Don't Bank On

Don’t Bank On It! Also by Craig R. Smith Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil (co-authored with Jerome R. Corsi) The Uses of Inflation: Monetary Policy and Governance in the 21st Century Crashing the Dollar: How to Survive a Global Currency Collapse* Re-Making Money: Ways to Restore America’s Optimistic Golden Age* The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It!* The Great Debasement: The 100-Year Dying of the Dollar and How to Get America’s Money Back* The Great Withdrawal: How the Progressives’ 100-Year Debasement of America and the Dollar Ends* Also by Lowell Ponte The Cooling Crashing the Dollar: How to Survive a Global Currency Collapse* Re-Making Money: Ways to Restore America’s Optimistic Golden Age* The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It!* The Great Debasement: The 100-Year Dying of the Dollar and How to Get America’s Money Back* The Great Withdrawal: How the Progressives’ 100-Year Debasement of America and the Dollar Ends* *Works co-authored by Craig R. Smith and Lowell Ponte Don’t Bank On It! The Unsafe World of 21st Century Banking By Craig R. Smith and Lowell Ponte Foreword by Pat Boone Idea Factory Press Phoenix, Arizona Don’t Bank On It! The Unsafe World of 21st Century Banking Copyright © 2014 by Idea Factory Press All Rights Reserved, including the right to reproduce this book, or parts thereof, in any form except for the inclusion of brief quotations in a review. Printed in the United States of America. For more information contact publisher. Cover design by Dustin D. Brown, KrypticEye.com Editing by Ellen L. Ponte Portions of this book originally appeared in the following projects by Craig R. Smith and Lowell Ponte: Don’t Bank on It! (2014 White Paper) The Great Debasement: The 100-Year Dying of the Dollar and How to Get America’s Money Back and Crashing the Dollar: How to Survive a Global Currency Collapse and The Great Withdrawal: How the Progressives’ 100-Year Debasement of America and the Dollar Ends. Copyright © 2010, 2011, 2012, 2013 and 2014 by Idea Factory Press. All Rights Reserved. Portions of this book originally appeared in The Uses of Inflation: Monetary Policy and Governance in the 21st Century by Craig R. Smith Copyright © 2011 by Swiss America Trading Corporation All Rights Reserved. Library of Congress Data ISBN Number 978-1-4951-2423-5 First Edition - September 2014 Idea Factory Press 2725 E. Mine Creek Road, #1028, Phoenix, AZ 85024 Tel. (602) 918-3296 * [email protected] Updates, reviews and more are posted at http://www.dontbankonitbook.com Table of Contents Foreword by Pat Boone ................................................................................vii Introduction by Craig R. Smith ......................................................................9 PART ONE – Banking’s Evolution Chapter One – Breaking the Banks ................................................................21 Chapter Two – Time Machines .....................................................................47 Chapter Three – Fractured Reserve Banking .................................................61 PART TWO – Politicizing Our Banks Chapter Four – Dawn of the Fed ....................................................................83 Chapter Five – Banking Left ........................................................................ 105 Chapter Six – The Wars Against Tax Havens ............................................. 135 Chapter Seven – Political Bank Robbers ..................................................... 153 PART THREE – The Choice Chapter Eight – The Death of Banking (As We Know It) ........................... 179 Chapter Nine – A Future You Could Bank On ........................................... 201 Epilogue: The Gamble ................................................................................. 213 Footnotes ..................................................................................................... 221 Sources ........................................................................................................234 Dedication To my wonderful wife and best friend Melissa Smith, who makes me better each day and raised our daughters Holly and Katie to love the Lord with all their hearts. Also to my Pastor Tommy Barnett, who taught me that doing the right thing is always the right thing to do, and to always hold onto the vision Foreword by Pat Boone “Go to the ant, O Sluggard; consider her ways, and be wise. Without having any chief, officer, or ruler, she...gathers her food in harvest.” – Proverbs 6:6-8 Thrift, saving, honesty and alertness are time-proven virtues, taught by the Bible. Another book also helped me learn the value of thrift: the little bank book of my first childhood savings account, which taught the rewards of saving today for tomorrow. Today, however, government follows economist John Maynard Keynes’ idea that saving is bad because the thrifty are not spendthrifts. In our spendaholic Progressive politicians’ new Aesop fable, the lazy grasshopper is rewarded with free government goodies, and the industrious ant’s savings are confiscated to pay for this. In this book my long-trusted friend and advisor Craig Smith and former Reader’s Digest Roving Editor Lowell Ponte explain why your bank account is now punished and discouraged with near-zero interest, yet is at risk of being looted in at least 20 different ways. Thrift is still a great virtue, and saving is wise and rational if done right. Craig and Lowell show us how to reduce the huge and growing risks our bank accounts and the value of our dollar now face, and how to save our savings. “I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson “Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they...ever will do good.” – John Adams Introduction by Craig R. Smith “Money amassed either serves us or rules us.” – Horace Roman poet Could the bank we trust to safeguard our money now be one of the riskiest places to put it? I have known for years that strange and ominous things are happening to our banks and our other store of value, our dollar. Yet even I was shocked recently when this hit close to home. Imagine this happening to you: A friend told me that she had tried to withdraw $25,000 from her savings in cash at the local branch of a major bank where she has been a customer for many years. This was a friendly bank where smiling tellers greeted her by name. This bank had always been delighted to accept her deposits. Suddenly, however, it refused to honor her request for a sizable withdrawal. Worse, a teller patronizingly demanded that she explain why she was trying to take out this money – as if she were a child who needed their permission or approval, or a note from her father. My friend was stunned. This was her money, not the bank’s, she had always assumed. And what she intended to do with her own money was none of this bank’s business. However, not until the following day, when she returned with a lawyer, did the bank allow her to withdraw this money from her own account. When we looked into this, we discovered that more and more such bank refusals are happening, and that what my friend experienced is merely one telltale sign of many frightening risks now emerging in our banks, currency and economy. “Capital Controls” In January 2014, Stephen Cotton walked into the British building where he had banked for 28 years, a branch of London-based giant HSBC that calls itself “The World’s Local Bank.” He filled out a withdrawal slip for 7,000 Pounds [approximately $11,000] he owed to his mother. [1] The bank refused to let Mr. Cotton have money from his account. It literally demanded a letter from his mother. It also refused to let him withdraw lesser amounts equivalent to roughly $7,500 or $6,000. The bank at last let him take the equivalent of $4,500 from his savings, but refused to let him withdraw any more that day. Customers had not been informed of these arbitrary new rules that HSBC quietly imposed in November 2013. “You shouldn’t have to explain to your bank why you want that money,” said Cotton. “It’s not theirs, it’s yours.” Alas, under today’s laws he is mistaken. As we shall explain, your deposits in certain key ways belong to the bank. What you “own” is a deposit receipt, an IOU for what the law now sees as the bank’s “unsecured asset.” “All these regulations which have been imposed on banks allow enormous interpretation,” Member of Parliament Douglas Carswell told the BBC in a January 24, 2014 story. “It basically infantilises the customer. In a sense your money becomes pocket money and the bank becomes your parent.” “We have an obligation to protect our customers, and to minimize the opportunity for financial crime,” an unapologetic HSBC spokesman told the BBC. [HSBC, which is by some measures the world’s largest bank, in December 2012 agreed to pay a $1.92 Billion fine in a money-laundering case in the U.S. This record fine did not alter the bank affiliate HSBC Securities (USA) Inc.’s position as one of 21 privileged “Primary Dealers” of the Federal Reserve Bank of New York.] If the $121 Billion on deposit in HSBC’s dwindling 248 American branches disappeared because of theft or cybercrime, reimbursing account holders could cost the government’s Federal Deposit Insurance Corporation (FDIC) as much as one-fifth of its entire theoretical capability to insure all deposits in U.S. banks – a capability, at maximum, only about one-fourteenth of the at least $7 Trillion of FDIC-insured bank accounts. The FDIC, even with the promised help of the Fed and the U.S. Treasury, cannot under present arrangements insure the safety of more than about 7 percent of U.S. private bank accounts in a major financial crisis. HSBC depositors can be required to “provide evidence” that they will spend it in an HSBC-approved way before they can withdraw their OWN money - or they may find it frozen.

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