by Toufic Nayel

Created on: April 17, 2009   Last Updated: April 22, 2009

Teaching young children to count and make proper change when transacting a purchase is a good start, but it is definitely not the final answer to being money smart. If the younger generation is ever to have a chance to enjoy the same standard of living that their parents experienced then monetary education must begin with an understanding of how money is created. This is a huge challenge, since most parents I've spoken with don't really understand the Fractional Reserve Banking System. And it stands that if they don't understand then their children are doomed to make mistakes in their economic planning.

Some argue that this responsibility, to learn the in-and-outs of finance, is incumbent on the educational system. Let me point out that the educational system is geared to producing 'useful cogs in the system' rather than free-thinking individuals. It's understood that most people, especially those that use television as their primary information source, believe otherwise, but the fact are the facts. How else does one explain the dumbing-down of populations over the past few decades while the debt-load of citizens is skyrocketing? It stands that if the banking establishment expects consumers to be swimming in debt then they do not wish to educate their customers on sound financial policy.

The responsibility clearly rests upon parents to learn how the banking system works. Here is a primer to give those interested a head's up to how the Money Masters spin their web:

1) Money is created out of thin air and is a product of credit or debt. For example: when someone (let's call him Mr. Bob) fills out a credit-card application for let's say $10,000, and is accepted, then the bank opens it's safe and issues the money right? Wrong. That 'money' never existed before the applicant, Mr. Bob, signed his name to the form. The issuing bank simply creates an account and enters the amount on an electronic ledger and presto...money-out-of-thin air! (at interest to Mr. Bob of course!) This is referred to as: A FIAT monetary system.

2) Banks may only be required to maintain as little as 10% on account (pre-existing savings deposits) in order to lend out the remaining 90%. This is what is referred to as the fractional banking system. The simplistic and dangerous ideology rests on the assumption that a bank is seldom required to pay out in cash, all of what they hold on deposit. Hence their push for the electronic banking practices that have been shoved down the throat of consumers,

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