According to a man named The Gym, the fiat currency system, also known as debt-based banking, is the foundation of modern economies.  It is inherently unstable, and when it is subjected to too much stress, it collapses.  In other words, banking is what causes our family’s financial misfortunes; it is not a symptom thereof.

Although banks are initially funded through something called paid-in capital, that capital has nothing to do with the bank’s credit business of making loans.  In other words, the monies a bank uses to loan out has nothing to do with the paid-in capital that initially liquidates the bank.  The paid-in capital remains on the bank’s books as a separate deposit, but the money the banks use to make loans is literally created out of thin air.  It is no more (or no less) than an electronic entry on a computer screen.

The mechanics of the banking system we are dependent upon are really quite simple.  Banks take in deposits, and then pay to those deposit holders as low an interest rate as possible.  The banks then use a leverage of 10 or 15 times on the deposit base then loan out the aggregate leveraged sum at much higher interest rates.

Again, the money the banks loan out is not the depositors’ money.  It is the total deposit base leveraged 10 to fifteen times the original amount.  That amount is issued as credit in the form of loans.  The bank is thus in the business of creating debt by offering credit.  Because of the leverage, at any given time a bank has 10 to 15 times as much money out in loans as it has deposits on hand.

If a bank is struggling to keep its books balanced while trying to meet its financial obligations – which it might otherwise be unable to do utilizing its own means – it can borrow money overnight in the repurchase (repo) market from other banks.  It can also loan its excesses out and get an interest payment in return.

The unfortunate fallout from this system for those of us trying to support families is that our country’s economic and monetary system is dependent solely on debt and the repayment of that debt.  And the problem with that, of course, is that any debt-based system, to survive, must expand.  When it stops expanding, it risks dying.

There are two huge risks riding with any debt-based monetary system.  The first was witnessed through the banking crisis of 1929-33.  The bank run happens when too many people rush at once to get their money out of the bank.  There’s nothing left for those who don’t get there in time.  There was no banking insurance during the Great Depression, so 80% of American banks collapsed.

The second risk is that banks, along with their clients, will lose their money on the bank’s bets.  This is what was recently witnessed in Cyprus.  Greek banks owned the banks in Cyprus which all had large investments in Greek debt.  When Greek banks got in financial trouble, Cyprus in turn started accumulating big losses, because their deposit base had a huge amount of money, most of which happened to be Russian.  So the 10 to 15 times leverage on that huge deposit base was too big to handle, and it blew up in the Cyprus banks’ own faces, and the banks became bankrupt.  Then the predator central banksters moved in to collect their debt from the nation.

This is what happens when any financial bubble bursts, because the cause of every financial bubble is bank leverage.  When the bubble collapses the leverage is gone, but it still exists in a negative sense because so much more is owed than ever existed in the first place.  And it’s important to understand that collapses like this don’t just happen out of a vacuum.  Collapse is always a potential with the debt-based system, but it doesn’t become reality until the banks cannot meet their financial obligations.

Money is constantly being fed into our financial system via debt.  This debt continuously compounds.  It creates a necessity for the economy to grow and pay back the constantly growing debt.  Our system of creating massive amounts of money through printing is nothing more than debt in motion.  Debt is constantly moving, growing, expanding, becoming riskier.  It doesn’t just sit in the bank and multiply with interest.

And the real problem with bail-ins is that they will solve nothing.  They will just take our money, break us, and forestall the inevitable.  It is merely a last ditch effort by the planners of the system to keep it alive a little longer, to steal a little more.  And they will, for a while until they’ve taken everything from everyone – the savings, the land, the natural resources.  It’s already happening here.  This is where America’s economic and monetary system presently finds itself.  And this is where our family’s future stands, on the brink of collapse.

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