Podcast

Jim Bruce: The Siren Song of 'Money For Nothing'

Shining a bright light on the Fed's culpability
Saturday, February 1, 2014, 4:29 PM

Like many concerned about the growing credit bubble driving the housing boom, Jim Bruce did his best to warn family and friends about the looming risks leading up to the 2008 financial crisis. Not many heeded him.

Jim, though, had not only positioned his portfolio defensively for such an event, he also managed to make profits by betting against the stocks of overly leveraged financial institutions. But it's what he did with the money he made that's the interesting story here.

Jim's worry about the unsustainability of our nation's economic trajectory only increased once the Federal Reserve began undertaking its extreme measures to get liquidity flowing (QE I, II, III, etc). In his eyes, easy credit and misguided market intervention were huge causes of the crisis in the first place, and here we were, trying to solve the problem by simply doing a LOT more of what created it.

So Jim set out again to educate people about the dangers of continuing down the reckless path we're currently on, and he chose to focus his beam on the Federal Reserve arguably the most influential institution in the world right now, and at the center of the policies and programs that, in his estimation, are currently dooming our economic and monetary futures. So last year, he released the film documentary Money For Nothing: Inside the Federal Reserve, which he wrote, directed, and produced.

Since its release, Jim has been touring the country with the film, speaking to Main Street and college audiences about the Fed: the implications of its policies, its fallibility, and our responsibility as citizens to remain educated on and vigilant of this private institution that has been granted tremendous power over our lives. Jim's goals are to build awareness that the money wizards are not all-knowing and to create a dialog to actively question policy decisions that he sees as detrimental to our nation's interests in the long term:

The Fed’s role has just grown and grown over time. To me, it is symbolic of how we are not addressing the real issues that our country faces. One of the big crutches we are using is the Fed.

Globalization has made the world a more competitive place for the last 30 years, and the Fed’s response has been to lower interest rates and encourage consumption even as American households (many of them) are not making what they used to make. The idea is, Let’s use credit to keep buying the same amounts of things that we used to buy. The whole thing is unsustainable.

It is something that, step-by-step, as crises came up, we traced the 1987 crash, Long-Term Capital in 1998, the tech bubble collapse in 2000, and now this most recent collapse. With each crisis, the Fed has expanded its actions, you could argue, with diminishing returns. They really are playing a bigger and bigger role in all of our markets and in our economy. If you look at right now, you can say the Fed today is trying to be Atlas. The have the government bond market (the largest in the world) on their shoulders and they're trying to fix prices there. They have the U.S. Stock Market the Fed is the biggest player there; the biggest influence, at least. Then, if you look at the housing market, buying $400-500 million dollars of mortgages each year, they are by far and away the biggest influence there.

The Fed really is directly involved and explicitly involved now in all of our major markets. The goal of the film is to lay that out for people to look at that and say: Maybe this is not such a good idea.

The film includes interviews with a number of former (and some current) Fed officials, as well as economists, historians, and investors. It's pretty remarkable to hear such a level of criticism about its current interventionism voiced by so many involved in that institution. None appears to have a clue how the Fed will get out of the box that its recent massive liquidity programs have put it in.

Given the number of insiders that appear in the movie, some readers here on PeakProsperity.com have questioned if this might be a publicity piece for the Fed, trying to soft-pedal its culpability in the recent state of the economy. We ask Jim that directly in the interview listen to his full response and judge for yourself but here's some of what he had to say:

If you look at the film, it is so critical of the Fed, ultimately, that there is no way Ben Bernanke wants that message out. We say a lot of bad things about the Fed...ultimately we come down on the side of, The policies we are doing today are wrong...I just cannot see how you can watch the film and think it is really implying that the Fed is on top of things.

Click the play button below to listen to Chris' interview with Jim Bruce (32m:39s):

Transcript: 

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson. In order to know where you are going, you have to know how you got there and you have to know where you are. Here were are, six years after the cracking of the housing bubble, the collapse of Lehman Brothers, trillions of dollars of official intervention. And in order to understand where we are going I truly believe we have to understand what it was that took us to that space. I do not think we have anybody better to tell us about the Fed in that regard; today, we are welcoming Jim Bruce to the program.

Jim is the writer, the director and producer of the documentary, Money for Nothing: Inside the Federal Reserve. That was just a really, really well-done movie. I just finished watching it and it is fantastic. Excellent production value; really nice narrative on it. The film is looking at the actions of the U.S. Central Bank, arguably the most influential institution in the world today, but with a critical eye. And revealing that many of those involved with running the Fed over the past few decades have actually very little idea how it is going to get out of the box its excessive liquidity measures have put it in. I am happy to see films like this emerge which attempt to engage mainstream audiences in a dialogue about central banking, something they might not otherwise do. In a world now largely directed by central banking monetary policy we need that discussion. We really need that discussion to enter the national dialogue, and fast.

So Jim, thank you so much for joining us today.

Jim Bruce: Thanks for having me.

Chris Martenson: What were your reasons for creating this movie?

Jim Bruce: You know, I was driven personally. Documentaries are always that way. My background is working in the film business, but this is my first as a director. I have worked on documentaries before, and I know it is a challenging business model, so you have to really care. I was someone who, from reading some of the people who are in the film, some of the economists were warning about imbalances in the early to mid-2000s. I was someone who was able to see it coming and protect myself. I wrote a newsletter to other people, my friends and family, in 2006, 2007, and 2008 saying, Watch out. Sell your stocks. Sell your house if you cannot afford your mortgage payment, and that kind of thing. Not too many people listened, but I was able to double my investment portfolio during the crisis, and in the wake of the crisis felt like all the Fed’s solutions were just more of the same policies that created it in the first place. I wanted to tell that story of how we got here. Like you were describing, I think the Fed was the key player in all of that.

The bigger thing was also, as someone who protected myself against what essentially was the collapse of the financial system by having puts, literally, in a lot of leveraged financial stocks, looking at the landscape in 2009 and 2010, I felt like, How do you protect yourself? One of the themes of the film is that each crisis is leading…the solutions to the tech bubble lead to the housing bubble, the “solutions” to the housing bubble are leading to the government debt bubble – QE bubble, or whatever you want to call it – that we are in right now, and each time we lead to a bigger crisis.

One of the main motivations for me in making the film was the sense that there is not an easy way to protect yourself against a loss of credibility in the government of the nation you are living in or a loss of credibility in the currency. These are things that have social impacts that are very hard to get away from. You cannot just buy a put for that. You have to worry about who your counterpart is, if you do.

Chris Martenson: Yes.

Jim Bruce: So I have two little kids, and I felt like I wanted to tell the story. I wanted to get people talking about the Fed, thinking about the Fed in our country, and hopefully reevaluating its policies and we are asking the Fed to do.

Chris Martenson: We have remarkably similar stories and backgrounds. It is around the same time I got very concerned with what I saw. I also rode a bunch of financial stocks down in the initial downdraft through 2007-2008. I have to tell you, I had two vexations that happened to me. The first was that I could not really get people to listen to me. Most of my friends and family were a very hard sell to convince them that something was about to change.

The second thing was that, I know that there are people like yourself (and many of others), but just a handful, who really saw this coming. In the postmortem, the Fed got to dominate the airwaves and say, Oh, nobody could have seen this coming. This was just impossible to spot. But, it was not, was it?

Jim Bruce: No, not at all. That to me is such a shame. I think Greenspan is a master at spin. He, amazingly, has not really protected his legacy. I think it has been hugely damaged. That idea, that sort of group-think idea, that nobody saw it coming – and Greenspan is even quoted as saying he knows of three or four people or something like that who saw it coming and they are really smart; that was his take – to me, it is just so invalid.

And that was really one of our motivations in the film. It is to show that – we have, I do not know how many, but nine or ten interview subjects who are on the record. Senior people like Raghuram Rajan, who is the Chief Economist at the IMF. He presented a paper at Greenspan’s last Jackson Hole symposium questioning basically whether the financial system was stable or not and was called a Luddite by Larry Summers. That is part of our story, the idea that you could see this coming. The housing bubble was the logical response, in some ways, by the American public and by the financial system to the incentives the Fed presented them.

And so we really try to point it out as not something that came from out of the blue. If you then think, Well, the Fed is having these impacts, hopefully we can question what the Fed is doing right now and say, What are the impact of today’s policies?

Chris Martenson: Yes. I really want to get to that part, because I think what your film does is lay out beautifully that the Fed is just a bunch of people, and they have institutional sclerosis and biases and blinkers on.

Before we get into that arc of the movie, though, because I think it is just fantastic, can you elaborate on your position today on the Federal Reserve, what you knew before and what you learned in the filming? Its actions, its impact on the world, the role of central banking in general. Where do you stand on the subject?

Jim Bruce: My take is that, and we trace this in the film – we do not literally get into this too much, but, when the Fed was first created we were on the gold standard. It was not even conceived of when the Fed was created that it would have to manage the value of money, because it was thought that we would always be on the gold standard. The Fed’s role – and we do not touch on that specifically but we do touch on the expansion of the Fed’s role – the Fed’s role has just grown and grown over time. To me, it is symbolic of how we are not addressing the real issues that our country faces. One of the big crutches we are using is the Fed.

Globalization has made the world a more competitive place for the last 30 years, and the Fed’s response has been to lower interest rates and encourage consumption even as American households (many of them) are not making what they used to make. The idea is, Let’s use credit to keep buying the same amounts of things that we used to buy. The whole thing is unsustainable.

It is something that, step-by-step, as crises came up, we traced the 1987 crash, long-term capital in 1998, the tech bubble collapse in 2000, and now this most recent collapse. With each crisis, the Fed has expanded its actions, you could argue, with diminishing returns. They really are playing a bigger and bigger role in all of our markets and in our economy. If you look at right now, you can say the Fed today is trying to be Atlas. The have the government bond market (the largest in the world) on their shoulders trying to fix prices there. They have the U.S. Stock Market (the biggest player there; the biggest influence, at least). Then, if you look at the housing market, buying four and five hundred million dollars of mortgages each year, they are by far and away the biggest influence there.

The Fed really is directly involved and explicitly involved now in all of our major markets. The goal of the film is to lay that out for people to look at that and say, Gee, maybe this is not such a good idea.

Chris Martenson: Well, it is an interesting arc when you look at it. You mention in 1913 when the Fed is formed, they were not really supposed to manage anything but gold and the money supply around gold. And now they are not only managing the price of money itself, but they are managing its quantity and they are managing stock markets and bond markets. They think they are responsible for inflation, unemployment, and even fiscal policy at this point; you can argue that now they are monetizing well over half of the running deficit.

Jim Bruce: Absolutely.

Chris Martenson: We get into all of that craziness right there, and one of the things that pops out clearly that I think you just did a fantastic job of laying out is how the Fed kind of lurched from a smallish sort of an accident, which was the stock market crash of 1987 (I am going to pin some stuff there), and then you get this Greenspan put, more than doubling of the financialization of the economy under his watch. We go from there – in 1994, there was a smallish corporate bond market accident which Greenspan met with the Sweeps Program which enabled him to just explode out bank reserves. Then, you get 1998 and LTCM, and that is even bigger. Then you get 2000 and that is even bigger. The housing bust is even bigger. When I look at that trajectory I see both the amplitude and frequency increasing.

That is what I took way from the film.

Jim Bruce: Our tag line on our poster is “The First Film About the Next Crisis.” One of those things, and I think you probably could have and some of the people we are both reading probably could have made a movie about the housing bubble in 2005 or 2006. People might not have gone to see it because they were too busy embracing and participating in the housing bubble. I feel like the goal of this film is where the U.S. government hasn’t lost all of its credibility yet, or the dollar has not lost all of its credibility yet, we still have this bigger crisis we are on the path towards out there. The goal is to talk about the trajectory to try to see if we might reverse course or at least give it the best shot. That is my hope.

Chris Martenson: How did you decide whom to interview for this film?

Jim Bruce: It was interesting. To some degree, there were a few people I tried to get and did not. I mostly got the people that I wanted to. I was trying to, and our web site lists people in different group, I was trying to take – for one thing, I really wanted to have Federal Reserve officials in the film, because I knew at the time and I learned more as I did the film, that there were some that were actually critical of Fed policy. I think that is something that is surprising to people, seeing a film in which Charles Plosser of the Philadelphia Fed talks about how printing money is a cure that may be worse than the disease we are trying to deal with.

A number of the regional bank presidents in the film are very open and voting against recent policies. Paul Volcker is in the film talking about how the Fed’s low interest rates led to a boom and a bust. It is just that simple, the way he puts it.

I felt like we needed to have the voice of Federal Reserve officials because I wanted the film to have credibility in circles where people think the Fed has done a good job. It is a surprising thing. I had a more critical perspective myself, but when we were doing man-on-the-street interviews asking people about the Fed a lot of people had great things to say about Ben Bernanke. They would say, Alan Greenspan, oh he screwed up, but Ben Bernanke saved the day. This was a common perception that surprised me. I thought people might have been more cynical like I was.

We felt like we needed to have Fed officials part of the story, and, as much as possible, to have criticism coming from Fed officials to just give it more validity then to have only outsiders. People say, Oh, those are outsiders. Those are people living in caves in the woods. What do they know? We felt like, if Paul Volcker is saying, The Fed screwed up, then maybe it will carry a little bit more weight.

So, we wanted to have Fed officials. We wanted to have figures from academia, historians. I chose people who I think are a lot closer to my views. There are a lot of critics of the Fed in academia who are in the film, people like Allan Meltzer, who has written several huge volumes on the Fed and knows more than anybody does. And financial historians; I wanted to get that perspective that people like Jim Grant bring. But then I also wanted to get people like Gary Shilling, John Mauldin, and Barry Ritholtz, people who are trying to advise people on what to do with their money; people who are involved in markets.

We got some traders, a guy named John Succo, who I think is pretty brilliant with the derivatives. I think he was Head of Derivatives at Lehman Brothers leading into long-term capital and was fired because he did not want to take the position the firm ultimately took with long-term capital, which threatened the survival of Lehman. Without the Federal Reserve’s bailout in 1998, Lehman probably would have gone under. We tried to get people who actually – Peter Atwater who was at JP Morgan – people who are in the markets, and people who have a real world perspective. To me, that is almost my ideal. I wish these people were making monetary policies.

Some of the smarter people, I think, from the Fed, and people with more critical views of what is going on, and then people with a sense of the history and the background. People who are some pretty brilliant economists, guys like Jeremy Grantham and John Mauldin and people who are trying to make money in the markets and have that real world perspective. We try to blend those different views. My problem is the average person only hears what Ben Bernanke or Alan Greenspan when he was Chair says, and they do not get to hear these other voices.

We really wanted to have a broad group of speakers. I was going through some people I was familiar with, and some people I became familiar with as I read about the Fed, and really trying to get voices that were outside the conventional wisdom in Fed circles. Conventional wisdom at the Fed in 2005, 2006, and 2007 said everything was great, until the financial system totally collapsed and then they said, Oh, there is something wrong. There was no sense that any of this was coming or that the Fed did not have all the tools to deal with it.

Janet Yellen is the perfect villain in that case. I forget the exact nature of the speech but she very confidently said she was sure that the housing bubble would not be a big problem, and if it was a big problem they had the tools to deal with it. Wrong on both counts. That is my concern. Today we have a new conventional wisdom. It is a lot of the same people, and it is that, Oh, the Fed can manage an exit from QE, and all of these expectations they have created. I think if history is any guide, we are going to see the Fed behind the curve, surprised by the unintended consequences of their policies and ultimately surprised by a big unraveling of what they thought was a well-managed recovery.

Chris Martenson: It is interesting that you put it that way because I really share that view. I was very impressed and surprised that you not only had former but also current Fed officials who were willing to go on camera and really speak fairly honestly about what happened there. Some of our readers who have seen the movie are concerned that it becomes a publicity vehicle for the Fed. It gives them a chance to say, Oh, yeah; we made some mistakes, but we are good, and we are a necessary institution. We will do better in the future. Just trust us. Were you worried about having to help them carry their message out?

Jim Bruce: Not really in a sense that, we have heard people say, Oh, there are all of these people from the Fed. Is the Fed financing the film? or something like that. If you look at the film, it is so critical of the Fed, ultimately, that there is no way Ben Bernanke wants that message out. In terms of the criticism, I think one of the things is, we say a lot of bad things about the Fed. To me, one of the little shafts of light in the story is the idea that it is an institution unlike any other I can think of, where it is a government institution that tolerates dissent at the highest levels. Yes, there are people from the Fed criticizing current policy in our film, and they are also going out and doing that in speeches on their own pretty regularly, and it has not been enough to overturn QE. I wish it had, but I at least think that we are showing that and it is a positive thing that there are, and I am glad there are some different views at the Fed. Ultimately we come down on the side of, the policies we are doing today are wrong.

I just cannot see how you can watch the film and think it is really implying that the Fed is on top of things. I think it is an ongoing criticism. The people who are saying QE is a bad idea today at the Fed are not saying, …but we have it under control. There are Regional Bank Presidents now who have just been warning and warning and saying, This is not going to end well. In the film, I think hopefully we are doing a service to the debate by bringing those voices out and more people will hear them and say, I did not realize people at the Fed were reconsidering these policies, because, of course, Bernanke very much presents his side of the story when he is providing testimony.

Chris Martenson: Yes. You know something I noticed clearly is that you have got all the great quotes. Bernanke saying, subprime is likely contained, and Greenspan opining that bubbles cannot be seen except in retrospect, and all of those wonderful quotes. You gave them plenty of rope to hang themselves.

One of the things that I have noticed is that you mention the Regional Presidents of the twelve branches of the Fed. They come up through the banking ecosystem, and my experience with them is that they are really steeped in the business. And then you have got the FOMC members, which is a different Fed ecosystem, appointed, some of them coming up through banking and some not, but generally more a political animal on that side of the house than on the regional guys. Did you feel that tension? Did you notice that there was a schism within the Fed?

Jim Bruce: Absolutely. I think that to me that is one of the interesting things about the Fed. There are two parts of it. There are Regional Bank Presidents who are actually private appointees; they are private figures. There is the Governors, of which the Chair is one, Bernanke – and Yellen now – who are politically appointed by the President and are government officials; they are technically on the public side of the Fed, which has a crazy public/private structure.

What is interesting to me is that people assume – in some circles they say, The thing we should worry about the Fed is that it is private. It is as Federal as Federal Express, that whole line. Strangely enough, I find at least today, these private Regional Bank Presidents, like Tom Hoenig from Kansas City, Charles Plosser from Philadelphia, Richard Fisher in Dallas, to me they are the ones that the things they are calling for and the things they are worried about, they are worried about the long-term of all of this, and that is what you would hope a public official would be. Then, if you look at the public officials, they tend to be the chairmen who are trying to save the day in the short run and are creating these big problems in the long run.

You could do a thought experiment and say, just become someone is a public official, does that mean they have the public’s best interest at heart? I think if you look at Congress you say, Well, obviously that is not the case. Sometimes people look at the Fed and say that with the Regional Bank Presidents, the problem is they are private. I would like to see totally different policies from what we are seeing, but I think in the debate that is happening around that table, these Regional Bank Presidents, at least today and in recent years, have been the good guys in that circle and in that debate. I think they have been trying to steer towards policies that are more geared towards thinking about the long run, and they have been opposing QE at every stage.

Chris Martenson: Here is an interesting fact in my life history. My grandfather served with Paul Volcker on the New York Federal Reserve board for a period of time. My grandfather comes from a regional bank in upstate New York, just solid 20% loan-to-value, small-time regional banker kind of guy. I do not think he would even remotely recognize the landscape we are in. One of the things that really struck me in your movie, you surfaced a fact I was not aware of, which was that the Fed had asked for and been granted sole authority for regulating the home mortgage market, and then did nothing to regulate that market even remotely properly or maybe even at all. And yet, in the aftermath of the 2008 crisis, they somehow walked off with even more power and more regulatory duties. If I was going to give your movie an alternate title, I might call it Rewarding Failure.

Jim Bruce: That is what is happening. It is amazing. It is totally overlooked. Greenspan and Bernanke have managed to spin it that, Oh, the Fed did not have the power to oversee these investment banks. The implication is that if they had that power, they would have exercised it and used it wisely, in the case of Lehman or Bear Stearns or whatnot. What we uncovered – actually, courtesy of Bill Black, who is a professor at The University of Missouri Kansas City, who has a lot of very strong views on regulation and has a background in that world, and he called them out in testimony. He said, The Fed under HOEPA is a special act after a real-estate crisis – you know, we had a real estate crisis in the early 1990s, the Savings and Loan crisis, the government was saying, How can we avoid this?

The S&L crisis touched both sides of the aisle, just like the housing bubble. There was support on both sides for real estate booms, as there always are. So the Fed was given the specific power to regulate any mortgage lender, and they had that power throughout the housing bubble. The great irony is the rule went into effect in 2009. They passed it in 2008 and applied it in 2009, and they said, Oh, actually, if you are going to give someone a mortgage, you have to verify their ability to pay. They basically eliminated liar loans three years after the market had stopped making them. This is, to me, the story of the Fed’s regulatory and really their policy history as being just way behind the curve.

In mentioning your grandfather, I think that is part of the story of the Fed. People say, Oh the banking interests are evil or nefarious, but what was great, I think, about Paul Volcker is that he had actually worked at a bank. He had a background in banks that the Chairman before him, Bill Martin – he had that famous line about the Fed taking the punch bowl away – had been the head of the New York Stock Exchange. He had a background in stock markets. People with that background are going to be better suited to deal with markets and to make decisions. I think Paul Volcker’s background in markets gave him the confidence to do something that the more academics on the board would say, Oh, 20% interest rates are going to bankrupt everybody. We cannot do it. It is going to be the end of the world. He went ahead and did it, and it was painful in the short run and it was beneficial in the long run.

And I think that is part of the story today. If you look at Greenspan, he was an ideologue. He had a pretty bad record in working in markets trying to forecast things. Even 20 years ago, he had some bad calls in the 1970s, for example, and he was an ideologue. He was someone who was good at manipulating markets, I think for a time, but did not have a real world experience there. I think that is the problem. We have migrated more and more towards the academic, the theoretical, and we have gotten away from people who literally have a practical background in this field.

Chris Martenson: Well, it is a movie about monetary policy. Obviously, a recipe for instant box-office success, right? How has the film been received so far?

Jim Bruce: You know, for what it is, for an independent documentary, we have actually done quite well. We came out in about 13 or 14 markets in the fall with the typical run you might have in a theater, running for a week or two or three depending on how we did. We did pretty well. It is a crazy process and my first time releasing a film. There are times when you are in a theater with Captain Phillips, Gravity, and then my film. It was that thing. The competition was a bit much, but we did well in those circles.

And we have since recently come out with the film on DVD. It has been doing well. We have been selling it to television abroad. Slowly but surely, the message is getting out. Ultimately, to me, people who see the film, it changes their point of view, and that is really what we were trying to do. To some degree, to some people who have already gotten to the point where they say, We need to get rid of the Fed; they don’t have an endgame strategy for what they are doing, those people I think are going to enjoy the film, but they might say, Oh, it does not go far enough.

What I have seen is people with no background – and this is what we really wanted to do with the film – no background with the Fed, no history of thinking about this stuff, coming through and staying with the film and trusting the film because of who some of the opinions are coming from, and walking out of it with a lot of question marks. Walking out of it saying, Hey wait a second. How is this all going to work out? What kind of path are we on? And to me that begins the process of creating a discussion and creating a debate.

We have been able to get it on a lot of college campuses lately, and I think that is to some degree because policymaking really comes, these days especially, from the academic community. We are hoping to have an impact with economics majors or graduate students seeing this film and maybe thinking a little differently from their professors or rethinking some of these big issues of, What role should a central bank play in an economy? I think that is the big question we ask, This is what the Fed has been doing; is this what the Fed should be doing?

Chris Martenson: It is really a beautifully done movie and it is a storyline that I thought I was completely familiar with, and I was fascinated and watched it all the way through. I was prepared to feel like there was some old territory, but it was because of the quality of the production and the people you got. Most importantly, I thought – and this was important to me – the way you told the story was sort of, Sergeant Joe Friday. Here are the facts. You just laid it out without putting the emotional content in to help direct the viewers in a direction. I think that is more powerful for people who are coming to a subject fresh and you want to open their minds up. Really, kudos on that.

If I was going to write a blurb for it, my blurb would be, I laughed; I cried; I bought more gold.

Jim Bruce: That is what we want you to do. Have you called your Congressman and told him to get rid of the dual mandate? That is maybe the fourth thing you should do.

Chris Martenson: If I have time. For folks who are listening who live in places your film will not be appearing any time soon, first tell people how they can find out where your film is appearing. That would be a great place to start.

Jim Bruce: The easy way to do it is to go to our web site moneyfornothingthemovie.org. We have got some listings of where we are still screening in theaters. We actually just are signing a deal with a Canadian distributor, so we will be out in Canadian theaters in coming months. We also have a link to buy the film on DVD, which is the easiest way to do it. We also have a contact form for people who have local groups or a library or university that might be interested in a screening. We have been doing a lot of grassroots screenings and we would love to get in touch with people that way.

Chris Martenson: Fantastic. I believe you are going to be at a Wine Country Conference coming up?

Jim Bruce: Yes. We will be out, I believe it is May 1st and 2nd at the Wine Country Conference, which is a great event for a great cause. John Hussman, I believe, is hosting this year. He was one of the guys I would have loved to get in the film but could not get to. But hopefully his ideas are in there.

Chris Martenson: He is a great guy. I will be intersecting with you at that event, so if anybody wants to catch both of us there, that would be great. It is a wonderful, wonderful conference.

Jim, thank you so much for your time. It is a great film and we are going to do what we can to make sure people get to see it because people need to know the context of how we got here so thank you for your time.

Jim Bruce: Great. Thanks so much, 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

14 Comments

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
On Responsibility

If the FED assumes responsibility for the economy then it also assumes responsibility to get a can of beans on that little old ladies kitchen table.

Leadership does not mean a bigger tent.

I have forgotten who said that, but it is true.

jerry mac's picture
jerry mac
Status: Member (Offline)
Joined: Feb 2 2014
Posts: 1
Fed

With all due respect, the Fed is not incompetent.  Hasn't ever occurred to either Chris or Jim to look at the history of central banking and how the Fed was created?  I specifically mean where the act came from and how it was passed into law.  Isn't it obvious that it pays for the Fed to only look incompetent or just some of its officers?  Ever wondered why a central bank is necessary when the Constitution specifically delegates the exclusive power of money creation to the Treasury?  Okay, stability.  So, where is it?  Ever wondered why there is not complete transparency of the Fed and why its member banks are kept secret?  Jeez, I could go on all day?

Since the establishment of the Fed the dollar has lost at least 95 percent of its value as a result of fractional reserve lending.  This is an invisible tax on an unsuspecting public.  Please stop assuming that the Fed is Public/Private because that's what you hear over and over.  Ever hear the expression, 'if a lie is repeated enough it becomes fact?

Again, don't believe me, research it.  Read Modern Money Mechanics.  Learn the difference between elastic currency like the FRN and inelastic currency like US notes.  Read Federal Code etc. etc. etc.  There's no time for this nonsense.

Lastly, please spare me the conspiracy theorist rhetoric.  Want a quick proof to demonstrate that things are not as they seem?  Go to Bradstreet and Dunn online and do a search of the city and/or state you live in.  What you'll find is that the town you live in a for profit corporation.  Yes, people were not the only entities that were made into corporations.  Try it.  The website is a source for information about corporations. 

q-bosty's picture
q-bosty
Status: Member (Offline)
Joined: Dec 28 2008
Posts: 9
Netflix?

Chris said:

That was just a really, really well-done movie. I just finished watching it and it is fantastic. Excellent production value; really nice narrative on it. 

What an endorsement!  My wife and I are really excited to see this.  We're reading in more and more places about how impressed people are with the film.

For those of us who are trying to live quite frugally and keep our spending down, and who live far from any screening, when might Money for Nothing be available on Netflix?

Oliveoilguy's picture
Oliveoilguy
Status: Platinum Member (Offline)
Joined: Jun 29 2012
Posts: 578
FED Stock dividend is 6%

 

"The Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year." (http://www.federalreserve.gov/faqs/about_14986.htm)

If there is not enough common sense available to abolish the FED, maybe knowing that they draw 6% dividend for themselves would spark enough outrage for Congress to tie the dividend rate on FED Stock to the interest rate they set for everyone else.  

 

 

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3200
q-bosty wrote:Chris

Never, mind.  follow the link in the article.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5971
Well, Bless All You People

Well, bless everyone who thinks the right way to wake up a sleeping person is to rip the covers off and toss on all the cold water you have handy, but I am of the mind that coming to grips with the world as it really is happens to be a very large adjustment process.

More importantly, when it comes to motives and deciding "why" things are done, I am not the one to decide what is actually right and true, and I am pretty certain that I don't really know and will never really know, because I am not in that club.  If there even is one...  As far as I can tell, though, everything I see around me falls neatly into the box of 'individual self-interest,' and what seems like grandiose plans are really just already powerful people acting in their own short term and long term self-interest(s).

Most importantly, I have found it invaluable to my ability to influence people to drop any preconception I might about "where they should be" with respect to any piece of information (e.g., angry, depressed, in acceptance...).  Everyone is exactly where they need to be.  If they were ready to be in some other place, they'd be there.  

So I really do support efforts at educating and illuminating that merely lay out the facts and then let people draw their own conclusions.  That's what Money For Nothing does.

People who are ready to connect the dots will do so.  Those who are not, won't.  Both are exactly right...for the individuals involved.

However, I do understand the desire to shake people by the shoulders and 'make' them come around, but my message here is that if you follow that path, you are doing no favors for anybody involved...you or them.

Instead, have compassion for where people are, note their clues and emotional signals for what next step of dawning awareness they are ready for, and offer both facts and compassion in equal measure, and you'll be doing everyone a service.

Remember, waking up is not easy, and it has nothing to do with 'facts', per se; rather, it is a process of having old beliefs crumble away, which is not a logical process, but an emotional one.  The limbic system is the one running the show, not the neocortex.

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Welcome Jerry.

Welcome, and an interesting first post jerry mac.

I have read through it several times but I am afraid that my powers of comprehension fail me. I see that Bradstreet and Dunn  are a debt collection agency. I should imagine that they will have an interesting future.

I found this graph there.

But I take exception to the slur against Rhetoricians.

Persig has shown that there is such a thing as Quality and it exists separate from both the Subject and the Object, which is precisely the point from which Rhetoricians argue their concept of Arete.

Aristotle Edit: Oops, Plato has a lot to answer for.

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 811
I have to and will see this documentary

The is another I'd like to see.  It's Club of Rome's "Last Call."

KennethPollinger's picture
KennethPollinger
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 656
Another OF INTEREST post

I posted this on the Daily also, but felt it important enough to repeat it here, in light of the PODCAST today.  Sorry,  Ken

 
 
 
 

http://srsroccoreport.com)" rel="noreferrer noopener">SRSrocco Report

 

Who Controls The Gold Stealing New York Fed Bank?

Posted: 01 Feb 2014 10:38 AM PST

NYFed Vault

(by Charles Savoie) “ANY ATTEMPT TO WRITE UP THE PRICE OF GOLD WOULD ASSUREDLY BE MATCHED, WITHIN HOURS, BY COMPARABLE AND OFFSETTING ACTION.”  —Robert V. Roosa, Pilgrims Society, in “Monetary Reform for the World Economy” (1965). Roosa was with the New York Federal Reserve Bank, 1946-1960 when he moved to Treasury to fight silver coinage!

This is a guest post by Charles Savoie.  He is by far one of the best researchers in uncovering “Who’s Who”, in controlling the gold and silver markets.  Savoie details the members of the “Pilgrims Society” who have been running the show for over 100 years.

by Charles Savoie,

“A FREE GOLD MARKET IS HERESY. GOLD HAS NO USEFUL PURPOSE TO SERVE IN THE POCKETS OF THE PEOPLE. THERE IS NO HIDDEN AGENDA.”
—Pilgrims Society member Allan Sproul, president of Federal Reserve Bank of New York, 1941-1956.

“ANY ATTEMPT TO WRITE UP THE PRICE OF GOLD WOULD ASSUREDLY BE MATCHED, WITHIN HOURS, BY COMPARABLE AND OFFSETTING ACTION.”
—Robert V. Roosa, Pilgrims Society, in “Monetary Reform for the World Economy” (1965). Roosa was with the New York Federal Reserve Bank, 1946-1960 when he moved to Treasury to fight silver coinage!

“The most powerful international society on earth, the “Pilgrims,” is so wrapped in silence that few Americans know even of its existence since 1903.”
—E.C. Knuth, “The Empire of The City: World Superstate” (Milwaukee, 1946), page 9.

“A cold blooded attitude is a necessary part of my Midas touch!”
—financier Scott Breckenridge in “The Midas Man,” April 13, 1966 “The Big Valley”

The Pilgrims Society is the last great secret of modern history!
********************
Before gold goes berserk like Godzilla rampaging across Tokyo—and frees silver to supernova—let’s have a look into backgrounds of key Federal Reserve personalities, with special focus on the New York Federal Reserve Bank.

The NYFED is the center of an international scandal regarding refusal (incapacity) to return German-owned gold. The outrage will worsen. I hope to add to examining this Pandora’s Box of gold suppression by documenting membership of key Fed officials in The Pilgrims Society, which has existed unknown to the public for over a century, and which shoved the world financial system off gold and silver through a series of breathtakingly villainous schemes as profusely documented in http://silverstealers.net/tss.html Just like President Nixon, who stole gold from foreign dollar holders by closing the Treasury gold window, the NYFED is a Pilgrims Society entity.

On March 24, 1969, Richard Nixon sent a letter to 74 Trinity Place, New York, to The Pilgrims office, formally accepting their invitation to joinand added, “I was delighted to have the opportunity to address The Pilgrims of the United States during my term of office as Vice President some years ago.” (“The Pilgrims of the United States,” 2003, Profile Books, London, page 141, VERY short run book).

Page 196 of the 2002 book “The Pilgrims of Great Britain” (same publisher, same very short run) notes that Richard Nixon was The Pilgrims guest in London on November 25, 1958—so that over ten years before officially joining, he was already in their “orbit!” Using however the 1969 joining date, Nixon was a member for almost 125 weeks before they pulled his strings and he closed the Treasury gold window on August 15, 1971! “No gold from Treasury!” said The Pilgrims Society then. “No gold for Germany!” says The Pilgrims Society now. It was deeper than that—Nixon’s daughter Tricia married the son of attorney and real estate developer Howard E. Cox, who surfaced in the leaked Pilgrims list for 1980.

Nixon’s son in law was grandson of Edward Ridley Finch, a prominent judge who surfaced in the leaked 1940 Pilgrims list. Finch was descended from a member of Winthrop’s voyage to New England in 1630, and the Winthrops have been a significant family in the secret society, including with Federal Reserve connections. Other old-line East coast wealthy families in the genealogy of Tricia Nixon’s husband include the Delafields and Livingstons, owners of old colonial land grant fortunes; the Delafields were linked by marriage to French nobility and Time Magazine, February 13, 1928, mentioned Edward Delafield (Pilgrims 1924 leaked list) was president of the Bank of America and “director of many corporations.”

Both President Bushes are descended from the Livingstons—both are Pilgrims Society members—both have acted as precious metals suppressors and/or allowed the suppression. Edward Ridley Finch Jr. was in the 1980 Pilgrims list. “We’re mostly family in The Pilgrims Society!” The Bush family has an entity called “Pilgrim Investments” http://rense.com/politics6/green.htm

READ MORE HERE:  Who Controls The Gold Stealing New York Fed?

SRSroccoReport Twitter Button

 

Collin E's picture
Collin E
Status: Member (Offline)
Joined: Feb 2 2014
Posts: 1
The ONLY answer to the debt!

The one and ONLY answer to the debt problem is to declare it null and void because of FRAUD ! It is fraud because it is mathematically impossible to repay ! It can not be repaid because the interest is never created on the loan and that is fraud ! And fraud voids all !!! If we don’t void all out of thin air debt the bankers will own almost EVERYTHING !!! And we will be homeless slaves ! They have a license to counterfeit ! Can I counterfeit the money to repay the loan ? Why not ? If we even attempt to repay a impossible debt (the national debt) all we do is show our ignorance ! The way to fix this mess is so simple a 3rd grader can figure it out ! We void the fraudulent debt and everyone keeps ALL the items they have so called debt on ! And we start to use a debt free currency or / and gold and silver ! And then we will have a robust economy like never before — OR WE LET THE BANKERS STEAL EVERYTHING !
I was in about the third grade when the news was talking about the national debt and I asked my dad who do we owe money to and who could possibly be richer than the United States and where did they get the money? And then my dad took a gulp off his beer and said we owe it to our self ! I said that’s the dumbest thing I ever heard of that’s like borrowing from my right pocket and setting fire to the interest and putting the rest in my left pocket ! This was about 1972 ! And yes it really is this simple !

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 3200
rewatched

After listening to the interview I again watched Money for Nothing and was as impressed as I was the first time.  Mr. Bruce, I think, captured the narrative that describes how we came to be where we are wrt the Fed.  It's fun to watch Greenspan, Bernanke, et al make bone headed statements only to be disproved by facts on the ground and what many in the economic community were warning of all along.  I don't think tptb have significantly improved their perceptions or prescriptions.  This will end badly.

However, there are two points missing from this film that I thought were central to this site's purpose and in contrast to what everyone taped for the movie seems to believe.  The first is the assumption that a healthy economy is a growing economy.  As I think we know that is an unsustainable path.  It cannot infinitely grow.  We have to come to terms with a steady state economy.

Second, and related to the first point, there is no mention anywhere of resource limitations.  Although the peak oil can has been successfully kicked down the road again, the new oil and gas resources are more expensive and have to become dominant factors in the not-too-distant future.  In a more general sense, we are supposedly using up resources at a pace that would require 1 1/2 earths to sustain.  And, I find even that notion hopelessly naive.  Continuing to increase the rate of resource extraction will increase the number of earths we would need to sustain the extraction rate until we can't.  What happens then?

And, of course, none of this says anything at all about the third E, the environment.  How can the environment adjust to all this growth?  To me, that is the real controlling factor.  We appear to be ruining our land, air and water at a faster pace than we will run out of financial and physical resources.

I guess my question is, has the message of this site changed to allow for the possibility of a continually growing economy and diminished resource base?  How does the damage to the environment figure into all this?

Doug

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5686
The Fed: "nowhere left to go"

So everyone gets something different from this movie depending on who they are and what they are looking for.  Me - I look for charts, and I got a new one.  Now its not the only thing I got, but ... it caught my eye.

These are two timeseries - one is growth in bank credit, the other is the Fed Funds rate.  Declining growth in bank credit is (usually) a sign of a recession.  Fed response for the last 40 years: drop rates in order to spur lending to get things going again.  End result: a 40 year debt bubble - massive underbrush in the forest that was never allowed a real forest fire to clear it away.

The interesting thing about the Fed Funds rate (red line) is, it is a declining timeseries over time.  Each time the Fed needed to drop rates even lower to spur borrowing.  Today, we are so indebted, it required dropping rates to zero.  This worked - very briefly - and now it has stopped working.  Credit growth (the black line) has tipped over yet again.

What will the Fed do?  What can they do?  Lending just isn't happening.  The Fed is out of gas.  The game is over.  We have reached the logical endgame condition, but the Fed doesn't want to walk off the field.  They still think they have moves left to make.  Negative interest rates - are they crazy?  No.  That's what the chart says is left to them.

After all, serial manipulators will keep playing the game until you pry the controls from their cold, dead, hands.

"Debt bubble pop?  Impossible.  We'll get credit growth going again, you'll see.  Negative rates will be sure to fix the problem.  Then we'll get back to normal."

"But what about the next recession?  What will you do then?"

And this next chart: this represents the underbrush that never was allowed to be cleared away, the end result of the past 40 years of serial interest rate manipulations - the end product of the Fed's attempt to smooth away the business cycle.

This, then, is the price of Mr. Greenspan's Great Moderation: TCMDO/GDP of 350%.

Again: we are at endgame.  Now someone just needs to tell that to the gang at 33 Liberty St.

exomatosis's picture
exomatosis
Status: Bronze Member (Offline)
Joined: Feb 2 2014
Posts: 37
The game is far from over

Dave, my dear soul, if you use your imagination, you'll find the game is far from over.  Their options are almost unlimited.  Think of what their historical progression has consisted of, what their end game ultimately is, and connect the dots.  It's creative thinking, not chart reading, that is necessary.to understand where they are going (or, at least, think they are going) and what the next step is.  Do you really think Greenspan, Bernanke, or Yellen are in charge?  Really?  That's like believing Obama is in charge.  The ones who think they are in charge are only in charge on the gross material level. 

Buy cocoa, my dear soul.  Chocolate makes everyone happy.  Except dogs.  But they don't need it.  But you and I do. 

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 811
exomatosis wrote:Dave, my
exomatosis wrote:

Dave, my dear soul, if you use your imagination, you'll find the game is far from over.  Their options are almost unlimited.

I see you are new to this website.  I don't think you will find a lot of people here who think the Fed or the US Government have ultimate independent power. 

But, regardless of who is pulling the most strings, this game is approaching an end, or at least moving to another level.

Even if you conjecture a handful of insanely rich people making decisions and trying to control the world, there are still limits to what they can do and complexities beyond their control.  Personally, I tend to believe that the ultra wealthy are mostly like the rest of humanity.  Some are good and some are bad.  All of them are doing what we are doing, which is doing what they believe is in their best interest.

Beyond all of that, the debt bubble still looms and it can't be magically vanished with the swish of a wand.  Past the debt there are unfunded obligations including things like pensions, social security, medicare, medicade and veteran's benefits.  When those obligations go into default spending will take a nose dive. People simply won't have money to spend.  Reduced spending contracts the economy and reduces tax revenues.  A virtuous circle or perfect storm perpans.

Even if you could make all that go away, it would only buy a few years at most.  Beyond the debt bubble, there are overshoot, resource shortages and environmental issues.

Frankly, regardless of who is pulling the strings, this party is about over.

 

 

 

 

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