How do banks lend money? – Part 6

With this continuation we will realise the great ability of some people to cheat and get so much money, one of the bases of capitalism.

As we know Goldsmith was angry because he was not earning as much as in the beginning, so in a moment of inspiration he came up with the current economic base, lend money to people from where there is no money.

The creation of money, lending money from where there is not:

Remember that Goldsmith representated the gold stored in his warehouses in the form of ticket, so he had the posibility of creating any type of representation from wherebanqueros there was nothing.

With this in mind Goldsmith started giving loans to people without gold that represented what was offered, through this Goldsmith received money with deposited with gold, plus the gold that was lent, and finally with bills created by him.

By this time you should have in your mind the ability that Goldsmith had to invent a monetary system in which he always wins, no matter what happens, now try to apply this idea today, surely you will think it is very difficult that it still happens, but you’ll see how easy it is for bankers.

Continuation: How do banks lend money?


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