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Libya: All About Oil, or All About Central Banking?

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Libya not only has oil.   According to the IMF, its central bank has nearly 144 tons of gold in its vaults.   With that sort of asset base, who needs the BIS, the IMF and their rules?  

All of which prompts a closer look at the BIS rules and their effect on local economies.   An article on the BIS website states that central banks in the Central Bank Governance Network are supposed to have as their single or primary objective "to preserve price stability."   They are to be kept independent from government to make sure that political considerations don't interfere with this mandate.   "Price stability" means maintaining a stable money supply, even if that means burdening the people with heavy foreign debts.   Central banks are discouraged from increasing the money supply by printing money and using it for the benefit of the state, either directly or as loans.  

In a 2002 article in Asia Times titled "The BIS vs National Banks," Henry Liu maintained:   

BIS regulations serve only the single purpose of strengthening the international private banking system, even at the peril of national economies. The BIS does to national banking systems what the IMF has done to national monetary regimes. National economies under financial globalization no longer serve national interests.  

. . . FDI [foreign direct investment] denominated in foreign currencies, mostly dollars, has condemned many national economies into unbalanced development toward export, merely to make dollar-denominated interest payments to FDI, with little net benefit to the domestic economies.  


He added, "Applying the State Theory of Money, any government can fund with its own currency all its domestic developmental needs to maintain full employment without inflation."   The "state theory of money" refers to money created by governments rather than private banks.

The presumption of the rule against borrowing from the government's own central bank is that this will be inflationary, while borrowing existing money from foreign banks or the IMF will not.   But all banks actually create the money they lend on their books, whether publicly-owned or privately-owned.   Most new money today comes from bank loans.   Borrowing it from the government's own central bank has the advantage that the loan is effectively interest-free.   Eliminating interest has been shown to reduce the cost of public projects by an average of 50%.    

And that appears to be how the Libyan system works.   According to Wikipedia, the functions of the Central Bank of Libya include "issuing and regulating banknotes and coins in Libya" and "managing and issuing all state loans."   Libya's wholly state-owned bank can and does issue the national currency and lend it for state purposes.  

That would explain where Libya gets the money to provide free education and medical care, and to issue each young couple $50,000 in interest-free state loans.   It would also explain where the country found the $33 billion to build the Great Man-Made River project.   Libyans are worried that NATO-led air strikes are coming perilously close to this pipeline, threatening another humanitarian disaster.                  

So is this new war all about oil or all about banking?   Maybe both -- and water as well.   With energy, water, and ample credit to develop the infrastructure to access them, a nation can be free of the grip of foreign creditors.   And that may be the real threat of Libya: it could show the world what is possible.   Most countries don't have oil, but new technologies are being developed that could make non-oil-producing nations energy-independent, particularly if infrastructure costs are halved by borrowing from the nation's own publicly-owned bank.   Energy independence would free governments from the web of the international bankers, and of the need to shift production from domestic to foreign markets to service the loans.  

If the Gaddafi government goes down, it will be interesting to watch whether the new central bank joins the BIS, whether the nationalized oil industry gets sold off to investors, and whether education and health care continue to be free.     

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Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book, she explores successful public banking models historically and (more...)
 

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Slam dunk.Great article.... by zonie on Thursday, Apr 14, 2011 at 11:49:46 AM
that any war US does is the WAR ON INDEPENDENCE. ... by Mark Sashine on Friday, Apr 15, 2011 at 6:44:18 AM
I criticised a piece by Ellen. It is likely still... by zonie on Friday, Apr 15, 2011 at 3:52:03 PM
Enraged about the Green Book? As bad literature, p... by Mac McKinney on Friday, Apr 15, 2011 at 5:18:48 PM
or we will have to compare with the following rece... by Mark Sashine on Friday, Apr 15, 2011 at 5:52:51 PM
Forcing Libyans to swallow the implementation of t... by Mac McKinney on Friday, Apr 15, 2011 at 5:57:32 PM
I like it. Of course women are different from men,... by Peter Duveen on Friday, Apr 15, 2011 at 8:14:30 PM
election campaign. To win a second term, a Pres... by Samuel Bryan on Thursday, Apr 14, 2011 at 12:18:18 PM
Yes, it's about putting Libya under the control of... by Ernie Messerschmidt on Thursday, Apr 14, 2011 at 12:35:04 PM
This system of cartels is endemic. Ignorance of t... by Robert Bostick on Friday, Apr 15, 2011 at 8:44:44 AM
Brown has it right. The key issue is that Libya ha... by R A Bows on Thursday, Apr 14, 2011 at 1:35:29 PM
"it will be interesting to watch whether the new c... by Keith Pope on Thursday, Apr 14, 2011 at 2:29:34 PM
"I spent 33 years and four months in active milita... by Chantal Laurent on Thursday, Apr 14, 2011 at 3:18:06 PM
That is a powerful quote! THANK YOU! I had never s... by Elizabeth Hanson on Friday, Apr 15, 2011 at 12:13:43 AM
Likely one of our greatest generals, if not the gr... by zonie on Friday, Apr 15, 2011 at 3:43:35 PM
... by Chantal Laurent on Friday, Apr 15, 2011 at 8:58:44 PM
I watched it.Everyone should look for it.Thanks...... by zonie on Saturday, Apr 16, 2011 at 12:49:40 PM
I read that website that you had mentioned,and ask... by nativenezperce on Friday, Apr 15, 2011 at 10:17:01 PM
As the mainstream media portray a "defiant" Ghadha... by Sylvain Lamoureux on Thursday, Apr 14, 2011 at 3:44:45 PM
Readers of opednews could read some of her sources... by John Smith on Thursday, Apr 14, 2011 at 7:20:57 PM
Thanks for all the good comments!... by Ellen Brown on Thursday, Apr 14, 2011 at 8:36:42 PM
This might be the best article I have ever read on... by Robert Tracey on Thursday, Apr 14, 2011 at 9:09:22 PM
... by Ellen Brown on Friday, Apr 15, 2011 at 1:02:13 AM
YES... by 911TRUTH on Thursday, Apr 14, 2011 at 10:40:00 PM
This is a nice, fanciful spin on an economy that h... by Mac McKinney on Thursday, Apr 14, 2011 at 11:48:33 PM
Interesting. Wikipedia puts the unemployment rate... by Ellen Brown on Friday, Apr 15, 2011 at 12:35:14 AM
Much of the information cited by McKinney comes f... by Chris Cook on Friday, Apr 15, 2011 at 10:20:58 AM
Thanks Chris! I thought this was good, on AOL tod... by Ellen Brown on Friday, Apr 15, 2011 at 10:27:32 AM
Now that you have swallowed Aisha's gushing accoun... by Mac McKinney on Friday, Apr 15, 2011 at 5:00:58 PM
I figured someone would attack the WSJ and Heritag... by Mac McKinney on Friday, Apr 15, 2011 at 11:33:06 AM
The Economist magazine as described by Wikipedia:"... by Chris Cook on Friday, Apr 15, 2011 at 12:14:11 PM
I think I must be psychic, because I just knew you... by Mac McKinney on Friday, Apr 15, 2011 at 5:54:26 PM
The "economic freedom" ratings are extremist neo-l... by Ernie Messerschmidt on Friday, Apr 15, 2011 at 11:43:21 AM
Aren't you being a bit ideological there, Ernie? D... by Mac McKinney on Friday, Apr 15, 2011 at 6:13:24 PM
"Ideological" is pretty mild name calling there, M... by Ernie Messerschmidt on Friday, Apr 15, 2011 at 9:43:21 PM
"Ideological" is pretty mild name calling there, M... by Ernie Messerschmidt on Friday, Apr 15, 2011 at 9:43:46 PM
A decade ago the US may have been number one, but ... by Mac McKinney on Friday, Apr 15, 2011 at 10:12:25 PM
Great article Ellen.Naomi Klein would answer, of c... by Robert Bostick on Friday, Apr 15, 2011 at 8:26:51 AM
Several Arab nations issue interest free loans to ... by John Smith on Friday, Apr 15, 2011 at 8:34:33 AM
If this article has veracity, and most likely it d... by Chris Cook on Friday, Apr 15, 2011 at 2:20:42 PM
Though I always appreciate Ellen's articles, I am ... by Alan MacDonald on Friday, Apr 15, 2011 at 3:54:15 PM
War and empire are endemic to human history and co... by Mac McKinney on Friday, Apr 15, 2011 at 4:31:09 PM
Mac, in all due respect, since I'm a proud Mac als... by Alan MacDonald on Friday, Apr 15, 2011 at 5:58:44 PM
Well I think we are more in sync now that I unders... by Mac McKinney on Friday, Apr 15, 2011 at 6:34:01 PM
Glad you Macs reached agreement! My own sense of ... by Ellen Brown on Friday, Apr 15, 2011 at 9:00:38 PM
I just don't see that Ellen. I think you are misco... by Mac McKinney on Friday, Apr 15, 2011 at 9:38:55 PM
I'll go with that article Chris Cook cited:http://... by Ellen Brown on Friday, Apr 15, 2011 at 9:52:30 PM
Ellen, OMG, those Libyan freedom fighters must rea... by Alan MacDonald on Sunday, Apr 24, 2011 at 10:52:00 AM
Well as Bogey and Captain Renault said while they ... by Alan MacDonald on Friday, Apr 15, 2011 at 9:38:16 PM
They hold either number one or number two spot in ... by zonie on Friday, Apr 15, 2011 at 4:15:56 PM
googler ads are jamming articles like this becaus... by Ray O. Sunshine on Friday, Apr 15, 2011 at 5:55:54 PM
I've been commenting on a number of articles, and ... by Jim Arnold on Friday, Apr 15, 2011 at 9:47:03 PM
Agreed. How would you turn our power against them... by Ellen Brown on Friday, Apr 15, 2011 at 9:55:48 PM
two kinds of questions -- wonderins and challengin... by Jim Arnold on Saturday, Apr 16, 2011 at 8:35:10 PM
even just the rippling of "moral" support and the ... by Ellen Brown on Saturday, Apr 16, 2011 at 10:20:01 PM
Where did I lose you? The Vietnamese were aware of... by Jim Arnold on Sunday, Apr 17, 2011 at 12:41:58 AM
Almost all of the BIS members are from North Ameri... by Ty on Saturday, Apr 16, 2011 at 10:51:30 AM
Kropotkin stated that change will occur when a maj... by Bernard on Sunday, Apr 17, 2011 at 5:49:45 PM
It's necessary to make assumptions and inferences ... by Jim Arnold on Sunday, Apr 17, 2011 at 8:53:17 PM