Five Fraudulent Acts...

[zonsb]

Uplaoder's comment:

Quote:Bailouts, stimulus packages, debt piled upon debt, where will it all end?

How did we get into a situation where there has never been more material wealth & productivity and yet everyone is in debt to bankers?

And now, all of a sudden, the bankers have no money and we the taxpayers have to rescue them by going even further into debt!

Money as Debt II explores the baffling, fraudulent and destructive arithmetic of the money system that holds us hostage to a forever growing DEBT...

...and how we might evolve beyond it into a new era.

--

[Jonathanr]

Well, I got about five minutes in, and decided that I couldn't sit and watch this rubbish any longer. I also get irritated when I hear JT talk about banks loaning money out of thin air. This too is incorrect, although a popular meme. The other popular meme is that the system must continually grow in order to provide the money to pay all the interest. That too is wrong.

Let's start with the first point. The US dollar is now a chartalist currency. It only has value for reason of taxation, market liquidity and depth. Market liquidity is the only reason it has held up for so long, and ditto that for the US treasury market. There is no more liquid a place to park one's wealth - specifically for short periods.

This means that, yes, the currency is thin air, so to speak, but it has value only because the Feds and states impose taxation on property. You can't live and own land without needing to pay at least some of your wealth to the .gov by way of property tax. For more info on this concept, look up Hut Tax in wikipedia. Yes, it is a racket.

Then there is fractional reserve banking. In a gold-standard system, the reserves are in fact gold. In a chartalist system (as is the US, post 1973 or whenever), the banks are credit organisations. Credit, is simply confidence in the ability to pay at a future date, or maintain a cashflow over some future period. Credit has always been this. It's the reason you might lend your brother or sister some money, unsecured. They are creditable or credible. Both words originate from credo, to believe. The credit is typically supported by collateral, and the purpose of collateral is to reduce the price of obtaining that credit (interest rate).

So is the 'loan' a proper contract? Does it have all the elements of a contract? I'm pretty sure that arguing against a meeting of the minds would be frivolous. It is impossible to say that the borrower didn't understand that the provision of loan funds involved an obligation for repayment plus interest - even if those funds were denominated in a chartalist unit.

The other factor of a contract being exchange of consideration. The lender does loan an amount of chartalist currency, even if it is keystrokes within the banking system computer. The loan amount isn't conjured out of thin air, but I'll defend that further a bit later. The borrower's consideration is the legal detriment of providing a series of future cash-flows back to the lender and the pledging of a future item of collateral. Using loan-funds obtained for the purpose of say buying a new car, for some other purpose (pissing it against a wall, say) would constitute a breach of contract, or perhaps even fraud. Since the legal detriment (part of consideration) of pledging the future item as collateral has not been honoured. If that diversion of funds was willful and intentional, then it is fraud.

Point #2 in the video suggests that the bank is lending money (even chartalist currency). This is not correct, since the bank can only lend from its reserves. It doesn't just create them. If, however, the loan funds stay within the bank, then at least part of them can be re-lent (so as to preserve the reserve ratio). All of the depositors' funds are backed by the credit assets - that is the collection of contracts that provide a cash-flow to the bank.

Point #3 suggests that the credit contract is impossible, and therefore invalid. To do this, they conflate money and debt, without considering the chartalist nature of the currency. Chartalist currency can easily be earned, and the loan repaid. There is nothing impossible about it. The red herring is the implication that hard, precious metal money must be used to repay. That is patently false. The other premise is the distinction between principal and interest. It's all the same currency. There aren't notes marked as interest and notes marked as principal. And the biggest point to make is that currency circulates. It goes 'round and around, and gets used multiple times. It facilitates exchange of wealth and creation of wealth (all mutually agreed transactions increase wealth). Thus the interest is paid of wealth, not of currency. The currency used to pay the interest doesn't somehow become extinguished. It gets recycled through bank operating costs and bank shareholders dividends. Even the currency used to pay principal simply returns to the bank reserves, ready to be lent again. This meme is false false false.

Even with a credit union (the concept most favored by anti-bank sorts), the account holders funds are only backed by the loan assets and the small amount of reserve funds (most of which are probably held at a commercial bank).

Points #4 and #5 are also red herrings.

The root of our GFC/credit crunch crisis is not at commercial banks. It lies with the inadvertent collusion between the US Treasury and the Federal Reserve system.

It is the Fed that buys US Treasury paper and increases the supply of FRNs. It is the Treasury that funds that bunch of liars called CONGRESS, that chooses to spend more money than they steal in taxes. It is CONGRESS that created Fannie and Freddie and imposed requirements on the banks to loan money to sub-prime borrowers. It is the influx of sub-prime borrowers which bid up the prices and kick-started the speculative housing ponzi scheme - which deluded banks into eventually offering negative amortization mortgages. It is CONGRESS that repealed Glass-Steagall and allowed investment bankers access to commercial bank funds via sweep accounts, and Fed borrowing. It was the Federal Reserve that introduced TALF and other schemes in order to facilitate hiding of bank insolvency. It is CONGRESS that passed TARP and bailed out the insolvent banks. It is CONGRESS that formed the RTC, which was the animal that invented and popularized structured financing. It is the FDIC which failed to recognize bank insolvency when it whacked them upside the head. Have a look at the recovery rates for FDIC actions. How did they let banks get that far out of whack?

We need to recognize the root cause, the origin of all our financial ills. Politicians. Lying scum. Ignorant dickheads that somehow delude people into accepting their legitimacy.

The natural free market would never, never, never let the economy get this far out of shape - even with fractional reserve banking.

[eye2i2hear]

I found your post fascinating; thanks for taking the time to type it all out for sharing. For now, I only want to comment on a side-bar tidbit --mostly because of a mere coincidental/personal tie in:

(11-03-2011 04:09 PM)Jonathanr Wrote:  So is the 'loan' a proper contract? Does it have all the elements of a contract? I'm pretty sure that arguing against a meeting of the minds would be frivolous. It is impossible to say that the borrower didn't understand that the provision of loan funds involved an obligation for repayment plus interest - even if those funds were denominated in a chartalist unit.

I forget now where specifically it was, but just this past week a couple of us here on the forum discussed the word "understand". Where to break it down, there's under + stand. With 'archy' essentially (and conversely) meaning to stand over. Anarchy is to not stand under?

So, with that meaning in view, do most folks 'understand' the "terms" of The FR "loans"? (as they similarly understand taxes, Citizenship, The State, etc?) [hand over heart, standing under Ole Glory, here-hear!]

Next, again just in the past week, a couple of friends and i, via email, discussed the word "ignorance". Where it was noted, that typically, currently, it's used akin with "to lack knowledge" and more synonymous with dumb or uneducated. Yet to break it down into it's basic form or root, you have: ignore. Which typically carries an element of intent or wilfulness; a rejection. It's not that one who is ignorant just doesn't know (any better), but rather, that they ignore elements (the knowledge offered and available somewhere?).
i can almost hear the ignore + rant!
One popular U.S. form being, "Love it or leave it!" [inclusion of the trusty tag, "BY GOD!" optional]

Thus indeed: do most boobu.s. erectus specimens understand the current System, and are they ignorant? [the numbers of them not on forums like MSN, sure indicate so... etymologically speaking, that is]

And just what is a meeting of the minds, when parties are ignorantly understanding?! [noting too, that most if not practically all legal forms currently (currency) include signing: "I understand...". Too sad that they don't also include for the formal signing: I'm ignorant.]

[notavoter]

Why make this so complicated. To the extent that a government exists the money monopoly is the head of the monster. Without this monopoly a government would have to deliver whatever it says it will deliver in order to justify its existence.

Why are Fed notes still so popular even in the face of the fraud? Because everyone is paid in them and they need them to go to the grocery store to buy food.

Take something of real value that you have in your possession and you claim to own as your personal property. This could be anything including your own time and labor. Try selling that to the grocery store for trade of food. If the grocery store would accept your offer you would be spending real money. it is that simple. This indeed will be the case when the illusion is realized by enough people, and it will not be pretty.

[Jonathanr]

eye2,
That story about understand is simply bullshit, unless you have evidence that these sovereign person folks have hijacked etymonline.

Etymology of understand

Notavoter, please do yourself a favour and read the Hut Tax article at wikipedia. It gives a good grounding about the origin of chartalist currencies. While it is true that the USD didn't start that way, it definitely shows how the "fraud" is perpetrated, and why it has survived, post 1933 and post 1971.

Yes, it survives at the barrel of a gun.