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to Latin American countries that had failed to adopt the bankers™
policies. Gibson writes:
Kennedy™s support for economic development and Third World
nationalism and his tolerance for government economic planning,
even when it involved expropriation of property owned by
interests in the U.S., all led to conflicts between Kennedy and
elites within both the U.S. and foreign nations.1
Web of Debt

There is also evidence that Kennedy crossed the bankers by seeking
to revive a silver-backed currency that would be independent of the
banks and their privately-owned Federal Reserve. The matter remains
in doubt, since his Presidency came to an untimely end before he could
play his hand;2 but he did authorize the Secretary of the Treasury to
issue U.S. Treasury silver certificates, and he was the last President to
issue freely-circulating United States Notes (Greenbacks). When Vice
President Lyndon Johnson stepped into the Presidential shoes, his first
official acts included replacing government-issued United States Notes
with Federal Reserve Notes, and declaring that Federal Reserve Notes
could no longer be redeemed in silver. New Federal Reserve Notes
were released that omitted the former promise to pay in “lawful
money.” In 1968, Johnson issued a proclamation that even Federal
Reserve Silver Certificates could not be redeemed in silver. The one
dollar bill, which until then had been a silver certificate, was made a
Federal Reserve note, not redeemable in any form of hard currency.3
United States Notes in $100 denominations were printed in 1966 to
satisfy the 1878 Greenback Law requiring their issuance, but most
were kept in a separate room at the Treasury and were not circulated.
In the 1990s, the Greenback Law was revoked altogether, eliminating
even that token issuance.

Barbarians Inside the Gates

Although the puppeteers behind Kennedy™s assassination have
never been officially exposed, some investigators have concluded that
he was another victim of the invisible hand of the international
corporate/banking/military cartel.4 President Eisenhower warned
in his 1961 Farewell Address of the encroaching powers of the military-
industrial complex. To that mix Gibson would add the oil cartel and
the Morgan-Rockefeller banking sector, which were closely aligned.
Kennedy took a bold stand against them all.
How he stood up to the CIA and the military was revealed by
James Bamford in a book called Body of Secrets, which was featured
by ABC News in November 2001, two months after the World Trade
Center disaster. The book discussed Kennedy™s threat to abolish the
CIA™s right to conduct covert operations, after he was presented with
secret military plans code-named “Operation Northwoods” in 1962.
Drafted by America™s top military leaders, these bizarre plans included
proposals to kill innocent people and commit acts of terrorism in U.S.

Chapter 21 - Goodbye Yellow Brick Road

cities, in order to create public support for a war against Cuba. Actions
contemplated included hijacking planes, assassinating Cuban ©migr©s,
sinking boats of Cuban refugees on the high seas, blowing up a U.S.
ship, orchestrating violent terrorism in U.S. cities, and causing U.S.
military casualties, all for the purpose of tricking the American public
and the international community into supporting a war to oust Cuba™s
then-new Communist leader Fidel Castro. The proposal stated, “We
could blow up a U.S. ship in Guantanamo Bay and blame Cuba,” and
that “casualty lists in U.S. newspapers would cause a helpful wave of
national indignation.”5
Needless to say, Kennedy was shocked and flatly vetoed the plans.
The head of the Joint Chiefs of Staff was promptly transferred to an-
other job. The country™s youngest President was assassinated the fol-
lowing year. Whether or not Operation Northwoods played a role, it
was further evidence of an “invisible government” acting behind the
scenes. His disturbing murder was a wake-up call for a whole gen-
eration of activists. Things in the Emerald City were not as green as
they seemed. The Witch and her minions had gotten inside the gates.

Bretton Woods: The Rise and Fall
of an International Gold Standard

Lyndon Johnson was followed in the White House by Richard
Nixon, the candidate Kennedy defeated in 1960. In 1971, President
Nixon took the dollar off the gold standard internationally, leaving
currencies to “float” in the market so that they had to compete with
each other as if they were commodities. Currency markets were turned
into giant casinos that could be manipulated by powerful hedge funds,
multinational banks and other currency speculators. William Engdahl,
author of A Century of War, writes:
In this new phase, control over monetary policy was, in effect,
privatized, with large international banks such as Citibank,
Chase Manhattan or Barclays Bank assuming the role that central
banks had in a gold system, but entirely without gold. “Market
forces” now could determine the dollar. And they did with a
It was not the first time floating exchange rates had been tried.
An earlier experiment had ended in disaster, when the British pound
and the U.S. dollar had both been taken off the gold standard in the
1930s. The result was a series of competitive devaluations that only
Web of Debt

served to make the global depression worse. The Bretton Woods
Accords were entered into at the end of World War II to correct this
problem. Foreign exchange markets were stabilized with an
international gold standard, in which each country fixed its currency™s
global price against the price of gold. Currencies were allowed to
fluctuate from this “peg” only within a very narrow band of plus or
minus one percent. The International Monetary Fund (IMF) was set
up to establish exchange rates, and the International Bank for
Reconstruction and Development (the World Bank) was founded to
provide credit to war-ravaged and Third World countries.7
The principal architects of the Bretton Woods Accords were British
economist John Maynard Keynes and Assistant U.S. Treasury Secretary
Harry Dexter White. Keynes envisioned an international central bank
that had the power to create its own reserves by issuing its own
currency, which he called the “bancor.” But the United States had
just become the world™s only financial superpower and was not ready
for that step in 1944. The IMF system was formulated mainly by White,
and it reflected the power of the American dollar. The gold standard
had failed earlier because Great Britain and the United States, the
global bankers, had run out of gold. Under the White Plan, gold would
be backed by U.S. dollars, which were considered “as good as gold”
because the United States had agreed to maintain their convertibility
into gold at $35 per ounce. As long as people had faith in the dollar,
there was little fear of running out of gold, because gold would not
actually be used. Hans Schicht notes that the Bretton Woods Accords
were convened by the “master spider” David Rockefeller.8 They played
right into the hands of the global bankers, who needed the ostensible
backing of gold to justify a massive expansion of U.S. dollar debt around
the world.
The Bretton Woods gold standard worked for a while, but it was
mainly because few countries actually converted their dollars into gold.
Trade balances were usually cleared in U.S. dollars, due to their unique
strength after World War II. Things fell apart, however, when foreign
investors began to doubt the solvency of the United States. By 1965,
the Vietnam War had driven the country heavily into debt. French
President Charles DeGaulle, seeing that the United States was spending
far more than it had in gold reserves, cashed in 300 million of France™s
U.S. dollars for the gold supposedly backing them. The result was to
seriously deplete U.S. gold reserves. In 1969, the IMF attempted to
supplement this shortage by creating “Special Drawing Rights” --
Greenback-style credits drawn on the IMF. But it was only a stopgap
measure. In 1971, the British followed the French and tried to cash in
Chapter 21 - Goodbye Yellow Brick Road

their gold-backed U.S. dollars for gold, after Great Britain incurred
the largest monthly trade deficit in its history and was turned down
by the IMF for a $300 billion loan. The sum sought was fully one-third
the gold reserves of the United States. The problem might have been
alleviated in the short term by raising the price of gold, but that was
not the agenda that prevailed. The gold price was kept at $35 per
ounce, forcing President Nixon to renege on the gold deal and close
the “gold window” permanently. To his credit, Nixon did not take
this step until he was forced into it, although it had been urged by
economist Milton Friedman in 1968.9
The result of taking the dollar off the gold standard was to finally
take the brakes off the printing presses. Fiat dollars could now be
generated and circulated to whatever extent the world would take
them. The Witches of Wall Street proceeded to build a worldwide
financial empire based on a “fractional reserve” banking system that
used bank-created paper dollars in place of the time-honored gold.
Dollars became the reserve currency for a global net of debt to an
international banking cartel. It all worked out so well for the bankers
that skeptical commentators suspected it had been planned that way.
Professor Antal Fekete wrote in an article in the May 2005 Asia Times
that the removal of the dollar from the gold standard was “the biggest
act of bad faith in history.” He charged:
It is disingenuous to say that in 1971 the US made the dollar
“freely floating.” What the US did was nothing less than
throwing away the yardstick measuring value. It is truly
unbelievable that in our scientific day and age when the material
and therapeutic well-being of billions of people depends on the
increasing accuracy of measurement in physics and chemistry,
dismal monetary science has been allowed to push the world
into the Dark Ages by abolishing the possibility of accurate
measurement of value. We no longer have a reliable yardstick
to measure value. There was no open debate of the wisdom, or
the lack of it, to run the economy without such a yardstick.10
Whether unpegging the dollar from gold was a deliberate act of
bad faith might be debated, but the fact remains that gold was
inadequate as a global yardstick for measuring value. The price of
gold fluctuated widely, and it was subject to manipulation by
speculators. Gold also failed as a global reserve currency, because
there was not enough gold available to do the job. If one country had
an outstanding balance of payments because it had not exported
enough goods to match its imports, that imbalance was corrected by
Web of Debt

transferring reserves of gold between countries; and to come up with
the gold, the debtor country would cash in its U.S. dollars for the
metal, draining U.S. gold reserves. It was inevitable that the U.S.
government (the global banker) would eventually run out of gold.
Some proposals for pegging currency exchange rates that would retain
the benefits of the gold standard without its shortcomings are explored
in Chapter 46.

The International Currency Casino

The gold standard was flawed, but the system of “floating”
exchange rates that replaced it was much worse, particularly for Third
World countries. Currencies were now valued merely by their relative
exchange rates in the “free” market. Foreign exchange markets became
giant casinos, in which the investors were just betting on the relative
positions of different currencies. Smaller countries were left at the
mercy of the major players “ whether other countries, multinational
corporations or multinational banks “ which could radically devalue
national currencies just by selling them short on the international
market in large quantities. These currency manipulations could be so
devastating that they could be used to strong-arm concessions from
target economies. That happened, for example, during the Asian Crisis
of 1997-98, when they were used to “encourage” Thailand, Malaysia,
Korea and Japan to come into conformance with World Trade
Organization rules and regulations.11 (More on this in Chapter 26.)
The foreign exchange market became so unstable that crises could
result just from rumors of economic news and changes in perception.
Commercial risks from sudden changes in the value of foreign curren-
cies are now considered greater even than political or market risks for
conducting foreign trade.12 Huge derivative markets have developed
to provide hedges to counter these risks. The hedgers typically place
bets both ways, in order to be covered whichever way the market
goes. But derivatives themselves can be very risky and expensive, and
they can further compound market instability.
The system of floating exchange rates was the same system that
had been tried briefly in the 1930s and had proven disastrous; but
there seemed no viable alternative after the dollar went off the gold
standard, so most countries agreed to it. Nations that resisted could
usually be coerced into accepting the system as a condition of debt
relief; and many nations needed debt relief, after the price of oil
suddenly quadrupled in 1974. That highly suspicious rise occurred

Chapter 21 - Goodbye Yellow Brick Road

soon after an oil deal was engineered by U.S. interests with the royal
family of Saudia Arabia, the largest oil producer in OPEC (the
Organization of the Petroleum Exporting Countries). The deal was
evidently brokered by U.S. Secretary of State Henry Kissinger. It
involved an agreement by OPEC to sell oil only for dollars in return
for a secret U.S. agreement to arm Saudi Arabia and keep the House
of Saud in power. According to John Perkins in his eye-opening book
Confessions of an Economic Hit Man, the arrangement basically
amounted to protection money, insuring that the House of Saud would
not go the way of Iran™s Prime Minister Mossadegh, who was
overthrown by a CIA-engineered coup in 1954.13
The U.S. dollar, which had formerly been backed by gold, was
now “backed” by oil. Every country had to acquire Federal Reserve
Notes to purchase this essential commodity. Oil-importing countries
around the world suddenly had to export goods to get the dollars to
pay their expensive new oil import bills, diverting their productive
capacity away from feeding and clothing their own people. Coun-
tries that had a “negative trade balance” because they failed to export
more goods than they imported were advised by the World Bank and
the IMF to unpeg their currencies from the dollar and let them “float”
in the currency market. The theory was that an “overvalued” cur-
rency would then become devalued naturally until it found its “true”
level. Devaluation would make exports cheaper and imports more
expensive, allowing the country to build up a positive trade balance
by selling more goods than it bought. That was the theory, but as
Michael Rowbotham observes, it has not worked well in practice:
There is the obvious, but frequently ignored point that, whilst
lowering the value of a currency may promote exports, it will
also raise the cost of imports. This of course is intended to deter
imports. But if the demand for imports is “inelastic,” reflecting
essential goods and services, contracts and preferences, then the
net cost of imports may not fall, and may actually rise. Also,
whilst the volume of exports may rise, appearing to promise
greater earnings, the financial return per unit of exports will fall. . .
Time and time again, nations devaluing their currencies have
seen volumes of exports and imports alter slightly, but with little
overall impact on the financial balance of trade.14
If the benefits of letting the currency float were minor, the
downsides were major: the currency was now subject to rampant


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