Promissory Notes and their Legal Validity....

[fluffybiscuits]

http://www.accountingexplanation.com...ssory_note.htm

http://en.wikipedia.org/wiki/Promissory_note

http://www.jus.uio.no/english/servic...ange-notes.xml

Being trying to just get a basic idea of these promissory notes, what they are, what they do etc etc. One of the things I noticed was that they are unconditional and no conditions should be attached.Surely by Europe attaching all sorts of conditions to these promissory notes they are in breach of legislation ? Or am I picking this up wrong?

[PaddyJoe]

There's a really good explanatory visual presentation on the promissory notes here from the #notourdebt people
[ame="http://www.youtube.com/watch?v=ri1PFJ5vTTk"]What is the Promissory Note? - Anglo: Not Our Debt - YouTube[/ame]

[Holly]

I'm still confused.
From the video I gather that the bond holders have already been paid by the Central Bank and the government will pay back the money in installments to the Central Bank which then burns it.
I don't understand how the government can owe money to the Central Bank.

[concernedparent]

I always thought it was an offence to destroy or deface 'legal tender'.

Can anyone enlighten me on that one.

[Holly]

I always thought it was an offence to destroy or deface 'legal tender'.

Can anyone enlighten me on that one.

Well, that one is easy. Banks don't deal in real money anymore; it's all done electronically. The whole thing is a con job.

[fluffybiscuits]

I'm still confused.
From the video I gather that the bond holders have already been paid by the Central Bank and the government will pay back the money in installments to the Central Bank which then burns it.
I don't understand how the government can owe money to the Central Bank.

That is what I dont understand. Are the Central bank getting their own money or wha????

[TotalMayhem]

Are the Central bank getting their own money or wha????

That's what banks do.

If you believe they make profit from lending money that others have deposited in their vaults you might as well believe in Santa and the Easter Bunny.

On this note: your deposit (if you have any) is not an asset for the bank but in fact a liability.

[Griska]

That's what banks do.

If you believe they make profit from lending money that others have deposited in their vaults you might as well believe in Santa and the Easter Bunny.

On this note: your deposit (if you have any) is not an asset for the bank but in fact a liability.

Right, but do you get why the CB are getting the money back?
I can't get my head around it.

[fluffybiscuits]

That's what banks do.

If you believe they make profit from lending money that others have deposited in their vaults you might as well believe in Santa and the Easter Bunny.

On this note: your deposit (if you have any) is not an asset for the bank but in fact a liability.

Why is that? They use that money for investments etc etc? Is it that the money while the property of us is a debt to us in that when they use it it is always a debt?

[TotalMayhem]

Yes, money (as we know it) is debt, every penny you may own is owed by someone else. We have thread here dealing with the question where the money is coming from.

[C. Flower]

I'm still confused.
From the video I gather that the bond holders have already been paid by the Central Bank and the government will pay back the money in installments to the Central Bank which then burns it.
I don't understand how the government can owe money to the Central Bank.

The Central Bank is "independent" of the Government. It was allowed by the ECB to print this money to repay the bondholders only on the basis that it would be paid back (removed from the system and replaced with "real money").

[fluffybiscuits]

Yes, money (as we know it) is debt, every penny you may own is owed by someone else. We have thread here dealing with the question where the money is coming from.

Thanks mate , had to think that one through for a minute!

[C. Flower]

The Central Bank is "independent" of the Government. It was allowed by the ECB to print this money to repay the bondholders only on the basis that it would be paid back (removed from the system and replaced with "real money").

Having re-read this, I realise that I was rationalising it. I don't know if the Central Bank entered any such agreement.

Does anyone else know ?

There is reference here to the ICB printing, with or without ECB permission, but the Promissary Notes are not directly mentioned.

http://www.telegraph.co.uk/finance/e...ncy-loans.html


And here ( hat tip to DCon)

http://www.politicalworld.org/showth...printing+euros

Quote:
A hat tip to eurozone blogging maestro Edward Hugh for drawing our attention to the following extracts of the ECB’s opinion on the emergency stabilisation of credit institutions, dated December 17 — which outlines the ECB’s position on the prohibition of monetary financing by the Bank of Ireland (and other member banks):

This provision should also specify that nothing in the draft law will prejudice the compliance by the Central Bank with the prohibition on monetary financing under Article 123 of the Treaty13.

- —-

The monetary financing prohibition in Article 123 of the Treaty is further clarified in Council Regulation (EC) No 3603/93 of 13 December 1993 specifying definitions for the application of prohibitions in Article 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1) according to which overdraft facilities or any other type of credit facility with the ECB or the national central banks (NCBs) of Member States in favour of Community institutions or bodies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States are prohibited, as is any purchase directly from these public sector entities by the ECB or NCBs of debt instruments.

In other words, providing that the Central Bank of Ireland is not buying debt directly from government or quasi-government institutions — it is perfectly able to buy debt or create overdraft facilities for private credit institutions.

And if you dig deeper into Article 123 of the Lisbon Treaty you also get this point:


Paragraph 1 shall not apply to publicly owned credit institutions which, in the context of the supply of reserves by central banks, shall be given the same treatment by national central banks and the European Central Bank as private credit institutions.

http://ftalphaville.ft.com/blog/2011...euro-printing/ __________________

[TotalMayhem]

You thought the gamblers would be waiting 50 years for Paddy to pay them what they lost in the Grand Casino that Ireland once was? Well, think again. That's where the CBoI came in, they created the money to pay the crooks immediately and the CBoI will deal with the payback and indeed with the interest on top of it.

The Central Bank is "independent" of the Government.

Not only that, the central bankers are calling the shots (Remember? "Give me control over a nations money supply and I care not who makes its laws"), Meanwhile government can write "strong letters" until the cattle find their way home.

[ang]

Karl Whelan cannot understand why the Government continue with the spin of this money was borrowed by the Central Bank to give to Anglo and as a result has a liability that must be repaid.

Karl says he can think of two explanations as to why this line is being followed

1) Either officials who draft briefing notes don't understand how ELA works.

or

2) It is believed that the “money was borrowed from the ECB” line will provide a good excuse on March 31.

This is not true. ELA funds were not borrowed by the Central Bank from the ECB or the rest of the Eurosystem. They were created by the Central Bank of Ireland and provided as a credit to Anglo’s reserve account. To the extent that Anglo used this money to pay off people with foreign bank accounts, the liability will have switched from being a reserve liability to an Intra-Eurosystem (i.e. Target2) liability.

Furthermore, as central bank economists throughout Europe have been saying time and again over the past year (e.g. this piece by two Bundesbank economists) Target2 balances simply reflect the outcome of private decentralised transactions and there is no system whereby a Target2 creditor is under an obligation to “repay” the Target2 liabilities under any particular time-frame.

http://karlwhelan.com/blog/?p=182