Already in 1966 Professor Carroll Quigley warned that the capitalist powers – the proponents of the old paradigm – would try to create a world system of financial control in private hands, able to dominate the political systems and the entire world economy. We are right now living the fulfilment of his predictions.
As I write this on the eve of the 10th anniversary of “9/11”, the worn and torn counterfeit terrorist card is being played again by media at the behest of the US powers that be, in order to justify their continually criminal policies, both international and domestic. Each time the terrorist threat is being used, it comes across as more contrived and less convincing.
Applying a larger perspective than is available in media, we see how it all forms part of a grand historic pattern forged out of the ongoing clash between two cosmic super-paradigms, much like a relentless earthquake-provoking clash between tectonic plates.
In this week´s blog I quote an article by Ellen Hodgson Brown JD, attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org.
In the latest of her eleven books, Web of Debt, she shows how the power to create money has been usurped from the people, and how the people can get it back. Her websites are http://webofdebt.com and http://ellenbrown.com.
Ellen Brown explains here how the scene was set for a gradual take-over of all financial and political power by an unelected “shadow government” ruling from the hidden vaults of the most powerful international banks. Banks that are controlled by less than a dozen families on both sides of the Atlantic, and that indirectly control most national governments and parliaments, beginning with the US president and congress.
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“Professor Carroll Quigley was an insider groomed by the international bankers. He wrote in Tragedy and Hope in 1966:
The powers of financial capitalism had another far reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole.
The apex of this privately owned financial control system was to be the Bank for International Settlements [BIS] in Basel, Switzerland, a private bank owned by the world’s central banks. The most important central banks are themselves private corporations. Each central bank… sought to dominate its government by its ability to control Treasury loans…”
The debt trap was set in stages. In 1971, the dollar went off the gold standard internationally. Currencies were unpegged from gold and allowed to “float” in currency markets, competing with other currencies, making them vulnerable to speculation and manipulation.
In 1973, a secret agreement was entered into in which the OPEC countries would sell oil only in dollars, and the price of oil would be dramatically increased. By 1974, oil prices had increased by 400% from 1971 levels. Countries lacking oil had to borrow dollars from U.S. banks.
In 1981, the Fed funds rate was raised to 20%. At 20% compound interest, debt doubles in under four years. As a result, most of the world became crippled by debt. By 2001, developing nations had repaid the principal originally owed on their debts six times over; but their total debt had quadrupled because of interest payments.
When debtor nations could not pay the banks, the International Monetary Fund stepped in with loans — with strings attached. The debtors had to agree to “austerity measures,” including:
• cutting social services
• privatizing banks and public utilities
• opening markets to foreign investors
• letting currencies “float.”
Today, austerity measures are being imposed not just in developing countries but in the European Union and on U.S. States.
What Professor Quigley foretold about the Bank for International Settlements (BIS) has also come to pass. The BIS now has 55 member nations and heads the global financial pyramid.
The power of the BIS was seen in 1988, when it raised the capital requirement of its member banks from 6% to 8% in an accord called Basel I. The result was to cripple the Japanese banks, which until then were the world’s largest creditors. Japan entered a recession from which it was just about recovering when the recent earthquake and tsunami hit.
U.S. banks managed to escape by dodging the capital requirement. They did this by moving loans off their books, bundling them up as “securities,” and selling them to investors.
To persuade the investors to buy them, these mortgage-backed securities were protected against default with “derivatives,” which were basically just bets. The “protection seller” collected a premium for agreeing to pay in the event of default. The “protection buyer” bought the premium. Owning the asset was not required. Like gamblers at a horse race, derivative players could bet without owning a horse.
Derivatives became a very popular form of gambling. The result was the bubble of all bubbles, exceeding $500 trillion by the end of 2007.
Because of securitization and derivatives, credit mushroomed. Virtually anyone who walked in the door could get a loan.
The tipping point came in August 2007, with the collapse of two hedge funds. When the derivatives scheme was exposed, the market for derivative-protected securities suddenly dried up. But the U.S. stock market did not collapse until November 2007, when new accounting rules were imposed. The rules grew out of the Basel II Accords initiated by the BIS in 2004. “Mark to market” accounting required banks to value their assets according to market demand that day. Many U.S. banks, like those in Japan in the 1990s, suddenly had insufficient capital to make new loans. The result was a credit crisis from which the U.S. has not yet recovered.
The BIS has now become global regulator, just as Quigley foresaw. In April 2009, the G20 nations agreed to be regulated by a Financial Stability Board based in the BIS, and to comply with “standards and codes” set by the Board. The codes are only guidelines, but countries that fail to comply risk downgrades in their credit ratings, something so costly that the guidelines have effectively become laws.
An article on the BIS website states that central banks in the Central Bank Governance Network should have as their single or primary objective “to preserve price stability.” That means governments should not devalue the national currency by inflating the money supply; and that means not “printing money” or borrowing credit created by their own central banks. Like the American colonies after King George took away their power to issue their own money, governments must fund their deficits by borrowing from private banks.
The bankers’ global control over currency issuance has become virtually complete.
The effects of this policy are particularly evident in the European Union, where EU rules allow deficits of only 3% of government budgets and prevent member countries from either issuing their own money or borrowing credit advanced by their own central banks. Member nations must borrow instead from the European Central Bank, private international banks, or the IMF. The result has been forced austerity measures, as seen in Greece and Ireland. The system is so unsustainable that commentators are predicting that the EU may break up.
To escape the debt trap of the global bankers, the power to create the national money supply needs to be restored to national governments. Alternatives include:
• Legal tender issued directly by national treasuries and spent on national budgets.
• Publicly-owned central banks empowered to advance the nation’s credit and lend it to the government interest-free.
• Nationalization of bankrupt banks considered “too big to fail” (after expunging or writing down bad debts on inflated bubble assets). These banks could then issue credit to the public and serve the public’s banking needs, with the profits recycling back to the government, defraying the tax burden on the people.
• Publicly-owned local banks (state, provincial, or municipal).
Publicly-owned banks have been successfully established and operated in many countries, including Australia, New Zealand, Canada, Germany, Switzerland, India, China, Japan, Korea, and Malaysia.
In the United States there is currently only one state-owned bank, the Bank of North Dakota. The model, however, has proven to be highly successful. North Dakota is the only U.S. state to have escaped the credit crisis unscathed. In 2009, while other states floundered, North Dakota had its largest budget surplus ever. In 2008, the Bank of North Dakota (BND) had a return on equity of 25%. North Dakota has the lowest unemployment rate in the country and the lowest default rate on loans. It also has the most local banks per capita.
North Dakota has had its own bank since 1919, when farmers were losing their farms to the Wall Street bankers. They organized, won an election, and passed legislation. The state is required by law to deposit all its revenues in the BND. Like with the sustainable model of the bank of colonial Pennsylvania, interest and profits are returned to the government and to the local economy.
A growing movement is afoot in the United States to copy this public banking model in other states. Fourteen U.S. state legislatures have now initiated bills for state-owned banks.
The model could also be replicated in other countries. In Ireland, for example, where the major banks are insolvent and are already nationalized or soon will be, the government could deposit its revenues in its own publicly-owned banks, add sufficient capital to meet capital requirements, and leverage these funds to create interest-free credit for its own local needs. That is exactly what Alexander Hamilton, the first Secretary of the Treasury of the USA, did when faced with government debts that were impossible to repay: he put the government’s existing funds in a bank, then borrowed the money back several times over, employing the accepted “fractional reserve” model.
Japan’s solution is also a variant of what Alexander Hamilton proposed two centuries earlier. Japan retains its status as the third largest economy in the world although it has a debt to GDP ratio of 226%. Japan has “monetized” the national debt, turning it into the national money supply. The government-owned Bank of Japan holds Japanese government debt equal to 100% of the nation’s GDP; and because the government owns the bank, this loan is interest-free and can be rolled over indefinitely. An interest-free loan rolled over indefinitely is the equivalent of issuing money.
You will find the full text of Ellen Brown´s article with referencing links here: http://www.webofdebt.com/articles/global_debt.php
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Understanding the financial structure of the world is key to understanding politics as we know it today. In real life, in real terms, democracy is but an illusion to keep the people happy and give it hope. The system, such as it is set up, makes it impossible for anyone not sponsored by the true hidden power – let alone truly idealistic and altruistic people – to win elections. And once the people have had their say via the ballot boxes they are neither asked for their opinions, nor kept informed of the decisions taken. As we all know, these decisions hardly ever coincide with the program proposed or the promises made during the election campaign.
Anyone who runs for political office depends for success on two kinds of support: Money and Media. Since all important mainstream media are corporate owned, and the banks ultimatley control both the money and the corporate world, the banks usually get to decide who will be elected. This is particularly true in the US, where the fights between the Republicans and the Democrats are just a kind of shadow-boxing. Both parties eventually obey the signals from the hidden shadow government, and it really makes no difference which puppet occupies the oval office. Should he dare disobey his invisible bankster sponsors, then something happens that quickly brings him in line – dead or alive. The only recent president who dared insist on defying the military-industrial complex, run by the banks and the CIA, was John F. Kennedy. Draw your own conclusions.
Maybe this casts some light on Obama´s glaring breach of practically all his election promises, once in office. Though I must say that he never looks as being under any kind of pressure. So, would that make him one of the greatest actors of all time? – Or just world champion of hypocrisy and lies? Hard to say.
As I publish this on 9/11, 2011, Obama is celebrating the 10th anniversary of that defining state-terrorist act that set the note for transforming the US into a corrupt brutal police state domestically, in addition to the expansion of its imperial military ambitions, under the guise of “the war on terror”, or of “liberating”, “saving” protecting” etc. select resource-rich countries across the globe.
I understand the US has at least some 150 permanent military bases all over the planet. Less than a fourth of the world´s supposedly sovereign nations have escaped having a permanent US military presence within its borders. The official US military budget equals the sum total of military spending by all other countries together. Is it surprising then that the US is bankrupt and in default? But when debating the economy in the US, the military spending is never mentioned.
Incidentally, the “early responders” meaning fire fighters and rescuers who risked their lives to help others that day – many of whom died – along with family members of the victims, have been banned from participating in the 9/11 commemoration this year. Precisely those who have most reason to be commemorating and honored. No reason offered, as far as I am aware. I must assume that the government is aware that they know too much and will spill some bitter beans, if they are allowed to participate. Police state in deed!
What can I say? Happy Anniversary Mr. Emperor !
Signing off as the incorrigible rhymesmith I am, thus:
Until next note
stick to your rote,
keeping afloat,
and do not bloat.
While in the boat
with this old goat
in the global moat,
we´ll add our vote
control remote
for a far better tote.
Dr. Jens
(a Capricorn, aka a Cosmic Sea-Goat)
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