In this report I cover the early market action from London on Monday, June 25th, 2018. I look briefly at the precious metals, the stock market and the dollar.
I also explain the mechanism of fractional reserve lending and fiat money used in our current monetary system and how if heavily favours the bankers or money lenders. Through fractional reserve lending the bankers are able to lend money they do not have many times over and earn exorbitant returns while in the real economy people are unable to replicate this mechanism.
A farmer that owns a $1 million farm might earn 5% or $50'000 per annum while the banker who borrows $1 million will lend out $10 million and earn 5% on the original $1 million but will actually get $500'000 just or ten times what the farmer gets.
I argue that this fractional reserve/fiat money system has created the huge wealth inequality we now have and why the middle class and the economy has been hollowed out. I also note that by bailing out the banks and the system after 2008 our political leaders have basically given this parasitical system a second chance.
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Banks also have costs. They don't get to keep that whole 5%. Banks have to publish their financial statements. Do they in actual fact make exorbitant profits like that? They are not making that kind of profits from fractional reserve lending. That's not an extremely good business at least with interest rates being as low as they are now.
Fractional reserve lending is older than fiat. Under the gold standard reserve money was gold-backed but loans did not have to be 100% backed by reserves just as they do not have to be now.
Another thing is that under the gold standard, a huge amount of value would be in the hands of gold producers. How's that not parasitism?
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