Living in the Economic Past

by Bill Sardi
Jun. 17, 2010

I visited with my neighbors last night, a Christian Arabic family, whose relatives live in Nazareth, Israel.

The occasion was their son's 20th birthday, so we toasted with champagne and ate homemade birthday cake.

I laid a copy of Robert Kiyosake's new book, Rich Dad's Conspiracy of the Rich, on the table and urged their son to read it before he finished his formal education and didn't know a thing about money and how to keep it.

I briefly mentioned the problems caused by fiat money, fractional banking, etc.

My neighbor's brother was sitting at the table, and he said he did not know of fractional banking.

I explained it to him, that banks keep depositors' money as a 10% reserve and make 9-fold more money out of thin air and loan it out to home buyers, etc. I explained that banks offer 1.2% interest on saved money today and turn it into ten times more money, that a $1000 deposit would yield $12 a year in interest, but the bank would use that $1000 as a reserve to make another $9000 out of thin air, loan it at 5% interest, make $450 a year, and he would only make $12 a year on his money. This didn't seem to bother him.

The conversation drifted to gold. I said it might be wise to buy some gold to protect your wealth, if you have money in the bank.

My neighbor's brother said "We have gone through all this before. We have been told the U.S. dollar will become worthless and to buy gold. China and other countries will never let the U.S. dollar fold. They will prop it up. It will never happen."

My neighbor's brother went on to say that gold doesn't produce any dividends, that it is better to own stocks and to buy real estate.

Continued