FTC Shuts Down "Debt Elimination Lite" Scammers

[Arthur Rubin]

REALLY??? Then why do you suppose I WON?

Actually, I see no evidence that you "won" other than your postings.

Well... then you haven't LOOKED. Demosthenes and her flying monkeys already searched my local court's website and found every case.

Your local court has a web site?

Oh great melon-helmeted cat, please answer.

[added] Seeing the musical "Wicked" gives a whole new perspective on the "flying monkeys" issue. Not that it's consistent with the original Frank L. Baum works, but...

[notorial dissent]

It's too bad that you have so little respect for a truly intelligent, insightful, and well-written screenplay depicting the way banking was actually practiced PRIOR to Congress' legalization of "money creation" (euphemism for legalized counterfeiting).
You really are clueless aren’t you? IAWL was written and produced in 1946, at the end of WW II for crying out loud. The Fed had been in existence for almost 33 years by that point. I don’t know which is worse, your math or your grip on reality. Just how do you think the B&L got into the state they were in in the first place, it wasn’t just that dumb old uncle Billy managed to lose a deposit, it was that most of their funds were out at loan in the community. Even with the deposit they wouldn’t have had funds to have covered all the deposits, and did you miss the part where they were actually depositing the funds into the mean old miser’s bank, so they wouldn’t have had that much cash on had at any time.

Understood... but I must point out that including the deposits present in CUs among "M1" does not indicate that CUs practice Fractional Reserve lending.
Nor a bank’s or any other financial institution.

Yes; always have... which is why (prior to fractional reserve lending) in the unfortunate event that all (or even most) of the depositors of a pre-Fed Res or non-Fed Res banking institution turned up to withdraw their deposits at the same time (a "run on the bank"), the depositors COULD NOT and DID NOT receive 100% of their funds, the bank ran out of money on deposit, and the bank or S&L went bankrupt.
Which is still what happens today. What part of reality have you missed recently with the number of bank closures due to insufficient capital? The ONLY think the Fed will do in the event of a “run on the bank” is make a short term loan if the bank is solvent, if it isn’t then they will close it and sell the assets.

This is EXACTLY the scenario depicted in "It's a Wonderful Life"... and George Bailey's speech to the depositors is a brilliantly written explanation of exactly why depositors needed to maintain faith in their bank's loan officers and LEAVE a large percentage of their savings on deposit to earn interest from the lending process.
The chief difference being that the B&L was short some money, not insolvent, there is a big difference.

This little act of prestidigitation is the Fed Res's magic money machine -- the supposed panacea to prevent all "run on the bank" scenarios and sold to the public as the great safety-valve to prevent the risk of loss which normally accompanies an honest, hard-money lending process with no legalized counterfeiting (AKA "money creation").
Where do you get this nonsense, the Fed was set up to regulate and moderate the banking industry, not act as nanny for it, there was never any claim otherwise. The Fed would lend, based on assets, and solvency, to a bank short on cash on hand to handle a crisis, but only if they actually had the resources to cover the loan, and loan was all it was.


YEAH.... BASED ON ... the same way that counterfeit bills scanned and printed are BASED ON existing money...
No, based on govt securities sold to match currency issued.

Hmmmm.... are you suggesting that Lawrence V. Morgan, President of the First National Bank of Montgomery, had no more authority to testify under oath as to the every day operations of his bank than Mahoney had to preside as a Justice of the Peace?
No, I am suggesting, rather broadly, that like Mahoney’s authority to hold the so called “trial”, it didn’t exist. I tend to not give too much credence to a drunken sot of a JP, and a crooked, and soon to be disbarred for numerous crimes lawyer as anything but suspect of reality.

That testimony was never contradicted by cross-examination, or by appeal.
No, the entire process was declared a legal nullity, which means it never existed legally, at all.

Pure conjecture. No proof whatsoever that Daly fabricated anything.
More to the point there is no proof that any of it actually happened. A JP is not a court of record, CANNOT take testimony, and cannot do any of the things he tried to do, so therefore the whole process is suspect start to finish.

But consider this... if Morgan the Bank Pres lied under oath, why wasn't he exposed and vilified by the First National Bank of Montgomery?
Again no proof, other than the aforementioned drunken sot and disbarred lawyer’s attempt at thwarting legal process, so I remain skeptical as to any validity whatsoever.

You do like to dodge the fact that Mahoney did not hand down the decision - a jury did - based upon sworn testimony by a high-ranking officer of that bank -- Testimony which comports perfectly with other Fed Res materials like "Two Faces of Debt" and that chart which several people here still fail to comprehend..
A jury, which equally, if it was even there to begin with, had no authority or ability to act. A JP cannot empanel a jury for anything, they did not/do not have that authority, and certainly didn’t in MN at the time. So their actions, if any, were equally a nullity of no more value than calling twelve of your idiot neighbors together in your living room, declaring the moon a sovereign and independent state, and then expecting anyone to care. A jury cannot issue a finding it has no authority to issue, and a jury for which there is no legal authority, does not exist. That is the little unpleasant truth you do not want to accept.

What a clever obfuscation that is. You are one of the better Tools here.
My, almost a compliment, however, truth is not obfuscation, despite what you would like to believe.

Let's take your statement about lending out the same book 100 times. Can the same book be in 100 places at once? Not if there's only ONE book. So just exactly HOW can that book be lent out 100 times?
The same way the same dollar bill can be in multiple places over time. Every time there is a deposit, or in my scenario a rental, there is eventually or usually a matching withdrawal or return of a book. The dollar bill goes back in the til until the next time it is withdrawn, or the book loaned, and stays out again until it is once again deposited or the book returned. Every time that dollar is deposited it counts as a deposit in the diagram, what they don’t show is that same dollar being withdrawn and put back into circulation. Same dollar producing multiple deposits as same book being loaned and returned repeatedly. It is the equivalent of the library having 100 copies of the latest novel, and loaning it out. Over the course of time the 100 copies may be loaned out 10,000 times. The library still only has 100 copies, but they have loaned it 10,000 times. This is over time, and is no different than claiming some theoretical figure for deposits over time, based on the same money $9,000. It is just deposited, and then withdrawn and redeposited over time until they come up with whatever figure they want to reach, but is still only the same $9,000 dollars.


The HONEST and TRANSPARENT way for that book to be lent out 100 times would be for it to be REMOVED from the library shelf and handed OUT to the first borrower, who returns that same book later, and it is placed back on the shelf again. Borrower number 2 then takes it OUT (it is removed from the shelf), and returns it later, and so forth...
Which is exactly what I said.

But let's say that this particular book is extremely popular, and that lots of borrowers want to read it at the very same time. The library realizes that it could make a lot more money if it could lend out the same book to many borrowers all at once. So it prints up 100 more copies of that original book and lends out all 100 copies, keeping the original back on the shelf.
Yes, and then the library inventory would be increased by 100 copies, which would show at the final inventory, which curiously, it doesn’t. aside from the fact they would be guilty of copywrite infringement.

If we want this metaphor to be even more apt, we would say that borrower number 1 takes his copy of the book and puts it in a second library for safe-keeping. Then library number 2 makes a copy of that copy and loans it out to borrower number three, who puts it in a third library for safe-keeping, where it is copied again, and lent out to borrower number 4... etc, etc, etc, until there are 100 copies of that book in circulation. But remember... ONLY the LIBRARIES are allowed to make copies of the books. The borrowers would be criminals if THEY made any copies.
No, you mean if you want to bend reality to fit your warped interpretation. That isn’t how a library operates, any more than how a bank works, but it is nice to see you still trying to rationalize nonsense to fit your current delusion. If this is what it takes for you to keep your illusion alive, if tells me how poorly grounded it is in reality. But then we already knew that didn’t we Heidi?

[Pantekhnikon]

I realize it won't matter to let a few facts get in the way of a long-held myth, but the library analogy is flawed.

I thought about that later... and yes, the library analogy was flawed (although my version was much closer to the truth than ND's was... and ND dreamed it up in the first place.

It's what I had to work with ).

To improve the analogy, and make it conform more accurately to the info provided by that Fed Res chart, we can begin with a 100 page book purchased and deposited at Library One (L1).

This book belongs to the library, but someone wants to borrow it, and the library wants to earn the lending fee without parting with their original... so it agrees to lend out a partial copy for a fee. The Library keeps that original book on 'reserve'.

They copy 90% of it - 90 pages - and lend out this slightly abridged version to Reader One (R1).

R1 deposits the 90 page book in Library 2 (L2), expecting to find it available whenever he/she wants to use it. Meanwhile, L2 has a reader who wants to borrow that book and is willing to pay a fee. So L2 makes a 90% copy, too - 81 pages long, and lends it out to R2 while the initially deposited copy remains on the shelf in L2, always available to the reader who deposited it.

There is now a 100 page book remaining on 'reserve' in L1, and a 90 page book 'reserved' on deposit at L2, for a total of 190 pages on deposit (at two different libraries). There are also two copies out on loan: one 90 pages long, and another copy 81 pages long.

R1 eventually returns the 90 page book to L1, and L1's lending list shows that it has been returned. L1 now has 190 pages in its book stacks... plus the lending fee.

Meanwhile, L2 receives its 81 page copy back from their borrower, R2, and L2 now has 90 pages plus 81 duplicate pages of that book in it's book stacks, for a total of 171 pages based upon that same book... plus the lending fee.

There are now 271 pages on deposit (at two different Libraries), and some lending fees as well.

But before R2 returned his 81 page copy to L2, he deposited those 81 pages at L3. And before he gradually returned his 81 pages to L2 a few pages at a time, L3 made a 90% copy ( 72.9 pages) and lent those 72.9 pages out to Reader 3 (R3).

There are now 243.9 pages on deposit at three different libraries (plus lending fees). Two loaned out copies have been returned while a third copy has been loaned out to R3.

R3 is probably going to deposit his 72.9 pages ... or at least SOME of them at another library (L4) where they will be held on 'reserve' while 90% of those pages will be copied and loaned out to someone else.

Whatever pages R3 does not deposit or return immediately, he will probably give out to someone else in exchange for something (and return other copies of them to the library later), and the other readers will deposit some of them in yet another library... which will treat them as 'reserves' (always available to the original depositor).

In any case, those pages do not ‘disappear’.

And as the Fed Res chart said... "etc. .... etc. ... etc. ...".


To be continued...

[Pantekhnikon]

What the money-mythology promoters refuse to see is only a small part of lending by any one institution is done from customer deposited funds on hand in that institution.

Since customer deposited funds always remain 100% available to each customer all of the time at fractional reserve banking institutions (ostensibly to prevent loss should there ever be a ‘run on the bank’… the rationale which supposedly ‘sold’ the Federal Reserve Act to Congress in the first place), I don’t believe that ANY portion of depositors’ funds are ever lent out by such banks. The deposits are treated as ‘reserves’ – 90% of which are lent out as newly created money (via bookkeeping entry – electronic these days -- making this process even more convenient) while the original amount stays right where it is.

If it were, there would be places in the country where no one could get a loan because the local institutions weren't getting sufficient deposits at any given point in time.

Another rationale which convinced Congress to pass the Federal Reserve Act.

Banks, and yes, even credit unions, Heidi, have lines of credit with other financial entities - including the Fed in the case of banks.

So you admit that Credit Unions are not connected with the Fed, but licensed banking institutions are. Good.

They make investments as well. They manage trust assets and get paid to do it. They sell securities to raise capital. They manage cash-in processing (drop boxes), they take in fees (more and more every day), interest, etc., etc. They do consulting and cash management. They do factoring and receivables. They also own real estate and lease not only office space but even storage facilities. They license credit card operations. They can and do borrow against assets. They also sell assets, including loans and leases. They can trade in currencies. They guarantee loans with letters of credit. They are huge in the leasing business. And guess what? A lot of that income has nothing to do with deposits you're so fixated on.

That seems true… but it is via using deposits as ‘reserves’ that money creation through fractional reserve lending takes place, and deposits come from a variety of sources.

… the over-simplification works so well in trying to make people think there is something secret and devious the banks won't admit to…

Oh, but they DO admit to it. See “Two Faces of Debt” and “Modern Money Mechanics” – both originally posted on Fed Res websites.

… that if we all just would wake up to it, we'd put an end to it.

We can certainly put a dent in our reliance upon credit cards and fractional reserve lending… and our subsequent victimization through creeping (and occasionally sprinting) inflation and usurious interest rates.

Oh, and in the mean time, because the banks are allegedly getting away with it, they really didn't loan us real money, so if you know the secrets, you don't have to pay it back.

Had my career continued as expected, I WOULD have paid it all back... and in the case of the longest held accounts, the interest I’d already paid in more than reimbursed the amount of the original debts… not a bad return on the risk of newly created Vapor Money, is it? Not like the PRE-EXISTING assets my father lent out and lost.

Combine that with the other 3% the CC Co’s charged the merchants for the convenience of letting customers charge merchandise on the banks’ credit cards, and it’s “nice work if you can get it”… and you can only get it LEGALLY if you are part of the Federal Reserve.

[notorial dissent]

Congratulations Heidi, you have now moved from merely being silly and pathetic to total absurdity.

Since customer deposited funds always remain 100% available to each customer all of the time at fractional reserve banking institutions (ostensibly to prevent loss should there ever be a ‘run on the bank’… the rationale which supposedly ‘sold’ the Federal Reserve Act to Congress in the first place), I don’t believe that ANY portion of depositors’ funds are ever lent out by such banks. The deposits are treated as ‘reserves’ – 90% of which are lent out as newly created money (via bookkeeping entry – electronic these days -- making this process even more convenient) while the original amount stays right where it is.

Which is all total nonsense, this was never even broached for the simple fact that it is total nonsense, banking has not changed since the advent of the Fed, EXCEPT, that banks are more regulated now than they ever have been before. What you believe is just the outward manifestation of your delusions and refusal to deal with reality. Whether you believe it or not, banks always have lent their depositor's money-otherwise, they would be called depositories, and still do so to this day, and will continue to do so in the future, your delusions not withstanding. The world will continue on whether you believe it will or not.

edited 11-16 for typo and dropped sentence.

[Pantekhnikon]

Congratulations Heidi, you have now moved from merely being silly and pathetic to total absurdity.

Since customer deposited funds always remain 100% available to each customer all of the time at fractional reserve banking institutions (ostensibly to prevent loss should there ever be a ‘run on the bank’… the rationale which supposedly ‘sold’ the Federal Reserve Act to Congress in the first place), I don’t believe that ANY portion of depositors’ funds are ever lent out by such banks. The deposits are treated as ‘reserves’ – 90% of which are lent out as newly created money (via bookkeeping entry – electronic these days -- making this process even more convenient) while the original amount stays right where it is.

Which is all total nonsense, this was never even broached for the simple fact that it is total nonsense, banking has not changed since the advent of the Fed, EXCEPT, that banks are more regulated now than they ever have been before. What you believe is just the outward manifestation of your delusions and refusal to deal with reality. Whether you believe it or not, banks always have lent their depositor's money-otherwise, they would be called depositories, and still do so to this day, and will continue to do so in the future, your delusions not withstanding. The world will continue on whether you believe it will or not.

edited 11-16 for typo and dropped sentence.

You are so wrong... and you are so in the Fed banking system's pocket.

Either that, or you are deliberately attempting the old "throw a lot of **** against the wall and hope some of it sticks" tactic. Whichever it is (and only you know for sure), I think it's time for our readers to have a listen to one of my respected mentors - learned economist Murray N. Rothbard (discussion of Federal Reserve and Fractional Reserve Banking begins at 3:20)... and please DO remember that Mr. Rothbard was Jewish :

http://www.youtube.com/watch?v=metf7Wpv_6c

And this speech by Rothbard, too... about the Gold Standard before the Civil War. It puts fiat money into perspective:

http://www.youtube.com/watch?v=Wfyp_i7y1t0

(NO, wserra... it's not true because it's on youtube. It's true because a brilliant and learned economist said it. It just happens to be available on youtube.)

[notorial dissent]

Heidi, I have spent most of my adult life working in the financial industry in one area or another, and have seen all of the back office workings of it, and from that perspective, I can say quite simply and unequivocally that you are full of it. Your insistence on clinging to the so called “vapor money” theory, and your delusions about how banking is carried on would be comical if they weren’t so pathetic.

If you wish to worship at the feet of the great Murray, then by all means do so, however, you, and the flat earthers are in a minority status and are deservedly the objects of ridicule and scorn.

I really did try and listen to the boring old troll, but after about the first 30 seconds of feeling my IQ begin to whither from listening to him I gave up on it. I have a problem taking anyone seriously, when the first things out of his mouth are how he cannot understand why there should have been a shortage of specie in the colonial period when all they had to do was just buy more and that with the free market economy of the time that shouldn’t have been a problem. Two stupid and entirely incorrect statements at the very beginning are enough to set the tone for the rest of the drivel that is to follow.

As a cure for insomnia he may have a place in life, as an economist, I don’t think so. Better luck next time.

[Pantekhnikon]

CONSIDERING THE SOURCE...

Heidi, I have spent most of my adult life working in the financial industry in one area or another, and have seen all of the back office workings of it...

Is that SO? Who are you then? You already know who I am.

And I presume you already know who the late Murray N. Rothbard was:
Former Dean of the Austrian School of economics and author of 26 books, including: America's Great Depression, Man, Economy, and State, What Has Government Done to Our Money, The Case Against the Fed, and The Case for a Hundred Percent Gold Dollar.
He was also an S.J. Hall Distinguished Professor of Economics at the University of Nevada, and Academic Vice President for the Ludwig von Mises Institute (Conservative economics).

Granted, he is not the most charismatic individual or politically gifted speaker... but if you haven't enough intellectual honesty and/or curiosity to listen to his entire lecture, don't take one sentence out of context and presume that you correctly comprehend it.

As a matter of fact, all you've done is hurl more ad hominem attacks. You have made NO salient points in response to anything Rothbard said... nor have you intelligently contradicted even ONE factual statement he uttered.

and from that perspective...

What perspective might THAT be? Bending over to pick up the wastebaskets during your midnight janitorial service at the Charles Schwab building?

I can say quite simply and unequivocally that you are full of it...

My... what a reasoned and fact-based argument. I'm so impressed (can you tell that was sarcastic, wserra?)

Your insistence on clinging to the so called “vapor money” theory, and your delusions about how banking is carried on would be comical if they weren’t so pathetic.

If you (and several others here) had actually done your 'homework', you would already be aware that no economist, whether liberal or conservative, denies that the Fed creates money. They continue to carry on their philosophical and factual arguments concerning whether or not the creation of money (euphemism for legalized counterfeiting... and, as Rothbard also says, embezzlement of monetary wealth from the American people) is (liberal viewpoint) or is not (conservative viewpoint) the best and most effective economic policy. Among actual economists, there is no argument about whether or not money creation via multiple deposit creation actually takes place.

If you wish to worship at the feet of the great Murray, then by all means do so, however, you, and the flat earthers are in a minority status and are deservedly the objects of ridicule and scorn.

(YAWN) Another Ad hominem fallacio (you suck).

I really did try and listen to the boring old troll, but after about the first 30 seconds of feeling my IQ begin to whither from listening to him I gave up on it.

"Old troll?" Are you an 'age-ist' or an 'anti-semite'? Is it the Jewish nose you didn't like? Some other ethnic feature? The fact that he was elderly?

I see...... you couldn't bear to listen to more than 30 seconds of his lecture because you didn't like his looks, or his manner of speaking... and you failed to comprehend his introductory remarks. That speaks eloquently of your intellectual honesty and qualifications as a self-proclaimed (but anonymous) expert on economics. FEH.....

I have a problem taking anyone seriously, when the first things out of his mouth are how he cannot understand why there should have been a shortage of specie in the colonial period when all they had to do was just buy more and that with the free market economy of the time that shouldn’t have been a problem.

You fail to recognize the wisdom of purchasing specie with paper? HA! You need to listen to more old Jews...

Two stupid and entirely incorrect statements at the very beginning are enough to set the tone for the rest of the drivel that is to follow.

Tell us, then, oh expert anonymous economist, from your 'perspective'.... WHY those statements were "stupid" and "entirely incorrect" so that we can become dazzled by your relative brilliance.

As a cure for insomnia he may have a place in life, as an economist, I don’t think so. Better luck next time.

OMG !!!!!!! AN ANTI-SEMITE !!!!!!

[Nikki]

Moderator:

A toilet seems to have overflowed.