Tag Archives: Fractional reserve banking

GE Christenson ~ Fire and Ice: Inflation And Deflation

DeviantInvestor  January 15 2014 (Thanks, Gary)

gechristensonFractional reserve banking and central banking began their reign of destruction upon our financialworld a few centuries ago.

Politician’s greed and need for control over people have been ever present.

Their mutual interests created an unholy union from which were born two progeny. Call them Fire and Ice. Call them Inflation and Deflation.

This is their story – simplified and sanitized.

FRACTIONAL reserve banking allowed banks to loan out considerably more currency than was received from depositors – this increased the supply of currency in circulation. If demand for currency did not increase proportionally, then each currency unit was devalued and prices increased. The first child born of the unholy union – Fire – destroyed the purchasing power of the currencies in the world financial systems. (Inflation was created via fractional reserve banking instead of the usual debasing coinage or printing paper.)

Do you remember gasoline selling for $0.15 per gallon? Why does it cost 20 times as much now? The fires of inflation have destroyed most of the value of the currency unit – each dollar in circulation.

Because of government greed, its need for power over people, and every politician’s desire to meddle and spend, government granted bankers the power to create and control currency, monetize debt, fix interest rates, and so much more. Central Banking was born. In return, government could spend in excess, borrow from bankers, members of the legislature collected handsomely from the banking community, national debts expanded, and interest expense paid on those debts grew to outrageous levels. Politicians, their friends, favored industries, and bankers won, while most others lost.

For a personal perspective, how much interest have you earned on your savings since 2008? Does it seem like you lost and bankers won? Have your after-tax wages increased proportionally with your expenses since 2008, since 2000, since 1971? Probably not!

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GE Christenson ~ Gold, Silver, And The Sins Of The Past

Deviant Investor July 30 2013

Consider these thoughts on “the great lie,” our strange world, its unstable financial system, overwhelming debt, exponential growth, inevitable collapse, fractional reserve banking, counterparty risk, and gold – from highly intelligent individuals who think beyond the traditional:

From Karl Denninger: Detroit: The Shape Of Things To Come

“If you make political promises that can only be met through increased tax rates, now or in the future, you begin the process of slitting your own throat. That outcome is inevitable when you agree to political promises that have escalating expenses over time as pensions, medical benefits, salary “step” increases, bond issues that have a payment schedule longer than the useful life of the asset bought and similar.

There is no way out of this box other than to repudiate those promises.”

From Richard Russell: (subscription service)

“The compounding debt is the monster that is eating the U.S. The only way out is to renege on the debt or try to pay it off with inflation or hyperinflation. The bull market in bonds is over. From now on, we are dealing with a bear market in bonds, at which time natural forces will drive bonds down, and as bonds fall, interest rates will rise.”

“It’s taken almost two centuries for bankers to pull the wool over Americans’ eyes, but today you and I are working for intrinsically worthless paper that can be created by bureaucrats – created without sweat, without creative ability, without work, without anything but a decision by the Federal Reserve.

This is the disease at the base of today’s monetary system. And like a cancer, it will spread until the system ultimately falls apart. This is the tragedy of the great lie. The great lie is that fiat paper represents a store of value, money of lasting wealth.”

From The Burning Platform: Trying to Stay Sane in an Insane World – Part 1

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Real vs False Money – Key Insights From Monetary History

 July 22 2013

Where does money come from? Is its value constant or does it change? Are there risks associated with money? These are all important questions, because today’s monetary system combined with fractional reserve banking has a lot of risks. It is vulnerable to bank runs, inflation, and economic bubbles, to name just a few. Yet, those risks remain invisible to the majority of people. Global Gold Switzerland, a bullion company specialized in brokerage and custody services exclusively in the physical precious metals market, created a report and a short educational video. They explain how our current monetary system works, where it fails and how you can protect yourself against it.

In this article we extract twelve insights from the extended report. Readers are recommended to read the extended report (request the report “Real vs false money” here).

  1. Governments have a track record of diluting the value of their currency. History is full of examples where governments started mixing worthless metals into gold coins as soon as they ran into financial trouble.
  2. The first documented case of fraud by a banker dates back to the year 393 BC. A banker called Passio used bribes and falsified documents to misappropriate the gold which was entrusted to his bank. It became a widely used practice of goldsmiths and other depositories to lend out the gold which was handed to them for safekeeping; earning interest on lending out gold in the form of receipts; which wasn’t legally theirs. Continue reading

10 Things Government Can Do That Would Land You in Jail

Activist Post May 29 2013

Do you still believe the government represents the people? Are you part of the majority that genuinely wants the government to do good things?

There remains a large portion of the population that believes government to be a force for good and they blindly support giving it more power even at the expense of their own liberty.

Perhaps government should be a force for good represented by the will of the people. But, unfortunately, that is not what it is. Instead, the government does horrible things including breaking laws that regular citizens would go to jail for.

Ask yourself, why is a “representative” government allowed to do things that regular citizens are not allowed to do?

When a government declares itself above the law of the land, then the people live in a imperial dictatorship, and a tyrannical one at that.  It is the hallmark of a ruling class that lives with a separate set of rules than the rabble.

Take a look at the top ten things the government can do that would land you in jail:

Spying: You are considered a Peeping Tom if you spy on your neighbor, and if caught you’d go to jail or be sued. Citizens are also increasingly being arrested for filming police or public buildings under wiretapping charges of all things.  Meanwhile, the government is using massive resources (paid for by tax slaves) to violate the Constitution to spy on everyone and everything with impunity.

Insider Trading: Yes, you will serve jail time like Martha Stewart did for using marginally helpful insider trading information, but politicians voted themselves exempt from insider trading laws.  It must be nice to be exempt from the peasant’s laws.

Hacking: You will go to jail if you hack into someone’s cell phone or email account. The government, on the other hand, has legalized wiretapping and hacking to keep us safe. As they attempt to convince the public that nation-states and terrorists will engage in cyber attacks so that they can pass Internet control legislation, the U.S. and Israel are the only nations to publicly admit to attacking another nation with a computer virus.

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GE Christenson ~ Gold And What I Know for Certain

Deviant Investor May 16 2013

What I Know for Certain

  • Death and taxes!
  • Fear and greed are powerful motivators.
  • Individuals, businesses, and governments do what they think is beneficial for them.
  • Businesses and governments protect their products and territory and resist competition and enemies.
  • Concentrated wealth creates power and corruption. The greater the concentration of wealth, the larger and more pervasive the power and corruption.
  • Gold and silver have been money for over 3,000 years.
  • Unbacked paper money systems have always failed.

What I Think is True

  • The basic product of a central bank is the unbacked paper currency it prints in ever-increasing quantities.
  • Central banks will fight all competitors to their currencies. The oldest competitor to unbacked paper currencies is gold, ancient money.
  • Politicians want to spend money and increase their power.
  • Bankers want to create money, lend it to governments, and thereby secure a permanent and increasing revenue stream.

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Tom Dennen ~ DHS Has Reportedly Told Banks That It Has Authority To Seize The Contents Of Safety Deposit Boxes

Before It’s News March 31 2013

Could This be the Simple Formula That has Wrecked Two Civilizations, Going on Three?

If everyone asked the banks for their money tomorrow, only the first few would be successfully served. Cyprus? No. The US of A. And they’d use their one point seven billion hollow points to back it up

The Truth About Safe Deposit Boxes [Video]

The Case Against the Fed, Chapter 8, “Problems for the Fractional-Reserve Banker: Insolvency.” By Murray Rothbard. (Slightly edited for publication as a separate article – Tom Dennen)

Today’s banks are insolvent by definition and if customers lose confidence in their holdings and decide to cash out, it’s called a ‘run on the bank’ and the doors close.


If banks were legitimate businesses with ‘normal’ constraints, they would be legally liable to meet their contractual obligations, one of which is to ‘pay you, on demand’ your money.

A loss of confidence is always fatal because, by the very nature of fractional-reserve banking, no bank can honor all of its contracts.

How It Works

A bank has two “customers”: people who make the initial deposit of cash and those who borrow the bank’s issue of warehouse receipts against its deposits or ‘reserves’.

The fractional-reserve process works because the law treats a deposit of cash in a bank as credit rather than a ‘bailment’ or a loan to the bank.

A deposit is a loan, and you expect a return of interest on it – it’s a transfer of custody, not ownership.

Assume that I set up a Rothbard Bank, which adheres strictly to a 100-percent reserve policy. Suppose that R20,000 is deposited in the bank. Then, abstracting from my capital and other assets of the bank, its balance sheet will look like this:

Assets Equity & Liabilities

  • CASH Warehouse Receipts to Cash
  • $20 000 $20 000

So long as Rothbard Bank receipts are treated by the market as equivalent to cash, and they function as such, the receipts will work as cash. So if Mr John Smith has deposited $3,000 at the Rothbard Bank, buys a painting from an art gallery and pays for it with his deposit receipt of $3,000, it’s valid.

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Bix Weir ~ All Banks To Impose “Capital Controls” Within Weeks

www.RoadtoRoota.com March 26 2013

Things are happening as predicted. A whole lot of talk coming out of Europe that the Cyprus issue is under control and yet all Cyprus banks are still closed!

Cyprus making “Superhuman” Effort to Reopen Banks by Thursday


I’m sorry but the “cat is out of the bag” when it comes to fractional reserve banking and it will never crawl back in the bag. Yes, the Cyprus banks will open but depositors will not be able to take all their money out…ever!

The name of the game will be Capital Controls…meaning that depositors will only be allowed to take out little bits of their money for as long as the system is under stress.

Which will be forever!

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Rand Clifford ~ Only One Solution To The Fed Debt Trap

Activist Post | January 31 2013

The Oxford Dictionary of Proverbs lists the oldest written version of the saying “what you don’t know can’t hurt you” as coming from playwright George Pettie’s Petit Palace in 1576:“So long as I know it not, it hurteth me not.”

Several Rothschild-controlled centuries later, what Americans don’t know about “the Fed” may be fatal.

The Fed gained control of America’s money in 1913. Government debt now soars toward $17 trillion. Interest paid to service this debt, for the year 2011 alone, was $454,393,280,417.03, largely funneled by the Fed to eight international banking families:

Rothschild’s of London and Berlin; Lazard Brothers of Paris; Israel Moses Seaf of Italy; Kuhn, Loeb & Co. of Germany and New York; Warburg & Company of Hamburg, Germany; Lehman Brothers of New York; Goldman, Sachs of New York; Rockefeller Brothers of New York.

Ever heard a better argument for entitlement reform?

Rothschild wealth alone is estimated at $500 trillion.

Keeping the America public ignorant of why debt crises and threatened government shutdowns are a semi-automatic ruse aimed at social programs; reinforcing that cherished ignorance is a vital function of mainstream corporate media (MSM). Prevailing “see no evil, hear no evil, speak no evil” public attitudes toward the Fed are boosted by the trouble decent people have even imagining such an epic crime…there must be a law! Then, there’s faith…I really want to believe the Fed is part of the federal government.

No matter how many times former Fed Chairman Alan Greenspan and others remind us that the Fed is an untouchable independent agency, people like to believe what they want to believe, regardless.

An image problem with our country’s first two Rothschild-controlled central banks was transparency of the name, “U.S. Central bank”, or “BUS” (Bank of the United States).

Our current “Federal Reserve System”…now there’s a name with enough mojo to span a century, and even juice Congress into re-chartering the Fed for another 100 years (to 2113). MSM went totally mild.

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