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Wonder why no banker went to jail after the Great Financial Crisis? The reason is simple: it was the bank’s money.

The biggest secret about modern banking goes back to 1848 and a case before Parliament in the United Kingdom. The case Foley Vs Hill forms part of the foundational cases relating to English banking law and the nature of a bank’s relationship with its customer in relation to the account.


Here are the highlights:

“Money, when paid into a bank, ceases altogether to be the money of the principal; it is then the money of the banker, who is bound to an equivalent by paying a similar sum to that deposited with him when he is asked for it.” [Emphasis mine]

“…The money placed in the custody of a banker is, to all intents and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable to the principal if he puts it into jeopardy, if he engages in a hazardous speculation; he is not bound to keep it or deal with it as the property of his principal; but he is, of course, answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.” [Emphasis mine]

“It is quite clear, that a banker is not to be considered a trustee for his customer in the legal sense of the term. Money advanced by a customer to a banker is a loan, and constitutes a debt. If it were necessary to refer to authorities in support of this proposition, I might refer to Sims v. Bond, in the Queen’s Bench, where it was laid down, that sums paid to the credit of a customer with his banker, though usually called deposits, are in truth loans to the banker. And that is in accordance with the doctrine of Sir Grant in Devaynes v. Noble. He says, ‘There is a fallacy in likening the dealings of a banker to the case of a deposit, to which, in legal effect, they have no sort of resemblance: money paid into a banker’s, becomes immediately a part of his general assets; and he is merely a debtor for the amount.’”



What you consider a deposit is not a deposit. As soon as you hand over your money to a bank, it ceases to be your property. You have, in effect, loaned your money to the bank. This is the reason you get a small return on your savings account.

This is why owning precious metals is a paradigm shift in your portfolio. You are not owed your gold and silver. You own it.

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