Wednesday, October 6, 2010


Millions of Americans are facing foreclosure.
Is this avoidable?
You bet!, and it's been done.

What is money? (and what is it NOT?)
Originally in England, the unit of money was called "one pound sterling". That was because it was literally, sterling silver a weighing one pound. As it was quite difficult to carry several pounds weight of currency round with you, it was arranged that the actual silver could be held in a bank and a promissory note which was essentially, a receipt for the deposit of each pound of silver, was issued. It was much easier to carry these "bank notes" around and to do business with them. If you wanted to, you could always take these notes to a bank and ask for them to be cashed, and what happened then was that the bank would hand you the equivalent weight of sterling silver in exchange for the notes.

Today, the currency in England is still "bank notes" which are certainly easier to carry around, but there is one very important difference. These notes are issued by the private company called "The Bank of England" (which is as good a name for a company as any other name). However, if you were to take one of their bank notes to the premises of that company and ask for it to be cashed, all that they would do is give you another note with the same number of pounds written on it, or alternatively, some other notes with smaller numbers printed on them. This is because, unlike the original bank notes, there is nothing of any physical value backing up the bank notes of today - they are only worth the physical paper on which they are printed.

It actually gets worse than that. What happens most commonly nowadays is that they do not even bother printing those pieces of paper. Now, they just tap some numbers into a computer record, or if they are old-fashioned enough, they write the numbers into a ledger. What do those numbers represent? Nothing at all - they have no actual value, in other words, just as much value as if you typed them into your own computer - quite meaningless. And yet, a bank or other financial institution will merrily "lend" you those numbers in return for years of your work - now isn't that really generous of them?

Actually, this is not at all funny, because if you don't keep paying them money earned by your very real work, then they will attempt to take your house and possessions away from you. This won't happen if you understand that what they lent you was actually valueless.

Take the case of Jerome Daly of Minnesota.

In court, Jerome challenged the right of the bank to foreclose on his home which had been purchased with a loan from the bank. Jerome argued that any mortgage contract required that both parties (that is, himself and the bank), to put up a legitimate form of property for the exchange. In legal language, that is called a legitimate "consideration" put forward by both parties to the contract.

Jerome explained that the "money" was in fact, not the property of the bank as it had been created out of nothing as soon as the loan agreement was signed.   That is, the money does not come out of the bank's existing assets as the bank is simply inventing it and in reality, the bank is putting up nothing of it's own, except for a theoretical liability on paper.  

As the court case progressed, the President of the bank, Mr Morgan, took the stand and admitted that the bank, in combination with the (privately owned commercial company called) "The Federal Reserve Bank", created the entire amount of the loan in credit in it's own books by means of a bookkeeping entry, the money and credit coming into existence when they created it.

Further, Mr Morgan admitted that no United States Law or Statute existed which gave him the right to do this.

A lawful consideration must exist and must be tendered to support the loan agreement.   The jury found that there had been no lawful consideration put forward by the bank and so the court rejected the bank's application for foreclosure and Jerome Daly kept his home

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