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tv   In Depth Nomi Prins  CSPAN  April 18, 2019 8:00pm-10:03pm EDT

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♪ ♪ starting now, booktv on c-span2. ... >> host: nomi prins in your book you describe the relationship between banks and presidents as codependent. what do you mean. >> guest: what i mean is it changes over the decades. all the figures cover from
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1890s until the obama administration but what it means is that in times of war there's a certain relationship for the government turns to bankers to help finance and in times of peace the bakers acquire the presidents help them think more widely and with fewer rules. depending on when there's a financial crisis or global warlike situation the relationship changed but the dependency of one group on the other continued either about money or influence but it was prevalent in different ways to the different presidencies we've had throughout our history and history i cover specifically since teddy roosevelt administration through today. >> host: is there reason a pick that starting point? >> yes. first of all it was only so much time i had in life to do couple of centuries versus one but what happened was as we there was a crisis or crash black to state
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1929 and that's not what i start the book but when i research that crash a couple of the bankers that were was connected to the crash concerned including thinkers from the morgan bank which we now know is j.p. morgan chase if you trace them back to j.p. morgan he was one of the leading figures in the country from 1890. through line of individual family and banks that cast back to that time but also that was a time under teddy roosevelt and menstruation where there was recession going on so times where the country did well for a couple years and then proceed for a couple years economically to the point where in the mid- 1890s government talks about dependency and to call upon j.p. morgan to help them finance the budget so that was what happened and a gift that jp morgan gave and in return required influence over his years after that's how
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it started and then in 1907 that midpoint was when there was a huge panic in new york and it required a lot of banks to close as ultimately happened in 2008 almost 100 years later and at that point in time teddy roosevelt ministration turn to j.p. morgan again as they had in 1890s and said what can i do to help you help me basically? what happened was the treasured apartment fashion $25 first bailout of the banks that the government paid for and said to j.p. morgan hears $25 million figure it out. j.p. morgan gathered in his library major bankers at the time and what he decided to do is press lot money to some of them they were friends and had shares with them and they hung out and family get-together et cetera and banks failed at the time but that is the situation where he became known because he let his bank survive and saved
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this panic as the king of thinking. new york times call for that as well. the history goes back to that. between 1890s and 1920s because around the morgan bank there were influential for money and also for what happens politically and how the treasury department and presidency ultimately survived their panic at the time. >> host: but pr was known for being the trust buster for not liking big business or railing against it at least publicly. >> guest: yes, and he was known and known as a trust buster but what he busted was nonbanks. at the time standard oil which was major oil company under the rockefeller family and other companies of the nature he did bust up some of their more powerful elements to try to make them more competitive environment and did not do that and known is that another industry as well but he stayed away from banks and if you look at the history of white he did that it expected that 1907 panic
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and needed j.p. morgan to help him basically not have a larger panic throughout the united states and to keep money flowing throughout the entire country but not having runs on the banks. that element of the seating was something that he required and therefore as a gentlemen's agreement stayed off of busting up the larger institutions which, as a result is why we have j.p. morgan chase today. the fact that he did not. some of the banks back then is one of the reasons why our larger banks in this country today have been able to accumulate that size and footprint in the way they have. >> host: too big to fail is not a new concept. >> guest: no, it deafly is not paid in our more recent past for it to fail or banks that became big over this major period of the past century and then
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required help from the government and the government provided that help as did the federal reserve it at the time they were helping themselves getting some money from the government to help themselves but it was a bit more limited. >> host: before we leave this. there's a character in your book that we that we have not heard of today james stillman he had a influential wall role. >> guest: one of the leaders of national city bank which now we know is citigroup. going back in time family was a very upscale family in new york city and there was also one of the bankers that after this period of time and friends with the morgans and support he was one of the main people the decided it would be necessary for there to be central-bank in the united states like we have
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now the federal reserve that would say banks in a situation where the government could not step in and help those banks so when there was an unstable. like the panic other than j.p. morgan counting on the treasury department which he had furnished money to in decades before that there would be other central entity that would do that. those behind the scenes and started to work with congress to create what became the federal reserve bank but it was not noted for that in history. >> jekyll island, 1913, is that a noble effort? >> guest: jekyll island started 1910 and basically was the country club for all that rich people in the united states at the time. they effectively -- is the time to research down there and now it's a resort hotel off the coast of georgia but at the time
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all these major families, morgans, rockefellers would have condos there but were not any condos but just really nice and service service come down with them and did it to the waterways and rest of the people and they were going down to things giving in christmas and hang out. of particular things giving around 1910, a very small number of them were before the families came in for the holidays to inc. what became the documents that ultimately turned into the federal reserve act in 1930 which graded the federal reserve it at the time it was clandestine and almost did not happen. i talk about it in the president's bank and one of my favorite stories. nelson eldridge who was head of the finance committee, senator, at the time. >> host: republican, rhode island. >> guest: that's right. he had a bit of prestige and wealth himself and on the
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finance committee of the banking committee and he had a son winthrop aldridge working in new york as a banker and went to visit him and talk to j.p. morgan and about a central-bank and decided where they could have this meeting. he was going to meet in york but he got hit by a trolley car and so he got laid off and had to convalesce and rather than having people know what was going on it was decided by j.p. morgan that aldrich had a bunch of other people go to jekyll island, uses membership and convene and decide what to do. ultimately, that's what happened. they really happen because nelson eldridge was in the wrong place at the wrong time relative to a trolley car. they made it jekyll island and these ideas for central-bank based on travels and what was required with a thought would go through with the mission
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american public if it was voted in ultimately a bunch of bankers including james feldman who took those documents back to congress. they basically brought the men to the senate and ultimately it was not passed in 1910 under what was the republican presidency but passed under woodrow wilson and the democrat who came in after that presidency to take over and it was basically full of the said yes there be a federal reserve to help them when they needed it but to provide credit for the country so the idea was that there was ever to be a panic again like the farmers in the country. find the banks cannot get money from your and provide them to that season or hardship. that was how it was sold. in reality, it was created together with nelson eldridge and some senators and bankers to provide them an out if there were to be an emergency.
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>> host: based on the european model? >> guest: to an extent. with a sort of because our country is bigger the bank of england model for bank of france model of the time which is out for the european central bank is the idea we have 12 different entities which were part of the federal reserve system. that goes back to the farmers into the idea that we have 12 separate entities which in washington we have the main one federal reserve and new york fed in san francisco and support they would cover the local banks in that area in terms of making sure they had credit when they needed it, regulating them when they have to make sure other banks use the big banks to help workers and farmers and other businesses country would have access to credit and access to money. our system has more banks in it to spread out through the country politically and geographically we are bigger and have different cities that have more banks in them for work
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purposes locally and now their more national but at the time that was the idea. >> host: where their protests against it in 1913 and today there still an undercurrent of protest against the fed? >> guest: there are more protests in 1911 in 1912 and basically more protests under the president before wilson and there were during him and with him it was much more yes there were off ads and concerns that a bait could be to controlled by wall street banks but what he did is decide to use wording and he was worried about having federal reserve after the fact but he decided to use wording and to work with politicians throughout the country particularly in the middle part of the country in those regions to provide the narrative to the rest of the country that the money would be good to everyone. the idea is to not focus on the big poster banks and the
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powerful families that ran those banks of the time for the idea was it would be a way to smooth out money for the country and in that respect he got around any protest which were limited by the type he was in office and got around criticisms because he got finance from a number of senators and representatives to the country that ultimately the system by being a system of banks who work for everyone. >> nomi prins will return to the central banks when we get to collusion and you must read the book but i want to read two things. first of all, from all the presidents fingers quote the political and financial alliances between thinkers and presidents in 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 financial sectors wheels in washington can't be underestimated.
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>> guest: that is true. other people's money i wrote in the wake of the enron scandal and worldcom's control which effectively in the energy until the litigation sector after deregulation in the sectors but they happened because those institutions and ron were working with the major banks of the country and derivative structures hiding money off their books and so forth so the scandal situation happened in recession happened and everybody knew about it but the bad banks got off relatively free from that none of their ceos went to jail and this was 2001, 2002 turn when i wrote after which i wrote other people's money but their influence was high in washington because they basically said that, this is on enron and this is dated things wrong. we might have paperwork and helped with banking here and there the reality is those institutions and enron could not have become the major derivative that it came instead of the
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energy company it said it was an worldcom cannot become a massive organization with so much stuff hidden offshore and from their book from the public if banks had not helped create the facilities and credit lines and merge companies together and basically do all that. with respect to the influence in washington all of that comes to bear. all the bakers of the time throughout our history have been able to money or through having the ear of presidents being on committees and major advisors they've been able to look it was enough, you need us and summarizing but work it into that. in terms of all the presidents bakers the same thing. i wrote ten years after i wrote other people's money but in that book i go through specifically
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the kinds of relationships and influence bakers at washington and today we think mostly of the donations. and that lobbying which is immense compared to other sectors although that right now the tech sector is giving banks a run for their money but historically the influence of sitting down with the president obama or president trump or whomever or a major bakers like j.p. morgan chase ceo does have a lot of clout. the media has clout so they can influence washington business media in the narrative of what banks do and why they are need needed. even if they do criminal things and why they need to be maintained in their current fo form. >> host: nomi prins you come from that side of the equation as well, don't you. >> guest: yeah, when enron was happy i was at that time managing director of goldman sachs and working and had a team that created what were called credit derivatives which were effectively that's another companies or any loans whether
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attached to mortgages or anything else would default. basically that's what a credit derivative is. i bet you that you'll be able to pay off your loan or not pay off your loan or your company you are able to pay off the debt you borrowed in the public market from banks or not. then i bet on that and offset that bet with someone off who is willing to take the other side. or with insurance companies that ensure this that or this insurance and taking out on the other side to make this bad. they were much more convoluted than that ultimately as we found out in the subprime mortgage crisis and aftermath in the financial crisis. i created at goldman and concerns from iran and analytics department for seven years during the '90s for bear stearns that the creations that could enable these credit derivatives are to be used for investors, companies, and large quantities mix and match
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together so all the analytics for that very much involved during my career on wall street. when i left i wrote this in other people's money for the end of that book i said that and i wrote that credit derivatives and ceos which to get technical on a sunday i'll go on. credit collateralized obligation means i put a bunch of stuff together and that against that also. in layman's terms. they were something i said we should watch because they'll be at the crux of the next financial crisis. that is partly because i saw where they were going and soft the junk being put inside and still is and then they were mall in a small part of the market and very much in fashion because they make so much money for banks like goldman sachs and bear stearns and ultimately they became the crux of a financial close in new york later.
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>> host: for you good at your job? >> guest: yes, i was a quantitative analyst from my career in the street and started as a programmer at the chase manhattan bank in the 80s from having got a degree in math and basically trying to get a job and work in your city and the banks were hiring so for the beginning of derivatives and looking at aggregating different types of financial security looking at them map and programming i did that stuff from very initial level in the 80s to when i ultimately left in 2002. what i also did and one reason i left was wall street it was important when i was creating analytics or directing my team as i know them in the different places i worked to analyze the
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downside and to make sure that the salesperson was selling a product for which we were doing analytics they were also explaining what the risks were in that product? and what begin happening was as things got more voracious and competitive and more money and more esoteric products this idea of talking to clients about risks for funding risk analytics within the company just like the budget in washington money goes for this that happens in banks as well and it wasn't considered a priority but down considered and i had more and more of a problem just morally on that because it just it is one thing to create something and risk attached to it and if someone understands the risk to be involved but if the risk is ultimately on the public but cannot be explained properly then that is a bigger problem
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and that is where i started to divide out from wall street and ultimately become a journalist and author. >> host: you write about 911 and the impact that had on the. >> guest: that was the breaking point for us in your is working at goldman sachs at the time very close to where the towers had been in fact, that morning i had the corner office on a high floor at goldman sachs and the actual playing went by my office. when the first plane went nobody really noticed that were on the news noticed that and it just happened but we were in the flightpath but then once the kickers and debris and smoke started accumulating quickly upwards and started to be covered on the news and the second plane came by that plane we noticed came close. at the time that moment of
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impact on the bus new it was a terrorist attack but what we did happen was everything got chaotic quickly. internally we were supposed to go to an off-site to talk about credit derivatives and teams were being flown in from around the world the night before we were supposed to go off and do a jekyll island with the same thing happens all the time and thinking and be somewhere else but obviously we cannot in my clarity moment was when one of the people from the major person in the department said they be we be now we can beat the traffic out of manhattan. dude, there is no, something really big happened and it's not about that right now. but then ultimately those next few days and spent time thinking about where i was at and where my life was and i wanted to
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volunteer to help at the armory instead of going into work at goldman a few days "after words" to try to match items with people as they were coming in and help volunteer to do that where we were supposed to be at work and there was these moments of priorities. yes, that was a big pivot point and i wound up designing resigning a few months after that mac the one from it takes a pillage, nomi prins right unless you've been embraced into the bosom of goldman sachs even for a brief state of time it is hard to fully grasp its culture of excellence and it's like harvard, new york times, senate in 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 thank you are better than everyone else. >> guest: i wrote that. yeah. first of all, when i was interviewed for goldman as
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people where it's a long process and i was working and bear stearns in london at the time and sought out by goldman to come to new york and get to credit related products for them and to this nine-month interview process there were partners in the net when they were in london and i was out in new york and it's a rigorous getting through this totem pole up through the senior levels of the company and all along the way there is this idea not that we do not know: how this aura in the industry of being the manna of the banking and how this just presented itself. the idea of the interview process manifested that like if you get through this hurdle and this hurdle it's almost like this makes if we like you more this makes you better and it's a weird cultural indoctrination
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from the beginning and once you get through that i remember i was standing on the trading floor from one of the later interviews and i was being interviewed by lori who became the ceo of goldman sachs and walked me out after we were chatting to the trading floor and did one of these and he says this is not bear stearns did in other words, we are just so much better than bear stearns which is where i'm that and this is woman. it was that kind of aura and moment of presentation of who we are and the idea of that culture of excellence and that's there's a book about written about not too long after i was there about goldman's culture of excellence and its something discussed internally and they consider it that's the word they use. it's considered a culture of excellence and if you are like them moving up the sort of
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letter then you are called a culture carrier and it's a thing. at least when i was there. this idea of being one of us and then doing your job but then your job is about being one of us is very self enforcing and that is what i mean by that that there is a very strong sense that we are great if you're here but only if you behave like us if you don't then you do not belong. >> host: what do they do? [laughter] >> guest: well, any of the working investment banks do a few major things. they put banks together and put companies together and they are investment banking advisors so they find acquirers of companies and companies that want to be acquired and work out the details.
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in the working of the details a couple things fall out. one thing that falls out is fees and another thing that falls out of that deal are the ability to potentially issue bonds on behalf of that new company or on one of the companies involved so they raise money to either go on to the next part of the business for by each other. they can issue shares or new shares of stock to do that and ultimately once companies are merged together or already exist without having to merge but are just corporate clients they work on issuing stocks and trade the stocks or issuing bonds and trade those bonds and they can effectively create a financial powers for their clients that they take cuts of all along rate either through the initial creation of bonds or stocks or through treating it in the secondary market along the way.
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they can be on both sides of the initial entry of something new to trading something that's already in existence. >> in your newest book collusion you write that much of the 20th century belong to wall street but the 21st century now belongs to the central bank. >> right. along the way of the 20th century as we talked about the influence through wars and crises and economic policy and was a symbiotic conversation or relationship that occurred between administrations, presidencies and the major banks. j.p. morgan chase, citigroup, bank of america, goldman sachs, morgan stanley and so forth. as we go into this century, not
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so much the beginning of it but the last decade and moving forward until banks stepped in to act as the financers for everything the banks were doing so when the crisis happened in 2008 the fed did this major permit in the federal reserve, mean that the bank did up at it and said well, thanks don't trust each other right now and created a crisis. number two, they don't trust each other even let alone feel compelled to give money to the small businesses or individuals at the rates we will ultimately give them which is zero. into the crisis we will come in and help them and create advocate money electronically in order to provide them with credit because we can but what happened was they did not just do it a little bit but took a situation, federal reserve in connection with the treasured apartment the major banks of the time and took him being that was considered to be an emergency
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what was going on in the fall of 2008 when there were basically a complete crisis of confidence in the banking system inside it and extremely related to it and they said we will come tons and tons of money into the system to make a right into it as an emergency basis first in the banks loans and give them low rates so they can basically get money from us and nothing and we will 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 major influence financially relative to washington to the fed having it was because the blood had the money and all of a sudden it was not just the banks that had the money and raise money and credit markets historically or in public markets plus so much a people's deposits in which they could do more financial
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activities with but there is an extra body and it had been there all the time and created ultimately over 100 years before that the provide banks help when they needed it but when it's overdrive and was not just the federal reserve but they talk about it in collusion and it was european central bank and the bank of japan and on to that people's bank of china and the major banks that the world decided to electronically advocate money to put into their systems and then they are still going. this thing that was an emergency and considered to be an emergency back in 2008 has become policy. it's become monetary policy and even though people don't think of it it's our economic policy and there's this body that can create funds when necessary and
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has no legal cap to how much they can create. there is a cap in terms of how much conversation they might have about what they've created but for public opinion may be about political opinion may be but there is no legal cap to what any of these central banks can create electronically in the guise of helping the financial system or in the guise of helping the general economy and that is why they have so much more power than they had before because they now know this and in different ways over the last year's decade plus since the financial crisis that is what they operate and whoever is putting the federal reserve or european central banks and institutions themselves are now proceeding even their ability and what they may want to do by virtual power of being to create so much money when they want to. >> host: here is the warning from collusion. the fed and its allies have graded a shaky monetary system that will collapse without their
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manipulation central bankers with 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 is happened and we can see this with since i wrote the book recently our fed reserve had an about-face in its policy. just going back quickly to what central banks do one of the things they do is create a level for interest rates and by virtue of that interest rate that is what banks receive and that the interest banks have to pay to receive that money. when the fed but rates down at 0% in the end of 2008 and kept on their december 2015 they were basically saying one of our
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tools is to be able to make sure the cost of money over the month. is negligible to banks and from 2015 to the end of 2018 incrementally they raised the cost of that money and raised interest rates by a quarter of 1% in 2015 and then waited one more year because the markets did not like that for 2016 was all about turbulence in the beginning after the fed raised their rates after seven years of being at zero by quarter of a 1%, financing, smallest margin it could raise rates and then they stopped for one year. they did not raise rates again until 2016 by another 25 points in the needed more in 2017 and always with an eye of the mother the financial system and the markets themselves would be okay with that and what is them being okay with that connector means not having cratering downturns in the market and this year on
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january 3 after there was a fourth rate hike last year which was december 2018 the markets open really upset. banks were upset and as it turns out they were meetings with senior bankers in the fed at the end of december as well going into what became an about-face. about-face was the us-led thing we are going to hold back but first it was language different central-bank leaders from the different parts of the 12 banks, federal reserve system, popping up saying maybe the economy is too slow and maybe we should not tighten too much and things started being said and then couple weeks ago main policy came out that we're not raising rates at all this year at all and maybe not even until 2020. the reason for that is considered to be the economy is
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slowing. if you raise rates or increase the cost of money too much you choke off the ability of that economy to get its funds. reality is many times during his tenure. the economy is doing worse and they keep rates low. different now is that the markets have gone upset again and so it was a negative that since then we've seen a massive rally in the stock market because of the fed's about-face. it was not just the fed about-face but also to banks on the world worried that the fed did about-face they would have to tighten money and make money more expensive and stop buying assets in the market to keep the level of finance up and the cost of money down and then they were like we will breathe a sigh of relief because the feds will not do it that we don't have to worry and that is what some of the markets have rallied as well. there is this location between economies and market and the fed were truly getting back to what i said were truly to say we will
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normalize rates and going to reduce the size of our books in the amount of money we put into our market and basically all the assets we bought for the money to take the money back there would be absolute financial crisis throughout the entire making system and all these major countries and the stock market. that is not some crazy statement that does not come from the actual data that's looking upon what happens when money gets too tight, too quickly in the immediate reaction of the stock market which is a place where money moves quickly in and out so the reactions they are are very indicative of the reactions happening throughout corporations and banks the world as well. >> if you don't understand exactly what nomi prins is talking about and need a refresher that i think about your books is you put in glossaries and cast of characters that you call which is important and good afternoon,
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this is book tv monthly index program and our guest this month is author and financial journalist nomi prins, first book came out in 2004 after she left goldman sachs called other people's money, corporate mugging of america. the next book came out zero six how conservatives are picking your pocket whether you voted for them or not and the trial came out in 2008 but written by somebody named -- who was that can expect. >> guest: that was my alter ego. that book was a thriller, financial thriller because what i decided to do when i left goldman initially was to do a john grisham with respect. [laughter] but basically write about my industry from the same point of something that was palatable and
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that book i wrote as i was leaving goldman came out later and took another name because i had done that in case it was too close to home and one of things about the book now that we recall is i talk about the character who was the head of the company that was equivalent to goldman and i think i called it silverman and barry loosely failed and how that character openly became vice president of the united states and in fact based on colson who became the treasury secretary later but it was not far off from that so i basically was using the name for that purpose. >> it takes a pillage, 2009, epic tale of power, deceit and untold trillions about to say another novel came out in 2011 and her two most recent books all the presidents fingers, hidden alliances the drive american power, 2014 and her most recent collision of central
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bankers rigged the world. this is your chance to talk with nomi prins and here are the numbers for 202748 ###-820 ###-8200 202748820001 for mac. >> if you cannot if you want to make a comment go cycle through our social media sites as well. twitter, facebook, and e-mail. all available to you and we monitor those as well. nomi prins now that we have this 100 year history or 100 plus year history that we have written about has there been a cost to the taxpayer human. >> guest: there has been also the voter. we talk about a new banker that can influence policy and ultimately for example in the
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cases of j.p. morgan chase jamie diamond is someone who is on the new york bedboard class a director at the new york bedboard. >> host: head of goldman sachs today connect. >> guest: no, head of j.p. morgan and a director at the new york red with the wall street located fed of the 12 member reserve system but also one of the people along with hank paulson for the time treasury secretary who had when i came in to goldman ceo had to embroider a lot of relationships ultimately came in but new york fed president at the time and came to treasury secretary under obama at the turn of the year after that crisis to have individuals who effectively have the ability to direct policy and money coming out of washington to their own institutions but the public institutions and the
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trade on stock exchanges and monitor federal reserve because of the job is to be the regulatory answer oversight body to these banks and their monitored and yet there individuals have such a tight relationship with the central political powers of the country that they are able to get money effectively to themselves when they need it in far greater figures than individuals are able to galvanize to do that and as a result money goes from taxpayers to edit them and not just when there's a crisis but even from the standpoint of a legal act called the glass-steagall act repealed in 1989 and had been in place since 1933 specifically to protect the taxpaying public and voters from any world esoteric products
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respect relation the banks -- banks could choose to bet on all sources but if they lost those bad it was on them or on their shoulder and however they were structured to repay it and not on the government or people. that is repealed after 1999 so you have this merging of peoples deposits and people's mortgages and institutions that could do stuff with that and do badly with it and then come to the government for help. the fact that they had these deposits that they could say we have them in atm machines will number of people will not get their money back in the places and it meant a different way of taking money from deposit or taxpayers because they influenced the policy that allow them to have the deposit. on multiple levels they are extracting by their influence and when their businesses from taxpayers into their own pocket.
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>> host: jim walsh tweets into you and could you explain how someone so brilliant and economically astute, you, as an economic system that always fails at tremendous human and economic costs or divulge into a dictatorship? she supports progressivism socialism is are you a socialist? >> guest: i.c.e. the port certain socialist policies because if we think about how economics divide the need to society and another words the money that comes from society helps society and they were used to appropriate response i think about things how extensive healthcare is for people in this country and how extensive it is for student to go to university
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and to come out with 50, 60, 70000 dollars worth of debt so they can't ultimately be the kind of participant in their economy that they could've been without so much that fit when i went to school i started out in public schools and went to community college and ultimately went to state college and went to private nyu for my education but i paid for all of it along the way and i could pay for in a long wait because what i was earning by working was enough to allow me and rents on tiny places of the time. that is an impossibility so when i look at the economy as a whole and think do we think it's better for an economy to be more level for people and for more people in order for them to contribute foundational through most parts of the economy in an easier way i think about how we also have firefighters post
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offices and police officers and a whole host of elements of our society that are meant to help more a society than just shareholders or banking institutions. i look at it as a standpoint of healthy society healthy economically and educationally and physically and they are protected, defense is another level of our society which has a lot of money that goes into it and supposedly to protect everyone protect the country and all those things to me for social good. what i support from the economic standpoint and financially is for actors within that not to risk the countries financial health and be mailed out to the extent they were by the country and by taxpayers or help to the extent that they been by the federal reserve. i look at it economy as being
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holistic in that respect. >> host: in today's current political environment is capitalism at a tipping point? >> guest: in general were a capitalist nation and we do strive as a nation to do business activities that create profits and those profits go in different ways either to the people involved in creating them or society for tax or people's features. i don't think that is going away but i do think that using wall street as an example in the financial crisis and the fact that our federal reserve still has $4 trillion on her books after what is not an emergency situation we should think anymore since it happened in 2008 and still subsidizing wall street and subsidizing larger banks and those are tremendous sums of money. i think that healthy capitalism
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has to recognize that putting too much money in one place for that one place will cost the general financial system or the general economy is not necessarily the decision. and so it needs to be more regulated and we have rules in place that do that that we are ignored and into the collapse that we are still reeling from in terms of these policies. i think those need to be reinvigorated and we need to protect anyone. >> host: before we go to golf, finally, the fed is in your view the fed type bank necessary is question number one and then i follow up with question number two. >> guest: i think what the fed does in terms of providing subsidy to so many banks is not necessary.
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i think the fact that the fed can raise or lower interest rates at monetary policy elements something that could 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 is structured in the fed ultimately does provide credit and does take meetings with the heads of wall street because they are the primary shoulders of the feds and historic shareholders in the fed and created the fed so wherever the fed is today there is a major flaw in how it was created and how it exists which is that it exists ultimately to benefit its members and says it exists to member to help greater economy and greater public but the reality is if you look at the actions they are visceral when there's a situation where wall street large institution is in trouble.
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or there's a necessity to help goldman or j.p. morgan chase or help someone who has an institution that is part of history in the fabric of how the fed was created and benefited from how the fed is graded and continues to benefit from this implicit subsidy and not just the fed but all that central banks provide to the largest banks in their respective country. i think that's a flock. >> host: are the us and china central banks in your view colluding? >> guest: okay. so, this is a interesting question because the major collusion i talk about in the book had to do with predominantly g7 countries and what was interesting after the financial crisis was that the method they were using and the timing of quantitative and reducing rates and a putting money to swap between them to make sure the currencies were moving back and forth between
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the central banks into the banks of the major banks in their respective countries because they work with each other across borders and all of that happened with phone calls documents that happened in the book between major countries where china comes in is that they actually critical of the process in the beginning. one of the major reasonably china became such a tremendous economic superpower in the decade since the financial crisis is that initially they were public about being if you create too much money to quickly and subsidize the system that system can sustain itself. however, in recent years people's bank of china has also been creating their own quantitative and the difference between what happens in china and what happens with the fed so they're not so much colluding but acting in opposition to in a world where money is cheap in one place and we have an international capital by system it will be cheap somewhere else
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people's bank of china come in with their own methods but what they do is inject them directly into growth strategies throughout the country so they will direct the money to create into infra structure building and into companies that create higher-speed railroads or companies of finance which we do not. they have a different twist so it's not so much collusion but more the antithesis but the result is greedy money and it's directed in different ways in the us and in china right now. >> host: nomi prins is our guest. cc is in portland, oregon. go ahead, cece. >> caller: hello. i have a comment in question. the comment is within the context of the person who makes $50000 a year and has a 401k this whole what you've been describing to me sounds like
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there is no freehand as adam smith and the freehand was a fair but this is gaveling that the stock market and wall street is the bookmaker like in vegas and they are playing around with our money. they are gaveling. i see it as gaveling. i know there is no way for us it seems to make money or to advance $50000 year 401k without having it in there but essentially the rules are regular working public, 50000 year put your money into the stock market and that the people who are managing the stock market, wealthy people, they don't leave your money in the stock market but move it in and out constantly with all these reports and tell the person with the 401k making 50000 year to leave them in there because that
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is the money in my mind that they are playing around with. >> host: cece we will get a response to that. are you invested in these markets by a retirement account or any other method? >> guest: i am. what i want to know is tell me why this isn't gambling? and how it is that the person making $50000 a year is supposed to trust the system and finally, is there such thing as the hand of the market. >> host: thank you ma'am. >> guest: yeah, excellent questions. for a number of reasons. i think your question gets to the core of so many millions of people in this country because the reality is only about 10% of the country owns 90% of the stocks in the us stock market. even someone like you who has
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investment through your 401k plan and the stock market the reality is that it is the people that are wealthier and have accumulated more stock that ultimately get the benefits of the stock market going up insignificant more ways than when they are in it then you would see. the reason it is gambling is because and i would say it is rigged gambling in weight because these institutions whether their hedge funds or brokers and you should check this on your 401k plan. those who make money for moving what is in your 401k around so some 401k plans are actively managed means brokers are moving them around and get trading unnecessarily for performance and it comes out of your retirement and out of the warm sun left at the end of the day that is something to look at for those institutions that do that in those institutions that manage money and the fact there's this relationship between wall street institutions
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that get has access to cheaper rates and access to federal reserve policy and influence the policy means they're trying to influence the stock market so from their perspective their betting on stock market and i'm using the term bedding as he used the term gambling and they have a sense for whether it will go up or down more so than you might for a number of reasons. they have volume so they can see how much volume is going in or out and they might also have the ability when things go down too much to go to the federal reserve and they look, there's problems going on for look at our books have credit issues going forward and ease money a little bit and the money goes back into the stock market. it rises so quickly in that matter is because it's easy to keep money and easy for money to come out which makes it a very good payment or betting. not to say companies that don't have real value in that are producing things and aren't hiring people
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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 wan >> caller: i wanted to talk to you about an ideaa and a set of ideas recently and if you were to construct global wealth tax where the 0.1% of the wealthy, large corporations and the large donations had to pay 7% a year if they do not pay with bank loans and they only pay 3% a year if they do pay with bank loans to save they would pay with bank loans and the banks would get two sets of fees.
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first-aid charge fees to the wealthy for providing the loans and then a second set of fees that the banks would package the loans into wealth tax, collateralized loan obligation bonds and the bond buyers would pay a fee for the packaging. the banks and the tax if you constructed it that way the banks could make 200 billio 200 billion-$600 billion a year for the $10 trillion a year plus and while tax money and since we were talking earlier about how the powerful bank lobbyist and since this would be a profitable event in the history of the banking industry the bank lobby would be the most ferocious for the global wealth tax. >> host: scott, do you work in the financial industry?
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>> caller: yeah, i'm a retired j.p. morgan baker and has fun banker and i'm an alumnus from columbia universityol and a mathematics. >> host: what made you come up with this formula? what was the impetus??la >> caller: i've been thinking about this a long time. i lived with this woman for 11 years and graduated second in class from columbia and then she works at a big law firm and there was one of her clients with years and years without paying his taxes and sheet -- he's a billionaire guy and she arranged $100 million loan for him to pay his taxes. of course, i look at twitter all the time and see these right-wing guys saying you can't have a wealth tax because all these rich guys will have to liquidate all their assets. i would always respond that look, if you think the guy worth $2 billion can't get a bank loan at low interest to pay his wealth tax then you just don't
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know or have no concept of reality. >> host: we have to leave it there. scott, 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 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 the less you will feel the tax that's true and if it were created in such a way that it was connected to banks being able to manufacture or to
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securitize as you mentioned to aggregate loans they would go to institutions or individuals they get paid. the wealth tax would be an attractive way to make money out of it. i agree with that. on the other hand, if we have a wealth tax, we should look at it as more of a speculation tax in that it should be related disorders accumulated wealth and yes, that is hard to find a way to purely get to from a sort of forensic accounting perspective to thbut the idea is if we are actually passing state transactions or speculative transactions or buying a piece or selling a piece on a certain higher-level that would be a way to take some of that money back into the system and then use it for other things that might be
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beneficial. >> host: asheville north carolina, good afternoon. >> caller: good afternoon. thank you for taking my call. i have a question for your guests about a relatively simple questions about the rating agencies like. when the bottom fell out of the tub in 2008, all of these wall street mouth breathers were taking them to places like moodies. any fool knows that there's almost only for commercial paper that's going to qualify as the. did any of the people inin these rating agencies that stamped all
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of the aaa or any of them ever jailed or prosecuted? >> host: before we get an answer, were you affected by the 2008 crisis? >> guest: not at all. i was lucky. >> guest: thanks for that question, and it's good that you weren't. first of all, the way the rating agencies work as you mentioned they get paid based on what they are rating and the information they get goes into the security rating that has to come from the institution that once the securities rated. they should also have independent sources, and in some cases they do, but the payment been that a has bank that want once a security d goes to movies and so forth and they stand there and get paid by the bank for that relationship
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and stamping and it goes into the market, and that was definitely one of the main problems that the financial crisis, because not only did they have bad loans coming in already come and because we are talking about this i just want to say the smallest details of things throughout my career he had information coming all the time and know immediately if it it isgoing to pay or if in default they know exactly what to pick. what happened and what is still happening in creating these collateralized securities are the loans. at the time of the mortgage loans to banks were taking enough to add it to the good loans to get the good rating on the entire package, but to give them enoughe money because of d loans generally are paying a higher interest before they go bad in the good loan and the gos
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why there are subprime and they are harder so they are getting juice out of that process and shoving it to the rating agency. institutions that are supposed to provide aaa rated securities are like cool we are going to to buy this and it's going to get more return than another treasurthen anothertreasury bona rated and we will buy as much as we can. what else happened that made it worse is they would borrow money from the same banks creating these subsidies in order to rally them. so now these institutions that could only buy aaa are buying something labeled aaa that really isn't and they are also borrowing money because they have a aaa against what they just thought which they also have to pay back. they multiply that a number of times and every time you lose $100 on blackjack thumbnails lindsay $10 $100 that's what i e
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$100 to play but ultimately you have to go back to repay everybody. that is still the situation today accepts the agencies now tend to be rating securities that have corporate loans as opposed to more of the mortgage loans or individual borrowers, so it's now happened in the years since the financial crisis and because the money was so low and companies for all tomorrow or leverage them so much if any of them go bust it will create a default. if they are packaged somewhere else and rated high and then they default, then the package is going to decrease in value very quickly again. so we are kind of in that situation again with rating agent that t but to your point,y went to jail in the institutions and the billions of dollars they paid in fines.
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and they were sent to jail but not any of the people running the banking institutions involved in this process. >> host: steve in anchorage alaska i appreciate the opportunity to hear good today i'd like to go back to the point you made about the relationship between the social goods that provide the benefits the society intand the relationship of these economic systems. it should be fundamentally positioned toa provide the services. in that context i'm wondering about the social order in which it is by law a judicial decision the obligation, the judiciary obligation of corporations to make profit for their shareholders and fundamentally
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remake that particular proposition. and let me lead you back to a second related proposition which is if you are familiar with the governance you may recognize jerry rawlings, the leader of the force who carried off the queue after watching years and years of the elite and corporate production deflecting money away from the basic social goods for theas society. after power he passed the law entitled economic sabotage and with those walls, he indicted and found guiltyun those previos owners. why should we not have economic sabotage laws associated with the matter in which our economic institutions function? >> guest: we are going to leave it there. going back to what i was saying
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before, and i don't know all the innins and outs of what happene. but from what you were saying in from your question, again the institutions that were involved in the financial crisis to look at the example of the fraud to which some of them admitted or settled to the tune of multi-billions of dollars and for which it still continues. you look at a bank like wells fargo after the financial crisis and after paying tens of billions of dollars with a settlement for various mortgage s relations and other misstatements and fraud they went about creating accounts for the customers and they were ultimately discovered to be fake but in the meantime, these people might just be on the edge of thei their paycheck for thath with 80% of the country is living paycheck to paycheck and it means something to have fees or credit score go against you
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these are all things that we should subsidize in the institutions doing thiss and we should have individuals need to be responsible and if there's jail time for the crimes and they are tried and it's discovered that they were guilty, it should be done because the net result because of the laws that enable them to function as they are currently functioning without having real accountability is ultimately on multiple levels of society because the things they do to the society in affect incrementally so many people in the society and economy. they don't allow these things to
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happen or at least have regulators more attuned to what's going on and after the damage has been done to individuals. >> host: in 2009 it takes a village came out and you appeared on our "after words" program and she was interviewed by this gentleman. >> i remember the budget committee now. now. we have hank paulson a couple of years ago the economy is doing good and year after year it's astounding and aggravating. from that perspective it was doing great explain to me how they could believe the economy was doing great in the middle
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class is collapsing an was colle getting closer and closer. since i was on the show which was the first time i met senator sanders. i served on the federal reserve advisory council which was a bipartisan council. they were subsidizing the banks in a tremendous way in trying to influence them to think about these matters and where they could need going forward and in a better way.y. i've also contributed to recently he had a bailout at the end of last year where to kind
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of relates to this question and the derivatives that have been my expertise particularly when i was back on wall street to ensure banks that have too much of a concentration of too many derivatives on their books are to be at the helm of the next financial crisis and would have to reduce their size and footprint by a certain amount, so that is a very large bank of the city was subsidized in the financial crisis in control for most of the derivatives activity that happens it has to actually reduce their size. so it's a different way of getting at that from the standpoint of legislation introduced it was not passed which isn't surprising because i think members on both sides of the aisle tend to think that okaythe banks say we are now thatt it's true and that is
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the situation that we find ourselvess today. >> host: folks on the hill comment piece comment on the trump administration trying to influence the policy. how much influence is on the fed and is that a good or bad thing by the way monetary policy set by the treasury department would be overtly political. >> guest: it's interesting because going back to the history of the creation of the fed it was created as a marriage between politics and finance. it really was wall street working with the senate finance committee to create an institution that could help them in times of trouble. it wasn't because jpmorgan decided to talk about how to help farmers in iowa. that wasn't how it happened.
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so if you consider that was the initial source of set and it has issues and has done monetary policy for different reasons to combat inflation or price activities going forward, that's one element. even though it was created as an independent body where the members are institutions in washington, so it's very hard to think of it as an independent body. it wasn't created independently. it's supposed to be independent, but from the sheer pragmatics of it, it isn't that set. i think when president trump talked about there shouldn't be rate hike is i think it is list the economy and more the market as i was talking about before, he doesn't want the markets go ledown on his watch any more thn president obama onto the marketh
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go down on his watch. it's just a much more public way of giving his opinion then happened under the obama administration. so, what we have now is very publicly having talked about there shouldn't be any rate hike standard then it turned out the committee of the fed decided not to raise rates for the rest of the year so there is that relationship. is it because ofai trump? i don't know, but i think it's because of his ultimately they are looking at the same thing. they are looking at data, the markets and not on their watch having another financial crisis. so, in that respectan there is sort of where they are right now. trump said they should be cutting the rates right now and immediately asked if economic adviser in a week later president trump did, that's going further sort of in the same process.
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you did this before, you should do this again. and i think even though the economy is slowing, it's not necessarily because of the economy. it's because of the beer way to look at how money is impacting the front-line figures which is how it'sbe impacting stock mark, which i think they both look at. >> host: with your background and philosophy, what do you think when you see president trump criticize the fed chair? >> guest: from the standpoint he took the position just off bubut he's criticized other peoe that he's appointed after he's appointed them if they haven't done what he has wanted them to do. but having worked on the past votes on interest rates in general, i'm told he basically y voted with the rest of the committee he voted with janet
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yelling. co was fairly dovish and in fact he only had a couple of more hikes under his time and janet started undered her time and he would have seen that before criticizing his actual policy. so it's interesting on a personal level you appoint someone that you then criticize ecause they are not doing what you want them to do, and i think that he wants them to do what he wants them to do more quickly as with other entities in washington, butut i also think that it's an alignment that he has looking at market and ultimately they are coming to the same conclusion which is there might be a fed cut by the end of this year. and if it happens, he will say that's because of data and president trump will say that it's because he told them so. as result is going to be the same.
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>> host: lexington mississippi, you are on. thank you for taking my call. i am a primary care physician and my issues are very complicated. who is going to safeguard a. there is no way they can take care and then it takes months to
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gather and if something happens they barely get something where they can make the choice between paying for the medicine for their own food and all the celeb topic people and government agencies by this and someone come and visit here. i am an outsider looking at an insider and this is a great country because o of the scholastic fairness. people understand this is a freh party, no it's not a free party and then i was given an education in america. >> host: we are going to leave it there. i apologize. >> guest: what you are talking about is again something that unfortunately is not just the
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underbelly of america which is great asly a country on the who, but it's also prevalent throughout the country. i remember when i was writing my second book after katrina when hurricane katrina happened, i spent time in louisiana and mississippi and of course that was after an actual devastation, but it was apparent having lived on the edge to begin with and compounding that with the natural disaster creates devastation that goes past any of the individuals with their family and people that work with them and companies that rely on people for their own benefit and so forth it's not going to affecaffect what i think you are talking about from the primaryop healthcare perspective. if we don't have a way from an economic did defend the maximum
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amount of wealth we have as a country to support the people and others in need of medical care, then on multiple levels we are hurting ourselves if someone goes into a hospital and they could be the richest person in the world of themselves and have access to the best information there is out there that if they are p being cared for by people who can't afford their own health care would have to choose between food and if there's a situation for themselves, then that is a massive hole in the system. so, i believe that there is 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
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disability program and appropriated in a way that looks more at. >> host: let's make no mistake about this insurance companies are middlemen. their job is to connect the dots that stand between you and your medical treatmentta more often than not it seems like the job is actually to create red tape between you and your wallet why do we put up with them sex >> guest: that book came out in 2006. thisis was before our conversations about whether it is medicare for all, whatever you call it. the reality is insurance companies or private workers and get paid a lot of money in the process of separating people
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from the premiums of raising premiums without the limit of some states with anyone that really just what the market can bear and ultimately what that means is people don't get all of the levels in the countries that rely on them. >> caller: thank you for taking my call. it's fascinating to listen to you and other colors. it's interesting when you look at the history of economics and i think a lot of what you're touching on in the free market standpoint, if of it has been people talking about the effects of money in the economy and the effects of too muchh easy money in the vacant system if you look at the financial crisis in 2008
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it is a good case study when you have too much currency laying around. it seems like some aspects she's in favor of the free market. one of my questions do you think we should tend towards a commodity money and perhap perht back to the gold standard or do you think we should continue on with this currency that we have. we have a quote from the long run. i will leave it there. >> host: that kind of stole my thunder. i was going to close with that. i didn't associate you with frederick hayek.
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>> host: >> guest: what's interesting is money is very complex. i think markets are very complex and what we do with it tends to get labeled under different political fights. from the standpoint of the market quickly i don't think we have free markets. i think it's kind of a theoretical construct by which is what the definition would be full transparency and participation by the actors in the market, and this sort of relates to my theory about the currency were subsidizing the main financial actors in that environment by definition in the market. if you were subsidizing one level of the market that has the most access and voice command influence and control over the market, we sort of get away from the free markets in general just sort of a practicality standpoint in virtue of the monetary system.
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that said, just because you mentioned how society should have more of the economic benefits that are produced by that society does fo have felt t whether it's for me healthcare or stabilities might find that ultimately allows people to be responsive in the economy and that helps the financial standpoint and is more secure for everyone involved. in terms of the gold standard because it is a question that comes up when i was taken off of the gold standard under the nixon administration is that all of ahe sudden banks didn't haveo
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reserve the gold. there was no anchor to the financial system or currency anchor by subsequent definition to other currency outside that were to the dollar's all of a sudden you had the ability to create more money because there was nothing anchoring the money and that was a situation that was pushed primarily by the bank and it was pushed nearly by the bank because they knew that and it was much easier to create money if you didn't have to also connect it to some sort of other standard on the outside of that creation. you could just do more. it was a way of deregulating the monetary system. i don't think from the standpoint ofte pragmatism thate are going back to a gold standard. in fact i have a lot of some of
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the things he said specifically to congress in collusion about the gold standard. he went on a sort of defensive movement against the gold standard of being brought back when no one was asking 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. this isn't the time to be talking about this. with that said, there are central banks that do stockpile more gold and do think not that we are going back to a gold standard but it could be more of a sort of global currency or benchmark that would include pieces of the standard that gives to sort of create dollars and create money and will. >> host: can you explain where they get the initial funding for the balance sheets, does the cos appropriated?
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>> guest: congress appropriates things like how it pays people in? sort of this space and logistic types of things. it's created a corporation and gives shares like a corporation so that the members were the big thing are like shareholder sharn the car privation based on that and the reserves they put onto the balance sheet of the federal reserve is how they ultimately get the money to be able to utilize that. it's also an electronic process now. so it used to be a plus reserv reserves. they would use that as collateral and issue notes on the back of that and now it can be created electronically. there were reports that came out that talked about how the member banks how many shares they own and how much they were putting
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in for them. them. those haven't been available since world war ii, but for the most part it's the larger bang that have more of a percentage and also put in more of the reserves to be able tobl operat. >> host: robert in california go-ahead you are on booktv. >> caller: thank you very much. i implying so hopefully your book will have an audio subscription. anyway, i'm a devil's advocate site here and at the wa the wayi look at california conversely and arguably they say it is the sixth largest economy in the world coming and silicon valley is sixth largest yet we have the highest rate of welfare and poverty than any other state even the southern state and they say silicon valley to the way money out of the country and they won't even invest it in our
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banks. that worries me and i wonder i think you are more liberal i would say i have no problem with that as long as it gets distributed right but it seems. what would you do about that click >> guest: the last three books that i know of and in fact the most recent book that i think it's phenomenal i know that it was done because a lot of the
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names chinese names, japanese names and the woman that actually does the audio spent a lot of time on the language and making sure things are accurate and what could be considered dry and thcomes the story of the cel banks a very entertaining topic i think she did a good job on that. hopefully you will be able to listen to those. frompe the standpoint when we tk about the major banks and influences dave had come it's of ourer a long period history and our evolution as a country and political system. our sort of dominance as a superpower as the major reserve currency and so many other things that have happened whereas a love of the technical companies are new to that aspect although with that said i think last year they overtook what they were pouring in to get what
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they wanted from a legislative or policy perspective for their companies and certainly many of them don't pay any taxes. president trump talked about getting taxes back onshore. president bush talked about getting those taxes back before google was google and facebook was facebook so this has been a problem in general particularly in technology where a lot of the work is done and you are not necessarily building the bridge in front of and building all of the sort of construction aspects to it and everything else. you can actually do these jobs in different places and it's easy to create different countries and not pay taxes. i do think that is a problem. if an individual is basically paying and this is data from the
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last census which we are playing it's a combination of income taxes, social security taxes and so forth into the country but corporations pay as a percentage of revenue and the actual money that goes to the revenue department at them ultimately gets appropriated in the budget process and watching m tennis on money in the last ten years somewhere between seven to 11% of all the money that comes into washington. so on that basis, individuals are paying a lot more as long as there is a lot more so i believe that's wrong.
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>> host: a lot of e-mails and facebook comments along this line as the retirees of investments, how can i best protect myself that is from george and again several comments like that and then a follow-up. this is george in florida. what do you do with your money? >> guest: on the re- tie here beside or even if you are younger but looking at the fact that you wantt to live into door retirement we need to finance that i think there's a couple of things. one is the older you get the more what you have should be secure so i think it's hard now
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because the rates are so low if you have money into savings accounts you are getting a quarter of a% increase on that square for example if you put that retirement money into savingsth part into something le an american express, bank online or aspirations then that money is getting over 2.1 or 2.2% interest. so, right there on a secure basis they just don't pay enough relative to other places i could put that in saving and so that is one example of what i would recommend. in termsms of the four o. one k. plan coming in, there's a couple of things on how it's changing on a regular basis and a lot of people look at their statements when something bad happens oreo
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happens and i think what you might see if you monitor them as you change they make money off of effectively trading your money. and if you're plan has to basically paid for the charge of executing each transaction that they execute against the account. it might not be you individually it could be where the account is, so it's important to have control of the 401 k. and if you have an outside manager have it someone that is a fiduciary 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 it is housed within so therefore it trades with what the bank wants to trade so that is just kind of what happens and
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it loses less in that process. those are two things i look at my money kind of religiously in that respect because one thing i will tell you if you make more on wall street than you do as a journalist. if anyone thinks there's a major difference you are right and it's important for me to preserve what i have and i do that by being very careful about not giving it away first of and money that i know i want to keep withth me in terms of interest d make sure that i'm not paying fees and extra things along the way because those adjustments and without paying the higher rates and getting down to zero or nothing or transferring balances does actually make money especially when you compound that and look at how the money grows over time. getting rid of the cost.
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>> host: she writes banks spend hours determining how to use your relationship with them to take money from you. take years. there is no reason they have to charge people to access their own money and get what happens if you can't maintain a minimum balance, and pay a fee to do direct deposit because you need the cash from your paycheck immediately. pay a fee. next call david from hot springs village arkansas. >> caller: i'm interested in the history of goldman sachs and therefore i read william goldman spoke and the thing that struck me about it is the legendary principal partner was able to get on the dozen of the fortune 500 were the fortune 100 companies and then come back and
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trade on the information he's getting at these board meetings and inn just wonder if you had read that book and what you think of it and my other question is very simple. do you think thomas has nailed it? thank you. >> guest: by a review that back when it came outt so yes it did. it's a very well researched book and i think -- anyway however, yes. one of the things that happened through the initial history of goldman sachs and i talk about this because it is a fascinating set of relationships in particular. even before that sidney weinberg around the time of the crash in nb1929 was at goldman sachs as t wasas participating in other
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things that basically conglomerations of stocks and other securities that might not be doing that while to get people to buy into them, but ultimately they lost all of their value when the market crashed in 1929 as the way that he thought he could get through yois was to become friends with the governor of new york and man named franklin and eleanor roosevelt who ultimately became the president and the country. why did he become president roosevelt? one of thero things he had witha bunch of people in the business community that he aggregated contradicted to his campaign so even though he's considered a traitor to his class every apathy if he followed the money back to thee original campaign coming into office is that sidney weinberg and another fellow for helping him to create
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money. as a result, they appointed a new council which they put at the head sidney weinberg so they have regained in the eyes of fdr in the country in any way by getting his friends that he and tested with two basically supports the incoming president. that'that kind of thing has cond throughout the fine since. and also a vast percentage in congress they own stock in companies that doesn't take a rocket scientist to figure out how they are related to policies that those very people might be promoting. so that still happens.
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>> host: i will put this as a political football question in 2020, can a president get 10% to pay a fair share of tax to reconstruct america's infrastructure? they all laughed in america's face and try to get as much money as they can. under this administration we have kind of gone the opposite way in terms of taxes. there's no particular reason that they would work better on that kind of attack.
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it's more of a proportion tax throughout the entire country so that the wealthie wealthy are pp to a a certain amount a higher percentage into the tax system and beyond that a different percentage perhaps that is a way to bring money into the treasury department which is where the money was taken into the budget process and ultimately it can get appropriated into things teke infrastructure. we have a tremendous infrastructure deficit in the country. everyone is in the process to get elected including president trump talked about paying money into infrastructure. it's a problem that we have, bridges are falling apart and ports that are old and the railwarailways that are slow and hospitals in need of equipment andds better roads. that is a significant problem for the country. and we treating money from
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companies that use more of those benefits because they ultimately depending on what they are running could be utilizing more of the infrastructure they need. we also benefit them as well. back when president eisenhower was president, they had a lotnhf bankers he came up with a plan to build the nation's highways and he raised taxes and have built the highways and presided over a number of economic booms not just for the people at the top of the country but throughout the rest of the country. an anecdote i found looking at the documents in a period in history is that there was a person who was a banker at the
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time who said to the president in a letter if you create a tax system whereby those of us and he was rich people that have less money can keep more of their money and the people that have more money have to pay a little bit more into the system ultimately have a stronger economy. he was a millionaire working one of the major banksks in the country and this was in a letter he wrote to eisenhowerte he indicated a proportional tax system because he believed the better the economy would be to beat kobe and it would risk all of the people at the top of that and that is one of the things inside of a a philosophy for the highway programs. it wasn't the only thing that eisenhower did listen to people. they love people communicated
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through letters and he took people's opinions very seriously so this was something that worked to the benefit of the country and was something that was postulated byby the members. >> host: this is from the preface of all of the bankers you talk b about your research. all of thehe national archives d records administration libraries from fdr through carter had accessible and well organized information with consisting classifications they were a pleasure. after reagand took office the records became less available at the library in little rock i learned about islam may never be acovered without the benefit of a freedom of information act request of the commitment to organize a vast amount of material is not what it was before the 1980s.s as such, the bulk of information that might be revealed by that
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request. >> it's interesting because from that time, i did file requests t with the clinton library and the george w. bush library, senior. i wound up ultimately getting some off those requests back to me from the clinton library. and it's interesting it took a number of years and they did respond to some of them, but they didn't respond to others. what i tried to get at is what happened in 1999 because there's an awful lot of activity that was going on back and forth in particular the citibank so that
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i was trying to do is trying to get as much of that as i could amplify sound because the classification systems in general and the presidential library became more difficult to access and the funding became less and they had difficulty and some of it was classified. but ultimately, they got me some material after the book came out and i used some of it in a paperback version and some of it is still coming in, but not all of it is exactly what i so even though i did get some material that i haven't gotten it back from the bush or the clinton library. it's become difficult and my guess is going forwardrd in tim, and i think i talked about this in the end of the president's fingers when you get to the end of the obama administration, whoever we have going forward,
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it becomes harder and harder to get access to that information because now it is electronic and there are security labels and reductions. every piece of every e-mail has to go through an analysis whether it is a security risk to even get the access that would require. so it's difficult. times have changed. >> host: i know this is not your area of writing that if george washington had a relationship bankers? >> guest: that is an interesting question. i don't know if he did. i know john adams did have a relationship and in terms of financing their own rise and thomas jefferson as well. i am not entirely sure about george washington. someone had to finance some of the wars and in a lot of cases even the initial war that
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created the country you have to have financing to do that and often times it was financiers who wereha involved with the ary and with ultimately a government that helped to provide some of that. >> guest: >> host: during world war ii or the banks important to fdr? >> guest: they were very important. if we look at even the memories of that in terms of the bonds that were issued through the banks and individuals there were documents where you could see the ads being put out by the population in new york city to see you (-open-paren account i get a certificate for all sorts of deals that were being sort of run by banks as well as providing some of the round and directing some of that work effort at different banks provided different funds to the elements of the world and the countries outside the allies
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going to the uk, going to germany as well as the other side, so definitely they have a role in the financing and the raising of the finances for that war. during that period in history i talk about world war ii. there's a lot of communication going back and forth between the sort of people that were running these institutions, like tom lamont running the mortgage bank at the time, and the president's staff as well as fdr. >> host: before we leave solution, what is the role of the imf and the world bank and the money situation? >> guest: talking about coming out of world war ii, a meeting was held in 1944 in new hampshire where the leaders of the international sort of community came toun bear to talk about how to fund ultimately the reparations that needed to be
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done in the wake of the war. so the argument for the international monetary fund and the world bank came out of two things. one to have a currency elements that could work throughout the world so we could look at financing or at the time a lot of devastation and money required because of world war ii, and then by extension other countries that have suffered because of the economic downturns that were caused by the war that needed funding to be developed. and that has changed over the years since to having something that is based on development, developing countries and helping with anything down and building a waterway from a village to rosort of the more complex and larger funded programs in these monetary system components are run by different individuals from different parts ofco the world. so the idea is there is an
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international development of related money. thepm world bank was run by the chairman of chase after he became the head of a second head of the world bank int and that relationship again have some end to do with chase or bank's going out to the public and they would try to raise money that would then go back to the world bank and they could then use for projects that they deemed appropriate for necessary and then they would work on discrediting the money out this particular projects. >> host: one final character before we run out of time that you spent a lot of time with. david rockefeller. >> guest: he was in a major shift that happened throughout the relationship between banking and washington and that is when
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his family owned a significant portion. he married into the family so they became david rockefeller, nelson rockefeller and others, so the family itself was fascinating but it goes through multiple decades of the family being involved and the wall street elements of global policy, nelson rockefeller became the vice president while ntvid rockefeller was coming chase which at the time was a major bank in the united states. it was a major power player at the chase, but david rockefeller during his time as he was rising to become the chairman was also working more and more with other foreign policy initiatives like working more closely with the middle east and finding ways for
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money to be used as currency come as collateral for loans that they could make to latin america or other developing countries and make money off of that soap rather than be fully aligned as they had been historically to the government for money and therefore very symbiotic relationship and influence change, now through him they had an ability to access money comingor in from an external place and blended it to another external place and in thathat way sort of take themses intoth a position they could control of the government was doing as opposed to having to be a team player because they have this extra money coming from someplace else and he was an advocate for going after the gold standard and everything to death 1970s. co. tcoach would allow the banko have larger access and a larger general footprint so he's interesting for a lot of reasons. he goes back to having lots of
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things that are interesting in his life as well. john mccoy that i mentioned had worked with david rockefeller throughout his earlier career and had grown through that relationship to become the head of the world bank and the head of chase. so it would've individuals that live between politics and global monetary systems and banks and societies have all tied in somehow. >> host: she tells the story in her book in case you are interested. in the last minute let's bring all these pieces together from the past two hours. what in your view is the solution to this on hundred plus years of banking regulation law and the government? >> guest: i think we do have to reinstate glass-steagall to separate not just our banking system but globally because
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banks of the banks. from the money that i is putting through peoples deposits and loans and credit that they require for themselves into small businesses or what have you from the more speculative activities banks to do because without doing that, it's important to make that split we will have a situation where the federal reserve and others would have no choice in their mind and in their policies but to continue to subsidize the very risk that these institutions place upon society. ..
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>> cares for them and praying for them. >> at that time columbine had ever happened near the parents nor the school counselor look at the violent issue that was a possibility of deterioration of thinking
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