Crime Against Humanity: the Holy GAAP, 24

Before we halt a third time in meditation (becoming a habit, isn’t it?), this time to confront the aforementioned worldwide financial bubble, and how these IAS/IFRS may be instrumental to it, I would recall here to you my own draft of a definition of what we’re talking about here, what I previously labelled “tertiary seigniorage”: purchasing power created out of nothing in any form, physical or dematerialised, that does not even mind to pretend to be money by carrying its name any more. I guess the ease and speed with which the Ponzi scheme of global finance skyrockets well beyond the solar system somewhat demonstrates that something – or, in the final analysis, someone – clears its way.

Speaking of how legislators clear the banker’s way, an example comes in handy. IAS 32, paragraph AG3, tells us that a deposit of cash with a bank or similar financial institution is a financial asset. An asset belonging to its depositor, right? Well, in a sense… not exactly. Remember when we saw how the banker is not a bailee but a debtor of the money you deposited with him? The moment you hand him your quids, they are not yours any more, they are his; and he just owes you the same amount, hopefully. It’s no small thing, is it? But it’s not just that, should he go bankrupt, those quids would be subject to the bankruptcy as assets of the banker, so all you could do would just be hopefully join the queue of his unsatisfied creditors; that’s just a facet of it. The main purpose of this trick is that if he owns your money that money will be counted as part of his reserves on which he can leverage his fractional reserve. Out of nothing, but alas still not completely, so he needs your money to be formally his.
So here comes to the banker’s rescue, in the Italian law taken as an example, article 1834 of Civil Code: “In the deposits of a sum of money with a bank, the bank becomes its owner […]”. There you go, sir.

Crime Against Humanity: the Holy GAAP