Learning the Disturbing Facts about Credit Card Debt

When I received my first credit card in the mail at age 18 I was ecstatic, I said to myself, wow now I’m getting somewhere in life. This credit card company thinks I’m worthy of 500 dollars in credit. So I made my monthly payments like a good consumer and watched my credit limit grow. I thought boy this company must think a lot of me to take such a risk. I however had no idea how the money came into existence. All I cared about was that as long as when I slapped the plastic down I was approved. Like most young people I had no idea what an interest rate even was much less how it effected my monthly payments. I was like a lot of kids in America today, my parents were not a big part of my early adult life and so I really didn’t have much guidance when it came to making financial decisions. The lessons I learned were hard and I continue to learn as each day passes.

After all what is credit? When you get that “Pre-Approved” application in the mail, does that mean that the credit card companies have been watching you personally and are rewarding you for having so called “good credit,” Of course not, they are looking to make money just like any business, and they are making a lot of it.

Today there are thousands of people who are losing their homes, farms, and businesses because they do not understand the meaning of credit. This article will explain the difference between money and credit and will show you how the banks create “credit” and pretend that it is “money”.

There has been a monetary debate in our country for some time now and that debate focuses on two central issues. First that only gold and silver are Constitutional money Article I Section 10 clause 1U.S. Constitution and second that the dollar is defined by the Mint Act of 1792, and that a Federal Reserve Note is not a dollar. There is a third area that is not well understood, but which is very important. It is the most important issue of all because 97% of our money supply today consists of bank credit whereas Federal Reserve Notes and coins consist of less than 3%.Today every bank loan in the United States can be legally voided because it is based on credit instead of money!

YEAH RIGHT, you say. Well I have explored that accusation for over a year now and here is what I have found. One must ask the question, “What is Credit?” after all we throw the word around so freely today, but how many of us truly understand its meaning. Credit is the opposite of money. Money is legal tender for the payment of debts as defined by Congress in 31 U.S.C.A. Sec 392. This section basically describes all coins and currency issued by the U.S. government as legal tender for all debts, public and private. Many will argue that Federal Reserve Notes are Unconstitutional, but for this article it will be assumed that coins and paper currency both represent money.

Now let’s assume you are going to make a purchase say for an automobile or a living room suite. You might say that your credit is good or that your promise to pay is sufficient. In other words the seller trusts that you will pay the money back. At that point you sign a loan agreement in which you pledge the auto as collateral for the security agreement. In other words the auto dealer has accepted your credit, your promise to pay, in exchange for the auto.

OK here is where it starts to get interesting. Now consider a bank loan. When you go to the bank for a loan, based on your promise to pay and your good credit the bank gives you the loan right? The bank has accepted your promise to pay the money back, but ask yourself this question. What exactly did the bank loan you? Well, the bank will invariably give you a check which is also a “promise to pay” you so many dollars, with interest. What you and the bank have is a bilateral contract when you exchange “promises to pay”. In other words you have accepted each others credit, and yet no money has exchanged hands. This is an important point; no “money” has exchanged hands.

Now what do you do with the check? Probably one of two things: either you deposit it in your checking account or you bring it to your car dealer. Either way, when the check gets deposited it goes directly to the banks bookkeeping department and the numbers from the check are entered into your account. Now the bank will say that its deposits have increased, still no “money” has exchanged hands.

These bookkeeping entries are called “demand deposits” meaning that the customer can walk into the bank at any point in time and demand the deposit from the vault. In accounting terms, the money is placed into the banks liabilities column because this is money that the bank owes the people.

Now what do you think the bank has for assets? Well it has a small amount of vault cash which the Federal Government requires them to keep on hand and a whole lot of IOU’s for those entire loan agreements people sign their names to. The bank is gambling that not every customer will come into the bank at the same time and demand their money in cash and it’s a pretty good gamble. All those promises to pay are on paper so also are all of the bank assets.

All this amounts to is a transfer of numbers or book entries from one checking account to another. The same thing happens when you write a check. Numbers called “dollars” are transferred from your checking account to someone else’s. When a credit card is used, bank credit or book entries are created and transferred to another person at the same time.

The next question is, if it so easy for a bank to create “credit”, which is used like money, how then is this “credit”, destroyed? The “credit” is destroyed when the principle of the loan is repaid. However, the interest collected by the bank on the “credit” it loaned, is transferred, to another account for distribution to its stockholders.

What happens is that because 97% of the nation’s money supply consists of credit which is all created by private corporations (banks), and because interest is charged on every dollar of “credit” used, debts are constantly created for which no money or credit exists to repay these debts. Hence our money system can be best described as a “debt usury” money system, for every dollar of credit which comes into existence, a debt is created to the banks and interest (usury) is charged.

Under our present money system, the Federal government will never be able to balance its budget and the national debt will continue to grow exponentially. However, every bank loan made in the United States today is illegal, since all bank loans are based on “credit” instead of “money”! The words “ultra vires” are important words because they mean that “a contract made by a corporation beyond the scope of its corporate powers is unlawful.”(see Black’s Law Dictionary)

The courts have consistently ruled that banks cannot lend their credit, but can only lend their money and that all loans of credit are “ultra vires.” Since no bank charter gives them permission to lend their “credit”, and Congress never gave the banks permission to create money, all such loans of credit are ultra vires or unlawful. The bank, by loaning credit, has unjustly enriched itself. It pays no interest for the use of its credit but charges its customers the same amount of interest as if it loaned out its money.

These practices are a high level form of loansharking. It is deception and fraud. The collection of interest on credit is in violation of all usury laws. After all, the bank is collecting interest on money which doesn’t exist. There are many programs today such as a particular program which I represent, Debt Solutions International (DSI.) There are over two trillion dollars worth of illegal bank loans out there waiting to be challenged. A program such as DSI’s is a much better alternative to bankruptcy since you get to keep your property and void the bank loans at the same time.

Anyone can walk off his property and let the bank have it, but to do so is to reward them for their fraudulent acts. It would be much better to sue the bank on fraud and usury charges and ask that all contracts which you signed on the day you took out the loan be declared “ultra vires”, null and void. That includes deeds of trust, mortgages, notes and security agreements, but particularly credit cards.

For a long time, patriots have been writing to their Congressmen asking them to give us an honest money system without extortionate interest rates and they have ignored us. I am not an expatriate, I still believe in my country, but our current fractional reserve banking system must be eliminated. If we do not do something our children will pay the price of inheriting our debts. I believe with the power of the internet, consumer education will become so powerful that the banks and the “powers that be” will meet their match. People will see that programs such as those offered by DSI and others are nothing to be afraid of and will become mainstream.

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Dictionaries Are Important Reference Tools For Writers

It’s the little things that often get overlooked.

Writers feel they have to struggle to find the right word, almost as if the struggle itself somehow makes the discovery valid. But help is at hand, and it’s a lot closer than you think.

I’m talking about reference books, and dictionaries in particular. No matter how you go about the business of writing, reference materials are always important. They’re part of every writer’s toolkit, like a carpenter’s hammer and saw. And just like a carpenter, a writer can use these tools to construct a solid piece of prose, a short story, a poem, an article, a book or some web copy.

Dictionaries have been part of the writer’s palette since Dr. Samuel Johnson created A Dictionary of the English Language way back in the 1750s. Browse the reference section of any library or bookstore and you’ll find dictionaries covering a host of topics: languages, medicine, dreams, fictional characters, scrabble, finance, etc. And then there are rhyming dictionaries, multilingual dictionaries, legal dictionaries, dictionaries of symbols, cultural literacy, biblical imagery, philosophy and so on.

Most mainstream dictionaries have online presences these days, so it’s possible to access them without even reaching across to your bookcase. There are a few more exotic dictionaries out there, too, such as Ambrose Bierce’s The Devil’s Dictionary – a fascinating tongue-in-cheek twist on the concept with some scathing definitions, including:

Wit, n. The salt with which the American humorist spoils his intellectual cookery by leaving it out.

Variations come in all shapes and sizes, with titles like Who’s Who in Shakespeare (or Dickens), collections of this or that, and volumes named A Dictionary of the 20th Century, for instance. Of course, those lazy writers among us need only bookmark the site at Dictionary.com and/or Thesaurus.com to have everything at hand. But there’s something about flipping through a book and landing on a page — particularly one with new words on it — that can’t be equalled.

I have a copy of The New International Webster’s Comprehensive Dictionary. It’s a massive tome, nicely bound with gilt-edged pages. I opened it at random and found this entry:

gyve, n. A fetter for the limbs of prisoners.

Pronounced jive, here’s a word I’d never heard before. Will I use it anywhere else? I’m not sure. But it conjures up a bunch of images. Like a group of convicts, gyve talking. It’s expanding my vocabulary and giving me story ideas at the same time. And that’s just one word on one page.

Forget writer’s block. If you own a good dictionary you’ll never be stuck for a word. You can even create stories or articles out of thin air just by choosing three words at random from different places in the book. They don’t necessarily have to be unfamiliar words, but sometimes putting three unrelated words together can help spark off an idea or two.

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Finance – The Fuel For Progressive Business

Finance is a simple keyword around which the globe revolves. It is therefore the basic aspect behind the existence of mankind and the most important of all aspects that support the sustenance of human race.

Going by the dictionary, Finance refers to the science of managing funds. On the other hand, if you seek a fairly brief elucidation on what finance is, the investors come up with this: The act of saving money for future use and making more money with the saved money by investing in new areas and lending etc is commonly regarded as Finance. It is a life-blood of any business that can be categorized into 3 types with respect to the regulation of the funds and the mode of investment in the areas namely

* Personal finance,
* Corporate finance and
* Public finance.

Finance keeps the monetary world running. Scores of businessmen (Personal finance), government and other social financial bodies (Public finance) and few enterprises and conglomerates (Corporate finance) are highly dependent on this seven-letter mantra. Only finance powers a cycle that rotates by means of financial credibility of all the businesses run by several entrepreneurs. Ultimately, this cycle depends on the finance obtained from the lenders and the money offered to the borrowers. Now the need to relate to the importance of financial credibility is rightly understood, I hope.

Experts say that the domain of finance usually deals with the interrelation of 3 fundamental aspects that constitute the major part of financing namely time, risk and money involved. Furthermore, a budget that is sometimes referred to as financial plan would also determine the fate of the business. This is why new companies believe in employing financial experts so that an effective and professional implementation of a plan that they propose comes along well.

While contriving a finance plan, if there is a miserable failure in adhering to expert advice a unbearable financial turmoil— irrespective of the financial reserves and credit ratings on hand-is sure to come about. Granted, every business man who wants to build up his firm into a concrete and profitable business unit must understand that finance would play a significant part of his business development cycle.

Therefore, managing funds is important to ascertain that the future is safe for both the workforce and the enterprise, especially, when there is a global financial slowdown. Financial assessment and development tools would be in huge demand in the times of recession. Naturally, if a businessman wishes to see the firm keep away from succumbing to financial impediments he must put a regulated dynamic budget plan in place. It should be monitored periodically and be changed if the plan invites a strategic change in the finance plan to fend off a possible financial turmoil.

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Accounts Receivable Financing – Don’t Worry, Be Happy

There is a reason why accounts receivable financing is a four thousand year old financing technique: it works. Accounts receivable financing, factoring, and asset based financing all mean the same thing as related to asset based lending- invoices are sold or pledged to a third party, usually a commercial finance company (sometimes a bank) to accelerate cash flow.

In simple terms, the process follows these steps. A business sells and delivers a product or service to another business. The customer receives an invoice. The business requests funding from the financing entity and a percentage of the invoice (usually 80% to 90%) is transferred to the business by the financing entity. The customer pays the invoice directly to the financing entity. The agreed upon fees are deducted and the remainder is rebated to the business by the financing entity.

How does the customer know to pay the financing entity instead of the business they are receiving goods or services from? The legal term is called “notification”. The financing entity informs the customer in writing of the financing agreement and the customer must agree in writing to this arrangement. In general, if the customer refuses to agree in writing to pay the lender instead of the business providing the goods or services, the financing entity will decline to advance funds.

Why? The main security for the financing entity to be repaid is the creditworthiness of the customer paying the invoice. Before funds are advanced to the business there is a second step called “verification”. The finance entity verifies with the customer that the goods have been received or the services were performed satisfactorily. There being no dispute, it is reasonable for the financing entity to assume that the invoice will be paid; therefore funds are advanced. This is a general view of how the accounts receivable financing process works.

Non-notification accounts receivable financing is a type of confidential factoring where the customers are not notified of the business’ financing arrangement with the financing entity. One typical situation involves a business that sells inexpensive items to thousands of customers; the cost of notification and verification is excessive compared to the risk of nonpayment by an individual customer. It simply may not make economic sense for the financing entity to have several employees contacting hundreds of customers for one financing customer’s transactions on a daily basis.

Non-notification factoring may require additional collateral requirements such as real estate; superior credit of the borrowing business may also be required with personal guarantees from the owners. It is more difficult to obtain non-notification factoring than the normal accounts receivable financing with notification and verification provisions.

Some businesses worry that if their customers learn that a commercial financing entity is factoring their receivables it may hurt their relationship with their customer; perhaps they may loose the customer’s business. What is this worry, why does it exist and is it justified?

The MSN Encarta Dictionary defines the word worry as:

“Worry

verb (past and past participle wororied, present participle wororyoing, 3rd person present singular worories)Definition:
1. transitive and intransitive verb be or make anxious: to feel anxious about something unpleasant that may have happened or may happen, or make somebody do this

2. transitive verb annoy somebody: to annoy somebody by making insistent demands or complaints

3. transitive verb try to bite animal: to try to wound or kill an animal by biting it

a dog suspected of worrying sheep

4. transitive verb

Same as worry at

5. intransitive verb proceed despite problems: to proceed persistently despite problems or obstacles

6. transitive verb touch something repeatedly: to touch, move, or interfere with something repeatedly

Stop worrying that button or it’ll come off.

noun (plural worories)Definition:
1. anxiousness: a troubled unsettled feeling

2. cause of anxiety: something that causes anxiety or concern

3. period of anxiety: a period spent feeling anxious or concerned…”

The opposite is:

“not to worry used to tell somebody that something is not important and need not be a cause of concern (informal)

Not to worry. We’ll do better next time.

no worries U.K. Australia New Zealand used to say that something is no trouble or is not worth mentioning (informal)”.

Query: if a business is financing their invoices with accounts receivable financing, is this an indication of financial strength or weakness? Query: from the point of view of the customer, if you are buying goods or services from a business that is factoring their receivables, should you be concerned? Query: is there one answer to these questions that fits all situations?

The answer is it’s a paradox. A paradox is a statement, proposition, or situation that seems to be absurd or contradictory, but in fact is or may be true.

Accounts receivable financing is both a sign of weakness with regard to cash flow and a sign of strength with respect to cash flow. It is a weakness because, prior to financing, funds are not available to provide cash flow to pay for materials, salaries, etc. and it is an indication of strength because, subsequent to funding cash is available to facilitate a business’ needs for cash to grow. It is a paradox. When properly structured as a financing tool for growth at a reasonable cost, it is a beneficial solution to cash flow shortages.
If your entire business depended on one supplier, and you were notified that your supplier was factoring their receivables, you might have a justifiable concern. If your only supplier went out of business, your business could be severely compromised. But this is also true whether or not the supplier is utilizing accounts receivable financing. It’s a paradox. This involves matters of perception, ego and character of the personalities in charge of the business and the supplier.

Every day, every month thousands of customers accept millions of dollars of goods and services in contracts that involve notification, verification and the factoring of receivables. For most customers, “notification” of accounts receivable financing is a non-issue: it is merely a change of the name or addresses of the payee on a check. This is a job for a person in the accounts payable department to make a minor clerical change. It is a mainstream business practice.

Bobby McFerrin wrote and performed a song called “Don’t Worry, Be Happy” for the movie “Cocktails” starring Tom Cruise. The song was a number one U.S. pop hit in 1988 and won the Grammy for Best Song of the Year. Here are the lyrics:

“Here is a little song I wrote

You might want to sing it note for note

Don’t worry be happy

In every life we have some trouble

When you worry you make it double

Don’t worry, be happy……

Ain’t got no place to lay your head

Somebody came and took your bed

Don’t worry, be happy

The land lord say your rent is late

He may have to litigate

Don’t worry, be happy

Look at me I am happy

Don’t worry, be happy

Here I give you my phone number

When you worry call me

I make you happy

Don’t worry, be happy

Ain’t got no cash, ain’t got no style

Ain’t got not girl to make you smile

But don’t worry be happy

Cause when you worry

Your face will frown

And that will bring everybody down

So don’t worry, be happy (now)…..

There is this little song I wrote

I hope you learn it note for note

Like good little children

Don’t worry, be happy

Listen to what I say

In your life expect some trouble

But when you worry

You make it double

Don’t worry, be happy……

Don’t worry don’t do it, be happy

Put a smile on your face

Don’t bring everybody down like this

Don’t worry, it will soon past

Whatever it is

Don’t worry, be happy”

The bottom line: “notification” should not be an issue in most situations involving accounts receivable financing; non-notification factoring is another option that is available for businesses concerned with confidentiality that meet minimum credit standards for asset based lending. Bobby McFerrin was right: “Don’t Worry, Be Happy”.

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