Posted on: Monday, June 17, 2013
Written By:"The Elemental Economist" Jim Purnell
Zerohedge.com reports: [ It will come as a shock to all of you to know that such daylight robbery is perfectly legal & this has been so for hundreds of years.
Let me explain, 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 & 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 & 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 & there are still some funds left (usually, not much, more often zilch!) that unsecured creditors are paid & the sums pro-rated among all the unsecured creditors.
The law has been in existence for hundreds of years & was established in England by the House of Lords in the case Foley vs Hill in 1848.
When a customer deposits money with his banker, the relationship that arises is one of creditor & 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 #3b4d81;">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 & 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, #3b4d81;">Relationship Between A Banker And Customer, That Of A Creditor/Debtor, emphasis added,)
Holding that the relationship between a banker & his customer was one of debtor & creditor & not one of trusteeship, #3b4d81;">Lord Brougham said:
“This trade of a banker is to receive money, & 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, & for which money he is accountable as a debtor. I cannot at all confound the situation of a banker with that of a trustee, & 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 & 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 & 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:
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 & is insolvent, it is too late. Your entitlement to be repaid is that of a lonely unsecured creditor & only if there are funds left after liquidation to be paid out to all the unsecured creditors & the remaining funds to be pro-rated. You would be lucky to get ten cents on the dollar. ]
Think back to the MF Global scandal with Jon Corzine for a moment in order to get perspective on this revelation. Corzine arrogantly assumed the ECB would bail out the sovereign Greek debt so he rushed out & leveraged the entirety of MF Global’s assets 100/1 & used every single penny to buy up defunct Greek debt instruments & waited for the ECB press conference to hear the good news which would have made him billions of dollars in profits. The press conference dropped the bombshell that the ECB would NOT be propping up the Greek debt in any way shape or form & MF Global was rendered insolvent in seconds, his plan was a bust. But what happened next is the focal point of this fiasco. He immediately liquidated almost $900 BILLION worth of private customers of MF Globals positions in the commodity markets (w/out their consent or knowledge of course) & took the liquid capital from this liquidation & drafted a transfer of these funds to none other than JP Morgan. Once this outright robbery was concluded in the afternoon following the run of tough luck Mr. Corzine packed up & went on vacation, having just imploded the investing firm he presided over in the blink of an eye.
After much outcry by the defrauded clients of MF Global, the govt. realized this wouldn’t be going away anytime soon so they pacified the public by holding a Congressional hearing on the goings on at MF Global. Corzine gave the classic federal criminal answers to everything of “I don’t recall, I can’t remember, I’m not sure, I will have to get back to you on that one” & wasted the first 1/2 of the hearing. After breaking for lunch his #2 man got on the stand & caved in by saying: “These are hard working everyday citizens & I can’t lie about their entire retirement portfolio being taken from them, YES Corzine knew about the customers accounts being cleaned out, Yes he knew about the wire of these funds to JPM BECAUSE HE ORCHESTARTED THE TRANSFER OF FUNDS FROM THE PRIVATE ACCOUNT HOLDERS TO JP MORGAN HIMSELF BEFORE HE LEFT FOR VACATION”!
There you have it! Corzine’s #2 just dropped the dime on his boss & now he can go to prison for GRAND THEFT & at the very minimum (because federal players never answer for their crimes directly, they usually get a slap on the wrist for some lesser petty crime as the system takes care of their own) go to jail for perjury before Congress right? WRONG! He actually went on to become Obama’s #1 campaign fund raiser for his re-election campaign & was awarded personally from Mr. Obama himself for his charitable work on his behalf! NO JAIL TIME WHATSOEVER!
Now the question is why? The answer, using the above referenced 1848 UK House of Lords Banking Law it becomes a rather easy truth to explain. You see the private investors willingly & voluntarily established their trading accounts with MFG & deposited their capital without securing a secured creditor status, they instead were UNSECURED CREDITORS of MFG. So when the insolvency was officiated MFG LEGALLY was obligated to repay their SECURED CREDITOR who just so happened to be none other than JP Morgan & the easy solution was to take the capital from the unsecured creditors (private investors) & simply hand it off to the secured creditor (JP Morgan). This is why the admission of the removal of funds from private investors never resulted in any criminal charges being filed, as there was NEVER ANY LAW BROKEN if you can believe that!
I am asked the question: “What does a 150 yr old British banking law have to do with America & American investors money”? The answer is that America was a British colony originally & we adopted British law after we won our independence, therefor the British banking law is applicable to us at home. The British law then extends to the four corners of the earth by default as well. You see because the world has accepted the USD as the world reserve currency they have accepted the laws that come with the dollar as well. So the world also falls under this UK banking law by default of excepting the dollar & there has been proof of that recently if you look at the events in Cyprus where depositors were taken for upwards of 60% of their deposits when the Cyprus banking system imploded which resulted in the merging of the two largest banks in the country & customer funds were used to recapitalize the new conglomerate.
The warnings are getting louder, yet nobody seems to be hearing them. I know this seems to unbelievable but I can assure you the way the world works is by distorting the letter of the law & using it to the advantage of those in the know. You & I are obviously not in the know so I’m doing everything I can to fix that, what you do with it from here is entirely up to you. Remember that whether or not you believe this to be true & are willing to gamble you hard earned money, a simple remedy is to remove yourself from the rigged banking system all together & that is as simple as securing inflation proof money in physical gold & silver bullion. The current global currency warn with China thanks to the FEDs QE infinity programs will bring inflation home & shift our current recession into depression territory so gold & silver bullion will quickly become a very desirable asset moving forward.
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