BullionStar News
Writers Torgny Persson, Koos Jansen
& Hong Kang See

FRB Bail-ins: You don't own your money

Monday the 4th of May 2015
Bank deposits

The account balance on your bank account is known as a demand deposit. Under our Fractional Reserve Banking (FRB) system, your deposits are used by the banks to leverage lending.  What most people think of as their account balance is actually something very different.  Many people mistakenly believe that their account balance shows how much they own.  This is not so. Instead, it shows what the bank owes you. You merely hold a claim on cash. Knowing this will help you understand that bank deposits are actually loans.

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Your cash forms the foundation for a banking system that loans out (hypothecates) your account balance with the promise that they will keep some of it on hand and return all of it if you ask for it.  This is called fractional reserve lending and this is what all banks do.

The legal precedent, that established the foundation for fractional reserve banking, was determined in a UK Supreme Court, (Foley vs. Hill, 1848).

Money, when paid into a bank, ceases altogether to be the money of the principal; it is then the money of the banker, who is bound to an equivalent by paying a similar sum to that deposited with him when he is asked for it. ... The money placed in the custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal;... Continue Reading
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