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Thursday, March 21, 2013
controlling the world's monetary system the bank for international settlements
By Joan Veon
August 26, 2003
While most people understand what took
place when the American Revolution was fought, many are not aware of the
permanent financial revolution that is being fought over the world's monetary
system since 1694 when the Bank of England was created. At that time, a group of
private individuals decided that they could make a great deal of money if they
changed the laws of the land to shift control of the country's finances from the
government to them. The Bank of England, which is England's "central bank," is a
private corporation which earns a continuous stream of income when the British
government borrows from them to run the country. England was the ingenious
country that recognized they could run the world's finances if they established
private corporations in all the countries of the world. The combined debt of all
the world's country's would create an income stream of unbelievable amounts.
In 1913, Congress passed
the Federal Reserve Act creating our central bank. Most Americans don't know
that this organization is a private corporation established to control America's
monetary system through the banking industry.
In the last several years, our central bank
has helped to push through two major pieces of legislation expanding its power
over not only the banking system, but the stock market, insurance and real
estate industries as well. Let me explain. When the stock market crashed in
1929, to safe guard our financial system Congress passed the Glass-Steagall Act
separating the commercial activities of banks (savings, checking, deposits and
loans) from that of investment banks that bring new stocks and bonds to market,
offering them to investor through their in-house stockbrokers. Our Federal
Reserve worked very hard with the Clinton Administration to pass the Banking
Modernization Act in 1999 which erased the Glass-Steagall Act. Furthermore this
law expanded the functions of commercial banks to not only syndicate securities
but to also sell both personal and commercial insurance as well as real estate,
thus creating what is termed, "financial conglomerates."
Now let's understand what really took
place. When Congress passed the Federal Reserve Act in 1913, this private group
of bankers only got control of our monetary system via the banking system. They
did not have control over the insurance industry and stock markets. By passing
the Banking Modernization Act 86 years later, they now have control over ALL of
these areas worth trillions of dollars.
That same year, Congress also passed the
Gramm-Leach-Bliley Act with very little fanfare. Former Treasury Secretary
Robert Rubin, now a co-Chairman at Citigroup which is a financial conglomerate,
praised this bill as being necessary and critical. What it really did was amend
key banking laws such as the Banking Act of 1933, the Bank Holding Company Act
of 1956, the Federal Deposit Institutions Act, the Community Reinvestment Act of
1977 and the International Banking Act of 1978 to substitute the Federal Reserve
as being responsible for our financial system instead of Congress! The permanent
financial revolution that has been waged in America has been without any bullets
being fired and with very little explanation from the main stream press.
While the Federal Reserve is a private
corporation, it is also one of the owners of the Bank for International
Settlements-BIS which America helped establish in 1930. Bill Clinton's mentor at
Georgetown University, Dr. Carroll Quigley, said the BIS was to "serve as a
'Central Bankers' Bank'". 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. Quigley further explained, "[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, a private bank owned and controlled by the world's
central banks which were themselves private corporations."
There is not a whole lot of press about its
activities, hence it is not a household name. The boot like structure of the BIS
is only apparent from the backside. There is nothing about it that indicates it
is the most important bank (and building) in the world. When the BIS holds its
two-hour annual meeting, those who control the monetary system of their
country-the central bank ministers walk to it from nearby hotels.
Once you enter the front doors of the BIS,
you are confronted with two sets of glass doors that are circular. The only way
to go beyond them is to have permission. Those who enter are escorted at all
times. In order to be admitted to the middle of the circular doors, the two back
glass panels slide open to let you in. When you are in the middle they close and
the two front glass panels then slide open to allow you to enter into the tower
where the offices are. Because it is rather unique, a fellow reporter remarked,
"Masonic looking isn't it."
The great security makes you wonder why all
the secrecy. Only once in all the years of holding annual meetings has the BIS
given a tour for "outsiders" such as me. Of the various meetings rooms, two
stand out: the special room where the Group of Ten* central bank ministers meet
which has a round table positioned in the middle of the room with some kind of
round halo hanging from the ceiling over it, giving the impression of the
"Knights of the Round Table". Then there is the "green" room which is shaped
like an almond, reminding you of an "eye" because of its shape and color. I
gasped when I first entered the room, for the illusion could not be missed.
Over the years, the Bank for International
Settlements has amassed more power over the global financial infrastructure then
most people are aware of. They have a number of very powerful committees which
include: the Basel Committee on Banking Supervision which has been working on
how to regulate not only international banks of the world, but eventually those
rules will pertain to every national bank as well, the Committee on the Global
Financial System which monitors financial markets around the world with the
objective of identifying potential risks for financial stability, and the
Committee on Payment and Settlement Systems looks to strengthen the
infrastructure of financial markets with regard to rules on how to transfer
monies and how to make payments between member banks.
One very important committee is Financial
Stability Forum-FSF which was created as a result of the Asian Crisis. Their
mandate is to help set up safeguards for the entire global economic system
(notice that this responsibility no longer belongs to the individual
nation-states). It should be noted that Federal Reserve Vice Chairman Roger
Ferguson is Committee Chairman of both the Committee on Global Financial Systems
and the FSF. This Forum is comprised of the G7 Central Bank Governors, G7
Finance Ministers and the G7 Regulatory Agencies (in the US they are the
Comptroller of the Currency and Federal Deposit Insurance Corporation). In
addition, a number of international organizations take active part: the World
Bank, International Monetary Fund, the Organization for Economic Cooperation and
Development, the International Association of Insurance Supervisors, the
International Organization of Security Commissioners and the newly formed
International Accounting Standards Board. Besides the G7 countries, there are a
number of emerging market countries such as India and China that participate.
Dr. Knight concurred with my assessment that the FSF represents "greater
cohesiveness and harmonization among countries."
Over the years, I have watched as the BIS
has continued to push the envelope further in a borderless world. Some of their
growing powers have come directly from governments like ours that have
transferred the regulatory power they used to have over the banking system to
the central bank while the rest comes from the simple fact that they do indeed
control the monetary system of the world.
In an exclusive interview with the new BIS
Managing Director Dr. Malcolm Knight , he went on record when he said, "We are
not a central bank. We are the bank for the central bankers." This is extremely
important for this fact has not been written about in books on the BIS.
Furthermore, to my knowledge, no one at the BIS has explained that they are the
"central banks' bank."
Dr. Knight, who received his post-graduate
degrees from the London School of Economics explained that "Central banks need
to operate in independence." This means no control by government which is pretty
clear by the above changes to American law. When Alan Greenspan goes to
Congress, they ask him what he thinks and what he will do. It should be noted
that he is not elected, he is appointed and his word literally moves markets.
Interestingly enough since 1997 the Bank of England and the Bank of Japan have
been given more power to determine monetary policy which includes the freedom to
set interest rates apart from government opinion and to intervene in foreign
exchange markets. These are the same powers as what the Federal Reserve has.
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. So when Dr. Knight talks about controlling the "financial centers
where a lot of hot money could be placed," he is explaining that as a result of
the work of the FSF, they are "implementing rules on financial behavior all over
the world" which means they positioning the BIS to be able to control hot money.
Lastly, one very important aspect of my
interview with Dr. Knight is that of a harmonization of global currencies. In an
interview 18 months ago with noted economist Dr. Jacob Frenkel who does not hide
his view that all of the currencies of the world need to be harmonized, I asked
him when he thought that would occur. He told me then it would occur after the
economies were harmonized. When I posed this question to Dr. Knight, he only
addressed that fact that many central banks have a consistency of objectives
that harmonize their policies. Interestingly enough, the Wall Street Journal
reported on a meeting which included Dr. Frenkel, former U.S. Fed Chairman Paul
Volcker and Dr. Robert Mundell that took place on June 30, the same day I was
interviewing Dr. Knight. Their theme was "Does the Global Economy Need a Global
Currency?" The thesis was that if the euro can replace the franc, mark and lira,
why can't a new world currency merge the dollar, euro and yen? I submit to you
that this is the next agenda of the central bankers. When this change occurs, I
can assure you, they will make money on a new global currency. Time will tell if
The difference between Dr. Knight's view of
the BIS and mine are diametrically opposed. I believe, as Dr. Quigley said, that
the central banks have the financial power over both markets and governments
versus Dr. Knight who believes they are fixing the markets.
*G7: U.S., Canada, Germany, Japan, Italy,
France, Great Britain; G10 is G7 plus Switzerland, Sweden, the Netherlands and