front of a bank teller, who is reading a demand note. It says, “Give me all the money in my account.”
Bernie Madoff showed us how it was done: you induce many investors to invest their money, promising steady above-market returns; and you deliver – at least on paper. When your clients check their accounts, they see that their investments have indeed increased by the promised amount. Anyone who opts to pull out of the game is paid promptly and in full. You can afford to pay because most players stay in, and new players are constantly coming in to replace those who drop out. The players who drop out are simply paid with the money coming in from new recruits. The scheme works until the market turns and many players want their money back at once. Then it’s game over: you have to admit that you don’t have the funds, and you are probably looking at jail time.
- A d v e r t i s e m e n t
A Ponzi scheme is a form of pyramid scheme in which earlier investors are paid with the money of later investors rather than from real profits. The perpetuation of the scheme requires an ever-increasing flow of money from investors in order to keep it going. Charles Ponzi was an engaging Boston ex-convict who defrauded investors out of $6 million in the 1920s by promising them a 400 percent return on redeemed postal reply coupons. When he finally could not pay, the scam earned him ten years in jail; and Bernie Madoff is likely to wind up there as well.
Most people are not involved in illegal Ponzi schemes, but we do keep our money in accounts that are tallied on computer screens rather than in stacks of coins or paper bills. How do we know that when we demand our money from our bank or broker that the funds will be there? The fact that banks are subject to “runs” (recall Northern Rock, Indymac and Washington Mutual) suggests that all may not be as it seems on our online screens. Banks themselves are involved in a sort of Ponzi scheme, one that has been perpetuated for hundreds of years. What distinguishes the legal scheme known as “fractional reserve” lending from the illegal schemes of Bernie Madoff and his ilk is that the bankers’ scheme is protected by government charter and backstopped with government funds. At last count, the Federal Reserve and the U.S. Treasury had committed $8.5 trillion to bailing out the banks from their follies.1 By comparison, M2, the largest measure of the money supply now reported by the Federal Reserve, was just under $8 trillion in December 2008.2 The sheer size of the bailout efforts indicates that the banking scheme has reached its mathematical limits and needs to be superseded by something more sustainable.
-
- Social bookmarks
- Email this article
-
- Print this page
- Share on Twitter
December 30th, 2008 at 1:14 pm
The American people are awash in a sea of paper money which has been printed up and dumped on them by the FED and U.S. Congress. Deceitful government! Each time they print up a few more billion or trillion dollars and circulate it, each and every dollar in circulation loses value. This is the great evil and fraud that has wrecked our economy. This is the root cause of all the financial turmoil in the markets and everywhere else. This is the big secret in Washington D.C. Most knowledgeable people (such as Bernanke) in Washington know it, but won’t speak up. Among themselves they know how destructive printing up more paper money is, never doubt it — but they also know that if they say anything to embarrass or expose the parasites in Congress, they could lose their jobs.
Only Ron Paul is courageously speaking out against this treachery, much to the aggravation and worry of the bums in the FED. They know Ron Paul speaks the truth, they just don’t want the general public to know it, because it would mean the end of the FED and their over paid jobs and luxury lifestyles.
But, until this fraud is stopped it will continue to weaken your purchasing power and that means simply that it will take more and more dollars to buy just about anything, which is really bad if your on a fixed income or have a job with a fixed pay scale. You are going to get royally screwed before this is over. For example, a loaf of bread will very likely hit $15.00 or more in the next few years. And, gasoline will go way past $5.00 a gallon.
Remember this: it’s not that a item has gone up in price; it’s the opposite; rather the value of the dollar has gone down (because they keep printing up more and more), meaning that it will take more and more dollars each time to purchase the same basket of goods. Did you know that an ounce of gold today will buy just about the same quantity of goods that it did in Julius Caesar’s time, 2000 years ago? Gold is an incredibly stable form of money. Gold is timeless. Gold is real money, recognized and honored as money across borders and by all but the most primitive of cultures, without government decrees. Governments and spendthift politicians don’t like currency being tied to gold, because it puts a real limit on their spending sprees and wastefulness. That is the reason they bad mouth the gold standard. Under a renewed gold standard the conniving politicians lose control of wasteful, endless spending and the people rightfully take control of their currency. Their purchasing power is restored and stabilized, as it should be. Sadly, people today have no idea what it’s like to live in a world where things cost just about the same amount year after year. We’ve become “accustomed” to the idea that prices just “naturally” go up and up. But that’s the big fraud now being perpetrated on the people for over 80 years now. End the FED and see your purchasing power restored!
Back in 1990, I went through U.S. Abstracts year by year from 1970 to 1990 and counted just the number of 20 dollar bills in circulation (I could have done it for the other denominations, but the 20s served the purpose). Then I plotted the number of 20s for each year on a piece of high school graph paper. The number in circulation had increased on an exponential curve since 1970. For me, at that time (1990) that was conclusive proof of the great fraud perpetrated on the America people by the FED and the U.S. Congress. Now, sometime in the past few years, I believe our government has stopped publishing the number of 20 dollar bills in circulation along with all other denominations. But, no one should be surprised, as they’ve wised up that they don’t want that information on the street! But, that also rather says they are fully aware of what they are doing, they just don’t want the people to know. They are thieves and liars, like most of the members of the U.S. Congress, who also lie when they say they have no control over FED. They authorize all of the FEDs activities. Abolish or destroy the FED, whichever will get the job done!
December 30th, 2008 at 1:18 pm
this man’s government can only walk out of the house, look up to the stars and soil its self
why pay for this system? only yahshua can help with national repentance!
longryder Reply:
March 9th, 2009 at 4:37 pm
You are wise and correct..But let us not forget the example that Jesus left for us when he took a whip and DROVE the money changers out of the temple..He used his physical self to make them leave,There is such a thing as righteous anger..We need to find it ourselves.
December 30th, 2008 at 1:23 pm
When it comes to the FED Ponzi scheme you all are Blind, Deaf, and DUMB
December 30th, 2008 at 1:50 pm
Best article I’ve read on explaining fractional reserve banking.
December 30th, 2008 at 1:51 pm
~ New video showing a spirit of opposition against the New World Order. Constitutional Oaths are being (re)sworn across the country on YouTube by watchful guardians to resist NWO tyranny.
http://www.youtube.com/watch?v=JJv59hUoIsE
December 30th, 2008 at 2:21 pm
Question: Nature of money in China
What is the nature of money in China? Is the Yuan put into circulation by PRC as a matter of
Sovereignty or is the Yuan borrowed from a private bank into circulation? Or , perhaps, is there
another description of how the Yuan comes to be ?
Thank you in advance.
December 30th, 2008 at 2:40 pm
If I had missle foot, It would be up there ASSES!!
December 30th, 2008 at 2:42 pm
Go for it Red, just watch where you point that thing!
December 30th, 2008 at 3:29 pm
Pay no attention to the man behind the curtain!
December 30th, 2008 at 3:47 pm
I’m wondering why my lengthy arguement for creating our own new monitary system didn’t make this post but the obscure irrelavant refrence to the Wizard of Oz did….. Please don’t tell me I’m being censored here!
December 30th, 2008 at 4:24 pm
just think about it folks, a new american dollar printed by us and backed by gold. Congress has betrayed us by giving our right to print our own money and control our own destiny to the fed. They have betrayed us and should be recalled.
I’m pretty sure the founders printed their own money when they declared independance. Why can’t we?
Take back the key to our prosperity and send the loan sharks packing!
It’s way past time for an endrun around the elite to regain our beloved republic!
December 30th, 2008 at 4:25 pm
to #11
Yes you are being censored!
I’m being censored here as well, if this even makes it up there. It seems when truth is posted here, it’s deleted, and they only leave the pointless bickering back and forth.
The only time my comments make it up there is when I say somthing stupid.
December 30th, 2008 at 4:58 pm
at least the condensed version made it up. Think about it……
December 30th, 2008 at 5:05 pm
Wealth not debt!!!!!
December 30th, 2008 at 5:24 pm
http://www.youtube.com/watch?v.....re=channel
December 30th, 2008 at 5:55 pm
If you want to stop all of this then put all your efforts into this Pear reviewed Power Point presentation (Science & Math don’t lie) http://www.ae911truth.org/flashmov11.htm
Slam them with true facts and get in thier face like your life depends on it(AND IT DOES)
December 30th, 2008 at 6:13 pm
This is like the UN taking over the US thing, when in fact UN is only a tool of the US.
How the hell are the banks supposed to cover their overhead and pay interest to depositors without the fractional reserve banking? They keep 10% in banks to cover the withdrawls and lend out 90%. One day, sit down and do the math. BANKS DO NOT CREATE MONEY like Money Masters claims. Only Federal Reserve creates money. If every bank created money then everyone would be in the banking business.
December 30th, 2008 at 6:22 pm
Time for talking is over.
December 30th, 2008 at 6:56 pm
Why is no one fighting back? You think your whining and piss-moaning is gonna change a damn thing? Why are you so afraid of being killed? Arn’t the values you espouse worth fighting for as did generations before us? Let me know when the real fighting begins…..
December 30th, 2008 at 7:45 pm
It’s not borrowing when you’re thieving moron.
December 30th, 2008 at 9:08 pm
Jim Baker of PTL fame got sentenced to thirty five years for overbooking a hotel that was not overbooked. Martha Stewart sold stock when her broker told her that someone else at Imclone did. What should all of our Constutional Representatives who have taken an oath to God to protect us from all enemies foreign and domestic deserve for the social security Ponzi sceme? If they would just stop murdering two million or so innocents per year the scam would probablly go on indefinatly.America was born of lead and rope for tyrants. As Jefferson said rebellion to tyrants is obedience to God.
December 31st, 2008 at 5:11 am
POWER 2 THE PEOPLE, BY THE PEOPLE, 4 THE PEOPLE
December 31st, 2008 at 11:36 am
I got taken by a Hawaiin named John Cerizo. he took $8 million from 75 investors. He got 5 years and I believe the FBI found the funds and kept them. Some system of honesty we have, isn’t it?
Jingus Reply:
February 23rd, 2009 at 10:46 am
A Swiss man took the money. No one knows where it is.
January 2nd, 2009 at 5:45 am
joe-6-pack
In the limited scope you are talking about it is not a problem but from a wider perspective it is a huge problem. The wider perspective being that debt has to grow exponentially since only the principle of a loan is created but principle plus interest has to be repaid. This leads to an exponential growth that is unsustainable over long periods of time. This is basically a debt based ponzi scheme that concentrates money into the hands of people who do very little productive work.
KB Reply:
February 26th, 2009 at 1:20 pm
Correct me if needed……….my understanding is that it is permissible for the local bank to create a loan first and than borrow the 10% (or whatever the reserve requirement in effect) after the fact to replenish funds on hand.
I agree that the mathematical impossibility is the creation of only the principle amount and the non-existence of the money that will be required as interest at a future date. This necessitates the need to create another interest bearing debt for the due interest and on and on and on.
This is an outright crime and it is amazing that this mechanism is allowed to survive.
March 9th, 2009 at 4:32 pm
WOW..Thank you so much for articulatingthe truth …I have been , seeingly, the “lone nut” telling people about this den of vipers for over 4 years of finally waking up.I had gathered some info about 2 yars ago that showed beyond doubt that the Federal Income taxes that we like fools have been paying -does not go to running our Federal infrastructure..It goes primarily to the family’s who a part of this massive fraud..Ron Paul has been trying to get the Anericans to get up off their collective asses and learn whaat is reality..Aaron Russo tried his best..We are all trying to get a collective movement together to make the point that we are through being bent at the waist while grabbing our ankles..BUY..and I had this discussion withj another guy that finally “gets it ” just the other day..How on earth do we prosecute or even persecute the “Boss Man”. You are right , these people own our debt buy and large..they own Congress and the White House..military..media..When those jerks keep telling us that it is “none of your business ” where aand to who, the bailout B.S, is going..in a sense , they are right..So please tell me how this will ever work to gain control of our Country again? It seems reasonable to me, that the only alternative willbe armed conflict..I don’t see the monster and his disciples who caused this to become Saints and just give it all back..what say you?