This post Financial Collusion: A Decade After the Crisis, We’ve a Lot Yet to Learn appeared first on Daily Reckoning.
I’m Nomi Prins, a friend and colleague of Nilus here to fill in for the weekend.
The great American novelist F. Scott Fitzgerald gets credit for my new book, Collusion: How Central Bankers Rigged the World. A decade after I left my final Wall Street post — as a managing director at Goldman Sachs — it was The Great Gatsby that carried me back in time and forward in geography.
Let me tell you how it went down.
You see, after I’d written the book It Takes a Pillage about the 2008 financial crisis, I was exhausted. Not from writing, but from the sheer ignorance that the global elite had paid (and are still paying) to the banking, economic and financial conditions that led to disaster. In 2004, my book Other People’s Money warned exactly how the 2008 financial crisis would unfold. Sadly, I was right. In the wake of the chaos, I needed a break.
Attempting to unplug, I wandered into my local library to spend an afternoon perusing. Right there in the front, I saw something that caught my eye. A poster for “Great Gatsby month” activities around the neighborhood, including 1920s music, readings, specialty drinks in local bars and a discussion of the book at a senior citizens’ community club.
By returning to the glitz and drama of the 1920s, it hit me.
The same banks that had perpetuated the crash of 1929 had perpetuated the crash of 2008!
The same families and their confidantes over decades had consistently set the stage for expansion and crisis — always to their benefit.
By researching the Big Six banks and their leaders who protected their interests at the expense of the rest of the population, I constructed the foundation of my next nonfiction book, All the Presidents’ Bankers.
I traveled the U.S. from New York to California, from Kansas to Texas, digging into the presidential libraries for documents relegated to the coffins of history until I uncovered them.
They revealed key findings — that for the past century of American history, the same banks and their bankers exuded influence over presidents from both parties.
Then came a life-changing moment. A year after the book came out, I got an email. It was from the Federal Reserve. Every year, the Federal Reserve, the IMF and the World Bank have an annual internal conference. It’s where the most elite central bankers from around the globe gather. The Fed invited me to talk at the opening session. The session would take place in the very room in which the Fed convenes to set interest rates.
I was in shock. To say the least, I hadn’t written very nice things about the Fed’s policies since the financial crisis. In very public channels, I had criticized their cheap-money and quantitative easing policies as subsidies to the private banks that had crashed the system. I had labeled their policies as rigging the markets and unhelpful to ordinary citizens and the Main Street economy.
I thought the invitation might be a mistake, but they assured me that they knew exactly who I was. In fact, they wanted me to address the topic of why Wall Street banks weren’t helping Main Street, and they looked forward to hearing my views.
A few months later, I was sitting in the front of a room with central bankers from around the world, listening to Fed Chair Janet Yellen proclaim that the worst of the crisis and its causes were behind us.
The gloves were off. The first thing I asked the distinguished crowd was, “Do you want to know why big Wall Street banks aren’t helping Main Street as much as they could?” The room was silent. I paused before answering for everyone. “Because you never required them to.”
When a bank is offered a pile of cheap money in bailouts and loans for dangerous behavior with no major consequences and no stipulation that they engage the real economy, why should they? What would you expect? The presentation was clear, and you can see the notes I revealed to them here.
Something more interesting happened after my talk. Some of the people at the Fed — not at the top, but in the ranks — told me it made sense. Many thanked me. Leadership of central banks from Lebanon to Thailand thanked me for making it clear that the entire monetary system was controlled more than ever by the major central banks, with the Fed leading the way.
I realized right then and there that the zero interest rate policies prevailing in the U.S., Europe and Japan were part of a coordinated effort. They were trying to render the cost of money cheap everywhere so that banks and other financial players could thrive. The move could also harm smaller, emerging-market countries. The side effects would lead to asset bubbles that could pop and cause an even greater crisis the next time around.
I had to get back on the road. This time, it wasn’t to traverse the U.S.; it was a global affair. My next expedition took me from Mexico to Brazil, China to Japan, Europe and the United Kingdom and back across the United States.
I spoke with central bankers who gave me intel about how this collusion happened in practice and behind the scenes. That information was verified multiple times over.
What might surprise you is that after confirming these findings with both off-the-record and public sources — from different languages to local sources — is that very few had put it all together.
No matter what happens from a geopolitical perspective, monetary policy strategy is often more collusive than government leaders might present on the surface.
When I met with a key central banker in Brazil, he left me shocked after revealing his analytic findings. He presented me with reams of information about just how far the collusion went. The central banker’s analysis showed the high correlation between the level of markets …read more
From:: Daily Reckoning