Celebrating Usury Free Living

by Anthony Migchels 

A transformation of awareness of money is necessary and possible. How to get the message out there? Wayne Walton is showing the way.

When Wayne opened up to the Usury issue, he wondered why interest-free money was not yet the norm. And he came up with an answer - marketing.

To create new units and market them properly, that is his mission.

He managed to create not only his own Mountain Hours, but helped initiate a number of other similar initiatives throughout the country.

His communication is great, he’s a good orator, knows his stuff and really passionately puts forward the usury free case in a most comprehensive way.

He’s also absolutely great with videos. Here’s a very powerful one, getting right to the heart of the matter:

Walton brings people together around his themes. He seeks the common ground. And what could be more beautiful than interest-free money? Because he’s actually doing it with his Hours, people love it.

One of his themes is Jubilee. Here’s a typical and wonderful video showing all this:

He used to toy around with Austrianism, before being exposed to Sacred Economics. This helps in bringing them on board also.

Here’s Adam Kokesh, with a good and very enthusiastic analysis of the Mountain Hours. True, their monetary architecture is not the greatest, but it is all being developed as it goes.

He’s revolutionizing the promotion of usury free living. He radically posits the problem, quoting Jesus, Moses and Mohammed, and offers direct solutions: Jubilee and Hours. He does so in a way as to really touch people.

Wayne is very active on Facebook too.

There is another way. We don’t need to exploit to survive. We can have abundance. Usury is the original sin, the ultimate cause of our economic and social woes and the ‘conspiracy’ and its nasty tricks are simply retribution. The suffering it causes worldwide is unfathomable. As always the solution is simple: quit sinning and start interest-free money.

More power to Wayne Walton.

NOTE: This article is originally published at this website:

https://realcurrencies.wordpress.com/2013/04/27/celebrating-usury-free-living

No Bank Deposits Will Be Spared from Confiscation

By Matthias Chang

I challenge anyone to prove me wrong that confiscation of bank deposits is legalized daylight robbery

Bank depositors in the UK and USA may think that their bank deposits would not be confiscated as they are insured and no government would dare embark on such a drastic action to bail out insolvent banks.

Before I explain why confiscation of bank deposits in the UK and US is a certainty and absolutely legal, I need all readers of this article to do the following:

Ask your local police, sheriffs, lawyers, judges the following questions:

(1) If I place my money with a lawyer as a stake-holder and he uses the money without my consent, has the lawyer committed a crime?

(2) If I store a bushel of wheat or cotton in a warehouse and the owner of the warehouse sold my wheat/cotton without my consent or authority, has the warehouse owner committed a crime?

(3) If I place monies with my broker (stock or commodity) and the broker uses my monies for other purposes and or contrary to my instructions, has the broker committed a crime?

I am confident that the answer to the above questions is a Yes!

However, for the purposes of this article, I would like to first highlight the situation of the deposit/storage of wheat with a warehouse owner in relation to the deposit of money/storage with a banker.

First, you will notice that all wheat is the same i.e. the wheat in one bushel is no different from the wheat in another bushel. Likewise with cotton, it is indistinguishable. The deposit of a bushel of wheat with the warehouse owner in law constitutes a bailment. Ownership of the bushel of wheat remains with you and there is no transfer of ownership at all to the warehouse owner.

And as stated above, if the owner sells the bushel of wheat without your consent or authority, he has committed a crime as well as having committed a civil wrong (a tort) of conversion – converting your property to his own use and he can be sued.

Let me use another analogy. If a cashier in a supermarket removes $100 from the till on Friday to have a frolic on Saturday, he has committed theft, even though he may replace the $100 on Monday without the knowledge of the owner/manager of the supermarket. The $100 the cashier stole on Friday is also indistinguishable from the $100 he put back in the till on Monday. In both situations – the wheat in the warehouse and the $100 dollar bill in the till, which have been unlawfully misappropriated would constitute a crime.

Keep this principle and issue at the back of your mind.

Now we shall proceed with the money that you have deposited with your banker.

I am sure that most of you have little or no knowledge about banking, specifically fractional reserve banking.

Since you were a little kid, your parents have encouraged you to save some money to instil in you the good habit of money management.

And when you grew up and got married, you in turn instilled the same discipline in your children. Your faith in the integrity of the bank is almost absolute. Your money in the bank would earn an interest income.

And when you want your money back, all you needed to do is to withdraw the money together with the accumulated interest. Never for a moment did you think that you had transferred ownership of your money to the bank. Your belief was grounded in like manner as the owner of the bushel of wheat stored in the warehouse.

However, this belief is and has always been a lie. You were led to believe this lie because of savvy advertisements by the banks and government assurances that your money is safe and is protected by deposit insurance.

But, the insurance does not cover all the monies that you have deposited in the bank, but to a limited amount e.g. $250,000 in the US by the Federal Deposit Insurance Corporation (FDIC), Germany €100,000, UK £85,000 etc.

But, unlike the owner of the bushel of wheat who has deposited the wheat with the warehouse owner, your ownership of the monies that you have deposited with the bank is transferred to the bank and all you have is the right to demand its repayment. And, if the bank fails to repay your monies (e.g. $100), your only remedy is to sue the bank and if the bank is insolvent you get nothing.

You may recover some of your money if your deposit is covered by an insurance scheme as referred to earlier but in a fixed amount. But, there is a catch here. Most insurance schemes whether backed by the government or not do not have sufficient monies to cover all the deposits in the banking system.

So, in the worst case scenario – a systemic collapse, there is no way for you to get your money back.

In fact, and as illustrated in the Cyprus banking fiasco, the authorities went to the extent of confiscating your deposits to pay the banks’ creditors. When that happened, ordinary citizens and financial analysts cried out that such confiscation was daylight robbery. But, is it?

Surprise, surprise!

It will come as a shock to all of you to know that such daylight robbery is perfectly legal and this has been so for hundreds of years.

Let me explain.

The reason is that unlike the owner of the bushel of wheat whose ownership of the wheat WAS NEVER TRANSFERRED to the warehouse owner when the same was deposited, the moment you deposited your money with the bank, the ownership is transferred to the bank.

Your status is that of A CREDITOR TO THE BANK and the BANK IS IN LAW A DEBTOR to you. You are deemed to have “lent” your money to the bank for the bank to apply to its banking business (even to gamble in the biggest casino in the world – the global derivatives casino).

You have become a creditor, AN UNSECURED CREDITOR. Therefore, by law, in the insolvency of a bank, you as an unsecured creditor stand last in the queue of creditors to be paid out of any funds and or assets which the bank has to pay its creditors. The secured creditors are always first in line to be paid. It is only after secured creditors have been paid and there are still some funds left (usually, not much, more often zilch!) that unsecured creditors are paid and the sums pro-rated among all the unsecured creditors.

This is the truth, the whole truth and nothing but the truth.

The law has been in existence for hundreds of years and was established in England by the House of Lords in the case Foley v Hill in 1848.

When a customer deposits money with his banker, the relationship that arises is one of creditor and debtor, with the banker liable to repay the money deposited when demanded by the customer. Once money has been paid to the banker, it belongs to the banker and he is free to use the money for his own purpose.

I will now quote the relevant portion of the judgment of the House of Lords handed down by Lord Cottenham, the Lord Chancellor. He stated thus:

“Money when paid into a bank, ceases altogether to be the money of the principal… it is then the money of the banker, who is bound to return an equivalent by paying a similar sum to that deposited with him when he is asked for it.

The money paid into the banker’s, is money known by the principal to be placed there for the purpose of being under the control of the banker; it is then the banker’s money; he is known to deal with it as his own; he makes what profit of it he can, which profit he retains himself,…

The money placed in the custody of the banker is, to all intent and purposes, the money of the banker, to do with it as he pleases; he is guilty of no breach of trust in employing it; he is not answerable TO THE PRINCIPAL IF HE PUTS IT INTO JEOPARDY, IF HE ENGAGES IN A HAZARDOUS SPECULATION; he is not bound to keep it or deal with it as the property of the principal, but he is of course answerable for the amount, because he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.” (quoted in UK Law Essays,  Relationship Between A Banker And Customer,That Of A Creditor/Debtor, emphasis added,)

Holding that the relationship between a banker and his customer was one of debtor and creditor and not one of trusteeship, Lord Brougham said: 

“This trade of a banker is to receive money, and use it as if it were his own, he becoming debtor to the person who has lent or deposited with him the money to use as his own, and for which money he is accountable as a debtor. I cannot at all confound the situation of a banker with that of a trustee, and conclude that the banker is a debtor with a fiduciary character.”

In plain simple English – bankers cannot be prosecuted for breach of trust, because it owes no fiduciary duty to the depositor / customer, as he is deemed to be using his own money to speculate etc. There is absolutely no criminal liability.

The trillion dollar question is, Why has no one in the Justice Department or other government agencies mentioned this legal principle?

The reason why no one dare speak this legal truth is because there would be a run on the banks when all the Joe Six-Packs wise up to the fact that their deposits with the bankers CONSTITUTE IN LAW A LOAN TO THE BANK and the bank can do whatever it likes even to indulge in hazardous speculation such as gambling in the global derivative casino.

The Joe Six-Packs always consider the bank the creditor even when he deposits money in the bank. No depositor ever considers himself as the creditor!

Yes, Eric Holder, the US Attorney-General is right when he said that bankers cannot be prosecuted for the losses suffered by the bank. This is because a banker cannot be prosecuted for losing his “own money” as stated by the House of Lords. This is because when money is deposited with the bank, that money belongs to the banker.

The reason that if a banker is prosecuted it would collapse the entire banking system is a big lie.

The US Attorney-General could not and would not state the legal principle because it would cause a run on the banks when people discover that their monies are not safe with bankers as they can in law use the monies deposited as their own even to speculate.

What is worrisome is that your right to be repaid arises only when you demand payment.

Obviously, when you demand payment, the bank must pay you. But, if you demand payment after the bank has collapsed and is insolvent, it is too late. Your entitlement to be repaid is that of a lonely unsecured creditor and only if there are funds left after liquidation to be paid out to all the unsecured creditors and the remaining funds to be pro-rated. You would be lucky to get ten cents on the dollar.

So, when the Bank of England, the FED and the BIS issued the guidelines which became the template for the Cyprus “bail-in” (which was endorsed by the G-20 Cannes Summit in 2011), it was merely a circuitous way of stating the legal position without arousing the wrath of the people, as they well knew that if the truth was out, there would be a revolution and blood on the streets. It is therefore not surprising that the global central bankers came out with this nonsensical advisory:

“The objective of an effective resolution regime is to make feasible the resolution of financial institutions without severe systemic disruption and without exposing taxpayers to losses, while protecting vital economic functions through mechanisms which make it possible for shareholders and unsecured and uninsured creditors to absorb losses in a manner that respects the hierarchy of claims in liquidation.”(quoted in  FSB Consultative Document: Effective Resolution of Systemically …)

This is the kind of complex technical jargon used by bankers to confuse the people, especially depositors and to cover up what I have stated in plain and simple English in the foregoing paragraphs.

The key words of the BIS guideline are:

“without severe systemic disruptions” (i.e. bank runs),

“while protecting vital economic functions” (i.e. protecting vested interests – bankers),

“unsecured creditors” (i.e. your monies, you are the dummy),

“respects the hierarchy of claims in liquidation” (i.e. you are last in the queue to be paid, after all secured creditors have been paid).

This means all depositors are losers!

Please read this article carefully and spread it far and wide.

You will be doing a favour to all your fellow country men and women and more importantly, your family and relatives.

NOTE: This article is originally published at this website:

http://www.globalresearch.ca/no-bank-deposits-will-be-spared-from-confiscation

**************************************

NOTE: Comment by David Kevin Lindsay:

"This is an an awesome article on the nature of banking and why people will never get their money back when the banks collapse; nor are the banks required by law to pay them back.

Keeping money in the bank is not logical.  People may think that there is risk involved in keeping money at home or in their pockets. However, whether you keep $100 or $10 000

there, the fact is that no one else has any idea how much money you have as they cannot see inside.  So why be nervous?  It may not be logical to keep all your money in one location, in the rare instance that something does happen, however keeping it in the bank where it can be taken by governments and others on a whim, is not that intelligent either.  To say nothing of the record keeping that is kept for all your transactions. 

The more people use cash, as opposed to credit and debit cards, the less likely it will be that cash will be eliminated.  The more people that use cards and/or electronic transactions, the

more likely it will be that cash will be eliminated.

So do your part.  Take your money out of the bank, put it in a couple of different locations (even buy a safe) and use cash as much as possible.  For your own protection."

In freedom I remain

David Kevin Lindsay

CLEAR

The Big Banks Are Recklessly Gambling With Our Money

... And It Will Cause The Global Financial System To Collapse

By Michael Snyder

Have you ever wondered how the big banks make such enormous mountains of money?  Well, the truth is that much of it is made by gambling recklessly.  If they win on their bets, they become fabulously wealthy.  If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are "too big to fail".  Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to "recapitalize" themselves by stealing money directly from our bank accounts.  So if they win, they win big.  If they lose, someone else will come in and clean up the mess.  This creates a tremendous incentive for the bankers to "go for it", because there is simply not enough pain in this equation for those that are taking the risks.  If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street.  But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened.  In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.

Have you noticed how most news reports about Cyprus don't even get into the reasons why the big banks in Cyprus collapsed?

Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them.  In a recent article, Ron Paul explained how the situation played out once the bets started to go bad...

The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer's Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus' GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.

If those bets had turned out to be profitable, the bankers would have kept all of the profits.  But those bets turned out to be big losers, and private bank accounts in Cyprus are now being raided to pay the bill.  Unfortunately, as Ron Paul noted, what just happened in Cyprus is already being touted as a "template" for future bank bailouts all over the globe...

The elites in the EU and IMF failed to learn their lesson from the popular backlash to these tax proposals, and have openly talked about using Cyprus as a template for future bank bailouts. This raises the prospect of raids on bank accounts, pension funds, and any investments the government can get its hands on. In other words, no one's money is safe in any financial institution in Europe. Bank runs are now a certainty in future crises, as the people realize that they do not really own the money in their accounts. How long before bureaucrat and banker try that here?

Unfortunately, all of this is the predictable result of a fiat paper money system combined with fractional reserve banking. When governments and banks collude to monopolize the monetary system so that they can create money out of thin air, the result is a business cycle that wreaks havoc on the economy. Pyramiding more and more loans on top of a tiny base of money will create an economic house of cards just waiting to collapse. The situation in Cyprus should be both a lesson and a warning to the United States.

This is an example of what can happen when the dominoes start to fall.  The banks of Cyprus failed because Greek debt went bad.  And the Greeks were using derivatives to try to hide the true scope of their debt problems.  The following is what Jim Sinclair recently told King World News...

When people say that the Cypriot banks lost because of being in Greek debt, what was one of the Greeks’ greatest sins? They used over-the-counter derivatives in order to hide the real condition of their balance sheet.

Depositor money, brokerage money, and clearing house money have been tangled up in the mountain of derivatives as the banks have used this cash to speculate in an attempt to make huge bonuses for bank executives.

As I have written about so many times, the global quadrillion dollar derivatives bubble is one of the greatest threats that the global financial system is facing.  As Sinclair explained to King World News, when this derivatives bubble bursts and the losses start soaring, the big banks are going to want to raid private bank accounts just like the banks in Cyprus were able to...

What do you think happens when Buffett reports that he made $10 billion in derivatives? Somebody else lost $10 billion and it was most likely one financial institution. There is no question that what we are seeing right now is not isolated to Cyprus. It has happened everywhere, but is has been camouflaged by making the depositors and the banks whole. What Cyprus will reveal is that losses do not stop with the bank’s capital. Losses roar right through bank capital and take depositors’ money.

This could have all been avoided if we had allowed the big Wall Street banks to collapse back in 2008.  Reckless behavior would have been greatly punished and banks would have chosen to do business differently in the future.

David Stockman, the former director of the Office of Management and Budget under President Ronald Reagan, says that because we bailed out the big banks it was a signal to them that they could go back and freely engage in the same kind of reckless behavior that they were involved in previously...

Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.

Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.

The lessons that we were supposed to learn from the crisis of 2008 have not been learned.

Instead, the lure of huge returns and big bonuses has caused a return to the exact same behavior that caused the crisis of 2008 in the first place.  The following is one example of this phenomenon from a recent article by Wolf Richter...

The craziness on Wall Street, the reckless for-the-moment-only behavior that led to the Financial Crisis, is back.

This time it’s Citigroup that is once again concocting “synthetic” securities, like those that had wreaked havoc five years ago. And once again, it’s using them to shuffle off risks through the filters of Wall Street to people who might never know.

What bubbled to the surface is that Citigroup is selling synthetic securities that yield 13% to 15% annually—synthetic because they’re based on credit derivatives. Apparently, Citi has a bunch of shipping loans on its books, and it’s trying to protect itself against default. In return for succulent interest payments, investors will take on some of the risks of these loans.

Yes, the Dow hit another new all-time high today.  But the derivatives bubble that hangs over the global economy like a sword of Damocles could burst at literally any moment.  When it does, the damage is going to be incalculable.

In a previous article entitled "Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers", I noted a couple of statistics that show why derivatives are such an enormous problem...

-$212,525,587,000,000 - According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States.  But those banks only have total assets of about 8.9 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.

-$600,000,000,000,000 to $1,500,000,000,000,000 - The estimates of the total notional value of all global derivatives generally fall within this range.  At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.

When the derivatives bubble finally bursts, where are we going to get the trillions upon trillions of dollars that will be needed to "fix" things this time?

And sadly, the reality is that we are quickly running out of time.

It is important to keep watching Europe.  As I noted the other day, the European banking system as a whole is leveraged about 26 to 1 at this point.  When Lehman Brothers finally collapsed, it was leveraged about 30 to 1.

And the economic crisis over in Europe just continues to get worse.  It was announced on Tuesday that the unemployment rate in the eurozone is at an all-time record high of 12 percent, and the latest manufacturing numbers show that manufacturing activity over in Europe is in the process of collapsing.

So don't be fooled by the fact that the Dow keeps setting new all-time record highs.  This bubble of false hope will be very short-lived.

The unfortunate truth is that the global financial system is a complete and total mess, and at this point a collapse appears to be inevitable.

NOTE: This article is originally published at this website:

http://theeconomiccollapseblog.com/archives/the-big-banks-are-recklessly-gambling-with-our-money-and-it-will-cause-the-global-financial-system-to-collapse

Esquimalt First Nation Unveils Barter Currency

Willie Seymour and Meaghan Champion with the barter currency called Tetlas.

By Judith Lavoie

Meaghan Champion intends to reform the monetary system.

Not an easy ambition, she admits, as she thumbs through a pile of Tetlas, the currency she is using for a barter system.

But, First Nations have a history of bartering and it is time for new ideas to help people cope financially and raise money for worthy projects, said Champion, a member of Cowichan Tribes living in Esquimalt.

“Money is just a tool,” said Champion, comparing the Tetlas to Canadian Tire money. “Our people have bartered and traded since the beginning of time. The Tetlas will allow us to realize our cultural inheritance.”

So far, 35 businesses, ranging from restaurants to web designers, have signed on to the Tetla system, allowing between 25 per cent and 100 per cent of the bill to be paid in Tetlas.

“Right now, there are over 5,000 Tetlas in circulation and they can be used to buy services or as a reward or people can donate them to us,” said Champion, who is also hoping for donations of grocery gift cards. “The more people that participate in this, the more value the Tetlas have.”

To obtain Tetlas, participants can accept them in payment or offer a service in return.

From a business point of view, Tetlas can be used as a marketing tool, said Champion, who owns a house-cleaning business.

“Businesses get new customers and people tend to buy things they wouldn’t buy if they were spending money,” she said.

Tetlas cannot be used to buy alcohol or drugs.

Scott Kelly, manager of Mister Sweeper Vacuums, which allows 25 per cent to be paid in Tetlas, said he looks at it as a discount for new clients.

“It’s a form of alternative currency that people can trade for products and services,” he said.

“It’s what people have been doing for thousands and thousands of years.”

Champion’s major aim is to raise money for Snuwylh Lelum, a teaching house, where all cultures can come together and learn about Coast Salish culture.

“We are trying to create an immersion experience so people can bathe in the culture,” she said.

Willie Seymour, a Stz’uminus First Nation elder, has completed a series of lectures on traditional teachings, and is hoping, one day, to be able to deliver them in a new Snuwylh Lelum big house — built with the help of a Tetla economy.

“We need something for all people. We are trying to build a bridge between nations,” he said.

Coast Salish teachings are based on helping other people, Seymour said.

“You can’t shake hands with a clenched fist. You have to open your hand and say thank you.”

It is a massive project and it is likely about $50,000 will be needed, but Champion has faith it will happen.

Already there have been offers of land and construction work and a fundraising dinner is scheduled for May 20 at the Esquimalt Big House, she said.

“Tetlas are very much like salmon spawning. They go out to sea and mysteriously come back and spawn more salmon,” she said.

For more information go to http://www.tetla.org

Judith Lavoie: jlavoie@timescolonist.com

NOTE: This article is originally posted at this website:

http://www.timescolonist.com/business/esquimalt-first-nation-unveils-barter-currency-1.112277

The Global Economic Crisis

The Great Depression of the XXI Century

The following is an excerpt of a chapter by Ellen Brown from the new book by Global Research Publishers, “The Global Economic Crisis: The Great Depression of the XXI Century.”

Michel Chossudovsky & Andrew Gavin Marshall (editors)

Help us get the word out, “like” the book on Facebook, comment, and share with friends!

By acting together to fulfill these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future. We are committed to take all necessary actions to restore the normal flow of credit through the financial system and ensure the soundness of systemically important institutions, implementing our policies in line with the agreed G20 framework for restoring lending and repairing the financial sector. We have agreed to support a general SDR allocation which will inject $250bn into the world economy and increase global liquidity.– G20 Communiqué, London, April 2, 2009

Towards a New Global Currency?

Is the Group of Twenty Countries (G20) envisaging the creation of a Global Central bank? Who or what would serve as this global central bank, cloaked with the power to issue the global currency and police monetary policy for all humanity? When the world’s central bankers met in Washington in September 2008 at the height of the financial meltdown, they discussed what body might be in a position to serve in that awesome and fearful role. A former governor of the Bank of England stated:

The answer might already be staring us in the face, in the form of the Bank for International Settlements (BIS)… The IMF tends to couch its warnings about economic problems in very diplomatic language, but the BIS is more independent and much better placed to deal with this if it is given the power to do so.[1]

And if the vision of a global currency outside government control was not enough to set off conspiracy theorists, putting the BIS in charge of it surely would be. The BIS has been scandal-ridden ever since it was branded with pro-Nazi leanings in the 1930s. Founded in Basel, Switzerland, in 1930, the BIS has been called “the most exclusive, secretive, and powerful supranational club in the world.” Charles Higham wrote in his book Trading with the Enemy that by the late 1930s, the BIS had assumed an openly pro-Nazi bias, a theme that was expanded on in a BBC Timewatch film titled “Banking with Hitler” broadcast in 1998.[2] In 1944, the American government backed a resolution at the Bretton Woods Conference calling for the liquidation of the BIS, following Czech accusations that it was laundering gold stolen by the Nazis from occupied Europe; but the central bankers succeeded in quietly snuffing out the American resolution.[3]

In Tragedy and Hope: A History of the World in Our Time (1966), Dr. Carroll Quigley revealed the key role played in global finance by the BIS behind the scenes. Dr. Quigley was Professor of History at Georgetown University, where he was President Bill Clinton’s mentor. He was also an insider, groomed by the powerful clique he called “the international bankers.” His credibility is heightened by the fact that he actually espoused their goals. Quigley wrote:

I know of the operations of this network because I have studied it for twenty years and was permitted for two years, in the early 1960’s, to examine its papers and secret records. I have no aversion to it or to most of its aims and have, for much of my life, been close to it and to many of its instruments… In general my chief difference of opinion is that it wishes to remain unknown, and I believe its role in history is significant enough to be known…

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. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.[4]

The key to their success, said Quigley, was that the international bankers would control and manipulate the money system of a nation while letting it appear to be controlled by the government.

The statement echoed one made in the 18th century by the patriarch of what became the most powerful banking dynasty in the world. Mayer Amschel Bauer Rothschild is quoted as saying in 1791: “Allow me to issue and control a nation’s currency, and I care not who makes its laws.” Mayer’s five sons were sent to the major capitals of Europe – London, Paris, Vienna, Berlin and Naples – with the mission of establishing a banking system that would be outside government control. The economic and political systems of nations would be controlled not by citizens but by bankers, for the benefit of bankers.

Eventually, a privately-owned “central bank” was established in nearly every country. This central banking system has now gained control over the economies of the world. Central banks have the authority to print money in their respective countries, and it is from these banks that governments must borrow money to pay their debts and fund their operations. The result is a global economy in which not only industry but government itself runs on “credit” (or debt) created by a banking monopoly headed by a network of private central banks. At the top of this network is the BIS, the “central bank of central banks” in Basel.

Behind the Curtain

For many years the BIS kept a very low profile, operating behind the scenes in an abandoned hotel. It was here that decisions were reached to devalue or defend currencies, fix the price of gold, regulate offshore banking, and raise or lower short-term interest rates. In 1977, however, the BIS gave up its anonymity in exchange for more efficient headquarters. The new building has been described as “an eighteen story-high circular skyscraper that rises above the medieval city like some misplaced nuclear reactor.” It quickly became known as the “Tower of Basel.” Today the BIS has governmental immunity, pays no taxes, and has its own private police force.[5] It is, as Mayer Rothschild envisioned, above the law.

The BIS is now composed of 55 member nations, but the club that meets regularly in Basel is a much smaller group; and even within it, there is a hierarchy. In a 1983 article in Harper’s Magazine called “Ruling the World of Money,” Edward Jay Epstein wrote that where the real business gets done is in “a sort of inner club made up of the half dozen or so powerful central bankers who find themselves more or less in the same monetary boat” – those from Germany, the United States, Switzerland, Italy, Japan and England. Epstein said:

The prime value, which also seems to demarcate the inner club from the rest of the BIS members, is the firm belief that central banks should act independently of their home governments… A second and closely related belief of the inner club is that politicians should not be trusted to decide the fate of the international monetary system.[6]

In 1974, the Basel Committee on Banking Supervision was created by the central bank Governors of the Group of 10 nations (now expanded to twenty). The BIS provides the twelve-member Secretariat for the Committee. The Committee, in turn, sets the rules for banking globally, including capital requirements and reserve controls. In a 2003 article titled “The Bank for International Settlements Calls for Global Currency,” Joan Veon wrote:

The BIS is where all of the world’s central banks meet to analyze the global economy and determine what course of action they will take next to put more money in their pockets, since they control the amount of money in circulation and how much interest they are going to charge governments and banks for borrowing from them…

When you understand that the BIS pulls the strings of the world’s monetary system, you then understand that they have the ability to create a financial boom or bust in a country. If that country is not doing what the money lenders want, then all they have to do is sell its currency.[7]

The Controversial Basel Accords

The power of the BIS to make or break economies was demonstrated in 1988, when it issued a Basel Accord raising bank capital requirements from six percent to eight percent. By then, Japan had emerged as the world’s largest creditor; but Japan’s banks were less well capitalized than other major international banks. Raising the capital requirement forced them to cut back on lending, creating a recession in Japan like that suffered in the U.S. today. Property prices fell and loans went into default as the security for them shriveled up. A downward spiral followed, ending with the total bankruptcy of the banks. The banks had to be nationalized, although that word was not used in order to avoid criticism.[8]

Among other “collateral damage” produced by the Basel Accords was a spate of suicides among Indian farmers unable to get loans. The BIS capital adequacy standards required loans to private borrowers to be “risk-weighted,” with the degree of risk determined by private rating agencies; farmers and small business owners could not afford the agencies’ fees. Banks therefore assigned one hundred percent risk to the loans, and then resisted extending credit to these “high-risk” borrowers because more capital was required to cover the loans. When the conscience of the nation was aroused by the Indian suicides, the government, lamenting the neglect of farmers by commercial banks, established a policy of ending the “financial exclusion” of the weak; but this step had little real effect on lending practices, due largely to the strictures imposed by the BIS from abroad.[9]

Economist Henry C K Liu has analyzed how the Basel Accords have forced national banking systems “to march to the same tune, designed to serve the needs of highly sophisticated global financial markets, regardless of the developmental needs of their national economies.” He wrote:

National banking systems are suddenly thrown into the rigid arms of the Basel Capital Accord sponsored by the Bank of International Settlement (BIS), or to face the penalty of usurious risk premium in securing international interbank loans… National policies suddenly are subjected to profit incentives of private financial institutions, all members of a hierarchical system controlled and directed from the money center banks in New York. The result is to force national banking systems to privatize…

BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies… The IMF and the international banks regulated by the BIS are a team: the international banks lend recklessly to borrowers in emerging economies to create a foreign currency debt crisis, the IMF arrives as a carrier of monetary virus in the name of sound monetary policy, then the international banks come as vulture investors in the name of financial rescue to acquire national banks deemed capital inadequate and insolvent by the BIS.

Ironically, noted Liu, developing countries with their own natural resources did not actually need the foreign investment that trapped them in debt to outsiders: “Applying the State Theory of Money [which assumes that a sovereign nation has the power to issue its own money], any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation.”[10]

When governments fall into the trap of accepting loans in foreign currencies, however, they become “debtor nations” subject to IMF and BIS regulation. They are forced to divert their production to exports, just to earn the foreign currency necessary to pay the interest on their loans. National banks deemed “capital inadequate” have to deal with strictures comparable to the “conditionalities” imposed by the IMF on debtor nations: “escalating capital requirement, loan write-offs and liquidation, and restructuring through selloffs, layoffs, downsizing, cost-cutting and freeze on capital spending.” Liu wrote:

Reversing the logic that a sound banking system should lead to full employment and developmental growth, BIS regulations demand high unemployment and developmental degradation in national economies as the fair price for a sound global private banking system.[11]

The Last Domino to Fall

While banks in developing nations were being penalized for falling short of the BIS capital requirements, large international banks managed to skirt the rules, although they actually carried enormous risk because of their derivative exposure. The mega-banks took advantage of a loophole that allowed for lower charges against capital for “off-balance sheet activities.” The banks got loans off their balance sheets by bundling them into securities and selling them off to investors, after separating the risk of default out from the loans and selling it off to yet other investors, using a form of derivative known as “credit default swaps.”

It was evidently not in the game plan, however, that U.S. banks should escape the regulatory net indefinitely. Complaints about the loopholes in Basel I prompted a new set of rules called Basel II, which based capital requirements for market risk on a “Value-at-Risk” accounting standard. The new rules were established in 2004, but they were not levied on U.S. banks until November 2007, the month after the Dow passed 14 000 to reach its all-time high. On November 1, 2007, the Office of the Controller of the Currency “approved a final rule implementing advanced approaches of the Basel II Capital Accord.”[12] On November 15, 2007, the Financial Accounting Standards Board or FASB, a private organization that sets U.S. accounting rules for the private sector, adopted FAS 157, the rule called “mark-to-market accounting.”[13] The effect on U.S. banks was similar to that of Basel I on Japanese banks: they have been struggling to survive ever since.[14]

The mark-to-market rule requires banks to adjust the value of their marketable securities to the “market price” of the security.[15] The rule has theoretical merit, but the problem is timing: it was imposed ex post facto, after the banks already had the hard-to-market assets on their books. Lenders that had been considered sufficiently well capitalized to make new loans suddenly found they were insolvent; at least, they would have been if they had tried to sell their assets, an assumption required by the new rule. Financial analyst John Berlau complained in October 2008:

Despite the credit crunch being described as the spread of the ‘American flu,’ the mark-to-market rules that are spreading it were hatched [as] part of the Basel II international rules for financial institutions. It’s just that the U.S. jumped into the really icy water last November when our Securities and Exchange Commission and bank regulators implemented FASB’s Financial Accounting Standard 157, which makes healthy banks and financial firms take a ‘loss’ in the capital they can lend even if a loan on their books is still performing, even when the ‘market price’ [of] an illiquid asset is that of the last fire sale by a highly leveraged bank. Late last month, similar rules went into effect in the European Union, playing a similar role in accelerating financial failures…

The crisis is often called a ‘market failure,’ and the term ‘mark-to-market’ seems to reinforce that. But the mark-to-market rules are profoundly anti-market and hinder the free-market function of price discovery… In this case, the accounting rules fail to allow the market players to hold on to an asset if they don’t like what the market is currently fetching, an important market action that affects price discovery in areas from agriculture to antiques.[16]

Imposing the mark-to-market rule on U.S. banks caused an instant credit freeze, which proceeded to take down the economies not only of the U.S. but of countries worldwide. In early April 2009, the mark-to-market rule was finally softened by the FASB; but critics said the modification did not go far enough, and it was done in response to pressure from politicians and bankers, not out of any fundamental change of heart or policies by the BIS or the FASB. Indeed, the BIS was warned as early as 2001 that its Basel II proposal was “procyclical,” meaning that in a downturn it would only serve to make matters worse. In a formal response to a Request for Comments by the Basel Committee for Banking Supervision, a group of economists stated:

Value-at-Risk can destabilize an economy and induce crashes when they would not otherwise occur… Perhaps our most serious concern is that these proposals, taken altogether, will enhance both the procyclicality of regulation and the susceptibility of the financial system to systemic crises, thus negating the central purpose of the whole exercise. Reconsider before it is too late.[17]

The BIS did not reconsider, however, even after seeing the devastation its regulations had caused; and that is where the conspiracy theorists came in. Why did the BIS sit idly by, they asked, as the global economy came crashing down? Was the goal to create so much economic havoc that the world would rush with relief into the waiting arms of a global economic policeman with its privately-created global currency?

Notes

[1] Andrew Gavin Marshall, “The Financial New World Order: Towards a Global Currency and World Government”, Global Research, http://www.globalresearch.ca/index.php?context=va&aid=13070, 6 April 2009. See also Chapter 17.

[2] Alfred Mendez, “The Network”, The World Central Bank: The Bank for International

Settlements, http://copy_bilderberg.tripod.com/bis.htm.

[3] HubPages, “BIS – Bank of International Settlement: The Mother of All Central Banks”, hubpages.com, 2009.

[4] Carroll Quigley, Tragedy and Hope: A History of the World in Our Time, 1966.

[5] HubPages, “BIS – Bank of International Settlement: The Mother of All Central Banks”, hubpages.com, 2009.

[6] Edward Jay Epstein, “Ruling the World of Money”, Harper’s Magazine, November 1983.

[7] Joan Veon, “The Bank for International Settlements Calls for Global Currency”, News with Views, 26 August 2003.

[8] Peter Myers, “The 1988 Basle Accord – Destroyer of Japan’s Finance System”, http://www.mailstar.net/basle.html, 9 September 2008.

[9] Nirmal Chandra, “Is Inclusive Growth Feasible in Neoliberal India?”, networkideas.org, September 2008.

[10] Henry C. K. Liu, “The BIS vs National Banks”, Asia Times, http://www.atimes.com/global-econ/DE14Dj01.html, 14 May 2002.

[11] Ibid.

[12] Comptroller of the Currency, “OCC Approves Basel II Capital Rule”, Comptroller of the Currency Release, 1 November 2007.

[13] Vinny Catalano, “FAS 157: Timing Is Everything”, vinnycatalano.blogspot.com, 18 March 2008.

[14] Bruce Wiseman, “The Financial Crisis: A look Behind the Wizard’s Curtain”, Canada Free Press, 19 March 2009.

[15] Ellen Brown, “Credit Where Credit Is Due”, webofdebt.com/articles/creditcrunch.php, 11 January 2009.

[16] John Berlau, “The International Mark-to-Market Contagion”, OpenMarket.org, 10 October 2008.

[17] Jon Danielsson, et al., “An Academic Response to Basel II”, LSE Financial Markets Group Special Paper Series, May 2001.