WHERE DO THE BANKS GET THE MONEY THEY LEND YOU?
Banks do not have money to lend. When we borrow money from a bank we assume that the money we are borrowing comes from what the banks have, or the deposits others have, in the bank. This is natural, because when you lend someone money, you have to lend them some of your own money. Banks do not lend us their own assets, or money they earned, the way we do when we make a loan to someone, rather, banks issue, or create, the money they lend you when you promise to pay it back. Banks monetize your promise to pay! Your debt, your promise to pay, becomes their asset. Your promise to pay is valuable. When your promise to pay is backed by a mortgage or collateral your promise to pay is more valuable because the mortgage is easier to enforce than an IOU. In banking circles this is a well known fact, but it is not the way it is usually represented. However, describing it this way makes it clear that you provide everything of value when you borrow from the bank and the bank provides nothing of its own. Put differently, when you borrow from the bank your promise to pay becomes their asset and your liability and the money they create with an accounting entry, and deposit in your account, is their liability and your asset. And you have to pay them interest, which for a typical mortgage will be more than the principle, so twice as much as you borrowed; and, if you default on the loan, they get the valuable things you acquired with the loan!
IS THIS LEGAL?
Yes, it is legal. The whole financial system is based on it. It is called Fractional Reserve Banking and it became legal with the Federal Reserve Act of 1913. The Federal Reserve issues the currency - our legal tender - to the Federal Government on the basis of the Federal Government's promise to pay! The member banks which own the Federal Reserve use their deposits with the Fed as the basis for their right to create the money they lend you. They keep a fractional reserve, a fraction of their deposits, as a reserve and create money as loans to whatever multiple of their deposits the Fed has decreed (usually between 6 and 30 times as much as they have on deposit) The courts have been enforcing this system ever since.
IS IT CONSTITUTIONAL?
No! The Constitution gives Congress the authority to issue the currency, debt free and interest free, and to regulate its value. Since the Federal Reserve was established by an act of Congress and not by an amendment to the constitution, it is still an unconstitutional law. Understanding money will help us remedy such acts of treason by Congress. Our constitutional rights are not granted to us by the Constitution, they are inalienable rights. We institute government to secure our inalienable rights. When we understand money we will know that we have the inalienable right to issue the currency as a common good.
IS IT A SECRET?
Yes! It is the "banking secret". As Henry Ford and Andrew Jackson before him, said: "It is well enough that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." and Marshall McLuhan: "Only the small secrets need to be protected. The big ones are kept secret by public incredulity."
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