Biblical Law and Government

Lesson Nine - Page 12

Savings Accounts

$25,000. $25,000.

Cash on hand

$25,000. $25,000.

Loan to 1st customer

Mortgage on home

Load to 2nd customer $100,000.

Mortgage on business $100,000.

_________ $150,000.

_________ $150,000.

Liabilities

Assets

(Owed to customers)

(vault cash + mortgages)

At this point the bank has created $125,000 in new money. ($25,000 - $100,000). The bank’s gross profit is as follows:

Interest paid on savings. Interest charged to customer

5% x $25,000. . . . . . . . . . . . . . $1,250.00 15% on $125,000. . . . . . . . . . . $18,750.00

The Bank’s gross profit

$18,750. $1,250. . . . . . . . . . . .$17,500.00

The bank made $17,500 on the customers savings (deposits) of only $25,000! That is a 70% interest return on the customer’s money!

(47) By the modern definition, usury is excessive interest. In your opinion, using the modern definition, is a 70% interest return usury? ( ) Yes. ( ) No.

The bank can keep up this “sleight of hand” as long as people do their business with checks (or com puters) rather than cash. Now watch what happens when the loans of credit are repaid.

Savings Accounts

$25,000. $25,000.

Cash on hand

$25,000. $25,000.

Loan to 1st customer

Mortgage on home

Load to 2nd customer $100,000.

Mortgage on business $100,000.

_________

_________

Liabilities

$25,000.

Assets

$25,000.

(Owed to customers)

(vault cash + mortgages)

The payment of the loan principle covered the checks presented for payment. The $17,500.00 usury went into the banker’s pocket.

“The important aspect of this process from an economic stand point is that commercial banks create“money” by credit extensions to borrowers in the form of additions to checking accounts and, con versely, banks destroy “money” when borrowers later write down their accounts to pay the loans. commercial banks have the function in out economy of creating or wiping out checkbook money by increasing or decreasing loan volume.”

The above paragraph is quoted from “Your Bank” by David H. McKinley, Associate Dean and Professor of Banking, and George L. Leffler, Assistant Dean and Professor of Finance. Both are of Pennsylvania State University. Published by Pennsylvania Bankers Association, Harrisburg, PA.

Money Supply Charts are often seen in newspapers and magazines. When the money supply increas es bankers are creating money. When the money supply decreases they are destroying money.

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Ten Commandments Bible Law Course Sovereignty Education and Defense Ministry (SEDM), http://sedm.org