The Banking System vs. Compumatrix

Let’s examine, in simple terms, how the banks work.  Pay close attention to see if you can find under which shell the pea (real money) is hiding. 😉

If I were to loan you $100, my assets would decrease by $100. But, when a bank or other “lending” institution loans you $100, their assets increase by $100!  Huh?  That’s right, when banks make loans; they accept promissory notes in exchange for credits to the borrowers’ transaction accounts. Loans (assets) and deposits (liabilities) both rise by the amount of the loan.  So, when was the last time you loaned money to a friend, and suddenly you had more funds? (trick question)

Accepting Your Promissory Note

So, “lending” institutions (including credit card companies) accept promissory notes in exchange for credits to the borrowers’ transaction accounts. What exactly does that mean?

This means that they add money (they credit money) to your checking account, but not the one that you know you have. The funds for the addition to the “secret” account came from depositing your promissory note!  (Except the credit card companies actually deposit your application/agreement – and monetize it even if you are not approved! Again, you provide the source of the funds that are deposited into your account.)

How can they do that? Because they’re banks. Your promissory note, is a note.

Federal Reserve Note

Look at a dollar bill. It says “Federal Reserve Note” on it.  A note is legal evidence of a debt or obligation. Thus, a “note” is “owing money.” That means what we call “money” or “cash” today is really owing money.

So, since “money” means “owing money,” and your promissory note is “legal evidence of a debt or obligation” (owing money), your note counts as “money” and can be deposited.  Still with me?

All they’ve done is converted your promissory note into “funds” that they then “loan” back to you. And now you have to pay them again, plus interestSay what? Where in the agreement does it say that you are providing the value (through the promissory note that they received from you) to fund your own loan? Is that a mutual intention? Is that what you agreed to? 

Money is such a routine part of everyday living that its existence and acceptance are ordinarily taken for granted. You might think money comes into being either automatically, as a result of economic activity, or as an outgrowth of some government operation. But just how this happens often remains a mystery.

The “Fed”

Luckily, the Fed (Federal Reserve System and its member banks in the USA, or any other country’s central bank) will soon solve the mystery for us!  In the United States, neither paper currency nor deposits have value as commodities. Intrinsically, a dollar bill is just a piece of paper.  Coins do have some intrinsic value as metal but generally far less than their face value. 

So, why do we, the people, accept these instruments (i.e., checks, paper money, and coins) at face value in payment of debts and other monetary uses?  The reasons are:

  • According to the Fed, it is the confidence we have that we will be able to exchange such money for other financial assets and real goods and services whenever we want.  Really?
  • It is partly a matter of law. Currency has been designated “legal tender” by the government, i.e., creditors must accept it in payment of money debts, and paper currency is a liability of the government.
  • The assets that exist on the books of the government (or central bank) and the depository institutions are equal to the amount of money outstanding. This is true even though most of these assets are no more than pieces of paper.


“Money” is anything people accept, but (returning to the mystery) we just saw that “money” is not a thing, it’s just bookkeeping entries, pictures of dead presidents, and essentially valueless coins.  And exactly who/what is it that creates this No Thing used as money today, internationally?

The actual process of money creation takes place in the banks.  The Federal Government, with the cooperation of the Federal Reserve, has the inherent power to create money — almost any amount of it. This power makes technical bankruptcy out of the question.

The reason we no longer have gold and silver coin is because they wanted to transition us from using the money we produced and instead make us dependent upon the money they create! “Money” with the force of law; “Money” you only have IF your banker says you do! We don’t need a government to tell us to accept silver or gold coins but when it comes to bank “fiat” money?

What About Credit?

Okay, isn’t “CREDIT” what we use when we don’t have any money? Isn’t it something we apply for and get from, say a bank, after we first prove to the bank we don’t need it? You know, you’re a little short of cash right now, but you’d like to have that new car so you ‘buy it on credit’, right? WRONG!  When you buy something “on credit” you are incurring a debt.  Thus, credit is debt!  This means our system works only with debt.  

On June 24, 1968 Congress removed the last known THING, i.e., silver coin, that was used as money in the United States. Although some THING should have replaced it, in fact, it was not replaced by a THING, rather it was replaced by credit, which is debt, which is monetized debt, which is what we now call MONEY!  

Not only did that Act of Congress eliminate our payments mechanism, it also established the greatest confidence game in history. The “leaders” in 1968 knew something had to be done, for if a bad check is one that is not redeemable, why isn’t a currency that is not redeemable bad currency?  Currency backing isn’t relevant in today’s economy. Currency cannot be “redeemed” or exchanged for Treasury gold or any other asset used as backing. The question of just what assets “back” Federal Reserve notes has only bookkeeping significance.  Unfortunately, there is no “pea” (real money) to be found because all the shells are empty. ;( 

Could It Be?

Could it be that because you THINK you have money, your banker agrees that you have it, and you THINK you are paid and, therefore, you THINK you are free? Could it be that simple?  By the way, the US Treasury owns no gold and hasn’t since August 1975.  SERIOUSLY?


Compumatrix is, in short, none of the above

In Compumatrix, you are your own bank; transactions are peer-to-peer; the system is not controlled by one entity (it’s decentralized); the value of the cryptocurrency assets is determined by the marketplace (i.e., the people);  _______________ (fill in your favorite features/benefits). 


About the author

Dr. Paul Repicky has had a varied career in business and academia. As an instructional designer, he developed training programs for health care companies and commercial airlines. His business experience includes corporate consultant, project manager in several mid-sized companies and as an entrepreneur, as he founded and led six start-up companies. His passions include teaching, understanding human behavior, physical and mental health, and surfing.


  1. Very good post and well timed. We were having a conversation recently about the agreed value of such things as jewels and gold, silver etc. Obviously they were declared to be of value by certain people but what if we ll decided they are just rocks from the ground, suddenly they have no value.

    Money is just paper. There is constantly millions sent across the world but where is this money actually exist?

    1. Lucianne, I agree with your comment. Who/what determines what is of value that can serve as “money”? After all, diamonds are just compressed coal, but they are attractive when they are cut into a specific shape. Also, your idea of, “what if we all decided they are just rocks” is relevant to the idea of cryptocurrency, which is based in part on the idea that our “money” today is in fact just paper.

  2. Thank you Dr. Paul for this mind blowing enlightenment. It’s quite sad as to how our system works only with debt. As a pilot I’ve watched companies emerge from nothing to greatness, on the flip side, I’ve also seen companies on top of the food chain collapse to absolute nothing [Debt and finally filing for bankruptcy]. All this has clearly opened my mind as to the main problem being credit, which is actually debt which in turn is monetized debt. Sadly we call it MONEY but in actuality it isn’t!

    1. Yes, ikimotho, I agree that it’s sad that we have such a system. But, on the bright side, there are people taking action to create a new, more healthy, economic system … via decentralized cryptocurrencies. So, regardless of the state of the money system we have, I choose to focus on the brilliance and the potential of Compumatrix and all the other approaches that are seeking optimal solutions!

  3. Excellent information Paul. The monetary system was made so complicated and hidden in plain site that it is very difficult or almost impossible for people to understand. To begin to see the system as it is, one must know that the Federal reserve
    is a private cooperation (for profit) and is not controlled by the Government. Then read the book by Edward Griffin “The creature of Jekyll Island”. Only then we will understand what and why things are how they are. Thanks for the eye opener.

    1. You are right on it, Carlton! I was inspired by Griffin’s book many years ago (and still have it on my bookshelf) along with other enlightening books on the financial system. I so appreciate those who seek the truth and are courageous enough to share it with others. Henry is clearly one of those visionaries leading the way to a new financial system.

  4. Thank you Paul, for that extremely enlightening blog post. My mind is going in circles, and I must confess I am not totally following all the ins and outs. However, I can see that our money system is just run on debt. We have worked all our lives to not accrue and pay off any debt as soon as possible. Why would we want to keep plugging along in this system which makes the bankers, etc. rich, when we can be proud we have found the Compumatrix system?

    1. Janis, I am with you on that. Once someone understands how the system works it’s clear an alternative is needed. Lately, we see a lot of movement by retailers and financial institutions toward accepting Bitcoin, for example. I take this as a sign of hope that people are catching on. We live in very interesting financial times, besides all the other upheaval we are experiencing. Go Compumatrix!

  5. Wow… A true understanding of how central banking works. Another thing that needs mentioning is that the interest owed when the debt is created, is never created along with it. i.e. $1000 is borrowed from the bank at 10% interest. The extra $10 is never created so the only way to pay it is to borrow more. Which is a path to guaranteed bankruptcy for a certain percentage of the population.

    A credit card actually is in violation of several laws just by being in existence. Fraudulent conversion and fraudulent concealment are 2. It is also very interesting that someone who pays off their cards every month earn more money for the card companies than those who carry a balance. It’s a very slick system they use and don’t disclose – And far too long an explanation to go into on a single reply.

    I highly recommend the book “Creature from Jeckyl Island” by G Edward Griffin. Foes into great detail about the fraud that was thrust on the US in December 1912 called the Federal Reserve System.

    1. Albert, your comment includes several important points about the financial system. No wonder the U.S. is a nation of “debtors” where so many of us carry a negative balance sheet, i.e., having more liabilities than assets. I never learned any of this in school, but it should be a part of the curriculum. That’s why we all have to do our own research and study on this. Reading Griffin’s book was certainly an “Aha” moment for me.

  6. Thank you for the article. I guess it can be said, “we are at the right place at the right time.”
    in Compumatrix. I have been doing some reading on this very subject for a few years and I am happy to have it put so succinctly. I keep expecting the great fall when our debt becomes so large that it all fails and we are thrust into a depression again.

    1. Maxine, I am glad my blog was helpful. I agree that the way our government has been spending over the last several years that something has to give. There must be some limit on how much “money” we can create before the whole thing crashes. It is comforting to know, however, that cryptocurrencies, and specifically, Compumatrix may allow us to survive, and even thrive in, the coming financial storm.

  7. Interesting and informative blog, Paul. Yes, we do get complacent about money and how it serves us and the world. Banks exist for one purpose and that is to make profit. Compumatrix and the cryptocurrency movement will, at some point, make “money” and banks obsolete. Millions more people around the world will be able to have a better life because of it.

    1. Gloria, that’s a wonderful vision you have for the financial future of our world. Sign me up! I think a key part of that transformation is people becoming educated about how the “money” system really works. So, feel free to share this information with family, friends and anyone who has an open mind and an interest in knowing.

  8. this is a great posting and my gosh — reading the information in this and re-hashing so much of my own last 40 years –it is a great a read — knowing mostly in todays economy that here in the states dollars are worthless and most of the worlds economy bases off of here — it will be interesting to see how the next few years move ??? thank you so much for such great information –hope most read this —

    1. Thank you for your kind words, rjh59. When you consider that many other countries have fiat currencies (aka, fake currencies) it makes you wonder if the whole thing is just a big game that we’ve all been duped into playing. I’m so grateful to be part of the team here at Compumatrix where people are so aware and open to being a part of this revolutionary business.

  9. Thank you Paul, happy to see others aren’t living in total darkness when it comes to the creation of money / debt. I see a few others here reference to the book, the creature from Jekyll Island, and John, you will have to correct your date of 1912 to Dec 1913 when the Fed was passed through Congress by the president of that time, Woodrow Wilson, when everyone was away on Christmas break, how convenient. Right now, all banks are insolvent, trillions in debt, and Maxine, we won’t be paying back any money, because it’s all based on fraud.

    1. YEs, Dan it was passed in 1913, but the meeting on the island took place over Christmas break 1912. This was when the bill was made ready to be put in front of congress in 1913. I also find it interesting that the Canadian Central Bank was also brought into being in 1913. Knowing the history of it all sure brings the whole system into light. It’s a crazy world.

    2. Thank you for sharing your wisdom on this topic, Daniel. Yes, isn’t it interesting that the Federal Reserve Act was “slipped” past the system. Whenever you see such deception it’s a sign of foul play. Isn’t it odd how controlling the message around an issue, and repeating the same story over and over, leads people to accept it as fact. It’s comparable to the story (belief) centuries ago that the Earth was at the center of the solar system. It’s good to be in a group of like-minded people who see the value of Compumatrix as a game-changer.

  10. I’m with you on this one, Dr. Paul! I too am excited that the people have finally overcome the “big money game” that only a few elite were “allowed” in the past. We can be thankful we are among the many people across the globe who woke up and joined the cryptocurrency (r)evolution, and now more and more are adopting it, giving it all that much more credence as a genuine and valuable currency system.

    1. Yes.. this give us insight of how the banks operate of course they have to keep us in the hole. Making it so complicated so we never understand how it actually works. Banks are always been kind of ripping off. With the high interest and fees. Now I reading that the Federal agencies want to control us completely with the way funds flow. I guess I am understanding this correctly. 🤔 still confused but: soon and very soon we don’t have to live that life thanks compumatrix/cryptocurrency system we’ll be operating our own business/assets. Being decentralized is a win win, Our goal is to bring many more in so they don’t have to feel that’s their only option is banks and other intuitions, controlling them. compumatrix world is a great opportunity to get involve with and avoid all the confusion in the Federal bank world.

    2. I am also thankful, Zeejay. I recall when I first heard about Bitcoin, during its early years. I read a few articles on it but didn’t really understand the concept so I didn’t buy any at that time. However, today it’s a different story. While I’m sure there are plenty of people who aren’t involved in cryptos, the increasing acceptance of Bitcoin in the marketplace continues to add credibility. Human beings created our original money system, so we can certainly do it again!

  11. Good article,Dr. Paul Ripicky,For centuries, people lived under an outdated system,these were the compulsions of the people,cryptocurrency has broken this stalemate,cryptocurrencies have freed the world from debt now everyone in the world is moving towards a better life.Thank you for sharing info.

    1. Zahra, I love your enthusiasm and certainty regarding the current and potential impact of cryptocurrencies. For me, it’s about freedom. Freedom to choose and to exchange value (money) with others in an open, honest and just system. I believe this is how we are all supposed to live our lives … free to choose in all areas of life.

  12. The banking system is a very, very crafty system. As someone who’s been in the financial world for quite some time, I’ve seen how Banks have become so unreliable to the point where one is asked what they want to do with their own money and to give reasons as to why you want to withdraw the large sums. With the emergence of compumatrix as its own self-sustaining eco system, banks will no longer have control over ones financial movements. Salute to you Sir Henry James!

    1. Elizabeth, I appreciate your insights into the financial world. It reminded me of a cute story. When my daughter was very young and had just opened her first savings account, as we were leaving the bank she asked, “When I come back to get my money, how do they know which money is mine?” 😉 Now, just consider that banks are only required to retain a small portion of depositors’ money in cash, which becomes very clear during a bank “run.”

  13. Interesting article. As a former banker and economist not sure I am in total agreement. Banks make loans based on their abilty to leverage against their capital. There is nothing mysterious about this. They attract deposits from customers and borrow short and long term up to a value determined by their reserve ratio – often around 30-40 times their capital. They lend the cash from those deposits and loans to customers mostly like you and me.

  14. Paul, this is so good that I can’t even understand it! No wonder the banks own the world and everything in it. And finally a question with a super easy and obvious answer: Centralized or Decentralized? It is so frustrating to think about all the debt we have been suckered into by the banks while they get rich from our confusion. And, Compumatrix has arrived to let us all out of debt jail! Talk about being set free! Set free from that nasty ‘ol “money”. As my mama used to say…”Take that money out of your mouth son. You have no idea where it’s been”. How appropriate it is to finally understand how having total control over “something” will make you the Grand Master of the “something” world. Wow, you are “something rich”!!!

    1. William, I appreciate your perspective on a simple question to answer. Yes, it is, now I understand the concept of decentralized. Years ago I certainly never thought “outside the box” of the centralized system that was ubiquitous. Now, I really love the idea of being my own bank, so to speak. Thank you Henry and the Compumatrix team!

  15. Dr. Paul Repicky, while I never truste doing away with the Gold Standard in favor of money back debt versus life long work enairng for value sort of thinking. I was always aware of what happened to many countries in the early days who tried similar national laws and soon went bankrupt due to inflation (a place the USA may just find themselves). But, I am glad this system has held up so far, and you explanation was very efficient. Perhaps a further comparisons of life long work ethic for money, or cryptocurrency is in order??? Then perhaps and education on the possible outcome of inflationary events might be another topic to know. Thanks for the fine post, Paul!

    1. Samuel, I appreciate your multiple perspectives on this topic. My understanding of inflation is that ever since the gold standard was eliminated the Federal Reserve has been printing money, i.e., creating money out of thin air, whenever it was needed. This decoupling from the gold standard is a major reason we have inflation. To me this fact is related to the idea of a life-long work ethic. I think in the US we work too much and play too little.

  16. Thanks for such an interesting article. Banks seem to rule the world today. We all live in debt, we constantly go to banks for loans. We all have credit cards and so on. The only way out of this bondage is to be your own bank. It’s good that we have Compumatrix.

    1. Right on, Alexander! It’s certainly time to adopt a new system that is more equitable for we, the people. The concept of a credit score is part of the challenge. To have good credit you must play the credit card game. I’m hoping all of us in Compumatrix will be successful in escaping the banking system.

  17. Very interesting explanation about the banking system, thanks for the publication. I really want it to be time to operate at Compumatrix and learn more about this great and promising business. In the near future we will see the banking system succumb to the modernity of cryptocurrencies, this will be a great technological and social breakthrough as well. Let the news come!

  18. I have known for years; their financial gain comes intrinsically from debt. Many seemingly smart men and women have pulled the wool over our eyes, and we followed blindly. The banking system is a factual reality and no conspiracy theory. Coming to this truth will awaken you to more positive ways to financial stability. Compumatrix is a means to financial security with truth and openness. Thank God!

  19. There is not doubt in my mind that banking is a complex and little understood business. Dr. Repicky’s explanation above confirms it. We, the people, have been trained to think doing any kind of business with a bank is a necessity…virtually a requirement. I don’t disagree Compumatrix offers an alternative to the common banking system, but it is not the only one. There is a term “banking on yourself” which has grown in recent popularity because people are wising up to the fact that the normal banking system is ripping you off in the name of customer service. The current banking system is a habit. We should at least investigate alternative systems that favor us as the owner of money.

  20. Ever since I read the book the creature from Jekyll island years ago and went deep down the rabbit hole of discovery and facts, and did in-depth research on what transpired at that meeting. I am still gobsmacked at how complacent and non-committaly laid back the majority of the world’s population are to how their lives are being manipulated by the New World Order WAKE UP SHEEPLE

  21. Consider this scenario. I have a neighbor, Jim, who has a fence on his property but very near our property line. It is unmaintained. I go to Jim and say, “Jim, I bet you $1,000 your fence will blown down onto my property during the storm forecasted this weekend.” “It’s a bet.” says Jim. The storm comes, but the fence is still standing. I pay Jim the $1,000 in hopes he will use it to mend the fence. He doesn’t. So, ridiculous as it sounded, I thought it would be a fun investment (it would have cost $5,000 to replace the fence) to motivate Jim to get his fence fixed at my 25% expense and to remove the eyesore. No middleman, no fancy computers or algorithms, but the “investment” simply ended up putting $1,000 into Jim’s pocket. Now, consider I go to my investment broker and and order $1,000 of XYZ stock, thinking it is a good investment and it will boost my retirement account a few years down the road. The trade is made. What happens on this trade is a different owner of XYZ stock has a different opinion about the company’s future and sells it to me. He gets MY $1,000 less a significant amount for the brokerages handling the trades. I am proud of my new stock and new financial “partner” (XYZ Corporation), thinking they will increase their business and make us both money. The next year a pandemic hits the globe and XYZ Corporation fails due to a lack of business fo a year. The stock is now worth less than $1. What is the difference between the two situations? NADA! In the first I could have openly worked with my neighbor and come to a mutual agreement to replace the fence sharing the cost with him paying the most because it was his fence. In the second, NONE of my money went to XYZ Corporation so they could have helped the company endure the tragedy, but it didn’t…it went to some other sucker who failed to lose everything because I came along. The moral of this whole diatribe is both financial exploits were a gamble. . You are gambling with other investors on what the price of the company stock will do…up or down (no different than betting on horse #3 will win or lose). There are a couple of ways a company can benefit or be hurt by public trades (bets): selling stock in an IPO; initiating a stock buyback; and, the asset status of the stock the company holds and the current trading price of that closely held stock. These are the only 3 ways I know of where you are investing your money, directly, to improve your chance of making a profit. So, while you think you are investing in a company when you buy (and eventually sell) a stock, you are more likely just betting on the “Come Out” that the price of the stock will go up. Better yet, invest in yourself! Whether it be improving your marketable skills or owning your own business (solo or with partners), in both cases YOUR money is going into your effort to own a profitable business.

  22. The banking system is nicely explained at a very common man level. I guess if everyone understood this in majority, we wouldn’t be talking about it as it won’t exists in today’s world.
    better late than never, let’s change the world through our Compumatrix ecosystem.

  23. Very well explained Paul the difference between the Banking system and Compumatrix. In the centralized system the banks have full control over our money,and utilize it according to their needs,where as in Compuamtrix which is the Decentralized system we are in full control of our money,and now other institution controls our money or uses it according to their likes.

  24. I appreciate the information within this blog and the comments that have followed. One thing that has not been mentioned with regard to debt and credit is that in the main, it is of our own choosing. My parents were strongly against debt so we lived very simply and it has taught me the value of saving for something I want or need, not just borrowing so I can have it now! I am certainly looking forward to having more freedom from the old system when Compumatrix goes live and encouraging others to break away from their indentured lifestyles.

  25. Thank you Dr. Paul for giving us an understanding about the Banking system and Compumatrix which is totally based upon crypto currencies.This is what the whole world is moving towards to make payments easier for people working online (and with the pendemic virus most people have lost their jobs due to companies closing down), therefore it is become easier for people to find work online and earn in crypto currencies, like in Compumatrix.

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