[R-G] [BillTottenWeblog] The Tower of Basel

[Bill Totten]

Do We Really Want the Bank for International Settlements Issuing Our
Global Currency?

by Ellen Brown

webofdebt.com (April 20 2009)

Originally posted on Global Research (April 18 2009)


In an April 7 article in The London Telegraph titled "The G20 Moves the
World a Step Closer to a Global Currency", Ambrose Evans-Pritchard wrote:


"A single clause in Point 19 of the communique issued by the G20 leaders
amounts to revolution in the global financial order.

"'We have agreed to support a general SDR allocation which will inject
$250 billion (GBP 170 billion) into the world economy and increase
global liquidity', it said. SDRs are Special Drawing Rights, a synthetic
paper currency issued by the International Monetary Fund that has lain
dormant for half a century.

"In effect, the G20 leaders have activated the IMF's power to create
money and begin global 'quantitative easing'. In doing so, they are
putting a de facto world currency into play. It is outside the control
of any sovereign body. Conspiracy theorists will love it."

Indeed they will. The article is subtitled, "The world is a step closer
to a global currency, backed by a global central bank, running monetary
policy for all humanity". Which naturally raises the question, who or
what will serve as this global central bank, cloaked with the power to
issue the global currency and police monetary policy for all humanity?
When the world's central bankers met in Washington last September, they
discussed what body might be in a position to serve in that awesome and
fearful role. A former governor of the Bank of England stated:

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

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

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

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

Quigley wrote of this international banking network:

"[T]he powers of financial capitalism had another far-reaching aim,
nothing less than to create a world system of financial control in
private hands able to dominate the political system of each country and
the economy of the world as a whole. This system was to be controlled in
a feudalist fashion by the central banks of the world acting in concert,
by secret agreements arrived at in frequent private meetings and
conferences. The apex of the system was to be the Bank for International
Settlements in Basel, Switzerland, a private bank owned and controlled
by the world's central banks which were themselves private corporations."

The key to their success, said Quigley, was that the international
bankers would control and manipulate the money system of a nation while
letting it appear to be controlled by the government. The statement
echoed one made in the eighteenth century by the patriarch of what would
become the most powerful banking dynasty in the world. Mayer Amschel
Bauer Rothschild famously said in 1791:

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

Mayer's five sons were sent to the major capitals of Europe - London,
Paris, Vienna, Berlin and Naples - with the mission of establishing a
banking system that would be outside government control. The economic
and political systems of nations would be controlled not by citizens but
by bankers, for the benefit of bankers. Eventually, a privately-owned
"central bank" was established in nearly every country; and 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; and at the top of this network is the BIS, the
"central bank of central banks" in Basel.

Behind the Curtain

For many years the BIS kept a very low profile, operating behind the
scenes in an abandoned hotel. It was here that decisions were reached to
devalue or defend currencies, fix the price of gold, regulate offshore
banking, and raise or lower short-term interest rates. In 1977, however,
the BIS gave up its anonymity in exchange for more efficient
headquarters. The new building has been described as "an eighteen
story-high circular skyscraper that rises above the medieval city like
some misplaced nuclear reactor". It quickly became known as the "Tower
of Basel". Today the BIS has governmental immunity, pays no taxes, and
has its own private police force. {4} It is, as Mayer Rothschild
envisioned, above the law.

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

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

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

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

"When you understand that the BIS pulls the strings of the world's
monetary system, you then understand that they have the ability to
create a financial boom or bust in a country. If that country is not
doing what the money lenders want, then all they have to do is sell its
currency." {5}

The Controversial Basel Accords

The power of the BIS to make or break economies was demonstrated in
1988, when it issued a Basel Accord raising bank capital requirements
from six percent to eight percent. By then, Japan had emerged as the
world's largest creditor; but Japan's banks were less well capitalized
than other major international banks. Raising the capital requirement
forced them to cut back on lending, creating a recession in Japan like
that suffered in the US today. Property prices fell and loans went into
default as the security for them shriveled up. A downward spiral
followed, ending with the total bankruptcy of the banks. The banks had
to be nationalized, although that word was not used in order to avoid
criticism. {6}

Among other collateral damage produced by the Basel Accords was a spate
of suicides among Indian farmers unable to get loans. The BIS capital
adequacy standards required loans to private borrowers to be
"risk-weighted", with the degree of risk determined by private rating
agencies; and farmers and small business owners could not afford the
agencies' fees. Banks therefore assigned 100 percent risk to the loans,
and then resisted extending credit to these "high-risk" borrowers
because more capital was required to cover the loans. When the
conscience of the nation was aroused by the Indian suicides, the
government, lamenting the neglect of farmers by commercial banks,
established a policy of ending the "financial exclusion" of the weak;
but this step had little real effect on lending practices, due largely
to the strictures imposed by the BIS from abroad. {7}

Similar complaints have come from Korea. An article in the December 12
2008 Korea Times titled "BIS Calls Trigger Vicious Cycle" described how
Korean entrepreneurs with good collateral cannot get operational loans
from Korean banks, at a time when the economic downturn requires
increased investment and easier credit:

"'The Bank of Korea has provided more than 35 trillion won to banks
since September when the global financial crisis went full throttle',
said a Seoul analyst, who declined to be named. 'But the effect is not
seen at all with the banks keeping the liquidity in their safes. They
simply don't lend and one of the biggest reasons is to keep the BIS
ratio high enough to survive', he said ...

"Chang Ha-joon, an economics professor at Cambridge University, concurs
with the analyst. 'What banks do for their own interests, or to improve
the BIS ratio, is against the interests of the whole society. This is a
bad idea', Chang said in a recent telephone interview with Korea Times."

In a May 2002 article in The Asia Times titled "Global Economy: The BIS
vs National Banks", economist Henry C K Liu observed that the Basel
Accords have forced national banking systems "to march to the same tune,
designed to serve the needs of highly sophisticated global financial
markets, regardless of the developmental needs of their national
economies". He wrote:

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

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

Ironically, noted Liu, developing countries with their own natural
resources did not actually need the foreign investment that trapped them
in debt to outsiders:

"Applying the State Theory of Money [which assumes that a sovereign
nation has the power to issue its own money], any government can fund
with its own currency all its domestic developmental needs to maintain
full employment without inflation".

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

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

The Last Domino to Fall

While banks in developing nations were being penalized for falling short
of the BIS capital requirements, large international banks managed to
escape the rules, although they actually carried enormous risk because
of their derivative exposure. The mega-banks succeeded in avoiding the
Basel rules by separating the "risk" of default out from the loans and
selling it off to investors, using a form of derivative known as "credit
default swaps".

However, it was not in the game plan that US banks should escape the BIS
net. When they managed to sidestep the first Basel Accord, a second set
of rules was imposed known as Basel Two. The new rules were established
in 2004, but they were not levied on US banks until November 2007, the
month after the Dow passed 14,000 to reach its all-time high. It has
been all downhill from there. Basel Two had the same effect on US banks
that Basel One had on Japanese banks: they have been struggling ever
since to survive. {8}

Basel Two requires banks to adjust the value of their marketable
securities to the "market price" of the security, a rule called "mark to
market" {9} The rule has theoretical merit, but the problem is timing:
it was imposed ex post facto, after the banks already had the
hard-to-market assets on their books. Lenders that had been considered
sufficiently well capitalized to make new loans suddenly found they were
insolvent. At least, they would have been insolvent if they had tried to
sell their assets, an assumption required by the new rule. Financial
analyst John Berlau complained:

"The crisis is often called a 'market failure', and the term
'mark-to-market' seems to reinforce that. But the mark-to-market rules
are profoundly anti-market and hinder the free-market function of price
discovery ... In this case, the accounting rules fail to allow the
market players to hold on to an asset if they don't like what the market
is currently fetching, an important market action that affects price
discovery in areas from agriculture to antiques." {10}

Imposing the mark-to-market rule on US banks caused an instant credit
freeze, which proceeded to take down the economies not only of the US
but of countries worldwide. In early April 2009, the mark-to-market rule
was finally softened by the US Financial Accounting Standards Board
(FASB); but critics said the modification did not go far enough, and it
was done in response to pressure from politicians and bankers, not out
of any fundamental change of heart or policies by the BIS.

And that is where the conspiracy theorists come in. Why did the BIS not
retract or at least modify Basel Two after seeing the devastation it had
caused? Why did it sit idly by as the global economy came crashing down?
Was the goal to create so much economic havoc that the world would rush
with relief into the waiting arms of the BIS with its privately-created
global currency? The plot thickens ...

_____


Ellen Brown developed her research skills as an attorney practicing
civil litigation in Los Angeles. In Web of Debt (2007), her latest book,
she turns those skills to an analysis of the Federal Reserve and "the
money trust". She shows how this private cartel has usurped the power to
create money from the people themselves, and how we the people can get
it back. Her earlier books focused on the pharmaceutical cartel that
gets its power from "the money trust." Her eleven books include
Forbidden Medicine (1998), Nature's Pharmacy (1998), co-authored with Dr
Lynne Walker, and The Key to Ultimate Health (2000), co-authored with Dr
Richard Hansen. Her websites are www.webofdebt.com and www.ellenbrown.com.

Notes:

1. Andrew Marshall, "The Financial New World Order: Towards a Global
Currency and World Government", Global Research (April 06 2009).

2. Alfred Mendez, "The Network", The World Central Bank: The Bank for
International Settlements, http://copy_bilderberg.tripod.com/bis.htm.

3. "BIS - Bank of International Settlement: The Mother of All Central
Banks", hubpages.com (2009).

4. Ibid.

5. Joan Veon, "The Bank for International Settlements Calls for Global
Currency", News with Views (August 26 2003).

6. Peter Myers, "The 1988 Basle Accord - Destroyer of Japan's Finance
System", http://www.mailstar.net/basle.html (updated September 09 2008).

7. Nirmal Chandra, "Is Inclusive Growth Feasible in Neoliberal India?",
networkideas.org (September 2008).

8. Bruce Wiseman, "The Financial Crisis: A look Behind the Wizard's
Curtain", Canada Free Press (March 19 2009).

9. See Ellen Brown, "Credit Where Credit Is Due",
webofdebt.com/articles/creditcrunch.php (January 11 2009).

10. John Berlau, "The International Mark-to-market Contagion",
OpenMarket.org (October 10, 2008).

(c) Copyright 2007 Ellen Brown. All Rights Reserved.

http://webofdebt.wordpress.com/2009/04/21/the-tower-of-basel-do-we-really-want-the-bank-for-international-settlements-issuing-our-global-currency/


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