This is the third in a series of articles on Ellen Brown's superb 2007 book titled "Web of Debt," now updated in a December 2008 third edition. It tells "the shocking truth about our money system, (how it) trapped us in debt, and how we can break free." This article focuses on global debt entrapment.
Global Debt Enslavement - From Gold Reserves to Petrodollars
"The gold standard (while it lasted) was a necessary step in giving bankers' 'fractional reserve' legitimacy, but the ruse could not be sustained indefinitely" because exiting gold to defray foreign debts results in money backing it to be withdrawn from circulation. The result - contraction, recession, or depression, the very problem that forced FDR to drop the gold standard to prevent an even greater collapse. In 1971, Nixon did it permanently "when foreign creditors threatened to exhaust US gold reserves by cashing in their paper dollars for gold."
John Kennedy was the last president to challenge Wall Street, contends Donald Gibson in one of his two books about him. In "Battling Wall Street: The Kennedy Presidency," he said that Kennedy opposed "free trade," believed industry should serve the nation, and that America should sustain its independence by developing cheap energy. That "pitted him against the oil/banking cartel," intent on "raising oil prices to prohibitive levels in order to" entrap the world in a "web of debt."
Evidence also suggests that "Kennedy crossed the bankers by seeking to revive a silver-backed currency," independent of the Fed. In fact, on June 4, 1963, he issued Executive Order (EO) 11110 giving the president authority to issue currency. He then ordered the Treasury to print over $4 billion of "United States Notes" in place of Federal Reserve Notes. Some believe that he intended to replace them all when enough of the new currency was in circulation - to return money-creation power to the government where it belongs.
Five and a half months later, he was assassinated. In his second book on the president, "The Kennedy Assassination Cover-up," Gibson contends that a private network of wealthy individuals did it - not the FBI, CIA, Mafia, LBJ, the oil cartel, or anti-Castro extremists. Whatever the truth, bankers regained their power in short order when Johnson rescinded Kennedy's EO and fully restored their money-creation authority. They've had it ever since.
In mid-1944, the Bretton Woods monetary management system was established, about a year before WW II ended but when its outcome was clear. It created a postwar international monetary system of convertible currencies, fixed exchange rates, free trade, the US dollar as the world's reserve currency linked to gold, and those of other nations fixed to the dollar. It also designed an institutional framework for market-based capital accumulation to ensure that newly liberated colonies would pursue capitalist economic development beneficial to the victorious powers, most of all America.
In August 1971, the system unraveled when Nixon closed the gold window - ending the last link between gold, the dollar, and sound money. Thereafter, currencies would float and compete with each other in a casino-like environment, easily manipulated by powerful insiders, hedge funds, giant international banks, or governments at times in their own self-interest.
According to F. William Engdahl: "Market forces now could determine the dollar (entirely without gold). And they did it with a vengeance."
Bretton Woods was to ensure stability along with the IMF and World Bank's original missions - to establish exchange rates for the former and provide credit to war-torn Third World countries for the latter. Both bodies are, in fact, hugely exploitative while David Rockefeller ostensibly convened Bretton Woods to ensure gold-backed currencies would "justify a massive expansion of US dollar debt around the world."
The scheme worked until Vietnam war debt unraveled it. It might have continued (for a while at least) by raising the gold price. Instead it was kept at $35 an ounce forcing Nixon to close the gold window permanently, then take "the brakes off the printing presses" to generate as many dollars as there were willing takers. After that, Wall Street financiers "proceeded to build a worldwide financial empire based on a 'fractional reserve' banking system (using) bank-created paper dollars in place of the time-honored gold. Dollars became the reserve currency for a global net of debt to an international banking cartel."
Skeptics said they planned it that way to pull off "the biggest act of bad faith in history." True or not, gold failed as a global reserve currency because there isn't enough of it to go around. Inevitably shortages result forcing something to change.
Earlier in the 1930s, floating exchange rates proved disastrous, yet most countries agreed to them post-1971. Ones that resist are very vulnerable and can be coerced as a condition of debt relief, much like what happened after oil quadrupled in price in 1974. Suspicions about it at the time were justified.
It was a Kissinger - Saudi royal family scheme to revive dollar dominance by recycling petrodollars into US investments and weapons in return for guaranteeing the kingdom's safety - mainly from America had they turned us down. In a word, it was protection money like the underworld extracts on a smaller scale with oil now backing dollars instead of gold. Henceforth, countries need dollars to buy it and require exports for enough of them.