The purpose of this three-part series is to make a call to action against the TBTF

banks who have created mortgage loans, MBS and CDO securities, and foreclosure
mills spewing toxic debts that wreak havoc in the chain of title and property rights
for homeowners who have purchased property from the years 2000 and onward,
affecting millions of homes and lives, and ultimately resulting in the unlawful
foreclosure and forced expulsion of people and families out of their homes all over
America.

I call this foreclosure crisis the Mill Wars, representing the mortgage loan mills, the
MERS securitization mill, and the foreclosure mills that have forged the weapons of
our own demise. I compare the tactics of the TBTF banks with military warfare. They
have planted bombs in the housing market and their effects will be as powerful as
the assault on 9/11.

The TBTF banks have not been alone in their actions. Every step of the way the US
government, regulators, GSEs, the Federal Reserve, and Congress and its passage of
laws that deregulated or interfered with the capital markets have contributed to the
economic crisis.

For the last 30 years, the economy and GDP numbers have been a sham. We’ve seen
the offshoring of jobs, dismantling of domestic manufacturing, monopolizing farms
and food production by major corporations, stifling development of alternative fuels
and vehicles, and the dumbing down of our children. All of these processes have
deteriorated our economy, degraded the physical infrastructure of our towns and
cities, and drained the brain power of the next generation.

The TBTF banks have been able to get over on the working class and upper middle
class by possessing proprietary information, knowledge that we don’t have.

It is in the attempt to close this gap that I’d like to examine the debt-based
monetary system and the Uniform Commercial Code that governs our economy. We
have been kept in such profound ignorance or rather in a state of blissful apathy
about basic concepts of money and debt that we are unable to manage our
commercial affairs. We have made ourselves the perfect mark.

Let’s start with the definition of the word money under the law. Money is a currency
of gold or silver with an intrinsic value or a paper bill backed by gold or silver. In the
United States all bills stopped being backed by gold and silver in 1933. From the
time FDR ordered that all gold was to be collected from the people, it would be a
crime henceforth to request the discharge of any debt in gold or silver. Only silver or
copper coins retained some intrinsic value of the metal after 1933.

Enter Modern Money Mechanics

The book Modern Money Mechanics posted at the Federal Reserve was graciously
written by the Chicago Federal Reserve Bank to help people understand the concept of
money. My first criticism is the disingenuous use of the word “money” within its pages.
The Black’s Law Dictionary clearly states that “money” is backed by gold and silver. Not
many people living today have ever had any “money” in their pockets. But in the Fed’s
writing, the word money is used inaccurately and interchangeably to refer to debt-notes.
We have had debt-notes since 1933 and their creation is based on something completely
different from money that circulated in previous centuries.

The general use of the word money encourages people to consider money as it existed
300 years ago. That is precisely the kind of confusion that the Federal Reserve is trying to
propagate. There are a whole set of paired legal words that describe transactions in a
money and in a debt-based monetary system. These are: money/debt-note, buy/purchase,
pay/discharge, and so on. These pairs are defined by law because they make an important
distinction between true ownership and right of use privileges.

For example, an individual in northern Spain in 1790 would pay a sum of money in gold
or silver to buy a piece of property. The property was owned exclusively by the owner.
He had allodial rights, a king of his castle type of right, in which no government could
dispossess him of the land, regardless of other debts that might have been due. No
property taxes were ever assessed.

In a debt-based monetary system such as ours, we use debt-notes to “purchase” property.

However, we have acquired only right of use privileges. The real property doesn’t belong
to us. We must send in a yearly property tax (tribute), and any city, county, state, or
federal agency can place a lien against the property at any time if a claim is presented
against us. The land becomes forfeit. We are so brainwashed into thinking this is the only
way of holding possession. Nobody questions the reasons why.

Modern Money Mechanics provides a clue to the little power debt-notes have to secure
and hold real property or any personal possessions.

What Makes Money Valuable?

In the United States neither paper currency nor deposits have value as commodities.
Intrinsically, a dollar bill is just a piece of paper, deposits merely book entries.

Coins do have some intrinsic value as metal, but generally far less than their face value.

Modern Money Mechanics

Are you willing to concede that all the work you do and the debt-notes you receive in
exchange are worth nothing? Any logical person observing the world would register a
disconnect between the physical and mental labor exerted in the economy and refuse to
be renumerated in a fiat currency that has no value. This is the first deception that we
have accepted from the Federal Reserve Bank.

A crack in the illusion begins to appear. Most people are still using the concept of money
that existed 300 years ago. The vocabulary we use in referring to money is completely
confused, and purposely so. The law makes a strict distinction in vocabulary. And that
vocabulary makes a powerful distinction in property title and ownership between either
buying with money or purchasing with debt-notes.

This is the big advantage for the bankers that opened the door to usury and outright theft
of the life productivity of all Americans for three generations. The passage of the Federal
Reserve Act of 1913 cemented our fate.

Let’s give a tiny example of the dialogues going on in courtrooms all over the United
States. In this example, the defendant only has a partial understanding of his commercial
affairs and the courts.

San Jose, California County Court House circa 2007

Judge: State your name.

Defendant: John Smith.

Judge: Do you swear to tell the truth, the whole truth, and nothing but the truth.

Defendant: I do.

Judge: You entered into a mortgage contract with Bank of America in 2003.

Defendant: Yes, but the bank doesn’t have the mortgage note. I’m not the person who
should have to pay off the loan.

* * *
The judge would find the defendant in dishonor with the court. Why? The defendant
confessed to being a fictitious corporation and placed himself immediately under the
judge’s jurisdiction by stating his name. The word name in the court refers to a
corporation.

The defendant swore to tell the truth, but in an equity court there is no truth to tell, since
there are no eyes to see, or ears to hear. Two corporations are interacting.

The mortgage contract binds the defendant as a DEBTOR to the bank. The DEBTOR has
no recourse, because at law he holds a diminished capacity to handle his own commercial
affairs.

The defendant is openly stating in court he is not a fictitious corporation with the phrase “
I am not the person.” And yet he just stated his name.

The defendant has refused to accept the claim for value in violation of the currency laws.
Under the UCC, every claim must accepted for value and returned.

The defendant has created a controversy, thus placing himself in dishonor with the court
again.

The defendant used the word “pay,” when there has been no money in the United
States since 1933. The legal term for debt-notes is the discharge of your debt.

One slip of the tongue in regards to your commercial affairs in court and you are a goner.
Standing in front of the judge the defendant appears like a raving lunatic from the judge’s
legal perspective. The judge reasons correctly that the defendant is confused about the
debt-based monetary system and has no understanding of the Uniform Commercial Code.
The judge has no other choice but to find the defendant guilty, and the house is
foreclosed.

Your head should be spinning by now. You may not know the correct vocabulary. Your
debt-notes aren’t worth anything. And you as a debtor are stripped of your labor.

Wake Up Call

Everything you think you know about mortgage loans, debt-notes, and the law is a sham.
Maybe you’ve been a DEBTOR, a ward of the legal system your entire life. You don’t
have the basic vocabulary to discuss your mortgage loan problems or present them in
court correctly. Individuals who file Pro Se proceedings often times get their butts kicked
from here to the moon. This is a control tactic to make sure the high priests of the law,
the lawyers, continue to make gobs of money and lead as many DEBTORS into dishonor
as possible.
Why is it that every foreclosure case is different? What happened to equal application of
the law?

I’ve read the posts on zerohedge filled with the moral outrage “You have to PAY back
your mortgage.” About people who want to shoot first and ask questions later. These are
all delusions and crazy behavior about a problem they don’t comprehend. There are a few
rare voices who come in asking questions—like where did the money come from? Do
you understand the Contract Law? They are cryptic and won’t elaborate much. This is
because we are in a war, and it is dangerous to set people straight on what is going on in
the banking system and the Uniform Commercial Code. Yet all the information is in plain
site.

What is a mortgage loan? How is it created? These are questions that people have been
groomed to ignore. They think they know what a mortgage loan is. But they don’t know
what they don’t know. The devil is in the details.

This is an asymmetrical war. The PTB have the ammunition like the massive mortgage
mills that can spew out thousands and thousands of mortgages per month all over the
country. They have the escrow companies to process all the paperwork. They have the
MERS system to support securitization of the mortgage contracts. They have automated
tools to upload UCC 1 Financing Statements, streamlined directly into the UCC online
filing systems. The county clerk recorders process all their Affidavits and reject the
Affidavits of the people responding to demands. They have the foreclosure mills to
handle thousands and thousands of foreclosures per month, which go through the courts
in judicial states or just spit out paperwork for the non-judicial states. The PTB are
mobilized and in tight formation.

The response from the every day man caught up in the war is haphazard. It remains a
one by one operation to get papers in order, either Pro Se or with a lawyer.

The DEBTORS don’t have any mills to defend their positions. They are confused and
scared of being stripped of their life savings. I’ll rely on the Pareto principle that
states 80% of the effects are generated by 20% of the causes. It may be that 20% of the
people acted irresponsibly in getting loans. Some of them suffered some unfortunate
setback out of their control that made them unable to “pay” their mortgages. But
technically, anyone with a mortgage is effected by this mess and that includes all
homeowners in the United States whether their houses are “paid off” or not.

Then there’s the outright scammers – the phoney refi companies, debt reduction
companies, patriot solutions in commerce websites that spring up to provide a hope and a
prayer that gets DEBTORS into even more trouble.

Some lawyers get relief for their clients by getting them a new loan or negotiated
dissolution of the contract, but most individuals are burnt at the stake for presuming they
worked for a living, paid hard-earned dollars to maintain the mortgage over many years,
and think intuitively that they should not be stripped of their assets. Most people feel very
guilty for not fulfilling their contracts. That is why so many people just walk away. They
don’t have a response to the onslaught of foreclosure and social ostracism.

We, as the slaves, are trained to believe in the morality that our masters hand over to us.
It is all to their benefit. Haven’t any of you ever read Nietsche -- The Genealogy of
Morals? The masters know that they can steal from us so much the better that way.

The Mortgage Loan Defined

Why is everyone so cocksure that they know what a mortgage loan is? How are the funds
created to make the loan? Who owns the funds? The mortgage loan is the second great
deception from the bankers.

Let’s go back briefly to the Modern Money Mechanics posted by the Federal Reserve.
But first it’s important to review a basic rule about accounting and bookkeeping.

All bookkeeping is based on a principal called double entry. You have your debits and
credits. The debit side represents your surplus “money” that you have asked the bank to
hold for you. The credit side represents your liabilities. And in double accounting, the
balances must match eventually. So you would move a debit amount over to the credit
side of the ledger to balance the account in order to pay your debts quite literally. This is
how money was treated 300 years ago and all the way up to 1933 in the western world.

Today, we have debt-based money. Every debt-note comes into existence by borrowing
from the Federal Reserve. When you apply this concept to the balance sheet, the debt-
notes are piled up on the credit side of the ledger. And discharge of the debt moves the
amount from the credit side to the debit side. Read the instructions to the bank requesting
“payment” on the Standard Form SF5510 posted on the GSA forms website. This is a big
clue that you may not be on solid ground when it comes to debt-notes and mortgage
loans.

Here’s my quote from Modern Money Mechanics that I’d like you to absorb.

Then, bankers discovered that they could make loans merely by giving their promises to
pay, or bank notes, to borrowers. In this way, banks began to create money.

Modern Money Mechanics p. 3

Let me distill it down. The banks give you no consideration (no matter of substance).
They give you a promise to “pay." In other words, the bank gives you debt-notes, which
they defined in previous paragraphs as having no value.
Further on, Modern Money Mechanics describes what the bank receives when it makes a
loan to expand the M1 money in circulation.

If business is active, the banks with excess reserves probably will have opportunities to
loan the $9,000. Of course, they do not really pay out loans from the money they receive
as deposits. If they did this, no additional money would be created. Modern Money
Mechanics p. 6

What they do when they make loans is to accept promissory notes in exchange for credits
to the borrowers' transaction accounts. Modern Money Mechanics p. 6

The banks don’t lend their money or the other funds of depositors. That seems clear.
What do they lend on? The promissory note that you sign is a creation of debt-notes,
since under the UCC we are transmitting utilities and an accomodating party. This
creation of debt-notes is a liability to the bank and placed on the debit side of its balance
sheet, because the bank owes you for your signature.

And this liability is offset by the credit deposited to the borrower’s account. Where is this
credit coming from? Remember the double entry?

The credit deposited into the borrower’s account is the credit from the borrower’s
exemption (credit) account at the US Treasury. The borrower is creating the debt-notes
and the bank is receiving credit, a commodity of substance (labor) to discharge and
balance out the accounting at the bank. All this goes on right under the borrower’s nose.
It is even documented in Modern Money Mechanics, but no one in the general public has
deciphered what it means. Then, the bank withholds your credit.

Every debt-note in existence is borrowed. And the borrower is the principal and owner of
the credit under the Uniform Commercial Code. However, the borrower is also the
DEBTOR and surety of the monetary system. He has no standing to manage his
commercial affairs until he files a UCC 1 form claiming himself as the CREDITOR with
a security interest in all the assets, real property, debts, liens, marriage, children, and
body of himself, the DEBTOR.

Mortgage Loans in Layman's Terms

First, the banks don't lend their money or the deposits of their clients. They access YOUR
credit in your exemption (credit) account at the Treasury. Under the Uniform
Commercial Code, the principal is the owner of his own credit.

Second, the banks withhold your credit. When you sign the loan application, the
application is presented to the overnight lending window at the Fed and the bank
gets your credit. But they don't tell you. They lead you into signing another set of
papers, the promissory note. This makes you promise to pay them back for YOUR
credit plus interest for the life of the loan. In addition, they make you agree to put
up the home as collateral for the loan.

The characteristics of contract are: Offer, Acceptance, Intention, Equal consideration,

Genuine consent (knowingly and willingly), Meeting of the minds, full disclosure of
the terms and conditions.

The bank has no consideration in the contract. It forced unequal consideration by

collateralizing the home.

The mortgage loan was a complete fraud, since the material terms and conditions of
the loan were not disclosed.

The banks file a 1099A form 3 years later claiming that you abandoned your
credit without your knowledge or consent. The banks are stealing credit at that point.

The banks take your credit and leverage it up 9x. They are required to report
interest earned from these loans on a 1099OID form. They never report their taxes
and are tax evaders. In fact, they have evaded taxes at every step of the loan,
securitization, and foreclosure process and avoided paying the recording fees to
counties across America for the assignments in the great mortgage musical chairs
game.

You are the principal and owner of your credit. However, you are unfit to manage
your commercial affairs if you do not file a UCC 1 Financing Statement correctly.

You can get back the interest earned on your own credit by a process called
Recoupment under Article 3 of the Uniform Commercial Code.

Here is the rub. This part of the Uniform Commercial Code is not taught to the
average individual. But you can bet that the banks are busy perfecting their liens and
using other people's credit. Not only do the banks do this, but every employer,
insurance co., assisted living provider, doctor, hospital (who knows something about
all this), plus every city, state, and federal agency is dipping into your credit.

Here is the new meme: There is no money, and there is no debt. There’s only debt-notes
and the discharge of debt.

In a debt-based monetary system when you get a fiat mortgage loan, you have to
discharge the debt with more paper. That is why I am preparing the discharge of debt for
the home that I’ve paid off with cash.

Only the discharge of debt through the exemption (credit) account at the US Treasury is
an exchange of commodity value (labor) for the home. So all you people out there with
mortgages that think that you’ve “paid” off your loan better stand at attention and
discharge your debt.

In Asymmetrical Warfare in the Mill Wars Based on UCC Practice Part II, we'll look at
the processes to perfect your security interest in the DEBTOR's property and discharge
debt as it applies to the Uniform Commercial Code.