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tv   In Depth Nomi Prins  CSPAN  August 31, 2019 2:00am-4:01am EDT

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"collusion: how central bankers rigged the world." >> host: in your book "all the president's bankers" you describe the relationship between banks and governments and presidents as codependent. what do you mean? >> guest: what i mean change of the decades because "all the president's bankers," really from 1890s until the obama administration but what it means is that in times of war is a certain relationship where the government turned the bankers o finance it, in times of peace the bankers required of the presidents that they help them bank more widely and with fewer rules. so depending on whether there was a financial crisis or global
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warlike situation, relationship changed but the dependency of one group on the other continued. it was either about money or influence by them is pretty much prevalent in different ways through different presidencies we've had throughout our history but the history i cover specifically since teddy roosevelt administration until today. >> host: is there a reason you picked that starting point? >> guest: yes. first of all it was only so much time i had an life basically to do a couple of centuries versus one but really what happened was as we know there was a crisis, a crash, "black tuesday" 1929. not want to start the book but when i realized when i researched that crash was a couple of the bankers that were most connected to the crash and most concerned about it including bankers from the morgan bank bank which we now s j.p. morgan chase, if you trace them back, traced back to j.p. morgan and j.p. morgan was one of the league bankers in the country from 1890.
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there was this through line of individual families and banks that went back to that time. but also that was the time under teddy roosevelt administration where there was a lot of recessions going on. times with the country doing well for a couple of years and then it would receive for a couple of years economically. to the point where in the mid-1890s the government, talk about dependency, had to call upon chase j.p. morgan cut them finance the budget. so that was what happened. that was a gift that j.p. morgan gave any return the record influence over issues out of it. that's a start. in 1907 was when it was a huge panic in new york and it required a lot of banks to close as ultimately happen in in 200, almost 100 later, and at the point i'm teddy roosevelt administration turned to j.p. morgan again as he had in the 1890s and he said what can i do to help you help me, basically.
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what happened was the treasury department fashion $25 million, kind of the first bailout of banks that the government paid for and set a jg morgan here 255 million, figure it out. what j.p. morgan tegucigalpa in his library, major bankers at the time and what he decide to do is parcel of money to some of them, all the strength, shares with him, they hung out together. i i love the other banks failedt the time but that was a situation where he then became known because he let his banks survive and he saved his panic a sort of the king of banking. new times called him that as well. the history goes back between 1890s and 1920 because 20s because really around the morgan bank they were very influential for money and also for what happened politically and have treasury department and the presidency ultimately survived their panic. >> host: but tr was known for
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being the trust buster, for not liking big business, or writing against it at least publicly. >> guest: and he was. he is noted as any was the was the trust buster. what he busted was nonbanks. but the time standard oil which is major oil company under the rockefeller family and of the types of companies of that nature, he actually did bust up some of their more powerful sort of elements to sort tried to make some more competitive environment. he was known as that and other industries as well. but he stayed away from banks. if you look at the history of why did that i think it goes back to 1907 panic. he needed come j.p. morgan to help him basically not have a larger panic throughout the united states, threat the entire country. and to keep money flowing threat the entire country by not having runs on all the banks. that element of saving was something that he required and
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that he therefore as a kind of gentle men's agreement stayed off of busting up the larger institutions. which as result is longer j.p. morgan chase today. the fact he did not bust ups on the banks back then is one of recent what are larger banks in this country today have enabled to accumulate that size and a footprint in the way they have. >> host: soaked too big to fail is not a new concept? >> guest: no, it isn't. the difference is that more in the recent past too big to fail were banks that he can bake over this major time of the past century and then required help from the government and the government provided that help as did the federal reserve. at the time back then they were either helping themselves getting some money from the government to help themselves but it was a bit more limited. >> before we leave this time, as a character in your book that we probably haven't heard of today,
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james stillman but he seemed to have this very influential law. >> james stillman was one of the leaders of what was called national city bank which now we know as citigroup. going back in time he was one of the major directors of the bank and family was a very sort of upscale blueblood family in new york city in culture and so forth. but he was also one of the bankers that after this time, and his friends with the morgans and so forth, he was one of the main people that decided it would be necessary for there to be some sort of central bank in the united states like what we have now, the federal reserve, that would be able to save banks in a situation where the government did not step in and help those banks. when it was sudden instable. unlike the panic rather than j.p. morgan for excel account of the treasury department, which she had furnished money in decades before that, they would be other central entity that would do that. stillman was one of the people
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sort of behind the scenes started to work with congress to basically create what became the federal reserve bank. but his name isn't really noted for that in history. >> host: subject island 1913, was that that a noble effort? >> guest: so jekyll island started in 1910 and was basically, jekyll island was like the country club for all the rich people in the united states at the time. they effectively, i spent time doing research down there. now it's a resort hotel off the coast of georgia. but at the time all these major families, the morgans, the rockefellers would have thought of condos there but they were not like city contester they which was nice and had lots of service come down with them and they could only access jekyll island through the waterways and the rest of the people had to stay away from it during the times they were there. it would go around thanksgiving to christmas at and hang out. a particular thanksgiving around
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1910 a very small number of them went before the families came in for the holidays in what became the documents that ultimately turned into the federal reserve act of 1913 which permitted the federal reserve reserve. but at the time it was over clandestine and almost didn't happen. i talk about and "all the president's bankers" because it's one of my favorite stories. nelson aldrich was a senator, head of the finance committee at the time -- >> host: republican from rhode island. >> guest: that's right. he had a bit of wealth and prestige and stuff himself and he was on the fines committee, the banking committee it was called at the time. -- finance committee. he had a son new york as a banker, and he was going to visit him and come talk to j.p. morgan and others about a central bank and decide where they could have this meeting. he was going to meet in new york. what happened was he got hit by a trolley car and so we got laid
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up. he had the convalesce. during that time rather than at people note was going on, it was decided by j.p. morgan basically aldrich and a bunch of other people voted jekyll island, used its membership because it was a club and convene their and decide what to do. all the stories about being all secret, it will happen because nelson was at the wrong place at the wrong time relative to a trolley car. they met at jekyll island. they pin these ideas for the central bank based on the travels convey some what was required, based on what they thought would go through with the american public if it were voted and ultimately it was a bunch of bankers including james stillman who took those documents back to congress and basically brought them into the senate and ultimately was not passed in 1910 underflow spent a republican president. it passed under woodrow wilson, a democrat who came in after that presidency to take over,
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and it was basically sold as this i do that would be of federal reserve, central bank, a bank to the banks to help them when he did it but also provide credit for the country. the idea was if there was to be panic again like the farmers in the middle of the country would not find the banks could get money from new york and wouldn't be able to provide them through that season or through that hardship. that was how it was sold as a people's bank. but in reality it was created together with nelson aldrich and senators and bankers to provide them an out if it were to be an emergency. >> host: based on the european model? >> guest: to an extent based on european model, with a sort of more, because our country is bigger than say the bank of england model or the bank of france model of the time which is now part of the european central bank. the idea was we would have 12 different entities which were part of the federal reserve system. that goes back to the farmers and backed the idea if we have
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12 separate entities in which washington writer we have the mainland federal reserve, we have new york fed, san francisco so forth, they would be able to cover the local banks in terms of making sure that credit when they needed it, regulations and when they have to and me are making sure of the banks that use the big banks to help workers and farmers and other businesses throughout the country would have access to credit and access to money. our system has more banks in it, just spread after the country. politically and also geographically we are bigger and have different cities that have more banks in them for more purposes locally, and now there are more national but at the time that was the idea. >> host: where their protest against it in 1913? today there's an undercurrent of protest against the fed. >> guest: the remote protest in 1911 and 1912. basically more protest under taft, the president before wilson, the number during him. within it was much more yester
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op-ed updates and concerns that the bank could be too controlled by wall street banks, but what he did is decide to use wording -- he was worried about having a federal reserve and even was after the fact, but he decided to use wording and to work with politicians to the country, particularly in the middle of the country in those regions to provide the narrative to the rest of the country that this money would be good for everyone. the idea was not to just focus on the big wall street banks for the big powerful families the basically ran those the banks e time but the idea was would be a way to spend that money for the country. in that respect he kind of got around any sort of protest which were limited by the time he was in office and also got around any criticisms because he got buy-in from a number of senators and representatives threat the country that ultimately the system by being a system of 12 banks will work for everybody.
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>> host: we will return to the social banks only get into "collusion", your most recent book by to want to read two things. first of all from "all the president's bankers," quote, the political and financial alliances between bankers and presidents and their cabinets continue to define the policies and laws that drive the economy. and then from one of your previous books, "other people's money", you write that the amount of clout of financial sectors wheeled in washington can't be underestimated. >> guest: that's true. those are both two statements. "other people's money" i wrote in the wake of the enron scandal and the worldcom scandal which were would effectively end energy and telecommunications sectors after deregulation in the sectors but they happened really because those institutions, enron, worldcom were working with the major banks of the country and all sorts of tremendous structures, hiding money off their books and so forth.
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the scandal situation happen, the recession happened. everybody knew about it but the banks kind of got off relatively free from that. not other ceos went to jail then, which i wrote "other people's money," but their influence was very high in washington because what they would basically saying was look, this is on enron. this is on worldcom. they did things wrong. we might have did some paperwork and help them with a banking are there but the reality is those kinds of institutions, enron could not have become the major derivatives trader that it became instead of the energy company it's that it was. worldcom could not have become such a massive organization with so much stuff hidden offshore and from their books come from the public, if banks had not helped create the facilities, the credit lines, birch compass together and do all of that. with respect to the influence in washington, all of that comes to
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bear. all of the bankers at the time at throughout our history have been able either through money with a just having the ear of president being on committees, the major advisors, that even it would to look it wasn't as, you need us, it was then. and sort of come on summarizing, but working into that. so in terms "all the president's bankers" h-1a the same thing. i wrote ten years after i wrote "other people's money", but in that book i go to specifically the kinds of relationships and influence that bankers had in washington. today we think mostly of the donations, the lobbying riches and then skippered other sectors the right now the tech sector is kind and giving banks a a run r the money but historically the influence of sitting down with a president obama president trump or who ever from a major banker like j.p. morgan chase as chairman ceo jamie dimon really does have a lot of clout.
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also the media has caught on oe other sets of the influence washington through influencing business media and the narrative of what banks to and why they are needed, even if they do criminal things and why they need to be maintained in their current form. >> host: now, nomi prins can you come from outside of the equation as well, don't you? >> guest: yes. went into ron -- went in when was happening at the thomas managing director goldman sachs and is working, , i had a team that created what were called credit derivatives which were effectively bets on whether companies or any sort of loans whether they were attached to mortgages or anything else would default. basically that's what a credit derivative is. it's like i bet you you will be able to either catholic or not be able to fairfield on. or if your company are either able to pay off the debt you borrowed in the public markets or from banks or you're not. that i can bet on that. i offset that with someone else's is willing to take the other side or with insurance
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companies that ensure this or that, i'm taking on the other side to make this bet. but there they were much more convoluted than that ultimately as he found out in the subprime mortgage crisis and aftermath in the financial crisis. but i created at bear stearns where i i ran a department for seven years, more than 70 string the '90s for bear stearns the creation that could enable these types of credit derivatives to be used for investors, for companies, and large quantities, mixed and matched together. all of the analytics for that i was a much involved in threat might run wall street. when i left and about this and "other people's money" towards into that book i said that, i wrote credit derivatives and cbo's come which to get a technical on a sunday, then i will go on, credit,
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collateralized debt obligations, collateralized just means of what a bunch of stuff together and the predicates that also come just in lehman terms. they were something i i said we should watch because they will be at the crux of the next financial crisis. that's partly because i saw where the recording. i saw the junk that was being put inside of them and that still is. and then there were small, very small part of the market and they were very much in fashion because they could make so much money for banks like goldman sachs or banks like bear stearns and then ultimately became the cracks of a financial implosion years later. >> host: were you good at your job? >> guest: yes, i was good at my job, and that i was a quantitative analyst throughout my career and wall street. i stored as a programmer at the chase manhattan bank in the '80s from having gotten a degree in math. that's basically try to get a job and work in new york city. from the beginning of
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derivatives, of looking at aggregating different types of financial securities, looking at the math, looking at the programming i did that stuff from the sort of very initial level in the '80s to when i ultimately left in 2002. what it also did and one of the reasons i left wall street was it was very important when i was creating analytics or directing my team as is building them into the place i worked to analyze the downside, to make sure if a salesperson was selling a product or which we're doing analytics, they were also explaining what the risks were in that product, and what begin happening was, as things got more voracious, , more competite and there was more money in these more esoteric products, this idea of talking to clients about risk or funding risk
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analytics within the company come just like the budget in washington, this medical for this, this money goes for that, that happens in banks as well. it wasn't kind of considered a priority. it was down considered. i had more and more of a problem just morally on that because it just didn't, it's one thing to create something and at risk attached to it, and assuming understand the risk to be involved. but if the risk is either ultimately on the public but can't be explained properly, then that's a a bigger problemd that's where i started to divide out from wall street and ultimate become a journalist and an author. >> host: you write about 9/11 and the impact that had on you. >> guest: so that was really the breaking point i think for a lot of us in new york. i was working at goldman sachs at the time, very close to where the towers had been. in fact, that morning i had a
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corner office actually on a high floor of goldman sachs, and the actual playing went by my office. when the first plane went, nobody, nobody really noticed that. nobody on the news noticed that. it's the sort of happened but we are sort of in the flight path. but in once all this kickers and debris and spoke started accumulating very quickly aboard and a started to be covered on the news, and the second plane came by, that plane we noticed that plane came very close. at the time that moment of impact obviously none of us knew it was a terrorist attack, but what we did come what did happen was everything got very chaotic very quickly internally. we were supposed to go to an off-site to talk about credit derivatives and all ortega flown in from around the world the night before and we're supposed to go off somewhere and sort of like doing jekyll island in the
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face with the kind of thing that happens all the and thinking and just be somewhere else. we couldn't. my clarity moment was when one of the people from the major person in the department said maybe it relayed that we can beat the traffic at a manhattan it was like dude, there's like, no, something really big is happening here. it's not about that right now. but then ultimately the next few days i spent a lot of time just inking about where i was at, with my was at, where life was. i was volunteering to help with the primary instead going into work at goldman a few days afterwards to try to match items with people as are coming in and help volunteer to do that. so there was all these moments of just priorities in terms of what was happening in the industry and life in general. so yes, that was a very big pivot point for me and i wound up re-signing a few months after that. >> host: from "it takes a
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pillage," nomi prins writes in less you've been embraced into the bosom of goldman sachs, even for a brief span of time, it's hard to fully grasp culture of excellence. it's like harvard, the new york times, the senate and the new york yankees all rolled into one. once you drink the kool-aid and manage not to spit it out, you really begin to think you're better than everyone. >> guest: i wrote that, yeah. so first of all when i was interviewed for goldman as people were, it's a very long process. i was working at bear stearns in london at the time. i was sought out by goldman to come to new york and he credit related products with them, and this nine-month anything process that was partners, i met when the they were in london, in new york, it's a rigorous getting
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through of a sort of totem pole up through the very senior levels of the company. so all along the way there's this idea, not that we did know that goldman sachs had this aura in the industry of dean, sort of a man of wall street, a banking because of how it just rescinded itself. so the idea, the interview process and manifested that. if you get through this, and you get through this photo and get through this portal it's almost like if we like you more, this make you better. it's kind of like a weird cultural indoctrination just from the beginning. and once you get throughout, i remember i was standing on one of the trading floors for one of the later reviews and i was being interviewed by lord blankk line who became the ceo of goldman sachs. he walks out to the trading floor and he can does one of these -- he says, this is not
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bear stearns. in other words, like we are just so much better than bear stearns which is where i was at. this is goldman sachs. it was that kind of aura and that moment of presentation of who we are. the idea that culture of excellence and there was this book helps well that was written not too long after i was about the culture of excellence, something that is discussed internally. they considered come that's that's the word they use. it's considered a culture excellent. if you are like them come sort of moving up the sort of latter, then you are called culture carrier. it's just a thing. at least when i was there. so this idea of being one of us and then doing your job, but then your job is about being one of us, is very sort of self enforcing. and that's what i i mean by th, that there's a very strong sense
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of we are really great, if you are you really great but only if you behave like as big and if you don't maybe you don't belong here. >> what do they do? >> guest: well, they, like any other sort of more marquis investment banks do a few major things. they put things together. they put companies together. they are investment banking advisors. they find acquirers of companies and basically find companies that want to be acquired and to work out the details. and for working out the details a couple things fall out. one thing that falls out is a lot of fees. another thing that falls out of that deal are the ability to potential issue bonds on behalf of of that new company or on behalf of one of the companies involved so that they can raise money to either go on with the next part of the business or to
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buy each other. they can issue shares. they can issue new shares of stock to do that. and then ultimately once companies are already merged together for that already exist without having been merged,, catches corporate clients, they can issue working issuing stocks or bonds, and they can effectively create a sort of financial powers or the clients that they take cuts up along the way either through the initial creation of bonds or stocks to a deal or through trading at in called the secondary market along the way. so they can condemn both sides of the initial interest something you to trading something that's already in existence. >> host: in your newest book "collusion," you write that much of the 20th century belong to wall street. the 21st century now belongs to the federal bank. >> guest: right.
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so along the way of the 20th century cut as we talked about this, the influence through wars, through crises come through economic policy, through trade agreements, all sorts of other things was very much a symbiotic conversation of relationship that occurred between administrations, presidencies and the major banks of the country. so your j.p. morgan chase, citigroup, bank of america, goldman sachs, morgan stanley and so forth. as we went into this century, not so much the beginning of it but sort of the last decade and looking moving forward, central banks stepped in to act as the financiers for everything the banks are doing. so when the crisis happened in 2008, the fed did this major pivot, the federal reserve, the main central bank of the u.s. did a major pivot and said well, thanks don't trust each other right now. it just, number one.
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a number two, they don't trust each other let alone you compelled to give money to like a small businesses or to individuals at the rates we are only going to give them, which is zero. but into the crisis we will come in and help them and we will create or fabricate money electronically in order to provide them with credit because we can, but what happened was they didn't just do it a little bit. they took a situation, the federal reserve, in conjunction with the treasury department and major bankers, and it took something that was considered to be an emergency but what was going on in the fall of 2008 when there was basically a complete crisis of confidence in the banking system inside it and externally related to it. and they said we're just going to dump tons and tons of money into the system to make it right. we'll do an emergency basis first, give banks loans, going to give them low rates so they can basically get money from us
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at nothing and were going to buy ultimately bonds from them that no one else wants in order to give them more cash something called quantitative easing in order for them to continue to operate. this entire shift from the banks having a lot of the major influence financially productive to washington to say that that having it was because the fed has the money. all of a sudden wasn't just the banks that have the money and ability to raise money in private markets historically or in public markets, plus so much of peoples deposit of which they can do more financial activities with, all of a sudden there's this extra body. they had been all the time. it had been created ultimately over 100 years or so before that to provide banks help when you need it but went into overdrive. i wasn't just the federal circuit as a thought but in general soleimani's was a federal reserve, the european central bank and the bank of
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japan, on to the ultimate people's bank of china. all the major banks in different ways throughout the world decided to find ways to electronically fabricate money to put into their systems, and then they are still going. so this thing that was an emergency and considered to be an emergency back in 2008 has become policy. and it's become monetary policy and if the people don't really think of it this way, it's our economic policy. there's this body that can create funds when necessary and that has no legal cap to how much they can create. there's a cap in terms of how much conversation they might have about how much they have created what public opinion might be what political opinion might be, but there's no legal cap to what any of the central banks can create electronically in the guise of helping the financial system or in the guise of helping the general economy. that's why they have so much more power now than they had
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before because they now know this, and in different ways over the last years, decade low sense of financial crisis, that is with how to operate. whoever is heading the federal reserve or heading the european central bank, the institutions themselves are now sort of superseding even their ability and what they may want to do by the virtual power as being able to create so much money when they want to. >> host: here's the warning from "collusion." the fed and its allies have created a shaky monetary system that will collapse without their manipulation central bankers for all their meetings and posh locales the world over have no plan b to reverse or alter course without causing massive damage and financial pain to billions of people. >> guest: yes. so what's happened and we can see this since i wrote the book,
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but recently our federal reserve had an about-face in its policy, right? just going back with intuit central banks do or one of the things they do is they create a level for interest rates and by virtue of that level of interest rates, that's what makes basically seemed, at the interest banks have to pay and would precede that money. when the fed put rates down at 0% at the end of 2008 2008 andt them there through december 2015, there were basically saying one of our tools is to be able to make sure the cost of money over three months is negligible to banks. from 2015 until the end of 2018 incrementally they raise the cost of that money, they raise interest rates once by just 25 basis points, a quarter of 1% in 2015 and awaited all year because the markets didn't like that. twice 16 was all about turbulence in the beginning
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after the fed just raise the rates after seven years of being at zero by a quarter of 1%, by like nothing, the smallest amount of money could possibly raise rates by. and so then they stopped that and it will raise rates begin until the end of 2016, 872016 by another 25 basis points and did more in 2017 and more 2018 but always with an eye to sing whether the financial system, the markets themselves would be okay with that. what is that? like not having massive create a downturn in the market. this year on january 3 after there was a fourth rate hike last year, which was in decemben really upset and banks really upset. as it turned out the word meetings with senior bankers and the fed at the end of december as well, sort of going into what became an about-face. the about-face was he was fed saying you know what, what is
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going to hold back. first it was just some language, different central-bank leaders from the different parts of the 12 bank central desert system sort of start popping up saint maybe the economy is too slow, maybe we shouldn't tighten too much. things started being said and then a couple weeks ago the main policy came out that were not raising rates at all this year off and maybe not even intel 2020. the reason for that is considered to be because economy is slowing. and if you raise rates for increase the cost of my too much to choke off the ability of that economy to get its funds. the reality is that many times during this timeframe they coniston a lot worse than his been doing recently and they still kept rates low. the difference now is that the markets have gotten upset again. it's a january 3 was a negative debt. since then we've seen a massive rally in the stock market because of the feds about-face. because it wasn't just the feds
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about-face figures all the central banks around the world who are worried if the fed did an about-face, they would have to tighten money. they would have to make money more expensive. it have to stop by and sits in the markets to keep the level of finance up and the cost of money down. and then elect okay, we're going to breathe a sigh of relief as the donut worry about it, that's why some of the markets have rallied as well. there is this dislocation between economies and markets. if the fed were truly and other central banks were truly, getting back to what i said, were to say we're going to normalize rates, going to reduce the size of our books, if not the money we put into the market and we're going to basically selling assets we bought for that might affect the money back, there would be absolute financial crisis of the entire banking systems, all these major countries and the stock market. that's not like some crazy
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statement that doesn't come from actual deity. that's just looking upon what happens when money gets too tight to quickly and the immediate reaction of the stock market, which is a place where money was very quickly and it out, so the reactions there are very indicative of the reactions that are happening about corporations and banks of the world as well. >> host: so if you don't understand exactly what nomi prins is talking about and need a refresher, the nice thing about your books is you put in glossaries and cast of characters, as you call them, which is very important. good afternoon. this is booktv's monthly "in depth" program your car just this month is author and financial journalist nomi prins. her first book came out in 2004 after she left goldman sachs and it's called "other people's money" the corporate mugging of america. her next book came out in 2006, "jacked" how conservatives are
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picking your pocket whether you voted for them or not. the trial came out in 2008 but it was written by somebody named natalia prentice. was that? >> guest: that was my alter ego. actually that though, it was the trail, a financial throat. because what i decide to do when i left goldman initially was to do a john grisham with respect but basically write about my industry from the standpoint of something that was palatable. actually that book i wrote as i was leaving goldman and came up later as i took another in just kind of done that to begin with just in case it was too close to him. one of the things about the book now that you mentioned it and just recalling, i talk about a character who was ahead of a company that that was equivalent to goldman, i think i called the silverman, very, very, very loosely loosely and how have
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character only became the vice president of the united states. and affect it's based on hank paulson became the treasury secretary of the united states later, but it wasn't far off from that. i basically was using that name for that purpose. >> host: "it takes a pillage," 2009 an epic tale of power, deceit and untold trillions, "black tuesday" another novel came out in 2011. our two most recent books "all the president's bankers" 2014, and her most recent is "collusion: how central bankers rigged the world." this is your chance to talk with nomi prins. here are the numbers. 202-748-8200 eastern/central. 202-748-2001 mountain/pacific. if you cannot get to on the phone lines as to want to make a comment we will cycle through our social media sites as well,
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twitter, facebook and e-mail, all available to you. we monitor those as well. so nomi prins, now that we have this 100 year history, 100 plus year history that you've written about, has the been a cost to the taxpayer? >> guest: there has been a cost to the taxpayer, also the voter. because when you talk about a major banker who can influence policy and ultimately for example, in the case of j.p. morgan chase, jamie dimon with someone who was on the new york fed board. he was a class a director at the new fed board -- >> host: goldman sachs today? >> guest: no. jamie dimon. he happened to been in the height of the financial crisis when it first occurred also director of the new fed which is the wall street located fed of
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the 12 member reserve system but he was one of the people along with hank paulson who at the time was treasury secretary but who would then when i came into goldman ceo and chairman of goldman sachs. tim geithner that a lot of relationships, ultimate came in but he was a new york fed present at the time and became the treasury secretary under obama at the turn of the year after that crisis to get all these individuals would effectively have the ability to direct policy and money coming out of washington to their own institutions which are public institutions. these are banks that trade on stock exchanges, monitor supposed by the federal reserve because one of their day jobs is to be the regulatory sort of answer, the oversight body to these banks. they are monitored and yet their individuals of such a tight relationship with the central political powers of the country that they're able to get money
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effectively to themselves when they needed. and far greater figures that individuals are able to galvanize to do that. as a result money goes from taxpayers to benefit them. not just when there's a crisis but even from the standpoint of, for example, illegal act called the class to go act which was repealed in 1999. it'd been in place since 1933 specifically to protect the depositors and the taxpaying public and voters from any kind of weird esoteric parts of speculation the banks today. thanks could choose to bet all sorts of stuff but if they lost those bets it was on them, it's on their shareholders who is on the private partners however they were structured to repay. it was on the government, it wasn't on people. that was repealed in 1999. you had this merging of peoples deposits, peoples cash, peoples mortgages into institutions that also could all sorts of stuff with that, too badly with it, that won't and come to the
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government for help. the fact that all these deposits that they could say we have them competing machines are not going to work, people will not get the money back in this crisis of this give us all these other things meant that you were taking money from depositors or taxpayers because they influenced the policy that allowed them to all those deposits. so on multiple levels that are extracting by their influence and when things go wrong and to remove rules surrounding their businesses from taxpayers into the own pocket. >> host: so julie walsh tweets into you, could you explain how someone so brilliant and economically astute, you, supports an economic system that always fails tremendous human and economic costs, or dissolves into a dictatorship? she supports progressivism,
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socialism. is that true, are you a socialist? >> guest: i support certain socialist policies. because if we think about how economics divides into the needs of society, in other words, how many that comes from society helps society and how governments are used to appropriate those funds, i think about things like how expensive health care is for people in this country. i think about expensive it is for students to go to university and to come up with 50, 60, $70,000 worth of debt which means they can't ultimate be the kind of participant in our economy that they could have been with out so much debt. when i went to school, i started out in public schools and i went ticking the college and then ultimately went to a state college and then it went to private nyu for all my education
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but i but i paid for all of it along the way. i could pay for all of it along the way because what i was learning by working was enough to allow me to afford horses in books and rent some tiny place at the time. now that's an impossibility. so when i went to the economy as a whole and think okay, do we think it's better for an economy to be more level for people, in order for them to contribute foundation early only throughot parts of the economy and an easier way, and to think about how we also firefighters now and never post offices and how we have police officers and a whole host of elements of our society that are meant to help more a society than just their shareholders or just the banking institution. so i look at from the standpoint of a healthy society that is healthy economically and educationally and is physically and they are protected, defense
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as another sort of level of our society which has a lot of money that goes into it and supposedly to protect everyone, protect the country. all of the things to me or social goods. what i support from an economic standpoint and financially is for actors not to risk the countries financial health and be bailed out the extent that they were by the country, by taxpayers or held to the extent that they have been by the federal reserve. so i look at an economy as being holistic in that respect. >> host: in today's current political environment, is capitalism at a tipping point? >> guest: i think in general we are a capitalist nation. we do strive as a nation to do business activities that create profits and the profits go in
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different ways either to the people involved in creating them or to society to tax or the people's future. i don't think that's going away, but i do think that using wall street as an example and the financial crisis as an example and using the fact federal reserve still has $4 trillion of assets on our books after what is in an emergency situation, we should think anymore since it happened in 2008 and its still subsidizing wall street and large bass, those are tremendous sums of money. so i think healthy capitalism has to recognize that putting too much my in one place for that one place has been a cause for the general financial system or the general economy is not necessarily a good decision. and so i think it needs to be more regularly. i think liberals in place that do that were ignored into the
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collapse that we're still sort of reeling from in terms of these policies. and i think that those need to be reinvigorated at the think we need to protect everyone. >> host: before we go to calls, finally, the fed, is in your view a fed type bank necessary? question of what and then i will follow up. >> guest: i think what the fed does in terms of providing so much subsidy to so many banks is not necessary. i think the fact that the fed can sort of raise or lower interest rates in terms of monetary policy element is something equally be done within the treasury department. i think that the fact that the fed is structured in a way that allows the private members of the bank, which is how it was structure. the fed only does provide current and doesn't take
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meetings with heads of wall street firms and stuff because they are the primary shareholders in the fed and they are datastore shareholders in the fed. they created the figure where the fed is today, there's a major flaw in how it was created and how it exists, which is that it exists ultimately to benefit its members. it says it exists to help the greater economy and sort of the greater public. but the reality is, , if a lookt the action, they're very visceral when the situation where a wall street large institution is in trouble or there's a necessity to help a goldman or help a jp morgan chase or not someone who has an institution that is part of history and the fabric of how the fed was greeted has benefited from how the fed is created and continues to benefit from this sort of implicit subsidy that not just the fed but all of the central banks provide to the largest banks in their respective countries.
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i think that is a flaw. >> host: on the u.s. and the china central banks, in your view, colluding? >> guest: okay, so this is a very interesting question because the major collision i talk about in the book had to do with predominantly the g7 countries. what was interesting at the financial crisis was that the methods they were using, the timing of quantitative easing,, reducing the rates, of putting money to swap between and help make sure the currencies were moving back and forth between the central banks and only to the banks, major banks and respective country because they were a cross-border come all of that happened with phone calls, with documents and things that i have in the book between major countries. where china consent for the people's bank of china comes in is that they were quite critical of this process from the beginning and it's faceting because one of the major ways i believe china became such a
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tremendous economic superpower in the decade since the financial crisis is that initially they were very public about being critical of the feds policy. that he could create too much money to quickly come if you subsidize the system old my thaad system cannot sustain itself. however, in recent years the people's bank of china has also been creating their own sort of quantitative easing. the difference between what happens in chen and what happens with the fed come certain that much colluding but acting in opposition to in a world where money is cheap in one place and we have an international capital call by susan b cheap summerhouse, people take a turn has come in with her own methods. what to do is to inject them directly into more growth strategies throughout the country. they will actually direct sum of money they create interest infrastructure building, into companies that create high-speed railroads a compass of finest finance them and so forth which we don't. so they have a different just
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twist so it's not so much collusion. more sort of the antithesis of the result is still creating money. it's just directed in different ways in the u.s. and in china right now. >> host: nomi prins is a guest and cc is in portland, oregon. go ahead. >> caller: i have a comment and a question. you know, the comic is within the context of the person who makes $50,000 a year and has a 401(k). this whole what you been describing to me sounds like that there's no freehand, you know, the freehand blasé fair, that this is really ganley. the stock market and gambling is the bookmaker like in vegas, and they are playing around with our money, gambling i just get as gambling. i mean, i know there's no way
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for us it seems to make money or to advance as just a $50,000 a year 401(k) person without having it into them but essentially the rules are regular working public figure thousand you can put all your money in the stock market and then the people for managing the stock market, the wealthy people, they don't leave the money in the stock market. they move in and out constantly with all these reports and they tell the person with a 401(k) making 50,000 a year, just leave leave it in there because that's the money in my mind they are playing around with. >> host: we would get a response to that. are you invested in these markets via a retirement account or any other method? >> caller: am, and so what i want to know is, tell me why this isn't gambling, you know, and how it is that the person making $50,000 a year is
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supposed to trust the system, and finally, is there such a thing as freehand of the marketing such as adam smith? >> guest: those are actually questions. because, for number of reasons. one, i think your question really gets to the core of so many millions of people in this country. because the reality is there's only about 10% of the country owns 90% of the stocks in the u.s. stock market. so even someone like you who has an investment through your 401(k) plan in the stock market, the reality is that it is the people that are wealthier that have accumulated more stock that ultimately gets the benefits of the stock market going up in significantly more ways when they're in it than you would see. the reason it is gambling is
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because, and i would think it is rigged gambling in a way because these institutions, whether their hedge fund of whether their brokers, and you should check this on your 401(k) 401() plan, anyone should, who make money for moving what's in your 401(k) around, some 401(k) plan to actually manage. that means brokers are moving them around. they did caesar trading and not necessarily for performance and the comes out of your retirement. that comes the lump sum that is left at the end of the day. those institutions that do that and those institutions that manage money and the fact there is this relationship between wall street institutions that gets this access to cheaper rates and get access to federal reserve policy and influence the policy means they are influencing the stock market. from that perspective if they're betting on the stock market and then using the term betting as you use the term gambling, they also have since the weather it's going to go up or down more so than you might for for a numbef reasons for when is they had the
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volume so they can see how much volume is going in or out. also have the ability when things go down too much to go to the federal reserve and simple, there some problems going on, or look at our books, , or we could have credit issues going forward and ease my little bit and then i goes back into the stock market. the reason the stock market rises so quickly in that manner is because it's easy to chew it money into it and it's these are meant to come out which also makes it a very good -- that's not to say their company senate have good value and are not producing and hiring people in providing input into the economy and buying shares in the stocks isn't necessarily a gamble. that's actually investing in the growth of that company. where the camera comes in is how they are all ultimately, their stocks are related to money coming in from outside source. it into the atmosphere of idea, so to freehand, the reality is right now and take her in the
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last financial crisis, it's the sort of external artificial injection of money into the financial system that then gets barred against and leverage into moving stocks ofcom moving real estate for those threat that might at the top that receive the bulk of that wealth back and then reposition into the market and move it up even further. that connotes a lack of transparency and the lack of a full sort of free-market celibate. what it does is it shows their system artificial stimulus to the market which has continued to drive it. if you look at the relationship between bouts of quantitative easing of the federal other central banks by assets in the countries, you will see those are days in which their stock markets tend to cook up. by just more money coming and artificially and lifts it up. >> host: scott is in your city. you are on with author nomi prins, scott. >> caller: i wanted to talk to
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you about an idea i had come a set of ideas i've been developing recently. and that is if you were to construct a global wealth tax where 0.1% of the wealthy, the large corporations and the large foundations had to pay 7% a year if they do not pay with bank loans but don't have to pay 3% a year if you do pay with bank loans, then obviously to say 400 basis points on their wealth, all these guys would pay you with bank loans and the banks would get two sets of fees. first of the able to charge fees to the wealthy for providing the loans, event a second set of these is the banks with package the loans into wealth tax collateralized loan obligation bonds, and the bond buyers would pay a fee for the packaging. so the wealth tax if you
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constructed it that way, the banks could make 200 billion, $600 billion a year for the $10 trillion a year plus in wealth tax money. and since you were talking earlier about how powerful bank lobby is and since this would be the most profitable event in history of the banking industry, the bank lobby would be the most ferocious proponent for the global wealth tax. >> host: the work in the financial industry. >> caller: yeah, i'm a retired jp morgan banker and does hedge fund banker. and i'm an alumnus from columbia university. i am a mathematics. >> host: what made you come up with this point formula? what was the impetus? >> caller: cyber think about this a long time. so i have lived with this one for 11 years who graduated second in a classroom columbia. ..
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>> and, so you know i would say, if you think the guy with $2 billion can't get a bank loan with low interest, and you have no concept of reality. >> we will have to leave it there. nomi prins, what did you hear? >> that's interesting because the last thing you said. it is true. someone with an extreme amount of wealth should figure out not just how to borrow cheaply in
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order to pay a tax but also just in general, if there was a tax more related to their actual wealth as opposed to leveraging that wealth. then they could easily figure out how to make extra money to cover their tax anyway point whether their borrowing to do it were that siphoning a portion of what they have and making more. i agree with you that someone that position, the more wealth you have, the less you'll feel a tax. that's true. if attacks were created in such a way that it was connected to banks being able to manufacture or securitize to aggregate loans. that go to institutions or individuals. that would be something that would be an attractive way to buy into a wealth tax and make money out of it. i agree with that. on the other hand, i think if are going to have a wealth tax, we should look at it as more of
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a speculation tax. in the issue be related to accumulated wealth. it's hard to find for me forensic accounting perspective. the idea is if we are actually taxing transactions or buying a piece of the clo at a higher level than a capital gains tax bill that would be a way to sort of take some of that money back into the system. and then use it for things that might be more beneficial. >> jamie from north carolina. good afternoon. >> good afternoon. thank you for taking my call. i have a question for your guest. it's a relatively simple question. about these rating agencies like moody.
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part of when the bottom fell out of the tub in 2008, all of these wall street mouth breather's were taking the so-called mortgage securities to places like moody's stamped every single one of them, aaa. can't lose. any full knows there's only so much commercial paper that will qualify as of that. did any of these people at these rating agencies that stamped all of this toilet paper aaa, were any of them jailed or prosecuted? >> before we get an answer, were you affected by the 2008 crisis? >> not at all, i was lucky. >> thank you sir. nomi prins. >> thank you for that question
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and good that you weren't. first of all, the way the rating agencies work as you mentioned is that they get paid based on what their rating. the information they got that goes into securities that they are rating has to come from the institutions that want the securities rated. they should also have independent sources and in some cases they do. but the reality is, the payment relationship has been that a bank who wants a security rated goes to moody's or smp and so forth. they get paid for that relationship and that staying thing. and it goes into the market. and that was definitely one of the main problems at the crux of the financial crisis. because not only did banks have bad loans coming in already. because we are talking about this, i just want to say, from someone who programmed the
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smallest details throughout my career at wall street. banks have information coming in all the diaper they know immediately if alone isn't going to pay or fits into liquid see all the fault. they know exactly what to pick. what happened was and what still happens today in creating these collateralized securities. the collateral are the loans. at the time they were mortgage loans. the banks are just picking enough bad loans to add to the good loans to get the good rating on the entire package. but to give them enough money because the bad loans generally are paying a higher interest before they go bad than the good loans were paying. that's why they are subprime. their rates are higher to the borrower. so they are getting juice out of the entire process of creating a loan. showing it to the rating agency and the rating agency is rating that high. then what happens is, institutions who only are supposed to buy aaa rated
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securities are like cool. we will buy a aaa rated security. it will give us more return then a treasury bond that's also aaa rated. that's great. we will buy as much as we can. what else happened during the financial crisis which made it worse, they would borrow money from the same banks creating the securities in order to buy them. so now, these institutions that could only buy aaa are buying something labeled aaa that really isn't. there also borrowing money because they have a aaa against the aaa thing they just bought which they also to pay back the you multiply that number of times. it's like going to vegas every time you lose 100 bucks, someone outlined you 100 bucks. you think you have another hundred bucks to play but ultimately you have to go repay everyone back. that's still the situation today except for the fact that the rating agencies now tend to be rating securities that have corporate loans in them as opposed to more of those mortgage learns or individual borrowers. what's now happened in the years since the financial
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crisis. the cost of money were so low and the companies are able to leverage themselves so much cheaply. if any of those go bust, it will create default. if there loans are packaged somewhere else and rated high and then they default, then that package is going to decrease in value very quickly again. so we're kind of in that situation again with rating agencies been to your other point, no one in rating agencies went to jail. no ceo running these institutions, despite billions of dollars they paid in fines have gone to jail for fraud. you have to go back to my first book. people like ken lay at enron were sent to jail but not any of the people running the banking institutions involved in this process. >> steve from anchorage, alaska. hi steve. >> hello. thank you for taking my call. i very much appreciate having the opportunity to hear nomi
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prins today. my call is to park. i'd like to first of all go back to the point you made about the relationship between the social goods that provide the benefits to the society and the relationship of the economic system. it should be fundamentally a position to provide those services. in that context, i am wondering about the social order in which it is by law and judicial decision the application of corporations to solely make profit for their shareholders. and the need to fundamentally - - that particular proposition. let me leave that to a second related proposition which is, if you're familiar with the governance of ghana, you may recognize a man named jerry rollins. he was the leader of the - - force who carried off a crew
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after watching years and years of elite and corporate corruption, deflecting monies away from the basic social goods to the society. he passed a law entitled, economic sabotage. with those laws, he indicted and found guilty those previous owners. why should we not have economic sabotage laws associated with the manner in which our economic institutions function? >> thank you steve. we will leave it there. nomi prins. >> going back to what i was saying before and i don't know the ins and outs of what happened in ghana from what you're saying and from your question, again, the institutions that were involved in the financial crisis. just a look at our most recent example of massive fraud .2 which some of them admitted or settled.
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to the tune of multi-billions of dollars and for which the fraud still continues. you look at a bank like wells fargo, after the financial crisis, after paying tens of billions of dollars of - - for other types of misstatements and fraud. they went about creating fake accounts for their real customers and charged customers fees on those fake accounts which ultimately discovered to be fake. in the meantime, those people might just be on the edge of their paycheck for that month. 80 percent of the country is living paycheck to paycheck and it means something to have fees or a credit score go against you or whatever it might be because a bank is basically committing fraud and stealing from you. these are all things that none of us should be proud of economically and we shouldn't subsidized institutions doing this.we should have individuals made to be responsible and liable but if there's still time for those crimes and they are tried. and it sticks cover they are guilty, that should be done. because the net result, the
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financial system of having such a way to be able to pay fines so easily. because of the laws to allow them to function the way there currently functioning. without any accountability is ultimately a detriment on multiple levels of society. the things they do to society affect incrementally so many people in our society and in our economy piece i agree. we need to have a better way of making them legally responsible and enforcing laws and creating laws that don't allow these things to happen or at least to - - the regulars be more attuned to what's going on not just after the damage has been done to individuals. >> it was - - that - - came out. nomi prins was interviewed by this gentleman. >> iv member we had - - a
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couple years ago and i said, back in my state of vermont. the middle class is in a whole lot of trouble. people struggling and people losing their jobs. their income is going down. what's your sense of the economy, he said, the economy is doing really good. year after year, this is really astounding and a bit aggravating. your after year, we heard from the bush administration that from their perspective, the economy was doing great. now explain to me how they could be leave the economy was doing great when the middle class was collapsing and we were getting closer and closer and closer to the edgeof a major global financial crisis? >> because for them it was great and that's the problem. >> nomi prins, what's your relationship with senator sanders? >> since i was on the show which is one of the first times i met senator sanders. was here at c-span for that
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interview. i subsequently served on his federal reserve advisory council which was a bipartisan counsel. to take a look or at least talk to the fed at the time to talk about more transparency. in terms of what they were doing. because of that time they were subsidizing the banks in a tremendous way. and trying to influence them - - to think about these matters and where they could lead going forward in a better way. and i also contributed recently, he had a bill out at the end of last year. where it relates to this too big to fail, with respect to derivatives which have been my expertise particularly when i was on wall street. to ensure banks that have too much of a concentration of two mini derivatives on their books. they are most likely to be at the helm staring at the next
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financial crisis would have to reduce their size. reduce their footprint by a certain amount. that's a very large bank we are subsidizing. for financial crisis that control most of the not surprising because i think members on both sides of the aisle tend to think that when bank say we are okay now, we've got this. that it's true. and that's the situation in which we find ourselves today. >> folks on the hill tweets to you, please comment on the trump administration trying to influence fed policy. how much influence does president trump have on the
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fed? is that a goodor bad thing? by the way, monetary policy set by the treasury department would be overtly political . >> it's interesting because, just going back to the history of the creation of the fed. it was effectively created as a marriage between politics and finance. it really was a wall street working with the senate finance committee to create an institution that could help them in times of trouble. it wasn't like that happen because - - [indiscernible]. if you consider that was the initial sort of - - of the fed. it's done monetary policy and set rates to combat inflation or price activities going forward. since then. that's one element. if we look at what's happening today, there's still a relationship even though it was
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created as an independent body. where its members are institutions and it lives in washington. it's very hard to really think of it as an independent body but it wasn't created independently. it's supposed to be independent. just from the sheer pragmatics of it, it isn't really. that said, i think when president trump talked about that there should be rate hikes at the end of last year.what he was looking at, i think, was less the economy and more the markets. as i was talking about before. he doesn't want the markets to go down on his watch anymore then president obama wanted the markets to go down on his's just that he is a much more public way of tweeting his opinion then happened under the obama administration where rates didn't rise at all. but we have now is in very publicly having talked about there shouldn't be any rate hikes and it turned out that chairman jerome powell and the
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committee at the fed decided not to raise rates for the rest of this year. so there is that relationship and is it because of trump? i don't know but i think what it's because of is ultimately, they are looking at the same things been looking at data and the markets and looking at not on their watch having another financial crisis. in that respect, no go. when president trump said recently that they should be cutting rates immediately. after larry kudlow and then a week later, president trump did. that's going further in the same process. you did this before, you should do this again. and i think again, even though the economy is swelling but it's not necessarily because o the economy. it's because of the easier way to look at how money is impacting headlines .which is how it's impacting the stock market. which i think they both look at. >> nomi prins, with your background and your philosophy,
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what do you think when you see president trump criticize the fed chair? >> from the standpoint he put the fed chair in his position. it's odd. but i mean, he's criticized other people he's appointed. after he's appointed them. if they haven't done what he's wanted them to do. but, having looked at german powell's past votes on interest rates in general. until the she basically voted with the rest of the committee. he voted with janet yellen. in fact, he only had a couple rate hikes under his time when janet yellen started under her time. he would have seen that before criticizing his actual policy. i think it's interesting on a personal level that you appoint someone that you then criticize because they're not doing what
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you want them to do. i think he wants them to do what he wants them to do more possibly with other entities in washington. but i also think it's just - - out of alignment that he has looking at the markets. and ultimately, they're coming to the thin conclusion point which is that there might possibly be a fed cut in rates by the end of this year. and if it happens, then chairman powell will say it's because of data. and president trump will say it's because he toldhim so. the net result will be the same . >> - - is in lexington, mississippi and you are on with author nomi prins. >> thank you for taking my call. my name is - - and i'm a primary care physicianwho happen to come to mississippi . my issues are very complicated but i came here to get my own green card which took me almost
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3 years to get a green card. because my son is a u.s. citizen. so what i've seen here and i challenge anybody in the united states of america to visit and see the other suffering of the american people in mississippi. as a physician, that's my observation of 25 years. a. d, who is going to safeguard the american people who pick up the garbage, work in the hospital as janitors who takes care. when they can become sick, there's no way they can be carried upon. if they become sick and need disability, it takes months. if something happens to these people, they barely get something where they have to make a choice between paying for the medicine or their own food. also, all the philanthropic people and government agencies. why don't someone come visit here, i'm available to give
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them a tour. i'm an outsider looking inside. this is a great country because of the scholastic fairness. i came to america because of the scholastic fairness. if you lose the scholastic fairness and give people the understanding that this it's a free party. it's not a free party. i studied and then i was given an education in america. >> we will live it there. i apologize. >> what you are talking about is again, something that unfortunately is not just the underbelly of america. which is great as a country on the whole. but it's also prevalent throughout the country. i remember when i was writing my second book, after katrina. that hurricane katrina had happened and i spent time in louisiana and mississippi. of course that was after an actual devastation.
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but it was apparent then, just living on the edge to begin with and then compounding that with a natural disaster creates devastation that goes past any of the individuals involved. to their families and people that work with them, to companies that rely on those people for their own benefit and so forth. i think what you're talking about for the healthcare perspective that you do. is that as well. people don't understand that if we don't have a way from an economic perspective. given the massive amount of wealth we have of the country. to support the people that support not just themselves and damaged but others in need of medical care. then on multiple levels, we are hurting ourselves. if someone goes into a hospital
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and they can be the richest person in the world themselves. they can have access to the best private health insurance that there is out there. but if they're being cared for by people who can't afford their own health care or have to choose between food and that if there's a situation for their families or themselves. then that's a massive hole in our system. i believe there is and primarily because in many ways, we do subsidize so many financial activities. that we have the ability to create a way to help through an extended medicare for all program or an extended disability program. people have already put in and appropriated in a way that actually looks more at areas such as yours and throughout the country. >> and from her book, jack.
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nomi prins writes, let's make no mistake about this. insurance companies are middlemen.their sole job is to connect the dots thatstand between you and your medical treatment .more often than not, it seems like their job is actually to create red tape. between you and your wallet and why do we put up with them? >>) that was written, that book came out in 2006 i think. that was before our conversations about whether medicare for all, obamacare. whatever you call it. the reality is, insurance companies are private brokers. and they get paid a lot of money and their shareholders make a lot of money in the process of separating people from their premiums without a lot of limits. or some states with any limit really. just what the market can bear. ultimately, that means people don't get the healthcare they need in order to sustain not just themselves, but all the levels in the country of individuals who rely on them. >> travis, eagle river, alaska.
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>> thanks so much for taking my call. it's fascinating listening to nomi prins and your other callers. it's interesting when you look at economic fit i think a lot of what nomi prins is touching on from the free market standpoint. a lot of this has been presented previously by people like - - talking about the effects of money on the economy.the effects of too much easy money in the banking system. you look at the financial crisis in 2008, i think it's probably a pretty good case study you have too much free currency flying around. i just kind of, trying to figure out where nomi prins sits on these issues. it seems like in some aspects, she's in favor of the free market. not in favor of too much currency but then she has these socialistic tendencies. i guess one of my questions
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would be, do you think we should tend toward commodity money and perhaps get back to a gold standard or do you think we should continue on with this fiat currency we have. know go i will just - - leave it there.>> he kind of stole my thunder. i was going to close with that when we were done. i didn't associate you with frederick hayek. >> which interesting about your statements, i think money is very complex. what we do with the tens to get labeled under different sorts of isms. from the standpoint of the free market, i don't think we have free markets.
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i think it's a theoretical construct by which - - the definition for which would be full transparency and full participation by all actors in the market. and this relates to my theories about the fed or fiat currency or subsidizing the main financial actors in that environment. you by definition, rigged the market. if you're subsidizing one level and that's the one that has the most access and volume and influence over the market. we get away from free markets in general just from a practicality standpoint by virtue of how our monetary system has been constructed. that said, because you mention in terms of my thoughts about how society should have more of the economic benefits that are produced by that society. to sort of help it whether
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that's from healthcare standpoint or security, police, firemen, education and so forth. i think that ultimately allows people to be responsible to the economy. from individual, to local and small business and so forth. in a way i think is more secure for everyone involved. in terms of the gold standard. because it is a question that comes up from a lot of people that have read my books particularly , it takes a village, "all the president's bankers" and "collusion: how central bankers rigged the world". one of the things that happened when the united states was taken off of the gold standard was that all of a sudden banks - - there's no anchor to the financial system.there's no currency anchor to the dollar and by subsequent, just definition. two other currencies outside of the dollar.
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there was nothing anchoring that money. was pushed primarily by the banks because they knew that. they knew it was much easier to create money if you didn't have to also connect it to some hard asset or other standard. you can just do was a way to - - of deregulating the monetary system. i don't think from the sheer standpoint of pragmatism that were going back to a gold standard. in fact, been red and i i have a lot of the things he says specifically to congress in collusion about the gold standard. he went on the defense against the gold standard being brought back when no one was asking him that question. when the financial crisis was at its height. which is interesting because it was basically saying, we need to create money right now so this is not the time to be talking about pegging it.
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that said, there are central banks that do stockpile more gold. not that we will go back to a gold standard but it could be a more global currency or benchmark that would include pieces of the gold standard. to simply create dollars and the money just at will. >> lawrence tweets, can you explain were the fed gets its initial funding for its balance sheets? does congress appropriated? >> congress appropriates things like how it pays its people and more the logistic types of things. it's created like a corporation and it gives shares like a corporation. so that the members are like
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shareholders in this corporation. based on that and the reserves they put onto the balance sheet of the federal reserve. it's how the fed ultimately gets the money to utilize that. that said, it's also an electronic process now. used to be there were reserves where there was gold put against federal reserve notes. they would use those as collateral and issue notes on the back of that. now we can be created electronically. through 1941, there were reports from the fed that talked about how the member banks, how many shares they owned and how much they were worth and how much they were putting in for them. those reports haven't been available since world war ii. for the most part, it's the larger banks who have more of the percentage and also puts in more of the reserves to be able to operate. >> robert. temecula, california. please go ahead.
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you are on booktv with author nomi prins. >> hello. i am blind so hopefully your book will have an audio subscription. i will be on the devils advocate side. the way i look at california conversely and arguably. they say it has the sixth largest economy in the world. that's silicon valley. sixth largest point yet we have the highest rate of welfare and poverty than any other state. they say silicon valley takes its money and takes it out of the country but they won't even invest in our banks. that really worries me. i think you're more liberal i would say. i have no problem with that but as long as the money gets distributed right. it seems that silicon valley and the way they run out of our country with the money.
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you seem to argue the point against wall street but you don't say anything about silicon valley. what would you do about that? >> robert, thank you very much. audio, have you recorded audio versions?>> there are audio versions to all of my books. atleast the last three books that i know of. in fact, the one for collusion , which is the most recent book, i think is phenomenal. >> did you do the audio yourself? >> i didn't. i know it was done. a lot of names in collusion. a lot of chinese and japanese names. and the woman who actually does the audio spent a lot of time on the language, making sure things were accurate as well as making it what could be considered dry, i'm very
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entertaining topic. she did a good job on that. hopefully you will be able to listen to those. silicon valley is interesting because, when you talk about the wall street banks and the influences they've had. it's been over a long period of our history. the evolution of our country and political system. our dominance as a superpower. so many other things have happened. a lot of the tech companies are new to that aspect. that said, i think last year they overtook wall street in terms of lobbying money and what they were pouring in to get what they wanted from a legislative or policy perspective for their countries as they grow. certainly, many of them don't pay any taxes. president trump talked about getting taxes back on shore. president obama talked about getting taxes back on show. president bush talked about getting those taxes back on shore before google was google and facebook was facebook.
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this has been a problem in general particularly in technology where the work is done - - you're not building a bridge and bringing all of this construction aspect and physical people and everything else. you can actually do these jobs and multiple different places. and it's easy to create different kinds of hubs in different countries and not pay taxes. i do think that's a problem. i think if an individual is basically paying, and this is data from our last. if you look at the number of individuals in the country be what we are paying in terms of multiple taxes. a combination of income taxes, social security taxes and so forth into the country. what corporations pay as a percentage of revenue. the actual money that goes to the treasury and gets
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appropriated through the budget process and washington been is only - - in the last 10 years, somewhere between 7-eleven percent of all the money that comes into washington. on that basis, individuals are paying a lot more and small business owners a lot more than these corporations are paying which is a small proportion. i believe that's wrong. i think companies that have the benefit of the american population of workers and even the global environment you should be paying more taxes to the country in which there actually domicile but not the country which they on paper existed. >> nomi prins, a lot of email, tweets and facebook comments along this line. as a retiree with investments, how can i best protect myself? that's from george. several comments like that.
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and then a follow-up, that's george in maryland and this is george in florida. what do you do with your money? >> those are great questions. on the retiree side, or even if you're younger but looking at the fact you want to live as long into your retirement and as long as possible. you'll need to finance that. i think there's a couple things. one is the older you get, the more secure what you have should be. it's hard now because rates are so low. if you have retirement money in a savings account with j.p. morgan and chase, you are now getting a quarter percent interest on that. for example, if you put that retirement money into something like an american express - - or an bank. online. and that is getting 2.1-2.2
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interest. and i do this. i don't have savings accounts in any of the large banks in this country because they just don't pay enough relative to other places i can put that savings. so that's one example of what i would recommend for secure money for a retiree. in terms of 401(k) plans or pension plans, there's a couple things .1 is i think you should always be aware of what you have and how it's changing on a regular basis. a lot of people look at their statements when something bad or good happens. you're not monitoring as their changing. i think what you might see as you monitor and they change, is that sometimes your money is managed by companies that make money off of effectively treating your money. and your 401(k) plan or pension plan has to basically pay for
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the charge of executing each transaction. that they execute against your account. it might not be you individually but when your account lives. it's important to have control of your 401(k) but if you are having an outside manager. have it be someone who is a fiduciary. someone responsible to your money and not necessarily to a major company they might be working for. or a bank that might also have an asset management element that your 401(k) is housed with. so therefore, it trades with what the bank wanted to trade that even though it's not supposed to. that's kind of what happens and it loses less in that process. i think those are two things. i look at my money religiously in that respect. one thing i will tell you is you make a lot more money on wall street then you make as a journalist. that's just a thing out there. what that means is it's important for me to preserve
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what i have. i do that by being very careful about not giving it away first off. money that i know i want to keep with me, having it rated as high as it can in terms of interest and make sure i'm not paying fees and extra things along the way. those little adjustments or even looking at your credit cards and getting them down to zero or nothing. or transferring balances but those actually make you money especially when you compounded that. getting rid of your costs is huge. >> from nomi prins's book, jack. she writes, banks spend hours determining how to use your relationship with them to suck money from you. take sees, there's no reason banks have to charge people to access their own money. yet, what happens if you can't maintain a minimum balance? you pay a fee. don't do direct deposit because you need the cash from your paycheck immediately?
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pay a fee. next caller, david. hot springs village, arkansas. >> hello. i'm interested in the history of goldman sachs and therefore i read william goldman's book. i'm wondering if you read it. the thing that struck me about it is that - - legendary principal partner there, was able to get on the board of at least a dozen of the fortune 500, maybe even the fortune 100 companies. and then come back and trade on the information heat beginning at the board meetings. i was wondering if you had read that book and what you think of that. my other question is very simple. do you think thomas picketing has nailed it? thank you. >> i think i review that book for the daily beast back when it came out. so yes i did. it's a very well researched.
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it's a good book. i think his name is william - - anyway. we will get it. sorry about that however, one of the things that happened in the initial goldman sachs. it's a fascinating set of relationships. sidney weinberg who was around at the time of the crash in 1929. he was running goldman sachs as it was participating in a lot of what were culturalist. now they are called clo's. conglomerations of stocks and other securities that might not be doing that well and need to have stories told about them in order to get people to buy them. which lost all of their value when the market crashed in 1929. the way sidney weinberg thought he could get through this was to become friends with the governor of new york.
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a man named franklin delano roosevelt who ultimately became the president of the country. why did president roosevelt become president roosevelt? one of the things he had with sydney one burke and a bunch of people in the business community that weinberg aggregated. contributed to his campaign. even though he's considered a traitor to his class. the reality is if you follow the money back to his initial campaign and his initial coming into office. is that sydney one burke and another fellow named joe kennedy. were helping them to create money. weinberg and juergen kennedy in california. as a result, fdr appointed a business council on which he put the head, sidney weinberg. so he redeemed goldman and wall street in the eyes of fdr and the country in a way. by getting his friend, that he invested with and that invested
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with him to basically support the incoming president and his other writing on the t lease. that kind of thing has continued throughout time since. there's a tremendous of interlocking board memberships between institutions. and also a vast percentage of people in congress on stocks in companies. it doesn't take a lot of scientist to figure out how they related to policy. that those very, as people might be promoting. so that still happens. >> phil, portland, oregon. please go ahead with your question or comment for nomi prins. >> thank you c-span for taking my call. where to begin after all you said been . can the president get the 10 percent to pay the fare share tax? to reconstruct america's
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infrastructure? the mercer's, produce, waltons, they all laugh in america's face. americans like you and me that try to keep as much money as they can. can a president get 10 percent from the wealthy without creating a civil war in the house? >> that's an interesting question because under this administration who have kind of gone the opposite way in terms of taxes. the math would work better on that kind of attacks. a more of a proportion tax throughout the entire country. so that the wealthier pay up to a certain amount. a higher percentage into the tax system and beyond that, a different percentage perhaps. but that is a way to bring money into the treasury
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department which ultimately is where the money is taken into the budget process that ultimately, that money can get appropriated into things like infrastructure we have a tremendous infrastructure deficit in this country. everyone was in the process trying to get elected last election including president trump talked about paying money into infrastructure. it's a problem we have. bridges we had that are falling apart and ports that are old and railways that are sloping hospitals in need of better equipment or roads to get to them or whatever it might be. again, that's a significant problem for the country. and retrieving money from companies or the wealthy that use more of those benefits. because they ultimately, depending on what they're running. could be utilizing the infrastructure they need to would actually benefit them as well. back when president eisenhower was president, they had a lot of bankers and people around him that prompt him into that
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position. he came up with a plan to build our nation's highways. he came up with that plan and he raised taxes and built the highways and he presented it over a number of economic - - not just for the people at the top. but throughout the rest of the country been an anecdote i found going through a lot of files. i spent time a lot of time in kansas looking at president eisenhower's notes and documents from that period of history. there was a person who was a banker at the morgan bank at the time. one of the most powerful bank still and at that time. was said to president eisenhower in a letter. they said look, if you create a tax system whereby those of us that is and he was rich.the people who have less money can keep more of their money and the people who had more money have to pay a little bit more into the system. ultimately, you have a stronger
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economy. he was a millionaire working one of the major banks in the country. this was a letter he wrote to eisenhower where he advocated this kind of a more proportionate tax system because he believed the more money that was in people's pockets throughout the country, the better ultimately, the entire economy will be it will lift those people and the wealthy people at the top of that. that was one of the things inside the philosophy for the highway program. it wasn't the only thing. but what eisenhower did was listen. a lot of people communicated a lot of letters. he took people's opinions very seriously. so this was something that worked for the benefit of the country and something that was postulated by its wealthiest members. >> this is from the preface of all the presidents bankers. you talk about your research. all of the national archives and records administration libraries for fdr through carter have exceedingly
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assessable and well organized information with consistent classifications. they were a pleasure to peru's and i lost myself for days and all of them. after reagan took office, records became less available. at the clinton library in little rock, i learned some records may never be uncovered without the benefit of a freedom of information act request. not merely for national security reasons, but because the commitment to organize such a vast amount of material is not what it was before the 1980s. as such, the bulk of information that might be revealed by the request that i filed at the reagan, george h.w. bush and clinton library's was not available. >> it's interesting because since that time, i actually, i did file a request with the clinton library. and with the george w. bush library. senior.
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i wound up ultimately getting some of those requests back to me from the clinton library. and it's interesting it took a number of years. they did respond to some of them but they didn't respond to others. what i had studied or tried to get that at the clinton library is what happened into the repeal of the - - act in 1999. there was a lot of activity going on back and forth between in particular, the citibank. and the clinton administration and congress and so forth. what i was trying to do because it was happening during clinton's administration, was get as much as that as i could. what i found, because the classification systems in general in the presidential library became more difficult to access. and the funding became less so librarians had more difficulty with some of it was classified. it was difficult.
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ultimately, they got me some material after the book came out. and i used some of the in a paperback version. some of it is actually still coming in. not all of it is exactly what i asked. even though i did get some material back from clinton's library, i haven't got it back from the bush one point even from the clinton library, it's become difficult. i guess is going forward in time, i think i talked about this at the end of "all the president's bankers". when you get to the obama or trump administration or whoever we have going forward. it becomes harder to really get access to that information because now it's electronic and there's all sorts of national security labels. all sorts of redactions. every piece of every email has to go through analysis as to whether it's a security risk to even get basically the access that a - - would require.
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it's difficult at times have changed. >> nomi prins, i know this is in your area of writing. but did george washington have a relationship with bankers? >> that is an interesting question. i don't know if he did. i know john adams did have a relationship with bankers. in the adams family in general in terms of financing their own rise. thomas jefferson as well but i'm not entirely sure about george washington. someone had to finance some of those wars. in a lot of cases, even the initial war that created our country. you had to have financing to do that. often times, it was financiers involved with the army and ultimately, the government who helped to provide some of that. >> and during world war ii, were banks important to fdr? >> banks were very important in world war ii. if we look at the memories of that in terms of war bonds that
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were issued through the banks to individuals. i looked up documents where you could see at the put out - - ads being put out. thing open up an account, get a war bond certificate. all sorts of deals that were being sort of run by banks as well as providing their own money into the war effort. as well as directing some of that war effort. different banks provided different funds ii, there's a lot of communication going back-and-forth between the people running these
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institutions. like tom lamont who was running morgan bank at the time and the presidents staff as well as fdr. >> before we leave collusion, what's the role of the imf and the world bank and the world money situation? >> talking about coming out of world war ii, the idea was in the meeting was held in 1944 where the leaders of the international sort of community came together to talk about how to fund. ultimately the reparations that needed to be done in the wake of war. so the argument for the international monetary fund and the world bank came out of two things. one to have a currency element that could work throughout the world so we could basically look at financing what were at the time, a lot of devastations
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and money required for those around the world because of world war ii for the war. by extension, other countries who had suffered as of the economic downturns that were caused by the war. that made - - needed funding. and that's changed having funding based on development in developing countries and helping with anything down to building a waterway from a village to a major river to more complex and larger funded programs. and these monetary system components are also run by different individuals in different parts of the world the idea there and international pace of development. the world bank was one of the second - - was run by a name man named - -. would go out to the public and they would try to raise money that would go
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back to the world bank that the bank could then use for projects that they deemed appropriate or necessary. then the world bank would find the tax teams and distribute those money to those particular projects. >> one final character before we run out of time that you spend a lot of time with. david rockefeller. >> david rockefeller is very interesting because he was at the crux of a major shift that happened throughout the relationship between baking and washington and the presidency. - - banking. he comes from a time where there was a depression and his family owned a significant portion of the rockefeller eldridge the ãabby rockefeller and windsor had children. they became david rockefeller, nelson rockefeller. so that the family itself was fascinating and i'm summarizing
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but they go through multiple decades of this family being involved. elements of wall street, elements of global policy. nelson rockefeller became the vice president while david rockefeller was running chase, which at the time was a major bank. it was a major power player at chase. but david rockefeller during his time as he was rising to become the chairman of chase, was also working more outwardly with other foreign policy initiatives. more closely with the middle east and finding ways for middle east money. money that was made out of oil to be used as currency, as collateral for loans that chase could make to latin america or other developing countries and make money off of that.
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therefore a very symbiotic relationship and influence chain. they threw him, had this ability to access moneycoming from an external place . and linda to another external placement that way to take themselves into a position where they could control what the government was doing as opposed to having to be a team player. because they had this extra pot of money coming from somewhere else. he was also an advocate of going off the gold standard during that period to allow banks to have larger access and had grown through that relationship ultimately to become the head of the world bank and the head of chase. a lot of individuals that move between politics and global monetary systems and banks and
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society, all titan somehow to david rockefeller. >> she tells that story in her book called, "all the president's bankers". nomi prins in our last minute, let's bring these pieces together from the last two hours. what interview is the solution to this hundred plus years of banking regulation law and the government? >> it's a couple pieces .1 is we do have to reinstate - - we do have to separate not just our banking system but globally. from the money that's put in people's deposits and through their loans and the credit they require for themselves and small businesses or what have you. because without doing that, and it's important to make that split. we will have a situation where
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the federal reserve and other central banks will have no choice in their policies but to continue to subsidize the very risk. so these institutions placed upon society while they are saying everything is okay. they always will say everything is okay, particularly if they're not the ones holding the bag on the other side. i think that's one major thing that needs to be done. from that, everything aligns.>> this, we will the air right now. o'connor."


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