History: Modern Financial and Economic System

[Azadkashmir]

The History of Modern Financial and Economic system
The shift from the old economic system to the new economic system which includes the monetary system (which is the system of adoption and issuing the currencies and metals or commodities used as currencies) and banking system (which includes financing and borrowing and lending of money) began in the 15th and 16th century when the Jews in Britain established informal money lending institutions which lent money on interest.
Interest was considered a major sin in Christianity and Judaism both and in those times Christians were good and practicing Christians and refrained from lending or borrowing money on interest and so were some of the JEWs but Christians were more faithful to their religion and JEWs were involved in interest based transactions from them.
After the establishment of these institutions and the availability of the facility slowly Christians who were destitute and needy started borrowing money from those loan sharks (informal money lender which is not a bank or registered financial institution) but considered it as a sin and hurried to repay the loans.
In about a hundred years the industry grew by leaps and bounds and more and more people cared not about the law of the religion and flocked to those money lenders to borrow money for personal and business purposes. Availability of credit in those times on such easy terms and custom repayment time for each deal was rare and was taken as a blessing and very soon usury and interest was not perceived as a serious sin and had become a norm.
One problem these money lenders faced was that as the industry was not regulated they had no guarantee for the repayment of money sometimes they would ask the borrower for a collateral and sometimes not and sometimes the borrower would have nothing as a collateral.
This resulted in both fraud and genuine repayment issues and people were not able to payback so the money lenders would lose their money. As there was no legislation it was difficult to involve any government agencies into it like police or courts and force the borrower to repay the money.
As the industry grew so did the pockets of those people running these shops and their influence in the political circles. They were now trying hard to get it regulated by the governments in Europe, have legislation on it so that they can enforce the action against the borrower using government law enforcing bodies in case of a default. This was the only way to scale up the industry and reach to every customer without having the need to check if the customer is a fraud or not or if has the capacity to payback or not.
Another purpose was lend money to the governments also so that the government could do infrastructure projects and for their warfare expenses and Britain in those days was waging war everywhere in the world.
Rothschild family gained massive wealth and power in Britain and in other European countries and got the legislation done they wanted.
This resulted in the birth of formal modern banks. After the emergence of banks they could set up their retail shops which were now banks in all cities and towns and villages and the need for owner management was finished and the staff could manage it all as the need for due diligence of the customer was finished.
The banks grew and the society had already accepted them so their customer base also grew.
Now they could have all the money gathered in one place and the institutions that were created for the purpose of lending money now became institutions that would lend and borrow money.
The idea was to borrow from the rich and lend to the poor as repayment issues were resolved and bank became an agent between the borrower and lender and would keep a spread income for itself in between.
The working for the spread which was the profit of the bank was such that the rate of lending of the bank would be for example 10% and the rate of borrowing would be 7%. Bank would borrow from the investors for 7% and lend it to poor people at 10% and keep 3% for itself.
That is how banks are working from then till now. Once a few big Jewish players were established in the formal banking industry they wanted to put an end to the competition and monopolize the industry. For this purpose they were able to get a legislation done by the government of Britain which disallowed anyone else other than the banks registered with the government to lend or borrow money and it was now a criminal offence for anyone else to do so.
Now these few people had the money of the whole country with them and so the idea for modern cities, urbanization and a fast way of life and communication and shortening of the distance was born.
They now wanted to turn the world into a global village and that was only possible with technology.
Huge funding was given to the research and development in different universities and they started making connection among countries with the purpose to decrease travel time provide better travel facilities so they could reach out to everywhere in the world.
Railway was the first thing that could help achieve this objective and they wanted to put the railway tracks in a way that all the towns and cities of every country could be connected.
The development projects offered huge business potential and the future earnings potential from the railway alone in the form of ticket from the passengers and the spending would also provide huge profits for the money lenders.
This was when the bankers like Rothschilds, Rockefellars and JP Morgan realized that they could not provide all the money required to complete such huge projects. The idea of stock exchange was born then.
Stock exchange is a mechanism which provides investment opportunity in a certain business to everyone. When someone buys shares in a company they become the partners in the company and are entitled for all risks and rewards (profits) that arise from that business.
If a huge investment is required for a project that idea can be floated to people and money can be raised people will buy the shares and there are many shareholders in a Public limited company shareholders can be in millions for a company.
As there are many people who are shareholders they don’t manage the company themselves. The mechanism is that the company is managed by the management which is voted into power by shareholders and the management manages the operations on behalf of the shareholders.
Then the profits or losses are borne by the shareholders, this was a good way to lure investors to invest in those mega projects and get the work done. That is how stock markets were born and then the corporate sector came and listed on these stock markets to raise funding for themselves.
Advent of stock markets helped the bankers achieve their objectives more easily as they were already recognized and respected in communities for their financial services and when the stock markets started these bankers also started providing brokerage and stock listing services which allowed them to have more influence.
There is a mechanism when any company needs more financing it needs has to turn to either a bank for a loan or the stockmarket and sell some of its shares to public for money and the rest remains with the actual owners and the ownership percentage is then worked out for the original owners and the shareholders, there are certain rules for it.
When a company chooses to raise funding from the stock market it has to go through a process called Initial Public Offering (IPO). In the IPO process the company’s shares are not already trading on the stock exchange they are put for sale first not through the exchange but it’s a public offer anyone can go to a broker open a stock market account and buy the forms of the potential company and pay money to them to acquire the shares after that it becomes public and is listed on the exchange for trading and any shareholder can sell their shares to any buyer in the market and then the shares and traded between ordinary people and company has nothing to do with it.
If the company is performing well shares will rise and people will try to buy them for future profits and if not share price will fall but this now is the profit or loss of the shareholder the company received the funding with IPO company only gets money when they issue new shares first issue is called IPO and any subsequent issues can be made in various ways.
Now during the IPO process the shares are to be sold to the investors and the investors have their accounts with the brokers that are the banks in most cases and they provide information to their investors and also the advisory services and it’s the job of the bank to promote the shares of the company doing IPO and make sure that the shares are sold and the company gets the financing.
Again it is the process of taking from the poor and giving it to the rich but this gave immense power to the banks as the companies need banks so that they can sell their shares and in the process the bank charges them huge commissions and gets shares for itself for free sometimes.
All the corporate sector needs banks to raise financing for themselves as the good companies are always expanding and expansions require more investment which either comes from issue of shares or loans.
After this the people who desired to bring the NEW WORLD ORDER (NOW) came up with the idea of central banks that are basically government institutions but are given independence and their function is to regulate the private banks, monetary policy which is the setting up of interest rates lowering or increasing them according to the economic conditions of the country and issuing currency and determining the value of the currency whether to appreciate or depreciate the currency in relation to gold and other currencies of the world and this also depends on the economic conditions of the country.
The purpose for the creation of central banks was to finally eliminate gold as currency so it cannot be used for making transactions and replace it with paper currency.
In the Islamic monetary system a currency should be something which has INTRINSIC VALUE the value of the currency should be in itself and it could be used in the market independently which means you should be able to exchange it independently in the market for anything, historically precious metals and commodities were used as currency.
Islam gives us the guidelines and examples of things that can be used as currency. Prophet Mohammad (SAW) said currency is Gold and Silver and if Gold and Silver is not available then Barley, Dates, Salt and Sugar can be used as currency.
All these things have their value in them and can be exchanged for other goods at anytime, this disallows any chance for inflation.
Other things of this kind can also be used like platinum or copper, rice or wheat but perishable things cannot be used as currency like mangoes or apples as currency has to store the value and if it perishes it cannot be kept or held so it cannot function as currency.
The central banks issued paper currency and backed it with gold and assigned the value to the paper equivalent of the gold they would have. In 1929 they illegalized the use of gold as currency in USA and people had to exchange their gold coins for dollars so they ended up giving all of their gold to the central banks and receiving paper dollars for it.
Remember that a 100 dollar bill is only worth if it is backed by gold or till the time the American economy and American central bank is trustworthy and doing well. If American is destroyed today any person in India who has a 100 dollar bill at his home will become worthless if wont have the same purchasing power but will only be worth the paper.
Now see if any country faces any kind of threat or war or corona virus their currency begins to drop and even if the country is facing economic crises the currency will drop and the currency that people hold in their homes or bank accounts loses its value and the purchasing power is diminished.
But if someone holds gold instead of paper it will never lose value instead it gains value when paper currency loses value.
In 1950s when the system was pretty new the federal reserve of America started printing more currency than the gold they had and finally the requirement for keeping gold equal to the currency that can be issued was abolished and countries were allowed to issue whatever they wanted.
This gave immense power to the United States as after the WWII US gave huge amounts of dollar loans to Germany and other European countries for infrastructure development which was destroyed during the war. The money was taken back in America as the contracts were given to American construction companies for the infrastructure and they took the money and those countries were left with the massive loans which they couldn’t repay and were enslaved. And someone made a documentary named all wars are bankers wars and US president once said show me who makes a profit from war and I will tell you who is responsible for getting the war started.
Almost every country in the world was indebted with the loans that US had provided them by printing the paper and giving them the paper which cost them nothing. In 1973 PETRO DOLLAR happened and they signed a deal with Arabs that they will sell their oil only for US dollars and no other currency.
This PETRO DOLLAR deal creates an artificial demand for dollars now as every country needs to have dollars so that they can buy oil as oil cannot be sold in any other currency.
Then in the United Nations USA was able to pass a law that gave the US dollar a rank of world reserve currency and for any cross border transaction which is imports and exports every country will use dollar for anything they want to trade and the violator will face economic sanctions and trade boycott as the law of United Nations says.
Now every country in the world needed to have dollars for making imports and dollar gained immense strength.
The loans America gave to different currencies could only be paid in US dollars and no other currency which gave America an unfair advantage over the others and everyone need dollar further for their trading with other countries of any product specially oil which almost everyone needs to import from a few oil producing countries.
When the requirement for gold backing was ended it opened another door which was very lucrative.
Everyone could spend more than they had and the only thing they had to do was to print more currency so any government can print currency and spend money in their country which does not require any imported product like spending on infrastructure or raising the salaries of the government servants and meet those expenses by printing currency.
Almost 75% of the countries in the world run budget deficit every year which is financed by either printing currency or by getting more loans from banks.
Now come to the expenditures related to imports. Every government these days has to hold two currencies their local one and the world reserve currency which is dollars.
Now when a common citizen buys an imported product he spends in local currency but the dollars are spent as a consequence as he has to first change his local currency into dollars and then buy the product and make the payment in dollars.
There are three sources from where a government can get dollars. One is exports one is remittances this comes from the people who work abroad and send money back home or the local companies that have overseas operations and they send the profits back to the home country. This is how a government earns dollars and the third option is to get loans.
Dollar loans are easy to get and American lenders like World Bank and International Monetary Fund IMF are keen to lend to any country that demands a loan.
These loans come with certain terms and conditions imposed by the lenders which include raising taxes energy prices and a few other things.
They have laid debt traps and all of the world except a few like Russia and China and a few European countries are trapped.
These loans are never paid back by these countries to the lenders instead they take more loans each year as they spend more (IMPORTS) than they earn (EXPORTS).
These loans cost them nothing as all they have to do is to print the dollar bills using paper and ink.
Any country like Pakistan, Srilanka, Turkey or Indonesia will go bankrupt within a year if they refuse to provide more loans.
This is how they now control all countries and get them run their policies so when they need Pakistan to jump into the war with Afghanistan Pakistan has to say yes because Pakistan was already on the verge of collapse at that time and when they want to invade Iraq Qatar has to allow them to use their air bases for flight operations of war planes and Turkey has to help them invade Libya.
Another advantage the dollar hegemony provides is the voting power in the United Nations. All the countries that are members of the UN and need IMF or World Bank or US AID or any other form of funding from the US has to obey and when they come up with a bill in the UN all these countries have to vote in the favor of the bill and that’s how any international legislation is so easy for them.
One more thing that needs to be noted here is that the total debt of America which America owes to its lender countries and her own central bank which is federal reserve (which prints money and lends to the American government as the bank is independent and that is how the loan from central bank is accounted for it is an accounting procedure that bank records it as a loan to the government however in essence they are creators of wealth and own the loan themselves.)
The amount of this total debt is 21 trillion dollars which is more than the total debt of the whole Europe which is 16 trillion dollars and which is also printed in euros by the European central bank.
GDP of America is 21 trillion and their debt to gdp ratio is 100% which is a lot more than the troubled countries like Pakistan which has an external debt to gdp of 33% and Turkey which as a debt to gdp of 50%. Still these countries continue to struggle economically and USA remains the richest one. The question is HOW?
American imports have already exceeded their exports hence they are spending more than they earn and there are other places where they run deficit like their defense institutions which spend on the arms purchased with borrowed money.
They can finance their deficit by printing money and owning the loans themselves which the government is never going to payback and the federal reserve is never going to demand back.
They create wealth not earn it so they can keep spending more than they earn and buy whatever is required by printing paper which keeps their economic strength intact and so they can enforce the world reserve currency and Petro Dollar with their political influence all around the world and with their military might.
Colonel Gaddafi was trying to make a union with African countries like European Union and the member states would trade with each other in gold instead of dollars and immediately after that Gaddafi was punished. Same thing happened with Saddam Hussain he also wanted to abandon the USD and was destroyed.
In my personal opinion BREXIT is a conspiracy as the European Union has an open border system and they use EURO to trade with each other and USD is not able to dominate there and the EU is a model which they fear can be adopted in other parts of the world as China is already using Yuan to trade with Pakistan however it amounts for a very small amount and for very little transactions but they have bypassed the law. China is also buying oil from Iran and Russia and is making the payments in Bitcoin so the US wants the European Union to break up so does the European Central Bank breaks up and Euro disappears and all those countries use their own currencies for local transactions and dollar for international transactions.
Italy also looks in a mood to leave the EU and once a few countries leave the EU like UK has already left it will break the camel’s back.
The modern economic system was designed in a way which ensures prosperity for USA no matter how their businesses are doing and slavery for everyone else. The currency of any other country with an exception of EURO as it has grown strong cannot be used outside of its borders and has no value internationally.
They have corrupted the leadership of almost every country in Asia, Africa and Latin America and the Arab world so if any country runs a surplus which usually does not happen as each one spends more than they earn and get loans to finance deficit and so the living standards are rising all across the globe and the nations are falling into the debt trap.
If someone like Saudi Arabia is able to earn a surplus they wont allow to keep them the surplus amount in dollars or in gold. They will send the economic hitmen to corrupt their leadership and let them waste their money on projects that don’t earn any profits like infrastructure projects or spending on defense equipment. Read the book “CONFESSIONS OF THE ECONOMIC HITMAN” by john perkins to understand the concept of economic hitman.
Another tactic is sanctions and tariffs (tariffs is a tax on imported goods) so it a country with a trade surplus supplies goods to US and allies they place high custom taxes on the products coming from that country and go purchase those products from another country that is not doing well economically and the sale of that product will not be much helpful for that country. This is the concept of trade war going on between America and China these days.
The system is such that everyone has to be a slave and the slave master will have power and dominance.