The Hidden Secrets of Money: Unveiling the Financial System

Is the current financial system a “money scam” that benefits the wealthy at the expense of everyday people? It’s a bold claim, but one worth exploring.

Most people can feel deep down that something isn’t quite right with the global economy, yet few understand exactly what’s causing this unease. The days when one paycheck could comfortably support a family are long gone. Every day, it feels like the financial situation is spiraling further out of control, yet only a handful of people truly understand why.

You’re about to uncover the hidden financial system responsible for much of today’s inequality. Powerful interests have kept this system a secret for decades, as it has kept them at the top of the financial hierarchy for over 100 years. My mission is to empower you with this understanding so that you can change the financial choices you make and ultimately transform your life.

Imagine if enough people truly understood how this old financial system worked. We could fundamentally change the world, especially now that cryptocurrencies and decentralized finance (DeFi) offer an alternative. Understanding this “money scam” can help more people let go of their fear and confidently embrace crypto, the future of money and finance.

Deficit Spending and the Cycle of Debt

Our government spends more than it collects in taxes, leading to deficit spending. How does it manage this? The Treasury borrows money by issuing bonds. A bond is really just a glorified I.O.U. that promises to pay the bondholder back plus interest. But guess what? Treasury bonds are the nation's national debt. These glorified I.O.U.s will be paid back by taxpayers and our descendants through future taxation. Therefore, when the government issues a bond, it steals prosperity from the future to spend it today.

The Federal Reserve: Creating Money from Thin Air

The Federal Reserve, often perceived as a government entity, is actually a private corporation owned by the big banks. Through a shell game called Open Market Operations, the banks get to sell some of those bonds to the Federal Reserve at a profit.

To pay for the bonds, the Fed creates currency by essentially writing checks on accounts with zero balances. This is how they swap I.O.U.s with the Treasury. It’s like creating money out of thin air, and it has significant consequences.

When you or I write a check there must be sufficient funds in our account to cover that check, but when the Federal Reserve writes a check there are no actual funds which that check is drawn. When the Federal Reserve writes a check, it is creating money. The Fed then hands those checks to the banks, and currency springs into existence.

So what’s really happening is the Federal Reserve and the Treasury are just swapping I.O.U.s, using the banks as middlemen, and presto, currency magically springs into existence. This process repeats over and over again, enriching the banks and indebting the public by raising the national debt.

This process is also where all paper currency comes from. The Federal Reserve and the government mistakenly call it ‘Base Money’, but it’s not real money; it’s just made-up currency, so we’ll call it Base Curency.

Money has to be a store of value and maintain its purchasing power over long periods of time. We know in our history, our paper currency was just a claim check. It was a representation of real money of intrinsic value, the gold and silver that were held on deposit at the Treasury.

You could walk into any bank and redeem your currency for real money, let’s say a $20 gold piece. But now this ‘base currency’ that’s piling up is nothing but a receipt or a claim check on an I.O.U. (that bond), So it’s really nothing but a supply of numbers.

Fractional Reserve Lending: Banks Multiplying Money

This may shock you, but when you deposit your currency with the bank, you’re not actually depositing it into an account to be safely held in trust for you. Instead, you’re actually loaning the bank your currency, and within certain legal limits, they can do with it what they want. This includes investing in the stock market and loaning it out… at a profit. Now, this is where the machine of currency creation really gets cranking because something called ‘Fractional reserve lending’ comes into play.

The banks can reserve only a fraction of your deposit and loan the rest out. Although reserve ratios may vary, let’s assume a 10 percent reserve ratio as our example. If you deposit $100 in your account, the bank can legally take ninety dollars of it and loan it out without telling you. The bank must hold ten dollars of your deposit in reserve just in case you want some of it. These reserves are called ‘Vault Cash’.

But why does your bank account still say you have one hundred dollars if the bank has loaned out ninety dollars of it? Because the bank left I.O.U.s, it created a credit called ‘bank credit’ in its place.

These are numbers that the banks type into their computers, even though these bank credit I.O.U.s. numbers are very different from base currency numbers (because they only exist in computers), they are still currency. So now there is one hundred ninety dollars in existence. Now, the reason people take out loans from the banks is to buy something. They’re going to buy a house or a car, so the borrower takes the ninety dollars that the bank loaned to them from your account and pays the seller of the item. But then the seller deposits that currency into his account, and his bank loans out ninety percent of that, and leaves bank credit numbers in its place.

So now there are two hundred and seventy-one dollars in existence. This process repeats and repeats until they go under the 10 percent reserve ratio. From an initial deposit of just one hundred dollars, they can create up to one thousand dollars of bank credit, all backed by one hundred dollars of vault cash, just 10 percent.

Inflation: The Silent Thief

The expansion of the currency supply leads to inflation, which is defined as an increase in the amount of money in circulation. As the money supply grows, the value of each unit of currency decreases, causing prices to rise. This effectively steals purchasing power from individuals, transferring it to banks and the government. Think of it like this: if there are only 10 slices of pizza and 10 people, everyone gets a slice. But if you suddenly double the number of people to 20, each slice becomes half as valuable.

Income Tax: Paying Interest to the Fed

A significant portion of the income tax we pay covers the interest on these bonds bought by the Federal Reserve. The Federal Reserve’s stockholders (remember the Fed is a private corporation) even receive a guaranteed 6% annual dividend. This raises questions about the fairness and sustainability of the system.

The Delusion of the Debt Ceiling

The current system requires ever-increasing levels of debt to function. The concept of a debt ceiling becomes almost delusional in this context. It’s like trying to stop a runaway train by putting a small rock on the tracks. The system is designed to require ever-increasing levels of debt to continue, and that’s why politicians will always kick the can down the road and raise this so-called ‘debt ceiling’ over and over again until the whole system finally collapses under its weight. In other words, they don’t want it to collapse on their watch.

A Warning from the Founding Fathers

The United States' Founding Fathers warned against central banking and fiat currency. They understood the dangers of concentrating financial power in the hands of a few. Their concerns are more relevant today than ever. The Revolutionary War started as a tax revolt, but now we must pay taxes for a monetary system. Having just suffered through the hyperinflation of the Continental Dollar, which was printed into oblivion to finance the Revolutionary War, they understood the dangers of fiat currency and debt-based monetary systems.

So to protect future generations from institutional theft and out-of-control government, they wrote into the constitution that only gold and silver can be money, for the simple fact that you can’t print them. Our current system is not only unconstitutional, but it robs us of the liberty and prosperity our forefathers fought and died for.

Embracing a New Financial Future

Understanding the current financial system is crucial for building a better future. It empowers us to explore alternative financial systems like cryptocurrencies and decentralized finance (DeFi). These new technologies offer the potential for greater financial freedom and control.

Take Control of Your Financial Future

Don’t let the complexities of the financial system intimidate you. Arm yourself with knowledge, explore new possibilities, and take control of your financial future. The first step towards financial freedom is understanding the game.

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