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.