Dear President Donald Trump
Your Tariffs and NO income tax which increase take-home-pays and incomes, INFLATES
‘COSTS’ and ‘PRICES’ and ENDS your promise to MAGA.
To MAGA you MUST CUT ‘COSTS’ and ‘PRICES’ to have a Volume/Cost/Price MIX so that “Made
in America’ replaces ‘Made in China and BRICS’.
Until you understand this basic economic reality your Presidency will fail the American People.
The deregulation of the USA Banks in the 1980s created the Financial Crisis in 2008.
The Chair, Directors and CEO of Banks securitised Depositors’ Funds to borrow long term at
fixed interest rates and make short term deposits at higher variable interest rates to earn mega
bonuses. As variable interest rates fluctuated Derivatives were entered into to protect these
bonuses. This escalated the Banks’ risk exposure to Derivates and inevitably defaults occurred
causing the 2008 Financial Crisis and Bank bail out by Government. The Public were led by the
nose to believe it was caused by subprime home loans.
For 7 years from1989, I was the CFO of a State Industrial Development Bank and experienced
the above.
The remainder of this Letter is PART I of what you need to have changed in the Banking System.
I see and hear so much criticism of the Fractional reserve banking where banks hold only a
fraction of deposits as reserves and lend out the remaining amount, creating credit and
expanding the money supply.
What these critics fail to understand is that the primary purpose and intent of the banks is to
1. act as an intermediary, facilitating the flow of funds between those who have money
(depositors) and those who need it (borrowers), thereby supporting economic activity and
growth.
2. accept deposits from individuals and businesses, providing a safe place to store money and
earn interest.
3. lend money to borrowers in the form of loans, mortgages, and credit lines, enabling
individuals and businesses to finance their activities and investments.
4. Implement monetary policy for economic stability and confidence.
The Fractional reserve lending by creating credit is secured by the borrower’s
1. Property based on independent expert valuations.
2. Business assets and profitability based on audited financial statements and industry
comparatives.
3. Taxation Returns lodged with the Government Authority.
4. Gender and age relative to the term of the loan and financial capacity to repay the loan with
interest as and when payments fall due.
5. mortgaged assets realisable value to recover unpaid loan balance and interest.
The Bank’s internal loan application process MUST exhaustively determine the character,
financial standing of the borrower, their capacity to repay the loan with interest at applicable
rates, the realisable value of mortgaged assets.
From my experience over 90% of Bank’s BAD DEBTS were BAD the day the loan was approved
and made.
With 2% LIBERTY TAX everyone can have the opportunity for wealth creation to fast track the
repayment of Bank DEBT. Free of the Banks, everyone can invest outside the Banks free of the
risk of Bank failures. The Banks must attract depositors and must lend to stay in business.
2% LIBERTY TAX can create a revolution in Banking whereby lending is based on Character,
Capacity and Mortgage Security. This will force banking to be done over the tractor wheel, home
kitchen table, factory floor, building site etc. by banking officers trained in relationships
management.
From my understanding of your experience of your Banks I think you, like me, can’t wait for 2%
LIBERTY TAX.
Please see PART 2 in my next letter.
Kind regards
Derek Smith CA
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