Fractional Lending Explained

Henry Ford once stated, ―It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning‖.

The commonly accepted delusion is, it is good for everyone if only a few make the money, as it wends its way down to the blue collar. In reality, the money is wrenched from the calloused hands of the
working class into the already lined pockets of an elite group. Almost all of the money in our economy is created by banks when people take out loans. In other words, money is created from debt. The more loans people take, the more debt there is, the more money there is.

Shockingly, if no one went into debt there would be no money. The most prevalent assumption is that a bank loans out money that it's patrons have already deposited yet instead, they are loaning money that has been created electronically.

The process begins with the government going into debt. They request a large loan (let's say 10 million) from the Fed with an exchange of government bonds as a promise to repay. The ―money‖ is then deposited electronically into their bank account. 1,000,000 is held as reserve funds as required by law and the other 9,000,000 is considered to be excessive reserve funds and can be loaned out at the current interest rate.

Here's where it gets really interesting. Let's say someone borrows the entire 9 million, they will most
likely deposit it to their bank account and the 90%/10% loan/reserve process is repeated. This cycle can technically go on to infinity yet the average mathematical equation suggests that 90,000,000 can be created from the original 10,000,000 borrowed. Money is created by charging people interest to rent the created money by the Fed and banks which then returns to them, effectively further widening the gap between the rich and the poor. Only 3% of the money in circulation is actually represented in paper form. Because of this, the dollar has steadily been devalued 96% since the federal reserve came into existence.

Devaluation then creates inflation of the costs of goods and services. The banks don't want the working public to know that the reason prices of necessities and housing keeps going up, is because they are effectively making money out of nothing. The government, banks and big business‘ further benefit by purchasing any services, products, or assets they need before the money goes into circulation, therefore avoiding higher prices created by inflation. People at the bottom of the economic barrel; rural dwellers, workers on fixed income, people with savings, are hit the hardest. By the time the newly created money filters down to them, prices have risen, their wages have stayed the same and their savings buy them less. Some are even forced to take a loan just to purchase the things they need. Which means they have to go back to the banks. Which means more debt, which means more money for the elite.

This process perpetually redistributes the wealth from the bottom to the top, ever increasing the gulf between rich and poor and leaving most enslaved to debt. You cannot get yourself out of debt by creating more debt. Remember the wise words of Voltaire; all paper money eventually returns to its intrinsic value -zero.

Source of Information : Ask About Gold By Michael Ruge