was flowing freely. To pay off their credit cards, people used their homes as ATMs. After all, houses always went up in value, right?
Blinded by greed and easy credit, however, many people either didn’t see or ignored the dire warning signs such a system created.
In 2007, a new term crept into our vocabulary: subprime borrower—a person who borrowed money to buy a house he could not afford. At first, people thought the problem of subprime borrowers was limited to poor, financially foolish individuals who dreamed of owning their own home. Or they thought it was limited to speculators trying to make a quick buck—flippers. Even Republican presidential candidate John McCain did not take the crisis seriously in late 2008, trying to reassure everyone by saying, “The fundamentals of our economy are strong.”
Around the same time, another word crept into our daily conversation: bailout—saving our biggest banks from the same problems that faced sub-prime borrowers: too much debt and not enough cash. As the financial crisis spread, millions of people lost their jobs, their homes, their savings, their college funds, and their retirement funds. Those who so far have not lost anything are afraid they might be next. Even states felt the pinch: California Governor Arnold Schwarzenegger began talking about issuing IOUs instead of paychecks for government lawmakers because California, one of the biggest economies in the world, was going broke.
As 2009 began, the world looked to a newly elected president, Barack Obama, for salvation.
A Cash Heist
In 1983, I read a book by R. Buckminster Fuller entitled Grunch of Giants. The word grunch is an acronym standing for Gross Universe Cash Heist. It is a book about the super-rich and uber-powerful and how they have been stealing from and exploiting people for centuries. It is a book about a conspiracy of the rich.
Grunch of Giants moves from kings and queens of thousands of years ago to modern times. It explains how the rich and powerful have always dominated the masses. It also explains that modern-day bank robbers do not wear masks. Rather, they wear suits and ties, sport college degrees, and rob banks from the inside, not the outside. After reading Grunch of Giants so many years ago, I could see our current financial crisis coming—I just did not know exactly when it would arrive. One reason why my investments and business ventures do well, in spite of this economic crisis, is because I read Grunch of Giants. The book gave me time to prepare for this crisis.
Books about conspiracies are often written by someone on the ‘fringe.’ Dr. R. Buckminster Fuller, although ahead of his time in terms of his thinking, was hardly a fringe individual. He attended Harvard University, and although he didn’t graduate from there, he did quite well (like another famous Harvard dropout, Bill Gates). The American Institute of Architects honors Fuller as one of the country’s greatest architects and designers. He is considered to be among the most accomplished Americans in history, having a substantial number of patents to his name. He was a respected futurist and inspiration for John Denver’s lyrics about “grandfather of the future” in his song “What One Man Can Do.” Fuller was an environmentalist before most people knew what the word meant. But most of all, he is respected because he used his genius to work for a world that benefited everyone… not just himself or the rich and powerful.
I read a number of Dr. Fuller’s books before reading Grunch of Giants. The problem for me was that most of his earlier books were on math and science. Those books went right over my head. But Grunch of Giants I understood.
Reading Grunch of Giants confirmed many of my unspoken suspicions regarding the way the world worked. I began to understand why we do not teach kids about money in school. I also knew why I was sent to Vietnam to fight a war we should never have fought. Simply put, war is profitable. War is often about greed, not patriotism. After nine years in the military, four attending a federal military academy, and five as a Marine Corps pilot who served in Vietnam twice, I could only agree with Dr. Fuller. I understood from firsthand experience why he refers to the CIA as Capitalism’s Invisible Army.
The best thing about Grunch of Giants was that it awakened the student in me. For the first time in my life, I wanted to study a subject, the subject of how the rich and powerful exploit the rest of us—legally. Since 1983, I have studied and read over 50 books on this subject. In each book, I found one or two pieces of the puzzle. The book you are reading now will put those many puzzle pieces together.
Is There a Conspiracy?
Conspiracy theories are a dime a dozen. We have all heard them. There are conspiracy theories about who killed Presidents Lincoln and Kennedy, and about who killed Dr. Martin Luther King, Jr. There are also conspiracy theories about September 11, 2001. Those theories will never die. Theories are theories. They are based on suspicions and unanswered questions.
I am not writing this book to sell you another conspiracy theory. My research has convinced me that there have been many conspiracies of the rich, both in the past and the present, and there will be more conspiracies in the future. When money and power are at stake, there will always be conspiracies. Money and power will always cause people to commit corrupt acts. In 2008, for instance, Bernard Madoff was accused of running a $50 billion Ponzi scheme to defraud not only wealthy clients, but also schools, charities, and pension funds. He once held the highly respected position of head of NASDAQ; he did not need more money, yet he allegedly stole it for years from very smart people and worthy organizations dependent upon his competence in financial markets.
Another example of the corruption of money and power is spending over half a billion dollars to be elected the president of the United States, a job that pays only $400,000. Spending money like that on an election is not healthy for our country.
So has there been a conspiracy? I believe so, in a way. But the question is, So what? What are you and I going to do about it? Most of the people who caused this latest financial crisis are dead, yet their work lives on. Arguing with dead people would be rather futile.
Regardless of whether there is a conspiracy, there are certain circumstances and events that impact your life in profound and unseen ways. Let’s look at financial education, for instance. I’ve often marveled at the lack of financial education in our modern school system. At best, our children are taught how to balance a checkbook, speculate in the stock market, save money in banks, and invest in a retirement plan for the long term. In other words, they are taught to turn their money over to the rich, who supposedly have their best interest at heart.
Every time an educator brings a banker or a financial planner into their classroom, supposedly in the name of financial education, they are actually allowing the fox to enter the henhouse. I am not saying bankers and financial planners are bad people. All I am saying is that they are agents of the rich and powerful. Their job is not to educate but to recruit future customers. That is why they preach the doctrine of saving your money and investing in mutual funds. It helps the bank, not you. Again, I reiterate this is not bad. It’s good business for the bank. It is no different than Army and Marine recruiters coming on campus when I was in high school and selling students on the glory of serving our country.
One of the causes of this financial crisis is that most people do not know good financial advice from bad financial advice. Most people cannot tell a good financial advisor from a con man. Most people cannot tell a good investment from a bad one. Most people go to school so they can get a good job, work hard, pay taxes, buy a house, save money, and turn over any extra money to a financial planner—or an expert like Bernie Madoff.
Most people leave school not knowing even the basic differences between a stock and a bond, between debt and equity. Few know why preferred stocks are labeled preferred and why mutual funds are mutual, or the difference between a mutual fund, hedge fund, exchange-traded fund, and a fund of funds.
