Book Summary: How Privatized Banking Really Works – Written by L Carlos Lara and Robert Murphy

The integration between Austrian economy, healthy money and the infinite banking concept is very logical. Once you understand these principles, the only question you have is why we as a whole society are not doing it. The authors provide answers and also shed some light on this.

Why is this important to me?

I always want to ask this question as if I were in your shoes. Would you benefit from reading this summary? At the moment, the whole world works with a fiat currency system. Basically, fiat means that the currency is not backed by hard assets like gold and silver. In 1971, Richard Nixon took the US off the gold standard and we’ve chased inflation ever since. Also, the Federal Reserve was established in 1913 and since then the dollar has lost 96% of its purchasing power. To put this in perspective, in 1950 two silver coins could fill your car with petrol and today two silver coins fill your car with petrol. The difference is that the silver was worth 50 cents in 1950 and is now worth $62. The problem is that it buys the same amount of goods.

With all the turmoil in the market, you hear the news headlines talking about the evils of capitalism. This book and many others show that the boom and bust cycles are created by government intervention and the Federal Reserve’s central control over monetary policy.

How privatized banking really works is full of several key concepts related to the entire financial system. It is divided into 4 main parts and for the sake of time we will briefly cover each part.

1. Fractional Reserve Banking – Fractional Reserve Banking is a very interesting concept as it brings massive profits to central banks and has the potential to wipe out our entire financial system. Basically, for every $10 deposited, the banks can borrow $10. This creates money out of thin air that contributes to inflation.

2. Privatize banking – The Austrian economy is about scarcity and choice. They promise that it makes financial sense to close the Federal Reserve and privatize the banking system. Right now, our entire financial system and government is controlled by the Federal Reserve, which is constitutionally illegal. When was the last time the Federal Reserve was publicly audited? I realize the news talks about more regulation that is actually needed to control the amount of leverage banks use to make a profit. The main problem is the Federal Reserve and the government controls our money.

3. Sound Money – Sound Money is money backed by real assets such as gold and silver. These precious metals have been real money for over 2000 years. When currency is tied to assets in this way, inflation and boom/bust cycles disappear because the government can no longer spend unlimited money. This one concept would be the greatest deterrent in stopping wars and building empires. This is the main reason why the government took us off the gold standard in the first place. Do a Google search for the 1950 Silver certificate and you will notice that it resembles the dollar bill. The difference is that it is not called a “Federal Reserve bill”, but you can exchange this certificate for real silver. Today the central bank prints money and our money supply has tripled in the last 3 years. History shows that all fiat currencies reach their zero intrinsic value. Every empire (Persian, Greek, Roman, etc.) has devalued its currency and failed. This is the only historical truth. The difference today is that the whole world has never been tied to fiat currency and the ripple effect will be terrible.

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4. Infinite Banking Concept – The good news is that the little guy has a method to opt out of the banking system. The concept was developed by R. Nelson Nash. By using a guaranteed life insurance policy, you can create a profitable banking system for yourself. Mutual insurance companies have been around for over 200 years. They are safe because their capital requirements are 1 to 1, so there is no extreme leverage like the mainstream banks. In addition, the policyholders own the business. The authors argue that if only 10% of the population adopted this banking method and opted out of the traditional financial system, real change would occur.

How Privatized Banking Really Works is an examination of sound money, private banking and the abolition of government monopoly control over our money. These concepts require study as it is directly related to our liberty and liberties that make this country great.

I hope you found this short summary helpful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits form in just 21 days. One thing you can take away from this book is the concept of sound money. You must have at least 10% of your savings in solid money, i.e. gold or silver. Silver is volatile because it is priced in dollars. If you price the stock market in terms of gold, you see that the values ​​have been declining for 20 years. Silver is still below 1980 levels. There is no other investment or commodity that is this cheap.