The Great Depression & What Caused It
In July, during the golden summer of 1927, four central bankers met secretly for an entire week in a Gastbyesque Italian-style mansion in what was then New York’s “gold coast” on Long Island. Secluded from prying eyes in a twelve-bedroom neo-Georgian masterpiece set well back from the road on the old Jericho turnpike, these masters of finance plotted away.
They were the heads of the French, German, British and American central banks. The essence of their discussion was an agreement to form a sort of secret cartel. Worried about the health of their respective economies, they agreed to begin to co-ordinate interest rate cuts and rises. And this time they chose to deliberately cut rates, giving a negative signal to the stock markets around the world, which immediately began to climb and overheat.
This bubble would burst in the fall of 1929, triggering the great depression of the 1930s. There was a cash run on the banks which would cause the collapse of more than a thousand banks globally. These “dust-bowl” years would see millions unemployed, wide-scale hunger, house repossessions and businesses failing at the fastest rate in history.
The situation fuelled the rise of extreme right-wing party politics, leading to the second World War, which swallowed upwards of fifty million souls. What we can learn from this story a century later now that all documents have been released is that the very wealthiest families in the USA in fact pulled out of the stock market in the months prior to the 1929 crash. They were pre-warned that this crash would be triggered purposely with a view to a quick price correction, allowing those families to then reinvest back at the bottom of the market.
But the seeds for all of this can be traced back to that single secret meeting between four central bankers.
Parallels between 1929 and 2008
The scary thing is that the parallels with today are uncanny. The 2008 banking crisis was essentially triggered by a handful of corrupt bankers in the USA packaging up all their worst loans and mortgages, many of which were already in default, and selling them wholesale as bonds to unsuspecting and greedy bankers in the UK and Europe who simply lapped them up. In short, they offloaded their garbage abroad and got us to pay a premium for the privilege.
This led to a decade of “austerity” and flatlining economics. In recent years the main justification given by doctors and railway workers etc. for national strikes was that their salaries and standards of living had not risen for 15 years, which tracks back exactly to the 2008 banking crisis. Not only have most European countries national debts ballooned to “bail out” the banks, but millions of people’s lifestyles have been frozen in time for at least a decade and a half… so far.
The USA had to vote to raise its overdraft limit quite recently, otherwise it would have gone bust. Right-wing parties are on the rise all across Europe as people become disillusioned with mainstream parties. Finally, the clouds of war loom large once again with the Russia/Ukraine conflict, the Middle East/Iran crisis and China’s covetous glances towards Taiwan.
All this can be traced directly back to a handful of corrupt bankers hatching a horrible plot in the USA… again.
Worse still is the fact that even if we do recover from this crisis and avoid another war, the banks have the next crisis already fully lined up. Not only have they helped to destabilise and reduce the value of all our currencies by flooding the globe with money under “quantitative easing”, but there are very worrying smoke signals around both crypto currencies and the futures markets.
I am not aware of any realistic political discussion about reducing national debt in a world where if a country’s debt reaches circa 120/130% of its GDP, then the markets automatically start to devalue that country’s currency valuation even further. In short, they start to price it as a “junk” or “banana” currency. Yet this is our current direction of travel and seemingly at our best possible speed.
Futures Markets
Crypto currency has been described as the “Wild West” of finance, with the founder of the biggest supplier already imprisoned for fraud running into the billions, yet our banks are racing to be involved. The “edge fund” and futures market is so complex that anyone outside it rarely understands it. For the laymen it’s the “Bet-Fred” of finance. You can buy a betting slip which predicts the price of almost anything going up or down at any point in the future for a fraction of what it would cost to buy the real thing.
Once bought these betting slips are saleable themselves and can change hands dozens of times making them so opaque, it’s ridiculous. Worse yet is the inevitable packaging up of these things, which can then be sold as a block or bond to corporate investors, banks, pension funds and so forth on the basis that if you buy enough gambles, some are bound to come good. Enough people cashing in these gambling slips can affect a market in extreme ways and strongly exaggerate price movements.
The whole mess is like a giant boil just waiting to be lanced. When it bursts, which it will, the financial turmoil could topple any economy too weak or too highly leveraged to take the inevitable hit. Our regulators are frankly ignoring all this, hoping the problem will go away.
So when I hear of savvy investors like George Soros liquidating all his investments and buying gold, not shares in gold, but the real stuff, and countries like Russia and China buying the stuff as fast as they can, regardless of cost, I worry. Honestly, you do not need a crystal ball to see what’s coming in a world where the American stock market has gone up four-fold since the Millennium. The inevitable price correction has to happen. But the real villains here are the banks, who, completely unfettered by any regulator on either side of the pond, continue to enrich themselves.
The Rothchilds
Was it one of the Rothschilds who said “Give me control of the money and I care not who makes the laws”? In very basic terms, until the banks are brought to heel, the world will continue to lurch drunkenly between boom and bust, because the banks make money on the way up and now they have even found a way to make it on the way down too. If you wish to stabilise the economy and protect our lifestyles, then the unelected people running the banks need both greater scrutiny and far greater accountability. By this, I mean serious legal consequences for everyone involved.
So far, our political servants have not had the stomach to tackle this problem. It will be a brave soul who stands up against the might of the world’s banks, but for all our sakes it needs to happen urgently. History always repeats itself and some of the lessons it chooses to teach us can be extremely sobering.
The secret meeting described earlier and subsequent unpicking of the crash is described beautifully in the award-winning book “Lords of Finance” by Liaquat Ahamed, who transports us back in time to the roaring 1920s, stately travel aboard the great ocean liners and secret meetings in the palaces of Europe. For anyone interested in history and finance it’s simply a “must-read” publication.
