1) Banks: They take deposits. These are held in trust for the depositor. They must, by law, always be prepared to return any and all deposits back to depositors on demand. That’s the LAW. They would not be able to do that if they were ever to lend out any money on deposit to anyone requesting a loan. They cannot, therefore, lend or invest anything entrusted to them. So the question is: Where do they get the money from, in order to loan it to you?
2) Loan Companies, Credit Card Companies, Building Societies: They don’t take deposit money anyway (I’m talking about the ‘older version’ of Building Societies before they became banks. I’m referring to the way they would just issue mortgages. Their ‘banking’ activities are controlled as in (1), above). So the question is: Where do they get the money from, in order to loan it to you as a mortgage?
Leave that question pending for a moment.
4) What is a Loan Application/Agreement? Paper, printing ink, somewhere a Payee will be written (the name of the Loan Company), somewhere for an Amount (in numbers and words), a Date, and somewhere to write your signature.
Do you see any similarity between (3) & (4)?
A Loan Agreement is a cheque. (Cheques can be written on anything … even toilet paper … provided it contains the essential information so as to enable correct clearance processing)
You send off the Loan Agreement to the Loan Company … and they CASH YOUR CHEQUE! They cash it with an organisation that has the power to issue ‘money’ for that purpose (for example the Treasury, or the Bank of England, etc)
NOW THEY HAVE THE MONEY, IN CASH, TO LEND TO YOU!
Simple. Wasn’t it?
But wait! Sure, they provided the ‘service’ of converting your cheque into funds within an account you can drawn upon (write other cheques against, use a Credit Card against, etc). And they could do that because they knew how to do that. And yes, that was a service. And yes, they should be paid a fee for that service.
But wait again! What is their ‘fee’? Their ‘servicing fee’?
Oh … only THE ENTIRE AMOUNT OF YOUR ORIGINAL CHEQUE, PLUS INTEREST!
That’s all they ask for .. in order to provide the original service!
How to do they ensure they collect this ‘service fee’. By giving you a Payment Book! And they make sure they cream off the INTEREST, before applying the remainder as PAYMENT. In fact they even cajole you into never-ending INTEREST by specifying aminimum payment equal to the INTEREST they want. (Knowing full well you’ll often opt for that, thereby allowing them to roll the whole thing on endlessly)
Now let’s view this another way.
If you write a cheque for £100, and send it to someone else (the Payee), and they cash it – DO YOU EXPECT THE BANK TO DEDUCT ANOTHER £100 PLUS INTEREST – FOR ITSELF – AS WELL?
No? You don’t when you write a cheque you ‘see’ as a cheque do you?
Well, then, why should they do that just because you can’t ‘see’ a Loan Agreement as the cheque it actually is?
MONEY IS CREATED WHEN YOU SIGN A PIECE OF PAPER AGREEING TO PAY.
AND THAT’S THE ONLY WAY MONEY IS -EVER- CREATED.
Your ‘promise to pay’ creates money. Yours, and everyone else’s.
So what -should- happen, then?
What should happen is that you write out a cheque – promising to pay – and send it to the Treasury yourself. They would then ‘cash’ it (in the same way they do that for a Bank), by updating an account with the amount you specified, from which you can draw funds as you need them.
That’s it. Your ‘promise to pay’ stands until the end of time. That’s all money is. A ‘promise to pay’, which stands until the end of time.
All money. “All thee bits of it”.
Check out a Banknote. What does it say? “I promise to pay the Bearer on demand the sum of so-many-pounds”. And signed by the Governor of the Bank of England (in the UK). A banknote is a Promissory Note – just like a cheque or Loan Agreement or any other IOU. An IOU that stands until the end of time.
What should a Bank do? It should simply accept the ‘cash’ from the Treasury, and operate the account for you.
And claim a reasonable – SMALL – fee for providing you with this convenience.
If you agree to some of your funds being invested, the bank should deduct their fees as commission, and not bother you with any other ‘charges’ at all.
THIS IS WHERE WE NEED TO GET TO. To be able to convert your SIGNATURE directly, without any Bank or Loan Company intervening.
And now for something completely different
When you sent them your cheque (aka Loan Agreement) and they cashed it, they could have just walked away with your money. If they’d done that, you wouldn’t have known any difference.
They could have just written to you and said “Sorry, we didn’t approve this loan, after all”
You would have been miffed at not getting the loan but, on the other hand, slightly relieved you didn’t have the payments hanging over you, believing that the whole thing was ‘dead’.
Dead? They were ‘up’ by the amount of the loan! And you were empty-handed! And you had given them that amount!
Dead? I should cocoa!
No. They are greedy, greedy, greedy, greedy. They want INTEREST. Never-ending INTEREST. They POSITIVELY HATE IT when you pay off a loan. Have you noticed? Try getting a loan, and then paying it back immediately. TRY IT.
No. They can lend you your own money, and then claim it back PLUS INTEREST, if they don’t just walk away.
That’s why they don’t just walk away.
Every loan taken out generates money for them. Generated by your payments back.
That’s where banks (etc.) get their money from. All they need to do is to make as sure as possible you’ve fallen for this SCAM sufficient times in the past, so as to be pretty sure you’ll fall for it again.
If you ‘default’ on payments, they had ALREADY BEEN PAID IN FULL RIGHT AT THE START. They took the risk with it.Exactly the same risk as when they invest anywhere. If prices go down, they simply lose, write off the experience, and try elsewhere. Do they send bailiffs if ‘prices go down’? Err … no.
They ‘involve’ themselves when (as explained above) they have no need to be. The risks of doing so are, therefore, entirely theirs, and consequently there is absolutely no need to feel sorry for them.
YOU, on the other hand, don’t owe ANYTHING to ANYONE.
What YOU did was to ‘make some money’ – and then spend it the way you wanted to spend it.
And why not? ‘Money was made’ by you SIGNING a cheque and thereby ‘promising to pay’. I repeat, that’s the only way ‘money is ever made’.
They were the ones who jammed their oar into that simple mechanism.
And now for something that gets really silly
Mortgages. The method for obtaining the cash amount is the same as described above. But there is more to mortgages that meet the eye. (More, over and above, straight loans).
Now, it is illegal to mortgage a property you don’t own. The property is considered to be the security on the loan. How can you be providing ‘security’ when you don’t – at that time – actually own the thing?
And, secondly, it is illegal to transfer a property/dwelling that has not yet been paid for.
So … what does this mean? You can’t establish a loan, because you don’t have any security to offer. Therefore you can’t pay for it, because you can’t get the loan money. (Err … no. You can’t offer you current home as security, because you are probably in the process of selling it!) And, since you can’t pay for it, the Seller can’t transfer it into your name.
But … on the other hand … people can and do establish mortgages, do buy homes, and do move house.
How is this done?
Well … it happens by ‘magic’. The Bank/Building Society uses ‘magic’.
Not really paranormal ‘magic’, of course … more akin to fraud, in actual fact.None found.