Gold Reserves
"Secondly," Fabian said, "some people have been excavated and are making their own gold coins. I suggest we pass a law so that anyone who finds gold nuggets must hand them over. Of course, it will be paid with cash and currencies. "
Saving
The next stage of the plan began. Until now, People Fabian was paying to save money. To attract more money into the vault Fabian offered to pay depositors 3% interest on deposits.
Most people believed he was paying that money to borrowers at 5% and profit was 2% difference. Also, people did not ask much, because you get 3% was far better than being paid to deposit money in a safe place.
The amount of savings grew and with the additional money in the vaults, Fabian was able to provide $ 200, $ 300, $ 400 to $ 900 for every $ 100 in notes and coins held in escrow. He must be careful not to exceed this factor of 9 to 1, since a person out of ten, you remove the deposit required to use their money. If there was not enough money available when someone needed it, people had begun to suspect, as the deposit books showed exactly how much they had deposited.
Beyond this, over $ 900 in accounting entries Fabian lent by writing checks himself, could claim up to $ 45 of interest, (45 = 5% 900). When the loan plus interest was returned ($ 945), $ 900 was canceled the debit column and Fabian kept the $ 45 interest. Therefore, he was more than happy to pay $ 3 interest on the $ 100 originally deposited, which had never left the vault. This meant that for every $ 100 they held in trust, could obtain a 42% gain, while most people thought he was earning only 2%. The other goldsmiths were doing the same thing. They created money in the air, just signing a check, paid and charged interest on top.
Credit
True, they were not doing bills, the government printed the bills and gave them to the goldsmiths to distribute. The only expense of Fabian was the small printing fee. However, they were created money "claim" that came from nothing and charge interest on it. Most people believed that the money supply was a government operation. They also believed that Fabian was lending them the money that someone else had deposited, but there was something strange: no deposit decreased when Fabian gave a loan. If everyone had tried to withdraw their deposits at once, the fraud had been discovered.
Emission
There was no problem if someone asked for a loan in coins or bills.
Fabian merely explained to the Government that the increase in population and production required more notes, and obtained for the small printing fee.
source: economia.com.mx
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