why are banks necessary?
Banking is necessary. Banks are not.
Banks are needed to secure our money, so that we don’t have to worry about it being stolen or lost. Banks provide this service to us. The premise is that they provide a level of security for us that we cannot, or are not willing to, provide for ourselves; eliminating or mitigating the risk of loss of us being the custodian of our own money.
Banks have additional services they may provide for us, such as investment vehicles, insurances, savings, checking, loans for vehicles and homes, etc. Additionally, there is a certain level of convenience provided by being able to access ATMS across the globe, digital mobile banking, or transference of money, exchange of money from one currency to another, etc. And then there is the issue of accessibility and transportability of your money. In theory, and for the most part in practice, this is the role traditional banks are supposed to play and the value they bring to you.
In today’s global marketplace, which is becoming more digital each day, banks can play a pivotal role, but they may also pose a risk to you, depending on your goals with money and how it impacts your life.
There are alternatives and various forms of money, i.e. Gold, Silver, Crypto, Digital Gold/Silver, barter, etc.
Remember, the bank is not your friend. It’s an investor, and you are its investment! You put your money in the bank. They lend that money to someone else at high interest and pay you back at a very low interest rate. These are the facts.
barter
Dating back to the origin of mankind, before the introduction of money, communities and whole societies utilized the barter system for trade.
Bartering is the exchange of goods or services for other goods or services. Individuals bartered directly, but this method had limitations, particularly when immediate needs and the timing of those needs didn’t coincide. For example, someone might swap a bag of corn for a bag of beans and call it an even exchange; or someone might trade the repair of a wagon wheel in exchange for a blanket and some coffee.
One major problem with the barter system was that there was no standardized rate of exchange. What would happen if the parties involved couldn't agree that the goods or services being exchanged were of equal value, or if the person in need of goods or services had nothing the person who had them wanted? No deal! To solve this problem, humans developed what is called commodity money. Estimated dates: 9000 BC.
commodity money
To supplement barter systems, traders began exchanging items of tangible value, such as salt, tea, tobacco, crops, grains, seeds, spices, livestock, or animal pelts. These commodities served as early forms of currency but had drawbacks due to their bulkiness, transportability, and perishability.
However, using commodities as money created difficulties. For instance, lugging heavy bags of salt or moving cattle around could prove impractical or logistically difficult. Using commodities for trade led to other problems as well, as many were difficult to store and could also be highly perishable. When the commodity traded involved a service, disputes also arose if that service failed to live up to expectations.
Estimated dates: 9000-6000 BC.
cowrie shells
Cowrie seashells were valued for their durability, uniqueness, and aesthetic appeal and were widely used as currency in various cultures. Estimated dates: 2000-1200 BC
metal coins
The invention of metal coins first appeared in China. They marked a significant advancement in the evolution of money.
Coins made of precious metals like bronze, copper, silver, and gold became standard forms of currency. They were stamped with symbols or seals to denote their authenticity and value.
Lydians became the first in the Western world to make coins. Metal was used because it was readily available, easy to work with, and could be recycled.
Soon, countries began minting their own series of coins with specific values. Since coins were given a designated value, it became easier to compare the cost of items people wanted.
Estimated dates: 1000-700 BC.
paper money
Paper money emerged as a convenient alternative to metal coins during the Tang Dynasty in China, around the 9th century. Initially introduced as promissory notes, paper currency evolved into printed currency issued by governments and backed by reserves of metal currency.
Estimated dates: 960-900 AD.
digital money and bitcoin
A pivotal point in the evolution of money
Released as open-source software in 2009, Bitcoin is a cryptocurrency that was invented by an anonymous person (or group of people) who used the pseudonym Satoshi Nakamoto.
Bitcoins are digital assets that serve as the reward for a process known as mining and can be exchanged for other currencies, products, and services. They employ robust cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
Records of these transactions are known as blockchains. Each block in the chain contains a cryptographic hash of the previous block, a timestamp, and transaction data. Blockchains, by design, are resistant to data modification, and by design are immutable.
As of August 19, 2018, there were more than 1,600 unique cryptocurrencies available online, and the number continues to grow. Active vs. Inactive Cryptocurrencies: Many cryptocurrencies are inactive or have failed. Reports indicate that over 50% of all cryptocurrencies have not succeeded.
In 2025 the number of active cryptocurrencies is significantly lower, with estimates suggesting around 10,000 to 17,000 are currently traded or have utility.
Key Factors for Growth of the cryptocurrency marketplace:
The rapid increase in the number of cryptocurrencies is largely due to low barriers to entry for creating new coins.
Many new projects are launched with the hope of quick profits, while others aim to solve real-world problems using blockchain technology.
This landscape continues to evolve, reflecting both innovation and volatility in the cryptocurrency market.
The top seven cryptocurrencies by market capitalization as of August 9, 2025 are pictured below: Top row from left to right: Bitcoin, Ethereum, XRP, Tether. Bottom row from left to right: Binance, Solona, USDC.
banking and representative money
The history of banking began with the first prototype banks, that is, the merchants of the world who gave grain loans to farmers and traders who carried goods between cities. This was around 200 BC in Assyria, India and Sumer. Later in ancient Greece and during the Roman Empire, lenders based in temples gave loans, while accepting deposits and performing the change of money.
With the introduction of paper currency and non-precious coinage, commodity money evolved into representative money. This meant that what the money itself was made of no longer had to be of great value.
Representative money was backed by a government or bank's promise to exchange it for a certain amount of silver or gold. For example, the old British Pound bill or Pound Sterling was once guaranteed to be redeemable for a pound of sterling silver. For most of the 19th and the early part of the 20th century, the majority of currencies were based on representative money that relied on the gold standard.
Beyond local markets these factors created a demand for more sophisticated and efficient financial institutions that could offer a wider range of services and products such as deposits loans bills of exchange letters of credit and insurance among the first to respond to this demand were the Medi, Bardi and Perzi families who found founded some of the earliest and most influential banks in Europe they established branches in major European cities such as Florence, Genoa, Rome, London, Paris and Barcelona.
They used their banking activities to finance their trade operations as well as to serve the needs of other Merchants Nobles and rulers. The development of banking spread from Northern Italy throughout the Roman Empire and in the 15th and 16th centuries to Northern Europe.
However, this banking system was not without its risks and challenges. The banking system was fragmented, meaning each bank was issuing its own currency that was backed by gold or silver reserves. There were many different types of bank notes in circulation each with a different value and quality. This created problems for trade and commerce as people had to exchange their bank notes for coins or other bank notes at different rates and fees. Moreover, the banks were vulnerable to economic shocks such as famines plagues or inflation.
How is Fractional Reserve Banking stealing your money?
FRACTIONAL RESERVE SYSTEM. Banks operate under a Fractional Reserve System which means they keep only a fraction of their deposits as cash reserves. Typically, between 10-20%. They lend out the rest to earn interest.
This boosts money and credit in the economy, but it also exposes them to the risk of not having enough cash to meet the demands for withdrawals without a central authority to regulate them.
Banks decided their own Reserve Ratios which often left them short of cash. During crisis when people feared their bank might fail or run out of money they withdrew their deposits en masse, causing a bank run.
Even if a bank was fundamentally sound and not at risk of insolvency, the bank run could quickly turn it into a failing institution. Moreover, a bank run on one bank would usually trigger a chain reaction affecting other banks in the entire financial system, creating widespread instability and Chaos.
This U.S. presidenT THOUGHT central banking WAS DANGEROUS
Jefferson's thoughts on central banking
Thomas Jefferson, the third President of the United States and one of the nation’s Founding Fathers, expressed deep skepticism about central banking, famously stating: “I sincerely believe that banking institutions are more dangerous to our liberties than standing armies. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.”
WHAT IS THE FEDERAL RESERVE SYSTEM AND IT'S REAL PURPOSE?
THE FEDERAL RESERVE SYSTEM: Central Banking System of the United States of America.
Although it is not a Constitutionally established institution, nor an official US Government entity, it wields world changing power.
It was established in 1910 when six high-powered bankers gathered secretly at a private club on Jekyll Island, Georgia. It is estimated that these men represented one-fourth of the total wealth of the entire world. Their names were: 1) Nelson W. Aldrich, Republican “whip” in the Senate, Chairman of the National Monetary Commission, father-in-law to John D. Rockefeller, Jr. 2) Henry P. Dawson, Sr., Partner at J.P. Morgan Company, 3) A. Piatt Andrew, Assistant Secretary of the Treasury, 4) Frank A. Vanderlip, President of the National City Bank of New York, Representing William Rockefeller, 5) Benjamin Strong, head of J.P. Morgan’s Bankers Trust Company, later to become head of the system; 6) Paul Warburg, a partner in Kuhn, Loeb & Company, representing the Rothchilds and Warburgs in Europe.- (Source: “The Creature from Jekyll Island” by G. Edward Griffin).
The result of their meeting, (which some deem a conspiracy to defraud Americans and the world of their finances), was a charter presented to Congress in 1913 and established the contractual relationship with the US Government. The Federal Reserve was established on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law. The context of the establishment of the Fed was that there was a need for a central bank. This became evident after the financial panic of 1907, which highlighted the lack of a stable monetary system in the U.S.
Legislative Process: The Federal Reserve Act was introduced by Congressman Carter Glass and was shaped by debates on the control of the central bank, balancing private and government interests.
Significance: Presumably The Federal Reserve System was created to provide a safer and more flexible and secure monetary and financial system for the nation. This action bound the US Government to abide by the actions of the Fed, without absolute oversight. The President, nor any branch of Constitutional Government has any power to do anything but accept the decisions of the Fed. Why? Because the Fed is not Federal! The Fed has never been audited!
It is privately owned and acts on its own directives and desires, irrespective of the economic needs of the people.
Reserve Requirements: As on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institution!
Is your money actually at the bank, if you go to get it, with 0% reserve requirements? Have you tried to withdraw a sum of money, even $5-10K, and had the bank tell you it would be available in several days? What does that tell you. Are you comfortable with that level of risk for your money?
And perhaps you already know that the Fed can print all the money it wishes and charge whatever rates to its banks, (which are your banks), as well as charge interest to the US Government for the money it lends to the government.
Abolition of the Federal Reserve System:
According to G. Edward Griffin, Author of "The Creature from Jekyll Island" there are at least seven profound reasons to abolish the Fed.
- It is incapable of accomplishing its stated objectives
- It’s a cartel operating against the public interest
- It is the supreme instrument of Usury
- It generates our most unfair tax
- It encourages war
- It destabilizes the economy
- It is an instrument of totalitarianism
SHOULD WE ABOLISH THE FED?
From Congressman Massie’s website:
Representative Thomas Massie of Kentucky. Washington, D.C. Representative Thomas Massie (R-KY) announces the introduction of H.R. 1846, the Federal Reserve Board Abolition Act. Rep. Massie's legislation abolishes the Board of Governors of the Federal Reserve and the Federal Reserve banks. It also repeals the Federal Reserve Act, the 1913 law that created the Federal Reserve System. Senator Mike Lee (R-UT) leads the companion bill in the United States Senate, S. 869.
"Americans have suffered under crippling inflation, and the Federal Reserve is to blame," said Rep Masie, "During COVID, the Federal Reserve created trillions of dollars out of thin air and loaned it to the Treasury Department to enable unprecedented deficit spending. By monetizing the debt, the Federal Reserve devalued the dollar and enabled free money policies that caused high inflation.”
The gold standard for our money
The gold standard of financial collateral. -Constitutional money. There are only two specific references to money in the Constitution: “Congress shall have the power …to coin Money…” and, “No State shall… coin money; emit Bills of Credit; make anything but gold and silver Coin a Tender in Payment of Debts;…” Combined, these seem to imply that only gold and silver coin, created by the federal government can be money.
However, that has never been the interpretation. Money, which is representative of commodities of all kinds, of lands, and of everything that is capable of being transferred in commerce.
Bank notes or bills of credit issued by authority, and exchangeable for coin or redeemable, are also called money; as such notes in modern times represent coin and are used as a substitute for it.
The Federal Reserve was established on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law.
Richard Nixon announced the end of the U.S. dollar's convertibility to gold on August 15, 1971. This decision was part of a broader economic policy response to rising inflation and a looming currency crisis. This course of action ended the direct convertibility of the U.S. dollar to gold, effectively marking the end of the Bretton Woods system.
Background of the Nixon Decision:
The U.S. dollar was pegged to gold at a fixed rate of $35 per ounce under the Bretton Woods system established after World War II.
By the late 1960s, the U.S. faced a surplus of dollars in circulation, which exceeded its gold reserves, leading to concerns about the dollar's stability.
Other countries began demanding gold in exchange for their dollar reserves, putting pressure on the U.S. to maintain its gold commitments. The key actions that were taken included action Nixon took on August 15, 1971. He implemented several measures including suspension of the convertibility of the dollar into gold, effectively ending the Bretton Woods system. Imposing a 90-day freeze on wages and prices to combat inflation, and instituting a 10% import surcharge to protect the U.S. economy from foreign competition.
The action taken by Nixon marked a significant shift in U.S. monetary policy, transitioning the dollar to a fiat currency system. A very dangerous move that would have an extremely negative impact on the economies of entire world.
fiat money
If our money is not backed by anything; what is it really worth?
Representative money has now been replaced by fiat money. Fiat is Latin for "let it be done."
Money is now given its value by government fiat or decree, ushering in the era of enforceable legal tender, which means that by law, the refusal of "legal tender" money in favor of some other form of payment is illegal.
Fiat money like the US Dollar no longer has the backing of anything except the ”good faith and credit of the US Government”.
Its value is only because the people believe it has value. It does not represent any real-world tangible or fungible asset.
Now you know why it has lost its value so much. Being aware of this should help you plan for your financial future, since we are never sure what the Fed is going to do and how that is going to affect the US and the global economies.
All modern banks are fiat. In fact, this is the first time in history that no bank in any country has its currency tied to gold or silver. The whole world of conventional banking is fiat!
Fiat money gives the power to the government. Gold, which is real money keeps the power with the people.
The threefold purpose of retail banking is essentially to hold and keep secure your money (deposits), to lend money (loans), to provide a convenient and safe way for you to transact commerce through their institutions (financial services). For this they are entitled to charge fees and collect interest. They represent that your money is secure and available to you upon your demand.
There is a competitive relationship between gold and national fiat currencies. Gold is what protects the people from the reckless policies of government. Gold is governments chaperone.
Gold is an enemy of government, but the friend of the people.
Always remember: Banks run the world.
are there alternatives to banking? yes...
Banking Alternatives
Credit Unions are typically nonprofit organizations that are owned by their respective members. They have lower fees and better interest rates on loans and savings than traditional banks. The limitations are that Credit Unions have fewer products to offer than traditional banks.
Online Banks are banks that operate exclusively online and have no physical branches. They typically offer lower fees and higher interest rates on loans and deposits because they have substantially lower overhead costs. Customers have no interpersonal relationship with a banker, and therefore customer service may be less.
Community Banks are the way we “used to do business”. You will receive personalized service, and the banker may actually know your name! Community Banks have stronger ties to the local economy, lower fees and better rates, with a more tailored service, but generally less digital banking options.
Neobanks are digital only banks that offer their services through Apps. For the most part, the user interaction is intuitive. There are lower fees than traditional banks and more creative and innovative feature options. Neobanks may not offer loans.
Digital Fintech Banking options include one-to-one, peer-to-peer payment apps with options to split a bill/ticket and are driven by an individuals' digital wallet on their phone. These payment and banking apps probably will lack the range of products and services and may not include the insurances and protections available through other banking means. However, these features seem to be coming online as the digital currency playing field expands its offerings.
Modern banking doesn’t need vaults, it needs code. What you borrow isn’t real cash, it’s synthetic credit, numbers on a screen; not backed by anything of tangible value.
Alternative money and currencies:
Cryptocurrencies: The advent of crypto has opened a whole new world of possibilities for peer-to-peer transactions, P2P lending and borrowing as well as earning interest on “staking” digital assets. Cryptos employ robust cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. They can be traded on crypto exchanges, which may be “centralized” or “decentralized”.
Decentralized finance (DeFi) refers to a cryptographic financial system built on blockchain technology that operates without traditional intermediaries like banks or brokerages. It allows users to conduct financial transactions directly with one another. Services such as lending, borrowing, trading, and earning interest through smart contracts on public blockchains, primarily Ethereum, XRP and AAVE, among others.
Key Features of DeFi:
Peer-to-Peer Transactions: Participants conduct business without the need for middlemen.
Smart Contracts: These are self-executing contracts with the terms of the agreement directly written into code, ensuring transparency and security.
Lower Costs: By removing intermediaries, DeFi can reduce transaction fees and costs associated with traditional finance.
Speed of transactions: The function of blockchain technology is to create an immutable, autonomous and speedy transaction, without the delays of traditional banking and wire services. Digital funds can be sent or received usually within seconds or minutes around the globe, not days such as is the case with banks. And transactions are transparent: All transactions are recorded on a public blockchain, allowing anyone to verify them.
Global Reach: DeFi services are available to anyone, regardless of location, as long as they have internet access.
Risks of DeFi:
Market Volatility: The value of assets in DeFi can fluctuate significantly, leading to potential losses.
Security Risks: DeFi platforms can be susceptible to hacks and coding errors.
Lack of regulatory oversight and built in uncertainty: The lack of regulation can expose users to risks, including scams and fraud.
DeFi represents a shift towards a more open and inclusive financial system, leveraging technology to democratize access to financial services. It is fast gaining ground as the “new” money.
Gold and Silver: Owning gold and silver have historically been a safe haven from the ebbs and flows, and uncertainty of the stock and bond markets, and other traditional asset classes. Physical gold and silver carry a certain benefit but also embody the risk of holding them personally.
A solid waterproof and fireproof safe in a secure location may be suitable for some but others prefer a custodial account where their gold and silver is vaulted at a secure location. Additionally, there are sites that digitize the physical gold and silver and you can buy, sell and trade them online. The disadvantage to this, is that you only have access to your assets online, not physically.
There are also some companies coming online that actually digitize the unmined gold and/or silver and secure your assets through digital tokens on the blockchain. This approach though novel may be a consideration for those that oppose the economic, environmental and social harms that can be caused by mining physical gold and silver.
Barter: Direct peer-to-peer barter can be a most powerful means of “money”. You can trade something that you own which you no longer need or want for that product or service another person has, which they have a surplus of or no longer need. This is Americana as you can get!
Trading a used lawnmower for a shotgun, or food and clothing for firewood and coal. Look around your house and see how much “stuff” you have that you don’t need.
The average household in American has between $10-15K of “stuff” in their attic, garage or basement. This can be real “money” to you, especially in times of great need, or disasters; manmade or natural.
Organized community barter exist within barter “exchanges” in various cities around the country.
Members of the barter exchange can trade with one another using barter “dollars” or “tokens” that represent the value of the products and services “listed” on the exchange.
These trade exchanges generally operate online. They charge a small cash fee to join, sometimes a monthly fee in cash and /or trade dollars, and generally a buy or sell side transaction fee in cash. Although you are paying fees in cash, you're still ahead of the game when you barter in this manner because you are trading a product or service at the cost of what you paid, but you are getting a product or service at retail. The difference is your margin of profit.
A combination of cash and barter can make for a very interesting leverage tool to help you build or secure your personal and business finances.