Check Kiting ExplainedCheck kiting involves floating checks between multiple bank accounts to create the illusion of funds. For example, Tom, Dick, and Harry each have accounts at Bank A, Bank B, and Bank C, respectively, with less than $100 combined. Tom writes a $3,500 check from Bank A to Dick, Dick writes a $3,500 check from Bank B to Harry, and Harry writes a $3,500 check from Bank C to Tom, totaling $10,500 in checks. These checks will not bounce unless the scheme is detected, as they circulate without sufficient funds. Withdrawing these checks for cash constitutes fraud, and writing them is check kiting, a federal crime. Large-scale schemes can involve millions in bad checks, with depositors cashing them before disappearing.E.F. Hutton CaseIn 1985, E.F. Hutton executed a check kiting scheme, floating up to $270 million daily in bad checks across accounts. The firm earned approximately $25 million annually in interest without cashing the checks. Despite a Department of Justice investigation, no individuals were indicted.The Monopoly Game AnalogyIn a Monopoly game, if the banker alone creates money and lends it to players, securing mortgages and liens on their property, the banker controls the game. The banker charges interest, creating a debt exceeding the money supply. By cutting off credit and calling in loans, the banker causes a money shortage, collapsing property and commodity prices, and forecloses on players’ assets under color of law. In reality, Americans have entered a similar debt system through contracts, pledging land and freedoms to lenders, creating a debt dictatorship.Constitutional Money CreationThe U.S. Constitution, Article I, Section 8, grants Congress the power to coin money and regulate its value. Under 31 U.S.C. § 5103, U.S. coins and currency are legal tender for all debts, public charges, taxes, and dues. Congress has not delegated this power to private individuals or corporations. Evidences of debt, such as checks, credit cards, lines of credit, demand deposits, letters of credit, and checkbook money, are not legal tender and pass as money only with public confidence.Do Banks Create Money?Banks claim to create money, as stated in Federal Reserve publications. Modern Money Mechanics (Federal Reserve Bank of Chicago) notes that money creation occurs in commercial banks through book entries, where banks increase deposits by issuing loans or creating demand deposits, the modern equivalent of bank notes. Putting It Simply (Federal Reserve Bank of Boston) states that the Federal Reserve creates money by writing checks. I Bet You Thought (Federal Reserve Bank of New York) describes checkbook money as bookkeeping entries by commercial banks.However, courts have ruled that checks and evidences of debt are not money (Hegeman v. Moon, 131 N.Y. 462, 30 N.E. 487; State v. Neilen, 73 Pac. 321, 43 Ore. 158). Writing a check without sufficient cash to back it constitutes a bad check, whether by an individual or a bank. Banks, however, mark bad checks as “PAID” and credit accounts with book entries, circulating them as money. This practice, known as fractional reserve banking, allows banks to loan up to 33 times their actual cash reserves. By accepting and depositing checks, Americans inadvertently participate in this check kiting scheme, passing bad checks as money.