Wow! New federal bank "THE LAZY PATRIOT BANK, S.A." - Make $160,000 a year sleeping!

[RonPaulCentral]

Ok so this is mostly for fun but what an idea...... Who says Wall Street Vultures are the only creative people around!

So we need to get a website together and get 2000 people willing to charter...

"The Lazy Patriot Bank, S.A.".

This will be a Federally chartered U.S. deposit bank with all right there of that all these existing fools use.

2000 people the "founders" all need to have $1000 to invest... PERIOD.

This is a total of $2,000,000. Ok cool. Requirements to open a bank (Federally chartered) takes $1,000,000.

(1) $1,000,000 invested to charter the bank and meet financial requirements. This would take the first $500 of each "shareholders" capital.

(2) Each "shareholder" takes the remaining $500 in capital and deposits it into the bank. This means $1,000,000 is deposited into the bank.

(3) "The Lazy Patriot Bank, S.A." now has $10,000,000 to loan under the fractional reserve system after placing the deposits with the FED (If they even still require the 10:1 deposit ratio. Hell it might be almost 0% now).

(4) The $10,000,000 is now loaned out to the shareholders at 0.000001% Annual Interest. The amount is so low I won't even bother to calculate it. This means each shareholder gets a $5000.00 loan from the bank. Excellent.

(5) Open a new account at "the bank" and deposit your new $5000.00. After everyone deposits their cash the bank now has $10,000,000 on deposit.

(6) Now the bank has $100,000,000 in capital.... so lets make one more round of loans to ourselves, great idea?

(7) Using magic "fed math" the bank now has $1,000,000,000 in capital due to the wonderful counterfeiting, er I mean "magic", provided to us by the Federal Reserve.

(8) Start depositing the monies into secured/insured accounts (foreign and domesitc) that pay a rate of at least 4% 30 day window. Easy enough to do with this level of capital.

(9) Wait... as we use the FEDs money (1%) to make "us" more money.

(10) We wait three months and produce $120,000,000 in interest return.

(11) Subtract funds due the "fed" ($40,000,000) from our "return" ($120,000,000) and we are left with $80,000,000.

(12) Wow. The bank had a very profitable year... I mean 3 months and made each shareholder a return of $40,000 on $1,000 for doing... ah ... a bit of paperwork.

... then do it all over again.

$160,000 a year profit to you for joining me in forming...

THE LAZY PATRIOT BANK, S.A.

Only 2,000 shareholder positions available.... become a "founder" of this fine new bank today. PM me for investment information..... LOL

 

[Carole]

Cool! I'm all in.

 

[s35wf]

great plan. when do we start???

 

[trapfive]

Awesome....can I put my buy-in on my Mastercard........lol

 

[IPSecure]

Brilliant!

 

[eOs]

best idea i've heard in a long time. lets do this

 

[NewEnd]

I have thought of this before... what makes the other banks so special. How can we get a pledge list started?

 

[fedup100]

I'm in!

 

[fedup100]

I'm in! I'm sure there are mass rules against what you are trying to do. mostly title 1. section: 3 "All banking gigs are just for us".

 

[Tenbatsu]

I'm down for sure. If you can't beat them join them right?

 

[bojo68]

I may have a family member that would like to invest in this.

Does he need s SS#?

 

[BeFranklin]

I'm pretty sure we could beat them at their own rules if we try long enough. Hurry up, so if we fail we can qualify for a bailout. Million dollar bonuses for EVERYONE!

 

[NewEnd]

I'm pretty sure we could beat them at their own rules if we try long enough. Hurry up, so if we fail we can qualify for a bailout. Million dollar bonuses for EVERYONE!

sweet!!!

 

[WRellim]

Misunderstanding of how the 10x multiplier works.

Sadly, all this does is show that you have a complete mis-understanding of how fractional reserve banking and the 10x on the loans actually works.

Ok so this is mostly for fun but what an idea...... Who says Wall Street Vultures are the only creative people around!

So we need to get a website together and get 2000 people willing to charter...

"The Lazy Patriot Bank, S.A.".

This will be a Federally chartered U.S. deposit bank with all right there of that all these existing fools use.

2000 people the "founders" all need to have $1000 to invest... PERIOD.

This is a total of $2,000,000. Ok cool. Requirements to open a bank (Federally chartered) takes $1,000,000.

(1) $1,000,000 invested to charter the bank and meet financial requirements. This would take the first $500 of each "shareholders" capital.

(2) Each "shareholder" takes the remaining $500 in capital and deposits it into the bank. This means $1,000,000 is deposited into the bank.

DING. Your understanding is OK as far as this point. The "bank" has $1,000,000 (1 million) in equity (shares) which it can then spend to buy buildings, etc.

(3) "The Lazy Patriot Bank, S.A." now has $10,000,000 to loan under the fractional reserve system after placing the deposits with the FED (If they even still require the 10:1 deposit ratio. Hell it might be almost 0% now).

Bzzzt... 100% WRONG.

What you have is $1,000,000 (1 million) in "deposits" -- for simplicity's sake, let us say these are all checking accounts (aka DDA's).

On that $1 Million, you will be required to maintain a MINIMUM of 10% ($100,000) as reserve in form of either currency, or on deposit with one of the regional Federal Reserve Banks.

You have, at most, $900,000 available to lend. Not 10 million, but $ 900,000 (the original 1 million, minus the 10% reserve).

The only way you gain that "multiplier" is if you make loans to people, who then deposit that money BACK into another DDA in your bank (and do NOT withdraw the currency to spend that loan money).

So, if you loan out $100,000 to someone AND they deposit it back into your bank... then you will:

a) be required to hold $10,000 in additional money in reserve (currency or on deposit w a Fed Reserve bank). -- Bringing your total reserves to $110,000.

b) be able to make an additional loan of the $90,000 balance.

c) the above continues ONLY so long as that money remains in your bank... the minute any of your DDA customers begin to withdraw their money, your total desposits go down, your remaining reserves go down, AND your multiplier goes down.

d) IF YOU ARE LUCKY then the person who took that loan spends that money IN YOUR COMMUNITY and it is redeposited in your bank (raising your deposits, your reserves, and your *potential* multiplier).
​

The only way to loan out $10,000,000 (the proverbial 10 MILLION) -- is if you LOAN OUT EVERYTHING you have -- AND your depositors do NOT withdraw money, AND money withdrawn or loaned STAYS in your community and re-enters YOUR BANK... AND you are basically the ONLY bank in town.

If the money leaves the community... and doesn't come back quickly, then it's GONE (aka your community has a "trade deficit").

And if you DO manage to loan it all out, AND have it all redeposited in your bank... you will have to keep the entire $1,000,000 (1 million) ON RESERVE.

And you will have to HOPE and PRAY that... IN TOTAL your depositors (which includes your loan customers) NEVER "demand" or withdraw more than 10% of your total deposits in currency (because you have $10 MILLION in deposits, but only $1 Million on hand -- and at any given time you cannot "hand out" more than you have).

Actually, of course you can... but to do so you will need to BORROW additional "reserves" (currency) from either the Fed, or some other bank. And the instant you start borrowing reserves, you now have to pay interest on those reserves!

And you will LOSE MONEY and soon be bankrupt, because you are NOT charging enough interest to cover your OWN interest costs.

(4) The $10,000,000 is now loaned out to the shareholders at 0.000001% Annual Interest. The amount is so low I won't even bother to calculate it. This means each shareholder gets a $5000.00 loan from the bank. Excellent.

(5) Open a new account at "the bank" and deposit your new $5000.00. After everyone deposits their cash the bank now has $10,000,000 on deposit.

(6) Now the bank has $100,000,000 in capital.... so lets make one more round of loans to ourselves, great idea?

(7) Using magic "fed math" the bank now has $1,000,000,000 in capital due to the wonderful counterfeiting, er I mean "magic", provided to us by the Federal Reserve.

See, here you've gone off to LA-LA-LAND.

Because you don't understand that the 10% reserve causes the THEORETICAL LIMIT of the multiplier to be 10x... you simply think you can hit the multiply button on your calculator; and it doesn't work that way for you. (The FED has "infinite" credit only because it has the printing press, cranking out T-Bills which is sells to suckers, and FRN's when it needs them).

Your BILLION dollars consists of baloney... because you do not control or own an FRN printing press.

The max you would possibly have is $10,000,000 (10 million), and of that a full NINE million would be DEBT that shareholders have PROMISED TO PAY.

In truth, your BANK itself hasn't created ANY money... the "loanees" have created it as FUTURE PROMISES to pay it back.

(And never mind that there ARE regulations limiting loans to equity holders of banks... all you've done is convinced a lot of people to go into debt, and created a situation for a Bank that will VERY SOON experience a "run" and go bankrupt as a result -- the FDIC will "seize" your little institution, hand it over to JPMorganChase, and your shareholders will be stuck with shares worth $0 and a whole shitload of debt they will now have to pay to JPMorganChase, which will adjust the interest rates on those loans back up ASAP.)

(8) Start depositing the monies into secured/insured accounts (foreign and domesitc) that pay a rate of at least 4% 30 day window. Easy enough to do with this level of capital.

(9) Wait... as we use the FEDs money (1%) to make "us" more money.

(10) We wait three months and produce $120,000,000 in interest return.

(11) Subtract funds due the "fed" ($40,000,000) from our "return" ($120,000,000) and we are left with $80,000,000.

(12) Wow. The bank had a very profitable year... I mean 3 months and made each shareholder a return of $40,000 on $1,000 for doing... ah ... a bit of paperwork.

... then do it all over again.

$160,000 a year profit to you for joining me in forming...

THE LAZY PATRIOT BANK, S.A.

Only 2,000 shareholder positions available.... become a "founder" of this fine new bank today. PM me for investment information..... LOL

The rest of this is pure baloney -- as ALL of it is built on your complete misunderstanding of how the 10x multiplier functions.

The 10x is a MAXIMUM POSSIBLE multiplier and applies to the "entire banking community" -- it is merely an extrapolation (inverse) of the 10% reserve ratio; and BTW that maximum is seldom actually reached in the case of local banks.

And in the end, all you would have done with this little "scheme" is added YET ANOTHER "bank" to the Federal Reserve banking system... you haven't made a profit, you haven't "stuck it to the man" -- you will have simply joined in the charade (and lost your shareholders at least $1000 each, and put them on the hook for even more debt).

 

[HOLLYWOOD]

Hey,

Stop STEALING the US Banks, Financial Corporations, and Investment Club ideas. You may get sued, because that's, their conjured up SCHEME, uh, I mean, business model. ANYWAY, It's ILLEGAL for us to run this type of "Banking system policy... because you need a few MILLION dollars to BUY all the Politicians and government agencies to legalize the "Pyramid/Ponzi Schemes you seek to run.

Oh So Sorry... Theft is for the U.S. Government and the Banks that OWN THEM.

Ok so this is mostly for fun but what an idea...... Who says Wall Street Vultures are the only creative people around!

So we need to get a website together and get 2000 people willing to charter...

"The Lazy Patriot Bank, S.A.".

This will be a Federally chartered U.S. deposit bank with all right there of that all these existing fools use.

2000 people the "founders" all need to have $1000 to invest... PERIOD.

This is a total of $2,000,000. Ok cool. Requirements to open a bank (Federally chartered) takes $1,000,000.

(1) $1,000,000 invested to charter the bank and meet financial requirements. This would take the first $500 of each "shareholders" capital.

(2) Each "shareholder" takes the remaining $500 in capital and deposits it into the bank. This means $1,000,000 is deposited into the bank.

(3) "The Lazy Patriot Bank, S.A." now has $10,000,000 to loan under the fractional reserve system after placing the deposits with the FED (If they even still require the 10:1 deposit ratio. Hell it might be almost 0% now).

(4) The $10,000,000 is now loaned out to the shareholders at 0.000001% Annual Interest. The amount is so low I won't even bother to calculate it. This means each shareholder gets a $5000.00 loan from the bank. Excellent.

(5) Open a new account at "the bank" and deposit your new $5000.00. After everyone deposits their cash the bank now has $10,000,000 on deposit.

(6) Now the bank has $100,000,000 in capital.... so lets make one more round of loans to ourselves, great idea?

(7) Using magic "fed math" the bank now has $1,000,000,000 in capital due to the wonderful counterfeiting, er I mean "magic", provided to us by the Federal Reserve.

(8) Start depositing the monies into secured/insured accounts (foreign and domesitc) that pay a rate of at least 4% 30 day window. Easy enough to do with this level of capital.

(9) Wait... as we use the FEDs money (1%) to make "us" more money.

(10) We wait three months and produce $120,000,000 in interest return.

(11) Subtract funds due the "fed" ($40,000,000) from our "return" ($120,000,000) and we are left with $80,000,000.

(12) Wow. The bank had a very profitable year... I mean 3 months and made each shareholder a return of $40,000 on $1,000 for doing... ah ... a bit of paperwork.

... then do it all over again.

$160,000 a year profit to you for joining me in forming...

THE LAZY PATRIOT BANK, S.A.

Only 2,000 shareholder positions available.... become a "founder" of this fine new bank today. PM me for investment information..... LOL

 

[forsmant]

I call CEO and take full responsibility for your...I mean my idea!

 

[bojo68]

Sadly, all this does is show that you have a complete mis-understanding of how fractional reserve banking and the 10x on the loans actually works.



DING. Your understanding is OK as far as this point. The "bank" has $1,000,000 (1 million) in equity (shares) which it can then spend to buy buildings, etc.

Bzzzt... 100% WRONG.

What you have is $1,000,000 (1 million) in "deposits" -- for simplicity's sake, let us say these are all checking accounts (aka DDA's).

On that $1 Million, you will be required to maintain a MINIMUM of 10% ($100,000) as reserve in form of either currency, or on deposit with one of the regional Federal Reserve Banks.

You have, at most, $900,000 available to lend. Not 10 million, but $ 900,000 (the original 1 million, minus the 10% reserve).

The only way you gain that "multiplier" is if you make loans to people, who then deposit that money BACK into another DDA in your bank (and do NOT withdraw the currency to spend that loan money).

So, if you loan out $100,000 to someone AND they deposit it back into your bank... then you will:

a) be required to hold $10,000 in additional money in reserve (currency or on deposit w a Fed Reserve bank). -- Bringing your total reserves to $110,000.

b) be able to make an additional loan of the $90,000 balance.

c) the above continues ONLY so long as that money remains in your bank... the minute any of your DDA customers begin to withdraw their money, your total desposits go down, your remaining reserves go down, AND your multiplier goes down.

d) IF YOU ARE LUCKY then the person who took that loan spends that money IN YOUR COMMUNITY and it is redeposited in your bank (raising your deposits, your reserves, and your *potential* multiplier).
​

The only way to loan out $10,000,000 (the proverbial 10 MILLION) -- is if you LOAN OUT EVERYTHING you have -- AND your depositors do NOT withdraw money, AND money withdrawn or loaned STAYS in your community and re-enters YOUR BANK... AND you are basically the ONLY bank in town.

If the money leaves the community... and doesn't come back quickly, then it's GONE (aka your community has a "trade deficit").

And if you DO manage to loan it all out, AND have it all redeposited in your bank... you will have to keep the entire $1,000,000 (1 million) ON RESERVE.

And you will have to HOPE and PRAY that... IN TOTAL your depositors (which includes your loan customers) NEVER "demand" or withdraw more than 10% of your total deposits in currency (because you have $10 MILLION in deposits, but only $1 Million on hand -- and at any given time you cannot "hand out" more than you have).

Actually, of course you can... but to do so you will need to BORROW additional "reserves" (currency) from either the Fed, or some other bank. And the instant you start borrowing reserves, you now have to pay interest on those reserves!

And you will LOSE MONEY and soon be bankrupt, because you are NOT charging enough interest to cover your OWN interest costs.

See, here you've gone off to LA-LA-LAND.

Because you don't understand that the 10% reserve causes the THEORETICAL LIMIT of the multiplier to be 10x... you simply think you can hit the multiply button on your calculator; and it doesn't work that way for you. (The FED has "infinite" credit only because it has the printing press, cranking out T-Bills which is sells to suckers, and FRN's when it needs them).

Your BILLION dollars consists of baloney... because you do not control or own an FRN printing press.

The max you would possibly have is $10,000,000 (10 million), and of that a full NINE million would be DEBT that shareholders have PROMISED TO PAY.

In truth, your BANK itself hasn't created ANY money... the "loanees" have created it as FUTURE PROMISES to pay it back.

(And never mind that there ARE regulations limiting loans to equity holders of banks... all you've done is convinced a lot of people to go into debt, and created a situation for a Bank that will VERY SOON experience a "run" and go bankrupt as a result -- the FDIC will "seize" your little institution, hand it over to JPMorganChase, and your shareholders will be stuck with shares worth $0 and a whole shitload of debt they will now have to pay to JPMorganChase, which will adjust the interest rates on those loans back up ASAP.)



The rest of this is pure baloney -- as ALL of it is built on your complete misunderstanding of how the 10x multiplier functions.

The 10x is a MAXIMUM POSSIBLE multiplier and applies to the "entire banking community" -- it is merely an extrapolation (inverse) of the 10% reserve ratio; and BTW that maximum is seldom actually reached in the case of local banks.

And in the end, all you would have done with this little "scheme" is added YET ANOTHER "bank" to the Federal Reserve banking system... you haven't made a profit, you haven't "stuck it to the man" -- you will have simply joined in the charade (and lost your shareholders at least $1000 each, and put them on the hook for even more debt).

There's some baloney in here too, I saw awhile back where the 10% was severly relaxed to eliminated.

 

[Cleaner44]

Maybe we can get a Federal Reserve printing press on ebay!

 

[BeFranklin]

There's some baloney in here too, I saw awhile back where the 10% was severly relaxed to eliminated.

Thats what I heard, in fact here it is right here. We need to start talking about these things again. When they passed the legislation, talk dropped to zero, but its going to be what causes all the messes in the next year.

This was also posted here at that time, but I googled it because its faster. Bailout gave them the power to reduce reserves to zero...

http://www.abovetopsecret.com/forum/thread395884/pg1

First, let's start by looking at the text of the proposed bailout at this handy-dandy link provided by SkepticOverlord.

The relevant section I'm speaking of is:


SEC. 127. ACCELERATION OF EFFECTIVE DATE.
Section 203 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 461 note) is amended by striking "October 1, 2011" and inserting "‘October 1, 2008".


So something from another piece of legislation is being pushed forward, in simple English.
That legislation in full can be found at this link.

The specific section amended is as follows:


SEC. 202. INCREASED FLEXIBILITY FOR THE FEDERAL RESERVE
BOARD TO ESTABLISH RESERVE REQUIREMENTS.
Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C.
461(b)(2)(A)) is amended—
(1) in clause (i), by striking ‘‘the ratio of 3 per centum’’
and inserting ‘‘a ratio of not greater than 3 percent (and which
may be zero)’’; and
(2) in clause (ii), by striking ‘‘and not less than 8 per
centum,’’ and inserting ‘‘(and which may be zero),’’.
SEC. 203. EFFECTIVE DATE.
The amendments made by this title shall take effect October
1, 2011.


So whatever this mumbo jumbo is authorizing, it's going to go into effect in Oct 2008 instead of October 2011. But what does it mean?

Right now, a bank does not hold every dollar you deposit with them in some big vault. If you deposit $1000, they are only required to physically keep a percentage of that in cash available for withdrawal. The remainder of the deposit is loaned out to other customers - credit cards, mortgages, etc. This is called fractional reserve banking. The banks only keep a FRACTION of what you deposit into your account in RESERVE on hand for withdrawals.

This works because, in normal times, the demand for withdrawals rarely exceeds what a bank holds in reserve. If a bank has, let's say, $1million in deposits, it may only keep $200k in cash on hand. If, over the course of a year, withdrawal requests only average $150k in cash, then the bank is operating normally and keeping up with customer demand. In abnormal times, such as the current environment, the demand for withdrawals can and will start outpacing what a bank holds in reserve. People get nervous and take their money out of the bank - also known as a "bank run." If that happens, the bank physically does not have the cash to meet its depositors' demand. They may be able to raise cash by taking a loan from another bank or selling assets, which keeps the bank afloat...but if they can't do this, then we see an IndyMac situation.

But what does this have to do with the text in the bailout bill?
Well, that ratio of about $.80 loaned out for every $1 in reserve not only protects the bank (somewhat) in normal economic times, but it also prevents an excess of credit money (or commercial money) being created. Let's say a bank loans out $800k of its $1million in deposits. It has effectively released an extra $800k into the market via credit.

This tends to balance out as loans are paid back....but what happens when loans aren't paid back? The bank can seize assets (foreclose on a house) and try to resell them to recoup their depositors' money. What happens if they can't resell the asset (a foreclosed house, for example)? The bank now has lost its depositors' money and must find another way to honor withdrawal requests. Again, in normal times this tends to balance out as banks make profit in other ways, but when huge numbers of loans are in default, we start to see banks collapse.

Now. The root of this massive issue comes down to that ratio. There's a cap on how much a bank can lend out, based on how much it holds in deposits (reserves).

What this amendment in the bailout bill does is allow for a bank to hold zero in reserve. It removes that cap. If a bank holds $1million in deposits and this bill passes, as of October 1st the bank can loan out all $1million of those deposits. It can loan out more than that.

It allows a bank to create money by loaning out more money than it physically can back!

What happens when money is created at an explosive rate with nothing to back it? We're seeing it happen in Zimbabwe right now. It's called hyperinflation - only this money isn't being created by the Fed. As things stand, it will be created by the banks by removing any controls they previously had on issuing credit.

THIS is how they want to save the economy???

 

[BeFranklin]

So with the "zero reserve" requirement in the new bailout, I suggest we start our own bank for when they reduce it to that so we can inflate forever.. To the moon!