Nomi Prins: The Sinister Evolution Of Our Modern Banking System

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I quit Wall Street and decided that it was time to talk more about what was going on inside it, as it had changed. It had become far more sinister and far more dangerous. 

~ Nomi Prins

Today, the 'revolving door' connecting our political and financial systems is evident to anyone with eyes. But this entwined relationship between Washington DC and Wall Street is nothing new, predating even the formation of the Federal Reserve.

To chronicle the evolution to where we find ourselves today, we welcome Nomi Prins, Wall Street veteran turned financial industry reformist, and author of the excellent expose All The Presidents Bankers.

In this well-detailed interview, Nomi goes into depth of the rationale and process behind the creation of the Federal Reserve, and more important, how its mandate -- and the behavior of the banking system overall -- metastasized into the every-banker-for-himself regime of sanctioned theft we now live with.

Chris Martenson:   To me, it couldn’t have been more obviously obscene then in 2010, and I believe maybe 2009, right after the big banks had been handed just vast, huge, very favorable handouts and bailouts during the Great Recession -- and then they handed themselves record bonuses. I thought optically that was just horrible. As somebody who was inside the banking system: Are they that tone deaf? What’s behind that sort of behavior?

Nomi Prins:   Indeed, they have become very isolated.

It began with the period before the 1970s when different people were rising to leadership in banks, and worsened in the 80s when we started seeing people who had more sociopathic tendencies or less ability to appreciate the idea of the public's economic stability being beneficial to growing their institutions. They no longer viewed it as necessary.

And with the advent of the larger futures market, the options market, the derivatives market, and all the off-shore elements of banking that were able to be developed, so much capital was now available and off of the books that the idea of maintaining some sort of a connection to stability policy -- or even to whatever the Presidency might want -- dissolved. At the same time, all the Presidents that were involved in running the country around that time didn’t ask or require accountability towards financial stability from them.

So there was a bunch of things that were happening at the same time, and that’s why the media does a poor job of critiquing this because they’re not looking at all the strands. None of this is simple. A lot of things happened at the same time to create these kinds of shifts. On the one hand, you have no restraint: you don’t have the Gold Standard anymore, so you have less of a strain on having something physical be reserved against your leverage. You now have this ability of petrodollars being recycled. You have the ability to leverage more debt. You have less humility. You have a more technologically-advanced, less transparent global financial system, so you can make and hide money easier. And then you have ascendancies of leadership in banks and in the government that are OK with all this, and allow it to fester.

It's all defended as some sort of example of a free market and competition -- "the best gets the best", and so forth -- when the reality is it just destabilizes the entire system and creates an artificiality. We see central banks supporting all of this mess, as opposed to figuring out what the exit policy is -- which none of them have a clue about. That’s really where we’ve evolved to. 

Click the play button below to listen to Chris' interview with Nomi Prins (52m:45s)

This is a companion discussion topic for the original entry at https://peakprosperity.com/nomi-prins-the-sinister-evolution-of-our-modern-banking-system/

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…into the relationship between the Federal Reserve, banksters and the US Gov't!!   It's a treat to hear Nomi Prins tell this story,  as someone with 1st hand personal insight (having worked in the banking system) and in-depth historical knowledge into the topic (having done extensive research for her book, "All The Presidents Bankers").  Add to that Nomi's high level of intellect, and you have the ingredients for a great conversation between two top-notch minds.
   Thanks Chris, Nomi and Adam!!

 

 

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I really appreciated this podcast in that a complex subject was made much easier to absorb. A few thoughts with regard to some things that jumped out at me:

There’s always been a concentration of capital at the largest, most politically connected institutions. But the more concentrated it is, the more dangerous the risk that it imposes to the rest of society, to the markets, to finance, to economics, it imposes.
One of my favorite Plutarch quotes, he of many, many centuries ago, of thousands of years ago, he said "An imbalance between rich and poor is the oldest and most fatal ailment of all republics."
...you don’t need to care because you’re so insulated
The concentration of capital, shifting of risk and movement of society towards the inevitable financial end game was further enabled by computer technology. A sociopath in the financial world sees computer technology as a tool to achieve greedy, ill conceived ends, in the same manner that a pedophile sees computers as a tool to achieve their particular brand of evil. The rest of us see computer as a tool to do relatively benign things like uploading our daily lives to Facebook. The elites could not be happier with the general mindlessness.

Insulation works two ways. Much to the delight of the elites, the general populace has insulated themselves from reality, giving the elites free reign to do as they wish. We have said it here many times before, there is a massive state of denial with regard to what is really happening out there.

There are some cracks appearing in the denial game though, as witnessed by the changing of the guard in Greece and the protests in Portugal. Countries in South America are on the brink. The fuse has been lit and there are many small fires burning globally. With every new greedy action the elites are adding fuel to the fires. The stage is being set for a colossal bonfire. There will be a spark of outrage that will light the fire. We often call it a Black Swan event. I prefer to call it something simpler - people power. A day is soon going to come where someone, whether in Greece, Portugal, small town USA, or any other place on the globe where someone gets pushed too far, they cannot feed their family, their kids are crying all the time from hunger, they have the indignity of not being able to wipe their ass because toilet paper on the black market costs a hundred bucks, and then they hear about another bail-in or bail-out. Someone will snap, then someone else will join them, and within hours it will become a raging brush fire the likes of which has never been seen, jumping from country to country. There are too many oppressed, too many who have been screwed by the greedy socio-paths…people can only be pushed so far before they will start to resist. We are seeing that happen now.

No wonder the elites are making escape plans. They might just find that they can run but they can't hide.

What a black post!!! Holy, I am sitting here with my morning coffee wondering to myself "where did all that come from?" And I realized that if that is how I feel deep inside, in my comfortable, first world lifestyle, imagine how those in places like Greece and other places, who are in dire straits are feeling. I cannot imagine.

I do believe we are that much closer to the precipice. I also know the elites will drive this bus right over the edge, with the thinking that they are somehow insulated. In the years I have been visiting this site I have never felt quite so strongly the need to work on my preparations for what I feel will be a very changed world in the next couple of years. We are already in the deflation phase. Next comes the inflation and hyperinflation. Will I be ready to weather the storm?

Will you?

Jan

 

 

 

 
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First, great podcast.

Second, nice to have you post Jan, I love the term "people power" and agree with her.

Third, not to pick on Chris or Nomi specifically but more of a general comment. The discussion, this one and most all others regarding the economic situation we are in are "sanitized and generalized".  By that I mean generic phrases are used like "a real dangerous relationship" and "the risk is still there" and "break the money trust or it will break us". How about "we are all deeply affected". Yawn, tisk, tisk, yep we all agree. It's akin to using the term "ethnic cleansing" when talking about the brutal, unconscionable slaughter of a group of people. Sooner or later someone, someone will have to be specific and call a spade a spade and instead if eloquent sanitization of the subject, talk about how we Middle Americans are being systematically robbed, and driven into poverty and starvation. How about the  blatant "stealing of our jobs, money, and the fundamental concept of the Constitution of "We The People" being turned into "We The Banks" and the corrupt cabal of leaders. We Middle Americans can barely pay our bills, put food on the table, find a job, especially one that sticks around, provides benefits and pays enough to live on.  "We are all deeply affected" no shit and those whose belly's are empty feel it ever so much more acutely than those of you/us who have plenty of extra money and can obsess over the stock price and PM prices. We don't notice the suffering of our neighbors but a time will come when they will insist that we pay attention. 

Marie Antoinette supposedly, when told the Peasants didn't have bread to eat, laughed and said "well let them eat cake". She lost her head to a guillotine. Unfortunately, history repeats over, and over, and over again.

AKGrannyWGrit

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AK GrannyWGrit,
Thank you!

The Predator class is able to continually spout their economic nonsense, employ fraudulent financial practices with immunity, and expect the common person to not only support their hoarding of capital but actually support more of the same.  It is about time that they are called out individually.

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I know it's not new and it's been suggested before,but why don't we all just take all our money out of the banks? I did it in Japan because I was getting no interest and any time outside of banking hours that I wanted to withdraw money they charged me the equivalent of 2 dollars,so for three years I was outside the system.Is it practical?

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it  can be done

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I agree with you on the outcome…that the system can not last, but I wonder historically if the fall of great civilizations comes from a popular uprising as you suggest might happen, or that the system just becomes so broken that it implodes leaving a vacuum to fill. It probably doesn't matter for the lowly (compared to the banker class) we just need to be ready. And another takeaway for me is that I need to give more to the less prepared.  Thanks for your passionate post.

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Like it or the dollar bill is all that any of us know for all are lives.How do we change I do not know,oh brother this is going to be hard!

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Hi folks.  I came down to Costa Rica to avoid the cold, snow and ice.  It's so sunny here and Sooo agreeable. Planting more fruit trees, increasing the raised beds for veggies, now got 12, finally finished building my two Guest Houses (cabinas), created a plunge pool and a fire circle for gatherings, preparing for my daughter's chiropratic-yoga retreat, teaching English as a second language to my laborers, and building a much larger yoga pavilion.  Been invited out to the homes of the locals for local meals–very different and delicious. Clearing away some of the forest for a potential permaculture school/center, and swimming in the Pacific frequently.  See www.AwarenessCenters.com and click onto Costa Rica Retreat Center, and then down to Guest Houses Gallery and 2015 Pics.  It's been lovely taking a break from all the news but here comes another one about Griffin, in JoePlummer's offerings.


CNN Editorial Calls for a North American Union

Source: TheDailyBell.com

Is the campaign for a North American Union officially underway with this editorial appearing in CNN?



Certainly conspiracy theorists might be justified in thinking so.



For years, more than a decade, some have suspected that powerful bureaucracies in North America – especially in Washington – might seek to combine Mexico, the US and Canada into a single super-state.



This was always greeted with howls of contempt by those in the mainstream media, especially in the liberal congregation, who knew better. There was no need, no possibility, that Canada, Mexico and the US would ever form a single trading – and perhaps political – union in the manner of the EU.



But here we go. Those derisive hoots are now drowned out by the reality of what this editorial proposes.

Read full article at: http://www.thedailybell.com/news-analysis/36033/Shock-CNN-Editorial-Calls-for-a-North-American-Union/?uuid=6F805BB4-5056-9627-3C



COMMENT: G. Edward Griffin: “The objective is to draw the United States, Mexico, Canada, Japan, and Western Europe into political and economic union. Under slogans such as free trade and environmental protection, each nation is to surrender its sovereignty “piece by piece” until a full-blown regional government emerges from the process. …Once that has happened, it will be a relatively simple step to merge the regional governments into global government. That is the reality behind the so-called trade treaties within the European Union (EU) the North American Free Trade Agreement (NAFTA) the Asia-Pacific Economic Cooperation agreement (APEC), and the General Agreement on Tariffs and Trade (GATT). "



Expanding on Griffin’s assertion, the EU (European Union) provides a perfect example. What we now call the EU began as a simple trade agreement in 1951 between six European countries. That agreement was called The European Coal and Steel Community and it established a “free trade area” where coal and steel could be bought and sold without import/export duties. -In that very limited sense, the agreement “erased the borders” between those member nations.



But in 1957, a new agreement was signed and the concept of cooperation among member nations was greatly expanded. The new agreement was called the European Economic Community and its ultimate aim was the economic and eventual political merger of its member nations. (Policies on labor, social welfare, agriculture, transportation, foreign trade, etc. were to be “harmonized.”)



In 1992, the word “economic” was dropped and the organization became known as simply the European Community. And finally, in 1993, the European Community became the European Union.



http://joeplummer.com/chapter_5_building_a_new_world_order.html

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… the bankers and politicians (as well as anyone else) are behaving logically? What they do can be represented by an "equation"? Behavior = F(Available resources per capita).
Let me explain: Many species, including our, are naturally altruist when there is enough for everyone. But lose quickly this trait when resources per capita diminishes, whatever the reason.

With this in mind, and the fact that world population exploded (2.5B in 1950, 7B 60 years later) is it possible that the behavior we see today is simply an adaptation to the reduction of available resource? (I use the term resource in its broadest meaning). We are no more altruist because the competition is tougher? and this justify "all means are good"?

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https://www.youtube.com/watch?v=qZM6TJ4Cvb0#t=255

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The bus was driven off the years ago and has been falling in ghastly slow motion ever since.  The Greek elections would seem to suggest that the front of the bus has finally hit the ground and is beginning to crumple. 
AK granny, I share your frustration with the euphemistic language.  I had dinner last night with a dear friend who is a physician.  She is highly intelligent and very well educated.  I have been trying for years to get her to look at the "Crash Course" without success.  I've shown her my preps, my garden, my bees, solar panels, wood stove, etc.  I've taken her shooting.  I've tried every approach I can think of, she doesn't get it.  This morning I took my schizophrenic neighbor shopping with his SNAP card.  He has limited intelligence and little education.  In the years I've known him I haven't been able to convince him that his benefit might be better spent on 20 lbs. of potatoes rather then a 2 pound steak.  I'm now thinking that, with time apparently getting short, I'm going to have lay in an extra few hundred pounds of beans and a couple of thousand pounds of field corn just to feed people who don't, or can't, get it.  In Chris and Adams defense, how the hell do present this information so that people don't either get angry and defensive or think you're crazy?

Jan, I have to say that I share your dark mood.  By "weather the storm" do you mean arrive on the other side warm and dry, or simply alive?  I have a ton and a half of grain and legumes put back and I hope to double it if there's time, but there sooo many unprepared.

Ken, "Come to sunny Costa Rica" sounds a little like "Let them eat cake".  Just sayin'.

John G

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jgritter.  That was not my intention.  To the contrary, see below:
"We Break them, or

they break us."
 
Quite a choice!   However, with these established LARGE and COMPLEX institutions/organizations, along with police and military power/backing, in conjunction with the IMF, CFR, World Bank, Bank of Settlements, etc., the CIA, FBI, etc.,and too numerous "secret security" organizations, how in the hell can WE ever "break them?"
 
"People Power" as mentioned in this site seems quite naive.
 
Sociologists who study local, national and international "power structures"
speak of "The Iron Law of Oligarchy" and "The Circulation of the Elites."
Very little chance of change.
 
Even revolution hardly matters in the long-term, witness the American Revolution (co-opted by the Federal Reserve and the crony politicians), or the South Africa
after Nelson Mandela (now the blacks control the blacks instead of the whites controlling the blacks).
 
So I applaud the efforts here to lecture/write on how to:
 
*preserve our wealth
*live with sustainability
*learn new skills
*watch for the stock bottoms for jumping in again
*create a virtual community of like-minded folks who LOVE
    the Great Game, i.e., understanding intellectually the geopolitical scene
*and so forth and so on
 
HOWEVER, I do not see concrete plans/ideas/suggestions of HOW TO BREAK THEM.
Voting doesn't do it.  Internet signatures do little, it seems. Even Occupy was disorganized and petered out.
 
Am I missing something?  If so, please let me know.
 
For disappointment, frustration, disgust and even despair rears their ugly heads now and then.
 
  What is one to do?  Griffin in The Creature lists a few possible 
suggestions near the end of his book  Joe Plummer has a very activistic website and newsletter.
 
But I wonder why PEAK isn't on board with more on BREAKING THEM--BEFORE they break us??????????
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Hi John G smiley
I hope that I make it to the other side with some kind of a decent life, but I think what it will actually end up being is a toss up for most of us, largely dependent upon where one lives. And the proximity to large population centres, which could be come ground zero for masses of unhappy people who will help themselves.

I am trying hard not to have a dark outlook, but wow, it is hard some days. One almost has to tune right out and quit reading about world events. Not going to happen in my case. I do believe that awareness is half the battle and gives one a big advantage, providing of course they do something useful with that knowledge.

Best John,

Jan

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I never thought that was your intention, all your posts have shown you to be a deeply thoughtful and caring man.  My remark stems from my own weakness, fear and insecurity.  I live in an area that has been actively collapsing for some time, greater then 25% on food assistance.  I don't have the means to move.  I am preparing to shelter (perhaps die) in place.  It's apparent that I may have to shelter many loved ones with limited means.  "Come escape to a tropical paradise and help build an enlightened community" can be difficult to hear if it simply is not an option.  No offense was intended.
"Break them before they break us" is ridiculous.  The revolution happened years ago and we've already lost badly.  All they need to do to suppress a slave revolt is turn off the electricity and stop food and fuel deliveries and a revolt would collapse in a week.  To me  "People Power" means make our preps, bide our time, and be prepared to step into the power vacuum to rebuild after TPTB can no longer afford to bribe us with carrots or intimidate us sticks.  As things play out I think that we will have the opportunity to build enlightened communities in situ or revert to savagery, our choice.  The great challenge is that, if the current state of the world gives any indication, savagery would seem to be the most likely outcome.

For my part I think PP should keep doing exactly what it's been doing, providing tools, information and encouragement for individuals and communities to build resilience.  I think if you stand back and give it a little time, the social upheaval will happen on it's own.

John G.

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I, too, hope to make it to the other side but I agree, it looks like a crap shoot.  So many variables, so little hard data.  One of the hardest things for me is that as much as I'd like to say "This is making me uncomfortabe, I don't want to play this game anymore", we're all strapped in and we're all going to have to ride it out, come what may, no blue pill.
 One of the great things about this community is it gives you a place were you can say "I am gravely concerned about the future and this is why" and rather then being treated like you're crazy or stupid, people respond with "your concerns are valid and we're concerned too.  One of my concerns is that as things progress, communication may be lost, and we may never know what becomes of each other.

In the mean time, it was good to hear from you,

John G.

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John I liked your post and a couple of things came to mind
The bus was driven off the (cliff) years ago… Agreed. And I've been pondering how long ago. I suspect it's a long time indeed. There seems to be something about being human that means we have a massive blind spot. I think for a species to thrive and dominate like humans have a range characteristics are necessary. Adaptability, tenacity, drive, cleverness - these are all part of our makeup but the ability to integrate complex information is lacking for most. 

This dovetails into my second thought. …people …don't or cant get it.  how the hell do (you) present this information so that people don't either get angry and defensive or think you're crazy? I can't answer that but I stumbled on a useful article a while ago. I've lost the source but grabbed a few paragraphs.

When we observe the world, form models and use them to decide, there is a process termed “semantic closure”. This is where all the bits of information and their relationship with each other and correspondence to life purposes make sense with each other....

So what happens if “semantic closure” cannot be achieved? The answer is that those aspects of reality which do not fit are simply ignored.

So most people are simply not able to 'get' it. Their brains are unable to process and integrate information contrary to their overall world view. What you and I see as unavoidable, they see as unthinkable and ignore it.  This insight has helped me become less frustrated with otherwise intelligent people.

To wrap this up I guess I'm suggesting that our predicament is built in to our human nature. We can look at history and identify key times where different decisions could have been made. But would these have made any real difference? A different path to the same result?

When I was a kid I loved science fiction. I was fascinated by the prospect of alien life and slightly baffled that, in the vastness of the universe there was no sign of it. Perhaps this is the reason why - species that have the capability to achieve a global domination do not necessarily have the capacities to manage their success.

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So what happens if “semantic closure” cannot be achieved? The answer is that those aspects of reality which do not fit are simply ignored.
What helped me is reading the Jared Diamond book, Collapse, and pondering what the person cutting the last tree down on Easter Island was thinking. Or wondering why the Jews of Germany would not have risen up and fought to the death to avoid the camps. 

What I believe is different now and might change the outcome is the inescapable information explosion that makes it much harder to ignore facts and easier to create semantic closure within more a realistic framework that allows for time to adjust. After all, turns out the frog in boiling water imagery used to support the notion that resistance to change is baked into human nature is actually a myth.

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David, interesting post. With regard to this paragraph:

This dovetails into my second thought. ...people ...don't or cant get it.  how the hell do (you) present this information so that people don't either get angry and defensive or think you're crazy?...
... I have to ask why is it that we here at PP can get it while others cannot? What is it that differentiates us from them?  My own proposition is that those who refuse to engage on this subject matter are simply using denial as a coping mechanism. On the other hand we who have bought into the concept do not engage in denial.

When presented with information people do make choices, and I think that (unless there is a mental disability of some sort) can't is not part of the equation. It is more "don't or won't".  To pretend something is not a problem or does not exist is to give one's self permission to not have to deal with it.

Think of it this way: people are watching TV and then one of those awful fundraising commercials comes on showing us pictures of starving, emaciated people with flies crawling all over them. The common reaction is "eeeeeeeeeeewwwwwwww, I don't wanna look at that" and we quickly change the channel. That does not mean the problem does not exist. We are simply denying it existence by looking the other way. Humans are famous for taking the easy way out. That saying that people do not change until a crisis hits exists for a reason.

The denial mindset was further exacerbated by the increased prevalence in the instant gratification mindset, a by product of the very evil banking system that is the main subject of this podcast. Many people, in complete denial of their own financial situations engaged in their own brand of irrational exuberance, falling hook, line and sinker for the manipulations of cheap, easy money to fuel lifestyles that are not in keeping with their reality. And now they cannot bear to admit that it was all a bad thing, they are in debt up to their eyeballs; that we have literally screwed our entire environment from excessive consumerism and greed; that they were part of the problem; that the solution management of the situation going forward is going to involve A LOT of pain… I surmise most people simply cannot handle that and so they just will not engage in any conversation that brings that reality front and centre. That would burst their denial bubble and make it real.

I am with John G in that it is wonderful to have this community to voice and share our concerns. These interactions help keep the sanity in this interested observer while she watches the world going down the tubes.

Jan