Ogee s Secret

Many many year<strong class="superseo">s ago in a land far across the sea lived a man called Ogee. He laughed a lot because he had a secret. And his secret made him very rich. Even today most people do not know this secret， although it is affecting them every day of their lives.

　　Being a goldsmith， Ogee made sparkling necklaces， rings， and bracelets， and marvelous tiaras for the grand ladies of the region. He also made pretty and useful figurines and pottery decorated magnificently. He was good at what he did and his work was much in demand. But that was not his secret.

　　Because Ogee used valuable gems and gold in his work， he built a strong， secure room to keep these valuables safe from thieves. People who did not have such a secure place to keep their gold paid Ogee to keep it for them. Many people know about Ogee's safe room， so that was not his secret， either.

　　When someone stored gold with Ogee， he of course gave the depositor a receipt showing the amount of gold stored. When the depositor wanted his gold back， the certificate （receipt） was presented to Ogee who then returned the gold to the depositor.

　　This worked out quite well for Ogee. He was gradually reimbursed for the cost of building the safe room by the payments of depositors for storing their gold. It worked well for the depositors， too， because their gold was safeguarded by ogee for much less than it would cost them to build their own safe rooms.

　　Over time， Ogee noticed a very interesting thing happening. A substantial portion of the gold stored in his safe room just stayed there. It was not withdrawn. individual depositors would store gold with him from time to time， and also some depositors would withdraw gold now and then. But there was always a substantial amount of depositor's gold in the safe room. Just sitting there.

　　When Ogee learned why this happened， the wheels began spinning in his head. Ogee discovered that gold certificates which he had given to depositors were being used as though they were actual gold， to pay for goods and services. They were passing from one person to another， and then another and another， in payment for things and services just as though they were gold.

　　If the amount of a particular transaction was less than the gold certificate， the depositor would just write and sign a note directing Ogee to pay a stated amount of gold to the payee named in the note. That note， in turn， would pass from hand to hand many times as payment for goods and services before it was presented to Ogee for the actual gold. Often such notes would not get to Ogee until they were worn out from being carried holders of worn notes often did not ask for the actual gold when presenting them to Ogee. They just wanted new notes that were not worn out.

　　In this way， Ogee's gold certificates became"money"， which were readily passing from hand to hand as though they were actual gold because people trusted that they could get the actual gold at any time merely by presenting the certificate to Ogee. Ogee knew this and was always very careful to honor the certificates and notes whenever they were properly presented to him for the gold they represented. Of course Ogee had to maintain accurate records for each depositor who stored gold with them.

　　Then one day Ogee's friend， Aga， came to him with a proposition. Aga had an opportunity to make a profit on a business deal， but he needed some gold up front to get the deal going. Aga offered to pay Ogee part of the profit （interest） if he would lend Aga the money he needed.

　　When Ogee agreed， Aga said he desired the borrowed gold to remain in Ogee's safe room so Ogee gave him a gold certificate instead of actual gold. Aga then went on his way t carry out his business deal， using the gold certificate Ogee had given him. Now， let us pause to analyze what had just happened. It is of key importance in understanding Ogee's secret. The total amount of gold certificates issued by Ogee was now greater than the total amount of actual gold stored with him by depositors. Previously， he had given gold certificates in the proper amount only to depositors who left gold with him for safekeeping. Each gold certificate issued had been"back up" by actual gold stored in the safe room. This time， however， Ogee issued a gold certificate to Aga as a loan， although Aga had not deposited any gold with him.

　　Ogee had created paper money！ Out of nothing！ There was no gold in the safe room to back up the certificate issued to Aga. he did it by giving Aga a gold certificate promising to pay gold when the certificate was presented. The gold certificate which Ogee gave Aga was no different than certificates given to those who had actually deposited gold.

　　Ogee felt safe in doing this because there always had been a much greater supply of gold in the safe room than was needed to cash certificates presented for that purpose. He was confident that even if the certificate which he had given to Aga were presented immediately， which wasn't likely. there would be plenty of gold in the safe room to cover it. This worked out fine， so Ogee gradually began to make other loans on the same basis.

　　No wonder Ogee was happy. He had discovered how to create money out of thin air by loaning that which he did not have and collecting interest on it.

　　Now you know Ogee's secret. But that is not the end of the story， only the beginning. It is still being played out today with other Ogees and Agas all over the world. Ogee's secret has tremendous implications regarding war and peace， depression and inflation， freedom and slavery， but there is not space here for a discussion of these implications.