WHAT ARE TRADE PROJECTS AND HOW DO THEY WORK?

Although all high yield programs and games claim some kind of connection to a trade project of some type, very few people know anything about what trade projects really are, how they work, and what it takes to get into one.

It is estimated that around 95%, or more, of all high yield programs and games are not real income producing opportunities. It may be possible to earn money in them, but that is a byproduct of the ponzi payment system to demonstrate performance to the initial participants and not the result of true external earnings based on the business of the company or game. Clearly, it is possible to earn money in a Ponzi scheme system, but that is rare and only at the expense of the later participants.

Because so many programs are not real programs, it is rare for many people to understand very much about the trade projects which are suppose to be backing all of these real and not real opportunities. While there is a great deal of trade information that is disseminated through many different sources, much of that information is conflicting and wrong. Because the program is not real, the information they provide in terms of their operation and trades in general is not real.

In the case of mistakes on purpose, this normally indicates the company or expert is a scam. If the mistakes are accidental, that normally means the expert may be doing something off the beaten path or has tried to be successful for a long time but still has not made it. The fact that somebody has not been successful at getting into a real trade to date does not mean he or she will remain unsuccessful in the future.

In the case of mistaken information by accident, this is very common because trades only flourish without the light of day. There is no one who understands every aspect of the trade industry, probably even including some traders.

The biggest problem with companies that are scams is that they teach false information that is clearly not possible as a justification for why they are successful and trustworthy. For example, many people actually believe that the collected pocket change from a dozen people can corner world markets in the hands of an expert who would rather work with the collected pocket change of a dozen people instead of the millions or billions in Wall Street and top European financial institutions.

As a rule of thumb, if the money for trade is less than what a television set or cellular telephone costs, that trade is probably not real. How can it be real? If the financial wizard behind the game is such an expert, why does he need your five or ten dollars?

Diversification is a very good idea to balance the risk of loss, but only if you are able to diversify into programs which are probably not very risky. Most people are not advised to diversify because they do not possess the necessary skills to choose programs more likely to succeed. If you diversify but all of the programs you pick are doomed from the beginning, diversification will be harmful for you.

When you diversify, if you normally choose programs that fail, than you simply spending more money in more programs that fail. If you normally choose programs that are successful, than diversification will probably be helpful. The key here is that programs that fail cost you money and choosing more programs which fail simply means that you will lose more money in more cases.

In order to help diversify into successful programs, many potential members write a series of email test questions to better judge an opportunity. While many people feel that these test questions are beneficial, they are actually just a very dangerous waste of time. When you write a test question to a program manager, you are providing the program manager a request for the information you are specifically looking for in order to be happy about participation. This makes it very easy to talk anyone into doing anything.

It is rare for anyone to be a good judge of the information received, but this is a common assumption. For example, how many people feel they can do a better job at whatever they are watching on the television? Basically, a better coach than the coach, a better general than the general, a better whatever than whatever. An actor who plays a doctor on television is not a good judge of the best aspirin and an armchair coach is not likely to win any games either.

Hopefully a firm understanding of how trades really work will save many people from costly mistakes which most novices make over and over again. By understanding how trade projects really work, you can make a more informed decision about participating in a game or not.

It should be clearly noted that it is possible to earn a profit from a game. However, a game is different from a program in that the profit earned in a game represents money that others have lost. Because a game earns no real profit, any extra money you receive beyond what you put into the game represents a loss for a later member.

Games are basically like a lottery. A few people will earn a great deal of money and everyone else will lose the money they invested. Knowing that it is only possible to earn money from a game by causing others to lose money, we do not recommend anyone to participate in a game. Even if you are one of the early members and receive a great deal of money, that money represents the lost hopes and dreams from most of the other game participants.

What separates a game from a project is an outside money source that pays the member profits. In a trade project, the member profit is fresh money from some kind of investment vehicle. In a game, the member profit is money that is paid to earlier members from the deposits of later members.

Many people believe that trade projects do not exist, which is the intended result. These non-traditional investment vehicles remove money from traditional investments such as stocks and bonds. It is estimated that around 10% of the United States Gross Domestic Product every year is moved offshore to avoid taxes and perform offshore financial activities. In order to stem this flow of money out of the US taxation system and out of traditional investment vehicles, the official position of the United States Government is that trades do not exist even though the United States Federal Reserve runs all United States based programs.

Another common reason why many people do not believe trade projects exist is because there are very few people who are successful. The opportunity for fraud is too high; there are many brokers and traders that are more interested in stealing the funds for trade than actually locating a trade to earn investment income. Many brokers have no real trade connections and others falsely believe that the failure to place implacable assets implies anything about the trade industry. If 95% of all pool companies and games are not real, at least 98% of all brokers or traders are either fraudulent or they are an honestly trying to work placements but have no legitimate trader connections.

A final main reason why many people do not believe that trade programs exist is because the potential earnings are not comparable to more traditional investment vehicles. Most traditional financial vehicles all pay around the same, which is by design. This is suppose to stimulate all aspects of the economy without prodigious while at the same time keeping most citizens from attaining any real measure of financial security or independence.

Most people are use to a specific earning level, which is artificially low in many cases and not a useful judge of what is too good to be true. For example, the annual interest rate paid by an American financial institution is between one-half to a third of the interest paid by most other financial institutions. Does a different financial institution that pays 250% more than the bank down the street sound too good to be true, because that is happening quite commonly.

All of these reasons work together to make most people skeptical about trades. They pay much more than traditional financial vehicles; there are a great number of failures due to incapable or unscrupulous participants, and the US Government official statement is that trades do not exist in order to increase the participation in traditional investments and reduce the light of capital from the United States.

Regardless of these issues, there are many types of trade projects, some of which are not really trades. True trades are based on the sale of bank or government paper to artificially increase the money supply, but other financial investments such as FOREX currency trading have become associated with high yield investments lately.

The trade industry started approximately fifty years ago as a byproduct of World War Two. Before WW2, the British Pound was the basis of international commerce. If two countries needed to trade merchandise, the monetary exchanges were in Pounds more often than not. However, due to the damage of WW2, the British Empire no longer had the reach and strength to fund all international commerce and the international monetary community decided to switch to the United States Dollar instead.

Unfortunately, the volume of United States Dollars in circulation was too small to support the level needed to facilitate the ever-increasing levels of international commerce. To get around this limitation, trades were invented to artificially inflate the money supply. With this inflation, the money can be created as needed without artificial constraints imposed by the level of actual money in circulation.

Today, there are assortments of quasi-trade projects plus two real trade methods. The real trade projects are either a European bank buy/sell of bank notes in the top fifty financial institutions or in the United States through the Federal Reserve. Fed trades can be bank trades but more commonly are based on the buy/sell of US government securities.

In order to go into either type of trade, the investor must have at least US $1,000,000 cash for placement. It is not legally possible for a trader to speak with any potential investor who has less than US $1,000,000 for trade. This is one of the main reasons why a game that collects five dollars from 20 people can not be in trade, they are short about US $999,900 dollars needed to even speak to a trader.

This is an international standard for all trades, but is famous in the United States as one of the requirements to be an Accredited Investor by the Securities and Exchange Commission. Although this is not legal advice, as long as a potential investor has US $1M (US $1,000,000 dollars), states he or she understand the risks inherent in a non-traditional trade process, and is familiar with trade projects in general, than it is normally acceptable for that person to be to introduced to a trader.

All trade projects follow the same basic process, starting with a proper introduction. The trader cannot solicit participation, so an intermediary must be present to bridge the trader and investor together, hi exchange for this introduction, a few percentage points of the earnings are normally paid to the intermediaries out of the trade earnings.

It is easy to be a broker, which is why there are so many of them. As long as you know a trader or think you know a trader, then you can be an intermediary. The key here is that you need to really know trade sources or you will never be a successful intermediary or earn any money.

The intermediary will discuss a general trade project overview with the investor and collect the basic investment application documents. These documents are fairly simple and comprise a proof of funds for at least US $ 1,000,000 along with different personal information and a statement of non-solicitation.

The proof of funds must represent actual cash or cash equivalent. Many players in the high yield field believe that nearly anything is tradable, which is one of the reasons why there are so many placement failures. For example, popular items which are not tradable but which many brokers and fake traders play with for placement include:

1. Old Federal Reserve Notes from the 1930s: The Department of Treasury in the United States routinely destroys old money from the last year or two and replaces the destroyed notes with fresher currency. Old money, regardless of age, is just old money unless there is some kind of collectable value. While many people spend a great deal of time on these notes, the US Treasury has not assigned any special value to them and they are worth a dollar the same as they were seventy years ago (not counting the depreciation from inflation). There are no trades based on the value of these historical collector items and anyone holding them after all this time has only lost a great deal of money due to inflation.

 2. Gold Backed Historical Bonds: Sometimes these are from old railroad bonds and other times these are from governments that no longer exist. The theory is sound, they are suppose to be backed by gold bullion and worth billions after a hundred years of annual interest. However, if the government which issued the bond no longer exists, such as in pre-war Germany, there is no liability imposed by those bonds, such as the government of post-war Germany, and they have no financial value despite continual claims in regards to hypothetical decisions in the United Nations or fictitious insurance backing. The old railroad bonds are similar. Even though a modern descendent can be traced through the various mergers and acquisitions, that modern entity has no obligations for the old bonds - which makes them worthless. In other words, there is no gold backing and there is no modern company required to redeem the bonds, so the bonds are not worth billions of dollars in real money. To hide this fact, special warehouses certify a hypothecated value for the bonds assuming they had value and safeguard them with a great deal of concern and respect. Regardless, this does not provide any inherent value to these collector items and it is not possible to enter them into trade.

3. Foreign currency: In many cases, odd currency types can be the mistaken basis of a potential trade project. For example, Mexico devalued their currency a few years ago by dropping the last three digits in their currency values. A 5,000-peso note today would be worth around 5,000,000 pesos under the old numbering system even though both peso notes are the same value. The old notes are devalued to modern day standards, but five million pesos seems like five-million pesos if you are not aware that the true value is only five thousand. Even though the peso is not rated very high as compared to other world currencies, somebody looking at five million pesos is still likely to get very excited even though this is actually not very much money and all trades are based in United States Dollars anyway.

4. Bank Guarantees and Letters of Credit: These are the two main financial instruments which uninformed intermediaries and potential investors try to place. Neither instrument represents money; they are insurance policies that are redeemable only in limited situations for limited periods of time. For example, if your house burns down and you have a fire protection insurance policy to protect you against that devastating loss. If your insurance policy is worth US $1,000,000 but your house does not burn down, you cannot dip into the unused US $1,000,000 anyway. Also, when the insurance policy is cancelled or expired, the US $1,000,000 just disappears. This is because it was not real money; it was only an insurance policy representing potential money that is redeemable in limited ways for a limited time.

Because these are insurance policies that are rarely (or never) cashed in, a potential investor can purchase these documents for a very low fee that is a very small percentage of the face value. However, even if the Bank Guarantee has a face value of US $500,000,000, it is not even worth the US $200,000 that the insurance policy cost because the fees are non-refundable. It is not possible to trade any of these insurance policies, because they have no cash value regardless of the millions or billions of dollars of insurance in the Bank Guarantee or a Letter of Credit.

5. Another common type of placement is based on the value of tangible assets such as rugs, paintings, and oil reserves are the most common, hi order to place these into trade, the investor must personally obtain a cash credit line which can be housed into the trade bank.

These items are tradable, only because the investor is easily able to obtain a credit line himself or herself and use that cash for placement. In nearly all cases, investors are unwilling to make this effort, which means that no trade is possible in those cases.

Once a Proof of Funds representing real money is obtained worth at least US $1,000,000, the trader can speak to the investor about the trade project parameters. However, before this happens, many potential investors will try to get as much information as possible in order to better decide about moving forward. Normally, this means the investor will question the intermediaries for a while before deciding to move forward and speak with the trader.

It is rare for an intermediary to know very much about the trade project details. Many potential investors judge a trade program based on broker comments or broker knowledge, which is flawed because intermediaries actually know very little about the trade. Legally, only the investor can obtain a trade contract, for his or her eyes-only. In other words, the intermediary is only responsible for resolving trader solicitation issues, he or she is not suppose to sell the trade project or be a personal source of credibility for the trade project.

Most of the trade projects that people have been exposed to are pool investments. In this case, many small people come together to meet the US $1,000,000 minimal placement amount. This can work well, but there are many problems that can occur.

The investor in trade is accountable for the funds placed into a project by the trader and trade bank. When the trader and the trade bank pay him, they must be sure of where the profits are going. For example, if a portion of the funds are used to launder drug money or purchase weapons for terrorist, the trader and the trade bank can have some serious legal consequences for paying that person trade profits.

Because trades will only pay investors that are completely accountable, pool placements sometimes have troubles if the pool participants do not properly behave. For example, if one of the potential participants tries to discuss the pool venture with the trader or the trade bank, then obviously the trader and the trade bank will know that they do not have complete information on hand as far as the eventual distribution of the profits.

Several problems are common in pool placements when small participants get out of hand. First, traders are only able to place money from individuals or companies that are placing at least US $1,000,000 into trade; which means that the person trying to verify the safety of the trade is not a valid trade participant. Second, none of the smaller people have been cleared to receive trade profits and it is not worth the effort to clear an unknown number of people placing a small level of funds into the pool. In some cases, the cost to clear a participant may be more than the participant deposits into the pool. Third, without the legal ability by the trader and trade bank to contract with all of the sub-participants and ensure that all funds disbursed are to approved destinations, the trader and the trade bank may not pay the sub-participants.

Many pool programs are able to resolve these problems because they do not provide any details on the trade and they use disbursement and collection bank or electronic currency accounts which have no direct linkage to the trade and trade bank. In other words, they remove the ability of the small level participants to cause problems that would be fairly common otherwise.

Most trade placements are ruined as a result of intermediary problems and in most of these cases a potential investor never even learns about the lost trade opportunity. Most of these conflicts result from arguments over the fee split, which is zero to all parties when nothing happens.

Other placements are fouled up because the investor does not have real money or that money is not place able. Another common problem is that brokers have no real trade connections so a placement could not happen no matter how smoothly everything else fits into place. The final reason is that potential investors feel they are much more important then they actually are and are undesirable to the trader due to personality conflicts.

Many potential investors are not successful because they have a greatly inflated sense of their own self worth. Unless the trader has never performed any trades and is hoping to finally be successful this time, the investor needs the trader much more than the trader needs the investor. In other words, the trader is already earning money whether the investor goes into the project or not.

In many cases, potential investors feel they can change the trade procedures or can expect some kind of special concession for going into the trade. There is very little interest in working with potential investors that cause unnecessary problems or animosity, which means that many potential investors are quickly dropped from trade or barred from entering due to personality issues.

Even though the trade could have worked, in many cases the potential investor will claim the grapes were sour anyway. In many cases, these potential investors do not learn their lesson and do not behave any better with the next trader and instead expect more concessions with each new trader as some kind of concession for the past failures.

In other cases, it is possible that the investor himself or herself is not tradable for many different reasons. It may be that the investor has been associated with criminal activity or is a nationality that is viewed unfavorably for one reason or another. The money for placement is also important, a three-year history must be provided to prove the money is of non-criminal origin and is free and clear without any liens or encumbrances. If there are any past problems or a hint of potential future problems, the investor is not tradable.

Assuming the trader is real, the potential investor behaves himself or herself, and the investor is tradable; the trader will provide the details of the trade and directly answer any questions the investor may have. The main factors that the potential investor is normally concerned with are the safety of the invested funds and the potential earning rates.

There are many ways to participate in a project, all of which are based on money and offer different safety levels. The main buzzword is a sole signatory bank account, which means that the investor can keep the money in his or her own bank account under his or her sole control. This is reasonably safe depending on the wording of the investment contract and the actions of the trader.

In order to perform a trade buy/sell of anything, the trader must either have the money itself or the value of the money instead, hi a sole signatory bank account, the value of the money is assigned to the trade at the discretion of the trader, which is roughly the same as giving the trader the money directly. Some sole signatory bank accounts are safe and secure, but this is basically a buzzword tossed around by amateurs without much of a real measure of safety or security.

Other safety factors can be an insurance policy or bank guarantee, depending on if the trade is through a bank or securities brokerage house, or the ability to redeem the funds on deposit with a demand guarantee. In the past, another buzzword many potential investors looked for was pay orders issued in advance. This is not very common today and was rarely associated with real trades hi the past.

Most European trades are through a trade bank while US Fed trades are split fairly evenly between trade banks and securities brokerage houses. In some cases, high volume trade banks will split the transactions among several brokerage houses so it may be a bank trade but conducted through a securities brokerage firm.

There are many ways to deposit funds into a trade, with the most popular being a sole signatory bank account. This is possible only for high level potential investors due to the overhead setting up account scanning and performing account scanning. It is extremely rare to find account scanning below the US $10,000,000 level. Besides a sole signatory bank account, the investor can normally purchase a US Government security or bank Certificate of Deposit, in other cases; a brokerage account can also be the basis of a trade.

According to the international laws that govern high yield placements, only United States Dollars may be the basis for trade. Many companies claim to be trading E-Gold or similar, but only United States Dollars in a real bank or brokerage house can be used for trade. Many pool participation companies use E-Gold or similar to collect and disburse funds, which is a good idea, but E-Gold and similar electronic currency monetary equivalent may not be directly traded in any type of trade.

After an investor has signed the participation agreement, and has funds ready for participation, the trade may begin. There are several possible trade routes, all of which are different.

FOREX currency trading is a not a real trade project but is very profitable and is almost a traditional investment. Basically, one type of money is purchased while another is sold in the hopes that the exchange rates will favorably change over the course of an hour or a day. For example, if a British Pound is purchased with American Dollars at an exchange rate of One Pound per Two Dollars; 1,000,000 US Dollars will obtain 500,000 UK Pounds. An hour later, the trader still holds 500,000 Pounds, but the Dollars to Pounds exchange rate changes.

In the old exchange rate, one dollar was worth 0.50 Pounds. In the new exchange rate, either the Pound becomes more valuable or the Dollar drops, so the new exchange rate is one dollar to 0.45 Pounds. This means that it either takes more dollars to purchase the same amount of pounds or the same amount of dollars will purchase less pounds. This example is a drop in value of the US Dollar of eleven cents or a raise in the British Pound by the same amount. With the new exchange rate, selling the 500,000 Pounds will result in 1,111,111 American Dollars. The extra US $111,111 dollars are real money and would represent a very large 11% profit shift. A currency trade rarely earns a profit level this high but leveraging is possible and buy/sell trades can be as quick as 15 minutes.

When the invested funds are leveraged, the trade bank or brokerage house allows the money to be multiplied five or ten times greater than the actual investment amount. In traditional terms, this would be similar to purchasing stocks or commodities on margin.

Leveraging the invested money is the secret to the very high earning potential. A point spread may actually be only a penny on the dollar. However, if the money is leveraged ten times, that penny becomes ten cents instead.

With leveraging, US $1,000,000 can purchase US $10,000,000 worth of UK Pounds. If the point spread is only a penny instead of eleven cents in the earlier example, the end result would still work out to US $1,100,000 on deposit because that penny is based on US $10,000,000 worth of currency instead of US $1,000,000.

All of the other buy/sell trades are similar; it only depends on the type of security or financial instrument, which is traded. In the United States, US Government securities are traded and many top banks can also sell bank notes in a limited way while in Europe mostly bank notes are bought and sold. The easiest way to understand this process is to look at how US banks provide so many loans for so many different purposes.

The American dollar is considered fiat money, which basically means it is a national currency that has no inherent value. It is money because the government says it is money and made a law stating it must be used, but there is no inherent value beyond the good faith and credit of the United States Government.

This is true for the Euro and most other national currencies as well, due to the limitations that a gold backed system imposes. In a value backed monetary system, you can only have as much money as you have assets on hand, which limits the amount of money which can be exchanged in that economy.

In other words, if you need to have $100,000,000 in your economy for salaries to be paid, for citizens to purchase goods and services, and to allow for international commerce, that government would need to obtain $100,000,000 worth of precious metals first. Since it is easier and simpler to just print sheets of paper that contain ink marks writing out $100,000,000 and skip the actual purchasing of all that real value, most governments stick with the printed paper and make it a law forcing people to accept this as money.

The process for a European bank trade or a US Fed trade is very similar, but different financial instruments are bought and sold. On a much smaller level, US banks perform the same function.

Bank debentures, that is a common name for bank instruments that are bought and sold, can be several different things. They are essentially like a Certification of Deposit but created and sold instead of being sold and created. To purchase a CD from a bank, you have to pay the money first and than the bank will create and sell you a CD based on the amount of money you gave the bank.

Conversely, in a debenture sale, the bank creates it first and then sells it afterward. Insurance companies and other cash based businesses buy trillions of dollars of this paper to productively employ the cash people use to pay their monthly premiums. Other debentures are for specific purposes such a loan in the millions or billions to a major company performing an expansion or similar.

A debenture is profitable in a trade sense because there is a great difference in price between the sales price of the bank and the sales price of the end consumer. For example, in the US, a treasury sells for around 93 cents on the dollar to a consumer but actually passes through many intermediaries who get a few pennies each. Most treasuries start around 50 cents to 75 cents if you are an insider, but it is not possible to purchase them from the government directly at that level.

The trade system is the reason why private investors or institutional buyers cannot purchase US treasuries directly from the US Government. All treasuries must be purchased through a brokerage house through the trade process. Trades are the private part of the transaction that drives up the price between what the government sells the instruments and the 93 cents most end users pay.

The banks in Europe do the same thing but with a slightly different process. With fractional banking, they create a debenture most commonly called a Medium Term Note for US $100M that is sold for around US $50M. From an accounting standpoint, they have an obligation now for US $100M and a credit of US $50M in new earnings. The new earnings can be leveraged into US $500M of lending power and normally a maximum of US $450M is placed back into the economy.

With US $450M on the books as incoming obligations, they have no trouble repaying US $100M to the debenture note holder. The note holder can pay up to face value for the note and earns the difference plus interest income over the three or four months before the note is redeemed.

Between the end purchaser and the bank, a lot of intermediaries split the 45 to 50 cents between what the bank sold the note for and what the end user paid. This 48%, give or take, is split between the trader and an assortment of investors and brokers, hi most cases, a large percentage of these earnings must be paid to some kind of humanitarian project, which lowers the US $48M in earnings down to around US $10M in profits from that single tranche which is split among the investor, the trader, the trade bank, and the intermediaries.

Assuming some of the bank loans default, the bank can still expect most of them to come back. If 10% of the loans default, out of US $450M they can expect to get back US $405M plus the interest. If the interest is 10%, they can plan on getting back an extra US $45M in earnings from the loans that do not default.

With the loan interest and only 10% of the loans defaulting, the bank can expect to earn around US $450M over the life of the loans. With the US $50M from the sale of the original debenture, this comes to US $500M. Minus the US $100M debt from the debenture itself, the bank will earn approximately US $400M for each US $100M bank note sold at a 50% discount over the period of the loan repayments.

This is not how all debentures work; there are many types of bank paper and special circumstances. However, this is the most common situation and fairly easy to understand.

US banks can do this as well on a much smaller scale; basically it is a tool to artificially inflate the money supply. This is not a trade procure; instead, they performed solely to increase the volume of money in circulation. Instead of selling a debenture, they leverage the money obtained from new CD sales and client deposits. As long as there is a net increase, they can leverage the difference ten times to make house loans, college loans, car loans, emergency signature loans, personal loans, extend credit card credit, and everything else.

Without the ability to inflate the money supply, these loans would not be possible. This is the main reason why a gold backed currency is not possible, most Americans would not be able to attend college or purchase an automobile.

Most people never consider how a bank earns money and just assume this is the difference between the interest rate on CD sales and the interest rate on loans along with a smattering of fees, which is not very much money to build a marble building, hire three dozen employees, purchase nice furniture and equipment, hire a security staff, purchase television advertisements, and give out millions of dollars in loans.

Although many banks are dropping their service charges to be competitive, even a dollar a month is not going to go very far. Other fees are not very high either such as selling a CD for 5% and loaning the money out for 10%. I suppose most people think there are just as many people buying a one year CD as there are getting a five year car loan. On top of that, most people live paycheck to paycheck and their bank account is cleaned out before the end of the pay period.

Television commercials can cost an advertiser anywhere between US $50,000 and US $500,000 per 30 second advertisement and some of the more popular television shows can go as high as several million dollar for the same plug. This is very expensive considering that many financial institutions are purchasing these commercial slots to tell people that there are no bank fees if potential clients will just open a bank account and deposit some money.

This sounds like the bank is losing a great deal of money, but what actually happens in this case is that the bank sells several new CDs and obtains a great deal of new deposits over the last quarter totals. The difference here we will call US $1M in new money, which means $1,000,000 more United States Dollars are on deposit in the bank this accounting period than the last accounting period. Of this money, they leverage the US $1M into US $9M in lending power. They can actually loan out US $10M in loans, but if a CD or deposit is withdrawn untimely, that can create liquidity problems so the full leveraging potential is never used incase that buffer is needed to cover a liquidity shortfall.

Of the US $9M in loans that are made, US $1M can be expected to default leaving only around US $8M in profit over the life of the loans. Some of these loans are short term and others are long term but the bank can expect to receive US $8,000,000 in profit when all of them are paid back plus interest. With these inbound obligations, there is no trouble paying the expenses incurred by the US $1M from the original Certificates of Deposit when the bank repays that money plus an additional US $50,000 interest income paid tot he CD owner.

The left over money (around US $6,950,000 over the life of the loans) is used to pay for the building, pay employee salaries, purchase nice office equipment and furniture, hirer some security guards, make other loans, and pay bank profit. This is one of the main reasons why there are more financial institutions than churches in most towns.

Because we are working with fiat money, which has no inherent value, the banks are able to create any money they want digitally and lend it out. This artificially inflates the money supply and allows for many people to purchase something they ordinarily would not be able to afford, such as a house paid over 30 years or a car over five. There is no real limit to the amount of money that can be artificially created.

The money that is created is not invented out of nothing. Technically, this money is borrowed from the Fed at the interest rate that is raised or lowered when the US debt based economy needs tweaking. The leveraging through fractional banking is the level of money that the bank can loan out based on money from the Fed. The Fed does not invent the money either, it creates whatever is needed digitally and it becomes real money as a debt of the United States Government.

The two systems are the same, except that European financial institutions are able to perform this on a larger scale in advance. They can print debentures now for sale later while American banks can only sell Certifications of Deposit after the sale. Either way, these transactions allow for a great level of earnings through fractional banking techniques.

In the United States, many different securities can be bought and sold but the most common are US treasuries. These are printed by the government and sold through brokerage houses. It is not possible to purchase a Treasury directly from the US Government; they must be purchased only through a brokerage house.

While this process is fairly complex, it is essentially the same as European bank debentures. The US government prints a Treasury note and sells it after printing. The notes are drastically marked down and passed through a series of intermediaries before a brokerage house sells it to a cash based business like a utility company, an insurance company, or retirement fund managers for around 93 cents on the dollar.

Many other securities can be bought and sold, but are not a real trade project. Instead, these are traditional investments that rely on the skill and physic ability of the trader, such as earning money in stocks on Wall Street or in Commodities.  In most cases, your stockbroker who performs these trades for you are called brokers, that is a good example of the differences in these investment vehicles.

A trade project is special because there is a built in profit that will always happen. This is in virtue of the special intermediary process between the creator of the item being sold and the end holder who will purchase and keep the note until maturity. When purchasing something on Wall Street, you are basically performing a currency exchange and hoping to catch a favorable exchange rate, there is no built in profit.

Stocks on Wall Street are not fiat money like in currency exchanging. In currency exchanging, the money being bought and sold has value based on the good faith and credit of the issuing governments. Any gains or loses are gains and losses of real money.

In Wall Street, a stock has very little connection to the issuing company, which makes the value less obvious. This is readily apparent in observing shifts in value. On the ForEx market, two or three pennies are large shift while on Wall Street the DOW can perform triple digit movements. Since the DOW is the dollar value of 30 some different stocks added together, a 100-point shift means that these stocks collectively change in value by at least 100 pennies. Another example of stocks versus fiat money is that stock profits are not considered real money until after the stock is sold. Your loan officer will be happy to explain to you why stock values drop around 70% when used for collateral.

It is possible to earn money doing ForEx and Wall Street trades, but they are not real projects because these buy/sell trades do not factor in a profit at the outset. A profit is likely, but based more on luck or physic ability than the pre-coordinated plan of the trade project. Only in a trade can the potential for earnings happen in a reasonably safe and secure way because only in a trade project is the potential profit included as part of the trade project parameters.

Because stocks are a foolish investment considering these other financial vehicles, the US Government has a vested interest in ensuring that trade projects are not common knowledge or available to common investors.

If Wall Street were to drop in value, the entire US economy will slump. Previous newsletters have discussed this in greater detail, but essentially, Wall Street is a route for US companies to generate free money without a great deal of obligations towards the stocks which are sold. This money can be used for expansion or any other purpose and is essentially free money.

Unfortunately, a great portion of the common US Citizens have purchased these stocks, so there is an obligation on the behalf of the US Government to make sure this investment remains at a non-zero level. Because stocks have no inherent value, are not money itself, and the feelings of what people think other people will think about a company is more important than the actions or inaction's of the company itself; the US Government has an uphill battle getting more people to buy stocks than sell them.

If more people are selling than buying, the value of a stock will drop regardless of any factors related to the company itself. This is simple supply and demand, if there is more supply than demand, the price drops until the demand increases. To stop this, the US Government must force new investors to deposit money into Wall Street every single day. Even if an investor cannot be encouraged to invest more money, the US Government must stop investors from selling whatever they have already purchased.

Because of this need to keep Wall Street money on Wall Street, the official US Government position on trades is that they do not exist. That money must not be removed from Wall Street or all of the value on Wall Street will drop faster than the consumer confidence would ordinarily indicate, make consumer confidence even lower.

 Getting back to the start of this article, potential participants are removed from eligibility through a series of requirements that keep trades open only to a limited number of high network participants. The rest of the world should plan to purchase stocks in an effort to keep the stock value of all the previously sold stocks at a non-zero level.

The other part of the placement process, besides keeping many people out, is to resolve solicitation issues. After the intermediary confirms the potential investor is a legal participant in that he or she confirms non-solicitation and posses the required participation amount, then the trader will discuss the trade project and maybe a trade placement will happen.

When a trade placement happens, regardless if this is through a sole signatory bank account, a brokerage account, or another method, the trader has access to the money placed into trade by the investor.

The money is very important because it is the basis of the buy/sell for the trader. The money itself is not involved in the buy/sell, but it allows for the trader to move the instruments from the creator to the end user, in other words, if the investor places US $10,000,000 into trade, the trader can use this money to hold US $100,000,000 worth of bank debentures or US Treasuries but not actually purchase them as the sale has already been coordinated with an end purchaser before the trader obtained the debentures or treasuries.

Only the end user will actually purchase the debenture or treasury and hold it until maturity. The money submitted by the investor to bankroll the trade is not actually used to purchase the debenture or treasury, instead it only serves to provide the margin for the trader to pass the debenture or treasury from the maker to the pre-coordinated end user.

The international laws which govern these trade projects place several limits on this process, which is why traders are always interested in fresh investors. Because of these laws, it is not possible for a trader or a trade bank to bankroll the transfers personally, only outside investors can provide the money to hold the financial instruments during the buy/sell. Also, investor money is only good for specific projects and cannot be recycled over and over again into fresh projects. Ongoing trades will always require a fresh source of capital.

In many cases, there is a need for a humanitarian project to be associated with a trade project. This is not a large concern for the investor; the trader or trade bank will normally supply whatever reason is the basis of the trade. However, in these cases, most of the trade earnings are legally required to go to the humanitarian project that forms the basis of the trade. This does not mean the trade is not profitable, just that some of the profit is diverted to a worthy cause.

In many cases, a trader will coordinate a specific project based on a specific trading velocity and the bank ability to print debentures or other factors. For a popular trade, the number of potential investors may exceed the amount of money needed to perform the pre-coordinated buy/sell tranches. In this case, the trade project is ongoing but can be considered closed because no new investors may participate.

Based on the trade parameters, some investors may be able to participate in a trade project for many years. These projects are attached to long-term buy/sell contracts and tend to earn a lower amount. Other projects are very quick but pay a great deal more because of the short time frame for participation. A shorter project might last for only part of a year, but will pay much more than an ongoing open-ended placement.

Earnings from trade are generated each trade day, which is normally three or four times weekly. However, it is rare for quick payment account periods of a week or less because longer time frames allow for compounding and less overhead performing and tracking daily or weekly payments.

In some cases, trades at the US $100M level will pay daily, but even then that is not desirable due to the lot compounding. If you are a member of a daily pay trade that claims to earn money holding an electronic currency and costs only US $10 to corner the world market, you are probably not in a real trade. It is possible to earn money because some people will always earn money in a ponzi game. However, the success or failure of this game has no relationship to any other game or any aspect of reality in any way, shape, or form.

In other words, if you are in a game and are successful, that is at the expense of later participants. If you are in a game and are not successful, that does not affect any other game, program, or any aspect of reality. It just means you waited too long to join or did not cause enough of your friends to lose money.

When these games slow down and close, many people feel that this indicates some kind of problem about something. In some cases, many games will use the same excuse, which causes people to think some kind of trend is happening. Unfortunately, because the game had no basis in reality, it is safe to assume that no aspect of the game has a connection to reality and all of these ideas and beliefs are false.

Normally, when a game closes, people slow down on participation in other games or they remove funds from those games to reduce their risk exposure. Because those other games are ponzi payments just like the original game, anything that reduces the money flowing into those games will reduce the money flowing out. When the withdrawals exceed the deposits, the game closes.

This creates a wave of closures until people stop pulling out money from games and a new balance between deposits and withdrawals is found. The closure waves happen for two reasons, with the first being reduced participation and increased withdrawals. The second has to do with misinformation published during the game closure.

It would be extremely rare for a game to close stating they were a ponzi scheme and ran out of fresh money. As a result, all games will close stating some kind of external factor as the reason for problems. These excuses tend to be fairly similar in most cases, because they are not based in reality as much as what most people will believe and accept.

In some cases, this fuels the game closure wave because many people will buy into whatever the popular excuses are at the time. For example, the US Patriot Act or similar is a popular theme because most people will accept US Government meddling as a valid reason for failure or complications. This is probably not true, because the game never actually entered into any trades or earned any external money, so there was nothing to meddle with, but it is a good excuse to shift the blame for the failure to somebody else.

If several games are forced to close because of the decreased deposits or increased withdrawals, then several games will present similar excuses. In this case, each of the game closures serve to justify the other game closures and many people will believe there is a problem that actually does not exist.

On Wall Street, this is called investor confidence. The company printed on the stock certificate is not very important compared to what investors think other investors think. If investors feel other people will buy something, they want to buy it first. If investors feel that other people will be selling something, they want to unload it first.

Stocks and games are very similar, but stocks do not have an obligation to repay anyone. A game on the other hand must redeem all of the deposits or it is considered a failure, which is impossible because the later deposits are used for payments to the earlier members. Because games try to represent real money and stocks do not, games will close but stocks just have corrections.

This process is part of the reason why this article on how trades work is necessary. Most people are limited only to the information that the game invents to describe a trade they are not doing. After the game closes, additional misinformation is presented to shift the blame to a different entity as to why the nonexistent trade failed, which further confuses many people.

While this article did not discuss a variety of different ways to perform buy/sell tranches and while this is not a complete list of financial instruments that may be bought and sold, this discussion is fairly complete in terms of trade projects as whole with all of the different factors which make trade projects successful.

Hopefully you have a better understanding of how trade projects work, who can get into them, the basic process of participation, what is acceptable to trade and what is not, and how the money is earned. If you take it upon yourself to understand this process in greater detail, you should be able to make more informed game participation decisions and you should have a much better understanding about what it means when we discuss going trader direct.

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