Michael Schemmann (2023),
BANK MONEY IN CRISIS pbk. 255 pages $22.70 USD |
BANK MONEY IN CRISIS
- Mock Deposit Lending & Accounting Fraud A new publication 27 March 2023 by Michael Schemmann,
Going to the roots of the tricks to the trade that cause these never ending banking debacles unmasked by John Maynard Keynes, Irving Fisher & John Kenneth Galbraith."
The power to create money is historically and remains the prerogative of the sovereign, which under the Constitution is the Congress/Parliament, exercised through various enactments by the
a governmental agency, the Central Bank the Fed in the US, the Bank of England in the UK, the ECB in the European Union, or the SNB Swiss National Bank in Switzerland.
Money is the common highway to transact our nations' Gross Domestic Products (GDP), which in the United States, for example, being the world's largest economy, came to some $24 trillion in 2022.
But the amount of legal tender in the form of Federal Reserve notes and deposits at the Fed is the relatively small amount altogether $5.3 trillion compared with $21.2 trillions created by commercial
banks, the private sector. Commercial bank money has no real existence because is only the result of double-entry bookkeeping in the accounts of each of 7,000+ US banks, and worse,
is NOT transferable except by way of offset during the daily payments clearing. The depositor cannot go to his bank and say, "show me the money." It isn't there. The teller may offer
Federal Reserve notes, the usual scanaior, meaning "cash" if the bank is "liquid."
The author's finding after decades of banking, public accounting, corporate crontrollership and university teaching, is that so called experts masquerading as university professors of economics lack the accounting
foundation on which banks rely, teaching false theory from textbooks without practical let alone professional experience. There's a saying in Germany that the doctorate degree, which is the univerrsity
teaching qualification, is the awarded for hauling the professor's luggage (Dem Herrn Professor die Koffer schleppen). Economics profs are telling their students, for example,
that bank loans can only be made if the general public provides the funds to the banks by way of savings.
And students and the public are told that banks are failing for lack of equity capital, which,
by the way, is on the wrong side of the balance sheet and cannot redeem deposits, because liquid assets are needed, and those are on the asset side of the balance sheet just to make the point.
The author was a student, too, and remembers. These professors do not know, let alone understand, that bank deposits are recognized and recorded at will from thin air in utter violation of accounting principles and are the
Achilles heel of our economies when the common highway to transact our GDP breaks down for want of bank liquidity, which is easy to fix if only the accounting profession would adhere to its own accounting
principles instead of closing their eyes as they did ushering in the Global Financial Crisis of 2007-2008 and, without fail, the current collapse in March 2023 of Silicon Valley Bank, Santa Clara, California, the second
largest bank failure in the financial history of the United States.
The subsequent failure of Credit Suisse a week later and its acquisition by UBS on 19 March 2023 is discussed in this publication in great detail. Contrary to the opinion of so called experts,
the new combined UBS + Credit Suisse is NOT too large to be bailed out, if need be, and Switzerland is not too small a country because it sits on 1.1 trillion foreign exchange reserves and gold,
whereas UBS + Credit Suisse's total deposits are only 731 billion, valued in Swiss frans currently at USD 1.09/CHF, and there would be no collapse of the Swiss franc's FX value either, as the experts have it.
There is that old discussion about contagion as if a banks' illiquidity was depending on the faith and loyalty of its depositors not to come and withdraw their deposits so long as the bank "shows them
money" on their monthly bank statements. Contagion would mean there is a virus out there, but there isn't. There is only accounting fraud in perpetuity back to the
Bank of Amsterdam founded in 1609 which was found to commit what was then a fraud and closed in 1820 (see BIS Working Paper 1065 January 2023,
but today is copied as the business model of the banks, the accounting profession aiding an abetting.
The author is a learned banker at Commerzbank in Germany, commercial banking at American Express Bank in Zurich and investment banking under Paul E. Erdman in Basel, Switzerland, a former commercial credit officer
at the Bank of Nova Scotia in Toronto, corporate controllership at Sandoz (Novartis) in Basel, Switzerland, auditing experience at KPMG and Touche Ross as a licensed CPA (State of Washington), and university
teaching experience as Chair and Associate Professor of Accounting & Finance in Bangkok and Almaty, Central Asia. He is the author of professional accounting, finance and banking books
and the Managing Director of the IICPA and AASBI, the Association of Accredited Schools of Business.
Safe and Sound Central Bank Accounts for Everyone
For everyone of us the federal and State governments maintain tax and social security accounts and a data base of our most sensitive personal information such as date and place of
birth, next of kin, telephone number, email and most recent street address, photo for facial recognigtion, height and weight, our finger prints as may be required for driver's license,
State ID or passport. So, why can only banks and some important entities have a Central Bank account?
Professor Merwyn Allister King, London School of Economics, Baron King of Lothbury KG, GBE, DL, FBA, born 30 March 1948, is a British economist and public servant who served as the Governor of the Bank of England from
2003 to 2013 the Central Banker in personam lectures and tells us with unquestionable authority that there is no reason why not only banks and special entities like insurance companies but every
individual should be able to have a bank account at his/her country's central bank (eg, the Bank of England or the Schweizerische Nationalbank in Bern), a public institution that is always liquid and cannot go bankrupt, ever.
Once the opportunity is opened to maintain deposits at the central bank for everyone, private and other banks are no longer "systemic", because people and businesses who foregoe their deposits at the risk-free central bank,
chose to do so at their own peril, which eliminates the need for government and central bank bailouts (so called "public liqquidity backstops") entirely.
"Bank accounts, either to make anticipated payments or to hold a liquid reserve of generalised purchasing power, will be with us indefinitely, and so therefore will be the
need for a pawnbroker for all seasons.
"One way to reduce the demands for deposits, and to mitigate the scale of operations of the pawnbroker for all seasons, would be for [the governments' Author] central banks to
allow anyone at all to open an account with them for purposes of making payments to others and to hold [100% safe Author] liquidity."
Merwyn King (2016), "The End of Alchemy. Money, Banking and the Future of the Global Economy." London: Abacus, pp. 284-285.
Official portrait: UK Parliament 18 December 2019.