Bank of England Head Mervyn King Proposes Eliminating Fractional Reserve Banking - November 1, 2010

I’ve been waiting for someone in power to say this – and here we are. 

As things continue to get worse economically – we’ll see more and more world leaders propose a new global monetary system to replace the current one that is collapsing. This rhetoric regarding a new monetary system started in 2007/2008 during the financial crisis (see previous blog posts) – but the rhetoric has waned over the past two years as government and Federal Reserve ‘stimulus’ has propped up the system. Now that we’re nearing the inevitable collapse of the system – expect the rhetoric for a new system to increase.

As you’ve seen me say before – this is not random – it is planned. Our current system requires debt and money to grow exponentially forever – which is mathematically impossible in a finite world. 

I feel certain that the governor of the Bank of England knows this.  You and I are being conditioned for the next phase of the plan. A phase that I believe will start with a significant global stock market crash.

jg – November 1, 2010

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Bank of England Head Mervyn King Proposes Eliminating Fractional Reserve Banking

http://www.zerohedge.com/article/bank-england-head-mervyn-king-proposes-eliminating-fractional-reserve-banking

Submitted by George Washington on 10/31/2010 21:02 -0500

→ Washington’s Blog

Mervyn King - the governor of the Bank of England - has proposed abolishing fractional reserve banking.

As the BBC noted last week:

Mervyn King, the governor of the Bank of England, has tonight made a big intervention into the debate on banking reform. In a speech at Buttonwood, New York, he [listed] much more radical proposals.

 1. Forcing the riskiest banks to hold capital "several times the magnitude" of requirements at present.
2. The Volcker rule-style enforced breakup of banks into speculative and non-speculative arms.
3. The "Kotlikoff proposal", which forces banks to match each pool of risks with a requisite amount of capital, preventing losses in one spilling over into another.
4. Stunningly, Mervyn King imagines the "abolition of fractional reserve banking":

 "Eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not co-exist with risky assets."

 King does not advocate any of these radical plans - but the fact that he goes out of his way to list them, and to place them on the agenda of the UK's Independent Commission on Banking, means that we are not yet at the end of the debate about long-term reform of the banks.

 ***

 Beyond the technicalities, the fact that a central banker in a G7 country is prepared to imagine such outcomes is itself significant.

Moreover, King wrote to Ben Dyson and stated:

You suggest that banks should be forced to conform to the underlying purpose of the 1844 Bank Reform Act. You might be aware that I have said publicly that I think ideas in this spirit - such as those advocated by John Kay - certainly merit serious consideration in the debate as to how we reform our financial system. I remain sympathetic to these views. But as I said in my previous letter, I do not want to prejudice the outcome of the Banking commission's deliberations. Now the Commission has been set up, I think we all should wait to see its conclusions."

As Dyson explains:

The 1844 Bank Charter Act ('Reform' is a typo) was a piece of legislation that prohibited commercial banks from printing paper notes (£1, £5, £10 and so on). Before this law was passed, banks were permitted to print as many paper notes as they wanted, up to the point where they printed too many and went bankrupt (as everyone cashed in their paper notes at once).

That situation should sound very similar to the situation that we have today - we currently allow commercial banks to 'print' money in the form of digital bank deposits (the numbers in your bank account). In the years up to 2007, the banks 'printed' far too much of this digital money, to the extent that they - and the economy - started to collapse.

The 'underlying purpose' of the 1844 Bank Charter Act was to prevent the commercial banks creating money and to restore that privilege to the state. It had become obvious to the government of the day that if banks were allowed to create money, they would keep creating money up until the point where it destabilized the economy, so they could not be trusted with this responsibility.

So, in plain English, Mervyn King appears to be saying:

"I agree that banks should probably be stopped from creating money, and recommend John Kay (or Laurence Kotlikoff's) proposals. But it's not for me to say - let's leave it to the Banking Commission."

It's very reassuring to know that the top guy at the Bank of England understands the root of the issue and is promoting solutions that would go a long way to addressing it. Both John Kay and Laurence Kotlikoff's proposals would prevent commercial banks from creating money (or 'issuing credit') for their own benefit at the expense of the wider economy and the public.

Ironically, while King is proposing the potential elimination of fractional reserve banking (i.e. a return to 100% reserves), Ben Bernanke has proposed the elimination of all reserve requirements (i.e. requiring no reserves):

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

Leaders May Close World's Markets

I mentioned yesterday that we would begin seeing comments relating to how this financial crisis would need to be solved 'globally'. It's already starting. This is an article by Chris Martenson posted this morning.

John - Oct 10, 2008

Berlusconi Says Leaders May Close World's Markets
Friday, October 10, 2008, 12:15 pm, by cmartenson

An interesting bit of news:

Quote:

Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

The really interesting part is here where he hints that a second aim is to revisit the Bretton Woods agreement.

Translation: The US dollar's role as the world's reserve currency is up for debate.
Quote:

Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are ``talking about a new Bretton Woods.''

The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.

Central Banks and Governments Continue to 'Fight' Crisis

We continue to see central banks and governments around the world ‘fight’ the current financial crisis. Now that it appears deflation (and rapidly slowing global growth) is the key problem (not runaway inflation), we’re seeing central banks around the world cut interest rates and reduce loan reserve restrictions in an attempt to inject additional liquidity into the world market. We also see governments (see article below on Korea) increasing spending or talking about doing so. Central bankers also continue to recommend additional government spending to help the crisis.

The reason that we’re seeing these actions is that private banks around the globe are failing or are in serious trouble. As we’ve learned, the current global monetary system requires continual debt creation – someone has to provide new money or the system collapses. Everyone continues to treat the symptoms (loan defaults, credit ‘crisis’, slowing economic growth, etc.) while the disease (world’s debt-based monetary system) continues to wreak havoc on the world’s economies.

Also notice that we’re starting to see where central banks are saying that they have reduced interest rates and have provided additional liquidity – so there’s not much more they can do. What they’re saying is that the world is running out of options – get ready for a new global ‘solution’ as things rapidly deteriorate. I’m very interested to hear what is announced after the upcoming economic summit of world leaders in Washington D.C. on November 15.

jg – Nov 3, 2008
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NOVEMBER 3, 2008

Italian Central Banker Tells States to Act

By LUCA DI LEO
Wall St. Journal

ROME -- European Central Bank board member and Italian central bank Gov. Mario Draghi called on governments to sustain demand by boosting spending or cutting taxes, warning that the scope for using monetary policy to boost the economy is limited.

"Given the minimum level reached by America's official interest rates and the ample liquidity put in circulation by central banks, the room for monetary-policy maneuver is reduced," Mr. Draghi told a meeting of Italy's top bankers Friday.

"To sustain demand on a global level, the anticyclical action of budget policy may be required," Mr. Draghi said, warning that the world economy would stagnate until at least mid-2009.

Central banks around the world last week unleashed a new assault on the global economic downturn. The U.S. Federal Reserve on Wednesday cut its key rate by half a percentage point to 1%. Its move was accompanied by cuts in China and Norway. ECB President Jean-Claude Trichet last week signaled that the central bank is likely to cut its key rate this week from its current 3.75% level.

Mr. Draghi said European Union budget rules, which call on states to keep their deficit below 3% of gross domestic product, allowed for increased spending during tough times. His remarks indicate that central banks want governments to act since they are running out of ammunition.

Mr. Draghi, a former Goldman Sachs executive, said the crisis made state intervention more desirable.

Mr. Draghi effectively gave the green light to Prime Minister Silvio Berlusconi's government to approve further measures to shore up banks. But Mr. Berlusconi's cabinet, which has boosted liquidity and guaranteed bank debt this month, on Friday disappointed those in the market who were expecting further moves.

"It is not the government's duty to have banks. Having shares in banks can only be a transitory necessity," Economy Minister Giulio Tremonti told the same banking conference, adding that government intervention could be harmful.

His remarks were taken as a sign that no move by the government is imminent.
Write to Luca Di Leo at luca.dileo@dowjones.com

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NOVEMBER 3, 2008

India and Pakistan Ease Lending to Help Growth

By ABHRAJIT GANGOPADHYAY and NEELABH CHATURVEDI
Wall St Journal

NEW DELHI -- The Reserve Bank of India unexpectedly cut its key lending rate on Saturday for the second time in as many weeks, and also lowered the amount of money banks have to keep in reserve as a deepening global financial crisis threatens to stall growth.

The Indian central bank said it cut the repurchase rate -- its main short-term lending rate -- by 0.5 percentage point to 7.5% to ease the impact of the global liquidity crisis on India. It had cut the repurchase rate by one percentage point on Oct. 20, its first such cut since March 2004.

The central bank also cut its cash-reserve ratio -- the proportion of deposits that banks have to set aside as cash -- by one percentage point to 5.5%. The cut in the cash-reserve requirements will release 400 billion rupees ($8.11 billion) into the banking system.

In Pakistan, the central bank said Saturday that a one-percentage-point reduction to its cash-reserve ratio will take effect immediately, instead of the previous plan to implement it on Nov. 15. The State Bank of Pakistan has cut the cash-reserve ratio by four percentage points to 5% since Oct. 11, including the rate cut that was moved forward. Pakistan's foreign reserves have fallen steadily since November 2007, as foreigners pulled out money over rising political uncertainty and the weakening economy.

Meanwhile, the New Zealand government Saturday announced it would guarantee banks' wholesale funding on an opt-in basis to ensure domestic financial institutions can access funds. Finance Minister Michael Cullen said the decision will ease access to international funding markets for New Zealand banks.

The global financial crisis has had a rapid and deep effect on India's economy, which has been seen as a candidate to help the world weather the current downturn. Just a few weeks ago, the overriding concern for policy makers was containing inflation, especially in the run-up to a national election expected early next year. Inflation is a particularly sensitive political issue here because of the impact it has on India's hundreds of millions of poor.

But as the financial crisis has deepened, the threat to India's economic growth has increased. The central bank recently downgraded its estimate for gross domestic product growth in the year ending March 31, 2009, to a range of 7.5% to 8%, from 8% previously.

—Haris Zamir, Shri Navaratnam and Jackie Range contributed to this article.

Write to Abhrajit Gangopadhyay at Abhrajit.gangopadhyay@dowjones.com and Neelabh Chaturvedi at neelabh.chaturvedi@dowjones.com
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NOVEMBER 3, 2008

China Drops Strict Loan Caps on Banks
Central-Bank Move to Help Growth Marks First Acknowledgment of Lending Curbs

By ANDREW BATSON
Wall St. Journal

BEIJING -- China's central bank said it is no longer capping the amount of loans that commercial banks can make, abandoning a frequently criticized policy as it redoubles efforts to sustain the nation's economic growth amid the global financial crisis.

A spokesman for the People's Bank of China clarified the bank's policy in a dispatch by the official Xinhua news agency during the weekend following a string of three interest-rate cuts, the most recent unveiled Wednesday.

Some economists had questioned whether the rate cuts would help boost flows of credit to households and businesses because the central bank since late 2007 also has imposed strict limits on the amount of new loans that banks can make.
Those limits were designed to keep China's economy from overheating at a time when growth was still running relatively high.

The central-bank spokesman, Li Chao, said those credit curbs are no longer being enforced. "At present, the central bank is no longer applying hard constraints to the lending plans of commercial banks," Mr. Li was quoted as saying by Xinhua.
Mr. Li defended the original decision to impose the credit curbs as being justified by the economic conditions at the time, which included high inflation and the threat of excess capacity. "These policies were necessary and effective," he said.
Mr. Li's comments mark the first time the central bank has formally acknowledged the existence of the credit curbs.

Top-Down Instructions

Although the controls on lending were open secrets among businesses and in the press, the central bank never publicly discussed them. Its instructions on how much banks could lend were delivered orally to top executives, a practice that business groups criticized as unnecessarily secretive and arbitrary.

The loan limits were partially eased, though not removed, at the beginning of August.
The use of credit quotas -- a practice that had been largely phased out in recent years as China's state-controlled banks were reorganized to run on a more commercial basis -- was an attempt to curb growth in bank lending without raising interest rates.

The measures appeared to be effective, reducing growth in lending from a pace of above 17% last year to nearer 14% in recent months.

Critics, however, have said that much of the growth in credit simply ended up in harder-to-track areas like underground lenders or off-balance-sheet vehicles set up by banks.

News of the end of the credit quotas came amid further signs of a slowdown in China's economy, which is being battered by weakening in overseas demand and in the domestic housing market.

Economic Outlook Dims

The purchasing managers' index published by the China Federation of Logistics & Purchasing declined in October to its lowest level since the index was launched in January 2005.

The reading of 44.6, down from 51.2 in September, indicates a sharp contraction in manufacturing activity, led by a decline in new export orders and demand for construction materials like steel.

The worsening economic outlook for China, which has deteriorated more rapidly than most analysts expected, had already generated calls for the removal of the loan constraints.

In a commentary published last week, Fan Jianping, the chief economist of the State Information Center, a major government think tank, suggested canceling the loan-quota system in 2009.

The willingness to abandon the policy before then gives some backing to Chinese officials' repeated vows to be flexible and open-minded in finding ways to deal with the impact of the financial crisis and global economic slowdown.

"To guard against the economic and financial impact of this crisis on China, we will flexibly adjust economic policies, including monetary policy, when necessary, and strive to minimize the possible negative effects of this crisis," said Mr. Li, the central-bank spokesman.

Write to Andrew Batson at andrew.batson@wsj.com
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NOVEMBER 3, 2008

South Korea Plans $11 Billion in Tax Cuts, Other Stimulus
By EVAN RAMSTAD
Wall St. Journal

SEOUL -- The South Korean government early Monday proposed a fiscal stimulus plan of tax cuts and new government spending amounting to 14 trillion won, about $11 billion, for next year to help cope with the likelihood of slower economic growth.

Of the total, 11 trillion won will come from new spending and 3 trillion won will come from tax cuts. Government officials have been discussing ideas for stimulating the economy for the past two weeks. Monday's announcement marked the first time officials placed a value to their planning. Shares on South Korea's stock market were trading up 3% after the announcement and, in currency trading, the South Korea won was slightly lower against the U.S. dollar.

The Ministry of Strategy and Finance said 90% of the new spending will be sent to provincial and local governments for infrastructure and construction projects. Almost two-thirds of the spending will occur in the first half of next year, a step that recognizes how quickly the global slowdown may impact South Korea.
The country has been relatively insulated from the economic troubles that began with the collapse of the U.S. housing market, in large part because South Korean banks didn't buy many securities tied to subprime mortgages.

But when the economic crisis spread to credit markets and consumer purchasing, South Korea became more vulnerable because of its banks' borrowing on foreign markets and its heavy reliance on the manufacturing and exporting of products like TVs, cellphones, cars and steel.

Because of the global slowdown, government officials have said they expect South Korea's economic growth to slow next year to below 4%. Economists' forecasts for the nation's growth next year range from 2.5% to 3.5%. South Korea's annual growth this year is now expected to be just below 4%. That's down from earlier projections of 4.5% to 5%. The stimulus package amounts to about 4% of the government's annual budget.

Write to Evan Ramstad at evan.ramstad@wsj.com

Nations Strive for Unity on Financial Crisis

This is like watching a grand drama play out on the world’s stage. Every nation has its role – to give the appearance that there is much dissention among the nations as they strive to solve this crisis. And just like a play – those involved in the production already know the outcome. After much debate and the appearance of cooperation – in the end we’ll see the solution appear – as if the actors decided the ending. We all know that actors simply read their lines and put on a good show – it’s the people writing the script who ultimately control the production.

Who – might you ask – is writing this script? It’s easy to say that the ‘illuminati’ or whatever you want to call this cartel of secret societies/international bankers is behind the scenes – orchestrating all of this. As I’ve said many times before – to truly understand our world – you must be able to see and understand the spiritual component. The writer of this evil script is our spiritual enemy – and I’m sure that he’s pretty proud of himself – after all – pride caused his downfall and it continues to consume him. However, we can take solace in the fact that our Creator knows our enemy’s script – and has incorporated the evil that is present in the world – into the ultimate script - our Father’s plan to end evil and restore us. So, let the world’s screenwriters continue to write and let the world’s actors continue to act on the world’s stage. Those of us who know the ending of this grand play will simply continue to watch, learn and listen – until our Father asks us to enter stage right.

jg – Nov 10, 2008
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Nations Strive for Unity on Financial Crisis
By BOB DAVIS

November 10, 2008

Wall St. Journal

WASHINGTON -- Leaders of 20 nations will gather in Washington Friday, supposedly to speak with one voice about how to handle the economic crisis that engulfs the world.
When it comes to action, though, don't count on unity. A nationalist Tower of Babel is more likely.

The French want to rein in unbridled global capitalism and build a new regulatory order. The Americans are suspicious of that.

The British first said they wanted a "new Bretton Woods," which sounds like a call to remake or even replace the International Monetary Fund and other international institutions conceived at that 1944 New Hampshire conference. Now they want a more powerful IMF.

Finance Ministers and Central Bank Governors from around the world at the opening of the G-20 summit in Sao Paulo, Brazil.

But the Russians would try to veto the latter idea. They want an IMF that won't impose what Arkady Dvorkovich, a top Kremlin economic adviser, calls "political conditions" on borrowers as it does now.

Meanwhile, the Chinese -- who Sunday announced a sweeping economic-stimulus plan -- want more influence on IMF decisions. Everyone else wants the Chinese to bankroll IMF lending programs whether or not the power structure is changed quickly.

Group of 20 finance ministers and central bankers met during the weekend in São Paulo to prepare for the summit. Speaking at a news conference Sunday, IMF Managing Director Dominique Strauss-Kahn recognized that leaders hold differing views about the best way forward. He said there is reason to be optimistic about the G-20 summit because everyone at the table agrees coordinated action is crucial.

"If there were already a single voice, then you wouldn't have a need for a meeting," Mr. Strauss-Kahn said. Differences of opinion "are always the case at the beginning of a meeting." Joseph Guinan, a senior analyst in Brussels at the German Marshall Fund, a U.S.-European think tank, said, "We're still at a phase where nobody trusts a version of how we move forward that's propounded by anyone else."

The problems plaguing the conference are part conceptual, part political. It's far from clear how to stanch the economic crisis from getting worse given the complex interaction between housing problems, tightened credit, bank solvency and slumping consumer demand globally. The IMF plans to use the conference to lobby nations for a big dose of Keynesian pump priming -- running big budget deficits to cut taxes and boost spending. The U.S. has started in this direction, but many European countries are skeptical.

How to head off a potential future crisis is also an imponderable. It's easy to talk about more regulation. But what kind? And how much should regulation be transnational?

The main political problem dogging the conference is the U.S. America's economy is so vast and its influence over international institutions so large that significant change in the global economic system can't occur without U.S. assent.

But President George W. Bush has just more than two months to serve and can't bind the U.S. beyond that, while the president-elect, Barack Obama, isn't ready to take up global economic overhauls. "The United States has only one government and one president at a time," Mr. Obama said Friday, although representatives of other nations are talking to Obama aides. European leaders are proposing a second summit 100 days after the Washington confab -- in late February, about a month after Mr. Obama takes office.

The best that's likely to come of this week's meeting is a commitment to make financial reform a continuing priority. After the Asian financial crisis in 1998, the IMF pushed for changes in the "global financial architecture," including an international bankruptcy court to handle country defaults. But once the global economy recovered, interest in change plummeted and the bankruptcy-court idea died.

At this meeting, the IMF plans to showcase some new ideas, including work it is doing on identifying asset bubbles before they develop. IMF economists are studying past crises globally to see how asset prices develop into major problems over several years, to assess whether there were indicators of trouble that could help predict problems in the future.
The IMF also is debating internally whether to nominate itself as a global financial regulator or propose a "network" of international institutions.

European nations are pushing a somewhat different network -- a "college of supervisors" for the largest financial institutions: Regulators of, say, Citigroup from different countries would meet informally to swap information.

The weakness with all these proposals is enforcement. For years, the Europeans and the U.S. have ignored IMF advice on how to deal with problems at home, while they expect developing nations to hew to IMF requirements in order to qualify for emergency loans.
This past spring, the IMF worked up a plan for the U.S. to recapitalize its banks and presented it to the Treasury, where it was ignored. A Treasury official says the report wasn't even passed along to the Treasury secretary's office. The British and French are no different, said Simon Johnson, a former IMF chief economist.

Mr. Obama didn't take positions on remaking the global financial system during the campaign. But it will be an issue forced upon him quickly. During the Asia crisis, some of his top economic advisers -- then in the Clinton White House -- used the IMF to push U.S. economic policy.
This time, the Obama administration will be judged internationally, in part, on whether it is willing to listen to advice as well as dole it out.

—John Lyons in São Paulo contributed to this article.
Write to Bob Davis at bob.davis@wsj.com

Pope Calls for a 'World Political Authority'

I’ve mentioned many times (and shown many mainstream articles) how world leaders have been speaking of the need for a new global monetary system and the need for additional oversight of financial markets. We’ve seen this from our own political and financial leaders and leaders from Europe, Asia, South America and Australia.

What should make all of us sit up and start paying attention – is that we’re now hearing the same rhetoric from the leaders of the Catholic Church. Pay very close attention to the wording of the Pope’s letter (below). The Pope is now calling for a ‘true world political authority’. I find it interesting that he mentions a ‘political authority’ to oversee world markets – not a financial authority. A ‘world political authority’ can only be referencing one thing – a world government that oversees the world’s markets.

The Pope’s remarks don’t end there. What, exactly, does ‘acquire real teeth’ mean? I’m sure we’ll find out soon enough.

If you’re scratching your head and wondering why a church would make such bold statements – I would encourage you to read my posts on the ‘beasts’ of Revelation 13. It might surprise you to learn that Bible prophecy tells us that a false worldwide church will work closely with an evil worldwide political entity to bring about a world government and false world religion.

We’re watching Bible prophecy come to pass before us.

jg – July 8, 2009
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JULY 8, 2009

Pope Calls for a Group to Oversee World Markets

United Nations and Other International Bodies Need 'Real Teeth' to Prevent Future Crises, Letter From Vatican Says

By STACY MEICHTRY
Wall St. Journal

ROME -- Pope Benedict XVI issued a rare papal critique of the global economic crisis Tuesday, calling for a "true world political authority" charged with exercising greater oversight of financial markets.

Pope Benedict XVI signs a rare papal critique of the global economic crisis at the Vatican on Tuesday. He said the United Nations and other international bodies need to 'acquire real teeth' to properly monitor markets.

In a letter titled "Caritas in Veritate," or "Charity in Truth," Pope Benedict said the United Nations and other international bodies need to "acquire real teeth" to properly monitor markets, stem the current crisis and prevent future ones. "There is urgent need of a true world political authority," the pope wrote in the 44-page encyclical.

The pope is expected to give a copy of the document to President Barack Obama when the two meet at the Vatican on Friday, said Cardinal Renato Martino, a top Vatican official.

The papal push for financial reform comes on the eve of a meeting of the Group of Eight leading nations in the Italian mountain town of L'Aquila. As part of their discussions on the global economy, G-8 leaders are due to discuss recent efforts to establish new global standards for regulating international finance.

Popes seldom weigh in on economic matters and rarely in the form of an encyclical, one of the most authoritative forms of papal writing. When popes do address the economy, it is usually during moments of tectonic shift.

In 1891, Pope Leo XII wrote "Rerum Novarum," or "Of New Things," a response to Marxism in light of the economic upheaval caused by the Industrial Revolution. In 1967, Pope Paul VI issued "Populorum Progressio," a treatise on the need for economic development around the world. And in 1991, John Paul II issued "Centesimus Annus," a critique of socialism and communism following the fall of the Berlin Wall.

In "Caritas in Veritate," Pope Benedict offered a sweeping indictment of the troubles that fueled the global economic crisis, ranging from outsourced labor, to lax market regulation, to managers and financiers driven by profit and "darkened reason."

"Today's international economic scene, marked by grave deviations and failures, requires a profoundly new way of understanding business enterprise," he wrote.

The release of the document was initially planned two years ago to coincide with the 40th anniversary of Pope Paul VI's encyclical. The document underwent numerous revisions, however, as the sands shifted beneath the global economy, with the U.S. sub-prime-mortgage crisis growing into a global financial crisis.

Some observers said the pontiff's stern critique of the modern marketplace will serve as a wake-up call to financial and business leaders, particularly in the U.S.

"He's trying to develop a moral foundation to support the sustainability of free markets," said Carl Anderson, chief executive of the Knights of Columbus, a Catholic order based in New Haven, Conn., and a member of several Vatican advisory bodies. "A lot of people are looking at the meeting [with Mr. Obama] in terms of issues like abortion. But a big issue with this encyclical is: Are American Catholic businessmen going to listen?"

Some analysts, however, questioned the pope's call for a world financial watchdog, noting that he stopped short of describing what form the authority should take. "I don't get the sense that Pope Benedict is very confident in [making] policy prescriptions," said Kishore Jayabalan, a former Vatican official who heads the Istituto Acton, a Rome-based think tank focused on the intersection of faith and economic policy.

The global economy will loom large at the L'Aquila meeting, which comes midway between the Group of 20 industrial and developing nations' meeting held in London in April and the next one planned for Pittsburgh in September. The leaders are expected to discuss when to start scaling back stimulus packages that countries have undertaken in past months to aid ailing economies.

On Tuesday, German manufacturing orders rose by a higher-than-expected 4.4% in May from the previous month, the country's Economics Ministry said, outstripping the 0.5% gain many analysts had expected. The rise, led by a jump in foreign orders, bodes well for a pickup in German industrial production.

Also on the G-8 agenda is a document -- drawn up by Italy and approved last month by the group's finance ministers -- that seeks to establish a new set of internationally accepted rules for transparent and ethical behavior in finance, business, trade and fiscal policy.

Write to Stacy Meichtry at stacy.meichtry@wsj.com

Egypt Calls for Establishing New World Order to Overcome Crisis

Here we see yet another nation calling for a new world order. The list continues to grow…..

jg – July 13, 2009
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Egypt Calls for Establishing New World Order to Overcome Crisis

Infowars.com

Crienglish
July 12, 2009

Egyptian Assistant Foreign Minister Naela Gabr said Saturday that the world society should make joint efforts to set up a new world order to deal with various crises.

Gabr made the appeal when addressing the senior officials’ meeting of the 15th Non-Aligned Movement (NAM) summit, which opened Saturday in Egyptian Red Sea resort of Sharm el-Sheikh.

The current world situation is quite different from 48 years ago when the NAM was founded, with increasing population, outbreaks of epidemic and deteriorating environment, she said.

The world society should reconsider the international financial system and be more democratic in decision-making so as to avoid the global financial crisis which has hampered the economic growth of developing countries, Gabr said.

She also called for restructuring of international mechanism in health and agriculture in an effort to help overcome the crises in the two areas, referring to global spread of A/H1N1 flu and rising food prices.

Senior officials from over 140 countries gathered here to work out basic documents for the coming NAM summit, which will state the movement’s stance in the current international context on major international and regional issues like the global financial crisis, the Middle East peace process, and the Iranian nuclear issue.

The NAM has played a significant role in protecting rights and interests of its member states, and Egypt, as it will be the rotating chair of the group of pan-developing countries, will endeavor to strengthen its role in the world arena, she added.

Formally founded in September 1961, NAM groups 118 member states, which represents nearly two-thirds of the United Nations’ members, particularly developing countries. It also comprises 55 percent of the world population.

The Pope's July Encyclical

In July (2009), I posted an article on Pope Benedict’s Encyclical ‘Charity in Truth’.

Pope Calls for 'World Authority'

Today I received an email from Steve Wohlberg that provides additional details behind this document. Since you now understand who the ‘beasts’ of Revelation 13 really are – the message contained in ‘Charity in Truth’ shouldn’t surprise you.

The Catholic Church and the Global Elite are working together to bring about world government and world religion – just as the Lord tells us they will do. I expect that we’ll see more and more global government rhetoric as the world’s economy continues to decline. As I’ve stated before – the collapse of the world’s economy is not a surprise to the world’s true leaders – nor is it a surprise to the leaders of the Catholic Church.

The world is being deceived on a massive scale.

jg – September 10, 2009
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White Horse E-News - 09-09-2009

The Pope's July Encyclical

Dear friend of White Horse Media,

Today (Sept. 9, 2009) I hope to send you two e-newsletters. This first one contains information you may have already heard. If not, you need to know it, for it is of monumental prophetic significance.

Two months ago, in early July, President Barack Obama went to Italy for the G-8 economic summit. While in Italy, he also had a personal interview with Pope Benedict XVI during which the pope presented Obama with a copy of his latest papal encyclical entitled, Charity in Truth. For those who don't realize it, a papal encyclical is one of the most authoritative documents a pope can produce.

Charity in Truth is a 44-page letter in which Pope Benedict XVI comments on the world's current economic crisis and, from his perspective, what he sees as the solution. From a prophetic standpoint, here are 9 significant highlights found within this encyclical:

1. A Global Government. Pope Benedict is calling for a "true world political authority" to fix the problems that plague planet Earth. (Page 67)

2. Church and State. The pope says this new political authority must make its decisions based on spiritual values. (Chapter 5)

3. The Papacy at the Head. These spiritual values cannot be derived from just any religion, since not "all religions are equal." (Page 55)

4. Religion, Politics and the Economy. The "church" must influence all areas of society because God must have "a place in the public realm, specifically in regard to its cultural, social, economic, and particularly its political dimensions." (Page 56)

5. Power to Enforce Law. This "political authority" must have "real teeth" and "be vested with the effective power" to enforce laws around the world. (Page 67)

6. Control Buying and Selling. Once in place, the new world governing power will institute socialistic policies for government to redistribute wealth. (Chapter 3)

7. Resurgence of Labor Unions. Labor Unions are to be empowered to "play a decisive role" in the new world order. (Page 25) For those who know European history, this is exactly what happened in Poland, leading to the collapse of Soviet Communism.

8. The Church's Goal. Pope Benedict says that his encyclical will help achieve "The goal of the history of the human family," which is to build "the universal city of God." (Page 7)

9. Redefining Religious Liberty. While claiming not "to interfere in any way in the politics of States," the pope redefines "liberty" as happening when the world obeys laws shaped by the Roman Catholic Church's spiritual values. According to the pope, as the church influences states to enforce "truth" upon others, such people are then set "free." "This mission of truth is something that the Church can never renounce." (Page 9)

When Charity in Truth was first released in July 2009, newspapers ran stories on it around the world. Here are just three headlines from Time, USA Today, and New American:

http://www.time.com/time/world/article/0,8599,1909020,00.html

http://www.thenewamerican.com/index.php/culture/education/1375

http://www.usatoday.com/news/religion/2009-07-07-pope-encyclical_N.htm

For those who have read my book, End Time Delusions, which clearly documents not only what the Bible teaches, but also what Reformation Protestants understood "about the beast," then you know what's coming. The proverbial handwriting is on the wall. God's Word predicts,

And I saw one of his heads as it were wounded to death,
and his deadly wound was healed. And all the world wondered
after the beast… and power was given to him over all
peoples, and tongues, and nations (Revelation 13:3, 7).

This prophecy is on the verge of fulfillment right now.

The book End Time Delusions fully documents the decisive role of the papal power in last day events. For those who haven't read it, and who would like to receive a copy, White Horse Media is again make the newly printed hardcover version available for only $15 plus shipping.

You can order by calling 1-800-782-4253

Concerning the "signs" of the approaching end of the age, Jesus Christ plainly said, "Now when these things begin to happen, look up, and lift up your heads, because your redemption draws near" (Luke 21:28).

Maranatha! Come Lord Jesus!

Steve Wohlberg
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Pope Calls for “World Political Authority”

New American

http://www.thenewamerican.com/index.php/culture/education/1375

Written by: Thomas R. Eddlem

Wednesday, 08 July 2009

Pope Benedict XVI called for a “true world political authority” to manage the economy in his new encyclical on social justice. The encyclical, entitled “Charity in Truth,” was released by the Vatican on Tuesday and signed by the pope a day earlier.

Benedict’s encyclical specifically called for “regulation of the financial sector,” and a “worldwide redistribution of energy resources.” Benedict added that “the State’s role seems destined to grow” if his political prescription is followed.

“There is urgent need of a true world political authority,” Benedict wrote in the 30,000-word encyclical, calling for “reform of the United Nations Organization, and likewise of economic institutions and international finance, so that the concept of the family of nations can acquire real teeth.”

Benedict described what a powerful world government with teeth would look like: “Such an authority would need to be universally recognized and to be vested with the effective power to ensure security for all.” He added: “Obviously it would have to have the authority to ensure compliance with its decisions from all parties” — that is, nations.

At best, Benedict is proposing a global federation that would improve upon the U.S. Constitution’s checks and balances. “Such an authority would need to be regulated by law, to observe consistently the principles of subsidiarity,” Benedict says.

What’s “subsidiarity”?

It’s a Catholic social principle that says that all events should be handled by the least centralized competent authority. One example of subsidiarity in the U.S. Constitution is the 10th Amendment, which says “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Benedict is calling for a global federalized state using the principle of subsidiarity: “Hence the principle of subsidiarity is particularly well-suited to managing globalization and directing it towards authentic human development. In order not to produce a dangerous universal power of a tyrannical nature, the governance of globalization must be marked by subsidiarity, articulated into several layers and involving different levels that can work together.”

Although he’s correct when he writes “subsidiarity is the most effective antidote against any form of all-encompassing welfare state,” much of the underlying assumptions of the social policies he proposes in the encyclical would mandate a globally-managed welfare state and dump the principle of subsidiarity.

Although he says “the Church does not have technical solutions to offer” in the way of political plans, it’s clear he is calling for the mandatory transfer of wealth from the haves to the have-nots through the brute force of the state. He even offers one suggestion as to how this might be made less objectionable to those whose wealth would be taken:

One possible approach to development aid would be to apply effectively what is known as fiscal subsidiarity, allowing citizens to decide how to allocate a portion of the taxes they pay to the State. Provided it does not degenerate into the promotion of special interests, this can help to stimulate forms of welfare solidarity from below, with obvious benefits in the area of solidarity for development as well.

Of course, letting citizens choose their taxation in the form of government “charity” would necessarily lead to special interests, as aid groups and governments compete for aid. It’s part of the fallen nature of man for such competitions. Benedict states in the encyclical that “attitudes of gratuitousness cannot be established by law,” but then proposes that governments attempt to do just that. The Christian principle of charity is that it is voluntary, or it isn’t charity. Governments, Benedict should know, are more often representative of the fallen side of human nature than are the persons who make up the governed.

And that’s the basic problem with Benedict’s encyclical. It’s based primarily upon the assumption that governments are essentially institutions of good, while free markets are not self-regulating (or even self-sustaining) institutions that produce vice and license. “Profit is useful if it serves as a means towards an end that provides a sense both of how to produce it and how to make good use of it. Once profit becomes the exclusive goal, if it is produced by improper means and without the common good as its ultimate end, it risks destroying wealth and creating poverty.” Published in the wake of the current financial scandals, Benedict’s meaning becomes all the more clear. He blames the current global economic crisis on “badly managed and largely speculative financial dealing” among the private sector and says that “the regulation of the financial sector, so as to safeguard weaker parties and discourage scandalous speculation … should be further explored and encouraged.”

But in fact the current economic crisis was government-made, not private speculator-made. The speculators in the markets only reacted to extremely loose credit policies employed by the U.S. Federal Reserve Bank, a creature of the state.

Benedict argues that there’s an “urgent need of a true world political authority.” But if the world government is a tyranny, we don’t need it; and if men were good enough to be trusted to run that world government, a world government wouldn’t be necessary. As James Madison noted in The Federalist #51: “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.”

Benedict says he wants a world government. He shouldn’t. World government should be approached with the same circumspection that one approaches nuclear warfare. Indeed, mere national governments have killed many times more people in peacetime than nuclear weapons have in warfare. A world government powerful enough to “to ensure compliance with its decisions from all parties” is also a world government powerful enough to impose a global tyranny that could result in the murder of countless millions. The history of the world has taught that most people were not allowed to be free by their governments in the past, or even in the present. Most people who have walked this world have done so as slaves to the state. Incautious language about the supposed “urgent need” for a global political authority may convince many Catholics and other Christians to accept whatever world government they can get, and what they’ll likely end up with — if history is any guide — is a brutal tyranny.

Abandonment of Traditional Catholic Social Teaching

Pope Leo XIII’s classic 1891 social encyclical Rerum Novarum cited the scriptures almost exclusively as its authority for Catholic social teaching, along with a few of the patristic writings of church doctors such as Thomas Aquinas and Augustine. Rerum Novarum defended property rights and the commandments not to steal and covet as key to the social order under man’s fallen and sinful state. Benedict’s encyclical ignores those two commandments entirely, and makes no mention of property rights whatsoever. It mentions Rerum Novarum in passing, but ignores both the scriptures as well as Augustine and Aquinas.

Though nearly all the footnotes in Benedict’s encyclical refer to post-Vatican II documents, Benedict points in his encyclical to a coherence of past and recent Catholic teachings: “It is not a case of two typologies of social doctrine, one pre-conciliar and one post-conciliar, differing from one another: on the contrary, there is a single teaching, consistent and at the same time ever new. It is one thing to draw attention to the particular characteristics of one Encyclical or another, of the teaching of one Pope or another, but quite another to lose sight of the coherence of the overall doctrinal corpus.” If nearly all the documents cited by Benedict were post-conciliar (after Vatican II, which took place in the 1960s), how does that reflect coherence with 2000 years of history? If Benedict’s new encyclical represented old teachings of the Catholic Church, the least he could have done was to cite a few examples.

Instead of using time-tested Catholic social justice principles, Benedict employed trendy slogans such as “food security”/“food insecurity” and how the world is “increasingly interconnected” and “interdependent.” So it’s not surprising that the leftist New York Times trumpeted that “Pope Benedict XVI on July 7 called for a 'world political authority' to manage the global economy and for more government regulation of national economies to pull the world out of the current crisis and avoid a repeat.”

Conservative and libertarian Catholics who understand economics can expect to be pilloried as being anti-Catholic if they hold to the economic and political realities of the modern world in the wake of Benedict’s encyclical. But Catholics who disagree with the pope's understanding of social justice do have a defense: the encyclical was not issued “ex cathedra,” and is therefore not binding on Catholics. The Catholic Church teaches that the pope has the power to bind the faithful only when speaking “ex cathedra.” The “ex cathedra” pronouncements are so infrequent that most popes do not make any. An “ex cathedra” pronouncement can happen only when a certain set of formalized criteria are met: 1. the pope claims to be speaking on behalf of the worldwide church from the seat of the Apostle Peter; 2. he specifically states that he is binding the faithful for all time on the doctrine; 3. the doctrine is about faith and morals; and 4. he can’t contradict past church doctrines.

In the case of “Charity in Truth,” Benedict XVI has issued an ordinary encyclical letter, and none of the criteria for “ex cathedra” were satisfied. But the question for the rank-and-file Catholics around the world is this: will this distinction matter, or will they unthinkingly follow the extremely dangerous new social doctrine of the Vatican?

We're Governed by Callous Children

My personal belief is that we (Americans) are beginning to wake up to many truths. We are beginning to question many of the things that are being told to us by political and financial leaders.


“The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers.”

We no longer believe the lies that are being told to us on a daily basis.

“No one believes the bad time is over. No one thinks we're entering a new age of abundance. No one thinks it will ever be the same as before 2008.”

The article below by Peggy Noonan speaks to many truths today. I encourage you to read the entire article - but I’m adding it to this blog mainly for the following passage.

“The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.”

I am posting this – because the words above are true. This is something that the global elite want to happen. They want you to become disheartened. They want you to accept a world monetary system and a world government. They want to control you – every aspect of your life. They want total control of the world’s population. They want you to believe that they are too powerful. They want you to ask – ‘how can I stand against them?’ They want you - to give up.

I will admit here – that when I first began to look into the world’s monetary system and the global elite – I could not see anyway out of our predicament. It became clear that our economy was doomed and that the people controlling the world’s central banking system were much too powerful to overcome. They have infiltrated our government and they own/manipulate the world’s financial system. How can we possibly overcome this?

I won’t lie to you – when you begin to understand the magnitude of what we face – fear will begin to creep into your consciousness.

So – how do we overcome this fear and find the faith required to stand against such overwhelming odds? The only way for us to overcome our enemies and to succeed in saving our nation – is by recognizing what we have become and seeking forgiveness from our Creator. If we will seek Him and His plan for us – if we will allow Him to strengthen us – then we will be able to stand. Without Him – we fail and the United States of America will cease to exist as a sovereign nation. There will be many who ridicule this – but it’s the truth.

I do not know how this ends. I do not know the choice our nation will make.  I only know how it will start. It will start with a severe economic crash in the United States – and the world.

We will get one more chance to choose God and his way. What will we choose?

jg – November 3, 2009
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OCTOBER 31, 2009

We're Governed by Callous Children

By PEGGY NOONAN

Wall St. Journal

The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers.

Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren't rising, they're bobbing, and will settle. No one believes the bad time is over. No one thinks we're entering a new age of abundance. No one thinks it will ever be the same as before 2008.

Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They'll miss the meaning of this moment, too.

The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.

It is a story in two parts. The first: "They do not think they can make it better."

I talked this week with a guy from Big Pharma, which we used to call "the drug companies" until we decided that didn't sound menacing enough. He is middle-aged, works in a significant position, and our conversation turned to the last great recession, in the late mid- to late 1970s and early '80s. We talked about how, in terms of numbers, that recession was in some ways worse than the one we're experiencing now. Interest rates were over 20%, and inflation and unemployment hit double digits. America was in what might be called a functional depression, yet there was still a prevalent feeling of hope.

Here's why. Everyone thought they could figure a way through. We knew we could find a path through the mess. In 1982 there were people saying, "If only we get rid of this guy Reagan, we can make it better!" Others said, "If we follow Reagan, he'll squeeze out inflation and lower taxes and we'll be America again, we'll be acting like Americans again." Everyone had a path through.

Now they don't. The most sophisticated Americans, experienced in how the country works on the ground, can't figure a way out. Have you heard, "If only we follow Obama and the Democrats, it will all get better"? Or, "If only we follow the Republicans, they'll make it all work again"? I bet you haven't, or not much.

This is historic. This is something new in modern political history, and I'm not sure we're fully noticing it. Americans are starting to think the problems we are facing cannot be solved.

Part of the reason is that the problems—debt, spending, war—seem too big. But a larger part is that our government, from the White House through Congress and so many state and local governments, seems to be demonstrating every day that they cannot make things better. They are not offering a new path, they are only offering old paths—spend more, regulate more, tax more in an attempt to make us more healthy locally and nationally. And in the long term everyone—well, not those in government, but most everyone else—seems to know that won't work. It's not a way out. It's not a path through.

And so the disheartenedness of the leadership class, of those in business, of those who have something. This week the New York Post carried a report that 1.5 million people had left high-tax New York state between 2000 and 2008, more than a million of them from even higher-tax New York City. They took their tax dollars with them—in 2006 alone more than $4 billion.

You know what New York, both state and city, will do to make up for the lost money. They'll raise taxes.

I talked with an executive this week with what we still call "the insurance companies" and will no doubt soon be calling Big Insura. (Take it away, Democratic National Committee.) He was thoughtful, reflective about the big picture. He talked about all the new proposed regulations on the industry. Rep. Barney Frank had just said on some cable show that the Democrats of the White House and Congress "are trying on every front to increase the role of government in the regulatory area." The executive said of Washington: "They don't understand that people can just stop, get out. I have friends and colleagues who've said to me 'I'm done.'" He spoke of his own increasing tax burden and said, "They don't understand that if they start to tax me so that I'm paying 60%, 55%, I'll stop."

He felt government doesn't understand that business in America is run by people, by human beings. Mr. Frank must believe America is populated by high-achieving robots who will obey whatever command he and his friends issue. But of course they're human, and they can become disheartened. They can pack it in, go elsewhere, quit what used to be called the rat race and might as well be called that again since the government seems to think they're all rats. (That would be you, Chamber of Commerce.)

***

And here is the second part of the story. While Americans feel increasingly disheartened, their leaders evince a mindless . . . one almost calls it optimism, but it is not that.

It is a curious thing that those who feel most mistily affectionate toward America, and most protective toward it, are the most aware of its vulnerabilities, the most aware that it can be harmed. They don't see it as all-powerful, impregnable, unharmable. The loving have a sense of its limits.

When I see those in government, both locally and in Washington, spend and tax and come up each day with new ways to spend and tax—health care, cap and trade, etc.—I think: Why aren't they worried about the impact of what they're doing? Why do they think America is so strong it can take endless abuse?

I think I know part of the answer. It is that they've never seen things go dark. They came of age during the great abundance, circa 1980-2008 (or 1950-2008, take your pick), and they don't have the habit of worry. They talk about their "concerns"—they're big on that word. But they're not really concerned. They think America is the goose that lays the golden egg. Why not? She laid it in their laps. She laid it in grandpa's lap.

They don't feel anxious, because they never had anything to be anxious about. They grew up in an America surrounded by phrases—"strongest nation in the world," "indispensable nation," "unipolar power," "highest standard of living"—and are not bright enough, or serious enough, to imagine that they can damage that, hurt it, even fatally.

We are governed at all levels by America's luckiest children, sons and daughters of the abundance, and they call themselves optimists but they're not optimists—they're unimaginative. They don't have faith, they've just never been foreclosed on. They are stupid and they are callous, and they don't mind it when people become disheartened. They don't even notice.

Printed in The Wall Street Journal, page A19

IMF Proposes Global Currency - Bancor - April 2010

This isn’t conspiracy or fantasy – this is very real.  A global currency waits in the wings – for the U.S. Dollar to collapse.

jg – August 26, 2010

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Bancor: The Name Of The Global Currency That A Shocking IMF Report Is Proposing

http://theeconomiccollapseblog.com/archives/bancor-the-name-of-the-global-currency-a-shocking-imf-report-urges-the-world-to-adopt

Sometimes there are things that are so shocking that you just do not want to report them unless they can be completely and totally documented.  Over the past few years, there have been many rumors about a coming global currency, but at times it has been difficult to pin down evidence that plans for such a currency are actually in the works.  Not anymore.  A paper entitled "Reserve Accumulation and International Monetary Stability" by the Strategy, Policy and Review Department of the IMF recommends that the world adopt a global currency called the "Bancor" and that a global central bank be established to administer that currency.  The report is dated April 13, 2010 and a full copy can be read here.  Unfortunately this is not hype and it is not a rumor.  This is a very serious proposal in an official document from one of the mega-powerful institutions that is actually running the world economy.  Anyone who follows the IMF knows that what the IMF wants, the IMF usually gets.  So could a global currency known as the "Bancor" be on the horizon?  That is now a legitimate question.

So where in the world did the name "Bancor" come from?  Well, it turns out that "Bancor" is the name of a hypothetical world currency unit once suggested by John Maynard Keynes.  Keynes was a world famous British economist who headed the World Banking Commission that created the IMF during the Breton Woods negotiations.

The Wikipedia entry for "Bancor" puts it this way....

The bancor was a World Currency Unit of clearing that was proposed by John Maynard Keynes, as leader of the British delegation and chairman of the World Bank commission, in the negotiations that established the Bretton Woods system, but has not been implemented.

The IMF report referenced above proposed naming the coming world currency unit the "Bancor" in honor of Keynes.

So what about Special Drawing Rights (SDRs)?  Over the past couple of years, SDRs have been touted as the coming global currency.  Well, the report does envision making SDRs "the principal reserve asset" as we move towards a global currency unit....

"As a complement to a multi-polar system, or even—more ambitiously—its logical end point, a greater role could be considered for the SDR."

However, the report also acknowledges that SDRs do have some serious limitations.  Since the value of SDRs are closely tied to national currencies, anything affecting those currencies will affect SDRs as well.

Right now, SDRs are made up of a basket of currencies.  The following is a breakdown of the components of an SDR....

*U.S. Dollar (44 percent)

*Euro (34 percent)

*Yen (11 percent)

*Pound (11 percent)

The IMF report recognizes that moving to SDRs is only a partial move away from the U.S. dollar as the world reserve currency and urges the adoption of a currency unit that would be truly international.  The truth is that SDRs are clumsy and cumbersome.  For now, SDRs must still be reconverted back into a national currency before they can be used, and that really limits their usefulness according to the report....

"A limitation of the SDR as discussed previously is that it is not a currency. Both the SDR and SDR-denominated instruments need to be converted eventually to a national currency for most payments or interventions in foreign exchange markets, which adds to cumbersome use in transactions. And though an SDR-based system would move away from a dominant national currency, the SDR’s value remains heavily linked to the conditions and performance of the major component countries."

So what is the answer?

Well, the IMF report believes that the adoption of a true global currency administered by a global central bank is the answer.

The authors of the report believe that it would be ideal if the "Bancor" would immediately be used as currency by many nations throughout the world, but they also acknowledge that a more "realistic" approach would be for the "Bancor" to circulate alongside national currencies at first....

"One option is for bancor to be adopted by fiat as a common currency (like the euro was), an approach that would result immediately in widespread use and eliminate exchange rate volatility among adopters (comparable, for instance, to Cooper 1984, 2006 and the Economist, 1988). A somewhat less ambitious (and more realistic) option would be for bancor to circulate alongside national currencies, though it would need to be adopted by fiat by at least some (not necessarily systemic) countries in order for an exchange market to develop."

So who would print and administer the "Bancor"?

Well, a global central bank of course.  It would be something like the Federal Reserve, only completely outside the control of any particular national government....

"A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing."

In fact, at one point the IMF report specifically compares the proposed global central bank to the Federal Reserve....

"The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. Such liquidity was provided in the most recent crisis mainly by the U.S. Federal Reserve, which however may not always provide such liquidity."

So is that what we really need? 

A world currency administered by an international central bank modeled after the Federal Reserve?

Not at all.

As I have written about previously, the Federal Reserve has devalued the U.S. dollar by over 95 percent since it was created and the U.S. government has accumulated the largest debt in the history of the world under this system.

So now we want to impose such a system on the entire globe?

The truth is that a global currency (whether it be called the "Bancor" or given a different name entirely) would be a major blow to national sovereignty and would represent a major move towards global government. 

Considering how disastrous the Federal Reserve system and other central banking systems around the world have been, why would anyone suggest that we go to a global central banking system modeled after the Federal Reserve?

Let us hope that the "Bancor" never sees the light of day.

However, the truth is that there are some very powerful interests that are absolutely determined to create a global currency and a global central bank for the global economy that we now live in. 

It would be a major mistake to think that it can't happen.

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Here's the IMF report (PDF Format):

IMF Proposes Global Currency – Bancor – April 2010