The trap was borrowed in large banks in New York and London petrodollars 'recycling'. These 'eurodollar' banks provide dollar loans to desperate Third World countries initially on a "floating rates" tied to the London rate of LIBOR. When the LIBOR rate rose during the month by about 300% as a result of the Volcker shock therapy, these debtor countries were unable to continue to pay interest. Urged the IMF and began the greatest Rogue Sabbath in world history, mistakenly called 'The debt crisis of Third World countries'. This crisis is quite predictably provoked a shock policy Volcker.
In 1986, after seven years of relentlessly high interest rates by the Fed under Volcker, filed credulous public as "squeezing inflation out of the economy U.S. ', the internal state of the U.S. economy was terrible. Much of America began to resemble the Third World: the growing slums and double-digit unemployment, rising crime and drug addiction. The Fed report showed that 55% of all American families were net debtors. The annual federal deficit has reached unprecedented up to this level of over $ 250 billion In reality, Volcker, a personal protege of David Rockefeller of the , was sent to Washington for one purpose – to save the dollar from free-fall and collapse that threatened the role of the U.S. dollar as global reserve currency. This role of the dollar as a reserve currency was hidden the key to American financial domination. Once U.S. interest rates skyrocketed, foreign investors have rushed for profit by buying U.S.