It usually makes sense to follow the money when seeking understanding of almost any major change. The strategy of following the money in our current convergence of crises in late summer of 2020 leads us directly to the lockdowns. The lockdowns were first imposed on people in the Wuhan area of China. Then other populations throughout the world were told to “shelter in place,” all in the name of combating the COVID-19 virus.
Understanding of the enormous
impact of the lockdowns is still developing. The lockdowns are proving to pack
a far more devastating punch than any other aspect of the strange sequence of
events that is making 2020 a year like no other. Even when the issues are
narrowed to those of human health, the lockdowns have had, and will continue to
have, far more wide-ranging and devastating impacts than the celebrity virus.
The lockdowns have, for
starters, been directly responsible for explosive rates of suicide, domestic
violence, overdoses, and depression. In the long run, these maladies from the
lockdowns will probably kill and harm many more people than COVID-19.
But this comparison does not
tell the full story. The nature and length of the lockdowns are causing
millions of people to lose their jobs, businesses and financial viability. It
seems that the economic descent is still gathering force. The assault of the
lockdowns on our economic wellbeing still has much farther to go.
The lockdowns have proven to be
a powerful instrument of social control. This attribute is becoming very
attractive especially to some politicians. They have discovered they can derive
considerable political traction from hyping and exploiting the largely
manufactured pandemic panic.
The lockdowns are still a
work-in-progress. There are past lockdowns, revolving lockdowns, partial
lockdowns, mandatory lockdowns, voluntary lockdowns, severe lockdowns and
probably an array of many lockdown types yet to be invented.
The lockdowns extend to
disruptions in supply chains, disruptions in money flows, drops in consumption,
breakdowns in transport and travelling, increased bankruptcies, losses of
finance leading to losses of housing, as well as the inability to pay taxes and
debts.
The lockdowns extend beyond
personal habitations to prohibitions on large assemblies of people in stadiums,
concert halls, churches, and a myriad of places devoted to public recreation
and entertainment. On the basis of this way of looking at what is happening, it
becomes clear the economic and health effects of the lockdowns are far more
pronounced than the damage wrought directly by the new coronavirus.
This approach to following the
money leads to the question of whether the spread of COVID-19 was set in motion
as a pretext. Was COVID-19 unleashed as an expedient for bringing about the
lockdowns with the goal of crashing the existing economy? What rationale could
there possibly be for purposely crashing the existing economy?
One possible reason might have
been to put in place new structures to create the framework for a new set of
economic relationships. With these changes would come accompanying sets of
altered social and political relationships.
Among the economic changes
being sought are the robotization of almost everything, cashless financial
interactions, and elaborate AI impositions. These AI impositions extend to
digital alterations of human consciousness and behavior. The emphasis being
placed on vaccines is very much interwoven with plans to extend AI into an
altered matrix of human nanobiotechnology.
There are other possibilities
to consider. One is that in the autumn of 2019 the economy was already starting
to falter. Fortuitously for some, the new virus came along at a moment when it
could be exploited as a scapegoat. By placing responsibility for the economic
debacle on pathogens rather than people, Wall Street bankers and federal
authorities are let off the hook. They can escape any accounting for an
economic calamity that they had a hand in helping to instigate.
A presentation in August of
2019 by the Wall Street leviathan, BlackRock Financial Management, provides a
telling indicator of foreknowledge. It was well understood by many insiders in
2019 that a sharp economic downturn was imminent.
At a meeting of central bankers
in Jackson Hole Wyoming, BlackRock representatives delivered a strategy for
dealing with the future downturn. Several months later during the spring of
2020 this strategy was adopted by both the US Treasury and the US Federal
Reserve. BlackRock’s plan from August of 2019 set the basis of the federal
response to the much-anticipated economic meltdown.
Much of this essay is devoted
to considering the background of the controversial agencies now responding to
the economic devastation created by the lockdowns. One of these agencies is
empowered to bring into existence large quantities of debt-laden money.
The very public role in 2020 of
the Federal Reserve of the United States resuscitates many old grievances. When
the Federal Reserve was first created in 1913 it was heavily criticized as a
giveaway of federal authority.
The critics lamented the
giveaway to private bankers whose firms acquired ownership of all twelve of the
regional banks that together constitute the Federal Reserve. Of these twelve
regional banks, the Federal Reserve Bank of New York is by far the largest and
most dominant especially right now.
The Federal Reserve of the
United States combined forces with dozens of other privately-owned central
banks thoughout the world to form the Bank of International Settlements. Many
of the key archetypes for this type of banking were developed in Europe and the
City of London where the Rothschild banking family had a large and resilient
role, one that persists until this day.
Along with the Federal Reserve
Bank of New York, BlackRock was deeply involved in helping to administer the
bailout in 2008. This bailout resuscitated many failing Wall Street firms
together with their counterparties in a number of speculative ventures
involving various forms of derivatives.
The bailouts resulted in
payments of $29 trillion, much of it going to restore failing financial
institutions whose excesses actually caused the giant economic crash. Where the
financial sector profited greatly from the bailouts, taxpayers were abused yet
again. The burden of an expanded national debt fell ultimately on taxpayers who
must pay the interest on the loans for the federal bailout of the “too big to
fail” financial institutions.
Unsettling precedents are set
by the Wall Street club’s manipulation of the economic crash of 2007-2010 to
enrich its own members so extravagantly. This prior experience bodes poorly for
the intervention by the same players in this current round of responses to the
economic crisis of 2020.
In preparing this essay I have
enjoyed the many articles by Pam Martens and Russ Martens in Wall Street on Parade. These hundreds of
well-researched articles form a significant primary source on the recent
history of the Federal Reserve, including over the last few months.
In this essay I draw a contrast
between the privately-owned regional banks of the Federal Reserve and the government-owned
Bank of Canada that once issued low-interest loans to build infrastructure
projects.
With this arrangement in place,
Canada went through a major period of national growth between 1938 and 1974.
Canada emerged from this period with a national debt of only $20 billion. Then
in 1974 Prime Minister Pierre Trudeau dropped this arrangement to enable Canada
to join the Bank of International Settlements. One result is that national debt
rose to $700 billion by 2020.
We need to face the current
financial crisis by developing new institutions that avoid the pitfalls of old
remedies for old problems that no longer prevail. We need to make special
efforts to change our approach to the problem of excessive debts and the
overconcentration of wealth in fewer and fewer hands.
Locking Down the Viability of
Commerce
Of all the facets of the
ongoing fiasco generally associated with the coronavirus crisis, none has been
so widely catastrophic as the so-called “lockdowns.” The supposed cure of the
lockdowns is itself proving to be much more lethal and debilitating than
COVID-19’s flu-like impact on human health.
Many questions arise from the
immense economic consequences attributed to the initial effort to “flatten the
curve” of the hospital treatments for COVID-19. Did the financial crisis occur
as a result of the spread of the new coronavirus crisis? Or was the COVID-19
crisis set in motion to help give cover to a long-building economic meltdown
that was already well underway in the autumn of 2019?
The lockdowns were first
instituted in Wuhan China with the objective of slowing down the spread of the
virus so that hospitals would not be overwhelmed. Were the Chinese lockdowns
engineered in part to create a model to be followed in Europe, North America,
Indochina and other sites of infection like India and Australia? The Chinese
lockdowns in Hubei province and then in other parts of China apparently set an
example influencing the decision of governments in many jurisdictions. Was this
Chinese example for the rest of the world created by design to influence the
nature of international responses?
The lockdowns represented a new
form of response to a public health crisis. Quarantines have long been used as
a means of safeguarding the public from the spread of contagious maladies.
Quarantines, however, involve isolating the sick to protect the well. On the
other hand the lockdowns are directed at limiting the movement and circulation
of almost everyone whether or not they show symptoms of any infections.
Hence lockdowns, or, more
euphemistically “sheltering in place,” led to the cancellation of many
activities and to the shutdown of institutions. The results extended, for
instance, to the closure of schools, sports events, theatrical presentations
and business operations. In this way the lockdowns also led to the crippling of
many forms of economic interaction. National economies as well as international
trade and commerce were severely impacted.
The concept of lockdowns was
not universally embraced and applied. For instance, the governments of Sweden
and South Korea did not accept the emerging orthodoxy about enforcing
compliance with all kinds of restrictions on human interactions. Alternatively,
the government of Israel was an early and strident enforcer of very severe lockdown
policies.
At first it seemed the lockdown
succeeded magnificently in saving Israeli lives. According to Israel Shamir,
in other European states the Israeli model was often brought up as an example.
In due course, however, the full extent of the assault on the viability of the
Israeli economy began to come into focus. Then popular resistance was aroused
to reject government attempts to enforce a second wave of lockdowns against a
second wave of supposed infections. As Shamir sees it, the result is that
“Today Israel is a failed state with a ruined economy and unhappy citizens.”
In many countries the lockdowns
began with a few crucial decisions made at the highest level of government.
Large and proliferating consequences would flow from the initial determination
of what activities, businesses, organizations, institutions and workers were to
be designated as “essential.”
The consequences would be
severe for those individuals and businesses excluded from the designation
identifying what is essential. This deep intervention into the realm of free
choice in market relations set a major precedent for much more intervention of
a similar nature to come.
The arbitrary division of
activities into essential and nonessential categories created a template to be
frequently replicated and revised in the name of serving public heath. Suddenly
central planning took a great leap forward. The momentum from a generation of
neoliberalism was checked even as the antagonistic polarities between rich and
poor continued to grow.
To be defined as “nonessential”
would soon be equated with job losses and business failures across many fields
of enterprise as the first wave of lockdowns outside China unfolded. Indeed, it
becomes clearer every day that revolving lockdowns, restrictions and social
distancing are being managed in order to help give false justification to a
speciously idealized vaccine fix as the only conclusive solution to a
manufactured problem.
What must it have meant for
breadwinners who fed themselves and their families through wages or
self-employment to be declared by government to be “non-essential”? Surely for
real providers their jobs, their businesses and their earnings were essential
for themselves and their dependents. All jobs and all businesses that people
depend on for livelihoods, sustenance and survival are essential in their own
way.
Was COVID-19 a Cover for an
Anticipated or Planned Financial Crisis?
A major sign of financial
distress in the US economy kicked in in mid-September of 2019 when there was a
breakdown in the normal operation of the Repo Market. This repurchase market in the United States is
important in maintaining liquidity in the financial system.
Those directing entities like
large banks, Wall Street traders and hedge funds frequently seek large amounts
of cash on a short-term basis. They obtain this cash from, for instance, money
market funds by putting up securities, often Treasury Bills, as collateral.
Most often the financial instruments go back, say the following night, to their
original owners with interest payments attached for the use of the cash.
In mid-September the trust
broke down between participants in the Repo Market. The Federal Reserve Bank of
New York then entered the picture making trillions of dollars available to keep
the system for short-term moving of assets going. This intervention repeated
the operation that came in response to the first signs of trouble as Wall
Street moved towards the stock market crash of 2008.
One of the major problems on
the eve of the bailout of 2008-09, like the problem in the autumn of 2019, had
to do with the overwhelming of the real economy by massive speculative
activity. The problem then, like a big part of the problem now, involves the
disproportionate size of the derivative bets. The making of these bets have
become a dangerous addiction that continues to this day to menace the viability
of the financial system headquartered on Wall Street.
By March of 2020 it was
reported that the Federal Reserve Bank of New York had turned on its money
spigot to create $9 trillion in new money with the goal of keeping the failing
Repo Market operational. The precise destinations of that money together with
the terms of its disbursement, however, remain a secret. As Pam Martens and Russ Martens write,
Since the Fed turned on its
latest money spigot to Wall Street [in September of 2019], it has refused to
provide the public with the dollar amounts going to any specific banks. This
has denied the public the ability to know which financial institutions are in
trouble. The Fed, exactly as it did in 2008, has drawn a dark curtain around
troubled banks and the public’s right to know, while aiding and abetting a
financial coverup of just how bad things are on Wall Street.
Looking back at the prior
bailout from their temporal vantage point in January of 2020, the authors noted
“During the 2007 to 2010 financial collapse on Wall Street – the worst
financial crisis since the Great Depression, the Fed funnelled a total of $29
trillion in cumulative loans to Wall Street banks, their trading houses and
their foreign derivative counterparties.”
The authors compared the rate
of the transfer of funds from the New York Federal Reserve Bank to the Wall
Street banking establishment in the 2008 crash and in the early stages of the
2020 financial debacle. The authors observed, “at this
rate, [the Fed] is going to top the rate of money it threw at the 2008 crisis
in no time at all.”
The view that all was well with
the economy until the impact of the health crisis began to be felt in early
2020 leads away from the fact that money markets began to falter dangerously in
the autumn of 2019. The problems with the Repo Market were part of a litany of
indicators pointing to turbulence ahead in troubled economic waters.
For instance, the resignation in 2019 of about
1,500 prominent corporate CEOs can be seen as a suggestion
that news was circulating prior to 2020 about the imminence of serious
financial problems ahead. Insiders’ awareness of menacing developments
threatening the workings of the global economy were probably a factor in the
decision of a large number of senior executives to exit the upper echelons of
the business world.
Not only did a record number of
CEOs resign, but many of them sold off the
bulk of their shares in the companies they were leaving.
Pam Marten and Russ Marten who
follow Wall Street’s machinations on a daily basis have advanced the case that
the Federal Reserve is engaged in fraud by trying to make it seem that “the
banking industry came into 2020 in a healthy condition;” that it is only
because of “the COVID-19 pandemic” that the financial system is” unravelling,”
The authors argue that this
misrepresentation was deployed because the deceivers are apparently “desperate”
to prevent Congress from conducting an investigation for the second time in
twelve years on why the Fed, “had to engage in trillions of dollars of Wall
Street bailouts.” In spite of the Fed’s fear of facing a Congressional
investigation after the November 2020 vote, such a timely investigation of the
US financial sector would well serve the public interest.
The authors present a number of
signs demonstrating that “the Fed knew, or should have known…. that there was a
big banking crisis brewing in August of last year. [2019]” The signs of the
financial crisis in the making included negative yields on government bonds
around the world as well as big drops in the Dow Jones average. The plunge in
the price of stocks was led by US banks, but especially Citigroup and JP Morgan
Chase.
Another significant indicator
that something was deeply wrong in financial markets was a telling inversion in
the value of Treasury notes with the two-year rate yielding more than the
ten-year rate.
Yet another sign of serious trouble
ahead involved repeated contractions in the size of the German economy.
Moreover, in September of 2019 news broke that officials of JP Morgan Chase
faced criminal charges for RICO-style racketeering. This scandal added to the evidence of
converging problems plaguing core economic institutions as more disruptive
mayhem gathered on the horizons.
Accordingly, there is ample
cause to ask if there are major underlying reasons for the financial crash of
2020 other than the misnamed pandemic and the lockdowns done in its name of “flattening”
its spikes of infection. At the same time, there is ample cause to recognize
that the lockdowns have been a very significant factor in the depth of the
economic debacle that is making 2020 a year like no other.
Some go further. They argue
that the financial crash of 2020 was not only anticipated but planned and
pushed forward with clear understanding of its instrumental role in the Great
Reset sought by self-appointed protagonists of creative destruction. The
advocates of this interpretation place significant weight on the importance of
the lockdowns as an effective means of obliterating in a single act a host of
old economic relationships. For instance Peter Koenig examines the
“farce and diabolical agenda of a universal lockdown.”
Koenig writes, “The pandemic
was needed as a pretext to halt and collapse the world economy and the
underlying social fabric.”
Inflating the Numbers and
Traumatizing the Public to Energize the Epidemic of Fear
There have been many pandemics
in global history whose effects on human health have been much more pervasive
and devastating than the current one said to be generated by a new coronavirus.
In spite, however, of its comparatively mild flu-like effects on human health,
at least at this point in the summer of 2020, there has never been a contagion
whose spread has generated so much global publicity and hype. As in the
aftermath of 9/11, this hype extends to audacious levels of media-generated
panic. As with the psyop of 9/11, the media-induced panic has been expertly
finessed by practitioners skilled in leveraging the currency of fear to realize
a host of radical political objectives.
According to Robert E. Wright
in an essay published by the American Institute for Economic Research, “closing down the U.S.
economy in response to COVID-19 was probably the worst public policy in at
least one-hundred years.” As Wright sees it, the decision to lock down the
economy was made in ignorant disregard of the deep and devastating impact that such
an action would spur. “Economic lockdowns were the fantasies of government
officials so out of touch with economic and physical reality that they thought
the costs would be fairly low.”
The consequences, Wright predicts, will extend
across many domains including the violence done to the rule of law. The lockdowns,
he writes, “turned the Constitution into a frail and worthless fabric.” Writing
in late April, Wright touched on the comparisons to be made between the
economic lockdowns and slavery. He write, “Slaves definitely had it worse than
Americans under lockdown do, but already Americans are beginning to protest
their confinement and to subtly subvert authorities, just as chattel slaves
did.”
The people held captive in
confined lockdown settings have had the time and often the inclination to
imbibe much of the 24/7 media coverage of the misnamed pandemic. Taken
together, all this media sensationalism has come to constitute one of the most
concerted psychological operations ever.
The implications have been
enormous for the mental health of multitudes of people. This massive alteration
of attitudes and behaviours is the outcome of media experiments performed on
human subjects without their informed consent. The media’s success in bringing
about herd subservience to propagandistic messaging represents a huge incentive
for more of the same to come. It turns out that the subject matter of public
health offers virtually limitless potential for power-seeking interests and
agents to meddle with the privacies, civil liberties and human rights of those
they seek to manipulate, control and exploit.
The social, economic and health
impacts of the dislocations flowing from the lockdowns are proving to be
especially devastating on the poorest, the most deprived and the most
vulnerable members of society. This impact will continue to be marked in many
ways, including in increased rates of suicide, domestic violence, mental
illness, addictions, homelessness, and incarceration far larger than those
caused directly by COVID-19. As rates of deprivation through poverty escalate,
so too will crime rates soar.
The over-the-top alarmism of
the big media cabals has been well financed by the advertising revenue of the
pharmaceutical industry. With some few exceptions, major media outlets pushed
the public to accept the lockdowns as well as the attending losses in jobs and
business activity. In seeking to push the agenda of their sponsors, the big
media cartels have been especially unmindful of their journalistic
responsibilities. Their tendency has been to avoid or censor forums where even
expert practitioners of public health can publicly question and discuss
government dictates about vital issues of public policy.
Whether in Germany or the
United States or many other countries, front line workers in this health care
crisis have nevertheless gathered together with the goal of trying to correct
the one-sided prejudices of of discriminatory media coverage. One of the major
themes in the presentations by medical practitioners is to confront the chorus
of media misrepresentations on the remedial effects of hydroxychloroquine and
zinc.
On July 27 a group of doctors gathered
on the grounds of the US Supreme Court to try to address the biases of the
media and the blind spots of government.
Another aspect in the
collateral damage engendered by COVID-19 alarmism is marked in the fatalities
arising from the wholesale postponement of many necessary interventions
including surgery. How many have died or will die because of the hold put on
medical interventions to remedy cancer, heart conditions and many other
potentially lethal ailments?
Did the unprecedented lockdowns come
about as part of a preconceived plan to inflate the severity of an anticipated
financial meltdown? What is to be made of the suspicious intervention of
administrators to produce severely padded numbers of reported deaths in almost
every jurisdiction? This kind of manipulation of statistics raised the
possibility that we are witnessing a purposeful and systemic inflation of the
severity of this health care crisis.
Questions about the number of cases arise
because of the means of testing for the presence of a supposedly new
coronavirus. The PCR system that is presently being widely used does not test
for the virus but tests for the existence of antibodies produced in response to
many health challenges including the common cold. This problem creates
a good deal of uncertainty of what a positive test really means.
The problems with calculating
case numbers extend to widespread reports that have described people who were
not tested for COVID-19 but who nevertheless received notices from officials
counting them as COVID-19 positive. Broadcaster Armstrong Williams addressed
the phenomenon on his network of MSM media outlets in late July.
From the mass of responses he
received, Williams estimated that
those not tested but counted as a positive probably extends probably to
hundreds of thousands of individuals. What would drive the effort to exaggerate the size of
the afflicted population?
This same pattern of inflation
of case numbers was reinforced by the Tricare branch of the US Defense
Department’s Military Health System. This branch sent out notices to 600,000
individuals who had not been tested. The notices nevertheless informedthe
recipients that they had tested positive for COVID 19.
Is the inflation of COVID-19
death rates and cases numbers an expression of the zeal to justify the massive
lockdowns? Were the lockdowns in China conceived as part of a scheme to help
create the conditions for the public’s acceptance of a plan to remake the
world’s political economy? What is to be made of the fact that those most
identified with the World Economic Forum (WEF) have led the way in putting a
positive spin on the reset arising from the very health crisis the WEF helped introduce and
publicize in Oct. of 2019?
As Usual, the Poor Get Poorer
The original Chinese lockdowns
in the winter of 2020 caused the breakdowns of import-export supply chains
extending across the planet. Lockdowns in the movement of raw materials, parts,
finished products, expertise, money and more shut down domestic businesses in
China as well as transnational commerce in many countries outside China. The
supply chain disruptions were especially severe for businesses that have dispensed
with the practice of keeping on hand large inventories of parts and raw
material, depending instead on just-in-time deliveries.
As the supply chains broke down
domestically and internationally, many enterprises lacked the revenue to pay
their expenses. Bankruptcies began to proliferate at rates that will probably
continue to be astronomical for some time. All kinds of loans and liabilities
were not paid out in full or at all. Many homes are being re-mortgaged or cast
into real estate markets as happened during the prelude and course of the
bailouts of 2007-2010.
The brunt of the financial
onslaught hit small businesses especially hard. Collectively small businesses
have been a big creator of jobs. They have picked up some of the slack from the
rush of big businesses to downsize their number of full-time employees.
Moreover, small businesses and start-ups are often the site of exceptionally
agile innovations across broad spectrums of economic activity. The hard
financial slam on the small business sector, therefore, is packing a heavy
punch on the economic conditions of everyone.
The devastating impact of the
economic meltdown on workers and small businesses in Europe and North America
extends in especially lethal ways to the massive population of poor people
living all over the world. Many of these poor people reside in countries where
much of the paid work is irregular and informal.
At the end of April the
International Labor Organization (ILO), an entity created along with the League
of Nations at the end of the First World War, estimated that
there would be 1.6 billion victims of the meltdown in the worldwide “informal
economy.” In the first month of the crisis these workers based largely in
Africa and Latin America lost 60% of their subsistence level incomes.
As ILO Director-General, Guy
Ryder, has asserted,
This pandemic has laid bare in
the cruellest way, the extraordinary precariousness and injustices of our world
of work. It is the decimation of livelihoods in the informal economy – where
six out of ten workers make a living – which has ignited the warnings from our
colleagues in the World Food Programme, of the coming pandemic of hunger. It is
the gaping holes in the social protection systems of even the richest
countries, which have left millions in situations of deprivation. It is the
failure to guarantee workplace safety that condemns nearly 3 million to die
each year because of the work they do. And it is the unchecked dynamic of
growing inequality which means that if, in medical terms, the virus does not
discriminate between its victims in its social and economic impact, it
discriminates brutally against the poorest and the powerless.
Guy Ryder remembered the
optimistic rhetoric in officialdom’s responses to the economic crash of
2007-2009. He compares the expectations currently being aroused by the
vaccination fixation with the many optimistic sentiments previously suggesting
the imminence of remedies for grotesque levels of global inequality. Ryder
reflected,
We’ve heard it before. The
mantra which provided the mood music of the crash of 2008-2009 was that once
the vaccine to the virus of financial excess had been developed and applied,
the global economy would be safer, fairer, more sustainable. But that didn’t
happen. The old normal was restored with a vengeance and those on the lower
echelons of labour markets found themselves even further behind.
The internationalization of
increased unemployment and poverty brought about in the name of combating the
corona crisis is having the effect of further widening the polarization between
rich and poor on a global scale. Ryder’s metaphor about the false promises
concerning a “vaccine” to correct “financial excess” can well be seen as a
precautionary comment on the flowery rhetoric currently adorning the calls for
a global reset.
Wall Street and 9/11
The world economic crisis of
2020 is creating the context for large-scale repeats of some key aspects of the
bailout of 2007-2010. The bailout of 2007-2008 drew, in turn, from many
practices developed in the period when the explosive events of 9/11 triggered a
worldwide reset of global geopolitics.
While the events of 2008 and
2020 both drew attention to the geopolitical importance of Wall Street, the
terrible pummelling of New York’s financial district was the event that ushered
in a new era of history, an era that has delivered us to the current financial
meltdown/lockdown.
It lies well beyond the scope
of this essay to go into detail about the dynamics of what really transpired on
9/11. Nevertheless, some explicit reckoning with this topic is crucial to
understanding some of the essential themes addressed in this essay.
Indeed, it would be difficult
to overstate the relevance of 9/11 to the background and nature of the current
debacle. The execution and spinning of 9/11 were instrumental in creating the
repertoire of political trickery presently being adapted in the manufacturing
and exploiting of the COVID-19 hysteria. A consistent attribute of the journey
from 9/11 to COVID-19 has been the amplification of executive authoritythrough
the medium of emergency measures enactments, policies and dictates.
Wall Street is a major site
where much of this political trickery was concocted in planning exercises
extending to many other sites of power and intrigue. In the case of 9/11, a
number of prominent Wall Street firms were involved before, during and after
the events of September 11. As is
extremely well documented, these events have been misrepresented in ways that
helped to further harness the military might of the United States to the
expansionistic designs of Israel in the Middle East.
The response of the Federal
Reserve to the events of 9/11 helped set in motion a basic approach to disaster
management that continues to this day. Almost immediately following the
pulverization of Manhattan’s most gigantic and iconographic landmarks, Federal Reserve officials made
it their highest priority to inject liquidity into financial markets. Many
different kinds of scenario can be advanced behind the cover of infusing
liquidity into markets.
For three days in a row the
Federal Reserve Bank of New York turned on its money spigots to inject
transfusions of $100 billion dollars of newly generated funds into the Wall
Street home of the financial system. The declared aim was to keep the flow of
capital between financial institutions well lubricated. The Federal Reserve’s
infusions of new money into Wall Street took many forms. New habits and appetites
were thereby cultivated in ways that continue to influence the behaviour
of Wall Street organizations in
the financial debacle of 2020.
The revelations concerning the
events of 9/11 contained a number of financial surprises. Questions immediately
arose, for instance, about whether the destruction of the three World Trade
Center skyscrapers had obliterated software and hardware vital to the
continuing operations of computerized banking systems. Whatever problems arose
along these lines, it turned out that there was sufficient digital information
backed up in other locations to keep banking operations viable.
But while much digital data
survived the destruction of core installations in the US financial sector, some
strategic information was indeed obliterated. For instance, strategic records
entailed in federal investigations into many business scandals were lost. Some
of the incinerated data touched on, for instance, the machinations of the
energy giant, Enron, along with its
Wall Street partners, JP Morgan Chase and Citigroup.
The writings of E. P Heidner
are prominent in the literature posing theories about the elimination of
incriminating documentation as a result of the controlled demolitions of 9/11.
What information was eliminated and what was retained in the wake of the
devastation? Heidner has published a very ambitious account placing the events of 9/11 at
the forefront of a deep and elaborate relationship linking George H. W. Bush to
Canada’s Barrick Gold and the emergence of gold derivatives.
The surprises involving 9/11
and Wall Street included evidence concerning trading on the New York Stock
Exchange. A few individuals enriched themselves significantly by purchasing a
disproportionately high number of put options on shares about to fall
precipitously as a result of the anticipated events of 9/11. Investigators,
however, chose to ignore this evidence because it did not conform to the
prevailing interpretation of who did what to whom on 9/11.
Another suspicious group of
transactions conducted right before 9/11 involved
some very large purchases of five-year US Treasury notes. These instruments are
well known hedges when one has knowledge that a world crisis is imminent. One
of these purchases was a $5 billion transaction. The US Treasury Department
would have been informed about the identity of the purchaser. Nevertheless the
FBI and the Securities Exchange Commission collaborated to point public
attention away from these suspect transactions. (p. 199)
On the very day of 9/11 local
police arrested Israeli suspects employed in the New York area as Urban Movers.
The local investigators were soon pressured to ignore the evidence, however,
and go along with the agenda of the White House and the media chorus during the
autumn of 2001.
In the hours following the
pulverization of the Twin Towers the dominant mantra was raised “Osama bin
Laden and al-Qeada did it.” That mantra led in the weeks, months and years that
followed to US-led invasions of several Muslim-majority countries. Some have
described these military campaigns as wars for Israel.
Soon New York area jails were
being filled up with random Muslims picked up for nothing more than visa
violations and such. The unrelenting demonization of Muslims collectively can
now be seen in retrospect as a dramatic psychological operation meant to poison
minds as the pounding of the war drums grew in intensity. In the process a
traumatized public were introduced to concepts like “jihad.” At no time has
there ever been a credible police investigation into the question of who is
responsible for the 9/11 crimes.
Defense Secretary Donald
Rumsfeld chose September 10, the day before 9/11, to break the news at a press
conference that $2.3 trillion had gone missing from the Pentagon’s budget. Not
surprisingly the story of the missing money got buried the next day as reports
of the debacle in Manhattan and Washington DC dominated MSM news coverage.
As reported by Forbes Magazine, the size of the amount said
to have gone missing in Donald Rumsfeld’s 2001 report of Defense Department
spending had mushroomed by 2015 to around $21 trillion. It was Mark Skidmore,
an Economics Professor at the University of Michigan, who became the main
sleuth responsible for identifying the gargantuan amount of federal funds that
the US government can’t account for.
As the agency that created the
missing tens of trillions that apparently has disappeared without a trace,
wouldn’t the US Federal Reserve be in a position to render some assistance in
tracking down the lost funds? Or is the Federal Reserve somehow a participant
or a complicit party in the disappearance of
the tens of trillions without a paper trail?
The inability or unwillingness
of officialdom to explain what happened to the lost $21 trillion, an amount
comparable to the size of the entire US national debt prior to the lockdowns,
might be viewed in the light of the black budgets of the US Department of
Defense (DOD). Black budgets are off-the-books funds devoted to secret research
and to secret initiatives in applied research.
In explaining this phenomenon,
former Canadian Defense Minister, Paul Hellyer, has observed, “thousands
of billions of dollars have been spent on projects about which Congress and the
Commander In Chief have deliberately been kept in the dark.” Eric Zuess goes
further. As he explains it, the entire Defense Department operates pretty much
on the basis of an unusual system well outside the standard rules of accounting
applied in other federal agencies.
When news broke about the
missing $21 trillion, federal authorities responded by promising that special
audits would be conducted to explain the irregularities. The results of those
audits, if they took place at all, were never published. The fact that the
Defense of Department has developed in a kind of audit free zone has made it a
natural magnet for people and interests engaged in all kinds of criminal activities.
Eric Zuess calls attention to
the 1,000 military bases around the world that form a natural network conducive
to the cultivation of many forms of criminal trafficking. Zuess includes in his
reflections commentary on the secret installations in some American embassies
but especially in the giant US Embassy in Baghdad Iraq.
The US complex in Baghdad’s Green
Zone is the biggest Embassy in the world. Its monumental
form on a 104 acre site expresses the expansionary dynamics of US military
intervention in the Middle East and Eurasia following 9/11.
The phenomenon of missing tens
of trillions calls attention to larger patterns of kleptocratic activity that
forms a major subject addressed here. The shifts into new forms of organized
crime in the name of “national security” began to come to light in the late
1980s. An important source of disclosures was the series of revelations that
accompanied the coming apart of the Saudi-backed Bank of Credit and Commerce
International, the BCCI.
The nature of this financial
institution, where CIA operatives were prominent among its clients, provides a
good window into the political economy of drug dealing, money laundering,
weapons smuggling, regime change and many much more criminal acts that took
place along the road to 9/11.
The BCCI was a key site of
financial transactions that contributed to the end of the Cold War and the
inception of many new kinds of conflict. These activities often involved the
well-financed activities of mercenaries, proxy armies, and a heavy reliance on
private contractors of many sorts.
The Enron scandal was seen to
embody some of the same lapses facilitated by fraudulent accounting integral to
the BCCI scandal. Given the bubble of secrecy surrounding the Federal Reserve,
there are thick barriers blocking deep investigation into whether or not the US
Central Bank was involved in the relationship of the US national security
establishment and the BCCI.
The kind of dark transactions that the BCCI was
designed to facilitate must have been channelled after its demise into other
banking institutions probably with Wall Street connections. Since 9/11, however,
many emergency measures have been imposed that add extra layers of secrecy
protecting the perpetrators of many criminal acts from public exposure and
criminal prosecutions.
The events of 9/11 have
sometimes been described as the basis of a global coup. To this day there is no
genuine consensus about what really transpired to create the illusion of
justification for repeated US military invasions of Muslim-majority countries in
the Middle East and Eurasia.
The 9/11 debacle and the
emergency measures that followed presented Wall Street with an array of new
opportunities for profit that came with the elaborate refurbishing and
retooling of the military-industrial complex.
The response to 9/11 was
expanded and generalized upon to create the basis of a war directed not at a
particular enemy, but rather at an ill-defined conception identified as
“terrorism.” This alteration was part of a complex of changes adding trillions
to the flow of money energizing the axis of interaction linking the Pentagon
and Wall Street and the abundance of new companies created to advance the
geopolitical objectives emerging from the 9/11 coup.
According to Pam Martens and
Russ Martens, the excesses of deregulation helped induce an anything-goes-ethos
on Wall Street and at its Federal Reserve regulator in the wake of 9/11. As the
authors tell it, the response to 9/11 helped set important precedents for the
maintaining flows of credit and capital in financial markets.
Often the destination of the
funds generated in the name of pumping liquidity into markets was
not identified and reported in transactions classified as financial emergency
measures. While the priority was on keeping financial pumps primed, there was
much less concern for transparency and accountability among those in positions
of power at the Federal Reserve.
The financial sector’s capture
of the government instruments meant to regulate the behaviour of Wall Street
institutions was much like the deregulation of the US pharmaceutical industry.
Both episodes highlight a message that has become especially insistent as the
twenty-first century unfolds.
The nature of the response to
9/11 emphasized the mercenary ascent of corporate dominance as the primary
force directing governments. Throughout this transformation the message to
citizens became increasingly clear. Buyer Beware. We cannot depend on
governments to represent our will and interests. We cannot even count on our
governments to protect citizens from corporatist attacks especially on human
health and whatever financial security we have been able to build up.
Bailouts, Derivatives, and the
Federal Reserve Bank of New York
The elimination of the
Glass-Steagall Act in 1999 was essential to the process of dramatically cutting
back the government’s role as a protector of the public interest on the
financial services sector. The Glass-Steagall Act was an essential measure in
US President Franklin D. Roosevelt’s New Deal. Some view the New Deal as a
strategy for saving capitalism by moderating ts most sharp-edged features.
Instituted in 1933 in response to the onset of the Great Depression, the
Glass-Steagall Act separated the operations of deposit-accepting banks from the
more speculative activity of investment brokers.
The termination of the
regulatory framework put in place by the Glass Steagall Act opened much new
space for all kinds of experiments in the manipulation of money in financial
markets. The changes began with the merger of different sorts of financial
institutions including some in the insurance field. Those overseeing the
reconstituted entities headquartered on Wall Street took advantage of their
widened latitudes of operation. They developed all sorts of ways of elaborating
their financial services and presenting them in new packages.
The word, “derivative” is often
associated with many applications of the new possibilities in the reconstituted
financial services sector. The word, derivative, can be applied to many kinds
of transactions involving speculative bets of various sorts. As the word
suggests, a derivative is derived from a fixed asset such as currency, bonds, stocks, and
commodities. Alterations in the values of fixed assets affect the value of
derivatives that often take the form of contracts between two or more parties.
One of the most famous
derivatives in the era of the financial crash of 2007-2010 was described as
mortgaged-backed securities. On the surface these bundles of debt-burdened
properties might seem easy to understand. But that would be a delusion. The
value of these products was affected, for instance, by unpredictable shifts in
interest rates, liar loans extended to homebuyers who lacked the capacity to
make regular mortgage payments, and significant shifts in the value of real
estate.
Mortgage-backed securities were
just one type of a huge array of derivatives invented on the run in the heady
atmosphere of secret and unregulated transactions between counterparties.
Derivatives could involve contracts formalizing bets between rivals gambling on
the outcome of competitive efforts to shape the future. An array of derivative
bets was built around transactions often placed behind the veil of esoteric
nomenclature like “collateralized debt obligations” or “credit default swaps.”
The variables in derivative
bets might include competing national security agendas involving, for instance,
pipeline constructions, regime change, weapons development and sales, false
flag terror events, or money laundering. Since derivative bets involve
confidential transactions with secret outcomes, they can be derived from all
sorts of criteria. Derivative bets can, for instance, involve all manner of
computerized calculations that in some cases are constructed much like war game
scenarios.
The complexity of derivatives
became greater when the American Insurance Group, AIG, began selling insurance
programs to protect all sides in derivative bets from suffering too drastically
from the consequences of being on the losing side of transactions.
The derivative frenzy, sometimes
involving bets being made by parties unable to cover potential losses,
overwhelmed the scale of the day-to-day economy. The “real economy” embodies
exchanges of goods, services, wages and such that supply the basic necessities
for human survival with some margin for recreation, travel, cultural engagement
and such.
The Swiss-based Bank of
International Settlements calculated in 2008 that the size of the all forms of
derivative products had a monetary value of $1.14 quadrillion. A quadrillion is
a thousand trillions. By comparison, the estimated value of all the real estate
in the world was $75 trillion in 2008.
[Bank for International Settlements, Semiannual OTC derivative
statistics at end-December, 2008.]
As the enticements of
derivative betting preoccupied the leading directors of Wall Street
institutions, their more traditional way of relating to one another began to
falter. It was in this atmosphere that the Repo Market became problematic in
December of 2007 just as it showed similar signs of breakdown in September of
2019.
In both instances the level of
distrust between those in charge of financial institutions began to falter
because they all had good reason to believe that their fellow bankers were
overextended. All had reason to believe their counterparts were mired by too
much speculative activity enabled by all sorts of novel experiments including
various forms of derivative dealing.
In December of 2007 as in the
autumn of 2019, the Federal Reserve Bank of New York was forced to enter the
picture to keep the financial pumps on Wall Street primed. The New York Fed
kept the liquidity cycles flowing by invoking its power to create new money with
the interest charged to tax payers.
As the financial crisis
unfolded in 2008 and 2009 the Federal Reserve, but especially the
privately-owned New York Federal Reserve bank, stepped forward to bail out many
financial institutions that had become insolvent or near insolvent. In the
process precedents and patterns were established that are being re-enacted with
some modifications in 2020.
One of the innovations that
took place in 2008 was the decision by the Federal Reserve Bank of New York to
hire a large Wall Street financial institution, BlackRock, to administer the
bailouts. These transfers of money went through three specially created
companies now being replicated as Special Purpose Vehicles in the course of the
payouts of 2020.
In 2008-09 BlackRock
administered the three companies named after the address of the New York
Federal Reserve Bank on Maiden Lane. BlackRock emerged from an older Wall
Street firm called Blackstone. Its former chair, Peter C. Peterson, was a
former Chair of the Federal Reserve Bank of New York.
The original Maiden Lane
company paid Bear Stearns Corp $30 billion. This amount from the New York Fed
covered the debt of Bear Stearns, a condition negotiated to clear the way for
the purchase of the old Wall Street institution by JP Morgan Chase. Maiden Lane
II was a vehicle for payouts to companies that had purchased “mortgage-backed
securities” before these derivative products turned soar.
Maiden Lane III was to pay off
“multi-sector collateralized debt obligations.” Among these bailouts were
payoffs to the counterparties of the insurance giant, AIG. As noted, AIG had
developed an insurance product to be sold to those engaged in derivative bets.
When the bottom fell out of markets, AIG lacked the means to pay off the large
number of insurance claims made against it. The Federal Reserve Bank of New
York stepped in to bail out the counterparties of AIG, many of them deemed to
be “too big to fail.”
Among the counterparties of AIG
was Goldman Sachs. It received of $13 billion from the Federal Reserve. Other
bailouts to AIG’s counterparties were $12 billion to Deutsche Bank, $6.8
billion to Merrill Lynch, $5 billion to Switzerland’s UBS, $7.9 billion to
Barclays, and $5.2 billion to Bank of America. Some of these banks received
additional funds from other parts of the overall bailout transaction. Many
dozens of other counterparties to AIG also received payouts in 2008-2009. Among
them were the Bank of Montreal and Bank of Scotland.
The entire amount of the
bailouts was subsequently calculated to be a whopping $29 trillion with a “t.”
The lion’s share of these funds went to prop up US financial institutions and the
many foreign banks with which they conducted business.
Much of this money went to the
firms that were shareholders in the Federal Reserve Bank of New York or
partners of the big Wall Street firms. Citigroup, the recipient of the largest
amount, received about $2.5 trillion in the federal bailouts. Merrill Lynch received
$2 trillion,
The Federal Reserve Bank was
established by Congressional statute in 1913. The Federal Reserve headquarters
is situated in Washington DC. The Central Bank was composed of twelve
constituent regional banks. Each one of these regional banks is owned by
private banks.
The private ownership of the
banks that are the proprietors of the Federal Reserve system has been highly
contentious from its inception. The creation of the Federal Reserve continues
to be perceived by many of its critics as an unjustifiable giveaway whereby the
US government ceded to private interests its vital capacity to issue its own
currency and to direct monetary policy like the setting of interest rates.
Pam Martens and Russ Martens
at Wall Street on Parade explain the controversial
Federal Reserve structure as follows
While the Federal Reserve Board
of Governors in Washington, D.C. is deemed an “independent federal agency,”
with its Chair and Governors appointed by the President and confirmed by the
Senate, the 12 regional Fed banks are private corporations owned by the member
banks in their region. The settled law under John L. Lewis v. the United
States confirms:
“Each Federal Reserve Bank is a separate corporation owned by commercial banks
in its region.”
In the case of the New York
Fed, which is located in the Wall Street area of Manhattan, its largest
shareowners are behemoth multinational banks, including JPMorgan Chase,
Citigroup, Goldman Sachs and Morgan Stanley.
There was no genuine effort
after the financial debacle of 2007-2010 to correct the main structural
problems and weaknesses of the Wall Street-based US financial sector. The
Dodd-Frank Bill signed into law by US President Barack Obama in 2010 did make
some cosmetic changes. But the main features of the regulatory capture that has
taken place with the elimination of the Glass-Steagall Act remained with only
minor alterations. In particular the framework was held in place for
speculative excess in derivative bets.
In the summer edition of The Atlantic, Frank Partnoy outlined a
gloomy assessment of the continuity leading from the events of 2007-2010 to the
current situation. This current situation draws a strange contrast between the
lockdown-shattered quality of the economy and the propped-up value of the stock
market whose future value will in all probability prove unsustainable. Partnoy
writes,
It is a distasteful fact that
the present situation is so dire in part because the banks fell right back into
bad behavior after the last crash—taking too many risks, hiding debt in complex
instruments and off-balance-sheet entities, and generally exploiting loopholes
in laws intended to rein in their greed. Sparing them for a second time this
century will be that much harder.
Wall Street Criminality on
Display
The frauds and felonies of the
Wall Street banks have continued after the future earnings of US taxpayers
returned them to solvency after 2010. The record of infamy is comparable to
that of the pharmaceutical industry.
The criminal behaviour in both
sectors is very relevant to the overlapping crises that are underway in both
the public health and financial sectors. In 2012 the crime spree in the
financial sector began with astounding revelations about the role of many major
banks in the LIBOR, the London Interbank Offered Rate. The LIBOR rates create
the basis of interest rates involved in the borrowing and lending of money in
the international arena.
When the scandal broke there
were 35 different LIBOR rates involving various types of currency and various
time frames for loans between banks. The rates were calculated every day based
on information forwarded from 16 different banks to a panel on London. The
reporting banks included Citigroup, JP Morgan Chase, Bank of America, UBS, and
Deutsche Bank. The influence of the LIBOR rate extended beyond banks to affect
the price of credit in many types of transactions.
The emergence of information
that the banks were working together to rig the interest rate created the basis
for a huge economic scandal. Fines extending from hundreds of millions into
more than a billion dollars were placed on each of the offending banks. But in
this instance and many others to follow, criminality was attached to the
financial entities but not to top officials responsible for the decisions that
put their corporations on the wrong side of the law.
One of the factors in the
banking frauds comprising the LIBOR scandal was the temptation to improve the
chance for financial gains in derivative bets. The biggest failure of the
federal response to the financial meltdown of 2007-210 was that little was done
to curb the excesses of transactions in the realm of derivatives.
Derivatives involved a form of
gambling that exists in a kind of twilight zone. This twilight zone fills a
space somewhere between the realm of the real economy and the realm of notional
value. Notional values find expression in unrealized speculation about what
might or might not come to fruition; what might or might not happen; who might
win and who might lose in derivative speculations.
The addiction of Wall Street
firms to derivative betting remains
unchecked to this day. The bankers’ continuing fixation with unregulated
gambling, often with other people’s money, is deeply menacing for the future of
the global economy…. indeed for the future of everyone on earth. According to
the Office of the Controller of Currency, in 2019 JP Morgan Chase had $59
trillion in derivative bets. In July of 2020 it emerged that Citigroup held $62
trillion in derivative contracts, about $30 trillion more than it held before
it was bailed out in 2008. In 2019 Goldman Sachs held $47 trillion and Bank of
America held $20.4 trillion in derivate bets.
A big part of the scandal
embodied in these figures is embedded in the reality that all of these banks
carry their most risky derivative bets in units of their corporate networks
that are protected by the Federal Deposit Insurance Corporation. This peril played
a significant part in deepening the crisis engendered by financial meltdown
that began in 2007.
One of the most redeeming
features of the Dodd-Frank Act as originally drafted was a provision preventing
financial institutions from keeping their derivative portfoliosin
banks whose deposits and depositors were backed up by federal insurance.
Citigroup led the push in
Congress in 2014 to allow Wall Street institutions to revert back to a more
deregulated and danger-prone economic environment. The notoriously inept
decisions and actions of Citigroup had played a significant role in the lead up
to the financial debacle of 2007 to 2010. Since 2016 Citigroup has become once
again the biggest risk taker by loading itself up with more derivative
speculations than any other financial institution in the world.
By returning derivative speculations
to the protections of federal financial backstops, taxpayers are once again
forced to assume responsibility for the most outlandish risks of Wall Street’s
high rollers. It is taxpayers who are the backers of the federal government
when it comes to their commitment to compensate banks for losses, even when
these losses come about from derivative bets.
How much more Wall Street risk
and public debt can be loaded onto taxpayers and even onto generations of
taxpayers yet unborn? How is national debt to be understood when it plunders
working people to guarantee and augment the wealth of the most privileged
branches of society? Why should those most responsible for creating the most
excessive risks to the financial wellbeing of our societies be protected from
bearing the consequences of the very risks they themselves created?
Along with Citigroup, JP Morgan
Chase stands out among a group of financial sector reprobates most deeply
involved in sketchy activities that extend deep into the realm of criminality.
In a simmering scandal six of JP Morgan Chase’s traders have been accused of
breaking laws in conducting the bank’s futures trading in the value of precious
metals. They have been accused of violating the RICO statute,
a law meant for people suspected of being part of organized crime.
In the charges pressed by the
Justice Department on JP Morgan Chase’s
traders it is alleged that they “conducted the affairs of the [minerals] desk
through a pattern of racketeering activity, specifically, wire fraud affecting
a financial institution and bank fraud.”
In 2012 JP Morgan Chase faced a $1 billion fine for
its role in the “London Wale” series of derivative bets described as follows by
the Chair of the US Senate’s Permanent Subcommittee on Investigation. Senator
Carl Levin explained, “Our findings open a window into the hidden world of high
stakes derivatives trading by big banks. It exposes a derivatives trading
culture at JPMorgan that piled on risk, hid losses, disregarded risk limits,
manipulated risk models, dodged oversight, and misinformed the public.”
Traders at Goldman Sachs appear
to have been part of the Wall Street crime spree. The tentacles of corruption
in the Goldman Sachs case apparently extend deep into the US Justice
Department. The case involves allegations of embezzlement, money laundering and
missing billions. These manifestations of malfeasance all spin out of a
scandal-prone Malaysian sovereign wealth fund administered by Goldman Sachs.
A big part of the scandal
reported in Wall
Street on Parade in July of 2020 involves the fact that the Justice
Department’s prosecutors seem to be dragging their feet in this possible
criminal felony case against Goldman Sachs. The
prosecutors, including the US Attorney-General, William Barr, worked previously
for the law firm, Kirkland and Ellis. Kirkland and Ellis was retained to defend
Goldman Sachs in this matter.
Pam Martens and Russ
Martens express dismay at
the failure of US officialdom to hold Wall Street institutions accountable for
the crime spree of some of its biggest firms. They write, “Congress and the
executive branch of the government seem determined to protect Wall Street
criminals, which simply assures their proliferation.”
Even racketeering charges against
officials at JP Morgan Chase, where Jamie Dimon presides as CEO, failed to
receive any attention from the professional deceivers that these days dominate
MSM. The star reporters of Wall Street on Parade write, “Crime and fraud are so de rigueur at the bank led by Dimon
that not one major newspaper ran the headline [of the racketeering charge] on
the front page or anywhere else in the paper.
While federal charges that JP
Morgan Chase’s Wall Street operation engaged in criminal racketeering was not
of interest to the press, Jamie Dimon’s surprise
visit in early June to a Chase branch in Mt. Kisco New York aroused
considerable media attention. Dimon was photographed with staff wearing a mask
and taking the knee. By participating in this ritual Dimon signaled that his
Wall Street operation is in league with the sometimes violent cancel culture
pushed into prominence by the Democratic Party in partnership with Black Lives
Matter and Antifa.
JPMorgan CEO Jamie Dimon takes a knee with employees in front of a
bank vault. Credit: JPMorgan
In an article on 21 July
marking ten years since the Dodd-Frank Act of 2010,
the Martens duo conclude, “So here we are today, watching the Fed conduct
another secret multi-trillion dollar bailout of Wall Street while the voices of
Congress and mainstream media are nowhere to be heard.”
Enter BlackRock
In March it was announced that
representatives of the US Treasury Department, the Federal Reserve Board and
the BlackRock financial management were joining forces to make adjustments in
the US economy. The aim was to address the financial dislocations resulting
from the decision to lock down businesses, citizens, schools, entertainment,
and social mingling outside the home, all in response to the health care
hysteria promoted by governments and their media extensions.
The format of this process
suggested some relaxation in the strict distinctions historically drawn between
the US Treasury and the Federal Reserve. What would be the role of the third
member of the group? In reflecting on this topic Joyce Nelson observed, “the
new bailout bill not only further erases the line between the Federal Reserve
and the U.S. Treasury, it places BlackRock effectively
in an overseer position for both.”
Some saw as symbolically
instructive the delegation to BlackRock of a larger role than that assigned it
during the first bailout of 2007-2008. It would be hard to overestimate the
significance of this prominent Wall Street firm’s return to a strategic role
near the very heart of this major exercise of federal power. This invitation to
take part in such crucial negotiations at such a consequential juncture in
history caused some to characterize BlackRock as a
“fourth branch of government.”
As Victoria Guida commented
in Politico, “This is
a transformational moment for the Fed, and BlackRock’s now going to be in an
even stronger position to serve the Fed in the future.”
BlackRock officials
had been instrumental in helping to manoeuvre their company into such a
strategic role by responding proactively to the understanding in some elite
circles that another financial debacle was imminent. Only months before the
financial meltdown actually occurred a group of former central bankers all
commissioned by BlackRock delivered a recovery plan in August of 2019.
Presented at a G 7 summit of central bankers in
Jackson Hole Wyoming, the plan for the government responses to the looming
financial collapse was entitled Dealing with the Next Downturn. Its authors are Stanley Fischer, former
Governor of the Central Bank of Israel, Philipp Hildebrande, former Chairman of
the Governing Board of the Swiss National Bank, Jean Boivin, former Deputy
Governor of the Bank of Canada, and Elga Bartsch, Economist at Morgan Stanley.
The BlackRock Team at Jackson
Hole put forward the case that a more aggressive and coordinated combination of
monetary and fiscal policy must be brought to the job of stimulating a
financial recovery. Monetary policy includes the setting of interest rates.
Where monetary policy has historically been the domain of the central banks,
fiscal policy, involving issues of taxation as well as the content and size of
government budgets, lies within the jurisdiction of elected legislatures.
The nub of the proposal to
unite fiscal and monetary policy put the US Treasury and the US Federal Reserve
on the same political platform. As the author of this merger of monetary and
fiscal policy, BlackRock became third member of the triumvirate charged to
address the broad array of economic maladies that arrived in the wake of the
lockdowns.
In the spring of 2020 BlackRock
has been hired by the Bank of Canada and by Sweden’s Central Bank, the
Riksbank, to deliver on the approaches to crisis management its representatives
had laid out at Jackson Hole. BlackRock’s most high-profile and strategic
engagement, however, began with its involvement in the negotiation of the $2
trillion CARES stimulus package that passed through the US Congress in March of
2020.
The CARES Act included $367
billion for loans and grants to small business, $130 billion for health care
systems, $150 billion for state and local government, $500 billion for loans to
corporate America, and $25 billion for airlines (in addition to loans).
The heart of the plan involved
a payout of $1,200 per adult and $500 per child for households making up to
$75,000. This payment to citizens approaches the concept of disseminating
“helicopter money” as referred to in BlackRock’s initial outline for dealing
with the “downturn.” Helicopter money distributed by the federal government to
its citizens was also related to the concept of “going direct” in strategies
for stimulating the economy.
BlackRock seems to be moving
into the space recently held by Goldman Sachs as Wall Street’s best embodiment
of ostentatious success including in the preparation of its corporate leaders
for high-ranking positions in the federal government. Laurence Fink,
BlackRock’s founder and CEO, might well have replicated this career path to
become Treasury Secretary if Hillary Clinton had succeeded in becoming US
President in 2016.
BlackRock’s leadership went to
great lengths to avoid being tagged with the title in the United States of a
“systematically important financial institution” (sifi). To be subject to this
“sifi” label entails added federal scrutiny and regulation as well as
heightened requirements to keep high amounts of capital on hand. BlackRock’s
status as a private company not subject to sifi regulations makes the financial
management firm more attractive to its federal partners in the federal payout
operation presently underway.
One of the reasons for
including a private company in the trio of partners involved in the payouts is
to sneak around limitations on the legal powers of the Federal Reserve. As
explained by Ellen Brown in her essay, Meet BlackRock: The New Great Vampire Squid, the Federal Reserve can only
purchase “safe federally-guaranteed assets.” As a private company, BlackRock
apparently faces no such restrictions.
It can purchase more risky assets not backstopped by federal insurance.
The regional banks of the Federal
Reserve Board are owned by private companies whose directors seem to have been
part of the decision to include BlackRock in the implementation of the CARES
process. There can be no doubt that the format of the CARES negotiations pulled
the supposedly independent Federal Reserve more deeply into the political orbit
of the US Treasury branch. The presence of a major Wall Street firm in the
process, however, apparently gave the advocates of the Fed’s supposed
independence from politics a sense that they retained some leverage in the
process.
The inclusion of private
companies in the conduct of government business has become in recent decades a
very common expression of neoliberalism. One of the reasons for this embrace of
public-private partnerships in the conduct of government business is to take
advantage of the legal nature of private companies. The apportionment to
private companies of significant roles in deciding and implementing public
policies helps put veils of secrecy over the true nature of government
decisions and actions.
Private companies can more
easily assert claims to “proprietary information” than can public institutions
when they act on behalf of citizens. This feature of privatization in the
performance of public responsibilities by elected government runs counter to
the imperatives of democratic transparency. It puts obstacles in the way of
genuine accountability because the public is more likely to be kept in the dark
about key aspects of what is being decided and done on their behalf.
Suck Up Economics and State
Monopoly Capitalism
BlackRock owns, controls, or
manages about $30 trillion in total in securities. It directly controls or owns
somewhat less than a third of this amount. The remainder of the assets
BlackRock manages are to service clients responsible for taking care of pension
funds, philanthropies, foundations, endowments, family offices, superannuation
funds and such.
A big part of BlackRock’s
business model involves attracting customers by allowing them access to great
masses of timely information of significant utility to those responsible for
making investment decisions. This technological wizardry happens on a very
advanced computational platform known as Aladdin.
Aladdin remains a
work-in-progress, one that is widely recognized as the most sophisticated
medium of its kind for assessing all manner of financial risks and potentials
for profit. Its future as an investment platform is to become more and more
integrated into the complex mix of hardware and software animating Artificial
Intelligence.
BlackRock’s job is to dispense
funds ushered into existence through the money-creating powers of the Federal
Reserve. These transactions are to take place through eleven so-called “special
purpose vehicles” similar to the Maiden Lane companies that BlackRock administered
during the prior bailouts.
The funds it distributes in
this round starting in 2020 are meant, at least at this early stage of the
crisis, as payments for various sorts of assets. These assets might include an
array of corporate bonds spanning a range from so-called investment grade to
garbage grade junk bonds. The losses incurred in this exchange, involving
supposed assets that might turn out to be worthless, or loans that might not be
paid back, are to be charged to the US Treasury. Ultimately the liability lies
on US taxpayers who are the holders of the national debt.
Bonds of varying levels of
worth lie beneath another asset eligible for transformation into cash. This
instrument of value is referred to as Exchange Traded Funds, ETFs. ETFs happen
to be a specialty of BlackRock ever since the company launched a range of
commercial ETFs into Stock Market circulation through its iShares division.
BlackRock’s role on both sides of buying and selling ETFs comes up repeatedly
as one of the many conflicts of interest of which the Wall Street firm stands
accused.
Given that BlackRock is
involved in one way or another in the proprietorship of pretty much every major
company in the world, there is plenty to back up the allegation that Black Rock
is an interested party in most of the transactions in which it engages as part
of its partnership with the US Fed and Treasury Branch.
Pam Matens and Russ Martens
have been very critical of the role of the Federal Reserve and BlackRock in the
current economic crisis. They have anticipated that, if the current drift of
events continues, American taxpayers will once again be gobsmacked with a huge
growth in the national debt. This development would amount to another major
transfer of wealth away from working people to the beneficiaries of Wall Street
firms and the same commercial institutions that received the lion’s share of
funds during the last bailout.
The co-authors picture
BlackRock is part of a scheme to use “Special Purpose Vehicles” like “Enron
used to hide the true state of its finances and blow itself up.” They entitle
their article published on 31 March, 2020 as “The Dark Secrets in the Fed’s
Wall Street Bailout Are Getting a Devious Makeover in Today’s Bailout.”
The authors observe. “What makes
the New York Fed’s bailout of Wall Street so much more dangerous this time
around is that it has decided to use a different structure for its loans to
Wall Street – one that will force losses on taxpayers and, it hopes, will
provide an ironclad secrecy curtain around how much it spends and where the
money goes.”
I find this account of an
effort by the Federal Reserve to
create an “ironclad secrecy curtain” shocking under these circumstances. It
suggests an intention to exceed the deceptiveness of the last bailout. This
warning renews longstanding suspicions that the failures of transparency and
accountability have not subsided since the beginning of the era when
deregulation and the 9/11 deceptions converged in the domestic and
international operations of Wall Street.
The structural problems already
identified in the process initiated to implement the CARES Act could have
enormous consequences if the current economic crisis continues to deteriorate.
This deterioration is not likely to stop anytime soon given the depth of the
crash and its probable domino effects. It was reported in late July that during
the second quarter of 2020 the US Gross Domestic Product collapsed at an
annualized rate of 33%, the deepest decline in output ever recorded since the
US government began measuring GDP in
1947.
The CARES Act helped set in
motion a program with the potential to repeat elements of the earlier bailout.
The amount of $454 billion was to be set aside to assist the banking sector.
The Fed can leverage this amount by ten times according to the principles of fractional
reserve banking.
The news of this development
caused Mike Whitney to
imagine “the Fed turning itself into a hedge fund in order to buy the sludge
that has accumulated on the balance sheets of corporations and financial
institutions for the last decade,” Whitney pictured an onslaught of “scheming
sharpies who will figure out how to game the system and turn the whole fiasco
into another Wall Street looting operation.”
Meanwhile the Martens Team
at Wall Street on Parade called attention to
the $9 trillion already injected by
the New York Fed to flood liquidity into the still-troubled Repo Markets that
began to falter in September of 2019. Add to this revelation the news that the
Fed “has not announced one scintilla of information on what specific Wall
Street firms have received this money or how much they individually received.”
There is no doubt that the
nature of economic relations will be substantially altered in the process of
dealing with the financial meltdown induced by the lockdowns and by the
overreliance on high debt rates combined with artificially low interest rates prior
to 2020. The altered political economy that is beginning to emerge following
the lockdowns is sometimes described as state monopoly capitalism.
In deciding what companies get
bailed out and what companies don’t, the financial authorities that are intervening
in this crisis are pretty much deciding what enterprises get the advantage of
federal financial backstops and what enterprises will not enjoy government
sanction. Increasingly, therefore, it is the state that determines winners and
losers in the organizing of financial relations. This development further
undermines any notion that some idealized vision of competition and market
forces will determine winners and losers in the economy of the future.
As Peter Ewarts has observed,
it seems that BlackRock is being delegated by federal authorities to exercise
“discretionary powers to pick winners and losers,” a choice that is “where the
real bonanza and clout lies.” Will the winners be chosen from the companies run
by executives that used the money gained from the prior bailouts to engage in
stock buy backs? This process of buying back stock tends to be reflected in CEO
bonuses and higher share prices. Alternatively this way of allocating funds
tends to short change workers as well as innovation and efficiency in
industrial production?
Will companies be rewarded
whose executives have moved production facilities overseas or issued billions
in junk bonds? Will companies be rewarded whose directors have participated in
the effort to censor the Internet, bring about lockdowns or foment mask
hysteria? Why is it that the coddled elites serving the financial imperativesof
most wealthy branches of society are being put in the best position to decide
who gets a life preserver from the state and who must sink and drown?
Might this bias be a factor in
the current process that led Forbes Magazine to
conclude in a headline that “Billionaries Are Getting Richer During the Covid-19 Pandemic While
Most Americans Suffer.”
There can be no doubt that the
financial transactions beginning with the CARES Act represent a crucial initial
stage in what the promoters of the World Economic Forum have been labeling as
the Great Reset. Laurence Fink and the BlackRock firm are significant
participants in the World Economic Forum. The WEF helped introduce the pandemic
in Event 201 in October of 2019 even as it is now trying to put a positive face
on the fiasco.
Why should the people most
harshly affected by the lockdowns tolerate that the very Wall Street interests
dispossessing them, are tasked once again to lead and exploit the reset of the financial system?
As presently structured by the likes of BlackRock and its beneficiaries, this
process is once again transferring new wealth to the most wealthy branches of
society. Simultaneously it is burdening the rest of the population with yet
another massive increase in both personal and national indebtedness.
There is no more discussion of
“trickle down” economics, a frequent metaphor invoked in the Reagan-Thatcher
era. Instead we are in the midst of an increasingly intense phase of suck up
economics. The rich are being further enriched and further empowered through
the dispossession of the poor and the middle classes. This procedure, initiated
when locked down citizens were sidelined from the political process, has the
potential to result in the largest upward transfer of wealth so far in history.
BlackRock Versus the Debt-Lite
Legacy of the Bank of Canada
At the end of March Laurence
Fink, CEO and founder of BlackRock, announced
in a letter to his company’s shareholder, “We are honored to have been selected
to assist the Federal Reserve Bank of New York and the Bank of Canada on
programs designed to facilitate capital to businesses and support the economy.”
This announcement might leave
the impression that the Bank of Canada and the Federal Reserve Bank of New York
are similar institutions. This impression is unfounded. The two banks have very
different structures and histories. A spotlight on these differences helps
illuminate the nature of a number of core financial issues.
These financial issues should
command avid attention during this time of reckoning with a serious economic
crisis that may well be still in its early stages. Such issues inevitably draw
attention to the current manifestations of very old questions about the
character of money and its relationship to the concepts of usury and debt.
Questions about debt, debt enslavement as well as the possibility of debt
renunciation or debt forgiveness are becoming especially pressing.
These controversial queries
arise in an era when a tiny minority is aggressively asserting sweeping claims
to ownership of vast concentrations of the world’s available assets. The other
side of this picture reveals that the largest mass of humanity is sinking into
a swamp of rising debt on a scale that is concurrently unsustainable and
unconscionable. How did this level of inequity reach such audacious extremes?
Are there any remedies in sight?
There is nothing to suggest
structural remediation in the current approach to the economic crisis. In fact
so far there is every indication that the current approach of bringing about an
enormous expansion in the availability of debt-laden money will only compound
the further dispossession of the already dispossessed in order to expand the wealth
of the already wealthy.
As already noted, the Federal
Reserve Bank of New York is one of twelve regional banks that together
constitute the US Federal Reserve. Every regional Federal Reserve Bank is owned
by a group of private banks. Each of the private banks at the base of a Federal
Reserve regional bank marks its proprietorship through the ownership of shares.
These shares cannot be freely traded in stock markets. The ownership of these
shares expresses the private ownership of the US banking system.
The Fed’s New York regional
bank has a special role in money creation given its location at the heart of
the US financial sector on and around Wall Street. In this crisis, the Federal
Reserve Bank of New York is creating new money in the name of holding back
onslaughts of destitution and penury in a traumatized society. Ever since 1913
every new dollar brought into existence by the Federal Reserve, which is the
central bank of the United States, creates added debt that collects compound
interest as long as it is left unpaid.
The Bank of Canada was created
to counter the delegation of money-creating authority to privately-owned banks.
The Bank of Canada was founded during the Great Depression, a time when the
failure of many existing institutions created the conditions to try out
alternative entities in the attempt to improve economic relationships.
One of the driving forces in
the creation of Canada’s new banking system was Gerald Gratten McGeer. McGreer
was an elected official in British Columbia dedicated to changing the system so
that the people of Canada could generate their own currency through the
sovereign authority of Canada’s Parliament. McGeer helped to push the national
government of Prime Minister R.B. Bennett in this direction. The wheels were set
in motion in 1933 through the work on the Royal Commission on Banking and
Currency.
McGeer drew much of his
inspiration from former US President, Abraham Lincoln. Lincoln led the US
federal government throughout the US Civil War. To finance the Armed Forces of
the Union, Lincoln used the authority of the federal government to create
“Greenbacks” as a means of paying the troops. By employing the sovereign
authority of the US government to create its own currency, Lincoln avoided the
intrigues that often accompanied the process of borrowing money from foreign
lenders.
McGreer had obtained what he
viewed as credible evidence that Lincoln had been assassinated because of his
antagonism to the designs of private bankers seeking to widen their base of
power in the United States. The Canadian politician had taken to heart a
comment attributed often to Lincoln:
“The privilege of creating and issuing money is not only the supreme
prerogative of Government, but it is the Government’s greatest creative
opportunity.”
The Bank of Canada was created
in 1934 and nationalized as a Crown Corporation in 1938. To this day it retains
its founding charter that affirms,
WHEREAS it is desirable to
establish a central bank in Canada to regulate credit and currency in the best
interests of the economic life of the nation, to control and protect the
external value of the national monetary unit and to mitigate by its influence
fluctuations in the general level of production, trade, prices and employment,
so far as may be possible within the scope of monetary action, and generally to
promote the economic and financial welfare of Canada.
The Bank of Canada formed an
essential basis of a very creative period of Canadian growth, development, and
diversification throughout the middle decades of the twentieth century. The
Bank of Canada created the capital that financed the Canadian war effort from
1939 until 1945. After the war the Bank of Canada lent money at very low rates
of interest to the municipal, provincial and national governments. The monies
were used for infrastructure projects and for investments to increase the
wellbeing and creative potential of Canada’s most important resource, its
people.
This type of low interest or no
interest financing formed the economic basis for projects like the creation of
a national pension plan, national health care insurance, the Trans-Canada
Highway, the St. Lawrence Seaway, the Avro-Arrow initiative as well as a
formidable system of colleges and universities.
One could say that the Bank of
Canada provided an indigenous money supply that was spent into the operations
of a fast growing economy greased with lots of federal liquidity. The new money
derived its value from the efforts of Canadian workers. Together they brought
about significant increases in the country’s net worth through practical
improvements that bettered the lives of all citizens.
Consider the contrast between
this type of national development and the kind of larceny facilitated by the
Federal Reserve’s infusions of the money it creates into Wall Street’s
operations in the twenty-first century. In, for instance, the financial
bailouts of 2007 to 2010 the largest part of the newly-created money ended up
in the coffers of the wealthy whereas the new debt created ended up as part of
a US national debt.
The burden of carrying this
debt falls inter-generationally on average working people who form the lion’s
share of taxpayers. They have long been saddled with an “inextinguishable debt”
that unrelentingly grows, hardly ever shrinks, and remains basically unpayable
forever. The very concept of “compound interest” conveys the image of an
overall debt spread out over many venues. This debt must grow in perpetuity.
There is a constant need for additional debtors while existing debtors must
face constantly growing personal debt.
There is reason to suspect that
the financial debacle of 2020 will re-enact some the worst excesses of the 2008
bailout. Might the payouts this time around to derivative-addicted Wall Street
firms like Citigroup, Goldman Sachs and JP Morgan Chase exceed the scale of the
prior bailout? Would there be any way of even knowing whether the current round
of payouts outdoes the former round of bailouts? The current process of federal
disbursements is not transparent. In fact the process has been described as one
designed to “provide an ironclad secrecy curtain around how much [the Fed}
spends and where the money goes.”
Why is the Canadian government
turning to the very firm that emerged as Wall Street’s main fixer and winner in
the 2008 bailouts? Why is Justin Trudeau looking to BlackRock to respond to
the Canadian aspects of the 2020 economic crash?
Justin Trudeau seems unwilling
or unable to provide a coherent answer to this question and others requiring
thoughtful replies rather than barrages of platitudes. Why is Justin Trudeau
instituting what Joyce Nelson has characterized as a “new feudalism” in
Canada’s economic policies?
Any decent effort of response
on Trudeau’s part would have to make some reference to the background of the
current debacle. There would have to be some acknowledgment that between 1934
and 1974 the Canada government did not build up any significant national debt.
Then, between 1974 and 2020, the national debt of Canada skyrocketed from $22
billion to $700 billion.
Why was such a good and
sustainable use of the Bank of Canada put aside, one that contributed
magnificently to the health and wellbeing of the Canadian people as well as the
Canadian federation? Who lost out? Who gained besides the international
bankers?
The incomprehensible
abandonment of a winning formula for Canadian development by Prime Minister
Pierre Trudeau puts a special onus on his son, Canada’s current PM, to explain
the incredibly costly mistake of his father. Why won’t Justin Trudeau fix the
mistake of his father and restore the Bank of Canada to its former role in
Canadian nation building?
There has never been a full and
satisfactory explanation of what really happened in 1974 to persuade Pierre
Trudeau to throw aside the means of developing infrastructure with resources
generated internally within Canada. Trudeau Senior’s decision to stop building
up Canada through the operation of the Canadian people’s own national bank was
not debated in Parliament. The option was never part of an election platform
let alone the subject of a national referendum.
Apparently the Swiss-based Bank
of International Settlements, which is often referred to as the central bank
for central bankers, had some role in Pierre Trudeau’s decision to cease using
the Bank of Canada’s powers to generate near-debt-free Canadian currency.
Government as a Means of
Escaping Debt Entrapment
That powers of debt-lite money
creation invested by Parliament in the Bank of Canada have never been formally
withdrawn. The Bank of Canada could still revert back to the direct creation of
Canadian currency to be spent into an economy of national recovery; to be spent
in investments in infrastructure as well as in cultivating and applying the
creative skills of the Canadian people.
Between 2011 and 2017 a court
case was brought against the government of Canada with the aim of restoring
the Bank of Canada to
its former role. As Rocco Galati, the lawyer for the Committee on Monetary and
Economic Reform (COMER) explained “Not only has the government abandoned its
constitutional duty to govern, but it has transferred it to international
private banks which corresponds to an abandonment of its sovereignty.”
After some significant rulings
and contentious appeals, the COMER case came to an end without delivering
results that its plaintiffs sought. But the court case helped
to put a spotlight on the potential of the Bank of Canada. If properly
utilized, this institution could provide a model corrective to the
subordination of governance to the international Lords of Debt Explotation and
their minions.
This process of politicizing
the role of the Bank of Canada should
extend to a process of calling out Justin Trudeau’s current approach to selling
off key components of Canada’s infrastructure.
This topic came up in private
discussions between Larry Fink and Justin Trudeau at the World Economic Forum
in Davos in January of 2016. Fink apparently got Trudeau interested in
attracting private investors to the project of improving or building Canadian
infrastructure projects like roads, high-speed trains, airports and such. This
kind of approach to developing infrastructure projects runs counter to the role
once played by the Bank of Canada in
incorporating self-sufficiency into the process of national building.
The dangers and opportunities
in this time of manufactured crises are indeed unprecedented. Instead of
rejecting the Davos crowd’s preoccupation with a giant reset, why not embrace
the concept? Why not treat this moment as an opening to reset the global
economy in a way that would restore the Bank of Canada to some of its former
functions. Why not highlight this return to the sovereign embrace of benevolent
nation building as an example for the rest of the world?
Why not reconstitute the
worldwide structures of the international system of economic relations to
restore elected governments to the functions that have been pre-empted by unaccountable
institutions like the US Federal Reserve or the Bank for International
Settlements? Why not renew the model of banking as an exercise and expression
of national sovereignty and the self-determination of peoples in a dynamic
global arena of rules-based economic interaction?
Why not withdraw the power from
private bankers to create national currencies? Why not follow the advice of the
deceased Abraham Lincoln by restoring “the greatest of all creative
possibilities available to governments,” namely their power to issue money and
set interest rates. The restoration of economic power to governments and the
people and peoples they represent would involve the infusion of life into
conceptions of globalization very different than those used to justify the
industrialization of China and the deindustrialization of North America.
By delegating to international
organizations much of their capacity to influence the economic conditions
affecting their own people, national legislatures have lost much of their capacity
to provide responsible government. Governments thus weakened are not
realistically in a position to derive their authority from the consent of the
governed. When representative bodies cannot effectively express the right of
their constituents to collective self-determination in economic realm, what
legitimacy is left to the institution of representative government?
This strange moment puts
humanity face to face with much that is novel and unprecedented and much that
is old and integral to the history of human interaction. The economic
dimensions of this crisis constitute its most devastating and far-reaching
attribute. The supposed remedy being rushed into operation is to flood large
quantities of debt-laden loans into existence and for governments to distribute
the borrowed funds to individuals, businesses, and organizations as they see
fit.
Once again, vast quantities of
debt-laden money are being created without the informed consent of those on
whose shoulders the vastly increased loads of debt are falling. Once again
governments are rewarding political friends and punishing political enemies by
means of the way the new funds are being apportioned.
Decisions are pushed forward
that emanate not from citizen constituents but from cabals of supranational
connivers actively engaged in wrecking what little remains of responsible
government. As governments lose legitimacy by engaging in collusion with
corrupt cronies and international crime syndicates they must depend more and
more on police state thuggery to enforce some semblance of order.
This process is going forward
in spite of the fact that alternative means exist to create as much new money
as is required without having to pay large amounts of compound interest to
private bankers. Every sovereign government has the capacity to generate new
money by following the model of the Bank of Canada between 1938 and 1974.
There is an especially urgent
need at this time for some serious reckoning with the economic dimensions of
the crisis before us. This reckoning will inevitably meet the resistance of
extremely powerful interests who are deriving great benefits from the existing
system. The process of privatizing the creation of money has enriched and
empowered a clique whose institutionalized, deep-rooted and continuing
kleptocracy was exposed in part by the bailout of 2008.
Why should we take for granted
in 2020 that the best way to deal with the economic debacle put before us is to
create new money by agreeing to go much deeper into a quagmire of debt
entrapment. This debt trap, whose cumulative amount will soon be more that $300
trillion globally, creates gross liabilities in a trajectory of disadvantage
that severely limits the life chances even of many generations still unborn.
The other side of debt is
embodied in assets. Who gets the assets and who gets the liabilities that
coalesce to form indebtedness? What is to be made of the role of birth or
inheritance or race or natural ability or social connections in apportioning
assets or imposing the enslavements of accumulated debt?
John Perkins addressed some of
these issues in his Confessions
of an Economic Hit Man and in a subsequent follow-up volume. Perkins chronicled how an
inter-related complex of US institutions aligned themselves with his own greedy
and unscrupulous interventions. The goal of their coordinated aggressions was
aimed at imposing the enslavements of massive debt with compound interest.
Their version of loan sharking is one of many manifestations expressing a very
old and common phenomenon. It often happens that powerful interests
parasitically exploit the weak to further enrich themselves.
This partnership between John Perkins and
the kleptocratic agencies directed by the US government has long been drawing
wealth from struggling countries by pushing them more deeply into national
indebtedness. Once the governments of target countries succumbed to greater
dependence on debt-based financing, the conditions were ripe to force officials
into adopting policies of austerity that harmed local citizens in order to
augment the assets of international investors.
Significantly the World Bank
demonstrated how this coercion works in the context of the current economic
crisis. The World Bank attempted to impose conditions on a loan of $940 million
to Belarus because the WB wanted Belarus to conform to the lockdowns that are a
primary cause of the current manufactured crisis.
As revealed by the Belarus’s President,
Alexander Lukashenko, the World Bank wanted his country to adopt the full set
of COVID-19 measures that had been implemented by the Italian government.
Lukashenko said no to the loan. He refused to accept the conditions and carried
on the established policies of Belarus, a country that has “not implemented
strict coronavirus containment measures.”
Lukashenko is far from alone in
his contempt for the manipulative tactics of the apparatus promoting the
manufactured crisis. For instance Tanzanian President, John Magufuli, tested
the accuracy of the testing procedures being forced on his country by the World
Health Organization. President and Medical Doctor Mugufi included in the
samples submitted to the testing agency some tissue of a goat and a papaya.
Both the goat and the papaya tested positive for COVID-19, an outcome he
publicized before ordering the WHO group to leave his country.
The Political Economy of Usury
From the Middle Ages to the Era of Social Credit and Ezra Pound
We cannot assess the division
of humanity between a massive group of debtors and a much smaller group of
creditors without touching on the issue of usury. The subject of usury, the
lending of money with the addition of interest payments, has been an extremely
contentious issue throughout much of human history.
There were prohibitions against usury in
ancient Greece, ancient India and the Roman Empire. Throughout much of the last
thousand years usury has been regarded as a sin outlawed in the Bible, the
Torah and the Koran. At different times in history the Roman Catholic Church
has been an especially zealous opponent of some forms of usury.
Considering the nature of our
current predicaments including obscene levels of economic inequality, usury
might yet again arouse contentions. Some of the core ethical issues raised by
the resort to usury remain unresolved. How is it ethical, for instance, to
subject disinherited children in poor countries to the indignities of deepened
poverty so that rich folks in rich parts of the world can reap larger
dividends?
Beginning in the Middle Ages,
forms of usury began to show up first in the Italian city states and in the
towns of the Franco-Flemish realm. The act of loaning money with interest
gradually spread throughout Europe. In some predominately-Muslim jurisdictions,
the concept conveyed in the Arabic term, “riba,” approximated the idea of usury
or interest. Over time various versions of riba have affected Muslim banking
practices.
Often there were prohibitions
preventing Jews from demanding interest on loans made to other Jews. There were
many Talmudic teachings, however, permitting interest to be collected from
gentiles when they borrowed money from Jews. Many accounts of Jewish efforts to
break down prohibitions on usury highlight obstacles preventing Jews from
pursuing other lines of work. The case is made that the pull of some Jews into
banking came about in part because of their exclusion from other occupations.
Whatever the case, the
obstacles to usury continued to be lessened including through the changes to
Biblical interpretation that came with the Protestant Reformation. Even in the
twentieth century, however, usury continued to arouse criticism and distrust.
Ezra Pound was one of those who became very outspoken when it came to problems
with usury.
The modernist poet and scholar,
Ezra Pound, was one of the most influential literary figures of the twentieth
century. The importance of his work was expressed not only in his own literary
efforts but also in his contributions to other authors in his circle of friends
and colleagues.
Pound’s outspoken criticism of
usury formed part of the discourse that was integral to the political movements
seeking economic reform. The creation and successful nationalization of the
Bank of Canada was one of the outgrowths of the concerted quest to give
substance to economic institutions that would more effectively serve human
needs.
The creation of the Bank of
Canada drew on the ideas of Abraham Lincoln and also on those of many other
theorists including Major C.H. Douglas. While Major Douglas and John Maynard
Keynes each denounced one another’s work, both sought to stimulate economic
activity by expanding the supply and distribution of money. Major Douglas’
vision of Social Credit, one that Pound enthusiastically
embraced, sought to bring about greater harmony and equilibrium between the
forces of production and consumption.
A biographer of Pound has
explained that this formidable literary figure believed “there was the prospect
of building a Social Credit society where money served the consumer and served
the producer.” As Pound pictured it, “the middle men” seeking usurious,
interest bearing profit” to be collected “without work or prior motivation,
could be cut out.” During the Depression the hope of prosperity through the
application of Social Credit principles was seized upon by many. One of them
was an evangelical preacher in the Canadian province of Alberta.
Largely as a result of the
popularity he gained by incorporating Major Douglas’ analysis of Social Credit
into his Sunday afternoon Christian radio broadcast, “Bible Bill” Aberhart
became the Premier of Alberta. His Social Credit Party gained 56 of 63 seats in
the Alberta Legislature. The Social Credit Party continued in power until 1971.
The Social Credit preoccupation
with bringing about changes in the relationship of citizens to financial
institutions helped add to the discourse from which the Bank of Canada emerged
as a dynamic instrument of nation building.
The enthusiasm was well placed
of those who threw their lot in with the movement to create and enlivened the
Bank of Canada. The generations that put their trust in this federal financial
institution had the satisfaction of knowing that their taxes were not devoured
to pay big amounts of interest to private bankers in the style that presently
prevails almost everywhere.
Like his good friend and
colleague, Ernest Hemingway,
Pound was a devotee of clear, terse and succinct prose.
This characteristic of his
writing comes through strongly in his harsh condemnations of usury. “Usury is the
cancer of the world,” Pound wrote. He explained, “Until you know who has lent
to whom, you know nothing of politics, you know nothing whatever of history,
you know nothing of international wrangles.”
Ezra Pound was born in Idaho
but was attracted to Italy throughout long periods of his life. In Italy he
lionized its fascist leader, Benito Mussolini. He embraced the Axis side in
World War II developing close relations with the British fascist leader, Oswald
Mosley. Pound threw himself into the contest producing a torrent of radio
broadcasts seeking to win over English-speaking converts to the Axis side.
These broadcasts are today widely described as war propaganda.
Pound was indicted in the
United States in 1943 and arrested at the war’s end by the US Armed Forces in
Italy. After being jailed in Pisa, Pound was charged with treason. Then Pound
was diagnosed as being mentally unfit to face charges.
The finding that he was
mentally ill caused Pound to be locked up as a patient in St. Elizabeth’s
Hospital in the Washington DC area for the next 13 years. In spite of his
severe prejudices against Jewish bankers and his active embrace of fascism
during the war years, Pound continued to carry on very lively interactions with
his formidable circle of poets, essayists and novelists.
Pound’s circle included James
Joyce, Ernest Hemingway, and T.S. Eliot. All these writers wrote works that won
a Nobel Prize for Literature. These and many other authors benefited from
Pound’s encouragement and mentorship. In 1948 Eustace Mullins joined Pound’s
circle. Mullins was introduced to the famous poet and scholar through Pound’s
wife, Dorothy Shakespeare,
When he first met Pound,
Mullins was an art school student and a veteran of the US Air Force. He had
already published some short pieces in the British journal, Social Creditor. Mullins remembered Pound’s
place of forced residence as “a hideous, urine-soaked madhouse in Washington
D.C.” As their visits became increasingly regular, Pound encouraged Mullins
to conduct research into the history and activities of the Federal Reserve.
When Pound proposed the idea
Mullins was unaware of the existence of the Federal Reserve. Nevertheless,
Mullins threw himself into the project that he supported by combining his
research with work as a book stacker at the Library of Congress. At the Library
he befriended George Stimpson who was well known among Washington journalists
and government officials for his wealth of knowledge and his ability to locate
relevant research materials.
Stimpson happily worked with
Mullins. He helped the aspiring author by guiding him into the primary and
secondary literature illuminating many facets of the Federal Reserve’s history
Eustace Mullins Explores the
Secrets of the Federal Reserve
An initial edition of the volume appeared
in 1952 as Mullins
on the Federal Reserve. Another edition with added information was published in 1954.
The text has been republished many times, sometimes in different editions under
the title Secrets
of the Federal Reserve. The text is organized around both thematic and chronological
facets.
Mullins lays out the history of
the Federal Reserve with considerable attention to the institution’s roots and
origins. The author emphasizes several strands of continuity showing the links
of the Federal Reserve to the banking establishments of Europe but especially
those of Great Britain and Germany.
Mullins characterizes the
Federal Reserve as the most powerful institution in the United States whose
influence grew so that “it gradually superseded the popular elected government
of the United States.” The power of the Fed and its core facet, the Federal
Reserve Bank of New York, is said to have become so formidable because the
agency operates in secrecy without any genuine form of accountability to any
public institution. The NY Fed combines the power of secrecy with the enormous
power to create new currency and to set interest rates becoming in the process
“the most gigantic trust on earth.”
Mullins makes the case that the
financial district known as the City of London exercised enormous influence
over the activities of the Federal Reserve and many of the large Wall Street
banks. Mullins wrote, “London is the world’s financial centre, because it
commands enormous sums of capital created at its command by the Federal Reserve
Board of the United States.”
Mullins is conscientious in
presenting many citations to back up his observations and interpretations. He
cites, for instance the New York Times on January of 1920 where it states, “The Federal Reserve is
a fount of credit not capital.” The manipulation of credit, however, can
greatly affect the industrial economy by affecting the ability of manufacturers
and farmers to produce.
Mullins emphasizes throughout
the text how events are often engineered to strengthen the hand of the Lords of
Credit in the matrix of society’s operations. In referring, for instance, to a
secret banker’s plan to crash the stock market in 1929, Mullins expressed a
view that could as easily describe the growing suspicion in 2020. Could it be
that the lockdowns of businesses and workers were purposely engineered to
strengthen the hands of the Lords of Credit whose main platform is the Federal
Reserve Bank of New York?
Mullins explains that sometimes
“bankers paralyse the industrial energies of the country” in order to highlight
and strengthen “their tremendous powers” over the financial and business
organization of the American economy. Mullins’ observation that “panic is an
instrument of [financial] power” is another statement with obvious relevance to
the current crisis.
As have many authors since,
Mullins emphasizes the importance of a top-secret meeting on Jekyll Island in
the state of Georgia in 1910. At this meeting Paul Warburg essentially took the
intellectual lead in creating a plan for a Central Bank in the United States.
Such an institution was long contemplated and promoted but it had been stopped
repeatedly, most famously be Andrew Jackson. Jackson’s political career
culminated in his winning the US presidency between 1829 and 1837.
Warburg left his family banking
business in Hamburg Germany in 1902. He joined the Wall Street Office of Kuhn
Loeb, a Wall Street House that helped finance the Bolshevik Revolution in
Russia. Mullins devotes much effort to describing the complex of alliances and
rivalries that characterized banking before and after the founding of the Fed.
Weaving throughout these
networks of financial activity were the banking operations of the Rothschild
family. Mullins leaves no doubt that the operations of the Rothschild family of
bankers were extensive, elaborate and very influential.
In the nineteenth century the
Rothschild banking establishment gradually wove its operations into those of
large segments of Europe’s royal and aristocratic establishments. Mullins
emphasizes the genesis of the close business relationship between the
Rothschild banking clan and a London-based US company, George Peabody and
Company.
Peabody’s bank was passed on to
a father and son team, Junius Spencer Morgan and John Pierpont Morgan. In the
days of the Fed’s founding and even today, the name of J.P. Morgan is
synonymous with New York banking. Mullins explains how the Rothschild bankers
kept a fairly low profile in New York by conducting much of their American
business largely through the financial organizations associated with the name
and reputation of J.P. Morgan.
Mullins outlines the role of
the Federal Reserve in the funding of two world wars. Many of the topics
covered in Secrets
of the Federal Reserve were later pursued in much more detail in the prolific
writings of Antony C. Sutton.
Most of Sutton’s volumes
describe the role of Wall Street in helping to bring about many of world
history’s major turning points during the twentieth century. These turning
points include Wall Street’s funding of the rise of the National Socialist
government in Germany in the 1930s and the role of Wall Street in financing the
Bolshevik Revolution and the business activities of the Soviet Union.
The capacity of the New York
Bank of the Federal Reserve to create vast quantities of credit to finance
wars, often with the same bankers funding competing sides in conflicts,
provided the key to the creation of huge fortunes. The funding of both sides in
war can be seen as an early form of hedging one’s bets. This kind of high
impact intervention through banking sometimes created huge leverage for a very
small number of people to steer history towards preconceived destinations.
As Mullins explains it, the
Federal Reserve was founded in extreme secrecy and often employs deceptive
tactics to misrepresent its true nature. As Mullins sees it, for instance, the
creation of the twelve regional banks was a ploy to gain political acceptance
for the Central Bank’s core entity, the Federal Reserve Bank of New York.
Mullins explains, “the other eleven banks were so many expensive mausoleums
erected to salve local pride and quell the Jacksonian fears of the hinterland.”
The ability of Wall Street
bankers to invoke the credit creating powers of the New York Fed forms a key
aspect of the frequent military adventurism of the US government. This military
adventurism continued full force even after the United States became the
world’s largest debtor nation after 1990. How large has been the role of the US
Fed in building up the US national debt together with the tens of trillions
missing from the books of the US Defense Department?
The Israel Lobby and the
Federal Reserve
Much of the military adventurism
of the United States especially after 9/11 was directed into invasions of
Muslim-majority countries that threaten a particular view of Israel as a
dominant power in its region and in the world. Why would it be that the Federal
Reserve is any less involved in creating the available credit for the waging of
wars in the twenty-first century than it was in creating the wars of the
twentieth century?
In his authorship of The Secrets of the Federal
Reserve,
Mullins seems largely oblivious to the role in world history of Zionism and the
genesis of Israel. His main attention lay elsewhere. As I read his text, he
accurately conveyed how the large Jewish influence in the banking institution
of Europe, including the influence of the Rothschild consortium, was extended
into Wall Street including the Federal Reserve.
While Mullins does not shy
aware from dealing with the Jewish component of the story he set out to tell, I
don’t think he belabours this subject or becomes aggressively polemical about
it. Certainly the same cannot be said of some of his critics whose
condemnations of Mullins can sometimes be extremely polemical.
Mullins might have made more of
the identity politics prevailing throughout the twentieth century. The
sensibilities of the dominant Christian constituency in the United States
probably influenced the decisions of many customers shopping for banking
services. Quite likely some of them would have been more comfortable dealing
with firms identified with names like J.P. Morgan, Rockefeller and Mellon
rather than Warburg, Greenspan or Fink. Times, however, have changed.
Some of the more severe
prejudices seem to have subsided around the time that Sandy Weill combined his
Travellers Insurance Company with Citicorp to create Citigroup. This merger
helped create the political momentum leading to the elimination of the
Glass-Steagall Act in 1999. With Glass-Steagall’s elimination, Citigroup tried
to become a giant department store of varied financial services. In its inner
sanctums, however, Citigroup developed a preoccupation with derivatives that
continues yet.
In the twenty-first century it
happened that some of the cosmetic overlays were removed that had previously
been imposed to disguise the large representation of Jews in Wall Street
banking, including in the Federal Reserve Bank of New York. For good or
bad, usury has become a
core features of how the contemporary world is organized. Some reckoning with
the ethnic inheritances attending usury are therefore inescapable, especially
when dealing with the some of the most dramatic displays of usury on steroids
in Wall Street institutions.
Where I see the need to draw a
line in the sand is not on the question of the ethnicity of Wall Street
personnel. Rather this line in the sand involves the question of how power is
used or abused at the domineering heights of our financial institutions. Generally
speaking it is not a justifiable use of the Federal Reserve to produce credit
that enables the waging of wars that are offensive rather than defensive in
character.
The waging of war has long been
one of the big bonanzas producing major windfalls for international bankers. In
the twenty-first century so many of the wars involve the flexing of military
might by the United States to advance the expansionary designs of the Israeli
state. The US Federal Reserve has been part of the process of creating what
some would consider wars for Israel in Iraq, Syria, Yemen and Iran.
Why are the money-generating
powers of the secretive Federal Reserve being invoked to help fund wars for
Israel and also to help shape public opinion to accept the US role in these wars
of aggression. Especially sensitive is the further indebting of the American
people to subsidize the production of propaganda aimed at persuading them to
back wars for Israel. This propaganda is deemed necessary to deflate opposition
to Israel’s actions including the ruthless dehumanizing treatment of
Palestinian Arabs.
We have seen that the Federal
Reserve Bank of New York was deeply engaged in 2008 in transferring tens of
trillions into the coffers of its own member institutions and counterparties.
What uses were made of this bailout produced through a dubious process of
legalized financial larceny?
One way or another the Israel
Lobby must be a prime beneficiary of the machinations of Wall Street and its
money spigot, the Federal Reserve Bank of New York. This pattern of priority
can easily be related to US federal funding of the Israel project as a higher
priority in federal budgeting than even the basic needs of the domestic
population of the United States. Black Lives Do Matter but why is it that the lives
of Israel First Partisans seem to matter more than any other group?
This Israel Lobby has the power
to prevent any critic of Israeli policies from gaining the nomination of a
major US party to run for US president. The result is that, in election after
election, Americans are offered a very limited choice between competitors who
are equally supportive of Israel.
The Israel Lobby can intervene
to prevent the leadership of opposition parties from adopting policies that
emphasize equity in Israel-Palestinian relations. Through its campaign
contributions, the Israel Lobby dominates the process of choosing and electing
representatives in Congress. How much does it cost to buy the political
obedience of most federal politicians? How much does it cost to replicate this
feat in the state legislatures and even municipal governments?
Through the ownership and/or
control of major media outlets, the Israel Lobby exerts major influence in
determining the main outlines of much public discourse when it comes to US-Israeli
relations and many related subjects. How could one calculate the amount of
money it took to achieve this feat? How much of this money is directed into
payments for compliance, in other words, bribery? In the post-Epstein era what
is the role of bribery’s criminal cousin, namely backmail?
The Israel Lobby is deeply
engaged with other lobbies in transforming the Internet from an open forum of
public interaction and debate into a centrally controlled propaganda
instrument. Prominent among the Internet’s most aggressive censors and thought
police are Google, You Tube, Facebook, Twitter and the Anti-Defamation League
of B’nai B’rith.
Through all kinds of
interventions the Israel Lobby asserts significant forms of control over a
broad array of institutions and operations including those of the judiciary,
the universities, book publishing, magazine publishing, municipal governments,
trade unions and cultural groups. The biggest and most influential cultural
group of all is the Hollywood film industry. Not surprisingly there is little
in its cinematic output that provides critical perspectives on Zionism and its
emanations.
The injection of huge amounts
of money are essential to the exercise of so much concerted influence over such
a broad sweep of political, intellectual and cultural organizations. Where do
the large quantities of money supporting the activities the Israel project come
from? Why is it that so many of agencies of the Israel Lobby have the status of
charitable organizations with the capacity to extend tax write-offs to donors?
What is the relationship of the Israel Lobby to Wall Street and the Federal
Reserve Bank of New York?
Even the act of asking such
questions will be seen by some as heretical. There is, however, nothing wrong
with looking into issues that have so much impact on the quality of our
political discourse… so much impact on our capacity to live together with the
civility and security we have been losing so quickly with the imposition of the
economically crippling lockdowns.
It is no less legitimate to ask
questions about the ethnic identity of those who benefit most from the US
economy than it is to ask questions about what groups suffer the most from the
deprivations of poverty. Wouldn’t it make sense to try to moderate the
disparities beginning with processes of research and discussion?
In a book of the same name,
former ADL Executive Director, Abe Foxman, has opened the discussion of Jews and Money. Foxman effectively counters
the view that all Jews are rich. Foxman, of course, is correct in this
assertion. All Jews are not rich.
Some are outright poor. A fairly large number of Jews, however, are somewhat
rich and a small minority of Jews are disproportionately invested with wealth
and power. Jews are especially well represented in the billionaires club both
within the United States and internationally.
Some of the wealthiest Jews are
part of the Wall Street establishment including the Federal Reserve Bank of New
York. Perhaps the time has come to begin retiring this, “the most gigantic
trust on earth.” Perhaps it is time to retire some of the debt created over
more than a century of putting private bankers in charge of dictating interest
rates as well as creating debt-laden dollars. Perhaps the time has come to
lessen the debt burden that is narrowing the life chances of so many people who
have been funding the wars for Israel mounted in the wake of the 9/11
deception.
The severity of the crisis
before us compel all thoughtful people of conscience to look beyond the
redeployment of old institutions and old remedies for old problems that are
different from the challenges facing us now. One of the most obvious ways to
avert further calamity is to move away altogether from the empowerment of
private bankers to massively expand national debts with compound interest
charged to tax payers.
The alternative to this
approach is to change the present means of creating new money. The creation of
many banking systems similar to that of the Bank of Canada should be considered
in the quest for the main ingredients of a global reset. The Bank of Canada
brought about an almost-debt-free run of prodigious nation building before
Pierre Trudeau bent the policies of his government to meet the impositions of
the Bank of International Settlements.
