Fractional reserve banking and global debt are tumours spreading throughout the world's economies...

Debt. You have to have it, right? It's just a part of life. Unavoidable. As certain as death and taxes.

Want to go to school? Borrow money. Buy a car? Borrow money. Buy a house? Borrow money. Buy a coffee? Borrow money and tap that credit card - easy as can be.

We live with debt so ubiquitous and pervasive, it has become invisible.

Of course, this kind of debt is small potatoes, but adds up collectively. To truly understand the pervasiveness of debt on a global scale, we need to look at the fractional reserve system.

The fractional reserve system, a so-called "innovation" is credited with tremendous growth in JP Morgan's "Bitcoin Bible":

Fractional reserve banking was a tremendous innovation that surely contributed greatly to global growth over the last two centuries, and we would expect that central banks would think twice before disturbing this source of capital to the private sector. (source)

Of course, JP Morgan credits fractional reserve banking as a tremendous innovation, but is it really? Has this so-called innovation contributed to a better world?

Briefly explaining fractional reserve banking:

You deposit $1000 in your bank account. The bank is allowed to lend out about 90% of that $1000 and must keep a fraction - about one tenth - in reserve. Someone else borrows $900 from the bank - your money - and spends it on something. They now owe the bank debt with interest on money you deposited. That $900 gets deposited by whoever made the money from the borrower. Now, the bank can again lend out 90% of the $900 that was deposited - magically fabricated from your original $1000. This goes on and on and eventually, your $1000 turns into about $10 000 that the bank has issued in debt and is collecting interest on, while paying you a tiny fraction of interest for leaving your original money in the bank.

What happens if everyone decides to withdraw their made-up money at once? It's called a "run on the banks" and involves waiting in long lines hoping to get maybe a tiny piece hopefully of your own money back, if you're lucky.

Fiat money and the global economy in general is built on this foundation. Those who issue debt make tremendous money, not from labour or innovation or efforts or products - but from fabricated, non-existent money. We are conditioned to accept this as normal. This is why a burger at McDonald's today costs five or six dollars, when it used to cost two or three dollars twenty years ago. Money is worth less because it is fractionally reserved and replicated to produce interest for banks, like JP Morgan, who call it a "tremendous innovation". No wonder.

Cancers spread and take over their hosts. In the same way, fractional reserve banking allows the spread of debt as our money continuously becomes worth less and less. Exacerbating this spread of disease is the fact that governments can literally print more made-up money out of nothing by simply buying - you guessed it - more debt. As economies pile on debt, they need to get this continuously diminishing value of money in greater quantities to pay for military expenditures (which, of course, have to be kept top secret and can't be checked for legitimacy), expensive government programs (some of which are admittedly beneficial), and the occasional wall to protect us from our neighbours.

Lack of scarcity by having no standard by which to measure money - it used to be gold - has led to a big problem - the economic problem of our lifetimes. Since money is not tied to anything of substance, such as gold, it can be made out of nothing at virtually no immediate cost - just long-term cost of debt that we have all grown to tolerate and accept as it festers in our collective body.

Could cryptocurrency be the cure? Could we somehow inoculate our nations against debt by using inherently scarce, impossible to counterfeit cryptocurrency? If a currency were to be used that could not be fractionally reserved, could not be printed out of nothing by manipulative banksters and corrupt governments, could this change the way the world sees and deals with debt?

There's a big problem with injecting this cure into the economy. The powers that be do not stand to benefit from this one bit. In fact, it is, to them, the enemy. Would a cancer voluntarily subject itself to being cured? Of course not. It, too, will strive to survive and preserve itself at all costs. We will see resistance to money that can not be manipulated from all corners of global institutions.

So, the writing may be on the wall for the likes of JP Morgan, but the cure is a long ways off. It will take some time, perhaps generations, for this disease to be cleared from our bodies.

Start today by inoculating yourself - protect yourself and your money from the disease of debt. Re-examine your finances. Eliminate debt as soon as you can and reduce your exposure to debt. Yes, I know it is easier to say this than it is to do this. It might mean spending less on wants for the time being (and perhaps for the long term). Invest in cryptocurrencies - a safe amount - not an amount you can not afford to lose - these markets will be volatile for years because of this economic battle. Build up your exposure over time as you regain control of your personal finances.

Be a part of the cure.

*This is not professional trading advice - it's just my opinion!

source:
https://www.zerohedge.com/news/2018-02-11/jpmorgan-publishes-bitcoin-bible

image source:
http://money.cnn.com/2017/02/16/pf/americans-more-debt-in-2016/index.html