The Biggest Banking Scam in Existence: Fractional Reserve Lending

By Dr. John L. Reizer

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I have always believed it was extremely unfair that a person could deposit his or her hard-earned money in a savings account and be rewarded with virtually no interest payments whatsoever. On the other hand, an individual could borrow money from the same banking institution and be hammered with countless fees and interest charges. Why is it legal for a bank to charge 29% interest on a credit card and only pay, to its depositors, 1% interest for funds deposited in the bank’s savings accounts? The answer is because the entire banking industry was founded on completely corrupt practices. These practices were designed and developed to rob people blind.

From a very early age, in government funded indoctrination centers (public schools), we are taught that the Federal Reserve Banking System is a fair and safe place to store your monetary assets. Nothing could be farther from the truth.

Some years ago, I discussed some of the same information in this article with a friend of mine who was a branch manager at a local bank in my hometown. What he proceeded to tell me about the banking industry made me feel quite ill. I had thought I was upset about the fact that my bank was paying me pennies, in interest, for the funds in my savings account. That banking practice was only mildly distressing compared to the new information I had just learned.

According to my friend, the biggest banking scam on the face of the planet is known as Fractional Reserve Lending. I had never learned about this banking practice in the public school system. The best way for me to describe Fractional Reserve Lending is to begin by writing that there’s actually very little money in reserve. When you deposit a certain amount of money in a bank, you have, in reality, given that bank the ability to create and lend, to consumers, ten times the original amount you deposited. You read that correctly! For every dollar we deposit into a U.S. bank, the bank’s money inventory increases tenfold. That institution then lends the, made out of thin air, money to customers and charges them interest on top of it.

Fractional Reserve Lending practices are completely legal for all banks in the Federal Reserve Banking System. If you or I attempted to write a $100.00 check from a bank account that had a $10.00 balance, we’d be thrown in jail before the ink on the check dried. This is how and why banks can afford to lend money to individuals and companies that cannot afford to pay the funds back. Hell, the banks don’t care because they never had the money in their drawers to begin with.

After thoroughly studying the practice of Fractional Reserve Lending for several years, I can tell anyone with confidence that the entire banking industry is built upon various deceptive practices, all of which have been implemented with the sole purpose of stealing money from financial consumers. I can also write, with confidence, that the entire Federal Reserve Banking system is based on a lot of hot air and not much else. Our government is regularly printing money, not backed by any tangible assets, and circulating it into the economy. Even a child could understand that this is a recipe for a financial disaster.

What most people fail to realize is that the Federal Reserve is not a Federal agency. It’s a private corporation made up of very wealthy stockholders. There’s nothing Federal about it and, coincidentally, there’s nothing on reserve in the form of real assets.

So the next time you enter a banking institution to apply for a car loan or home mortgage, remember that the money you are borrowing doesn’t really exist. The bank you are borrowing from never had the funds in the first place. They are charging you fees and interest on money that only exists in theory, and is based on the biggest scam in existence – Fractional Reserve Lending.

Article Source –  The book, ” Pull Your Head Out of the Sand: Because What You Don’t Know Can Hurt You” (Available on