You own your debt - not the bank!
by DebtReliefDougThe banks do not lend any of their depositor’s money. And they don’t lend their own money.
In fact, the banks do not lend anything.
Today’s banks only buy and sell receivables, notes, or paper. Sometimes they’re called negotiable instruments. Your payment authorization for each credit card purchase, along with your credit application, is used to create new currency to pay the merchants. This makes you, the bank customer, the lender!
That makes the bank the borrower.
These transactions look just like counterfeiting, except the banks call it “originating.”
In any case, the banks benefit from money they did not have prior to accepting their customers’ applications or notes. Their customers’ applications or notes are used to pay for purchases or collateralized property.
The Federal Reserve Bank of Chicago publishes “Two Faces of Debt” which explains the process:
“Debt does more than simply transfer idle funds to where they can be put to use — merely reshuffling existing funds in the form of credit. It also provides a means of creating entirely new funds — funds needed to finance the greater volume of new projects and spending that contribute to economic growth.
Again, checkable deposits in commercial banks and savings institutions are debts — liabilities of these depository institutions to their depositors. But checkable deposits are also the money used for most expenditures. How do these deposit liabilities arise?
For an individual institution, they arise typically when a depositor brings in currency or checks drawn on other institutions. The depositor’s balance rises, but the currency he or she holds or the deposits someone else holds are reduced a corresponding amount. The public’s total money supply is not changed.
But a depositor’s balance also rises when the depository institution extends credit — either by granting a loan to or buying securities from the depositor. In exchange for the note or security, the lending or investing institution credits the depositor’s account or gives a check that can be deposited at yet another depository institution. In this case, no one else loses a deposit. The total of currency and checkable deposits — the money supply — is increased. New money has been brought into existence by expansion of depository institution credit. Such newly created funds are in addition to funds that all financial institutions provide in their operations as intermediaries between savers and users of savings.”
A Congressional Subcommittee on Domestic Finance explains the process in very much the same manner, in its publication “Money Facts.”
“33. Do private banks issue money today?
Yes. Although banks no longer have the right to issue bank notes, they can create money in the form of bank deposits when they lend money to businesses, or buy securities. (The next chapter will explain how banks create money.) The important thing to remember is that when banks lend money they don’t necessarily take it from anyone else to lend. Thus they ‘create’ it.
45. Where did the commercial banks obtain their reserves?
By and large the bulk of commercial bank reserves were created by the Federal Reserve and credited to the account of the various commercial banks which are Federal Reserve ‘member’ banks. The Federal Reserve creates these reserves just as a bank creates checkbook money. By various devices, either loans or other means, the Federal Reserve credits a bank with bankers deposits—‘reserves’.
47. Where does the Federal Reserve get the money with which to create bank reserves?
It doesn’t ‘get’ the money, it creates it. When the Federal Reserve writes a check, it is creating money. This can result in an increase in bank reserves—a demand deposit—or in cash; if the customer prefers cash he can demand Federal Reserve notes, and the Federal Reserve will have the Treasury Department print them. The Federal Reserve is a total moneymaking machine. It can issue money or checks. And it never has a problem of making its checks good because it can obtain the $5 and $10 bills necessary to cover its check simply by asking the Treasury Department’s Bureau of Engraving to print them.”
You can use this information to protect yourself from creditors. The rules require creditors and collectors to prove that money was lent, or that they in fact paid the merchants for purchases you made, and that the arrangement was not fraudulent.
(You can learn more by reading G. Edward Griffin’s book, The Creature from Jekyll Island: A Second Look at the Federal Reserve
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