Monday, September 17, 2007
International banking His-story
and it’s effect on the New World Order
Money is anything that is widely used for making payments and accounting for debts and credits.
- Money did not have a single origin but developed independently in many different parts of the world.
- Many factors contributed to its development and if evidence of what anthropologists have learned about primitive money is anything to go by economic factors were not the most important.
- Money performs a variety of functions and the functions performed by the earliest types were probably fairly restricted initially and would NOT necessarily have been the same in all societies.
- Money is fungible. This means there is a tendency for older forms to take on new roles and for new forms to develop which takes on old roles, e.g., on English banknotes such as the 5-pound notes it says, "I promise to pay the bearer on demand the sum of five pounds.” Below that, it carries the signature of the chief cashier of the Bank of
Also according to
Specific functions (mostly micro-economic)
- Unit of account (abstract)
- Common measure of value (abstract)
- Medium of exchange (concrete)
- Means of payment (concrete)
- Standard for deferred payments (abstract)
- Store of value (concrete)
General functions (mostly macro-economic and abstract)
- Liquid asset
- Framework of the market allocative system (prices)
- A causative factor in the economy
- Controller of the economy
The table above comes from page 27 of A History of Money.
"Money originated very largely from non-economic causes: from tribute as well as from trade, from blood-money and bride-money as well as from barter, from ceremonial and religious rites as well as from commerce, from ostentatious ornamentation as well as from acting as the common drudge between economic men."
Glyn Davies, The Origins of Money
The Invention of Banking and Coinage
The invention of banking preceded that of coinage. Banking originated in Ancient Mesopotamia where the royal palaces and temples provided secure places for the safe-keeping of grain and other commodities. Receipts came to be used for transfers not only to the original depositors but also to third parties. Eventually private houses in
In
Precious metals, in weighed quantities, were a common form of money in ancient times. The transition to quantities that could be counted rather than weighed came gradually. On page 29 of A History of Money Glyn Davies points out that the words "spend", "expenditure", and "pound" (as in the main British monetary unit) all come from the Latin "expendere" meaning "to weigh". On page 74 the author points out that the basic unit of weight in the Greek speaking world was the "drachma" or "handful" of grain, but the precise weight taken to represent this varied considerably, for example from less than 3 grams in Corinth to more than 6 grams in Aegina. Throughout much of the ancient world the basic unit of money was the stater, meaning literally "balancer" or "weigher". The talent is a monetary unit with which we are familiar with from the Parable of the Talents in the Bible. The talent was also a Greek unit of weight, about 60 pounds.
City-states with strong and widely accepted currencies would have gained prestige. In the 1960s newly independent countries in the
Coercion played a role in establishing monetary uniformity. In 456 BC Athens forced Aegina to take Athenian 'owls' and to stop minting her own 'turtle' coinage and in 449 BC Athens issued an edict ordering all 'foreign' coins to be handed in to the Athenian mint and compelling all her allies to use the Attic standard of weights, measures and money. The conquests of Alexander the Great brought about a large degree of monetary uniformity over much of the known world. His father, Philip, had issued coins celebrating his triumph in the chariot race in Olympic games of 356 BC - an example of the use of coins as propaganda.
The Roman emperors made even more extensive use of coins for propaganda, one historian going so far as to claim that "the primary function of the coins is to record the messages which the emperor and his advisers desired to commend to the populations of the empire."
The Royal Monopoly of Minting
One of the reasons for the rapid spread of the use of coins was their convenience. In situations where coins were generally acceptable at their nominal value there was no need to weigh them and in everyday transactions where relatively small numbers were involved counting was quicker and far more convenient than weighing. By the Middle Ages monarchs were able to use this convenience as a source of profit.
On page 168 Glyn Davies writes, "because of the convenience of royally authenticated coinage as a means of payment, and with hardly any other of the general means of payment available in the Middle Ages being anything like as convenient, coins commonly carried a substantial premium over the value of their metallic content, more than high enough to cover the costs of minting. Kings could turn this premium into personal profit; hence ... the wholesale regular recall of coinage... first at six yearly, then at three-yearly intervals, and eventually about every two years or so. In order to make a thorough job of this short recycling process it was essential that all existing coins should be brought in so as to maximize the profit and, in order to prevent competition from earlier issues, the new issues had to be made clearly distinguishable by the authorities yet readily acceptable to the general public."
These recoinage cycles were far more frequent than was justified by wear and tear on the coins but the profits from minting, known as seigniorage, supplemented the revenue that English monarchs raised from the efficient systems of taxation introduced by the
"Anyone who had occasion to handle coins of silver or gold in any volume, whether merchants, traders, tax collectors, the King himself, the royal treasury, or the sheriffs, required reliable devices for testing the purity of what passed for currency."
(Page 144 The origin of Money).
Paper Money
In
Bills of Exchange
With the revival of banking in western Europe, stimulated by the Crusades, written instructions in the form of bills of exchange, came to be used as a means of transferring large sums of money and the Knights Templars and Hospitallers functioned as bankers.
Goldsmith Bankers
During the English Civil War, 1642-1651, the goldsmith's safes were secure places for the deposit of jewels, bullion and coins. Instructions to goldsmiths to pay money to another customer subsequently developed into the cheque (or check in American spelling). Similarly goldsmiths' receipts were used not only for withdrawing deposits but also as evidence of ability to pay and by about 1660 these had developed into the banknote.
Gold Standard
Although paper money obviously had no intrinsic value, its acceptability originally depended on its being backed by some commodity, normally precious metals. During the Napoleonic Wars convertibility of Bank of England notes was suspended and there was some inflation which was worrying to contemporary observers who were used to stable prices and, in accordance with the recommendations of an official enquiry
However when the various German states merged into a single country in 1871 they chose the gold standard. The Scandinavian countries adopted the gold standard shortly afterwards.
With the outbreak of the First World War in 1914
The
Intangible Money
The break with precious metals helped to make money a more elusive entity. Another trend in the same direction is the growing interest in forms of electronic money from the 1990s onwards. In some ways e-money is a logical evolution from the wire transfers that came about with the widespread adoption of the telegraph in the 19th century but such transfers had relatively little impact on the everyday shopper.
The evolution of money has not stopped. Securitisation, the turning of illiquid assets into cash, developed in new directions in the 1990s. One much publicised development was the invention of bonds backed by intangible assets such as copyright of music, e.g.Bowie bonds, named after those issued by the popstar David Bowie.
Here comes the money changers!
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance."
President James Madison
Truth is most people don't realise that the issuing of money is essentially a private business, and that the privilege of issuing money has been a major cause of the attack on national soveriegnity throughout history.
Wars have been fought and depressions have been caused in the battle over who issues the money; however the majority of us are not aware of this, and this is largely due to the fact that the winning side became and increasingly continues to be a vital and respected member of our global society, having an influence over large aspects of our lives including our education, our media and our governments.
MEDIEVAL
Here we find goldsmith's offering to keep other people's gold and silver safe in their vaults, and in return people walking away with a receipt for what they have left there.
These paper receipts soon became popular for trade as they were less heavy to carry around than gold and silver coins.
After a while, the goldsmith's must have noticed that only a small percentage of their depositor's ever came in to demand their gold at any one time. So the goldsmith's made out some receipts for gold which didn't even exist, and then they loaned it out to earn interest.
These early loan sharks incorporated this practice into the banking system. They even gave it a name to make it seem more acceptable, christening the practice 'Fractional Reserve Banking' which translates to mean, lending out many times more money than you have assets on deposit.
Today banks are allowed to loan out at least ten times the amount they actually are holding, so while you wonder how they get rich charging you 11% interest, it's not 11% a year they make on that amount but actually 110%.
King Henry1, produced sticks of polished wood, with notches cut along one edge to signify the denominations. The stick was then split the full length so each piece still had a record of the notches.
The King kept one half for proof against counterfeiting, and then spent the other half into the market place where it would continue to circulate as money.
Because only Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which gave people confidence to accept these as money.
The tally stick system worked really well for 726 years. It was the most successful form of currency in recent history and the
In 1694 the Bank of England at its formation attacked the Tally Stick System because the realised it was money outside the power of the money changers, (the very thing King Henry had intended).
The money changers the first shareholder's in the Bank of England simple had to buy their original shares with notched pieces of wood and retired the system. Bought shares you say?. The Bank of England was set up as a privately owned bank through investors buying shares. These investors, who's names were kept secret, were meant to invest one and a quarter million pounds, but only three quarters of a million was received when it was chartered in 1694.
It then began to lend out many times more than it had in reserve, collecting interest on the lot.
This is not something you could just impose on people without preparation. The money changers needed to created the climate to make the formation of this private concern seem acceptable.
Here's how they did it.
With King Henry VIII relaxing the Usury Laws in the 1500's, the money changers flooded the market with their gold and silver coins becoming richer by the minute.
The English Revolution of 1642 was financed by the money changers backing Oliver Cromwell's successful attempt to purge the parliament and kill King Charles. What followed was 50 years of costly wars. Costly to those fighting them and profitable to those financing them.
So profitable that it allowed the money changers to take over a square mile of property still known as the City of
The 50 years of war left
Now the politicians had a source from which to borrow all the money they wanted to borrow, and the debt created was secured against public taxes.
You would think someone would have seen through this, and realised they could produce their own money and owe no interest, but instead the Bank of England has been used as a model and now nearly every nation has a Central Bank with fractional reserve banking at its core.
These central banks have the power to take over a nations economy and become that nations real governing force. What we have here is a hidden tax, being collected by private concerns.
The country sells bonds to the bank in return for money it cannot raise in taxes. The bonds are paid for by money produced from thin air. The government pays interest on the money it borrowed by borrowing more money in the same way. There is no way this debt can ever be paid, it has and will continue to increase.
If the government did find a way to pay off the debt, the result would be that there would be no bonds to back the currency, so to pay the debt would be to kill the currency.
With its formation the Bank of England soon flooded
One company was even offering to drain the
By1698 the national debt expanded from £1,250,000 to £16,000,000 and up went the taxes the debt was secured on.
As hard as it might be to believe, in times of economic upheaval, wealth is rarely destroyed and instead is often only transferred. And who benefits the most when money is scarce? It's those controlling what everyone else wants, the money changer's.
When the majority of people are suffering through economic depression, you can be sure that a minority of people are continuing to get rich.
Even today the Bank of England expresses its determination to prevent the ups and downs of booms and depressions, yet there have been nothing but ups and downs since its formation with the British pound rarely being stable.
One thing however has been stable and that is the growing fortune of the international Bankers
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