A few years ago on “24”, there was a scene where Jack was talking to one of the bad guys. Here’s the scene:
Jack Bauer: [to Christopher Henderson, who is holding Audrey hostage] Why are you doing this? Why are you protecting Logan?
Christopher Henderson: I'm protecting something much more important than Charles Logan...
Jack Bauer: What?
Christopher Henderson: The integrity of our government!
Jack Bauer: Our government has no integrity!
Here’s the thing I realized today: fractional reserve systems rip off the middle class. The reason is based partly on fractional reserve itself, and the other based on FDIC limits.
First, FDIC. The limit of FDIC insurance is $100K, $250K between a married couple. So people with more than $100K to save are going to put it into a financial instrument other than a deposit at a bank. Maybe a mutual fund, or maybe a bond ladder. The middle class, they mostly have savings accounts.
Now consider fractional reserve. Banks loan that money at a 9 to 1 ratio. So for every dollar of that $100K you’ve put in, the bank has loaned out possibly 9 dollars.
Doesn’t this sound like it’s diluting the money you’re putting in? It is.
The fractional reserve system is purely designed to benefit one group: banks, who can make 9x the interest they’d make if they could only loan the same money you had deposited with them.
The result is inflation, and your money being worth less. The long term result is we have an economy that isn’t based on production. It’s based on borrowing and consumption, because that’s the incentive built into the system. The incentive is to grant as much credit as much as possible.
And that’s all of what we see today, almost 100 years after the Federal Reserve Act was put in place.
- The country is overleveraged.
- Production has moved out of the country.
- The middle class has no buying power left.
- The thrifty people we borrow from are all foreign entities.
The only solution is to abolish the fractional reserve system and return to a non-fiat currency. These frauds in Washington like to pretend we need to spend another trillion to save the country even before the last trillion has run out. They believe currency is a confidence game. And, you know what… it is, if it’s left to the bankrupt scam called the Federal Reserve that’s in place today.