Charges against Icelandic banks for money counterfeiting

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The Homes Association of Iceland, announced the filing of a charge to local police against all executives of all banks in Iceland:

The motivation for this charge is a recent report about the monetary system by member of parliament Frosti Sigurjónsson, commissioned by the Prime Minister’s Office. The report states very clearly that banks have in fact been creating new money when they issue loans in the form of new deposits which add to the supply of money already in circulation.

This kind of money creation is clearly in opposition to the sole right of the Central Bank of Iceland to issue bank notes and coins or any equivalent currency to be circulated as legal tender. Therefore it is inevitable to consider the electronic money creation of banks to effectively constitute money counterfeiting as defined by Article 150 of the General Penal Code No. 19/1940.

The Homes Association would also like to welcome the report about the monetary system by MP Frosti Sigurjónsson, as it clearly shows how fractional reserve banking has done great harm to the Icelandic homes and the national economy. The Homes Association encourages everyone to read the report and support its proposals of monetary reform. In order for the monetary system to serve the public interest it is vitally important to make substantive reforms.

Article 150 of the General Penal Code No. 19/1940 reads:

Anyone counterfeiting money for the purpose of putting it into circulation as legal tender and anyone acquiring counterfeit money for himself or others with the selfsame end in view shall be subject to imprisonment for up to 12 years.

In case counterfeiting be performed in such a manner as to reduce the specific value of legal tender the penalty shall consist of imprisonment for up to 4 years.

That second paragraph is really remarkable. Banks cause inflation when they over-lend. And inflation reduces the value of legal tender.

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  • Fleagus Gustafario

    Hell yeah Iceland.

  • Fleagus Gustafario

    Hell yeah Iceland.

  • Ben Kelly

    BAM #ThatsWhyMums

  • Ben Kelly

    BAM #ThatsWhyMums

  • StupidPolice

    About time!

  • StupidPolice

    About time!

  • weefyman

    These bankers just cant help themselves.

  • weefyman

    These bankers just cant help themselves.

  • Trevor Mills

    Go Iceland, lead the way for the rest of the world to wake up and take action.

  • Trevor Mills

    Go Iceland, lead the way for the rest of the world to wake up and take action.

  • henryfifth

    Well done Iceland! However, it is not just private banks creating money that is the problem, it is USURY, the charging of interest on the created debt money loan issue that is the major problem and object of the Bankster’s nefarious scamming!

    • Geo

      Interest is not a problem in a full reserve system.

  • henryfifth

    Well done Iceland! However, it is not just private banks creating money that is the problem, it is USURY, the charging of interest on the created debt money loan issue that is the major problem and object of the Bankster’s nefarious scamming!

  • Marco Saba

    This is formally correct but unsustainable because it endanger all existing contracts enacted with that kind of money. A solution for practical use to regain the seigniorage is to have the banks writing the sum of the money created in the profits side of the balance. If those profits are taxed at 100% then the seigniorage is restored to the sovereign and it is almost equivalent to restoring the money creation power to the Treasury.

    • Duncan Frame

      I think you’re overlooking the massive bonuses that form a large part of the operating costs before income reaches the profit margin.

      • Marco Saba

        In Italy the cost of the bank is in the order of 1 to 3 % of nominal value of the aggregated sum of credit creation.

  • Marco Saba

    This is formally correct but unsustainable because it endanger all existing contracts enacted with that kind of money. A solution for practical use to regain the seigniorage is to have the banks writing the sum of the money created in the profits side of the balance. If those profits are taxed at 100% then the seigniorage is restored to the sovereign and it is almost equivalent to restoring the money creation power to the Treasury.

    • Duncan Frame

      I think you’re overlooking the massive bonuses that form a large part of the operating costs before income reaches the profit margin.

      • Marco Saba

        In Italy the cost of the bank is in the order of 1 to 3 % of nominal value of the aggregated sum of credit creation.

  • se7ensnakes

    The following statement is a horrendous lie

    “Banks pay out loans to costumers from other people’s savings ”

    We are refering to COMMERCIAL BANKS, correct?

    Empirical data clearly and absolutely shows that banks do not lend from other people’s deposit, and moreover, they are outright telling you that that is not what they do. If a banks has 10 million dollars in deposit, and they lend 300k for a mortgage, they still will have 10 million dollars of savings in reserve. The 300k DOES NOT reduce the amount of money in other people’s saving account. We know this with absolutely certainty because the monetary base lags behind the credit cycle. But despite this the banks have to balance their books. They can balance their books because of intrabank loans, the FED’s discount window or the effects of the velocity of money. However, too much credit too fast destroys the velocity effect, and we get recessions and depressions. But this is, in its modern version, three centuries old. So yeah digital money is counterfeit money. The banks can choose what business can use them and which cannot. They can effectively control online businesses because accepting digital money is their exclusive privilige.You also hinted about regulation? Have you been sleeping under a rock all this time! Politics dont work that way. Politics work with $. If you dont have $ you dont get represented. It workds exactly like that for both parties. Sometimes the banks write the laws, and the respective law makers get campaing contributions. Most of the time the banks write the laws word for word, leaving out blanks so that the supporting congressman can fill in their names. When representatives go to Washington they spend most of their time trying to get money for their party, Republican or Democrat. They even have dinner clubs in Washington where lobbyist and lawmakers meet..

    REFERENCES“In the real world banks extend credit, creating deposits in the process, and look for the reserves later” (Moore (1979, p. 539)—quoting Fed economist)“In the real world, banks extend credit, creating deposits in the process , and look for the reserves later.”Alan Holmes, then Senior Vice President, Federal Reserve Bank of New York (1969)@835955103154389http://www.bostonfed.org/economic/conf/conf1/conf1i.pdf”the difference of m2-m1 leads the cycle by even more than m2 with the lead being about three quarters” kydland and prescott Pg 14@835955103154389https://minneapolisfed.org/…/presc…/papers/prescott-et91.pdf“Banks lend by simultaneously creating a loan asset and a deposit liability on their balance sheet. That is why it is called credit “creation” – credit is created literally out of thin air (or with the stroke of a keyboard).”Paul Sheard, Chief Global Economic & Head of Global Economics and Research, Standard and Poors@835955103154389http://2joz611prdme3eogq61h5p3gr08.wpengine.netdna-cdn.com/…There is no evidence that either the monetary base or M1 leads the [credit] cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the [credit] cycle slightly.Nobel prize winners Finn Kydland and Ed Prescott , Federal Reserve bank of Minneapolis (1990)@835955103154389http://www.minneapolisfed.org/research/qr/qr1421.pdfUnder the present system banks do not have to wait for depositors to appear and make funds available before they can on-lend, or intermediate, those funds. Rather, they create their own funds, deposits, in the act of lending. This fact can be verified in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries.IMF Working Paper Chicago Plan Revisited, p9@835955103154389@2012The key function of banks is money creation, not intermediation.Michael Kumhof, Deputy Division Chief, Modeling Unit, Research Department, International Monetary Fund@835955103154389http://vimeo.com/64807284@835955103154389www.bostonfed.orgBOSTONFED.ORG

  • se7ensnakes

    The following statement is a horrendous lie

    “Banks pay out loans to costumers from other people’s savings ”

    We are refering to COMMERCIAL BANKS, correct?

    Empirical data clearly and absolutely shows that banks do not lend from other people’s deposit, and moreover, they are outright telling you that that is not what they do. If a banks has 10 million dollars in deposit, and they lend 300k for a mortgage, they still will have 10 million dollars of savings in reserve. The 300k DOES NOT reduce the amount of money in other people’s saving account. We know this with absolutely certainty because the monetary base lags behind the credit cycle. But despite this the banks have to balance their books. They can balance their books because of intrabank loans, the FED’s discount window or the effects of the velocity of money. However, too much credit too fast destroys the velocity effect, and we get recessions and depressions. But this is, in its modern version, three centuries old. So yeah digital money is counterfeit money. The banks can choose what business can use them and which cannot. They can effectively control online businesses because accepting digital money is their exclusive privilige.You also hinted about regulation? Have you been sleeping under a rock all this time! Politics dont work that way. Politics work with $. If you dont have $ you dont get represented. It workds exactly like that for both parties. Sometimes the banks write the laws, and the respective law makers get campaing contributions. Most of the time the banks write the laws word for word, leaving out blanks so that the supporting congressman can fill in their names. When representatives go to Washington they spend most of their time trying to get money for their party, Republican or Democrat. They even have dinner clubs in Washington where lobbyist and lawmakers meet..

    REFERENCES“In the real world banks extend credit, creating deposits in the process, and look for the reserves later” (Moore (1979, p. 539)—quoting Fed economist)“In the real world, banks extend credit, creating deposits in the process , and look for the reserves later.”Alan Holmes, then Senior Vice President, Federal Reserve Bank of New York (1969)@835955103154389http://www.bostonfed.org/economic/conf/conf1/conf1i.pdf”the difference of m2-m1 leads the cycle by even more than m2 with the lead being about three quarters” kydland and prescott Pg 14@835955103154389https://minneapolisfed.org/…/presc…/papers/prescott-et91.pdf“Banks lend by simultaneously creating a loan asset and a deposit liability on their balance sheet. That is why it is called credit “creation” – credit is created literally out of thin air (or with the stroke of a keyboard).”Paul Sheard, Chief Global Economic & Head of Global Economics and Research, Standard and Poors@835955103154389http://2joz611prdme3eogq61h5p3gr08.wpengine.netdna-cdn.com/…There is no evidence that either the monetary base or M1 leads the [credit] cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the [credit] cycle slightly.Nobel prize winners Finn Kydland and Ed Prescott , Federal Reserve bank of Minneapolis (1990)@835955103154389http://www.minneapolisfed.org/research/qr/qr1421.pdfUnder the present system banks do not have to wait for depositors to appear and make funds available before they can on-lend, or intermediate, those funds. Rather, they create their own funds, deposits, in the act of lending. This fact can be verified in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries.IMF Working Paper Chicago Plan Revisited, p9@835955103154389@2012The key function of banks is money creation, not intermediation.Michael Kumhof, Deputy Division Chief, Modeling Unit, Research Department, International Monetary Fund@835955103154389http://vimeo.com/64807284@835955103154389www.bostonfed.orgBOSTONFED.ORG

  • se7ensnakes

    HOW THE JUDICIAL SYSTEM PROTECTS BANK COUNTERFEIT CURRENCY

    May 10, 2015 at 9:06pmPublicFriendsFriends except AcquaintancesOnly MeCustomClose FriendsFort Pierce, Florida AreaSee all lists…AcquaintancesGo Back

    “Plaintiff alleges that the promissory note he executed is the equivalent of ‘money’ that he gave to the bank. He contends that [the lender] took his ‘money,’ i.e., the promissory note, deposited it into its own account without his permission, listed it as an ‘asset’ on its ledger entries, and then essentially lent his own money back to him….He further argues that because [the lender] was never at risk, and provided no consideration, the promissory note is void ab initio, and Defendants’ attempts to foreclose on the mortgage are therefore unlawful.” Demmler v. Bank One NA, No. 2:05-CV-322, 2006 WL 640499 at *3 (S.D. Ohio Mar. 9, 2006).

    While the vapor money theory has not been addressed by any court within the 8th Circuit, it and “similar arguments have been rejected by federal courts across the country.” McLehan v. Mortgage Electronic Registration Sys., No. 08-12565, 2009 WL 1542929 at *2 (E.D. Mich. June 2, 2009) (citations omitted). See, e.g., Thomas v. Countrywide Home Loans, No. 2:09-CV-00082-RWS, 2010 WL 1328644 (N.D. Ga. Mar. 29, 2010); Andrews v. Select Portfolio Servicing, Inc., No. RDB- 09-2437, 2010 WL 1176667 (D. Md. Mar. 24, 2010); Barber v. Countrywide Home Loans, Inc., No. 2:09-CV-40-GCM, 2010 WL 398915 (W.D.N.C. Jan. 25, 2010); Kuder v. Washington Mut. Bank, No. CIV S-08-3087 LKK DAD PS, 2009 WL 2868730 (E.D. Cal. Sept. 2, 2009); Rodriguez v. Summit Lending Solutions, Inc., No. 09cv773 BTM(NLS), 2009 WL 1936795 (S.D. Cal. July 7, 2009); Johnson v. Deutsche Bank Nat’l Trust Co., No. 09-21246-CIV, 2009 WL 2575703 (S.D. Fla. July 1, 2009); Gentsch v. Ownit Mortgage Solutions Inc. No. CV F 09-0649 LJO GSA, 2009 WL 1390843 (E.D. Cal. May 14, 2009). Thus, the vapor money theory is not a valid route to recovery, and Plaintiff’s claims based upon it must be dismissed.”

    VS

    “In the real world banks extend credit, creating deposits in the process, and look for the reserves later” (Moore (1979, p. 539)—quoting Fed economist)

    “In the real world, banks extend credit, creating deposits in the process , and look for the reserves later.”

    Alan Holmes, then Senior Vice President, Federal Reserve Bank of New York (1969)

    http://www.bostonfed.org/economic/conf/conf1/conf1i.pdf

    “the difference of m2-m1 leads the cycle by even more than m2 with the lead being about three quarters” kydland and prescott Pg 14

    https://minneapolisfed.org/research/prescott/papers/prescott-et91.pdf

    “Banks lend by simultaneously creating a loan asset and a deposit liability on their balance sheet. That is why it is called credit “creation” – credit is created literally out of thin air (or with the stroke of a keyboard).”

    Paul Sheard, Chief Global Economic & Head of Global Economics and Research, Standard and Poors

    http://2joz611prdme3eogq61h5p3gr08.wpengine.netdna-cdn.com/wp-content/uploads/2013/08/SP-Banks-Cannot-And-Do-Not-Lend-Out-Reserves-aug-2013.pdf

    There is no evidence that either the monetary base or M1 leads the [credit] cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the [credit] cycle slightly.

    Nobel prize winners Finn Kydland and Ed Prescott , Federal Reserve bank of Minneapolis (1990)

    http://www.minneapolisfed.org/research/qr/qr1421.pdf

    Under the present system banks do not have to wait for depositors to appear and make funds available before they can on-lend, or intermediate, those funds. Rather, they create their own funds, deposits, in the act of lending. This fact can be verified in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries.

    IMF Working Paper Chicago Plan Revisited, p9

    http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

    The key function of banks is money creation, not intermediation.

    Michael Kumhof, Deputy Division Chief, Modeling Unit, Research Department, International Monetary Fund

    http://vimeo.com/64807284

  • se7ensnakes

    HOW THE JUDICIAL SYSTEM PROTECTS BANK COUNTERFEIT CURRENCY

    May 10, 2015 at 9:06pmPublicFriendsFriends except AcquaintancesOnly MeCustomClose FriendsFort Pierce, Florida AreaSee all lists…AcquaintancesGo Back

    “Plaintiff alleges that the promissory note he executed is the equivalent of ‘money’ that he gave to the bank. He contends that [the lender] took his ‘money,’ i.e., the promissory note, deposited it into its own account without his permission, listed it as an ‘asset’ on its ledger entries, and then essentially lent his own money back to him….He further argues that because [the lender] was never at risk, and provided no consideration, the promissory note is void ab initio, and Defendants’ attempts to foreclose on the mortgage are therefore unlawful.” Demmler v. Bank One NA, No. 2:05-CV-322, 2006 WL 640499 at *3 (S.D. Ohio Mar. 9, 2006).

    While the vapor money theory has not been addressed by any court within the 8th Circuit, it and “similar arguments have been rejected by federal courts across the country.” McLehan v. Mortgage Electronic Registration Sys., No. 08-12565, 2009 WL 1542929 at *2 (E.D. Mich. June 2, 2009) (citations omitted). See, e.g., Thomas v. Countrywide Home Loans, No. 2:09-CV-00082-RWS, 2010 WL 1328644 (N.D. Ga. Mar. 29, 2010); Andrews v. Select Portfolio Servicing, Inc., No. RDB- 09-2437, 2010 WL 1176667 (D. Md. Mar. 24, 2010); Barber v. Countrywide Home Loans, Inc., No. 2:09-CV-40-GCM, 2010 WL 398915 (W.D.N.C. Jan. 25, 2010); Kuder v. Washington Mut. Bank, No. CIV S-08-3087 LKK DAD PS, 2009 WL 2868730 (E.D. Cal. Sept. 2, 2009); Rodriguez v. Summit Lending Solutions, Inc., No. 09cv773 BTM(NLS), 2009 WL 1936795 (S.D. Cal. July 7, 2009); Johnson v. Deutsche Bank Nat’l Trust Co., No. 09-21246-CIV, 2009 WL 2575703 (S.D. Fla. July 1, 2009); Gentsch v. Ownit Mortgage Solutions Inc. No. CV F 09-0649 LJO GSA, 2009 WL 1390843 (E.D. Cal. May 14, 2009). Thus, the vapor money theory is not a valid route to recovery, and Plaintiff’s claims based upon it must be dismissed.”

    VS

    “In the real world banks extend credit, creating deposits in the process, and look for the reserves later” (Moore (1979, p. 539)—quoting Fed economist)

    “In the real world, banks extend credit, creating deposits in the process , and look for the reserves later.”

    Alan Holmes, then Senior Vice President, Federal Reserve Bank of New York (1969)

    http://www.bostonfed.org/economic/conf/conf1/conf1i.pdf

    “the difference of m2-m1 leads the cycle by even more than m2 with the lead being about three quarters” kydland and prescott Pg 14

    https://minneapolisfed.org/research/prescott/papers/prescott-et91.pdf

    “Banks lend by simultaneously creating a loan asset and a deposit liability on their balance sheet. That is why it is called credit “creation” – credit is created literally out of thin air (or with the stroke of a keyboard).”

    Paul Sheard, Chief Global Economic & Head of Global Economics and Research, Standard and Poors

    http://2joz611prdme3eogq61h5p3gr08.wpengine.netdna-cdn.com/wp-content/uploads/2013/08/SP-Banks-Cannot-And-Do-Not-Lend-Out-Reserves-aug-2013.pdf

    There is no evidence that either the monetary base or M1 leads the [credit] cycle, although some economists still believe this monetary myth. Both the monetary base and M1 series are generally procyclical and, if anything, the monetary base lags the [credit] cycle slightly.

    Nobel prize winners Finn Kydland and Ed Prescott , Federal Reserve bank of Minneapolis (1990)

    http://www.minneapolisfed.org/research/qr/qr1421.pdf

    Under the present system banks do not have to wait for depositors to appear and make funds available before they can on-lend, or intermediate, those funds. Rather, they create their own funds, deposits, in the act of lending. This fact can be verified in the description of the money creation system in many central bank statements, and it is obvious to anybody who has ever lent money and created the resulting book entries.

    IMF Working Paper Chicago Plan Revisited, p9

    http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

    The key function of banks is money creation, not intermediation.

    Michael Kumhof, Deputy Division Chief, Modeling Unit, Research Department, International Monetary Fund

    http://vimeo.com/64807284

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