Fundamental Flaw in Banking Systems a Major Factor in Global Financial Fiasco?
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Based on our review and systems analysis of the world finance and banking systems, an “apparent” fundamental design flaw in the banking systems. Although limited in access to some of the internals due to a lack of transparency (see below) one has been able to locate a fundamental design flaw in the world’s banking systems. Still pending introspection from other subject matter experts that can explain the findings, and or a response from the industry and regulatory authorities the flaw is outlined below.

The Flaw:
Currently the creation of money consists of a several general ledger journal transaction entries to cash, liability, asset and owner equity accounts regarding the principle amount of debt created.

The crucial flaw is that these debt transactions involve monetary units representing the interest portion of the debt transaction. Monetary units representing the interest portion of the debt transaction is not created in the money supply master account.
What was found is that money creation transactions are each tied to an interest liability transaction that shows as an asset in the lenders schedule of accounts and liability on the borrowers account.  If we look at the master chart of accounts and lender borrower equation we see that see that the money needed to balance the transaction requiring payment of interest does not exist in the system.

There are not GL journal transaction entries to create the monetary units needed to pay “all” of the interest back. This is not a problem that would cause the system to malfunction in the short term because physical tangible assets (collateral) can be converted into value on the borrower side of the equation and be used in lieu of dollars to pay the interest.

However the economic system based on computer models fails in the long term and this may be what we are seeing now.

Over time as a result of borrower defaults the tangible assets presented as collateral would be transferred to banking establishments, lenders controlling the symbol, allowing them to use their control of the monetary units and the master accounts to convert their intangible (valueless) fiat currency journal entries in real tangible physical assets with value.
Furthermore this flaw in the system can be covered up for many years by either simply creating more money (loan debt) with accounting entries allowing the borrowers to pay the interest while acquiring more debt or creating enticements to move money into M3 (IRA’s 401Ks) where it cannot be accessed or spent for decades by the true owner, effectively taking it out of circulation or more precisely giving control of it to others.

It is not clear how depreciation of assets, for example cars, is accommodated in the system and the borrower and lender relationship. Or the devaluation of currency that happens when money is transferred from the private sector to the public sector.
With this interest issue where there are no transactions on the monetary borrower’s side of the equation to allow payment of interest using monetary units. Some borrowers are forced to transfer ownership of tangible assets in lieu of not being able to settle their debt with monetary units.

This system can work for a time but not indefinitely, and the creators knew they would be dead or own enough physical assets before the realization of the flaw took place. A small number of borrowers will always end up defaulting each year and this accumulates until there are no more physical assets to be converted and the consumers are not owners but renters of tangible property.

Example of lack of transparency: the privately owned Federal Reserve recently stopped publishing M3 and will not give out the numbers because they want to keep it secret. There has been a suggestion to allow college and university students majoring in accounting and finance to audit the Federal Reserve as a National Project. Any of the big five CPA firms cannot be trusted to do the audit or can they?

In summary the inherent flaw in the systems is hidden by their complexity and also the fact that borrowers can also become secondary lenders the Federal Reserve being primary.

Still the truth is those that got in on this opportunity when it was ground floor allowing them to control large numbers of monetary units have guaranteed themselves Supreme Power until the system changes.

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