Hi there everyone!!

Once upon a time, before there was any money, individuals in small communities would exchange products and services with each other.

To have a standard unit of measurement that was generally accepted by all, things like shells, cocoa beans, feathers, or even pretty stones were used to denote value.

Gold and silver, being soft, attractive, and easy to work with, soon were adopted by many cultures as a new standard. Goldsmiths made trade much easier, by casting coins -- standardized units which could be measured to verify their purity.

The goldsmith needed a vault to protect his gold, and soon townsmen would come to the goldsmith to safeguard their gold as well. The goldsmith also made money by lending out his gold to fellow townsmen, charging interest.

Claim-checks (receipts) the goldsmith would write would be used in the marketplace for commerce, instead of the gold itself. This paper money was much more convenient because the exact amounts could be written down instead of being laboriously counted one-by-one.

Not everybody would ever come to reclaim their gold at once, so the goldsmith realized that he could lend out OTHER PEOPLE’S gold, charging interest, and making the interest money himself.

Eventually, depositors found out what was going on. But instead of demanding their gold back, they simply asked the goldsmith, now more banker than artisan, to cut them in on the profits of the interest he was collecting.

This was the beginning of banking. Depositors loan money to a bank at a small interest rate. The bank loans that money out at a much higher interest rate to a borrower. The difference in interest from depositor to borrower is kept by the bank to cover operations and profit.

However, this is not the way banking works today.

As industry expanded, demand for credit grew, and our goldsmith/banker had another brilliant idea! Nobody but him knew what was in the vault and so he could write claim-checks for gold (earning interest on it) that wasn’t even there. As long as everybody didn’t come at once to reclaim their gold, how would anybody find out?

Making money from nothing got to the banker’s head, and his ostentatious wealth was eventually questioned. The game was up, and the goldsmith went bankrupt. The phenomena of a “run on the bank” ruined individual banks and damaged public confidence in all bankers.

Instead of outlawing the practice of inventing money from nothing, the practice was legalized and regulated. Limits on “fictional loan money” were usually regulated at a ratio of 9:1, enforced by surprise inspection. Infusion of emergency money from a “central bank” would avoid a run on the bank for smaller institutions.

Today, our world banking system is based on this model of fictional loan money, with some accounts having ratios as high as 30:1. This system is not sustainable, and has led us into a collapsing economy of debt, where it becomes impossible to payback the initial capital plus interest, from a pool of currency that does not exist (or must be continually borrowed, creating more debt). Both individuals and governments cannot escape this financial slavery.

The healthcare crisis, social security, and the sub-prime mortgage meltdown are all examples of a now debt-based economy collapsing in on itself.

One way to escape this prison is to revert back to a barter network. This is why we build communities and networks. We exchange products and services with each other, avoiding the use of a government currency whenever possible. The quality of our life increases, without the need to pay interest or taxes on that trade.

Gold and precious metals may or may not become a standard once again. However, they have always retained their value over thousands of years, and it is always a good idea to have a backup means of currency.

Much of this information was paraphrased from “The Goldsmith’s Tale” found in the YouTube video, “Money as Debt.” It’s an entertaining cartoon which illustrates this story in more depth.


Discover how you can make a substantial passive income, and build your alternative currency portfolio, working with me in a unique humanitarian opportunity. Visit http://www.givewhileyoureceive.com/MrDistinct to learn more.

Let's love the world together...

[)anish /|hmed, Visionary

P.S. You may have heard about the sub-prime mortgage meltdown and the war on the middle class. But did you stop to think about what the new economy will look like and how you are going to survive? Will you have a source of income? Will the money you possess now have the same value in that economy?

Author's Bio: 

I am a blind, Pakistani albino. Really. That's who I am. I'm an entrepreneur, inspirational speaker, and best-selling author of "A Dictionary of Distinctions."

My vision is to help transform the lives of millions of people around the world through a new media genre: the convergence of entertainment and inspiration.

For example, I produced "What is Love?" -- http://www.TheLoveMovie.com -- a three minute movie on the Internet, now seen by a million people across 112 countries. My greatest passion is working with projects like co-producing hit shows (such as I DECIDE and SHIFT), and now working on a feature-length reality-based biographical movie of my life called "an Ordinary Story"!

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