Reviewing Ellen Brown's "Web of Debt:" Part III

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could not be sustained indefinitely" because exiting gold to defray foreign debts results in money backing it to be withdrawn from circulation.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 Whatever the truth, bankers regained their power in short order when Johnson rescinded Kennedy's EO and fully restored their money-creation authority.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.

Bretton Woods - The Rise and Fall of the International Gold Standard

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:

Flawed as it is, however, "floating" exchange rates are much worse, especially for developing nations at the mercy of giants, like America, able to devalue currencies by attacking them through short selling. Manipulative power is so great, it can extract painful concessions that are hugely profitable to bankers.

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.

As for oil producers, Wall Street and London bankers profited from windfall petrodollar deposits - recyclable as developing nation loans to buy oil but at the same time to be entrapped in permanent debt bondage. Pre-1973, Third World debt "was manageable and contained....financed mainly through public agencies (for projects) promising solid economic success." That changed when commercial banks took over. Their business isn't development. It's "loan brokering (or) loan sharking," preferably with dictator/strongmen able to cut deals on their own.

Later the IMF got involved. At the behest of giant bankers, as "debt policemen" instituting rigorous structural adjustments, including slashed wages and social benefits as well as state asset sales on favorable terms to private investors.

At the same time, America got deeply indebted. It's now the world's largest by far and needs hundreds of billions annually to keep the dollar recycling game going - in the last 12 months alone, far more than that after the national debt doubled. Today, the nation is "hopelessly mired in debt to support the banking system of a private international cartel." Ordinary people pay the price.

Germany Finances a War without Money

The 1919 Versailles Treaty imposed onerous post-WW I terms on Germany. In May 1921, it got a six-day ultimatum to accept them or have the industrial Ruhr Valley militarily occupied. Even worse, it lost its colonies, all their resources, and the population had to pay the cost of war, amounting to three times the value of all property in the country. At the same time, German mark speculation caused it to plummet causing hyperinflation that by 1923 was catastrophic.

In January, the mark dropped to 18,000 to the dollar. By July, it was 353,000, by August 4,620,000, and by November an astonishing 4,200,000,000,000 - effectively worthless from the greatest ever hyperinflation, ravaging the nation's savings and making later calamitous events inevitable.

Loss of German assets compounded the problem. Britain took its colonies along with Alsace-Lorraine and Silesia with its rich mineral and agricultural resources. Lost was 75% of the country's iron ore, 68% of zinc ore, 26% of coal as well as Alsatian textile industries and potash mines. In addition, Germany's entire merchant fleets were taken, a portion of its transport and fishing fleet plus locomotives, railroad cars and trucks - all justified as legitimate war debts that were fixed at an impossible to pay 132 billion gold marks at 6% interest.

The 1923 Dawes Plan (named for US banker Charles Dawes) imposed fiscal control to continue the looting and assure reparations were paid. A huge debt pyramid resulted that collapsed after the 1929 crash along with radical political elements gaining prominence.

How to cope was the key question. Like the earlier American Greenbackers, Germany issued its own money after Hitler came to power. He had two choices, and like Lincoln, did it right. He freed the country from debt bondage and at the same time implemented vast infrastructure development - what Roosevelt as well did, but in his case by indebtedness to bankers.

Hitler issued $1 billion interest-free, "non-inflationary bills of exchange, called Labor Treasury Certificates." He put millions back to work, paid them with the Certificates that were used for goods and services to create more jobs and revive prosperity. Within two years, Germany was "back on its feet....with a solid, stable currency, no debt, and no inflation, at a time" America and Western economies were still struggling.

Hitler, however, diverged from the Greenbackers by equating bankers with Jews and launching a reign of terror against them. Greenbackers knew the real enemy - private bankers imposing debt bondage with onerous terms.

Beyond that and his imperial aims, Hitler reinvigorated the Third Reich in a few years, became hugely popular, and achieved it even before undertaking large-scale military spending. It impressed Pastor Sheldon Emry to write: