Margaret Thatcher - Britain

excerpted from the book 'Gods of Money' by F. William Engdahl

In early May 1979 Margaret Thatcher won election in Britain by campaigning on a platform of "squeezing inflation out of the economy." Thatcher, and her inner circle of Adam Smith 'free market' ideologues, promoted a fraud, insisting that government deficit spending, and not the 140 percent increase in the price of oil since the fall of Iran's Shah, was the chief cause of Britain's 18% rate of price inflation.

According to Thatcher's advisers, inflated prices could be lowered simply by cutting the supply of 'surplus money,' thereby inducing an economic recession. Since the major source of surplus money, she argued, was from chronic government budget deficits, therefore government expenditure must be savagely cut, in order to reduce 'monetary inflation.' The Bank of England simultaneously restricted credit to the economy by a policy of high interest rates, as their part of the remedy. It was identical in every respect to the RockefellerS' Second American Revolution, only it was called instead, the 'Thatcher Revolution.'

In June 1979, only one month after Thatcher took office, Thatcher's Chancellor of the Exchequer, Sir Geoffrey Howe, raised Base Rates for the banks a staggering five percentage points-from 12% up to 17%--within a matter of twelve weeks. This amounted to an unprecedented 42% increase in the cost of borrowing for both industry and homeowners. Never in modern history had a major industrialized nation undergone such a shock in such a brief period, outside the context of a wartime economic emergency.

The Bank of England simultaneously began to cut the money supply, to ensure that interest rates remained high. Unable to pay borrowing costs, businesses went bankrupt; families were unable to buy new homes; long-term investment into power plants, subways, railroads, and other infrastructure ground to a halt as a consequence of Thatcher's monetarist revolution.

Thatcher also imposed draconian labor policies, forcing militant British miners to cave in after brutal months of strike, which earned her the epithet 'The Iron Lady.' Unemployment in Britain doubled, rising from 1.5 million when she was elected, to a level of 3 million by the end of her first eighteen months in office. That was part of the bankers' strategy: calculating that unemployed workers who are desperate will work for less to get any decent job. Thatcher targeted labor unions, claiming they were obstacles to the success of the monetarist 'revolution,' and blaming them for creating the enemy-inflation.

Meanwhile, Thatcher accommodated the big City banks by removing exchange controls, so that instead of capital being invested in rebuilding Britain's rotted aging industrial base, funds flowed out to speculative real estate in Hong Kong or lucrative loans to Latin America.

Beginning in Britain, then in the United States, and from the AngloAmerican world radiating outward, the shock waves from the radical monetarism of Thatcher (and Rockefeller protégé Paul Volcker in the Carter Administration) spread like a virulent parasite after 1979. Country after country buckled under demands to cut government spending, lower taxes, deregulate industry and break the power of organized labor. Interest rates rose around the world to levels never before imagined in peacetime.

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