The glory of Western Civilization was its protection of life, liberty, and property. Through an admixture of Biblical principles, Natural Law, and the English Common Law, America was gifted a solid foundation for people to enjoy a life of liberty with protection of private property.
Today, however, this historic legacy is under attack. Perhaps the most significant attack is the one least understood by the people – the State supported Fractional Reserve Banking (FRB) system imposed upon society. What is this FRB system? In short, it is the State sponsored process whereby banks use customer deposits as a fractional reserve base for loans to third parties. Loans of deposits is not fraudulent, but when the State permits the bank to turn a $1,000 deposit into $10,000 worth of loans, then we have an ethical problem.
Fractional Reserve Banking Creates Money
According to Professor Thorsten Polleit of the Frankfurt School of Finance and Management, FRB, “means that a bank lends out money that clients have deposited with it. Fractional-reserve banking thus leads to a situation in which two individuals are made owners of the same thing. Fractional-reserve banking thus creates a legal impossibility: through bank lending, the borrower and the depositor become owners of the same money. Fractional-reserve banking leads to contractual obligations that cannot be fulfilled from the outset.”
Anyone ever heard of a bank run? This occurs when customers are concerned that the bank does not have enough money to redeem all the deposits of its customers. Of course, in the FRB system, the bank doesn’t have all the depositor’s money since it has loaned it out many times over. Only the minimum fractional reserve mandated by the State is retained to service potential depositor withdrawals.
In truth, every FRB bank is inherently bankrupt by the very nature of the State allowing only fractional reserves. Proverbs 11:1 states, “The LORD detests dishonest scales, but accurate weights find favor with him.” Alas, FRB is dishonest because it pyramids fiat money (dishonest layers of fake money) on top of the real money deposits.
By studying the FRB system, one quickly realizes that it permits the banks to expand the money supply (leading to inflation and boom/bust cycles) by loaning the same deposited money to numerous other individuals and businesses. Somehow the banks profess to have the money on deposit for immediate withdrawal while, at the same time, providing the funds several times over to other parties. Banks, through the joys of the FRB system, can charge interest on loans that exist only on a computer screen or on a piece of paper not backed by real deposited funds.
How, for example, can $1,000 of real deposits be converted into $10,000 of loans? This is nothing less than creating money out of thin air. Worse, this fiat money is dangled in front of instant-gratification consumers, who do not possess the moral strength to delay their gratification until they have produced enough income to pay cash for the desired item. Instead, they eagerly enslave themselves into the FRB system for the latest of Mammon’s creations.
Indeed, the number one method the FRB system captures people into its net is through the consumers desire to “own” a house. Whereas in 1900 there were only 5% of the households in America holding a mortgage, today that number has ballooned to over 37%. The rapid increase in the number of mortgages is responsible for FRB mortgage debt money becoming over 70% of the total USA money supply at its peak! No wonder the State and FRB system are constantly reducing the qualifications for home ownership because its the easiest way to ensnare people into usurious debt.
The State sponsored FRB banks needs the populace to remain in debt in order to fund the debt-based monetary system. This is not just my personal opinion on the issue, but is well-known, though rarely discussed, fact by those in power. For instance, Robert H. Hemphill, credit manager of the Federal Reserve in Atlanta, stated in 1939:
If all the bank loans were paid, no one would have a bank deposit and there would not be a dollar of coin or currency in circulation. This is a staggering thought. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. When one gets a complete grasp of the picture the tragic absurdity of our hopeless position is almost incredible, but there it is. It (the banking problem) is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.
Simply put, the entire system relies on people willingly enslaving themselves into the FRB system. Ok, I have ranted long enough. Is anyone interested in the solution?
Consumers, en masse, must reject the FRB model of increasing debt to “own” products. Instead, they must pay for goods today from production they earned yesterday. Simply put, its time to build Ownership rather than Loanership. Laurie and I personally made the last payment on house in Grand Blanc in early 2003 and have been out of the FRB system ever since. It is LIFE Leadership’s goal, through sharing the principles in our Financial Fitness Pack, to help millions of others get free from the FRB system.
Jesus said, “No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.” No, I am not saying to sell your house and live like a hermit. But I am saying to eliminate debt in your household like a patient seeks to eliminate cancer from his/her body. As one wipes out debt, start paying down the mortgage principle down by restraining one’s urge to spend until it is paid off.
LIVE DEBT FREE! Then, and only then, can a person experience both spiritual and economic freedom to follow God’s plan rather than Mammon’s commands.