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Memorandum of Law on Money, Credit, and Banking

Memorandum of Law on Money, Credit, and Banking

I. Introduction.
Definitions of various essential terms used herein are set forth in the Appendix hereunder.
This Memorandum of Law on Money, Credit, and Banking, hereinafter “Memorandum,” constitutes an exploration and analysis of the origin and nature of the money that circulates as currency, along with the operational law and jurisdiction that defines and governs the use thereof. It should be noted this was written in 2003, long before the foreclosure and debt crisis now evident to everyone, the way to see ahead is to follow maxims/principles of universal law, the current situation should come as no surprise to those who understand how money, banking, and credit are structured into our daily lives.
In addition to a legal perspective, it is well to place the human dimension of the situation into perspective. The condition of Americans vis-à-vis the banks and monetary system comes into focus with the following statistics on debt:
A. Statistics cited by New Step Solutions:
  • The average American household has 13 payment cards, including credit cards, debt cards and store cards. There are 1.3 billion payment cards in circulation in the United States.
  • Americans made $1.1 Trillion worth of credit card purchases in 1999.
  • Americans carry, on average, $5,800 in credit card debt from month to month. If one were to make only the minimum payment on that debt every month, it would take 30 years to pay off - and include an additional $15,000 in interest.
  • According to the American Bankruptcy Institute, 302,829 people file for bankruptcy in the first quarter of 2000.
  • On average the typical credit card purchase is 112% higher than if using cash.
    Over 40% of US families spend more than they earn. (Federal Reserve).
  • 96% of all Americans will retire financially dependent on the government, family, or charity. (U.S. Dept. of Health & Human Services)
  • Almost one out of every 100 households in the United States will file for bankruptcy.
  • A 1992 Federal Reserve study showed that 43% of U.S. families spent more than they earned.
  • According to the National Association of Realtors the average homeowner stays in their home for 7.1 years (1993 statistic). With an 8% mortgage, they will sell their home still owing over 90% on their mortgage. If they were to continue this trend they would NEVER pay off a mortgage in their lifetime!
  • Only 2% of homes in America are paid for!
  • On average, Americans can expect to receive just 37% of the annual retirement income they will need to live comfortably. [America's Retirement Crisis: The Search For Solutions- Openheimer Funds Dist., Inc. 1993]
  • As of 1995 92% of U.S. family disposable income is spent on paying debts, up from 65% in 1975. [Federal Reserve]
  • For the year ending June 30, 1996, personal bankruptcies totaled more than ONE MILLION for the first time ever in a twelve month period. That is almost one bankruptcy for every 100 U.S. households.
  • On average, you will spend 112% more on a credit card purchase than when using cash.
  • The average household has four credit cards with balances around $4,800, up from two cards and $2340 in balances five years ago. [RAM Research, 1996]
  • Making the minimum payment on a $4,800 balance (average balance of U.S. cardholders) at the average annual 17% interest rate, it would take you 39 years and seven months to pay off. You would pay $10,818.63 in interest alone, and a total of $15,619 for the privilege of charging the $4,800!
  • Nearly half of all Americans (46%) have less than $10,000 saved for their retirement. And 39% of Americans are anxious about their ability to achieve their desired retirement lifestyle. [Miles To Go: A Status Report on Americans' Plans for Retirement-Public Agenda, 1997] It can either be the golden years or the golden arches.
  • An $8,000 debt at a rate of 18% interest will take you over 25 years to repay and cost you over $24,000 in the long run.
B. Statistics cited by Debt Smart:
  • Today (2001), the typical U.S. household carries an average credit-card balance of $7,500 up from less than $3,000 in 1990.
  • Personal bankruptcies have nearly doubled in the 90's to 1.2 million per year. With credit-card debt as the significant factor.
  • In 2001 $670 billion of the nation's $5.1 trillion in mortgage debt will be refinanced, according to Mortgage Bankers Association estimates. Fannie Mae economist Orawin T. Velz figures that nearly half of borrowers will add to their loan balances. All told, homeowners could walk away with $55 billion in cash from refinancing. Spending from that windfall could exceed the impact of the $38 billion tax rebate.
  • As of 7/31/01 the total public debt of the US was $3,266,222,376,162.12.
  • The number of young people filing for bankruptcy increased by 50% in the past ten years. That's bad, but it must be viewed in the context of the overall bankruptcy rate, which increased by 40% in the same period.
  • Americans currently owe over $180 billion in federally guaranteed student loans—the majority of which carry variable interest rates that are reset every July 1.
In short, Americans—and indeed the people of the world—are drowning in a sea of debt. The nature of this debt is a function of the monetary and banking system that currently prevails. Elucidating the major features and origin of such debt, as well as the money and banking system that spawns it, is the point of this Memorandum.
II. Quotes on money and banking.
An overview on contemporary money is provided in the following quotations from celebrated sources:
"The few who can understand the system [check money and credits] will either be so interested in its profits, or so dependent on its favors, that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests." —Rothschild Brothers of London.
"There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic laws on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." —John Maynard Keynes, The Economic Consequences of the Peace, 1919.
“The refusal of King George to operate on an honest, colonial money system which freed the ordinary man from the clutches of the manipulators was probably the prime cause of the Revolution.” —Benjamin Franklin
“History records that the moneychangers have used every form of abuse, intrigue, and deceit and violent means possible to maintain their control over governments by controlling the money and its issuance.” —James Madison
“All the perplexities, confusion and distress in America arise, not from defects of the Constitution or Confederation; not from any want of honor or virtue, as much as downright ignorance of the nature of coin, credit and circulation.” —John Adams
“The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the republic is destroyed.” —Abraham Lincoln.
"Banking was conceived in iniquity and born in sin....Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again....Take this great power away from them and all great fortunes like mine will disappear [he was reputed to be the second-richest man in Great Britain] and they ought to disappear, for then this would be a better and happier world to live in....But, if you want to continue to be the slaves of the bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit." —Sir Josiah Stamp, President, Bank of England.
“If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible—but there it is.”Robert Hemphill, former Credit Manager of the Atlanta Federal Reserve Bank
Federal Reserve Publications:
Modern Money Mechanics, Federal Reserve Bank of Chicago (brochure no longer available):
"Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries. Coins do have some intrinsic value as metal, but generally far less than their face value.” Page 3.
The same publication extols the banks’ history and policy of thriving by fraud:
"It started with the goldsmiths. As early bankers, they initially provided safekeeping services, making a profit from vault storage fees for gold and coins deposited with them. People would redeem their 'deposit receipts' whenever they needed gold or coins to purchase something, and physically take the gold or coins to the seller who, in turn, would deposit them for safekeeping, often with the same banker. Everyone soon found that it was a lot easier simply to use the deposit receipts directly as a means of payment. These receipts, which became known as notes, were acceptable as money since whoever held them could go to the banker and exchange them for metallic money.
"Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money. More notes could be issued than the gold and coin on hand because only a portion of the notes outstanding would be presented for payment at any one time.
"Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries [now 'computer blips'] crediting deposits of borrowers, which the borrowers in turn could 'spend' by writing checks, thereby 'printing' their [alleged borrowers'] own money [i.e., a mortgage note (asset) deposited with the bank creates a different form of 'money,' i.e., ‘checkbook money,’ the alleged borrower receives as a loan]." Page 3.
"In today's world of computerized financial transactions, the Federal Reserve Bank pays for the securities with an 'electronic' check drawn on itself." Page 6.
"Of course, they do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created [i.e., the bank could not create new money by monetizing a borrower’s note]. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts." Page 6.
"The Federal Reserve System has added $10,000 of securities to its assets, which it has paid for, in effect, by creating a liability on itself in the form of bank reserve balances." Page 6.
Your Money, Federal Reserve Bank of Richmond, 1991, page 12:
"Federal Reserve Banks pay 2.5 cents for each note [regardless of denomination] produced by the Bureau of Engraving and Printing. This price changes when labor, materials, and operating costs rise or decline."
National Geographic:
National Geographic, Vol. 183., No. 1, January 1993, "The Power of Money," pp. 83-84:
“Every business day, after a telephone conference call at 11:45 a.m., the Federal Reserve Bank of New York, acting on directives from the Federal Open Market Committee at Fed headquarters in Washington, buys U.S. government securities from major banks and brokerage houses, or sells some—usually U.S. Treasury bills, which in effect are government promissory notes. Say today the Fed buys a hundred million dollars in Treasury bills from those big securities dealers, who keep a stock of them to trade with the public. When the Fed pays the dealers, a hundred million dollars will thereby be added to the country's money supply, because the dealers will be credited [accounting entries] that amount by their banks, which now have that much more on deposit.
“But where did the Fed get that hundred million dollars?
“'We created it,' a Fed official tells me. He means that anytime the central bank writes a check, so to speak, it creates money [out of nothing]. 'It's money that didn't exist before,' he says.
“'Is there any limit on that?'
“'No limit. Only the good judgment and the conscience of the responsible Federal Reserve people.'
“'It was delegated to them in the Federal Reserve Act of 1913, based on the Constitution, Article I, Section 8. ‘Congress shall have the [exclusive] coin money, regulate the value thereof.’”
United States Supreme Court:
Juilliard v. Greenman, (1884) 110 U.S. 421; 28 L Ed 204:
“Starting with the undisputed proposition as laid down by this court, speaking through Mr. Justice Story, Martin v. Hunter, 1 Wheat. 326, that: ‘The Government, then, of the United States can claim no powers which are not granted to it by the Constitution, and the powers actually granted must be such as are expressly given, or given by necessary implication, they have maintained: That the power to make anything except gold and silver a legal tender for the payment of debts, prohibited by the Constitution of the United States, is not granted by express terms to Congress, and in the light of history contemporaneous with the adoption of the Constitution, was not intended to be granted....[1]
“‘That it cannot reasonably be so derived, because it is not to be deduced from the express power to coin money and regulate the value thereof, a paper currency being itself a contradiction of the term 'money,' and cannot, by logic or by regulation of law, any more than by magic, be turned into money. Nor from the express power to 'borrow money,' because this power gives no authority to any debtor, citizen or Sovereign, to change the standards of value or to give greater currency to promises to pay by declaring their enforced substitution as money between third persons not concerned in the act of borrowing.’
“...the Constitution vests no power in Congress, either by express grant or as the result of any one or of all the powers which it confers, to create at will and in the absence of any national exigency, a legal tender paper currency, to exist for an indefinite period, and to be an enforced substitute for coin in the payment of public and private debts.
“In the absence of public exigency, legal tender legislation is not a means appropriate to any legitimate end of government.
“Money is not only a medium of exchange, but it is a standard of value. Nothing can be such standard which has not intrinsic value, or which is subject to frequent changes in value. From the earliest period in the history of civilized Nations, we find pieces of gold and silver used as money. These metals are scattered over the world in small quantities; they are susceptible of division, capable of easy impression, have more value in proportion to weight and size, and are less subject to loss by wear and abrasion than any other material possessing these qualities. It requires labor to obtain them; they are not dependent upon legislation or the caprices of the multitude; they cannot be manufactured or decreed into existence, and they do not perish by lapse of time. They have, therefore, naturally, if not necessarily, become throughout the world a standard of value. In exchange for pieces of them, products requiring an equal amount of labor, are readily given. When the product and the piece of metal represent the same labor, or an approximation to it, they are freely exchanged. There can be no adequate substitute for these metals. Says Mr. Webster, in a speech made in the House of Representatives in 1815:
“‘The circulating medium of a commercial community must be that which is also the circulating medium of other commercial communities, or must be capable of being converted into that medium without loss. It must also be able, not only to pass in payments and receipts among individuals of the same society and Nation, but to adjust and discharge the balance of exchanges between different Nations. It must be something which has a value abroad as well as at home, by which foreign as well as domestic debts can be satisfied. The precious metals alone answer these purposes. They alone, therefore, are money, and whatever else is to perform the functions of money must be their representative, and capable of being turned into them at will. So long as bank paper retains this quality, it is a substitute for money; divested of this, nothing can give it that character.’
"So it always will be; legislative declaration cannot make the promise of a thing the equivalent of the thing itself.... Promises of money are not money." [Emphasis added.]
III. Bank mortgage loans and credit cards.
As may be gleaned from the statistics cited above on debt, the largest percentage of Americans’ debt is due to home mortgages and credit cards. Although it may be considered an astonishing contention, there are numerous grounds on which both mortgage loans and credit cards may be deemed illegal. Some of the reasons for this claim are set forth herewith.
A. The banks are operating in violation of federal and State constitutions and the bank’s charter, and without declared and lawfully established money of account
The Constitution of the United States forbids bank paper to be passed as currency and restricts legal tender to gold and silver coin:
"No State shall...coin money; emit bills of credit; make any thing but gold and silver coin a tender in payment of debts..." Article I, Section 10, Clause 1.
The Coinage Act of 1792 defines “money of account of the United States” as gold and silver coin, i.e., “de jure Dollar,” containing certain grain weights of gold or silver:
The de jure government of the United States of America guarantees the accuracy of the government’s system of weights and measures. On April 2, 1792, via the Coinage Act of 1792, the U.S. Congress set the standard for “money of account of the United States” as a dollar’s worth (a “dollar” is a unit of measurement, such as “quart,” but does not specify the content of that which the unit of measurement contains) at 416 grains of standard silver. In 1837 the standard silver U.S. Dollar was changed to 412.5 grains 0.9 fine silver, meaning that a silver coin weighing 412.5 grains could contain up to ten percent alloy metal, or 41.25 grains of some alloy, and the balance of 371.25 grains of silver. The standard gold U.S. Dollar had nearly one-sixteenth of the silver weight or 25.8 grains 0.9 fine gold, meaning that a gold coin weighing 25.8 grains could contain up to ten percent alloy metal, or 2.58 grains of some alloy, and the balance of 23.22 grains of gold.
Although the Coinage Act of 1792, which has never been repealed, specifically states that gold and silver are “money in the United States,” in 1933 Congress suspended redemption of currency in gold, and in 1968 suspended the redemption of silver certificates in silver, with the cumulative effect of eliminating the money of account of the United States (gold and silver coin) without declaring a replacement. As a result, neither the courts nor public offices are functioning in compliance with 31 USC 371, and, indeed, are operating in a de facto manner by not having declared the money of account with which the courts and agencies are functioning.
FRNs may be “legal tender for all debts, public and private,” and may be defined as “lawful money” (since FRNs are deemed “equitable” and have not been declared “unlawful”), but FRNs have never been declared the money of account of the United States, nor of any State of the Union, as gold and silver coin have. Nor have FRNs been established in any court or agency as the money by which “all accounts in the public offices and all the proceedings in the courts shall be kept and had.” In California, for instance:
The 1849 California Constitution states in Article I
"Sec. 34. The legislature shall have no power to pass any act granting any charter for banking purposes; but associations may be formed, under general laws, for the deposit of gold and silver; but no such associations shall make, issue, or put into circulation, any bill, check, ticket, certificate, promissory note, or other paper, or the paper of any bank, to circulate as money.
"Sec. 35. The legislature of this state, shall prohibit, by law, any person or persons, association, company or corporation from exercising the privileges of banking, or creating paper to circulate as money."
Money of account
"The money of account of this State is the dollar, and all proceedings in courts shall be kept and had in conformity with this section." California Government Code § 6850.
"The money of account of the United States shall be expressed in dollars or units, dimes or tenths, cents or hundredth part of a dollar; and all proceedings in the courts shall be kept and had in conformity to this regulation." 31 USC § 371.
Every state, in order to join the union, was required to adopt a constitution under the authority of the people that was in conformity with the Constitution of the United States of America, 1787. This is why no State has any declared money of account other than gold and silver coin. After the bankruptcy of the United States, hereinafter “US Inc.,”[2] House Joint Resolution 192, hereinafter “HJR-192,” of June 5, 1933, neither any State, nor the US Inc., nor any agencies thereof, may deal in the lawfully established money of account of the states and the United States, i.e., the de jure Dollar. The original, organic constitution of every state thus contains, in whatever variation in text, provisions with the same intent as Sections 34 and 35 of Article I of the 1849 California Constitution, supra. After HJR-192, all commerce and monetary transactions have occurred within the private, international Law Merchant (see below) of the Creditors in bankruptcy, the Federal Reserve, et al, which became the operational government under color of law, usurping the forms and trappings of the de jure government while gutting it of substance and sovereignty. (See below.)
At the same time, however, no aspect of the operational private Law Merchant may make FRNs the money of account that may be used to compel in tender of satisfaction of any alleged obligation inasmuch as the provisions of the constitutions of both the states and the federal government prohibiting anything but de jure Dollar as being the money of account remain intact. Indeed, for anyone in the current Law Merchant scheme to accept as payment, or use as money, de jure Dollars is an international felony in accordance, inter alia, with such law as the Par Value Modification Act. One may try going into an IRS office, for instance, and paying his taxes in American Double Eagles (pre-1933 gold coins) and see the reception he receives.
Lawful Money (even by today's law), however, may be defined as any medium circulating at par (what is the par value of a FRN?), being or representing standard gold or silver coin and payable or redeemable on demand (which FRNs are not). FRNs may be labeled "lawful money," as they ostensibly represent specie, pass at par, and are redeemable on demand in either more of the same or in U.S. bonds, but try to redeem them in specie, or determine “par,” or “redeem” them in anything other than more of themselves (this is like paying a debt with a debt or one IOU with another IOU).
Unlike FRNs, checkbook money may never be deemed “lawful money.” Demand Deposits form about 75% of the assets of banks. These deposits constitute the checkbook money created by the banks themselves on loans out of the ether at ratios of from 10-to-l to 16-to-1 on their "reserves." The demand deposits do not exist until the bank creates them, and they are not payable on demand but within 30 days notice, for the obvious reason that the reserves to back them up do not exist. Thus, even though the powers-that-be have legislated FRNs as "lawful money," demand deposits cannot be glorified as "lawful money." Nor is a check either "legal tender" or "lawful money," even certified, but a mere personal order to pay. The courts have consistently ruled that checks and evidences of debt are not money (see Hegeman v. Moon, 131 NY 462; 30 NE 487; State v. Neilon, 73 Pac 321, 43 Ore 168), nor are they legal tender. While “money” is defined as currency that flows at par without question, demand deposits are not money, but derivative claims on money.
Notwithstanding the bankruptcy of US Inc., neither any State nor the federal government may outlaw the substance of the common law of the several states and thus regulate commerce by compelling use of “equitable money” (FRNs) as tender for discharge of obligations between either States or federal government and citizens of States. Neither may any bank or financial institution lawfully act in violation of the express provisions of both State and federal constitutions, and do so only because the operational private Law Merchant of the bankers allow the practice and the people are unaware of the truth of the matter. Now the situation has become too far gone for the system to correct itself, the doing of which would constitute admission that those responsible for upholding the law, e.g., Congress, had not done so from the beginning.
If a mortgage bank is a State-chartered financial institution, its very charter will reflect the above situation by containing text forbidding the institution from engaging in the banking business. This renders the bank’s banking activity of lending money into existence to pass as currency ultra vires by violating the provisions of its own charter as well as the constitutions of the state and national government, and could result in the loss of said charter.
B. Bank may not lend credit
National banks are creations of the federal government and are allowed to engage only in activities expressly authorized by Congress, which are called “express powers.” The banks may also engage in activities incidental to what is specifically authorized, which activities are called “incidental powers.”
Innumerable times over the past hundred years or so national banks have attempted to engage in activities under the incidental powers section that, after lawsuits, litigation, and court review, have either been rejected or approved as legitimate activities. The courts have uniformly ruled against the banks concerning lending credit, becoming a guarantor, or becoming surety for a third party. Both federal and state courts have emphatically rejected the idea that a bank may lend credit, guarantee another’s debts, or act as surety for a third party:
“In the federal courts, it is well settled that a national bank has not power to lend its credit to another by becoming surety, indorser, or guarantor for him. Farmers’ & Miners’ Bank v. Bluefield Nat. Bank, C.C.A.W.Va., 11 F.2d 83. See also, C.E. Healey & Son v. Stewardson Nat. Bank, 1 N.E.2d 858, 285 Ill.App. 290. People’s Nat. Bank of Winston-Salem v. Southern States Finance Co., 122 S.E. 415, 192 N.C. 69, 48 A.L.R. 519. Colley v. Chowchilla Nat. Bank, 255 P. 188, 200 C. 760, 52 A.L.R. 569. Rice & Hutchins Atlanta Co. v. Commercial Nat. Bank of Macon, 88 S.E. 999, 18 Ga.App. 151. First Nat. Bank of Hagerman v. Stringfield, 235 P. 897, 40 Idaho 587. First Nat. Bank v. National Produce Bank of Chicago, 239 Ill.App. 376. City Nat. Bank of Wellington v. Morgan, Civ.App., 258 S.W. 572. Farmers’ & Merchants’ Bank of Reedsville v. Kingwood Nat. Bank, 101 S.E. 734, 85 W.Va. 371. Best v. State Bank of Bruce, 221 N.W. 379, 197 Wis. 20. Also:
"Corporations are creatures of the law, and their powers are limited. Every person is presumed to know the law, and is charged with notice of the limitations on the powers of a corporation fixed thereby....A bank can lend its money, but not its credit....The law will not look merely to the form, but it will look to the substance of a transaction in determining its legality and effect." First National Bank of Tallapoosa v. Monroe, 135 Ga 614, 69 SE 1123, 32 LRA (NS) 550.
"Neither, as included in its powers nor incidental to them, is it a part of a bank's business to lend its credit. if a bank could lend its credit as well as its money, it might, if it received compensation and was careful to put its name only to solid paper, make a great deal more than any lawful interest on its money would amount to. If not careful, the power would be the mother of panics, and if no compensation was received, there is the additional reason, if any is needed, that such a power is in derogation of the rights and interests of stockholders, and at all events could only be exercised with the consent of all.
"'Indeed, lending credit is the exact opposite of lending money, which is the real business of a bank, for while the latter creates a liability in favor of the bank, the former gives rise to a liability of the bank to another." 1 Morse, Banks and Banking, 5th Edition, Section 65; Magee, Banks and Banking, 3rd Edition, Section 248.'
"This rule is so well established that it is unnecessary to cite the great number of cases which declare it." American Express Co. v. Citizens State Bank, 194 NW 429.
"'It is not within those statutory powers for a national bank, even though solvent, to lend its credit to another in any of the various ways in which that might be done." Bowen v. Needles National Bank, 94 F 925, 36 CCA 553 (certiorari denied in 20 S.Ct. 1024, 176 US 682, 44 Led 637); also Federal Intermediate Credit Bank v. L Herisson, 33 F 2nd 841.
"Banks are not eleemosynary institutions, and may lend their money, but not their credit under 12 USC § 24, par.7." p. 501.
The US Code does not allow a national bank to issue credit cards, for instance, based on the fact that the bank possesses no express power to do so. Additionally, there is no authority to issue such cards through incidental powers. Meanwhile, banks engage in the practice anyway from a profit motive and people’s acceptance, even though it is not legal.
C. Mortgage contract, Note, and Deed of Trust re the alleged mortgage loan of Bank violate securities laws and the Fair Debt Collection Practices act due to absence of full disclosure
In securities law, the most important requirement is full disclosure. Investors must be given the full story, with nothing held back. Everything—lawsuits, criminal records, market share, debt—must be disclosed. This same type of disclosure is required in the Truth In Lending Act. It is important and relevant to reveal to potential customers, as well as bank shareholders, that according to the US Code and numerous judicial decisions a national bank may not lend credit, become a guarantor, or become surety, all of which the banks do with each mortgage loan made and credit card issued. What if a State-chartered financial institution disclosed in its so-called loan documents the fact that it was acting in violation of State and federal constitutions and its own charter?
As with securities, the loan documents of a bank require full disclosure or the bank is acting in bad faith and with unclean hands. The result is that the bank’s actions are inequitable and the bank is precluded from right to enforce the provisions of the misleading and fraudulent documents based on violating fundamental principles of equity, such as:
  1. Equity denotes the spirit and habit of fairness, justness, and right dealing which would regulate the intercourse of men with men.
  2. Equity suffers no right without a remedy.
  3. Equality is equity.
  4. He who seeks equity must do equity.
  5. He who has committed iniquity shall not have equity.
  6. He who seeks equity must have clean hands.
  7. Equity abhors a forfeiture.
  8. Equity will not permit a party to profit by his own wrong.
  9. To receive equity one must give equity.
  10. 1 Am Jur 2d “Actions”:
The law does not permit one to profit by his own fraud or take advantage of his own wrong or found any claim on his own iniquity or acquire property by his own wrong, and no court, particularly a court of equity, will lend its aid to a party who grounds his action upon an immoral or illegal act or an illegal contract, or whose conduct in connection with the transaction upon which his claim is based is illegal or criminal.
Hence, an action will not lie to recover money on property which is the fruit of an employment involving a violation of law, where a recovery would have to be based on the illegal contract, or to recover back the consideration given for the maintenance of illicit relations with the defendant." Section 51.
[N]o action will lie to recover on a claim based upon, or in any manner depending upon, a fraudulent, illegal, or immoral transaction or contract to which the plaintiff was a party. Section 52
The text of a mortgage note is misleading, with the fraud usually revealed in the first paragraph through in such phrases as, “In return for a loan that I have received…” What “loan”? Who lent what to whom? What did the alleged borrower receive from the bank that validates designating the transaction a “loan,” the bank the “lender,” and the author of the Note “borrower”? Who decides these matters? A plaintiff? Defendant? Jury? Judge? The text of the Note is characterized by deceit and concealment of material fact in contract, with the text implying—and intended to imply—that the borrower is signing the Note as guaranteeing payment of P&I because he has received a loan from the bank, not a loan from himself. Furthermore, the statement uses the past tense, referring to a “loan that I have received,” when the loan had not yet been received because neither the “checkbook money” constituting the “loan,” nor the concurrently arising “debt,” exists until the instant the borrower’s Note is placed on deposit as the “new money” the bank “lends.” The statement is therefore untrue.
Inasmuch as an alleged borrower is “lent” his own money while not given in exchange from the bank anything owned or risked by the bank, the bank forfeits the right to be deemed “lender” in the mortgage documents and the alleged borrower may not validly be labeled “borrower.” Consequently, the bank is without authority to attempt enforcement of the alleged, but non-existent, mortgage contract by and between an alleged borrower and the bank concerning the alleged loan. No alleged borrower may be deemed a debtor based on tendering alleged borrower’s own funds to the bank, nor may the bank collect upon any alleged “default” on provisions of the ultra vires, non-existent contract formulated in violation of State law, federal law, the Constitution of the United States of America, the Constitution of the State, the bank’s charter, and foundational principles of law, equity, and contract.
To “add insult to injury,” mortgage-lending banks are paid, i.e., unjustly enriched, numerous times over concerning their use of the money created by the alleged borrower’s signature/Note, such as:
  1. The bank’s fractional reserve balance and lending capacity increase multiple times based on the increase in the balance statement of the bank accomplished by placing an alleged borrower’s Note (IOU) on the bank’s books as a bank asset.
  2. Since all “home loans” are insured, the insurance pays for the bank’s so-called loss in case an alleged borrower defaults on paying the bank “principal and interest” on a loan of assets created by the alleged borrower.
  3. In case of so-called “default,” a bank forecloses on the property in addition to having collected P&I payments from alleged borrower, and collected on the mortgage loan insurance.
This money/banking swindle is nothing new. By such means the money-changers have been pillaging the world silly for centuries and largely obtained ownership of the planet and the people in it.[3] In 1684 William Paterson created the First Bank of England, a private corporation designed to purchase government debt from the Crown and resell it to private investors. In exchange the bank-issued currency (bills of credit to circulate as money) to the government to fund its deficits. Paterson himself summed up the scam: "The Bank hath benefit of interest on money which it hath created out of nothing." Having ability to perpetrate so massively lucrative a hoax, there was no reason to abandon it, but preventing the same scam from taking over America was the point of the debates on money in the Constitutional Convention and the reason for the resulting Constitutional prohibitions against issuing bills of credit to circulate as money.
When one contemplates the colossal magnitude of the scheme the tragic significance of the matter begins to dawn. The immensity and universality of a wrong does not transform it into anything lawful, just, fair, honorable, equitable, legal, or right. P. D. Ouspensky, in his book A New Model of the Universe, wrote:
“Culture strives to establish a boundary between itself and barbarism. The manifestations of barbarism are called ‘crimes. But existing criminology is insufficient to isolate barbarism. It is insufficient because the idea of ‘crime’ in existing criminology is artificial, for what is called crime is really an infringement of ‘existing laws,’ whereas ‘laws are very often a manifestation of barbarism and violence. Such are the prohibiting laws of different kinds which abound in modern life.
“The number of these laws is constantly growing in all countries and, owing to this, what is called crime is very often not a crime at all, for it contains no element of violence or harm. On the other hand, unquestionable crimes escape the field of vision of criminology, either because they have not the recognized form of crime or because they surpass a certain scale. In existing criminology there are concepts: a criminal man, a criminal profession, a criminal society, a criminal sect, a criminal caste and a criminal tribe, but there is no concept of a criminal state, or a criminal government or criminal legislation. Consequently the biggest crimes actually escape being called crimes.”
D. Bank may not act on re-delegated powers
Congress, through the Federal Reserve Act of 1913, granted the private Federal Reserve cartel the power to create and regulate money. While this Act may be deemed unconstitutional for re-delegating powers specifically delegated to Congress in the Constitution, for the National Banks to act on powers delegated exclusively to the Federal Reserve constitutes acting on re-delegated powers of re-delegated powers. A power delegated may not lawfully be re-delegated for want of authority in the law for delegated authority to do so. The Federal Reserve Act of 1913 purported to establish in law the re-delegating of the constitutional right/duty granted to Congress alone to “coin money and regulate the value thereof” to a private, international banking cartel whose jurisdiction is the private, consensual, largely unwritten Law Merchant of the international bankers and the world power structure of which they are a part.
E. Bank’s first priority is to protect its depositors’ money
Per the bank’s charter, the first priority of a national bank is to protect people’s money. In order to protect people’s money, the bank must be able to make money, and so the federal code describes the legitimate type of money-making activity in which a national bank may engage. Mortgage loans, as well as credit cards, exceed both the bank’s express powers and implied powers, exposing depositors’ money to loss in contradiction to the bank’s primary duty.
F. The alleged mortgage loan documents are contractually fraudulent, null and void
Whether or not an alleged borrower actually entered into a valid contract is fundamental. Did the alleged borrower have full knowledge of all of the terms and conditions of the so-called loan? Such full disclosure is not present in any of the mortgage documents, and one may seriously doubt that any loan officer, when interviewing a prospective borrower, informed him, “Now you understand that we are not lending you anything belonging to the bank. Banks today are merely bookkeeping mills, and have nothing to lend people but their own IOUs. We are going to monetize your promissory note by placing it on deposit in our bank as an asset and writing a check against it, which is what we are lending you. You will therefore be lent your own money and charged interest on the loan. This way we can make a great amount of money off of you while never giving, lending, or risking anything belonging to us.” Even if such disclosure were made orally, however, it would be legally irrelevant inasmuch as only that which exists in writing counts in the equation.
So, was there parity between the parties? Was there mutual good faith, full disclosure, mutual exchange of valuable consideration, absence of fraud and mistake? Does any bank inform a customer that the only asset/funds in the matter is that which he creates by signature on a note of his own indebtedness that become the funds “lent” to him that he is “indebted” to “repay” with interest? read on here....

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Comment by Peace Portal on March 26, 2009 at 4:16pm
Excellent expose on the funny money debt system!
Thank you Victor, more people need to understand how banks, credit, and debt money effect our lives.
Comment by Jeanne on March 26, 2009 at 3:02pm
Economic crisis? Psshaw! It is war... as surely as putting a gun to our heads or bombing us. Our recourse, as the "little people"? to grow gardens, create community and not let go of each other. Thank-you Victor for joining AOAND and for informing. Metta, Jeanne


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