1-The Public Limited Companies System.

As for the public limited company' system, it is set up in the first instance to enable businessmen and their businesses to protect their huge capital against the creditors and others who have interests in the business, in the event that some of these business ventures fail. It also enables them to control the ordinary shareholders who invest in these businesses. The distinguishing characteristic of the public company is that it has limited liability; hence if its business fails and losses are incurred, those who have rights upon the company would not be able to claim anything back from the investors, regardless of the amount of their capital (share-holding). They would only be able to claim back what is left in the company in terms of its capital.

It is an established convention in the West that the public limited company is established and declared by the state, not its founders. It is the state that issues the memorandum of association, specifies the nature of its business and the number of its shares. It is also the state that publishes the main articles of association. Hence, the public limited company has a corporeal personality that is totally independent of its investors. It gives the people who have a vested interest in the company the right to account it alone and not the investors. Thus the company's liability is limited to what is left in the company itself and does not extend to what the investors have in terms of money.

When the state issues the memorandum of association for a public limited company, it appoints an interim board of directors from among the founders, i.e. those who have applied for the company to be established. The board would appoint a chairman and the company would start selling shares in the form of transferable certificates. The holder of such shares has a host of specific and limited rights. These would include his dividend from what the company decides to distribute in terms of profits or his share from the company's capital if it decided to wind up its business. They also have the right to vote yearly to elect a new board of directors. However, all these rights are in relation to the shares they hold and not in relation to the investors. For instance, when voting for the board of directors, the votes would be according to the number of shares held and not according to the number of persons. Hence, if one person owned half of the shares plus one and if the number of the other shareholders who own the remaining shares were 100,000, that single shareholder with the majority shares would have the decisive vote in electing the board of directors, and the votes of the other shareholders would have no value whatsoever.

Businessmen do not usually need half the number of shares in a company in order to control it, sometimes 5% or 10% is sufficient. This could either be due to the fact that most of the small shareholders are dispersed, or due to cooperation between a group of major shareholders to elect a board of directors, thus controlling the capital of all the shareholders and managing all the company's affairs. This is a tangible reality perceived by all people, and before such a reality, most of the shareholders would have no power to have any say over the capital they invested in the company, save for the trading in the shares of the company in the stock market. This in fact does not make them partners in the company, but mere owners of company share certificates, which they buy and sell in the stock market, without the need of permission from either the company or its shareholders.

Furthermore, the stock markets enable the controlling shareholders to sell their shares without seeking anyone's permission and without having to inform anyone. Hence, they could in fact wash their hands of any liability pertaining to the activities of the company which they controlled and for which they run its affairs. Also, when they wish to buy more shares, be it of the same company or another company, they need not consult anyone. What prompts them to buy some yet sell other shares is the motive for instant profit; thus, if the value of the shares of a company that they control increased, they would sell all or part of their shares, then if the value decreased they would buy their shares back. Therefore, they have no loyalty to the company or to other shareholders, or to the business of the company or its staff. The capitalists aim from controlling a certain company through its board of directors is merely to influence its activity in a manner leading to the rise in the value of its shares.

All this has led to a split between the stock markets and other securities, and the real economy, i.e. the reality of the companies whose shares are traded. What confirms this fact is the ratio (price/earnings ratio) that traders constantly monitor in the stock market, using it as a standard to gauge the increase and decrease in the value of shares of a specific company. It is the rate of the current price of a share compared with the annual dividend paid by the company for each single share. For instance if the annual profit of a single share were 2 dollars and the price of the share in the stock market were 40 dollars, the price/earnings ratio would be 20. In other words the profit of the company per share would be 5% of the price of that share. Newspapers publish these ratios daily, for all companies whose shares are traded in the stock markets. By reviewing these ratios, we note that they diverge from each other a great deal. The rate for some companies could in some cases reach 100, while for others it could be as low as 5. This indicates the split in the relationship between the securities and stock markets, and the real economy and the reality of companies. It also indicates that the stock market has turned into a big casino. Speculation dominates the stock markets with sharp and repeated fluctuations becoming a feature of the market.

2- The Usurious Banking System.

As for the usurious banking system, it is considered as the chief calamity of the Capitalist economy. This is so because thanks to it, the banks managed to collect people's moneys under the name of deposits and to dispose of their moneys, as if they were the moneys of the banks and not the moneys of the depositors. They also managed to legitimise what they had collected in terms of funds from depositors by lending these funds to capitalists and businessmen, including traders in the stock markets, and also by lending money to the depositors themselves in some cases, then charging a guaranteed rate of interest for each loan.

However, this legitimising process is only partial. This is so because the banks' owners, most of whom happen to be capitalists and their companies, are given priority in acquiring loans, and these loans are at a reduced rate of interest. Other capitalists and businessmen are second on the list under the pretext that the default risks are minimal. Finally come the small businessmen and consumers from among the common people. This bias is clearly reflected in the disparity of the interest rates applied to each. In America for instance, the rate ranges from 5.8% on loans given to capitalists and major companies, to 20% on loans given to purchase a car. In conclusion, the interest system leads naturally to making people's moneys circulated among very few people.

The role of the banks in the stock markets is more dangerous than their role in the real economy. This is so because they lend the dealers of shares loans which exceed what they have in cash by manifolds. For instance, a share whose price in the stock market is $100.00 can be bought with $5.00 from the buyer's own cash and $95.00 with money borrowed from the bank, or borrowed from brokerage houses who in turn borrow it from the bank. This means that this person who deals in the stock market can buy a number of shares whose price is twenty times more than his cash can buy. However, the bank does not lend this sort of money to anyone except the very wealthy capitalists, this means that only those persons would be able to multiply their purchasing power in the market, thanks to the banks, and consequently increase their influence over these markets and increase their wealth at the expense of the common people from among the depositors or the traders.

Since most of what is bought in terms of shares is financed by loans that hugely exceed their values, a sharp fall in share prices is often followed by a further fall. For instance, if a bank were to agree to lend one of the traders 90% of the value of shares which he wants to purchase, and this trader were to buy shares for $1,000,000 his loan from the bank would be $900,000. Then if we were to assume that the value of his shares fell by 20%, i.e. it became $800,000, the authorised loan would become $720,000, i.e. 90% of $800.000. In this case he would have to repay the bank immediately the sum of $180,000 of his loan, in order to maintain the percentage of the loan at 90% of the value of shares. If he had the money he would not be forced to sell any of his shares whereas if he did not have it, he would be forced to sell his shares immediately to pay off his outstanding debt to the bank. This would increase the supply of shares and would lead to a further decrease in prices. If a host of traders were put in the same situation, this would lead to a constant fall in prices and perhaps to an agitation in the market.

Therefore, the role of the usurious banking system in the stock market shifts between inflating and deflating trading and prices. Hence, when the prices of some specific shares increase, banks tend to offer large amounts of money in terms of loans to those who trade in those specific shares, thus multiplying the amount of cash they have at their disposal. Those traders would in turn rush to buy more shares and the prices would continue increasing to an exaggerated level. However, the situation could change overnight. The prices of some specific shares could fall for any reason, such as a rumour or the failure of a project. The banks in this case would reduce their lending due to the decrease in the value of the shares which acted as securities against the loans they had issued to the traders. Those traders would in turn resort to either selling some or all of the shares and this would precipitate a fall in prices to an exaggerated level. This would consequently lead the banks towards reducing further, their lending due to the constant fall in share prices.

In answer to the question of where the banks get these funds from and where do they take them when they reduce their lending, the answer is that these funds belong to the depositors in the first place. Banks in the usurious banking system rely on people keeping their savings in the banks. They also rely on the fact that most of what is withdrawn from one account ends up in another account in the same bank or in another bank, and most of the moneys remain in the banks. What the banks lend to borrowers is not in fact money in kind that goes out of the banks' deposits, but rather a money in an account, that the bank creates by opening two accounts for the borrower, one for the loan that he owes and another as a deposit account holding the sum generated from the loan, for the borrower to withdraw what he needs. If most of the depositors and borrowers were to withdraw their deposits in cash all at once, they would not be able to do so, because most of those deposits are turned into loans which may be losses or may be in other banks, and thus they cannot be cashed in instantly. In such a case, the bank would often have to be shut down and liquidated.

The usurious banking system is based on trust in the banks and based on the fact that people's deposits are safe, i.e. that they can withdraw all of their deposits whenever they wished. However, this statement is deceptive and different from the reality of the banks. This deception has been exposed several times in the West and in other parts of the world, when depositors could not withdraw their deposits and lost huge sums of money as a result, and the banks were shut or declared bankrupt. Therefore, the West invented the inconvertible paper money, also known as Compulsory Bills.

3-The Inconvertible Paper Money Standard.

The supervision of this inconvertible money is assigned by the government to a central bank. And all this is merely to cover up the flaws of the usurious banking system, and to cover up the fact that it is based on deception, to prevent it from collapsing and to maintain people's confidence in the Capitalist system. The inconvertible paper money system gives powers to the Central Bank to issue a currency to be circulated throughout the country in the shape of printed papers that have no intrinsic value whatsoever. The government forces people in the country to accept this currency in fulfilling their financial commitments. If any of the citizens were to refuse this paper as a settlement to a debt they were owed, the law and the courts would force him to accept it; otherwise he would lose his claim and his rights.

This means that the Central Bank reserves the right to issue money that it deems necessary to implement the government's policy. For instance, when the treasury runs out of moneys that the government had levied in taxes or other, it resorts to the Central Bank and borrows from it. A loan is recorded against what it borrows and a deposit account is opened so that the treasury could withdraw what it needs to cover its expenditures. This would be considered as new money. Also, if the Central Bank deemed that there was a need for more money in the country, to lend to borrowers, it would purchase a host of exchequer bills or company securities, and it would record the value of these bills in the accounts of those who sell them, either at the Central Bank itself or in the commercial banks. This would also be new money.

An example: of this is what took place in October 1987 when the share prices in New York fell by 22% in one single day. The U.S. Central Bank issued at once huge amounts of money and put it at the disposal of the banks in order to redress the effects of the shock. The Central Bank bought billions of dollars worth of bills (securities) and put these amounts at the disposal of the banks, to lend to the dealers in the stock market and ease their hardship; the system succeeded for a while in riding the storm and covering up the flaws of the usurious banking system despite rumours circulating that Citibank, one of the leading banks in New York, was about to shut down.

Issuing money by printing paper money and placing it in the government's or in people's accounts is also very costly, and the burden of this cost is laid upon the common people who most of the time fail to perceive its causes. This is so because the increase of the money in circulation leads to a decrease in the value of the currency; hence, one of the flaws of this system is that it always suffers from an increase in the cost of goods and services. The reality of this increase which some refer to as inflation, is that it is a reduction in the value of people's moneys and a reduction in the value of their wages and their standard of living. However, the main flaw in this system is that it is based on a confidence trick, i.e. on the deception that the paper money has a value, whereas it has no intrinsic value; however, the law of the land has imposed it by force and made it a legal tender in the eyes of the judiciary. This is why we note that when the political situation in a weak country is easily undermined and when the State's reverence is shaken, its paper money becomes very weak and its rulers often resort to reducing the value of the currency vis--vis other currencies (devaluing), hoping to start afresh the confidence trick and to deceive people with regard to the value of the currency.

This is the reality of the stock markets in the West and in every country that follows and emulates the West. The stock markets are the hotbeds of the businessmen, for they do not produce any commodity that could be useful to people and there is no other incentive for the traders except a quick and easy profit. Stock markets are more like casinos than anything else. They are like cobwebs that can easily be shaken. They represent the symbol of the capitalist greed and gasping for material values. Had it not been for the Capitalist economic systems, such as the public limited companies, the usurious banking system and the inconvertible paper money, these parasitic markets would not have existed and would not have been able to survive. This is the reality of the stock markets in the West and in every country that follows and emulates the West.