Hey All,
I am not sure how much of this is true - but I read that the Dark Secret About Money is not known by 99% of People & the Banks do not want us to know about this secret as well. Have you heard about this mysterious 'Money Dark Secret,' and if so, could you share your thoughts about the same in the comment box below?"
This secret typically involves strategies or aspects of managing money, investing, or financial systems that can significantly impact one's wealth and financial stability.
So what is the Money Dark Secret here? Most of the money in the economy is not in its physical cash form but rather they are the digital entries in bank accounts, created through the lending process. This money creation power is often poorly understood by us i.e. we the people and the same can have significant implications for the economy, including inflation and financial stability. Lets try to understand the same with the help of an example::
As we know that banks have the power to create money through a process known as fractional reserve banking, so lets take this example to understand the Money Dark Secret
- Initial Deposit: Let's say a person deposit $1,000 in his bank account as a normal process to save the money.
- Reserve Requirement: As part of the fractional reserve banking the bank is required to keep a fraction of this deposit as reserves, typically a percentage set by the central bank (is like 10% lets take this as an example). Therefore in our example, the bank must keep $100 as reserves and can lend out the remaining $900 to any person looking out for a loan or mortgage against some assets like gold or loan against property it could be anything.
- Lending and New Deposits: The bank lends out the $900 to one of its prospect customer and he then deposits it into their account at the same bank. The bank, in turn, is required to keep 10% of this new deposit as reserves ($90) and can further lend out the remaining $810. Do you see where this is going???
Deposit -> Loan -> Deposit -> Repeat and Repeat.
- Keep Repeating: This process just continues, with the bank keeping a fraction in reserves and lending out the rest each time. As this cycle repeats, the total amount of money in circulation can far exceed the initial $1,000 deposit and you can start to picture how money seems to be created seemingly out of nowhere.
The banks are making Million and much more we have no Idea? So what can we do about all this? LOL franking speaking Nothing.. We can sit back and watch the banks make money, and that's about it. But there's a way we can get in on the "money" action too. Maybe we can also play the game on MONEY here..besides printing money banks also invests in assets and makes the money work for them. So may be we can also follow the same principle and invest in assets so that money works for us as well... cheers
What is this - Money Dark Secret that 99% of People Don't Know?
Have Your Say on Money Dark Secret...
Did you know about Money Dark Secret? OR any other secret associated to money? Money Vs Happiness? Let me know your thoughts on the comment box below?
#money #investment #secret #dark #defi #moneysecret
Best Regards
Image Courtesy:: leofinance, twitter - @LimitlessLif3, pro canva,
PS:- None of the above is a FINANCIAL Advice. Please DYOR; Do your own research. I've an interest in Blockchain & Cryptos and have been investing in many emerging projects..cheers