Paul Grignon’s Video “Money as Debt” - a critique - by Verne Warwick, Aug 24, 2006


In order to see if the concepts presented in the movie “Money as Debt” by Paul Grignon are objectives for which we should strive, let’s return to some basic principles, including definitions (We will limit our discussion to relationships between 2 parties rather than concerning ourselves with the more complex multi-party situation. The principles are the same):

Trade—The bilaterally voluntary exchange of goods and/or services for goods and/or services. (Without the bilateral and voluntary aspects, the exchange would be defined as either extortion, theft, coercion, slavery, etc.-- at least from the viewpoint of one side). This definition applies to individuals, and collectives (companies, organizations and nations).

Barter—The immediately completed trade of goods and/or services for another set of goods and/or services. Also applicable to individuals and collectives.

Deferred Trade—The instance wherein one of the parties has derived complete material satisfaction from a transaction, while the other party has derived either partial or no material satisfaction. (This is a direct lead-in to our next definition).

Debt Instrument—A contrivance for denoting that which is owed or for denoting a state of owing. (A “Debt Instrument” is what we employ to keep the accounting of a “Deferred Trade” having taken place).

Money—A Debt Instrument that is universally (within defined boundaries, usually those of a nation) accepted as the representation that a deferred trade has occurred. It is the most widely employed version of the debt instrument and is the most flexible. Money is a contractual IOU, now nationally, initially individually. It is not a commodity, although it is being treated as one by our financial “authorities”.

Fiat Money---(from the Latin “fiat”--”Let it be done”). Paper currency of government issue which is made legal tender by fiat, decree or law, does not represent, or is not based upon specie, and contains no promise of redemption” (emphasis--editor) (Webster’s New International Dictionary, 2nd Edition, unabridged, 1947).

The Backing of the Debt Instrument—“The contractual assurance, accepted by the recipient of the Debt Instrument (DI), of the redeemability of the Debt Instrument according to the terms of that contract, or by the terms of contingency should the original terms be untenable or impossible”.

This definition requires elaboration, for it is at the core of the issue of banking in general:

When we originally went from Barter to the first Deferred Trade, some form of accounting had to be accepted by both parties. No accounting was necessary for Barter, by definition. The two (2) most accepted forms of accounting were then, as they are today, the floating IOU (“scrip” money) and the ledger (cheque book money, or now computer “scrip”). In order for one party to part with his material asset or pure services in exchange for an IOU of either kind, he first had to trust in the assurance of the stated contractual obligation that gave the IOU value. Failure to have this trust would scotch the exchange. It is important to understand that the recipient of the DI usually comprehends on a conscious level that he has received the DI as the result of a deferred trade: meaning that he knows the other party to the transaction in which he received the DI has received what he wanted from the exchange, but that the recipient of the DI still has not received what he ultimately wants/needs from the exchange. We therefore need to consider two (2) scenarios in which the DI is issued, one leading from the other.

The Individual Debt Instrument

Prior to the existence of Money, as we have come to know it, John and Fred lived in a community that conducted its exchanges using only Barter. Fred agreed with John that ten (10) pounds (#) of his potatoes were worth two (2) of John’s chickens. One day when Fred told John he needed two chickens, John said that he did not need any potatoes and would not require them for about a month. Therefore he did not want to take the chance on having the potatoes spoil. Thereupon Fred came with the brilliant idea of offering John a hand-written IOU for 10# of potatoes, redeemable upon demand, in exchange for 2 of John’s chickens.

Now John has three choices:

(1) He rejects the offer of the IOU from Fred, in which the exchange of chickens for an IOU would have executed a deferred trade, but will now not occur, causing Fred to be chicken- deficient, and John to have an unwanted 2-chicken surplus over the quantity he would have had if he had accepted the IOU. This, of course, is not usually in John’s interest since he is in the business of raising and selling chickens.

(2) He accepts the offer of the IOU on its face and gives Fred the 2 chickens as his part in the exchange. John accepted the IOU from Fred because he believed in the Ability and the Integrity of Fred to redeem the IOU upon demand. In this instance, the backing of the Debt Instrument called Fred’s IOU is Fred’s ability and integrity to redeem the proffered IOU with 10# of Fred’s freshest potatoes at the time of redemption. Note that John’s belief in Fred’s ability and integrity to redeem the IOU is not necessary for the backing of the IOU to exist, but only for John’s acceptance of the IOU. If Fred has both the ability and the integrity to redeem the IOU then John’s belief in those qualities does not affect the actual existence of that backing.

(3) If John has doubts about the ability and/or integrity of Fred to redeem the IOU, yet still wishes to make the exchange (for reasons mentioned in [1]), he can ask for a contingency clause to be inserted into the wording of the IOU. He may say something like “upon failure to supply 10# of potatoes, Fred will supply an agreed equivalent in other available produce”.

Note Two (2) Concepts—

Note (A)--The insertion of this contingency clause into the IOU wording would only be applicable if John was concerned (for whatever reason) about Fred’s ability to redeem the IOU upon demand. If John was concerned about Fred’s integrity to redeem the IOU, the insertion of the contingency clause would be irrelevant: if Fred would renege through lack of integrity on redeeming the IOU for potatoes, why would he not renege on the redemption of the IOU for the conditions of the contingency clause?

[ASIDE—When Y2K was the perceived threat to everybody in the community, many banks were advertising: “Invest all your funds with us. We guarantee your savings!”. I asked a couple of these institutions “What comes after the “or”?” No representative understood to what I was referring. When I said “If there is a Y2K crash of the computers and somehow all the funds are lost or misidentified beyond comprehension, what will you do to replace those funds?” Their answer “We guarantee your funds”. There was nothing after the “or”! Therefore there was no guarantee at all! If they had said “We will return the exact amount of Canadian dollars that you deposited with us; OR, failing our ability to so do, we will now put into trust the equivalent in material assets of your choice, redeemable upon demand and upon your discovery that your funds were not accessible to you”, that would be a guarantee! That would be integrity!

The banks didn’t offer the first then; and they don’t have the second, now! ]

Note (B)—one of the contingencies that John would insert into the wording of the IOU would NOT be to accept another IOU, of any kind, in place of Fred’s potatoes, because John is now looking to complete his previous deferred trade. He is desirous of redeeming his IOU for some sort of material gain.

Fred’s IOU can circulate throughout an entire community of individuals who know Fred and believe in his ability and integrity to redeem the IOU upon demand. It is not necessary for each of these individuals to try to redeem the IOU with Fred, as long as the next intended recipient accepts the IOU per the terms on its face.

When the IOU is finally returned to Fred for redemption (after having taken part in two, or hundreds of deferred trades), Fred gives the holder of the IOU the 10# of potatoes, takes the IOU back and rips it up. The note (IOU) has served its purpose while in circulation and, when returned to the issuer has no value in Fred’s hands.

The Collective Debt Instrument

It is a short step from the Individual Debt Instrument to the Collective Debt Instrument. As members of a society, we have found that we can accomplish more for less real cost by compartmentalizing the tasks required of us on a daily basis. In the case of implementing a Monetary System, the elements are present for us to enjoy full benefits from collective association.

In the lawful practices of a free society, the individual has abilities of contractual association limited only to actions not infringing upon the more basic rights of another individual. (A discussion of where our society is presently in this regard is beyond the scope of this article). We only enter into contractual associations because we perceive more individual benefits to be derived from that association than if we had not entered that association. One of the associations into which we freely enter is the process of delegation. Daily, we delegate tasks to others. Some we could do by ourselves; others we cannot. We delegate to others the task to prepare our food when we enter a restaurant. If we cannot identify and repair problems with our vehicle, we go to a mechanic. The list is virtually limitless.

It is upon this premise that we originally decided to delegate certain functions to government (Again, the list of appropriate functions therein is beyond the scope of this article). By choosing to delegate to government the issuance of the Debt Instruments of Society (another term for this is the “Credit Creation of a Nation— note that “the issuance of the money supply” is a misleading term which elicits the thinking that Money is a commodity, which it most assuredly is NOT) we gain the following primary benefits:

(A) A potential recipient in Halifax of the Debt Instrument called the “Canadian Dollar” does not need to know Fred in Winnipeg to feel confident in accepting the Canadian Dollar in exchange for his goods and/or services. The Canadian Dollar therefore converts local redeemability into national redeemability. To the extent that we have honourable Debt Instruments (i.e., Caveat- in inverse proportion to their defilement by the corrupting influence of usury at their creation), our nationally redeemable debt instruments can be universally redeemable (i.e., outside of the nation).

(B) The “National Currency” increases the flexibility and range of the Debt Instrument beyond the capacity of the individual. The lone backer of the IOU is limited to his immediate grasp of goods and services for the support of his IOU and cannot cope with the quantities potentially required by multiple customers.

(C) The Canadian Dollar extends the periodicity of the value of the Individual Debt Instrument. There are obvious limitations to the Individual Debt Instrument from the viewpoint of “Ability” to redeem the DI. Death, sickness and contractual obligations beyond the individual’s control can limit or negate the redeemability of the IOU by the individual issuer. As long as the nation of Canada exists, however, the redeemability of its DI will be evident (subject to the caveat above). Death and sickness would not apply, although extraneous contractual obligations are still a concern.

(D) Most important of all benefits, however, is the national spreading of the risk associated with the decision to accept the individual debt instrument. If the Ability and Integrity of the issuer is spread across an entire nation, the Inability of the issuer to redeem the note for goods and services is greatly reduced, if not eliminated; and the potential Dishonesty of one individual is covered by the thousands of others that back the note daily with their integrity to redeem upon demand the national notes.

But the Government of Canada (and many other nations’ governments) took another step beyond the lawful delegation from sovereign individuals to a government entity (whose name and ownership may or may not be relevant, but is beyond the scope of this article), and then unconstitutionally (meaning it was beyond the authority given to it by the sovereign individuals in their delegating process) delegated this function to private banking interests.

In and of itself, this step was illegal, unlawful, unnecessary and criminal in nature:

Illegal—in that it violated the governments’ own statutes of limitation of delegation;

Unlawful—in that it violated the trust of the sovereign from which the contractual delegation was issued;

Unnecessary—in that all governments have the inherent capability to issue credit, or debt instruments, up to and including the capacity of the sovereign individuals of that nation to produce goods and services by which the DI’s can be redeemed. Thomas Edison once said that “The ink, paper and intent that make the bond [given to the bank as surety for the issuance of the credit of the nation] good also makes the note [dollar issuance itself] good”. No government needs to (A) Go outside the nation to borrow “tickets” from another nation or extranational bank, nor (B) “borrow” money from a bank within the nation; since the government has the backing of the sovereign individuals of the entire nation. No “internal” bank has such scope, nor should have such scope!

Criminal in Nature—because all banks issue the credit of the nation in a 3-step process taken in its totality: (1) They create the money out of nothing and collateralize (back) it against the worthy asset of the “borrower” (he is not actually a borrower, as we shall see); (2) The banks then claim ownership of that which they created out of nothing; (3) The banks never issue, or put into circulation, the interest that the alleged “borrower” contractually agreed to remit along with the principle he received. Only the principle is put into circulation. Therefore, as a collective in the nation, the contracts into which we have entered are impossible to fulfill. If the collective cannot fulfill a contract due to the mathematical impossibilities, the individual cannot be bound to a collective contract on a pro rata basis.

In respect of (1) above, it is instructive to note that:

(A) as in all Debt Instrument issuances they are all created out of nothing. (Witness the illustration of the circulation of Individual Debt Instruments above). The problem with the banking system and the crimes perpetrated upon us from that system, do NOT rest herein!

(B) The money issued by the bank (which did not exist before the “borrower” entered the contractual obligation) is backed by the worthy asset of the “borrower”. This means that the “borrower” has signed a promissory note with two (2) primary stipulations (amongst several lesser strictures):

--he agrees to repay credit notes to offset the “loan”, comprised of principle and interest

--he agrees to the collateralization (or backing) of the “loan” with a Real asset of the “borrower” until repayment of the credit notes (above) occurs.

These stated components reveal that the source of the funds (which was NOT from depositors, as we are repeatedly told) is the Promissory Note of the “borrower”, thereby putting to the lie that banks “lent” money to the signer of the promissory note. In essence, and in totality, what the bank performed was a temporary monetization of a real asset. In other words, the banks (having been granted this unconstitutional authority by the Canadian government—which is why they are called “Chartered” banks) allowed the alleged “borrower” to temporarily extract liquidity from a real asset instead of being forced to actually liquidate that asset.

But if the real asset can be proven to belong to the “borrower”, then the temporary monetization of that real asset also belongs to the “borrower”.

The contract into which the “borrower” entered allows him “to have his cake and eat it too” as long as he abides by the stipulations of that contract. Should he fail to meet those obligations, he must lose his real asset to the holders of the notes backed by that real asset. The holders of the notes are never the banks, by definition, but the merchants and tradesmen to whom the notes were given by the “:borrower”. If the “borrower” defaults on his contractual obligation of timely repayment, the losers would be the holders of the notes which would then be unbacked without seizure and resale of the real asset hypothecated as collateralization!

In respect of (2) above, by entering into the process of issuing a “loan” the banks violate no less than 19 Canadian Criminal Code sections (see “Clear Money” Chapter 3 as defined by forensic micro-economist Tim Madden). In essence they and their legal representatives counsel the “borrower” to commit perjury and thereafter commit perjury themselves in the execution of all documents pertaining to, and surrounding, the Promissory Note. By making the claim of ownership of that which they created out of nothing, coupled with the insertion of the collectively impossible stipulation of repayment of interest (as outlined in Step 3 above) the banks ultimately own or control the assets of the nation, having performed no work other than keeping the records for the people.

In respect of (3) above, if the banks as a collective put 100 Billion Canadian Dollars into circulation and then demand 110 Billion be repaid, it is evident that this is an impossible contract. Yet, most of us, at one time or another, have entered into these impossibly fulfillable contracts, to the detriment of the individual, and therefore the nation.

Could all of this have happened without the awareness of the courts? The Department of Justice? The Judiciary?

In my studied opinion, it is not possible!

Can we expect the _expression of truth and justice thereafter to prevail?

In my experience, and in my studied opinion, it is not likely!

Due to the corruption of all those involved who would not be where they are without having sold their souls from having committed or permitted lesser crimes in an accelerating ascendancy, we are experiencing the depredations in each and every court of the land. The solution cannot be found emanating from the bench. Just because we witness the occasional “triumph” in the courts against either CRA or one of the banks, does not mean that we should be rejoicing. If every time the victim of a VLT got nothing, he would leave the rigged “gambling” machine within losses that were minimal. Until the “victories” we report are universally and consistently reproducible, we must know that we are being taken for a ride by the courts.

They are the enforcement arm for the collection agency (CRA) for the banks. Do we really expect justice therefrom?

Without a hearing by an informed jury of one’s peers, the task for us is hopeless!

Which now brings us to a discussion of some of the concepts put forth by the DVD “Money As Debt”.

(A) The narrator states that “the basic value of money has
changed”. The fact is that it has not changed. Money has always
been a Debt, still is, and should be. (See all definitions and
discussion above).

(B) The Canadian Dollar and US Dollar are not “Fiat Money” (See definition above). One of the prime components of the definition (as emphasized therein) is that the fiat money “contains no promise of redemption”. In these two countries (and most others operating under such a system) the dollars have been put into circulation virtually 100% collateralized by the worthy asset(s) of the “borrower”. There is no better form of collateralization, and the banks know it! To say that our credit notes are fiat money leads people to believe that they are unbacked and worthless. Very few concepts in monetary discussion are further from the truth!

(C) Contrary to what was stated in the written trailer to the movie, “the amount of money in circulation is equal to the total amount of debt”, we can demonstrate how untrue this is by looking at Canada and its closest neighbour:

The total Canadian Debt, comprised of seven (7) main components (federal, provincial, municipal and regional government debts; unfunded liabilities like CPP, SS, OAS etc.; private; and corporate) is approximately 5.8 Trillion Dollars! The total amount of Canadian Dollars in circulation throughout the world is approximately 800 Billion Dollars, leaving a shortfall of Approx. 5.0 Trillion Dollars!! Hardly equalizing Debt to the Money in Circulation! The 800 Billion Dollars is virtually all backed by the real assets of the alleged “borrowers”. The 5.0 Trillion Dollars are unbacked, but declared by the banks to be “owing”: It is upon this declaration that they seize the real assets of the people!

The total US Debt is approx 44 Trillion Dollars, with approx 34 Trillion Dollars in unbacked debt due to the initial imposition of Usury on the creation of that Money.

To reiterate, our money in circulation is backed by the worthy assets of the “borrowers”; however, the Outstanding Interest is not backed, but is also never created!

(D) Not specifically mentioned by the movie producers, possibly because they are unaware, is the fact that the Fractional Reserve requirement in Canada was removed in 1993. As the Bank Act is open for modification and amendments every ten (10) years, commencing in 1913, this was the latest bombshell to cause alteration in this most important document at the basis of our financial well-being.

(E) In the example used in the DVD, the alleged “borrower” backed the $10,000 money by his Promissory Note (PN), which includes hypothecated assets and a promise to repay from future earnings.

(F) Banks do not lend money! They monetize real assets! If the alleged “borrower” is the actual owner of the real asset hypothecated, he is also the actual owner of the temporary monetization! But the banks not only illegally and unlawfully claim ownership of the real assets pledged but also the monetization created by the Promissory Note.

(G) The Promissory Note is the authorization of the creation of Money (and it is Money which is an IOU)

(H) Re “Question 2” -- Money IS Debt! To call it otherwise defeats its definition, its purpose and the perfection of fluidity it engenders in the necessary accounting of deferred trades.

(I) NOT all major religions decried, nor decry usury. Talmudists specifically endorse it!

(J) Honest Money is NOT gold! This is a clever Hobbsian Choice. Nothing in the realm of monetary theory has been promoted more widely and with such conviction and passion as this misbegotten myth. There are a number of factors we need to consider to see that there may be folly on this path:

(1) Gold has close to the least intrinsic value of any element/commodity known to man. It is used in jewellery; has limited use in electronics; and inappropriate use in dental “care”. The statement has been made that that observation about gold is what makes it perfect to back money. If that is true, then it relegates gold to merely existing as another IOU. In other words, people will mostly use it as being another medium to effect a deferred trade, rather than purchasing it for its intrinsic value, wherein the trade would be completed. If people want it to be another IOU, we must ask why? If you accepted the first IOU why do you need another IOU to back the first (money) IOU?

(2) The same crime families who created and run the Usury Monetary System (UMS) discussed above, also control gold and silver mining, supply and value. Why would we think they therefore do not control the debate about whether we should have FED money or gold-backed money? The true backing of money (the Ability and Integrity of the Issuer [the people-delegated Government of Canada] to redeem the IOU for goods and/or services) cannot be as easily controlled by the bankers as can the gold/silver backing.

(3) It is the Goods and Services pledged by a Nation that truly back a Nation’s currency. (The countries in the world that produce the least goods and services also have the least valuations on their currencies [with the obvious exceptions wherein overt manipulation of the currency occurs for external political control purposes]). To insert the requirement for a national currency to be backed by gold puts that nation, and the individuals therein, under the yoke of those who control gold/silver. We replace one yoke for another! Since the controllers of the UMS are also the controllers of gold/silver, they have been playing a shell game with us by offering first one false alternative and then another, in the expectation that we will not discover that there remain true alternatives that work for the benefit of the people of the nation rather than for the benefit of a small criminal cult.

(4) How do countries with no gold or silver back their currencies? (Either for trade within the nation, or for trade between nations?) How does it make sense that before I try to sell a considerable quantity of goods to a fellow national that I must check to see if we were able to send out of the country enough productivity so that we could “buy” enough gold from another nation to ensure the currency I receive for my productivity is backed by gold? And what if the purchase price of gold continues to fluctuate, wildly or otherwise, as it has done historically at the whims of the controllers? Why should what we do inside our gold-free nation depend on the whims of gold controllers in other nations?

(5) As stated on Page (8), Note “B”, when the holder of an IOU is looking to redeem that IOU, he does not consider it to be a worthy redemption to supplant one IOU (money) for another (gold). And make no mistake, it must be one or the other: an IOU: or a commodity. You cannot have it both ways, or one of the definitions of the two is violated.

Gold can either be considered a commodity, or an IOU. Rarely, if ever, is it used as both by a society. During the period when gold coins were used as a means of payment for goods/services received, the recipient of the gold coin would never be thinking that he would accept the gold coins so he could melt them down to make jewellery! Similarly, the jeweller, in accepting from his supplier a quantity of gold to make his next series of rings and bracelets would not consider using this raw supply as money!

To the jeweller the gold only has utility to the extent that he can make goods acceptable to his customers who are willing to pay him (in gold coin?) for his wares.

To the merchant accepting the gold coin in payment for other wares, the gold coin is only acceptable because he believes others after him will accept it at the same value at which he accepted it.

So, if we are considering gold as a commodity, it has limited intrinsic value. If we are accepting gold as an IOU, it acts as a secondary IOU and becomes superfluous!

(6) The complexity of the world’s trading (now dealing with close to a 7 Billion population, and trades of Trillions of Dollars daily in Derivatives), considerably more inter-connected than ever, could not possibly rely on backing by the very limited supply of gold. What could be a better backing than the unlimited production of goods and services of all the world’s people who have voluntarily contracted these goods/services to back their national notes?

(7) Trace the flow chart of backing money with Gold and describe the process and how it works! Do we really want to give that much power over us to the owners of Gold Mines?


(K) Tamworth Hours is NOT a barter System! It is Money, by definition.

(L) There is a basic misunderstanding in this movie about what Money is. Money is Debt to the Issuer when it is in the hands of another (a receiver), and a credit in the hands of the receiver. Every credit to one is a debt or debit to another, and vice versa. To state otherwise defeats the purpose and definition of Money.

(M) There is NO taxation required! This movie has missed the opportunity to educate the audience on the ultimate Solution to the myriad problems it has attempted to identify!

(N) Leo Tolstoy should have said “The present Usury Monetary System (UMS)” is a form of slavery (and not “money” per se). For money, when properly issued (meaning not issued as an interest-bearing debt) acts as an accounting system with maximum flexibility to balance debts and credits between parties who have voluntarily entered into their arrangements.

It is the element of collectively unrepayable usury on the creation of money that turns the monetary system into a programme for enslavement.

(O) In regard to the book “Funny Money”, Paul Hellyer himself either did not understand Money and how it should perform in any society; or was intentionally trying to mislead us.

If he truly understood the fundamentals of directing money to work for the benefits of the people for whom a monetary system should be designed, he would have shared with his readers that the only “nominal” rate of interest on the creation of money is 0% (and not the 6% he advocated!)



Summary

There are three (3) major steps presently in the creation of Money in the UMS used throughout the world:

(1) The banks create the money out of nothing

(2) The banks then claim ownership of that money which they created out of nothing.

(3) The interest, necessary for the ability of the “borrower” to fulfil his obligation to repay his “loan”, is never created!

There would be nothing wrong with the banks creating money out of nothing (as all money is, and should be created) as long as (A) there was no interest charged on that creation as it is presented to you, the “Monetizer”, and (B) only transaction fees were charged, incorporated into the original amount of the “loan” (monetization).

Of the three (3) steps above, only Steps #2 and #3 are the problems (not Step #1)!

Once we fully appreciate what Money is and how it should operate, the following benefits accrue:

(1) All taxation is eliminated !

(2) The actual cost of every service and product is reduced by a minimum of 80%, since that is the approximate proportion of costs taken up by Interest and Taxes, now both eliminated as unnecessary in a properly operating monetary system.

(3) Taxation and Interest are replaced by Dividends as costs are lowered and necessary productivity increased by an unfettered society.

These are the objectives for which the movie “Money As debt” could strive.

Respectfully;


Verne A. Warwick, Edmonton, Alberta, Canada