A Beginner's Guide to Understanding the World Financial System
Is it really still about finance or is there something more behind the curtain?
The World Financial System. That’s quite a large topic. What is it? Is there even such a thing? The answer is there definitely is and it has morphed into quite a monster in the last decade or so. In order to make this article approachable to all I will highlight points that are important to the average person who wants to understand the system from a “40,000 ft view”. This will give the reader a general understanding of how so many different countries that produce so many different goods and services all seem to orbit the US Dollar (USD) and why this talk of the BRICS nations moving away from the USD can be a good thing for humanity and the US itself.
In the time of intrinsic money i.e. the Gold and Silver system it was widely recognized by ALL (layman and the financial elite) that work had to be compensated for in real money. Well over a century ago if a farmer tilled the soil and sold crops he could receive payment in precious metals. These metals could then be used within his country and outside of his country. The layman was on par with the financial elite. Unfortunately there are risks carrying around large sums of money in precious metals. The major risk being that someone can bonk you over the head and take it away from you!
To circumvent this problem the financial elite started opening institutions called “Banks” to the general public. They said, “Bring in your precious metals, we will give you a piece of paper and these pieces of paper can be redeemed at any time for their equivalent value in precious metals. Also our partner banks accept our paper so you can trade out of town and soon out of the country via telegraph! You will just have to pay a small fee for this exorbitant privilege we are affording you of course. Nothing is for free after all!” It seemed too good to be true and for a while it was true until the unscrupulous in the financial elite figured out how gullible the masses were when it comes to money.
Hard working people, especially the young, think they can work, save and build themselves up. This used to be the case as with our hypothetical farmer above. However once the banks and their owners stopped competing against one another and started forming a cartel things went down hill very fast. The cartel initially created the associations they had to form to redeem their paper. They had to ensure the paper was legitimate, ensure legitimate paper wasn’t tampered with and ensure the issuing bank currently had funds on hand to pay them if they accepted the paper. These among other things lead to systems being formed between the banks to facilitate information sharing and trust relationships.
These systems grew in their own countries and these countries were of course the most affluent in the world at the time. Europe and America were the major purveyors of this new system but bank branches sprung up “Everywhere they wanted to be!”. This means banks owned by their banks appeared all over the world. Locals were hired to fill the front line staff and over time were lifted into higher management but never called the shots. How could they? They didn’t have any ability to honour foreign paper. What they needed was to own the bank they worked at, or even a new bank of their own. This dream never left them and for some of them it would be fulfilled in the future.
So in the above few paragraphs we see how just a handful of financial elite in just a few rich countries could within the space of a century spread a banking system they created into most corners of the world! The locals simply followed along. However as time went by people in 3rd World countries (I use the term purposefully) wanted independence for all sorts of strange reasons. I mean, the average man on the street believed what his leaders told him and they told him independence would make him rich and ensure his freedom. After all he was owner of his own country. So gullible we were in those days.
Fast forward to the end of 1945. The rich countries are all bruised and battered except for one. The United States (US). At this time it is rich in gold and the undisputed world power. The only country to have “the bomb” (the atomic bomb able to decimate an entire city in one strike). Yup, the last of the cowboys armed with nuclear weapons and a military war machine unlike the world had even seen sat down at a meeting in Breton Woods and told everyone they had them covered. The US Dollar (USD) would be as good as gold, redeemable for it and everyone, everywhere could rest easy. The US was ready to honour their paper. The US was going to become the bank of the world and if you didn’t like it there was a mushroom cloud in your future.
OK, maybe the mushroom cloud threat wasn’t vocalized but a country that had just obliterated hundreds of thousands of civilians and two major cities of its enemy was not one to take lightly considering no one else had the bomb at that time or the mighty war machine able to deliver it. Over the next decades the US detonated over 1000 nuclear bombs in tests. The USSR followed suit with a measly 727. The UK and France followed suit with 88 and 217 nuclear detonation tests respectively. If this league of nations sounds familiar to you today, the US, UK and France then one should consider the value of nuclear weapons in world diplomacy and how it is tied to the World Financial System.
The Eurodollar was hatched in the UK and France and quickly spread to the rest of Europe. The Eurodollar is a complicated beast in its detailed mechanics but can be understood as foreign banks in Europe having the ability to issue USD credit due to their banking relations with US Banks. More details on the mechanics of this system can be found online on YouTube at the Eurodollar University. I am not affiliated with the YouTube channel but I do respect the presenters views, credentials and analysis on some matters. Please note it is easy to get lost in the details when dealing with these complicated systems. You can hide the high level view by making the details of an implementation more complicated than it needs to be. This process is called obfuscation in programming and I believe it is utilized in the construction of this system to great effect to keep the gist of the system hidden from the masses.
As one can see Breton Woods was European Banks (the first in the Western World) ceding control of their system to US Banks and becoming one giant “World Bank”. In fact the World Bank and other major international institutions get the bulk of their funding and are under the control of these nations. The banking cartel in the US was called the Federal Reserve Bank system and today it is refereed to as the “Fed” for short. The Fed usurped control of the entire world’s economy.
For many the times I am describing may seem like the time of the dinosaurs but there are actually a few people still alive now who lived then. It wasn’t that long ago but it was per-Internet and for any under the age of 20 that is probably the equivalent of the stone age!
So what went wrong? Well for a decade or two not much. Since every independent country needed to be “banked” they all bowed to the new world banking system and the locals in countries all over the world got their wish! They got to own their own banks but they still couldn’t really honour the “big paper”. They were small fry in a sea of killer sharks. They had their old owners who gave them backing and allowed them to “play big bank” in their own country. The system worked well for them as those closest to the money benefit the most from it. The layman on the street got to feel a false sense of pride as his/her national banks made him/her think their newly independent country was going somewhere fast.
So local banks are on a tight leash when it comes to policy. A single call from the big international banks can destroy them. They know who their boss is. The independent countries have their own “Central Banks” of course. I mean they are the real boss right? Actually no. Government’s don’t have any money. The money belongs to the people. Governments are cost centers. They SPEND money. So where does the money come from? Can’t they just print it? Sure the government of a smaller country economically can print their own paper (currency not money, see my other articles) but no one will back it! The local paper is backed by the local banks who in turn are on the leash of the bigger banks who are on the leash of the biggest banks in the world. The entire World Financial System, hundreds of countries with thousands of banks all under the control of a few financial elite with the US Fed at the center of it all.
This system in and of itself is not inherently evil. The rich have used the poor for their pleasure since mankind was in the caves. However when the global elite decided to dictate more and more of the lives of the masses as technology allowed, things began to get out of hand. The use of mass media then the Internet to “Influence” the world’s desire for foreign goods and services skyrocketed across the 3rd world or “Global South” as it is sometimes called today. This is where the term social media “Infulencer” comes from by the way.
The financial and global elite don’t make anything. They don’t mine, they don’t assemble, they don’t engineer and they don’t build. The OWN the companies that do these things but they needed a way to get people to work more than their fair share so that growth could occur, massive amounts of new goods would be produced and wealth would be available globally to purchase these goods.
They have faced this problem for millennia. If they force the workers too much the workers stop working and start living off the land. Any land they can find! People needed food, shelter and protection. With these things they were independent and the global elite had to make concessions. The technology of the late 20th and early 21st centuries changed that a lot. People became more and more dependent on large corporations and technology allowed for the control of everything from the smart door lock and refrigerator in your home to the car you drive. Literally at the touch of a few buttons many people in developed countries can be made prisoners in their own homes.
The US got itself into a quagmire in the 1960s and learned a brutal lesson. The drive to develop the technology to replace people culminated in the US Space Program to place astronauts on the moon and return them safely to Earth. The US also found out people in the 3rd World were a lot tougher than those in the developed world. They lived simple lives and treasured their freedom more than money. The Vietnam War combined with the drive to develop cutting edge technology in the US Space Program essentially bankrupted the US. France saw the accounting misdeeds of the US and sent warships to convert its USD back into real money (gold) and take it back home. In 1971 the US, facing essential bankruptcy via a run on the bank of the US closed the gold window.
The term “closing the gold window” meant the US henceforth refused to convert USD for gold as it had agreed to in 1945. The USD was now fiat, paper without any backing except the will of a Government and institutions. The US had broken the most important deal since 1945 with barely a whisper of real disagreement (words are cheap) from any of the world’s major power brokers. No missiles were fired, no nuclear weapons went off. Everyone simply said “US paper is no longer as good as gold it IS gold!”.
There is a sordid segment in this decade where the US somehow magically convinced Saudi Arabia to sell its oil in USD only thereby “backing” the USD with oil instead of gold. This is termed the Petro Dollar period. There are some practical details that don’t make sense at the minutia level. Like how for instance barely a decade later the said OPEC cartel could embargo sales of oil to the US triggering a US oil crises and triggering yet another US technological push using technology developed post World War 2 to create the world we know today. One that is based upon telecommunications. The idea was if people could do things via telecommunications there would be less driving. Computers and telephones were said to be the saviors of humanity then, just as solar cells, windmills and lithium batteries are touted as that now.
It’s almost as if as time moved on the ultra rich and powerful from major countries were being given “VIP tickets” to the club in exchange for doing little favours. These little tricks pulled by foreign nations to receive blessings from the US power elite continued to trigger this vast push for a global communication network and the automation of jobs. While this part is conjecture it does fit the puzzle and one should never discount the ambition of the global elite. After all these are people who want to reduce C02 emissions “by any means necessary” and there are 7 billion breathers who produce C02 with every exhale. I refer the reader to do research on “The Club of Rome” and the report published in 1972 that stated the need to limit human population growth. A URL link is provided below.
https://www.clubofrome.org/ltg50/
This “Club of Rome” is the foundation of the World Economic Forum (WEF) and many of the ideas from 1972 have been carried over. Essentially we have a group of global elite using their power and influence with the World Financial System to modify the very perceptions on the human race on a generational level by leveraging marketing, propaganda and control of the media platforms. Over the decades since 1972 as the “modern way of life” became more and more global the global elite’s power increased by leaps and bounds.
Today it is unthinkable for most people to be without the Internet. The Internet is controlled by large, faceless corporations that can disconnect you from it. Laws are what Governments write and pass. Governments can’t do anything without currency and wealth to back it. The banks and their mutant entities (shadow banking system) control this wealth and they are in turn controlled by the global elite. The system is complete.
Rich people don’t get rich by being stupid. While the most powerful don’t do the physical work of producing anything they are masters at manipulating populations, human nature, human perception and changing society at the generational level. The minute it became possible to do this they took the opportunity and the current generation has lost any fear of the global elite. They see them as kind benefactors whose words are to be taken at face value. This was unlike generations before who harbored great distrust for the global elite and fought to keep the little freedoms they had.
So how do you as a global elite power broker peacefully coerce people into thinking they are richer than they are while all the while taking what little human dignity and freedom they have left? Could one inflate one’s way to absolute global power?
Inflation as a concept and as a technical financial term are different. There is a LOT of devil in those details which would require an entire article to adequately address. However, I can point out some anecdotal examples of the concept as I am framing it. Please note while this is not the financial definition it is the concept that everyone can understand as it pertains to the layman’s understanding of inflation. Do a Google search on shrinking portion size at super markets. View cans of products getting smaller and their contents reduced but the price is being kept the same. Video cards at a particular price point have their heat pipes made out of Aluminum instead of Copper to keep costs down so the price can be the same. Toilet paper rolls are reduced in width so the cost to produce is reduced but the price remains the same. I could go on but the idea is…FOOL the consumer into thinking they are getting the same amount but in reality give them less. This is equivalent to raising the price of the commodity.
Inflation of a currency acts in a similar fashion. Please note currency and money are defined as two separate items in this article. See previous articles for a detailed explanation. A state which controls its currency can print more of it yet back it with the same amount of “hard assets” thereby making people FEEL richer but in actuality they are poorer. The astute among you may say, “But can’t I just convert my currency into another currency and protect my wealth?”. The answer is no; due to the system explained previously. Most currencies today are pegged to the US Dollar (USD). Each country has what’s called a “Currency Account” and a “Trade Account”. The terms sometime vary slightly with Currency Account being called a Current Account and Trade Account being called a Surplus Account but these are just words.
“What's in a name? That which we call a rose by any other name would smell just as sweet.”- William Shakespeare
As the great Shakespeare said hundreds of years ago, words can be used to mislead but concepts remain the same. If you learn the concepts you will not be taken in by the corporate and rouge scammers who use words to blind all, but especially the young who have had less experience in the evils of human nature.
The Currency Account can be though of as the local currency of a country printed by the government of the nation. The Trade Account can be though of as the revenue the country earns when it sells whatever it exports onto the world market. The world is only now turning away from the USD but it still accounts for the bulk of the world reserve status. It gives an “exorbitant privilege” (coined from a French Finance Minister in 1960s and Charles De Gaulle) to the bankers of the nation state that owns it. This exorbitant privilege is the seemingly endless demand for USD as the world’s reserve currency used in all sorts of trades. It amazes me to think that even during the depths of the Cold War so called “enemies” of the US were using USD therefore creating a demand for it which allowed the printer of it to build more weapons to use against them. There we may have these global elite behind the curtain again.
For countries EXCEPT the one that prints the global reserve currency i.e. the US at the time of this writing, there is limited demand for their paper on the world market. This demand is directly tied to the goods and services they produce that require their paper as a prerequisite for purchase. As a government in one country prints more currency (digital or paper) people in that country have more to spend, demand for limited goods within the country increases, prices increase to suit and we have an inflation spiral. As prices for the goods in the country become more expensive, goods on international markets look more attractive and local currency has to be spent on the international market to purchase and import such goods. This leads to the currency “falling” in relation to the international trade currency because there is only so much demand for a country’s paper on the world market. After all the only reason I want the paper of a country is if I intend to spend it on things the country produces. Don’t produce enough to cover your paper being sold on the international market and you have a devaluation or a lot worse on the cards.
The system described in the previous paragraph is the way it works without the need to apply the shadow global banking system to the mix. When we apply that we can see that freedom for most countries is an illusion. Unless the country is a nuclear power with post first strike retaliatory capability and self sufficient in its own basics to maintain its standard of living the country is simply a pawn to be moved on the world stage, lead by a leash of currency and money.
The attempt to pull the leash on a country such as the one described in the previous paragraph was observed in how the West dealt with Russia after its invasion of Ukraine. Russia became the most sanctioned country on Earth, its national funds it had earned in international banks were seized in the order of 100 billion USD and a wave of mass media hate was directed at it. Much of Europe has slashed its own face to hurt Russia and this is because the rich and powerful are insulated from the effects until the masses start rioting, stop working and general chaos starts destroying the assets of the most powerful in the nations in question.
It seems, at least in small measure, people still have some freedoms. The rush for mass automation and “AI” (actually pattern recognition, not really AI) is the aim to make the masses redundant. The final aim of the global elite to have machines do everything so people no longer have any recourse against their diktats. Robot policemen (dogs is what they have started with) and robot soldiers will round out the system allowing unflinching obedience or death by robot brutality.
The World Financial System as it existed just a few years ago has become a tool of species domination. Every corner of the planet has been targeted and no one must have independent thought. You must follow what the elite has envisioned for you. If that means eating insects, living on 2 x 100 watt solar panels and a Tesla Home battery then so be it! The historical analysis of this sort of period we are going through is without precedent. Never in human history has the entire world been the target of such draconian measures. Some empires have attempted to exert this level of control on their citizens but this has always lead to them collapsing. However this occurred due to help for other nations. This is most likely the reason global targeting has been made priority number one this time around, now that the technology has made such an attempt possible.
The future is yet to be written on where this will end. With the BRICS nations moving away from the dollar a bifurcated world means there will be some competition. The more traditional values of BRICS nations means tradition, traditional human values, customs and family values can still find a home somewhere on this globe. Will it be enough to save everyone? I doubt it. However as a philosopher, scientist and engineer I have always felt that as long as just a few bright lights keep shining the human spirit will live on. The world view I have outlined here may seem dark even to the jaded but I assure you it is foremost in the minds of a lot of those who preach on YouTube about the evils of the system.
The young who are filled with hope due to the nature of youth may yet laugh last. I suppose it is possible these corporations that have swindled, stolen and destroyed the lives of millions could turn over a new leaf and once they attain absolute control of the species and will simply allow the robot factories to produce items for consumption while most of humanity stays at home, plays video games online and watches Netflix. The top corporations in the world could turn into your loving parents and provide everything you need while requiring nothing from you. This is the dream they are peddling. If they have “AI” and they have made people unintelligent enough by dumbing down everything then why do they need what little human intelligence is left?
As a man who believes in God I prefer to put my faith in a higher power. There are still many with faith in a divine although they are heading towards the grave. The upcoming generation is more apt to put its faith in a computer the global elite SAY is AI but is just them pulling the strings behind the curtain. At that point they can blame the AI for anything just as they blamed hackers for anything just a few years ago. Except this time the “anything” they can blame can literally be anything. What we have in the world now is a corrupt ruling class ruled itself by a few very powerful individuals who believe their view on the future of humanity should be every human’s view. I think even a teenager today with moderate education and IQ should see the fallacy in placing one’s faith in human beings at all, much less those of this ilk.