Your Gravity Defying Money Bazooka

Your Gravity Defying Money Bazooka

What if there was a financial super weapon which can be used to multiply the firepower and reach of your money in ways you’ve never thought possible before? What if such a weapon is widely available already and unlocking it only takes a few well directed steps? What if you’d like to learn more about this? Read on.

Spoiler alert: Having been working in Wealth Management for most of my professional life, your gravity defying money bazooka and most powerful tool to build and multiply your wealth is: Credit!


Recently Jay Z rapped about how crucial he believes credit is for financial freedom.

from 2:29

“You wanna know what’s more important than throwin’ away money at a strip club? Credit

You ever wonder why Jewish people own all the property in America?

This how they did it

Financial freedom my only hope

Fuck livin’ rich and dyin’ broke

I bought some artwork for one million

Two years later, that shit worth two million

Few years later, that shit worth eight million

I can’t wait to give this shit to my children”


In this post we will first discover how money is made and multiplied in our world. In the second part of the post we will explore how to apply this knowledge for your own investments and pursuit of wealth.

Part 1: The Money Multiplier

Do you have cash in your pocket right now? Chances are, the answer is yes. Money, we all use it, want it and think about it. But did you ever reflect in more detail about where your money actually came from and how it’s being released into the system? Instead of arranging a field trip to the money factory, let’s explore further here.

Step 1: Central banks add [virtual] money in the form of credits to the balance sheets of the various commercial banks.

Step 2: The commercial banks will then release it to the end users in the economic system, be it in the form of account balances or in cash.

The fascinating outcome of this money game is that after a while, the final amount of money in the system will DIFFER from the original amount of money issued by the central bank as in step 1. In fact, it will be a multiple of the original amount!

Surprising? How come?

Well, commercial banks engage in two distinct types of activities. One on each side of their balance sheet: Deposit-taking and lending. Are they allowed to lend out the same amount as customers have deposited? No! Banks have to withhold a certain percentage of all deposits as a safety requirement. How much is defined by the so called “reserve ratio”. The reserve ratio or withholding rate can only be amended by the central bank.

How does that work in real life?

Let’s say A has $100 which he likes to deposit into his bank, if we assume the bank has to withhold 10% as reserve, it can lent out $90 of A’s deposit. Assume the $90 are taken out and end up with B. B will now deposit the $90 back to the bank again. In a third step the bank can lend out another $81 (withholding 10% of $90 yet again) to C. C brings his $81 back to the bank and after withholding 10% an extra $72.90 may be lent out to the next client in line… Continue this game on and on until you realize the final sum of money floating in the system is not $100 but a whopping $1,000 instead.

So, we conclude:

If the reserve ratio is 10% the final amount of $100 issued by the central bank would end up to be $1,000 in the system. We can generalize that the money multiplier of any economy equals = [money issued] x [100/withholding rate]. The lower the reserve ratio, the higher the money multiplier of the economy. In case of a reserve ratio of 20% a $100 issued by the central bank will only magnify to $500 in the system.

The final amount of money in an economy is therefore not equal but a multiple of the original money released into the system. All capitalist monetary economies are controlled by an underlying money multiplier. The money multiplier is the result of central bank money issued into the system and the chosen reserve ratio which banks have to withhold. It’s not just a money multiplier, heck no, it’s an economic multiplier!

Understanding this mechanism is the key component for you to imagineer your own gravity defying money bazooka which you then can use on your journey to financial independence.

Part 2: Building Credit and Charging your Money Bazooka

Now think of yourself and your assets not just as a person but as a company or an economy as in part 1. What makes such entities so powerful as compared to a single human being? Well, they all have heaps of “credit”. Companies can issue equity or bonds, economies can even print money or steer the money supply by manoeuvring interest rates and reserve ratios. Now that’s powerful stuff. Isn’t it. This kind of credit, credit-worthiness or credit-line is something I deem a must-have for a successful financial life.

Somehow, it’s an often overlooked and ignored addition to any financially savvy persons’ skill tree. Build credit. Charge your Money Bazooka – unlock your own personal potential money multiplier. But hey, wait, wait, wait: You GOT TO UNDERSTAND how to apply, take aim and learn how to fire once loaded.

Hope is not a strategy.

Luck is not a factor.

Fear is not an option.

Wisdom is Knowledge Applied

Since we’ve gone through all the theoretical stuff, how do we actually charge our Money Bazooka effectively and how to engage, take aim and fire?

Level 1: Improve your credit score and get higher credit card limits.

First homework is to level up your credit score. A credit score is a numeric value which represents an individual’s creditworthiness. Banks and credit card companies use such scores to evaluate the potential risk posed by lending money to certain consumers and are aimed to avoid bad debt. How these scores are composed and evaluated differs from country to country. My advice: become the kind of person banks offer higher credit card limits and credit lines. If banks actually want to lend money to you, you’ve loaded your Bazooka to level 1 which is paramount to unlock further levels. While Level 1 doesn’t allow you too much financial imagineering yet, it unlocks the beauty of credit card award funded travel hacking, a topic we shall cover another time.

Level 2: Get standby lines of credit on your investment accounts.

Once you’ve maximized your credit score as in level 1, your bank would love to lend you some money. Let’s further imagine you have securities of $1,000,000 sitting in your investment account – invested in equities and bonds through fairly liquid products such as shares, ETFs or mutual funds. Did you know banks offer credit lines against such holdings for clients with good credit scores? Most banks can issue a credit-line somewhere around 50-70% of your liquid investment holdings. A $1,000,000 investment account will therefore provide you a comfortable $500,000 credit line – on demand. This is your Money Bazooka. It’s a “nice to have”!

What to use it for?

Picture yourself sitting at a real-estate auction where you suddenly realize you’d love to purchase a decent unit everyone’s bidding for. The going price is around $300,000 but you feel it’s worth more. How many people would you think can make an outright cash-offer and sign the deal on the spot? Congrats, since your Money Bazooka is fully loaded you’d be one of them! If you decide to buy the unit on the spot for cold hard cash, all you need to do is to draw the $300,000 from your standby line at the bank and pay. Done. You might even get (or ask for) a discount for speedy all in cash payment. Settled and end of story. Thanks to your loaded money bazooka you’ve just bought another property at a discount. But that’s not end of story yet. Once the deal is complete, kindly proceed to level 3.

Level 3: Pledge assets such as your real estate and parking lots to the bank.

After you’ve analyzed your newly purchased $300,000 real estate further, you find out its assumed market value is around $375,000. You present the property to your banker who will provide you with a mortgage of 80% of its value = $300,000. After all the paperwork is done your banker promptly provides you with a $300,000 mortgage. As financially smart individual, you promptly wire the $300,000 mortgage payout back in order to pay-off your short term advance against your investment portfolio. Doing so will recharge your Level 2 Money Bazooka in an instant (ka-ching!) – and you are ready for a next shot.

What happened: Surprise! Your Money Bazooka bought you time and flexibility – imagine you’d have to apply for a mortgage or sell your financial holdings just because you need liquidity in order to grab hold of a great opportunity during an auction.

If you’d like to magnify the firepower of your Money Bazooka for a potential next shot, you may also pledge other real estate such as property, parking lots or land.

Whether or not to shoot is up to whether or not you’d like to seize opportunities. It’s always nice to know you could take a shot if you wanted!

A somewhat more advanced move to consider for Level 3:

Imagine now the stock market goes on Sale – let’s say a 30% dive in the S&P500 happens – you may now call your banker and take another controlled shot with your asset-backed and fully loaded Money Bazooka in order to pick-up some discounted shares. Sit and wait until markets normalize and unwind.

Dedication is what turns dreams into reality.

Level 4: The full pledge

Since building and managing wealth will cover all aspects of your finances, some friends might want to think about going one step further. Consider to power-up your Money Bazooka by pledging your retirement account/ portfolio, a life insurance, a portfolio of employee stocks or in very lucky cases publicly traded shares of your very own company which would allow you to keep the majority voting rights while having an option of drawing cash firepower against your post-IPO shares. Some of these ideas might only work in certain countries but unlocking and activating Level 4 assets for charging the Money Bazooka offers you a new level of financial flexibility. It’s simply a matter of activating underused assets.

Make your own paychecks!

Level 5: Learn how to shoot around the corner with your Money Bazooka.

The cross border pledge is what enhances the reach of your Money Bazooka: Keep and pledge your assets in country A and draw-down a loan in country B using a letter of credit or undertaking. This comes with a price tag from the bank but allows you to safeguard your nest egg in a appropriately sheltered legislation while providing you with cash-firepower for investing in a new place without actually transferring money via cable transfer. Level 5 is the ultimate hack providing you a maximum of global flexibility and lets you apply your financial firepower like a pro. This level might however require a certain amount of accumulated wealth before it can be unlocked.

Magic is something you make.

Some People are Wise, some Otherwise.

Know what you don’t know and beware. Credit lines, loans and leverage can be your most amazing secret weapons if applied correctly. However, they also bear the risk to morph into a weapon of mass destruction if used wrongly. Start small and slowly is my best word of advice. Also, study and be aware of margin call levels and local legislations as well as tax implications for cross-border transactions. Read and fully understand the manuals well before manipulating your bazooka!

If you always do what you always did, you’ll always get what you always got.

– Albert Einstein

Using credit is similar to companies or economies using their very own money multipliers to do financial magic in order to expand their balance sheets and seize opportunities without selling your core holdings.

Take it step by step, unlock and get to know your gravity defying Money Bazooka!

Have a rich day,

Yours, Financial Imagineer

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