Banking

The Bank "never goes broke." If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper.

— Monopoly Rules

When I was a kid, I also believed in magic. Eventually, I learned there was no such thing as magic—just tricks, just sleight of hand. Unfortunately, this is really how money is created today—by sleight of hand. It is a magic show. The U.S. Treasury issues a bond in the form of a T-bill, the Federal Reserve writes a magic check for the bond, and the check is deposited into commercial banks, which then issue checks to regional banks, which then issue checks to smaller banks.

But this is not the full bag of tricks. The real magic is that the money supply increases at each bank. For every dollar a bank receives, it can in effect print even more money thanks to the sleight of hand known as fractional reserve banking, something we'll discuss in more detail later in this chapter. Every bank can do this trick. All a bank has to do is find people like you and me who are desperate for money and are willing to sign our life away by borrowing the magic money—and the more desperate you are, the higher the interest rate.

All banks, big or small, are effectively granted the license to print money. You don't need a mask to rob banks. All you need to do is own one.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

People have a tough time understanding money today. If you are an honest, hardworking person, it probably doesn't make much sense to you how banks create magic money. The conspiracy of the rich diminishes our financial intelligence through a monetary system that honest people don't understand. Owning a bank is not only a license to print money—it is also license to steal money, legally.

I am not calling your banker a crook. Most bankers are honest people, too, and have no idea how this robbery is accomplished. Many bankers are unaware of how they are used to steal the wealth of their customers. Bankers are not much different than a financial planner or real estate agent who reaches out to shake your hand, saying, "How may I help you?" Most bankers are simply doing a job, earning a living like the rest of us. It is the system of money creation that steals our wealth. The same system also makes some people very rich.

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich

The core business of banking was best described by the third Lord Rothschild as "facilitating the movement of money from point A, where it is, to point B, where it is needed."

— Robert Kiyosaki; Rich Dad's Conspiracy of The Rich