[13] And all of this served under the pretty sauce of 'world peace', 'disarmament' and 'elimination of the nuclear threat'. Everything was given up. The leaders of the USSR gave up the country's allies, its army its bases and then the country itself was given up as well as its citizens who all of a sudden found themselves in what was now a foreign country. And what happened in the end? Did the world become more secure? Did the main opponent, the USA together with NATO, disarm? How much blood has been shed in wars since then?

This is what incompetence and lack of judgement in political leaders may cause. Their good intentions to establish peace for everyone lead to wars and catastrophes because rivalry and political struggle were never cancelled. And therefore there is a sphere that everyone needs to understand, even if it seems too difficult and one does not feel like it. Even if one does not want to think about it or it is hard to believe in it. Because common ignorance will eventually concern everyone, and even if it does not concern yourself, it will concern your children. In any form. In the best case scenario, ordinary people will buy dollars as they get more expensive again and will start selling euros when they get cheaper. For their future retirement allowance they will buy shares that by the time they actually retire will cost nothing. In the worst case scenario a tank strike will shatter their house and an explosion in the underground will take their lives or health…

Politics and finances. These are the spheres of human life that require knowing at least the basic principles, otherwise it may incur real damage to human life. Finances today have brought politics to heel, have replaced politics with themselves. Not understanding this sphere may destroy peoples and countries. Today's world is based on finances, it lives among finances and is controlled by them. Therefore, dear reader, you will have to examine modern currencies. There is no moving on without it.

The financial world is not a group of geeks in front of computers, it is not polite clerks in banks and not even traders at stock exchanges. The financial world is aircraft carriers, nuclear-powered submarines, tanks, fighters and helicopters. It is infiltrators and assassins, snipers and spies, politicians and public figures. And all of that is only needed to preserve the existing financial order of the planet, to retain their dominance and even assert it. The most interesting thing is that despite clear physical signs of such world order, most people do not even have a slightest idea how everything functions. And those who dominate, those who created this theatre of the absurd, need exactly that.

In order to understand what is happening around you today, you have to realise three things, and they should be understood in combination.

1. The keystone of the modern financial world is the dominant part of the dollar. That means that all prices in world economy are only defined in dollars. Oil, gas, gold, aluminium etc. are only sold for dollars. All natural resources, all metals and all their derivatives. That means that it is in dollars that prices for production are defined. To put it short, everything, nearly everything that is sold at the global market, is only sold for dollars. This is how world economy works. If you want to buy gas or nickel – get your dollars out. It is impossible to buy them for euros or Norwegian Kroner. You have to exchange your currency for dollars. And that means creating extra demand for them.

And that is not all.

2. Not only is the dollar the main means of payment in todays international trade but it is also the main means of savings. And by that it is not private savings of people around the world that are meant but savings of countries themselves. The so-called gold and foreign currency reserves. Whichever country you take – it will have less gold in the reserves than currency[14] Therefore it would be more sensible to call such reserves foreign currency and gold ones.[15] But you had better get used to it – in the financial mirror-world all terms are designed to confuse the situation rather than make things clear.

3. It is not the United States of America but a private institution called the Federal Reserve System of the USA that issues the main currency of the world.[16] Private initiative has nothing to do with it. The US dollar just does not belong to the USA. The fact that the dollar is issued by a private institution is even stated on the dollar bill. But who reads that? Meanwhile, it says everything quite clearly. No one hides anything. American money says nowadays: Federal Reserve Note.

You are not holding a US dollar, you are holding a dollar of the Federal Reserve System.[17] But this strange situation has not always existed in the USA. It will soon be 100 years since the American government decided to privatise emission of the dollar. The Fed was established in December 1913, when President Wilson signed the Federal Reserve Act.[18] When money was issued by the Government and not by a private institution, dollar bills said a different thing: United States Note. Can you feel the difference? There used to be state money (bills) and now there is corporate money (bills). But, alas, there is no state money in the USA any more.

Even on the Federal Reserve official website you will find public information about its private nature: The Fed is a mixture of public and private elements.[19] This phrase is rather misleading – a bit like what they say about mixtures of raisins and nuts. Can such a phrase be found on a governmental institution website? Say, at the US Navy website? Or on the US Air Force website? Even the National Guard cannot say that it is a 'mixture of public and private elements'. Because the army, navy and police in the USA, as anywhere in the world, are run by the state. Whereas the organisation that issues American money is not. We do live in a strange world! Although, what is so strange? Who controls the wallet controls everything.

You can often hear statements that the Fed is controlled by the US government, which, allegedly, makes it a state organisation.[20] Refuting this statement is very easy. All it takes is to look at the founders of this institution. The Fed was established by twelve Federal Reserve banks scattered across the USA. It would seem that the Fed is a federal organisation since it consists of federal banks. But this is just a facade, a mimicry. There is not a single state-run bank in the USA! All the banks that have the word Federal in their names, were actually established by ordinary commercial banks which had been grouped according to their location. And who are the founders of American commercial banks? Via a chain of companies, shares, trusts and funds, it is always INDIVIDUALS. Therefore, the twelve Federal Reserve banks comprising the Fed are owned by unknown individuals, and not the American state. And each of these twelve Federal Reserve banks has the right to issue dollar bills.[21] If you are curious, you can take a note you have and read where it comes from.[22]

For an outsider, all proprieties are observed. An illusion is created that the Federal reserve is controlled by the state, although it is actually independent. It is about the independence of the Federal Reserve that you will read in all reference books. And it will be presented as a great advantage. The Fed is an 'independent financial institution established in order to function as the central bank and perform centralised control over the US commercial bank system'.[23]

So, what is the Federal Reserve System independent from? From the government. This means that the President of the United States has no influence on the policy of the Federal Reserve. Otherwise, what independence are they talking about? If the head of a corporation can appoint or dismiss the head of one of the companies within its corporate group, we can hardly talk of any independence. And if the head of the corporation has no right to dismiss him or make him to pursue a policy needed by the group, what kind of head of corporation is that? This is not authority any more but mere illusion. Similarly, speaking of the independence of the Fed on the one hand and of the control exercised by the state, on the other, is creating an illusion. One cannot be slightly pregnant, it is either one thing of the other.

The essence is simple: in the capitalist world everything is decided by shareholders, that is by owners of companies. If they want, they can appoint a CEO, otherwise, they can give him the sack. No American president could make Coca-Cola or Pepsi shareholders dismiss or appoint the CEO of these companies because neither he, nor the American government owns the control stock of these organisations. The situation with the Fed is similar. How many shares of the Federal Reserve System belong to the American Government? None. How can the President appoint or sack the head of the Fed? He cannot.

It does all look decent though. The Federal Reserve banks establish the governing body of the Fed, called the Board of Governors, and delegate one member each.[24] Each member of the Board of Governors is appointed for a term of 14 years.[25] These Governors then elect the Chairman of the Fed. He is appointed for four years and the US President confirms him at the position.

What do we see? This is an imitation of subordination. This is what you will find in the book written by the Fed Chairman, Alan Greenspan: 'Federal Reserve System, formally independent from the White House'.[26] What is informal dependence then? In a world where the whole management structure is strictly vertical, such dependence simply does not exist. No structure has one. There are always superiors and subordinates, ordered according to the staffing establishment, law or criminal practices.

We are dealing with an imitation. An imitation of formal subordination. Going back to the Coca-cola example, its shareholders can write in the corporate charter that every CEO has to be confirmed by the President of the United States. The head of the White House does not own any shares and therefore cannot vote. But he is granted the honourable right to sign the confirmation of the head of the company. The situation with the Fed is exactly the same because the appointment of the Fed Chairman is the most important appointment in today's world economy and hierarchy. Far more important than that of the US President.

You will also read that the FRB is accountable to the US Congress. But this is an imitation as well. It is as though the head of the Coca-Cola company made a statement in Congress and members of Congress heavily criticised it for the high concentration of sugar in the drink and for using the plastic packaging. What could they do apart from criticising? Nothing – Coca-Cola would continue to produce the same drink, with the same concentration of sugar and in the same packaging. In a similar manner, the FRB is accountable to Congress for its performance. And members of the Congress can criticise the organisation as much as they please, they can stamp their feet in anger and blame them for causing the recession and bad performance but it would have no legal implications.

As a result, we get a very peculiar image.

The main money for trading and main money for saving on the global scale is issued by an organisation owned by an unknown group of private bankers. But why should we care about the USA and the rest of the world – we should be primarily interested in our own country. It is high time we discussed the rouble. Let us look at it. Let us read what it is written on it. This is something that an ordinary person in everyday life never does. We are, frankly speaking, only interested in the value of the bill and not in what it says. Now, let us have a look. A note of the Bank of Russia'. Does it mean that the note was made in Russia? Geographically, yes. And de jure – no. Why? Remember the Federal Reserve System that issues green dollars with portraits of American presidents, an independent Central Bank, independent from the state. Is the Russian system the same?

In order to understand it, let us read the law on the Central Bank of Russia (Bank of Russia).[27] Let us start with the simplest question – who issues roubles? This is easy – the Central Bank of Russia, also known as that Bank of Russia, has the monopoly on issuing the Russian national currency. This is exactly what article 4 of the law says: 'has the exclusive right to issue cash money and organise its circulation'.[28] Does this sound sensible? Yes, there should be only one issue centre. But what is it controlled by? In order to find out, we carry on reading. The most interesting article in the law on the Russia Central Bank is probably article 2. It contains so much information that one needs to read it at least twice. Let us look at it as a whole and then examine the details.

Article 2. The registered capital or any other property of the Bank of Russia is considered federal property. In accordance to the goals and in the order specified by this federal act, the Bank of Russia exercises the authority to possess, use and dispose of the property of the Bank of Russia, including the gold and foreign currency reserves of the Bank of Russia. Withdrawal and encumbrance of the aforementioned property without consent of the Bank of Russia shall not be allowed, unless specified otherwise by a federal act. The state shall not be liable for the obligations of the Bank of Russia, and the Bank of Russia shall not be liable for the obligations of the state, unless they have taken such obligations or unless otherwise specified in federal acts. The Bank of Russia undertakes its expenditures by means of its own profits'.

So, what belongs to the state? The property of the Bank of Russia. That is – the real estate. Furniture of all sorts, chairs and suchlike. Wallpapers. Pens and computer mice. Turntables in microwave ovens. Is that it? No, it is not. There is also the 'registered capital' of the Central Bank in the amount of three billion roubles.[29] Is it much? You can answer this question yourself. First, look at the size of the gold and foreign currency reserve of the Central Bank.[30] These figures are published every day. Today the reserves amount to ca. 465 billion dollars. Now, you tell me whether three billion ROUBLES is a lot compared to 465 billion DOLLARS. This is very little. It is not the registered capital that matters but the assets of the Central Bank, its gold and foreign currency reserves. This is the 'grand prix', so to speak. And it is very peculiar that the gold and foreign currency reserves should be described in the law as 'other property'. Yet the most interesting part is ahead.

The gold and foreign currency reserves of the Bank Russia do not belong to Russia itself.

How else would you explain the following: 'Withdrawal and encumbrance of the aforementioned property without consent of the Bank of Russia shall not be allowed'. If the states owns the property, then it does not need consent from an organisation that uses the property ON BEHALF OF THE STATE. If the states owns a plot of land, it does not need any consent from the current tenant in order to build something on the land or sell it. In the case of the Central Bank we get a very strange picture – Russian citizens, voters, the people, elected high officials and through these officials granted the Central Bank with authorities in the financial sphere. It was entrusted with the country's gold and foreign currency reserves. And now they cannot use these values without consent of the Central Bank. Imagine that you let someone your own flat and then would not be able to use this flat without the tenant's consent.

'The state shall not be liable for the obligations of the Bank of Russia, and the Bank of Russia shall not be liable for the obligations of the state'.

If the state owns the property of the Central Bank and its gold and foreign currency reserves, why shall it not be liable for its obligations with this property? If the money and the gold belong to the state, then the state can pledge it, that is to be liable for its obligations with its assets. And in our situation, the country seems to have the money but it cannot be spent. It cannot be pledged. Nothing can be done without consent of the Central Bank of Russia. And we have come across another example of legal nonsense – the user can prohibit the owner to use their own property. Or does that mean that the gold and foreign currency reserves do not belong to the state?

'The Bank of Russia exercises the authority to possess, use and dispose of the property of the Bank of Russia, including the gold and foreign currency reserves of the Bank of Russia'[31].

Please note: the authority to dispose. What is that supposed to mean? When at a state institution, say, at a fire station or a tax office, a fire fighter or a tax inspector is sent to work and they are provided with appropriate instruments. The fire fighter is given a hose, a helmet and a fire engine, and the tax inspector is provided with a computer, a calculator and some paper. But the authorities of these employees are confined to, speaking of the language of the law on the Central bank, 'use and possession. There can be no disposition here. The fire fighter does not own the fire engine and the fire hose, and the tax inspector does not become the owner of the computer and the calculator. Similarly, a soldier does not become the owner of the tank or the aircraft that he has been entrusted with to protect the country, and a policeman does not become the owner of the gun and the bulletproof vest needed to capture criminals.

The 'right to dispose' is a legal term that indicates the owner of the gold and foreign currency reserves.

Your family has a wallet which contains a lot of money. You earned it over many years through honest labour. But you are not allowed to spend it. Under no circumstances unless you have the consent of an absolutely independent man who, incidentally, lives in your flat. Technically, he works for you. So to speak. But in reality, he is entirely independent from you. He sets the salary himself, he pays it himself.[32] And you are the one who depends on him, and quite a lot because he is the only person who can authorise you to spend the money YOU have earned. And without his consent you cannot do it. And to avoid all temptation, all your salary and your savings now go to the man and not to you. He guards the 'gold and foreign currency reserves' of your family. You find it unfair? Inconvenient? Strange? On the contrary! It is fair! Convenient! Progressive! And what is most important, there is no other way – if you are entrusted with the money, you can spend it. This is how this situation is explained to us. But you would quickly sort it out with the man in your family – you would simply kick him out. Right? But the man is cunning! As soon as you want to kick him out, he starts shrieking so that all the neighbourhood can hear him. And at the entrance to your house three more men are standing, 'just in case'. They are called 'Human Rights Organisations', 'Independent press', 'Civilised countries'. And it is not you who they listen to, but to your unwanted financial assistant. They vigilantly guard order and justice, effectively stopping you from hurting the man and making you politely ask him for approval of your expenditures. Why? Because you signed the Law on the Central Bank of your flat and now you are obliged to abide. Otherwise, all the newspapers of your district, as well as the bulletin of your company will have your portrait with nasty words about you. Your children will be lectured at school about their parent's 'legal nihilism'. And a sign saying WANTED under a picture of you will be attached to the door of your house.

Therefore, the law should be obeyed, and one should meet one's commitments because this is the way the whole civilised world lives. To spend your own money yourself is obsolete. Look around – all the neighbours live like that. They also have an independent man in their flat, and so does everyone in the building. It is hard for everyone. But everyone has something to aspire to. The boss of all these men lives on the top floor. He spends his money the way he wants, and, what is more, he is authorised to control all the men in the building. He drives around in a Mercedes, and everyone else in the building drives old cars. But the reason why he is so prosperous is concealed – they say that his posh car comes from the right electoral system. Because all his family issues are only solved through election…

Lets us imagine that you have had enough of this situation and have decided to stop caring about the three guys at the door who make a scene about right violation and carry on with dragging your man to the exit. You have decided to stop listening to the tales that spending your own money yourself is obsolete and inefficient. You were not convinced that the independent man is the key to your prosperity and wealth. In a word, you have decided to kick the annoying man out of the flat once and for all. And what do you see? Next to the lift there are three more people. Huge muscular blokes with very grim faces. The armbands on their sleeves say 'The US army', 'The British army' and 'NATO'. Still determined to kick the man out? Get ready for a fight then…

The law on the Central Bank is full of controversies. It is technically federal property, and nevertheless, the Central Bank has no obligations towards the state. What is more, should we, that is the state, decide to get rid of the annoying man and use the gold and foreign currency reserves of the Central Bank to build new factories and roads, we would be doomed to failure. The three guys next to the lift would not beat us up while we still have the Russian army and the nuclear shield. But very soon a fourth roughneck would come to the flat. 'Independent International Court' is written on his back. You must have already guessed that there is no chance for justice. The Central Bank of Russia, if the Russian state wants to use what allegedly belongs to it… can file a complaint to the international court!

Article 6. The Bank of Russia is authorised to file suits to courts in accordance with the legislation of the Russian Federation. The Bank of Russia is entitled to appeal to international courts, courts of foreign countries and courts of arbitration for protection of its rights'.

The Bank of Russia and the state cannot decide a controversy themselves. It will be decided by the Stockholm court of arbitration. Or the independent court of the State of New York. This is as ridiculous as if the Central Party Committee and the People's Commissioners for Finances at the times of Stalin did not solve their disputes in the Kremlin or government sessions, but at the court of the Third Reich. It was equally independent from the Central Committee of the All-Union Communist Party and from the USSR government. Right? Right. Therefore it could decide who was right and who was wrong in the USSR, being the court of Nazi Germany. It would have been fair and impartial. And of course, it would have been guided only by the interests of Russia and by the letter of the law. But the funniest thing is that should the Central Bank appeal to the International Court of Justice, it would inevitably win. And Russia, that is us, would inevitably lose. Why? Because the Central Bank is a part of a whole system of similar central banks which, in their turn are a part of a web called the International Monetary Fund (IMF). And what is most important: the gold and foreign currency reserves of the Central Bank of Russia are not stored in Russia. Except for a small percentage of gold stored in Russia, the rest of the reserves of our Central Bank does not look like wads of cash from various countries bound with rubber bands but digital 'zeros'. Which are stored, incidentally, in computers abroad. Gold and foreign currency reserves of our Central Bank are invested in state bonds of other countries, mostly in US state bonds: 'Russia has spent over 30% of the gold and foreign currency reserves on buying securities issued by the US Treasury… According to the American Ministry of Finance, our country's investments in American state bonds have grown by 3.5 times over the last year – from 32.6 billion up to 116.4 billion dollars. And now Russia takes the 7^th place in the rating of countries crediting the United States.'[33]

Can you imagine the USSR State Bank investing 30% of its reserves in US state bonds? Not in gold, but in bonds?

But let us be just – the Central Bank does not invest the gold and foreign currency reserves only in American securities. The International Monetary Fund also receives some funds: 'In the near future Russia will invest 10 billion dollars of the gold and foreign currency reserves in bonds of the International Monetary Fund (IMF). This was announced at a meeting with Russian president Dmitry Medvedev by the Finance minister of the Russian Federation Alexey Kudrin. According to the minister, it was the Central Bank that was going to invest the money'.[34]

The fact that the IMF is fully controlled by the Anglo-Saxons and other monstrous offspring of Bretton Woods will be discussed later. For now we will only note that the Central Bank always purchases various bonds when Russian economy needs the credits resources. But investing them inside Russia is impossible. Why? It is prohibited by law.

Article 22. The Bank of Russia is not entitled to credit the Government of the Russian Federation to fund budget shortfall, buy state securities at the initial offer, except for the cases when it is provided for by the federal law on federal budget'.

The Central banks of the so-called developed countries credit the budget through buying state bonds. And our Central Bank is not allowed to buy Russian bonds. But it can buy American state bonds and securities of some other countries. This is an important detail: the Central Bank of Russia is only entitled to buy bonds issued by OTHER countries, which means that it is obliged to credit other countries' economies. Very particular economies actually.

According to the legislation, the rouble can only be issued by the Bank of Russia. And according to the same law, it is not entitled to provide loans to the state. How is emission organised then, how are roubles introduced into circulation? Easily – through purchasing foreign currency at the stock exchange.

The system works as follows:

? Russia sells certain goods at the global market;

? the country receives 100 dollars;

? the Central Bank buys the dollars at the stock exchange;

? the dollars go to the gold and foreign currency reserves of the Central Bank;

? Russian economy gets 3000 roubles.

In other words, foreign currency can only get into the country through the stock exchange, where it is sold and the respective amount of roubles is 'injected' into Russian economy. Some sort of an unspoken parity rate for the population is observed. The parity rate between the amount of dollars in the gold and foreign currency reserves and the amount of roubles in the economy. For example, oil prices grow. For the same goods Russia now receives 110 dollars and not 100. The parity is tilted and the Central Bank corrects it. It lowers the dollar exchange rate, buys them for less money and injects in the economy a smaller amount of roubles per dollar. If the oil price drops, the process is reverse: the Central Bank increases the dollar exchange rate. And now, for each incoming dollar, more Russian currency is issued. It is the Central Bank that watches the gross volume of roubles. As according to the law on the Central Bank it is the governing body of the Central bank – the Board of Directors – that makes decisions regarding 'total volume of cash issue'.[35]

In other words, there is a strict relation between the monetary stock inside Russia and the dollar stock that Russia receives from the outside. And that means that we are vulnerable. We are not fully independent. Why does the Central bank keep the parity rate between the amount of dollars in the gold and foreign currency reserves and the gross volume of issued roubles? Because the Central bank controls issue of the rouble in the 'currency board' mode.[36]

It is required because any country which is a member of the IMF is obliged to guarantee single-step exchange of the total amount of the national currency into dollars and pounds using its own gold and foreign currency reserves. This rule has to be observed at any given moment. Otherwise, a country cannot be accepted to the IMF. And without being in the IMF one cannot be a part of the 'civilised society'.

As a result, the Russian economy does not have as much money as required for its proper operation but equal to the amount of dollars in the reserves of the Central Bank. The amount of roubles that can be issued depends of the amount of dollars Russia received for its oil and gas. That means that the whole Russian economy is artificially put in direct correlation with the export of natural resources. This is why a drop for oil prices causes a collapse of everything and everywhere. This is not due to insufficient tax collection from oil sales. The reason is that roubles disappear from the economy, which is followed by a collapse of trade, construction, reduction in salaries and curtailment of the whole production process.