WHO ARE THE G7 FINANCE MINISTERS?
BOCA RATON, FLORIDA - To most people the G7 Finance Ministers are just a bunch of guys who get together throughout the year and talk over the economy-but it is not just the U.S. economy-it is the global economy. In order to understand their position of power, we must go back to August 1971 when President Nixon took the dollar off the gold standard.
The Group of Seven first met in 1973, two years after Nixon severed the last attachment the dollar had to gold when he suspended the rights of foreign countries to convert their paper-dollars to gold in August, 1971. The world monetary system since that time has been based on faith in paper currencies which float against each other and whose value is determined by good or bad economic and political news and insider manipulation.
Between 1971 and 1973, the world's G5 leaders tried to keep the world's system glued together by agreeing on the parameters that the dollar float against the yen and Deutsche mark. By February 1973, that accord, known as the "Smithsonian Agreement," fell apart when the dollar dropped below those parameters. By 1973, the world monetary markets were closed on two occasions, Valentine Weekend in February and the beginning of March for three weeks while central bank governors met at the Bank for International Settlements to determine the new value of the dollar. By March, 1973, Arthur Burns, Chairman of the Federal Reserve Board said there was a "collapse of confidence" and told congress that "the task of overhauling the international monetary system must be done in a matter of months rather than years."
Due to the monetary instability caused in a post-gold world whereby "speculative investors" could buy and sell large amounts of any countries' currency on a whim to make a profit, President Nixon in May, 1973, called together U.S., French, British and German finance ministers to meet informally in the White House library while he, French President Georges Pompidou, Prime Minister Edward Heath and German Chancellor Willy Brandt met in the Oval office. As reported in the June 23-29, 1995 edition of The European, a German participant said, "We agreed there was a need for someone to be in control again on an international scale. We hardly knew each other prior to the meeting. But mutual appreciation and sympathy developed as we talked, laying the ground for successful cooperation." Hence the idea of a group of world leaders meeting to "monitor" the world's currencies markets was born.
The first official meeting of the Group of Five was in Rambouillet, France in 1975. The participants of that first meeting were the United States, France, Germany and England who also invited Japan and Italy. In 1976 Canada was invited, thus making it the Group of Seven up until 2000 when Russia was asked to join in all areas. With regard to finance, they only participate with regard to financial terrorism.
It appears, without going into all of the last 33 meetings, that the goal of the G8 heads of state is to bring the economies of the world into "harmonization." This is being accomplished through a number of steps that includes changing national laws to conform to international law and the establishment of an international political and economic infrastructure. Dominant global structures that have been set in place include the Bank for International Settlements (BIS), the International Organization for Securities Commissions (IOSCO), the International Association of Insurance Supervisors (IAIS), the World Trade Organization (WTO), the International Labor Organization (ILO), and others.
Throughout the years that the Group of Eight heads of state have met, they have added a ministerial level or "global cabinet" to assist and compliment their actions which basically make them a "global board of directors." You can go through the President's Cabinet and for each cabinet position, there has been erected on the international level, a G8 group comprised of the respective ministers for all eight countries. For example, in 1982 the trade ministers of the G8 countries were asked to participate, in 1994, foreign affairs and state ministers joined, then labor, transportation and education ministers. At one point, all of their deliberations were included in the final statement of the heads of state. Beginning in 1999, the various global cabinet ministers began meeting separately and issuing their own statement as to what needed to be done in their respective area to further global integration.
In 1982, when the G7 Finance Ministers were brought into the global cabinet, the heads of state declared, "It is essential to intensify our economic and monetary cooperation…to work towards a constructive and orderly evolution of the international monetary system by a closer cooperation among the authorities representing the currencies of North America, of Japan and of the European Community in pursuing medium term economic and monetary objectives."
In 1996, the G-7 Finance Ministers issued their own report which reflected their growing status in world affairs. It said in part, "The dramatic increase in trade and capital flows in the world has deepened economic and financial integration among all countries...This process of globalization creates new opportunities but also challenges for our countries and the international community."
As a result of the Asian Crisis in 1997-1998, the respective G7 central bank ministers joined the finance minister's deliberations. This is extremely important. If you want to follow the money, you need to follow the central bank ministers. As such, it is not Treasury that determines monetary policy for the U.S. but the Federal Reserve, our central bank. If you think about what makes the markets quake, it has not been the words of former Treasury Secretaries Robert Rubin, Larry Summers, Paul O'Neil or the current Treasury Secretary John Snow, but those of Alan Greenspan, chairman of the private corporation that runs our monetary system.
I asked Tony Fratto, U.S. Treasury Deputy Assistant Secretary for Public Affairs, who has the real power and the final say since the central banks lend to the countries that borrow money from them. He replied, "It's not that kind of body. It is a very collaborative, congenial group with some of the brightest minds in the world in economics and finance and they have very spirited discussions about economic policy and the international architecture for finance and trade and so they find ways to come to agreement. It is not that kind of body where one person or individual dominates. They try to find consensus." Anybody interested in buying the Brooklyn Bridge?
I also asked him, "Given the drop in the economic, financial and trade barriers and the global economy that is in operation, what else needs to be done to complete it?" He enumerated a whole list of changes that still need to be made. He also said with regard to the deadline for completion of the new global international architecture, "No one has put a specific date on it. From our perspective, we don't want to be bound by deadlines but we want to see progress-steady and everyday on these issues."
In a world which trades in paper
as a result of President Nixon's actions which eliminated financial
accountability, thus making it easier for central banks to create
money out of thin air, it is possible that the volatility that we
are seeing in the currency markets and stock markets is custom designed
to facilitate economic integration. Lastly, Boca Raton means the "mouth
of the rat." I think the fact that the G-7 is meeting here is more
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"It appears, without going into all of the last 33 meetings, that the goal of the G8 heads of state is to bring the economies of the world into "harmonization." This is being accomplished through a number of steps that includes changing national laws to conform to international law..."