Fractional Reserve Banking – How to Create Money Out Of Thin Air

Patrick J. Herbert, Contributor
Waking Times

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin. Bankers own the Earth. Take it away from them but leave them the power to create money, and with a flick of a pen, they will create enough money to buy it back again. Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. But if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.” – Sir Josiah Stamp, president of the Rothschild Bank of England and the second richest man in Britain in the 1920s, speaking at the University of Texas in 1927.

Did you know that you are paying money plus interest on loans that were created with money that does not exist but only as numbers entered into a computer screen?

This is what the banking system refers to as Fractional Reserve Banking, and it is the biggest scam known to humanity.

  • Investopedia describes Fractional Reserve Banking as:

    “… a banking system in which only a fraction of bank deposits are backed up by actual cash on hand and are available for withdrawal.”

    This enables the bank to create a digital loan of any value while only having a fraction of actual physical assets on hand to back up that loan. The bank will justify a loan of any value so long as it has 7% – 10% of the total value of that loan in actual physical money.

    For example, for a bank to justify issuing a digital loan that represents the value of $100, it would only need to have $10 in actual physical cash. The remaining $90 that represents the remainder of that loan is created as numbers entered into a digital ledger by the bank issuing that loan. There is no actual physical money that represents that $90.

    While they can create this money out of thin air and loan it to you, you have the responsibility of paying it back, plus interest, with actual physical money.

    If you do not repay this loan, the bank has the legal right to seize your assets to cover the value of that loan that did not exist in the first place.

    What if I were to tell you that this outrageous scam is perpetrated on citizens of the United States by a privately held banking system that is independent from the federal government of the United States?

    What if I were to tell you that this banking system with foreign holdings, referred to as the “Federal Reserve”, is actually constitutionally illegal?

    Article 1, Section 8 of the Constitution clearly states that:

    The Congress shall have Power…To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”.

    This constitutional law has never been amended leaving us with the ultimate conclusion that the Federal Reserve is an illegal institution according to the document that is to be considered the absolute supreme law of the continental United States of America.

    What if I were to tell you that the paper currency, or fiat, issued by the Federal Reserve as an instrument of debt is also constitutionally illegal?

    Consider Article 1, Section 10 of the Constitution:

    No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts”. 

    This constitutional law has never been amended as well and, as considered above with regards to the supreme law of the United States, the “Federal Reserve Note” is therefore an illegal instrument of debt.

    How did this happen?

    The Federal Reserve came into existence with the Federal Reserve Act of 1913 signed into law by President Woodrow Wilson. It was derived from a secret meeting in 1910 on Jekyll Island off the coast of Georgia. It was there that Senator Nelson Aldrich met with Paul Warburg of Kuhn Loeb Investment House, Henry Davison of Morgan Bank, and Frank Vanderlip of National City (Citibank) to discuss the formation of a central bank. This produced what was known as the Aldrich Plan for banking reform.

    The Federal Reserve Act was not ratified by any single state in the union. By the time of 1913, the United States government had already undergone a tremendous transformation with the Act of 1871 (titled “An Act To Provide A Government for the District of Columbia”; “Acts of the Forty-First Congress”, Section 34, Session III, chapters 61 and 62).

    This was a strategy by foreign interests with the intent of establishing a new territorial government for the District of Columbia as a system of corporate government with state franchises with the ultimate intent of establishing an independent and privately controlled central bank that would control the currency, and the people, of a nation.

    This new corporate entity had previously adopted its own constitution derived from the national constitution, but without the national constitution’s 13th Amendment. The original constitution drafted by the Founding Fathers is titled “The Constitution for the united states of America”, whereas the new corporate charter is titled “The Constitution of the United States of America”. In legal parlance, the changing of the word “for” to “of” is significant.

    This was essentially an act of treason against the citizens of the United States as the government to which we are beholden was no longer subject to the consent of the governed, and the government was transformed into a corporate instrument for the expressed interests of the international bankers which operates under Private International Law, and not Common Law, which remains unchanged and unchallenged to this day (UNITED STATES CODE Title 28 3002 (15)(A)(B)(C)).

    “The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” – The Rothschild brothers of London writing to associates in New York, 1863.

  • About the Author

    Patrick Herbert is a software engineer, researcher, and writer who currently resides in Texas. He has been through some remarkable metaphysical experiences that led to a spiritual awakening and is actively pursuing ways to help to raise the awareness of others with regards to the elements of what we call the global conspiracy and how it affects all of our lives regardless of political disposition. Visit his website at

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