As illustrated in last week’s comments on the nature of money, our government prints and sells paper Federal Reserve Notes (“FRNs”) at cost to the Federal Reserve System (“Fed”). The Fed then legally owns those FRNs and subsequently loans them into circulation in the US economy.
Implication? The Federal Reserve not only owns legal title to the FRNs in your wallet—it also owns legal title to whatever you purchase with those FRNs.
Most of what follows is speculation. I know I’m reaching conclusions that seem impossible, but consider . . . .
• There’s an ancient principle that whoever owns the money, owns whatever the money is used to buy. For example, suppose I lived 2,000 years ago and gave my servant some money (pieces of silver) to go town to buy me a new donkey. If my servant was unfaithful, he might buy a donkey with my money, but ask the donkey salesman to write the receipt (title to the donkey) so as to wrongfully identify the servant (rather than me) as the new owner of the donkey. But, if I could later prove that I owned the money (silver) used to buy the donkey, I could reclaim title and ownership of the donkey.
• Suppose I lend my pen to Bob and he uses it to write a short story. People would naturally presume from Bob’s use of the pen that he owned the pen.
It’s even possible that Bob, after using the pen for some time, might come to think of it as “Bob’s pen”.
But if I loaned that pen to Bob, no matter how much he used it, it would still my pen. I would own the pen. I’d own to the ink inside the pen. It’s even arguable that I might therefore have an ownership interest in whatever short story Bob wrote with my pen and my ink.
Yes, I may have authorized Bob to use my pen, but unless I gave the pen to him as gift or sold the pen to Bob, so long as I loaned the pen to Bob, I retained legal title (actual ownership, control and right of disposal) to that pen.
Bob, at best, might have equitable title (right of use—but not ownership) to the “loaned” pen.
• Let’s apply these principles (1. Whoever owns the money, owns whatever it’s used to buy; and 2. The lender (at least) retains legal title to whatever was lent until the loan is repaid) to our modern currency:
Given that the Federal Reserve (a private entity) buys the paper FRNs at cost from the federal government, the Fed has acquired both legal and equitable titles to the FRNs. The Fed owns those green pieces of paper.
When the Fed (owner) subsequently loans those FRNs into circulation, the Fed retains legal title (actual right of ownership, control and disposal) of those FRNs—at least until the original loan is repaid in full. Thus, until that original loan is repaid, the Fed owns legal title to every green piece of paper in your wallet.
• Much like Bob had the right to “use” the pen I loaned him, you also have the right to “use” the FRNs in your wallet. That right of “use” constitutes equitable title to the FRNs.
So what? What difference does it make?
It’s the difference between being a free man and being a slave (or at least a sharecropper).
First, because when you use FRNs to purchase goods, cars, computers, and homes, you don’t actually buy the product, you purchase a title to product.
For example, virtually everyone supposes that when you purchase a new car, you buy the metal, plastic, chrome and leather that’s assembled into the physical automobile. But that’s not true. What you really purchased was not the physical car; you purchased the piece of paper that constitutes title to the physical car. And not one man in a thousand even knows what the title to his car is. (It’s the MSO—Manufacturer’s Statement of Origin).
You thought you were buying a new, sweet-smelling automobile. In fact, you purchased that seemingly inconsequential piece of paper called the MSO—the seemingly insignificant piece of paper (evidence of the complete or perfect title) that ultimately determines both ownership (legal title) and right of use (equitable title) to drive “your” car. And what did you do with the title/MSO? You gave it to the State.
Your right to drive a particular car does not flow from the keys in your pocket or the gas you put in the tank. It flows from your title to that particular car.
The reason you can’t drive “my” car (at least not without my permission) is that I hold a title to “my” car. Likewise, if I try to drive “your” car without your permission, you can charge me with unauthorized use (not theft) of a motor vehicle.
• The same principle applies to computers, foods and homes. You don’t purchase the physical object. You purchase a title to that physical object.
Think not? Go to a grocery store and purchase some food. Try to get out of the store without the cashier obstinately handing you the receipt. They always make a point of handing you the receipt. Hasn’t that ever bothered you? Why do the clerks insist on handing you the silly receipt? Why not just throw the receipt in the trash?
Why? Because the receipt is a title (or at least evidence of title) to the groceries you purchased. You thought you were buying a steak. In fact, you were purchasing a title (the receipt) to that steak. The clerk must give you what you actually paid for—not the steak, but the title (the paper receipt) to the steak.
Your right to eat that steak flows from your title (paper receipt) to the steak.
Your right to drive a car flows from your title to that car.
Your right to live in a home flows from your title to that home.
You didn’t buy the food; you purchased a title to the food.
You didn’t buy the car; you purchased a title to the car.
You didn’t buy the home; you purchased a title to the home.
Once you begin to grasp the significance of “title,” you’ll begin to pay more attention to the paperwork involved in your purchases, than to the sizzling of steaks, sweet-smell of cars, and number of bathrooms in the mansions you seek to acquire.
• But here’s the rub—and it’s a big rub. You are only entitled to receive as much title to the property purchased as you had in the currency you used to make the purchase. (Remember? The man who owns the money, owns whatever the money is used to buy.)
When America had real money (gold and silver coin) in circulation, that real money was not loaned into circulation. Gold or silver ingots were bought with taxpayer dollars and coined by the government and then spent or sold into the economy—without being initially loaned into circulation by a private party. That gold/silver coin was an asset. It was the people’s money and held and conveyed both legal and equitable titles. It was a “medium of exchange” whereby a man who held both legal and equitable title to, say, a parcel of land, could sell both legal and equitable title to that land to another man who paid for the title with lawful money that also carried intrinsic legal and equitable titles.
• Insofar as I have legal and equitable titles to one hundred $20 gold coins, I can use those coins to buy legal and equitable titles to land and a home.
But if I only have equitable title to the currency I use to purchase that same piece of land, I can only receive equitable title (right of use) to that land and home. The legal title goes to whoever holds legal title (right of ownership, control and disposal) to the currency I’m using.
So what? I’ve got the land and home. I can raise crops or cattle or add a garage. What do I care if I have legal title, equitable title or any title?
Here’s why I should care (and so should you): If I had both legal and equitable titles to the currency I used to purchase “my” land, I’d also be entitled to receive both the legal and equitable titles to the land. As a result, that land and my home would truly be my “castle”. I would own it to the exclusion of all others and I could use it however I pleased.
But if FRNs are loaned into circulation and the legal title therefore remains with the lender (Fed), then I can only have equitable title to “my” currency and I can only use that currency to acquire equitable title to “my” land.
If I only held equitable title to “my” land, the home I built on that land would not actually be my “castle”.
Ohh, a lot of people might envy me for “my” land and “my” home. I, myself, might become quite proud of “my” home and “my land”.
But that land and home wouldn’t really be mine. Instead, so long as the Fed retained legal title to the currency used to purchase “my” land, the Fed would hold legal title to the land purchased with its currency.
I could puff out my chest and strut around “my” land like a king strolling about his castle, but the Fed would know that I was a fool. Because I didn’t hold legal title to “my” land/home, I’d be merely a sharecropper strutting around the “massa’s” home and land.
While I might think of myself as a land “owner,” I’d really be just a sharecropper on the “massa’s” land. Ohh, the massa (the Fed) would let me ‘n my woman raise our brood of “pickininneys” on what I mistakenly thought of as “my” land—provided that I work the massa’s land, take care of the massa’s home, follow all of the massa’s rules and regulations, and give part of whatever I earn to the massa in the form of “taxes”.
But if I got uppity and stopped working, stopped caring for the massa’s property, stopped paying the massa his “share” on my labor, or stopped obeying the massa’s rules and regulations—the massa could seize “my” home in a heartbeat, and throw me and my family off “our” land. Because the “massa” (Fed) held legal title to the currency used to purchase “my” home, that massa could summarily prove that the land and home were never really “my castle” but merely a shack that the massa had allowed me to use on the “global plantation”.
• The possibility that you and I don’t really “own” legal title the “money” in our wallets might also explain stories about government simply seizing someone’s cash and refusing to give it back, even if the original possessor did nothing illegal.
I.e., if it’s not really “our” money (only pieces of paper which are truly owned by the Fed) we may have possession (equitable title) to “our” FRNs, but no legal title (actual right of ownership and disposal) to reclaim “our” FRNs. If we don’t really “own” our currency, what right do we have to complain if the true owner (or his agents) takes that currency from us?
• I’m told that the average “lifespan” of a FRN is about 18 months. After that, the FRNs are removed from circulation by burning them.
Isn’t that strange? Burning “money”?
After all, who ever heard of anyone “burning” gold or silver coins (real money) when they became too old? Yes, those old coins—if they’re sufficiently worn—might be melted down and recast into newer gold or silver coins. But nobody in their right mind would absolutely destroy any gold or silver coins, no matter how worn or illegible.
When you stop to think about it, burning FRNs is absolute evidence that those FRNs have no intrinsic value. They are mere “units of account”. Numbers.
I can’t prove it, but I suspect that FRN’s aren’t being burnt because they’re worn out, but because they’re so old that the original loan which placed them into circulation may have been repaid and therefore legal title to those “old” FRN’s may have defaulted to the current possessor. If the original loan were repaid, the Fed would lose legal title to the FRNs. As a result, those old FRNs would then include both intrinsic legal and intrinsic equitable titles. If the FRNs carried both legal and equitable title, they’d be “good as gold” in that they might actually be used to acquire both legal and equitable title to property.
I strongly suspect that the old FRNs are being burnt before the original loans are repaid and the FRNs’ acquire legal title and become “units of value” rather than mere “units of account” (numbers). If we owned legal title to our currency, we could pay rather than merely discharge our debts. We could “buy” rather than merely “purchase”. If we could actually pay our bills with a currency to which carried intrinsic legal title, we could actually own property and our home might truly be “our castle”.
• I know that all of this speculation concerning FRNs sounds too fantastic to be true. But, consider that in a similar vein, on April 14, A.D. 1993, Former IRS Commissioner Shirley Peterson said publicly that the Internal Revenue Code (IRC) is now:
“… a virtual impenetrable maze. The rules are unintelligible to most citizens—including those holding advanced degrees and . . . specialize in tax law. The rules are equally mysterious to many government employees who are charged with administering and enforcing the law ….”
Based on a an alleged system of “laws” that even an IRS Commissioner can’t understand, our government takes so much of our earning as to drive us toward poverty, precipitate divorces, bankrupt businesses, incarcerate some of us and push others toward suicide, alcoholism or conspiracies to bomb government buildings. It’s no accident that our “money” system is every bit as “impenetrable … unintelligible … mysterious” as the IRC.
How can an entire nation fail to understand its own tax and monetary systems? Are we to believe that the creation of a relatively concise, comprehensible monetary and tax codes are simply impossible? Or is it more likely that the laws concerning money and taxes are written to be intentionally incomprehensible in order to prevent us from engaging in the kind of speculation seen in this article and perhaps even discovering the truth?
Q. What is this mysterious “truth”?
A: That currency involves two titles: legal and equitable; that the Federal Reserve, by loaning FRNs into circulation, divides the equitable and legal titles to the FRNs and to whatever FRNs are used to purchase; that the Federal Reserve owns legal title to whatever is purchased with FRNs.
• There’s a lot more to money than mere counting. Insofar as you use FRNs, your government presumes you to be a virtual sharecropper who doesn’t really own anything.
More importantly, until you understand the nature of money, you’ll never be free.
Written at arm’s length and without the singular “United States” (“this state”) by Alfred Adask