It was an advantage that this post did not take up business courses while in the undergrad. I did not have to be bound by business traditions and practices It was a clean slate for me when I started wading into the business world
Our foray into öur business was a thrift bank. While my mother spent almost 20 years in the rural banking as a cashier, the putting up of a new bank with existing competition was an entirely a new ball game.
Aside from the secret of success as hardwork, keeping your word, and knowing your goals, one of the most important secrets that I learned is CREATING YOUR OWN CURRENCY (money)
1. In the banking system one thinks that the best way to grow is gather deposit. One thinks that banking is like having a piggy bank that you fill up with deposit. It does not happen that way. The best way to grow is to create credit to lend. Lending creates money so many times depending on the reserve requirements: x10 if reserve is 10% 5x if reserve is 20%. Thus with the rural bank, having P1 million deposit, we would most likely to guess that we will get only a fraction of that deposit. But we ended with P5 million deposit after one year. And five years after, we had P100 million.
from Google
Most of the money in our economy is created by banks, in the form of bank deposits – the numbers that appear in your account. Banks create new money whenever they make loans. 97% of the money in the economy today exists as bank deposits, whilst just 3% is physical cash.
2. We utilize this powerful tool of capitalism to create wealth from nothing. The central banks have about P10 b in capital, but becomes a platform to trillion of GDP, loans and currency in circulation
Central banks create funny money. When they lend money to banks, (under a rediscount or
repurchase agreement, they simply Dr. Loans, and Cr. Bank Deposits to their reserve account
No money changed hands, no actual money was sourced by the Central Bank
Thus China CBs were smart. They created loans from nothing and bought commodities, oil
and coal, and or other blue chip companies, and in the process increased Chinas wealth, In the
country behest loans drained the resources of our Central Bank (case against Marcos)
3. Firms like the SM group use this seminal idea to speed up their growth. Its growth being limited
by limited spending power of consumers, SM embarked on selling POs through agents, dealers who were given 5 to 10% discount for financing the said PO. They were payable in 2 mos. POs radically increased sales volume of SM and their affiliates.
They replaced this later on with their purchase of ACME bank (now BDO) which offers more convenient credit cards.
4. Car companies and dealers cant boost their sales without installment sales, and car loans offered by banks who are cobranding with them
5. For our business group:
1. We created real estate companies partially with equity from the bank (allowed by PD 71 and 72)
and loans (properly secured)
2. We bought properties under contract to sell (with partial dp) through the created real estate
companies
3. We created PN via the Contract to Sell (another money creation) Had we gone a step further,
we could have borrowed against these contract to sell. The sales proceed were deposited with
the bank
4. Or we required 30% dp, the properties were mortgaged wth the bank for the balance. (These
were choice properties located along the highway in front of public market near the church
The 30% dp and the proceeds of the mortgage were deposited with the bank. This caused
ballooning of deposits and assets of the bank, and of the real estate company
6. That is why, Japan through JICA and US through USAID finance road constructions and other
worthy projects. They do not only help develop the markets for their home country products
but generate entrepreneurship in the donee countries. When there is entrepreneurship, ,there is
progress.
7. That is why we also established lending investor company (to lend to our market) and foundation to
emulate this business model of Western Countries. They worked.
