Category Archives: Banking

Money as Debt 3, now available on YouTube

Here is Paul Grignon’s latest video animation that explains the money and banking problem and it’s fundamental  importance to the future of civilization. Please note the opening quote of E. C. Riegel,whom I have acknowledged as the most important source of my own understanding. You can find links to Riegel’s writings elsewhere on this site, or click here.

While I don’t fully agree with Grignon’s analysis of the effect of interest in the money creation process, I highly recommend this video, along with his shorter video, The Essence of Money.

Goldman’s “Toxic” culture documented.

This article documents what is probably merely the tip of the iceberg in the case against Goldman Sachs.–t.h.g.

13 Reasons Goldman’s Quitting Exec May Have a Point

By Cora Currier

An executive at Goldman Sachs left the firm today with a bang, penning a New York Times op-ed accusing the company of increasingly putting profits ahead of clients. Greg Smith started as an intern 12 years ago and last headed a derivatives department. Not surprisingly, Goldman quickly and strongly disagreed with his take.

There have obviously been plenty of unflattering headlines about Goldman in the past few years. We decided to look at just one aspect of their record: SEC charges levied against Goldman and its employees over the past decade.

April 2003: SEC charges Goldman Sachs over conflicts of interest among its research analysts. The company eventually settled for $110 million in fines and disgorgements.

November 2003: Former Goldman economist John Youngdahl pleads guilty to insider trading. The firm had to pay the SEC $4.2 million over profits it gained from the illegal dealings.

July 2004: Goldman settles with the SEC for $10 million over charges it improperly promoted a stock sale involving PetroChina.

January 2005: Goldman settles with the SEC for $40 million over charges that it violated securities law in promoting initial public offerings.

April 2006: Two former Goldman employees are charged with running an international insider-trading ring while they were at the firm. Eugene Plotkin and David Pajcin, both in their 20s, paid off insiders at other firms and stole early copies of Business Week to get an edge. They also tried (unsuccessfully) to use strippers to get information. Both eventually served jail time.

March 2007: A Goldman subsidiary, Goldman Execution and Clearing, settles with the SEC for $2 million over allegations that faulty oversight that allowed customers to make illegal trades.

March 2009: Goldman Execution and Clearing settles with the SEC for $1.2 million over improper proprietary trading by employees.

July 2009: The SEC charges a former Goldman Sachs trader Anthony Perez and his brother with insider trading based on information Anthony Perez obtained through his job at Goldman Sachs. He was fined $25,000 and his brother more than $150,000.

May 2010: The SEC hits Goldman Execution and Clearing with a $225,000 fine for violating a rule aimed at regulating short selling.

July 2010: Goldman settles with the SEC for $553 million over allegations that it misled investors about the collateralized debt obligation ABACUS 2007-AC1 by not disclosing the involvement of a hedge fund in its creation, or the fact that the hedge fund stood to benefit if the CDO failed. Goldman executive Fabrice Tourre was also charged.

March 2011: The SEC charges Goldman board member Rajat Gupta with insider trading. Gupta allegedly passed on information he learned as a board member to the hedge fund Galleon Group. In October, 2011, he was arrested and hit with criminal charges by the FBI. The case is pending.

September 2011: The SEC charges a Goldman employee, Spencer Midlin, and his father for insider trading based on information Spencer Midlin gained from his position at Goldman Sachs. The two men were ordered to pay $92,000.

February 2012: Goldman Sachs receives notice from the SEC that the agency may bring charges related to mortgage backed-securities.

This article was published at NationofChange at: http://www.nationofchange.org/13-reasons-goldman-s-quitting-exec-may-have-point-1331824190. All rights are reserved.

Top level bankers resigning in droves. What does this mean?

I have been seeing reports lately that an unusually large number of top level banking and finance executives worldwide have been resigning their positions. The American Kabuki website features a report titled, 320 RESIGNATIONS FROM WORLD BANKS, INVESTMENT HOUSES, MONEY FUNDS, and a Japanese website has posted some amazing graphs of resignations by region, by country, and by company.

Now, today, the New York Times is reporting that, “Greg Smith is resigning today as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa.”

And Smith is not going quietly. The Times has published his Op-Ed article in which he explains the basis for his action. It begins with this…

Why I Am Leaving Goldman Sachs

By GREG SMITH

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

I urge everyone to read the rest of the article here.

Treasury Secretary Geithner facing possible indictment

Here is a rather astonishing report from Fox news about the possible indictment of Treasury Secretary Tim Geithner. Is this an indication that the oligarchy is beginning to crumble, or will the powers that be simply make him the sacrificial lamb so they can continue their fraud and  tighten their grip on power?

Public Banking Institute gains momentum; announces April conference

Since its founding little more than a year ago, the Public Banking Institute has become a significant force that is helping to turn banking and finance away from fraud and predation back toward their intended objectives of promoting general prosperity and the common good. According to the PBI website,

PBI’s vision is to establish a distributed network of state and local publicly-owned banks that create affordable credit, while providing a sustainable alternative to the current high-risk centralized private banking system.

The current PBI newsletter features important news items and impressive articles by Ellen Brown and yours truly. It also announces PBI’s inaugural conference on, Public Banking in America, to be held in April in Philadelphia. I”m proud to be among the group of distinguished speakers slated to give presentations at this event.

You won’t want to miss it.–t.h.g.

Banks too big to fail; bankers too powerful to jail.

According to the Associated Press, federal negotiators are close to concluding a deal with major banks that would essentially forgive them of crimes committed in connection with the mortgage crisis. You can read the story here, and a critique of the proposed settlement here: Obama Is on the Brink of a Settlement With the Big Banks—and Progressives Are Furious.

Coming soon: a world without money and banks.

Who in their right mind would be so bold as to predict the end of money and banking as we’ve known it (besides yours truly, that is)?

Well, how about the Governor of the Bank of England?

“There is no reason products and services could not be swapped directly by consumers and producers through a system of direct exchange – essentially a massive barter economy. All it requires is some commonly used unit of account and adequate computing power to make sure all transactions could be settled immediately. People would pay each other electronically, without the payment being routed through anything that we would currently recognize as a bank. Central banks in their present form would no longer exist – nor would money.”

— Mervyn King – Governor of the Bank of England

You see, even the insiders can see the writing on the wall.

Another observer who has been in the thick of cashless trading developments for decades is Bob Meyer, publisher and editor of Barter News. A while back, Bob wrote an article that gives some pertinent history of the “barter” industry and sketches his vision of how “Simple One-to-One Exchanges Will Give Way to Organized, Computerized, Multi-Lateral Barter.” I strongly recommend that people read it: THE ORIGINAL MEANING OF TRADE MEETS THE FUTURE IN BARTER

Move Your Money

The movement away from dependence upon mega-banks and political currencies is gaining momentum, not only amongst individuals and companies, but also amongst countries that have lost confidence in the international banking establishment.

The Associated Press reports today that Venezuela is recalling $11B in gold reserves. Here are some excerpts:

President Hugo Chavez announced Wednesday he is nationalizing Venezuela’s gold mining industry and intends to bring home $11 billion in gold reserves currently held in U.S. and European banks.

Central Bank president Nelson Merentes said on television that the decision to move the gold reserves was being taken out of “prudence.”

Venezuela has nearly $4.6 billion of its gold reserves in the Bank of England, according to a report by Finance Minister Jorge Giordani that was leaked to the news media Tuesday by an opposition lawmaker.

The report said additional Venezuelan gold reserves are held by the U.S. bank J.P. Morgan Chase, British banks Barclays, HSBC and Standard Chartered, France’s BNP Paribas and Canada’s Bank of Nova Scotia.

Giordani and Merentes, who appeared together on television Wednesday, said they proposed to Chavez that Venezuela’s nearly $6.3 billion in non-gold international reserves such as bank deposits and bonds should be reviewed and transferred from U.S. and European banks to countries they consider safer, including China, Russia and Brazil, among other countries in Asia and Latin America.

It makes sense for countries like Venezuela to hold their reserves in the currencies of countries that actually produce something and from whom they make substantial purchases. While the U.S. remains one of its main suppliers, Venezuela also imports significant amount from Colombia, China, Brazil and Mexico.

Meanwhile, back in the U.S., there has been a growing grassroots movement in which savers are taking their money out of the large banking corporations and moving it into credit unions and locally owned banks. One significant development is the Move Your Money Project, “a nonprofit campaign that encourages individuals and institutions to divest from the nation’s largest Wall Street banks and move to local financial institutions.” Go here to find one near you.

In my May presentation to the Financial Planning Association, I provided a resource list that included financing alternatives for enterprises and options for savers and investors.

As a side note, you may be interested in viewing Dylan Ratigan’s recent rant on MSNBC, in which he complained that the “Banking system is corrupt and defrauding us.” You can see it here.—t.h.g.

The monumental Fed Rip-off

We now have the results of the first-ever audit of the Federal Reserve. What it reveals is astounding and outrageous.

Senator Bernie calls it “socialism for the rich,” but it’s not merely “socialism for the rich,” it’s wholesale looting of our common wealth by the people who run the world. This blows sky high all arguments in favor of an “independent” central bank. Independence in this case means allowing an unelected self-serving elite to take what they want free from any effective oversight or control by the people or the people’s representatives.

The list of institutions that received the most money from the $16 trillion Federal Reserve bailout can be found on page 131 of the GAO Audit and are as follows..

Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
Bank of America: $1.344 trillion ($1,344,000,000,000)
Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
Bear Sterns: $853 billion ($853,000,000,000)
Goldman Sachs: $814 billion ($814,000,000,000)
Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
JP Morgan Chase: $391 billion ($391,000,000,000)
Deutsche Bank (Germany): $354 billion ($354,000,000,000)
UBS (Switzerland): $287 billion ($287,000,000,000)
Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
Lehman Brothers: $183 billion ($183,000,000,000)
Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
BNP Paribas (France): $175 billion ($175,000,000,000)

An excellent article on this story, from which the above list was obtained, can be found on Countercurrents.org.–t.h.g.

The Emergence of Self-Organizing Systems of Exchange

Joseph Jaworski is the author of Synchronicity: The Inner Path of Leadership. In a message today from the publisher announcing the second edition of the book, I noted the reference to Jaworski’s “Four Principles to Access the Source of Innovation.” Although I’ve not yet read the book, I did take a look at the blog entry that describes the principles.

This is an excerpt of what it says:

At the heart of what Joseph Jaworski discovered during this fifteen-year journey as a way to understand and access the Source of wisdom and creativity – the place from which profound innovation flows – are these four principles:

 1. There is an open and emergent quality to the universe; a group of simple components can suddenly re-emerge at a higher level of self-organization as a new entity with new properties.

2. The universe is a domain of undivided wholeness; both the material world and consciousness are parts of the same undivided whole.

3. There is a creative Source of infinite potential enfolded in the manifest universe; connection to this Source leads to the emergence of new realities.

4. Humans can learn to draw from the infinite potential of the Source by choosing to follow a disciplined path toward self-realization and love, the most powerful energy in the universe. The words of philosopher Pierre Telihard de Chardin speak well to this principle. “Someday, after mastering the winds, the waves, the tides, and gravity, we shall harness the energies of love and then, for a second time in the history of the world, man will have discovered fire.”

Perhaps you own experience, like mine, will attest to the truth inherent in those principles.

I was particularly struck by the first principle and the statement that, a group of simple components can suddenly re-emerge at a higher level of self-organization as a new entity with new properties. This is highly relevant to the transition process that is currently underway in the world, especially the reinvention of money. In Chapter 17 of my book, The End of Money.., I describe the four basic elements required for A Complete Web-Based Trading Platform. These elements are:

1. A marketplace

2. A social network

3. A means of payment

4. A measure of value or pricing unit

These components are indeed “re-emerging” (based on our changing collective consciousness) “at a higher level of self-organization.” We are seeing more widespread recognition that:

  • money is nothing but a systems of accounting for credits and debits,
  • that it is the people’s collective credit that supports every national currency and payment medium,
  • that the creation of money based on interest-bearing debt requires continual expansion of debt, which drives economic growth that has become dysfunctional and destructive,
  • that we no longer need to depend upon banking wizardry to provide the monetary and financial means for exchanging goods and services and actualizing our productive capacity.

We now have many web-based marketplaces and social networks, numerous private currencies and payment systems that use direct credit clearing, and increasing recognition that there is an urgent need for a measure of value that is independent of any fiat currency or central bank.

As I pointed out in my chapter, there are a number of “disruptive technologies” that are emerging to completely change the nature of money and banking. These are:

  • Direct credit-clearing among buyers and sellers
  • The use of the Internet to create Web-based marketplaces
  • Transparency in Web-based accounting, information, and exchange systems
  • Strong identity verification
  • Secure encryption of information over the Internet
  • Social networking
  • Reputation ratings of vendors and buyers that are continually updated and available on-demand
  • The reemergence of mutual companies, co-responsibility, and localized Web-based markets

“It is not any of these individually but all of them in combination that will, I believe, result in structures that will provide superior performance in mediating the exchange process. Worsening economic and financial conditions, such as those experienced in 2007 and 2008, will create enhanced market opportunities for this sort of nonpolitical trading platform, and will assure their eventual implementation and wide acceptance.”

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