Your Gravity Defying Money Bazooka

By Financial Imaginer

What if there was a financial super weapon which can be used to multiply the firepower and reach of your money in ways you’ve never thought possible before? What if such a weapon is widely available already and unlocking it only takes a few well directed steps? What if you’d like to learn more about this? Read on.

Spoiler alert: Having been working in Wealth Management for most of my professional life, your gravity defying money bazooka and most powerful tool to build and multiply your wealth is: Credit!

Recently Jay Z rapped about how crucial he believes credit is for financial freedom.

from 2:29

“You wanna know what’s more important than throwin’ away money at a strip club? Credit

You ever wonder why Jewish people own all the property in America?

This how they did it

Financial freedom my only hope

livin’ rich and dyin’ broke

I bought some artwork for one million

Two years later, it worth two million

Few years later, it worth eight million

I can’t wait to give this to my children”

In this post we will first discover how money is made and multiplied in our world. In the second part of the post we will explore how to apply this knowledge for your own investments and pursuit of wealth.

Part 1: The Money Multiplier

Do you have cash in your pocket right now? Chances are, the answer is yes. Money, we all use it, want it and think about it. But did you ever reflect in more detail about where your money actually came from and how it’s being released into the system? Instead of arranging a field trip to the money factory, let’s explore further here.

Step 1: Central banks add [virtual] money in the form of credits to the balance sheets of the various commercial banks.

Step 2: The commercial banks will then release it to the end users in the economic system, be it in the form of account balances or in cash.

The fascinating outcome of this money game is that after a while, the final amount of money in the system will DIFFER from the original amount of money issued by the central bank as in step 1. In fact, it will be a multiple of the original amount!

Surprising? How come?

Well, commercial banks engage in two distinct types of activities. One on each side of their balance sheet: Deposit-taking and lending. Are they allowed to lend out the same amount as customers have deposited? No! Banks have to withhold a certain percentage of all deposits as a safety requirement. How much is defined by the so called “reserve ratio”. The reserve ratio or withholding rate can only be amended by the central bank.

How does that work in real life?

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/your-gravity-defying-money-bazooka/