How to Decipher an Honest Bank
There have been many explanations of
the banking system seeking to make it easy to understand.
While I do not wish to demean these explanations, I would
like to try my hand at explaining the banking system so that
even a child can understand it.
There are natural laws of economics that we must give heed
to, or we will pay the consequences, and banking is no
exception. We all labor to earn a profit and make money for
a living by doing so. It comes down to trading our labor for
payment therefrom. This is logic so very easy to understand.
However, when we seek to change this elementary rule, we
naturally are headed for disaster.
Would you pay your boss just so you can say you have a job?
Absolutely not! That would be insane. We must apply this
very same logic to your local bank.
Why do seek out the services of a bank anyway? The theory is
that you do not want to maintain the risk of keeping your
wealth in your home under your mattress, or in the ground in
your backyard. Someone may break into your home while you
are away and steal all your wealth, therefore, you would
rather hire the services of a bank who has a very secure
vault to keep your money. After all, banks have alarms and
security guards to keep your valuables safe.
So we deem the services of hiring a bank beneficial to our
own interests. So economic logic tells us that you owe your
bank for his services of keeping your wealth safe. If a bank
were honest, he might say that it will cost you 5% of your
wealth deposited with him for his services. This would be an
honest payment for an honest service, which makes honest
However, this is not the way the "banking" system works.
Instead of charging you his services, he offers to pay you
to keep your money safe. Such defies economic sense.
Suppose you are my next door neighbor and I come over to
your house and offer you $15 if I can cut your lawn. You
would wonder if I had slipped a cog. After like manner,
suppose I offered you $10 an hour if I could come to your
house and wash your dishes and clean your house.
This is precisely the same logic that runs our entire
banking system when they offer you 5% of your deposit to
keep your money safe. You say, "This doesn't make sense." No
it doesn't. But this is the explanation of our banking
system made easy. Why are the banks willing to pay you for
their services of keeping your money safe? There can be only
one answer, and that is, they do not keep your money safe.
They gamble with it. They are involved in risk-taking with
your money, and hoping to win on your buck without you
getting a cut of the win, if there is a win.
I don't know about you, but if I am going to lay my money on
the gambling table, I would rather be present and do it
myself, and not being paid a measly 5% commission on the
risk of my own money. After all, if the banks win, they are
going to keep 100% of the winnings, and not share any of
that with me. They are only on the hook for the 5% they
agreed to pay you. But what if they lose on the risk? They
will just take the other guy's money whom they also agreed
to pay 5% and pay you just to shut you up, and then hope the
other guy will not come into the bank wanting his money.
What the banks fear worse is a run on the bank, i.e.,
everyone wants their money at the same time, because they
don't have it.
In other words, the banks exist on a giant Ponzi scheme.
They are all effectually involved in a Bernie Madoff type
deal. They are all alright so long a not everyone comes into
the banks and want their money out.
Banks are only required maintain a very small percentage on
the deposits to cover those who want to make a withdrawal.
That amount is approximately only 3%. This means that banks
they can only account for $3 for every $100 you placed in
their banks. It is a shell game which can go on forever
until they are made to turn up all three shells and reveal
what is under them.
Allow me to make another illustration of what is going on in
the banking system. I have a vehicle storage yard to keep
people's vehicles safe. It would make sense if I charged
each of my customers $60 per month for them to store their
vehicles in my storage lot. But applying the above banking
principles to this storage lot, I might offer to pay each
customer who stores their vehicle in my lot $5 per month.
You can't believe the deal I am offering to keep your
vehicle safe. It just sounds to good to be true. But then
you you investigate what is really going on.
I am leasing out everyone's vehicle to strangers and
charging them $20 per day, plus mileage, to use your
vehicle, and placing all that money in my pocket. Every
month I reach into my pocket and pull out a $5 bill and give
it to each customer for keeping their vehicle safe. This is
what is going on within the banking industry.
We just experienced a major banking bailout to save the
banks. What happened? The banks took risks with your money
and lost. The debt came due and they did not have the money
you placed in their trust, and therefore the entire banking
fraud was about to revealed and collapse.
But due to the generosity of your U.S. Senators and your
Congressmen, they voted to bail out (cover) for the banks
fraud with your money, otherwise known as that which you
entrusted to your public servants in what is commonly called
Of course, this money given to the bankers to cover their
risk, is going to have to be replaced. And just who is going
to have to replace it? Not the bankers. They gave themselves
bonuses of millions and even billions. You, your children,
and your children's children are on the hook for the
gambling losses of these bankers, which will last for many
years to come. Meanwhile, these bankers are home free living
high on the hog.
With this information, you know can understand our current
banking system. But I have one last tip to share with you. I
wish explain how you can to identify an honest banker. An
honest banker will tell you that his security services of
protecting your money is going to cost you. If you come upon
a banker who is willing to pay you to keep your money safe,
grab your money and run. Find one who is going to charge you
for his services.