Bail-ins are Now Legal: You Don’t Own Your Money in the Bank

Sunday, June 14, 2015
By Paul Martin

While shocking to some, the bail-in strategy is completely legal. Client account holders can only profess ignorance which – when it comes down to it – will not be enough to protect them.

Knowingly, or unknowingly, account holders are investors and not savers. The event in Cyprus is and will not be an isolated event.

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.
In very clear terms, when you deposit funds in a bank account, those funds are no longer yours.
Fractional reserve banking works as long as people have faith that the bank will give them back ‘their’ money.

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.

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