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Affidavit of Walker F. Todd

Walker F. Todd, an expert witness, provides an affidavit regarding the nature of a promissory note in a legal case, asserting that the transaction involved the creation of credit rather than the transfer of actual funds. He explains the historical context of 'lawful money' and its inconsistency with modern banking practices, emphasizing that the Plaintiff's claim relies on outdated interpretations. Todd concludes that the transaction aligns with contemporary banking methods, which primarily involve credit creation.

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39 views4 pages

Affidavit of Walker F. Todd

Walker F. Todd, an expert witness, provides an affidavit regarding the nature of a promissory note in a legal case, asserting that the transaction involved the creation of credit rather than the transfer of actual funds. He explains the historical context of 'lawful money' and its inconsistency with modern banking practices, emphasizing that the Plaintiff's claim relies on outdated interpretations. Todd concludes that the transaction aligns with contemporary banking methods, which primarily involve credit creation.

Uploaded by

1ofgodmillionaires
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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AFFIDAVIT OF WALKER F.

TODD

STATE OF MICHIGAN
IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND

AFFIDAVIT OF WALKER F. TODD, EXPERT WITNESS FOR DEFENDANTS

Now comes the Affiant, Walker F. Todd, a citizen of the United States and the
State of Ohio over the age of 21 years, and declares as follows, under penalty of
perjury:

1. I am familiar with the Promissory Note and Disbursement Request and


Authorization, dated November 23, 1999, which is referred to in this case as the
"alleged agreement" between Defendants and Plaintiff but is called the "Note" in
this Affidavit. If called as a witness, I would testify as stated herein. I make this
Affidavit based on my knowledge of the legal, economic, and historical principles
stated herein and on my professional experience and expertise as an attorney,
economist, research writer, and teacher.

2. My qualifications as an expert witness in monetary and banking instruments


include 20 years of work as an attorney and legal officer for the Federal Reserve
Banks of New York and Cleveland. My responsibilities involved questions about
notes, bonds, bankers' acceptances, and other financial instruments.
Additionally, I served as an economic research officer for nine years at the
Federal Reserve Bank of Cleveland. I am recognized as an expert in the history of
central banking and monetary instruments. I have published extensively on
these subjects and have served as an expert witness in several trials.

3. Banks are required to follow Generally Accepted Accounting Principles (GAAP),


which include the Matching Principle. When a bank accepts instruments such as
promissory notes or drafts, it records offsetting liabilities and assets. These
liabilities represent the amounts owed to customers, while assets are created by
the bank itself in a fractional reserve banking system.

4. Historical and economic studies reveal a misunderstanding of the nature of


money. Classical economic theory identifies two types of money: money of
exchange and money of account. In a fractional reserve banking system, a small
amount of money of exchange supports a much larger amount of money of
account, which consists mainly of credit transactions.
5. The Note in this case refers to repayment in "lawful money of the United
States." Historically, lawful money included only gold, silver, and currency notes
redeemable for these metals. This language appears to be a legacy from the pre-
1933 era and creates ambiguity in the repayment obligation.

6. Legal tender, unlike lawful money, includes instruments such as Federal


Reserve notes that are not redeemable for gold or silver. Since 1933, legal
tender has been the primary form of money of exchange in the United States.

7. The Uniform Commercial Code (U.C.C.) defines money as a medium of


exchange authorized by a government. This broader definition includes both
legal tender and other recognized forms of currency. The U.C.C. aligns with the
classical economic view of money as both a medium of exchange and a unit of
account.

8. Historically, banks began to lend their own credit instead of real money by
issuing drafts or bills of exchange. These instruments functioned as money in
many respects. This practice laid the foundation for the modern fractional
reserve banking system, where credit serves as a primary means of monetary
expansion.

9. In this case, Plaintiff asserts that Defendants signed a Note in exchange for
funds or credit. However, the bookkeeping entries suggest that Plaintiff extended
its own credit to Defendants rather than lending pre-existing money. This raises
questions about the nature of the consideration provided.

10. Modern banking practices involve the creation of credit as money. When a
bank makes a loan, it creates a deposit on its books equal to the loan amount,
which functions as money for the borrower. This process is consistent with the
facts of this case.

11. The Federal Reserve describes the lending process as creating new money
through the issuance of credit. This supports the conclusion that Plaintiff
extended credit rather than transferring pre-existing money to Defendants.

12. Plaintiff’s bookkeeping records indicate that the loan consisted of newly
created credit rather than actual funds. This aligns with the standard practices of
fractional reserve banking.

13. The use of credit as money is a well-documented practice in banking. Credit


agreements create liabilities and assets on a bank's balance sheet, effectively
expanding the money supply without requiring actual cash reserves.

14. Plaintiff’s reliance on the "lawful money" clause in the Note creates
confusion. The clause is inconsistent with modern banking practices and legal
definitions of money. It appears to be an outdated term that does not accurately
reflect the nature of the transaction.

15. The transaction in question involved the creation of credit by Plaintiff, which
was recorded as both an asset and a liability. This process did not involve the
transfer of pre-existing funds, as would be required for a loan in "lawful money."

16. Based on my analysis, Plaintiff used Defendants' Note to create credit, which
was then recorded as a liability. This supports the conclusion that Plaintiff did not
lend actual money but rather extended credit.

17. I do not have sufficient knowledge of all the facts to determine whether
Plaintiff incurred any financial loss. However, the inclusion of the "lawful money"
language in the Note is misleading and does not align with modern legal or
economic principles.

CONCLUSION

18. Based on the foregoing, Plaintiff’s claim appears to rest on an outdated and
inaccurate interpretation of the "lawful money" clause. The transaction was
consistent with modern banking practices involving the creation of credit rather
than the transfer of actual funds.

AFFIRMATION

19. I hereby affirm that I prepared and have read this Affidavit and that I believe
the foregoing statements to be true. The basis for these beliefs is my direct
knowledge of the legal and economic principles involved and the documents
provided to me by third parties whose veracity I reasonably assumed.

Further the Affiant sayeth naught.

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