Some people realize our banks create money out of thin air. However most do not realize this simple fact.
What I am about to tell you is a fantastic scam, used to enslave us financially.
Its ok if you do not believe it, I realize most of you don't think to much as it is.
Our story begins with fractional reserve banking (hereafter FRB), now the way it works is simple.
There are only two ways to create money in our system. 1. The government borrows money thru t-bonds. 2. The public borrows money thru FRB.
We will concentrate on number 2 today.
Banks have a 9-1 or 10% reserve ratio today. Meaning for every dollar they have in reserve they can create and loan out 9 dollars.
So where do reserves come from?
Reserves come from customers money deposited but also from promissory notes.
Let's walk you thru the loan process real quick.
A loan in reality is just an exchange, your note( money of account) for the banks checkbook money (also money of account).
You see a note is a negotiable instrument and has certain laws governing them.
Now modern money mechanics put out by the Chicago Fed tells us that they don't loan money. What they do is accept notes IN EXCHANGE for CREDITS to the borrowers transaction account.
Now when a bank deposits a note, 12 usc 1813 L1, tells us it acts like money.
Which makes sense because to be a holder in due course you have to accept the instrument for value. A lost note means the bank has to indemnify you the amount of the note if they want to foreclose.
So according to GAAP'S matching principal. The note should be entered into the banks asset side, and the same amount should be credited (not loaned) into your account(now reread modern money's explanation of a loan).
But instead of crediting your account, they say they loan you something, and the note(which is your asset) You gave to them for nothing.
Hope this helps clear some stuff you might of wondered about.