Manipulation by money

Najma Sadeque

So much money! Almost all of it created out of nothing for the last century-and-a-half, and succeeding in creating an imperialist world and an impoverished counterpart. It is amazing how entire governments, academics, bankers, economists and planners have swallowed this as right and the only way possible for progress, without questions asked.
Every single day, millions of transactions are being conducted all over the world worth $1.5 trillion. The strange part is that in the combined world, there does not exist at any point of time even one-tenth of that value in goods and services. That is to say, if you got hold of all that money in one place, and then bought all the goods and services in the world at once at whatever cost all the price tags called for, you would still be left with nine-tenths of the money!
So why create so much money when in reality at least nine-tenths of that money is useless, representing only the non-existent? As they say, there's method in the madness. Yet it is not so much madness but well-thought-out means to monopolise, simply by some having access to far more money than others to the bulk of it - so as to be able to outbid any competition.
Another reason why the so-called developing countries and LDCs are so poor is because our commodities have been grossly undervalued at the outset, from the time of colonisation onwards. The Northern industrialised countries have not been giving value for money for the last several hundred years, and have actually been cheating the South all the way, and continue to do so on even vaster scales than before.
Our 'experts' always explain values in relation to market supply and demand, but that's the only way Northern experts have conditioned them to think. And that is after the undervaluing has already been done. But global commercial values began to be set long ago by the colonisers, essentially to get away with paying a pittance, and that has been the rule of thumb ever since.
What does one need money for? The answer is obvious to all: to facilitate exchange of a large range of goods on the spot at any time, no matter how big or small, bulky or heavy, fragile or complex, because barter has its limitations. One may not want what is available in exchange in kind, or one may seek to preserve its equivalent value for future use. Money is needed for hundreds of millions of transactions on a daily basis all the time around the world, whether it is for food from the local marketplace or an import order from abroad.
In the olden days when the banking system was not so sophisticated or reliable, the money intermediary had to have intrinsic value which would be acceptable for buying the same or other goods. They were therefore made at first wholly of gold or silver. But the more people there were and the more transactions were made, the more money was needed - because money was not just a value for the moment, but could be stored without losing any of its value, until a later point in time when the owner wanted to buy something. Since the amount of gold and silver was limited, they stretched the money by diluting it with base metal to make more coins.
But even then it wasn't enough to go round for millions of people and transactions. There was usually enough for the middle class but not enough for the masses. For example, you could have peasants with fertile lands growing bumper crops and their families always well-fed and healthy. But they would not necessarily be able to progress beyond that condition to buy other goods to make life more comfortable or decorative. Not unless there is enough money in circulation, so that they can be paid in cash for the sale of their surplus, and with which money to make further purchases.
But it's even worse for the landless. They do not even have the food security that smallholders do, and depend entirely on selling their labour or skills or expertise to earn enough money for all their needs including food and shelter. If there's not enough money in circulation so that others can buy their services, they starve. This is exactly what happened in Britain several times when they relied only on gold and silver and had not worked out a smoother monetary and banking system.
It's important who controls the money system because there has to be enough to facilitate all transactions smoothly. But there shouldn't be such an excess that it has the effect of concentrating wealth in a few hands. And if it's far too much than can be backed by something tangible, it could become worthless altogether.
Today's paper or plastic or electronic money has almost no intrinsic value, especially the dollar, which, outside American territory is not redeemable in gold. Which makes one wonder why countries and country leaders like Pakistan's, clamour after dollars. China and Japan and Pakistan hold a lot of dollars, but while the US can thumb its nose at us when we want something they don't want us to have, it cannot trifle with China or Japan and me other powerful countries.
So it's a matter of having the backing of military and political power as well. Pakistan can't buy what it pleases no matter how many dollars it has, but China and Japan have lots of choices. Pakistan also has to pay relatively higher prices for many things.
So money is just an illusion of wealth which can be extended or withdrawn in an instant by those who control its creation. What money gives you is purchasing power as long as the banks or the government says you can have it.
The real reason why Saddam had to go although the US actively nurtured the monster for years was because he was no longer putting all his eggs in one basket and had started asking for Euros for oil instead of exclusively dollars. It meant US could lose control over the oil.
When the British colonials wanted to weaken the Indian economy and make the local rulers and people helpless, they simply declared one day that they would no longer make payments for commodities or receive taxes in anything but British-issued money. Overnight, India's monetary system was wiped out. When the British first came to Undivided India, the rupee was equal to 4 shillings. By 1887, it was arbitrarily reduced to 1 shilling and 4 pence, a 33% devaluation.
In post-partition India, devaluations brought about by the mischief of IMF conditionalities took the Indian rupee down to 2.2 pence. From the time of the colonials' arrival, till today, it has been devalued to one-thirtieth of its original value. It's even worse for Pakistan. In other words, Britain, and similarly, the entire North, have become 30 times richer or more, and have obtained 30 times the real value of goods they would have otherwise got if the former colonies received fair and full prices. Currency speculators make matters worse.
One would think that such a vital function as creating a nation's money supply to keep the economy going would be the responsibility of government, especially in an advanced, industrialised country. But no, the Bank of England and the Federal Reserve in the UK and USA respectively, are both private banks. Similarly in Europe.
What continues to shock financial historians is that these banks were handed the privilege of creating money without the country or the government getting any benefit in return. The 1844 Bank Charter Act actually stated: "The Bank of England …. may issue 14 million pounds (sterling) of government debt." In other words, the Bank not only got a free contract to create and print currency notes, but instead of paying the government for the privilege, the government for no comprehensible reason considered itself in debt for 14 million pounds!
But there was one person who got wise to the bankers. Abraham Lincoln. By then the same banking system was working in America as well. A Civil War was brewing against the cotton-growing, slave-system South. The government was short of money and urgently needed some for war preparations. Lincoln asked the banks for loans. Seeing that Lincoln had nowhere else to turn to, they demanded 20%-30% interest. Lincoln was outraged and more or less told them to get lost. He then ordered the making of government-issue money called 'greenbacks' that's where the word comes from.
He created $300,000 but none of it as debt. He spent it into the economy as part of war expenses, and that spurred the economy. It was secured against the credit of the USA, not the private bankers holding the government in debt. That really frightened the bankers. They realised they could lose the control over the money business of the entire country. In fact, they learnt that Lincoln had exactly such plans. That was the real reason, other historians maintain, that he was assassinated. It was not the only instance in history that murder or war broke out when government was about to take some decisive steps with regard to the country's interests. And it was usually accompanied by an assassination that was supposedly the work of a mad actor.
To have weaker countries' currencies valued blindly against the dollar is bad enough. But to continue to do so when the US is the most indebted country in the world, what with being over a trillion dollars in the red, is to expose the self-serving readiness of governments as well - submitting to an empty American hegemony from which nothing but domination, debt and death is to be gained.
The World Trade Organisation and the IFIS keep spouting rhetoric about 'level playing fields' and 'free trade'. If the criteria are supposed to be the same and equal for everybody, then wages should be the same all over the world for the same qualifications or ability. Otherwise it is anything but a 'level playing field'. Whatever an item costs to manufacture in one country should not be very different in another minus the costs of energy and transportation. But far from the IFIs such as the World Bank and ADB helping to create level ground through genuine development, their thwarting conditionalities and restraints turn out to be designed to maintain debt and increased subservience. And it is the underpaid difference in wages that makes trade not free in the sense of equal opportunity to all, but a free-for-all for predatory countries and trans-National companies.
Some 'experts' seek a universal currency for the convenience of trade, both domestic and foreign trade. But as long as wages and basic social and economic rights are not just as universal and the same, that would only help the already rich and the powerful to control the money flow and tighten their grip over finance even tighter, while driving the miserable masses into deeper penury.
What struggling countries need to survive against the machinations of foreign loans with strings attached, is to have a domestic currency that is totally delinked from those that are accepted as universal currencies, and that are simply not convertible. Then only can locals get honest value for their money and their sweat at the local and national level.
Without that starting point, they will not be able to build up to the requisite strength for the global level and always or mostly get the bad end of a bargain. But it won't come from individuals at the top who consider themselves to be 'global' rather than 'national' citizens which is a clever way of sounding democratic while being predatory; and who are impressed and convinced by Western material wealth without remembering at whose cost it was obtained.