only candidate who consistently mentioned the economy and the growing financial crisis during the early part of the 2008 presidential campaign was Representative Ron Paul of Texas, a true maverick Republican. Writing for Forbes.com on March 4, 2008, he stated, “Unless we embrace fundamental reforms, we will be caught in a financial storm that will humble this great country as no foreign enemy ever could.” Unfortunately, not enough voters cared to listen.
Reader Comment
I voted for Obama because I believe he is a sincere and compassionate leader. And, no matter how intelligent he may be, or anyone working with him, you, Robert, have taught me to see that financial education in this country is scarce! I worry that the folks in charge simply do not have a very high financial IQ.
—virtualdeb
Reader Comment
It seems that President Obama and his team are focused more on short-term tactical Band-Aids rather than long-term strategic goals. To date, all the “actions” taken by the new administration have been to plug the holes in the dike and shore it up a bit. There seems to be no attention to determining the underlying root cause and changing the foundation flaws that led to the current financial crisis.
—egrannan
The Roots of the Crisis
It is said that Mayer Amschel Rothschild, founder of one of the most powerful banking families of Europe, once observed, “Give me control of a nation’s money supply and I care not who makes the laws.” To understand today’s financial crisis, it is important to understand the relationship between the U.S. government, the Federal Reserve System, and some of the most powerful people in the world. This relationship is depicted in the overly simple diagram below:
In 1913, the creation of the Federal Reserve System granted the very rich of the world the power to control the money supply of the United States and fulfilled the spirit of Rothschild’s sentiments. Many people don’t know or understand that the Federal Reserve System is not a government institution or a bank, nor does it have any reserves. Rather, it is a banking cartel run by some of the most powerful men in the financial world. The creation of the Fed was basically a license to print money.
Another reason the Federal Reserve System was created was to protect the biggest banks from failing by providing liquidity to those banks when they were in financial trouble, which protected the wealth of the rich, not of the taxpayers.
We see this in action even to this day. In 2008, when President Bush authorized $700 billion in bailout money, Secretary of the Treasury Henry Paulson, formerly of Goldman Sachs, in conjunction with the Federal Reserve, immediately handed out billions of dollars in TARP (Troubled Asset Relief Program) money to the biggest banks in the country, his friends, no questions asked.
The reality of the situation is that the TARP bailout money went straight from our pockets—taxpayers’ pockets—into the pockets of the banks and corporations that helped create our financial mess in the first place. We were told the money was given to the banks with a mandate to lend it out, but our government was either unable or unwilling to enforce that mandate—or both.
In mid-December 2008, when USA Today asked banks what they were doing with the bailout money, JPMorgan Chase, a bank that received $25 billion in taxpayer money, replied, “We have not disclosed that to the public. We’re declining to.” Morgan Stanley, a bank that received $10 billion, replied, “We are going to decline to comment on your story.” The Bank of New York Mellon responded, “We’re choosing not to disclose that.” The bank bailout money was really just a rich friend bailout, employed to cover those friends’ mistakes and obvious fraud, not to save the economy.
The proof is in the pudding. As the Wall Street Journal reported on January 26, 2009, in an article entitled “Lending Drops at Big U.S. Banks,” “Ten of the 13 big beneficiaries of the Treasury Department’s Troubled Asset Relief Program, or TARP, saw their outstanding loan balances decline by a total of about $46 billion, or 1.4%, between the third and fourth quarters of 2008, according to a Wall Street Journal analysis of banks that recently announced their quarterly results.” This is even as they scooped up $148 billion in taxpayer TARP funds intended to stimulate lending.
If President Obama really wants to make changes in Washington, he needs to change this cozy relationship between the Federal Reserve System, the U.S. government, and the rich and powerful. And maybe he will. But by putting President Clinton’s financial team in his administration, it does not seem likely. It seems he will do as past presidents since Woodrow Wilson have done—protect the system, not change it.
Reader Comments
I must say that reading your first chapter has opened my eyes. I am only 23 years old and never fully understood what the Federal Reserve System was or what it did for our country. I have to say that it does not shock me; I am truly grateful that you have been honest and are not afraid to give the truthful definition of what a lot of things mean and stand for. It is however truly sad that taxpayers are affected by this and a lot of them do not even know or understand it!
—jacklyn
We hear the media speak of “the Fed” as if it is some mystical behemoth, when in reality, it is not what the general public thinks that it is. I had no clue that this was not a government or bank institution. It really worries me that this entity has almost limitless power with a lack of true oversight. The question becomes, how did they rise to such a prominent position?
—Kthompson5
By some estimates, the combined worldwide losses in commodities, stocks, bonds, and real estate are greater than $60 trillion. So far, the world’s banks and governments have put up nearly $10 trillion in efforts to fix the problem. What about the other $50 trillion? Who will cover those losses? Where did that money go? Who will bail us out, the people who really lost money and now must pay for our own losses and the losses of the rich via bailout money paid for with our tax dollars?
The year 2013 will mark the hundredth anniversary of the Federal Reserve System. For nearly 100 years the Fed has pulled off the biggest cash heist in the world. This cash heist is a bank robbery where the robbers do not wear masks, but rather business suits with American flag pins in the jacket lapels. It is a robbery where the rich take from the poor via our banks and our government.
While a student sitting in Dr. Buckminster Fuller’s class in 1981, I was disturbed to hear him say, “The primary purpose for government is to be a vehicle for the rich to get their hands into our pockets.” Although I did not like what he was saying because I only wanted to think great things about my country and its leaders, deep down inside of me, and based on my own experiences, I knew there was some truth in what he was saying.
Until that time, I had my own secret doubts about government. As a child, I often wondered why the subject of money was not taught in school. As a Marine pilot in Vietnam, I wondered why we were fighting the war. I also witnessed my dad resign his position as superintendent of education to run for lieutenant governor of the state of Hawaii because he was very deeply disturbed by the corruption he found in government. An honest man, my dad could not stomach what he witnessed after he became a high-ranking government official, a member of the governor’s staff. So, although Dr. Fuller’s words were not words I wanted to hear, because I do love
