Do You REALLY Know What A Bank Is – I Am Betting On No

The Inverted Pyramid Of Debt Banking System.

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Understand a simple explanation of a bank and why the banking system collapsed as it did.

The banking system collapse was a factor of many things, however, it is advantageous to have a basic understanding of what a bank actually is and why it is so vulnerable. After all, you put all your hard earned cash into it so it probably makes sense to understand how they work, wouldn’t you agree?

The Pictomin above shows a red triangle, a black circle and two arrows. This simple image is a pictorial representation of a bank. Don’t stop reading, I will explain.

The green ball is the actually amount of cash, back up by something of tangible value (like gold), that the bank currently owns. This is the amount of actual substance of worth the bank would have if currency and the effects of currency collapsed and people wanted to reclaim their money back in something solid and tangible. Yes, I know. It is worryingly small.

The red triangle that is balancing on this small ball is the inverted pyramid of debt that the bank has created from this small amount of cash through complex lending schemes and systems such as fractional banking, derivatives and future share buys. As you can see the triangle is pretty unstable, symbolised here by the arrows.

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The bigger the bank becomes, the larger the triangle becomes and thus the more unstable the bank becomes. Everyone following? Excellent.

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Over the last 10-15 years the banks debt triangle has been becoming incredibly large and thus the whole system in turn very very unstable as only a very small percentage of the monetary figures being thrown around are backed up against an actually commodity such as gold; the rest of it is just numbers, opinion and in some respect blatant lies and fabrications.

The banks are unstable but when all are operating in this way they tend to just about keep each other standing.

You can imagine, I hope, that if all these unstable structures are balanced very closely to one another, as they are in the real world, then the combined effects of all off them wobbling with just about keep them all upright. This is exactly what was happening before 2008 and the crash. The banks were holding each other up.

However, when consumer confidence goes, such as recently, the highly unstable banks have a tendency to very quickly fall over with the largest banks carrying the largest debt triangle falling first. Once one goes the resulting balancing act is unsettled and they all tend to start toppling unless someone, like the government, uses a vast amount of money to reduce the size of the triangle, pick them up again and once again start the balancing trick, which is exactly what happened.

As is probably obvious to most that have read this far, this is not a sustainable solution and once the banks start lending and creating wealth out of nothing again their triangles will once again start to grow and they will topple they again causing greater pain and misery to all involved, apart from the top guys at the bank who will walk away again having done very well out of the whole affair.

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Since moving away from the Gold Standard in the 1930s, where currency had to be backed up against something solid such as gold, we have created a system that can create money out of nothing and now we cannot go back.

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It is worth remembering the Pictomin image when you next put all your faith into a bank. They are very good at creating something from nothing, the only problem being that we then end up with a lot of nothing, also affectionately referred to as currency, floating around which can very easily disappear in an instant.

Why were so many people shocked when the biggest triangle pyramid of debt was broken and over a billion dollars disappeared instantly overnight. The reason being is that it never really existed in the first place, it was just numbers floating around the banks and the stock exchange.

I appreciate that this is quite a simplistic overview of the banking system but it is a good reminder for people to really understand the problems that are very much at the core of banking and why the governments interventions were no more than a buffer to a further more devastating collapse that will be inevitable if the banks are ever allowed to go back to their unmoderated ways. Unfortunately the truth is that they will.

I hope this has spoken to people, I will end on a joke to lighten things up again.

A woman gets on a bus with her baby. The bus driver says: “That’s the ugliest baby that I’ve ever seen. Ugh!” The woman goes to the rear of the bus and sits down, fuming. She says to a man next to her: “The driver just insulted me!”

The man says: “You go right up there and tell him off – go ahead, I’ll hold your monkey for you.”