I want to understand international banking

Miscellaneous General
1

I’ve gotten the basic idea of central banking as a national-government enforced banking cartel. Now, I’m trying to understand the IMF, World Bank, Bank for International Settlements and other international banking and financial institutions.

Unlike national central banks, the IMF, BIS, World Bank and so on do not have a single national government to enforce the cartel. The US can act as a “big stick” to hold the cartel together for the time being but this is manifestly coming to an end with the financial implosion of our national government’s finances.

So, how does international banking really work? Where is the gold and silver (or oil)? I know the BIS handles gold, but what exactly do they do? The member banks of the Federal Reserve system do not actually exchange gold with one another because there is no need, the cartel is “airtight”. But there is no airtightness at the international level, so real commodities must ultimately be exchanged to settle accounts, there is no other way. It is paramount to keep the role of commodity monies in settling accounts between central banks absolutely secret if you want to sell the notion to the world that gold is a “barbarous relic”.

The BIS has been described as the “central bank of central banks” but how?!? The Federal Reserve has the power of the Federal government at its disposal to enforce the rules of the cartel. Whose power backs the rules that the BIS makes?

How about the IMF? I guess it uses the “gold” held by the US Treasury as the backing for its “Special Drawing Rights” but since the US gold stock is completely unaudited, holding an SDR is an act of blind - and stupid - faith. Obviously, this system cannot possibly work as a “central bank of central banks.”

I understand that both the IMF and the BIS originated for very different purposes than that for which they are currently being used. But what I cannot find anywhere is a critical discussion of exactly what purpose these institutions fulfill and how. I’m looking for something along the lines of Rothbard’s The Case Against the Fed but on an international level. Is there such an article or book where the author really understands how the system works and identifies the true purpose the system serves rather than just spouting factoids and regurgitating the impenetrable bureacratese that these organizations use to describe their own activities?

I need an IMF/World Bank/BIS bureaucratese-decoder-ring!!

P.S. I’ve read Ferdinand Lips’ Gold Wars and it is fascinating but a little out of date. In it, Lips largely dismisses the IMF and BIS as antiquated relics that are irrelevant and largely impotent. But is this really true. Are they really so powerless? Is there some secret means by which they may be enforcing a de facto cartel?

Clayton -

2

Well, the IMF was founded by the same guy who brought you the Morgenthau plan and leaked documents to Moscow. So, it was probably intended for nefarious purposes and eventually became obsolete. But, like all state agencies, it was never shut down even after losing all credibility.

3

Well, the IMF is not a private bank. It is collectively owned by governments around the world. See here. I can’t find out how they get money to loan out. Presumabely, the member countries print some up for them.

4

My understanding of the IMF is that it came into existence as part of Bretton Woods and its first use was to implement the Marshall Plan. The “Special Drawing Rights” or SDR, which are the “currency” unit of the IMF, were originally claims on US gold. From Wiki:

When Special Drawing Rights were created in 1969, when the Bretton Woods system was still operational, one SDR was defined as the value of 0.888671 grams of gold, the same as the U.S. dollar. The SDR retained this value, however, even as the U.S. dollar devalued in 1971, 1972, and 1973, by the last of which the dollar was worth SDR 0.828948. Effective July 1, 1974, after the breakdown of the fixed exchange rate system, SDRs were defined in terms of a basket of major currencies used in international trade and finance.

Which basically says that the SDR went to pot a few years after the dollar did.

I guess my question boils down to this one issue: How do sovereign nations settle the balance of payments between their central banks??? The “hard” paper currencies - like Dollars, Yen, Euros, SDRs, etc. - can be used to settle small sums but you can’t use these for very large sums. For that, only real commodities can be used. Somewhere, the central banks are swapping real, physical gold - or other commodities - back and forth. Given the constant fluctuation of exchange rates, it would be impossible to execute any sort of long term credit or debt relationship between central banks without a commodity yardstick.

Clayton -

5

“I Want to understand international banking- So, how does international banking really work?”

Easy enough- just “follow the money”.

Regards, onebornfree.