The Global Monetary System,
The Shadow Banking System

excerpted from the book

The Global Economic Crisis

The Great Depression of the XXI Century

Michel Chossudovsky and Andrew Gavin Marshall, Editors

Global Research, 2010, paperback

 

Andrew Gavin Marshall

p303
The most vital and powerful force within the capitalist global political economy [is] the central banking system... the central banking system, is also the source of the greatest wealth and power, essentially managing capitalism - controlling the credit and debt of both government and industry.

p303
For as long as the central banking system has been dominant, central bankers have managed and controlled capitalism for the benefit of the few and at the expense of the many. Comprehending the nature of central banking is necessary in order to understand the nature of the current economic crisis.

p309
The Rothschilds ascended to the throne of international banking with the Battle of Waterloo. After having established banking houses in London, Paris, Frankfurt, Vienna and Naples, they profited off all sides in the Napoleonic wars.

p309
Carroll Quigley "Tragedy and Hope"

The merchant bankers of London 1810-1850 [controlled] the Stock Exchange, the Bank of England, and the London money market.

In time they brought into their financial network the provincial banking centers, organized as commercial banks and savings banks, as well as insurance companies, to form all of these into a single financial system on an international scale which manipulated the quantity and flow of money so that they were able to influence, if not control, governments on one side and industries on the other.

p310
Alexander] Hamilton believed that government must ally itself with the richest elements of society to make itself strong.

p310
In the latter half of the 1800s European financiers were in favor of an American Civil War that would return the United States to its colonial status.

p310
... The Civil War, lasted from 1861 until 1865 ... during which, Congress also set up a national bank, putting the government into partnership with the banking interests, guaranteeing their profits.

p310
President Abraham Lincoln

The money powers prey on the nation in times of peace and conspire against it in times of adversity. The banking powers are more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. They denounce as public enemies all who question their methods or throw light upon their crimes.

p311
President Abraham Lincoln

I have two great enemies, the Southern Army in front of me, and the bankers in the rear. Of the two, the one at my rear is my greatest foe. As a most undesirable consequence of the war, corporations have been enthroned, and an era of corruption in high places will follow. The money power will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed.

p311
Howard Zinn

The crisis [the Great Depression of 1873] was built into a system which was chaotic in its nature, in which only the very rich were secure. [The U.S. economic system suffered] periodic crises - 1837,1857,1873 and later: 1893,1907,1919,1929) - that wiped out small businesses and brought cold, hunger, and death to working people while the fortunes of the Astors, Vanderbilts, Rockefellers, Morgans, kept growing through war and peace, crisis and recovery. During the 1873 crisis, Carnegie was capturing the steel market, Rockefeller was wiping out his competitors in oil.

p311
Howard Zinn

The imperial leader of the new oligarchy was the House of Morgan. In its operations it was ably assisted by the First National Bank of New York (directed by George F. Baker) and the National City Bank of New York (presided over by James Stillman, agent of the Rockefeller interests). Among them, these three men and their financial associates occupied 341 directorships in 112 corporations. The total resources of these corporations in 1912 was $22,245,000,000, more than the assessed value of all property in the twenty-two states and territories west of the Mississippi River.

p312
In the early 20th century, European and American banking interests achieved what they had desired for over a century within America, the creation of a privately owned central bank. It was created through collaboration of American and European bankers, primarily the Morgans, Rockefellers, Kuhn, Loebs and Warburgs.

p317
Following World War II, the Allied powers set up the Bretton Woods System, in which the World Bank and IMF emerged, as well as the General Agreement on Tariffs and Trade (GATT), which later became the World Trade Organization (WTO). This system was set up under the hegemony of the United States.

p319
A. Paloni and M. Zonardi "Neoliberalism: A Critical Introduction"

[Neoliberalism is] a particular organization of capitalism, which has evolved to protect capital(ism) and to reduce the power of labor. This is achieved by means of social, economic and political transformations imposed by internal forces as well as external pressure. [It entails the] shameless use of foreign aid, debt relief and balance of payments support to promote the neoliberal program, and diplomatic pressure, political unrest and military intervention when necessary. Neoliberalism is part of a hegemonic project concentrating power and wealth in elite groups around the world, benefiting especially the financial interests within each country, and U.S. capital internationally. Therefore, globalization and imperialism cannot be analyzed separately from neoliberalism.

p325
The central banking system has been the most powerful network of institutions in the world; it reigns supreme over the capitalist world order, almost since its inception. Central banks are the perfect merger of private interests and public power. They have played key roles in every major development and drastic change in the capitalist world economy, and continue to do so.

p325
Central banks are kings without people; generals without armies; captains without crews and leaders without followers. They work behind the scenes; their weapons are the financial instruments they create and employ. With the stroke of a pen, they can destroy a nation and bankrupt a people. Their methods are covert, yet their powers are monumental.

***
Ellen Brown

p331
Carroll Quigley "Tragedy and Hope A History of the World in Our Time"

The powers of financial capitalism [international bankers] had a 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 [BIS] in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.

p332
The international bankers would control and manipulate the money system of a nation while letting it appear to be controlled by the government.

p332
Mayer Amschel Bauer Rothschild the patriarch of what became the most powerful banking dynasty in the world, 1791

Allow me to and control a nation's currency, and care not who makes its laws.

p332
Mayer Amschel Bauer Rothschild's [the patriarch of what became the most powerful banking dynasty in the world] 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 the BIS [Bank for International Settlements], the "central bank of central banks" in Basel.

p332
BIS [Bank for International Settlements] decisions [have been] reached to devalue or defend currencies, fix the price of gold, regulate offshore banking, and raise or lower short-term interest rates... The BlS has governmental immunity, pays no taxes, and has its own private police force., It is above the law.

p333
The BIS is 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.

p333
Edward Jay Epstein "Ruling the World of Money", Harper's Magazine, 1983

The real business [of the BIS] gets done 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... 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.

p333
Joan Veon, in a 2003 article "The Bank for International Settlements Calls for Global Currency"

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.

p335
economist Henry CK about the BIS [Bank for International Settlements]

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.

p333
economist Henry CK

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.

p333
When governments fall into the trap of accepting loans in foreign currencies, they become "debtor nations" subject to IMF and BIS [Bank for International Settlements] regulation. They are forced to divert their production to exports, just to earn the foreign currency necessary to pay the interest on their loan.

p333
economist Henry CK

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

***

Andrew Gavin Marshall

p343
Following the 2009 G20 summit, plans were announced for implementing the creation of a new global currency under the IMF's Special Drawing Rights (SDRs), to replace the U.S. dollar's role as the world's reserve currency. IDRs are a synthetic paper currency issued by the International Monetary Fund.

p350
The future of the global political economy is one of increasing moves toward a global system of governance, or a world government, with a world central bank and global currency.

... What we are witnessing is the creation of a New World Order, composed of a totalitarian global government structure.

... The very concept of a global currency and global central bank is authoritarian in its very nature, as it removes any vestiges of oversight and accountability away from the people of the world, toward a small, increasingly interconnected group of international elites.

***

Richard C. Cook

p355
Real economic democracy, defined as the unfettered opportunity for every person to achieve his/her productive potential and be fairly rewarded for doing so, does not exist on the earth today... The economic life of the world today is based on predatory capitalism, where the people with the most money are the ones in charge.

p355
Instrumental in control of economics by the rich has been the debt-based monetary system, where credit is treated as the monopoly of private financial interests who in turn control governments, intelligence services and military establishments. Politicians are bought and sold, elected or removed, or even assassinated for this purpose. The global monetary system is tightly controlled and coordinated at the top by the leaders of the central banks who work for the world's richest people.

p355
The financial systems of all nations have been arranged so that money only comes into existence when it is lent into circulation by a bank. Banks are organized to be under the control of central banks which are controlled by the international financial oligarchs.

p356
It is the rich who are the creditors, because not only do they have the money to lend, they enjoy, under law, the privilege of creating more lending capacity through the fractional reserve banking system. The bankers are allowed by public charters to create money out of thin air, lend it, and collect interest and fees on that lending.

p356
The financiers are able to create huge financial bubbles that inflate the costs of necessities such as housing, then profit from bankruptcies, foreclosures and public bailouts when the system crashes. [The 2008 economic] crash spread worldwide, but the crisis has nothing to do with any failure of the world's productive capacity. It was simply the result of financial system manipulations by the world's richest people.

p356
The bankers and their controllers rule towns, cities, nations and the world. The armies and domestic police forces are used by the rich to keep the debtors under control. That's simply the way it is and the way those with money are determined to keep it.

p358
Within the U.S.,[monetary reform] proposals have ranged from complete takeover of the Federal Reserve System by the federal government to the replacement of fractional reserve banking and the debt-based monetary system by one where the government spends money directly into existence as was done through the 19th century U.S. Greenbacks.

The Greenback system, which provided up to a third of the U.S. money supply through 1900, was highly successful. The bankers opposed it because it meant fewer loans and less profits.

p358
Stephen Zarlenga, American Monetary Institute [AM]I Director, and author of the American Monetary Act, in his book "The Lost Science of Money"

Under the [American Monetary] Act, instead of relying on taxes and deficits to raise revenue, the government would be authorized to spend money on tangible investments such as infrastructure, education and healthcare.

p363
While in the past, gold, silver and other commodities have been monetized, there never has been a true commodity currency in a modern industrial economy.

The real backing of a currency is the production of goods and services within a trading area and its availability to facilitate trade between buyers and sellers. It is the responsibility of government to provide such a currency to the community.

***

Ellen Brown

p373
The most brilliant banking model in our national history was the established in the first half of the l8 century, in Benjamin Franklin's home province of Pennsylvania. The local government created its own bank, which issued money and lent it to farmers at a modest interest. The provincial government created enough extra money to cover the interest not created in the original loans, spending it into the economy on public services. The bank was publicly owned, and the bankers it employed were public servants. The interest generated on its loans was sufficient to fund the government without taxes; and because the newly issued money came back to the government, the result was not inflationary. The Pennsylvania banking scheme was a sensible and highly workable system that was a product of American ingenuity but never got a chance to prove itself after the colonies became a nation. It was an ironic twist, since according to some historians, restoring the power to create their own currency was a chief reason the colonists fought for independence. The bankers' money-creating machine has had two centuries of empirical testing and has proven to be a failure. It is time the sovereign right to create money is taken from a private banking elite and restored to the American people to whom it properly belongs.


The Global Economic Crisis - The Great Depression of the XXI Century

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