For as long as I can remember I’ve always been confused by the words on our currency, “This note is legal tender for all debts public and private” as I always thought, “Well, if I am buying this, isn’t it mine? Why is it a debt? The following article explains it well and if it doesn’t make you scared, it should.
The sad part is that the average Joe has no clue how our current fiat currency monetary system works or exactly what “money” is. The average Joe doesn’t even know that the Federal Reserve is neither Federal or a Reserve and that it it a conglomeration of private banks that lend money, at interest (which you get to pay via federal taxes) and it totally against Section 8 of the Constitution of the United States which specifically states, “The Congress shall have power to borrow money on the credit of the United States and…… to coin money, regulate the value thereof, and of foreign coin, and fix the standards of weights and measures.” Today, and for the last 97 years, we have not had the power to coin money and have only borrowed it from this private institution at interest which, when we need to borrow money, they just input it into the computer and, poof, money is made out of thin air and we have to pay it back!
Until recently I didn’t understand this system either. Today I know better and I hope you will too after you read the article.
The Nature of Money
By Alfred Adask
Over 200 years ago, Thomas Jefferson warned, “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation the banks and the corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.”
Today, of course, we have a private bank (the Federal Reserve) that does control the issue of our currency (fiat, paper & digital dollars). We are subject to inflation (mostly) but possibly deflation (soon). And our economy is teetering on the edge of calamity.
But the average American will nevertheless dismiss Jefferson’s warning as curious, but irrelevant or even hyperbolic. After all, although we have a central (private) bank that issues our currency, where’s the harm? We still have our homes and property, right? Our children have not awakened “homeless” on the continent our forefathers conquered, right? Right?
Wrong.
To understand Jefferson’s warning on the dangers of private banks issuing a private currency, you must understand the nature of money. The vast majority of Americans view “money” as a merely mathematical device for “keeping score”; that money is only about adding and subtracting and the more you have, the better off you are.
Such people are dangerously ignorant in that they don’t realize that Jefferson’s warning is no longer a prediction, but already half true. Americans have already lost their property (and liberty) to the private bank that issues our currency—but the American people have not yet “awakened” to that loss.
• 15 years ago, a different “Jefferson” occupied The White House—William Jefferson Clinton. Unlike the first “Jefferson,” Bill Clinton was not held in high esteem. One of Clinton’s critics distributed thousands of “$6 Bills” that looked a lot like paper dollars. These “$6 Bills” had a picture of Bill Clinton on one side and Monica Lewinsky on the other, plus a half dozen lewd jokes in fine print. Most people knew instantly that these “$6 Bills” were just jokes.
But some did not.
I had a friend who’d buy hot dogs and cokes from 7-11 convenience stores during lunch hour, when the clerks (foreign immigrants) were busy. My friend tendered a “$6 Bill” to each of the overworked clerks. All the clerks accepted the “$6 Bills” and gave change. The clerks’ only problem was trying to figure out which slot in the cash register tray should hold the $6 Bills: The slot for $1s, $5s, $10s, or $20s? All the clerks chose to place the $6 Bills under the cash tray with the $100s.
This anecdote makes some people wince (the hard working clerks undoubtedly had to pay for the $6 Bills out of their wages). Other people grin (damn foreigners are so freakin’ dumb they don’t even know real money when they see it).
But the truth is that, when it comes to money, at least 99.99% of Americans are just about as dumb as the clerks who accepted the $6 Bills.
Here’s a little test to see whether you’re among the 99.99% ignorant or the 0.01% informed:
You go to the grocery store; the clerk rings up $18.75 worth of groceries; you tender a $20 bill; the clerk gives you $1.25 change and a receipt; you leave the store with the groceries and drive home.
Q: Did you pay for those groceries?
A: Yes ___ or No ___ (check one).
If you answered Yes (that you did, indeed, “pay” for those groceries), you’d be dumb. In fact, you be just about as dumb as those clerks who accepted “$6 Bills”.
Don’t feel too bad. You may be dumb (actually, ignorant) but you’re not alone. At least 99.99% of Americans would answer just as you did.
On the other hand, if you answered No, you are the one man or woman in 10,000—maybe more—who understands that you did not actually “pay” for the groceries, but instead merely “discharged” your debt.
To “pay” a debt means to “extinguish” that debt. Debts are paid/extinguished when you tender an asset such as lawful money (gold and silver coin) to compensate for and eliminate the debt.
It’s like adding positive and negative numbers. The debt, say $18.75 at the grocery store, is a negative number. The object is to extinguish or “zero out” the negative number (pay the debt) by tendering a positive number of equal magnitude. Mathematically, the formula for paying debts is something like “Debt + Payment = Zero”. I.e.,
-$18.75 (the debt due)
+ $18.75 (the tender of an asset)
Zero (debt extinguished)
On the other hand, to “discharge” a debt means merely to “promise to pay” the debt. Debts are “discharged” when you tender “legal tender”, paper or digital dollars and other fiat currencies. Debts are “discharged” with IOUs—a promise to pay (someday in the future, with lawful money or some other asset) rather than the actual payment of an asset, today.
For example, suppose you tendered a check for $18.75 to the grocery clerk and that check later bounced. Suppose you wrote a second check for $18.75 and persuaded the grocery store to accept your second check as “payment” for your first NSF check.
Your first and second checks were never anything more than promises to pay; they weren’t assets; only debt-instruments. You’d be temporarily discharging your first debt (the bounced check/promise to pay) with another rubber check (2nd promise to pay). But you wouldn’t be paying anything.
It’s fundamental law for thousands of years that you can’t actually pay a debt by tendering another debt. Yes, a creditor in a particular transaction may agree to accept a debt instrument as if it were a payment, but that new debt instrument will only “discharge” or replace the original debt. That is, the debt instrument would only promise to pay the original debt by issuing a “new and improved” debt.
Mathematically, the process of discharging debts might look something like this:
-$18.75 (debt due from debtor John Doe who purchased groceries)
-$18.75 (FRNs; a debt due from Federal Reserve)
-$18.75 (John Doe’s debt is still unpaid but discharged by debt instruments from the Federal Reserve). Confusing? You bet.
Too improbable to be true? Not necessarily.
The process of discharging debt isn’t so confusing once you recognize: 1) all Federal Reserve Notes (FRNs) are debt-instruments—not assets; and 2) it’s a simple matter of fact that you can’t actually pay a debt with another debt (another promise to pay). You can only pay debts with assets (like gold or silver).
The discharge process essentially allows you to walk out of the grocery store with the groceries because the grocer agreed to accept an IOU (promise to pay) from the Federal Reserve rather than an actual payment (tender of an asset) from you.
OK-so what? Isn’t this much ado about nothing? You got the groceries. You’ll be eating steak for tonight’s dinner. What difference does it make if the debt for your groceries was “paid” or “discharged”?
The differences are admittedly almost invisible, but they are nevertheless enormous.
First, when you discharge your debts by tendering a debt instrument, the debt can’t actually be paid. That means that while the debt may have been discharged, you are still, technically, a debtor. In law, debtors have little or no rights. It’s dangerous to appear in court as a debtor.
Second, remember the new car you purchased 20 years ago? Pretty snazzy, hmm? Remember how you impressed the neighbors? Great memories, hmm?
That car may be long gone. In fact, by now it may have been recycled into scrap metal.
But there’s a small problem. Technically, you never actually paid for that car. And because you never paid for that car, you never acquired legal title (actual ownership) to the car. Ohh, by discharging your auto debt with debt instruments (legal tender; FRNs), you may have acquired equitable title (the right to use the vehicle much like a renter acquires the equitable right to use an apartment), but you never acquired legal title to “your” car. You never actually “owned” your car any more than a renter comes to own his apartment.
As a result, you could “transfer” your equitable title to another person, but you could not actually “sell” the legal title to “your” car because you never acquired it in the first place; at least not for long.
What is the legal title your car?
A: The Manufacturer’s Statement of Origin (MSO) provided to all new car purchasers.
But what do all new car purchasers do with the MSO/legal title? As part of the original purchase transaction on a new car, the purchasers donate the MSO to the state gov-co. The state gov-co then issues each purchaser a license plate and registration decal to hang on the car.
What do the license plate and registration indicate?
A: That the state gov-co holds legal title to the car; that the state gov-co is the true owner and is thus entitled to not only dispose of the vehicle however it sees fit but also to regulate the use of that vehicle; that the driver is a debtor who, at best, holds only an equitable title; a right to use the vehicle, subject to whatever rules and regulations that may be imposed by the vehicle’s actual owner, the state gov-co.
Why can the gov-co insist that you have insurance on “your” vehicle before you can legally drive it? After all, if you’re a careful driver and never have any accidents, then you’ve never committed a common law offense sufficient to cause you to pay someone else for such injuries. So why do you have to pay for insurance every month? Why can the state gov-co subject you to a very handsome fine if they catch you driving “your” car without insurance?
A: Because it’s not your car. You don’t own it. It’s their (the state’s) car.
Yes, you might have equitable title (right to use) the vehicle, but you don’t have legal title because you never actually paid for the car with lawful money—you just discharged your debt with FRNs. As a result, the state gov-co holds legal title to “your” car and as the true “owner,” the state gov-co can impose whatever rules and regulations it likes on those who “use” the gov-co’s vehicles.
If the gov-co declares that you must have insurance as a conditional prerequisite for driving its vehicle, you must have insurance. If the gov-co/owner declares that you must have a driver’s license before you can legally drive its car, you must have a DL. If the gov-co/owner declares that you and your passengers must fasten your seatbelts, you’d better “click-it”.
If you fail to observe any of the rules and regulations imposed by the gov-co that owns legal title to “your” vehicle, you’ll be ticketed and fined. If you persist in ignoring the gov-co’/owner’s rules and regulations, the gov-co can seize its vehicle or even put you in the slammer.
How can those traffic tickets be issued in the “land of the free”? Shouldn’t you be free to drive “your” car however you like, so long as you don’t injure anyone else?
A: Yes. Absolutely. If it were your car, that would be true even today.
But, today, you are not free to drive your car however you like. Why? Because it’s not your car. While you may hold equitable title to the car, you do not hold legal title. The state gov-co holds legal title. Therefore, it’s not your car, it’s the state gov-co’s. And the state can regulate the use of its car any way it likes.
• A nearly identical argument can be made concerning your home. How long have you been paying on your mortgage? Five years? Fifteen? Twenty-five?
A: Technically, you have never actually paid on your mortgage so long as you were merely discharging that debt with intrinsically-worthless fiat currency (FRNs).
How long before your mortgage is paid off and you own “your” house free and clear? Five years? Fifteen? Twenty-five?
A: So long as you merely discharge your mortgage with debt instruments, you will never actually “pay off” or own “your” home.
I.e., because you’ve merely discharged your debt with fiat currency, you’ll never actually acquire and own legal title to “your” home. “Your” home will never actually be “your castle”. Sure, you may acquire equitable title to use “your” home. Yes, you may be able to “sell” (actually, “transfer”) your equitable title to another purchaser. You might even be able to make a “profit” when you do so. But you will never actually “own” legal title to “your” house.
Instead, you’ll spend your life as an unwitting and blissfully ignorant occupant on the “massa’s” land and in the “massa’s” house. Until one day, you “wake up” (just as Thomas Jefferson warned) to find yourself “home-less” (without legal title to the home you live in) “on the continent your forefathers conquered.”
• You may think of yourself as a free man who owns property, but so long as the only thing you know about “money” is how to count it, you’ll never be more than a sharecropper. So long as you have no understanding of the nature of whatever “money,” you’re using, you may ultimately be no more than a slave. So long as you don’t understand the difference between gold coin (asset) and fiat currency (debt-instruments), you and your children may spend your lives in debt bondage to the owners of the central banks that issue our fiat currencies and subject you to whatever rules and regulations they wish to ordain.
This isn’t news. Thomas Jefferson understood the dangers of private banks and fiat currency in 18th century.
In the early 20th century, Henry Ford also understood: “It is well enough that 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.”
Ford knew that “we be dumb”. Our governmental system depends on our ignorance to maintain its power and to keep us subject to a loss of liberty.
And Ford may have been right in declaring that if the American people understood banking (and the nature of money) that we might revolt tomorrow morning. Maybe that’s what it’ll take to regain real liberty and real ownership of our property and homes. A revolution. Maybe a shooting revolution.
But before we have a shooting revolution, we’ll need a revolution in understanding. We’ll need a revolution wherein the people of the USA (and of the world) begin to realize that there’s more to money than math. We’ll need a revolution wherein the people begin to understand the nature of money.
Posted by pachipro