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

[adam-taggart-2 (Adam Taggart)]

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):

This is a companion discussion topic for the original entry at https://peakprosperity.com/jim-bruce-the-siren-song-of-money-for-nothing/

[arthur-robey-2 (Arthur Robey)]

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]

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]

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]

 
"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]

Never, mind.  follow the link in the article.

[cmartenson (Chris Martenson)]

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-2 (Arthur Robey)]

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]

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

[kennethpollinger]

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

 

 

 

 

SRSrocco Report

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Who Controls The Gold Stealing New York Fed Bank? Posted: 01 Feb 2014 10:38 AM PST (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?

 

[collin-e]

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]

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]

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]

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]

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