DEBT DIAGNOSIS

Below is an Exam­ple of Veloc­ity at work for a bank.

What do you care about a banks veloc­ity? This por­trays what they do with your money and why the finan­cial sys­tem is set up to pre­vent you from doing this for yourself.

But! there is one way you can accom­plish a sim­i­lar ver­sion of veloc­ity for your­self. You must read all the way through so you under­stand why you want to do every­thing in your power to mimic this strategy.

Bank­ing Veloc­ity Example

The fol­low­ing charts depict one level of how VELOCITY cre­ates prof­its for banks. The exam­ple I am using shows some of what banks earn on one $100,000 deposit into a CD for 5 years earn­ing 1.5%.

First though we must under­stand a few things. What is VELOCITY? In sim­ple terms, it is the recap­tur­ing, reusing and recy­cling of the same dol­lar over and over and over again for as long as possible.

Sec­ondly, it is fact that banks can lend 9 times more than the total amount on deposit. So the $100,000 that ‘Sally the Saver’ has deposited into her CD account allows the bank to lend nine times that amount, $900,000. (p 151 – 152 How Pri­va­tized Bank­ing Really Works).

I will not be includ­ing the lend­ing of one mil­lion dol­lars in this exam­ple. I am keep­ing it sim­ple by only lend­ing the 100,000. You can mul­ti­ply all the num­bers by ten though, to get the real picture.

Let’s get started: I have mapped out a sce­nario where the bank began by divid­ing that $100,000 into four $25,000 vehi­cle loans @ 4% for 48 months, to four sep­a­rate borrowers.

I have sim­pli­fied this sce­nario even fur­ther by depict­ing the bank hold­ing the monthly vehi­cle loan repay­ments till they accu­mu­late to equal at least $25,000 of repay­ments, enough for another $25,000 vehi­cle loan.

This is not what banks do nor­mally. Do you think the bank will hold onto 12 months of repay­ments before it lends that money to another bor­rower? Never!!! Nor­mally, as soon as that money comes in, it is loaned out again. That will be veloc­ity level two. When those loan repay­ments come back to the bank and are lent out again, we see veloc­ity level three, etc. etc.. There are nor­mally many lev­els of veloc­ity but once you under­stand the first, you can apply it to the oth­ers. So the veloc­ity lev­els are going across and down at the same time. I just don’t show them all.

This is the most con­ser­v­a­tive illus­tra­tion and even so, the results are impres­sive for the bank.

Each chart is divided into 8 columns.

Col­umn one lists the 60 months of the CD term.

Col­umn two is the monthly pay­ment received by the bank from the num­ber of vehi­cle loans that pay­ment represents.

Col­umn three is the total amount of inter­est just one vehi­cle loan repays with a 4% inter­est rate being charged.

Col­umn four is the total amount of prin­ci­pal each one vehi­cle pay­ment con­sists of each of the 48 months.

Col­umn five is the total amount is inter­est paid by all the vehi­cle loans dur­ing the respec­tive month.

Col­umn six is the total amount of prin­ci­pal paid by all the vehi­cle loans dur­ing the respec­tive month.

Col­umn seven is the cumu­la­tive total of inter­est and pre­mium paid by all vehi­cle loans, over the 60 month period.

Col­umn eight is the cumu­la­tive end of year amount of inter­est earned by ‘Sally the Saver’ for deposit­ing $100,000 in her local bank’s CD.

Click on the dia­gram below to see the first twelve months of the 60 month CD term.

Months 1 through 12

After twelve months the bank has now recouped $27,095.04 in monthly car repay­ments and so the bank can lend that $25,000 to another fifth bor­rower.

As I stated ear­lier, banks would not nor­mally hold on to the accu­mu­lated repay­ments before lend­ing that money again. But for ease of under­stand­ing, I have not re-lent the repay­ments till month 13.

Also note that the bank increased ‘Sally the Savers’ $100,000 to $101,508.46 due to the earned inter­est for the first of the five years.

Click the image below to view months 13 through 21.

Months 13 through 21

Notice now at month 21 the bank has recouped $25,401.60 in loan repay­ments but within only nine months this time.

A sixth bor­rower can now buy a $25,000 vehicle.

Click on the image below to view months 22 through 29.

Months 22 — 29 of auto loans — 2 yrs 5 months of CD

With six vehi­cle loans being repaid, the bank has enough to lend bor­rower num­ber seven $25,000 in only eight months this time.

Also note at the end of year two of the 5 year CD the bank paid $1,531.22 in inter­est to ‘Sally the Saver’ for the use of her $100,000 for the sec­ond year.

Months 30 through 36 or 3/5 CD years

Seven months later, another $27,659.52 has been repaid to the bank who lends $25,000 of it to bor­rower num­ber eight for another vehicle.

Also, 3 years are up for the 5 year CD and so $1,554.31 more inter­est has been com­pounded over the past year.

Sally now has a total accu­mu­la­tion of $4,593.99 to add to her $100,000.00.

Click on the image below to see months 37 through 42

Months 37 — 42

Six months later another $27,095.04 is repaid so another $25,000 loan is made to bor­rower num­ber nine.

Months 43 — 47

After month 47 and before month 48 — the end of the first four vehi­cle loans…

After 47 months another $25,401.60 has been gen­er­ated with nine car loan repay­ments over five months and so loan num­ber ten is now in force.

After the final .18 cents has been paid back on month 48 the first 4 vehi­cles are now paid off and ‘Sally the Saver’ has earned another  $1,577.76 which has grown her deposit to $106,171.75.

Please note at the bot­tom of col­umn 7 on the dia­gram above that the bank has earned a 62.79% return on their money, so far, on level one of the veloc­ity scale.

This exam­ple also shows a 4% inter­est rate for all vehi­cle loans. Most loans are higher than that.

This exam­ple also only shows the first level of veloc­ity. Banks will never wait twelve months before they put those repay­ments to work. They lend them out again imme­di­ately upon receiv­ing them.

That will be level two of veloc­ity lev­els x 10. Can you imag­ine? Also, the inter­est that is being added to the prin­ci­pal $100,000, which equals $6,171.75 at the moment, is also avail­able for the bank to veloc­i­t­ize as well.

Months 49 — 55

Months 56 — 60

You are Forced to Bor­row from a Bank.…

…if your money, your sav­ings, your invest­ments, are all tied up in their jail. But when you want to buy a car or pay for your daughter’s wed­ding, or buy some fur­ni­ture or go on a vaca­tion, or pay for your son’s col­lege edu­ca­tion, what are you forced to do?

Bor­row money from a finan­cial insti­tu­tion!

So, what if there was a dif­fer­ent way of bank­ing? How soon would you want to know about it?

Do you want to learn how you can bor­row from your own pri­va­tized bank­ing sys­tem and veloc­i­t­ize your own money?Keep your money out of jail. Start now.

Call me now for your free consultation.

Jen­nifer Hansen

845 – 649-7487 or

email me jennifer@DebtDiagnosis.com