It’s the English-speaking world’s favourite game – property. And today the stakes in the game are higher than ever. Niall Ferguson, The Ascent of Money e5: Safe as Houses
Property ownership was once the preserve of an aristocratic elite. ibid.
Yet the Savings & Loan crisis was a mere tremor compared with the property earthquake that would strike the US market twenty years later … The subprime quake would shake the entire world of finance to its very foundations. ibid.
We tend to think of property as a one-way bet. ibid.
In our time we’ve witnessed the zenith of global finance. In 2006 the world’s total economic output was worth around $47 trillion. The total value of stock and bond markets was roughly $119 trillion. More than twice the size. And the amount outstanding of the strange new financial life-form known as derivatives was $473 trillion. Ten times larger ... This is the story of financial globalisation. Niall Ferguson, The Ascent of Money e6: Chimerica
According to [George] Soros’s Theory of Reflexivity, financial markets can’t possibly be perfectly efficient much less rational ... His biggest coups came from being right about losers not winners. And the greatest of these was among the most momentous speculative hits in all of financial history. On September 16th 1992 with the British £ in big trouble I watched as Soros put out a contract on the Bank of England ... So sure was he that the £ would drop that he bet $10 billion. ibid.
The Nobel Prize in Economics. It seemed as if Intellect had triumphed over Intuition. As if rocket science had taken over from risk-taking. Equipped with their magical black box, the partners in LTCM seemed poised to make money far beyond the wildest imaginings of even George Soros. And then in the summer of 1998 when every self-respecting hedge-fund manager should have been playing with his yacht something happened that threatened to blow the lid right off the Nobel Prize winner’s black box: Reality started to misbehave ... On Monday August 17th 1998 a giant asteroid smashed into Planet Finance. ibid.
The only chance of survival was to find a White Knight to rescue them. And the most powerful Knight in town was none other than George Soros. It was the ultimate humiliation: the Quants from Planet Finance begging for a bail-out from the Prophet of Irrational Unquantifiable Reflexivity ... Fear that Long Term’s failure could trigger a general financial meltdown, the New York Federal Reserve hastily brokered a multi-billion-dollar bailout by fourteen Wall Street banks. ibid.
The Ascent of Money has seldom been smooth. Time and again it’s been punctuated by big painful crises. ibid.
American borrowers have come to rely on Chinese savers, a symbiotic relationship between China and America that I call Chimerica. ibid.
So enormous have Chinese savings become in recent years they’ve enabled globalisation to do the most almighty U-turn. Previously, it was the rich English speakers who lent money to the poor Asian periphery. But now it’s the Chinese who are lending money to the Americans. Welcome to the strange new hybrid country of China and America – I call it Chimerica. ibid.
The People’s Republic of China has become banker to the United States of America. ibid.
What starts with competition for Olympic medals could end in a battle over dollars if the Chinese decide one day to cut off their credit line to the American empire. Maybe as it name suggests Chimerica is nothing more than a chimera ... The really big crises come just seldom enough to be beyond the living memory of the people who run today’s companies, banks and funds. ibid.
The Ascent of Money has been one of the key factors in human progress, an extraordinary story of innovation, intermediation and integration that has done as much as anything to help people escape from the drudgery of subsistence agriculture. And yet Planet Finance can never quite escape from the gravitational force of Planet Earth. Because the Quants can never take full account of the human factor – our tendency to underestimate the probability of black swans. Our propensity to veer from euphoria to despondency. Our chronic inability to learn from History. ibid.
What’s going on in America today? Why are we over our heads in debt? Why can’t the politicians bring debt under control? William T Still, The Money Masters
All of our money is based on government debt ... It lies in reforming our banking system. ibid.
There’s nothing federal about of the Federal Reserve. And there are no reserves ... The truth is the Federal Reserve is a private bank owned by private stockholders and run purely for their profit. ibid.
The Founding Fathers knew the evil of a privately owned national bank. ibid.
Who controls how much money we have? ibid.
We must take back the power to issue our own money. ibid.
In 1913 Congress gave an independent central bank, deceptively named the Federal Reserve, a monopoly over issuing America’s money ... Where did this idea come from? ibid.
Just who are these money-changers James Madison spoke of? ibid.
Rome plunged into the doom of the dark ages. ibid.
Fractional Loan Banking: that is loaning out many times more money than you have assets on deposits ... At least ten times more money than they actually have. ibid.
Interest was contrary to reason and justice ... A crime called usury. ibid.
The Tally system was adopted to avoid the monetary manipulation of the goldsmiths. ibid.
King Henry ordered that tally sticks had to be used to pay the king’s taxes. ibid.
The money-changers plunged Britain into a series of costly wars. ibid.
Nearly every nation now has a privately owned central bank. ibid.
The people pay for it in inflation. ibid.
The rise of the Rothschilds ... Nathan was clearly the most clever – he was sent to London at the age of twenty-one. ibid.
Nathan Rothschild later bragged that while he’d been in England he’d increased his original $20,000 stake by 2,500 times. ibid.
J P Morgan was thought to be the richest man in America. But after his death it was discovered he was only a lieutenant for the Rothschilds. ibid.
It was a totally fiat currency ... The colonies had been drained of gold and silver coin by British taxation. ibid.
The Bank of America ... It was allowed to practise fractional lending. ibid.
The Bank [of America] was given a monopoly over the American currency. ibid.
A new privately owned central bank through Congress called the First Bank of the United States ... The players were the same only the name of the bank was changed. ibid.
In 1790 less than three years after the constitution had been signed the money-changers struck again. The newly appointed First Secretary of the Treasury, Alexander Hamilton, proposed a bill to Congress calling for a new privately owned central bank. ibid.
In 1791 Congress passed the bill and gave it a twenty year charter ... The Rothschilds were the power behind the old bank of the United States ... It was a scam plain and simple. ibid.
Napoleon’s rise to power ... Napoleon decided France had to break free of debt. ibid.
It was not unusual for privately controlled central banks to finance both sides in a war. ibid.
War is the biggest debt generator in history. ibid.
Nathan Rothschild came to dominate not only the bond market but the Bank of England as well. ibid.
The Rothschilds were the richest family in the world bar none ... The rest of the nineteenth century was known as the Age of the Rothschild. ibid.
One expert estimated that the Rothschild family controlled half the wealth of the world. ibid.
This bank was called The Second Bank of the United States ... The primary stock-holders remained a secret. ibid.
The Rothschilds had taken control over the Bank of England and in the new privately owned central bank in America as well. ibid.
Jackson was determined to kill the bank at the first opportunity. ibid.
His [Jackson] veto message is one of the great American documents. ibid.
The bank sharply contracted the money supply by calling in old loans and refusing to extend new ones. A financial panic ensued followed by a deep depression. ibid.
Jackson paid up the final instalment of the national debt. ibid.
It took the money-changers seventy-seven years to undo the damage. ibid.
The most insidious weapon of the money-changers – fractional reserve banking – remained in use by the numerous state-chartered banks. ibid.
War to create debt and dependency. ibid.