Money – What and How
What is money and how does it work?
Money is a bill of exchange.
It indicates the value of the thing exchanged for it, thereby creating this same value for the bill itself as well. Money is not the same as currency. Currency is the unit of measure of this value. In Canada, it’s the Canadian dollar. A unit of measure is merely a quantity, not a thing. However, in the case of currency, it is both the unit of measure of money, and the physical thing, i.e. the dollar bill. Any bill of exchange is money. For example, a promissory note is money, a bill of sale is money, a debt obligation is money, a negotiable instrument is money, all these are bills of exchange and they all have a value indicated in currency. In the case of negotiable instruments, since they are negotiable, their value depends on not just the value indicated, but also on several other factors such as interest, payment method, thing for which it is issued, the person who issued it, etc. Typically, currency is not negotiable, unless it is bought and sold with currency from other countries, then by the nature of this exchange it is negotiable. The reason for this is that currency is the unit of measure of value of money, thus it must remain fixed and invariable, i.e. we can’t go to the bank and negotiate the value of 10x $10 when we give 1x $100 in exchange – $100 is $100 is $100 no matter how it’s made up.
Money is a negotiable instrument.
This means its value is variable according to offer/demand and other factors such as interest rate. For example, a promissory note of value $1,000, but with interest rate of 10% is more valuable than another promissory note of same value $1,000 but with interest rate of 5%. Or, if the maker of the note can’t pay now, the note then drops in value until the maker of the note gets rich, at that point the note rises in value. This is especially important when a note is sold by the payee to a holder in due course, and then this person tries to sell the note again, and so forth. That’s the purpose of a credit rating, it gives value to the promissory notes we issue. The higher a credit rating is, the more valuable these notes become.
How does money work?
First, we look at who issues money.
The central bank issues currency, everybody else issues any other kind of money of value indicated by currency.
Who’s the central bank? In Canada, it’s the Canadian Treasury (or its other name is Bank of Canada). The Canadian Treasury is a private bank. And this is where it gets really absurd. First of all it’s a private bank, a private corporation, and its sole purpose is to make a profit for its shareholders. First, the finance Minister issues promissory notes – called treasury bonds – and gives those bonds to the Treasury, who then issues the corresponding currency. This currency is issued at interest rate, determined by the Treasury, not by the finance Minister. This currency must be paid back to their full value indicated, not according to the actual cost of manufacture of these dollar bills. What this means is that the Treasury gets paid not for the actual thing made, but for the value indicated by the thing made, i.e. it gets paid $100 to make a $100 bill, $5 to make a $5 bill, etc, in spite of costing exactly the same to make any dollar bill of any value indicated. On top of this, interest is paid back as well, so that for every $100 bill, another $5 must be paid back to the Treasury. As if that was not absurd enough, who issues that $5 dollar bill that must exist to pay for the interest? You guessed it, the Canadian Treasury. And then we also have to pay back that $5, which the Treasury issued, so we could pay back the $5 interest on the $100 dollar bill the Treasury issued in the first place, and then more interest on that $5 dollar bill, and so forth. There’s no end. There’s only interest on interest on interest, ad nauseam. This is where the bulk of our taxes go.
The most absurd part is that since the Canadian Treasury is a private bank, and since it’s the only entity who can issue currency, it can issue any amount it wants, so the idea of making a profit for its shareholders is pointless. So what’s the true purpose of the Canadian Treasury? Well, who are the shareholders and what do they really want?
But there’s a trick.
Either we change the Law so that a) we pay only the actual cost of manufacture of dollar bills, or b) we dismantle the Canadian Treasury and instead create a state bank, then issue currency at cost without interest, or c) we each issue our own money in the form of promissory notes, with which we can then trade with everybody else, including with banks and government institutions and so forth, or d) we also maintain proper books and balance them at interval with those promissory notes, and so forth, or e) we remove money altogether, and use an alternative system instead (Ubuntu Contributionism, but it’s not the point of this post).
In fact, when we take out a loan at a bank, we sign a promissory note. The signer – the person who signs his name on the promissory note – is called the maker of the note, and the maker of the note is the issuer. We are led to believe that the bank makes the note or the bank issues the note, that’s incorrect. The signer is the maker is the issuer. We are also led to believe that we cannot control interest rates or penalties imposed when we can’t pay back the loan, that’s also incorrect. The maker/issuer of the note controls all aspects of its content, including interest rate, penalties, payment methods, frequency, amount, etc, everything. Indeed, if you’ve ever taken out a loan, read the “contract” carefully, you’ll see that the bank did not sign it, except maybe as a witness to your signature and it should be indicated clearly that it’s a witness, and anybody can sign as a witness, and even then the only signature that truly matters is the signer’s/maker’s/issuer’s – yours.
How it actually works when you take out a loan is that the bank first creates a deposit with the note you signed – this is an asset – then it creates a fictitious credit to your name – this is the liability and it balances the bank’s books. This credit to your name is financed by the note you signed – the bank is merely giving you back the money you gave it. The credit could be a check which you could cash in at any bank. Some claim that you don’t owe that money – the check you got – but that’s not entirely correct. The money you owe is the money you promised to pay, and the bank holds that promise. However, if the bank sold it, they no longer have the right to make a claim on it – to collect on it. Typically, the bank sells the note because it’s now worth much more than the value indicated because of interest. Basically, you’ve given the bank more money than the bank gave you, all because the note stipulates interest be paid.
Personally, I sent a promissory note to the bank to pay for a debt. If the bank was honest, they’d honor that note, and the debt would be paid, and then I’d pay that note according to its tenor. But the bank is not honest, so they continue to ask for money for that debt, and this makes them criminals since charging twice is fraud. The bank isn’t intentionally dishonest. I mean, it’s people and people are generally honest. Instead, it’s how they’re trained that makes them dishonest, they have no clue about the Law that applies or how that Law applies.
But that’s not a problem when we deal with promissory notes with each other, once we agree that’s how we’re going to do business with each other, and we establish a standard note format without interest or penalties. But then it’s an agreement, we must honor our promissory notes – our promise to pay. In fact, when we pay for things we can’t afford right now, we use promissory notes. For cars, houses, furniture, etc. We can’t afford the whole price right now, so we issue a note – a promise to pay – for the total amount, and that note actually pays for the whole price immediately. Typically, those notes we sign, they include interest and penalties, and they’re negotiable so the bank buys them, then sells them, but we still have to pay the bank, and again that’s fraud because the bank sold the note, yet continues to collect on it.
And this is where it gets interesting. If you’ve ever signed a promissory note, ask for the true original of this note. If the true original cannot be presented, then you cannot be liable to pay it anymore. This is how it works. When a note is sold, it is then said to be held by the “holder in due course”, and only the holder in due course has a right to make a claim on it, i.e. to collect on it. Once the bank sells a note, it no longer holds any right to make a claim on it.
It gets even more interesting. If you’ve already signed a promissory note for any kind of purchase like a car or a house, you can issue another promissory note to pay the first note, then you pay the second note according to its tenor (according to the terms and conditions which you set any way you want). This is basically what I did when I sent the note to the bank. I set the terms and conditions so that I no longer pay any interest, there’s no penalty for any reason, I set the monthly payments to be $10, and I set the payment place to be my home address so that now the bank must come to me to get their money, I also made the note explicitly negotiable so the bank can sell it if they so choose, and all of it conforms to the Law (the Bills of Exchange Act). For a house, typically there’s a mortgage – a condition that says the bank actually owns your house until you pay the full amount owed. Well, that too can be eliminated as you now control the terms and conditions, so obviously you won’t put a mortgage on your own note, right? Once you do this, the house is now yours and there’s nothing the bank can do about that. First though, you must find out the exact amount owed if you paid it in full (capital, interest, penalties, etc), then that’s the value you put in your promissory note.
Any promissory note can pay any other promissory note. In fact, that $5 dollar bill in your pocket is a promissory note, that stipulates the promise to pay $5 in the form of another $5 dollar bill, or in any other form of money of value $5. However, it’s not explicitly written on the dollar bills, that’s the nature of dollar bills – promissory notes to pay in the form of currency or in any other form of money, including other promissory notes of same value.
It’s important to keep in mind that when you sign a promissory note, you actually create money of the value indicated on the note. So, if you made a note for $500,000, then that’s the value of the note. Also, the instant you sign the note, that’s when the note becomes valuable and negotiable – it can be sold at any time after you sign it. So sign a note only when you’re about to deliver it, since delivery seals the deal – the payment (the note) is delivered, the note is completed by delivery. This means that if somebody steals your note, they won’t be able to sell it since you didn’t sign it – it has no value. Also, get a signature on delivery so that you have a record of the actual delivery to the payee, and also so that you establish your normal procedure for delivery in case of future dispute or theft of a note you signed but did not deliver yet. However, if you make a note and stipulate that it is non-negotiable, it is valuable only for the payee – for the person to whom you promised to pay.
Finally, when a promissory note you issued has been payed out in full, the note must be returned to you. So when you’ve payed back the bank for that loan, ask for the true original. If the bank does not return the true original, it’s fraud since that note continues to be deemed payable, in spite of having been payed in full, and thus continues to be traded for value even though there’s no value anymore. This is also true when you issue a promissory note to pay for another, or to pay for a loan or mortgage or whatever, the bank must return the first note you signed, because it has now been payed in full by the second note you issued.
But really, what did you think money was or how it worked?
Bills of Exchange Act: http://laws-lois.justice.gc.ca/eng/acts/B-4/index.html
(Look for definition of “bill” and “note”)
(Also read as best you can, so you get an idea of what the hell I’m talking about here)
Financial Administration Act: http://laws-lois.justice.gc.ca/eng/acts/F-11/index.html
(Look for definition of “money” and “negotiable instrument”)
Bank Act: http://laws.justice.gc.ca/eng/acts/B-1.01/
(Look for definition of “debt obligation”)
Bank of Canada Act: http://laws-lois.justice.gc.ca/eng/acts/B-2/
Currency Act: http://laws-lois.justice.gc.ca/eng/acts/C-52/page-1.html
Political party: http://www.ubuntuparty.org.za/
Political party Canada: http://www.ubuntupartycanada.org/
Martin Levac copyright 17:07 8/7/2016
FOR IMMEDIATE WORLDWIDE DISTRIBUTION WITHOUT RESTRICTION