Mortgage Elimination
Part 2
If a
promissory note is designed to circulate as money, like money it can be
deposited into a checking account, can't it? You bet.
That was never disclosed in the bank loan agreement, was it? No.
See, if gold and silver coin were the money, the current banking system could
not exist. Our founding fathers knew that.
Since the promissory note is a negotiable instrument, per the Uniform Commercial
Code, at what point did the bank "own" the promissory note? A note is an IOU. It
says "I owe you $X, which is to be repaid on this or that date, or through
payments."
Did you give the bank permission to turn your "promise to pay" into money?
Probably not. By the bank altering the note and turning it into a negotiable
instrument, they changed the cost and the risk to you and them. Before they
deposit the note into a checking account, you thought the agreement was that
they were going to loan you money. They were the ones at risk. It's your duty to
pay them.
When the bank deposited the note, the entire cost of the loan was funded by you,
and you're now supposed to pay them? That's not what you agreed to, is it?
Because of this banking system, you are in "debt" with "money" that you provided
the value for.
Banking was conceived in iniquity and born in sin. Bankers own the earth; take it away from them but leave them with the power to create credit, and, with a flick of the pen, they will create enough money to buy it all back again. Take this power away from them and all great fortunes like mine will disappear, and they ought to disappear, for then this world would be a happier and better world to live in. But if you want to be slaves of bankers and pay the cost of your own slavery, then let the bankers control money and control credit. - Lord Stamp, a Director of the Bank of England, in a speech in 1940
What's wrong with a little debt?
There is a kind
of fascinating appeal to this theory. It gives those who expound it an aura of
intellectualism, the appearance of being able to grasp a complex economic
principle that is beyond the comprehension of mere mortals. And, for the less
academically minded, it offers the comfort of at least sounding moderate.
After all, what's wrong with a little debt, prudently used and intelligently
managed? The answer is nothing, provided the debt is based on an honest
transaction. There is plenty wrong with it if it is "based upon fraud".
An honest transaction is one in which a borrower pays an agreed upon sum in
return for the temporary use of a lender's asset. That asset could be
anything of tangible value. If it were an automobile, for example, then the
borrower would pay "rent." If it is money, then the rent is called "interest."
Either way, the concept is the same.
When we go to a lender -- either a bank or a private party -- and receive a loan
of money, we are willing to pay interest on the loan in recognition of the fact
that the money we are borrowing is an asset which we want to use. It seems only
fair to pay a rental fee for that asset to the person who owns it. It is not
easy to acquire an automobile, and it is not easy to acquire money -- real
money, that is. If the money we are borrowing was earned by someone's labor and
talent, they are fully entitled to receive interest on it. But what are we to
think of money that is created by the mere stroke of a pen or the click of a
computer key? Why should anyone collect a rental fee on that?
When banks place credits into your checking account, they are merely
pretending to lend you money. In reality, they have nothing to lend. Even the
money that non-indebted depositors have placed with them was originally created
out of nothing in response to someone else's loan. So what entitles the
banks to collect rent on nothing? It is immaterial that men everywhere are
forced by law to accept these nothing certificates in exchange for real goods
and services. We are talking here, not about what is legal, but what is moral.
As Thomas Jefferson observed at the time of his protracted battle against
central banking in the United States, "No one has a natural right to the
trade of money lender, but he who has money to lend."
Let us, therefore, look at debt and interest in this light. Thomas Edison summed
up the
immorality of the system when he said:
People who will not turn a shovel of dirt on the project [Muscle Shoals] nor contribute a pound of materials will collect more money...than will the people who will supply all the materials and do all the work.
Is that an exaggeration? Let us consider the purchase of a $100,000 home in which $30,000 represents the cost of the land, architect's fee, sales commissions, building permits, and that sort of thing and $70,000 is the cost of labor and building materials. If the home buyer puts up $30,000 as a down payment, then $70,000 must be borrowed. If the loan is issued at 11% over a 30-year period, the amount of interest paid will be $167,806. That means the amount paid to those who loan the money is about 2 1/2 times greater than paid to those who provide all the labor and all the materials. It is true that this figure represents the time-value of that money over thirty years and easily could be justified on the basis that a lender deserves to be compensated for surrendering the use of his capital for half a lifetime. But that assumes the lender actually had something to surrender, that he had earned the capital, saved it, and then loaned it for construction of someone else's house. What are we to think, however, about a lender who did nothing to earn the money, had not saved it, and, in fact, simply created it out of thin air?
So how does the bank loan actually work?
- You want a loan for your home.
- The bank advertises that they loan money.
- You "apply" for a "loan."
- They put you through the ringer and make you glad and relieved that you were able to be approved for a loan. (You know, like they are doing you a really big favor.)
- They have you sign a promissory note.
And here's the part you're never supposed to know
- Since your promissory note can be sold for money, it's an asset.
- The bank deposits the asset into an account for approximately the amount of the note.
- The bank cuts you a check from the deposit you never knew about (or transfers the money to those who should be receiving it).
- And you think you owe money back on a loan, when in fact all that was made was an exchange.
If the promissory note is an asset, what funded the bank's ownership of the note?" Answer: They still don't really own it. They made an exchange - Your promissory note (asset to the bank) was exchanged for approximately the amount of the loan. You gave the bank an asset worth $100,000 and the bank returned $100,000 to you. Where was the loan? There wasn't one. But you really do have to admit, it's brilliant.
As an honest, ethical person who believes that all loans should be repaid, do you agree that the bank should repay your loan to them? After all, they deposited your promissory note. Your promissory note is an asset that they exchanged for a check. Where's the loan?
Factually, there isn't one. And since all lenders should be repaid, shouldn't the bank repay your loan to them? If so, you wouldn't have the "debt" and would live better.
Quickly, when you deposit money in your checking account, does the bank now owe you that money when you want it? Yes. The bank has a new asset, the $100 you deposited into your checking account. The bank also has a new matching liability that says the bank owes you $100. Assets = Liabilities.
The bookkeeping entries are nearly identical for a deposit into your checking account and for a new loan. By lending, the banks now have more assets and liabilities. If you were to lend me $500, your "pool of money" would be smaller. When a bank "loans" money, their "pool of money" increases.