The hidden secret of how a bank account works

I'm not sure where the impression came from, perhaps it is all the advertising and propaganda that we receive from the banks.  When we deposit money into our bank accounts, we have the impression that the money is ours and that we are using the bank for safe keeping, ownership remaining with us.  But when we start to dig into how bank accounts really work, that is not the case at all and the truth may shock some of you.

I found out for myself by looking up the word 'deposit' in my Canadian Law Dictionary 5th Edition.

Deposit:  In banking "when a customer pays money into his account in the usual way of business, he sells it to the banker ... In exchange for the money the banker makes an entry of an equal sum in credit in favour of his customer, which, in the technical language of modern banking, is termed a deposit." Re Alberta Legislation, [1938] 2 D.L.R. 81 at 99 (S.C.C.)

What the Supreme Court of Canada (S.C.C.) is saying is that the money you handed over to the teller or bank machine, is a commodity that you are selling it to the bank in exchange for credit in their institution.  It is like returning the sweater you got for Christmas for store credit.  Think of your bank account as a fancy prepaid credit card. That is why they want to do a credit check when you get a bank card.  Your bank card provides access to the account and when you want to use that credit, you then buy money back from the bank so that you can use it to pay your bills, whether that is in the form of electronic or physical currency.  

In 1938, the Canadian Dollar was a gold backed currency and the piece of paper was a receipt which could be turned in at any time for the gold.  If you are not aware of these concepts, I wrote a post a few months ago that you can read to catch up.  Now, the piece of plastic in your wallet or purse is nothing more than a promissory note, an IOU, a promise to pay.  But my question is: Pay what?  Bank's answer:  Trust me!  Ya right!

Since the currency was removed from the gold standard and the Bank of Canada (private centralized bank) took over in 1935, the Supreme Court had to rule (1938) what a deposit actually meant as there was no more real 'value' in a note.  In my previous post I shared how the courts said that these instruments are promissory notes and can be used as currency as well.

So when people complain when the government is taking their money or the banks control how much money you can take out of your account, the result of this research shows something more sinister.  When you take money out of your account, what you are actually doing is purchasing money with store credit.  The bank does not have to sell you anything if they don't want to.  Nobody can coerce or force somebody to sell their own property.  The government and banks have setup rules to limit the sale of money with store credit.  That is all they did.  They also setup rules that if the sale of money exceeds specific limits, then that will be reported to the government for investigation.  These are purchases and you are not reaching into your own cookie jar to pull out money that was stored for safe keeping.  Safety deposit boxes fulfill that function, but I would not use them as the Government has given banks permission to raid those boxes when the need arises.

The sooner we recognize that we are buying and selling money, the sooner we can recognize the true scope of the relationship and find alternatives.  This switch happened when we went from gold backed currency to debt based currency.  An IOU or promissory note may be defined as a valuable security, but in the end it is still debt. As such it has no value other than it being accepted as payment for taxes and that the vast majority of people have no idea what those pieces of plastic actually are or how they work.   

I've not had a bank account for over a decade and I have no plans to have one.  I have a real bank to store real money.  My cryptocurrency wallet is also a real bank and the tokens are encrypted so that only I can send them where ever I please as I'm the only one with they key.