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Moneyland
Why Thieves and Crooks Rule The World
Oliver Bulloughh
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In 1957 British sterling going through one of its periodic crises, and govt tried to stabilize the pound by restricting its movement. So London banks started dealing in dollars. They got the dollars from the Soviet Union, which kept money in London so that Americans couldn't confiscate it. City found that if they used the dollars outside the US, US regulations couldn't touch them. So no limit on interest charged, and no compulsion for bank to keep some dollars in reserve in case loans went bad.
At the same time as City banks were ramping up these Eurodollar trades, pirate radio was taking off. The ships were anchored just outside the 3 mile limit, meaning they were physically present (you cd tune in to listen to them) but legally absent. They were 'offshore'.
The concept was soon applied to the Eurodollar trades. The transactions took place in London, but legally nowhere. This is basic to the operation of Moneyland.
The next step was the bond market. A London banker named Siegmund Warburg knew where to find funds - Switzerland. Swiss banks were used to hide money from wives, business partners and the taxman. But first had to figure out a way to access the money without going through currency controls and paying tax on the transaction.
The solution was to issue the bonds in a duty free area of a Netherlands airport, pay the interest in Luxemburg, and to pretend that the borrower was an Italian state company with tax-free status.
These were 'bearer bonds' - ownership was never recorded, so whoever held them received the interest and final repayment, all outside of the tax system of the country thay lived in.
This was the new secret: first you get the money (steal it or evade taxes on it), then you park it, and then you spend it. Previously this third step was hard, but now Moneyland set the money free. Didn't have to stay in Switzerland - you cd carry it anywhere you wanted.
Can estimate how much money is hidden in Moneyland bc countries record money coming in (bc it gets spent on things inside the country) but have trouble tracking money going out. The differences can be added up worldwide and the total is between $30 and 30 trillion (as of 2010).
Nevis (pronounced 'knee-vis') is a small (size of Manhattan) rock sticking up from the Atlantic, with a population of about 11,000. With no way of earning a living, it started a ship registry for flags of convenience for ship owners who wanted to dodge American regulations. Then a smart US lawyer took over. He wrote laws to keep any transaction secret. A boon for those who believed America was over-litigous, that women get too much money from divorce settlements, and that the taxman steals money you have earned.
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