Friday, October 29, 2010


This is how the game has worked for hundreds of years. This is how the Federal Reserve Began its control.

The money changers had control of Medieval England's money supply and at this time were generally known as goldsmiths. Paper money started out and this was simply a receipt you would get after depositing gold with a goldsmith, in their safe rooms or vaults. This paper started being traded as it was far more convenient than carrying round a lot of heavy gold and silver coins.
Over time, to simplify the process, the receipts were made to the bearer, rather than to the individual depositor, making it readily transferable without the need for a signature. This, also, broke the tie to any identifiable deposit of gold.

Eventually the goldsmiths recognized that only a fraction of depositors ever came in and demanded their gold at any one time, so they found out how they could cheat on the system. They started to issue more receipts than they had gold to back those receipts and no one would be any the wiser. They would loan out these receipts which were not backed by the gold they had in their depositories and collect interest on them.

This was the birth of the system we know today as Fractional Reserve Banking, and like this system of today this meant the goldsmiths were able to make astronomical amounts of money by loaning out, what was essentially fraudulent receipts, as they were for gold the goldsmiths didn't even possess. As they gradually got more confident they would loan out up to 10 times the amount they had in their deposits.

To simplify how they made money on this, let's give an example in which a goldsmith charges the same rate of interest to creditors and debtors. In this example a goldsmith would pay interest of 6% on gold you had deposited with them, and then charge 6% interest on money, I mean fraudulent receipts, you borrowed from them. As they would lend out ten times what you had deposited with them, whilst they're paying you 6% interest, they are making 60% interest. This is on your gold.

The goldsmiths also discovered that their control of this fraudulent money supply gave them control over the economy and the assets of the people. They exacted their control by rowing the economy between easy money and tight money.

The way they did this was to make money easy to borrow and therefore increase the amount of money in circulation, then suddenly tighten the money supply, taking it out of circulation by making loans more difficult to get or stopping offering them altogether.

Why did they do this? Simple, because the result would be a certain percentage of the people being unable to repay their previous loans, and not having the facility to take out new ones, so they would go bankrupt and be forced to sell their assets to the goldsmiths for literally pennies on the dollar.

This is exactly what happens in the world economy of today, but is referred to with words like, "the business cycle," "boom and bust," "recession," and "depression," in order to confuse the population of the money changers scam.

The link gives you the rest of the story.

its gonna take a lot of this to happen.


  1. Kli, super explanation of the Federal Reserve fractional reserve system. Simple enough even I understood it. ;) Kudos.

  2. Yep, we're in dark times. How's your trading going Inlet, are you still predominantly the Q's or playing some other positions? I took alot off the table the last two days, actually I sat on my hands and did nothing on the trading day today. This is dicey right here, I am not in favor of news-heavy weeks like the next one, I have some calls on CCME and a long hold on EXAR, outside of that I am a spectator here. AAPL retrace is interesting along with RIMM ramping, semis are interesting but my sense now is to sidestep and only bite on good entries. I like retail on a reversal, but this feels toppy to me here.

  3. An even more interesting point is who were those goldsmiths and there controllers? A Google search will lead you to some interesting reads.

  4. Analyze, the trading could be a lot better. I have a couple of long positions in dividend paying stocks. Combine dividends with selling covered calls every couple of months and I am generating a decent amount of income from these long positions.

    This past week I bought/sold calls a couple of times (Nov 50) on CREE. Made good % gains, but they were small positions so the dollar gains were modest.

    I also have a position in QID which has kicked my butt, but I feel if I am patient this could be a big winner for me next year.

    I expect my approach and time horizons are longer than most here as I don't trade that often.

    Kli added my site to his blog list (Swing Trade Cycles). Give it a look. Let me know how I can make it better.

  5. Inlet, I just swung over there, I like the blog, clean and direct with just a TA focus. If you added more it would just become burdomesome to keep up with the content. Looks good, good posts you have so far as well.