Summary Continues:
Over time the goldsmiths became aware that most depositors never returned for their gold.
At this time they started to lend out some of the gold that was entrusted to them and kept
the interest they earned from the loan themselves. They then started to print more gold
deposit certificates than gold they had in reserve. They discovered they could lend out this
extra paper money and charge interest on it as well. This was the birth of fractional reserve
lending or in other words lending out more money than resrves you have on deposit. Really,
it was the beginning of an elabrorate scam that continues to this day. If you and I should
commit such acts, we would be jailed for fraud. Would you agree then, that it is definitely
in the bank's best interest for you to depost your money with them?
This is the end of the summary!
Thanks,
James
J M Global Marketing.
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