No
BaNK DePoSiTS WiLL Be SPaReD FRoM CoNFiSCaTioN
15
May, 2013
As
alert Zero Hedge readers are aware, this week the EURO Politburo is
busy debating the dodgy subject of deposit "bail-ins."
The
following article very succinctly explains this odious mode of
fractal fractional reserve end-game chicanery.
The
author encourages all of you to share it with others.
WB7
NO
BANK DEPOSITS WILL BE
SPARED FROM CONFISCATION
I
challenge anyone to prove me wrong that confiscation of bank deposits
is legalized daylight robbery
Bank
depositors in the UK and USA may think that their bank deposits would
not be confiscated as they are insured and no government would dare
embark on such a drastic action to bail out insolvent banks.
Before
I explain why confiscation of bank deposits in the UK and US is a
certainty and absolutely legal, I need all readers of this article to
do the following:
Ask
your local police, sheriffs, lawyers, judges the following questions:
1)
If I place my money with a lawyer as a stake-holder and he uses the
money without my consent, has the lawyer committed a crime?
2)
If I store a bushel of wheat or cotton in a warehouse and the owner
of the warehouse sold my wheat/cotton without my consent or
authority, has the warehouse owner committed a crime?
3)
If I place monies with my broker (stock or commodity) and the broker
uses my monies for other purposes and or contrary to my instructions,
has the broker committed a crime?
I
am confident that the answer to the above questions is a Yes!
However,
for the purposes of this article, I would like to first highlight the
situation of the deposit / storage of wheat with a warehouse owner in
relation to the deposit of money / storage with a banker.
First,
you will notice that all wheat is the same i.e. the wheat in one
bushel is no different from the wheat in another bushel. Likewise
with cotton, it is indistinguishable. The deposit of a bushel of
wheat with the warehouse owner in law constitutes a bailment.
Ownership of the bushel of wheat remains with you and there is no
transfer of ownership at all to the warehouse owner.
And
as stated above, if the owner sells the bushel of wheat without your
consent or authority, he has committed a crime as well as having
committed a civil wrong (a tort) of conversion – converting your
property to his own use and he can be sued.
Let
me use another analogy. If a cashier in a supermarket removes $100
from the till on Friday to have a frolic on Saturday, he has
committed theft, even though he may replace the $100 on Monday
without the knowledge of the owner / manager of the supermarket. The
$100 the cashier stole on Friday is also indistinguishable from the
$100 he put back in the till on Monday. In both situations – the
wheat in the warehouse and the $100 dollar bill in the till, which
have been unlawfully misappropriated would constitute a crime.
Keep
this principle and issue at the back of your mind.
Now
we shall proceed with the money that you have deposited with your
banker.
I
am sure that most of you have little or no knowledge about banking,
specifically fractional reserve banking.
Since
you were a little kid, your parents have encouraged you to save some
money to instil in you the good habit of money management.
And
when you grew up and got married, you in turn instilled the same
discipline in your children. Your faith in the integrity of the bank
is almost absolute. Your money in the bank would earn an interest
income.
And
when you want your money back, all you needed to do is to withdraw
the money together with the accumulated interest. Never for a moment
did you think that you had transferred ownership of your money to the
bank. Your belief was grounded in like manner as the owner of the
bushel of wheat stored in the warehouse.
However,
this belief is and has always been a lie. You were led to believe
this lie because of savvy advertisements by the banks and government
assurances that your money is safe and is protected by deposit
insurance.
But,
the insurance does not cover all the monies that you have deposited
in the bank, but to a limited amount e.g. $250,000 in the US by the
Federal Deposit Insurance Corporation (FDIC), Germany €100,000, UK
£85,000 etc.
But,
unlike the owner of the bushel of wheat who has deposited the wheat
with the warehouse owner, your ownership of the monies that you have
deposited with the bank is transferred to the bank and all you have
is the right to demand its repayment. And, if the bank fails to repay
your monies (e.g. $100), your only remedy is to sue the bank and if
the bank is insolvent you get nothing.
You
may recover some of your money if your deposit is covered by an
insurance scheme as referred to earlier but in a fixed amount. But,
there is a catch here. Most insurance schemes whether backed by the
government or not do not have sufficient monies to cover all the
deposits in the banking system.
So,
in the worst case scenario – a systemic collapse, there is no way
for you to get your money back.
In
fact, and as illustrated in the Cyprus banking fiasco, the
authorities went to the extent of confiscating your deposits to pay
the banks’ creditors. When that happened, ordinary citizens and
financial analysts cried out that such confiscation was daylight
robbery. But, is it?
Surprise,
surprise!
It
will come as a shock to all of you to know that such daylight robbery
is perfectly legal and this has been so for hundreds of years.
Let
me explain.
The
reason is that unlike the owner of the bushel of wheat whose
ownership of the wheat WAS NEVER TRANSFERRED to the warehouse owner
when the same was deposited, the moment you deposited your money with
the bank, the ownership is transferred to the bank.
Your
status is that of A CREDITOR TO THE BANK and the BANK IS IN LAW A
DEBTOR to you. You are deemed to have “lent” your money to the
bank for the bank to apply to its banking business (even to gamble in
the biggest casino in the world – the global derivatives casino).
You
have become a creditor, AN UNSECURED CREDITOR. Therefore, by law, in
the insolvency of a bank, you as an unsecured creditor stand last in
the queue of creditors to be paid out of any funds and or assets
which the bank has to pay its creditors. The secured creditors are
always first in line to be paid. It is only after secured creditors
have been paid and there are still some funds left (usually, not
much, more often zilch!) that unsecured creditors are paid and the
sums pro-rated among all the unsecured creditors.
This
is the truth, the whole truth and nothing but the truth.
The
law has been in existence for hundreds of years and was established
in England by the House of Lords in the case Foley v Hill in 1848.
When
a customer deposits money with his banker, the relationship that
arises is one of creditor and debtor, with the banker liable to repay
the money deposited when demanded by the customer. Once
money has been paid to the banker, it belongs to the banker and he is
free to use the money for his own purpose.
I
will now quote the relevant portion of the judgment of #3b4d81;">the
House of Lords handed down by Lord Cottenham, the Lord Chancellor. He
stated thus:
“Money
when paid into a bank, ceases altogether to be the money of the
principal… it is then the money of the banker, who
is bound to return an equivalent by paying a similar sum to that
deposited with him when he is asked for it.
The
money paid into the banker’s, is money known by the principal to be
placed there for the purpose of being under the control of the
banker; it
is then the banker’s money; he is known to deal with it as his own;
he makes what profit of it he can, which profit he retains himself,…
The
money placed in the custody of the banker is, to all intent and
purposes, the money of the banker, to do with it as he pleases; he
is guilty of no breach of trust in employing it; he is not answerable
TO THE PRINCIPAL IF HE PUTS IT INTO JEOPARDY, IF HE ENGAGES IN A
HAZARDOUS SPECULATION; he
is not bound to keep it or deal with it as the property of the
principal, but he is of course answerable for the amount, because he
has contracted, having received that money, to repay to the
principal, when demanded, a sum equivalent to that paid into his
hands.” (quoted in UK Law Essays, #3b4d81;">Relationship
Between A Banker And Customer,That Of A Creditor/Debtor, emphasis
added,)
Holding
that the relationship between a banker and his customer was one of
debtor and creditor and not one of trusteeship, #3b4d81;">Lord
Brougham said:
“This
trade of a banker is to
receive money, and use it as if it were his own, he becoming debtor
to the person who has lent or deposited with
him the money to use as his own, and for which money he is
accountable as a debtor. I cannot at all confound the situation of a
banker with that of a trustee, and conclude that the banker is a
debtor with a fiduciary character.”
In
plain simple English – bankers
cannot be prosecuted for breach of trust, because
it owes no fiduciary duty to the depositor / customer, as he is
deemed to be using his own money to speculate etc. There is
absolutely no criminal liability.
The
trillion dollar question is, Why has no one in the Justice Department
or other government agencies mentioned this legal principle?
The
reason why no one dare speak this legal truth is because there would
be a run on the banks when all the Joe Six-Packs wise up to the fact
that their deposits with the bankers CONSTITUTE IN LAW A LOAN TO THE
BANK and the bank can do whatever it likes even to indulge in
hazardous speculation such as gambling in the global derivative
casino.
The
Joe Six-Packs always consider the bank the creditor even when he
deposits money in the bank. No depositor ever considers himself as
the creditor!
Yes,
Eric Holder, the US Attorney-General is right when he said that
bankers cannot be prosecuted for the losses suffered by the bank.
This is because a banker cannot be prosecuted for losing his “own
money” as stated by the House of Lords. This is because when money
is deposited with the bank, that money belongs to the banker.
The
reason that if a banker is prosecuted it would collapse the entire
banking system is a big lie.
The
US Attorney-General could not and would not state the legal principle
because it would cause a run on the banks when people discover that
their monies are not safe with bankers as they can in law use the
monies deposited as their own even to speculate.
What
is worrisome is that your right to be repaid arises only when you
demand payment.
Obviously,
when you demand payment, the bank must pay you. But, if you demand
payment after the bank has collapsed and is insolvent, it is too
late. Your entitlement to be repaid is that of a lonely unsecured
creditor and only if there are funds left after liquidation to be
paid out to all the unsecured creditors and the remaining funds to be
pro-rated. You would be lucky to get ten cents on the dollar.
So,
when the Bank of England, the FED and the BIS issued the guidelines
which became the template for the Cyprus “bail-in” (which was
endorsed by the G-20 Cannes Summit in 2011), it was merely a
circuitous way of stating the legal position without arousing the
wrath of the people, as they well knew that if the truth was out,
there would be a revolution and blood on the streets. It is therefore
not surprising that the global central bankers came out with this
nonsensical advisory:
“The
objective of an effective resolution regime is to make feasible the
resolution of financial institutions without severe systemic
disruption and without exposing taxpayers to losses, while protecting
vital economic functions through mechanisms which make it possible
for shareholders and unsecured and uninsured creditors to absorb
losses in a manner that respects the hierarchy of claims in
liquidation.”(quoted in #3b4d81;"> #3b4d81;">FSB
Consultative Document: Effective Resolution of Systemically …)
This
is the kind of complex technical jargon used by bankers to confuse
the people, especially depositors and to cover up what I have stated
in plain and simple English in the foregoing paragraphs.
The
key words of the BIS guideline are:
“without
severe systemic disruptions” (i.e. bank runs),
“while
protecting vital economic functions” (i.e. protecting vested
interests – bankers),
“unsecured
creditors” (i.e. your monies, you are the dummy),
“respects
the hierarchy of claims in liquidation” (i.e. you are last in the
queue to be paid, after all secured creditors have been paid).
This
means all depositors are losers!
Please
read this article carefully and spread it far and wide.
You
will be doing a favour to all your fellow country men and women and
more importantly, your family and relatives.
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