The Global Monetary System,
The Shadow Banking System
excerpted from the book
The Global Economic Crisis
The Great Depression of the XXI
Michel Chossudovsky and Andrew
Gavin Marshall, Editors
Global Research, 2010, paperback
Andrew Gavin Marshall
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.
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.
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.
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.
Alexander] Hamilton believed that government must ally itself
with the richest elements of society to make itself strong.
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.
... 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.
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
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
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.
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
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.
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.
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
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.
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.
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.
The international bankers would control and manipulate the money
system of a nation while letting it appear to be controlled by
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.
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.
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.
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.
Edward Jay Epstein "Ruling the World of Money", Harper's
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.
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.
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.
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
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.
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
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.
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
... 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
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
Global Economic Crisis - The Great Depression of the XXI Century