Tip:
Highlight text to annotate it
X
And thirdly, due the inevitable defaults and foreclosures,
the banks gain legal title to a lot of real property the world over.
And finally, if the worst happens.
If borrowers default on mass causing the banks large losses
the government is forced to rescue the banks with multi-billion dollar bailouts...
to save the financial system.
And what are these bailouts financed with? You guest it.
More tax payer debt.
# really quite an achievement to pull this off...
and without most of the victims even being aware off.
If you're now thinking there ought to be a law...
well, there is a whole body of law that makes all of this legal.
So how # a system like this ever become the law?
To answer that we go back to England in the mids 17th century.
When plunder becomes a way of live for a group of men living together in society,
they create for themsevles in the course of time a legal system...
that authorizes it and a moral code that glorifies it.
Frederic Bastiat 1801-1850 political economist
With the development of better ships and the new explorations they allowed...
...trade was expanding rapidly.
In order to carry # commerce especially over great distances and lengths of time...
written contracts would be becoming more and more important and more sophisticated.
Under english common law that long had been established...
that a contract could only been enforced # something of real sustance has changed hands.
A transfer of goods or rights in property was the real stuff of the exchange...
and that was what the court would evaluate for fairness,
not just the words on the document.
A contract under which there had been no exchange of consideration,
meaning real goods or rights in property was # to be empty...
and was therefore not enforc# by the court.
So a contract in which a borrower say pledged a car...
he does not own in exchange for a bank's promise of payment...
would not even qualify as a contract.
No common law court would enforce it.
As well, in the event of a dispute over a contract under common law,
only someone who had actually provided consideration to the transaction,
in other words, only someone who delivered the goods had the right to # in court...
for fullfilment of the contract by the other party.
This right was not transferable to a third party.
When early traders went off personally on expenditions with trade goods...
they bought those goods at home with their local currency...
and would sell them for foreign currency in the distant destination.
They would then buy foreign goods with the foreign money,
bring those goods home and sell them for the local currency.
Pretty simple.
But as trade became more sophisticated, traders became more # to stay home...
and just hire ships to carry out deliveries.
This gave traders the freedom to import cargos of foreign goods from different sources...
than in the destination to which their home goods had been exported.
Thus, a problem was created.
The exported goods had been paid for with foreign coin, the value of which needed to be spent somewhere else.
Moving money as coins entailed a high risk of theft...
as well as the near certainty of partial loss by currency conversion in a different land.
This problem of payments from a distance was overcome by the use of bills of exchange.
A bill of exchange was a signed order from a payer to an #...
demanding that the # pay a certain specified sum of money to the person identified as the payee.
These were secured by signature...
and they could not be acted upon in court by anyone other than the original parties.
Thus, they're have no use to a thief or any other third party.
You probably recognize that these were the pre# of checks.
I the payer instruct the bank the adr# to pay the payee,
a person named on the check a certain sum of money.
This was all well and good for transactions among parties who were known to each other.
The bill of exchange was used merely as a way to order payment in coin at a distant location.
But merchants soon wanted more flexibility, they wanted to be able to use bills of exchange...
to # payments among many merchants in many locations...
using bills of exchange like money itself.
For this to work, bills of exchange had to be # to and enforceable by third parties.
As we shall see, this was the moment in legal history that gave # to the banking system we have today.
A third party who might have honoursly purchased a bill of exchange...
several steps remove from the original exchange...
could not be expected nor would have the right to show up in a common law court...
and defend the # of the contract and collect on it.
This made third party bills of exchange an unacceptable risk.
So, in order to be able to use bills of exchange as a convenient and guarante third party payment system,
essentially equavalant to money,
the common law practise had to be set aside regarding bills of exchange.
In England, by a series of legal decisions from 1664 to 1699...
this problem for commerce was remedied by making bills of exchange enforceable by third parties.
If a third party had purchased a bill for valueable consideration and in good faith...
having no apparent reason to suspect fraud or some # in the right of the seller to sell it,
then the bill automatically became good and enforceable by the court against the signer.
What did this change mean?
It meant essentually that any bill of exchange would be consider legitimate once it was sold.
Bills of exchange and all other subsequent types of signed promises to pay...
with the notably exceptions of checks became transferable and enforceable in court.
Just what the merchants wanted.
Now debt contracts could be sold like things and transacting business would be a whole lot easier.
Not only that, it opened up a whole new market for profit seekers, trading bills of exchange themselves.
The marketing of debt was born.
The change in the law had another affect as well.
It made # to trick or even force a person into signing a legally binding promise to pay...
and then if that promise were purchased by a third party for real consideration and in good faith...
it would be enforceable against the signer in court.
Ultimately, this became one of the foundation # principals of the uniform commercial code...
which governs the contact of business in the US and by extension in most of the world.
The entire taxing and monetary systems are hereby placed under the U.C.C.
US Federal Tax Lien Act of 1966
# if we buy a stolen laptop from a guy on the street, we're guilty of receiving stolen goods, a criminal #.
Doesn't matter if we # on its money and were unaware the goods were stolen.
The court will restore the goods to the rightfull owner.
We as purchasers, innocent or not, lose our money and may even be charged with a crime.
But if we buy a loan contract from a banker and give him real value for it in good faith...
it doesn't matter that the loan contract may have come into existence under false pretenses.
Whoever signed it, is required by commercial contract law to pay up...
and the courts will enforce the obligation.
Today, debt contracts come in a myriad of forms, including and especially loans and mortgages.
It's significant to know that just as these common law restrictions were been removed,
the brand new Bank of England was been established.
The first banks # authorize to create money out of thin air.
The new loss # perfectly, making the new bank's empty contracts enforceable against the so-called borrower.
The bank hath benefit of interest on all moneys which it creates ouf on nothing.
William Paterson founder, Bank of England
Those who've discovered the true nature of their own bank loans...
and have attempted to challenge the # of their debt contracts in modern courts...
have discovered to their # that this commercial contract law is still the # rock defence of money as debt.
The bank would have sold the original loan agreement to a third party for value...
and even though that third party is often just a sister company of the bank,
all that matters to the judge is who # the document, what it says and whose signature is on it.