Isn't this just monetization of the debt?
The Federal Reserve is Criminal Syndicate, a private Criminal Syndicate
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Although you do have a valid legal argument, fractional reserve banking is a bit different. I am not certain loans of mortgages or cars can use the same legal basis of lack of "consideration" to void the contract. The Fed is kiting checks which is fraud. Tough to prove fraud on fractional reserve lending. They are lending value although the reserve requirements are ridiculously low. Maybe a legal argument, however I don't think it hold up in court. At a minimum the Fed is guilty negligence. It is fraud, however existing employees of that corporation were not parties to the original fraud.
As far mortgages go, since many mortgages are financed by borrowing Treasuries and the mortgage is the spread, this would reduce many mortgage to nearly nothing. Treasuries are without value, so principal is not owed. That would bring the mortgage to owing only the spread on the interest rate. It really depends on the individual mortgage company and its source of financing, however. Some mortgage companies (possibly including FHA/VA) were financed differently and the full principal amount is not tied to Treasuries. So results will vary on that. Interesting enough, I think there will be a high correlation between honest people finding honest mortgage companies and will unfortunately owe the full principal. A class action discussion in the House of Representatives might resolve some that perceived unfairness.
When Congress borrows money on the credit of the United States, bonds are thus legislated into existence and deposited as credit entries in Federal Reserve banks. United States bonds, bills and notes constitute money as affirmed by the Supreme Court (Legal Tender Cases, 110 US 421), and this money when deposited with the Fed becomes collateral from whence the Treasury may write checks against the credit thus created in its account (12 USC 391). For example: suppose Congress appropriates an expenditure of $1 billion.
To finance the appropriation, Congress creates the $1 billion worth of bonds out of thin air [actually, created upon a presumption â see David's comment below] and deposits it with the privately owned Federal Reserve System. Upon receiving the bonds, the Fed credits $1 billion to the Treasury's checking account, holding the deposited bonds as collateral. When the United States deposits its bonds with the Federal Reserve System, private credit is extended to the Treasury by the Fed.
Under its power to borrow money, Congress is authorized by the Constitution to contract debt, and whenever something is borrowed it must be returned. When Congress spends the contracted private credit, each use of credit is debt which must be returned to the lender or Fed.
Since Congress authorizes the expenditure of this private credit, the United States incurs the primary obligation to return the borrowed credit, creating a National Debt which results when credit is not returned. However, if anyone else accepts this private credit and uses it to purchase goods and services, the user voluntarily incurs the obligation requiring him to make a return of income whereby a portion of the income is collected by the IRS and delivered to the Federal Reserve banksters.
http://www.21silver.com/?show=merrill&read=public_money_vs_private_credit
To finance the appropriation, Congress creates the $1 billion worth of bonds out of thin air [actually, created upon a presumption â see David's comment below] and deposits it with the privately owned Federal Reserve System. Upon receiving the bonds, the Fed credits $1 billion to the Treasury's checking account, holding the deposited bonds as collateral. When the United States deposits its bonds with the Federal Reserve System, private credit is extended to the Treasury by the Fed.
Under its power to borrow money, Congress is authorized by the Constitution to contract debt, and whenever something is borrowed it must be returned. When Congress spends the contracted private credit, each use of credit is debt which must be returned to the lender or Fed.
Since Congress authorizes the expenditure of this private credit, the United States incurs the primary obligation to return the borrowed credit, creating a National Debt which results when credit is not returned. However, if anyone else accepts this private credit and uses it to purchase goods and services, the user voluntarily incurs the obligation requiring him to make a return of income whereby a portion of the income is collected by the IRS and delivered to the Federal Reserve banksters.
http://www.21silver.com/?show=merrill&read=public_money_vs_private_credit
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Yes, Debt = Money. No debt, no money. Griffin calls it the "Mandrake Mechanism."
http://en.wikipedia.org/wiki/G._Edward_Griffin
12 USC §411
Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized. The said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.
Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized. The said notes shall be obligations of the United States and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.
Well, the film is interesting. Thank you for posting it. Some interesting history of monetary systems. History seems to be teaching us that war and monetary problems are linked. I'm not convinced that the historical perspective presented in the film is a coherent argument for eliminating the present Federal Reserve System, and that the alternative promoted would be better, or even possible, without tremendous upheaval. I do understand how it is that fractional reserve banking can be hugely profitable in boom times so long as too many bad loans are not made, and how in a Reaganesque world where almost any amount of regulation is regarded as anti-capitalist, which it is of course, that banks who make their money by making loans would make too many. But that does not convince me that bankers are anything other than human.
Similarly I am not at all convinced that the debt problems faced by the United States have their roots in the Federal Reserve and the Fractional Reserve Banking System. One can always increase the reserve requirements, reinstate Glass-Steagall, enforce reasonable loan underwriting standards, stop invading other countries, jail Lloyd Blankfein, put Greenspan in a nursing home, and burn Phil Gramm in effigy. That should pretty much correct the problem going forward.
I always like to hear both sides. How about a series of debates between Bernanke and William T. Still? Wouldn't that be entertaining, and possibly even interesting?
Similarly I am not at all convinced that the debt problems faced by the United States have their roots in the Federal Reserve and the Fractional Reserve Banking System. One can always increase the reserve requirements, reinstate Glass-Steagall, enforce reasonable loan underwriting standards, stop invading other countries, jail Lloyd Blankfein, put Greenspan in a nursing home, and burn Phil Gramm in effigy. That should pretty much correct the problem going forward.
I always like to hear both sides. How about a series of debates between Bernanke and William T. Still? Wouldn't that be entertaining, and possibly even interesting?
Most debt incurred by Congress is not the Fed's doing. But, the excessively low interest rates during Greenspan's tenure ultimately led to the 2008 financial meltdown and Congress piled on shitloads of debt to stabilize things.
So, the Fed does have to shoulder some of the blame for where we are today.
While the Fed is one of the most profitable operations on this ball of mud its profit (over $80BN last year) is not shared among member banks.
Over 97% of it is required to be given to the US Treasury every year.
That profit, BTW, is 75% the result of interest on treasury bonds.
The Fed isn't the problem, it's the result of not having a Constitutional amendment prohibiting the government from borrowing money to fund their operation.
Jefferson tried and failed to do that. It was his greatest single regret as a politician.