by Pam Martens and Russ Martens, Wall St On Parade:
Tonight, at 7 p.m., Wall Street historian and author, Nomi Prins, will be speaking at The Strand bookstore at 828 Broadway in New York City. (See admission details here.) The appearance marks the launch of her latest book, Collusion: How Central Bankers Rigged the World, set for release tomorrow. While former FBI Director James Comey’s new book, A Higher Loyalty, has been getting lots of attention on cable news, Collusion is a far more important book. America can recover from a disastrous presidency, the topic of Comey’s book. But America might not be able to fully recover from another epic financial crash brought on by disastrous central bank policy – the subject of Prins’ book.
Collusion not only proves that the 1 percent got bailed out while the 99 percent got sold out as a result of policies of the U.S. Central Bank (the Fed) during and after the financial crash of 2008, but it makes the powerful argument that another epic financial crash is inevitable under the current mega bank structure which has turned the Federal Reserve into little more than a money pimp (our term) for the Wall Street casino.
Prins writes that “Eight years after the crisis began, the Big Six US banks – JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Goldman Sachs, and Morgan Stanley – collectively held 43 percent more deposits, 84 percent more assets, and triple the amount of cash they held before. The Fed has allowed the biggest banks on Wall Street to essentially double the risk that devastated the system in 2008.”
Prins refers to what the U.S. Fed and other major central banks like the Bank of Japan and European Central Bank are doing as “conjured” money. The money has been conjured or fabricated, writes Prins, because the Fed and its counterparts are allowed to electronically create money out of thin air. (The U.S. Federal Reserve actually has a video on YouTube explaining how it creates electronic money.)
The super cheap money that the Fed was conjuring and funneling to the mega banks had no strings attached. Prins writes that the largest Wall Street banks “that inhaled this cheap money were not required to increase their lending to the Main Street economy as a condition of the availability of that money…Wall Street used its easy access to cheap money to increase speculation in derivatives and other complex securities. They used it to buy back their own shares, thus effectively manipulating their own stock – in broad daylight and with explicit approval from the Fed.” Equally problematic writes Prins, “these banks dialed back their lending to small and midsized businesses, which hampered their growth potential.”