Before Alan Greenspan fell off the wagon in pursuit of government power, position, praise, and riches, in his 1966 speech, “Gold and Economic Freedom,” he said the following:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value… The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard. (Emphasis mine.)

When Greenspan spoke in 1966, the public debt was just $325 billion and amounted to 40% of GDP. And that figure had been steadily falling from the WWII peak of 125%.

No more. The public debt now standards at $28.1 trillion and 127% of GDP and is rising at breakneck speed.

What happened was that once the Fed-fueled tech boom of the 1990s ran out of gas with the dotcom bust in the spring of 2000, industrial production in the US got pinned to the flat-line.

During the first period between 1972 and 2000 the Fed’s balance sheet grew by about $500 billion, or $18 billion per year.

But during the last 21 years since then, the Fed’s balance sheet has soared by $7.6 trillion, or $362 billion per year.

When the central bank injects 20 times more fiat credit into the economy each year, it has to go somewhere.

As dramatically depicted by the chart below, the stock market became the great monetary sump that absorbed the inflationary tide.

Inflation-adjusted NASDAQ 100 Versus Real GDP, 1995–2021

The stock market recorded a staggering $38.3 trillion gain in value during the last 25 years that was well more than double the $14.5 trillion rise of nominal GDP, meaning that the stock market is now capitalized at 200% of national income.

The value of the stock market rose by 6.3X during the last quarter-century of money-printing madness, while national income increased by only 2.7X.

What has driven the market to current nose-bleed heights is a purely central bank-fueled speculative mania and profits-to-earnings ratio (P/E) multiple expansion that is without any plausible foundation.

But this cannot lead to anything but a $90 trillion global stock market bubble collapse when the central banks are finally forced to throw in the towel on their “transitory inflation” baloney.

It also leads to decades of consumer inflation.

YoY Change in CPI for Durable Goods, 2012–2021

Editor’s Note: Did you know that that United States government has unleashed the most dangerous experiment in its entire history?

In fact, what’s been unleashed is trillions of dollars of stimulus with no end in sight.

When any government goes on an uncontrollable money printing spree it impacts everyone.

That’s precisely why, NY Times best selling author Doug Casey just released this urgent new video on the biggest imminent threat and what you can do about it.

internationalman.com

For many years now there has been a contingent of alternative economists working diligently within the liberty movement to combat disinformation being spread by the mainstream media regarding America’s true economic condition. Our efforts have focused primarily on the continued devaluation of the dollar and the forced dependence on globalism that has outsourced and eliminated most U.S. manufacturing and production of raw materials.

The problems of devaluation and stagflation have been present since 1913 when the Federal Reserve was officially formed and given power, but the true impetus for a currency collapse and the destruction of American buying power began in 2007-2008 when the Financial Crisis was used as an excuse to allow the Fed to create trillions upon trillions in stimulus dollars for well over a decade.

The mainstream media’s claim has always been that the Fed “saved” the U.S. from imminent collapse and that the central bankers are “heroes.” After all, stock markets have mostly skyrocketed since quantitative easing (QE) was introduced during the credit crash, and stock markets are a measure of economic health, right?

The devil’s bargain

Reality isn’t a mainstream media story. The U.S. economy isn’t the stock market.

All the Federal Reserve really accomplished was to forge a devil’s bargain: Trading one manageable deflationary crisis for at least one (possibly more) highly unmanageable inflationary crises down the road. Central banks kicked the can on the collapse, making it far worse in the process.

The U.S. economy in particular is extremely vulnerable now. Money created from thin air by the Fed was used to support failing banks and corporations, not just here in America but also banks and companies around the world.

Because the dollar has been the world reserve currency for the better part of the past century, the Fed has been able to print cash with wild abandon and mostly avoid inflationary consequences. This was especially true in the decade after the derivatives crunch of 2008.

Why? The dollar’s global reserve status means dollars are likely to be held overseas in foreign banks and corporate coffers to be used in global trade. However, there is no such thing as a party that goes on forever. Eventually the punch runs out and the lights shut off. If the dollar is devalued too much, whether by endless printing of new money or by relentless inflationary pressures at home, all those overseas dollars will come flooding back into the U.S. The result is an inflationary avalanche, a massive injection of liquidity exactly when it will cause the most trouble.

We are now close to this point of no return.

The difference between a crisis and a real crisis

As I have said for some time, when inflation becomes visible to the public and their pocketbooks take a hit, this is when the real crisis begins.

A Catch-22 situation arises and the Fed must make a choice:

1. To continue with inflationary programs and risk taking the blame for extreme price increases
2. Taper these programs and risk an implosion of stock markets which have long been artificially inflated by stimulus

Without Fed support, stock markets will die. We had a taste of this the last time the Fed flirted with tapering in 2018.

My position has always been that the Federal Reserve is not a banking institution on a mission to protect American financial interests. Rather, I believe the Fed is an ideological suicide bomber waiting to blow itself up and deliberately derail or destroy the American economy at the right moment. My position has also long been that the bankers would need a cover event to hide their calculated economic attack, otherwise they would take full blame for the resulting disaster.

The Covid pandemic, subsequent lockdowns and supply chain snarls have now provided that cover event.

Two years after the pandemic started and the Fed has pumped out approximately $6 trillion more in stimulus (officially) and helicopter money through PPP loans and Covid checks. On top of that, Biden is ready to drop another $1 trillion in the span of the next couple years through his recently passed infrastructure bill. In my article ‘Infrastructure Bills Do Not Lead To Recovery, Only Increased Federal Control‘, published in April, I noted that:

“Production of fiat money is not the same as real production within the economy… Trillions of dollars in public works programs might create more jobs, but it will also inflate prices as the dollar goes into decline. So, unless wages are adjusted constantly according to price increases, people will have jobs, but still won’t be able to afford a comfortable standard of living. This leads to stagflation, in which prices continue to rise while wages and consumption stagnate.

Another Catch-22 to consider is that if inflation becomes rampant, the Federal Reserve may be compelled (or claim they are compelled) to raise interest rates significantly in a short span of time. This means an immediate slowdown in the flow of overnight loans to major banks, an immediate slowdown in loans to large and small businesses, an immediate crash in credit options for consumers, and an overall crash in consumer spending. You might recognize this as the recipe that created the 1981-1982 recession, the third-worst in the 20^th century.

In other words, the choice is stagflation, or deflationary depression.”

Lies, damned lies and statistics

According to official consumer price index (CPI) calculations and Fed data, we are now witnessing the largest inflation surge in over 30 years, but the real story is much more concerning.

CPI numbers are manipulated and have been since the 1990s when calculation methods were changed and certain unsavory factors were removed. If we look at inflation according to the original way of calculation, it is actually double that reported by the government today.

In particular, necessities like food, housing and energy have exploded in price, but we are only at the beginning.

To be clear, Biden’s infrastructure bill and the pandemic stimulus are not the only culprits behind the stagflation event. This has been a long time coming; it is the culmination of many years of central bank stimulus sabotage and multiple presidents supporting multiple dollar devaluation schemes. Biden simply appears to be the president to put the final nail in the coffin of the U.S. economy (or perhaps Kamala Harris, we’ll see how long Biden maintains his mental health facade).

But how bad will the situation get?

“Collapse” is not too strong a word

I think most alternative economists have called the situation correctly in predicting a “collapse.” This is often treated as a loaded term, but I don’t know what else you could call the scenario we are facing. The covid lockdowns and the battle over the vax mandates have perhaps distracted Americans from an even larger danger of financial instability. That fight is important and must continue, but stopping the mandates does not mean the overarching threat of economic chaos goes away, and both serve the interest of central bankers and globalists.

Some of the key policies within the literature for the “Great Reset” and what the World Economic Forum calls “The 4^th Industrial Revolution” includes Universal Basic Income (UBI), the “Sharing Economy” and eventually a global digital currency system using the IMF’s Special Drawing Rights basket as a foundation. Essentially, it would be a form of global technocratic communism, and if you enjoy individual freedom, being forced into total reliance on the government for your very survival does not sound appealing.

To obtain such a system would require a catastrophe of epic proportions. The Covid pandemic gets the globalists part of the way there, but it’s obviously not enough. Covid has not convinced many hundreds of millions of people around the world to give up their freedoms for the sake of security.

But maybe a stagflationary collapse will accomplish what Covid has not?

Accelerated price spikes in necessities including housing and food will generate mass poverty and homelessness. There is no chance that wages will keep up with costs. The government might step in with more stimulus to help major corporations and businesses increase wages, but this would basically be the beginning of a universal basic income (UBI, or free money for everyone) and it would only cause more dollar devaluation and more inflation. They could try to freeze prices as many communist regimes have in the past, but this only leads to increased manufacturing shut downs because the costs of production are too high and the profit incentives too low.

I suspect that the establishment will bring back regular checks (like the Covid checks) for the public now struggling to deal with ever increasing expenses and uncertainty, but with strings attached. Don’t expect a UBI check, for example, if you refuse to comply with the vax mandates. If you run a business, don’t expect stimulus aid if you hire non-compliant workers. UBI gives the government ultimate control over everything, and a stagflationary crisis gives them the perfect opportunity to introduce permanent UBI.

The mainstream can no longer deny the fact that stagflation is happening and it is a threat, so hopefully those people that have not been educated on the situation will learn quickly enough to complete the preparations necessary to survive. Countering stagflation will require localized production, decentralization and a move away from reliance on the global supply chain, the institution of local currency systems, perhaps using state banks like the one in North Dakota as a model, barter markets and physical precious metals that rise in value along with inflationary pressures. There is a lot that needs to be done, and very little time to do it.

At bottom, the fight against economic collapse and the “Great Reset” starts with each individual and how they prepare. Each person caught by surprise and stricken with poverty is just another person added to the hungry mob begging the establishment for draconian solutions like UBI. Each properly-prepared individual is, as always, an obstacle to authoritarianism. It’s time to choose which one you will be.

Birch Gold Group via activistpost

Most likely you are unaware of what Trump is telling people as the media does not report it. A person who speaks like this:

– is not endeared to the oligarchs.

Who are the oligarchs?

— Wall Street and the mega-banks too big to fail and their agent the Federal Reserve, a federal agency that put 5 banks ahead of millions of troubled American homeowners who the federal reserve allowed to be flushed down the toilet. In order to save the mega-banks’ balance sheets from their irresponsible behavior, the Fed has denied retirees any interest income on their savings for eight years, forcing the elderly to draw down their savings, leaving their heirs, who have been displaced from employment by corporate jobs offshoring, penniless.

— The military/security complex which has spent trillions of our taxpayer dollars on 15 years of gratuitous wars based entirely on lies in order to enrich themselves and their power.

— The neoconservartives whose crazed ideology of US world hegemony thrusts the American people into military conflict with Russia and China.

— The US global corporations that sent American jobs to China and India and elsewhere in order to enrich the One Percent with higher profits from lower labor costs.

— Agribusiness (Monsanto et.al.), corporations that poison the soil, the water, the oceans, and our food with their GMOs, hebicides, pesticides, and chemical fertilizers, while killing the bees that pollinate the crops.

— The extractive industries—energy, mining, fracking, and timber—that maximize their profits by destroying the environment and the water supply.

— The Israel Lobby that controls US Middle East policy and is committing genocide against the Palestinians just as the US committed genocide against native Americans. Israel is using the US to eliminate sovereign countries that stand in Israell’s way.

What convinces me that the Oligarchy intends to steal the election is the vast difference between the presstitutes’ reporting and the facts on the ground. 

According to the presstitutes, Hillary is so far ahead that there is no point in Trump supporters bothering to vote. Hillary has won the election before the vote. Hillary has been declared a 93% sure winner.

I am yet to see one Hillary yard sign, but Trump signs are everywhere. Reports I receive are that Hillary’s public appearances are unattended but Trumps are so heavily attended that people have to be turned away. This is a report from a woman in Florida: 

«Trump has pulled huge numbers all over FL while campaigning here this week. I only see Trump signs and sickers in my wide travels. I dined at a Mexican restaurant last night. Two women my age sitting behind me were talking about how they had tried to see Trump when he came to Tallahassee. They left work early, arriving at the venue at 4:00 for a 6:00 rally. The place was already over capacity so they were turned away. It turned out that there were so many people there by 2:00 that the doors had to be opened to them. The women said that the crowds present were a mix of races and ages».

I know the person who gave me this report and have no doubt whatsoever as to its veracity. 

I also receive from readers similiar reports from around the country. 

This is how the theft of the election is supposed to work: The media concentrated in a few corporate hands has gone all out to convince not only Americans but also the world, that Donald Trump is such an unacceptable candidate that he has lost the election before the vote. 

By controllng the explanation, when the election is stolen those who challenge the stolen election are without a foundartion in the media. All media reports will say that it was a run away victory for Hillary over the misogynist immigrant-hating Trump.

And liberal, progressive opinion will be relieved and off guard as Hillary takes us into nuclear war.

That the Oligarchy intends to steal the election from the American people is verified by the officially reported behavior of the voting machines in early voting in Texas. The NRP presstitutes have declared that Hillary is such a favorite that even Repulbican Texas is up for grabs in the election. 

If this is the case, why was it necessary for the voting machines to be programmed to change Trump votes to Hillary votes? Those voters who noted that they voted Trump but were recorded Hillary complained. The election officials, claiming a glitch (which only went one way), changed to paper ballots. But who will count them? No «glitches» caused Hillary votes to go to Trump, only Trump votes to go to Hillary.

The most brilliant movie of our time was The Matrix. This movie captured the life of Americans manipulated by a false reality, only in the real America there is insufficient awareness and no Neo, except possibly Donald Trump, to challenge the system. All of my life I have been trying to get Americans of all stripes—academics, scholars, journalists, Republicans, Democrats, right-wing, left-wing, US Representatives, US Senators, Presidents, corporate moguls and brainwashed Americans and foreigners—out of the false reality in which they exist. 

In the United States today a critical presidential eletion is in process in which not a single important issue is addressed. This is total failure. Democracy, once the hope of the world, has totally failed in the United States of America.

Statistics provided by the US Federal Reserve give a general picture of the breakdown (table 1).

Table 1

International reserves held in the US (in billions of dollars)

Source: federalreserve.gov

The total quantity of international reserves held in the US has risen 9% in three years (2012-2015), but no particular changes can be seen in the breakdown of the holdings (see table 2). The geographical distribution of the owners of the international reserves held in the US is also fairly stable. The vast majority of the reserves (73.5% in 2015) come from Asia, since some countries there (China and Japan) possess international reserves that are at record highs.

Table 2.

The geographical distribution of the owners of the international reserves held in the US (in billions of dollars)

Source: federalreserve.gov

As a rule, international reserves that are held in the US provide the monetary agencies of other countries with only minimal interest rates (US Treasury securities offer interest of approximately 1% on average). Of course the IMF and rating agencies explain that such is the price of purchasing an investment that comes with virtually zero risk. Oh really?

There are many reasons to question such an assertion. In early February, the media reported that quite a large sum of money had been stolen in the US, as a result of «electronic hacking». We have long grown accustomed to news about «electronic bank robberies», but this was truly a bizarre event. First of all, the funds were stolen from an account at the Federal Reserve Bank of New York, which is known to be extremely secure. Second, this was not a theft of private money, but of $100 million of the foreign currency reserves belonging to the Central Bank of Bangladesh.

The funds were reportedly moved to accounts in Sri Lanka and the Philippines. That $100 million dollars was then transferred out of the banking system, ending up on the black market where it was subsequently sold. It left the country for an unknown destination via intermediaries, after being laundered in three casinos in the Philippines. The reports were later updated to clarify that the thieves did not make off with the full $100 million – merely $81 million – although they had originally planned a heist of $1 billion. The hackers made a serious spelling error in their fifth request, which was for another $20 million. That misspelling alerted the employees at the Federal Reserve Bank of New York. Were it not for that mistake, the Central Bank of Bangladesh could have lost 40% of its foreign reserves.

This event makes one reconsider the risks of depositing one’s international reserves in the US banking system. So what are those risks?

1. Technical risks. It turns out that even the Federal Reserve Bank of New York (advertised as a «safe haven» for foreign reserves) is not able to ensure that money is kept intact and secure. So what does that say about the abilities of ordinary, private US banks, where the monetary agencies of some countries have also opened accounts to hold their reserves (because of the higher interest rates)?

2. Economic risks. At the beginning of 2016, the US banking community began to wonder if perhaps the Federal Reserve should follow the example of some foreign central banks – such as those in Sweden, Switzerland, Denmark, and Japan – that had begun imposing negative interest rates on deposits. And beginning in 2014, the European Central Bank (ECB) also started to introduce negative interest rates. This made the US Fed seem attractive, because unlike those central banks, it would at least preserve the integrity of the funds that were deposited there. This situation will change if those reserves begin to melt away.

3. Legal risks. The question of the US Fed’s responsibility to keep foreign reserves intact and secure has never been raised. I do not think that the Fed’s obligations regarding missing funds have ever been spelled out in its contracts. It can be assumed that the New York Fed has no intention whatsoever of compensating Bangladesh for its losses. Let’s look back at the history of the monetary gold that makes up the international reserves of many countries and which is being held in the vaults underneath the Federal Reserve Bank of New York. Germany, for example, has been trying to retrieve its gold from the cellars of the Federal Reserve Bank in Manhattan ever since 2012. The Germans have to date received only a very small portion, and the gold bars that have been returned are not even the same ones that Germany originally stowed in the Manhattan vault.

4. Commercial risks. These are especially relevant for the foreign reserves that are being held in US commercial banks. The US banking system is currently extremely unstable. There are many signs of an impending banking crisis. If a commercial bank goes bankrupt, it is not at all certain that the monetary agencies of other countries would be even partially compensated for their losses. The bankruptcy of Lehman Brothers, once one of the biggest banks on Wall Street, was an extraordinary symbol of the financial crisis in the US. No one could have imagined that such a Titanic would sink all the way to the bottom and create problems for Ukraine. Prior to the February 2014 coup in Ukraine, the Verkhovna Rada repeatedly tried to piece together what had happened at Lehman Brothers and to identify the individuals who had made the decision to deposit Ukraine’s international reserves in a Wall Street bank.

5. Political risks. It is theoretically assumed that central bank funds are immune to many types of economic sanctions – such as seizure, freezing, confiscation, etc. But in the real world this works quite differently. We have frequently witnessed various countries’ international reserves being frozen or seized, and invariably it is Washington that is behind such actions. Iran is a vivid example. Its international reserves were frozen back in the twentieth century. An estimated $50 billion of funds have been blocked. Washington has announced that some of Iran’s hard currency accounts will be unfrozen, but only a total of $1.7 billion. Libya is another example – that nation possessed very sizable international reserves during the Gaddafi era. According to some estimates, the US and its allies – bowing to pressure from Washington – have blocked a total of $150 billion belonging to the Central Bank of Libya and to that country’s sovereign wealth funds.

Using reserves to purchase US Treasury bonds and notes also entails specific risks. These securities are held by special depositories under the jurisdiction of the US or its European allies. Washington has the ability to put pressure on these depositories, i.e., to block transactions involving treasury securities. With all this in mind, it would seem that the US and its closest allies are becoming extremely dangerous places to deposit international reserves. Especially the reserves of countries that are trying to pursue an independent foreign policy. So what other options do such countries have? There are many ways to minimize the loss of international reserves. I will list only three.

Number one, by converting the currency portion of reserves into monetary gold. Given the negative interest rates at central banks (and those negative rates could spread to private commercial banks in the future), buying precious metal could prevent losses. Moreover, the market is now entering a growth phase for the price of gold, making it one of the most lucrative assets. In addition, gold is an absolutely crucial strategic resource for any state.

Number two, by using foreign reserves to make central bank loans to commercial banks on the domestic market.

Number three, by putting a portion of a country’s reserves into yuan, especially since as of late last year the Chinese currency is now considered an official reserve currency.

And speaking of the yuan as an international reserve currency, it should be noted that even before it was granted that official status, it was, according to some accounts, already part of the international reserves mix of three dozen countries. However, alternatives should not be limited to the yuan. One might also consider including in one’s international reserves other notes that do not have the status of reserve currencies, but which are the legal tender of countries that are major trade and economic partners.

The central banks simultaneously adopted a policy of continuously reducing interest rates on active and passive transactions. As a result, interest rates on deposits at the central banks of Sweden, Denmark, Switzerland, Japan, and also the European Central Bank have plunged into negative territory. Money has become not only plentiful, but almost free.

The paradox is that this monetary expansion by the West’s leading central banks has not led to the expansion of the real economy, but has instead begun to run it into the ground. There are several reasons for this. First of all, an increasing proportion of what is being churned out by the money printing presses is making its way into the financial markets and being used for speculation, because the real sector cannot offer such quick, impressive profits. Second, the notes produced by the printing presses bear less and less resemblance to traditional money. No longer can money be used to measure either the value or price of goods and services. The price of oil is a conspicuous example of this. The fact is that oil prices are now being measured with a tool that we only call money out of habit. It is actually a tool for speculation, manipulation, and the redistribution of wealth in favor of the owners of money – the ones who control the printing presses. It is safe to say that we are now witnessing the death of money.

The producers in the real sector of the economy are being made painfully aware of all of this. Companies involved in manufacturing, agriculture, construction, and transportation are unable to make long-term investments, enter into long-term contracts, or commit themselves to promising research and development work. They cannot even engage in normal commerce. Working capital is in short supply (all the money is tied up in the speculators’ financial games), and even when it is available, it now entails risks associated with sharp fluctuations in exchange rates, the inflationary depreciation of money, and the ups and downs of commodity prices. Modern commodity producers are in the same position our ancestors were in thousands of years ago when no universal medium of exchange like money existed.

Naturally, commodity producers are trying to adapt to this era of the death of money – devising new economic relationships. These new relationships go by various names: alternative, non-traditional, non-cash, swaps, barters…

Alternative forms of economic relations may exist on several levels:

– local (trades within a single city, region, or community);

– national (trades within a single country);

– international (trades between actors belonging to different national jurisdictions).

The development of alternative economic relationships is being met with very active resistance by the owners of the money. This is no surprise, since all alternative economic relationships undermine the monopoly held by the central banks on issuing currency and the monopoly held by private banks on issuing non-cash money (from deposit accounts). Under different pretexts, the central banks and governments of various countries are waging a fierce battle against this kind of “creativity” on the part of economic agents. Incidentally, this explains the fact that many of these alternative economic relationships can be found within the “shadow” economy.

The entire spectrum of alternative economic relationships can be divided into three main groups.

1. Transactions involving nothing but the simple exchange of products and without the use of money in any form. Barter is the classic example of such a transaction. In addition to classic forms of bartering, “multi-product” bartering is gaining popularity – a deal in which dozens, hundreds, or thousands of economic agents can play a role.

2. Transactions paid for in part through the exchange of products. These are designed to minimize the use of official money. As a rule, a broad category of international transactions (“countertrade”) usually include some use of currency. Countertrade includes a monetary payment for goods or services exchanged between two countries, but the primary goal is to try to balance the value of those exchanges. The mechanisms used to carry out the transactions can be quite varied. For example, the export revenues earned by suppliers from country A can be stockpiled in their bank accounts, and then spent to import goods from country B. In this example it might be possible to sidestep the use of hard currencies (the US dollar, euro, or British pound sterling), instead basing the transaction on the currencies of the countries involved in the countertrade.

Even if the countertrade does not incorporate commitments such as using export revenues in a bank account to pay for imports, the principle of balance is still important for the countries involved, because it allows them to control the equilibrium of the balance sheets for their trade and payments, which is important for maintaining the stability of the exchange rate of their national currency.

Some of the most widely recognized forms of countertrade are: compensation on a commercial basis; counter purchases; compensation based on industrial cooperation agreements; the repurchase of used products; transactions involving raw materials furnished by the customer (tolling), etc. The most complex of these forms is compensation based on industrial cooperation agreements. In reality this is not merely a swap of products, but a deal to exchange investments for a product. As a rule, this type of deal includes another lender who provides loan capital to the investor.

Various mechanisms for handling clearing arrangements should also be noted here, making it possible to take into account the mutual financial claims and liabilities of each party in an economic relationship. Usually a bank acts as the clearing center. In a clearing arrangement, the balance of financial claims vs. liabilities is periodically registered. The balance can be settled (repaid) in a predetermined currency (the clearing currency). It is possible to extend financing to a participant in a clearing arrangement, if that entity finds itself in the red. A negative balance can also be repaid by supplying goods. The deliberate destruction of currency clearing agreements began in the 1970s, because those were lowering the demand for the products of the US Federal Reserve. Today we are once again seeing growing interest in currency clearing agreements, as an alternative to Washington’s dictate of the dollar.

3. Barter transactions, based on alternative forms of money. One way to survive in the modern world, in which the US dollar is forcibly imposed upon all the actors in economic relationships, lies in the creation of alternative forms of money that could truly fulfill their economic functions (primarily as a measure of value and a medium of exchange). In various countries around the world, large quantities of local forms of money are now being used within individual cities and regions. Of course, this local money is not entirely replacing the official money, but in some cases the local population’s need for official money can be reduced by half or even more. This local money, whether in the form of a paper currency or a computer entry, encourages the exchange of products of labor that are manufactured within a circumscribed area. Barter money particularly stands out amidst the wide variety of alternative money.

Many experts acknowledge that given the growing global instability, the subject of alternative (non-traditional) approaches to trade and settlements is becoming increasingly pertinent.

The motivation and rationale for the transition to negative interest rates on deposits varies among the different central banks. For the most part, the Swedish Central Bank and the ECB explained their decisions by pointing to the fact that the Swedish and eurozone economies are now faced with the threat of deflation. There are hopes that the negative rate will make money more accessible and will generate at least a bit of inflation. The national banks of Switzerland and Denmark are primarily concerned about the threat of strong upward pressure on their national currencies (the Swiss franc and the Danish krone), due to the crisis in the eurozone, investors’ growing lack of confidence in the euro, and the sharply increased influx of capital from the eurozone into their banking systems. In each case, the directors of the four central banks mentioned the need to stimulate economic development and that in order to accomplish that, no one should be encouraging free capital to be deposited in banks. Negative interest rates on central bank deposits are intended to force commercial banks to turn their attentions to the real economy.

The transition to negative rates has had only a very modest effect. For example, the ECB set its rate at minus 0.10% in the summer of 2014. This step did not reduce the threat of deflation in the eurozone countries, and so the ECB had to further lower its rate. The last rollback occurred in December 2015, when the rate was set at minus 0.30%. Similar events took place at other central banks. The Swiss Central Bank started December 2014 with a rate of minus 0.25%, which a year later had already dropped to minus 0.75%. In the summer of 2015 the Swedish Central Bank was forced to trim its interest rate even further. This was a reaction to the strengthening Swedish krona. And the strengthening, in turn, was driven by events in Greece (the expected default and the eurozone crisis), which increased capital flight from the eurozone into neighboring European countries.

As they say, monkey see, monkey do. The Bank of Japan has become the fifth member to join the «negative-interest-rate club». The West is closely watching this experiment with negative rates. The Bank of England has repeatedly stated that it has not ruled out the possibility of following in the footsteps of the central banks of continental Europe. It could become the sixth member of the club. Experts point to the Central Bank of Norway as the seventh potential member.

The interest rate cut on central bank deposits is inevitably reflected in every other parameter of the monetary, credit, and financial world.

First of all, at almost the same time that interest rates on deposits are falling, interest rates on the active (credit) operations of central banks are also being pared down. Some central banks are practically handing out money to commercial banks free of charge.

Second, following the drop in interest rates on central bank deposits, interest rates on commercial bank deposits also took a tumble – all the way into negative territory. As an alternative, commercial banks are introducing fees to open and maintain an account. A statement by HSBC, one of the largest banks in the world, drew particular attention. In the summer of 2015, it warned other banks that it would begin to charge fees for deposits in euros, Danish or Swedish kronor, or Swiss francs. Those are the currencies of the countries whose central banks imposed negative interest rates on deposits. For now, HSBC is introducing fees only on the accounts of other commercial banks, which does not affect individual or corporate clients. Last summer a string of small commercial banks in Germany and Denmark announced that for retail customers deposits could become fee-based. And it is true that in some cases private banks are explaining the introduction of negative interest rates on deposits (or fees for holding money) as not only being based on the interest rate policy of the central banks, but also by pointing to the fact that regulations on banking activities have tightened since the financial crisis of 2007-2009. Specifically, the American bank J.P. Morgan has warned that this is precisely why it will begin charging some of its biggest clients a fee on their deposits.

Third, the interest rate policy of the central banks still continues to strongly influence the market for government securities. Namely: at first there was a drop in the yield of these securities, and then some of them began to slide into the negative zone. This shift in the interest rates on government securities is in part due to the impact of market mechanisms (a realignment of the markets for securities and deposits). In part, the government is intentionally pursuing a policy of cutting the yield on its securities. This is done in order to reduce the influx of foreign investors and to prevent a sharp strengthening of the national currency, for example.

US Treasury bonds, which make up the bulk of the international reserves of the central banks of many countries, are receiving particular attention. A big chunk of the portfolios of institutional investors (investment funds, pension funds, insurance companies, etc.) also consist of US Treasury bonds. The yield on those securities has been steadily falling in recent years. It is a mystery to many why central banks, sovereign wealth funds, and other institutional investors are buying US securities that have a purely symbolic interest rate. The answer is simple: because for many other treasury securities that rate is even lower or negative. The first treasury securities with negative interest rates appeared in Europe five years ago. They were exotic back then. Now they’re the norm.

Last year, JP Morgan published some data about the market for «negative» securities. Approximately $1.7 trillion in bonds from eurozone countries with a maturity of more than one year have a negative yield. And another $1 trillion in similar bonds from Sweden, Switzerland, and Denmark can be added to those. Finally, $1.8 trillion of Japanese bonds with a negative yield were circulating in the financial markets a year ago. Last year, Finland entered the market with «negative» securities for the first time.

Just one year ago, only 6.8% of all government securities in the world had a minus sign. But on Feb.1, 2016, Deutsche Bank estimated that the proportion of bonds with a negative yield had risen to 25%. US treasury bonds with a two-year maturity currently have a yield of plus 0.72%, but similar securities in Germany are at minus 0.50% and in Japan – minus 0.17%.

Fourth, the epidemic of negative interest rates has even spread to the market for corporate securities. In January (2016) data from researchers at Bank of America Merrill Lynch (BAML) was released at Davos. According to BAML’s estimates, approximately 65 billion euros of European corporate bonds ($71 billion) are trading on negative yields; in other words, investors who hold these securities are losing money. Conservative investors, who prize dependability and safety over returns, prefer to work with such securities. Classic examples of such securities are the corporate bonds from the renowned Swiss company Nestlé, a manufacturer of food products. The company’s managers calculate that its bonds are in no way inferior to treasuries from the leading Western countries and could qualify for inclusion in the portfolios of established institutional investors.

Fifth, in the corporate bond markets, the trend of lowered interest rates on high-quality securities is in contrast to the trend of inflated interest rates on other securities. Interest rates are growing more polarized: at one extreme are high-quality corporate bonds with low or even negative rates; at the other end one finds the snowballing volume of speculative corporate bonds, which can be classified as junk. The spread, or the interest premium over government borrowing rates, paid by junk-bond issuers has risen by nearly 3.5 percentage points since last March. Today that gap is nearly as great as during the euro crisis of 2011, although it is less than half as much as it was after the collapse of Lehman Brothers in 2008. Yet the rates on low-quality (junk) bonds continued to soar in 2015. The proportion of junk (or toxic) bonds classified as high-risk (having a yield ten percentage points higher than treasury bonds) reached 29.6% by the beginning of this year, up from 13.5% a year ago. According to the rating agency S&P, this is the highest level of «toxicity» in the market since 2009.

The growth of «junk» in the financial markets is promoted not only by the central banks’ interest rate policy, but also by the policy of what is known as quantitative easing. The US Federal Reserve and Bank of England have lowered their interest rates, but still not taken them into the negative zone. It is precisely these two central banks that are pursuing the most extensive programs of quantitative easing, which occurs when central banks buy government bonds (of widely varying quality), thus lowering their yield. The yield on three-month US T-bills even dropped to zero in 2015. Given this situation, many investors have been left with no choice but to switch from low-yield or «zero» government securities over to corporate bonds. The central banks ended up stimulating demand for corporate bonds that are not of the highest quality. And some of those found their way into the portfolios of private investors and soon turned out to be junk. At some point the holders of junk bonds will lose their nerve, and a massive, uncontrolled dump of those securities will be unleashed…

The policy of the Western central banks to cut interest rates, coupled with quantitative easing programs, have established all the prerequisites for the start of the second wave of the global financial crisis.

These days are very reminiscent of the 1930s-1940s. At that time, the global economic crisis triggered several events, such as the economic and financial disintegration of the world, the fragmentation of the global financial system into currency zones and blocs, and the erosion of global trade and other forms of international economic ties. The monetary and financial disintegration was only halted in the summer of 1944 at the international conference at Bretton Woods, where the decision was made to establish a global monetary system based on gold and the US dollar. Shifting the global monetary and financial system to this new mode required a 15-year cycle of work, beginning with the onset of the crisis in October 1929. And even after the Bretton Woods conference, at least another five years passed before the new system was operational. Overall, the transition cycle to move the system from its old state to its new one took about two decades.

Now fast forward to our era. The starting point of the transition of the global financial system to its new role can be dated to 2007, when the global financial crisis began. Almost nine years have passed since then. The beginning of the “new era” of global finance can be seen as the point at which the process of financial globalization came to an end, and it was no longer possible to build the Tower of Babel of global debt any further. A retrenchment began, which took the form of a crisis, and multitude of “excessive” debts burned up in its flames.

The first wave of the financial crisis (2007-2009) has already led to significant financial disintegration worldwide. But judging by the statistics from the International Monetary Fund, the Bank for International Settlements, and other international institutions, higher levels of trading were seen on global financial markets in 2015 than in 2007. According to the assessments by the renowned consulting firm McKinsey & Co., debt in early 2015 also surpassed its pre-crisis levels –worldwide as well as in individual countries and groups of countries. McKinsey & Co. identified three potential epicenters of the second wave of the global financial crisis – the US, the European Union, and China. The world is anxiously awaiting an imminent financial tsunami. Worrying signs emerged in August in China, where the stock market indices began to fall sharply. Chinese officials succeeded in halting the destructive developments (primarily through direct administrative actions), but the bubble in the Chinese stock market hasn’t gone anywhere.

Bubbles in the financial markets continued to expand in 2015 in the US and EU as well. This is the first time that the world of global finance has been faced with bubbles that have been growing for so long, and it can be explained by the fact that the central banks’ printing presses have been working more energetically than ever before. Plus, the Federal Reserve, ECB, and other central banks in the industrialized world have been keeping their interest rates close to zero. This kind of free money was not available even at the height of the economic crisis in the 1930s.

Many experts had predicted other upheavals for last year as well, including the collapse of the dollar-based system, the full or partial destruction of the eurozone (the exit of a number of countries from the euro area), a full-fledged default in Ukraine, the paralysis of the International Monetary Fund, the dissolution of the G20, etc. Most of these predictions did not come true in 2015, but no one has given up on them – they have simply been held over until 2016.

Allow me to briefly characterize what I feel are the most important events in the life of international finance in 2015.

1. The end of the London Gold Fix on March 20, which had existed intermittently since 1919, and the transition to a new system for determining prices for gold. This event has not yet had a very significant impact on gold prices, but its effects will be felt in the future.

2. The announcement by Greece that it was defaulting on its obligations to the International Monetary Fund (it did not make its scheduled payment of approximately 300 million euros). In July Greece again defaulted and the fund did not receive about 1.5 billion euros that had been slated for debt repayment. In August, after negotiations between the Greek government and the Big Three creditors (the ECB, European Commission, and the IMF), an agreement was reached to provide Greece with a third bailout package worth 85.5 billion euros. That package will be distributed over the course of three years, assuming that Greece does not deviate in any way from its program of austerity, reforms, and privatization of state assets (totaling 6.2 billion euros).

3. The creation of the Asian Infrastructure Investment Bank (AIIB). China spearheaded the project and is its biggest shareholder. The first phase of its creation ended in the spring of 2015. A total of nearly sixty states have joined the bank. It is worthy of note that 20 of these states lie outside of Asia (including the United Kingdom and some other major European countries). In reality, the AIIB is not a regional organization, but a global one. The bank should begin its operations in 2016.

4. China’s yuan acquired the status of an official reserve currency. That decision was made by the International Monetary Fund on Nov. 30. The yuan became the fifth official reserve currency, joining the US dollar, euro, Japanese yen, and British pound sterling. It is telling that based on the weight set for it, the yuan was immediately ranked third in the IMF’s basket of reserve currencies, ahead of the yen and pound sterling.

5. The change to some of the basic principles of the International Monetary Fund. Dec. 8 decision allows the fund to finance countries that do not meet their obligations to their sovereign (official) creditors. The fund’s decision was timed to coincide with the impending Dec. 20, 2015 repayment of Ukraine’s debt to Russia. On one hand, the fund’s decision encouraged Ukraine not to meet its obligations to Russia; but on the other hand, it also shattered decades-old precepts that guide the work of global finance.

6. The Dec. 18 announcement by officials in Kiev of a moratorium on the repayment of Russia’s $3 billion loan. For all intents and purposes, this means a full-fledged default by Ukraine. After the New Year’s holidays, the story of Ukraine’s default will probably blow up in the global media.

7. Congressional approval in the US of the budget for the next fiscal year. Washington passed a spending package that includes an important clause agreeing to reforms for the International Monetary Fund (the review of the quotas of capital and voting shares assigned to its member countries, as well as the doubling of the fund’s capital). This was a significant event, since the decision to reform the fund had been approved back in 2010, but had been blocked by the United States for five years.

8. On Dec. 17, the IMF’s managing director, Christine Lagarde was summoned to appear in a French court. She is suspected of abusing her official position when she served as finance minister under President Nicolas Sarkozy. This démarche against Christine Lagarde looks like psychological pressure against the fund’s highest officer in order to make the IMF a more obedient tool in the hands of Washington.

My list of events is quite varied. Many of them might not currently seem very significant. For example – the elimination of the famous London Gold Fix. Outwardly, this even looks like a weakening of the role of gold in international finance. However, this is merely an issue of the reorganization of the system for managing the global market for the yellow metal, under the auspices of the same Rothschild family.

The biggest struggle for influence in the world of international finance will develop between Washington, which is attempting to salvage the dollar system, and Beijing, which is trying to squeeze American banks and corporations out of global financial markets. Some experts see this confrontation as a tussle between the two biggest clans of money masters – the Rockefellers, who are using the state power of the US, and the Rothschilds, who are seeking to establish control over China.

Returning to potential changes in the global monetary and financial system, I cannot rule out the fragmentation of a unified system into separate zones and blocs, which is exactly what happened in the late 1930s, on the eve of World War II. At that time trade and economic ties within the zones and blocs were maintained with the help of the currencies of the suzerain states (the British pound sterling, French franc, US dollar, etc.). Trade between the blocs fell by a huge ratio and inter-bloc ties were based on barter, clearing accounts, and gold.

The second wave of the global financial crisis will wreak only minimal damage on countries that are able to navigate the global financial chaos and protect their economies using import duties and restrictions on the cross-border movement of capital, sheltering themselves behind the walls of their regional economic, financial, and currency blocs.

It’s no secret that in many countries cash is losing its role as means of payments. Cash accounts for only 10% of transactions in advanced countries, and 15% of deals in the states of developing world (1).

Banks and governments promote the process. In some states social activists advocate for the idea to cancel cash payments at all. 

Those who want cash to become a thing of the past put forward the following arguments. They say the transfer to cashless payments will do away with many ills of society, for instance: drug trafficking, terrorism, slavery, corruption etc. Indeed, cash payments, or dirty money, allow criminals to hide their identity. That’s what «grey economy», or tax evasion, is based on. Cash is cumbersome to issue, make circulate and liquidate. It takes 1% of GDP to do all these things. Ecology suffers – toxic dioxin is produced while cash is burned. The absence of cash payments will benefit people. Their hands don’t touch bills infected by microbes, there is no risk of theft or robbery, people spend less time in shops – the list can go on…

Many countries of the West adopt laws to directly or indirectly squeeze cash out of circulation. They impose limits on cash payments. For instance, the sum one pays at a time in Spain and France cannot exceed 3000 euros. The French government says it plans to bring it down to 1000 euros like in Italy. All cash payments are government regulated. A citizen of France can spend no more than 3000 euros in cash during a week. One cannot take more than 10 thousand euros from bank account without attracting special attention of law enforcement agencies. A sum exceeding one thousand euros cannot be converted into a foreign currency. Such transactions are strictly regulated by government. This is the example of «monetary democracy» in the country that declared freedom a sacred value in 1789. 

Banks make their contribution into the process. Some just refuse to take cash. Others establish high commission fees for money transfers. For instance, in April Chase, the largest bank in the U.S. and a subsidiary of JP Morgan Chase and Co., joined the war on cash. The new policy restricts borrowers from using cash to make payments on credit cards, mortgages, equity lines, and auto loans. Chase even goes as far as to prohibit the storage of cash in its safe deposit boxes. In a letter to its customers dated April 1, 2015 pertaining to its «Updated Safe Deposit Box Lease Agreement», one of the highlighted items reads: «You agree not to store any cash or coins other than those found to have a collectible value». Chase will store your gun, but no cash, please! 

The process has encompassed public transport. A person willing to pay in cash for a bus ticket cannot do it anymore. The choice is purchasing a season ticket or sending an sms message to pay for a one way trip. 

In Germany Peter Bofinger, a well-known economist, campaigns for abolition of cash. If cashless society becomes a reality, the markets for undeclared work and drugs could be dried out. In addition, central banks would find it easier to enforce their monetary policies. The idea of cashless society is very popular in Sweden. The cash abolition is believed to be a contribution into the success of fight against drug trafficking, crime, terrorism etc. Bjorn Ulvaeus, the leader of ABBA – the band that was a pop music legend in the 1970-1980s – is an ardent advocate of the idea. The author of the hit called Money, Money, Money announced two years ago that he started a fight against cash. Back then it was announced that there would be no cash tickets sold by ABBA museum in Stockholm. «Electronic cards and smartphones today, and, perhaps, they’ll invent something else tomorrow». 

Lots of things are invented nowadays. Sweden is not lagging behind. This is the home country to the system of making payments by simply scanning one’s palm. An engineering student at Lund University in Sweden has made it happen – making his the first known company – Quixter – in the world to install the vein scanning technique in stores and coffee shops. He did not want to waste time standing in line. 

The cash payments are becoming a rare thing in practically all countries. 80% of transactions in the United States are cash free and the market continues to get rid of paper money and coins. The UK Payments Council has recently stated that the number of cashless transactions will exceed the number of payments in cash. Denmark, Norway, Sweden and Finland lead the process. Plastic cards are not the cutting edge means of payments anymore. In Denmark every third Danish citizen uses a mobile payment system. The MobilePay app allows you to send and receive money via iPhone, Android and Windows Phone. The service is open for Danske Bank and non-Danske Bank customers. The user transfers the money by selecting the mobile number of the person who is to receive the money. In Sweden cash is used for only 3% of transactions (2). For comparison, this index is three times higher in Europe. Cash accounts for 7% of transactions in the United States. The champion is South Korea with 2% of cash transactions, according to World Payments Report. Swedes like to remember that their country invented bills. In 1661, the Sweden’s Stockholm Bank issued the first bank note to compensate for a shortage of silver coins. Now Sweden strives to be a European pioneer to ultimately abolish cash. 

There is ground to believe that «the money holders» (bankers) provide incentives to expedite the process (while doing their best to conceal their activities). What do they need it for? Well, perhaps they pursue a number of goals. 

First, since the 1970s active (credits) and passive (deposits) interest rates have been gradually going down. Minus interest rates appeared after the 2007-2009 crisis. The trend leaves people with no stimulus to keep money in banks. Cash becomes preferable. With 100% cashless transactions clients will never leave banks. 

Second, cashless money comes out of thin air. The means of payments is the money issued by central banks. Clients use real money for deposits with bankers issuing a few units of currency (for every dollar, pound etc.), as credits. This is a large scale counterfeiting that has been taking place ever since the XIX century. It comes to surface only at the time of financial crises when clients rush in droves to demand their money back and banks happen to be in a bind. Text books on economy call it incomplete bank guarantees. The less cash is in circulation, the more wide opportunities exist for making profits out of thin air. 

Third, the money holders (the world leading banks, first of all the shareholders of the US Federal Reserve System) believe that their prime goal is achieving absolute world power. The transfer to cashless transactions means the construction of global «concentration camp» supervised by bankers. All transactions will be monitored by electronic means. Cashless account holders will have their behavior and even thoughts under control. In case of «deviations» accounts will be blocked. In practice it will be a death sentence. The 100% cashless world will turn into a concentration camp with prisoners sent to the otherworld without gas chambers and executions. 

The road to hell is paved with good intentions, they say. Let’s remember the 9/11. It was a well-prepared action staged by money holders to declare a total war against terrorists. Today even a blind man can see that the war against terror is used to justify the Washington’s efforts to destabilize the situation in different parts of the world, or, in other words, to implement the policy of managed chaos. The campaign for switching to cashless transactions is part of the game. 

What I call the concept of banks’ concentration camp is not something new, there is no sensation. Rudolf Hilferding wrote about it a century ago. He was an Austrian-born Marxist economist, a politician and chief theoretician for the Social Democratic Party of Germany. Hilferding was the first to put forward the theory of organized capitalism, or «finance capital», or concentrated banking system. He welcomed this system of totalitarianism. Rudolf Hilferding believed that it would evolve the traditional capitalism into a system that would eliminate wars, crises and revolutions. The commercial banks will become institutions to carry out the functions of record keeping and accounting. This function is an imperative for running concentration camps. 

John Coleman, former special services operative, continued to discuss the issue in his Committee 300 (first published in 1991). It tells about an all-powerful group answerable to no one but its members that knows no national boundaries, is above the laws of all countries. It actually controls every aspect of politics, religion, commerce and industry, banking, insurance, mining, the drug trade, the petroleum industry. Coleman is less optimistic than the Austrian socialist of the 20^th century. According to Coleman, the elimination of «extra people» on the planet is a prime goal of money holders. The banks-run concentration camp may be a perfect instrument for accomplishing the mission. 

That’s what came to my mind as I was reading the news about the recent «innovations» in Denmark and Sweden. 

P.S. More news was reported as I had finished the article. Martin Armstrong reported on preparations of a secret meeting to get together the representatives of European Central Bank, the US Federal Reserve System and the central banks of Switzerland and Denmark is reporting on a secret meeting in London with the aim of getting rid of any economic privacy that remains by ending cash. Armstrong is known in the world of experts on economy and finances as a master of forecasts (he has predicted many crises, including the default in Russia of 1998). He is well informed about the trends in banking business.(3) World news agencies turn a blind eye and a deaf ear on the planned event being commented only by bloggers. (4) 

The abolition of cash and switching to electronic transactions will top the agenda. It’s not the use of electronic technologies that is important, but rather the fact that there will be no anonymous deals. Armstrong even offers some details on the would-be event. As he put it, «I find it extremely perplexing that I have been the only one to report that there is a secret meeting in London where Kenneth Rogoff of Harvard University and Willem Butler the chief economist at Citigroup will address the central banks and advocate the elimination of all cash to bring to fruition the day when you cannot buy or sell anything without government approval». Armstrong called the meeting another step on the way to elimination of remaining freedoms and establishment of economic totalitarianism. 

Is just a few per cent of share capital enough to effectively manage a bank? At this point there are at least three things that should be taken into account. 

Firstly, large shareholders of leading US banks are long gone. Officially, there is not a single shareholder of these banks with more than a 10 per cent stake. The overall number of institutional shareholders (investors) of US banks is around one thousand. It works out that an average of one institutional shareholder accounts for approximately 0.1 per cent of capital. In reality it is less, since there are also mutual funds (accounted for separately) and many thousands of individuals. In a number of banks, shares are owned by employees. In the case of Goldman Sachs, nearly 7 per cent of the share capital is held by individuals. Finally, some of the shares are floated on the stock market. In view of the fact that share capital is dispersed among tens of thousands of security holders, owning just one per cent of the shares in a Wall Street bank is a very powerful position. 

Secondly, one and the same owner – the ultimate beneficiary – could be behind a few (or many) officially independent shareholders. Let us say that the owners of the financial holding company Vanguard Group hold shares in Goldman Sachs both directly and through mutual funds that fall within the holding company’s sphere of influence. Chances are that the share of the Vanguard Group in the capital of Goldman Sachs is more than 4.9 per cent (the percentage of the parent company) and more than 8.49 per cent (the percentage in view of the three mutual funds under its control). Neither should one disregard the individual shareholders, whose specific weight is far greater than their percentage of the share capital since they are senior managers who were put into management positions by the ‘ultimate beneficiaries’. 

Thirdly, there are shareholders whose influence on the bank’s policies is greater than their percentage of the share capital because they own so-called voting shares, while other shareholders own so-called privileged shares. The latter give their holders privileges like receiving a fixed dividend, but deprive them of the right to vote at shareholder meetings. By way of example, a shareholder may hold shares in the capital of the bank equal to 5 per cent, but his share of the total number of votes could be 10, 20 or even 50 per cent. The privilege of a casting vote for Wall Street banks could be of much greater value than the privilege of receiving a guaranteed income. 

Let us look back at Table 1 in the first part of this article. It shows that the main shareholders of almost all the US banks are financial holding companies. Moreover, while the names of the leading Wall Street banks are today familiar to all of us, the names of the financial holding companies that own large stakes in these banks only mean something to a very small circle of financiers. But they are the ones who ultimately control the US banking system and the Federal Reserve System. For example, the investment fund Franklin Templeton Investments, which bought up Ukrainian debt securities for $7-8 billion and is taking an active part in the country’s economic strangulation, has been mentioned rather a lot of late. This fund is a subsidiary of the financial holding company Franklin Resources Inc., which is a shareholder of Citigroup (with a share of 1.24 per cent) and Morgan Stanley (1.4 per cent). 

Financial holding companies like the Vanguard Group, State Street Corporation, FMR (Fidelity), BlackRock, Northern Trust, Capital World Investors, Massachusetts Financial Services, Price (T. Rowe) Associates Inc., Dodge & Cox Inc., Invesco Ltd., Franklin Resources, Inc., АХА, Capital Group Companies, Pacific Investment Management Co. (PIMCO) and several others do not just own shares in American banks, they own mainly voting shares. It these financial companies that exercise the real control over the US banking system. 

Some analysts believe that just four financial companies make up the main body of shareholders of Wall Street banks. The other shareholder companies either do not fall into the key shareholder category, or they are controlled by the same ‘big four’ either directly or through a chain of intermediaries. Table 4 provides a summary of the main shareholders of the leading US banks.

Table 4.

Leading institutional shareholders of the main US banks

Evaluations of the amount of assets under the control of financial companies that are shareholders of the main US banks are rather arbitrary and are revised periodically. In some cases, the evaluations only include the companies’ main assets, while in others they also include assets that have been transferred over to the companies’ control. In any event, the size of their controlled assets is impressive. In the autumn of 2013, the Industrial and Commercial Bank of China (ICBC) was at the top of the list of the world’s banks ranked by asset size with assets totalling $3.1 trillion. At that point in time, the Bank of America had the most assets in the US banking system ($2.1 trillion). Just behind were US banks like Citigroup ($1.9 trillion) and Wells Fargo ($1.5 trillion). 

It is interesting that the ‘big four’ financial holding companies control trillions of dollars worth of assets with a rather modest number of employees. With total assets of around $15 trillion, the ‘big four’ has less than 100,000 employees. For comparison: Citigroup alone has nearly 250,000 employees, while Wells Fargo has 280,000. Wall Street banks seem like workhorses in comparison with the financial holding companies of the ‘big four’. 

In terms of controlled assets, the ‘big four’ financial companies are in a heavier weight category than the ‘big six’ US banks. The tentacles of the ‘big four’ financial holding companies do not just extend to the US banking system, but to companies in other sectors of the economy in both the US and overseas. Here we can recall a study by specialists from the Zurich Institute of Technology in Switzerland, the aim of which was to reveal the controlling core of the global economic and financial system. In 2011, the Swiss specialists calculated that there were 1,128 companies and banks at the core of global finance at the beginning of the financial crisis (2007). An even denser core of 147 companies was revealed within this conglomerate. The authors of the study estimated that this smaller core controlled 40 per cent of all corporate assets in the world. The Swiss researchers ranked this core group of companies. Here is the top ten: 

1. Barclays plc

2. Capital Group Companies Inc

3. FMR Corporation

4. AXA

5. State Street Corporation

6. JP Morgan Chase & Co

7. Legal & General Group plc

8. Vanguard Group Inc

9. UBS AG

10. Merrill Lynch & Co Inc.

An important fact is that all ten places in the Swiss list are occupied by financial sector organisations. Of these, four are banks whose names everyone is familiar with (one of them, Merrill Lynch, no longer exists). I will make particular mention of the US bank JP Morgan Chase & Co. This is not just a bank; it is a bank holding company that holds shares in many other US banks. As can be seen from Table 1, JP Morgan Chase holds shares in every ‘big six’ bank with the exception of Goldman Sachs. There is another remarkable bank in the US banking world that is not officially one of the ‘big six’, but which has invisible control over some of the ‘big six’ banks. I am referring to The Bank of New York Mellon Corporation. This bank holds shares in Citigroup (1.24 per cent), JP Morgan Chase (1.48 per cent) and Bank of America (1.25 per cent). 

But six of the places in the Swiss list belong to financial companies rarely mentioned in the press. These are financial holding companies that specialise in acquiring shareholdings in companies in various sectors of the economy around the world. Many of them set up various investment funds, including mutual funds, and manage their clients’ assets on the basis of trust agreements etc. The list includes three of the ‘big four’ financial companies in Table 4: Vanguard Group Inc, FMR Corporation (Fidelity), and State Street Corporation. These financial holding companies, along with the company BlackRock (which has strengthened its position considerably since 2007) also make up the core of the US banking system. 

It is interesting that the ‘big six’ are also well represented in the bank holding company JP Morgan Chase: Vanguard Group – 5.46 per cent; State Street Corporation – 4.71 per cent; FMR Corporation (Fidelity) – 3.48 per cent; and BlackRock – 2.75 per cent. Another of the bank holding companies mentioned above, The Bank of New York Mellon Corporation, is controlled by three of the ‘big four’ financial companies: Vanguard Group – 5.15 per cent; State Street Corporation – 4.72 per cent; and FMR Corporation (Fidelity) BlackRock – 2.62 per cent. 

After revealing the controlling core of the US banking system made up of a small number of financial holding companies, a number of new questions arise. Who are the owners and ultimate beneficiaries of these financial holding companies? How far does the influence of these financial holding companies extend sectorally and geographically? And can we say that the approach to explaining what goes on in the sphere of global finance based on the concept of the struggle between the Rothschild and Rockefeller clans’ has now become obsolete? 

However, these are subjects for another discussion. 

During the 2007-2009 global financial crisis, the FRS quietly gave out more than $16 trillion worth of credit (virtually interest free) to various banks. The owners of the money gave out the credit to themselves, that is to the main shareholder banks of the Federal Reserve. Under strong pressure from US Congress, a partial audit of the FRS was carried out at the beginning of this decade and the results were published in the summer of 2011. The list of credit recipients is also a list of the FRS’ main shareholders. They are as follows (the amount of credit received is shown in brackets in billions of dollars): Citigroup (2,500); Morgan Staley (2,004); Merrill Lynch (1,949); Bank of America (1,344); Barclays PLC (868); Bear Sterns (853); Goldman Sachs (814); Royal Bank of Scotland (541); JP Morgan (391); Deutsche Bank (354); Credit Swiss (262); UBS (287); Leman Brothers (183); Bank of Scotland (181); and BNP Paribas (175). It is interesting that a number of the recipients of FRS credit are not American, but foreign banks: British (Barclays PLC, Royal Bank of Scotland, Bank of Scotland); Swiss (Credit Swiss, UBS); the German Deutche Bank; and the French BNP Paribas. These banks received nearly $2.5 trillion from the Federal Reserve. We would not be mistaken in assuming that these are the Federal Reserve’s foreign shareholders. 

While the makeup of the Federal Reserve’s main shareholders is more or less clear, however, the same cannot be said of the shareholders of those banks who essentially own the FRS’ printing press. Who exactly are the shareholders of the Federal Reserve’s shareholders? 

To begin with, let us take a good look at the leading US banks. Six banks currently represent the core of the US banking system. The ‘big six’ includes Bank of America, JP Morgan Chase, Morgan Stanley, Goldman Sachs, Wells Fargo, and Citigroup. They occupy the top spots in US bank ratings in terms of indices such as amount of capital, controlled assets, deposits attracted, capitalisation and profit. If we were to rank the banks in terms of assets, then JP Morgan Chase would be in first place ($2,075 billion at the end of 2014), while Wells Fargo is in the lead in terms of capitalisation ($261.7 billion in the autumn of 2014). In terms of this index, incidentally, Wells Fargo came out on top not only in America, but in the world (although in terms of assets, the bank is only fourth in America and does not even figure in the world’s top twenty). 

There is some shareholder information on the official websites of these banks. The bulk of the big six US banks’ capital is in the hands of so-called institutional shareholders – various financial companies. These include banks, which means there is cross shareholding.

At the beginning of 2015, the number of institutional shareholders of each bank were: Bank of America – 1,410; JP Morgan Chase – 1,795; Morgan Stanley – 826; Goldman Sachs – 1,018; Wells Fargo – 1,729; and Citigroup – 1,247. Each of these banks also has a fairly clear group of major investors (shareholders). These are investors (shareholders) with more than one per cent of capital each and there are usually between 10 and 20 such shareholders. It is striking that exactly the same companies and organisations appear in the group of major investors for every bank. Table 1 lists the major institutional investors (shareholders). 

Table 1.

Major institutional shareholders of US banks and their percentage of the share capital of each bank (as of 31 December 2014)

Source: finance.yahoo.com

As well as the institutional investors identified in Table 1, the list of shareholders of the leading US banks also includes the following organisations: Capital World Investors, Massachusetts Financial Services, Price (T. Rowe) Associates Inc., Mitsubishi UFJ Financial Group, Inc., Berkshire Hathaway Inc., Dodge & Cox Inc., Invesco Ltd., Franklin Resources, Inc., The Bank of New York Mellon Corporation and several others. I have only named those organisations that appear as shareholders of at least two of the six leading US banks. 

The institutional shareholders listed in the financial statements of leading American banks are various financial companies and banks. Separate records are maintained with regard to shareholders such as individuals and mutual funds. In a number of Wall Street banks, a substantial proportion of the shares are owned by the employees of these banks. Obviously these are top managers rather than ordinary employees (although ordinary bank workers may also have a symbolic amount of shares). With regard to mutual funds1, many of these fall within the sphere of influence of exactly the same institutional shareholders listed above. 

A list of the largest shareholders of the US bank Goldman Sachs that qualify as mutual funds may be given by way of example (Table 2). 

Table 2.

Largest mutual fund shareholders of Goldman Sachs (as of 31 December 2014)

Source: finance.yahoo.com

At least three of the funds listed in Table 2 fall within the sphere of influence of the financial corporation Vanguard Group. These are Vanguard Total Stock Market Index Fund, Vanguard 500 Index Fund, and Vanguard Institutional Index Fund-Institutional Index Fund. The Vanguard Group holds 4.9 per cent of the share capital in Goldman Sachs, but the three mutual funds that are part of this financial holding company provide an additional 3.59 per cent. The Vanguard Group’s actual position in Goldman Sachs is therefore determined by a share of 8.49 per cent rather than 4.9 per cent. 

A number of Wall Street banks also have an individual shareholder category. These are usually the banks’ senior executives, both active and retired. The table below contains information on the individual shareholders of Goldman Sachs (Table 3). 

Table 3.

Largest individual shareholders of Goldman Sachs (as of 27 February 2015)

Source: finance.yahoo.com

Altogether, the five individuals listed in Table 3 hold more than 5.5 million shares in Goldman Sachs, which amounts to approximately 1.3 per cent of the bank’s total share capital. This is the same amount of shares as an institutional shareholder like Northern Trust. Who are these people? They are senior managers at Goldman Sachs. Lloyd Blankfein, for example, has been the chairman and CEO of Goldman Sachs since 31 May 2006. John S Weinberg has been a vice chairman of Goldman Sachs since around the same time. He is also a member of the management committee and was co-head of the investment banking division (he left the latter post in December 2014). The three other individual shareholders also fall into the category of Goldman Sachs senior management, and they are all current employees of the bank. 

(To be concluded…)

(1) A mutual fund (MF) is a portfolio of shares acquired by professional financiers through investments by many thousands of small investors. By the beginning of the 21st century, there were several thousand mutual funds in operation in the US. By 2000, 164.1 million accounts had been opened under the framework of mutual funds, which is to say nearly two per family.