Fractional Reserve Banking in Pictures

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  • Sat, Aug 08, 2009 - 12:40am



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    Fractional Reserve Banking in Pictures

"The few who understand the system, will either be so interested in its profits, or so dependent on its favors, that there will be no opposition from that class. The great body of people, mentally incapable of comprehending the tremendous advantages, will bear its burden without complaint."

– Lord Rothschild, European central banker


More pictures to follow……

  • Mon, Aug 10, 2009 - 10:07pm

    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Fractional Reserve Banking in Pictures

The charts do a good job of explaining how fractional lending expands the money supply.  The first chart however (Dishonest Money: The Fall of the Dollar) is very misleading.

The implication is that the dollar began dropping from it’s pinnacle when FDR took America off the "classical gold standard" in 1933.  This is a reversal of the true cause and effect.  The 1900 gold standard act required that redeemable gold be provided for those who chose to cash their paper notes in for a prescribed amount of gold.

The gold standard could not possibly work under a fractional banking system as the money supply expanded while the gold reserves stayed relatively constant.  As soon as people began figuring this out, many were eager to cash out their Federal Reserve liability notes for the true asset of gold. 

Of course, there was not near enough gold to back up the currency so the government responded by ending the policy of redeeming paper notes for U.S. citizens.  It is important to note that even in 1900, when the act was passed, there was not near enough gold to back up the currency.  It was deceit from the start, there has never been enough gold in the U.S. to back up a currency dating all the way back to before the Declaration of Independence.

Inadequate reserves had always been a problem, but no one noticed until people started to redeem their Federal Reserve notes.  This happened during the depression and FDR acted as a puppet for the Federal Reserve by closing the gold window domestically.

Foreign held Federal Reserve notes were not part of FDRs order and at that time, the Bank of England for one, continued redeeming their gold.  In order to fulfill our "obligations" to foreigners – FDR ordered all Americans to turn in their privately held gold.  The gold was "bought’ from citizens at below market prices and the foreigners, who also controlled the Fed, got rich buying the gold on the cheap.

Gold had nothing to do with the dollar losing it’s purchasing power.  The Federal Reserve scam is the reason.  The gold standard is a myth, it never has existed honestly.


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