It is well enough that the people of the nation do
not understand our banking and monetary system, for if they did, I
believe there would be a revolution before tomorrow morning.
– Attributed to Henry Ford
In March 2014, the Bank of England let the cat out of the bag: money is just an IOU, and the banks are rolling in it. So wrote David Graeber in The Guardian the same month, referring to a BOE paper called “Money Creation in the Modern Economy.”
The paper stated outright that most common assumptions of how banking
works are simply wrong. The result, said Graeber, was to throw the
entire theoretical basis for austerity out of the window.
The revelation may have done more than that. The entire basis for
maintaining our private extractive banking monopoly may have been thrown
out the window. And that could help explain the desperate rush to “fast
track” not only the Trans-Pacific Partnership (TPP) and the
Trans-Atlantic Trade and Investment Partnership (TTIP), but the Trade in
Services Agreement (TiSA). TiSA would nip attempts to implement public
banking and other monetary reforms in the bud.
The Banking Game Exposed
The BOE report confirmed what money reformers have been saying for
decades: that banks do not act simply as intermediaries, taking in the
deposits of “savers” and lending them to borrowers, keeping the spread
in interest rates. Rather, banks actually create deposits when they make loans. The BOE report said that private banks now create 97 percent of the British money supply. The US money supply is created in the same way.
Graeber underscored the dramatic implications:
. . . [M]oney is really just an IOU. The role of the
central bank is to preside over a legal order that effectively grants
banks the exclusive right to create IOUs of a certain kind, ones that
the government will recognise as legal tender by its willingness to
accept them in payment of taxes. There’s really no limit on how much
banks could create, provided they can find someone willing to borrow it.
Politically, said Graeber, revealing these facts is taking an enormous risk:
Just consider what might happen if mortgage holders
realised the money the bank lent them is not, really, the life savings
of some thrifty pensioner, but something the bank just whisked into
existence through its possession of a magic wand which we, the public,
handed over to it.
If money is just an IOU, why are we delivering the exclusive power to
create it to an unelected, unaccountable, non-transparent private
banking monopoly? Why are we buying into the notion that the government
is broke – that it must sell off public assets and slash public services
in order to pay off its debts? The government could pay its debts in
the same way private banks pay them, simply with accounting entries on
its books. What will happen when a critical mass of the populace
realizes that we’ve been vassals of a parasitic banking system based on a
fraud – that we the people could be creating money as credit ourselves,
through publicly-owned banks that returned the profits to the people?
Henry Ford predicted that a monetary revolution would follow. There
might even be a move to nationalize the whole banking system and turn it
into a public utility.
It is not hard to predict that the international bankers and related
big-money interests, anticipating this move, would counter with
legislation that locked the current system in place, so that there was
no way to return money and banking to the service of the people – even
if the current private model ended in disaster, as many pundits also
And that is precisely the effect of the Trade in Services Agreement
(TiSA), which was slipped into the “fast track” legislation now before
Congress. It is also the effect of the bail-in policies currently being
railroaded into law in the Eurozone, and of the suspicious “war on cash”
seen globally; but those developments will be the subject of another
On June 3, 2015, WikiLeaks released 17 key documents
related to TiSA, which is considered perhaps the most important of the
three deals being negotiated for “fast track” trade authority. The
documents were supposed to remain classified for five years after being
signed, displaying a level of secrecy that outstrips even the TPP’s
TiSA involves 51 countries, including every advanced economy except
the BRICS (Brazil, Russia, India, China, and South Africa). The deal
would liberalize global trade in services covering close to 80% of the
US economy, including financial services, healthcare, education,
engineering, telecommunications, and many more. It would restrict how
governments can manage their public laws, and it could dismantle and
privatize state-owned enterprises, turning those services over to the
Recall the secret plan
devised by Wall Street and U.S. Treasury officials in the 1990s to open
banking to the lucrative derivatives business. To pull this off
required the relaxation of banking regulations not just in the US but
globally, so that money would not flee to nations with safer banking
laws. The vehicle used was the Financial Services Agreement concluded
under the auspices of the World Trade Organization’s General Agreement
on Trade in Services (GATS). The plan worked, and most countries were
roped into this “liberalization” of their banking rules. The upshot was
that the 2008 credit crisis took down not just the US economy but
TiSA picks up where the Financial Services Agreement left off,
opening yet more doors for private banks and other commercial service
industries, and slamming doors on governments that might consider
opening their private banking sectors to public ownership.
Blocking the Trend Toward “Remunicipalization”
In a report from Public Services International called “TISA versus Public Services: The Trade in Services Agreement and the Corporate Agenda,”
Scott Sinclair and Hadrian Mertins-Kirkwood note that the already
formidable challenges to safeguarding public services under GATS will be
greatly exasperated by TiSA, which blocks the emerging trend to return
privatized services to the public sector. Communities worldwide are
reevaluating the privatization approach and “re-municipalizing” these
services, following negative experiences with profit-driven models.
These reversals typically occur at the municipal level, but they can
also occur at the national level.
One cited example is water remunicipalization in Argentina, Canada,
France, Tanzania and Malaysia, where an increasing frustration with
broken promises, service cutoffs to the poor, and a lack of integrated
planning by private water companies led to a public takeover of the
Another example is the remunicipalization of electrical services in
Germany. Hundreds of German municipalities have remunicipalized private
electricity providers or have created new public energy utilities,
following dissatisfaction with private providers’ inflated prices and
poor record in shifting to renewable energy. Remunicipalization has
brought electricity prices down. Other sectors involved in
remunicipalization projects include public transit, waste management,
Sinclair and Mertins-Kirkwood observe:
The TISA would limit and may even prohibit
remunicipalization because it would prevent governments from creating or
reestablishing public monopolies or similarly “uncompetitive” forms of
service delivery. . . .
Like GATS Article XVI, the TISA would prohibit public monopolies and
exclusive service suppliers in fully committed sectors, even on a
regional or local level. Of particular concern for remunicipalization
projects are the proposed “standstill” and “ratchet” provisions in TISA.
The standstill clause would lock in current levels of services
liberalization in each country, effectively banning any moves from a
market-based to a state-based provision of public services. This clause .
. . would prohibit the creation of public monopolies in sectors that
are currently open to private sector competition.
Similarly, the ratchet clause would automatically lock in any future
actions taken to liberalize services in a given country. . . . [I]f a
government did decide to privatize a public service, that government
would be unable to return to a public model at a later date.
That means we can forget about turning banking and credit services
into public utilities. TiSA is a one-way street. Industries once
privatized remain privatized.
The disturbing revelations concerning TiSA are yet another reason to try to block these secretive trade agreements. For more information and to get involved, visit:
Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 300+ blog articles are at EllenBrown.com.
This article first appeared at The Web of Debt Blog and is reprinted here with kind permission from the author
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This post was written by Ellen Brown