2ndlook

The Greatest Crime Wave … Ever?

Seven time Prime Minister, Giulio Andreotti, 83

Seven time Prime Minister, Giulio Andreotti, 83

Crime in the last 50 years

From the 1960-1990, the Big Issue for people across large parts of the world was Big Crime. The 1960-1990 peak in organized crime, globally, is interesting due to the synchronized time frames – across USA, Europe and India.

The Godfather series was emblematic of this phenomenon. The Godfather trilogy of films remained popular amongst critics and viewers alike. For years, Mario Puzo’s books remained on best seller lists. When the freed slaves of Cuba, led by Fidel Castro, tried to overthrow American-foisted dictator Batista, the US used the American Mafia, to attempt assassination of Fidel Castro. The mafia controlled trucking in the US – and a company like UPS had to pay of mafia to continue its trucking operations across USA.

In India, the rise of the underworld was delayed by a decade – as was its decline. India’s underworld, centred in Mumbai, at its peak, intruded into trade unions, films and entertainment, gambling, real estate, extortion and smuggling. The specter of Dawood Ibrahim haunts India-Pakistan Governmental relations – even today.

American Mafia

Chief of Police Thomas Byrnes.

Chief of Police Thomas Byrnes.

In May 1950, Special Committee to Investigate Organized Crime in Interstate Commerce, was formed with Estes Kefauver and four other senators as members. Between 1950-51, the Kefauver Commission informed the American public that the American Mafia was synonymous with Union Siciliana. FBI finally admitted to the Mafia’s existence as La Cosa Nostra in the 1960s. The testimony of Detective Frank Serpico to the Knapp Commission opened to public view, how deep Mafia hooks were, into the US police.

A 130 years ago, the legendary New York police chief (and ex-detective), Thomas Byrnes had a simpler solution to the mafia problem, “Let them kill each other.”

From Publishers Weekly
During the 1920s the Gambinos, members of the New York Cosa Nostra “Five Families,” which also included the Colombo, Bonanno, Lucchese and Genovese families, controlled many businesses … Among their strongholds were private carting, garment industry trucking and construction. The mob also had … in the meat and supermarket businesses … loansharking, extortion and pornography. Additionally, the dons, having forbidden trafficking in drugs to subordinates, could not resist the vast profits and became involved themselves. Mafia founding fathers Vincent and Philip Mangano were succeeded by Albert Anastasia, who was murdered in 1957. The most effective leader, shows Davis, was Carlo Gambino, who emerged supreme in 1970, reigned for 19 years and was succeeded by his cousin Paul Castellano until he was killed at the behest of John Gotti, who was sentenced to life in prison in 1992.

… during Carlo’s reign the whole Mafia/all 5 Familys prospered more than they ever did … (ellipsis mine).

While the Italian-American involvement in crime has received wide publicity, the inclusion of African-Americans (much smaller in size and scale) in organized crime is less noticed. Similarly, the involvement of the African-Americans in crime peaked during the same 1960-1990 period.

roughly 1968 through 1984, organized crime also flourished in many of the city’s African-American neighborhoods, most of it under the average Philadelphian’s radar.

“The Black Mafia ran the heroin trade in the city,” says Sean Griffin, a former Philadelphia policeman and the author of Philadelphia’s ‘Black Mafia’, a new book that combines gritty street reporting with extensive scholarly research. “They were ruthless and ultra violent. They ruled major sections of the city, and yet somehow today it’s as if they never existed.”

The Black Mafia was “founded” in 1968 by Sam Christian, “a thick-necked 215-pound bully” and former Black Panther with an extensive rap sheet. Christian built his reputation holding up craps games and extorting drug dealers, numbers men and illegitimate businesses.

In the early days, the Black Mafia’s organized command structure consisted of 14 men, all with extensive records, most for violent crimes. As Griffin points out in Philadelphia’s ‘Black Mafia’, a book that grew out of the author’s Ph.D. dissertation, the nature of their crimes made them difficult criminals to prosecute because their victims and witnesses so feared retribution.

Of course, in terms of size and organization, it never matched or came even close to the American-Italian mafia.

The Rise & Fall of Organized Crime in America

Meyer Lansky character portrayed by Lee Strasberg in “Godfather II” told audiences, “We’re bigger than U.S. Steel.” It was during that era that Las Vegas was born, with millions of mob dollars invested in the ‘Bugsy’ Siegel’s Flamingo Hotel, and Havana became the greatest adult playground in the world due to huge amounts of bribes paid to President Batista and his cronies; when the Teamsters Union became king of the road and began using their pension fund millions to finance newer and bigger hotels in Vegas; and when everything from garbage collection, to juke box distribution, to construction projects large and small, to linen supplies for restaurants, to garment unions and the production companies under their thumbs, to illegal gambling…to all the ancillary businesses connected to those already mentioned…became mob cash cows.

In his book, former mob boss Joe Bonanno outlined a Commission of organized crime leaders around the country who settled arguments and set policy for all its underlings. That confession led United States Attorney for the Southern District of New York, Rudy Giuliani, to initiate a criminal case, under the R.I.C.O. Act, charging the alleged bosses (it was later proven that Anthony “Fat Tony” Salerno was NOT the head of the Genovese Family, as he was convicted of being) of New York’s five traditional organized crime families as Commission members of a criminal organization, commonly known as LCN, or La Cosa Nostra. Each was convicted and sentenced to more than one hundred years in federal prison. Bouncing off Giuliani’s success in the Commission Case, federal authorities brought more charges and convicted more top mobsters in Philadelphia, Boston, New York, and Chicago. More recently, in early 2008, sixty-two alleged members of the Gambino Crime Family were arrested both in the United States and Italy.

There is no more national strength.

Traditional organized crime families are well on the way toward total dissolution, as they probably would have six or seven decades ago.

Italian Mafia

Simultaneously, across the Atlantic, in Italy too, the mafia was very powerful. Mafia power peaked in Italy also at the same time. The death of numerous judges and police officials was emblematic of the power and means that the Italian Mafia used against opposition.

Popularly, it is believed that the killing of the police commander, Alberto Dalla Chiesa, in September 1982 marked a turning point in the battle against Italian mafia. Before that, it was the kidnap and death of Aldo Moro, initially by the suspected Red Brigade. Later, it was found, that the kidnapping and murder was done by the Italian mafia, allegedly, at the behest of Guilio Andreotti, the seven time Italian Prime Minister.

The iconic Post WW2 Italian politician, seven time Prime Minister, Giulio Andreotti was himself investigated (first acquitted, then convicted on appeal and then finally the conviction was annulled) of links with mafia. This year, (2008) this story led to a film -which detailed the long running Andreotti saga – with some liberties. The Vatican weighed in on the side of Guilio Andreotti, and Cardinal Fiorenzo Angelini said, “Also Jesus Christ was crucified before his resurrection.”

Nixon and Andreotti ...

Nixon and Andreotti ...

The Italian mafia also traced the rise of the Indian underworld.

Their ascendancy was followed, in the 1970s and 1980s, by that of Toto Riina, who strangled, shot, bombed and poisoned his way to the position of capo di tutti capi. Successive Italian governments either stood aside, embarrassed by the lawlessness of western and central Sicily, or actually connived in the corruption. But in the 1990s, the mafia, and the Corleone clan in particular, misread the end of the cold war. Their political cover in Palermo and Rome was removed by the collapse of the Christian Democrat and Socialist parties and several huge domestic political scandals.

This wave of crime affected Europe with crime, terror, extremism – much like India is today. But whether it was the US or Italy, the real roots of the Rise and Fall of the Mafia lay in India. As we will see.

Underworld and terror – The Indian face

On March 12, 1993, India woke up a new phase in terror. Urban terror of a type not previously known. In the space of less than 1 hour, 13 important places, including The Bombay Stock Exchange, Plaza Cinema, and some other prominent places were subjected to synchronized bombings – killing more than 250 people and injuring more than 700. For the first time, plastic explosives, of the RDX type, were used in India.

Who is responsible for Mumbai Bomb blasts?

Many, starting with Indian police and the Indian Government, blamed India’s premier underworld figure, the fugitive Dawood Ibrahim. Wrong! An accomplice, Tiger Memon was also suspected. Wrong again.

Gold policy in modern India

The answer is Late Morarjee Desai – India’s ex-Prime Minister and Finance Minister. And with Morarjee Desai, were a whole lot of RBI and GOI officials who were behind 40 years of legislation, which created India’s underworld, corrupted 4 generations of India Government officials and reduced the value of Indian savings by Rs.1,20,000 crores. 4000 tons of gold purchased by Indian consumers, during the 1965-1995 period, at a 30% premium at today’s value – do your numbers.

These laws corrupted four generations of Indians – Government and politicians. It made gold in India very expensive – and the Indian buyer remained in poverty longer. Many gold control laws were enacted which stopped all legal gold imports into India.

These laws were derived from two sources. One, the British colonial policy legacy (motivated by exploitative aims). Two, motivated policy recommendations by US sponsored institutions like IMF, World Bank, Western Universities and academics, was continued by Indian Government and RBI. Had it not been for this policy framework, Bretton Woods system would have collapsed within 12 years instead of 25 years. For which Morarjee Desai was allegedly rewarded by the CIA. But, before that it enabled the establishment of the Bretton Woods system itself.

Roosevelt had earlier in 1933, during his New Deal years, nationalized all gold. This restriction was finally eased only on December 31st, 1974, with Executive Order 11825 by Gerald Ford. It was Roosevelt’s gold nationalization which allowed the US to wage WW2 and create the Bretton Woods system.

From 1939, (the start of WW2), gold imports into India, the world’s largest market and also the largest private reserve of gold, were controlled or banned. Not only the largest, but Indian reserves of gold, are also the only significant reserve in the world without a history of war, genocide, slavery or loot, (unlike US, UK, Canada, Australia) or to due nature’s bounty (unlike South Africa, China, Peru, Ghana, etc.).

Gold imports restriction & history’s biggest crime wave

The first effect of restrictions on gold imports in India was on prices. Indian gold prices, on an average, were 30%-40% higher than international prices. The other thing that happened was that gold imports went underground. Gold imports (illegal), called smuggling, spawned the biggest criminals that India has seen.

The common threads in this were, of course, America, drugs, underworld, war, corruption, warlords – but what made all this possible was Indian appetite for gold.

All this was made possible by the Indian hawala system of money exchange. Hawala made money transfers safe, instantaneous, at a low cost. Traditional Indian ships from a thousand ports in Goa, Maharashtra and Gujarat sailed with this contraband and brought back gold.

The countries comprising these Golden Triangle /Crescent are India’s neighbours. The Indian underworld transported drugs through India. These drug shipments originated, were acquired, grown and traded from the Golden Crescent and the Golden Triangle.

Tentacles of the Indian Underworld

Like the American and Italian mafia, the Indian underworld, also spread its tentacles, wide and deep. In trade unions, film industry, politics and legitimate businesses.

In 1982, Dr.Datta Samant, a trade union leader, called for strike by the textile workers in Mumbai. He was the leader of Magar Aghadi (Workers’ Front), with more than 300,000 members. The strike went on for a year – with 250,000 workers abstaining from work for 20 months.

Mumbai’s textile industry, tethering on the brink of collapse, went bankrupt – and was nationalized. Hundreds of thousands of workers became unemployed – and Mumbai started rebuilding itself. Dr.Datta Samant was notionally affiliated to the Congress party – and INTUC. Since, his connections were tenuous, he had little political protection or patronage. A ‘supari’ (Indian underworld jargon for a contract) was ‘put’ out and Dr.Datta Samant was killed – on January 18th, 1997. Mumbai police listed sixteen people as accused, including underworld dons Chhota Rajan and Guru Satam, of which nine, are absconding.

Similarly, on May 7, 1994, businessman and industrialist, Sunit Khatau, was shot dead in broad daylight. Having used various underworld figures for getting his way with the labour unions, politicians, et al, Sunit Khatau paid the price for running with the hares and hunting with the hounds. The killing of Thakiyuddin A. Wahid, Managing Director of East-West Airlines, was yet another case where industry and underworld tried coming together with disastrous consequences.

The killing of Gulshan Kumar, the owner-founder of T-Series, was evidence of the underworld’s grip on India’s Mumbai-based Hindi film industry. A few years later, after the killing of Gulshan Kumar, the underworld was dictating star casts, release dates, projects, directors – and the Mumbai-Hindi film industry was in the grips of the underworld.

Indian underworld figures

One of the founder figures of the Indian (also Mumbai) underworld was Ayub Lala, who headed the Pakhtuk Jirga E Hind, an Afghani Pathan association in Mumbai. These were all small time figures – compared to the later times.

The new breed – bloodier and nastier than the previous, were represented by Karim Lala, Haji Mastan, Varadarajan Mudaliar, Yusuf Patel, Tiger Memmon, Chota Rajan, and of course, Dawood Ibrahim’s – a biological son of a police constable Sheikh Ibrahim Kaskar, was spawned by Morarjee Desai’s laws.

What’s common in the Golden Crescent & the Golden Triangle

After WW2, traditional opium supplies from (Greater) China, by Government granted opium monopolies, from Yugoslavia and Italy, were replaced by Iran, India, Pakistan, Afghanistan and Mexico. It was the Golden Triangle and the Golden Crescent which dominated opium supplies from 1960s-1990s.

The fact that flows from these new supply sources coincided with the American ‘domino theory’ wars, against ‘under-your-bed’ Communism (in Cambodia, Thailand, Laos, Vietnam, Korea, etc.) is the subject of much research, significant evidence and many Hollywood films – which have suggested that the American armed forces and the CIA were behind the start of the drugs import into USA.

Interestingly, this period is also the background to the other chain of events – now dubbed as Yamashita Gold. Involvement starts with Douglas MacArthur and the Who’s Who of American politics, bureaucracy and military. They purportedly, extracted information from Japanese warlords and crime bosses about the fabled loot of the Japanese bosses, who ruled over Korea, China between WW1-WW2. Some writers allege that the link goes from Prescott Bush right upto the soon-to-be-the-ex-President George ‘Dubya’ Bush.

Counterfeit Currency

The other interesting feature of this great crime wave was fake Indian currency. The counterfeiting of US dollars is understandable. It is the world’s largest currency – and most acceptable. The GBP or the Euro are also reasonable targets for counterfeiting activity. Even counterfeiting the Canadian dollar!

But, the most unlikely target is the Indian Rupee!

India is a small, poor economy, (at least, till about 5 years ago). India does not have capital convertibility either. So, this huge counterfeiting operation raises more questions. Is this counterfeiting related to India’s Gold reserves?

The entire currency and security-grade printing is dominated by less than a dozen companies. These companies will not dare to support ‘counterfeiting’ operations – unless there is official cover or support given to them, by their respective Governments.

The invisible Indian connection

The US eliminated gold ownership restrictions in 1975. India followed. 20 years later. In 1992, India took its first hesitant steps towards legalizing gold imports. By 1995, these import control laws had been diluted to near non-existence.

Much like the fading away of the mafia in the US and Italy, in India too, after the gold trade was legalized, the mafia’s source of power, liquidity, earnings, profit were taken away. With it came the underworld’s loss of power and influence – globally. And that coincided with the reduction and control of organized crime from the US and Europe and India. And an end to the greatest crime wave in the modern history.

Today, the abatement in organized crime is ascribed to vigourous efforts by the police and legal systems. The earlier lack of success is conveniently forgotten. In India, many ‘encounter’ specialists claimed credit for the reduction in the power of the India’s underworld.

A paperback by Penguin, The Complete Idiot’s Guide to the Mafia By Jerry Capeci does not mention India even once. Another book, Cops Across Borders By Ethan Avram Nadelmann which details global, cross-border police co-operation, mentions India only 11 times – in more than 500 pages. These books are symptomatic of the world’s non-recognition of the genesis of the greatest crime wave in history.

Indian social system itself does not see organized crime having any logical existential reason. It is these values that gives India one of the lowest prison populations in the world – and practically very few positions in the Forbes ‘Most Wanted’ List. With the lowest police to population ratio.

New Global Reserve Currency – Connecting the dots – Part 2

Posted in Business, Current Affairs, European History, Gold Reserves, History, Media, Uncategorized by Anuraag Sanghi on October 23, 2008

ECB’s Nowotny Sees Global `Tri-Polar’ Currency System Evolving Bloomberg.com: Worldwide

European Central Bank council member Ewald Nowotny said a “tri-polar” global currency system is developing between Asia, Europe and the U.S … leaders of the U.S., France and the European Commission will ask other world leaders to join in a series of summits on the global financial crisis beginning in the U.S. soon after the Nov. 4 presidential election, President George W. Bush, French President Nicolas Sarkozy and European Commission President Jose Barroso said in a joint statement yesterday.

European leaders have pressed to convene an emergency meeting of the world’s richest nations, known as the Group of Eight, joined by others such as India and China, to overhaul the world’s financial regulatory systems. … Sarkozy wants the G8 to consider re-anchoring their currencies, the hallmark of the 1944 Bretton Woods agreement that also gave birth to the International Monetary Fund and World Bank.

Europe’s Been Onto Something … While the US gently weeps

The EU region calling for a ‘G8 + India & China’ conference to thrash out this global monetary issue – and has been twisting the knife in the reluctant US side. The US has been dragging its feet. While the EU has been going gung-ho on this, the US has been floating many trial balloons. Warren Buffet, Paul Volcker and Lawrence Summers have been co-opted by the likely President of the US – Barack Obama. There has been talk of a manipulation in bullion prices – which may be required for re-anchoring currencies. Interesting deals – considered impossible till a few years, are being done in a tearing hurry.

Imagine! The EU in the middle of a global crisis goes out and restores diplomatic ties with Cuba.

The US Gameplan

US analysts, led by Paul Krugman, have been calling for Barack Obama (or maybe McCain) to emulate Roosevelt – who waded into WW2, with 25,000 tons of nationalized gold. If gold is nationalized, it may depress demand in the short term – giving rise to huge volatility in gold prices. But Warren Buffett has been on the silver bandwagon for a while – and that is making the gold-silver equation hazy. What if Warren Buffet becomes the new US Treasury Chief? There is the real risk of another fraud like the gold standard happening all over again.

The US has been making its moves – differently. Paul Krugman’s Nobel Prize is an indication of this. Will the US use Paul Krugman as the Keynes of the Bretton Woods. The background of Bretton Woods itself, is of course something that the US and Europe do not want the world at large to know. The other ploy that is being bandied about is the re-launch of the fraud called the Gold Standard – now in a better packing.

The Oil-Dollar Tango

The Oil-Dollar Tango

What Has Been India Upto?

While the US has been resisting calls for action, busy doing post-mortem, Asia and Europe have been moving. Interestingly, Manmohan Singh has done some huge work in the last 60 days – the nuclear deal with the USA and NSG, the IBSA Summit, the ASEAN free trade agreement – and now his three Asian nation visits. India’s Trade and Commerce Minister, Kamal Nath, has been talking about a multi-lateral set up. The UN was made to issue a statement on this. Am I reading too much into this? At times, India has seemed clueless.

After the ministerial meeting, both Prime Minister Manmohan Singh and Finance Minister PC Chidambaram talked about how the ‘developed’ world’ was now ‘listening’ to the developing world – and was willing to ‘give more representation.’

This language itself indicates the distance that the Third World needs to travel.

China and Russia

The big issue is of course, China and Russia. China has 2 trillion of US dollars – and what does China do with this? Russia has come out from a default about a decade ago – with a nearly US$400 billion reserves – flexing its muscles in Georgia and dependent on a high oil prices. What happens to Russia if a new Pacific Republic (Cuba, Haiti, West Indies, etc) were to start drilling for oil? In 5 years, the world would be awash with oil – and Russia’s mineral earnings could evaporate. This crisis seems to have made the Chinese Premier shaky. So, the world may not trust China and Russia too much. Russia and China can be the party poopers – but they cannot be the life of the party.

For financial and military reasons, the inclusion of Russia and China is useful – though not essential to the emergence of a tri-polar currency system. The cost of Russian and Chinese inclusion is high degree of influence that these ‘super powers’ will want – which the developing world will not approve.

Why supplant one form of exploitation with another?

Contours Of The Deal

The EU-USA-Asia may agree on a broad a global regulatory and oversight body to monitor and maintain oversight over a multiple currency regime – an improved, better IMF.

The new 3rd currency may take some time to figure out. Not that it is difficult, expensive, or impossible. Some of Asia may want to cling to the dollar skirt. The new currency may be an Asian-Developing world currency. This may see the emergence of a tri-polar currency regime – which the US and Europe duopoly is desperate to avoid.

The 2ndlook proposal for the Third Global Reserve Currency has been in circulation for some time now.

Connecting The Dots …

Posted in Business, Current Affairs, Gold Reserves by Anuraag Sanghi on October 11, 2008
The Dollar Yuan Rumba

The Dollar Yuan Rumba

Dollar Devaluation

1973-1985. The Japanese were strutting on the world stage.

1973-1985. The Japanese were strutting on the world stage. In their hubris, one Japanese businessman declared that the only world-class product made in USA was maple syrup. The Japanese manufacturing juggernaut seemed unstoppable. Japanese management was the first lesson and the last word in business schools. Companies like Xerox, FedEx, Motorola adopted various ‘QIP’ systems – quality improvement processes.

Finally, the Americans decided that the yen-dollar exchange rate was the culprit. In 1985, the US worked out a deal whereby the US dollar was devalued. Only it was not called a devaluation. It was called the Plaza Accord.

Without a formal devaluation, the Plaza Accord allowed Americans to depreciate the dollar against other currencies – especially the Japanese Yen. Intense negotiations spread over nearly a decade followed. During a crucial negotiation in Japan, in 1992, a stressed out George Bush Sr., vomited and fainted.

The Oil-Dollar Tango

The Oil-Dollar Tango

Endaka – and the end of the Japanese run

After the Plaza Accord, the Japanese team went back home and prepared their industry for endaka – high yen prices.

From August 1971 through April 1995, the yen’s value ratcheted up from 360 to the dollar to 80 to the dollar. This was primarily because some U.S. industries, anxious about their eroding share of world markets, put political pressure on American politicians. The American government in turn put pressure on Japan’s politicians and central banking officials to keep raising the value of the yen against the dollar. With some support from academic economists, American producers argued that a higher-valued yen would help their products sell better in competition with Japanese products and therefore reduce the American trade deficit.

Net outcome, by the mid 1990s, the Japanese juggernaut was halted. Japan had to remain contented with being the world’s second largest economy. George Soros thought,

the prospect of Japan’s emerging as the dominant financial power in the world is very disturbing, not only from the point of view of the United States but also from that of the entire Western civilization

For the next 10 years, the Japanese economy stagnated, investments stagnated. Their dream of supplanting the US as the world’s largest economy were over – for now at least.

Stuffed Tigers

The 90s was decade of the Asian Tigers. Korea, Malaysia, Thailand, Indonesia, Singapore were all set to replace Japan as the axis of world economy. India especially came out as a distant plodder against these countries. Lee Kuan Yew, held forth on the Indian character was faulty – and could not compete with the Chinese-Confucian value-set.

Then followed the Asian Crisis. Mahathir Mohammed claimed that the 1997 Asian Crisis was a foreign conspiracy. Specifically, he named George Soros as the master mind behind the Asian Crisis. 9 years later, Mahathir made up with George Soros – and retracted his charge.

The ostensible reason was that investors in the Asian Tigers were funding long-term investments from short-term borrowings – a classic mismatch. The rapid withdrawal of foreign funds impacted development of these economies to the extent of a decade.

Has It Come To This? (Cartoon by David Horsey from seattlepi.com).

Has It Come To This? (Cartoon by David Horsey from seattlepi.com).

The 2 trillion trap

After the Asian crisis, China was in a better position to resist American pressure for renminbi revaluation.

That resistance to renminbi revaluation, in turn, caught China, in another trap. China has US$ 2 trillion worth of rapidly depreciating foreign reserves.

Which brings us to India!

What will it be

What are the threats to the Indian economy! Will it be a ‘sudden’ collapse in software and outsourcing? Or will it be a severe contraction in gems and jewellery exports? Can it be a 3 year drought due to global warming?

Bretton Woods – What they wont teach or tell you …

Posted in Business, Current Affairs, Environment, European History, Gold Reserves, History, Media, Uncategorized by Anuraag Sanghi on October 8, 2008

Prequel to Bretton

Keynes’ first book that gained him some following in the world of economics was the ‘Indian Currency And Finance‘. This work examined in significant detail the workings of the Indian currency system. The Indian colonial currency system was anchored to the British pound – and various other local Indian currencies were in use – and even legal tender in large parts of India.

G5 will take on G8

G5 will take on G8

Thus there was always great pressure on Britain to keep the British pound on gold standard – as there was always the option for the common citizen to use coinage from other kingdoms and princely states. In 1900, the British colonial Government tried to enforce circulation of British sovereigns in India – which failed.

Of course, gold importation into India was severely restricted. The gold blockade against India was effective as the major gold production centres were under Anglo Saxon occupation (Australia, Canada, USA, South Africa, Rhodesia, Ghana, etc.).

The Birth Of Bretton Woods

As WW2 was winding down, the Anglo Saxon Bloc went ahead and devised the Bretton Woods system. This system was a copy of the Indian currency system – where instead of the British pound, the American dollar became the Index currency.

Instead of milking only India, the Anglo Saxon Bloc could now milk the whole world. Keynes noted how America when dealing ‘her dependencies, she has herself imitated almost slavishly, India.’ So, when the time came, it took very little time for the US to scale the Indian currency model on the rest of the world.

The success of Bretton Woods-I depended on blockading India from buying gold – which was effectively done by Morarji Desai. (I wonder why the ungrateful Anglo Saxon Bloc has not made a statue of Morarji Desai at Mount Rushmore). He has after all been the single biggest contributor to their prosperity for the last 50 years.

What was Bretton Woods

The world stamped their approval on Bretton Woods.

As per the agreement, all countries of the world would use the dollar as the index currency – for international trade and foreign exchange reserves and for nominal exchange rate fixation. This system allowed the USA to print ‘excess’ dollars. These ‘excess’ initially in limited quantities, but soon at an accelerating pace. Today the USA has flooded the world (and the USA markets with more than US$50 trillion) of excess currency. The housing bubble, the M&A frenzy, the credit crisis are by products of this printing of dollars. With these excess dollars, the US consumers and others bought what they wanted – and US went ahead and printed some more dollars.

Bearing the dollars cross

Bearing the dollar's cross

Behind Bretton Woods – Gold

If the Bretton Woods system was defective, unfair, weighted et al, why was it accepted? Why did the world believe that only the Anglo-Saxon Bloc could deliver.

Why?

In 1944, the Anglo Saxon Bloc (countries, colonies and companies) controlled more than 90% of gold production and reserves. The largest private gold reserve in the world, India was still a British colony. Hence, it was fait accompli.

The Cornering Of Gold Supplies

For the last 150 years, the ABC countries (America, Australia, Britain, Canada) comprising the Anglo Saxon bloc (countries, colonies and companies) have controlled 90% of the world’s gold production. Till (a large part of) India was a British Colony, they also controlled more than 50% of the above-the-ground gold reserves. This gave them absolute liberty to print depreciating currency and flood the world pieces of paper(called dollars and pounds), manipulate the world financial system and keep other populations poor and backward.

Who paid for the dollar hegemony

Who paid for the dollar hegemony

Bretton Woods – Broken Promises

The promise of the Bretton Woods system was stability. USA promised the world that they will redeem the US dollar for gold – at a rate of US$35. Anyone could (except Indians and Americans) buy an ounce of gold from the USA for US$35 – managed by the the London Pool system. Within 20 years, the first promise was broken. Redemptions of dollar for gold to individuals was stopped in 1968 (March15th).

The Bretton Woods system worked for 20 years because Indians were not allowed to buy gold. India’s finance minster during that crucial period, Morarji Desai, (allegedly on CIA payroll during Lyndon Johnson’s Presidency 1963-1968), presented a record 10 budgets, between February 1958, up to 1967.

His break with Indira Gandhi began when the Finance portfolio was taken away from him. Morarji Desai’s ban on gold imports allowed the sham of Bretton Woods to continue for 20 years. His adamant attitude on gold cost the government popularity and electoral losses – and the Indian economy and Indians much more. Was it a co-incidence that many of the RBI functionaries later got (and even now) plum postings at LSE (IG Patel) and BN Aadarkar (IMF)?

The Bretton Woods Twins

Bretton Woods also gave rise to the the Bretton Woods twins (the IMF and the World Bank) which are run and managed by the Anglo Saxon countries. The ABC countries, their client states like Japan, OECD, etc. have 65% of the voting rights. With this huge voting majority, less than 5% of the world’s population (of the ABC countries) decide how 95% of the world lives.

The Bretton Woods twins (the IMF and the World Bank) been significant failures. Aid (spelt, ironically, very similarly to AIDS) projects are approved – which are tied to imports from these Anglo Saxon countries.

Bretton Woods Fraud

The Bretton Woods system was technically created by more than 700 delegates from the 44 allied nations. But the match was fixed.

It was designed by the Anglo-Saxon countries (America, Australia, Britain, Canada), for the benefit of the Anglo Saxon countries. Notice how much Britain resisted and finally did not join the European Currency Union. This system has swamped the world with accelerating inflow of dollars (American, Australian, Canadian) and British pounds. Producers and exporters are left with vast reserves of a depreciating currencies.

Nixon Chop And Bush Whack

From the Nixon Chop to the Bush Whack final months of Dubya’s Presidency, the Bush Family has been in the Presidency for 12 years of the 37 years. And in positions of lesser power for the entire period. George Bush Sr. was the US representative to the UN during the Nixon era – when Nixon made his infamous remarks to Kissinger about the ‘sanctimonious Indians’ who had pissed on us (the US) on the Vietnam War’. George Bush Sr. was also the US Vice President during the 8 years of Reagan Presidency.

The bend in the flow

The bend in the flow

During these 37 years – between the Nixon Chop (1971) and the Bush Whack (2008), the world has changed significantly.

The Nixon Chop

On August 15th, 1971, President Nixon after a two day huddle with 15 advisers at Camp David, delivered the Nixon Chop to the world. The Nixon chop (my name for this event), one month after his China breakthrough, cut the convertibility peg of US$35 to gold as US gold reserves were severely depleted.

The French had been regularly redeeming gold for their dollar earnings – and for this ‘perfidy’ the US had not forgiven France. This was much like the pre-WW2 French methodology of devaluation, new peg, old debt for new gold routine which got the US hackles up. Many decades have passed since these redemption by France, and the new French President, Sarkozy believes it is now possible to renew US-French relations again.

On the opposite side of the world, a beleaguered Indian Prime Minister was celebrating 24 years of Independence with a “ship-to-mouth” economy, dependent on PL-480 grain. Private gold reserves in the Indian economy after nearly 25 years of post-colonial rule, were steadily rising. Over the next 10 years, the western world (and most of the rest) blamed OPEC for post-1971 inflation, gold scaled US$800 an ounce; the Hunt Brothers launched their bid to corner the silver market; stagflation made an entry and Soviet power grew. Nixon Chop , itself the result of many years of gold reserves erosion, was one in many steps that brought the US$ to its knees.

Can the dollar be fixed?
Can the dollar be fixed?

On August 15th, 1971, the world got the Nixon Chop – where even Governments could not redeem dollar holdings. The dollar was put on float. In little time, dollar value depreciated from US$35 per ounce of gold to US$800 in 1980. Over the next 20 years, through various clandestine methods (check out the Edmond Safra and the Yamashita stories links), gold prices were managed and brought down to US$225 per ounce – but still 80% reduction in value of dollar value. Foreign reserves of poor countries got eroded. It was a gigantic fraud on the world – especially the poor, developing countries. And the fraud continues.

Every Few Years

Every 10-25 years, the world seems to go from one financial crisis to another. Trucks full of economic analysis follow each crisis – and everyone agrees after each meltdown, that there will not be another catastrophe. What the poor (and not so poor) economists don’t see is that the Anglo Saxon bloc with 80% of the world’s gold production in a choke-hold does what it wants.

On December 31st, 1974, nearly forty years after Roosevelt nationalized private American gold stocks, Americans were allowed to invest in gold again. Again Indian liberalization (1991) of gold imports happened a good 17 years after the US laws (1974) were liberalized. I wonder, how that was tied.

And that is what has happened for the last 60 years. Of course, all good (for the Anglo-Saxon Bloc) things come to an end. And so has Bretton Woods – I & II.

The Gold Standard Fraud – New “Old’ Gold Standard Born Again

Posted in Current Affairs, European History, Gold Reserves, History, India, Pax Americana by Anuraag Sanghi on October 4, 2008

Instead of gold standard disperse gold holdings among citizens. This will dilute the ability of nations to wage war!.

Good OLDEN Days

Good ‘OLDEN’ Days

Good Ole’ Gold Standard

In the last few decades between the Nixon Chop and the Bush Whack, the Western academic world, has floated another ‘hot air’ balloon. It is the revival of the ‘pure,’ Gold Standard. The story goes that in the ‘olden’ days of 19th century, in the golden age of Western civilization, there once reigned the Gold Standard.

As Senator Ron Paul says,

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971.Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo gold standard under Bretton Woods.It certainly was less stable than the gold standard of the late 19th century.

The Oil-Dollar Tango

The Oil-Dollar Tango

The simplistic logic of this theory is that the world should ‘go back’ to the Gold Standard – or as some put it, improve the ‘corrupted Gold Standard’ of the 19th century, and then everything will be fine. All currencies of the World, should be indexed to Gold – and then everything should be fine.

Currency can be redeemed against gold – and gold reserves equivalent to currency should be kept as reserves. This will kill inflation, stop war, make politicians honest, make tax payers honest, citizens hard-working and business efficient.

In short a magic bullet.

The last time, we saw this, it was called the Bretton Woods. The US and the Anglo-Saxon Bloc came together and said we will administer the new world currency system. The world agreed – once again. And we know what happened.

A Bad Idea – Whose End Has Come Too Late

Gold is the root of war. That is gold in the hands of kings, generals and rulers.

Alexander

Alexander’s campaign started with the gold reserves that his father had built from the mining operations at Mount Pangeus. The Macedonians were the first in the Hellenistic world to keep standing army – a luxury and a big expense, in Greece, at that time. (His first sexual experience was with a slave girl from these mines, Leptine from the slave camps of Mount Pangaion also written as Mount Pangaeus).

In 357 BC, Alexander’s father conquered Amphipolis in Thrace, an Athenian colony – and that gave him possession of the Mount Pangaeus gold mines. Gold from theses mines financed Phillip’s wars. (356 BC – captured Potidea in Chalcidice, Pydna on the Thermaic Gulf; 355 BC Crenides, a Thracian town (later re-named Philippi). 354 BC – Methone, advanced into Thessaly. 348 BC – Completed the annexation of Chalcidice, including Olynthus). His politics and financial muscle got him (346 BC) a seat in the Delphic council, a prestigious position in Greece.

Alexander set off on his campaign with this hoard of gold – and King Phillip’s standing army. The Persian conquest further added to his gold hoard. And India took away some of that loot. A bit of that gold loot was spent by a nervous Alexander for buying peace with Indian rulers at the borders of his empire.

Roman Empire

The Roman empire was similarly funded by gold mining and loot. Julius Caesar’s European conquests were funded by Gallic loot. The Punic Wars with Carthage were fought over Spanish Gold. Roman conquest and love affair with Egypt was motivated by grain and Nubian gold. One of the first actions that Romans took in Wales, Britain was to build an gold ore refining system. Gold mined in Britain went to Roman coffers.

Charlemagne of France – The First Christian Emperor

The movement towards gold standard will ensure that the US government will again become a huge gold owner - giving it enormous financial muscle. Last time, they had much muscle, we had WWII.  |  Cartoon by Bill Sanders. Publication date - NA.

The movement towards gold standard will ensure that the US government will again become a huge gold owner – giving it enormous financial muscle. Last time, they had much muscle, we had WWII. | Cartoon by Bill Sanders. Publication date – NA.

Carolus Magnus, Karel de Grote, Karl der Grosse, Carlomagno, Charles the Great – or more commonly known as Charlemagne (ruled between 768-814) waged war for 30 years, spread over more than 50 battles. Charlemagne’s conquests were funded by the Saxony mines, the Haartz mountains, etc. His victory over Avars, (modern Hungary) gave him treasures which needed 15 carts, pulled by grey steppe oxen for transport.

America And The Great Depression

Roosevelt gave a New Deal to the Americans. He took away all their gold. WWII followed soon thereafter.

The British loot from Canada, Australia, South Africa – and India, gave the world, numerous wars and brought humanity “under the heel by means that will not bear scrutiny.” It is these very same Gold reserves which gave birth to the Bretton Woods – and we know what happened after that!

Gajalakshmi at the Varaha caves

Gajalakshmi at the Varaha caves

What Should We Do With Gold

Just sell it to people. From all the countries of the world.

The world financial organization should limit control of global gold output by any mining organization to 10% or a single mine – which ever is lower. Gold holding should be widely dispersed, as widely as possible, amongst individuals – like the Indian gold possession model. No national government, in the new financial architecture should not be allowed to have more than 250 tons of gold – to progressively reduce to 50 tons.

What this will do is disperse gold holdings among the citizens of the world – and dilute the ability of nations to wage war! National Governments (like the US), have used gold looted from their own citizens (and others) to deprive other Peoples of the world of gold – and wage war.

Lakshmi – And Her Two Vahaans

Lakshmi the Indian Goddess of wealth rides on two animals. The airawata – a white elephant, is one. She blesses the deserving, by the day, riding on the airawata. The deserving and the whole world knows that the deserving have been blessed – by Lakshmi, when she comes riding on the airawata.

Gajalakshmi at Bantei Srei Temple - Cambodia

Gajalakshmi at Bantei Srei Temple – Cambodia

But the other way, in which Lakshmi dispenses her favors, is by night – when she comes flying on a owl. No one, including the recipients of her bounty, comes to know when she arrives – or more importantly, when she flies away. Spain and Britain are two excellent examples, when Lakshmi came at night and flew away. The Spaniards and the English are still wondering, what happened.

Gajalakshmi

Gajalakshmi

The new financial blue print must ensure that Lakshmi comes riding on the airawata – and we have a sustainable currency system!


%d bloggers like this: