The Financial Crisis
&
A Father Who Cares
Ithaka Fellowship
January 2009
Personal Background and Story
In the Last Year…
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Failure of:
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Bear Stearns- Investment Bank
Lehman Brothers- Investment Bank
Fannie Mae/ Freddie Mac- Mortgage Providers
AIG- Insurance
Wachovia, Washington Mutual, Indy Mac
Near Collapse/ Bailout of
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GM, Ford, Citigroup, Bank of America
Signs of the Times
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$50 Trillion+ total national debt
$10 trillion+ in government debt
Personal savings rate is negative
Oil moves from a record high to decade low in 8 months
Unemployment nearing 10%
Money supply increased by 70% since Oct*
Housing Market collapse/ Foreclosures
$Trillions in bailouts have been earmarked by the Federal Government
Iceland Bankrupt
Global Bailouts
Federal Funds Interest Rate Targeted at 0%!
Debt-GDP ratio over 300%= 3rd world nation state
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*estimated
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Symbols of the Times
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$50 Billion Ponzi Scheme
U.S. Treasury Secretary Personal Income Tax
issues
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$150 Million Presidential Inauguration
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Yankees Keep Spending hundreds of millions
Is Anyone Asking
What in the World
is Going on?
Main Thesis:
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The current global financial system is
inherently unstable, unethical, and has
fueled the fires of greed and idolatry that
are rooted in every human heart. It
permeates every crevice of society
physically and spiritually and needs to be
abolished and reformed immediately for
the short and long term health of God’s
creation.
100 Person Global Village
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60 Asians
14 African-American
50 do not have reliable daily food
30 suffer malnutrition
2 have a college education
Global Wealth
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50% of wealth held by 2% of adults
37 million Americans live in poverty
Of the top 100 economic entities, 51 are
corporations and 49 are countries
60% of world pop. (3.5 Billion) receives 6.3% of
total world income
Per capita income of Third world countries
$1,200. (4.6 Billion)
Per capita of rich countries is $26,000 (900
million)
3rd World Debt
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1970- $62 Billion
1980- $481 Billion
1998- $2 Trillion
Ultimate Monopoly
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Where does “The Banker” get his Money?
“If the American people only
understood the rank injustice of
our money system, there would
be a revolution before morning.”
President Andrew Jackson- 1829
“There are two ways to conquer
and enslave a nation. One is by
the sword. The other is by debt.”
President John Adams
“if the foundations are destroyed,
what can the righteous do?”
Psalm 11:3
Total U.S Debt Graph
Housing Bubble
A History of the Financial System
&
The Ethics of Money Production
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Real Trade
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Direct exchange of useful goods
Commodities as a Medium
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Money promotes market expansion
Available, durable, moldable, intrinsic value
Every modern currency est. as a unit of
weight of gold or silver
Money Warehousing
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Warehouse does not owe, it stores
Bailment contract vs. debt contract
Homogenous goods open the door for
embezzlement
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Grain
Money
Temptation to Counterfeit
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Increase in money supply (Inflation)
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Changes distribution of wealth
Alters the structure of relative prices
Permanent changes in income distribution
Hidden Tax
Bid resources away from genuine owners
Perversion of genuine money production
Legalized Counterfeiting
1. Government Paper Money
2. Fractional Reserve Loan Banking
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Establishes a permanent partnership
between government and banks
Lobbyists & politicians laxed the laws to
treat deposits as credit vs. bailment
1694- Bank of England
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Financial Revolution
Right to Issue money from gov. to private banks
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1.2 million pounds to 885 million in a century
Direct Taxation of the people
Two major functions of a Central Bank
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Finance government deficits
Cartelize private banks
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Alleviates run on the banks
1815- Rothchild Coup
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Nathan Rothchild spreads false rumors
that Napoleon had won Battle of Waterloo
Would become biggest bank in the world
after buying British bonds on the cheap.
1830s- Andrew Jackson
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Eliminates Hamilton’s Central Bank
Established free trade for the last time
Paid off the federal debt for the last time
Vicious fight with private bankers
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“The bank is trying to kill me, but I will kill it.”
1862- Lincoln & Greenbacks
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Gov. issued paper money
Represented man-hours vs. gold
Financed Civil War
Assassinated in 1865
1881- James Garfield
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“Whoever controls the volume of money in any
country is absolute master of all industry and
commerce. And when you realize the entire
system is very easily controlled, one way or
another by a few powerful men, you will not
have to be told about how periods of inflation
and depression originate”
-Assassinated 4 months into office
1890-1900 Wall Street Diminishing
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Losing dominance over the banking
system
Post- Civil War dominance waning to State
Banks
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State banks now with more than 50% of
business.
Robber Barons
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Morgan- Finance
Carnegie- Steel
Rockefeller- Oil
They didn’t build. They bought
Hated competition
Money “Trusts”
Dominated entire fabric of the economy
House of J.P. Morgan
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Started as banker during Civil War
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$3.50 rifles for $22
Built extraordinary political clout
Trusts- concentrated money in the hands
of a few
Controlled railroads
Progressive spirit
Bank Panic of 1907
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Rumors that major banks were insolvent
1900-1907 propaganda
Public stages a run on the banks
Morgan imports $100 million worth of gold
from Europe
“The people” now desire banking reform…
Money Trust caused the panic
Trilateral Commission
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Bilderbergers and New World Gov.
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Multinational consolidation of commercial and
banking interests
Goal to control 4 centers of power
Political
 Monetary
 Intellectual
 Ecclesiastical
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2 Steps in Cartel-Gov. Regulation
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1. Pass the Bill and establish the structure
2. Select the proper personnel
Morgan Empire in control of the Fed
Benjamin Strong as Fed Chairmen until
1928
Jekyll Island
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6 of the most powerful groups
represented
Secret meeting
Competitors in alliance
Aldrich Bill turns into Federal Reserve Act
1913- Federal Reserve Act
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Passed through Congress 3 days before
Christmas
Private central bankers win a 100 year war
“Elastic currency”- Fedspeak begins
Authorized central bank to create $$$
Financial system turned over to profiteers
Obtain greatest profits through use of other
people’s money
Institutional usury
The Federal Reserve is Born
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NOT owned by the government
12 regional Federal Reserve Banks
Fractional Reserve Banking
Monopoly on the issue of all bank notes
National banks forced to become members of
the Fed
No more need for gold
10% reserves requirement
Immediately doubled $$ supply- World War I
Federal Income Tax
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Previously deemed unconstitutional
1913- Sixteenth Amendment w/ Fed
Reserve Act
Congress shall have the power to lay and
collect taxes on income
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Tax code was 14 pages
Today the tax code is 17,000 pages
IRS employs 144,000
Pays interest on the National debt
World War I
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JP Morgan sole underwriter of British/
French bonds
Bonds floated in U.S. to pay for arms and
goods from America
Morgan now has enormous stake in
Britain/ France victory
U.S. enters war
Gold Stock is Nationalized
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Americans weaned off of gold
Gold exports prohibited
Gold reserves tripled to 74%
Confiscation of private gold
The Great Depression
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Stock market crash in 1929- largest bank run in
history
Fed had made money plentiful in “Roaring 20s”
through low interest rates
Robber Barons promoted markets
Common man can buy stock on margin
Gold flowing to U.S.
Low rates causing inflation
1929-1933 money supply contracts 1/3
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1/3 of banks close
Federal Reserve Scheme Failed
FDIC- Shell Game
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Federal Government provides backup
money to prevent bank failures
Not really insurance
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Payoff- small banks
Selloff- arrangements made for a large bank
Bailout- “too big to fail”
FDIC covers all bank deposits
 Wealthy investors are fully protected
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FDR- New Deal- Keynes
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Alliance of Rockefellers
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Lehman & Goldman Sachs
Permanently off the gold standard in early
1930s results from annihilation of the
currency
Federal Reserve Notes are legal tender
Fannie Mae created
More Taxes
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Accounts receivable tax, building permit
tax, capital gains tax, corporate income
tax, unemployment tax, Medicare tax, real
estate tax, property tax, road usage tax,
social security tax, telecom tax, vehicle
sales tax, sales tax.
40% of avg. citizens income goes to taxes
1971 Bretton Woods
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Foreign investors doubt solvency of U.S.
Viet Nam War had plunged U.S. into debt
Nixon takes the U.S. off International gold
standard
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Oil quadruples in the 1970s
Foreign creditors threaten to exhaust gold reserves
by turning in paper dollars
Fiat Currency globally
Currencies now float in the market in competition
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Currency manipulation is born
Modern Events
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Internet
Repeal of Glass-Steagal Act in 1998
Stock Market Bubble in 2000
Housing Bubble
Housing Saves the System
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New Borrowers needed to keep new debtmoney afloat
Transfer of wealth from public to banks
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Public took risk, properties appreciate
Banks created money and lend it to the people
We spend the money to prop up economy
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HELOC & credit cards
Banks own the property and we are on the hook to
pay back inflated prices
Financial Tsunami
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Inflation and deflation collide
Money supply pumped up with new money as
loans
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Defaults extinguish money supply
Stagflation- price inflation without economic
growth
Fed needs high rates to attract foreign $
High interest rates create more housing defaults
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Defaults extinguish money supply
The A-Bomb- Derivatives
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A bet on the movement of a security
Example of 2 people flipping a coin for a
trillion dollars
97% of bank held derivatives in the 5
largest banks
Estimated at $200 trillion for U.S. Banks
Credit Default Swaps
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Buyers and sellers place bets on the
likelihood that loans will default.
Insurers are risk counter-parties
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Insurers backed corporate bonds backed by
subprime mortgages
Insuring against a collapse in the housing
market
Bailout
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Bailout legislation is smoke and mirrors
We are propping up derivatives gone bad
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Fannie Mae, AIG, Banks
Massively debasing the currency
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Deflation then inflation
Fighting inflation with more inflation
Dollar headed for collapse…?
Summary Conclusions
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Free markets work, but only when the
foundation is laid appropriately.
International private bankers create money and
control credit and hence, control human society.
Power of lobbyist bribes have influenced the
entire social structure.
Dollar is dead. The economic system has been
destroyed.
How Then Shall We Live?
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The Current System and the Sovereignty
of God
Nehemiah 5