If you read this blog on a regular basis, you know I frequently write about the debt elimination scam. I’m usually coming at it from the angle that companies offering these services are fraudulent. The owners know they are ripping people off by selling a system that simply doesn’t work. But every once in a while I hear from someone who’s not trying to sell debt elimination as a service. They write as individuals, true believers in what I call the “conspiracy theory of global finance.”
The tendency to believe in conspiracies is rampant in our society. The Kennedy assassination, fluoridated water, UFO phenomena, the 9/11 attacks, vaccines — these subjects have all been the focus of conspiracy-minded individuals, some of whom are obvious candidates for the “tin-foil hat” award. I guess aluminum foil is supposedly pretty effective at blocking alien mind-control signals… ?
One of the most popular areas for conspiracy-mongering has been the global financial system. Some of the theories are overtly anti-Semitic, blaming Jews for all the financial evils in the world, while other are more subtle in their rhetoric. The bizarre legal and financial theories behind the debt elimination movement are in the latter category.
It’s all about the secret wheeling and dealing that happened in the early decades of the 20th century and resulted in the establishment of the Federal Reserve system and fractional reserve banking in general. Once you believe that the core financial system of world commerce is an insidious scam – you know, the system that has helped lift the living standard of billions of human beings around the world — then all remaining logic and critical thinking goes right out the window.
What follows is a classic example, starting with an opening email salvo from my new cyber pen-pal (name changed for privacy):
“Hello,
I came across your website and found it interesting, however it is grossly misinformed. I have personally discharged over $40,000 worth of unsecured debt using the exact methods you claim to be fraudulent.
I did this using the FDCPA regulations, a couple of simple letters, and information found in the book “Modern Money Mechanics.” Banks actually commit fraud when “loaning” money in several ways. One way is that a bank leads people to believe there is an actual loan made in acquiring a credit card or student “loan”, when in fact the money is created out of thin air by making an entry into a computer. Furthermore, the money that is created is entered as a CREDIT in the person’s name.. which is in capital letters. This is known in Black’s Law Dictionary as the Strawman.
The fact of the matter is that the entire credit industry IS operating fraudulently. When you research it as I have over the past three years, just HOW fraudulent is absolutely mind boggling. I realize as I write this that you have a vested interest in NOT telling people the truth, or perhaps even wanting to know it yourself because it would effectively put you out of business. However the fact remains that you are telling people blatant lies out of ignorance.
Were you to do some research and discover the truth for yourself, you might then work for real justice in the world, and perhaps change your product and service to something which is based in Truth rather than that which is perpetuating a myth and which is harming everyone.
In the meantime, you might find a couple of movies intersting (sic) :
“The Money Masters” – available on YouTube or DVD.
“Money As Debt” – Available on YouTube also.
If you would like copies of the actual letters I used please let me know and I will be happy to forward them to you.Sincerely,
Allen”
OK, so in his very first email message to me this tactful fellow accuses me of being grossly misinformed, having a vested interest in deceiving the public, and telling blatant lies out of ignorance. Nice way to start off a dialogue with a total stranger, right?
Now, I have a confession to make. I actually enjoy sparring with these folks. It’s pretty sick, I admit it, but it’s a form of amusement and entertainment for me, what can I say. My first reaction was to launch into attack mode, but I figured I would give this guy the benefit of the doubt first. Here’s my reply:
“Allen,
You are “grossly misinformed” about my supposed lack of knowledge of the system you are such a fan of, but I don’t have time to debate with you. I’m too busy helping people who have been ripped off by “crusaders for justice” like yourself, who told them they could legally walk away from their debt obligations with no consequences, only to find they got laughed out of court, lost their cases, and started seeing wage garnishments.
Extraordinary claims require extraordinary proof. Please tell me the name/county of the court where your cases were heard, along with the civil case docket numbers. Don’t send me any documents directly, please. Only documents that I can retrieve directly from the court will meet the standard of evidence required here. Let’s have the case citation(s) where a judge ruled in your favor on the basis of the “no money lent” argument.
Sincerely,
Charles J. Phelan
President/Founder
Manchester Publishing Company, Inc.”
This is my standard technique for dealing with “experts” who write to me, tell me how full of baloney I am on this particular subject, and then claim they were successful using the techniques I warn consumers against. My first response is always the same. “Prove it.” Give me the documents, *court* documents where a real-life judge pounded the gavel and agreed with your cockamamie legal theory that “no money was lent” by the creditors. I’ve been asking for proof for nearly a decade. I’m still waiting.
So how did he reply? By backing up his mental dumpster and unloading it in my email inbox:
“Actually I’m not a fan of a fraudulent system that takes advantage of others, which is why I work to bring it down rather than to support it by buying into the lies.
I didn’t go to court on any of the cards that I got charged off.. which was every one of them. Contrary to what most people believe, it’s actually quite easy to do because the banks don’t WANT to go to court, or their little scam would be revealed and a finding against them would set a legal precedent that bring the whole house of cards down around the world.
All I did to accomplish that was exactly as I said in the earlier email. I challenged the banks for fraud on the contract and fraudulent conveyence (sic) and the debts were charged off for the following reasons:
1. There is NO legal and binding contract.. only a promisory (sic) note which creates the funds to discharge.
2. There is NO disclosure of the actual accounting procedures. If there were the banks would be forced to tell people that the monies created were created as a CREDIT to the account of the Strawman, and NOT a debit. This means that the individual has legal right to the monies from the start and is under no obligation to pay them back.
They entire system is a scam that originally began in 1913 and was subsequently pushed through Congress a few years later. When done correctly the FDCPA, and the FCRA can easily be used to get an unsecured line of “credit” charged off. It is also possible to obtain the remainder of the monies in a given account in cash. As I said, the money was assigned as a credit and not a debit to the individual and is therefore legally ours to begin with.
As I said earlier, if you want to know more, watch “The Money Masters”, “Money as Debt”, and read “The Creature From Jeckyl (sic) Island”. That will bring you up to speed on what the World Bank and the Federal Reserve is REALLY up to.
In closing, I’m sure there are idiots out there who scam people. In fact I recently read about one in Florida who took thousands and never did the work promised. But that there are idiots in every walk of life, and a few bad seeds don’t change the fact that what I am saying is true. If you want, I’ve given you enough information that you can find out for yourself. And as I said, once you do, I can provide you with the necessary tools if you decide you want to alter your course a little.. and I won’t charge you a penny.”
OK, so where do I start? This is so wrong on so many levels that it’s difficult to know where to begin. But let’s begin with the obvious. No legal paperwork. All this person accomplished was to get their debts charged off. Um, hello? That happens automatically! Don’t pay a credit card bill for six months, and voila, charge-off time. A charge-off just means the creditor records the loss on their books. It doesn’t mean they will stop trying to collect afterwards.
Anyway, I was getting a bit annoyed with this chap’s self-satisfied smug tone, so I decided to let him have it with both barrels.
“Allen,
Listen carefully, please. Both your emails were very insulting in tone and approach. You’re writing to a professional, not some clueless newbie. I do this for a living. I’ve seen it all, every trick in the book. I have been aware of everything you are describing for a decade or more and know a hell of a lot more about it than you apparently do. You’re just another in a long line of people who thinks he has discovered some big conspiracy, and can’t resist emailing me to tell me how wrong I am. What a laugh. I read Jekyll Island years ago. It’s complete crap from start to finish. Griffin is a John Birch whack-job, and his book was thoroughly debunked by legitimate scholars long ago. That’s as deep as your “research” went? Griffin? LOL.
If you don’t have court cases ruling in your favor, then all you did was temporarily chase away some collection agencies via the various documents utilized by the monetary protest crowd. Creditors drop cases all the time, or choose not to sue, for a variety of reasons that have absolutely nothing to do with what you think it does. You, like everyone else tilting at windmills out there, are completely clueless about what a pile of bulls**t you have chosen to put your faith in. You apparently don’t even understand what a charge-off is! You didn’t “get” your creditors to record charge-offs. That happens automatically. You’ll get sued sooner or later by a debt purchaser, or two, or three. If you enjoy the legal fight, bully for you. But 99% of consumers don’t want to go that route.
Did you, or did you not, purchase goods and services to the tune of $40,000 via the credit cards? Are you saying you received NO value whatsoever from the purchases made with the credit you claim was illegal? If you had not had those credit cards, how would you have obtained those $40k worth of goods or services? Don’t you understand what “consideration” means in the context of a business transaction? From my perspective, all you did was stiff your creditors to the tune of $40k. But that apparently does not conflict in any way with your values or ethics. Sorry. Call me old-fashioned, but I’ll side with the OCC, FTC, and every single state AG out there, and continue to advise consumers to steer clear of conspiracy-theory-based techniques that simply do not work for the vast majority of people who attempt to implement them. I’ll continue to do what I know DOES work — good faith negotiation and settlement. If you want to preach otherwise, get your own website.
Sincerely,
Charles J. Phelan
President/Founder
Manchester Publishing Company, Inc.”
A little harsh, perhaps, but hey, he started it, right? (You have to give as good as you get sometimes with people who are a bit thick in the skull.) His response?
“My apologies if I was coming off like I was being condescending.. I wasn’t. As with you, I am a professional and hold two degrees.. one in Electrical Engineering and a Doctorate in Philosophy.. so obviously I didn’t just fall off the potato truck.
My only intent from the start was to inform you of the truth, not to try and make you believe it. I’ve researched this for over three years, and the information I have portrayed /is/ accurate. However, you are certainly entitled to believe that Jeckyl (sic) Island isn’t true, or that the system we are living with is ethical and in integrity. The choice is entirely yours.
Please don’t bother responding, no further dialog on the subject is necessary or desired.
The best,
Allen”
Translation: “Gosh, you hurt my feelings. I don’t want to play anymore.” So there ends the exchange, which is too bad, because I was having so much fun. You’ll notice, however, that he failed to answer a single relevant question that I raised. “I know I’m right, and you can’t confuse me with facts to the contrary.” That was the essence of his defense. Our monetary system is a scam, therefore I never spent any real money, blah, blah, blah.
The core point I was trying to get across to this person was the concept of business “consideration.” I focused on that because someone who has two college degrees really should know better (not to mention they should also be able to spell better). How can you study Philosophy, obtain a PhD, and not understand basic logic? The debt elimination promoters often rely on the assertion that no consideration was received by the debtor because the creditor was not out any of their own actual money. Baloney! You can read the linked Wikipedia entry on consideration for further detail, but the core idea is that in a business contractual situation, consideration must be involved for it to be a valid contract, where consideration is defined as value paid in exchange for a promise. Simple enough.
By arguing that no value is received by the debtor because the bank is extending credit and not loaning money directly, the true believer in debt elimination is overlooking basic reality. When you use a credit card to purchase goods or services at a retailer or other business, the mere fact that you had the convenience of using credit constitutes consideration. Look at it this way. If you did NOT have a credit card, you’d have to write a physical check or pay in full with cash, right? Because the creditor extended you a credit facility in the form of that little piece of plastic, you didn’t need to pony up money out of your bank account to pay for the item. That fact alone means you were extended consideration in the transaction, because otherwise you would not have been able to conclude the transaction under such convenient terms and would have had to directly negotiate credit terms with the merchant. So this blows away any and all objections by the debt eliminator that no consideration is involved. Crash. Down comes the whole kooky house of cards.
Anyway, all this person accomplished was to rip off his creditors for $40,000, *temporarily*. Since he never resolved anything, and thinks that the process stops with charge-offs (which is actually when the collection process just starts kicking into a high gear that can last for *years* to come), he will be exposed to multiple lawsuits in the coming months and years. This is my beef with all such mumbo-jumbo “magic bullet” techniques. They never result in any of the debts actually getting resolved in a final manner. A debt settlement letter accomplishes that resolution. You pay X dollars by such-and-such a date, and you’re done, period. And you have it IN WRITING FROM THE CREDITOR. Game over. On to the next debt, etc.
I doubt the above will convince a true believer. But I figured I would go ahead and post this exchange for its educational value. If I can spare one consumer from falling into the insidious trap set by the scam artists who sell these bogus “programs” for thousands of dollars, then I’m happy to keep sparring with true believers in the conspiracy theory of global finance. Anybody else out there want to take a shot at convincing me I’m wrong on this subject? 🙂
Charles,First let me state at the outset that I will not accept the label you have assigned to me as a seller of some “fly by night debt elimination scheme”. I am not, what I am is an interested individual in understanding the credit banking system. Not a novice, to be sure, as this study has been given more than several thousand hours of research over the last 10 years.
Regarding the “Credit River” decision, which was actually based on the “money argument”, you will find that IT WAS AND HAS NEVER BEEN OVERTURNED! Investigating the entire case will reveal that Mr. Daley did indeed put under oath the top attorney from the Federal Reserve, who admitted that what I have previously stateed is ABSOLUTELY TRUE!. He freely admitted that so called “loans” come into existence through the monetizing of promissory notes in the form of bookeeping entries. When asked to quote the exact procedure he freely used the Federal Reserves own publication to quote from, namely that bookeeping entry “money” is created by monetizing the note, simply endorsing “pay to the order of” name of bank, and depositing it as cash into the “borrowers” deposit account. This is deposited as CASH, having NO distinction than any other cash deposit from the public. The Federal Reserve in it’s own publication “Modern Money Mechanics” and “Two Faces of Debt” clearly state there is no difference in this cash deposit, through “monitization of the note” than that of any other cash deposit, AND MUST BE PAID BACK ON DEMAND! Charles, if you don’t understand the clear meaning of the Fed’s own words in their official publications, I don’t know where to go from there. Your further disagreement with my previous post took incorrect positions by trying to twist what I wrote. You tried to make it appear that I was suggesting trying to get something for nothing, rather than answering my clear indication, it was not my THEORY of what was taking place, but rather stating what the FEDERAL RESERVE ITSELF STATES IS HOW BOOKEEPING ENTRY MONEY COMES INTO EXISTENCE. The payments made to merchants accepting credit cards is paid by the bank from the transaction account which was created by operation of the cash deposit held in the “borrowers” name. The merchant gets “paid” when he turns in the signed purchase slips into the banking system. You indicate the money he is paid with is from bank funds, which technically it is, because all cash deposits are bank property, offset by the liability of what’s owed by the bank to the depositors. The credit card mechanism therefore becomes just a different method of purchasing, other than using your checking account. The difference is, THIS DEPOSIT ACCOUNT WAS CREATED BY MONITIZATION process used and allowed under the banking laws to create “bookeeping money” rather than “outside cash” creating the deposit account. On the banks books, there is a demand deposit account in the name of the credit card debtor, that is what the Federal Reserve states creates the transaction account from which the merchant transactions are deducted. Is this asset account substance or bookeeping money? The latter of course. Is this transaction account considered the banks asset? YES YES YES! Was it created through new money deposited by the borrower? NO NO! The fed states clearly in All their publications that there is NO MONEY, just bookeeping entries, money of account, created solely, entirely through lending based on monitizing promissory notes through the process explained above. This is not ME saying this, read it for yourself in the Fed Publications. Is it legal, of course it is. Congress gave banks the power to do this. Can WE the public do this kind of thing? NO NO NO. The basis of these so called “schemes” of debt elimination through use of offset or accord and satisfaction are based on the fraud of the offer which does not include the true substance of what is happening. There never was this bookeeping money in the transaction account until the note was monitized, therefore it clearly is the source of the vapor funds. Admittedly, there is no “real money” involved in any of these transactions, but that is a function of the banking system. The fact is that the bank “pays” from the transaction account, which is the banks account, but it is also true that the bank has a liability to the depositor for that amount as shown on the banks books. Failure to disclose that in effect the credit card user is funding his own account through signing the application, is at the basis for the claim of fraud in the factum, failure to disclose etc., for it is implied the bank has something to lose in this transaction if the debtor fails to pay back the amount used. The truth is that the banks immediately insure against bad debts, ande having paid that insurance, sells these accounts into security tranches which use these insured accounts as collateral backing the securities. If a debtor fails to pay, collection efforts are excercised under the insurance clause, and the non performing asset, under banking laws must be moved from one side of the books to the other. This is shown as a charge off, allowing a tax deduction, of whatever the loss can be substantiated after receiving the payment from the insurance. Of course as it is no longer a profit making account, it can no longer be used in the tranche, and it is retired and replaced by another account under the same procedures. Complicated bookeeping? YOu bet, but is this how it is done? Yes it is. So now all the originating bank has is the so called “obligation” created by the application, which it sells off to the debt collection industry for a few cents on the dollar. However the deposit is still on the banks books, is it not? Is it still an unpaid obligation as a demand deposit? Yes it is. When queried as to when this deposit is paid back to the depositors, the is only silence when asked, either from the banks or the Federal Reserve. What has happened to multiple of 9 times the asset created because of this cash deposit as allowed under the fractional reserve system? If this were not a cash deposit in the name of the applicant for credit, then why did the bank pay the required reserve amount on deposits to the regional Fed Reserve bank? Their books reveal that in fact they did pay this required amount. Therefore the deposit exists, or they wouldn’t have to pay the reserve amount, right? This is an admission to the existence of the cash deposit account, and that accountis in the depositors name, and the Fed says it must be paid back. No exceptions, period. If the bank would return the deposit and account for it honestly, or at the very least use it as offsett against what the card user drew it down to thru use, that would be an honest transaction with all parties fully aware of exactly how all this works. It is the fraudulent witholding of what is happening, the implied mistatement of the true nature of the transaction, which would allow the borrower to have capacity to make an informed decision to contract, that is where the problem lies. It this fact of failure to disclose which is at the heart of the claim that because of this, there never was a binding contract. No contract, no obligation. Claim there was a valid contract, then give the deposit money back, or at the very least use it as an offset against the claim. But the banks do none of this. When presented with accord and satisfaction in the correct way, and not rebutted in a timely manner, the law states A&C has been achieved. Again, I remind the readers of this post, it is not me saying this, it is the Federal REserve’s own publications, and their attorney’s while under oath that state this is the system. They do not claim it is illegal, nor does the public. It is the failure to reveal the true source of the funds through misdirection and false implications, that is at the heart of invalidating any contract where this has occurred. If one is not told that they are the true source of the “money” which funds the account for these purposes, then there never could have been a “meeting of the minds to contract”. No meeting of the minds, means no full disclosure, no full disclosure, no valid contract. If there never was a valid contract, then one could argue there never was a valid note, no note, no “pay to the order of”, no monitization, no deposit account, no deposit account, no transaction account from which to write checks or debit from the account or credit the merchant accounts. Back to square one. Did the merchant get paid? Yes. He has no complaint. Did the bank pay him from a bookeeping account? Yes. Did the bank lose it’s asset money if the depositor did not refill the transaction account through payments? Yes. Can the bank refuse to pay the depositor back his deposit? NO, not under the banking laws. Was the card user ever infomed he had this deposit? NO. If the bank asset was based on a declining liability to the deposit account, is the deposit liability offset to zero if not replenished by the card holder through payments? Yes, if agreed to by the depositor, which is not the case here. The bank has only “lost” its asset if has paid from it and exhausted this balance through payment to merchants. However, it is compensated through the depletion of liability to the depositor, therefore its loss is zero. It has received fees from both the card user as well as the merchant, as well as compensation from the insurance. It has from the outset been allowed to loan out an amount of 9 times the original asset created on its books through the monitization. Does the bank make a profit from this leverage? I leave that answer to your speculation. Does the card holder share in these enormous profits created through this allowable fractional reserve procedure? NO. Must the bank share or even inform the card holder how this transaction has enriched the bank? NO NO NO. Ask the FDIC about how are these depositors accounted for when a bank goes under? How are all these unpaid entries showing deposits handled? You will get the loudest silence you will ever experience. Ask the Federal Reserve top attornies this question, you will receive silence, absolute silence.
Charles claims what is written in this post, and the previous post, must be a pipe dream, for to assume it is true would mean the whole banking system is crooked? I can only refer to the complete collapse of the current financial system as reported all over the world to let the reader decide whether or not the whole banking system, including the stock markets are crooked or not. I’m afraid, Charles, it is you who are living in a pipe dream, not me, or the rest of the world. The cat is out of the bag, and it cannot be put back in. The whole thing is nothing more than an illusion, and a house of cards. Don’t believe me, all one has to do is read the official publications of the Federal Reserve. “Mondern Money Mechanics” and “Two Faces Of Debt” and many other official publications of the Fed. Greenspan himself has stated “all money, comes into existence through borrowing”. In effect it is created on the books out of thin air through a few key strokes on a computer”. If anyone doubts what I have written here, merely obtain copies of those mentioned publications, if still available, and read for yourself. Then decide who knows what he is talking about, Charles, or the Federal Reserve. What I have put forth is based on the law as written, and Charles would have you believe I am a purveyor of one of a host of “schemes”. I have already stated, I am not, merely one who has spent thousands of hours getting to the bottom of this charade. Charles, however takes the position of the banks, suggesting he might be a “shill” for them.
Charles…I should know better, but I’m always amazed at the idiocy of the conspiracy crowd. If they spent the amount of time at legitemate work, the could pay their debts and support the system that has provided a standard of living never seen before. JimMcCall
Jim, you’re absolutely correct. Looking at some of their postings, I’m
beginning to think someone is paying them by the word. 🙂