Cascade of Scams

THE RIP OFF OF AMERICA
By
Chris Chisholm
Published by
ASSET PROTECTOR GROUP, LLC

President Obama and his Congress have burdened the US taxpayer – that’s you and me – for generations to come.  99.99% of the populace has no idea what is happening and they will never be told – unless they read this report and understand the depth of the deception.

Let’s begin by discussing the triggers that broke the economy’s bank – the housing debacle and a closely related – and mostly ignored - problem, consumer credit. My statement that the crisis in totally fabricated may not be easy to swallow, yet I state authoritatively that it is true.

Let me begin by asking a question – should one who borrows money always return the money he borrowed, whether from an unsecured loan (e.g. credit card debt) or a secured loan (such as a home loan) to the lender? What if no money was ever loaned?  What if there were a official publications from the Federal Reserve Bank that admit that the customer is the lender in any bank loan transaction?

Let me re-state that:  that the Borrower (the customer) is actually the Lender?  Sounds stupid, doesn’t it?  It gets even better.  Read on.  Another question:  would it be right to expect someone to pay you with the results of their 8 hours hard work if you only gave them a piece of paper that cost you nothing in return?

Let me give an example.  You come to me to borrow some money, let’s say $100.  I didn't have the cash, so I wrote you a note on a piece of paper that said IOU $100. Then suppose you used that IOU to buy food at the grocery store. Did I lend you anything of value? The checkout clerk accepted the paper as having value, but in fact all I did was write IOU on it.  Do you believe in this case you have a moral obligation to "return" $100 of value – your earnings from 8 hours hard work - to me?

At the moment a new customer loan or credit account is opened, the “lenders” holdings increase by the value or credit limit of that account. New money is created. Were you or I to do this it would be known as counterfeiting.  In banking terms this is “originating”. The entire process is admitted and explained in “Money Facts” published by the United States Congress, Two Faces of Debt and Modern Money Mechanics, published by the Federal Reserve Bank, The Creature from Jekyll Island (Mandrake Mechanism) published by G. Edward Griffin and Money & Banking, 5th Ed. And Money & Banking Instructor’s Manual published by the American Banking Association.

According to at least these public documents, when a person writes a check on his checking account, the person receiving the check’s account is credited and the one writing it has his account debited. And according to the same publication, when a bank "extends credit", the customer's credit account is opened and credited with the "currency" to use, or the homebuyer is given a check to use at the closing to buy his house, but no other accounts are debited.

The banks "originate" currency! The accounting record (transaction ledger) will show that originating currency is identical to counterfeiting. The money did not exist prior to their issuing a check.  And there is nothing there to back it up.  The reason why the banks are permitted to do it is that they are licensed by the Federal Reserve System to do so.  So do they lose money when someone fails to pay his or her mortgage?  Not really.  Keep reading.

Inflation or Deflation?
A main cause of inflation is this uncontrolled "extending credit" since more units of currency in the economy is the only cause of inflation and creates higher prices since higher prices will be paid since there is more currency. This in itself is proof that banks do not lend, they counterfeit, or what they call "originate".  Were that money there in the first place, there would be no inflation.
Further, this “inflation” is a complete misnomer – it is a “deflation” of the value of the US dollar. 

The Federal Reserve Note is the same identical piece of paper used in my example about the grocery store above, where you borrowed $100 from me. I gave you an IOU, or a note, promising to pay you the $100 at a later date, but the date was not specified on the note. You didn’t really care because you were able to buy your groceries. What we call “dollars” are actually nothing but promises to pay issued by the “Fed”.

The Federal Reserve Bank, which many people believe is part of the U.S government, is a private corporation that creates currency (not money) just like this every day. In fact, when a customer obtains a bank “loan”, new currency is created that never existed before. The bank lent nothing, but because it created or “originated” new currency, the customer was able to purchase what he wanted. The bank produced nothing of value, incurred no loss, and suffered no injury.

The problem with this system is that the customer believes he must return this “dollar”. In order to return it, he must perform actual work in exchange for the IOU. This allows the bank to take the customer’s actual value - his 8 hours work - for free, and on top of that the customer pays fees and interest for this “service”. This scheme creates higher prices since there are more units of currency in circulation as more people obtain “credit” from the Federal Reserve commercial banking system.

Would a bank say that they lent you something and confidently argue that point? What facts would they present to support their statement? In fact, have you ever known a bank employee to walk into the bank vault where you submitted your application for credit and collect the money it has approved to “lend” you and then hand it to you? I concede this does not mean that you are not lent money in the same manner; the bank just credits dollars to your account upon approval of your credit application. (The true definition of “dollars” is debt). That’s easy to understand and does not really prove anything. However, where did that money originate? What account was debited in order to credit your account? This is the secret they don’t want you to know.

A bank is a different animal. A bank is able to process your promissory note or credit application by accepting either of them as a cash deposit, just as if you handed the bank an envelope of cash and it gave you credit. For lack of a better explanation, the bank can use your approved credit application or promissory note to purchase other assets. Try doing that by yourself and you’d be convicted of fraud. The name for this process is “origination” and it is synonymous with “counterfeiting”. Now, let’s discuss banking secrets and begin to explain how you and I have just been ripped off by the biggest scam in American history.

riginating money and the thrills of fractional banking
There’s not a banker worth his salt who is not infatuated with “fractional banking” yet 90% of the American people have no idea what that is.  Simply put it is part of the scam.  Here’s an example… the grocer deposits that $100 IOU which I gave you into his commercial bank account.  His account gets credited with the supposed value of $100.  With that deposit, the banker can then do his “Mandrake Mechanism” magic (credit to G. Edward Griffin’s The Creature from Jekyll Island).  So what is that? 

It’s an explanation of fractional banking and here’s the scoop.  When a bank accepts a deposit, they must keep a portion of it in “reserve”, normally 10%.  That means they can loan out the remaining 90%.  OK, so they loan out $90.  That gets deposited in a commercial bank.  $90 is credited to the “borrower” and the bank has another $90 asset – and they can loan out 90% of that or $81.  But wait, they only took in the $100 and now they are able to “loan” out $171?  It gets better – for the bank.

With the new $81 deposited, they can then loan out another $72.90 and it goes on and on until they have actually inflated the original $100 to $900 – a nine times multiplier due to the 10% reserve.  (Have they inflated the original $100 to $900 or have they deflated the value of the $100 by pumping another $800 into circulation?)

A quick summary of where we are so far.  The banks are licensed to increase the amount of money in circulation nine fold with each deposit.  Who authorizes them to do that?  Is it the government?  In part, yes.  But in reality it is the “central bank”; although by law we do not have a “central bank” in the United States.  Instead, we call it the Federal Reserve System.  It serves as our central bank.

If you’re not aware, the “Fed” is not part of the government at all.  It is a “quasi-governmental body”.  That means they want you to believe they are a governmental body.  But they’re not.  It is a privately held corporation who back in 1910 was given the charter to provide money to the United States, signed into law in December, 1913 by Woodrow Wilson, the same Democrat credited with establishing the graduated Federal Income Tax.  He was instrumental in getting legislation passed called the Currency Bill, later known as the Federal Reserve Act.  Not a single Democrat voted against the bill.  It seems the political feelings have not changed in the past 100 years.  Not a single Democrat voted against the “bail-out” of the banks in 2009.

However, to truly understand what the Federal Reserve System is, their history, and their impact on your wallet, the premier source for information is G. Edward Griffin’s “The Creature form Jekyll Island”.   Without a basic knowledge of the Fed, as most of our existing politicians seem to lack, one cannot appreciate what has been done to us. 
Of all the mortgages today, who has actually funded them?  With the collapse of the housing market, who has lost and who has gained?  Can you understand that when money is lost in on one side that it is gained on the other?  Let’s look deeper.

To answer our question about who funded the majority of the mortgages… companies such as World Savings did a lion share.  Begun in the 1950’s by a conservative couple, the company became a mortgage giant.  Sold to Wachovia only months before the market collapse for billions of dollars many of their insiders knew the crash was coming and knew they were a part of it.  According to CBS News interviews, it was a cut and run by top World Savings officials.
But did World Savings actually lose money?  It depends on what you consider as their “loss”.  Where did their money come from to begin with?  We know that it came from thin air, that it was created by banks themselves under authority of the Federal Reserve System.  But does that mean that individual investors did not lose money?  NO.  And here’s where the scam begins.

For you and me to have money, we must do our 8 hours hard labor each day.  If we lose what we “earned” in that manner, it is a true loss.  If a bank “loses” money that they created out of their right to “originate” it, did they actually lose anything?  The answer is that they only lost the anticipated profits that could have bought our labor. 

But what happened to all that ability to “originate” or create money that has caused this so-called credit-crunch that mandated the “bail-out” of the bankers?  And who profited by it?  Money, like water, can’t just “disappear?  Or can it?

Who actually supplied the “billions” of dollars that “disappeared” when the housing market crashed – and why did it crash in the first place?
An answer to that has to address the meaning of the word “value”.  G. Edward Griffin uses an interesting analogy based on actual value.  In his analogy he uses the value to an ounce of gold.  In Roman times this ounce of metal could have bought a fine toga, a crafted belt and a pair of sandals.  In today’s set of values, the same ounce of gold could indeed buy a fine suit, a crafted belt and a pair of dress shoes.  That is actual value.  Yet today, that ounce of gold sells for just shy of $1000 as of this writing.  Is it that the “value” of gold has increased or is it that there is simply more money available to buy it?  In our example, the actual value has not changed at all, merely the numbers of dollars attached to its price.

Is the house you are in more valuable today than it was when it was built?  Or is it less valuable?  Let’s look at a typical scenario of a homebuyer named Fred who bought a condo in 2000.  It’s a nice one that sits on the beach in Melbourne, Florida.  The going price was $500,000.  Fred earns a salary of $75,000 a year and he took out 100% “interest only” loan at 6.5%.  With insurance and taxes adding to his escrow, his payments were $3400 a month, a little steep but he was making them. It did eat half his take home pay. By 2003, the price (or “value”) had risen to $600,000.  Fred refinanced at 5% and took out 100% of his equity. 

He paid off some bills and bought a boat. Payments dropped a little.  He was a happy camper – until 2005 when he had to start making principal payments and his slip fees were raised.  Suddenly his monthly mortgage payment went to $3220 plus insurance and taxes, making his total monthly expense $3950.  It was time to sell.  He even considered living on his boat but his wife wouldn’t hear of it.  He called a local realtor to list his condo.  She did a “comp” and came back with a market value of $525,000, telling him to accept that and sell fast as prices were on the way down, not up.  Fred was upside down on his mortgage – “underwater”.  He owed more on the condo than it was worth.
Had the “value” changed?  Had the condo suddenly become less attractive?  Or was there just less money in circulation? Who was profiting from this change?  Who profited in the first place?

Let’s change the scenario to credit cards.  Tina is a single mother of two growing kids.  She’s has a decent steady job that pays enough for them to have a small house in the country.  She bought it at a good price to value and has no plans to refinance or to move.  Her expense to raise her kids continues to rise, though, and she tends to buy them more clothes and shoes than she needs to.  Shoes!  Her failing.  She sees a nice pair of shoes and she just has to have them.  With 42 pairs in her closet she still buys more… and she buys them with her Visa.  Sound familiar?

When she got her first Visa it carried a 7% interest rate but she didn't care as she paid off the balance every month.  Then she got another one, then a Discover card so she could shop at Sam’s Club.  By the time she realized she was in trouble she had 8 cards, five of which were maxed out.  Then she missed a car payment.  Put it off for a month just to make ends meet in December.  Her Minimum Monthly Payment on all her cards had been about $940 and she’d been paying between $1200 and $1300 on them.  It fit in her total budget.  In February she opened her monthly statements and found that the MMP had gone up.  So had her interest rates.  Four of the 8 cards were now at 18%, one was at 29% and the other three were still at 7.  Her MMP now totaled $1620.  She couldn’t pay them all, so she paid on only 6 of the 8. 

Then in April, all 8 cards had risen to 29% interest.  Her salary could not stretch to buy groceries, pay her mortgage, and make the MMP on her cards.  Tina realized that she was a slave to the bankers.  She could lose her house.

These are real situations that happened to real people, people just like you are.  Are they the villains for taking advantage of the system, or are they the victims of it?  So again we ask, who profits from this?
Is there any justification for:

1. Allowing 100%, “interest only” mortgages?
2. Extending mortgages to under qualified borrowers?
3. Providing many credit cards with high limits to those on fixed incomes?
4. Universal Default?
5. Charging 29% interest on credit cards?

No, there isn’t. 

BUT… someone is profiting and profiting greatly.  It is the bankers and their hand in glove relationship with the Fed.  And, ultimately and forever, it is the central bankers who rule the country, who profit from it all and care nothing for the serfs over whom they rule.  That’s you and me.

How do they profit from lending money?  Is it the interest percentage that they receive from providing this “service”?  That’s the pocket change that the local banks get to keep.  It is from the actual creation of “money”. 

Let’s go back to the original $100 that I gave you.  I “created” that money, remember?  So I was the central banker.  That $100 eventually got turned into $900 more, a total of $1000.  The banks that distributed it got to keep all the service charges, but even they had to eventually return all that money to me.  When a loan is paid off, the money “disappears” back into the central bank.  So my $100 came back to me as $1000.  And I created the $100 in the first place.  I can now buy your actual work with the $1000 from the $100 I created.  Not a bad deal… for me and the central bank.

Who allows this to happen?  The U.S. Government, of course.  The government of our country sold us down the river almost 100 years ago when they accepted this arrangement.  It seemed to serve their purposes at the time, politically and economically.   Both previous and subsequent U.S. Presidents fought centralization of the banks, specifically Lincoln and Kennedy.  Perhaps it is but a coincidence that both were assassinated.  Now we have a President who has already given billions and billions of dollars to the bankers to “bail them out” when there was no financial crisis at all. 

You believe there is a financial crisis?  Did the ability to create money cease?  No!  Only the decision to stop doing so.  Did the demand for housing stop?  Did the value of homes actually fall?

President Obama touts that credit has dried up, that we have to save the banks to get credit flowing again.  Does he actually believe that the ‘creation’ of money has ceased or is he just playing their game? 
It is easy to point fingers at something called “asset backed securities” as the cause of the housing market collapse and impossible to understand if you are not an insider.  Let me break it down in simple terms.  When Fred applied for his mortgage, the bank funded it with created money. They then had that “asset” in their bank.  Fred’s mortgage, along with a few hundred more, were then a ‘service’ issue.  So, instead of them ‘servicing’ these accounts themselves and accepting the stream of payments, they bundled them together and sold them as an “asset backed security” – the asset being the mortgage and the home which it represented.  Individual investors and even other countries bought these “assets”.

Wikipedia says “… an asset-backed security is a type of debt security that is based on pools of assets or collateralized by the cash flows from a specified pool of underlying assets. Assets are pooled to make otherwise minor and uneconomical investments worthwhile, while also reducing risk by diversifying the underlying assets… These asset pools can be made of any type of receivable from the common, like credit card payments, auto loans, and mortgages, to esoteric cash flows such as aircraft leases, royalty payments and movie revenues. Typically, the securitized assets might be highly illiquid and private in nature.”

Yes, even credit card debt.  But let’s stick with mortgages.  The bank now has reduced the amount of capital it is required to maintain by the bank regulators.  These mortgage backed securities are guaranteed by U.S. government agencies.  Are you beginning to see the light?  These securities are sold, not pledged, so they are treated as off-balance-sheet bookkeeping entries which receive better taxation treatment.  So how did the bank profit?  They used created money to fund the mortgage then sold it off at a discount against the anticipated cash flow to be generated, a net present value of between 60% to 80%.  How could they sell them so low?  They had no money in the deal!  It was all profit.

Let’s revisit World Savings.  Wachovia got stuck with paying around $25 Billion dollars for a company whose management knew it was about to fail.  They had written thousands of mortgages that many say border on fraud.  (Notice I didn’t say that.)  For example sake, let’s say that Fred got his mortgage through them.  He was not qualified for the loan he got, but World Savings made the loan.  With a reputation of being conservative, World was just another form of a Ponzi scheme.  Anyone can get a loan, qualified or not.  Add it to the income stream of originated loans and build an empire.  Sell it off to an unsuspecting buyer who happened to have $25 billion dollars laying around. 

What a cascade of scams! 

Wachovia has the money because they, too, create it.  World Savings just did a better job of creation while simultaneously not regarding guidelines.  All those people who got mortgages that should not have gotten them are now underwater with their loans, they cannot sell their homes and they are subject to foreclosure.  The winners are the bankers who paid nothing of real value for the homes on the mortgages and who are now crying for “bail out funds” which President Obama is determined to give them. 

Yet the individual investor paid for these securities with their hours of actual work.  The credit card user pays for the 29% interest rates with their actual hours of labor.

This short essay barely scratches the surface of the “Cascade of Scams”.  We will continue to observe, research and write. 
Your option is to fight back as best you can.  And we can, in our own small way, fight back.  We can refuse to make those 29% credit card payments at least.  If we stop paying on our mortgages or for our cars they will come take those away from us. But can they take away the groceries we bought last month that we already ate?  But what can they do?  Sadly, without help there’s a lot they can do.  Read on.

You need to know about the Shielded Circle.  This is an organization dedicated to helping individuals regain their financial freedom.  They do it through using legal means to settle debts for 10% of supposed existing balances due, using the banks’ tactics to accomplish their goals.

They use what is called the DebSol® System to allow you to stop making monthly credit card payments.  Nothing new to that.  It’s what happens next that is meaningful.  They know you will start getting collection phone calls and demand letters in the mail.  Not only do they accept those for you, they also protect your assets and prevent creditors from being able to garnish your wages.  Their entire program takes up to a year and a half before they are ready to settle your debts.  It takes that long for the creditors to realize that you are not one they can collect from. 

Learn more about this program and how it can help you fight back.  Ask about getting your membership in the Shielded Circle.

The phone number is 800/488-2051 Ext 80.

They also have a program where you can assist others and pay only $99 a month for yourself to be in the program.  The website for that is www.apgaffiliates.com
It is an effective way to fight back.