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In June I started a series of (TBR)tweets named #TheBigResetSynopsis

Today I will share the core of #TBRchapter2 – Central Bankers, The Alchemists of our Time
Gold still represents the ultimate form of payment in the world.
Fiat money in extremis is accepted by nobody. Gold is always
– Alan Greenspan, former Chairman of the Federal Reserve

If the people ever allow private banks to control the
issue of their currency, first by inflation, then by deflation, the
banks/corporations which grow up around them will
deprive the people of all property until their children wake up
– Thomas Jefferson
It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation. If the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks -Paul Volcker
On the first banknotes used in the Netherlands, a promise was printed that the bank would pay gold ‘to the bearer of ten golden guilders’. Later on, that changed into ‘to the bearer of 10 (silver) guilders’, followed by ‘to the bearer’ and finally
‘lawful means of payment’.
During the Middle Ages, European royalty and even the church often needed to borrow money to fight wars. This financing was provided by so-called moneychangers, who understood pretty quickly that lending to powerful entities such as kings and churches carried less risk.
The German Rothschild family established an international
banking business and dynasty, becoming one of the most powerful families in the 19th century. In return for financing royal empires, several family members were even elevated to nobility in Austria and the United Kingdom.
This can be seen as the start of modern banking. Often an
intimate relationship developed between governments and
bankers and led to the establishment of the first central banks. Increasingly, bankers were given the right to print money in exchange for their financial support.
To this day, many central bankers regard politicians as loyal
operators of the financial architecture they have been building
for over 400 years. Over the years, bankers have learned that
citizens could always be taxed by governments to pay back the banks.
Moreover, banks know they will be bailed out if they run
into trouble because the economy cannot function without them. #TBRChapter2
In 1694, the Scotsman William Paterson tried to sell the scheme to the governments of England, the Holy Roman Empire and the Dutch Republic, but none were willing to support him. In 1694, he wrote a pamphlet entitled A Brief Account of the Intended Bank of England.
It explained how the British government could be helped to create money by setting up ‘a joint-stock company’ by the name of the ‘Bank of England’ to act as the English government’s banker.
He proposed a perpetual loan of £1.2 million to the government, but with an annual interest of 8% a year to the shareholders. In return, the investors would be allowed to incorporate a ‘Company of the Bank of England’ with banking privileges, including the issuing of banknotes.
Paterson was backed by a group of rich traders from the City
of London who would generate the starting capital. He was
also supported by Charles Montagu, one of the most important officials within the Ministry of Finance.
Together, they persuaded the government to create a bill so that the Bank of England could be established. The Royal Charter was granted on 27 July 1694. The first loan by the Bank of England was to finance the Royal Navy by issuing Navy Bills.
The start of the Bank of England is often seen as the start of
a new era. Fiscal deficits by governments could be financed by means of selling (perpetual) bonds. We could in fact say that the current financial system of bond financings started more than three hundred years ago.
The perpetual character of the first national loan was replaced in most countries by bonds with a duration of up to thirty years. Actually, these loans are almost never paid off but ‘rolled over’ continuously. New loans pay off old loans. A Ponzi scheme indeed.
This British model was so successful that other countries soon started their own private central banks. It all led to a mountain of government debt, which now totals around $ 50 trillion (as of 2012). There is no way this debt can ever be repaid in nondeflated currencies.
Strangely enough, most of the money that is supposedly safely invested in risk-free bonds are most at risk. A recent study of eight centuries of government debt defaults by
economists Carmen M. Reinhart and Kenneth S. Rogofff warns of the real likelihood of national debt crises..
A global debt restructuring will probably be needed, and could
be part of the Big Reset. In 2012, Bill Gross, founder of the largest bond investor house Pimco, advised investors to start buying ‘hard assets’ instead of paper assets such as government bonds.
Central bankers and private bankers have completely different
mindsets. While the first are often academics and enjoy
their position of power, private bankers are the real deal and
moneymakers. As we have seen in the past, some will even sell their country for money.
Napoleon stated in 1802:
The hand that gives is above the hand that takes. Money has
no motherland, financiers are without patriotism and without
decency; their sole object is gain.
In the current banking system, central bankers often turn out
to be lap dogs for private bankers instead of watchdogs. This
explains how Wall Street banks were able to sell increasingly
risky products (derivatives) without the US central bank standing in their way.
Other central banks were pressured by the Fed to refrain from regulating the worldwide trade of derivatives. Not much has changed in the US since the start of the credit crisis. Annually, the financial sector spends $1mln dollars per member of Congress on financial lobbying.
Despite this collusion between central banks and commercial
banks, politicians still believe that the best way to reform financial institutions is via self-regulation. The most important international banking regulations – known as ‘the Basel Rules’
are still decided at regular meetings of the Bank for International Settlements (BIS) in Basel. The BIS can be seen as the mother of central banks and was founded at the International Bankers Conferences at Baden Baden (1929) and The Hague (1930).
The BIS was originally intended to facilitate the payment of reparations imposed on Germany by the Treaty of Versailles after World War I. But after hyperinflation in the Weimar Republic from 1921 to 1924, a new plan for settling German reparations was written in 1929.
Between 1933 and 1945, the BIS board included Walther Funk and Emil Puhl, both high-level Nazis who were subsequently convicted of war crimes at the Nuremberg trials. After World War II, it became clear that the BIS, as house banker to the Nazis, had helped to launder stolen gold
Under the supervision of Funk and Puhl, Nazi Germany had confiscated gold from Jewish concentration camp victims and melted it down to make new gold ingots. During the Bretton Woods conference of 1944, the bank was even accused of acting under orders from the Nazis.
The Americans were appalled, and the US government supported a motion that called for the abolishment of the BIS.
The proposal was supported by other European delegates but
was opposed by John Maynard Keynes, the head of the British delegation.
In April 1945, a decision to liquidate the BIS was made,
but it was reversed by the US in 1948. The BIS had survived but was badly wounded. It had less influence and needed time to find a proper new role behind the scenes.
During the 1970s, the functions and the number of BIS members were substantially enlarged. Today, 60 central banks are members of the BIS, including those from the most important industrialized countries. Surprisingly, the Fed did not join until 1994.
This was because the Americans saw the BIS as a competitor
to ‘their’ IMF. At the start of the 1990s, the US realized they needed the BIS for European central bank support in its war on gold (of which more later) and in order to prevent regulation on derivatives.
While the presidents of the ECB and the Fed can still be held accountable by parliament or congress, no single form of democratic control exists over the decision-making process of the BIS. Their meetings are concealed from the outside world.
To this day, BIS directors enjoy diplomatic status and cannot
be prosecuted even after the end of their tenure. They are also
allowed to move house with their family at any time to neutral
End (Today I will share the core of #TBRchapter2 – Central Bankers, The Alchemists of our Time)

Full manuscript of The Big Reset can be downloaded:…
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