APPENDIX on Methodology

Excerpt from Nominal my butt

Calculated to deceive

The U.S. (and Canadian) nominal method [the fraudulent feedback-loop device] is recognised as criminal in the U.K. for very good reasons. The 1968-71 U.K. Crowther Committee investigated about a dozen different alleged interest calculation methodologies then in use in the U.K. The final report of the Committee identified the effective-rate or actuarial formula as the one and only method that maintains the time value of money inherent to the annual (interest-growth-rate) rate disclosed.

Most notably, the Crowther Committee expressly identified and emphasized that the so-called “nominal” method is an especially nasty or specious form of deception (a virtual psy-op) precisely because it appears to make sense to those not sufficiently educated as to why it makes a difference, or even to know that there is a difference.

The following comparison has been designed so as to demonstrate the cost of the nominal method device in terms of money (dollars) out of a debtor’s or borrower’s pocket instead of just rate differences. Because most consumer interest payments are made monthly we will deal with the application of the device or nominal method to monthly interest charges or calculating monthly as it is sometimes called in the finance business.

The nominal method is also sometimes referred to as the straight division method because the creditor takes the stated annual rate and then divides both components of the rate by the number of payment periods in a year. For example, if a debtor agrees to pay interest at 12% per annum by monthly payments, then the creditor will assess 1% each month.

Most American (and Canadian) consumers think that such procedure is correct. Financial institutions (meaning the people who run them, and most certainly those who own them) are in the business of knowing that it is not. It would not be such a problem if the error were consistent, but, again, the nominal method error increases exponentially in favour of the creditor as the stated annual rate is increased. At the higher levels associated with credit card account rates the error is positively obscene, and a genuine crime against humanity on payday loans.

The first step is to be certain to compare like things, and to use a long enough period so as to clearly demonstrate the significance of the thing being measured. A 30-year period is used here because it is the standard amortization period on a residential mortgage in the U.S. Think of it also as your working-lifetimepeak-earning-years-period and how and why your earnings are quietly re-directed to the owners of the private financial system.

Using $100,000 as a comparison loan or advance amount, over 30 years at 6% per annum using the device / nominal method, the required monthly payment (combined principal and interest) will be $599.55. If the interest charges were determined at a real 6% per annum, then the monthly payment would be only $589.37. Comparing two different monthly payment streams, however, using two different (alleged) calculation methodologies, would confound the results. To determine the extra cost of the nominal method, and only the nominal method, it is necessary to compare identical payment streams applied against identical loans where the one and only difference (single variable) is the calculation (interest assessment) method.

Given a fixed loan amount ($100,000) and a fixed monthly payment amount ($599.55) the only way to measure the extra cost in dollars is by the time (and total payments) required to pay off the debt / contract (the amortization period). (Also note that such is the actual basis on which financial contracts trade in the financial markets, i.e., total time-adjusted-payments required and not the stated interest rate).

At a real 6% per annum a $100,000 advance requires 28.67 years to pay off with monthly payments of $599.55. If the creditor uses the nominal method, then the same advance takes exactly 30 years to pay off based on the same monthly payment. The cost of the nominal method (i.e., extra cost from passing off the Annualized Amount or PPFR [Payment Period Frequency Rate] for the rate of interest) is slightly less than 16 extra payments of $599.55 for a total of $9,564 per $100,000 advanced. The total interest cost is the total payments (360 months x $599.55 = $215,838) minus the principal advanced ($100,000) with the result $115,838.

The $9,564 difference (the Banker’s Bonus) from the use of the nominal method / device therefore represents a 9% increase in the total dollar cost of credit, or about 8.25% of the total interest money paid / collected over the 30 year period.

What then happens to the extra cost when the same technically incorrect nominal technique or procedure is applied at a claimed 15% per annum? That is the approximate weighted average stated credit / lending rate over the 30 year period 1974 to 2004 (about equal to (royal bank of canada) prime plus 3% as a purported variable rate). Does the error stay the same at about $9,500? Does a two-and-a-half-times increase in the stated rate from 6% to 15% cause a proportional increase in the extra cost from $9,500 to about $23,000 for each $100,000 advanced? Or is there something more but which bankers never talk about in public?

Again the example is a $100,000 advance repaid over 30 years and at a nominal 15% per annum the required monthly payment is $1,264.44. If interest were at a real 15% per annum, then the monthly payments would be about $75 less at $1,189.46, but once again we want to isolate the extra cost of the nominal method device and so that is the assumed (or control) payment amount.

At a real 15% per annum a $100,000 advance requires 18.68 years to pay off based on monthly payments of $1,264.44. If the creditor uses the same device / nominal method, then it takes exactly 30 years to pay off the same advance with the same monthly payment. Now the cost to the debtor (and bonus to the creditor / bank) is 135.88 extra payments (11.3 years) of $1,264.44 per month or $171,806 per $100,000 advanced!!!

Here again the total interest cost is the total payments to be made (360 x $1,264.44 = $455,198) minus the principal sum advanced ($100,000) with the result $355,198. Now the $171,806 difference represents a 93.68% increase in the total dollar cost of credit or 48% of the total interest paid/collected over the 30 year period!!! The interest cost should be $183,436 over 18.68 years, but at this higher level the exponential error in the nominal method procedure adds 11.32 extra years to create a debt with total interest payments of $355,198.

What may otherwise be made to appear to be a small difference is actually a form of mathematically engineered leverage (actually double-leverage or cross-leverage or feedback-loop-leverage) that increases the total cost of credit (cost of the contract) by 93% at a stated interest rate of 15% per annum. A mortgage or any amortized term loan is designed with the monthly payment amount determined so as to be just so slightly more than the initial (first month’s) interest cost so that the advance will take 30 years (or adjusted to whatever desired amortization period) to pay off. By using the device / nominal method, at any given (claimed) rate, the creditor gets to both collect larger payment amounts which pay down the advance relatively quickly at the rate stated and collect those larger payments for 30 years anyway.

The higher the stated rate – the more exponentially massive that factor becomes.

It is also irrelevant that many creditors no longer make advances for fixed terms of 30 years. The 30-year period is simply a standardized reference period by which to demonstrate and measure the radically different effects of the same math procedure error and fraudulent device at different nominal interest rates. At 15% per annum, over any given 30-year period, the credit industry will increase the total amount of interest money exacted (harvested) and / or assessed from / against all debtors by 93% by simply using the device / nominal method (again, as measured at the end of the period).

Of course the credit agreements don’t actually say “the nominal method”, much less explain what it means. In Canada it is simply the explanation given if and when (rarely in practice) a debtor discovers that their monthly payment does not correspond to the rate of interest stated and declared in the agreement. In the U.S. there is no need for an explanation because the fraudulent nominal method is required by law.

If the creditor were to deliberately set out to defraud the debtor by obtaining their agreement / consent to one rate while stipulating for payments that correspond to a higher rate, then they need not do anything different.

The 6% and 15% per annum examples are highlighted in the table below (next page).

A Note on the standard deviation factor (or average variance factor)

A very simplified example will demonstrate why the average rate(s) as used in the model is / are a minimum value that will in practice generate more fraudulent revenue (and so correspond to an even higher real rate) to the creditor depending on how high the standard deviation or average variance is.

Assume that half of all loans are at a nominal 30% per annum (they use the device), and the other half are at a nominal 0% per annum. The arithmetic average is a nominal 15%, which corresponds to an actual 16.1% (assuming monthly payment / conversion).

But in fact the creditor(s) will receive a real 34.5% from the half of all loans at a nominal 30%, and 0% from the other half at a nominal 0%. The average-in-fact is therefore half of 34.5% or 17.25% and not 16.1% based on a stated / nominal average 15%.

In this (most extreme variance) example the standard deviation or average variance of the rate per contract accounts for a greater increase in percentage point gain (1.15 percentage points (i.e., from 16.1% to 17.25%) than the (otherwise) nominal method or fraudulent device itself (1.1 percentage points (i.e., from 15% to 16.1%)). Both factors then cross-leverage or cross-compound-upon the other. (Concealed credit / loan fees have the same exponential effect, and loan fees plus the fraudulent device on the same loan / credit can have a truly astronomical effect.)

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Extra Cost from use of recognized fraudulent “Nominal Rate Method”

device based on 30-year Amortization per $100,000 advance

[Multiply $ amounts by 10 million to get results for the $10 trillion mortgage model]

Rate Per Annum

(time to
pay off)
Period without Nominal
Payments needed
to pay out
same loan
Total Extra
Cost from Nominal Rate Assertion
Relative Increase

in Total Cost

(without interest

on extra

Absolute Increase

in Total Cost of Credit (with interest on extra payments at same rate)
0% $277.78 30 years 30 years 0 $0 0% $0
1% $321.64 30 years 29.98 years 0.27 $87.92 0.56% $87.92
2% $369.62 30 years 29.90 years 1.20 $444.55 1.36% $448.12
3% $421.60 30 years 29.75 years 2.98 $1,256.10 2.49% $1,330.99
4% $477.42 30 years 29.51 years 5.86 $2,799.59 4.05% $2,856.22
5% $536.82 30 years 29.16 years 10.09 $5,414.53 6.16% $5,627.42
6% $599.55 30 years 28.67 years 15.95 $9,564.00 9.00% $10,226.49
7% $665.30 30 years 28.03 years 23.69 $15,758.19 12.73% $17,546.23
8% $733.76 30 years 27.21 years 33.43 $24,531.72 17.57% $28,860.18
9% $804.62 30 years 26.24 years 45.18 $36,351.30 23.71% $46,029.68
10% $877.57 30 years 25.11 years 58.69 $51,502.07 31.32% $71,615.81
11% $952.32 30 years 23.87 years 73.54 $70,036.97 40.53% $109,273.61
12% $1,028.61 30 years 22.57 years 89.21 $91,767.15 51.40% $164,167.54
13% $1,106.20 30 years 21.24 years 105.14 $116,306.77 63.93% $243,414.09
14% $1,184.87 30 years 19.93 years 120.82 $143,151.47 78.05% $357,107.66
15% $1,264.44 30 years 18.68 years 135.88 $171,806.80 93.68% $519,135.35
16% $1,344.76 30 years 17.50 years 150.03 $201,747.44 110.63% $749,120.41
17% $1,425.68 30 years 16.39 years 163.32 $232,841.30 129.07% $1,073,912.81
18% $1,507.09 30 years 15.38 years 175.44 $264,403.06 148.42% $1,531,117.56
19% $1,588.89 30 years 14.48 years 186.24 $295,915.34 168.05% $2,172,495.87
20% $1,671.02 30 years 13.60 years 196.80 $328,856.48 190.41% $3,069,808.94
21% $1,753.40 30 years 12.82 years 206.16 $361,480.96 212.96% $4,321,651.31
22% $1,835.98 30 years 12.11 years 214.68 $394,149.21 236.29% $6,064,408.22
23% $1,918.73 30 years 11.47 years 222.36 $426,648.98 260.00% $8,484,949.11
24% $2,001.60 30 years 10.88 years 229.44 $459,248.12 284.66% $11,841,982.54
25% $2,084.58 30 years 10.37 years 235.56 $491,043.34 308.05% $16,488,251.18
26% $2,167.63 30 years 9.84 years 241.92 $524,393.53 336.25% $22,909,009.85
27% $2,250.75 30 years 9.38 years 247.44 $556,924.93 363.19% $31,768,596.37
28% $2,333.91 30 years 8.96 years 252.48 $589,265.93 390.39% $43,974,982.25
29% $2,417.11 30 years 8.57 years 257.16 $621,584.83 418.36% $60,773,640.32
30% $2,500.34 30 years 8.21 years 261.48 $653,790.13 446.78% $83,863,243.77

Problem much greater still

The structure of the analysis (thus far) also substantially understates the real financial and economic consequences in that the extra payments made by the debtor are assumed to earn zero interest themselves. For example, at a stated 15% per annum the extra $171,806 is simply the sum of the extra 11.32 years worth of payments as if the debtor would otherwise stuff the money into a sock or under a mattress. If the lost opportunity cost is taken into account (i.e., the true financial and economic damage, and unjust enrichment of the creditor) the amounts are greater and increasingly so at higher stated rates (e.g., $519,135 per original $100,000 at 15% (last column on the right in the table)).

Mathematically, the proper way to look at it or to measure it is to assume that the debtor has up to several other loans or advances and at the same rate of interest such that the extra payments on the first advance could be used to pay down the debt on the second and subsequent advances (or even put into a personal investment account (again with interest at the same rate)). At the end of the 30 year comparison period the debtor’s total debt on all advances would be $519,135 less (or investment earnings $519,135 greater) based on a nominal rate of 15% (even vastly more if the overpayments on the mortgage could be applied entirely to higher-rate credit card debt). At 6% the foregone interest on the overpayments is only the $662 difference between $9,564 and $10,226.

At just a stated 1% per annum the difference is indicated as $87.92 in both columns (with and without interest on the overcharges). In fact the “with interest” amount is ever so slightly greater, but not enough to show / force an extra cent on the spreadsheet.

The overpayments with interest, from the far right column, are the true measure of the benefits to the institution (and its owners of course) and cost to the debtor (and society in the aggregate). Even if a particular debtor does not have other advances to which the overpayments could be applied, the creditor is either in the business of loaning those overpayments to someone else (a small percentage) or using them (the vast majority by amounts) as a deemed equity / capital base by which to advance new (and leveraged) credit at interest.

With interest on the overpayments, if the nominal method error and device were characterized as a kind of societal-cash/working-capital/wealth-eating monster, then the monster grows about 50 times larger just between a stated 6% per annum (an extra $10k) and a stated 15% per annum (an extra $500k+), while the broadly-defined global financial academic community remains oblivious to it!: “What monster? I don’t see any monster – Do I get my bonus now?”

And which, here again, has for centuries been systematically denied or suppressed by the people who are most egregiously and unjustly enriched by it.

Testifying in Canada under oath before the Select Standing Committee on Banking and Commerce in 1928, for example, the spokesman for the private chartered banks (Mr. M. W. Wilson) said of the nominal method device / discrepancy / overcharge:

Mr. Wilson: It [use of the nominal method / fraudulent-device] makes an infinitesimal difference. That is not the reason it is done, I give you my word for it. (Parliament of Canada – Select Standing Committee on Banking and Commerce hearing transcripts, [1928] p. 464.)

Likewise the (mostly banker-written) Encyclopedia of Banking and Finance (Munn, Glenn G. (General Editor)) acknowledged the fact of the math-error, and of the at-least-constructive fraud, in its 1937 Edition under the general heading of Interest:

…if the interest period is less than one year, the [amount of interest determined under the] nominal…interest rate is greater than the true interest rate… Practically, however, the difference is disregarded.

While according to the former bankers and bank solicitors who operate and control the Courts in Canada (Standard Reliance v. Stubbs [1917] S.C.C. VOL. LV 423):

It must be observed that whatever interpretation is put upon the words “calculated…,” the difference [from the fraudulent device] in the rate chargeable would be only fractional, …

But the difference is neither infinitesimal, nor only fractional, and it is not in fact disregarded.

It is pocketed by the banker as an immediate increase in earned income which the banker can then spend for the banker / banks’ own account (e.g., to pay bonuses to management or dividends to the owners).

It is concurrently incurred / charged again because it is charged against the otherwise-reduction-in-the-principal balance, which in turn commensurately extends the amortization period.

Repeat 360 times over 30-years to increase total interest-money-cost of the contract by 9%, per se, at a stated 6% per annum (long-term historical norm), rising exponentially to a 93% increase, per se, at a stated 15% per annum.

With respect to our forensic-examination period or period of inquiry, for the 30-years from 1968 to 1998 most of the private global financial system maintained that such a difference remains “infinitesimal” and “practically…disregarded” regardless of the general level of nominal interest rates.

It was the single biggest heist in history. And we’ve been adding more, plus more interest on all of it, for another 23 years past 1998.

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Comparison of 1st Graph (above) with no interest on overcharges – and the same with interest on the overcharges at the same rate.

This is also what the bankers globally refer to as a


One final observation and frame-of-reference

In the late 1970’s and early 1980’s the nominal creditors in Canada finally succeeded (officially in early 1981) in getting Parliament to repeal the federal Small Loans Act of 1939.

The federal law restricted the interest rate on most credit-card accounts to 6% per annum, and the creditors desperately needed to get rid of it so that they could jack-up their rates to remain solvent.

As soon as the law was repealed, most of the bank-issued cards went right to a stated 24% per annum (a real 2% per month or 26.8% per annum).

There was also an anomaly with respect to department-store accounts. Virtually all of the major department store chains across Canada increased their stated rates from about 6% per annum to a suspiciously consistent and precise 28.8% per annum (a real 2.4% per month or 32.9% per annum).

The same occurred in the U.K. and other of the Commonwealth Nations – for some reason 2.4% per month appears to be the consensus department-store-account-rate.

There was much controversy in Canada at the time the Small Loans Act was repealed, but the creditors were relentless and unanimous that they had no choice, and that market-forces dictated the increase in the stated rate from 6% to 28.8%. Over the previous decade the bank-rate had risen from 6% to about 16%, and the market-forces could no longer be denied or contained.

But then for the next forty-years (1981-2021) the prime / bank-rate has been up, down, and all over the place, before settling down to about 2% well over a decade ago.

Yet the department-store accounts continue to charge and bear interest at 2.4% per month and a stated 28.8% per annum (a real 32.9%), and which has not changed in forty-years.

So what happened to the market-forces?

The same with the price of gasoline. I vividly recall the price going up in 2008 in lockstep with the price of a barrel of oil. When oil hit (USD) $80 per barrel, the price at the pumps (in B.C.) was (CAD) 80 cents per litre, and when it went to $90 per barrel it went to 90 cents per litre – and all the way up like that for about six months until oil hit $150 per barrel and was matched by $1.50 per litre at the pumps.

The price of oil has since declined to about $60 per barrel, and has been as low as $0 per barrel in the meantime, while the price at the pumps is now $1.64 per litre.

So here too, what happened to the market-forces?

Put another way, based on the observations of the department-store-account-rates, what is the coefficient of market-forces?

Answer: Zero.

There are only two material possibilities. Either there has been an utterly inexplicable event and associated phenomena, or else there is a de facto Money-Power-Politboro in Canada that decided that department-store-rates shall be set at 2.4% per month, period.

And if that is the case, then why would anyone believe anything about market-forces if they are de facto non-existent? How can there even be genuine market forces in a fantasy-fiction-world?

COVID is the last great red herring to avoid Lord Acton’s observation that:

“The issue which has swept down the centuries

and which will have to be fought sooner or later

is the people versus the banks.”

That time has come.

Either we’re going down.

Or they are.


The Short Version

The global private financial and legal / BAR system is collapsing because there is nothing left about it that is not criminal-in-fact and criminal-in-law.

The governments know, and are simply and admittedly choosing not to prosecute them, as a matter of policy.

The foxes have overrun the chicken-house and there’s nothing left to steal.