Setting
up a system of rules, institutions, and procedures to regulate the
international monetary system, the planners at Bretton Woods established the
International Bank for Reconstruction and Development (IBRD) (now one of five
institutions in the World Bank Group) and the International Monetary Fund
(IMF). These organizations became operational in 1945 after a sufficient number
of countries had ratified the agreement.
The chief
features of the Bretton Woods system were an obligation for each country to
adopt a monetary policy that maintained the exchange rate of its currency
within a fixed value—plus or minus one percent—in terms of gold and the ability
of the IMF to bridge temporary imbalances of payments. In the face of
increasing strain, the system collapsed in 1971, following the United States'
suspension of convertibility from dollars to gold. This created the unique
situation whereby the United States dollar became the "reserve
currency" for the nation-states which had signed the agreement.
I copied
the 2 paragraphs above from WIKI :)
You can
read the whole history if you are interested in Economics. Its extremely
interesting, I can tell u that.
In 1945,
the world was very different from what it is today. The economy of Europe was
destroyed because of the first world war, the great depression and the second
world war. Most Asian and African countries were still colonies fighting for
freedom. They had nothing....Nothing! No money, no rights and no power to
negotiate. The only country that emerged relatively unscathed was the USA.
Before
the agreement, the currencies of the world were valued or pegged against gold.
Each country had its own gold reserves, their currency was guaranteed by gold
and gold was the major unit of trade between countries in case they had a major
trade deficit.
As a
consequence of the bretton woods agreement all the governments of the world
transferred their gold reserves to the US. It still resides there today . About
70% of all gold ever mined in the world is in the US. Only the US dollar was
now backed by gold !!! And the world currencies pounds, francs, rupees
etc etc were now backed by US dollars, making the US dollar the reserve
currency of the world !!!! Later after this system failed in 1971, even the US
dollar was not backed by gold. Essentially it is backed by nothing. If the US
fails, so does the world.
If you
think this is not fraud enough....you haven't heard the worst of it !!
THE
IMF
The IMF
was to be the world organization that would assist, finance ( lend at an
interest ) to countries who had big trade deficits.
The big
question at the Bretton Woods conference with respect to the institution that
would emerge as the IMF was the issue of future access to international
liquidity and whether that source should be akin to a world central bank able
to create new reserves at will or a more limited borrowing mechanism.
What
emerged largely reflected U.S. preferences: a system of subscriptions and
quotas embedded in the IMF, which itself was to be no more than a fixed pool of
national currencies and gold subscribed by each country as opposed to a world
central bank capable of creating money. The Fund was charged with managing
various nations' trade deficits so that they would not produce currency
devaluations.
When
joining the IMF, members were assigned "quotas" reflecting their
relative economic power, and, as a sort of credit deposit, were obliged to pay
a "subscription" of an amount commensurate to the quota. The
subscription was to be paid 25% in gold or currency convertible into gold
(effectively the dollar, which was the only currency then still directly gold
convertible for central banks) and 75% in the member's own currency.
In the
event of a deficit in the current account, Fund members, when short of reserves,
would be able to borrow foreign currency in amounts determined by the size of
its quota. In other words, the higher the country's contribution was, the
higher the sum of money it could borrow from the IMF.The countries issued bonds
and they got cash.
Now if
the inequality of this system is not immediately apparent to you , you are not
intelligent enough to view this blog...please stop reading !!
Now lets
talk about the Quotas :) If you think quotas for SC/ST etc are wrong.
This is a completely different type of quota. It is like giving quotas to the
upper class which is even dumber.....
Lets talk
numbers :)
USA -
17%
UK -
5 %
France -
5 %
Japan -
6.13 %
Germany -
6 %
Italy -
3.25 %
China -
3.72 %
Saudi
Arabia - 3.21 %
Canada -
3 %
Russia - 2.74
%
Pot
Smoking Netherlands - 2.38 %
Belgium-
2.12 %
India -
1.91 %
Switzerland
- 1.6 %
Australia
- 1.5 %
Mexico-
1.45 %
Spain -
1.4 %
Brazil -
1.4 %
Argentina
- 1 %
Pakistan
- 0.5%
Keep in
mind that these quotas are the latest and have been arrived upon by successive
iterations every 5 -10 years. The Initial quotas of 1945, gave about 60% voting
rights to G8 at that time.
About 21
countries are indebted to the IMF since it was started. Those in debt include
Brazil, Argentina, Chile, Pakistan, South Africa and most of Africa.
I think
the men who put the Monetary system of the world in place probably did it with
the best of intentions, or maybe they were just plain evil. But the fact
remains that this is the system we live in. They could never have fathomed the
kind of world we live in today, the kind of technology that would exists. Think
about it. We produce enough food every year to feed the whole world for a year
and a half, yet people die of hunger.
I think I
have given you enough to think about and shed some light on the shady monetary
system of the world.
Will
continue this post later :)
I am
posting references so u can make intelligent comments ....
http://www.guardian.co.uk/money/2006/dec/06/business.internationalnews
http://en.wikipedia.org/wiki/International_Monetary_Fund
http://www.imf.org/external/np/sec/memdir/members.htm
http://en.wikipedia.org/wiki/Bretton_Woods_system