Wednesday, January 12, 2005

The Shocking Truth About Our Banking System

If you deposit $100 cash in a bank, how much money can the bank turn around and lend out?

You might think the bank would be able to take your $100 and lend out $90 but the true answer is they can lend out $900 !!!

What!? How is it possible for them to lend out more than they take in? It's called fractional reserve banking. They are lending money that doesn't exist. It's phantom money. It's unethical and unhealthy for any economy.

Banks have a long history of unethical behavior in this regard. In the early days, a bank was just a secure warehouse to safeguard your gold. People would place their gold in the bank and get a receipt. People started trading receipts rather than running back to the warehouse to get the actual gold. The banks realized they could print some phony receipts to buy land and buildings and no one would be the wiser as long as not all the customers came asking for their gold at the same time.

That's how it got started but how does it work today? Currently, there is a 10% reserve requirement for banks in the federal reserve system (virtually all banks of any significance). This means if you deposit $100 in cash into your checking account, the bank can lend out $900 because they will have cash on hand equal to 10% of loans outstanding. If you then write a check to someone for $100 who happens to use your same bank and who deposits your check into their account at the same bank, all is good from the perspective of the bank. Nothing happened except a little accounting entry in the computer. What if you withdraw $100 of cash from the ATM or the person to whom you wrote the check does their banking at a different bank than you? Your bank will have to turn over actual cash but then they are no longer meeting their reserve requirement. They will have to borrow cash somewhere to cover their 10% reserve requirement. That's what inter-bank borrowing and the federal funds rate is all about.

Does it sound a little flakey? That's because it is flakey. It's the world's largest pyramid scheme. Wouldn't you love to be able to loan money you don't have and charge interest on money that doesn't exist?

How does it affect us? It gives us wild inflation, deflation, recessions, depressions and economic instability. Inflation is entirely created by the banking system with the Federal Reserve in the driver's seat. Inflation results from increasing the money supply and only banks, especially the Federal Reserve, can increase the money supply. The Fed and the banks create phantom money which increases the money supply which causes inflation. This is the ONLY source of inflation. If you ever hear the Federal Reserve or banking executives claim to be fighting inflation, don't believe it. They are the sole creators of inflation.

Believe it or not, the Federal Reserve is not entirely a government entity. It is mostly a private entity with little accountability to our elected government officials. The accountability of the Federal Reserve really boils down to just two things: 1) Quarterly reports to Congress; 2) Congress created the Federal Reserve via legislation and can eliminate the Federal Reserve just as easily. If it weren't for the fact that Congress could eliminate the Federal Reserve or change the laws governing its operation, the Federal Reserve would truly be an evil rogue operation.

What should we expect in the future? We currently have a national debt of around 7 trillion dollars, nearly $25,000 for every man woman and child in America. Unless there is another technology boom like the internet boom of the 90's to increase taxes taken in by the government, there is only one way our government can pay back this enormous debt: by expanding the money supply thereby devaluing the money and creating inflation. The Federal Reserve can do this with the wave of a pen. You can expect your money to become considerably less valuable in the near future, i.e., you can expect some serious inflation, possibly another great depression.

How can we fix this problem? There are lots of good ways to fix this problem. One way is to simply eliminate the Federal Reserve and require all banks to have a 100% reserve. A 100% reserve means that if you deposit $100, the bank can turn around and loan out $100 but no more. They cannot loan money that was never deposited and doesn't exist. But how should we control the size of the money supply? Milton Friedman suggested that we simply increase the money supply by 3 percent each year every year. Increasing the money supply 3% per year would lead to a much more stable economy. We would still have highs and lows but they would be milder and shorter than we get under Federal Reserve. Remember, the Federal Reserve was created in 1913 and the Great Depression occurred in 1929. One repercussion of this fix is that our economy wouldn't grow as fast in boom times but by the same token, it wouldn't crash as hard in bust times. The economy and prices in general would be much more stable over time and economic growth would be steady and predictable.

What can we as consumers do to protect ourselves from the rigged money and the resulting inflation? Some suggest purchasing collectible gold coins - collectible because if the government once again outlaws private ownership of gold collectible gold coins would probably be exempted. Another good option is investing in the stock market.

Here are some books on this topic. These are the best books I've found so far on this topic but I'm still hoping to find better books. If you know of better books, please let me know.

Sunday, January 02, 2005

Why Keep Government and Religion Separate?

Why keep religion out of government? Because religion is not objective. Religion is nothing more than subjective opinion and personal preference. Can anyone prove their religion is right and other religions are wrong? There is no evidence that any gods ever existed and there is no evidence that even one single supernatural event ever occurred in all the history of the earth. Belief in the supernatural, the basis of religion, is unprovable, untestable, unverifiable and therefore absolutely unreliable.

In other words, there is no reason to think religion is anything more than pure superstitious myth.

Should a government be based on or influenced by myth? Would you want your government run by people who relied on astrology? How about electing a psychic as president? What about a president who makes all decisions based on Tarot cards or the voodoo pattern formed by casting some chicken bones on the floor? How about if, instead of requiring rigorous clinical trials to determine the safety and efficacy of new drugs, the Food and Drug Administration simply prayed for guidance from god? What if the Supreme Court issued rulings with no more explanation than "divine guidance" rather than detailed, logical opinions based on constitutional principles?

So, you wouldn't want a president to take us to war based on a hand of Tarot cards? Why not? Could it be that you don't believe in Tarot cards? Why don't you believe in Tarot cards? Is it because you've never seen any evidence to suggest Tarot cards can reliably predict the future? Exactly what is the evidence you've seen to suggest the existence of anything at all supernatural?

Here's a good little experiment: Ask a religious person how he knows his religion is correct and other religions are wrong. After wading through some diversionary chaff, there are really only two possible answers:
  1. I just feel it.
  2. I just believe it.
In other words, belief in religion is not based on evidence or reality or reason. Belief in religion is based on nothing. People just choose to believe because they want to believe.

If religion is not based on evidence or reason, how do you confirm it is right or wrong? If you can't even confirm a religion as a whole is right or wrong, how can you begin to interpret the meaning of thousand-year-old gibberish written by ignorant, superstitious men that didn't even know the earth is round and didn't know of the existence of bacteria let alone that it causes disease?

On top of being pure myth, christianity, like most religions, is so full of contradictions and inconsistencies that anyone can justify anything based on it. Want to justify war? The bible says that if people in a city serve other gods you are to kill everyone in the city and burn it to the ground (Deuteronomy 13:12-16) and Jesus commands we kill anyone not believing in him (John 15:6). Want to justify peace? Jesus said turn the other cheek. Any book of philosophy that can be conveniently used to justify both sides of any argument is not to be trusted and is not worth the paper it's written on.

The bottom line is this: religion boils down to mob rule. It has to be mob rule because it is not based on reason or evidence. You can't assert a religious position by being brilliant with logic since logic has nothing to do with it. Whoever gets the most followers is the leader of the mob and is the one who decides. That's why Islam has its sharia and christianity has its tele-evangelists. They are the leaders of the mob and they decide how to interpret the thousand-year-old religious writing.

So, if religion controls government, it means that government is controlled by a mob. This is just another form of dictatorship. A religious theocracy is really a religious dictatorship.

Religion is a weed growing in the brain attacking the natural human capacity to reason logically and think clearly. It starts small but eventually it will take over and corrupt and destroy all that is good in humanity.

Like a weed, religion needs to be stamped out while some of us can still think clearly like rational human beings.

The World Was Better Off With Saddam Hussein In Power

I just saw King Abdullah 2nd of Jordan on TV last night. He's concerned that the Shia majority in Iraq will take power and align themselves with their religious center - Iran.

In other words, he's concerned that Iranian Shiites will end up controlling Iran, Iraq, and Iraq's oil. Combined with their influence in Syria and Labanon, the new Iran-Iraq could be a major destabilizing force in the middle east.

What a disaster.

Saddam Hussein kept the religious fanatics under control in Iraq. Apparently, keeping muslim fanatics under control requires a brutal dictator. We were actually safer WITH Saddam Hussein controlling Iraq. Invading Iraq has been the greatest recruiting tool the muslim fanatics could ever have hoped for and was a horrible mistake. Invading Iraq has destroyed America's credibility in the world, destroyed America's military recruitment, and squandered the new trust we all had in our American military that took so many years to regain after the Vietnam debacle.

Imagine what could have been had someone like Colin Powell been president instead of the "W" clown. Colin Powell would have investigated and determined that Saddam was not a threat to America. He could have then chosen to work diplomatically with Saddam encouraging Saddam to move gradually towards democracy. It could have been a win-win situation for Iraq and America and, indeed, for the whole middle east. Instead, thanks to the clown in the oval office, we have the worst possible outcome: American soldiers dying for nothing, more muslims than ever wanting to kill us, and a situation in the middle east getting worse by the day.

Our idiotic Bush regime has caused some serious damage to America and the world but the christian fanatics don't care! They re-elected him in spite of the fact that he has done the wrong thing at the wrong time every time. This is part of the problem with mixing religion into government - a total disregard for reality to such a degree that the worst president in the history of the United States can get re-elected merely on the basis he is a "christian" in spite of the fact he is a miserable failure.

The christian fanatics, like the muslim fanatics, are not concerned with reality. Their only concern is spreading their personal religious superstition.