An argument used by Jerome Daly in 1968 to win his foreclosure case can be applied to all dealings with banks today, from a micro loan for an individual mortgage, for example, to a macro loan for Greece from the IMF.
Central to Daly’s argument was the fact that banks create money out of thin air using the fractional reserve banking system. As a result, he argued that any loan which banks make does not consist of real capital or collateral. It is, in fact, just an entry in their book keeping system.
Therefore, Daly argued the contract he made with the bank was invalid in as far as the bank never fulfilled its side of the contract by putting up something of value, any capital or collateral in return for the mortgage in the first place. All the banks put up as their sid eof the contract was fiat…
View original post 665 more words