Should An Even Exchange Be Considered A Loan?
In the previous section we learned how money is created by Congress, now let's
examine how it is created by "credit-lenders".
Your signature is an asset in our economy. You create the value for
your mortgage with your signature on the Promissory Note. You do not
borrow the bank's money.
Take a look at the definition of “Bank” in the 4th Edition of Black’s Law Dictionary:
If a promissory note is designed to circulate as money, like money it can be
deposited into a checking account. Though this is the case it was never
disclosed in the bank loan agreement.
Since the promissory note is a negotiable instrument, per the Uniform
Commercial Code, at what point did the bank “own” the promissory note? The
"lending" techniques that banks have used for centuries appear to be lending
money, but in actuality have the value supplied by the person seeking the loan.
The bank does not disclose to you that your Promissory Note is actually an asset
to the bank. Instead they focus your attention on the second document you sign,
the Mortgage Agreement. The intent of this misdirection is to perpetuate a public
perception that you are receiving something from the bank that you are obligated
to repay.
The bank does not let you know that a promissory note is actually a “negotiable
instrument” under the Uniform Commercial Code, and that it will be deposited to
fund your loan. Nor does the bank tell you that they have a liability to you of
approximately the amount of the loan. (The bank owes you by their own
bookkeeping entries).
When you apply for a $100,000 bank loan, you sign a $100,000 promissory note,
which funds the $100,000 bank loan check that you receive at closing. What is
the actual cash value of the promissory note? It is $100,000, because the bank
exchanges your promissory note for $100,000 in government bonds, which has
value equal to cash.
The lender merely exchanged actual cash value for actual cash value, and you
were charged as if there was a loan.
As per the Federal Reserve Bank of San Francisco publication Monetary Policy
in the United States (p. 13) states that, "bank loans is/are funded...by banks
creating new deposits." They claim there was a loan. The truth is , it was an
exchange and they called the exchange a loan. The proof is in the bookkeeping
entries. No actual cash value was loaned as consideration for obtaining the
promissory note, and the proof is that the note is what funded the check that you
received.
If you gave the bank $100.00 cash as collateral for a bank loan, and the bank
deposited the $100.00 cash and used it to fund a bank loan check which was
delivered to you, and the bank refused to return the $100.00 cash collateral,
does that make business sense to you? Does that sound like a fair and equitable
transaction?
That is exactly what the bank does on every loan it makes. When you hand the
lender a promissory note, it has equal value to the loan check. Where is the
money that paid for the promissory note?
When a bank grants a $100,000 loan, all they are doing is taking $100,000 of
actual cash value from you (the promissory note) and transferring it to them, for
free. The bank did not loan one cent of their depositor's money for the $100,000
promissory note.
They did it by recording the promissory note as a loan from you to the bank, on
the banks books by journal entry. The bank then used the $100,000 they obtained
from you to create the $100,000 of new money called checkbook money.
Checkbook money has equal value to legal tender because the promissory note
can be sold for legal tender.
Then the bank uses the newly created checkbook money to give you back the
$100,000 as a bank loan.
- You want a loan for your home
- The bank advertises that they loan money
- You apply for a loan
- You jump through all their hoops and are approved for a loan
- They have you sign a promissory note
- Your promissory note is exchanged for currency of equal face value
- The bank deposits the currency into an account
- 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 took
place was an exchange.
What other business in the world allows you to create money based on the value
that someone else gives you, then charge that person again plus interest!?
So the real question becomes, “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 and 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 was not one.
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 is not one. And since all lenders
should be repaid, shouldn' t the bank repay your loan to them?
Federal Reserve System, expanding its value up to nine times the note's face
value ($100,000 becomes $900,000), tax-free money they can spend and invest
as they please. Bearing in mind, your are "currently obligated"to repay the loan
with interest that works out to 2 1/2 times the principal over a 30 year period..
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