Where Money Comes From and Why They Don’t Teach It in School

Money Puzzles: A Film About Money and Debt, Austerity, Solidarity and Alternative Solutions

Directed by Michael Chanan (2016)

Film Review

This film starts by examining the history of money, which developed in all civilizations except the Incan civilization (the Incas had gold but didn’t use it for money). The first coins seem to have appeared independently in China, India and Ionia* in the 6th century BC.

Our current system of money creation, sometimes referred to as “fractional reserve banking,”** began in the Netherlands and the Italian city states in the 17the century. It came to Britain (and most of the British colonies) with the formation of the Bank of England in 1694.

Contrary to popular belief (and most economic courses), 97-98%*** of the world’s money isn’t created by government (or central banks), but by private banks when they issue loans. The money banks loan out doesn’t originate from reserves or savings accounts. Banks create it out of thin air.

The documentary’s main focus is the debt crisis that collapsed the Greek economy in 2015. Unfortunately the film mentions, but fails to explain clearly, that governments also create money by borrowing from private banks. At times, when banks stop making private loans, governments are forced to increase borrowing to ensure there is sufficient money in circulation to keep the economy going (ie to prevent recession and/or economic depression).

What many people fail to realize, is that most governments have the constitutional authority to create money. Their decision to borrow it from banks (rather than create it themselves) is purely political.

The film explores the collapse of the radical Greek party Syriza when its leadership  ignored a 2015 popular referendum rejecting the EU’s austerity bailout proposal. 61.3% of Greek citizens opposed the bailout, essentially opting for Greece to default on their debt and withdraw from EU.

The filmmakers also explore the Argentinian decision to default on their debt in 2001. Although UN General Assembly passed a resolution in support of the Argentinian default in September 2015, a new Argentinian government took out new IMF loans in 2016 to resume debt repayments.

The documentary concludes with a number of innovative grassroots alternatives Greek citizens have initiated to support each other in meeting post-collapse survival needs (see Debt and the Economic Colonization of Greece), Spain, and Argentina have adopted in the face of extreme economic austerity. These include local currencies, squatting and a variety of community-based mutual aid cooperatives to ensure people don’t go without food, clothing or other basic necessities.

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*Ionia was an ancient civilization in the western part of modern day Turkey. It consisted of the northernmost territories of the Ionian League of Greek settlements.
**Under fractional reserve banking, banks are required to hold in reserve a minimum percentage (10%) of loan’s face value. In reality, most central banks discarded reserve requirements at least a decade ago, essentially allowing private banks to decide how much money to create.
***The other 2-3% of the money supply is issued by central banks as notes and coins.  97-98% is electronic money created via computer entries.

Hunting Hitler: Reality TV as Psyops

 

Reality TV Masquerading as History.

 

I recently came across the 2015 History Channel series Hunting Hitler. Season 1 starts off plausibly enough. Seizing on 700 pages of FBI files declassified in 2104, former CIA officer Bob Baer leads a team of former Seals and special operations officers in amassing physical evidence to verify dozens of recorded witness sightings of Hitler in South American  in 1945-48. The series makes no pretense of presenting an accurate historical record. In fact, it appears the History Channel’s main objective (helped by dramatic voice overs and atmospheric music) is to glorify the hyper macho physical and technological supremacy of US (semi-legal) special operations activities.

 

Baer draws the tentative conclusion that Nazis supporters most likely faked Hitler’s suicide, while he himself escaped from his underground Fuhrerbunker. The hypothesis Baer offers is that the former dictator used a series of underground tunnels to evade invading Russian troops and took one of ten flights that left the former Tempelhof Airport on April 21, 1945  carrying Nazi war criminals abroad.*

 

Both the FBI files and the Baer’s physical evidence make a superficially plausible case that Hitler’s plane could flown to fascist Spain (under Franco), continuing to Argentina via U-boat (submarine).

 

Baer maintains the evidence supporting Hitler’s escape is much stronger than that supporting his suicide. Because loyal Nazis burned his corpse, the only physical remains invading Soviets found were a partial skull (which remains in Russia) and a partial jawbone and teeth (which remain in the Ukraine). In 2009, the Russians allowed a Connecticut archeologist to perform DNA testing on the skull fragments, which revealed its former owner to be a female.

 

Unfortunately, the Hunting Hitler series makes no mention whatsoever of the jaw and teeth, which, verified as Hitler’s in 1945 by his dentist, his dental hygienist and his dental x-rays. This information was in the public domain in 2015 when the History Channel aired Season 1 of Hunting Hitler.** See https://historian-at-large.blogspot.com/2015/03/on-hitlers-teeth-or-death-of-dictator.html

 

A recent DW documentary entitled The Death of Adolf Hitler: History of a State Secret tells the sad story of the hygienist, who the Soviets arrested and sent to a labor camp for ten years. Yet even this strongly anti-Soviet DW documentary neglects to explain why the dental work was so easy to identify: namely the special gold bridge his dentist had made for the dictator.

 

It does, however, delve deeply into Stalin’s repeated claims that Hitler was still alive and had escaped to Argentina via Spain. The latter would trigger massive investigations by US, UK and French intelligence, as well as hundreds of reports from all over the world related to Hitler sightings in South America.

 

To its credit, Hunting Hitler does make reference to the “Rat Line,” a scheme whereby the Catholic Church and Red Cross assisted hundreds of Nazi war criminals to escape from Germany to Argentina and other South American countries. The tunnels Baer’s team uncovered leading to Templehof Airport, the Spanish monasteries that hid Nazi war criminals, the 46 missing U-boats and the elaborate secret Argentinian hideouts filled with Nazi paraphernalia all provide important insight into the Rat Line’s actual operation.

 

I find it really interesting that former CIA operative Baer (and the History Channel) choose to focus on an individual (Hitler) with no known historical role in post war fascist regimes in South America. Especially given the prominent role other Nazi war criminals played in South American cocaine networks and death squads. For example Klaus Barbie in Colombia (see Klaus Barbie: America’s CIA Cold War Cocaine and Death Squads) and Otto Skorzeny in Bolivia (see Mae Brussell: The Nazi Connection to the JFK Assassination)

 

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*The Russians would capture central Berlin on May 1, 1945.

 

** Hunting Hitler Season 2 focused on additional from CIA, MI6 and Russian, German and Argentinian government authorities. Season 3, which premiered in December 2017, investigated Nazi weapons of mass destruction. Season 4, scheduled to air in 2018, was canceled.

 

Hunting Hitler can be viewed free at https://play.history.com/shows/hunting-hitler/season-1/episode-1

 

The Death of Adolf Hitler: History of a State Secret can be viewed free at https://www.youtube.com/watch?v=2QSXKDCFh7o&bpctr=1606277048

Poisoning the World: The Companies that Profit Big from Exporting Banned Chemicals

Circle of Poison

Al Jazeera (2016)

Film Review

This documentary is about the US export of toxic pesticides that are banned in the US. This is ironic. Despite these domestic bans, heavy dependence on food imports means that most Americans end up ingesting these toxins in imported produce. In fact the only way Americans can avoid pesticide-laden food is to buy certified organic food from local farmers.

In 1979, President Jimmy Carter signed an executive order banning the export of toxic pesticides. The order was revoked by Reagan a few months after his inauguration.

The US controls 75% of the global pesticide market via five notorious companies: Bayer-Monsanto, Syngenta, DuPont, Dow and BSAF. Although Bayer, Syngenta and BSAF are European companies, they produce their toxic pesticides in the US, where export regulations are more lax (ie non-existent). The pesticide industry has one of the most powerful lobbies in Washington. Thanks to the courage of Democratic Vermont Senator Patrick Leahy, the Senate has passed several bills banning pesticide exports. However because members face re-election every two years, they have no hope whatsoever of winning in House.

Most of the film concerns the epidemic of cancer and horrendous birth defects in India, Mexico, Argentina and other countries that continue to use US-produced pesticides that are banned in the global North.

Surprisingly it ends on an optimistic note with news about the growing organic food movement in Argentina, Kerala India and Bhutan. Rather than pressuring their governments to ban toxic pesticides, activists are learning chemical-free organic soil building techniques. In doing so, they also significantly increase their yields. In replacing monoculture techniques with crop diversity, organic farming methods are far more productive per unit land than traditional agriculture.

The full video can be viewed for free at the Al Jazeera website: Circle of Poison

Untold History of the US – Johnson, Nixon and Vietnam

Part 7 of Oliver Stone’s Untold History of the United States concerns the Johnson and Nixon presidencies.

The Johnson Presidency

Johnson continued Kennedy’s glorious tradition of overthrowing foreign democratic governments. He openly admitted the military aggression he authorized wasn’t about fighting communism – but about fighting third world peoples for their resources. He saw no other way 6% of the world’s population could control 50% of its wealth.

• In 1963 Johnson reversed Kennedy’s order to draw down US “military advisors” and introduced ground troops to Vietnam.
• In 1964 he ordered US troops to overthrow the democratically elected government of Brazil.
• In 1965 he invaded the Dominican Republic to crush a popular insurrection against a CIA-inspired right wing coup.
• In 1966-67 he authorized a bloody CIA coup to oust President Sukarno in Indonesia and replace him with the right wing dictator Suharto.
• In 1967, he ordered the CIA to (illegally) spy on anti-Vietnam War protestors through Operation Chaos.
• In 1967, he fired Secretary of Defense Robert McNamara when he opposed escalating the bombing in Vietnam.

When a bipartisan group of elder statesman called for US troop withdrawal from Vietnam, Johnson decided to focus on Vietnam peace negotiations instead of running for a second term in 1968.

The Nixon Presidency

Robert Kennedy was the clear front runner in the 1968 election prior to his assassination in July 1968.

Despite basing his campaign on a “secret plan” to end the war in Vietnam, Nixon and Kissinger (who secretly undermined the Paris peace negotiations to help Nixon win the elections) vastly expanded the war, which would last seven more years. More than half the GI deaths in Vietnam occurred under Nixon.

As president, Nixon made 13 separate threats to use nuclear weapons in Vietnam. Stone believes it was only the massive anti-war protests (which deeply unnerved Nixon) that prevented their use.

Nixon and Kissinger were also responsible for secretly and illegally bombing Cambodia and Laos, the 1973 coup that overthrew Chile’s democratically elected government, and Operation Condor, a secret dirty war against pro-democracy movements in Brazil, Chile, Argentina, Uruguay, Paraguay and Bolivia.

Part 7:  Johnson, Nixon and Vietnam: Reversal of Fortune – Cataclysm in Vietnam

The Psychological Trauma Inflicted by Predatory Capitalism

The Shock Doctrine: The Rise of Disaster Capitalism

Directed by Michael Winterbottom (2009)

Film Review

Based on Naomi Klein’s best-selling book by the same name, this documentary explores predatory capitalism’s use of psychological trauma to crush human rights and forcibly transfer vast sums of money  from the poor to the rich.

Like the book, the documentary begins with Dr Ewan Cameron’s CIA-funded research at McGill University into the long term  effects of shock therapy, sleep deprivation and other deliberately inflicted trauma. The Agency would incorporate Cameron’s findings in their Kubark counterintelligence interrogation (ie torture) manual. They went on to use Kubark to train fascist South American military officers at the School of the Americas and to interrogate random prisoners (the vast majority were never charged) at Guantanamo and Iraqi prisons.

The film also explores the “economic shock therapy” developed by the late University of Chicago economist Milton Friedman. Friedman was a master at exploiting natural and contrived disasters to impose the kind of extreme free market reforms that crush unions and wages, shut down or privatize public services and create massive unemployment – while simultaneously transferring obscene amounts of wealth from the working and middle classes to the rich.

Friedman and his cronies seized the opportunity to put their predatory theories into practice when the CIA helped overthrow democratically elected governments in Chile, Brazil, Uruguay and Argentina; during the neoconservative regimes of Thatcher and Reagan; in Russia after the Berlin Wall collapsed; in New Orleans after Katrina; in Sri Lanka after the 2004 tsunami; and in Iraq after 9/11.

Privatization and the Theft of the Commons

Catastroika

by Aris Chatzistefanou and Katerina Kitidi

Film Review

Catastroika is a Greek documentary on neoliberalism, with a specific focus on the privatization of publicly owned resources. Although it makes no mention of historian Richard Linebaugh, its depiction of the neoliberal privatization movement provides an elegant illustration of the ongoing theft of the Commons (see Stop Thief: the Theft of the Commons).

After a brief overview of the University of Chicago economists (championed by Milton Friedman) who first put neoliberal theory into practice during the Pinochet dictatorship, the documentary tracks the wholesale privatization of Russia’s state owned industries after the 1993 coup by Boris Yeltsin, in which he illegally ordered dissolution of the Russian parliament (see The Rise of Putin and the Fall of the Oligarchs).

The fire sale of state assets to oligarchs and western bankers would virtually destroy the Russian economy, throwing millions of people into extreme poverty and reducing average life expectancy by ten years.

The Privatization of East Germany

With German reunification in 1990, East Germany would be the third major target for massive privatization. According to German economists interviewed in the film, the process amounted to an “acquisition” of East Germany by West German bankers. The West German government set up an agency called Treuhand to buy up state owned East German businesses at the rate of ten to fifteen a day – a total of 8,500 businesses in four years. The process, undertaken with virtually no oversight, predictably resulted in massive chaos and fraud. Many well-performing East Germany companies were dissolved for the simple reason they competed with West German businesses. Three million (out of 4.5 million) East German workers lost their jobs, which East Germany’s GDP shrank by 30%.

Using Debt to Compel Compliance

With the gradual demise of the world’s dictatorships during the 1990s, debt, rather than brute force, became the main mechanism to compel people to give up their publicly funded assets. At present, most of the focus is on Greece.

Current EU Commission Jean-Claude Juncker holds up Treuhand (which incurred a 250 million euro debt German taxpayers are still paying off) as a model for the Greek Asset Development Fund. The latter has been steadily selling off (at bargain basement prices) Greek railroads and municipal power and water systems.

The Dismal Track Record of Privatized Utilities

The filmmakers end the film by highlighting the disastrous outcome of Britain’s decision to privatize its railroads in 1993, the city of Paris decision to privatize its water service in the 1980s (it’s recently been re-municipalized due to massive public unrest – like privatized water systems in Bolivia, Ecuador and Argentina) and California’s experiment with electricity deregulation in the 1990s (leading to the Enron scandal).*

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*The Enron scandal involved massive securities fraud and a deliberate conspiracy by power companies to withhold power to drive up electricity prices.

The Fatal Soybean

The Fatal Soybean

Press TV (2013)

Film Review

Recently 30,000 Argentinean doctors signed a petition requesting their government ban the use of Monsanto’s Roundup herbicide. The Fatal Soybean is a documentary about the large cluster of miscarriages, birth defects, cancer and autoimmune disease in villages adjacent to Argentina’s immense “soy desert.” The filmmakers interview local doctors, environmentalists and grassroots activists. They focus in on one particular activist group, the Ituzainga Mothers Club. These women mobilized after numerous family members died or developed chronic illness following repeated exposure to the herbicides and pesticides sprayed on soybean crops.

As depicted in the documentary, Silence of the Pandas, a massive swathe of Argentina’s natural forest and grassland has been cleared to plant Monsanto’s Roundup-ready soy. The latter is a genetically engineered plant specifically designed to withstand spraying with the Monsanto herbicide Roundup. Owing to the emergence of Roundup resistant super weeds, most farmers are spraying more and more frequently with heavier and heavier concentrations of herbicide.

One of the doctors interviewed talks about the recent Dutch ban on Roundup and GM soy imports. Prior to 2014, the Netherlands imported GM soy animal feed from Argentina to feed their 250,000 pigs. After Dutch farmers found 20-30% of their piglets were born dead or with birth defects, research revealed that GMO soy absorbs traces of Roundup from repeated spraying.

 

A Classic Case of Greenwashing

Silence of the Pandas

Wilfred Huisman (2011)

Film Review

Greenwashing (def) – a form of spin in which green PR or green marketing is deceptively used to promote the perception that an organization’s products, aims or policies are environmentally friendly.

Silence of the Pandas is about the World Wildlife Fund (WWF) – the world’s largest conservation organization – and their open collaboration with Monsanto, palm oil manufacturers and other multinational corporations that are systematically destroying wildlife habit.

WWF solicits millions in donations every year based on the image it projects of protecting endangered animals, such as the panda and the tiger. In reality, the WWF, under the leadership of the British royal family and other members of the British aristocracy, forms lucrative “partnerships” with corporations seeking to greenwash their image.

Through these toxic partnerships, WWF is facilitating, rather than preventing, the destruction of rainforests and wildlife habitat. It also actively promotes the removal of indigenous populations (in India, Indonesia, South America and Papua New Guinea) from their rainforest habitat. As an example, WWF has collaborated with the Indian government to displace one million Adabzi from their tribal homelands to expand a WWF ecotourism venture. The habitat destruction stemming from this venture is rapidly depleting tiger populations rather than increasing them.

In Indonesia, WWF partners with the palm oil giant Wiemar to raze native rainforests and replace them with extensive palm oil plantations. In many cases the Indonesian government has illegally leased land to Wiemar. The land belongs to indigenous farmers whose ancestors planted the tropical forest gardens destroyed to make way for palm oil.

In Argentina WWF, in partnership with Monsanto, has brought the country to the verge of ecological collapse by destroying natural forest and pampas and replacing them with a GM soy desert the size of Germany.

As one of their vice presidents openly demonstrates in the film, WWF is a strong proponent of genetic engineering. In return for a sizable donation, in 2010 the group awarded Monsanto a seal of product sustainability for their GM soy seed.

I first became concerned about the activities off the WWF in the mid-nineties when I learned that they had allowed their parks to be used as training bases for the Hutu militants responsible for the Rwandan genocide. The film makes brief mention of the secret mercenary army WWF assembled from British special forces and South African (apartheid) security personnel. The alleged purpose of these mercenaries was to assassinate poachers who were endangering elephant and rhinoceros populations.

The pro-African website Nairaland tells a very different story.

Under the guise of protecting endangered species, such as the elephant, the rhinoceros and the tiger, WWF “park rangers” carry out assassinations and other attacks against so-called “poachers” who in many instances turn out to be local patriotic political leaders or farmers who refuse to abandon their land and their food production to the WWF’s land confiscation programs.

The Real Cause of Greece’s Economic Crisis

Debtocracy

(2011) Katerina Kitidi and Aris Hatzistefanou

Film Review

The 2011 Greek documentary Debtocracy effectively dispels the media myths about lazy Greek workers and and scofflaw Greek taxpayers being responsible for Greece’s present economic crisis.

The film begins with an overview of what its filmmakers (and I) feel has been a basic goal of both globalization and the creation of a single European currency – namely “labor discipline” and the suppression of wages in heavily unionized countries.

They show how sweeping deregulation in the industrialized world in the 1980s allowed manufacturers to eliminate unions by shutting plants down and reopening them as sweatshops in the third world. The subsequent creation of the Euro as a single currency allowed the central European countries (Germany and France) to use the mechanism of debt to weaken strong unions in peripheral Eurozone countries like Greece, Spain and Italy.

Thanks to relatively weak unions following reunification, Germany imposed a virtual ten year wage freeze. While workers suffered, German companies and banks racked up immense profits and stacks of cash, which they loaned to “peripheral” countries to finance big corporate tax cuts.

The bulk of the film focuses on the concept of “odious” debt and whether the Greek people should be forced to repay fraudulent loans from which they received no direct benefit. As Debtocracy poignantly depicts, Athens and other Greek cities are experiencing a third world humanitarian crisis, with massive homelessness, hunger and untreated illness.

Odious Debt: An American Invention

Odious debt was a principle invented by the US in the early 20^th century to avoid repaying Spain’s war debt after the US took possession of Cuba following the Spanish-American War. George Bush invoked it following the US occupation of Iraq. His goal was to avoid repayment of Sadam Hussein’s debts to China, France, Germany and Russia. Since then approximately a dozen countries – most notably Argentina, Ecuador and Iceland – have repudiated so-called “illegitimate” debt incurred by deposed leaders.

The film focuses mainly Argentina’s and Ecuador’s default on their foreign debt. In 2001 the structural adjustments the IMF forced on Argentina bankrupted the country. A popular uprising forced the Argentine president to flee (in a helicopter), and the new government declared the IMF debt illegal and unconstitutional.

When Ecuador experienced a similar economic crisis and uprising in 2007, they, too, sent their president packing in a helicopter. In 2008, their new president Rafael Correa appointed a Debt Audit Commission to study the strong arm tactics (some of which John Perkins describes in Confessions of an Economic Hit Man) that caused Ecuador to borrow billions of dollars to pay for US-built infrastructure that only benefited Ecuador’s wealthy elite. Correa’s Debt Audit Commission ascertained that only 30% of their external debt was legitimately incurred.

CADTM’s Call for a Greek Debt Audit Commission

Iric Toussaint, a French economist who participated in the Ecuadorian Debt Audit Commission, believes a major proportion of Greek debt may have been fraudulently incurred. The following evidence supports this view:

• Nearly one billion euros of debt resulted from a risky swap (of yen and dollars for euros) Goldman Sachs persuaded Greece to make in 2001. The transaction netted Goldman Sachs $600 million in profit (see Secret Greek loan).
• Major German and French loans were issued on condition that the Greek government incur further indebtedness to purchase hundreds of millions of euros of German and French armaments.
• Billions of dollars of Greek debt resulted from major cost overruns on the 2004 Greek Olympics (which cost twice as much as the Sydney Olympics in 2000). These have never been explained nor investigated.
• In 2010 a former Goldman Sachs official was hired to manage the Greek public debt authority, with the result that the entire 2010 rescue package (103 million euros) was used to bail out Greek banks.

The film also discusses the March 2011 call by the Committee for the Abolition of Third World Debt (CADTM) to create an audit commission to examine Greek public debt. It ends with the ominous sound of a helicopter, eerily foreshadowing the forced resignation of Greek prime minister George Papandreou last November, when CNN advised him to get a helicopter to save himself from angry protestors (see Fall of Papandreou).