TERRORISM & THE BUSINESS WORLD

 A talk delivered at a symposium organised by the Birla Institute of Management Technology at Delhi on December 13,2008)

Terrorists target human beings—combatants and non-combatants (civilians)— as well as capabilities—economic and strategic.

2. Till the 1980s, they focused more on targeting human beings. Targeting of capabilities—-which may or may not cause human fatalities—- came into vogue in the 1980s, when the Irish Republican Army (IRA) carried out explosions in London’s financial district.

3. Targeting of capabilities does not create the same kind of public revulsion against the terrorists as the targeting of human beings does. Whereas the after-effects of the targeting of human beings remain localised in the area where they were targeted, the impact of the targeting of capabilities has a ripple effect far beyond the area where the act of terrorism was carried out.

4. The 9/11 terrorist strikes in the US homeland had a ripple effect right across the world because of the increase in insurance premia for various business transactions and dislocation of international flights.The successful terrorist strikes in Bali had an impact on the tourist economy of not only Indonesia, but also of neighbouring countries. The effect of a successful terrorist strike on the oil installations of Saudi Arabia or on commercial shipping in the Malacca Strait would be felt right across the world with varying degrees of intensity. The impact of a successful terrorist strike on the information technology (IT) industries of Bangalore would be felt not only in Bangalore, but also in the stock markets of different cities, where the shares of the IT companies are traded. Because of networking, the repercussions of a successful terrorist operation against the critical information infrastructure in one city can spread the resulting damage right across the world.

5.Globalisation and decentralisation are the defining characteristics of the business world of today. Very often many of the core tasks of multinational companies are performed not by their headquarters in their country of origin, but by their field offices spread across the world. Western multinationals delegate many of their core tasks to their offices in India because of the availability in India of highly-qualified managerial experts, who are prepared to work for emoluments, which are high by Indian standards, but not so high by the standards of the country of origin of the multinational. If an act of terrorism disrupts the workling of their Indian offices it would affect not only their business operations in India, but also their operations right across the world.

6. Many studies of terrorist operations across the world since 9/11 have brought out how the international terrorist organisations of various hues have successfully adapted for their operations the same concepts and techniques of globalisation and decentralisation, which they have borrowed from the business world. They are globalised in their thinking and outlook and decentralised and autonomous in their operations In the field.

7.The terrorist strike in Mumbai from the night of November 26,2008 to the morning of November 29,2008, has sent a shiver right across the world not just because it was spectacular, but because there was a fearsome brain, which had conceptualised the entire operation, planned it to the minutest details and had it carried out through remote control from Pakistan with the help of not more than 10 terrorists. There might have been—-I apprehend there would have been— many, many more terrorists involved in various peripheral roles such as intelligence collection, reconnoitring, logistics etc, but the core group, which carried out the strike was not more than 10 in number, but it managed to have an important corner of Mumbai, India’s financial capital, under its control for more than 48 hours. A force of nearly 600 men of the Mumbai Police and the National Security Guards was required to eliminate this small group of 10. This was asymmetric urban warfare of a kind not seen in the world ever since terrorism assumed its major dimensions in the post-1967 world after the Arab-Israeli war of that year.

8. We saw in Mumbai a mix of attacks on human beings and capabilities, a mix of attacks on Indians and foreigners and a mix of various strategies. A strategy to disrupt the peace process between India and Pakistan was mixed with a strategy for reprisal against the expanding strategic co-operation of India with Israel and the Western world. A strategy for discrediting India’s political leadership and professional national security managers in the eyes of the Indian public was combined with a strategy for discrediting them in the eyes of the international community and the international business world. These strategies focussed on a mix of targets—-the man in the street and the elite. The man in the street was attacked in places like a railway station, a hospital and other public places. The elite was attacked in the Taj Mahal Hotel and the Oberoi-Trident Hotels.

9. These hotels are not just the favourite spots of tourists who travel on shoe-string budgets. These are the favourite spots of the cream of the international business world, who come to Mumbai not for pleasure, but for their business. Imagine what impressions the business managers of the world, who escaped being killed by the terrorists, would have carried back to their corporate headquarters— about the security of life and property in India, about the efficiency of India’s national security managers, about the quality of our political and professional leadership.

10. In an article on the terrorist strike in Mumbai, the “Guardian” of the UK wrote: ” Analysts are worried that the constant reminder of the attacks will heighten investors’ concerns at a time when the Indian economy is slowing and foreign capital is being repatriated. ‘This is the last thing India needs,’ said businessman Sir Gulam Noon. The British-based multimillionaire, who made his fortune in ready meals, escaped unhurt from the Taj Mahal after spending a frightening night holed up in his suite on the third floor. ‘The attacks will temporarily have an impact. It’s clearly not good for the economy at a time when the world is in a financial crisis.’ That the Taj Mahal and Oberoi play host to the cream of the international business elite is clear given the high-profile executives caught up in the tragedy. Along with Noon, Unilever chief executive Patrick Cescau and his successor, Paul Polman, escaped the Taj Mahal. ‘The security landscape has changed overnight,’ said Jake Stratton of investment risk consultancy Control Risks. ‘This will have a serious effect on how foreign companies perceive India as a business destination.’

11. The success of the terrorists in Mumbai was due to various factors—- inaction or inadequate action on available intelligence about the plans of the Lashkar-e-Toiba (LET) to target Mumbai with a sea-borne operation,the rusting of our rapid response capability, our failure to draw the rigt lessons about crisis management from the unsatisfactory manner in which the hijacking of an Indian Airlines aircraft to Kandahar in 1999 was handled,and the lack of a joint action capability in our counter-terrorism community consisting of the intelligence agencies, the police, the armed forces, the NSG, the Ministry of Home Affairs, the National Security Council Secretariat (NSCS) and the Joint Intelligence Committee.

12. The intelligence about the plans for a sea-borne strike in Mumbai had reportedly started flowing in from September when the attention of our policy-makers and senior national security managers was turned towards Vienna where the Nuclear Suppliers Group (NSG) was meeting to consider the question of a waiver for India. In their preoccupation with the Vienna meeting of the NSG, the task of co-ordinating the follow-up action on the flow of intelligence appears to have been relegated to junior officials. whose decisions and directions did not have the same impact on the various dramatis personae involved in joint action. Moreover, during the months preceding the attack the Joint Intelligence Committee, whose task it would have been to analyse and assess the intelligence and decide on follow-up action, was without a head just as it was during the months when the Pakistan Army was getting ready to launch its intrusions into the Kargil area in 1998-99. One of the important lessons of the Kargil conflict was the danger of leaving important posts in our national security apparatus remain unfilled, but we seem to have repeated that mistake once again.

13. Terrorist attacks directed against economic and business targets have a tactical as well as a strategic impact, an economic as well as a psychological impact. The tactical impact is in respect of replaceable damages . The strategic impact has a long-term effect on the profitability of their business operations due to factors such as an increase in insurance premia for business transactions, an increase in their expenditure on physical security, and an increase in their tax liability due to a surge in Govt. spending on counter-terrorism for which the money has to come from the tax-payers. It has been estimated that the 9/11 terrorist strikes have resulted in a one-third increase in the expenditure on counter-terrorism in the US Defence Department alone. This does not include the expenditure of the Department of Homeland Security.The total US expenditure on counter-terrorism now amounts to US $ 500 billion per annum, which is 20 per cent of the total federal budget. This money has to come from the tax-payers.

14. The psychological impact arises from the nervousness of the business community. A businessman, who ventures abroad, looks for two things—-profitability and security of life and property. If we are not able to assure the security of life and property, no amount of profitability will induce him to take the risk of operating from India.

15. It is important to hold a thorough, time-bound enquiry into what went wrong in Mumbai and to share its findings with the Parliament and the public. The 9/11 terrorist strikes in the US led to an enquiry by a National Commission constituted jointly by the President and the two Houses of the Congress. Its report was released to the public and discussed in the Congress. A bipartisan resolution to implement its recommendations was passed in 2004. The London blasts of July 2005, were followed by a detailed enquiry by the joint Intelligence and Security Committee. Its report was discussed in the Parliament and its recommendations implemented. So too in Spain after the Madrid blasts of March,2004.In Singapore, there was a detailed enquiry into the escape from jail of a member of the pro-Al Qaeda Jemmah Islamiyah some months ago. Its report was placed before the Parliament and discussed. Since 9/11, there have been many acts of mass casualty terrorism in India—- seven since November,2007, alone. We have not had a thorough enquiry into any of them. How can we identify the weaknesses in our counter-terrorism machinery unless we enquire into the terrorist strikes?

16. The National Commission in the US, which went into the 9/11 terrorist strikes, pointed out that there was no culture of joint action in the US counter-terrorism community. We have no culture of joint action either. The basic principle underlying the concept of joint action is that every organisation in the counter-terrorism community is individually and jointly responsible for preventing an act of terrorism. Had we developed this culture of joint action, we would not be seeing the unedifying spectacle of the intelligence agencies, the Navy and the Mumbai Police blaming each other for not preventing the Mumbai strike.

17. Terrorists calculate that repeated and sustained successful terrorist strikes against capabilities would make the States more amenable to pressure and intimidation from them than successful terrorist strikes against human beings. Their calculations are not far wrong. In the case of terrorism against capabilities, even fears or rumours of a possible terrorist strike against them can have a negative effect on the economy.

18. Protection of capabilities against terrorist strikes has, therefore, become an important component of counter-terrorism. Protection of the capabilities of the State is the exclusive responsibility of the State for which it has a preventive intelligence capability and specially trained physical security agencies or forces.

19. Protection of the capabilities in the private sector is basically the responsibility of the physical security set-ups of the companies concerned, but the State too has an important responsibility for guiding them and helping them to improve their physical security set-ups through appropriate advice. There may be sensitive industries in the private sector, where the State’s role extends beyond guidance and advice to actually buttressing the physical security set-up of the company through its (the Government’s) own trained and armed personnel.

20. Effective physical security rests on a strong information base. The security set-ups of private companies and other establishments suffer from a major handicap in this regard. Their ability to collect intelligence is confined to the interior of the company or establishment. They will have no means of collecting intelligence about threats, which could arise from outside the company or establishment.

21. For this awareness of likely external threats they are dependent on the media, the police and the governmental intelligence agencies. The media reporting often tends to be sensational and over-dramatised. The reliability of their reports is often questionable. While open source information from the media is important for increasing awareness of likely threats, the ability to have it verified, analysed and assessed is equally important. Otherwise, physical security set-ups will be groping in the dark.

22. Such verification, analysis and assessment have to come from the Police and the intelligence agencies and the results of this process have to be shared promptly with the companies or establishments, which are likely to face a threat, with appropriate suggestions for follow-up action. It should not be left to the security set-ups of private companies to take the initiative to contact the police and other counter-terrorism agencies to find out if there are any external threats to them—particularly after reading media reports in this regard.

23. The police and other counter-terrorism agencies should play a proactive role in creating and strengthening credible information awareness among the heads of the security set-ups of vulnerable private companies and their CEOs. This has to be constantly achieved through periodic interactions organised by the police in the form of brain-storming sessions, round-table discussions etc. Such interactions at the initiative of the governmental agencies seem to be more sporadic than regular—-often triggered only by an actual crisis than by the anticipation of a possible crisis.

24. Heads of the security set-ups of private companies should have easy access, when warranted, to senior officers of the police and other counter-terrorism agencies. One gets an impression that such access is often restricted to officers at the middle or lower levels, who do not have the required degree of professionalism and self-confidence to be able to interact meaningfully and satisfactorily with senior officers of the private sector.

25. The effective physical security of any establishment—sensitive or non-sensitive, private or public— depends on effective access control. Access control is ensured through means such as renewable identity cards for the permanent members of the staff; temporary identity cards to outsiders coming on legitimate work; numbered invitation cards to those invited to conferences, meetings etc; restrictions on the entry of vehicles of outsiders into the campus; restricting the number of entry points and exits to the minimum unavoidable; identity checking at doors; checking for weapons and explosives through door-frame detectors; checking of vehicles for explosives; installation of closed circuit TV at the points of entry and exit and at sensitive points in the establishment; a central control room to monitor all happenings at the entry points and exits and inside the premises through the CCTV etc.Better access control by the security staff is facilitated through the advance sharing of information with them about the outsiders, who are expected to visit the premises for meetings, conferences, seminars etc.

26. These are the minimum measures considered necessary for any company or establishment, which is considered vulnerable to terrorist strikes. It is important for the Police to prepare and revise periodically lists of vulnerable companies/establishments in their jurisdiction and share their conclusions with the security set-ups concerned.

27. Similarly, it is important for each vulnerable company or establishment to prepare and revise periodically a list of vulnerable points/occasions, which would need the special attention of the security staff and brief the security staff on the follow-up action to be taken. It would also be necessary to discuss this list with the Police and seek their advice on the adequacy of the security measures, which the security set-up of the company or establishment proposes to take. The Police should not consider such consultations as unnecessary intrusions on their time. They should welcome such consultations or interactions as a necessary component of their counter-terrorism strategy.

28. IT companies and other establishments in South India often face work interruptions due to hoax telephone calls and E-mail and Fax messages regarding possible terrorist strikes. A basic principle in physical security is, “treat every information, hoax call etc as possibly correct unless and until it is proved to be false and take the necessary follow-up action. Never start on the presumption that the information is probably false or the message a hoax. This would be extremely inadvisable and even dangerous.

29.Even the best of intelligence cannot prevent a terrorist strike, if the physical security set-up is weak or inefficient. A competent physical security set-up can prevent a terrorist strike even in the absence of preventive intelligence.

30. Sometimes, despite the best of physical security, terrorists might succeed in staging an incident. That is where the role of the crisis management drill comes in to limit the damage. A well-prepared and frequently rehearsed crisis management drill is a very important part of the counter-terrorism strategy in any establishment—private or public.

31. Effective physical security is the outcome of constant enhancements in the security personnel of professionalism, self-confidence, information awareness, threat and vulnerability perceptions and protective capability. Achieving these enhancements is primarily the responsibility of the security set-up of the establishment, but the Police has an important role in facilitating this. This is a responsibility, which they should not evade. Well-structured police—security set-up interactions to enhance security in the private sector is the need of the hour.

32. Business resilience and business continuity management in terrorism-affected situations are two concepts increasingly figuring in discourses in the Western countries. They have also formed the subject of many studies by the business community and the counter-terrorism community—-separately of each other as well as jointly. It is said that the best contribution that the business community can make to counter-terrorism is by staying in business despite terrorist strikes. They may not be able to do it alone. The Government has to help them by playing a proactive role.

33. New ideas and new institutions have come up in the West to promote partnership between the Government and the business community for ensuring their security and for keeping their resilence undamaged. One example is the Overseas Security Assistance Council established in 1985 by the U.S. State Department to facilitate the exchange of security related information between the U.S. Government and the American private sector operating abroad. Another example is the creation of posts of Counter-Terrorism Security Advisers in important police stations in the UK after the London blasts of July,2005. One of their tasks is to keep in touch with the business establishments in their jurisdiction and advise them on security-related matters. 243 posts of Counter-Terrorism Security Advisers have been created since July 2005 and it has been reported that each important Police Station in London has at least two advisers attached to it. The London Police have established a programme called “London First” in which the Police and the private sector co-operate closely to ensure better security in London. The principle underlying it is that it is the joint responsibility of everyone in London to ensure its security from terrorist attacks. Let us have our own Delhi First,Mumbai First, Chennai First, Kolkata First, Bangalore First and Hyderabad First partnerships to ensure that November 26 will not be repeated again. (12-12-08)

by B. Raman

(The writer is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies)

The Origin of Modren Banking

“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. The issuing power should be taken from banks, and restored to the people.” Thomas Jefferson

Money was originally invented as a convenient alternative to barter, an alternative without which a highly developed civilisation like ours could not exist.

Imagine trying to pay the taxi driver with a bag of coal or the grocery bill with a box of spanners and a set of golf clubs. Imagine trying to carry all that around with you when you go shopping. As societies grew more complex and social roles became more specialised, the idea of money was conceived as a better and more flexible way to exchange, and thereby distribute among men, goods and services.

Money is quite simply an idea agreed upon among people that some system of tokens or symbols: discs of metal (coins) paper with symbols on it (notes) and so on, will be used by them to represent or stand proxy for goods and services and that those tokens can be exchanged for goods and services. One can then exchange the tokens rather than bags of coal, boxes of spanners or what-have-you and the tokens are easy to carry around. Its workability depends upon the participants' confidence that those tokens are and will continue to be exchangeable for a certain amount of goods or services.

That's all money is. It is no more complicated than that, although men may try to make it seem complex and hard to understand. The truth however, as truths tend to be, is simple; it is alterations of the truth - lies -that are complicated.

Many societies have used gold and silver coins as their tokens, then later pieces of paper to represent gold and silver coins, and later cheques and ledger entries to represent notes and coins and in modern times electronic money, the shifting and balancing of numbers in computer memories, alongside or in place of coins, notes and cheques. Thus when we receive a computer print-out of our bank statement saying we have £500 in our current account we usually visualise a stack of £l0 notes sitting in a vault somewhere, or perhaps a bag of gold coins, although in reality there is no pile of notes or bag of coins, merely the ledger-entry in an electronic memory Saying we have £500. Should we then write a cheque in order to spend £50 of it, the numbers in our ledger change to £450 and the payee's account increases by £50, although no notes, gold or anything else move from one account to another.

Yet it works because we have confidence in it and trust it and we know we can change that £500 for real notes, real coins or real goods or services whenever we want to.

This evolution in the system of tokens we use to represent real goods and services comes about through a succession of bright ideas in the direction of making distribution and exchange more convenient, the movement of wealth between people smoother and faster. However, anything can be used for money, provided people agree to use it and have confidence in it. For instance dried yak dung was once used in Tibet, notched pieces of wood in Medieval England, leather discs in Medieval Europe and even cigarettes and tins of coffee in post-war Germany. The money in use in a country is called currency, from the word current, meaning prevalent, in circulation or in use.

Governments firm up that agreement and confidence by enshrining a particular system of tokens in law and demanding those tokens in payment of taxes. A particular system of creating, denominating, issuing and circulating money - currency - where backed by law and deemed by law the only recognised system, and which cannot be legally refused as payment of a debt, is called legal tender. Where barter is no longer practised, one has to possess those tokens in order to acquire goods and services from others. It is the medium of exchange. Tokens, be they yak dung, metal discs or numbers with the '£' symbol in front of them, are exchanged back and forth between people instead of goods and exchange does now usually occur without the use of tokens or the promise of tokens on the future.

The way one acquires tokens is by producing something and then selling it to someone who has expressed his want for it by offering us some of his tokens. We do the deal and receive the tokens he has offered. Now we can go and exchange those tokens for other products that we desire, which we do not produce ourselves. Thus money enables goods and services to be exchanged among people and distribution of those goods and services to occur naturally, and according to the needs and wants of the participants.

The more of those tokens one possesses or is able to acquire through one's production, the more one can if one wishes acquire goods and services from others. One can also store money in a safe or bank account without having to build a couple of warehouses in which to store container-loads of spare goods. Money therefore confers exchange power or spending power on he who possesses it in direct ratio to the amount of it he is able to offer up for exchange.

GOLDSMITHS

In the old days gold was minted into coins and those coins, along with silver coins, formed the nation's currency. Goldsmiths had strongboxes and vaults in which to securely store the precious metal with which they worked. It was natural enough then that other people took to asking the goldsmith to store their gold and gold coins in his vault and to pay the goldsmith for the service. A merchant (for example) would entrust to the goldsmith £20 worth of his own gold for safekeeping. When he handed over his gold, the goldsmith would provide him with a receipt or note promising to hand back the gold (pay the bearer on demand) whenever the depositor returned and presented the note. The receipt held by the depositor was in fact as good as gold because he could exchange it for his £20 worth of gold any time he chose. But the note was easier to carry around than heavy and bulky amounts of gold and easier to conceal, so the depositor was often content to leave his gold in the goldsmith's safekeeping for long periods. In fact when the time came to pay for some commodity with his £20 of gold, instead of returning to the goldsmith, exchanging the receipt for the gold and then using the gold to pay for his purchase, it was more convenient for him simply to hand over his receipt to the seller. The seller was happy to accept the receipt in lieu of actual gold because it was more convenient to carry around and he knew that should he present it to the goldsmith, £20 of gold would be handed over to him.

Thus those gold receipts began to circulate and became the first paper money. People were happy to exchange them back and forth rather than the cumbersome gold they represented. The receipts had value because people were confident that in the goldsmith's vault lay the gold, which they could redeem at any time.

Eventually the goldsmiths noticed that the gold left by depositors remained in their vaults for longer and longer periods. People turned up wishing to exchange their receipts for gold less and less often, and that the receipts they had issued to depositors circulated in its stead. It seemed a shame to have that gold just sitting there doing nothing. Why not lend some of it out for a while? If it just sat there for year after year the owner, the holder of the receipt, was not going to miss it if it were loaned to someone else for a period.

As long as there was enough gold in the vaults to satisfy anyone who did turn up with a receipt, then no-one would be any the wiser. So depositor Joe would leave £20 of gold with the goldsmith for safekeeping and depart with his receipt which he would then use as money in lieu of the gold and it would circulate. It might be years before anyone turned up with that £20 note asking for £20 of gold. Meanwhile Tom would turn up at the goldsmith's asking to borrow £20 of gold and the goldsmith would lend it to him, demanding that it be paid back after a certain period at a certain amount of interest. But instead of lending Tom actual gold, the goldsmith would draw up a £20 receipt, just like the one depositor Joe had been given. Tom was happy to take the receipt in lieu of the gold because it was more convenient to carry around and people were happy to accept such receipts in payment for things.

So Tom went off with his £20 note, content that through it he was now in temporary possession of £20 of gold. But unbeknownst to Tom, Joe also has a receipt representing that gold. In other words there are now two notes in circulation representing the same £20 of gold! Clearly the goldsmith's issuance of two receipts for the same amount of gold is fraudulent - particularly when Tom repays the gold he believes he has borrowed in real gold. As each receipt promises to hand over the same £20 of gold on demand, the goldsmith is making a promise he knows he cannot keep.

Several things are clear at the moment the second receipt was issued and entered circulation: new money has been created out of thin air; that new money has been loaned into existence; as the loan has interest charged upon it, then a debt has been created out of nothing that is greater than the amount of new money created.

And another thing: Tom will eventually return to the goldsmith and repay his £20 loan, say at 10% interest. He will therefore hand the goldsmith, £22 in real gold. In other words, the goldsmith, in creating that bogus receipt and lending it to Tom, is creating for himself, albeit after a delay, real debt-free gold worth more than the new money he loaned into existence! It gets worse.

After a while the goldsmith, seeing that his fraud is working pretty well, thinks that if he can issue two £20 receipts against the same £20 of gold, then why not two, three or even four?

So Joe deposits £20 of gold and the goldsmith gives him his receipt. In time four other people turn up at his shop wanting to borrow that £20 of gold. The goldsmith obligingly lends it to each of them at interest, giving each a receipt purporting to represent that £20 of gold. There are now five receipts in circulation representing the same deposit of gold, one for the original depositor and one for each of the four borrowers. For that deposit of £20, £80 (4x £20) of new money is created merely by writing on a fancy piece of paper.

If(say) £2 of interest (10%) is charged on each loan, at the same time that £80 of new money is created out of thin air, a debt of £88 is also created out of thin air.

Property is held as security against these loans so if the borrower fails to repay with real gold the fraudulent piece of paper he borrowed, the goldsmith takes his property.

Each time the goldsmith lends £20 of bogus gold he charges 10% interest on the loan. By lending out £20 four times over and charging £2 interest on each loan, the goldsmith makes a whopping 40% (four times £2) in interest on the £20 "reserves" that were not even his to begin with! The goldsmith cannot lose and soon begins to amass a fortune from his fraud. It is the greatest get-rich-quick scheme ever invented. And it is, in essence, the basis of the modern banking system.

The goldsmiths of yesteryear became the bankers of today and although paper money and latterly electronic money took over from gold, essentially the same fraud is being run.

BANKERS

The business of lending pieces of paper pretending to be gold made the goldsmiths very wealthy and very influential men. Their easy wealth enabled them to move to upmarket premises. They became pillars of the community and some even became international financiers, lending money to kings and governments.

In the seventeenth century conflict between the bankers of the day and the Stuarts led the bankers to act in concert with bankers in Europe. They joined forces with those in the Netherlands to finance the invasion of England by William of Orange. William overthrew the Stuart Kings in 1688 and became King William III.

By the end of the 1600s England was in financial ruin, gold and silver supplies were running low and a costly civil war followed by costly wars with France and Holland, all in a fifty year period, had left her heavily in debt.

Government officials met with the financiers to negotiate the loans they needed. King William was £20 million in debt and he could not pay his army. Apparently it did not occur to William or anyone that if William needed to pay his army or get the economy going, all he had to do was have the government print its own money and use that to pay the troops -something that Abraham Lincoln would do successfully during the American Civil war nearly two hundred years later!

King William's "friends", the bankers, were willing to loan him the money he needed but the price they wanted for their "help" was high. They wanted a government-sanctioned but privately owned central bank that could; through fractional reserve lending, create money out of nothing and loan it to the government.

They got their way. In 1694 the world's first privately owned central bank was created. It was to be called the Bank of England. The Bank's charter included the following immortal words: "The bank hath benefit on the interest on all monies which it creates out of nothing."

Instead of exercising its right to create money and spend it into the economy, the government had the bank create it, then lend it to the government so that the government could spend it into the economy, then pay the loans back later at interest. That completely unnecessary complication was to have devastating consequences for the futures of the English people.

As well as delivering extraordinary power over the nation into the hands of a privately owned business corporation, it began the National Debt, a debt that would go on increasing remorselessly over the ensuing years until it had reached around £380 billion in 1996, costs us around £30 billion a year in interest payments and is still climbing.

By the end of the 17th century, the goldsmiths' scam had become respectable banking. The role of the banks in issuing money through lending to individuals and businesses had already become widely accepted. Thus there came to be established two routes by which money was borrowed into the economy: private and commercial borrowing on the one hand and government borrowing on the other. That combined debt in the present day has now soared to well over one trillion pounds.

In 1704, just ten years after the creation of the Bank of England, the banks' promissory notes, on the recommendation of the bankers and financiers who advised the government, were declared legal tender.

Although the new central bank was an entirely privately owned corporation, the name chosen for it led generations of Englishmen to believe that it was part of their government, when it most certainly was not. Like any other privately owned corporation the new central bank sold shares to create its initial capital. Its investors - whose identities were never disclosed - were supposed to put up a total of £1 ¼ million in gold coin to purchase their shares. Only three quarters of a million was ever received.

Nevertheless, despite that minor technicality, the bank was chartered in 1694 and began the business of lending out several times the money it supposedly had in its reserves.

In exchange for this unique and immensely profitable privilege, the bank would very kindly lend the English, and later British, government as much money as it wanted, at interest, provided the debt was secured by direct taxation of the people.

THE MODERN INCARNATION OF FRAUD

What happens when you or I, or for that matter the government, borrow money from the bank? Prepare yourself for a surprise.

Let's say we want to borrow a £100,000 mortgage on a house. The bank or building society does what the goldsmith did and creates £100,000 out of thin air. Instead of handing us a paper certificate, it simply credits our bank account with the £100,000 and registers that £100,000 as a debt, with (say) a further £100,000 interest over 25 years. The money is simply penned into our account without any account anywhere being debited the loaned money. New money is therefore created. Alongside it a debt (in this case £100,000 plus the roughly £100,000 of interest) is created. When we repay the debt, the interest is accounted as income for the bank. The £100,000 we originally borrowed is withdrawn from circulation and is accounted as collateral for further lending, loaned back into circulation when someone else borrows.

Our house is held as security so if we fail to keep up our repayments, the creditor takes possession of it. The repayments themselves can vary through no fault of our own, according to interest rates set by the banking industry.

After 25 years of blood sweat and tears we finally pay back the last installment of the £200,000 capital-plus-interest we owed and the house in finally ours. It is not ours until that point.

The lender, who loaned us money which did not exist until the moment he created it out of nothing, winds up with £100,000 of interest on the loan: that is real, spendable income that comes courtesy of our real work and real wealth creation. The numbers have been simplified to highlight the nature of the fraud and in practise the process is hidden under a great deal of complexity but this in essence is the process of money creation.

Each time the banks create money they create a debt that is greater than the spending power they create. One can see too that each time they are creating a debt for the borrower, they are ultimately creating debt free money for themselves.

Before the goldsmiths' scam began, the money in circulation was hard currency - usually gold or silver minted into coins which then circulated as the tokens used to represent goods and services. That minting and circulation of coinage was usually administered by the government or king.

However as soon as the goldsmiths' certificates became used in lieu of gold, paper money had made an appearance. As soon as the goldsmiths began issuing paper notes for gold they did not actually have, the goldsmiths were themselves creating new money and lending it into circulation.

One can see that this establishes debt as the basis of our currency. Where once, long ago, the British pound represented something -so much gold or silver - it now represents so much debt, which is not only nothing it is less than nothing.

Extracted from: Your Business Under Siege…and the reasons why. Published by the BAMR, email: BAMR@bamr.fsnet.co.uk Tel: 01342410962 (UK)

“Whoever controls the volume of money in any country is absolute master of all industry and commerce. And when we realize that the entire system is very easily controlled, one way or another, by a few very powerful men at the top, you will not have to be told how periods of inflation and depression originate.”
U.S. President James Garfield. A few weeks after making this statement, he was assassinated on July 12, 1818.

Current Geopolitics in light of Business

One important geopolitical consequence of the demise of the Soviet Union was the rise of intense political and commercial competition for control of the vast energy resources of the newly independent and vulnerable states of the Caucasus and Central Asia.
And if talking about today 35% to 79% of global act are acting for oil.
As considering the importance of oil, for any business to be start it is needed.
Ever since oil became a crucial resource at the beginning of the 20th century, fuel for motor vehicles and modern warships, it has been at the heart of geopolitical struggle. Today gas, used to fuel electric power generation, industrial processes and domestic heating, is just as important.


Geopolitics' means the struggle between rival powers for control over territory, natural resources (oil and gas, minerals, food products, water, etc), vital geographic features (strategic harbours and military base locations, rivers and canals, trade routes, etc), and other sources of economic and military advantage.