Henry Ford once wisely remarked that revolution would happen overnight if people really understood the banking and monetary system. That’s because modern banking is a complicated illusion – one that lulls people into a false sense of security… until it’s too late. Large banks can collapse within hours, and savings can disappear overnight.
The banking system in the United States is particularly vulnerable. So why do so many people trust and keep their savings in such a fragile system? This is because they do not understand the three basic truths of modern banking:
1. The money is not yours
Many people are shocked to learn that the money in their bank account is not actually theirs. Once you deposit money, it is no longer your personal property – it is legally owned by the bank. And you can do whatever you want with it. What we have is just a promise from the bank, a promissory note that it will repay the money.
In reality, depositing money is the same as giving an unsecured loan to the bank, often with little or no interest, to offset the risk. This is a fantastic deal for the bank and terrible for you. For this reason, a bank deposit is not the same as cash. Still, most people mistakenly equate the two. Worse still, banks can freeze “your” money at the touch of a button, often for obscure or arbitrary reasons. Maybe you bought something that the bank didn’t like, or maybe you said something “politically incorrect” on social media. Don’t be surprised if your account is frozen. Take PayPal, for example. He once came up with the idea of charging users $2,500 for spreading so-called “misinformation” (fakenews). Expect that this behavior of banks and financial institutions will become more frequent in the future, because if your money can be frozen or confiscated on a whim… It never really belonged to you.
2. The money isn’t really there
The money you think you have in your bank account doesn’t actually exist. Banks do not store physical cash in the vaults of all depositors. They don’t even have enough digital money to cover even a small portion of the payments. During the mass psychosis of COVID, the U.S. government lifted reserve requirements, meaning banks no longer need to hold money to withdraw.
So – where does all the money go?
Behind the scenes, banks are using their “money” to place risky bets on speculative investments. You gamble with your savings, often completely irresponsibly. And if only a small percentage of depositors show up to withdraw their money? Most banks would be in trouble immediately… Because the money is simply not there. This dirty practice is called “fractional reserve banking” – and yes, it’s perfectly legal. But that doesn’t make them any less deceptive.
Imagine if other industries worked like this. A car dealership or a jewelry store that sells ten times as many vehicles or diamonds as you actually own? That would obviously be cheating.
But that’s exactly how modern banking works. It’s like a Ponzi scheme – it’s based solely on the illusion that all the money is available… although it is not.
3. Money is not really money
Most people use currency on a daily basis without ever asking themselves: What is money? It’s like asking a fish, “What is water?” – the fish only notices when something goes wrong. Money is simply a commodity, like any other in business. And understanding what makes something “good money” is actually very simple. There is no need to study complicated theories – even if academics and media elites like to say so. Basically, money is only a means of storing and exchanging value – a way of transferring value in time and space. Think of money as a need for human time. It’s stored energy or stored life. But today, most people blindly accept anything the government gives them on paper or as a digital code and call it “money.” But the money doesn’t have to come from the government – it’s a myth. It’s like asking in the Soviet Union, “Where do shoes come from?” And somebody would have said, “Well, from the government”
This is exactly the way of thinking that exists today with money. The currency issued by governments is a miserable store of value. It is easy to produce, its supply is unlimited, and it is manipulated for political purposes. Imagine if Al Capone forced his neighborhood to accept his signature paper as money – and threatened violence against anyone who refused. Basically, this is what governments do with fiat money. The truth is that fake money comes from governments. Real money is created in the market.
Throughout history, people have used all sorts of things as money – shells, salt, glass beads, cattle, and even cigarettes in prison, but one form has prevailed: gold. For more than 5,000 years, gold has been humanity’s most durable money. Not because someone ordered it – but because countless people in different cultures and times have voluntarily decided to do so. Gold is a product of the market – the result of the search for the best way to store and transfer value.
So why gold?
Because it has unique properties: Gold is durable, divisible, recognizable, rare, portable – and above all: difficult to produce. It is resistant to inflation because it cannot be multiplied at will – a key feature of good money. This makes gold the heaviest of all physical commodities – and thus the best store of value.
Conclusion
The banking system is a fragile illusion – one that could collapse at any moment and wipe out the savings of millions who blindly trust.
This trust is based on ignorance of three simple truths:
- The money is not yours.
- The money is not really there.
- Money is not really money.
Translated and edited by Nick Giambruno