No Bank Deposits Will Be Spared from
Confiscation
Global Research, April 24, 2013
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
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, 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, 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 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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