On a cold, wet and breezy afternoon, Mithu decided to visit us once again. He was probably looking for a warm place to dry his wings. He flew in through the open kitchen window and decided to help himself with some of his favourite foods. He knew exactly where to look. Afterward, he came to visit me in my library room. Mithu is an old friend, a beautiful Indian Ringneck Parakeet. A proficient speaker. Below is the transcript of the chat between myself and Mithu.
Mithu: The pistachios were tasty.
Me: Hmm, thank you for letting me know. I am glad you enjoyed them.
Mithu: I was just flying by and I thought I come and say hello to you.
Me: Oh, hello. Now leave please, I am busy today, so don’t disturb me.
Mithu: How rude? A friend comes to visit you and you ignore your friend!
Me: I am sorry. You are right. I guess I am too much absorbed in my reading. Let’s talk. Come sit next to me.
Mithu: What are you reading about?
Me: I was looking into the causes of poverty and development in third-world economies. I mean most developing countries are independent, rich in resources yet they are so impoverished. I cannot understand why.
Mithu: Aah, that is a simple one. In my view, there is only one main cause.
Me: What is that one main cause?
Mithu: That biggest cause, my friend, is colonialism.
Me: But colonialism is history. It ended in the twentieth century. Countries are independent nowadays and have their governments to make laws.
Mithu: Colonialism is not dead. At least not yet. The British Empire continues to rule from behind the curtain. The colonies are now controlled remotely using various methods.
Me: Oh. Really? Why were we never taught this in schools and colleges? Tell me, what are those methods of control?
Mithu: In my opinion, there are three main methods. Corrupt and greedy leadership ruling the colonies is one of them. Indirect control over the national institutes like central banks is another. The third is more interesting, the economic model of all nation-states.
Me: Please explain a bit more in detail.
Mithu: There is no need to repeat the mantra of the pervasiveness of corruption as it is self-evident. So, let me briefly tell you about the central banks.
Me: Good idea, I agree.
Mithu: One of the main functions of a central bank is monetary policy e.g., setting the official interest rate and controlling the money supply and issuance of currency notes and coins, etc. We are told that the central banks are there to maintain price stability and control inflation. However, Murray N. Rothbard in his famous book, The Case Against the Fed (1994), has argued that “the claim that the central banks are designed to fight inflation is sophistry, that price inflation is caused only by an increase in the money supply, and that since only banks increase the money supply, then banks, are the only source of inflation.”
Murray N. Rothbard, was an American economist, he ascertained that:
“Unlike the days of the gold standard, it is impossible for the Federal Reserve to go bankrupt; it holds the legal monopoly of counterfeiting (of creating money out of thin air) in the entire country…. Neat trick if you can get away with it!”
However, when it comes to colonialism, the evil of central banks manifests peculiarly in developing countries, especially in Africa. For example, the French colonial empire robs the Africans of their wealth in a very unique way. Firstly, the French decided to confiscate (steal) all the gold reserves from their colonies when they gave them independence. If you can call that independence. Still, 14 African countries (French Colonies) have a common currency and they all fall under, the so-called ‘Franc Zone’ that is divided into two entities, WAEMU and CEMAC:
- West African Economic and Monetary Union (WAEMU)
- This includes Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo. Their central bank is the BCEAO.
- Economic and Monetary Community of Central African States (CEMAC)
- This includes Cameroon, Central Africa, Congo, Gabon, Equatorial Guinea and Chad. Their central bank is the Bank of Central African States (BEAC).
France has control over all foreign exchange reserves of these above-mentioned countries. These countries are required to have 85% of their foreign exchange reserves at Banque De France in Paris. The “franc of the French Colonies of Africa” has benefitted the French immensely at the expense of its colonies. Even now these former French colonies are forced to pay annual colonial tax to the sum of 440 billion Euros. The tax is collected based on the idea that they owe France for the benefits of having a colonial rule.
Me: Wow. Astonishing.
Mithu: Yes, just imagine if 440 billion Euros were spent on education, healthcare and welfare programs in those 14 African countries. But, what is even more astonishing is that France has the first say on any new natural resource found in those 14 countries.
Me: This probably explains the reasons behind higher inflation in developing countries. It is very interesting how you explain that the colonial powers keep developing countries impoverished by continuing to indirectly control the financial aspect as well as the natural resource. But, what about the other central banks that are not under the French Empire, are those central banks truly independent?
Mithu: You have heard of Cecil Rhodes? Yes?
Me: No. Who is he? Is he a comedian?
Mithu: No, Cecil Rhodes (5 July 1853 – 26 March 1902) “was a British mining magnate, and politician in southern Africa who served as Prime Minister of the Cape Colony from 1890 to 1896. An ardent believer in British imperialism, Rhodes and his British South Africa Company founded the southern African territory of Rhodesia (now Zimbabwe and Zambia).”
Me: Oh. OK. But, how is his legacy affecting the wealth of developing countries in the 21st century?
Mithu: Cecil Rhodes had the mindset of a colonialist. Some historians consider him as a ruthless imperialist and white supremacist. Regardless, he was a visionary man. He wrote in his will in 1877 that he wanted to create a secret society that would bring the whole world under British rule.
The reason I say he was visionary is due to his desire to establish a secret society. As the cliché goes, “The devil is in the detail.” His idea was that the secret society at the highest level would be run by a very few people, probably three or four people that would have few dozen people working under them, these dozens would control hundreds more. The real power would be in the hands of those at the very top of the hierarchy. The secret was that all those involved would (falsely) believe that everyone is equal despite the hierarchy. Even those at the bottom of the hierarchy would be convinced that truth and information are equally shared and distributed within the secret society.
His vision was put to practice long after his death when the nation-states were carved out of the British Empire in the twentieth century and central banks were created for each nation-state. And thereafter the Bank of International Settlements (BIS) started to dictate rules over them.
Me: But, BIS is not run by the British and it is located in Basel, Switzerland.
Mithu: I guess, like most people you are confused about the British Empire. The real center of power of the British Empire is not in the hands of the British government but rather the City of London. The British government is the front while the City of London pulls the strings from behind the curtains.
Me: Really? I never knew that.
Mithu: The point I am trying to make is that the same elites who once owned East India Company, also indirectly control the British Empire, and are influential players in all major global institutes like BIS.
Me: Yes, I see. It makes sense now. This is why most nation-states’ constitutions have not changed much from the days of the British. So, when you talk about the empire and imperialists you are referring to the elites. Now tell me, what did you mean by the economic model of nation-states?
Mithu: Well, if you remember, nations that have closed economies or are self-sufficient are coerced into opening their market for international investment. For example, India used to be a self-sufficient country till the 1980s and did not allow foreign multinationals to enter Indian markets. And now India’s farming community is protesting monopolisation by multinational cartels. The cartels are there to loot.
What happens is that the western elites convince nations with closed economies to change their economic models and become interdependent for trade with other nations. Thus, they become part of a globalised economy. There the western elites (agents of imperialism) exercise enormous leverage and influence on international forums like the WTO, AIIB, OECD and Common Wealth.
Me: I understand what you mean now. So, the wealthy and elites have become the gatekeepers and they restrict access to their markets, and membership in those elite clubs is considered a privilege.
Mithu: Exactly. Thus, colonialism is alive and well for the time being. It appears that the imperialists are becoming concerned about the world returning to the gold standard. If that happens, it will upset the bankers who are ruling over the masses.
Me: Yes, returning to the gold standard may not be a good idea from the bankers’ perspective.
Mithu: That is why these bankers are pushing for digital currencies. What do you think is the solution? How can developing countries find genuine freedom?
Me: Hmm. By erasing the colonial borders?
Mithu: Interesting idea. But how realistic is it? Then again the twenty-first century is all about freedom and change. A change is inevitable. The masses will rise against the oppression. When? I do not know. Maybe one day, soon.
Me: I agree. Still, it is very hard to predict the future. Hope is a good thing to have. Hope is good for the health of the mind and helps in Restoring The Mind.
