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In an April 7 article in The London Telegraph titled “The G20 Moves the World a Step Closer to a Global Currency,” Ambrose Evans-Pritchard wrote: “A single clause in Point 19 of the communiqué issued by the G20 leaders amounts to revolution in the international financial order. “‘We have accorded to help a standard SDR portion which will inject $250bn (£170bn) into the world economy and increase global liquidity,’ it said. SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century. “In effect, the G20 leaders have activated the IMF’s power to formulate cash and commence global ‘quantitative easing’. In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.” Indeed they will. The article is subtitled, “The world is a step closer to a international currency, backed by a international central bank, running monetary policy for all humanity.” Which naturally raises the question, who or what will 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 last September, they discussed what body might be in a position to serve in that astounding and fearful role. A former governor of the Bank of England stated: “[T]he answer might already be staring us in the face, in the form of the Bank for International Settlements (BIS). . . . The IMF have a tendancy to couch it is warnings with regards to economic difficulties 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 imaginativeness of a global currency outside government control does not set off conspiracy theorists, putting the BIS in charge of it surely will. 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 in an open way 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 solution 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 international 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 believability is intensified by the fact that he actually espoused their goals. He 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 consider in detail it is papers and mystery records. I have no aversion to it or to most of it is aims and have, for much of my life, been close to it and to galore of it is instruments. . . . [I]n popular my chief divergence of sentiment is that it wishes to stay unknown, and I believe it is role in history is substantial sufficient to be known.” Quigley wrote of this international banking network: “[T]he powers of financial capitalism had another far-reaching aim, not one thing less than to create a world system of financial control in private hands competent to dominate the political scheme 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 mystery agreements arrived at in standard private meetings and conferences. The apex of the scheme 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.” The key to their success, said Quigley, was that the global bankers would control and manipulate the cash system of a nation while letting it appear to be controlled by the government. The statement echoed one made in the eighteenth century by the patriarch of what would become the most powerful banking dynasty in the world. Mayer Amschel Bauer Rothschild famously said in 1791: “Allow me to issue and control a nation’s currency, and I care not who makes it is 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 schemes of nations would be controlled not by citizens but by bankers, for the gain of bankers. Eventually, a privately-owned “central bank” was conventional in closely each country; and this central banking scheme has now gained control over the economies of the world. Central banks have the authority to print cash in their respective countries, and it is from these banks that governments must borrow cash to remunerate 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) devised by a banking monopoly headed by a network of private central banks; and at the top of this network is the BIS, the “central bank of central banks” in Basel. BEHIND THE CURTAIN For a heap of years the BIS held a very low profile, operating behind the scenes in an abandoned hotel. It was here that conclusions were reached to devalue or defend currencies, repair the price of gold, regulate offshore banking, and raise or lower short-term interest rates. In 1977, however, the BIS gave up it is anonymity in interchange for more effective headquarters. The new building has been described as “an eighteen story-high circular skyscraper that rises above the medieval city like numerous misplaced nuclear reactor.” It speedily became known as the “Tower of Basel.” Today the BIS has governmental immunity, compensate no taxes, and has it is own private police force.4 It is, as Mayer Rothschild envisioned, above the law. The BIS is now composed of 55 fellow member nations, but the club that meets regularly in Basel is a much littler 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 likewise seems to demarcate the inner club from the rest of the BIS members, is the firm faith that central banks will have to act independently of their home governments. . . . A second and almost related faith of the inner club is that politicians will have to not be trusted to determine the fate of the international monetary system.” In 1974, the Basel Committee on Banking Supervision was developed by the central bank Governors of the Group of Ten 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 requisites 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 make an analyzation of the international economy and determine what course of action they will take next to put more cash in their pockets, since they control the amount of cash 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 grasp that they have the capacity to formulate a financial boom or bust in a country. If that country is not doing what the cash lenders want, then all they have to do is trade it is currency.”5 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 requisites from 6% to 8%. By then, Japan had emerged as the world’s greatest creditor; but Japan’s banks were less well capitalized than other major global 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, though that word was not used in order to keep out of the way of criticism.6 Among other collateral harm 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 peril determined by private rating agencies; and farmers and little business owners could not afford the agencies’ fees. Banks consequently assigned 100 percent peril to the loans, and then resisted extending credit to these “high-risk” borrowers because more capital was required to cover the loans. When the sense of right and wrong of the nation was aroused by the Indian suicides, the government, lamenting the neglect of farmers by mercantile banks, conventional 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.7 Similar complaints have come from Korea. An article in the December 12, 2008 Korea Times titled “BIS Calls Trigger Vicious Cycle” described how Korean enterprisers with good collateral cannot get operational loans from Korean banks, at a time when the economic downturn requires increased investment and having little impact credit: “‘The Bank of Korea has provided more than 35 trillion won to banks since September when the international financial crisis went full throttle,’ said a Seoul analyst, who declined to be named. ‘But the effect is not seen at all with the banks keeping the liquidity in their safes. They merely don’t lend and one of the greatest reasons is to keep the BIS ratio high sufficient to survive,’ he said. . . . “Chang Ha-joon, an economics professor at Cambridge University, concurs with the analyst. ‘What banks do for their own interests, or to improve the BIS ratio, is versus the interests of the whole society. This is a bad idea,’ Chang said in a recent telephone consultation with Korea Times.” In a May 2002 article in The Asia Times titled “Global Economy: The BIS vs. National Banks,” economist Henry C K Liu observed that 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, no matter of the developmental needs of their national economies.” He wrote: “[N]ational banking schemes are of a sudden 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 danger premium in securing international interbank loans. . . . National policies of a sudden are subjected to net profit incentives of private financial institutions, all members of a hierarchical system controlled and directed from the cash center banks in New York. The result is to strength national banking systems to privatize . . . . “BIS regulatings serve only the single intention 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 emergent economies to invent a alien currency debt crisis, the IMF arrives as a carrier of monetary virus in the name of sound monetary policy, then the global banks come as vulture investors in the name of financial rescue to acquire national banks deemed capital inadequate and insolvent by the BIS.” Ironically, cited Liu, fabricating countries with their own natural resources did not in truth need the alien 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 it is own money], any government may fund with it is own currency all it is domestic developmental needs to maintain full employment without inflation.” When governments fall into the trap of accepting loans in alien 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 alien currency necessary to pay the interest on their loans. National banks deemed “capital inadequate” have to deal with strictures comparable to the “conditionalities” enforced by the IMF on debtor nations: “escalating capital requirement, loan writeoffs 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 ought to lead to full employment and developmental growth, BIS regulatings demand high jobless and developmental degradation in national economies as the reasonable price for a sound international private banking system.” THE LAST DOMINO TO FALL? While banks in fabricating nations were being penalized for falling short of the BIS capital requirements, big international banks managed to escape the rules, altho they actually carried enormous peril because of their derivative exposure. The mega-banks succeeded in avoiding the Basel rules by separating the “risk” of default out from the loans and retail it off to investors, using a form of derivative known as “credit default swaps.” However, it was not in the game plan that U.S. banks will have to escape the BIS net. When they managed to sidestep the firstborn Basel Accord, a second set of rules was imposed known as Basel II. 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 it is all-time high. It has been all downhill from there. Basel II had the same effect on U.S. banks that Basel I had on Japanese banks: they have been engaged in a struggle ever since to survive.8 Basel II requires banks to adjust the value of their marketable securities to the “market price” of the security, a rule called “mark to market.”9 The rule has theoretical merit, but the problem is timing: it was enforced ex post facto, after the banks already had the hard-to-market pluses on their books. Lenders that had been considered sufficiently well capitalized to make new loans of a sudden found they were insolvent. At least, they would have been insolvent if they had tried to trade their assets, an assumption required by the new rule. Financial analyst John Berlau complained: “The crisis is ofttimes 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 grant the market players to hold on to an asset if they don’t like what the market is presently fetching, an necessary market action that affects price invention in areas from agriculture to antiques.”10 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 at last softened by the U.S. Financial Accounting Standards Board (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 rudimentary modify of heart or policies by the BIS. And that is where the conspiracy theorists come in. Why did the BIS not retract or at least modify Basel II after seeing the devastation it had caused? Why did it sit idly by as the international economy came crashing down? Was the goal to formulate so much economic mayhem that the world would rush with relief into the waiting arms of the BIS with it is privately-created global currency? The plot thickens . . . . Originally posted on Global Research on April 18, 2009. ——————————————————————————– 1. Andrew Marshall, “The Financial New World Order: Towards a Global Currency and World Government,” Global Research (April 6, 2009). 2. Alfred Mendez, “The Network,” in “The World Central Bank: The Bank for International Settlements.” 3. “BIS – Bank of International Settlement: The Mother of All Central Banks,” Hubpages (2009). 4. Ibid. 5. Joan Veon, “The Bank for International Settlements Calls for Global Currency,” News with Views (August 26, 2003). 6. Peter Myers, “The 1988 Basle Accord – Destroyer of Japan’s Finance System” (updated September 9, 2008). 7. Nirmal Chandra, “Is Inclusive Growth Feasible in Neoliberal India?”, Network Ideas (September 2008). 8. Bruce Wiseman, “The Financial Crisis: A look Behind the Wizard’s Curtain,” Canada Free Press (March 19, 2009). 9. See Ellen Brown, “Credit Where Credit Is Due,” webofdebt.com/articles/creditcrunch.php (January 11, 2009). 10. John Berlau, “The International Mark-to-market Contagion,” Open Market (October 10, 2008). |
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