"Our Land: Collateral for the National Debt"

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"Our Land: Collateral for the National Debt"

We commonly use two misleading expressions; "money out of thin air" and "government printing press" both imply that our money has no backing.  And often, the term "fiat" money is used to imply the same misconception.  The truth is that every dollar (FRN) issued by the private banks is backed by the good faith and credit of "We the People."

It is true that the money is created for free by the private banks and it is true that the banks add neither any banking or reserves but; it is not free for "We the People."  The banks use our credit which means we are backing the money.  If you are wondering why we as a nation; are paying private banks interest and principal for money created via OUR credit - you are catching on - but that's another story! 

I have often wondered what the reckoning might look like when we finally begin to default on our national debt.  What's on the other side of national bankruptcy?  In some other bankrupt countries, we've seen natural resources taken and public infrastructure privatized in leiu of debt repayment.  This article provides some other possibilities and a plan for what may be coming:

A listener sent me a copy of a report of the FOURTH WORLD WILDERNESS CONGRESS, which was held in Denver in 1987.  Over 1500 people from sixty countries were told that wilderness lands were to protect the reindeer, the spotted owl and other endangered species.  Ninety percent of the group consisted of conservationists, ecologists, government and United Nations bureaucrats.  The other ten percent were world banking heavyweights, such as David Rockefeller of Chase Manhattan Bank, London banker Edmund de Rothschild and the Secretary of the U.S. Treasury, James Baker, who gave the keynote address.  George W. Hunt, an investment councilor, served as official host and sat in on all the meetings.  It was George Hunt that wrote the report from which I have gleaned much of my information.

During the first three days, the group was told that the WILDERNESS CONGRESS was about beating the ozone deterioration and bringing the rain forests back.  The following days were closed to the public.  With only the bankers in attendance, the topics discussed centered on the creation of a "WORLD CONSERVATION BANK" with collateral being derived from receipt of wilderness properties throughout the world. 

This bank would have central bank powers similar to the Federal Reserve.  It would create currency and loans and engage in international discounting, counter-trade, barter and swap actions.  Rothschild personally conducted the monetary matters and the creation of this WORLD CONSERVATION BANK.  This bank would refinance by swapping debt for assets.  A country with a huge national debt would receive money to pay off the debt by swapping the debt for wilderness lands.  The plan was to swap one trillion dollars of Third World Debt into this new bank.  In the long term, when the countries won't be able to pay off the loans, governments from around the world will give title to their wilderness lands to the bankers.

George Hunt wrote: "Title to the lands will go to the World Wilderness Land Inventory Trust. This Trust will float into the World Conservation Bank by the unanimous decree of the world's people, saying, God bless you for saving our reindeer.Hunt goes on to say that World Bank loans, as they stand now, are not collateralized.

They're saying, we want collateral, so when we loan-swap this debt, we're going to own the Amazon if you default. They're going to make their bad loans good by collateralizing them after the fact with all of this land and somebody is going to end up with title to twelve and half billion acres. They have multi-trillions of dollars upon which they can create currencies and loans and they're going to begin to barter and counter-trade and loan-swap against the United States. The World Conservation Bank is a scheme to monetize land. This will function as a world central bank and out of that bank there will grow a one-world fiat currency.

This isn't some scheme conjured up during the Bush and Clinton administrations. The United Nations World Commission on Environment and Development was created in 1982. The commission published the "BRUNDTLAND REPORT," setting the stage for unlimited enactments to take over ecology, and environmental and pollution laws throughout the world. The report stated: "We will have a proposal for very harsh, quasi-spiritual ecological laws for MOTHER EARTH. A MOTHER EARTH COMES FIRST mentality will arise throughout the world."

Then James Baker made his keynote speech in 1987, he stated that, "No longer will the World Bank carry this debt unsecured. The only assets we have to collateralize are federal lands and national parks." Baker's definition of federal lands includes Heritage sites, of which there are about 20 in the United States. I say "about" 20, because they are being added on a regular basis.

As I write this article, Congress is about to vote on a proposed Rim of the Valley National Park that would include over 500,000 acres of National Forest land and 170,000 parcels of private property including many farms and ranches. At the same time there is a bill before Congress called the Northern Rockies Ecosystem Protection Act that would increase the acreage of designated wilderness by 50% in the lower 48 states. *** While our Heritage sites take in quite a large amount of territory, such as Yellowstone National Park and Mesa Verde, the Grand Canyon and the Everglades, other countries have much greater areas. Brazil for example has the Amazon Conservation Complex and Canada has the Canadian Rocky Mountain Parks. As I write this story, the list includes 851 properties in 141 countries, comprising over one third of the earth's land mass. Will all this land collateralize the world's debt? Probably not, so along comes NAIS (the National Animal Identification System).

President Jackson drives the Rothschild banking crime syndicate out of the U.S.!

According to the United States Department of Agriculture, "The first step in implementing a national animal identification system (NAIS) is identifying and registering premises that are associated with the animal agriculture industry. In terms of the NAIS, a premise is any geographically unique location in which agricultural animals are raised, held, or boarded. Under this definition, farms, ranches, feed-yards, auction barns and livestock exhibitions and fair sites are all examples of premises." That may be the definition some government bureaucrat will give you, but the word "premises" under the "international Criminal Court Act 2002- Sect 4, states: The word "premises" includes a place and a "conveyance." Why check with the International Criminal Court Act? Because on June 8, 2007, Under-Secretary of Agriculture Bruce Knight, speaking at the World Pork Expo in Des Moines, Iowa, is quoted as saying, "We have to live by the same international rules we're expecting other people to do."

Throughout the entire Draft National Animal Identification System Users Guide, land is referred to as a premises and not property. A "Premises" has no protection under the Constitution of the United States, while property always has the exclusive rights of the owner tied to it. The Fifth and Fourteenth Amendments of the Constitution protect property rights.

The word "Premise" is a synonym for the word tenement. A definition of the word tenement in law is: Property, such as land, held by one person "leasing" it to another. Webster's New World Dictionary 1960 College Edition defines "Premises" as the part of a deed or "lease" that states its reason, the parties involved and the property in "conveyance." Webster then defines "conveyance" as the transfer of ownership of real property from one person to another. It is quite obvious that the bureaucrats in Washington had a very good reason to use the term "premises" and never mention "PROPERTY."

I am convinced that the word "premise" will put an encumbrance on your deed. The bankers say they want to monetize land. It's your land and my land they want to monetize.

The bankers are in the process of accumulating the wealth of the world.  Very few privately owned assets can be termed "real wealth." Genesis 47 describes how Joseph had storehouses full of grain to feed the people, but he didn't have a welfare program. During the first year of the famine, Joseph took "ALL THE MONEY" the people had for only one year's supply of grain. The second year he took all their cattle for another year's supply of grain. The next year they said, "We have nothing left but our bodies and our land. Buy us and our land in exchange for food and we and our land will be servants to Pharaoh." Genesis 47:21 states, "And as for the people, he removed them to the cities and made slaves of them."  - complete article link

Larry

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Re: "Our Land: Collateral for the National Debt"

Fiat money        http://www.answers.com/topic/fiat-money

Debt                 http://en.wikipedia.org/wiki/United_States_public_debt

US Treasury bonds interest and principal payments are backed by the federal governments power to Tax the people.   Below is the result:

http://www.usatoday.com/news/washington/2007-05-28-federal-budget_N.htm

Banks do not use our credit,  they issue  credit  (loans) using base money from the Federal Reserve  and we pay interest and principal on those loans.

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Re: "Our Land: Collateral for the National Debt"

I have often wondered what the reckoning might look like when we finally begin to default on our national debt.  What's on the other side of national bankruptcy?  In some other bankrupt countries, we've seen natural resources taken and public infrastructure privatized in leiu of debt repayment.  This article provides some other possibilities and a plan for what may be coming:

Probably the same thing that the bankers have done in every other country.

First blame the government for everything, including the financial crisis (especially when our government creates no money and convince everyone that it does).

Second is to create a long and sustained financial crisis that gets the people to beg for any help they can receive.

Third is to have a social revolution.

And the fourth and final step is to overthrow the current form of government.  In our case in America the plan will probably be to overthrow the government and destroy all the rights guarenteed by the constution, and switch EVERYTHING over to a government licensed privledge.

Basically America is already at this point because you need a license to do anything these days, it's just in conflict with the highest so called law of the land.

Until the people wake up and realize that the power to create money should only be in the power of the public law and not private practice and created for the public good we will never have any rights in this country, nor ever will.  It will be impossible to fund any kind of real change until the people have access to funds that do not have to be borrowed from any group or the group of people who are activily out to destroy this country.

Until the people snap out of their slave mentality and demand debt-free wealth money nothing is ever going to change.

Nothing will ever change until We The People can OWN our medium of exchange.

If you can't own your medium of exchange then you are absoltely enslaved to the people who own it.  The banking system. 

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Re: "Our Land: Collateral for the National Debt"

Carl,

Banks do not use our credit,  they issue  credit  (loans) using base money from the Federal Reserve  and we pay interest and principal on those loans.

If all money is created as interest bearing loans where does the money come from to pay the interest on all that borrowed money since there is no money except that which has been borrowed?

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Re: "Our Land: Collateral for the National Debt"

MONEYCHANGER - That is a far-reaching charge. What basis do you have for that?

HUNT - Well, the London banker Baron Edmund de Rothschild was at the meeting for 6 days. Edmund de Rothschild was personally conducting the monetary matters and creation of this World Conservation Bank (WCB), in the company of I. Michael Sweatman of the Royal Bank of Canada. Those 2 were like Siamese twins, and that's why I say that it appears they were running at least the money side of this conference, and I would say the conference was primarily to get money. Also, David Rockefeller <of Chase Manhattan Bank> was there, and gave a speech on Sunday...The thing that really set me off was <Secretary of the Treasury James> Baker's talk.

MONEYCHANGER - Was he there?

HUNT - Oh yeah, he was there. He gave the keynote address. He said that conservation requires "growth and development". There was a HUM around the audience, because they knew that "growth and development" are antagonistic to conservation.

MONEYCHANGER - Wait now. There are some code words passing here, aren't there? When Baker says something like that, he's talking in code about something else.

HUNT - Exactly. He's talking in code about the *formula*, the "equation" of conservation and growth and development, that is, assets equals liabilities plus net worth. There were a lot of these *double intendres*.

MONEYCHANGER - But still, in the end, SOMEBODY is going to end up with title to those lands, and I suggest that these somebodies are these same moneyed interests that were so much in evidence at this Fourth World Wilderness Conference.

HUNT - Exactly, and they're going to be in back of the bank loaning currency and cash flow to the WCB to keep it alive, to give it the *appearance* of profitability. The bank will be running on an accrual basis. On paper it will be recognizing profits received on interests, but the interests will NOT be coming in because these countries cannot pay. So my hypothesis is that the kings, capitalists, and moneychangers of the world will be in the back of this bank in the position of *creditors*.

This plan has been in the works for over 30 years and it explains the current "credit crisis" better than the WSJ ever could.  If you wonder why we are borrowing our way into oblivion, now you know.  The collateral has already been carefully defined and detailed so that it will simply be taken as we continue on the path to debt slavery and a new "feudal" world order.

Many naively think that upon our default, things will be reset and we'll begin rebuilding.  The truth is that our bankruptcy has been carefully planned so that the next prepared phase will begin.  Nation states will disappear along with any pretense of constitutional rights as citizens become serfs.

Thomas Hedin wrote:

Until the people wake up and realize that the power to create money should only be in the power of the public law and not private practice and created for the public good we will never have any rights in this country, nor ever will. It will be impossible to fund any kind of real change until the people have access to funds that do not have to be borrowed from any group or the group of people who are activily out to destroy this country.

Until the people snap out of their slave mentality and demand debt-free wealth money nothing is ever going to change.

It is absolutely bizarre but what you say is dead on accurate.  This is all being done by choice, not necessity, as we could stop it any time we want by simply taking back the power to create our own money - separate from private banks and the international cartel.

I cannot explain why this simple truth has not taken traction in the minds and hearts of the people.  Jefferson, Jackson, Lincoln and on and on, practically screamed this fundamental truth through their words and actions - but yet their voices are not heard.

I know many Americans just don't understand who the "House of Rothschild" is or that the Rockefeller family is guilty of countless acts of treason and crimes against humanity.  Their dark deeds have been chronicled through history but there seems to be an aversion, a disconnect, a delusion, that makes it impossible for most to comprehend.

Even if you conclude that the media has brainwashed the mind's of the people you still have to wonder what happened to their hearts.  Our children and grandchildren are now born with unpayable debt that they will forever work off without any relief - add the national debt and unfunded liabilities and newborn Americans take on over $300,000 debt with their first breath.  We are as heartless as we are ignorant as a society - how did we become so corrupt and uncaring?

Here are a few must see videos from George Hunt that details the plan:

Larry

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Re: "Our Land: Collateral for the National Debt"

Carl Veritas wrote:

Banks do not use our credit,  they issue  credit  (loans) using base money from the Federal Reserve  and we pay interest and principal on those loans.

Respectfully, I have to say that like many, you don't understand the difference between credit and debt.  Prevailing economic theories are designed to be confusing by misapplying terms and making things much more complicated than needed.

Banks DO NOT issue credit, they issue debt by monetizing (private and public) our promise to pay and pledged collateral.  It is the private and public credit that banks use to issue debt.  The U.S. and western nations choose to issue sovereign debt (issue bonds) instead of sovereign credit (issue debt free money).  They could just as easily issue sovereign credit.  Noted economist Henry C K liu does a great job of explaining this:

"In the language of finance economics, credit and debt are opposites but not identical.  In fact, credit and debt operate in reverse relations.  Credit requires a positive net worth and debt does not.  One can have good credit and no debt.  High debt lowers credit rating.  When one understands credit, one understands the main force behind the modern finance economy, which is driven by credit and stalled by debt.

If fiat money is not sovereign debt, then the entire conceptual structure of finance capitalism is subject to reordering, just as physics was subject to reordering when man's worldview changed with the realization that the earth is not stationary nor is it the center of the universe.

The need for capital formation to finance socially-useful development will be exposed as a cruel hoax, as sovereign credit can finance all socially-useful development without problem. Private savings are not necessary to finance public socio-economic development, since private savings are not required for the supply of sovereign credit. Thus the relationship between national private savings rate and public finance is at best indirect.

Sovereign credit can finance an economy in which unemployment is unknown, with wages constantly rising to provide consumer buying power to prevent production overcapacity. A vibrant economy is one in which there is persistent labor shortages that push up wages to reduce overcapacity. Private savings are needed only for private investment that has no intrinsic social purpose or value. Savings without full employment are deflationary, as savings reduces current consumption to provide investment to increase future supply, which is not needed in an economy with overcapacity created by lack of demand, which in turn has been created by low wages and unemployment.

Say's Law of supply creating its own demand is a very special situation that is operative only under full employment with high wages. Say's Law ignores a critical time lag between supply and demand that can be fatally problematic to the cash-flow needs in a fast-moving modern economy. Savings require interest payments, the compounding of which will regressively make any financial scheme unsustainable. The religions forbid usury for very practical reasons.

The relationship between assets and liabilities is expressed as credit and debt, with the designation determined by the flow of obligation. A flow from asset to liability is known as credit, the reverse is known as debt. A creditor is one who reduces his liability to increase his assets, which include the right of collection on the liabilities of his debtors. Sovereign debt is a pretend game to make private monetary debts denominated in fiat money tradable."

Larry

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Re: "Our Land: Collateral for the National Debt"

FRACTIONAL RESERVE BANKING                                        

Banks expand the money supply by expanding Bank Credit                

http://www.investorwords.com/402/bank_credit.html

using Base Money   http://en.wikipedia.org/wiki/Monetary_base

obtained from the central bank  trough its Open Market Operations where the FRB buys treasury bonds from banks creating the payment  by crediting the banks account with the district FRB.

Sovereign credit is fiat money        http://en.wikipedia.org/wiki/Sovereign_credit          whereas                                                                                      

Bonds are Debt      http://en.wikipedia.org/wiki/Debt    and

Treasury bonds are  debt issued by the government           http://en.wikipedia.org/wiki/United_States_public_debt

                                

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Re: "Our Land: Collateral for the National Debt"

Banks expand the money supply by expanding Bank Credit

This is true but what should be added is that ONLY banks expand the money supply.  Also the money supply contracts when the principle part of the loans are paid back.  Carl, the question is, where does the money come from to pay the interest on those loans when all money in this system is created as an interest bearing loan?

using Base Money  

This 'rule' may or may not apply to state chartered banks.  I have been told that it does not apply to state chartered banks in minnesota, though for various reasons state chartered banks in Minnesota hold reserve accounts with the fed.  Obviously this rule does not apply to the Federal Reserve Banks.

obtained from the central bank  trough its Open Market Operations where the FRB buys treasury bonds from banks creating the payment  by crediting the banks account with the district FRB.

Had to call and ask someone, but they said that is basically accurate.

Carl can you answer my question?

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Re: "Our Land: Collateral for the National Debt"

Sounds like Larry has been reading to much of the misinformation advanced by Norman Kurland’s The Just Third Way and not looking for the real facts.

Black's Law Dictionary Fifth Edition states

"Credit.  The ability of a business or person to borrow money, or obtain goods on time, in consequence of the favorable opinion held by the particular lender as to solvency and reliability”  

“Credit” means the right granted by a creditor to a debtor to defer payment or to incur debt and defer its payment.  

The correlative of a debt.  Having a mutual or reciprocal relation, in such sense that the existence of one necessarily implies the existence of the other.

The banking system does loan credit or debt.  The banking system only loans a promise to pay, which is why the loan goes on the ledgers of the banking system as a liability of the bank.  The banking system relies on the “The correlative of a debt” to prove that you have received something from them.  The existence of your promise to pay the bank back implies that they loaned you something.  

Why else would you sign a promissory not if you had not received something?   

This is what a United States Attorney stated in a foreclosure case.

I don’t like to say it this way but, it sounds like too many people read too much stuff written by people who are writing what other people have written.  Without out any of them doing any real study or research.   

It is not only your land that is collateral for the national debt, the Congressional record states that Federal Reserve Notes are backed by a mortgage on all the homes and all the property of the people of America.

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Re: "Our Land: Collateral for the National Debt"

Thomas,

The fact that you actually asked around tells me you are not those          " I've made up my mind so don't confuse me with facts".     

Aside from the actual source of our money supply:       FRN's  from the Bureau Of Engraving & Printing,    Coins from the US Mint and  Bank credit from banks  via fractional reserve banking.

(a)    I  get the money to pay off my  Bank Loan,   and Taxes  from my time and labor spent earning a living,  over many years out. 

My balance sheet shows that I have more debt (loans)   than assets today.    Where would I get the money to pay off my loans?   See (a) above.

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Re: "Our Land: Collateral for the National Debt"

Byron Dale wrote:

Sounds like Larry has been reading to much of the misinformation advanced by Norman Kurland’s The Just Third Way and not looking for the real facts.

Hello Byron,

I've not read anything by Norman Kurland but it sounds like the Hegelian dialectic.  I was referencing Henry C K Liu and I might be missing something, but, he seems to agree with your book, Modern Money Secrets.  His terminology is different but the message is similar regarding "debt" and "wealth" money.  For example:

Debt Money( Modern Money Secrets) = Sovereign Debt (Henry C K Liu)

Wealth Money (Modern Money Secrets) = Sovereign Credit (Henry C K Liu) 

He doesn't get into the mechanics near as much as you do but he seems to agree with the fundamental importance of the "wealth/debt" relationship.  Please correct me if I am wrong.

Byron Dale wrote:

Black's Law Dictionary Fifth Edition states

"Credit.  The ability of a business or person to borrow money, or obtain goods on time, in consequence of the favorable opinion held by the particular lender as to solvency and reliability”  

“Credit” means the right granted by a creditor to a debtor to defer payment or to incur debt and defer its payment. 

I don't disagree with this but I don't think it applies to sovereign nations.  A sovereign nation has it's own credit and doesn't need a "creditor."  It may choose to borrow from private banks but does not need to.            

Byron Dale wrote:

It is not only your land that is collateral for the national debt, the Congressional record states that Federal Reserve Notes are backed by a mortgage on all the homes and all the property of the people of America.

Do you have a source or a link for this info?  I've read this before but can't remember seeing the congressional language referenced.  Does this include commercial real estate?  More details would be appreciated.

Thanks taking the time to comment!

Larry

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Re: "Our Land: Collateral for the National Debt"

Aside from the actual source of our money supply:       FRN's  from the Bureau Of Engraving & Printing,    Coins from the US Mint and  Bank credit from banks  via fractional reserve banking.

Only the banking system is the creator of money today.  FRN's and Coins to not increase nor decrease the money supply.

I  get the money to pay off my  Bank Loan,   and Taxes  from my time and labor spent earning a living,  over many years out.

And how is that money put into circulation for you to capture it?

My balance sheet shows that I have more debt (loans)   than assets today.    Where would I get the money to pay off my loans?   See (a) above.

It seems to me that you're under the belief that there is just "money out there".  It's all borrowed, and the bulk of it at interest. 

Can you see how this idiotic system will fail because the only way you can pay the 'interest' on your debts is to have someone else in the economy borrow that too, leaving them in an even tighter postion?

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Re: "Our Land: Collateral for the National Debt"

Byron,

I thought about your Post #8 and I think you bring up an interesting point that I want to pursue.  I had said that banks do not extend credit, they issue debt and I think this is in accord with what I have learned from you. 

In Modern Money Secrets, page 182 (discussing bonds), you wrote: "Two magical and deceptive things have happened.  First, a promise to pay has become the actual payment."  I take this literally and I think you intended it this way.  If this is true, then is a bank really giving you any money?  I'm not sure how Black's Law defines money but how can a promise to pay be final payment?

Larry

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Re: "Our Land: Collateral for the National Debt"

Thomas,

How is the money put into circulation?                   http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

Banks extend loans,      say $9 for every $1 of "reserve"    to other customers.     They are in effect, collecting interest payments on money that didn't exist before.  That is the lucrative racket that is fractional reserve banking, and the effective way to stop it is to allow over extended banks to fail.      Its customers will put it out of business.    But like I said, the Federal Reserve Systems main reason for existing is to bail out their creators, the large banks.   All other responsibilities are secondary, like throwing congress a bone by monetizing their bonds so they have spending money without having to tax.    The government will not abolish the Federal Reserve system,  not willingly anyway.

Where  and how will I get the money to pay off my bank loans?       With my time and labor spent earning a living over many years into the future


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Re: "Our Land: Collateral for the National Debt"

"A promise to pay has become the actual payment."

Beautiful! This sentence is beautifully simple and cuts right to the chase of the matter.

I learned that people like to interpret our money, aka book money, as being hard cash that one can deposit under its pillow or burry in a treasure chest as he or she likes. As it is known, it’s a detrimental misconception. (That's why I was carping on CC Ch7.) In reality no one has the chance to withhold book money from the banking system anytime. A loan being book money being a promise to pay is a bank deposit being registered as an asset in the very same system straightaway instantaneously.

On the contrary, bank’s business is not to manage or pile up assets/collaterals/our Land. Aren’t they born lousy real economy asset managers anyways? They do just extract a considerable share/interest. Essentially collaterals is a means to make sure the created money can be recollected since any principal needs to be wiped out sometime or other. And, they simply cannot fail unless we can accept that banks are allowed to issue non-returnable money, i.e. that banks are allowed to issue counterfeit money.

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Re: "Our Land: Collateral for the National Debt"

It is The Congressional Record, March 9, 1933 on H.R. 1491 pg. 83.  This is found on page 223 of my book Modern Money Secret.

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Re: "Our Land: Collateral for the National Debt"

Carl

Please be kind enough to explain to me your time and labor creates any money. 

   
Byron Dale   
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Re: "Our Land: Collateral for the National Debt"

Larry

You wrote 

Debt Money( Modern Money Secrets) = Sovereign Debt (Henry C K Liu)

Wealth Money (Modern Money Secrets) = Sovereign Credit (Henry C K Liu) 

I don't see how got debt money = Sovereign Debt or that Wealth Money = Sovereign Credit out of anything I ever wrote or said.

Weath money can only be money spent into circulation based on the production of the people.  I know that I wrote that the Fed. Bank of Minn.  said in court that the government and the Fed. Banks promisse to pay become payment when the government made Federal Reserve Notes legal tender.  But that only works for the banks.  I don't think that it even works for the federal government.  If it did they would no longer have a debt.

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Re: "Our Land: Collateral for the National Debt"

Larry

You wrote 

Debt Money( Modern Money Secrets) = Sovereign Debt (Henry C K Liu)

Wealth Money (Modern Money Secrets) = Sovereign Credit (Henry C K Liu) 

I don't see how got debt money = Sovereign Debt or that Wealth Money = Sovereign Credit out of anything I ever wrote or said.

Weath money can only be money spent into circulation based on the production of the people.  I know that I wrote that the Fed. Bank of Minn.  said in court that the government and the Fed. Banks promisse to pay become payment when the government made Federal Reserve Notes legal tender.  But that only works for the banks.  I don't think that it even works for the federal government.  If it did they would no longer have a debt.

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Carl Veritas
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Re: "Our Land: Collateral for the National Debt"

I can't speak for anyone else's loan,   but  I  will get  (I do not have to create it)  the money  to pay the interest from my future earnings, from my job, where I exchange my time and labor to earn  it.        

piquod12's picture
piquod12
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Re: "Our Land: Collateral for the National Debt"

Hi BD

Please be kind enough to explain to me your time and labor creates any money

Not sure if it helps but I always try to think of labour as equivalent to money rather than creating it. The other thing that helps square the circle regarding interest payment is to remember that banks are part of the economy rather than seperate from it. A simplistic way of looking at it would be to say that someone borrowing money to purchase something then owes a part of their labour to the creator of the item purchased and a part to the bank (the interest). They can then work off this debt to both parties through their labour. Because of the interest they will have to work that bit longer than the original creator of the asset purchased did. But effectively the bank will pay them for this labour - in money terms this means the interest is cancelled through their work for the bank (in reality the system is far more complex but devolves to the same principle). So once you include the bank in the economy and flow of money/goods at no point does principle + interest need to be created in order to satisfy all parties.

If you play around with a simple example, maybe a couple of individuals and a bank, you will soon see how it works in practice. You can even start to model economic growth by maybe allowing for introduction of a technology that make the borrowers work more efficient allowing them to pay off principle + interest with the same or even less labour than the original creator of the asset took. A problem arises of course once you remove economic growth when increasing amounts of labour are then required to pay off loans. As debt:gdp grows so does the requirement for ever more economic growth to keep labour manageable. And we all know how large debt:gdp in certain countries is these days. Ultimately some form of default becomes inevitable if economic growth is not forthcoming.

Thomas Hedin's picture
Thomas Hedin
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Re: "Our Land: Collateral for the National Debt"

I can't speak for anyone else's loan,   but  I  will get  (I do not have to create it)  the money  to pay the interest from my future earnings, from my job, where I exchange my time and labor to earn  it.

And where is that money going to be created?  If you could create it with your time and labor why would you go and borrow in the first place?

Thomas Hedin's picture
Thomas Hedin
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Re: "Our Land: Collateral for the National Debt"

piquod12

Not sure if it helps but I always try to think of labour as equivalent to money rather than creating it.

If labour is an equivalent to money, they why can't we pay our debts to the banking system with our labour?

The other thing that helps square the circle regarding interest payment is to remember that banks are part of the economy rather than seperate from it.

Since banks control 100% of the money supply wouldn't it be more accurate to say that the banking system is not really part of the economy but rather a master over it?  Banks do not manufacture anything that is made of any known chemcial substances.

A simplistic way of looking at it would be to say that someone borrowing money to purchase something then owes a part of their labour to the creator of the item purchased and a part to the bank (the interest).

I'm sorry but this statement isn't true.  If one borrows at interest what one owes is the principle plus the interest.  The banking system will not accept anything else in payment, except through forecloser, where your time and labor do not count for anything, only the bankers equity counts for anything when he purchased a mortage on your property with his promise to pay which he never has to pay.

They can then work off this debt to both parties through their labour.

This is simply not true.  They will not accept labor as payment.  This is more false propoganda that has been fed to you.

So once you include the bank in the economy and flow of money/goods at no point does principle + interest need to be created in order to satisfy all parties.

Have you been reading G. Edward Griffon? 

Lets go through how this really works.

I'll be the bank.

lets just say this is the only loan in exisistance.

I loan you $1 at 10% simple interest.

Now pay me back $1.10 with only $1 dollar in circulation.

You have to remember that when the principle part of the loan is paid back it gets extuiguished from ciculation.

The only way you can service your loan is for someone else to go into debt where you can capture some of their borrowed money to pay off your loan.

problem arises of course once you remove economic growth when increasing amounts of labour are then required to pay off loans.

If labor created the money nessecary to pay off the loans why would anyone in their right mind ever borrow in the first place?

piquod12's picture
piquod12
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Re: "Our Land: Collateral for the National Debt"

Hi TH

If labour is an equivalent to money, they why can't we pay our debts to the banking system with our labour?

We can, in fact people do it all the time when they pay off their mortgages or other debts. The fact that this is indirect rather than direct is immaterial once you allow bank owners into the economy as well.

Since banks control 100% of the money supply wouldn't it be more accurate to say that the banking system is not really part of the economy but rather a master over it?  Banks do not manufacture anything that is made of any known chemcial substances.

Nor do hairdressers. They both provide a service rather than manufacture goods but that doesn't mean what they do has no value.

This is simply not true.  They will not accept labor as payment.  This is more false propoganda that has been fed to you.

OK banks don't accept labour as payment but that's the peril of me trying to describe a system in very simple terms! The thing is that banks are owned by people (the shareholders) who do spend money in the economy and part of that money will be on goods/services provided by debtors. Another way to think of this is to replace the bank with a money-lender (early bank if you like!) who is much more obviously part of the market-place.

Regarding the influence of propaganda I would be naive if I considered myself above it but I honestly do try to work stuff out for myself. And creating as simple a model as possible helps me do that.

The only way you can service your loan is for someone else to go into debt where you can capture some of their borrowed money to pay off your loan.

Why can't the someone else be a bank shareholder? They really are people and part of the economy as well. Ironically, if you hold bank shares directly or through a trust/pension/fund you might be one yourself ;-)

If labor created the money nessecary to pay off the loans why would anyone in their right mind ever borrow in the first place?

To buy stuff that they cannot currently afford through savings. This doesn't have to be a bad thing and it might even make economic as well as hedonic sense. For example buying a house on which the mortgage payments are less than would be required as rent over the likley  lifetime of the purchaser. Not all debt is bad only debt that cannot reasonably be serviced through income - hence why current debt:income levels are so dangerous.

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goes211
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Re: "Our Land: Collateral for the National Debt"

Thomas,

When a bank spends money employing people or building their corporate headquarters skyscraper, where does this money come from?  Just am wondering if this is kind of the private equivalent of the state spending money into existence on infrastructure.

Thomas Hedin's picture
Thomas Hedin
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Re: "Our Land: Collateral for the National Debt"

When a bank spends money employing people or building their corporate headquarters skyscraper, where does this money come from?

This comes from the interest on all of the loaned money that is owed to the banks.  Banks do not Spend money into circulation, they only loan it.

This can get a bit interesting though.  If a person opens a bank, and starts a seperate business they could loan that business they own the money to build the entire building, then have the bank sign a lease with that other company and pay rent to them to cover the costs of servicing that loan.  How can anyone compete against a man who can create as much purchasing power for himself as he wants when he is the only one who can do that?

All this money still went into exsistance as an interest bearing loan.  I'm not sure the last time this practice was used, but I do know for a fact that process has been done in the past.

Banks can create money as an investment as well but the rules vary on the size, type, and charter of the banks but all money banks create goes on the books as an asset and a liability (someone has to go into debt in order for the money to exsist).

There is another way banks CAN create money to pay their expenses but that explanation requires T charts and through slight of hand they can create final payment money.  I was explained this process by a very successful retired international banker, and he told me fewer than 1 in 1000 bankers understand banks create money.  Even in this process the money initially went on the books as a liabilty of the banks but they really don't do a whole lot of this.

Just am wondering if this is kind of the private equivalent of the state spending money into existence on infrastructure.

Two fold answer. 

One, if money is Spent into circulation it would NOT go on the books as a liabiltiy, it would only go on the books as an asset that can be used to get rid of liabilities.  Everyone I know wants more assets and wants to get rid of their liabilities.  Banks do not do this at all.

Two : States are prohibited from creating money under the U.S. Constitution.

I guess the answer is no, because states do not and cannot create money to spend into circulation.

I hope this answers your question????

piquod12's picture
piquod12
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Re: "Our Land: Collateral for the National Debt"

Hi Thomas

Just realised my last post didn't specifically address the point you made here;

Lets go through how this really works.

I'll be the bank.

lets just say this is the only loan in exisistance.

I loan you $1 at 10% simple interest.

Now pay me back $1.10 with only $1 dollar in circulation.

You have to remember that when the principle part of the loan is paid back it gets extuiguished from ciculation.

The only way you can service your loan is for someone else to go into debt where you can capture some of their borrowed money to pay off your loan.

The $0.1 interest represents a claim on my labour to the value of $0.1. In my very simple system this could be repaid directly by services or goods rendered by myself to the bank owner/money lender and there would be no need to print any extra money.

However,we can make it a bit more complex (let's say the bank owner doesn't want what I produce) and let the bank use the IOU from me (or monitise the claim into more recognisable currency) to allow the bank owner to obtain goods from someone else. This intermediary could then purchase goods/services from me with the same promisary note (in original or monetised form) and I could then use the note to pay off the interest I owe the bank thus extinguishing this extra money/claim (delete according to your preferred perspective of how the system works). Throw in enough intermediaries and enough banks and you have an economy capable of supporting at least a certain level of interest-bearing debt.

The important things to remember are that money is a claim on labour (hence my previous suggestion of equivalence) and that bank owners are as much a participant in the economy as everyone else.

In summary I don't think the issue is in the payment of principle + interest per se but rather the unusual size of debt:income (or debt:gdp for the economy as a whole) just now. As I understand it the real problem that CM outlines is servicing this huge debt burden going forwards against a backdrop of declining resources (and therefore declining return on labour).

I do agree that trying to get ones head around the mechanics of money/debt creation and repayment takes a bit of getting used to. Which is why I resort to simplistic modelling and the use of Monopoly money and pieces to help me with the flows!

Thomas Hedin's picture
Thomas Hedin
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Re: "Our Land: Collateral for the National Debt"

The $0.1 interest represents a claim on my labour to the value of $0.1.

If it represents a claim on your labor then why can't you pay the banker with your labor.  The only thing he will accept in payment is monetary units, not labor.

In my very simple system this could be repaid directly by services or goods rendered by myself to the bank owner/money lender and there would be no need to print any extra money.

The only way they will accept those things is through forecloser.  I do know someone who tried doing that very thing, legally, and I would not recommend it to anyone.  You would probably not enjoy the outcome, as i'm sure he did not enjoy it.

However,we can make it a bit more complex (let's say the bank owner doesn't want what I produce) and let the bank use the IOU from me (or monitise the claim into more recognisable currency) to allow the bank owner to obtain goods from someone else.

I'm not going any further because all of this stuff you wrote is all theory and ignores the facts of how the real world operates.

If this works so well then I suggest you go try it.

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compinthegroove
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Posts: 113
Re: "Our Land: Collateral for the National Debt"

DrKrbyLuv wrote:

It is true that the money is created for free by the private banks and it is true that the banks add neither any banking or reserves but; it is not free for "We the People."  The banks use our credit which means we are backing the money.  If you are wondering why we as a nation; are paying private banks interest and principal for money created via OUR credit - you are catching on - but that's another story! 

I have often wondered what the reckoning might look like when we finally begin to default on our national debt.  What's on the other side of national bankruptcy?  In some other bankrupt countries, we've seen natural resources taken and public infrastructure privatized in leiu of debt repayment.  This article provides some other possibilities and a plan for what may be coming:

We as a nation pay interest to the banks because we mistakenly believe that they are loaning money.  If the average person knew that a bank loan was just a ledger entry, it would be a different story.

In a sense, what you're talking about is already happening.  With the Fed holding so many MBSs, that makes them the owners of countless mortgages.  I'd be curious to know how much land this amounts to. 

piquod12's picture
piquod12
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Posts: 99
Re: "Our Land: Collateral for the National Debt"

Hi Thomas

I'm not going any further because all of this stuff you wrote is all theory and ignores the facts of how the real world operates.

Which is a shame because I'd be interested in your take on the role of bankers in the economy and why their purchases cannot be seen as resolving the issue of interest repayment, i.e. by ultimately allowing borrowers to pay off their debt even if through a very convoluted series of pathways. Or, to answer your point about someone else having to go into debt to fund my repayment, this person could ultimately be the lender using the interest they have been paid, thus squaring the interest repayment circle. When I say that money is a claim on labour I mean it as an abstraction rather than suggesiting I can go to the bank and offer to paint the walls. But IMO it still helps to understand how the system has to ultimately work. For what it's worth Karl Marx thought so too.

If you make the assumption that ever increasing debt is inevitable if interest is charged then you ignore vast swathes of history that show that it isn't. Even when the gold standard existed interest-bearing debt was prevalent and yet didn't prevent stable economies persisting for many decades without significant debt expansion (even the occasional expensive war was eventually paid down!). The latest credit explosion in certain countries has been extraordinary but individuals and Nations have gone through periods of both rising and falling debt many times. Sometimes these end in a form of default and we may end up there this time. But it's not inevitable.

Thomas Hedin's picture
Thomas Hedin
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Posts: 815
Re: "Our Land: Collateral for the National Debt"

Piquod12

How can anyone pay back more(interest) than what is ever created(principle)?

Can you explain to me how we as a nation can borrow ourselves out of debt?

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