Zion, IL
By A.B. Dada
—

This year, I am doing something new for Christmas: I am shopping early for myself. We don’t spend a lot on Christmas because we don’t really partake of most consumer holidays. I’m a fan of ALL consumerism if it is based on spending only after you’ve paid your credit cards off, saved 10%+ a month, and kept up with your mortgage, utilities and your food needs. Whatever is left after all that is fine to blow on what you might want versus what you truly need.

This year we’re not buying snazzy clothes or cool electronics. We’re not buying things for the house or the car or the cats. We’re not taking an expensive vacation, and we’re not getting cool toys for the kids of our friends. No iPods, no cell phones, no jewelry. We’re buying a nice, heavy, fireproof vault.

As time goes on, I’ve started to realize that the biggest problem we face today is the fraudulent fractional banking system the world revolves on. I’ve written about it before, but the regular readers here will hear it more and more from me: before we get rid of the Federal Reserve’s inflationary basis, we MUST get rid of fractional banking, somehow. The only way to do that is to truly cause runs on banks and investment houses — these groups collude with the Central Bank to keep the fractional reserve banking system profitable, while stealing from you and me.

We’ll buy our Christmas vault maybe a week before Black Friday, the traditional start to the Christmas shopping season. We’ll store the vault at our secret castle, a house that not even my friends and family know exists. We use it as our getaway, and it is far enough from reality to be fairly safe and very well protected. It isn’t a tinfoil hat camp, it is just a place we go to when we want to admire nature and forgo the cell phones and internet and family craziness.

What will go in the vault? All our dollar assets. We’ve been slowly withdrawing from our savings accounts (yes, we do have one) and our money market accounts (two) and any investments we may have, even if there is a heavy tax penalty. I don’t need those accounts anymore, because they are immoral to have. We’ve been buying silver slowly, gold even more slowly, and focusing on dollar holdings because it hedges against deflationary concerns.

By withdrawing all our deposit accounts, we will put a very small ding, almost unnoticeable, in the fraudulent banking system. For every $1 you deposit in a savings account, investment holding account, or money market account, the fraudulent banks use to loan out more than your $1. When they receive a dollar, they have three choices:

1. Sit on the dollar, doing nothing with it
2. Loan out the dollar and hope to make 6% or 7% on it, or 18%-25% on a credit card loan.
3. Put the dollar into their reserves, and then loan out $9 hoping to make 6%-25% on those newly created fake-dollars.

Which one would you do if you had the legal power to act on? #3, I’m sure. If you sat on $1 in your mattress, you’d earn nothing for a year. If you loaned out $1 for a year at 10%, you’d make a dime. But if you were allowed to store the dollar in a cookie jar, and then print 9 more dollars to loan out, you could make 90 cents in a year, and still have the dollar to redeem to the person you owe it to! What a magical system.

It is fraudulent, it is theft. If you’re religious, the Old Testament, the New Testament, the Koran, whatever your holy book is, speaks out against theft and fraud. You can’t do it. If you’re non-religious, it is still immoral to steal, and there are few people who would disagree with that. Fractional reserve banking is theft.

I ask anyone here with savings or investment holdings to try to do the same. For everyone dollar you put in your mattress, the system loses $9+ dollars, or even more because they can use the new 9 dollars to drop into their reserves of other banks and let them create new money again. $1 can turn into $90 of new fake-money within days.

Would you join me in making a tiny, almost unnoticeable ding in this fraudulent, immoral and unethical system? By mattressing your dollars, you’re helping to reduce the available artificial credit that is making prices so high, making people so poor, and making the elite even more elite.

Share this with your friends and family — it is the only way we can pummel the Central Banking system in a short period of time. If just 100,000 believers in freedom and morals withdrew $10,000 each, that’s $1 billion taken out, but $10 billion-$90 billion removed from the credit system. Talk about hitting them where it hurts — reducing their ability to defraud the markets, consumers, and investors.

Zion, IL
By A.B. Dada
—

Over at the LRC blog, Chris Brunner posted an article titled Top 8 Ways Hard Money Would Change Your Life that details 8 decent reasons why Ron Paul’s stance on a gold-backed dollar is a good one. But the Federal Reserve’s printing presses and liquidity injections are not the biggest problem we face today in the U.S. in terms of economic difficult and years of financial abuse by governments at all levels, in fact the Federal Reserve’s control over “real dollar” creation is not really that bad when you consider the real culprit: fractional reserve banking.

Inflation happens when more money is created than previously exists, and the Federal Reserve does have the ability to inject new cash into the system (digitally or printed). Recently the Fed injected tens of billions of dollars in cheap “overnight” loans to member banks. New cash doesn’t always cause inflation, though, because of the growth of population and goods to buy.

If we had a fixed population, say 100 people, and a fixed supply of goods, as 10 oranges and 10 horses, new currency pumped into the market would definitely have an inflationary effect on prices. If there was 100 dollars to start with, and the Fed pumped another 100 dollars into the economy, some prices would likely double or more. If the demand for oranges was greater than horses, you might even see horse prices fall and orange prices more than double. But if the population doubled, or the supply of goods doubled, the new currency may not have that doubling effect on prices — it might keep prices close to stable. This is not a good thing, though, because the new money would be VERY beneficial to those who received it first, and the markets would swing in terms of price and production until they reached a new equilibrium of prices, supply, demand and production. This is why printing new money (or creating new digital balances) is bad, but it doesn’t always cause price increases necessarily.

This is also the reason why fiat currency is not as bad as the other problem with all fiat currencies: fractional reserve banking. Fractional reserve banking is a government-regulated standard of how much banks need to actually have on hand versus what depositors have given them. If the government required 100% reserves, we would not have a fractional reserve standard but a full reserve standard (which is what we want and need). That means if you deposit $100 to a bank into a savings account, they need to put that $100 in the vault and sit on it. If the reserve was set to 10% (where it is today), the bank would just have to keep $10 of your money in the vault, and then they could loan out $90 of it to another individual. This is where banks make their money, on the fraud of fractional reserve banking. Your $100 becomes $190, and that has a definite effect on price inflation, market fluctuations, malinvestment and overinvestment. If the person who borrowed the $90 from the bank (based on your $100 deposit) decided to deposit the money with another bank, the new bank could then give them a receipt for $90 and then loan out $81 — creating even more inflation! This repeats itself until there is many, many times more “money” in the system, which has an almost immediate effect on prices. When prices skyrocket in an industry, producers of the goods that skyrocket may think the market needs more of those goods, so they make more, and this is where malinvestment occurs. Look at the overabundance of new homes in the market — created on the false demand that came from fractional reserve banking.

When the the Federal Reserve “injects liquidity,” it is actually just giving banks new money (printed or digital) to use. Let’s say the Federal Reserve lets Bank of Yummy-Yummy borrow $2 billion. Normally they let them borrow at an interest rate below their market rate — the bank borrows for 0.5% less than you can borrow from the bank. The bank deposits that $2 billion into their vaults, but because of fractional reserve banking, they can loan that $2 billion out 10 times, and at a 0.5% interest rate profit! So not only do they get the money early (before prices have gone up), and have the ability to pick and choose who gets the money (before prices have gone up), but they get 10 times the money at a discount rate, and only have to pay back the initial loan.

If you had the ability to print 10 times as many dollars as you previously had in the mattress, would you? What if you took those new dollars you just printed, and stuck some of them into your mattress, letting you print even more new dollars? Does this sound like theft and fraud to you? Does this sound like something a good and moral person would do?

This is your government in action — all your governments. Every country in the world loves the fractional reserve banking system, but the bankers love it the most. If you work for a bank, you’re working for a fraudulent entity. If you deposit in a bank, you’re letting your money be used to counterfeit new money and also depreciate the value of your money. If you invest in funds that deposit money in banks, your investment may not grow more than the true rate of inflation, but the people who are getting your investment money are cutting themselves huge bonuses just because their fund grows, even though the true rate of inflation may show that the investment didn’t really grow at all, it just kept up with inflating prices.

This is the fraud that we need to be aware of. Ending the Federal Reserve may NOT end fractional banking, which could be maintained as a law on the books of Congress. Tying the dollar to gold won’t end franctional reserve banking, as Congress may allow the banks to keep a reserve of only 10% of the gold out there.

The only solution that I see is to keep your dollars with you at all times — in the mattress, in your home vault, in a teddy bear, wherever. Spend it on what you need, but hoarding dollars, if done by a significant percent of the population, is the only moral response to a banking system that steals, lies, defrauds and deceives the public.