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What are Banks for?

Discussion in 'Financial Cents' started by melbo, Jul 6, 2006.

  1. melbo

    melbo Hunter Gatherer Administrator Founding Member

    Recently, I started reading ‘The Creature from Jekyll Island,’ by G. Edward Griffin. It is an expose of the American Federal Reserve Banking system. After just two chapters I am already dangling between outrage and nausea. Griffin opens his book by republishing an article originally published in 1957 from British humor magazine, ‘Punch.’

    Q. - What are banks for?
    A. - To make money.

    Q. - For the customer?
    A. - For the banks.

    Q. - Why doesn’t bank advertising mention this?
    A. - It would not be in good taste. But it is mentioned by implication in references to reserves of $249,000,000 or thereabouts. That is the money they have made.

    Q. - Out of the customers?
    A. - I suppose so.

    Q. - They also mention Assets of $500,000,000 or thereabouts. Have they made that too?
    A. - Not exactly. That is the money they use to make money.

    Q. - I see. And they keep it in a safe somewhere?
    A. - Not at all. They lend it to customers.

    Q. - Then they haven’t got it?
    A. - No.

    Q. - Then how is it Assets?
    A. - They maintain that it would be if they got it back

    Q. - But they must have money in a safe somewhere?
    A. - Yes, usually $500,000,000 or thereabouts. This is called Liabilities.

    Q. - But if they’ve got it, how can they be liable for it?
    A. - Because it isn’t theirs.

    Q. - Then why do they have it?
    A. - Because it has been lent to them by customers.

    Q. - You mean customers lend banks money?
    A. - In effect. They put money into their accounts, so it really is lent to the banks.

    Q. - And what do the banks do with it?
    A. - Lend it to other customers.

    Q. - But you said that money they lent to other people was Assets?
    A. - Yes.

    Q. - Then Assets and Liabilities must be the same thing?
    A. - You can’t really say that.

    Q. - But you just said it. If I put $100 into my account the bank is liable to have to pay it back, so it’s Liabilities. But they go and lend it to someone else, and he is liable to have it to pay it back, so it’s Assets. It’s the same $100, isn’t it?
    A. - Yes. But .

    Q. - Then it cancels out. It means, doesn’t it that banks haven’t really any money at all?
    A. - Theoretically..

    Q. - Never mind theoretically. And if they haven’t any money, where do they get their Reserves of $249,000,000 or thereabouts?
    A. - I told you. That is money they have made.

    Q. - How?
    A. - Well, when they lend your $100 to someone they charge him interest.

    Q. - How much?
    A. - It depends on the bank rate. Say 5.5%. That’s their profit.

    Q. - Why isn’t it my profit? Isn’t it my money?
    A. - It’s the theory of banking practice that .

    Q. - When I lend them my $100 why don’t I charge them interest?
    A. - You do.

    Q. - You don’t say. How much?
    A. - It depends on the bank rate. Say half a percent.

    Q. - Grasping of me rather?
    A. - But that’s only if you’re not going to draw the money out again.

    Q. - But of course, I’m going to draw it out again. If I hadn’t wanted to draw it out again I could’ve buried it in the garden, couldn’t I?
    A. - They wouldn’t like you to draw it out again.

    Q. - Why not? If I keep it there you say it’s a Liability. Wouldn’t they be glad if I reduced their Liabilities by removing it?
    A. - No. Because if you remove it they can’t lend it to anyone else.

    Q. - But if I wanted to remove it they’d have to let me.
    A. - Certainly

    Q. - But suppose they’ve already lent it to another customer?
    A. - Then they’ll let you have someone else’s money.

    Q. - But suppose he wants his too. and they’ve let me have it?
    A. - You’re being purposely obtuse.

    Q. - I think I am being acute. What if everyone wanted their money at once?
    A. - It’s the theory of banking practice that they never would.

    Q. - So what banks bank on is not having to meet their commitments?
    A. - I wouldn’t say that.

    Q. - Naturally. Well, if there’s nothing else you think you can tell me .?
    A. - Quite so. Now you can go off and open a banking account.

    Q. - Just one last question.
    A. - Of course.

    Q. - Wouldn’t I be better to go off and open up a bank?

    After reading Griffin Armed Robbery will forever strike you as a honest man’s form of theft.
  2. Tracy

    Tracy Insatiably Curious Moderator Founding Member

    :eek: Kind of like Abbott & Costello's "Who's on First?" (except it's nothing to laugh at).
  3. melbo

    melbo Hunter Gatherer Administrator Founding Member


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  4. Seacowboys

    Seacowboys Senior Member Founding Member

  5. Bear

    Bear Monkey+++ Site Supporter+++ Founding Member Iron Monkey

    [​IMG]Things that make you go.... hmmmmmm.....


  6. Seacowboys

    Seacowboys Senior Member Founding Member

    [SIZE=+1]INSIDE THE FEDERAL RESERVE: WND unveils comprehensive report on 'fraud of the century' [/SIZE]
    <SMALL>WND ^ | July 8 06 | WND</SMALL>

    <SMALL>Posted on 07/08/2006 4:44:32 PM PDT by churchillbuff</SMALL>

    While millions of Americans look with awe to the Federal Reserve to protect the nation's financial well being, millions more mistrust the Fed, seeing it as an unaccountable, private banking cartel siphoning off citizens' wealth and manipulating America's economy for the benefit of a hidden elite.
    Where does the truth lie? That's the question that's asked – and answered in-depth – in the July issue of WorldNetDaily's acclaimed monthly Whistleblower magazine.
    Titled "THE FEDERAL RESERVE: FRAUD OF THE CENTURY," Whistleblower documents authoritatively and with uncommon clarity how the "Federal Reserve" – which is neither part of the federal government, nor does it rely on monetary reserves – is an unconstitutional, unelected cartel that literally creates the devastating problems it was supposed to prevent.
    Today, the entire Western financial world holds its breath every time the Fed chairman speaks, so influential are the central bank's decisions on markets, interest rates and the economy in general. Yet the Fed, supposedly created to smooth out business cycles and prevent disruptive economic downswings like the Great Depression, has actually done the opposite.
    "From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble" in 2001, charges U.S. Rep. Ron Paul, "every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy."
    While many Fed defenders claim it worked valiantly to prevent or minimize the ravages of the Great Depression, in reality the Fed caused the Depression and greatly increased the severity of its effects.
    In fact, as July's Whistleblower documents, the Fed's new chairman, Ben Bernanke, admits that the Federal Reserve was responsible for the Great Depression. "We did it," Bernanke said, adding, "We're very sorry."
    But the Fed's sins go way beyond the Great Depression. "Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy," said Paul, the congressman best known for his steadfast commitment to the U.S. Constitution.
    "In addition," said the Texas Republican, "most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people."
    And that's just the beginning. In this special Whistleblower issue , the crucial subject of economics and money – often deliberately made overly complicated and confusing – is laid out in the clearest way possible.
    Whistleblower takes readers on a stunning time-travel journey back to 1913, to a train on its way to Jekyll Island, just off the coast of southern Georgia, where America's wealthiest and most influential bankers got together in secret and hatched their plan for creating the private banking cartel that would control the American economy. It would deceptively be named the Federal Reserve to create the impression it is part of the federal government.
    Without resorting to financial jargon or doubletalk, Whistleblower explains in plain, commonsense language exactly how the Fed works and how Americans' formerly gold-backed currency has been corrupted and much of their buying power lost, thanks to the Fed, and how this continues into the present.
    Although today the governors of the Federal Reserve are literally the gods of the nation's money supply and financial policy, in previous eras of American history, leaders warned specifically against an unaccountable, unelected central bank:
    "I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." – Thomas Jefferson
    "Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money." – Daniel Webster
    "Whoever controls the volume of money in any country is absolute master of all industry and commerce." – James A. Garfield
    "All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation." – John Adams "For this issue of Whistleblower," said David Kupelian, managing editor of WND and Whistleblower, "we tried to remedy John Adams' concern over Americans' 'ignorance of the nature of coin, credit, and circulation.' So we worked very hard to come up with the most credible, most understandable, yet comprehensive analysis of the Fed possible." Kupelian added. "This issue will go a long way toward giving you the understanding you need – not only regarding this nation's extraordinarily deceitful banking and money system, but also, to help you make better financial and life decisions for the sake of yourself and your family."
  7. Ardent Listener

    Ardent Listener Monkey+++

    Banks are for turning your FRN into pennies and nickels.
    pennies in bags.
  8. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Been Reading "The Creature..." referenced above. As a student of economics, I can assure you this book is quite insightful and helpful. I am currently reading the crash course on "money"...what it is, how it works, etc. Many of the problems we have seen throughout history with fiat money are in the process of resurfacing in the future. It is not a matter of if, it is a matter of WHEN. The big WHEN will be determined by how long the realities of our banking system and "printing press" can cover-up the truth of what has sustained our economy and its growth.....INFLATION & Over Spending
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