5 Things About Money That Banks Hide from You

Andrew Jackson once said: If the people only understood the rank injustice of our money and banking system, there would be a revolution by morning." That's what he said way before the federal reserve was creating because, since the creation of the fed, the banking system has changed dramatically and is favoring the rich even more. The problem is that most people don't understand how the system works, they don't know how the money is created, they don't know how the fed works, so only a small minority actually benefits from this system at the expense of others. Or as Henry Ford said "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." So, let's find out what exactly banks don't want you to know? What are they hiding? And what you should know to profit from the system.

1.All money is debt. One of the fascinating things about people is that, we spend our entire life looking for jobs, working hard, building up businesses, all in hopes of making more money. And yet, most of us don't really understand where does the money come from? Why does this piece of paper is money in the first place, and not something else! Most importantly, it's a piece of paper with some pictures and numbers which means someone out there is printing it! It's certainly not growing on the trees or falling out of the sky!

In fact, the government is borrowing money exactly like you! it's in much bigger debt than you could possibly imagine! it sounds strange because if it's not the government who prints the money, then who has the power to do that!  As always, the government needs to build bridges, schools and hospitals in order to sustain the country but all of that requires money. In the past, it was simple, Gold and silver were money, so you either earn it, or borrow it from someone else as a loan! But in the modern world, it works in a different way. When the government needs money, it borrows it from the Federal Reserves as a loan with interest on it, and where does the federal reserve take the money. It creates it out of ink and paper. Then the government uses that money to build schools, hospitals, and bridges, that’s one of the ways how money gets into the economy.

The people who receive the money from the government deposit them in a bank, and then the bank lends it to someone else, and that's how it spreads all around the world! But that's only how a small fraction of money is created. Around 95% of money is nothing but digits in the computers created by the banks. When you deposit your money into the bank, the bank doesn't simply keep your money in the safe but rather lends it to someone else at higher interest because that's how banks make money. But then, why does your bank account say that your money is still there in the bank and you can take it out anytime you want!  Because Banks are allowed to lend 90% of your deposited money and keep only 10 percent in case you want some of your money back, at the same time, keep your account as if your money is still there

Let's say you deposit 100 dollars in the bank, the bank will lend 90 dollars out of it, but at the same time, it will create another 90 to show you that your 100 dollars are still there in the bank! Then those 90 dollars will end up in another bank, and they will keep 10% of it and lend the rest, creating even more money! and so on and forth, until that 100 dollars that were initially created will turn into a thousand dollars. If not more than that! That's how most of the money is created; that's why 95% of our money doesn't exist physically! And the strangest part of this system is that the money that was printed out in the first place was given as a loan to the banks and the government.

In other words, the government or the banks have to pay back more money than the amount of money that exists in the system, which means that debt simply can never be paid back! Let's say, for example, there isn't any money in the system yet. You go out there and ask the federal reserve (Fed) to loan you 10 dollars, it says sure, but you must pay it back with 10% interest, which means you have to pay back 11 dollars. Now the question is, where will you get the extra 1 dollar if only 10 dollars were created in the first place. The answer is Nowhere! In short, we use these pieces of paper as money because we trust this system, but in reality, it's not really backed by anything, so invest your money in real assets such as stocks, Gold or real estate.

2. Who owns the fed? To answer that question, we have to go back in time and find out how the fed was created in the first place.  The United States wasn't always such a great financial power. Back in the 19th, it was a country of turmoil. The civil war almost destroyed the country, and the financial market wasn't working properly. The US didn't even have a Central Bank to manage financial crises as many European countries did back then. In 1906 one of the famous bankers wanted to make a fortune by pushing United Copper shares to rise and force short sellers to buy his shares to exist their positions. But his plan backfired as the short sellers found a different source to buy United copper shares. That move bankrupted the company and multiple other banks. As the news of bankruptcy spread, depositors rushed to the banks to withdraw their savings.

As the banks run out of cash, they stopped lending money to their depositors and went bankrupt one after another. The stock market crashed to an all-time low. There wasn't a central bank back then to restore depositors' faith in the banks, so wall street turned to JP Morgan. He deposited a significant junk of his wealth into some of these banks to restore public faith in the banking system and convinced other wealthy bankers to do the same, and saved the economy from sliding into a crisis that God knows how long it would last. That's when the US realized that it couldn't rely on the good faith of the bankers.

It had to create a central bank that would step in such circumstances. But it wasn't easy since it involved too many opposing parties, from politicians who represented their people to wall street bankers to other wealthy individuals. Over a hundred wealthiest Americans met in Jekyll Island in Georgia and decided how the fed was going to work, and in 1913, the fed was finally created.  But it's not just one bank. It consists of 12 banks that are spread across the country. And each bank is required to keep 6 percent of its capital in the regional reserve bank, and in return, they own shares in that bank. Which means the fed is simply owned by the rest of the banks in the country. It sounds as if the system couldn't be more rigged since the big banks control the only bank that’s the source of the dollar but every major bank in the US is a public company which means by buying their stock, you turn into one of the owners of these banks and indirectly and an owner of the fed.

3. your bank is not your financial planner What most people don't realize is that banks are not there to act in your best interest. Their purpose isn't to help you become finically free or get the best deals or solve your financial difficulties. Banks are profitable corporations who are accountants to their shareholders and are obligated to make a profit, so, like any other business, they will act in their best interest by selling your products and services that benefit them and not you. Yes, your interests might align sometimes but not always. So, whenever a bank suggests you to do something, just because the bank teller is wearing a nice suit and is very kind to you doesn't mean he is giving you the best advice possible. Before trying to sell that product to you, every bank teller has gone through extensive training to learn to convince to pay for that service. So, think for yourself, don't decide to accept anything unless you sleep on it. Make sure to compare the rates always with other banks, don't let yourself for a moment be manipulated how nicely they treat you because that could end up costing you a fortune in the long run.

4. the wealthier you are, the less banks charge you. The main purpose of banks should be to take money from those who have extra money and lend it to those who need it. That's how banks emerged in the first place. However, the financial system has evolved since then.  When you live paycheck to paycheck, you are not valuable to the banks. They barely can make any money out of you. At best, they can provide you with a small mortgage and a credit card, so you are not a valuable customer. However, when you are a billionaire, for example, the banks would provide you much more favorable terms in hopes that you will stash your money in their banks or choose their banks as the primary bank for your businesses. You can easily see that in the montage rates that banks usually provide to ultra-rich people which are much lower than the average rate. 

5. A bank is a place to park your money and not invest Some people look at banks and get frustrated with their low rates. Today, it's almost impossible to get even a 1 percent rate on your money if you decide to invest in fixed deposits. But that hasn't always been the case.

For much of history, lending money and collecting interest has been a profitable business, but not anymore since money today doesn't hold any intrinsic value, so stop treating banks as investment tools and look at them as institutions to manage your money. If you still so desperately want to keep your money in a bank, try buying their stocks. Goldman sacks, for example, pays a 2.1 percent dividend rate, that's much higher than what they pay in fixed deposit rates. On top of that, you will benefit from the rise of the stock and the greatest part is that you are not going to just keep your money in a bank but you will be one of the owners of that bank.