What’s In It For Me?—Don’t Have What You Don’t Want
Part 3 of 6
 

First, Dad calculated the retroactive base monthly payment for his conventional loan. Subtracting the $25 monthly service charge the banks were allowed to charge retroactively under the new rules from his monthly payment of $672.80 left $647.80 per month, the amount of credit applied to the loan. Next, he needed the repayment rate. Dividing that base monthly credit by the loan amount ($647.80 divided by $87,500) equaled 0.0074034 dollars paid per month per dollar borrowed. “Hmmm,” Dad thought, translating the number in his head by shifting the decimal three places to the right, “that’s a payment of $7.40 each month for every $1,000 borrowed.” 

Substituting the repayment rate in his second equation with a bank monetizing-fee of 0.007083 (8.5 percent expressed as a decimal, 0.085, and divided by 12 months) showed his loan would have been paid off in about 200 months, or a little less than 17 years. Multiplying his monthly payment of $672.80 times 200 months equaled $134,560 and subtracting the loan amount of $87,500 left the bank a profit of $47,060.
 

Spread equally over 200 months, that gave the bank an average profit of $235.30 per month. Compared to his monthly telephone or cable TV bills it still seemed excessive for a few minutes work by a bank employee but it was a much better deal than paying $429.74 per month for the same service. And, as a bonus, it saved Dad over 13 years of indentured servitude, not to mention more than $100,000 of his future earnings! 

It was a good deal from the bank’s position, too. With conventional loans the bank had the lion’s share of profit up front. Out of his first monthly payment of $672.80, it got $619.76 profit. (The monthly interest rate, 0.007083, times $87,500.) In that first month only $53.04 went to pay off the loan. During the first 17 years the bank took most of his monthly payments as profit. For the last 13 years, more of each payment went to retire the principal. 

Because the loan was made on a fractional reserve basis, as it was repaid the bank would just mark it off its books, extinguishing the money. “That works,” Dad thought. “If they just mark most of it off their books anyway, they can as easily mark it all off and give me my mortgage! Nobody was telling them they had to give any money back; in fact, just the opposite.” 

In addition to its declared earnings, the bank collected service charges retroactively. Those $25 monthly payments for 200 months amounted to a tidy $5,000. NESARA allowed the bank to make a onetime adjustment on its books to close out his loan. This new money came from the same place as his original loan—right out of the air. The bank simply created the necessary funds and paid itself. 

Dad remembered a story about an English lady scolded by her banker for her overdrawn checking account. Without batting an eye she wrote him a check to cover the shortage. Her scheme would have worked had she been her own banker. As the law of the land, it did. 

The longer Dad sat and thought about the new law, the more reasonable it seemed. If the government did nothing and the country went bankrupt, he and millions of others could not pay their house notes. Banks repossessing those properties would have difficulty selling them during a market crash. Eventually they would cross the listed value off their books and dump the properties for pennies on the dollar just to get rid of them. Meanwhile, with the country in a depression, government revenues would decline while its expenses skyrocketed, increasing the total national debt. 

If debt had to be written off eventually, why not get organized and take that step first? A monetary system crash inevitably ended in bankruptcy. After the event the country had the same number of people and the same amount of resources as before. Once the books were straightened out, prosperity always returned. It wasn’t as if the outcome were unknown. History provided many examples in various countries, the United States being no exception. One could avoid a lot of misery by correcting the books before the crash. 

Dad found one of the keys to understanding the nation’s new monetary system in the realization that a monetization-fee differs from interest. Traditionally, interest is calculated in the time domain. Banks compound interest charges, declaring and disbursing profits without delay, all perfectly legal. But, under the old rules, debt constantly expanded and, with a large number of defaults breeding more defaults, the system crashed.
 

The presumption of a monetization-fee operated to stabilize a fractional reserve system. Competition permitting, banks could adjust their fees to make the same profit. Now, much of it was at the end of a transaction, not at the beginning. Equations in the time domain drove the new system but, unlike the old equations, they always converged; once established, debt always decreased. 

As an engineer, Dad knew that possibilities were infinite when redesigning a system. He quickly saw an alternative. Calculations for the monetization-fee could be based on magnitude. The law could easily establish the fee as a percentage of the loan amount. It might operate as a fixed fee for all those using the bank’s government-issued license to create money. Or the government might establish a variable fee based on the social status or income of the borrower. State, city and county governments might pay one fee for capital projects, students might pay another for student loans, farmers another, and heavy commercial industry yet another. With endless possibilities, one need not blindly follow tradition for tradition’s sake. 

On second thought Dad decided that he liked the time-based equations better than fixed fees. They provided a wider range of choices. Banks and their customers negotiating loans in a free market covered more contingencies than a government-imposed one-size-fits-all policy. With government-imposed fixed fees, the incentive for special interests to pursue Congress for preferential treatment would be staggering. In this instance Congress was doing what it should do—creating the principles for a national monetary system without specifying minute details. 

In the weeks that followed Dad heard several people say that NESARA turned the nation upside down. “Absolutely correct,” he replied. “In a world standing on its head, the only way to get it right side up was to turn it over.” He argued that debt had simply gotten out of control. With good returns available on government bonds, the safest of investments, trillions of dollars flowed into the treasury. The government spent the money back into circulation but rarely in a way that increased national productivity. In fact, much of its spending was counterproductive. Significant amounts of the circulating funds went to the rich who bought more bonds, sending money back to the government. With this repeating pattern, debt steadily increased in a continuous spiral as productivity declined. 

NESARA changed the rules, breaking old patterns by increasing the efficiency of the nation’s fiscal and monetary systems. If they were operating at peak efficiency there would be no way to solve the debt problem. One could claim that, under the circumstances, it was fortunate the rules were so archaic.