Adonis Diaries

Posts Tagged ‘finance

Odious Dept: IMF sustained by developing countries interests on loans

When presidents and the oligarchies in developing States are extended liquidity at high interest loans from international creditors and are used for their own benefit instead of investing the money in public infrastructure, whose debt is it? The president’s or the people’s?

This question has led to increasingly charged discussions between indebted countries and economists at institutions like the World Bank and the International Monetary Fund (IMF). Especially in post-revolutionary countries like Egypt and Tunisia, people are asking: Why should we pay a debt that went straight to the pockets of a dictator, or worse, financed a security apparatus that oppressed us?

Actually, these kinds of loans are categorized as Foreign Aid disbursed to governments, instead to particular communities or institutions.

Raphael Thelen posted on NOw this Feb. 8, 2013

Philip Rizk and other activists are leading the Drop Egypt’s Debt Campaign to make the issue public.

“We want to open the accounting books of the Mubarak regime. Many of those credits aren’t legitimate, because the IMF worked with the old regime, even though they knew that the money would not benefit the people.”

Several members of Mubarak’s regime were sentenced for corruption last year. The clique of young businessmen surrounding his son Gamal famously embezzled funds and oversaw opaque deals that involved the privatization of public companies and natural resources.

These “market-friendly reform programs”, dubbed neoliberal policies, were part of the prescribed structural adjustments that came as conditions for the IMF loan.

The Odious Debt concept was first tested in Ecuador in 2008.

After an audit by an international commission, the country’s democratically-elected President Rafael Correa declared that 30% of the debt had been contracted illegally by the previous administration. The findings led to a debt reduction of $3 billion. “As a president I couldn’t allow us to keep paying a debt that was obviously immoral and illegitimate,” Correa said.

The World Bank, IMF and Western analysts predicted that the Ecuadorian economy would take a hit, saying that foreign investors would refrain from making deals with the country. Instead, Correa used the money that would have gone into debt service and invested it in public infrastructure projects and education.

In 2010, two years after the debt audit, the economy had grown by 3.6 percent, and in 2011 by 6.5 percent. Poverty rates dropped from 36.7 percent in 2008 to 28.6 percent in 2011. Annual income per capita rose from $3,540 in 2008 to $4,200 in 2011.

Two years later international investors are investing in Ecuador again.

Nick Dearden from the human rights group Jubilee Campaign sees Ecuador as a role model for other countries. “If you look at the countries that defaulted on their debts, they are doing much better now. They have thrown Western institutions out and now are using their own resources,” he said.

Tunisia, where the Arab Spring originated, is pursuing a similar course.

A bill that is being prepared to be presented to the parliament asks for a debt audit and cancellation of debts that had been illegitimately contracted under ousted dictator Zine el-Abidine Ben Ali. The Tunisian government’s external debt is currently $14.6 billion, or 33 percent of the country’s GDP. Foreign debt payments are $1.9 billion a year, or 15 percent of government revenue. Though it is not clear how much, a part of the foreign debt was taken by Ben Ali’s regime, and debt audit activists say they might be odious.

As in Egypt, Ben Ali and his cronies were known for their corruption.

A letter signed by 100 members of the European Parliament is calling “for an immediate suspension of EU debt repayment by Tunisia (with frozen interests) and an auditing of the debt.” Belgium’s parliament as well has called for a similar suspension of all bilateral debts. Ecuador has offered the Tunisian government its experience in auditing its debt.

So far, Tunisia’s post-revolutionary government is cooperating with the IMF and the World Bank and has continued Ben Ali’s market-friendly economic policies of low taxes for corporations, the privatization of public firms and resources, as well as the flexibility of the labor law.  The resulting widening gap between rich and poor has sparked protests across the country.

In the difficult economic conditions of post-revolutionary countries like Tunisia, the easiest way to gain liquidity or repay existing debts is to take on new debts. But this only pushes the problems into the future, while the influence of institutions like the IMF grows along with indebtedness.

The IMF depends on the interest payment on debt of developing countries.

“This way the form of democracy might be preserved, but the people lose their decision-making power over their economy. They won’t be able to influence the country’s economic policies in a way that reduces poverty,” says Dearden. “The way out of this is a debt audit and a cancellation of its illegitimate

Note: On IMF failed mission https://adonis49.wordpress.com/2010/03/30/the-international-monetary-fund-imf-failed-in-its-mission-2/

How Neoliberal expatriate Contractor Class is managing the contracted national debt in Lebanon?

How neoliberalism is applied in your country?

Neoliberalism is not a difficult concept to comprehand: Just observe its applications and consequences on your survival instinct.

The best way to understand neolibralism in the western developed nations is to witness how developing States are applying it.

Particularly, new small States recognized in the UN that were under direct mandated powers for many decades, and now are appeasing their former “masters” in order to enrich the oligarchy ruling class these under-developped “nations” are sustaining.

How neoliberalism is applied in Lebanon?

Together with the governor of the Central Bank and the Prime Minister, the minister of Finance is a crucial player in the management of government debt.

From 1992, late Rafik Hariri PM, and later the Hariri clan hoarded the control of these three institutions.

The policy adopted in 1993 pegged the Lebanese currency to the US dollar. What that means?

The State borrows on behalf of the government large sums of loans that are not needed to finance the deficit.

The borrowing mechanism is basically a political decision to get the State tightly linked to outside multinational financial institutions… Institutions that the ruling class has invested in and wants to generate quick profit in this globalization era… at the expense of the people they claim to work for their benefit…

This scheme drove up the demand for the Lebanese currency, raised the interest rates on government debt, and high interest returns for depositors (reaching 30% at determined periods as the Future Movement spread the words among its elite class to deposit) and the new expatriate Contractor wealthy class of billionnaires…

Leading the country into a dept trap.

A debt ever increasing ($60 bn) and absorbing a third of the government budget, every year since 1992.

Servicing the interest of the debt has one purpose: Keeping the new neoliberal Contractors class in control of the management of the financial and economic institutions.

The main benefiaciaries were commercial banks and their wealthy depositors: Lebanon financial and economic elite classes (new expatriate contractors, warlords, oligarchic politicians…) have the necessary savings to invest in government debt instruments.

The notion of neoliberalism is that, as long as the government maintains the confidence of the elite classes in the soundness of the financial policy, the situation can remain in control, precariously in control, and relying mainly on foreign support for the policy.

The IMF working paper from 2008 mentions that the continuous rollover of Lebanon debt depends on an “implicit guarantor” from donors and international financial institutions.

And who is the main donor guarantor? It is Saudi Arabia absolute wahhabi monarchy.

This Saudi Kingdom

1.  Bought up Lebanon government bonds when investors refused to buy the bonds

2. It provided the largest chunk of concessionary loans at Paris 2 donor conference in 2002, and Paris 3 in 2007

3. It transfered One $bn to the central bank during Israel preemptive war in June 2006.

Consequently, the governor of the central bank, PM and finance minister must satisfy Saudi Arabia confidence!

The Hariri clan main objective was to deepen neoliberal economic “reforms”.

Former Fouad Seniora PM reiterated the neoliberal program, including privatization of State-controlled entities, welfare “reforms“, politically aimed at curtailing patronage opportunities of political rivals to the Future Movement…

However, Seniora could not pull off his wishes of abolishing the Council of the South (a Box of money controlled by Parliament chairman and worlord Nabih Berri) or the Central Fund for the Displaced “sandouk al mouhajjareen” (controlled by the Druze warlord Walid Jumblatt)

For over two decades, the Hariri clan attached a dozen public institutions to the Prime Minister, controlled the municipality of Beirut, extendit building permits to its elites and the foreign investors and dropping any resistrictions when convenient, assigning public contracts to the “Future Elite contractors” and entrepreneurs at manyfold the proper cost, extending their hold on Solidere for 75 years, never accounting for the bids on Sukleen which collect waste in Beirut at $100 per ton while costing $30 in Zahle for example…

The current “national debt” has skyrocketed to reach $70 bn, even after 2 decades of paying high interest rates. In addition to funding the warlord “reconstruction chests”, part of the loans were used to paying the tribute to the Syrian oligarchy, since lebanon was under Syria mandated power till 2005.

Mind you that Syria, after 2001, began a neoliberal policy for its oligarchic elite class, and privatizing new public institutions such as the mobile telecommunication and oil extraction and grandiose Real Estates development in Aleppo, Homs and Damascus…

Note 1: The oil boom increased the number of Lebanese workers in the Arab Gulf Emirates and Saudi Arabia within a decade from just 50,000 in 1970 to well over 210,000 in 1980, or one third of Lebanon work force.

Note 2: Post inspired from two chapters written by Fabrice Balanche and Hannes Baumann in the book “Lebanon after the Cedar Revolution

Note 3: A wealthy international neoliberal club requires from its members to extract profit from their own country, as a proof of allegiance to global neoliberalism, in order to facilitate the infusion of unwarrented loans to their corresponding State.

Have you witnessed that almost all current prime ministers, finance ministers and governors of central banks in Europe, the USA and many other countries were “employees” at the IMF, the World Bank , World Commerce institutions and international financial corporations?

Note 4: Basically, the expatriate billionnaire contractors initially got the blessing of the former civil war warlords (Nabih Berri, Walid Jumblatt, Samir Jagea… supported by Syria, Saudi Arabia and the US neoliberal financial institutions) who were brought back to power, and then managed their financial porfolio and financed the election campaigns as political allies…

International Monetray Fund (IMF) extends a costly loan to Egypt: The hidden restrictions

President Mursi’s bid for a $4.8 billion loan is raising questions as to what the exact benefits of increasing Egypt’s debt will be and the likely long-term repercussions on the economic situation.

International Monetary Fund (IMF) Managing Director Christine Lagarde (2nd L and bent over) checks some pyramid stones next to security guards while listening to a guide’s explanation as she tours the pyramids in Giza, at the end of her visit to Egypt, 22 August 2012. (Photo: Reuters – Asmaa Waguih)

The Popular Campaign to Drop Egypt’s Debt issued a statement Thursday opposing the IMF loan and questioning the lack of information about “the extent to which the Egyptian economy needs this massive amount of dollars.”

The group protested that there had been no discussion of alternative ways of financing public spending, adding that the government had obtained foreign loans amounting to $6 billion over the past year without any democratic oversight. Governments appointed by the military since the revolution had also borrowed record amounts from Egyptian banks, it said, and “it is not known how they were spent.”

The campaign added that neither Mursi nor his party had explained how the measures they would adopt to secure the loan would differ from “the policies of impoverishment pursued by Hosni Mubarak for 30 years.”

It noted that its declared purpose was to cover the budget deficit rather than invest in social justice and employment, but that the loan would put further pressure on the budget in the long run by increasing the debt servicing and repayment burdens.

Bisan Kassab published a translation from the Arabic Edition in the Lebanese daily Alakhbar, and posted it on August 24, 2012 under “The Hidden Costs of Egypt’s IMF Loan”

Cairo – There have been some unexpected reactions from Egyptian political forces to the multi-billion dollar loan which President Mohammed Mursi is trying to secure from the International Monetary Fund in the next few months.

Opposition to the loan has been voiced by the Freedom and Justice Party (FJP), the political arm of the Muslim Brotherhood (MB) from which Mursi hails. It objected to the lack of available information about the terms of the proposed deal.

Abdul-Hafez Sawi of the FJP’s economy committee explained that the party still holds the view it took when the loan was proposed to parliament by the military-appointed government of Kamal al-Ganzouri.

Sawi said: “We still don’t know anything about the program under which Egypt will get the loan or the measures and steps that will be taken to cut government spending, reform fiscal policy and collect unpaid taxes.  We need to consider who will bear the burden of repayment.” With the amount to be borrowed now being put at $4.8 billion rather than the original $3.8 billion

The FJP did not take issue with the loan on ideological grounds, given the Islamic prohibition on usury. Sawi argued that it is permissible to pay interest on loans under the expediency provisions of Islamic law, especially when alternative support from fellow Muslims is unavailable – “for example, when the wealth of the Gulf is spent on buying palaces in Paris rather than helping the poor on the Comoros Islands.”

Sawi added that he hoped “to propose Islamic ways of providing finance to the international institutions.”

The Nour Party, the political arm of the Salafi movement and one of the most doctrinaire of the Islamist parties seems to have become more pragmatic after a year and a half of direct engagement in politics since the revolution.

Abdul Halim al-Gammal, who sat for the Nour party in the upper chamber of parliament’s finance and economy committee, explained the thinking behind its backing of the IMF loan:

“Any loan that advantages the lender in the context of dealings between individuals is usury. But it is different when it relates to international institutions, because the reason for the religious prohibition – exploitation – does not apply. If the nation were to shun all international transactions whose nature it does not have the power to change, it would squander major opportunities.”

The liberal Wafd party, which held the third largest bloc of seats in parliament, called for the deal to be concluded with the IMF as soon as possible. The party’s finance spokesman, Fakhri al-Fiqqi, said it wanted the loan’s economic program extended from one-and-a-half to three years “so as to change it from an emergency program into an extended financing facility.”

Fiqqi, a former IMF staffer, said he hoped this would facilitate the introduction of difficult structural reforms in Egypt, such as the gradual elimination of consumer subsidies, “starting with the introduction of a coupon system, and eventually ending all subsidies, in exchange for raising salaries, for example.”

The business community also enthused about the prospect of an IMF loan.

Hani Geneina, macroeconomics analyst with investment bank Pharos, said: “Many clients have started returning to the treasury bond and equity markets since the resumption of negotiations with the IMF after a halt of several months. The final signing is bound to mean an inflow of foreign investments in the longer term because of what the loan will mean in terms of confidence in the Egyptian economy and putting an end to fears that it could be joining the bankruptcy train like Greece,”

But other saw things differently.

Political objections to the loan are not confined to concerns about its social impact. Constitutional and legal issues would also be raised if Mursi were to use the legislative powers he has assumed to push through the loan before a new parliament is in place.

That would amount to ratifying an international agreement, which is unambiguously the role of the legislature, explained Supreme Constitutional Court judge Tahani a-Gabali. It would amount to denying the public any oversight over the deal, and raise fears about the near-absolute powers that have been concentrated in the president’s hands.

 

Getting rid of all MBAs: Why? Is the problem How to rethink Management?

Dan RockwellI asked Professor Henry Mintzberg, author of 140 articles and 13 books:

“If you waved a magic wand over businesses, what would you change?”

Mintzberg said, “I’d get rid of all MBA’s. We’d lose some good people, but in the whole, it would be a positive move.” Never mistake quiet voices for weak people.

A few problems that trouble Mintzberg about MBA’s, including management gone completely off the rails, are:

  1. MBA graduate with distorted pictures of management. They believe management is about management principles, among other flawed beliefs.
  2. They believe they can manage anything regardless of the business type.
  3. They have knowledge without experience which leads to hubris.

And if management isn’t about management principles, what’s it about? Mintzberg says “Management is connecting.” 

Although Mintzberg didn’t use the terms human or humane, they seem to explain his passion. He despises placing emphasis on productivity, particularly built on the backs of over-worked, burned-out employees. Pushing people simply works in the short-term.

Bloodletting:

Mintzberg believes cutbacks and layoffs are equivalent to the failed practice of bloodletting. They produce short-term profits and long-term loses. Mintzberg loves saying, “If you want productivity, fire everyone and sell from inventory.”

Long-term success:

Mintzberg believes organizations should be built for long-term success rather than quick profits. Shifting to the long view may be the most radical change businesses can make because it requires connecting.

Henry Mintzberg thinks modern management is off the tracks. He said:

“The problem in America isn’t the economy: It’s management.” Like what problems?

  1. MBA’s with no experience.
  2. Shareholder value.
  3. Separating management from leadership.
  4. Making Top-down strategy.  Strategy should emerge from conversations within an organization.
  5. Excessive executive compensations: Narcissism with over-compensated CEO.
  6. Using terms like “human resources” and “human capital” is sickening.
  7. Pushing employees to work harder and longer.
  8. Current hiring practices.

Hiring a CEO:

Henry Mintzberg says: “Stop hiring people who can impress.” 

Stop looking for perfect candidates: “Flaws aren’t fatal. Listen to the people who know them best, the people who worked for them. There are only two ways to find out someone’s flaws, marry them or work for them.”

Searching for perfect – flawless – candidates prevent anyone from saying the “emperor has no cloths”. In a world filled with “perfect” leaders, fakery prevails.

Fakery exacerbates stress in an already stress-filled world.

Email:

Mintzberg isn’t a big fan of email, to add a ninth item to the list. It obviously has a place but, “It does have an off button. I check email every three weeks.”  Mintzberg can be contrarian but not contrary.

Rockwell is asking:

What do you think is wrong with modern management?

If you could wave a magic wand over businesses, how would they change?

How are you navigating short-term vs. long-term views of business, management, and leadership?

Recent article by Mintzberg and Todd: The Offline Executive

A new approach to leadership development: Coaching Ourselves

 International Monetary Fund:  Top Ten Reasons to Oppose the IMF

I have already written a dozen posts about the calamities and damages that International Monetary Fund has and is still doing on world financial and economic stability.  An extra concise article is a great reminder, from an unknown author.

What is the IMF?

Also available as a
pre-formatted flier.
(PDF 35kb)

The International Monetary Fund and the World Bank were created in 1944 at a conference in Britton Woods, New Hampshire, and are now based in Washington, DC.

The IMF was originally designed to promote international economic cooperation and provide its member countries with short-term loans so they could trade with other countries (achieve balance of payments). Since the debt crisis of the 1980’s, the IMF has assumed the role of bailing out countries during financial crises (caused in large part by currency speculation in the global casino economy) with emergency loan packages tied to certain conditions, often referred to as structural adjustment policies (SAPs).

The IMF now acts like a global loan shark, exerting enormous leverage over the economies of more than 60 countries. These countries have to follow the IMF’s policies to get loans, international assistance, and even debt relief.

Thus, the IMF decides how much debtor countries can spend on education, health care, and environmental protection. The IMF is one of the most powerful institutions on Earth — yet few know how it works.

  1. The IMF has created an immoral system of modern-day colonialism:  The IMF — along with the WTO and the World Bank — has put the global economy on a path of greater inequality and environmental destruction. The IMF’s and World Bank’s structural adjustment policies (SAPs) ensure debt repayment by requiring countries to cut spending on education and health; eliminate basic food and transportation subsidies; devalue national currencies to make exports cheaper; privatize national assets; and freeze wages. Such belt-tightening measures increase poverty, reduce countries’ ability to develop strong domestic economies and allow multinational corporations to exploit workers and the environment A recent IMF loan package for Argentina, for example, is tied to cuts in doctors’ and teachers’ salaries and decreases in social security payments…The IMF has made elites from the Global South more accountable to First World elites than their own people, thus undermining the democratic process.
  2. The IMF serves wealthy countries and Wall Street: Unlike a democratic system in which each member country would have an equal vote, rich countries dominate decision-making in the IMF because voting power is determined by the amount of money that each country pays into the IMF’s quota system. It’s a system of one dollar, one vote. The U.S. is the largest shareholder with a quota of 18 percent. Germany, Japan, France, Great Britain, and the US combined control about 38 percent. The disproportionate amount of power held by wealthy countries means that the interests of bankers, investors and corporations from industrialized countries are put above the needs of the world’s poor majority.
  3. The IMF is imposing a fundamentally flawed development model: Unlike the path historically followed by the industrialized countries, the IMF forces countries from the Global South to prioritize export production over the development of diversified domestic economies. Nearly 80 percent of all malnourished children in the developing world live in countries where farmers have been forced to shift from food production for local consumption to the production of export crops destined for wealthy countries. The IMF also requires countries to eliminate assistance to domestic industries while providing benefits for multinational corporations — such as forcibly lowering labor costs. Small businesses and farmers can’t compete. Sweatshop workers in free trade zones set up by the IMF and World Bank earn starvation wages, live in deplorable conditions, and are unable to provide for their families. The cycle of poverty is perpetuated, not eliminated, as governments’ debt to the IMF grows.
  4. The IMF is a secretive institution with no accountability: The IMF is funded with taxpayer money, yet it operates behind a veil of secrecy. Members of affected communities do not participate in designing loan packages. The IMF works with a select group of central bankers and finance ministers to make polices without input from other government agencies such as health, education and environment departments. The institution has resisted calls for public scrutiny and independent evaluation.
  5. IMF policies promote corporate welfare: To increase exports, countries are encouraged to give tax breaks and subsidies to export industries. Public assets such as forestland and government utilities (phone, water and electricity companies) are sold off to foreign investors at rock bottom prices. In Guyana, an Asian owned timber company called Barama received a logging concession that was 1.5 times the total amount of land all the indigenous communities were granted. Barama also received a five-year tax holiday. The IMF forced Haiti to open its market to imported, highly subsidized US rice at the same time it prohibited Haiti from subsidizing its own farmers. A US corporation called Early Rice now sells nearly 50 percent of the rice consumed in Haiti.
  6. The IMF hurts workers: The IMF and World Bank frequently advise countries to attract foreign investors by weakening their labor laws — eliminating collective bargaining laws and suppressing wages, for example. The IMF’s mantra of “labor flexibility” permits corporations to fire at whim and move where wages are cheapest. According to the 1995 UN Trade and Development Report, employers are using this extra “flexibility” in labor laws to shed workers rather than create jobs. In Haiti, the government was told to eliminate a statute in their labor code that mandated increases in the minimum wage when inflation exceeded 10 percent. By the end of 1997, Haiti’s minimum wage was only $2.40 a day. Workers in the U.S. are also hurt by IMF policies because they have to compete with cheap, exploited labor. The IMF’s mismanagement of the Asian financial crisis plunged South Korea, Indonesia, Thailand and other countries into deep depression that created 200 million “newly poor.” The IMF advised countries to “export their way out of the crisis.” Consequently, more than US 12,000 steelworkers were laid off when Asian steel was dumped in the US.
  7. The IMF’s policies hurt women the most: SAPs make it much more difficult for women to meet their families’ basic needs. When education costs rise due to IMF-imposed fees for the use of public services (so-called “user fees”) girls are the first to be withdrawn from schools. User fees at public clinics and hospitals make healthcare unaffordable to those who need it most. The shift to export agriculture also makes it harder for women to feed their families. Women have become more exploited as government workplace regulations are rolled back and sweatshops abuses increase.
  8. IMF Policies hurt the environment:  IMF loans and bailout packages are paving the way for natural resource exploitation on a staggering scale. The IMF does not consider the environmental impacts of lending policies, and environmental ministries and groups are not included in policy making. The focus on export growth to earn hard currency to pay back loans has led to an unsustainable liquidation of natural resources. For example, the Ivory Coast’s increased reliance on cocoa exports has led to a loss of two-thirds of the country’s forests.
  9. The IMF bails out rich bankers, creating a moral hazard and greater instability in the global economy:  The IMF routinely pushes countries to deregulate financial systems. The removal of regulations that might limit speculation has greatly increased capital investment in developing country financial markets. More than $1.5 trillion crosses borders every day. Most of this capital is invested short-term, putting countries at the whim of financial speculators. The Mexican 1995 peso crisis was partly a result of these IMF policies. When the bubble popped, the IMF and US government stepped in to prop up interest and exchange rates, using taxpayer money to bail out Wall Street bankers. Such bailouts encourage investors to continue making risky, speculative bets, thereby increasing the instability of national economies. During the bailout of Asian countries, the IMF required governments to assume the bad debts of private banks, thus making the public pay the costs and draining yet more resources away from social programs.
  10. IMF bailouts deepen, rather than solve, economic crisis:  During financial crises — such as with Mexico in 1995 and South Korea, Indonesia, Thailand, Brazil, and Russia in 1997 — the IMF stepped in as the lender of last resort. Yet the IMF bailouts in the Asian financial crisis did not stop the financial panic — rather, the crisis deepened and spread to more countries. The policies imposed as conditions of these loans were bad medicine, causing layoffs in the short run and undermining development in the long run. In South Korea, the IMF sparked a recession by raising interest rates, which led to more bankruptcies and unemployment. Under the IMF imposed economic reforms after the peso bailout in 1995, the number of Mexicans living in extreme poverty increased more than 50 percent and the national average minimum wage fell 20 percent.

Off-shore parked wealth: $32 trillion. Tax loss: $280 bn

Aljazeera posted on her blog:

“Rich individuals and their families have about $32 trillion financial assets hidden in offshore tax havens, representing up to $280 bn in lost income tax revenues, according to research published on Sunday.

The research was carried out by James Henry, former chief economist at consultants McKinsey & Co., for pressure group Tax Justice Network that campaigns against tax havens.

The study estimating the extent of global private financial wealth held in offshore accounts – excluding non-financial assets such as real estate, gold, yachts and racehorses – puts the sum at between $21 and $32 trillion.

What’s shocking is that some of the world’s biggest banks are up to their eyeballs in helping their clients evade taxes and shift their wealth offshore.– John Christensen, the Tax Justice Network

This amounts to roughly the US and Japanese GDP combined.

Roughly 10 million people worldwide have offshore accounts, with 100,000 people owning half of those secreted assets. (The same recurring 1% wealth structure)

John Christensen of the Tax Justice Network told Al Jazeera that he was shocked by “the sheer scale of the figures”.

“What’s shocking is that some of the world’s biggest banks are up to their eyeballs in helping their clients evade taxes and shift their wealth offshore,” said Christensen.

 

“We’re talking about very big, well-known brands – HSBC, Citigroup, Bank of America, UBS, Credit Suisse – some of the world’s biggest banks are involved… and they do it knowing fully well that their clients, more often than not, are evading and avoiding taxes. Much of this activity is illegal”.

James Henry used data from the World Bank, International Monetary Fund, United Nations and central banks.

The report highlights the impact on the balance sheets of 139 developing countries of money held in tax havens by private elites, putting wealth beyond the reach of local tax authorities.

The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of “unrecorded offshore wealth” by 2010.

Private wealth held offshore represents “a huge black hole in the world economy,” Henry said in a statement.

Libor, Not Labor: Everyone was affected

What is this benchmark rate, the London interbank offered rate (Libor)? The Libor is supposed to be based on the average rate at which large banks can borrow money overnight. It’s not based on actual transactions, and that leaves room for mischief.

Manipulating the Libor is a big deal because it affects the cost of money for almost everyone. The Libor is used to set rates on mortgages, credit cards and all manner of loans, personal and commercial. The amount of money affected by the phony rates is at least $500 trillion, British regulators have estimated.

 published in the New York Times this July 7 under “The British, at Least, Are Getting Tough”:

“THE unfolding story of how Barclays — and, in all likelihood, other big banks — rigged interest rates is full of telling tidbits about the way Wall Street works. It also represents yet another teachable moment.

By now the world knows that Barclays manipulated the most widely used benchmark rate, the London interbank offered rate.  But Barclays is just one member of the cozy club that sets the Libor. And mischief there was, according to e-mails and other documents that Barclays has turned over to regulators in the United States and Britain.

The upshot: traders colluded by posting rates that either helped their bets in the markets or their bank’s perceived financial strength during the harrowing days of 2008.

Barclays is not the only bank under investigation for rigging the Libor. It was simply the first to own up to the behavior and settle with regulators, paying $450 million. Other banks will almost certainly follow, and the documents bound to bubble up in those cases will surely prove fascinating.

One of the most revealing exchanges in the Barclays documents came when a bank official tried to describe why Barclays’s improper postings were not as problematic as those of other banks. “We’re clean but we’re dirty-clean, rather than clean-clean,” an executive said in a phone conversation. Talk about defining deviancy down.

“Dirty clean” versus “clean clean” pretty much sums up Wall Street’s view of cheating. If everybody does it, nobody should be held accountable if caught. Alas, many United States regulators and prosecutors seem to have bought into this argument.

British authorities have not bought on the argument that “dirty clean” is an acceptable basis to be absolved of outright cheating.

Last week’s defenestrations of Marcus Agius (Barclays chairman); Robert E. Diamond Jr.,(chief executive); and Jerry del Missier, (chief operating officer), apparently occurred at the behest of the Bank of England and the Financial Services Authority, the nation’s top securities regulator.

(Mr. del Missier have lost his post as chairman of the Securities Industry and Financial Markets Association, the big Wall Street lobbying group. His name vanished last week from the list of board members on the group’s Web site.)

MR. DIAMOND seemed shocked to be pushed out. An American by birth, he probably thought he’d be subject to American rules of engagement when confronted with evidence of wrongdoing at his bank.

You know how it works on this side of the Atlantic (USA): faced with a scandal, most chief executives jettison low-level employees, maybe give up a bonus or two — and then ride out the storm. Regulators, if they act, just extract fines from the shareholders.

British officials are taking a different approach with this scandal.

George Osborne, the chancellor of the Exchequer, said in a statement on June 28: “It is clear that what happened in Barclays and potentially other banks was completely unacceptable, was symptomatic of a financial system that elevated greed above all other concerns and brought our economy to its knees. Punish wrongdoing. Right the wrong of the age of irresponsibility.”

Mr. Osborne voiced the question that so many have asked recently in the United States: “Fraud is a crime in ordinary business — why shouldn’t it be so in banking?”

Perhaps the biggest lesson from the Libor scandal is how dangerous it is to rely on interested parties to set interest rates or prices of financial instruments, rather than on actual transactions conducted by investors.

The Libor has been set in the current and vulnerable manner since the late 1960s. Maybe it has never been rigged before, but who knows?

It is far better to have the transparent and verifiable record of prices created by a tape of electronic trading. Such records are standard pricing mechanisms for many securities. But not all.

Prices of derivatives, especially credit default swaps that trade one-to-one, can still be based on one dealer’s say-so. That’s why a rule proposed by the Commodity Futures Trading Commission that would require pre-trade price transparency in the swaps market is so important.

But it is also why Wall Street is pushing back, especially on the commission’s proposal that swap execution facilities provide market participants, before they buy or sell, with easily accessible prices on “a centralized electronic screen.”

The commission’s rule would eliminate the one-to-one dealings by telephone that are so lucrative to traders and so expensive to investors.

A bill intended to gut the commission’s proposed rule and to maintain dealers’ profits in derivatives failed to go anywhere after being passed last year by two committees in the House of Representatives — Financial Services and Agriculture. That was a good thing.

But there are rumblings in Washington that this bill has resurfaced and that it may be quietly attached to a House Agriculture Committee appropriations bill scheduled for a vote this month. The bill, if passed,

1. would bar the requirement for a centralized pricing platform to shed light on the enormous swaps market.

2. would prevent regulators from requiring that a number of participants provide price quotations to customers, a way to ensure fairness.

It’s hard to believe, in the wake of the Libor mess, that Wall Street and its supporters in Congress would continue to battle against price transparency in any market. Then again, that’s precisely what they did after the credit crisis.

With each new financial imbroglio, the gulf widens between Main Street’s opinion of Wall Street and the industry’s view of itself.

When Mr. del Missier took over as chairman of the Securities Industry and Financial Markets Association last November, he said: “We will continue to work on maintaining and burnishing the level of confidence investors have in our markets, in our own financial institutions, and in the general economic outlook for the future.”

Given the Libor scandal, let’s just say good luck with that.

 
Biggest Financial Scandal in Britain
 
The full-scale of the scandal is still unknown. What has been vented out is breathtaking: “Several” unnamed major banks were involved, and the rigging of the LIBOR interest rate, the rate on which many of the world’s interest rates are based, affected the value of literally hundreds of trillions of dollars in investments. Barclays alone has admitted to committing this fraud “hundreds” of times.
 
Alexander COCKBURN published in CounterPunch Diary on July 6 under “Biggest Financial Scandal in Britain’s History, Yet Not a Single Occupy Sign; What Happened?” (with slight editing):

“The Barclay’s imbroglio is being described as “the greatest financial scandal in the history of Britain”. I have a question to ask.

Where are those tents outside St Paul’s? Or ones in solidarity this side of the Atlantic? Where are the vibrant reminders that – as has happened in the Barclays case – there is most definitely one law for the 1% (none, in fact) and another for the 99 %?

It was very hard not to be swept away by the Occupy movement which established itself in New York’s Zuccotti Park last September and soon spread to Oakland, Chicago, London and Madrid. And indeed most people didn’t resist its allure.
 
Leninists threw aside their Marxist primers on party organisation and drained the full anarchist cocktail.

The Occupiers , with their “people’s mic”,  were always a little hard to understand. And as with all movements involving consensus, everything took a very long time.
 


Was there perhaps a leader, a small leadership group, sequestered somewhere among the tents and clutter? It was impossible to say, and at that point it is somewhat disloyal to pose the question.

Cynicism about Occupy was not a popular commodity.
 
But new movements always need a measure of cynicism dumped on them. Questions of organization were obliterated by the strength of the basic message – we are 99%, they are 1%. It was probably the most successful slogan since ‘peace, land, bread’.

The Occupy Wall Street assembly in Zuccotti Park developed its own cultural mores, drumming included. Like many onlookers, I asked myself, Where the hell’s the plan?

But I held my tongue. I had no particular better idea and for a CounterPuncher of mature years to start laying down the program seemed cocky. But, deep down, I felt that Occupy, with all its fancy talk, all its endless speechifying, was riding for a fall.

Before the fall came, there were heroic actions, people battered senseless by the police. These were brave people trying to hold their ground.

There were other features that I think quite a large number of people found annoying: the cult of the internet, the tweeting and so forth, and I definitely didn’t like the enormous arrogance which prompted the Occupiers to claim that they were indeed the most important radical surge in living memory.

Where was the knowledge of and the respect for the past?  We had the non-violent resistors of the Forties organising against the war with enormous courage.

The Fifties saw leftists took McCarthyism full on the chin. With the Sixties we were making efforts at revolutionary organisation and resistance.
 
Yet when one raised this history with someone from Occupy, I encountered total indifference.

There also seemed to be a serious level of political naivety about the shape of the society they were seeking to change. They definitely thought that it could be reshaped – the notion that the entire system was unfixable did not get much of a hearing.
 


After a while, it seemed as though, in Tom Naylor’s question in this site: “Is it possible that the real purpose of Occupy Wall Street has little to do with either the 99% or the one per cent, but rather everything to do with keeping the political left in America decentralised, widely dispersed, very busy, and completely impotent to deal with the collapse of the American empire…

“Occupiers are all occupied doing exactly what their handlers would have them be doing, namely, being fully occupied. In summary, Occupy Wall Street represents a huge distraction.”

Then the rains of winter came. Zuccotti Park came under repeated assault, the tents were cleared from Zucotti Park and from St Paul’s Cathedral and by early this year it was all over.

People have written complicated pieces trying to prove it’s not over, but if ever I saw a dead movement, it is surely Occupy. (Read the link in note)

Has the Occupy movement left anything worth remembering? Yes, maybe.  

With Bob Diamond squirming before British MPs, and politicians jostling to apportion blame for the Barclays scandal, memories of the 99% and the one per cent are surely at least warm in the coffin.

Everything leftists predicted came true, just as everything hard-eyed analysts predicted about the likely but unwelcome course of ecstatic populism in Tahrir Square also came true. 

I do think it’s incumbent on those veteran radicals who wrote hundreds of articles proclaiming a religious conversion to Occupyism,  to give a proper account of themselves, otherwise it will  happen all over again.” End of article

Ricken Patel of Avaaz.org posted:

Big banks have been caught in a massive scam to rig global interest rates, ripping off millions of people on their mortgages, student loans and more! We’d go to jail for this, but Barclays bank has only been fined, and just a fraction of their profits!

Outrage is mounting — this is our chance to finally turn the tide of the banks’ reign over our democracies.

The EU finance regulator, Michel Barnier is standing up to the powerful bank lobby and championing reform that would put bankers behind bars for fraud like this. If the EU goes first, accountability could quickly spread across the globe.

The banks are lobbying hard against accountability, and we need a massive surge of people power to drive these reforms through.

If we can get 1 million people to stand with Barnier in the next 3 days, it will give him momentum to face down the banking lobby and push governments to bring reform.

For too long, our governments have been cowed by powerful banks who threatened to move elsewhere if challenged. For too long, banks have manipulated our market economies, tilting the playing field in their favour, and engaging in reckless risk-taking, secure in the knowledge that they could force governments to hand them our taxpayer money when they got into trouble.

The system is rigged, and that’s a crime. It’s time to put the criminals behind bars for it.
There may never have been a time in modern history when the big banks didn’t have excessive and extraordinary power that they regularly abused. But democracy is on the march — we’ve seen this march overcome tyrants across the world, and together, we’ll help end the reign of the banks as well.

Click below to sign, and our growing numbers will be represented by adding mock bankers to a jail right in front of the EU Parliament:

http://www.avaaz.org/en/bankers_behind_bars_f/?bFAfecb&v=15942

Note: You may read https://adonis49.wordpress.com/2012/04/20/where-are-the-tea-party-and-the-occupy-wall-street-movement-its-two-party-presidential-campaign-stupid/

How the Federal Reserve Bank behaved since early 20th century?

The US Federal Reserve Bank, an owned private institution, was created on December 23, 1913. It was planned at a secret meeting in 1910 on Jekyll Island, Georgia, by a group of Zionist bankers and politicians.

The power to print money was transferred from the US Government to a private group of Zionist bankers.

The Federal Reserve Act was hastily passed just before the 1913 Christmas break. Congressman Charles A. Lindbergh Sr. warned: “This act establishes the most gigantic trust on earth. When the President signs this act the invisible government by the money power, proven to exist by the Money Trust Investigation, will be legalized. The new law will create inflation whenever the trust wants inflation….From now on, depression will be scientifically created.”

Three years after signing the Federal Reserve Act into law, US President Woodrow Wilson made the following statement:

Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world–no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of small groups of dominant men.”

During the Great Depression people who had gold in the banks wanted the banks to honor their contract to redeem the paper currency for gold…

The fraudulent nature of fractional reserve banking was at risk of being exposed because there was not enough gold on deposit in the banks to redeem all Federal Reserve Notes issued promising payment in gold.

That was when US President Roosevelt declared a national emergency and closed the banking system for two days as recommended by the Board of Directors of the Federal Reserve Bank of New York.

Congress passed the Emergency Banking Act declaring it illegal for US citizens to own gold under penalty of up to a $10,000 fine and/or up to 10 years in prison.

The people exchanged their gold and gold certificates for Federal Reserve Notes of created dollars based on debt, which stated a promise of redemption in lawful money.

Gold was now removed from the system, leaving silver dollars as the only lawful money available. Silver was eventually eliminated from the money system in 1965, leaving the public with a totally scam money system of irredeemable paper currency and copper-nickel clad tokens.

This money system represents a debt owed to the owners of the Federal Reserve Banking System, the payment of which is guaranteed by the collateral of all property and income of all US citizens.

When banks cannot honor their contract to redeem their notes for gold or silver coins, they are bankrupt. The contract between the people and the Federal Reserve printed on each bank-note promising to pay in lawful money was invalidated because:

1. the system went bankrupt and

2.  the amended version of the “Trading with the Enemy Act of 1917” placed all US citizens in the category of enemy, and no contract is considered valid between enemies.

American citizens were declared to be the enemy by their own government.  Indeed they would be the enemy if the people ever discovered what had happened to their money.

Being unable to trade in wealth such as gold and silver coin enslaves the people to those who create and control what is being called money. All it took to rob the public was to convince the people that “paper and credi”t are money.

The Federal Government and the Federal Reserve have the power to create unlimited amounts of credit because credit does not exist. Credit is not a tangible substance, but an idea represented by bookkeeping entries and computer symbols.

To pay means to deliver a tangible substance as money like gold and silver coin. Where there is no substance, there is no payment. There is only pretend payment.

Banks do not really lend money, they only pretend to lend money. They put no money in a borrower’s account. They only make bookkeeping entries that are reduced as the borrower writes checks against imagined deposits.

When the banks charge interest on a loan they do not make then banks impart psychological value to numbers of nothing. Charging interest sustains the illusion that banks loan something of value, when all they do is rent the appearance of money.

The Secretary of the Treasury is not the US Secretary of the Treasury because:

1. the US Treasury was bankrupted in 1933.

2. The Secretary of the Treasury is not paid by the United States Government. The Secretary serves as US Governor of the International Monetary Fund as receiver of the bankrupt United States, collecting the debt from US citizens.

The Federal Reserve Bank has provided the needed sleight-of-hand credit financing to involve America in every foreign war during the twentieth century. The net result of America getting involved in one foreign war after another has been a consequent steady decline in personal freedom; the growth of a highly centralized, bureaucratic and fascistic government.

A horrendous rise in taxation and the planned destruction of the gold standard, which used to give some degree of protection to American citizens against an out-of-control, profligate, high-spending government in Washington.  

The value of the US$ in 1940 was worth 17 times more than the value of the US$ now as a result of the Federal Reserve’s long-term monetary policy, which has quietly cooperated with the federal government to finance government deficits with Federal Reserve credit.

The Federal Reserve made extensive usage of the misleading words “Federal” and “Reserve” and has over time replaced our system of real money of gold and silver coin with worthless paper, which is against the law according to the US Constitution.

Alan Greenspan, served as Chairman of the Federal Reserve from 1987 to 2006, stated at the annual Dinner and Francis Boyer Lecture of The American Enterprise Institute for Public Policy Research on December 5, 1996:

 “Augmenting concerns about the Federal Reserve is the perception that we are a secretive organization, operating behind closed doors, not always in the interests of the nation as a whole. This is regrettable, and we continuously strive to alter this misperception.”

The only solution to this problem is to do away with the Federal Reserve and go back to the way it used to be and have American money system based on gold and silver coin.  The only solution to the problem is honest money.

Thomas Jefferson saw it coming more than 150 years ago and wrote:

“If the America people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered.

The Ninth Circuit Court adjudicated in 1982:

“Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the Reserve Banks are not federal instrumentalities for purposes of the FTCA, but are independent, privately owned and locally controlled corporations.”
– Lewis vs. U.S., 680 F. 2d 1239, 1241]

Congressman Louis T. McFadden, Chairman of the House Banking and Currency Committee, delivered a speech on the floor of the House of Representatives, June 10, 1932:

“We have in this country one of the most corrupt institutions the world has ever known.  I refer to the Federal Reserve Board and the Federal Reserve Banks.  

Some people think the Federal Reserve Banks are U.S. government institutions.  They are not government institutions.  They are private credit monopolies; domestic swindlers, rich and predatory money lenders which prey upon the people of the united States for the benefit of themselves and their foreign customers.  

The Federal Reserve Banks are the agents of the foreign central banks.  

The truth is the Federal Reserve Board has usurped the Government of the United States by the arrogant credit monopoly which operates the Federal Reserve Board.” End of quote

Congressman Wright Patman, Chairman of the House Banking & Currency Committee, speech on the House floor, 1967:

“In the united States we have, in effect, two governments….We have the duly constituted Government….Then we have an independent, uncontrolled and uncoordinated government in the Federal Reserve System, operating the money powers which are reserved to Congress by the Constitution.”

Teddy Roosevelt said:

“These international bankers and Rockefeller-Standard Oil interests control the majority of newspapers and the columns of these papers to club into submission or drive out of public office officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government.”

Americans have to ask themselves why they were not taught the truth about the Federal Reserve in school.

The US Congress initially defined a lawful money “dollar” as being and consisting of (at least) 371.25 grains of pure silver.  Before 1965, anyone could exchange one paper dollar for one real silver dollar.  

However, in 1965 the united States’ mint stopped minting silver dollars.  When this occurred inflation began to skyrocket.  Now it takes an entire fist full of paper dollars (i.e., “Federal Reserve Notes”) to buy one real silver dollar.  

It now takes two working parents to support a family and the national debt is shooting over 12 trillion dollars!  And this is not even counting the private debt by individuals and corporations, which is somewhere over 50 trillion dollars.

The paper and digital currency that bankers create out of thin air is backed by nothing. The more paper “dollars” they roll off the printing presses or digital “dollars” created by computers, the less each one is worth.  Therefore, it takes more of ’em to buy the things people need, so the price of everything has to go up and up and up in endless inflation.  

Wages for most people will not increase fast enough to stay ahead of the game.  But not to worry, the international bankers have created plastic credit cards – VISA, MasterCard, American Express etc., to help the people out.  Of course, they don’t bother to tell us that they do not create enough paper/digital currency to pay off the debt plus interest so mathematically the economy will eventually collapse as has always occurred in history with paper currencies.

The Federal Reserve system was created by international banking families such as the Rothschild, Wartburg and Rockefeller.  This international banking cartel creates “money” out of thin air.  It only costs them a few cents to print each Federal Reserve Note “dollar bill”, and then they “bill” the American people for the full face value of the note.  

To add insult to injury, they charge Americans interest to borrow their so-called “money”.  If you or I did this, we would be arrested for counterfeiting and fraud.  This system was instituted gradually, starting with the Civil War and culminating with the fraudulent passage of the Federal Reserve Act in 1913.

The passage of the Federal Reserve Act was unconstitutional because:

1) the US Constitution prohibited “bills of credit” (i.e., paper notes) and

2) the US Constitution would have to be amended to go off the silver and gold coin standard for money.  The US Constitution, the supreme Law of the Land, can only be amended pursuant to Article V.  The US Constitution cannot be amended by statute.  These unlawful actions by a criminal Congress remind me of a quote by Alfred E. Neumann of Mad Magazine fame: “America is that land which fought for freedom and then passed laws to get rid of it.”

The Federal Reserve is also a monopoly– in a country where monopolies are supposed to be illegal.  

The US income tax department – Internal Revenue Service (IRS) – deposits people’s income tax payments directly in the Federal Reserve Bank (not in the United States Treasury).  Therefore, the Internal Revenue Service (IRS), an unconstitutional entity, is merely the collection agency for the international bankers.  

Over the years the IRS has become a tool of the elite banking families to financially attack and/or imprison people who expose the Federal Reserve.

If you take out a paper dollar and look at it, you will notice that it states at the top of the “bill”:  “FEDERAL RESERVE NOTE”.  A “note” is, by definition, an “instrument of debt” and “evidence of debt”.  

According to BLACK’S LAW DICTIONARY (Sixth Ed.) “MONEY” is defined:  

“In usual and ordinary acceptation it means coins and paper currency used as circulating medium of exchange, and does not embrace notes, bonds, evidences of debt, or other personal or real estate.”  

Now this may come as a shock to some people, but those paper “Federal Reserve Notes” are not money and they are not dollars.  Federal Reserve Notes are merely an informal document acknowledging debt.   There is nothing backing these “bills” except debt.  However, people voluntarily use them as instead of money and as dollars.  The key word is “as” – The smallest words can have the biggest meanings.

Banks can create this phony “currency” out of thin air.  Banks can loan out “currency” that they don’t even have.  When you apply for a loan from a bank, the bank does not have anything to back up that loan because they are allowed to loan out about 7 to 10 times more “currency” than they have on deposit.  

This is not mere speculation; this is a matter of court record, testimony under Oath, by a former lawyer for the Federal Reserve.  In other words bankers create “currency” with just the stroke of a pen or the keystroke of a computer.  These bankers then charge you “interest” to borrow this “currency”, which is nothing more than some numbers typed on a piece of paper!  If American People ever did this they would be spending many years in an US federal prison.  

Unfortunately, they do not print enough currency to pay the interest so more pseudo-dollars must be borrowed to pay off the interest, resulting in ever-increasing debt that cannot be paid.” End of quote

Countless preemptive wars were waged, and many political and physical assassinations of leaders and Presidents in the USA were direct results of preserving this privately owned Federal Reserve Bank.

Seek knowledge and get engaged to change mankind’s lot.

Note 1: The article is a section of a lengthy reply by Nalliah Thayabharan in response to my post: https://adonis49.wordpress.com/2012/05/15/super-nationalist-zionism-contributed-to-the-rise-of-the-third-reich/

Genesis of Banks and Financial transactions: And this Credit system alternative

Thomas Jefferson said:
“If the America people ever allow private banks to control the issuance of their currencies, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their prosperity until their children will wake up homeless on the continent their fathers conquered.

There are only two economic systems: They are barter and credit.

1. Barter is the trading of one thing of value for something else of value. Throughout history, many different things have been used for bartering because money, in and of itself, does not exist. Something must be used as money. People have traded for goods and services using farm animals, large rocks, shells and crops.

All things used as money have had one thing in common, they were all tangible wealth. They were all things you could touch. They were all things you could weigh and measure.

Gold and silver have been used not long ago as money worldwide for a couple of thousand of years. A money system using gold and silver coin is a barter system.

A $20 gold coin is twice as heavy as a $10 gold coin.

2. Credit is intangible wealth. You cannot touch credit. You cannot weigh and measure it because there is no substance to weigh and measure. It is all imagination.

Credit is not wealth. No work is used in the creation of credit other than a booking entry.

Credit is an idea, not a thing. It is expressed by bookkeeping entries and computer symbols. The manipulation of words and their meaning is the key to controlling what people think.

Thousand of years ago, people would pay the local goldsmith to store their gold for them in his vault. He would then give them a receipt for the amount of gold that was stored.

The receipt was not money, it was a money substitute. It was later common for people to use the receipts as payment for goods and services since they could be exchanged for the gold held in the vault at any time.

The goldsmith found out that only a small amount of the gold was ever claimed since people just kept exchanging the receipts. The goldsmith started writing receipts for more gold than he had, using some of the receipts to buy things and loaning the rest at interest, while taking title to real property as collateral.

It is recorded that the City-State of Venice created the official institution named Bank

The gold for these extra receipts did not exist. By adding to the amount of receipts in circulation, the goldsmith stole from the people with the real receipts and decreased the value of the real gold receipts by creating inflation.

The more of something there is, the less it is worth and the more of it is needed to trade it for something else.

Paper currency is a money substitute, it is not money. It is only valid when the number of paper currency equals the amount of real money that it is a substitute for.

By manipulating the number of receipts in circulation, the goldsmith stole the wealth of the town without anyone figuring it out.

By lowering the number of receipts, he could make money scarce, creating a depression where he could foreclose on the property and magnify his riches.

He could quicken economic activity and bring abundance by raising the number of receipts until his next rip off.

Traditional definitions are eliminated while new meanings are repeated over and over again until accepted.

The definition of dollar has changed to hide the fact that a dollar is not money, but a unit of measurement for gold and silver coin. For example:

1. Title 12 United States Code Section 152 says: “The terms lawful money or lawful money of the United States shall be construed to mean gold or silver coin of the United Sates.”

2. Title 31 United States Code, Section 5101 says: “The money of account of the United States shall be expressed in dollars.”

The recent equivalent to the goldsmith’s receipt for gold is the Federal Reserve Note. The word “Note” implies a contract, because legally a note must state who is paying, what is being paid, to whom and when.

Most people say something like, “I have a dollar bill”. But what is a bill?

A bill is a receipt of a debt owed by one person or company to another. Therefore, a “dollar bill” is a receipt (or bill) of debt of one dollar that is owed.

From 1914 to 1963, Federal Reserve Notes never claimed to be money, nor did they claim to be dollars. A note for five dollars read: “The United States of America will pay to the bearer on demand five dollars.”

How can a promise to pay five dollars be five dollars? To the left of the President’s picture and above the bank seal, it said: “This note is legal tender for all debts public and private, and is redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank.”

In 1963, the Federal Reserve began to issue its first series of notes without the promise, while taking notes with the promise out of circulation. How can paper become what it promises by removing the promise?

To the left of the President’s picture and above the bank seal, it now read: “This note is legal tender for all debts public and private.”

A note is a proof of debt. It is not possible to pay off a debt with a debt. No debt can be paid in full unless paid in gold or silver, coined and regulated in value by Congress. The name “Federal Reserve Note” is a fraudulent label since each word claims to be something that in reality it is not.

By removing the promise to redeem the note in lawful money, the Federal Government in cooperation with the Federal Reserve, eliminated the monetary system of the United States as established by the Constitution and replaced it with something totally different.

If you are holding a one dollar Federal Reserve Note, the question is: “what is it one dollar of?”

The answer is absolutely nothing. The number one measures no substance.

The only thing that give paper money value is the confidence people have in it as is stated in chapter 30 of our textbook.

Depressions are the result of private bankers reducing the money supply by tightening credit and withdrawing currency, causing a drop in prices, unemployment and foreclosure of property. This is premeditated theft.

During the Great Depression people who had gold in the banks wanted the banks to honor their contract to redeem the paper currency for gold.. That was when US President Roosevelt declared a national emergency and closed the banking system for two days as recommended by the Board of Directors of the Federal Reserve Bank of New York.

Congress then passed the Emergency Banking Act declaring it illegal for US citizens to own gold under penalty of up to a $10,000 fine and/or up to 10 years in prison.

The Secretary of the Treasury is not paid by the United States Government. The Secretary serves as US Governor of the International Monetary Fund as receiver of the bankrupt United States, collecting the debt from US citizens.

The value of the US$ in 1940 was worth 17 times more than the value of the US$ now as a result of the Federal Reserve’s long-term monetary policy, which has quietly cooperated with the federal government to finance government deficits with Federal Reserve credit.

The US Congress initially defined a lawful money “dollar” as being and consisting of (at least) 371.25 grains of pure silver.  Before 1965 anyone could exchange one paper dollar for one real silver dollar.

Another myth that all Americans live with is the nature of the “Federal Reserve”: It it is not an agency (public institution) of the United States Government. (See details in link on note 3)

The name “Federal Reserve Bank” is not federal, nor is it owned by the government. It is privately owned.  Its employees are not in civil service. Its physical property is held under private deeds, and is subject to local taxation.

But that’s another story (See details in link on note 3)

The US national debt is shooting over 12 trillion dollars!  (This amount is equivalent of selling off all of France wealth). And the private debt by individuals and corporations, which is somewhere over 50 trillion dollars.

Yet, the US insists on extending financial advice to the European Union on how to manage the Euro currency…

Note 1: The Federal Reserve Act is hastily passed just before the 1913 Christmas break. Congressman Charles A. Lindbergh Sr. warned: “This act establishes the most gigantic trust on earth. When the President signs this act the invisible government by the money power, proven to exist by the Money Trust Investigation, will be legalized.”

US President John F. Kennedy planned to terminate the privately owned Federal Reserve System. In 1963, he signed Executive Orders EO-11 and EO-110, returning to the government the responsibility to print money, taking that privilege away from the Rothschild. Shortly thereafter, President John F. Kennedy was assassinated.

Note 2: The article was from Nalliah Thayabharan in response to my post: https://adonis49.wordpress.com/2012/05/15/super-nationalist-zionism-contributed-to-the-rise-of-the-third-reich/

Note 3: https://adonis49.wordpress.com/2012/06/10/privately-owned-federal-reserve-bank-how-the-rothschild-family-controlled-the-printing-of-the-dollars/


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