Real Estate Investor Magazine South Africa May 2013 | Page 19

UPFRONT
lead to unimaginable consequences: government
“appropriating” as much as 40% of the money in
depositors’ accounts at its two biggest banks to bail
out the financial institutions!
We need to become informed, involved and
concerned citizens who understand what is going
on and what the implications are, and take the
necessary action to safeguard our rights and
interests, not only for ourselves, but for our fellow
South Africans and our children.

2. Become part of the solution
We also need to understand that the fractional
reserve system is dangerous and inherently
unsustainable. As Russell Lamberti, head
strategist at ETM Analytics, wrote in an article
published in the Mail & Guardian: “The current
financial crisis is no accident. It is the predictable
and logical result of fractional reserve banking and
the political-legal privileges that make this system
possible.”
Because the “credit” or “money” loaned by banks
is not backed up by actual deposits in the bank,
but simply on ever-more “promises to pay”, it is
creating a credit pyramid that drives unsustainable
over-consumption.
This is patently clear in South Africa. While our
financial system is strong and highly regulated ,
the reality is that debt levels in South Africa
are frightening. There are 19.69 million active
credit consumers, of which 46.9% - almost half
- have impaired credit records. Our 75.8% debtto-disposable income ratio is extremely high by
our own historic standards, and this at a time of
prolonged low interest rates.
The value of outstanding credit balances in the
South African household sector showed growth
of 9.8% year-on-year (y/y) to R1.311 trillion up
to the end of February 2013. The components of
instalment sales and unsecured credit (comprising
personal loans, micro finance, credit card debt and
overdrafts) continued to record relatively strong
growth of 19.6% y/y and 27.4% y/y respectively in
February.
The rise of unsecured lending in particular
has raised alarm bells. Many experts are deeply
concerned about the level of debt defaults that
could occur if interest rates begin to rise.
We cannot deny that our excessive debt levels
are a part of the problem – our demand for
www.reimag.co.za

credit is driving an ever-more unsustainable
and shaky f inancial system. We need to
understand the system, and we need to
use it responsible and intelligently. And,
simultaneously, we need to demand that those
in power also use the system responsibly and
intelligently to protect us from the financial
disasters that are playing out across the globe.
Be part of the solution by drastically reducing
the number of your valuable “promises to pay”
f loating around in the financial system. In
other words, avoid making debt, especially
the kind of short-term, high-interest debt that
enslaves us to the financial system. If you need
assistance, email reimsave@budgetf itness.
co.za or visit www.thedci.co.za.

3. Take action
We are far too comfortable and complacent in
South Africa. And complacency is dangerous
– we hardly notice how our freedoms and our
values as a society are being eroded - like a
frog that is slowly boiled to death. When
organisations such as theDCI, NewERA or
the Free Market Foundation alert us that our
rights are under threat, we need to take action.
If banks are enforcing “loans” that have no
legal validity and are charging interest on
these “loans” that do not legally exist, we need
to take action. If banks are repossessing homes
and other assets illegally when the debts in
question have been securitised, we need to
stand up against a violation of human rights
that is destroying thousands of people’s lives.
If our government and financial institutions
are “creating” money in a way that threatens
our entire f inancial system, we need to do
something.
Investigate the claims and efforts of a
g row i ng nu mber of org a n isat ions a nd
“common law movements” that are working
to bring transparency and fairness to the
government and f inancial systems. These
decentralised and non-violent organisations
have been around for years across the globe
and they certainly have impressive numbers of
followers. In the US they are called “Sovereign
Citizens” and in the UK they are called
“Freemen on the Land.”
Some local examples include NewER A;
the newly-established Ubuntu political party
(w w w.ubuntuparty.org.za) formed on the

principles of absolute equality, abundance for
all and Unity Consciousness; and the One
People’s Public Trust (OPPT), which now has
a South African branch (www.oppt.co.za),
formed to “free the people of South Africa
from the shackles of a corrupt government and
a tyrannical banking system”. We need to start
getting involved. We need to join and support
organisations that are remaining vigilant and
are working to protect our rights.
Most importantly, understanding that the
“money” in the system is essentially worthless,
because it is not backed by gold reserves or even
deposits held, we need to shift our attention
away from making and saving “money” and
begin to focus on acquiring real assets. And
to do this, you need to follow the system of
building real, tangible wealth that is as old as
the financial system itself: securing real assets
in a trust.
We are not talking about cash in a bank
account or a fancy car. We are talking about
real, tangible assets that not only increase in
value over time, but also – at the same time
- produce an ongoing, passive and inflationlinked income. These assets include, for
example, a sustainable business run by an
independent management team; royalties,
copyright and patents; and of course, the cream
of the crop: income-producing properties,
especially those that are sustainable, featuring
alternative energy, a rainwater tank and a
vegetable garden.
These assets must be safeguarded in a wellstructured trust, managed by professionals,
to ensure superior protection of the assets
against the many risks we face in the current
unstable f inancial system, so the wealth is
preserved from generation to generation.
We are not simply victims of an ongoing
conspiracy between big corporate financial
ent it ies a nd gover nment. T he t r ut h is
more likely that we have become victims
of a system we have helped create through
ignorance, blind compliance and greed. But
we can help create a more transparent, fair
and stable system, if we are willing to get
informed, become part of the solution and
take the right action to defend our rights
vigorously, build real wealth and protect it for
the future generations.

May 2013 SA Real Estate Investor

17