Perhaps the best way to explain fractional-reserve banking is by analogy. Just as a bank note was originally a metaphysical paper representation of a specific physical amount of precious metal money so too is a property title a metaphysical paper representation of a physical plot of land. Imagine the indignation a person would feel if he had exchanged his money for the title believing he had purchased a plot of land only to discover later that the unethical seller had copied the title and sold the paper title to ten other people. What was actually sold? Eleven people cannot own the same physical piece of land but they can own identical metaphysical paper representations of the land. The fraud, as a result, begins the moment the metaphysical representation no longer matches the physical reality. Legally, the seller is guilty of violating property laws and would face severe sanctions for his crime.

Curiously, however, when a bank behaves in a similar fashion and prints numerous banknotes representing titles to the same specific physical precious metals money, it is not considered a violation of property laws. Paradoxically, the same fraudulent behavior where multiple metaphysical copies a one physical item receives severe penalties in every other area, somehow is considered “legal” practices in banking and is termed fractional-reserve banking (FRB). For how can the same physical precious metals be sold (loaned) to numerous parties via its metaphysical paper representation anymore than the same physical land can be sold to numerous parties using the identical scheme? How, in essence, can several parties own the same property at the same time? The answer is a physical impossibility and a metaphysical fraud.

Another example conveying the injustice of FRB is to picture a person who decides to sell his motorcycle. He places an ad in the paper and receives a call with a strange request. The potential buyer states his wife is against him owning a bike, but he really wants one. He offers to purchase the bike if the seller will store the motorbike in his garage. The buyer will only use the bike on Saturdays and he even offers to pay a small storage fee. The seller agrees and the title is exchanged for the cash. After several months, the seller realizes the bike is just sitting there the other six days. At first, he casually takes the bike for a ride personally, realizing he practically owns the bike even though he sold it and receives a monthly fee to store it. Finally, however, he conceptualizes and even more devious plan. Why, he asks himself, not copy the title for the bike six more times (since there is seven days in the week and the “owner” needs his bike only one of the days) and sell the bike again to other unsuspecting “owners”? Not only would I seven times my profit but I would also be able to charge a storage fee to each “owner”.

The fraudulent seller proceeds to run the motorcycle ad specifically looking for husbands with limited time and protective wives. To the seller’s delight, over the next several months he identified six more buyers. The seller was careful to only select buyers who asked to store the bike and who only desired to use the bike on a specific day. Although each person believed he owned the motorcycle in full, the seller defrauded all of them for his illicit gains. Now, the storage owner had a new “owner” for each day of the week and received seven times the profit on the sale of his bike and still received storage fees on top of that! Is this fraud or an innovative fractional-reserve motorcycle selling system?

True, if each owner knew he was only buying one day’s ownership then its physically possible and metaphysically permissible because the titles would represent only a fraction of ownership. This, however, wasn’t true in this case nor is it true with FRB loans. Each owner believes he owns 100% of the bike title and paid for it in full. Accordingly, the seller has committed fraud by metaphysically representing he had seven bikes to sell even though he actually owned only one physically. The pragmatic argument that since the bike owners were not using their property the other six days of the week that the storage facility had a right to sell someone’s else’s property the other six days is simply ludicrous. Especially when the owner’s property was sold without his knowledge or consent.

The banks, however, systematically practice the same thing. For instead of storing society’s money (like most people believe they do) they actually sell (loan) the owner’s money to numerous third parties while acting like the money is available to the original owner on demand. How can the same money be loaned out to ten separate parties while still being available to the actual owners all at the same time? This simply is not possible in the physical world but as shown above it is possible when practicing a metaphysical fraud. Amazingly, the motorcycle seller’s fraud would be punished severely, but the bankers similar fraud is blessed by the State.

The Bank of England (one of the first central banks) utilized FRB to print over ten times as many banknotes as the actual precious metals stored in England’s vaults. As a result, the Bank of England quickly captured the English Empire’s money supply and called the shots as Master of the Puppets. However, the issuance of paper bank notes led to one further innovation in money creation that, strangely enough, was developed in colonial America, namely State fiat-paper.  Colonial America lacked precious metal money and did not like the control the Bank of England had on colonial commerce. Naturally, the question was asked, why not have the colonies issue their own paper notes and promise to redeem them with future tax revenues? In this way the government, businesses, and individuals would not have to pay the Bank of England interest on their paper notes.

The new Sovereign State backed money was a huge success (its still Fiat Money and has its problems but at least the public State does not pay interest to private international financiers) in usurping the need for the Bank of England notes. In fact, Ben Franklin was so impressed by the new innovation that he wrote a treatise in defense of the public Sovereign State backed paper money. Of course, the international bankers who controlled the Bank of England were not amused with the colonial upstarts cheekiness. The Bank of England restored its profits by applying pressure to King George III who forced the colonies to shutdown the colonial paper and return to the Bank of England notes. This, in reality, and not the infinitesimal taxes on colonial merchandise was the real cause of the American Revolution. No less an authority than Ben Franklin himself (considered by many, including me, to be the greatest diplomat in American history because of his keen understanding of humanity) believed this when he observed, “The Colonies would gladly have borne the little tax on tea and other matters had it not been the poverty caused by the bad influence of the English bankers on the Parliament, which has caused in the Colonies hatred of England and the Revolutionary War.”

In closing, one of the best principles I learned from economist Dr. Murray Rothbard was FTM – Follow the Money. For every one person motivated by ideals, there are a thousand who are bought and sold. Unfortunately, the more history I read with an eye on Cui Bono (who benefits) the more I realize that most of the history I thought I had learned is simply not so. LIFE Leadership is a company designed to help people learn the truth, escape The Financial Matrix, and live a life that matter. I promise to play my part and continue my quest for truth by helping the people understand the dangers of enslaving themselves body, mind, and spirit into the matrix.

Sincerely,

Orrin Woodward

Once the elites understood how much wealth could be pilfered from society by capturing the money supply, it was not a question of free money or controlled money. Indeed, the only real question was: who would control the money system and whether it would be led by State Power creating a national fraud or by the Money Power creating an international fraud.

In reality, it wasn’t much of a contest since the Money Elites knew the State’s Achilles heel – it’s all-consuming desire for more power. To increase the State’s power over society, at least in a money economy, the State must direct more of society’s resources, which is just another way of saying the State needs more money. This is a challenge for a States in every age but was especially problematical in the classical age when the money system of society consisted mainly of gold/silver coins. As a result, there were only two ways for the classical States to access more funds, namely, increase taxes or borrow money. Remember, this is before State had the ability to print paper money because this fraud had not been discovered yet. Society, in any event, would not have recognized it as money anyway since precious metal coins were used as money. The State elites (monarchs, emperors, and tyrants) found increased taxes harmed their popularity with the people; hence, they saw the Money Power as the lesser of two evils. The monarchs, choosing short-term good for longterm harm, simply borrowed money from the financial elites rather than upset their subjects by increasing taxes.

                         Master of the Puppets

The State, strangely enough, despite owning the “monopoly of force”, feared a current tax rebellion more than a future debt slavery. Ironically, it will probably end up with both. The State elites sold the nation’s financial future (freedom decreases as debt increases) for increased power in the present. Meanwhile, the savvy financial elites did not rely on just one State for profits. Indeed, they offered loans to every rival States to generate competition amongst the States, which increased the total debt and expanded their financial web. The Money Power, after all, understood as State debts increased, they could demand further privileges to ensure mastery over the State. The Money Power (international elites) now topped the power pyramid followed by the obedient State Powers (national elites) which then directed Societal Power (the masses). Over time, the State, regrettably, became just as oppressed by the Money Power as the people were by the State and Money Power combination.

Unfortunately, the bad news gets even worse. For the “loans” used to enslave the States were not based upon real gold and silver stored in bank vaults; instead, the international financiers used what is known as fractional-reserve-banking (FRB) to initiate numerous loans with only a fraction of gold/silver promised in reserves. In a word, the States enslaved themselves by loving money more than the people. Through the use of bank ledgers credits and an early form of bank note credits, the States accepted money created out of thin air, but forced the people to pay back the loans with precious metals! One may ask how the same precious metals can be loaned to numerous parties (States) at the same time? In the real world, this is physically impossible, but in the imaginary world of high finances, it is metaphysically possible (bank ledger notations) despite being morally impermissible.

It’s been said there is nothing new under the sun, only the history a person doesn’t know. The modern States seem to validate this statement as they appear to have learned nothing from their ancient predecessors – both borrowed themselves into bankruptcy. The Money Power has mastered the State and society with FRB loans created out of thin air. While this information may seem shocking, it is true nonetheless. Yes, the truth will set a person free, but usually only after it ticks him off.

The author has termed the private Money Power’s control over the banking system and money supply the Financial Matrix – a system of control where the Money Power creates money out of thin air to loan to society’s members for profit and power. The origins of the Financial Matrix can be traced back to ancient Babylonian banking practices.  In the early twentieth century, however, with the creation of central banks as lenders of last resort, the Financial Matrix now reigns supreme over the earthly world. This debt system not only enslaves individuals and captures corporations into debt, but it also neuters the nation’s of the world. The Bible admonition in Proverbs 22:7, “The borrower is slave to the lender,” could not be more relevant than it is today and each person must face up to what role he is playing with respect to the Financial Matrix.

For instance, when a person borrows money to buy things he does not need, he is feeding the matrix and losing his liberties. The people must learn to deny themselves short-term pleasures in order to avoid the longterm pain. One final bitter fruit of the Financial Matrix system is the stress and pain experienced when a person attempts to pay off debt with compound interest working against him. The profits and control, in effect, go to the Money Power while the pain and stress go to the debtors. Financial ignorance is not bliss but rather pain personified. When the State debt increases the governments must squeeze society for more tax dollars even though the people are already struggling with their own debt. The shortfall, is then made up by the State borrowing even more money that it cannot afford. This is a form of insanity. Unquestionably, the kick the can down the road strategy cannot last but today’s politicians hope to be out of office by the time the can is no longer kickable. 🙂 Politics is now like a game of musical chairs where the current political leader hopes he is out of office before the music stops.

Meanwhile, the St. Louis Federal Reserve announced the total US debt (the combination of government, business, mortgage, and consumer debt) has risen from $2.2 trillion total in 1971 (the year Nixon took the dollar and thus the world off the gold standard) to $59.4 trillion in the first quarter of 2014. This is not a typo. The debt in America, which took nearly 200 years to reach $2.2 trillion and included the debts from the Civil War, WWI, and WWII, is now (43 years later) 27 times higher! Even at just 5% interest, this amounts to over $3 trillion in interest to service the debt. That’s 3,000,000,000,000 dollars every year, which is more than our total debt was a mere 43 years before. What is going on?

When Nixon took America off the gold, the dollar still remained the world’s money system, but it freed the Money Power to create as much money as it wanted without and need for gold in reserve. This turbo-charged the ability of the Financial Matrix to loan money and the consumers naively accepted the bait. I believe it’s time for the citizens of the world to reject the debt seduction. True, you can, like the proverbial ostrich, put your head in the sand and ignore this entire article, but I promise you even though you may hide your head from the financial tiger, it will still be painful when you are devoured.  🙂

The chart below reveals how the Financial Matrix is siphoning off trillions of dollars of productive capacity in each nation. The debt for American governments, corporations, and individuals is now around $20 trillion each and the interest payments are causing significant price, tax, and debt payment increases. The average American family is at the breaking point and what is need is some financial wisdom to alleviate their personal debt and stress. There is a personal pathway out of the Financial Matrix and I promise to do my part in sharing the steps to freedom.

Without intending to sound overly dramatic, I truly believe this is liberty’s last stand. The Founders of LIFE Leadership intend to stand in the gap and educate the masses of the world on a plan to escape the Financial Matrix. Will you help us set the captives free?

Sincerely,

Orrin Woodward

Society developed money to make trade easier between its members. Real money is simply the most marketable commodity within a society. For the most marketable commodity is in high demand and is generally accepted by all parties; consequently, over time, the most marketable commodity becomes the preferred medium of exchange. Of course, this is just another way of saying the most marketable commodity becomes society’s money. Without exaggeration, money is one of the greatest inventions in the history of mankind because it greatly increases the amount of win-win exchanges.

How does it do that one might ask? Because money allows all goods to be rated using the same monetary units which makes valuation of each item much more convenient. This leads to quicker agreement on win-win exchanges compared to the older and less convenient bartering process. It’s easier, in other words, to trade excess eggs for its money  market price and then buy bacon at its money market price rather than barter with every customer over how many eggs is bacon, milk, or even a chiropractic adjustment worth. Money simplifies the exchange process for all members in society; thus, it increases the amount of exchanges occurring. As a result, the division-of-labor and subsequent production and wealth for society’s members greatly increases.

Gold and Silver appear to be mankind’s preferred money because the commodity is in demand outside of its potential use for money, is easily divisible, and is extremely durable (coin collectors have many specimens over 2,500 years old). Of course, as the marketplace within society grew, the time and cost associated with moving precious metal coins from one location to another also grew. Predictably, the marketplace developed a solution to this challenge by creating modern banking. Instead of transferring the physical gold or silver, a bank would create a title or metaphysical representation of the physical precious metal. The paper claim (bank note) would allow the recipient to either receive the said amount of precious metals for the bank note or just exchange the bank notes to others in exchange for goods.

This allowed business to be carried on in others cities without  having to physically move the gold or silver. So long as the banks ensured the paper titles represented actual physical gold in the banks, the system worked wonderfully. Unfortunately, however, it didn’t take long for the banks, once they had established a reputation of integrity and trust,  to start printing more paper notes than the had precious metals backing them. This resulted in the birth of fractional-reserve bank notes – metaphysical banknote money backed by only a fraction of the physical precious metals the notes allegedly represented.

In essence, banks began printing more banknotes supposedly redeemable in precious metals even though the banks did not have enough gold/silver on hand to do so. Naturally, this increased banker profits exponentially but also caused rapid inflation from more not circulating within society. Furthermore, as bank members discover the bank’s fraud, they respond by returning the banknotes and demanding precious metals. Of course, this only works for the early returners of the fiat paper because the precious metals are quickly depleted and the bank collapses. The numerous remaining banknotes, allegedly redeemable in precious metals, are now worthless since the bank pledging to redeem them has bankrupted itself by falling for the something-for-nothing temptation of the fraudulent fractional-reserve-banking system. 

This process of collective banknote redemption by the banks members is called a bank run. Although the banks feared and hated this scenario, it is merely society’s natural response to the banks unnatural behavior. For how can a paper note, that is supposed to be simply a representation of the physical money (precious metal), now be passed off as the actual money? This is no different than a seller of land printing multiple paper titles to his land and selling the paper titles to different buyers to reap multiple profits from multiple sales.  Indeed, the main difference in the two frauds is that most land title holders will eventually want to see the physical land backing the title where few banknote holders (unless they lose trust in the bank) ever request to see the physical precious metals backing the note. The other difference, ironically, is the seller of multiple land titles (representing the same land) will be prosecuted for fraud while the seller of multiple banknotes (representing the same precious metal) will be protected by the government.

How did the banking system manage to convince governments to support fractional-reserve banking (FRB) fraud when similar practices in any other field are punished severely? Why would governments across the world support such an unethical behavior Perhaps the simplest answer is that all governments are insatiable in their desire for more money and power. The banks offer governments the philosopher’s stone of creating money out of thin air through the ‘joys’ of fractional-reserve banking. The government, in other words, supported the banks fraudulent activity because the banks happily agreed to loan copious amounts of fractional-reserve banknotes to the government. This is an ignominious alliance where the banks gain extra profits by creating money out of thin air and the governments gain extra power by borrowing the FRB funds. As a result, both the banks (profits) and governments (power) benefited while society paid the bill through the predictable inflation, boom/bust cycles, and lost liberties. 

The Birth of the Financial Matrix

Fiat Money: Only Backed by State Coercion

Absurdly, the monetary madness gets even worse with the beginning of World War I. For before the first World War, the bank notes at least had to be redeemed in gold or silver when demanded by the owner of the notes. Governments, however, knew this would be impossible to do during a war where billions of extra banknotes were create to fund the war without without the backing of any precious metals. As a result, the European governments ended the gold standard and permitted banks to no longer redeem the metaphysical banknotes into the physical precious metal. This was the beginning of fiat money – paper notes not backed by any precious metal but only by the coercion of government.

Fiat paper notes backed by government coercion knocked out the last connection between the metaphysical paper and the physical money. From now on, the central banks would create fiat paper and call it money. Then it allowed the big banks to pyramid fractional-reserve-banking on top of the fiat notes to multiply the money supply ten, one hundred, and eventually thousands of times over the actual commodity money. The purchasing power (amount of production each monetary unit can purchase) decreased disastrously as inflation increased the cost-of-living to unheard of levels.

Fiat paper money allows the banks to create money at will and profit on the loans to governments, businesses, and families. Meanwhile the government supports the FRB fraud by declaring the paper legal tender good for all taxes and monetary exchanges even though it is not backed by any physical precious metal commodity. Fiat money, in effect, is the victory of the governments and banks to replace the physical commodity money society developed with a metaphysical counterfeit that has no physical commodity backing whatsoever. Indeed, the only reason the banks can get away with this scheme is they have purchased government’s support (by loaning FRB money to it) and then using government’s monopoly of force to coerce society into using its funny money. The government has mandated acceptance of the banking system’s fiat paper money and punishes anyone who refuses to do so. Welcome to the wonderful world of fiat money. 🙂

Sincerely,

Orrin Woodward: Chairman of the Board of LIFE Leadership

“The trouble with paper money is that it rewards the minority that can manipulate money and makes fools of the generation that has worked and saved.” – George Goodman

The philosopher’s stone was mankind’s quest to turn base metals into gold. Although there were several reasons for the quest, the main one was to increase the power of the sovereigns over their people. Kings and princes encouraged and rewarded alchemists from the Middle Ages to the end of the 17th century in the effort to discover the philosophers stone to no avail. Unfortunately, however, mankind discovered an easier way to turn valueless material into gold, namely fiat paper money and fractional-reserve banking. I cover the basics of these two processes in my book The Financial Matrix, but I wanted to share from Jack Weatherford’s informative book The History of Money to convey just how confused most people are about money. These are blue quotes are from Weatherford’s book with my comments below. Sincerely, Orrin Woodward – LIFE Leadership Chairman of the Board

Nero Debases Roman Coins:

Nero began to tamper with the coinage itself. In A.D. 64, in a naive attempt to deceive the populace, Nero decreased the silver content in the coins and made both the silver and gold coins slightly smaller. By collecting the existing coins and reminting them with his portrait bust but less silver, Nero produced a momentary surplus of sliver and gold. The same pound of silver that had formerly produced 84 denarii now produced 96, giving Nero almost a 15 percent ‘profit.’ He similarly increased from 40 to 45 the number of golden aurei manufactured from a pound of gold, thus rendering the coins about 11 percent less golden.”

Nero attacked private property by manipulating the measuring scale of money. Instead of a certain amount of silver making 84 denarii coins, it now made 96 denarii coins. The measure of how much silver in each coin was arbitrarily changed by the sovereign. This attack on private property is no different than the State owing a certain merchant 100 pounds of gold, and then paying the merchant only 50 pounds of gold. When the merchant complains, the State points to a new law that has changed the pound to half its former weight. Therefore, the State did pay 100 pounds of gold, but changed the definition of the pound to steal half the value of amount owed. In a sense, the State debased the weight of the pound just as Nero debased the denarii coins.

Law of Inertia: If Bad Behavior is not Punished, it Expands:

Roman Coin Fraudulent Debasement = Inflation

Thus over the course of two hundred years, the silver content was cut from nearly 100 percent to virtually nothing. The amount of silver previously used to mint a single denarius eventually produced 150 denarii, and as the silver content decreased, the price of good increased in direct proportion. Wheat that had sold for one-half a denarius in the second century increased to 100 denarii a century later, a two-hundred fold increase.

If the State is allowed to arbitrarily change the monetary units at will, inflation occurs and the price system quickly accounts for the debased purchasing power of the monetary unit.  The State receives the benefit of the inflated money first, but they do so at the expense of later users of the money who now need more monetary units to buy the same production as previous. This is fraud perpetrated by the State upon society and one of the main reasons Rome fell.  The people lost trust in the money supply because the State could not stop debasing the dollar to benefit itself.  Accordingly, the late Roman empire devolved backwards to payment in kind and landlords protecting people rather than State. Once this occurred, society could no longer support the bloated  State and the Roman Empire collapsed under its own weight.

The Roman Empire Kills Its Money:

In the last centuries of the Roman Empire, the emperors operated without a workable currency; like the ancient empires that had preceded it, Rome turned to conscription and forced labor to meet its needs. The government often would not allow its citizens to pay taxes in the debased money that it still issued; instead, officials demanded payment in good, crops, or labor. . . As tax (and monetary) policies continued to suppress productivity and commerce, the emperors found it increasingly difficult to supply their armies and the bureaucracy with the equipment and goods necessary to rule the far-flung but diminishing empire. The markets had withered; even the emperor could no longer depend on the open market to supply him with the sandals, armor, weapons, saddles, tents, and other goods that an army needed. Out of desperation, Diocletian created government-sponsored workshops to manufacture armaments and supplies. As privately financed shipping and other transport enterprises declined, Diocletian also had to create government transport companies to move the goods that were manufactured in the workshops. Well before the end of the third-century, these changes made the emperor and the government the greatest manufacturers in the empire, in addition to being the largest owner of land, mines, and quarries. Step by step, the imperial government took over the direct administration of the economy and crowded out the small, independent merchants, landowners, manufacturers, and entrepreneurs. . . By its last decades, Rome had become another state-administered economy, an empire without money and markets. It had reverted to a palace system more like that of pharaonic Egypt or imperial China than that of the republican system on which it had been built.

Rome fell because as the State expanded, it destroyed the monetary system and thus the commercial system that used it as the medium of exchange in trade. Through increasing inflation and taxation the State killed society to feed the growing bureaucracy and military. The originally thriving Roman society provided a level of systematic justice unknown to previous empires eventually became just like the other empires as it killed the monetary system through repeated unjust debasements and the commercial society reverted to a command and control empire without money.  The Roman Empire died, in other words, when its money did.

Fractional-Reserve Banking is Fraud:

Under the new system a bag of a hundred florins that might once have sit idle for years in a noble’s strongbox could now be deposited for safekeeping in an Italian bank that had access to branches across the continent. The bank then lent the money and circulated the bill of exchange as money. The noble still had his one hundred florins, which were now one deposit in the bank; the bank had one hundred florins on its books. The merchant who borrowed the florins was richer, and the person who held the bill of exchange now had one hundred florins as well. Even though only one hundred gold coins were involved, the miracle of banking deposits and loans had transformed them into many hundreds of florins that could be used by different individuals in different cities at the same time. This new banking money opened vast new commercial avenues for merchants, manufacturers, and investors. Everyone had more money: it was sheer magic.

Actually, it is not sheer magic, but sheer fraud. In a nutshell, the banks creates a metaphysical representation (bank notes) of the actual money (precious metal commodity florins). This would be fine if there was only one banknote to represent the same commodity money, but fraudulently, the banks through FRB create multiple sets of banknotes to represent the SAME bag of florins. This is no different than a bank selling 10 people the same physical property by creating 10 separate metaphysical property titles to represent the land. Of course, in the property example, the fraud would be exposed because the owners would eventually show up at the property and realize, along with the the other “owners” of the property, that they were duped by duplicate property titles created for the same physical property. In the same way, the bank creates duplicate banknotes to represent the same physical commodity money. This is FRAUD. In the banknote example, however, all parties can use the banknotes representing the same bag without being aware that the others also have banknotes that represent the EXACT same physical bag of money.

Of course, this violates the laws of Logic. For two people cannot 100% own the same item at the same time and two people cannot be in the same spot at the same time. In a similar fashion, two people (let along 9 or 10 than FRB legally allows) cannot both have banknotes that metaphysically represent the same bag. Because this “magic” (read fraud) is allowed, the money supply is expanded metaphysically even though the physical money hasn’t changed size, just like the land was metaphysically  expanded by the fake titles even though the physical land has not changed. Unfortunately, the scam is rarely detected because the banknotes are just transferred from person to person without anyone realizing their are counterfeit not not backed by real commodity money. The result is huge bank profits, huge societal inflation, and indebtedness for governments, businesses, and people. Of course, another result is the predictable boom/bust cycle that bankrupts many others when the money supply deflation from its previous inflation.

Fractional-Reserve Banking (FRB), in other words, is modern man’s solution to the Philosopher’s Stone. Add to it the Central Banks special privilege to purchase items by creating banknotes not backed by anything and one can see that the modern day elites have accomplished what the middle-age kings and princes only dreamed of – creating fools gold, but having the legal right to pass off fool’s gold as real gold and enslave the people in the process. The is the Financial Matrix! Like I said previously, the modern golden rule reads: He who controls the fool’s gold controls the fools.