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Phillip Tilley

Banks stop loaning money

January 13, 2008 | Comment icon 36 comments


Image Credit: sxc.hu
Don’t get your knickers in a knot, it didn’t happen yesterday. The push for a cashless society has been upon us for some time. Some people believe it is OK for banks to charge high interest on certain individuals because they pose a risk. What does the bank risk that justifies this practice? First a look at Consumer Economics 101. Not so long ago in a land formerly known as a Free America, people prospered and had money left over after their monthly expenses were met. They would deposit that extra money in the Bank for safekeeping. The Bank would loan that money out to individuals or businesses so they could buy a house or expand a business venture.

The Bank charged an interest rate of 4% to the borrower. The Bank then paid depositors 2% interest on their deposited money and kept 2% to cover operating expenses and earn a small profit. It was a good deal for everyone involved. In this system the depositor is an investor and the money in the bank is an investment. The interest they receive is a dividend. The Bank acted as a broker on the deal insuring the safe return of the money loaned out. The borrower was happy to get a loan with a reasonable interest rate.

With a modest interest rate and a modest return there was modest growth. But there was some risk. The investor trusted the Bank not to lose their invested funds. If the borrower defaulted on the loan, which happened less then one half of a percent of the time, the Bank was still responsible to return money to the depositors. Too many bad loans and the Bank wouldn’t earn a profit, or might go out of business entirely. Everyone was risking something and everyone had an interest in the success of all involved.

Then things changed when the banking industry as a whole stopped using “money” and switched to Federal Reserve Note currency. Because it happened slowly, nobody noticed and no one seemed to care. Federal Reserve Notes, in spite of having no value of their own and backed by nothing of value, were declared by the Government to be legal tender and were treated as such. Now the risk factor was gone! Fewer people had leftover funds to deposit in banks and reserves dwindled. So the Government allowed Banks to “extend credit”, which is allowing people to go into debt which is a negative thing. Now credit could be extended to a borrower without the risk of losing depositors money, since depositors no longer had money anyway, only worthless Federal Reserve Note currency. The Government insured the safety of the returned debt through FDIC. This means they would return worthless Federal Reserve Notes to replace any worthless Federal Reserve Notes that were not paid back.
Now the depositor has nothing at risk, the Bank has nothing at risk, and if the borrower defaulted, the Government would extinguish the debt that had been created. Each time someone borrows from a Bank they are not loaned money, they are extended credit. Any banker worth their salt would never say they loan money because that would be a lie. They will say they will extend your credit.

The new system however created a new risk for the Banks. With all of our currency as debt currency, borrowed into existence when someone is extended credit, the funding to pay back the debt has to come from somewhere. This leads to sustained debt to pay an ever increasing debt. This cannot go on forever and it drives up interest rates and default rates until the entire system implodes upon itself.

If you haven’t been paying attention, the implosion point is nearly at hand. Perhaps you are too poor to pay attention. There is no money so Banks stopped loaning money a long time ago. It is one of the mechanisms of the money matrix. Some people are waking up though. In the video game Silent Hill 3, on a stone wall it says: “Thus one’s life turns to riches: What was a bag of silver coins is now the number in a book. Yet faith hath no price… Ah, but do people know this?”

Wake up people, the money matrix has you.

Phillip Tilley is the author of The Money Matrix of the New World Order and other articles.

Comments (36)

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Comment icon #27 Posted by SoCrazes 15 years ago
Oen, I'm still awaiting your, or Tilley's, answer to the question I asked in an earlier post: If our currency is a debt, then who is the borrower and who is the loaner? Thanks.
Comment icon #28 Posted by Oen Anderson 15 years ago
Oen, I'm still awaiting your, or Tilley's, answer to the question I asked in an earlier post: If our currency is a debt, then who is the borrower and who is the loaner? Thanks. From what I make of it, there is no borrower since you are not borrowing anything, you are only having your credit extended so you can go farther into debt. There is no loaner because nothing is being loaned, the bank is only allowing you to go farther into debt by extending your credit. There is a credit extender,(the bank) and a credit extendee, (you). Tilley says money equals nothing and in this example nothing is lo... [More]
Comment icon #29 Posted by realist 15 years ago
dear friends ; if you are watching money -tell me why the controls and laws are ever increaseing -yet the value is plumeting -welcome to the world of electronic inslavement .-what i see the future holding is not good -this national id driverslicence thing scares me .ive seen it at work years ago -to a degree with a comerial drivers licence a corporate accounting-bussiness id card and a computer . the driver for gasoline tanker delevery service had to use this system on every load to get gas out of the refinery -to deliver the load of gas to make money for his company -and his wagde by the hour... [More]
Comment icon #30 Posted by Siara 15 years ago
The way America keeps going deeper and deeper into debt while the stock market's still doing fine is something I don't understand. In managing your personal household finances, if you keep spending more than you're taking in you eventually reach a point when you're broke. Doesn't that EVER happen to countries? Isn't there some point when the sh** hits the fan? If so, what is that point?
Comment icon #31 Posted by Oen Anderson 15 years ago
dear friends ; if you are watching money -tell me why the controls and laws are ever increaseing -yet the value is plumeting -welcome to the world of electronic inslavement .-what i see the future holding is not good -this national id driverslicence thing scares me .ive seen it at work years ago -to a degree with a comerial drivers licence a corporate accounting-bussiness id card and a computer . the driver for gasoline tanker delevery service had to use this system on every load to get gas out of the refinery -to deliver the load of gas to make money for his company -and his wagde by the hour... [More]
Comment icon #32 Posted by Oen Anderson 15 years ago
The way America keeps going deeper and deeper into debt while the stock market's still doing fine is something I don't understand. In managing your personal household finances, if you keep spending more than you're taking in you eventually reach a point when you're broke. Doesn't that EVER happen to countries? Isn't there some point when the sh** hits the fan? If so, what is that point? It happened with the stock market crash of 1929 and when Roosevelt stole the gold in 1933. Tilley said in his book, "The Money Matrix of the New World Order", that the sh** hits the fan again around December 21... [More]
Comment icon #33 Posted by lunartwin 15 years ago
I live in the Upper Peninsula of Michigan and have worked for four years in a grocery store. I live in a small college town (Michigan Tech) and there were only four groceries locally by two families-two stores per family. When the store I work for came in, they weren't corporate, but they were bigger and privately owned by a family out of Wisconsin. They had a larger selection, a larger list of vendors, and more stores altogether than the family owned local businesses, which resulted in bulk-buying and lower retail prices. It wasn't long before two of the four smaller groceries shut down compl... [More]
Comment icon #34 Posted by BlueZone 15 years ago
Seems to me that someone is just trying to start a conspiracy theory that isn't quite taking off. I disagree. The system was broken. It allowed people to hopelessly over extend themselves financially. Now these people are in bad shape. It's hard to know how to understand the issue because there are two types of people who abused the system. 1) There are nice people who honestly thought (for instance), "I'll be able to pay the loan back when I finish school and am qualified for a better job." They didn't get the job and now they're up sh**'s creek without a paddle. OK they were overly optimisti... [More]
Comment icon #35 Posted by Oen Anderson 15 years ago
I live in the Upper Peninsula of Michigan and have worked for four years in a grocery store. I live in a small college town (Michigan Tech) and there were only four groceries locally by two families-two stores per family. When the store I work for came in, they weren't corporate, but they were bigger and privately owned by a family out of Wisconsin. They had a larger selection, a larger list of vendors, and more stores altogether than the family owned local businesses, which resulted in bulk-buying and lower retail prices. It wasn't long before two of the four smaller groceries shut down compl... [More]
Comment icon #36 Posted by Oen Anderson 14 years ago
It looks like Tilley was right, the system is imploding and he called it way back in January. He must be a prophet on no profit!


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