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No, I'm not advocating a mortgage elimination system, or even considering
using such a system (I don't have a mortgage to eliminate). I am, however,
trying to understand the theories that the mortgage elimination proponents
are using, and it's making my head spin. Thus, I've come here to state my
understanding of the theories, and the criticisms of those theories, to see
if I have everything right.
One of the theories is something like this: you give the bank a promissory
note that you will pay them a certain amount of money over a certain amount
of time. In turn, the bank gives the current house owner money. However,
promissory notes are legally money, so you're giving the bank money, which
they simply hand over to the house owner; thus, the house was bought with
*your* money!
However, it seems to me that if all promissory notes are money, then that
means that there are different types of money, each of which have different
properties. If you go to someone selling a house for $300,000 and give them
a promissory note saying "I'll pay you $10,000 per year for 30 years", the
house owner is *not* going to say "Alright then, here's the deed"; they will
want it to go through a bank, so they can use the money they receive *now*.
You give the bank one type of money, and the bank gives the house owner a
*different* sort of money, so it's not *your* money that the bank is giving
to the house owner.
The second theory seems to be that since banks lend more money than they have
at hand (fractional reserve banking), when they lend you money, they are
creating it out of thin air, thus is isn't *real* money, and thus they are
committing fraud. However, I think it would only be fraud if they gave you
money which you couldn't use; if everyone turned up their nose and said
"That's not real money, it was created from thin air, so I'm not going to
accept it", then you'd have a case for fraud. But when a bank lends you
money, you *can* use it to buy things, so there is no fraud, regardless of
how the money came into existence.
So, have I got it about right? Are there any other theories that mortgage
elimination proponents use?
Thanks in advance.
--
Give a man a match, and he'll be warm for a minute, but set him on
fire, and he'll be warm for the rest of his life.
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Matthew Cline was touched by the minds of the terrible Old Ones, and imparted
unto us these blasphemous ravings:
One of the theories is something like this: you give the bank a promissory
note that you will pay them a certain amount of money over a certain amount
of time. In turn, the bank gives the current house owner money. However,
promissory notes are legally money, so you're giving the bank money, which
they simply hand over to the house owner; thus, the house was bought with
*your* money!
Ooops, it's not quite like that. It's more like this:
One of the theories is something like this: you sign a promissory note that
you give to the bank, the bank gives it to the Federal reserve, gets cash
back, and uses that cash to pay of the owner of the house you're buying. To
quote:
You just funded your own loan on the power of your signature and the
banker doesn't tell you up front that you now own the property free
and clear, but it clearly states in the Deed of Trust that you do,
only you didn't catch it.
(http://www.the7thfire.com/debt_elimination/frequently_asked_questions_about_Mortgage_Elimination.htm)
But this doesn't really make sense to me: if you really did "fund your own
loan on the power of your signature", you could simply hand that promissory
note directly to the person selling the house, and they'd give you the deed.
But no house owner is going to do that, because the promissory note says
something like "I'll give you $10,000 a year over the span of $30,000", while
the house owner wants cash *now*. Even if the promissory note is "legal
tender", as the cited page claims, there's different types of legal tender:
you gave the bank one type, and the bank gave the house seller a different
type.
--
Give a man a match, and he'll be warm for a minute, but set him on
fire, and he'll be warm for the rest of his life.
Advanced SPAM filtering software: http://spamassassin.org
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