Fed Banking And How Safe Are Your Valuables 'Safe deposit boxes'

Dr. Ileana Johnson Paugh Friday, August 31, 2012

Safe deposit boxes

Over the years, on my trips to the local bank, I’ve watched people take their valuables to their vault, confident that the small or large safe rented on the premises would be the most secure place they could possibly keep their coin collections, jewels, extra cash, a valuable wine bottle, deeds of trust, a power of attorney, baseball card collection, Grandma’s pearls and diamonds, and many other unusual collector items. Who could possibly have access to their property as long as they had a key and paid their monthly rental dues?

There are those who do not trust banks and their operating hours – they buy expensive home safes, relatively easy to crack, or not-so-secure ones that determined thieves can carry out of the house undisturbed.

How safe are your valuables in the bank? After the 9/11 terrorist attacks, underground vaults in New York affected by the intense heat and smoldering fire that burned for weeks before they were accessed, did not fare so well. Documents were pulverized, pearls burned to a crisp, coin collections, jewelry, and ingots melted into a large mess, and everything else was charred so badly as to not be recognizable. Even Canadian silver ingots stored with the Federal Reserve Bank of New York melted. Heavy security guarded the area until the cache could be recovered safely from the underground caged deposits.

Technically, a bank is a private corporation with shareholders, whose interests are the primary purpose of its existence. A bank exists to make money for its stockholders. The depositors are just an inconvenience, customers whose money is used by bank employees to create more money for the bank and its owners. The depositors must pay a monthly fee for the privilege of lending money to others with little or no return on their deposit if you take into account the inflation rate. Rental safe deposit boxes take up precious space in the bank vault.

There is a plaque in Venice reminding passers-by of the fine and punishment for engaging in usury. Following into the footsteps of a Venetian condemned for usury, I crossed the Bridge of Sighs (tiny windows offered a convicted felon a last view into the gorgeous Venetian bay) from Palazzo dei Dogi, where the court and the Senate were located, into the dungeons of the prigione (prison) – it was a damp, dingy, dark, cold, humbling, and creepy experience.

Banking had become so dishonest that the tiny Venetian city-state ruled by a doge and a Senate, passed a law in 1361 that forbade bankers to use depositors’ money for their own interests – they had to allow the public to inspect ledgers and the actual deposit of coins.

In spite of the mentioned precautions, the bank of Pisano and Tiepolo lent money against reserves and could not meet depositors’ demand for their money in 1584, thus closing. We call this today a run-on-a-bank.

The government established the Banco della Piazza del Rialto (The Bank of the Rialto Square), named after the famous Ponte Rialto (Rialto Bridge) in Venice, one of the commercial points in Venice still in use today. The Banco della Piazza del Rialto was not allowed to make money from lending. “The bank was required to sustain itself solely from fees for coin storage, exchanging currencies, handling of transfer of payments between customers, and notary services.” (G. Edward Griffin, The Creature from Jekyll Island, p. 171)

A second example of honest banking was the Bank of Amsterdam, founded in 1609. G. Edward Griffin also describes the honest Bank of Hamburg as having excess reserves of silver deposits held against bank liabilities when Napoleon Bonaparte took control of the bank in 1813. (The Creature from Jekyll Island, p. 173)

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