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Austerity, IOUs, modern banking system explained, modern slavery, Money is just IOU

Lords and Serfs (1): ‘modern banking system’ or the grandest fraud in history?

Modern banking or fraud - mortgage scam

The purpose of this post is to capture the explicit basis of our intuition that the money-creating activity of Private Banks – revealed in a document recently published by the Bank of England [1] – boils down to legalised money-counterfeiting.

In order to substantiate above claim, in this post I describe a common scenario known as mortgage loan, through which the Lords reduce us into the position of Serfs, usually until the end of our lives. We “voluntarily” enter these contracts not because we want to, but because we are NOT informed of the essence  and consequence of these contracts. And because the current monetary system FORCES the vast majority (apparently the 97%) of the population to take upon the yoke of Debt, if we – rather than sitting in the wilderness and live on wild berries – would prefer to actively contribute to shaping the socio-economic reality of our world.

Below, for the sake of demonstration, the hidden steps in the mortgage loan-related transactions are explained and shown via the representation of money as a physical (tangible) medium rather than computer digits.
(Note: A = the conned and robbed Serf, B = the Lord holding the privilege to con and rob A.)

1. B prints fake bills worth $ 200,000. This is fake money because it is NOT earned, NOT invested or borrowed from an outside source. That is to say: these bills stand without any preexisting basis and without representing any produced tangible value. This money comes to existence, like all fake money, merely upon being printed.

2. B gives these bills to A in exchange for A’s obligation (IOU) that legally binds A to pay $ 200,000 (+ interests) to B some time in the future. In other words, B pretends to lend a real amount of $ 200,000 to A while actually giving A a fake amount of $ 200,000.

3. Since B is a bank, A walks into B bank and deposits the fake $ 200,000 that he received from B on his bank account with B. B obviously accepts these fake bills as “money” because B himself printed them.

4. Then A takes this amount of $ 200,000 and spends it for purchasing a real estate (house), meanwhile B secures the purchased estate as the collateral of the loan. “Should the buyer fail to pay the loan under the mortgage loan agreement, the ownership of the real estate is transferred to the bank.” (Wikipedia /Collateral (finance)

In the digital/real-life version of above process, referred to as “digital banking system in the modern economy” [1], the above steps are combined into ONE event comprising a set of digital transactions:

B enters mere computer digits – representing a certain amount of newly created monetary units that B never earned or borrowed – into the bank-accounting system, in the form of a balancing debit and credit entry, which digits are referred to as “IOU” (“I Owe You). The corresponding contract A signs upon the transaction, introduces A’s legally binding liability to pay a real $ 200,000 + interests to B, meanwhile the newly issued amount of $ 200,000 (the Bank-created fake money) appears on A’s bank account balance.  Then A buys an estate from his new account balance and B secures the purchased estate as a collateral. In the future B becomes the legally recognised owner of the estate purchased by A, unless A will repay the loan in full.

  • What above comes down to is an astonishing trick:
    B just acquired an amount of $ 200,000+interests, in exchange for his newly created fake $ 200,000, which he never earned or borrowed. B will receive this amount + interests some time in the future, but he will receive it for sure, either in the form of cash-repayment by A, or by B becoming the owner of A’s real estate. Which also implies, B the conman, who does nothing but counterfeits money, carries NO RISK whatsoever in this transaction, while the deceived and conned A, who will do the actual hard work from the received loan, carries ALL THE RISKS.

After A purchased the real estate, A’s bank account is reduced to zero balance, but B remains without any obligation towards either A or anyone else. Meanwhile A remains obliged to repay the loan + interests to B, since he has signed a legally binding obligation to do so. Accordingly, each month A pays back a part of the $ 200,000 principal plus interests, from the very real cash that A earns with real value-adding, tangible work.

In the case A stops the repayment (defaults on the loan), then B bank becomes the owner of A’s real estate. Thereafter B either keeps A’s estate as a REAL asset, or via foreclosure B recovers – in fact collects – the REAL value of the fake bills/IOU-digits he had formerly lent into existence. The procedure of foreclosure usually implies that B forces A to sell his real estate to A2, thereafter to give B the REAL cash that A received from A2 in exchange for the estate. (*)

The new paradigm established by our clear understanding of what Private Banking actually covers, will be discussed in the next two parts of this post. As a result of the ongoing monetary scam – aka Private Banking – that the Western world and its occupied colonies (eg Iraq and Ukraine) are subjected to, yields  modern feudalism, in which the Banks are the new feudal Lords, the corporations are the Lords’ allies and top beneficiaries, the Governments are the collaborating forces to secure this neo-feudalist system all over the world, and the rest of us are the Serfs who are robbed blind by the Lords.

The only difference between the past and present forms of feudalism is that the Lords of the past openly collected a large portion of what the Serfs produced, and it was a privilege granted only to feudal Lords, whereas the present Lords collect taxes from the Serfs on many levels and in a hidden and deceiving manner, and it is a privilege granted to the Banks and Governments.

> Continue to Part 2
> Jump to Part3

Summary of how Banks and Governments generate Public Debts to “justify” Austerity:


[1] Parts of a recent publication by the Bank of England:

“Of the two types of broad money, bank deposits make up the vast majority — 97% of the amount currently in circulation. And in the modern economy, those bank deposits are mostly created by commercial banks themselves.” (p.15)
“Most of the money in circulation is created, not by the printing presses of the Bank of England, but by the commercial banks themselves: banks create money whenever they lend to someone in the economy or buy an asset from consumers.” (p.25)

[2] Positive Money: How Banks Create Money

[3] Positive Money: The Proof That Banks Create Money

[4] Guardian: The truth is out: money is just an IOU, and the banks are rolling in it

(*) The referenced  Bank of England bulletin [1] claims that the commercial banks destroy the money they receive upon loan-repayment, but what Banks actually destroy via an accounting entry are the fake digits they entered into the system at the time of giving the Loan.  However, Banks keep the actual real estates and actual Cash they receive.


About Sky Wanderer

Global Political Analysis, Research & Commentary. Multidisciplinary research and analysis revealing the big picture of the global status quo versus the mainstream myths. Searching the way out of the global financial tyranny and slavery, before the system ends up in a full-blown version of global fascism.


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