“The control mechanisms in the current financial system have become so overwhelming”

Quadragesimo Anno more topical than ever

by Professor graduate engineer rer. nat. Dr iur. Heinrich Wohlmeyer

“This dictatorship is being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will.”

Concerned fellow citizens asked me if Pope Pius XI’s statement of 15 May 1931, in the encyclica “Quadragesimo Anno – On the Social Order, Par. 106,” is still relevant, and I can only answer, as I will explain below, that this pope’s wake-up call and his exhortations in the middle of the “world economic crisis” were almost providential, because the big capital owners’ financial stranglehold was secured during the Second World War and above all by the “international financial order” institutionalised after the Second World War and further developed later.
Pius XI stated:
“This dictatorship is being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will.”1
The way to the almost unlimited rule of big capital foreseen by the Pope, and its operations which are driven by anonymised merciless greed, will be briefly illuminated below.
In order not to be dismissed as a “conspiracy theorist”, I will also cite some illuminating sources from the financial world and from science.
Looking at the present situation, we should begin at the beginning of modern banking: the invention of money was based on the idea of finding a scarce, easily transportable, durable and divisible commodity that might serve as measure of exchange and as a commodity for barter. This commodity was mainly silver and gold. In order to save on transport costs and to be safe from robbery, coin money was deposited with dealers of precious metals and goldsmiths, who issued receipts, “banknotes”, for this purpose. These were accepted like the hard money in commercial intercourse. The “bankers”, however, soon came to the conclusion that customers did not normally collect their coins, and issued banknotes which were uncovered but trusted by the citizens (as they were redeemable at the bank).
Thus, the “fractional” creation of money out of nothing had been invented.2
The British globalised this system by appropriating gold mines worldwide3 and lending “gold-covered” money. The City of London, still today an extra-territorial area in London, became the “financial hub of the world”. However, as the British had underestimated the war costs of the First World War and had incurred debt with US high finance, they had to cede a good part of their financial dominance to them. They became “junior partners”. However, they were able to maintain their position largely through the colonial empire. It was the Second World War that brought the seismic shift:

Bretton Woods – License for big (dollar) money printing

The Bretton Woods Agreement of July 1944 determined the world financial order for the period after the Second World War. The US as the main victorious power insisted on the US dollar as the reserve currency, which at that time was also fractionally gold-covered and to which the other currencies were linked.4 The installation of the US dollar as the reserve currency alongside gold was, in effect, a “license to print money” by reason of supremacy.
The established international financial institutions (World Bank Group and International Monetary Fund) secured and continue to secure this system. The US is able to enforce its high-finance strategies5 through its blocking minorities. The so-called Washington Consensus, which aims at unrestricted exploitation of indebted states, calls for the opening of borders, for lowering public finances and for free access to private and state assets.

Financial colonialism through debt policy

When the European colonial powers were no longer able to keep their colonies by military means, the new dependency-creating “financial colonialism” was developed. This is mainly dominated by US high finance. The “developing countries”, formally released into independence, were advised to accumulate high debts and thus forced into interest-rate bondage.6 They were subsequently offered the “liberating” sale of raw material sources and land7 – i.e. indirect colonialism.8
In a modified form, this strategy was also applied in “developed countries” such as Argentina and, more recently, Greece. There also, unreasonably large loans were given cheaply, so as to then raise interest rates, declare the nemesis and force the country to sell out.9
Looking at the development of the last two hundred years, one encounters the same repetitive pattern of strategy: grant cheap credit created out of nothing and, when the companies are heavily in debt, raise interest rates on the grounds of a dangerous hazard of inflation and overheating.10 Those in possession of money can then buy the insolvent companies at low prices and, into the bargain, allow themselves to be celebrated as saviours. The publicly accessible study by the ETH Zurich, “The Network of Global Corporate Control”11 shows that this is not a tall tale of conspiracy. In this study, 37 million companies were examined in respect of their interconnectednesses and dependencies.12 The result is that 1318 out of 43,000 groups control four-fifths of the world’s sales and that the 50 companies pulling the central strings are big banks and capital funds. They own the “blue chips” – i.e. the best companies –, which they have acquired. In the current situation, it is above all the Chinese sovereign wealth funds that are constantly buying up companies and land.
A recent interview of ex-banker Ronald Bernhard in “Endzeitreporter” (https://www.youtube.com/watch?v=uKjTOKp5h2g), shows how ruthless and interconnected the international finance business is. This is also about the creation and financing of wars up to the financial flows around human trafficking.

Bubbles are made – bubbles are burst

The assumption of power by the financial elite and the way they steer towards collective expropriation in their favour is particularly evident in the monetary policy of the European Central Bank (ECB), which, in violation of the basic monetary policy of monetary stability, “prints” 60 billion euros per month by buying bonds from ailing states and companies,13 and which has lowered the prime rate to zero. And yet all EU citizens are held responsible for the liability of this monetary policy.
The fact that this megabubble must burst at the expense of all citizens has been explained by the financial expert Dr Markus Krall in his book, “Der Draghi Crash – Warum die entfesselte Geldpolitik in die finanzielle Katastrophe führt” (“The Draghi Crash – why unleashed monetary policy will lead to financial disaster”).14  While savvy people are currently seeking refuge in tangible assets, the remaining bona fide owners of financial assets are facing collective expropriation in favour of the world’s financial elite.
Therefore, in my “ Ausweg-Manifest” (“Way out manifesto”)15, which has already been translated into eight languages, I have made proposals for a “strategic tax reform” that will effect an appropriate contribution from big business to the financing of the community and to debt relief for states, and also recommended the reintroduction of the institutional separation of commercial and investment banking functions16 as well as a fundamental reform of the monetary system. In plain language: a release from the established interest bondage. Dirk Solte17, one of the best connoisseurs of the world finance scene, has explained very simply why these proposals are not being accepted by politicians: The big capital owners allow for the politicians’ short-term political survival, and these in turn do not touch the big capital playgrounds. If my proposals were accepted, the financial elite would lose their control as well as their capabilities of appropriation in the communities.18
The US is currently encumbered with debts to the unbelievable height of $ 21 trillion (US trillion), or 21 million x millions19 to big business and therefore kept in its leading-strings. The US doctor and politician Ronald Ernest Paul (Ron Paul)20 demonstrated that the citizens of the United States would have had to pay no taxes at all if the monetary expansion by the state issue of money since 1913 had flown into the community21.
Several politicians have paid with their lives for their attempts to return money creation to the community. The most prominent are Abraham Lincoln (issuance of the Green-Back government bonds) and, more recently, John F. Kennedy (Executive Order No. 11110, which was cancelled immediately after his death).
The ESM, the European Stability Mechanism, into which the politicians were advised with the argument of avoiding crises, shows just how far the financially strong will take their insolence. Because this would not even be covered by the Lisbon Treaty, it was introduced in the form of a state treaty outside the “EU Constitution”. It enjoys extraterritoriality and immunity, eludes democratic control and can call up money from the member states arbitrarily. In the EU context, there is additionally the “stability pact”, according to which the member states have to report their budgets to Brussels, where they are corrected through, before being rubber-stamped by the parliaments.22 In my book “Empörung in Europa – Wege aus der Krise” (“Rebellion in Europe – Ways out of the crisis”)23, I have, together with the experienced expert Günther Robol, pointed out this situation under the title “Geldgesteuerte Scheindemokratie – die Staatsmacht als Dienstmagd der Finanz­eliten” (“Money-driven mock democracy – the state power as a servant of the financial elites”) and warned against the ratification of the ESM. It turned out that most MEPs had not read the text and had voted in favour relying on the information they had received.
Before concluding that the Pius XI warning is more relevant than ever, I would like to share three pieces of information with the reader:
The first is an enlightening commitment to creating money: Taking the bull by the horns24, the Bank of England stated (admitted) in its 14th Quarterly Bulletin (2014 Q1) in the article “Money Creation in the Modern Economy”, that the creation of money essentially takes place through lending out of nothing (“bank lending creates deposits”). The description in many textbooks that banks accumulate savings and then lend them did not correspond to the “modern reality”.

Regulations, regulations, regulations: choke back the little fish, empower the big fish

The second is a colleague’s accidentally overhearing a conversation of high finance representatives in the couloirs of Brussels: the financial authorities said that six to seven banks in Europe would be enough to efficiently manage the money economy. This strategy is consistent with the current systematic stalling of local financial utilities through thousand-page rules that paralyse business and then result in closure because of the lack of profitability.
The authorisations to close down small banks go so far that according to the “Austrian Banking Restructuring and Resolution Act” (BaSAG), banks can be closed by the Financial Market Authority (FMA) on suspicion, without any legal remedy being permitted.25
The third is the method of indirect transfer union within the framework of the European Central Bank system as pointed out by Mr Hans Werner Sinn. The Target2 system allows deficit states to “chalk up” what they bought from surplus states. In this way, on 31 December 2017 the German “Bundesbank” had the sum of about 906 billion euros in their books as a claim. That’s 2.7 times the federal budget of around 330 billion euros! It is is any­body’s guess who will repay these sums … In any case, the owners of the “Bundesbank” are liable for this risk … and these are the German citizens.
Conclusion: The exploitative domination mechanisms in the current financial system have become so overwhelming that the warning of Pius XI is more relevant than ever, and that a gentle uprising and a courageous stand appear necessary.
In my book mentioned above and in my manifesto, I have shown ways to this effect.     •

1    http://w2.vatican.va/content/pius-xi/en/encyclicals/documents/hf_p-xi_enc_19310515_quadragesimo-anno.html
2    The currently mandatory low level of bank equity capital is in line with this pattern, and it should also be noted that most banks do not have any equity capital at all. As this is simply the difference between assets and liabilities, “equity” can be faked in the balance sheets through “hedonistic” valuation of the assets.
3    This was also the reason for the two Boer Wars in South Africa at the end of the 19th century.
4    In 1971, the gold cover was unilaterally terminated and the petrodollar system was created. An agreement with the Saudis as the leading producers and caller of the shots in OPEC made it possible to enforce that oil was traded only in US dollars. Since then, the US dollar is covered only by the military power of the United States. In all states that had wanted to break out of the dollar system, there were “humanitarian interventions” or revolutions. This attitude also explains the US position on world climate issues, which is usually about leaving the oil-based energy and transport industry.
5    Here it should be noted that the US Federal Reserve System (FED) is not a National Bank in the usual sense, but a large-scale cartel with National Bank privileges. This explains the USA’s policy of promoting and protecting big capital.
6    This is in line with the strategy that the second US President, John Adams (1735–1826), named: “There are two ways to own and exploit a country: by sword or by debt.”
7    An example of this is the book by John Perkins, Confessions of an Economic Hitman – Travelling in the Service of the Economic Mafia, Berrett-Koeh­ler Publishers, 2004
8    At present, aspiring powers such as China and India are pursuing an analogous strategy, especially in Africa.
9    The Greeks were advised to sell not only airports, railways and energy suppliers, but also entire islands to reduce their debts.
10    On a case-by-case basis – and I know of such cases – the cutting-off of money supplies is explained by the fact that criteria laid down in the original credit agreement are not or not sufficiently being fulfilled and that the risk has therefore become too high.
11    Posted on 26 October 2011, https://doi.org/10.1371/journal.pone.0025995
12    Basis of data: Database ORBIS of the OECD, as of 2007
13    In total, these have been around 3,000 billion euros in the last three years. This also causes apparent GDP growth.
14    “Deutsche Bank” also warned in a study published in September 2017, The Next Financial Crisis, about a severe “shock” triggered by the bursting of financial bubbles in the next two years.
15    available at wienerwende.org
16    Separation of commercial and investment banks, so that there can be no speculation with deposits.
17    His book “Weltfinanzsystem am Limit – Einblicke in den heiligen Gral der Globalisierung” (“World Financial System at the Limit – Insights into the Holy Grail of Globalisation”), Terra Media Verlag, Berlin 2009, is probably one of the most thoroughly researched specialist books with extensive data.
18    The founder of the Rothschild dynasty Amschel Mayer-Rothschild (1743–1812) and his son Nathan stated this in the familiar sentence: “Give me control of a nation’s money and I care not who makes its laws”.
19    That is around 35% of government debt worldwide. This situation also explains the United States’ almost desperate readiness for war, for the “Great Depression” of the 1930s was not overcome by the “New Deal” but by the Second World War.
20    See Ron Paul, Institute for Peace and Prosperity, Homeschooling curriculum
21    In a pre-Christmas surprise rally on 22 December 1913, Congress passed the Federal Reserve Act granting the major bank cartel, now with National Bank privileges, the right to spend its own money (the Federal Reserve System).
22.    This is the legal situation. The fact that from political opportunism (do not overstep the mark), these guidelines have recently often not been enforced shows the flexibility of the control strategists.
23    Wohlmeyer, Heinrich. “Empörung in Europa – Wege aus der Krise” (“Rebellion in Europe – Ways out of the Crisis”), IBERA / European University Press, Vienna 2012 and 2014
24    An unmasking article by the internationally renowned financial expert Prof Richard Werner, author of the world bestseller The Princes of the Yen, was threatening to appear.
25.    Interestingly, the FMA is bound by instructions of the ECB’s banking supervisor. The parallels to the control systems in China and Russia are striking. China manipulates its currency centrally and awards only “state-compliant” banking licenses. The export-friendly exchange rates have facilitated the accumulation of high foreign exchange reserves (totaling $ 3.14 trillion at the end of 2017), which might now be spent on a shopping spree (military purchases as well as buying global companies and land). $ 1.19 trillion of the total reserves are US debts, by means of which the US can be put under political pressure. Over the past three years, the Russian National Bank has deprived 350 private banks of their license, steering the Russian banking business towards state-owned banks.
(Translation Current Concerns)

Heinrich Wohlmeyer was born in St. Pölten, Lower Austria, in 1936. He studied in Vienna, London and the US. He is an Austrian industrial and research manager as well as a regional developer and was active in industrial and regional development for over 20 years. He was one of the first to initiate sustainable concepts and created the Austrian Union of Agricultural and Nutritional Scientific Research and the Austrian Society for Biotechnology. Heinrich Wohlmeyer taught at the Technical University in Vienna and at the University of Natural Resources and Life Sciences in Vienna. He initiated the Austrian legislation for balancing expenditure and is the author of countless trade articles, among which focus on CETA-, TISA-, and TTIP- agreements. Today Wohlmeyer operates a mountain farm in Lilienfeld (Austria). Wohlmeyer is married, has three daughters and five grandchildren. His books include: The WTO, Agriculture and Sustainable Development (2002); Globales Schafe Scheren – Gegen die Politik des Niedergangs (2006) (Global Sheep Shearing – Against the Politics of Defeat); Empörung in Europa – Wege aus der Krise (2012) (Outrage in Europe – Ways out of the Crisis).