Banks Rule – 2

by Benjie Oliveros

Last week, this writer wrote about the implications of the law signed by President Aquino liberalizing the banking sector. The article dealt with how multinational banks would be able to control local business activity and the economy as a whole once they begin dominating the banking and finance sector. Actually, multinational banks already control the world economy.

Consider this, when the US economy nosedived into a crisis in 2007-2008, then outgoing President George W. Bush and his successor current President Barack Obama released $700 billion in a bailout package to save not its citizens, not the manufacturing sector, but US banks. The US government absorbed the losses of the banks by purchasing its assets or derivatives, Collateralized Debt Obligations, which had lost much of its value. The US Treasury Department was then headed by Henry Paulson, former CEO of Goldman Sachs, one of the troubled financial investment houses bailed out by the US government. The bailout package had the blessing of US Federal Reserve Chairman Ben Bernanke.

The US Federal Reserve System, or the equivalent of a country’s Central Bank, has a profound influence in the economy as it controls the money supply by increasing or lowering interest rates and by purchasing or selling US Treasury bonds – which it holds to fund the government’s budget deficit – to mop up or increase the money supply. It is also the “lender of last resort” of banks. The Federal Reserve System has 12 Federal Reserve Banks. However, the Federal Reserve System is not a government agency as it does not receive funding from the US government nor does it get its directives from it. The stockholders of the Federal Reserve Bank are US-based multinational banks. As such, it promotes the interests of these private US-based multinational banks.

In 2008, the Federal Reserve Bank of New York advanced the funds to enable JP Morgan Chase Bank to purchase troubled investment bank Bearn Stearns at a bargain. This move was highly controversial because the CEO of JP Morgan sits in the Board of the said Federal Reserve Bank and even participated in the negotiations for the sale. In September 2008, the Federal Reserve Bank provided giant insurance company American International Group with a loan amounting to $85 billion to save it from crashing.

The influence of the US Federal Reserve System reaches beyond the US economy. The policy measures of the Federal Reserve Bank such as increasing or decreasing interest rates have a cascading effect on other countries. For example, when the US Federal Reserve raises its interest rates, the central banks of other countries follow suit for fear that capital lodged in their country would flock to the US.

Do you think that is bad enough?

Multinational banks do not only control the US economy, it controls the world through an institution it created in 1930 the Bank of International Settlements (BIS). The BIS describes itself as a forum of cooperation for its member central banks. Its members meet under its auspices every two months, where they decide on monetary policies such as whether “to devalue or defend currencies, fix the price of gold, regulate offshore banking, and raise or lower short-term interest rates.” (The Tower of Basel: Secretive Plans for the Issuing of a Global Currency by Ellen Brown). In other words, it decides on the value, supply and flow of money in the world.

While the BIS has 55 member central banks, it has an inner circle of around six representing the central banks of Germany, the United States, Switzerland, Italy, Japan and England. Describing the BIS in her article In Tragedy and Hope: A History of the World in Our Time (1966), Dr. Carroll Quigley wrote:

“[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.”

Dr. Quigley further wrote: “The international bankers would control and manipulate the money system of a nation while letting it appear to be controlled by the government.”

Brown in her article quoted Mayer Amschel Bauer Rothschild who said in 1791:

“Allow me to issue and control a nation’s currency, and I care not who makes its laws.”

The BIS provides gold and foreign exchange transactions for its members and holds central bank reserves. With the amount of gold and foreign currency it holds, it could control the price of gold and the value of any currency. When central banks experience liquidity problems, it offers to buy back tradable instruments from it thus, exercising control over the troubled central bank.

The policies issued by the BIS could make or break an economy. An example cited by Brown’s article is the Basel Accord of 1988, which raised bank capital requirements from 6% to 8%.

“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 U.S. 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.”

The BIS also issues requirements for lending by banks thereby restricting access to business loans.

The power of banks is not only exercised through the US Federal Reserve and the BIS. Its controlling hand could also be seen in the operations of companies. By controlling who gets the loan, in what terms and the amount of interest, banks are able to control which company expands and flourishes and which contracts and goes bankrupt. Banks and financial investment houses also broker mergers and acquisitions.

An article published in October 2011 by the New Scientist Revealed – the capitalist network that runs the world referred to a study conducted by the Swiss Federal Institute of Technology in Zurich. The team discovered that a “super entity” of 147 companies, mostly banks, control 40% of a network, which includes 43,060 multinational companies. The details are as follows:

– out of a listing of 37 million companies, the team picked 43,060 companies with shared ownerships

– out of the 43,060 companies, a core of 1,318 companies control two or more companies and had connections with 20 more

– these 1,318 companies represent 20 percent of global operating revenues but control 60 percent of global revenues

– the 1,318 companies are controlled by a “super entity” of 147 tightly-knit companies.

Of the top 50 from among the 147 companies, only one, the #50, the China Petrochemical Group Company, is not a bank or a financial investment company.

In his article The Merchants of Wall Street: Banking, Commerce and Commodities, Saule Omarova wrote “These financial services companies have become global merchants that seek to extract rent from any commercial or financial business activity within their reach.” These banks have engaged in price manipulation.

A July 27, 2013 letter from the US Congress to the Federal Reserve cited that JP Morgan is under investigation for manipulating power rates in California through the power plants it controls; and Coca Cola has accused Goldman Sachs of hoarding aluminum to jack up its price.

In the letter, the four members of the US Congress said these banks are subverting “the foundational principle of separation of banking commerce.”

The article Who Controls The Global Economy? Do Not Underestimate The Power Of The Big Banks By Michael Snyder reveals that the super rich who control these banks have $32 trillion in assets. This is more than double the US GDP in 2011.

Progressives have a name for it: financial oligarchy. (bulatlat.com)

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* Read the article Who Controls The Global Economy? Do Not Underestimate The Power Of The Big Banks By Michael Snyder, which contains most of the points raised in this analysis. Snyder also wrote World Bank Whistleblower Reveals How The Global Elite Rules The World.

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