Objections and Answers: Lawsuit Nullifying Debt Contracts

Objection citing the banks ownership of a home as “collateral” 

It is said that if a person stops paying their mortgage, the bank will reposes the house and settle the loan. This presumes that the bank owns the home legally which they don’t. If the money used to secure the home is fraudulent, then the ownership is fraudulent as well. Who owns a stolen bike? Certainly not the thief!

Objection: You signed a contract. Now pay up. 

It is true that every borrow signed a contract to pay back a loan with interest in exchange for a lump sum of cash. What no borrow signed up for, and which is the secret that isn’t disclosed that makes fractional reserve banking fraudulent, is that there is no way for all borrowers to pay back the loan with interest. Not only do depositors not knowingly deposit their money in a bank only to lose 90% of its purchasing power to inflation, borrowers borrow money with the understanding that it is possible to pay back the loan. The fact that the system distributes the inability to pay back loans throughout the economy doesn’t make the practice any less fraudulent. 

So in recap, banks may disclose that they are engaging in fractional reserve banking, but they are not disclosing the guarantee that they will be able to reposes real assets simply by the nature of this practice. Again, we can go back to the story of the farmer, the rancher, and the banker. If the banker was honest, he would have required depositors to pay a fee to park their money at the bank for immediate withdrawal or act as a middle man loaning out money that is not available for withdraw, creating a 100% reserve at the bank. The farmer may put $50,000 in for immediate withdraw and allow $50,000 to be lent out at interest to the rancher. The interest rate would be set by the likelihood that the rancher could provide a good or service that the farmer would want to pay for, since he is the only other member of the town. Without a strong business case, the banker would require a high interest rate secured by some real asset owned by the farmer. In the event the bank does loan the $50,000 and the farmer is unable to pay it back, the bank is able to acquire and liquidate the farmers assets, making the bank and the rancher whole, which was the clear and obvious bargain all agreed to in the plain language of the agreement. In this exchange where no money is being added to the system out of thin air, extreme due diligence is made to ensure the rancher, the farmer, and the banker are made whole. Money, lending, and interest rates becomes the language of serving others, rather than the tool of bankers to fleece unsuspecting clients. This arrangement is in fact what depositors and borrowers think they are engaging in but since banks do not disclose how they have rigged the arrangement in their favor, borrowers are fleeced when circumstances guaranteed by the system prevent them from meeting the obligations of the loan.

Objection: Why do you care so much? You are smart and capable. You can earn plenty of money. Just pay back your debts.

This objection is the most insidious because it treats the whole system like Russian roulette where certain participants can play game well enough to avoid the risk of getting shot. Meanwhile, other people, who aren’t as skilled or smart or (let’s say it) privileged to have the advantages of avoiding this risk are severely wounded. This also ignores the consequences of political spending and how destructive inflation and political programs have been for desperate populations. It ignores the breakdown of the family unit in African American cultures with the advent of welfare programs and it ignores the rise in obesity due to the industrialization of agriculture, made possible only by low interest government loans. It is the height of cruelty to my fellow man and our children to kick this can to him and down the road. The system will only become more destructive. I am appalled that my parents generation or their parents generation or even their parents generation did nothing to stop this, accepting 120 years of constant wars, a complete debasement of the currency, and risking complete annihilation of the species with the threat of nuclear winter. And all we had to do was notice that loan originated through fiat and through fractional reserve banking were fraudulent and therefore null and void…