What Schools Will Never Teach You About Money By Robert T. Kiyosaki

Assets
BALANCE SHEET
Liabilities
Income
Expenses
Income
Expenses
Assets
$100
$100
BALANCE SHEET
Liabilities
INCOME STATEMENT
INCOME STATEMENT
Banker
Saver

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Chapter Three
Unfair Advantage
97
96
Simply put, for every dollar you save, the bank can lend out a specific 
multiple of your dollars. For example, let’s say you save $1 with a 
fractional reserve of 10. The banker can lend out $10. Like magic, 
your $1 becomes $10, which the banker lends out at high interest 
rates, especially on credit cards. This is how the banks make money
from debtors and loses money from savers and why bankers love 
debtors—the bigger the better.
If the government wants to increase the money supply, the fractional 
reserve is raised to, let’s say, 40, which is what the SEC (Securities and 
Exchange Commission) allowed the biggest five banks to do in order 
to save the economy in 2004. This 1:40 fractional reserve caused a 
massive bubble and today we are in a global crisis of debt, debt that 
cannot be repaid. 
When debtors could not repay their loans, savers lined up outside of 
banks to get their money back. This is called “a run on the bank.”
A run on the bank is caused primarily by the fractional-reserve system, 
a system that allows a bank to lend out more money than it holds
in deposits.
If the government wanted to slow the economy, the U.S. Treasury and 
the Federal Reserve Bank would lower the fractional reserve to, let’s 
say, 5. That means, for every dollar you and I put in, the bank can lend 
out $5. With fewer dollars to lend, banks increase the interest rates to 
borrowers and the economy slows.
As you may have already noticed, the fractional-reserve system of 
banking destroys the purchasing power of your savings by magically 
printing money out of thin air every time you deposit your savings. 
This system is the same all over the world, a system mandated by the 
World Bank and the IMF, the International Monetary Fund.