The world’s largest holding companies of North American and European Banks are authorized to issue blocks of debt instruments such as Medium Term Notes, debenture instruments, and standby letters of credit at the behest of the United States Treasury for the United States Treasury Trust and Foundations and the United States Federal Reserve. The Instruments issued are backed by a treasury undertaking. The principles originally championed as answers to post World War II. Economic stability is still the impetus for the operation of these transactions today. These transactions started some fifty years ago and they have been growing and been continuously modified. The U.S. Treasury and the Federal Reserve investment transactions are administered by selected western banks. The Bretton Woods Conference held July 1st, 1944 with more than 700 participants representing 44 countries coming together and advocating for the establishment of an international banking system. International leaders have decided to adopt the US dollar as the standard global currency for international trade. It was backed by gold, which was the most stable currency at the time. The adoption of the US dollar as the standard currency of international trade was the milestone that triggered the development of the banking instrument market. To further solidify the universal acceptance of the U.S. Dollar as the standard world currency, the Conference had to fix the price of gold backing the U.S. Dollar per ounce. The United States did not possess enough gold to continue stabilizing international economic expansion. The US Treasury had to find a solution to continue creating US Dollars, that’s why it created financial instruments, mainly Medium Term Notes (MTN), which were sold to major global banks. Once the Federal Reserve cashed out the sale of the financial instruments in dollars, they were able to reintegrate into targeted segments of the global economy in accordance with the US Treasury and policies determined by the G-8 countries. The world’s biggest banks exchanged their financial instruments. Private Placement Programs (PPP) were born, but they were only served for banks and governments.
Private Placement Programs or high-profit investment programs are safe, private and “only invite-to-join” trading programs for financial instruments. They are offered by the banks. These instruments are first bought early for their nominal value with a significant discount, which are sold afterwards for a higher price in the secondary market. The difference between the selling price and the purchase price is the profit of the supplier/investor. These programs are offered only to customers with high purchasing power and such transactions may only be carried out by licensed dealers. Most of the revenues are used to finance humanitarian purposes and business projects. As explained in the previous chapter, PPP exist to ‘create’ money and money is created by creating debt. For example, you as an individual can agree to loan $100 to a friend with the understanding that the interest for the loan will be 10%, resulting in a total of $110 to be repaid. What you effectively have done is creating $10, even though that money cannot be seen initially. Banks do this sort of lending every day, however when the amount gets higher, it gives banks the power to create money. PPP involve trading with discounted bank-issued debt instruments which defer payment obligations, or debts. Theoretically, any person, company, or organization can issue debt notes. Debt notes are, in a sense, deferred payment liabilities. The PPP market is changing and it is no longer limited to governments and MTN, also, industrial companies and banks can issue their own debt instruments. Debt notes such as Medium Terms Notes (MTN), Bank Guarantees (BG), and Stand-By Letters of Credit (SBLC) are issued at the discounted prices by major world banks in the amount of $-billions every day.
All trading programs in the Private Placement Program area include trading with discounted debt notes. Furthermore, in order to bypass the legal restrictions, this trading can only be done on a private level. This is the main difference between trading with PPP and "normal" trading, which is highly regulated. Private Placement level business transactions are free from the usual restrictions in the securities market. It is based on reliable, essential, special relationships and protocols. However, none of these programs can be started unless there are sufficient funds to support each transaction. At this point, the customer is needed, because banks are not allowed to trade with their own capital or with the capital of the costumers, as long as they do not have the sufficient funds.