Fractional-Reserve Banking = Confiscation of Your $$

If you’ve ever heard the term Fractional-Reserve Banking and wondered “What the…”, don’t worry, you’re not alone.

It’s described as where banks hold reserves equal to a fraction of their deposit liabilities.

In Plain English it’s a way for the banks to use your deposits to leverage the hell out of their balance sheet so they can make more loans – that aren’t necessarily secured – and attract more money.

See the illustration below:

When you follow the cycle, you’ll see that the bank took your $1,000 and turned it into $3,439 in their system while only actually having $271 to back it up.

The $3,439 comes from your original deposit of $1,000. They kept 10% and created another loan of $910. They kept 10% again and created another loan of $810. They kept another 10% and $729 is available for another loan.

How’s that for excessive use of your money?

It’s great for the banks but eventually devastating for the depositors.

Why?

When the banking system has a 2008 deja-vu moment – most likely triggered by the imminent Repo Crisis – they say to you, “Sorry, we don’t have any money cuz it’s all loaned out.”

Ooopsie!

Think I’m kidding?

Go to your bank and ask to take out $3,000 in cash.

They’ll freak out and start asking you questions as to why you want to take THEIR MONEY.

You see, once you’ve deposited money into any bank, they consider it THEIR MONEY.

God forbid you want YOUR cash…and they’ll put up a fight because they don’t keep much cash in those giant vaults (compliments of the Fractional-Reserve System).

As the Repo Crisis accelerates in 2020, The Year of Chaos, accessing cash will become a major problem.

Learn what to do about it in our December newsletter (HERE).

And be on the lookout for our special Christmas pricing.