Nomi Prins: Collusion!

How central bankers rigged the world
Tuesday, May 8, 2018, 4:19 PM

Nomi Prins, Wall Street veteran turned financial industry reformist returns to the podcast this week to explain the findings within her new book Collusion: How Central Bankers Rigged The World.

Nomi has put together a timeline of exactly when and how the central banks have plundered the wealth of the masses since 2008, either directly or indirectly through the loss of purchasing power of the currencies they control: 

The relationship between the Central Banks, the major ones -- the Fed, Europe Central Bank, Bank of Japan -- all the larger Central Banks in the world and their private banks was effectively, and is effectively, kept secret. The relationships they have with each other, a lot of it is secret; so you have to really dig in to it to find out what's really going on.

What I did was dig into the documents that I could find and create a timeline. That's why each chapter in each region starts in 2008. It works with Mexico, Brazil, Japan, China and Europe and juxtaposes that with what the Fed was doing at that time to see how that collusive behavior wound up happening. The secret-ness is in the relationships of the banks, where that money that was fabricated by these institutions actually went, and when -- or if -- it's coming back.

The 'cheat and deceiving' part of that definition is also apparent: people have been cheated out of their futures from the standpoint of the central banks' strategies. So when the Feds creates cheap money, companies and banks and countries borrow more from the future because it is so cheap and easy. This deceives many people into thinking that the economy is somehow therefore being helped by this strategy, which is in acutality an emergency strategy. It's an emergency that's gone on now for ten years.

Yes there have been some tweaks here and there -- interest rates have gone up a little bit in the United States -- but all in all, rates are still pretty much 0% on average globally and quantitative easing still exists. The books of the major Central Banks are as big as they were at their heights through this last ten-year period...and they're still growing. Just look at Europe and Japan.

Look at the stock market. The stock market is really high right now in a lot of different places. Why is it so high? Because a lot of this money went into debt which was borrowed to buy corporate stock, to buy the stock of banks, or to buy the banks themselves. That's a major form of manipulation and deception as well.

Why is JP Morgan's stock going up? Is it just because JP Morgan is such a great bank and so helping? Well, no. It's because it received a lot of help from the Federal Reserve. It funneled that help into its own shares, and it has continued to pay settlements and be fined on egregious activity against its own clients, which are many because it's the largest bank in the United States among the largest banks in the world.            

There are multiple points of cheating and deception that have been enabled or that occur because of Central Banks policies. Some of those policies are secret; but a lot of them are public. You just have to piece the documents and the timelines together.

Click the play button below to listen to Chris' interview with Nomi Prins (41m:38s).


Chris: Welcome, everybody, to this Peak Prosperity podcast. It is April 30, 2018. I am your host, Chris Martenson. In October 2008 financial markets were melting down, and it got so bad that I read in The Wall Street Journal that an executive of a large Wall Street Bank, on his way to an emergency 2:00 in the morning meeting, stopped in the lobby of his own bank and took out as much cash as he could from the ATM because he was uncertain if any banks would even be open in the morning. Now, naturally, this executive would have flunked our Peak Prosperity resilience assessment because he should have had that money out, and much more, out of the bank months ahead of time, particularly given his position. But that anecdote illustrates just how bad things were. Hank Paulson went to Congress with a three-page memo saying basically, I need $750 billion right now, and if you don’t give it to me, Marshal Law may be next. It was scary times for sure.

So the Central Banks, they rode to the rescue. They swooped in and poured trillions of dollars, or their foreign equivalents, into the financial system. It was an emergency, but something funny happened along the way. In a full nine years after the emergency began, in 2017, the Central Banks were found to have printed up the largest amount of emergency money for any year of the emergency, including 2009. Now, when you stop and think about that, something really doesn't add up. It's a big deal, and it's super important to keep track of. I mean, way more important than Stormy Daniels. I mean, four orders of magnitude more important. Yet what the Central Banks are doing and who is benefitting and why are topics very rarely discussed in the mainstream media, which is why our guest today is such an important voice of our times.

Nomi Prins, who I've had the pleasure of working with recently, has written a new book titled, Collusion, How Central Bankers Rigged the World, which carefully examines what the Central Banks did, why, and who benefitted. Now, before becoming a journalist, Nomi worked on Wall Street as a managing director of Goldman Sachs, ran the International Analytics Group as a Senior Managing Director at Bear Stearns in London, and worked as a strategist at Lehman Brothers and analyst at the Chase Manhattan Bank. So, she's an insider who stepped outside and started writing about all this. Nomi, welcome to the program. It's so good to be talking to you again.

Nomi Prins: Thank you, Chris. It's great to be talking to you, as well. And yes, it's more important than Stormy, damn it.

Chris: Not a little bit, but four orders of magnitude. I mean, it's ten thousand times more important. Nomi, I want our listeners to get to know you better. What lead you out of banking and into writing and journalism?

Nomi Prins: Once I got to Goldman Sachs after – you mentioned my bio across a number of other banks and the world – realized that it was just a place I couldn't continue to be. I mean, the way in which the banking industry has degraded to such an extent, the types of really bad loan books we were supposed to be looking at to re-jigger into new kinds of securities to sell off to our other clients from clients that had the bad loans to being with on their corporate books – there was a lot of problems that were about to befall the entire system. And I actually left right after 9-11. I was down near Wall Street – well, I was in the Wall Street area near the World Trade Centers – well, in the area during the 9-11 attacks and working at Goldman Sachs. And I just remember not just the chaos that befell everyone that day and in the weeks to follow in New York City and as the stories went out throughout the world, but just how Goldman Sachs dealt with it which was basically to think of itself of this sort of country onto itself where – and Paulson, who later became the Treasury Secretary of the United States, but at the time was the CEO and Chairman of Goldman Sachs, sent out a company wide call to say the men and women of Goldman Sachs have to get to our seats, and said it's our duty to our country and our institution to sort of follow through and be there. It just all became too much.

And so, as a result, I left, and I wrote my first book. Other People's Money: The Corporate Mugging of America. In it, I detailed what was going on with the scandals at the time, Enron, WorldCom, those energy and telecom sectors, how the banks were really responsible for working with these institutions to hide and fake, on a routine basis, and how they were just held unaccountable. And also, how this little thing called credit derivative, which was naiscent at the time and which I was very involved, was going to ultimately crucify the markets in someway and be at the center of a crisis which they were in 2008.

Chris: So you're paying attention. As many of us did when we were younger, you join an industry – you went to banking. I went into the pharma industry and gathered some experience. And after time, if you pick your head up, you go, wait a minute, wait a minute, this is not what I thought I signed up for. Sounds like a case of the integrities came along. And you noticed that the banking system, if it has any integrity, it's really to its' own profits, and that's really as far as it seems to go, for me as an outsider. I mean, is that an unfair thing? I've gotten a little jaded watching all of the malfeasance of the bankers, and it seems endless, and there's no accountability to put any end to it. Is that an unfair way to sort of look at that unchecked people with incentives will do exactly what you think they're going do?

Nomi Prins: Will do what they did and continue to do it. The Fed, of course, is the regulator for that entire system, and that hasn't worked out so well. When I was leaving, just before I left, one of the senior partners told me that your clients are senior management – they're not the actual clients of the institution. So if you want to get ahead here at Goldman and make all those millions of dollars and become a partner and all of that, you kind of have to focus on the top of Goldman, not on the customers that we have. And so that's a truism. And that was pervasive of that culture, and Wall Street and greed are no strangers to each other. I mean, we all saw the Michael Douglas movie in 1987, or at least at some point we saw it.

But the way in which that sort of veracity to rip off any way you could any kind of customer that was a Goldman corporate customer and the institutions like Wells Fargo, people with bank accounts with barely any money to their name to begin with. It's just so pervasive, and it's become more and more pervasive because so much has been done, and these institutions have gotten away with it. Not only have they gotten away with it, they’ve been rewarded in epic ways for that malfeasance, for fraud, for felonies.

Chris: Well, indeed. And so, Nomi, I want to turn now to your newest book, which kind of is like a trip up the Nile. We're at the headwaters. We're talking about Central Banks this time. So your newest book. Collusion, it takes us on a tour of five regions of the world, and each story begins in 2008. So, let's start with the title Collusion, the definition of which is – and I just pulled this off Google, so it must be true – collusion is “secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others. Secret or illegal cooperation or conspiracy to cheat or deceive others.” Who was cheated or deceived in this tale, and who did that cheating and deceiving?

Nomi Prins: The relationship between the Central Banks, the major ones, for example, the Fed, Europe Central Bank, Bank of Japan, all the larger Central Banks in the world and their private banks was effectively, and is effectively, kept secret. The relationship they have with each other, some of it's secret, some of what they’ve done, you have to really dig in to. What I did was dig into the documents that I could find and create a timeline. That's why each chapter in each region starts in 2008. It works with Mexico, Brazil, Japan, China and Europe and juxtaposes that with what the Fed was doing at that time to sort of see how that ciliscent behavior wound up happening. And again, some of it is very public. So the secret-ness is in the relationships of the banks, where that money that was fabricated by these institutions actually went and where and if it's coming back.The cheat and deceiving part of that definition is also apparent. People havebeen cheated out of their futures from the standpoint of the strategies. So

when the Feds created cheat money and companies and banks and countries have borrowed more from the future because it is so cheap to pay for it, because it's easy and because of the Fed's policies, it effectively deceives us into thinking, not necessarily you and me or people listening to this, but many people into thinking that the economy is somehow therefore being helped by this strategy which, as you pointed out, was an emergency strategy. And this is an emergency that's gone on for now ten years.

You know, there have been some tweaks, rates have gone up a little bit in the United States, but all in all, they're pretty much zero percent on average globally and quantitative easing still exists. And the books of these major Central Banks are as big as they were at their heights through this last ten-year period, and they're still growing, for example, in Europe and Japan. So the deceit comes from looking at, for example, the stock market as well. the stock market's really high right now in a lot of different places. Why is it high? Because a lot of this money went into either debt which was used, borrowing which was done to buy corporate stock, to buy the stock of banks, buy the banks themselves, and that's a major form of manipulation and deception as well.

Why is JP Morgan stock going up? Is it just because JP Morgan is such a great bank and so helping? Well, no it's because it received a lot of help from the Federal Reserve. It funneled that help into its' own shares, and it's continued to pay settlements and be fined on egregious activity against its own clients, which are many because it is the largest bank in the United States, for example. And it's one of the largest banks in the world along the way.

So there's multiple points of cheating and deception that have been enabled or that occur because of Central Banks policies. And some of those policies and meeting, again, were secret. A lot of them were public, you just have to piece the documents and the timelines together.

Chris: Nomi, indeed, so if we had time, and I know you and I can parse through this – we could start going into some of the details, right. We could take about how interest on excess reserves is the Fed funneling ten billion dollars for every trillion and every percent they're paying out. We could talk about how the Fed has been front run on every auction, and so the big banks just get free money, and they have proprietary trading desks having zero loses over an entire year of two hundred trading days in a given year. We could talk how Black Stone was there picking mortgage backed securities for the Federal Reserve, but meanwhile also accumulating one of the largest residential real estate for rental portfolios of any private company out there. On and on and on.

But if we back up, this really looks like a looting operation to me. It looks like a transference of wealth from A to B, with A being the common people and the taxpayers and B being a very, very small group of very powerful, already very wealthy people. Have I got that wrong because that's how it looks out here in the cheap seats?

Nomi Prins: No, that's how it is. And these large institutions that front run auctions and then are able to know when things are going to happen, or at least mysteriously appear to trade on the right side of them, are effectively the ones that are accumulating – not effectively – they're actually the ones accumulation more of that money. In general, even if we look at the fact the stock markets have risen by so much since the financial crisis, on the back of all this artificial money going in to the system, the reality is that only about ten percent of Americans own 84 percent of those stocks and the numbers get smaller if you go up to the sort of point zero, zeros of a percent in terms of ownership.

And so even on paper, the wealth had been transferred away from regular people, and the majority of regular people, and into the hands of those that are connected to the Fed. And the customers and the people that were already wealthy and involved in a lot of these financial assets to begin with. It's not only a great transfer of wealth, it's really the biggest example of trickle down economics not working but being used as the narrative to work because all these Central Banks talk about how their activities have enabled the economy to come back from the depths of recession. In reality, they’ve enabled certain companies to look better on paper and into quarterly cycles because there able to get a lot of cheap money with which to buy their own securities.

And so it isn't really a picture of health. I mean, today, for example, this new constant, retailers are now going to fire a whole bunch more workers, and different sectors continue to either contract, provide less wages, provide less benefits, provide less stability to most people at the sort of bottom and middle and non-top of the system. And that's going to continue. And by the Fed's own admission. It's had – every three years it does a report, so the next one is going to come out next year. But the last one through 2016 – or it indicates that inequality has increased substantially since these policies have been enacted.

It's not that these Central Bankers are like, wait a minute, did we just do that, should we do something about that? Because they aren't using their own money. These are just funds that are created from their ability to create them. They're not coming from a pile of budget. They're not coming from decisions made on behalf of people. These are just funds that are available to be funneled into the private banking system and financial paper markets.

Chris: Nomi, very well said, and by the way, this book is just beautifully written. And you have a quote in here on page 252. It's by Joseph Stiglitz. It's all the way back in August of 2015. Of course, I'm sure we could surface earlier time period quotes, but he says here, "Quantitative easing was yet another instance of failed trickle down economics. By giving more the rich, the Fed hoped that everyone would benefit." Now, that actually angers me to read that, and the reason is is that integrity is really important to me. It means that your words, your actions, and your beliefs are all in alignment so that I can trust what you're up to.

It was in that time, 2015, I remember Stiglitz was very obviously pointing out what was clearly true, that Janet Yellen was out there wringing her grandmotherly hands saying we're really mystified by this whole wealth and equality thing. We think maybe if kids were better educated, people were more entrepreneurial, and by gosh, “it would help if you came from richer parents” – and I'm not kidding, those were her words – that then the wealth and inequality would disappear. But she was the head of the institution who was inarguably most responsible for it, in fact, directly responsible. Question: do you think they really – was she actually that naïve or is she fibbing a little or is that just a bald-faced lie? I mean, because I'm trying to figure out where are they on the spectrum? Dumb or evil? Where do we go?

Nomi Prins: You look at Janet Yellen, you're like, how can that be? But dumb and willfully misleading? Hinging toward an evil misrepresentation of fact? Yeah. Because the thing is, and, like I said, I just put this together because you just mentioned 2015. The reality is, the Fed itself was doing a study on sort of inequality. At the time, what she was saying – and I actually went and addressed the Feds' back around that time. It was in the summer of 2015, so this was before any rate hikes had been implemented. This is when they were still trying to figure out – she said publicly, but internally, I was in front of her. She was addressing a group of Central Bankers, and I just happened to be invited to talk to them about an interesting topic which is why Wall Street wasn't helping Main Street. This is the topic they asked me to speak about.

When they asked me to speak about it, I was surprised that they had asked me because I had written rather despairingly about the Fed for money years. But they did. And I went up, and she said the same sort of thing to a bunch of Central Bankers from around the world, some of whom were from countries that were really bleeding at the time. And she said, yeah, everything is – we got this. It's fine. Banks are healthy. We had Dodd-Frank. It's all good. And I'm sitting there thinking, well, no, it's not, and it won't be, and this won't end well.

So it got up and I say, you know, if you want to understand why – this is your question – Wall Street isn't helping Main Street, I'll tell you really simply. It's because you didn't make them. And so I went on from there. It was very simple. There were no strings attached to any of the quantitative easing. There was no strings attached to even bringing rates down to zero and enforcing or colluding with other Central Banks to make the global interest rate for money to the financial institutions that get it first by design to zero or negative. That just didn't happen. So why would you expect anything different? I mean, it was very bizarre. And then I realized after not having been invited back again that probably it was there to sort of check a box. Okay, we have the other side. Alright, we're good.

And then, subsequently, they raised rates a little, had some wobbles. Right after that early 2016 European Central Bank comes out and brings rates down. Bank of Japan brings rates to more negative, and all these things happened to calibrate the Fed as sort of the mother Central Bank, a tiny little movement in interest rates to act as if it was done with this sort of experiment of quantitative easing, and everything was fine, and it could show it was fine by actually raising rates a little.

Chris: So appearances over the reality of things is a big, central part. Of course, I think they consider part of their policy tool is create the appearance first, and then magic will happen. So if we can create the appearance of wealth by driving up asset prices – this is a stated position of the Fed – it's not secret. In fact, there's and op-ed by Bernanke saying, yeah, we're going to drive up financial asset prices – that means stocks and bonds and houses – and then people will feel wealthier, and then we'll all be spending more, which actually means feeling confident enough to borrow more because that's actually the banking game is to get more people borrowing more because that's where banks make their money.

So when you say no strings attached – I was looking at a chart yesterday which showed that I can get whatever, 1.8 percent on 30-day US Treasury paper through Treasury Direct. I can get probably 1.5 or 1.6 percent out of the money market funds, but out a bank itself? I don't know, 0.1 percent, maybe? And so the Fed could have created some strings saying hey, you got to pay market rates to people because people need interest income, and that's important. But they didn't.

Nomi Prins: No. At the very least, they could have done that. They also could have done things like and you have to put this percentage away for small businesses, and you have to put this percentage away for restructuring mortgages and this percentage away for helping with student debt so that they can actually come and participate in the economy right after they get out – or just anything. Literally anything. And they did absolutely nothing.

Now, they would say, as some of them did, that that's not their job. Their job isn't to tell banks what to do. But it's like, look, guys, women, you just created $4.5 trillion worth of effectively electronic money to buy a bunch of debt. You don’t think you could have figured out a way to add on to that some stipulations? Like that was beyond – no you didn't want to. And then, publicly, you might occasionally ask the question as to why that wasn't happening, why Wall Street wasn't helping Main Street. Or not even publicly, but in some manner that might get out. Yet you refuse to for ten years, for ten years, ask for anything in return.

And during those ten years banks are committing new crimes, they're reaching settlements on old crimes. You have mufti billions of dollars going basically from the Fed to these banks to pay for their own fines, for crimes they did beforehand and along the way that created the "necessity" for this entire quantitative easing period. But they just didn't.

Chris: You know, Nomi, I come from a, on my mother's side, a long line of bankers, great, great grandfather started a bank. My grandfather himself has been President and CEO of Canandaigua National Banks, served under Paul Volcker for a period on the Fed. And learning about banking from my grandfather was a liability for me because it bears no resemblance to what's happening today. And my sense is, correct me if I'm wrong, but something happened along the way – somewhere between when my grandfather in the 70s and 80s was in banking, and today, something really went off the rails. And it feels really like the Wild West with the Fed really being the chief enabler. They're supposed to be the cop out there pulling the punch bowl away when necessary. But also enforcing those sorts of regulations.

You just talked about that they're very sensible and, of course, comport with this idea, that people without any checks on their behaviors will do what people did, ever since Roman times, ever since humans were humans. How is the Fed – first, do you agree with the idea that they’ve sort of enabled this looter mentality, this pillaging, that's been going on? But second of all, how is it the Fed is this blissfully, delightfully unaware of human behavior?

Nomi Prins: I think, first of all, yes, I agree. It definitely enables all of this, and stage one in the 70s and 80s was to allow deregulation of the banking system instead of regulating the banking system. And when you have, not through Volcker, but we have Greenspan to thank for that. And then, Glass-Spiegel being repealed and having banks able to take deposits and loans of individuals and hold them as collateral against money that they will require in these emergencies from the Feds. I don’t even think that Jamie Dimon, CEO and Chairman of JP Morgan Chase could have dreamed that the Fed would amass a $4.5 trillion book, nor that Central Banks around the world would amass $21 trillion, the GDP of the United States, in doing this stuff.

But what also happens at Fed is I think, particularly at the top of the Fed, so when I was there there were definitely people there who don’t speak for the Fed publicly, but who had been there for decades and who even invited me – kind of the reason I was there – who were concerned about this, who were concerned about quantitative easing, who were concerned asset bubble. This was 2015 was apparent, they were everywhere already. This is not the discovery since then, but who didn't get to have their say, who didn't get to be prominent in terms of the narrative that the Fed presented to the world and to other Central Banks in particular.

And so they allowed themselves to be oblivious. Janet Yellen pretended, like you say, they pretended to be oblivious. There was no way they looked at their data and could think that they weren't somehow involved in inflating these assets. There's literally no way you could look at any chart along any time from when they began quantitative easing to this day where you don’t see a very, very solid correlation between what they did, how much money they stuck into the market and where the markets went. And the days when the markets wobble, where they're at, and the days when the markets come back, where they at. There's no way you can't look at this data and come to that conclusion.

So what they do is they choose to not to. They just literally say, look, we are in charge whether it's Ben Bernanke or whether it's Janet Yellen or whether it's now Jerome Powell, whether it's the Obama administration or Trump administration, we are in charge of this ship, and damn it, this ship is sailing, we're doing fine, we've created a better economy, look at the stock market, that's all on us.

And to admit failure in that, to admit that all of this was merely subterfuge, was merely artificial stimulation of markets, the health of certain companies and of the banking system, would be to admit they, and the world Central Bankers who are involved in this entire process, have been ineffective, lying, and failures. And they're not going to do that. So there's more than obliviousness attached to this – it's a willful oblivious because to pay attention and to be public about concerns at the top of these institutions means to admit defeat, and they're just not going to do that.

Chris: Well, Nomi, I love that willfully oblivious. It sounds a little bit like what I just heard about the FBI, in certain instances before Congress, not being completely forthright. There are other terms we could use, of course, but I love the euphemisms. They're always nice to soften this up a little bit. So back to the title: Collusion, “secret of illegal cooperation of conspiracy, especially in order to cheat or deceive others.” My sense of this whole thing was, look, there was a corporate bond hiccup in 94, lead to the repeal of – the introduction of the Sweeps programs which just did away with reserve requirements. Then we had long term capital management in 98. Boom. Everything blows up 2000. And then that skid that we got into – oversteer – and Bernanke gets us into the housing bubble and all that other junk that happened with the collateralized debt obligations. Boom. That blows up. another oversteer. I feel like the skid is getting pretty bad at this point – my sense.

What I'm wondering about now is, when we look at this, and you look at all of the human foibles and weak spots and willful oversights or whatever we want to call these things – here we are. And so my question to then is so, okay, how do we get out of this bind? I'm fascinated by how we got into this mess. You brilliantly chronicled this, and you also touch on, and the thing I'm very personally concerned about, is how do we get out? How do we do that, and is that even possible?

Nomi Prins: So, first of all, we know that where we're at now is going to create a bigger crisis than before because we're sitting on this mound of extra debt that we didn't have before, the keg being relatively dry or at least nearing dry – what Central Banks can even do to push this thing forward in time, not in effectiveness. There are things that can be done. Like you can deflect, for example, in all of these countries, the money, still, that went into supporting us and supporting debt that was conjured by these institutions into the real economy. You can ring-fence. For example, a trillion dollars, a trillion and a half, whatever, for the four and half trillion that's been created you can create an infrastructure bank. You can collateralize it with debt that already exists, no new debt, and you can say, look, this money will be for this purpose.

To an extent, that's what the People's Bank of China did. They’ve done a sort of quantitative easing of sorts program, not in conjunction with the United States or the other major G-7 countries, but they’ve utilized that money. And it's not perfect in terms of how things have been working out, but there is a lot of debt. They’ve used in for infrastructure. They’ve used it for development. They’ve used it for creating stronger alliances with trading partners. They're trying to help their trading partners regionally have more of their own infrastructure and have more people working and trained and bringing groups of people across borders to get that done. They have motivations and reasons and stuff, but the economics of it is what it is.

So it's funny. We're not doing that. We're going away from that. We're having these ridiculously dummy quibbles in Washington, and I speak to people on both parties. As you know, I'm there talking about little tweaks in the budget for one form of education or one form of infrastructure building or whatever it is. And there's this constant back and forth on numbers that could actually be supported by debt we've already issued, which is more than the percentage of the total terms relative to our GDP. We can reform the banks. We can separate and do a Glass-Steagall separation between deposits and loans and speculative behavior because by doing that we actually take ourselves out of the position of being the collateral through any type of bailout or subsidization provided by Central Banks or governments to the private banks when they screw this up again, which they will.

So there's things we can do to protect ourselves, things individuals can do. You mentioned like taking cash out on a regular basis. I do that. I know you do that. There's hard assets, things you can use to actually secure one's personal economy, and those are things that can be done on the aggregate level. And I think at least then we can create a situation where a crash isn't quite as painful as it will otherwise be.

Chris: Well, I think particularly about your very important sets of points in there. The way I've analyzed it, look, between the debts that you're mentioning, which are direct, and also the liabilities which are underfunded as indirect. When you put all those IOUs in a basket, the United States is running at 1,100 percent IOU to GDP, statistic right now, according to Bridgewater Associates. So the only question that really needs to be resolved is who's going to eat the losses. So I'm curious about a part in there where you said, look, at least we don’t want to be on the other side of the collateral chain when this thing blows up.

Let me talk about Greece real quick, which they’ve lost seaports, airports, public utilities including water, telephone, and electricity. They lost all of those things to privatization, enforced by the European troika. None of those where collateral for official Greek debt, yet they got basically seized in that process, sort of the confessions of an economic hitman model. Is that what we have to look forward here, or is there any way that we can prevent being collateral in this story really?

Nomi Prins: Again, but you're right, what happened with Greece, what's happening in the Brazilian countries that had been weakened economically by the financial crisis and whose solution from a governmental standpoint, or an external standpoint with respect to Greece and the troika is to take more out of these countries because speculators wanted their cut of what they chose to put at risk to begin with in this entire system. And that continues to be a problem.

I think so the awareness of that, of trying to stay outside of that from an investment standpoint. But from a pension standpoint, if people have pensions or 401Ks or whatever, that's actually a very small percentage of people. If there is a crash, obviously, those will shrink, and that's another reason to shift into assets that aren't connected to the sort of paper gains that a subsidized approach to the financial system that Central Banks have done indicates.

So I think you insulate by really retracting out of the system. And also, this has come up in a bunch of talks that the number one question is also ways to not work with the bigger banks. There is ways to work with smaller community banks, local banks, banks that actually take deposits and utilize them to collateralize building or small businesses in various towns and cities and communities which then provide jobs, which then provide demand for other things that support those businesses and so forth. And you create a sort of foundational economy, not weakened, due to – depending of what people's livelihoods are and where they're located from the ground up as well. I mean, I'm not advocating that the politicians or people in government are necessarily going to get any of this because many of them live on a whole different echelon of the universe. But that we can do things from the ground up.

Chris: Well, fortunately, in many cases, their salary depends on them not understanding it, to paraphrase Upton Sinclair. Always a problem with that. And, of course, you're speaking my language and to my audience in particular. We love this idea of taking control of what we can, knowing I can't control monetary policy, but I can certainly avoid storing my wealth in dollars or currencies that are associated with that – hard assets, building true wealth. And I think this is realy the key thing.

The one thing that these banks and the banking system and the Central Banks in particular would love to collude on is for us to confuse debt with wealth. And Frederick Saide wrote about this in the 1920s brilliantly. Debt is not wealth. It's this fictitious construct. So, you also wrote that maybe what we need is a debt reset in Collusion. I'm kind of wondering, very quickly, what does that mean? How could that even work?

Nomi Prins: Well, for example, in the case of Greece, there could be – some of their "bailout money" becomes due after they’ve already been pillaged in terms of the assets on the ground that had been actually accumulating money into Greece; that you could just forgive that debt. And the reason for that is not to do anything more than providing the same help to the nations and countries and individuals at the bottom of this hierarchy of money trickling into the top and just, not even redistributing, just putting it into a different part of the economy and the different elements of citizens and nations. I think that's something that they can do.

So, when I think about cancelling certain elements of debt, I'm talking about unpayable debt that will further damage the economies of people or countries that could become stronger without having to pay for it. And not as a free giveaway, but because that is precisely, in droves, what has been done for the private banking system. That's what they have received. Why should they receive that and places in which people and localities and nations could be strengthened and participate more in their economies or in the global economies from a real foundational perspective can't anywhere near the same percentage break?

Chris: Well, yeah. We'd have to put something before profits and big banks props. Listen, I know the Central Banks thought, they're doing God's work to pull a Lloyd Blankfein quote, and also that what they were doing was preserving the system. As long as we have a healthy banking system all other things are possible. Of course, banks have been pulling record profits and bonuses over this entire period, of course. Meanwhile, Detroit, still four years now into that. They're still drinking lead tainted water for want to $48 million bucks to tie into the Huron system.

So really, from a barter sort of moralistic, priority standpoint, what really gets my goat in this story is that we put so much effort into supporting institutions – I'm sorry – no offense to your former profession – but frankly, I think we could do away with a whole chunk of it and nobody would notice in terms of services actually needed and provided.

So, what I love about your book here is it tells the tale. You went to Mexico, Brazil, China, Japan, Europe. Nomi, I'm just wondering, in all those travels, what did you come across maybe that surprised you or that you weren't expecting coming into this that you're eager to share with people in this book, Collusion?

Nomi Prins: There's a couple really quick things. One is when I was in Brazil. Let me start with Mexico. When I was in Mexico I was actually at a breakfast in Monterey which is this industrial city, and I was sitting next to a former number two in the Central Bank there right before the crisis. And he literally leaned over to me and said, this is not going to end well, this is not how we would have done it, and we strongly spoke out against it. So that was very interesting. He was a very sort of senior, well respected person in the Mexican sort of hierarchy, as well.

In Brazil, I talked to a guy around the research department at the Central Bank of Brazil who came out and showed me data that he had been compiling that really showed that correlation between the money that came in from the major Central Banks. So, he basically added together European Central Bank, Bank of Japan, Bank of England, and the Fed, and how that correlated to activates politically from an accumulation standpoint on their own stock markets in Brazil and where that was relative to their economy, which I thought was very interesting because that was data I would have liked to of seen from the Fed.

And then just, honestly, traveling in China. I missed a flight or was there no flight from Beijing to Shanghai when I was there. And it was on of these situations where I was going to be speaking to one of the five vice presidents of the NDB, the New Development Bank which is the Brics Bank, which is headquartered in Shanghai. And like I had to get there at a certain time. So I would up sort of booking across booking Beijing which you can't really do because the traffic is awful. But just going to the train station I took a high speed, lovely rail ride from Beijing to Shanghai which was the smoothest, quickest sort of on land experience I had ever had. So when we talk about building infrastructure, I was in it. And it really does make a difference. And I could barely see all the towns that China was constructing along the way of this line because we were going so fast. So, I just thought that was just a neat experience.

Chris: Every time I go to China I get train envy. It's amazing what happens when you actually put your money into building the wealth of your nation and the infrastructure. It's astonishing. And I think that really, if I was going to super critique the Fed, and one of the reasons I'm a big non-fan of theirs is it seems like all they care about – maybe I have this wrong – they don’t care about full employment or whether inflation is two percent. They care about the profits of the big banks, who are, of course, their owners, share class owners, and that's it. I can't realize detect any other ulterior interest of there's at a higher level. And I know great people who work at the Fed, very earnest people. Just like I knew great people in the pharma business.

But there's a certain something in that industry which is very collusive, and it seems to be just about stuff that I don’t think is adding much to our future. In fact, the more debt we pile on, I think the gentleman in Mexico might agree, and you might, too, is that the more debt you pile on the more you steal from the future. And that feels irresponsible generationally, for sure. And I'm talking to more and more young people thirty and under who get that. They're not as invested in the future because they, too, have seen through the B.S. and said, wow, that really doesn't make sense.

Nomi Prins: Right. And it's not only we're stealing from the future, this entire process over the last ten years has ignited more stealing from the future than we were already doing.

Chris: Yeah, it has. And so Collusion is the book. It's just phenomenal. How Central Bankers Rigged the World by Nomi Prins. Nomi, people can, I'm sure, find your book in bookstores, as well as on Amazon. Do you have any upcoming book signings you'd like to alert people to or perhaps a place where they could see your schedule?

Nomi Prins: Yes. Well, the schedule is on the front page of my website. So, it's www.nomiprins.com. I will be in New York City tonight which is April 30th. I don’t know when this is airing. But after that, I will be in Washington at Politics and Prose on Wednesday night at 7:00. And if you're in the LA area, and it's a big space to fill, I will be at the Emmanuel Presbyterian Church on Saturday night, May 5th, so Cinco de Mayo there. And all the ability to buy tickets and get more information are on the website. I'll be in other places too, but it's all there.

Chris: Fantastic. And that would be nomiprins.com. Nomi Prins. Nomi, thank you so much for your time today. Congratulations of getting this book out. I know it's a labor of love and best of luck with all of it. I hope it's just a smashing success.

Nomi Prins: Thank you for all of your support, Chris.

Endorsed Financial Adviser Endorsed Financial Adviser

Looking for a financial adviser who sees the world through a similar lens as we do? Free consultation available.

Learn More »
Read Our New Book "Prosper!"Read Our New Book

Prosper! is a "how to" guide for living well no matter what the future brings.

Learn More »


Related content


karenf's picture
Status: Bronze Member (Offline)
Joined: Oct 2 2010
Posts: 27
One of the comments that

One of the comments that always bugged me after the banking crisis was underway was this plan to divide the banks into what they called "bad" banks and "good" banks, as if that would solve the problem.  You could just feel this desire to 'fix' things and not have to deal with anything bad.  Well I was thinking, "Where would these "bad" banks go?"  Who would "own" them?  It just seemed so incredibly naive and simplistic to me as if we could just take all those 'bad' things and sweep them under the rug and presto chango... "Look Mommy, no mess anymore!"  I knew nothing about banking but was shocked at the simplicity and frankly stupidity of that whole idea that reassured everyone in the financial media.    I still shake my head and marvel at what seemingly intelligent people will think.  We are in trouble.  People actually live in a dream and not in reality.    

karenf's picture
Status: Bronze Member (Offline)
Joined: Oct 2 2010
Posts: 27
I guess what I am really

I guess what I am really trying to say is that I understood on a very simple level that you can't make something just disappear.  

New_Life's picture
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 432
Great guest

I was actually going to recommend Nomi as a future guest after seeing her excellent performance when being interviewed on BBC News Beyond 100 Days (co hosted by two UK & US news presenters)


cmartenson's picture
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 6162
Well, you know...about that....
New_Life wrote:

I was actually going to recommend Nomi as a future guest after seeing her excellent performance when being interviewed on BBC News Beyond 100 Days (co hosted by two UK & US news presenters) https://www.bbc.co.uk/programmes/n27vnpbz

Thanks for the thought, and glad we had her on again so near to the launch of her new book, and I want to remark on one thing...

The moniker of "conspiracy theorist" is one that I now wear proudly because I value independent thought and free thinking, and fresh ideas above everything.

Apparently, if you even dare to question the official narrative now you are a conspricy theorist?!?  Okay then...if forced...here's where I fall.

As I've writtten (somehwat) extensively there's been a concerted assault on free thinkers by the MSM.  Of course, we here, are affected by that less, but the common experience is very different.  For most people anything outside of the commonly repeated narrative is disturbing.  

Weird, right?

Not really, that's what history tells us.  

So I'll leave you with this...found on Twitter just this moring so it's fresh!


Mark_BC's picture
Status: Platinum Member (Offline)
Joined: Apr 30 2010
Posts: 543
(No subject)

timeandtide's picture
Status: Bronze Member (Offline)
Joined: Apr 3 2010
Posts: 68
Query about statements on Nomi Prins' website

Nomi Prins posted her forecast for 2018 on her website:


She stated: "The dollar index that tracks the dollar against other major currencies (including the Euro and the Pound sterling) hit 14-year lows in 2017. "

That, surely is wrong. It fell all the way through 2017 but had lower lows than 2017 from 2008 to late 2014. What I think she meant was that it had the worst performance in 14 years. I'm not even sure that is true because my figures suggest that 2010 had a worse performance beginning to end.

The far more interesting aspect is that the dollar index has been steadily rising since a low on April 22nd 2008. That is despite the quantitive easing and other shenanigans. Correlations may seem intuitive but they can lead you badly astray as 2017 demonstrates. Rates then were rising in the US but still negative or near negative in Europe which rationalizers would have expected to increase the dollar index. That is not what happened.

The only forecaster that I know of that were bullish the dollar index back then was Elliott Wave International. They expected the dollar index to rise as equity markets fell. That happened but could have been expected to stop when equities bottomed in March 2009. Instead, it rose but made a higher low at 72.86 on May 5th 2011. It has not seen that level since.

What has been happening? The nominal prices for equity indexes have gone into orbit, it seems, so the Elliott Wave forecast would seem to be wrong. In reality, though, when you measure the equity indexes against the PPI or against gold, they are still well down from their tops around 1999 and 2000.

I have no argument with the general idea that the Fed has a lot to answer for but then so do we all for blindly following. The idea that rising equity markets create confidence which boosts the economy is wrong. Logic ought to suggest that if that sort of feedback was in place then markets would keep going up with barely a setback. History suggests otherwise.

The more logical way to look at is that confident bankers have been printing money like never before because they believe that the system works mechanically rather than being driven by mass mood. Everyone has been in the same euphoric head space where they are so confident that they blithely consign their hard earned cash to ETFs without a thought to due diligence or any form of research.  It is the same across property and money markets. Look at the price of housing, junk bonds and sovereign debt. The belief is widespread that the markets only go up.

Well that belief was very firm until the end of January this year. The last 2 months have been messy although the last week suggest that the market has its mojo back. We will see but under Elliott Wave theory that first downward 5 wave jolt suggests another that will go much lower.

Cash is king in this environment.

gcsimager's picture
Status: Member (Offline)
Joined: Dec 28 2017
Posts: 12
What's happening

   In brief, what we're seeing is the FED and Treasury doing what they do best, manipulating the market.  They don't want to buy any more debt which was indicated last year when they said the bond buying binge was over.  Question is, now what?  Better yet, why?  No one else was jumping in, not at near zero rates when the stock market was going gang busters. To get investors interested they had to do something otherwise the government would shut down.  The why is the debt was getting so high that it would affect the country's credit rating.  Ah ha, a lower credit rating means steeper rates.

  What's going on now is the stock market is being bumped to get investors away from stocks and into bonds.  We need that since Trump popped out another 1.8 trillion deficit.  You can't pull in buyers unless the bond rates are more attractive and or the stock market turns into a stomach churning spectacle. They did both. It's a given that government is to some degree controlling the market movements.  It's not a "free" market. They have to so I'll give them a pass on that. Bond rates have been increased ever so slightly although it's still no where near what most would call normal. Why is that?  It's simple.  They don't want to pay 5% when they can get away with 3%.  Remember, the government has to pay the interest on those bonds. I should say we are paying. To offset that trivial increase they shook the tree called the S&P and Dow.  

 In this new age of being disingenuous to the degree they are, it's not a problem to whack the stock market in order to shake out a few hundred thousand potential government bond buyers. Ever wonder who determines the price on any given stock?  Someone is pulling those levers.  I don't think it was the last buyer or seller determining price.

 What we're seeing is a shift so as to not arouse suspicion with stocks being rocked to ultimately drift south and bonds increasing. Who said the bonds have to go up at all?  Supply and demand?  Nope, the government is not in it to make money. So what then? They have God like control and will set it according to their needs which are what?  To mitigate the interest payments. Don't expect to see 5% anytime soon unless it really gets out of hand which it could and I think it will with the amount of debt that's circulating at all economic levels.  Student debt is mind boggling along with consumer and home mortgages.  I don't know how people sleep at night with the amount of debt they're carrying.

 I started selling off my rentals last year. They are going for good prices because I invested a little to get them up to par versus selling to some shmucky investor and losing 50+k in potential earnings. I think the crash will be worse than 08 since the amount of debt is so high. The number of defaults will be staggering and it will reverberate throughout the economy bringing the country to its knees. I honestly feel sorry for most people because they've got no way out.



Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments