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Free Markets operate under the premise that there is no free lunch. Everything costs something. This fact alone make business cautious when they operate because they know that if they make a mistake, they may be out of business forever.

However, since Central Bank’s job is to protect banks against the Free Market, this has a secondary and nefarious side effect. If banks are protected (i.e. too big to fail) then what is stopping them from getting into ridiculously risky business? Nothing. This is called Moral Hazard.

In a Free Market there is a natural process to prevent this. Invest unwisely and you will lose your fortune. But if loses can be covered by Central Banks, this punishment goes away. There is no downside. Banks are fee to speculate widely. This is precisely what happened in 2008. Banks speculated with highly leveraged so-called investments, some of them reaching ludicrous leverage levels of 100.000 to 1 or higher (i.e. the bank would control 100.000 dollars with one dollar).

This type of reckless behavior is not caused by the Free Market, much that disinformants and detractors may wish to claim, but precisely because the Free Market was and it is not allowed to operate. The lack of punishment is totally, completely and utterly against the very basic principles of the Free Market.

And so, thanks to Central Banks the risk of wider and more serious financial crises again grows exponentially. Oh, yes, just FYI, it will happen again… the 2008 crisis we mean. Banks are back to the pre-2008 practices. Expect an even worse meltdown in the future.


Part of the problem with the fractional reserve system as set-up up to this point, is that some bank actually went bankrupt. Amazing isn’t it? How much more incompetent can they be… we digress.

This very occasional bankruptcy created the “appearance” the people’s money were not actually in the banks and therefore people begun to act more in a Free Market fashion. They became very weary of depositing anything in banks. And so the Power Elite came up with a new scheme: Deposit Insurance.

Are you worried your money isn’t safe in Bank A? Never fear, the Central Bank is near.

Governments created Deposit Insurance organizations that would insure peoples’ deposits (up to a certain level and only cash) in all banks. For this, banks had to pay “insurance premiums” to these organizations who will pay out to bank clients should the bank goes bankrupt.

There is only one tiny problem with this. It is not real. Oh, sure, such organizations exist and banks do pay insurance premiums, the problem is that those premiums cover very little to nothing should a bank actually go bankrupt. Depending on the country, the insurance levels may oscillate between 1 to 5% of all cash assets available in the entire banking system. This is obviously not much. Nevertheless, always remember that you are paying those useless premiums from your bank fees.

Furthermore, said Deposit Insurances only work (to a degree) in very few selected and industrialized countries. In the rest of the world, said organizations rapidly become bankrupt and need to be “infused” with “new cash” from the magic Central Bank. And when this happens, you already know what happens, inflation goes up.

Worse, in the countries where said insurance would actually be helpful, it usually comes accompanied with other conditions because it usually happens after some sort of gigantically moronic government economic move. Like the last bank account freeze in Argentina, where people finally got their money back, all at the low, low discount of about 50%!!!

Let’s be clear. Deposit Insurance is fraud, plain and simple. If it is not fraud, then these organizations must be capable of producing valid actuarial documentation demonstrating their assessment of risks is sound and solid. They can’t. Banking risks are subjected to the general stupidity of governments (i.e. politicians and bureaucrats) and therefore they cannot be quantified.


Banks are supposed to have reserves on which they rely to issue currency. However, exactly what those reserves may be is a completely different game. Let’s take for example the European Central Bank (ECB).

ECB’s reserves were paid for by all the National Central Banks (NCB) of EU member countries using a percentage formula. The NCB’s provided the ECB reserves and in return they received shares from the ECB, or so the Statute of the European System of Central Banks tells us.

What kind of reserves where the NCB’s allowed to provide? Essentially cash from non-EU countries (typically US dollars and Japanese Yens) and some gold. However, many NCB’s did not even have the amount of money that they needed to buy shares in the ECB, and therefore they borrowed from private banks in US and Japan. These banks gladly provided the cash in their own currency, which was, of course, created out of thin air by their own Central Banks.

And there you have it. The “funding” model for the ECB, a modern Central Bank. Digital ones and ceros representing painted pieces of paper or even borrowed painted pieces of paper, which are even unsuitable as toilet paper (too hard).

This process works full circle, of course, because now the ECB issues Euros (out of thin air) and those Euros are used as “reserves” by other Central Banks elsewhere in the world. One hand washes the other, what else?

Does this make any sense to you or does it smell as rank as any other scam?


Central Banks need to go. They are essentially gigantic scam machines designed to protect and enrich the Power Elite. However, if that would be their only effect, they would not be so dangerous. No. Their real danger resides on the fact that they are incredibly destructive to a productive economy, and this affects us all by constantly, relentlessly and endlessly lowering our standards of living.

If you feel like vomiting, please do so. You wouldn’t be the first. Now you know why Central Banks need to go. What happens next is up to you. As usual.

Note: please see the Glossary if you are unfamiliar with certain words.


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