David Webb Lecture on Financial Markets and Money Creation

[Music] my name is David Webb I live in Stockholm Sweden I'm on a small farm here it's important to understand I am not giving Financial advice the book I've done has a greater purpose than that I am not active in the markets I am not short the market I am in things like Farmland I was managing public equities and ultimately hedge funds through the aftermath of the Asian financial crisis the lead up to the do bubble inv bust and I noticed that fund flows were very large relative to the size of the US economy for example or the global economy so I started to look at the scale of money creation by the Federal Reserve and I developed the Insight that the Fed was actually influencing the financial markets which no one would be surprised at today but at that time it was considered conspiracy theory even by my partners this was something I could not talk to people about but I began studying it myself and I saw that in individual weeks the scale of new money created was on the order of 1% of US GDP or more now what that meant given that the US economy was growing at maybe 3 or 4% in a good year to have money creation on that scale in a single week it meant that the money creation was far outstripping any real economic growth so the transmission mechanism for money creation into real economic activity was breaking down this is when I started becoming concerned and started following this closely and it actually developed into a way for me to navigate the markets so I applied it and I managed to protect people who I was responsible to as my clients through the do bubble and bust and did very well through that period armed with this understanding but the bigger understanding was that the velocity ofone was collapsing and I knew at that time this is over 20 years ago that we were headed into something like the time that the world experienced through the period of the great Wars and the Great Depression because this kind of velocity of money was occurring at that time so I went into this deeply and studied everything that was happening leading into the 20th century saw that this provided the best anal us period for understanding what we were entering then so I have followed this very closely I have applied it in my work in what I was doing so I had an effective understanding of it the important thing to understand now is that the velocity money which is the relationship between economic growth and money or money creation money supply has broken down and is now at a lower level phos of money than it was at any point during the Great Depression and the world wars so I believe that this is actually the profound underlying reason for the many things that we are seeing geopolitically I grew up in a family of medical people and Engineers they were not involved in High Finance as a boy I went through basically the beginning of the industrial collapse of Cleveland they say that people strive to get control over what has hurt them and I grew up with a real need to understand what was destroying us because it deeply affected my family which had been very happy prior to this A happy benevolent family and it literally destroyed the place where I grew up so I decided to study business and finance this was something my father did not want me to do he thought I should be an engineer and when I was younger I thought I would have been a medical doctor but this became the pressing thing for me to understand so I studied finance and computer science I got a subscription to the Wall Street Journal I had no one to guide me I just started looking at the Wall Street Journal and I noticed these two Tombstone which announced the big mergers and Acquisitions deals or financing that all these firms were in New York so I decided at a young age I needed to go to New York and I got a job with a computer services firm I could program I had studied systems analysis and finance so in this first year as a young guy I went into perhaps literally every Financial firm in New York City with the sales teams so that helps a person I think to begin to understand things on an intuitive level just by seeing things it's not so intimidating once you've been into these places things are intimidating if you've never encountered them so that all happened in my first year and then one of my clients which was a mergers and Acquisitions group their two analysts were leaving one was going to Harvard Business School the other was going to the London office and the sales guy that I worked with on that account came back and told me that they needed someone with a background in finance and computers and I realized at that time that was going to be me so I talked with my wife about it I showed up at this office so early the next day nobody was there I had to wait about an hour for people to start coming in and they were shocked that I thought that I had any business suggesting that I could work there they proceeded to put me through a shocking stressful morning I was ushered into one of the senior vice presidents who listened to what I had to say and then he said well you better be sure you want to do this because if you [ __ ] up you're gone by the time I left I thought maybe this wasn't such a good idea I probably shouldn't have bothered you know sure enough they called back they needed me because I knew how to do things so I worked in m&a mergers and Acquisitions for 5 years in this firm it was working literally Around the Clock sometimes for days with no sleep or maybe just lying on the office floor for half an hour to get up and continue so I learned to deal with a lot of stress with little sleep through this period of time and then I managed to move to what was than the biggest private Equity Firm in the world by an order of magnitude I chose to go there rather than stay I had another offer from a mergers and Acquisitions group at LF Rothchild that would have been for about twice the compensation but I sensed that there was going to be a crash of some kind and a month later was Black Monday October of ' 87 and LF Rothchild was wiped out lost all of its capital I really went to this private Equity Firm because when you're doing m&a it's basically being a glorified salesman you're an agent when you're in the shoes of the private Equity investment firm you were the principal it's a different kind of due diligence and Analysis and I was there for 3 years but it was very intensive 3 years and shortly after I had started with the firm I ended up running the acquisition this longdistance telephone company I handled all of it because the partner on the deal had difficulty with stress and he literally went home and stayed in bed for 6 months I handled all the due diligence which was very complicated and the financing and it ended up being the largest capital gain in the history of the firm but it was very stressful for my family because once again I was was working around the clock I would get up to negotiations on Saturday morning late into 3:00 in the morning Saturday night sleep for a few hours start again on Sunday morning this went on for 9 months when it was over it took a few months but my wife eventually said to me you know if I knew our life was going to be like this I wouldn't have signed up for it and that just crushed me I got out a road atlas of the us we went through a Page by Page and just thought about where could we go where could we be happy I couldn't stay in that there was a possibility I would go to their London office but I knew that would even be more intense it would just be more of the same once I've done something I don't need to keep doing it I learn what I have to learn from it I think I am different than other people in this financial world because I actually don't care about the money that is not why I'm doing it that should just kind of fall out of what you're doing and you don't need a lot of it there's no reason that you need more and more and more I was always driven by understanding things and that actually gave me an advantage I understood things that other people didn't so ultimately we just decided to go back to Cleveland where I grew up and we bought a house that was within the sound of the church bells where my grandfather's house was my memory from Sundays when my dad would take us to Grandpa's house so it was really going home to try to make things sane but the intensity returned again as I got into managing in the public markets I had this Insight that the public markets were even less efficient than the private markets because you had these big fun flows that were pushing things way up Beyond where a negotiated deal would ever be done and driving prices down below where would be done so you got better opportunities both buy and sell things I ended up ultimately running this hedge fund strategy that I created so I designed the trading desk I train the people develop this team trading strategy through the do com bubble in the bus we were typically in 3 to 400 positions at the same time I had developed a strategy to be short the market using hundreds of positions so that all these crazy.com stocks no one position could kill us but with all of these positions we had a kind of visibility into the market and the fund flows and what was happening we were doing exceptional well people couldn't figure out how we were doing so well so we had these Consultants coming from literally all over the world flying into Cleveland and coming to the office the macro thing I was looking at was this rate of money growth it's always growing whether it was accelerating or decelerating and I knew we had maybe a day or two lead time once I saw the figures to get positioned ahead of of the market rolling over or the market accelerating upwards and other people didn't understand this even if I explained it to them they didn't want to hear about it they didn't know how to apply it it was like that in addition to that I've always operated with a mental model of what is happening in the world and I suppose I'm different than other people in that the things I pay attention to is what does not fit my model that is what can kill you so I pay attention to what does not make sense to me what does not fit you have to drop everything imagine you're in a highly leveraged position with hundreds of positions when something comes up that does not fit you pay attention to that immediately so the trading room was a newsroom a research operation so we paid attention to things second by second and we would dig into things that did not make sense so through this period of time I also started changing I think as a person because I was seeing things that were not in the narrative the news narrative that people were accepting about what was happening so I knew that economic data series were being change this is after September 11th as well as all the disconnects around September 11th itself so it was the beginnings of my becoming a kind of activist although I didn't know it I wrote quarterly letters to my clients so I assembled things on my desk they would accumulate and I eventually had something like a thick telephone book of just the things that I knew and it documented that did not conform with the accepted narrative that people were being shown through the media and I then thinn this down into a thinner telephone book and literally started going door too to my neighbors and what I was doing was I was seeing how I could get through to people how could I explain this and it's damn difficult basically it doesn't work I decided that maybe my neighbors were too well off to be able to hear about this so I actually went out to a poor area and a guy was sitting on his front porch and he was interested in what I was doing cuz I was still in a business suit I explained it to him and he just said good luck man in this voice of someone who really knew already and had a kind of resignation that there wasn't much you could do about it so it's been a long journey for me trying to expose things I was expecting that there were going to be large scale insolvencies after the housing bubble I was aware of what happened during the housing bubble and how that was engineered in 2003 I met with George Soros I showed him a chart of the growth in asset back Securities and I told him that this would be the basis of the next bubble and collapse and he said to me you're crazy so he either did not know that or he did not want to acknowledge it at that time in 2003 so what was happening was tremendous growth in the derivatives complex so I started becoming concerned about derivatives in the very early 2000s in the aftermath of the do Bubble at that time the derivatives complex was about twice Global GDP by 2007 it was 10 times Global GDP that growth in maybe five or six years so the financialization was out stripping any real thing on earth already at that point and this growth in asset back Securities what was happening was that the process of doing any credit underwriting The Moorings had been slipped and this was done by Design prior to this Banks would do credit underwriting meaning they would want to get repaid for the money they had loan so they would do some analysis of whether the borrow could repay it but during this period of time the the banking industry went to securitization of loans so it became a business of originating loans without any concern as to whether they could be repaid the loans were all packaged up whether they were AAA loans or subprime loans or boat loans or car loans anything these pools were stratified now if you think of it you had a top 20% the next 20% and so on down to bottom and the idea was that any defaults would hit the bottom rated trunch first so for the defaults in that pool to reach the top of the pool the top 20% you'd have to blow through 80% of all the capital in the pool so the top was rated AAA just structurally they could do that the problem was no one wanted to buy the lower rated Tres so they then used an aspect of the derivatives Market the the credit default obligation CD to buy the default protection for the lower rated tranches then they could sell the entire pool as AAA so this was done through as green span called it the Miracles of modern finance and he said presumably the risk will be borne by those best able to bear that risk at the time so because it could all be sold as AAA and the yields were better than treasuries and the Fed was creating so much liquidity these pools were then sold 10 times over on a modeled synthetic basis also in the derivatives market and so while the banks knew that they did not want to eat their own cooking the stuff that they had originated they were buying the assets this is the nature of a bubble the people that know it's a fraud are still consuming the stuff that is being created through the same process so the asset side of the balance sheets of banks were these Securities that were being created through the same process it reached a point where credit default obligations alone were about 10% of the derivatives complex by the time the r Financial prices kicked off in 2008 2009 10% so credit to fall obligations alone were the size of the global economy now I wondered who's signing up to take that default risk and the early stages people were saying well the problem here is maybe in the hundreds of billions they were off by an order magnitude it was in the tens of trillions so as the FED were injecting all of this created money into the banks it eventually became clear that the default risk had been taken by hedge funds subsidiaries within the banks themselves so they enabled this whole thing by creating the entities within the banks that would take the other side of the default risk and then when the collapse occurred they were given the money to paper over that loss the FED has murky powers that people don't know about until they decide to make it visible one of their powers is to create entities out of nothing you just create a limited liability company and then the FED can loan money create money and put it into that entity it's completely off balance sheet doesn't have to be disclosed anywhere but in this case they did they created something called Maiden Lane which is a street I sometimes walk down in the southern district of Manhattan and the financial district so Maiden Lane was extended this created money to buy these problematic positions out of the banks take them off the hands of the banks and there was so much of this problematic stuff that they then created a Maiden Lane 2 and a Maiden Lane 3 and who knows what else was created that we were not told about so in 2008 I noticed the first failure of a broker dealer so I was expecting there to be a lot of insolvencies I was paying attention and the thing that shocked me was that the client accounts in this broker dealer were encumbered in the bankruptcy estate of the broker that never could have happened before in all of the history of Securities they were personal property and if the broker failed you would say I'm sorry you're out of business here's where you can transfer my assets that did not happen in this case so I started digging into what could possibly have changed and this was as serious as as a heart attack given that we were going into this meltdown at that time that's when I discovered it had been done through changes to the uniform commercial code in the United States this had been done in all 50 states so it was something that could be done very quietly over a long period of time and did not have to be done at the federal level didn't draw attention what they did was to create a new legal construct of a security entitlement now prior to this as I said Securities for 400 years were personal property this concept of a security entitlement severed that that's its purpose so what people then have and institutions and Pension funds even sophisticated investors all they have is an entitlement it's a claim it's a contractual claim which is very weak in the event of insolvency so it's an appearance of ownership it's sometimes referred to as beneficial ownership which sounds nice but what it means is that you receive dividends you receive a proxy you are the owner of title you can of course you can buy it and sell it but you can see in documents that I've found that the legal owner is actually the entity that controls the security with a secured interest they are the legal owners of the property so now you have a contractual claim next all of the Securities are held in pooled form so you have no specific identification it used to be that with paper certificates they were numbered you had a specific numbered Bond or stock share certificate so now they're fungible fungible bulk book entry form cooled further we know and it is absolutely irrefutable from the fed's own response to a questionnaire from the EU that even segregated accounts even people or institutions that have been told that their Securities are segregated are in the same pool and entitled to only a Prat a share in the event of an insolvency of the custodian so again segregation is just an appearance people are told that it's an absolute subterfuge and the shocking thing is that even sophisticated institutional investors do not understand this or they don't want to know it further even if fraud outright fraud is committed by the custodian that does not obviate the ability of the secured creditors to take the Securities from these pools ahead of the people who thought they owned them then there was in 2005 a change to the bankruptcy law in the United States creating something called Safe Harbor again that sounds nice but what Safe Harbor means is Safe Harbor for the secured creditors to take the client assets and to make that absolutely certain that even in the event of fraud they will take client assets so prior to this change in bankruptcy law there is something called fraudulent transfer fraudulent conveyance and the trustee the bankruptcy trustee had a duty to claw back any assets that had been fraudulently transferred so this change was made in 2005 and then with the failure of Leman Brothers this was cemented in case law and we concede the Judgment by the bankruptcy court Court related to this what happened there was that JP Morgan was both the custodian for the client assets and the secured creditor that took the client assets which prior to 2005 everything that happened there would have been constructively fraudulent but the bankruptcy judge this is the southern district of New York which is Manhattan found in FA of JP Morgan that JP Morgan absolutely was entitled to take the client assets the only question was whether JP Morgan was an entitled person basically to take the client assets this is an important point because it's not all secured creditors that have this power to take the client assets it is only the very biggest banks that are entitled to take the client assets so they don't want anyone else elbowing in there to take anything only they will take them and in this judgment the judge asks the question is JP Morgan a member of the protected class used explicitly those words and said quite obviously as one of the biggest banks in the world the biggest financial institutions JP Morgan is quite obviously a member of the protected class to see this in a bankruptcy case law from the court I think that's pretty strong stuff it's like that document directly from the FED provided to the legal certainty group this is hard to refute a custodian has the records of who owns what it's in their books and Records but that's all it is it is the records the system has been changed so that the property itself is then transferred up to a higher level and held in pooled form so you deal deal with your broker to execute a trade to buy or sell something and you get a representation of an account that shows you what you have in it but the assets are not held even at what you think is your custodian it's transferred to a higher level in the US that is the depository trust Court which holds all Securities in the United States in pooled form so the Brokers themselves are low down in the food chain in Europe there are Central security depositories at the national level that give an appearance of a registry of ownership at the national level but by law under something called the Central Security depository regulation csdr which was imposed in 2014 by law these Securities are transferred by a mandatory link to an international Central Securities depository so they want crossboard mobility of the collateral to occur so in Sweden for example you have a local registry but then the Securities go up to Euro CLE Belgium so they are subject to Belgian law not Swedish law at that level and then the collateral is transported to underpin the derivatives complex which is housed at the central clearing County parties the acronym is the ccps so this is the purpose to take the collateral up to this uh Central clearing counterparty level and we know from a bis document that is now over 10 years old that the systems are in place for the movement of this collateral on a global basis nearly instantaneously especially in a crisis to be swept to to meet the collateral demands of the system the secured creditors also associated with this we have to understand derivatives used to be bilateral you knew when you entered into a contract who your counterparty was and you look to the credit quality of that counterparty they were on the other side in the name of reducing risk they actually increased risk they created a monolithic risk because they forced Central clearing so that the CCP is the counterparty on all derivatives contracts the central clearing parties are the counterparties now what does that mean if the central clearing party itself fails that means there is no counterparty there to honor the derivative contracts for all manner of things but especially people that think that they have hedged their downside risk in the collapse there's no counterparty and the central clearing parties have been delivering liely under capitalized so in Europe and the us there are discussions by the participants themselves about the possibility of the central clearing parties failing in the last few years there have been discussions of this and if you look at DTC itself which houses all the Securities in the US Securities complex and is the central clearing party for most derivatives they have discussion of how they will start over again when the central clearing party collapses and explicitly that they will not put more Capital behind it but they have prund the startup of a new Central clearing party when one of the existing ones fails so it's essentially planned and the entire Capital base of depository trust so essentially the entire us Securities complex is housed there in all derivatives the entire capital is $3.5 billion individual banks have derivative positions the size of the global GDP so something will happen to trigger this collapse implosion I would say the cake is already baked at this time it's been made to happen because to take interest rates after having kept them at zero for 15 years which was insane to begin with and did not have to happen was made to happen and then in essentially a year to take that back to over 5% and if you're noticing they're not stopping the rates are continuing up I'll go through what that means for the Global Financial system when interest rates were at 5% if a bond paid $5 to simplify this let's say it's a perpetuity which means you don't have to take into account a maturity date so if it pays $5 it's worth $100 you would pay $100 for that because interest rates are 5% now if interest rates are driven down by the central bank to 1% and the bond still pays $5 now 5 is 1% of $500 so the value of the bond goes up fivefold by dropping interest rates like that and it was even further because they took it to zero so this is the source of the bubble the financial bubble that we've experienced the everything bubble as some people call it and the entire Financial system is basically a perpetuity so everything is based on discounting cash flows so all real estate the entire stock market is based on discounting back theoretical future cash flows from companies as well as bonds now if you do round trip on this and you take interest rates back from 1% back to over 5% which is something like what has happened here you reverse the entire thing and you have an 80% fall in value of everything everything all commercial real estate the stock market everything now imagine what happens to you if you own these things on Leverage if you borrowed to own these things that's the problem so the entire runup the entire bubble was artificial and the decline will be something like a decimation where indexes will go to maybe 10% of the peak because a lot of things will just go out of business and this is what happened with the whole dot sector when that bubble collapsed this is what happened in the 1930s this is what happened to the Nicki with Japan all bubbles end this way and when you step back and look at them it's like a very sharp mountain peak it goes into like a needle blowoff and you get a first break and then a second run for the top that fails and that's where we are now if you step back and you look at something like the NASDAQ index the second top is failing now which is understandable given that bond yields are continuing straight up so when this begins imploding the insolvencies will increase due to the level of debt and there will be an automatic call for more collateral that will be transferred into the derivatives complex in these Central clearing counterparties but the central clearing counterparties are themselves likely exposed to the collapse because I say to people people that you may think that you've hedged your exposure to a decline here but you've done it through the derivatives complex so the risk is in the derivatives complex it doesn't disappear doesn't go away it's all there and this pain will accumulate in the central clearing counter parties and then they will fail and they're basically telling us they will fail and when that happens the people that thought that they had hedged their exposure included the most sophisticated institutions and the Pension funds will have no protection and the secured creditors will take all of the underlying stocks and bonds which then gives them control of all public corporations and once you control the capitalization structure you then control all of the underlying real things so this is something like what happened in the 1930s when there was stress globally everywhere due to debt levels and you would think that there were no winners but there were because the banks that were controlled by the Federal Reserve for example in the US were slated to survive 9,000 banks in the United States were forced into failure the people who had money in those Banks lost all their cash but their debts were not cancelled their debts were then Consolidated into the Federal Reserve System and enforced so people that were in debt were in trouble even wealthy people lost everything the difference this time around is they're not going after just property that is encumbered by debt they've engineered this so they can take things all Securities as collateral from people and entities that have no borrowings against them they own them clear clear and outright now let me give you an example as analogy to explain the horror of this so you have bought a car and you paid cash for it you think you're being very conservative you have no debt against the car but unbeknownst to you the dealer continues to control your car as collateral you're not told this the dealer uses your car and all the other cars sold by the dealer as collateral for his borrowing in his business now the dealer goes bust and only certain secured creditors are empowered to immediately take your car and all the cars ever sold by the dealer without any judicial review immediately when I describe this to people they get worried about their cars this is not about your car this is an analogy for what has been done it's much worse than this being about your car because it is literally about the entire Securities complex globally so it is not about your insolvency that causes the loss of your assets it's the insolvency of the people that secretly used your collateral as their property without telling you that or disclosing [Music] it how could this happen legally it's a good question and perhaps there is some Hope For Humanity in avoiding this in challenging this whole construct cuz it is a construct none of this is real there are real things in the world this is not a real thing but they will try to convince us that well I'm sorry you've lost everything it's an elaborate story so yes they have changed law can that be challenged that's what has to happen so this was the process they changed it in the Uniform Commercial Code this was beginning in 1994 the efforts to affect this actually go back further than that into the 1960s when they began the process of dematerialization of Securities to hold them all electronically which some people were suspicious about then and they were right to be suspicious it is clear that that beginning process was literally run by the CIA and this is not Conspiracy Theory the man who was charged with forming the depository trust Corp to do this in his own Memoir and in interviews discloses that he was a career CIA operative from the time he was a young man so there was a grand strategic purpose behind this they've been able to do it because it has been run from the highest levels of the US government so the involvement of the CIA then when this construct of the Securities entitlement was put into the Uniform Commercial Code that was pushed through all 50 states done quietly that change was made in 1994 so it took maybe 10 years to get it done in all the states then they changed the bankruptcy law in 2005 and then it was ready to go with the testing of the Leman Brothers case in 2008 so there's a plan that's executed over decades to do this then they began a process of harmonization which was to force this model in law globally and they did this through the EU the first discussion in documents in the EU is in 2002 so that's when the process was beginning then in the aftermath of the com bust and the EU created something they called the legal certainty group and again that sounds like a good thing but what they mean is legal certainty that the secured creditors will take the client assets and they worked at this for years figuring out how to subvert local law when you think about it rights to property is kind of a sacred thing it's something that all people should care about and oddly enough even the people participating in making this happen should care about this in a big way so there in lies the hope of addressing this we can come back to that but the legal certainty group identified the problematic local law and then it took maybe another 10 years to come up with this csdr regulation Central Security ities depository regulation in 2014 that mandated the transport of the collateral from the local or the national level Central Securities depository where people think they own their things out right their record of ownership is there and the Securities are transferred up to this International Central Securities depository level and then on to the central clearing counterparties so it has been done in law it's been done legally it must be attacked legally it must be dismantled legally the power behind all of this is the private control of the central banks and when you look around the world they are all privately controlled you are not allowed to know actually who controls the Federal Reserve and how it is controlled we know that it is controlled some somehow by a set of banks so there is some kind of an ownership structure that extends through the banks that own and control the FED but something like this is done in all central banks around the world if you notice any country that has attempted to have a National Bank is literally attacked and destroyed they're not allowed to exist so it is linked with the war machine this private control of money the intelligence agencies the militaries globally would not be able to function as they are if they weren't linked with this money creation power we now know that when we were kids perhaps we thought that the money you borrow from the bank is someone else's savings that they're giving you it's a zero some game I think we now know with the scale of the money created during the covid period that that is not the case the scale outstrips any real world activity and it's just created out of thin air so this is the power that controls everything they control all political parties all governments all the major corporations the media and this was the case leading into the 20th century in this period when the velocity of money was collapsing that is basically a collapse of their control system the money is a very sophisticated control system system because it requires almost no energy input people are directed by chasing money incentives but this power through chronic overuse when it reaches this point where no matter how much money is created it's not translating into actual economic growth then it goes into a financial bubble and then you get the major collapse of the whole system then they must have a plan to stay in control control through that collapse which will require physical control over people through the reset because the money control system has broken down so this is why you have a period of terrible instability so as we were entering the 20th century velocity money was collapsing then the Ching Dynasty collapsed it's a global phenomena that ended dynastic rule in China then in the period 1914 to 1918 The Turk Ottoman Empire collapsed the austr Hungarian Empire the Russian Empire Germany was destroyed and the British Empire had passed its enith and was really collapsing at that point so it's a global collapse and the people that controlled the banking power through that managed to stay in control and they did it by subjugating populations it's not about taking their money it's not about taking their stuff which they don't need it's about suppression and subjugation and that's the lesson when you look at this period in the 1930s and that is what they have planned for this kind of a cycle again and they've set up for it so this plan to take all collateral globally and to collapse the system in a kind of controll demolition where they end up controlling everything this design was set in motion over 50 years ago it may have had a longer planning Horizon than that but we can see actual concrete steps beginning in the 1960s with the dematerialization so when this is unfolding this wave of insolvencies and it creates an urgency to take the collateral people will be terrified they will be panicked and we know that fear shuts down critical thinking so people people will be in panic mode I've always been interested in what happened in the 30s because of talking about these things with my father who lived through that and what I saw happening in Cleveland when I was a boy I'd try to talk with anyone who would lived through that time and I asked my aunt uh what had happened in the 30s and she said well suddenly no one had any money and I said what do you mean how could that be and she said well no one had any money and even wealthy families didn't have any money and she knew families in which their daughters had been going to private schools and they couldn't afford to go back to school when you really look at what happened there if you close all the banks which is what FDR did he suddenly literally closed all the banks and then only certain Banks were allowed to reopen which were the ones controlled by the fed well then suddenly no one had any money it's not hard to imagine when when it's all just shut down suddenly and then you have the problem that there was a drop in price level drop in activity and they kept the economic activity very suppressed for years and I know that from family history through the 30s my grandfather's engineering business I know from a family letter by 1936 which was 3 years after the banks had reopened there was still no business 3 years later they managed to get through this both sides of my family because they had no debt people were more conservative then but it was very difficult now the other thing that happened was the Federal Reserve was set up with a kind of inevitable logic that they would have to take the gold from the public which was of course the monetary asset backing everything then so the go gold of the public was confiscated under the complaint that the public was hoarding the gold but then what did the FED do with it the FED hoarded the gold and did not use it to expand credit they kept the conditions tight so what do we have this time around gold is not the underlying collateral in this system it's all Securities globally so they will be taken under the argument that well we have to save these systemically vital institutions so that we can restart the economy again how could we restart the economy if they are not protected so that will be the reason given and it's like a game of Monopoly where all of the pieces all of the money on the board are pulled back to the bank and then they say let's start a new game and we'll start over from the basis that we have everything and you don't so would you like to borrow something and this is what the CBD C the Central Bank digital currency will be it will be very difficult for people to refuse to use it because they literally won't be able to eat they will have an app they can download this will be the help this will be the calvary riding to the rescue just download this app and you can load your phone with some currency to allow you to go buy milk but every time you use that you actually borrowing money from them they had have you again it will happen very fast this will unfold in a very frightening crisis kind of environment and people will have difficulty refusing that's why it's so important to spread this awareness of this beforehand so that people understand what is happening and so that people can become engaged in this all the way to the top of the system it has the potential to activate very capable people all the way to the the top of the system it has the potential to unify people against this what I tried to do with this book was to stick with things I absolutely know and to make it a kind of ho in terms of allowing one to see a ear reputably the whole thing with the aim of pulling it out on the table so that everyone can have a good look at it including the participants including the people that are making it happen I have the premise that this is largely being done unconsciously that the end result of this has not really been fully understood by the participants and that her perhaps even the people at the very top of this do not understand what is about to happen and that they will be destroyed by their own hand if they do this so it's the result of a kind of inevitable logic that they have that they have to control everything that has now been taken to the ultimate degree where one can see while it's an intelligent design it is Liv literally insane to actually do this because no one wants this and that the people that have inherited this ownership layer at the very top they did not Design This they did not put it in motion they have allowed the Juggernaut to continue there has been no pruning in the garden there's been no oversight it's literally never been looked at never been checked it is basically run out of control unconscious ly so we have to make it conscious all the way to the top of the system now another way I think about this is they study us we have to try to imagine who we're dealing with here so I'm getting into conjecture about this I have known people pretty high in the system I have this idea that people are intimidating if you have not met them but once You' met them you see that they are just people and I think we have to understand these are just people they are not lizards eating babies like potato chips that is not helpful to think of it that way so they are actually not particularly capable people so there is a head of the snake but it can't do anything alone it is ryant on the muscle beneath the head of the snake to do everything for it and that part of the purpose of this is to push this awareness up to that muscle now what what would that look like it might look like people that control corporations that are doing all the work to implement this that would realize when they see this that they didn't know anything about this which means they do not actually have a place at the table how might that affect their thinking could they have some interesting conversations with someone when they're asked to do something could they perhaps decide to withdraw participation that kind of thing we need to happen so we have to reach people at high levels in this system another principle is that there's not just one head of the snake it's like a Hydra there are lots of heads and if you cut one off another one grows back so you have to be able to show the entirety of this because they only understand one piece of it so this is like a mirror to be able to see concisely ly the hole of where this is going so that you can address the many headed Hydra you know people consider that the CIA and all the intelligence organizations are much like that as I said the garden has not been pruned there's been no oversight here so they're all running within their missions essentially out of control those people also need to be aware of where this is going now there are people that are actually criminals that are killers in this but they are not the people running things actually if the money is just cut off to these entities it [Music] stops I think that we're very close to this collapse being triggered what are the indications for that well most profoundly what has been done to interest rates and where they are now in the scale of the insolvencies that are out there they're not being discussed they're being covered up the only way that the financial system has not collapsed is that there is a big Hidden Hand injecting lots of created money directly into the financial markets holding them up right now as well as allowing institutions to believe they have downside Risk by buying protection in the derivatives Market the combination of those things so this support The Hidden Hand as I call it can be withdrawn at the time of their choosing but we're getting late in this process given what's already happened to the interest rates the other indication of timing is the bank resolution the documents of the bank resolution Authority in Europe their planning cycle documents were mandating all of the globally systemically important Banks to be ready for solvent wind down at the end of last year 2022 now what they mean by solvent wind down is not wind down of the entire Bank on a solvent basis it will be parts of the bank that will remain solvent but they've literally mandated that they have to be ready the biggest banks to go flat on all of their derivatives positions in a controlled way suddenly so they've prepared for that that is operational as at the end of last year now in this year's planning cycle document they are saying that they are on track to have completed all their work by the end of this year 2023 so these are indications to give you another idea of the seriousness of this they've been running these trilateral exercises with Britain and the EU and the US for six of the seven past years I think they may have missed a year during Co but in these exercises from the US side the participants are the US Treasury secretary the chairman of the Federal Reserve the chairman of the FDIC the heads of all these entities in this exercise which I've never seen before with anything so they're very very serious about this and these exercises are about assuring the crossborder transfer of the collateral when the banks are put into wind down so you've noticed in the news that there have been some failures of banks in the last year and that is due to this increase this backup in interest rates and the idea that this is a bank specific problem is not the case these are the canaries in the coal mine this is absolutely systemic again looking back at the 1930s for guidance here the first big bank failure was in 1930 it was allowed to happen and there was a kind of trickle of bank failures so the bank holiday when they closed everything was until 1933 so it was an unfolding banking crisis for 3 years so it's not unusual that you would have an opening stage here of a number of banks that have failed but it doesn't all let loose immediately it unfolds over months and perhaps a couple of years before you hit the point where everything's in fre [Music] [Music] fall well how could things be better here how could this go well we have to imagine that it seems to be overwhelming but the first step is to get this awareness up to the highest levels so that people realize we don't want this to happen it's been taken to an insane extreme and it's not going to go well for anyone then people are left with this idea that well everything will just collapse and I don't believe that at all there is a real world with real economic activity that goes on despite this system that extracts resources from people and places enormous stress on them that funds psychological operations that are of course public facing they're used against the population so the the resources of the public are extracted tremendous burdens are placed on people stresses it's a system that subjugates people and if that simply stops everything gets better immediately now how could things be different Central Banking should be a public utility the very idea that it should be controlled by private interests that is the source of all the problems for Humanity that must stop as a public utility you know of course banking is a useful thing to have we have to realize we don't have to go back to Sticks and Stones we don't want everything burned to the ground we have to take back control of our society which has largely been created by good people all the Innovations and usurped so we don't owe them anything we have good things that have been created we just have to not allow them to control these things any longer so public banking would be like a utility any profits would be returned to the public or used to support government we have to have government we have to have some way to operate society and have roads and do things that work for society so Anarchy and Chaos we can't have that so this has to be done peacefully it has to be done legally another concept and these are not my IDE is on borrowing these things in terms of public banking but also something like the tax system which is really a way of harassing and again subjugating people we know with the scale of money creation things are not being funded from our tax dollars but if we had a stable system some kind of share of economic resources are needed to operate the government a very simple way to do that is to place a simple fee on every electronic money transfer wouldn't be needed for paper currency just every electronic money transfer we know today that the major corporations don't pay any taxes they aren't supporting anything so money flows it could be a fraction of a percent and especially if you end all of the wars if you wind down the military bases if you stop all the covert actions which are criminal the scale of government can be right sized to what is actually beneficial to humanity as I say we're being governed by constructs they aren't even real and if they don't serve Humanity they must be stopped and if we're going to have artificial constructs they must serve Humanity so imagine how people would feel if they were told you don't have to file taxes in anymore that's all going to be handled just pay a tenth of a percent on whatever electronic transfer you're doing but the people that run this system don't want those kinds of solutions because it would eliminate their control so my purpose with this book is to create something that will show the entirety of what this is and where it's going to do it with an economy of information and just hard irrefutable information and put this in something that can travel and that is happening and I know already that it has reached billionaires it's reached people all over the world it's Reach people that manage a lot of money have responsibility for that people in weris and Vancouver and New Zealand and Monaco London so it is happening that's what we have to have happen and we need people at the top of the system that are not 6° separation from the head of the snake but are more like one or two degrees from the head of the snake to become aware of this and start to say something about it and start to do something about it because they realize that they are not going to be protected as I say toward the end of the book wealthy people think they're special you are special they're saving you for [Music] dessert and you let that sink in so everybody has to get busy with this including people who believe that they are powerful and they can make a difference and it needs to be done legally needs to be opposed through legal means I mean imagine what would happen if judges in important position Ians become aware of this prosecutors this has never really been examined in terms of how it can be dismantled and there will be ways to do this because it is just a construct so in terms of advice to people and again I can't give you a financial advice I don't know your personal situation I would start by saying that your happiness is important and the happiness of your family and you should not let Financial considerations cause you to do something that will drive your family into despair you have to be able to get through these years but if there are things you can do that might actually give you a relief of stress you should consider doing those things and one of those might be to eliminate all debt so you have to get over this notion that you should use borrowed money to control more stuff they want you to do that because when the price level Falls you won't be able to service that debt so you take advantage of this time remaining to sell things to pay off your debts it doesn't make sense to have money in the financial markets when you also have debt there are people I know who have sold their homes which is a tough decision to make and are simply renting to make sure that they're not in debt at all so you have to ask yourself these are personal decisions how that feels for you to do that another principle is to get real so to speak to invest in real things avoid constructs and intermediaries you want to hold things directly have good title to them things that you can hold like that such as land buildings in land and you want to think about if this goes into a difficult period of years and this can be a positive thing is to have an ability to produce food in the 30s for both sides of my family they weren't Farmers but they had to have recourse to family that had farms in order to supplement their food it was important so again that can be done in a positive way you put money into building a green House have a big garden and Orchard might choose to live in a more rural area talking with people who went through the depression there was one friend of mine much older than me I knew he had lived through the depression and I asked him about it and he said well you know both my parents were killed in an automobile accident so I was on my grandfather's farm and I was not aware that there was a depression so he was on this farm with his cousins that tells tells you something as a child they were just [Music] fine the book I've written is called the Great taking and you can find it on a landing page at the great tak.com there is a free pdf you can download I've done it this way because it will make it close to zero friction so it can spread globally and that is really happening some people would say well surely you must be paid something for this and I know that if I had been paid anything I would just use it to spread the book so why do that make it zero friction this is the most important thing I can do right now there are hard copy books you can get through Lulu and those cost something because it cost something to produce them and they can be delivered globally there is some small profit in that but I am directing that to another person who is a scientist and has done very important [Music] work [Music] [Music]

[Music] my name is David Webb I live in Stockholm Sweden I&#39;m on a small farm here it&#39;s important to understand I am not giving Financial advice the book I&#39;ve done has a greater purpose than that I am not active in the markets I am not short the market I am in things like Farmland I was managing public equities and ultimately hedge funds through the aftermath of the Asian financial crisis the lead up to the do bubble inv bust and I noticed that fund flows were very large relative to the size of the US economy for example or the global economy so I started to look at the scale of money creation by the Federal Reserve and I developed the Insight that the Fed was actually influencing the financial markets which no one would be surprised at today but at that time it was considered conspiracy theory even by my partners this was something I could not talk to people about but I began studying it myself and I saw that in individual weeks the scale of new money created was on the order of 1% of US GDP or more now what that meant given that the US economy was growing at maybe 3 or 4% in a good year to have money creation on that scale in a single week it meant that the money creation was far outstripping any real economic growth so the transmission mechanism for money creation into real economic activity was breaking down this is when I started becoming concerned and started following this closely and it actually developed into a way for me to navigate the markets so I applied it and I managed to protect people who I was responsible to as my clients through the do bubble and bust and did very well through that period armed with this understanding but the bigger understanding was that the velocity ofone was collapsing and I knew at that time this is over 20 years ago that we were headed into something like the time that the world experienced through the period of the great Wars and the Great Depression because this kind of velocity of money was occurring at that time so I went into this deeply and studied everything that was happening leading into the 20th century saw that this provided the best anal us period for understanding what we were entering then so I have followed this very closely I have applied it in my work in what I was doing so I had an effective understanding of it the important thing to understand now is that the velocity money which is the relationship between economic growth and money or money creation money supply has broken down and is now at a lower level phos of money than it was at any point during the Great Depression and the world wars so I believe that this is actually the profound underlying reason for the many things that we are seeing geopolitically I grew up in a family of medical people and Engineers they were not involved in High Finance as a boy I went through basically the beginning of the industrial collapse of Cleveland they say that people strive to get control over what has hurt them and I grew up with a real need to understand what was destroying us because it deeply affected my family which had been very happy prior to this A happy benevolent family and it literally destroyed the place where I grew up so I decided to study business and finance this was something my father did not want me to do he thought I should be an engineer and when I was younger I thought I would have been a medical doctor but this became the pressing thing for me to understand so I studied finance and computer science I got a subscription to the Wall Street Journal I had no one to guide me I just started looking at the Wall Street Journal and I noticed these two Tombstone which announced the big mergers and Acquisitions deals or financing that all these firms were in New York so I decided at a young age I needed to go to New York and I got a job with a computer services firm I could program I had studied systems analysis and finance so in this first year as a young guy I went into perhaps literally every Financial firm in New York City with the sales teams so that helps a person I think to begin to understand things on an intuitive level just by seeing things it&#39;s not so intimidating once you&#39;ve been into these places things are intimidating if you&#39;ve never encountered them so that all happened in my first year and then one of my clients which was a mergers and Acquisitions group their two analysts were leaving one was going to Harvard Business School the other was going to the London office and the sales guy that I worked with on that account came back and told me that they needed someone with a background in finance and computers and I realized at that time that was going to be me so I talked with my wife about it I showed up at this office so early the next day nobody was there I had to wait about an hour for people to start coming in and they were shocked that I thought that I had any business suggesting that I could work there they proceeded to put me through a shocking stressful morning I was ushered into one of the senior vice presidents who listened to what I had to say and then he said well you better be sure you want to do this because if you [ __ ] up you&#39;re gone by the time I left I thought maybe this wasn&#39;t such a good idea I probably shouldn&#39;t have bothered you know sure enough they called back they needed me because I knew how to do things so I worked in m&amp;a mergers and Acquisitions for 5 years in this firm it was working literally Around the Clock sometimes for days with no sleep or maybe just lying on the office floor for half an hour to get up and continue so I learned to deal with a lot of stress with little sleep through this period of time and then I managed to move to what was than the biggest private Equity Firm in the world by an order of magnitude I chose to go there rather than stay I had another offer from a mergers and Acquisitions group at LF Rothchild that would have been for about twice the compensation but I sensed that there was going to be a crash of some kind and a month later was Black Monday October of &#39; 87 and LF Rothchild was wiped out lost all of its capital I really went to this private Equity Firm because when you&#39;re doing m&amp;a it&#39;s basically being a glorified salesman you&#39;re an agent when you&#39;re in the shoes of the private Equity investment firm you were the principal it&#39;s a different kind of due diligence and Analysis and I was there for 3 years but it was very intensive 3 years and shortly after I had started with the firm I ended up running the acquisition this longdistance telephone company I handled all of it because the partner on the deal had difficulty with stress and he literally went home and stayed in bed for 6 months I handled all the due diligence which was very complicated and the financing and it ended up being the largest capital gain in the history of the firm but it was very stressful for my family because once again I was was working around the clock I would get up to negotiations on Saturday morning late into 3:00 in the morning Saturday night sleep for a few hours start again on Sunday morning this went on for 9 months when it was over it took a few months but my wife eventually said to me you know if I knew our life was going to be like this I wouldn&#39;t have signed up for it and that just crushed me I got out a road atlas of the us we went through a Page by Page and just thought about where could we go where could we be happy I couldn&#39;t stay in that there was a possibility I would go to their London office but I knew that would even be more intense it would just be more of the same once I&#39;ve done something I don&#39;t need to keep doing it I learn what I have to learn from it I think I am different than other people in this financial world because I actually don&#39;t care about the money that is not why I&#39;m doing it that should just kind of fall out of what you&#39;re doing and you don&#39;t need a lot of it there&#39;s no reason that you need more and more and more I was always driven by understanding things and that actually gave me an advantage I understood things that other people didn&#39;t so ultimately we just decided to go back to Cleveland where I grew up and we bought a house that was within the sound of the church bells where my grandfather&#39;s house was my memory from Sundays when my dad would take us to Grandpa&#39;s house so it was really going home to try to make things sane but the intensity returned again as I got into managing in the public markets I had this Insight that the public markets were even less efficient than the private markets because you had these big fun flows that were pushing things way up Beyond where a negotiated deal would ever be done and driving prices down below where would be done so you got better opportunities both buy and sell things I ended up ultimately running this hedge fund strategy that I created so I designed the trading desk I train the people develop this team trading strategy through the do com bubble in the bus we were typically in 3 to 400 positions at the same time I had developed a strategy to be short the market using hundreds of positions so that all these crazy.com stocks no one position could kill us but with all of these positions we had a kind of visibility into the market and the fund flows and what was happening we were doing exceptional well people couldn&#39;t figure out how we were doing so well so we had these Consultants coming from literally all over the world flying into Cleveland and coming to the office the macro thing I was looking at was this rate of money growth it&#39;s always growing whether it was accelerating or decelerating and I knew we had maybe a day or two lead time once I saw the figures to get positioned ahead of of the market rolling over or the market accelerating upwards and other people didn&#39;t understand this even if I explained it to them they didn&#39;t want to hear about it they didn&#39;t know how to apply it it was like that in addition to that I&#39;ve always operated with a mental model of what is happening in the world and I suppose I&#39;m different than other people in that the things I pay attention to is what does not fit my model that is what can kill you so I pay attention to what does not make sense to me what does not fit you have to drop everything imagine you&#39;re in a highly leveraged position with hundreds of positions when something comes up that does not fit you pay attention to that immediately so the trading room was a newsroom a research operation so we paid attention to things second by second and we would dig into things that did not make sense so through this period of time I also started changing I think as a person because I was seeing things that were not in the narrative the news narrative that people were accepting about what was happening so I knew that economic data series were being change this is after September 11th as well as all the disconnects around September 11th itself so it was the beginnings of my becoming a kind of activist although I didn&#39;t know it I wrote quarterly letters to my clients so I assembled things on my desk they would accumulate and I eventually had something like a thick telephone book of just the things that I knew and it documented that did not conform with the accepted narrative that people were being shown through the media and I then thinn this down into a thinner telephone book and literally started going door too to my neighbors and what I was doing was I was seeing how I could get through to people how could I explain this and it&#39;s damn difficult basically it doesn&#39;t work I decided that maybe my neighbors were too well off to be able to hear about this so I actually went out to a poor area and a guy was sitting on his front porch and he was interested in what I was doing cuz I was still in a business suit I explained it to him and he just said good luck man in this voice of someone who really knew already and had a kind of resignation that there wasn&#39;t much you could do about it so it&#39;s been a long journey for me trying to expose things I was expecting that there were going to be large scale insolvencies after the housing bubble I was aware of what happened during the housing bubble and how that was engineered in 2003 I met with George Soros I showed him a chart of the growth in asset back Securities and I told him that this would be the basis of the next bubble and collapse and he said to me you&#39;re crazy so he either did not know that or he did not want to acknowledge it at that time in 2003 so what was happening was tremendous growth in the derivatives complex so I started becoming concerned about derivatives in the very early 2000s in the aftermath of the do Bubble at that time the derivatives complex was about twice Global GDP by 2007 it was 10 times Global GDP that growth in maybe five or six years so the financialization was out stripping any real thing on earth already at that point and this growth in asset back Securities what was happening was that the process of doing any credit underwriting The Moorings had been slipped and this was done by Design prior to this Banks would do credit underwriting meaning they would want to get repaid for the money they had loan so they would do some analysis of whether the borrow could repay it but during this period of time the the banking industry went to securitization of loans so it became a business of originating loans without any concern as to whether they could be repaid the loans were all packaged up whether they were AAA loans or subprime loans or boat loans or car loans anything these pools were stratified now if you think of it you had a top 20% the next 20% and so on down to bottom and the idea was that any defaults would hit the bottom rated trunch first so for the defaults in that pool to reach the top of the pool the top 20% you&#39;d have to blow through 80% of all the capital in the pool so the top was rated AAA just structurally they could do that the problem was no one wanted to buy the lower rated Tres so they then used an aspect of the derivatives Market the the credit default obligation CD to buy the default protection for the lower rated tranches then they could sell the entire pool as AAA so this was done through as green span called it the Miracles of modern finance and he said presumably the risk will be borne by those best able to bear that risk at the time so because it could all be sold as AAA and the yields were better than treasuries and the Fed was creating so much liquidity these pools were then sold 10 times over on a modeled synthetic basis also in the derivatives market and so while the banks knew that they did not want to eat their own cooking the stuff that they had originated they were buying the assets this is the nature of a bubble the people that know it&#39;s a fraud are still consuming the stuff that is being created through the same process so the asset side of the balance sheets of banks were these Securities that were being created through the same process it reached a point where credit default obligations alone were about 10% of the derivatives complex by the time the r Financial prices kicked off in 2008 2009 10% so credit to fall obligations alone were the size of the global economy now I wondered who&#39;s signing up to take that default risk and the early stages people were saying well the problem here is maybe in the hundreds of billions they were off by an order magnitude it was in the tens of trillions so as the FED were injecting all of this created money into the banks it eventually became clear that the default risk had been taken by hedge funds subsidiaries within the banks themselves so they enabled this whole thing by creating the entities within the banks that would take the other side of the default risk and then when the collapse occurred they were given the money to paper over that loss the FED has murky powers that people don&#39;t know about until they decide to make it visible one of their powers is to create entities out of nothing you just create a limited liability company and then the FED can loan money create money and put it into that entity it&#39;s completely off balance sheet doesn&#39;t have to be disclosed anywhere but in this case they did they created something called Maiden Lane which is a street I sometimes walk down in the southern district of Manhattan and the financial district so Maiden Lane was extended this created money to buy these problematic positions out of the banks take them off the hands of the banks and there was so much of this problematic stuff that they then created a Maiden Lane 2 and a Maiden Lane 3 and who knows what else was created that we were not told about so in 2008 I noticed the first failure of a broker dealer so I was expecting there to be a lot of insolvencies I was paying attention and the thing that shocked me was that the client accounts in this broker dealer were encumbered in the bankruptcy estate of the broker that never could have happened before in all of the history of Securities they were personal property and if the broker failed you would say I&#39;m sorry you&#39;re out of business here&#39;s where you can transfer my assets that did not happen in this case so I started digging into what could possibly have changed and this was as serious as as a heart attack given that we were going into this meltdown at that time that&#39;s when I discovered it had been done through changes to the uniform commercial code in the United States this had been done in all 50 states so it was something that could be done very quietly over a long period of time and did not have to be done at the federal level didn&#39;t draw attention what they did was to create a new legal construct of a security entitlement now prior to this as I said Securities for 400 years were personal property this concept of a security entitlement severed that that&#39;s its purpose so what people then have and institutions and Pension funds even sophisticated investors all they have is an entitlement it&#39;s a claim it&#39;s a contractual claim which is very weak in the event of insolvency so it&#39;s an appearance of ownership it&#39;s sometimes referred to as beneficial ownership which sounds nice but what it means is that you receive dividends you receive a proxy you are the owner of title you can of course you can buy it and sell it but you can see in documents that I&#39;ve found that the legal owner is actually the entity that controls the security with a secured interest they are the legal owners of the property so now you have a contractual claim next all of the Securities are held in pooled form so you have no specific identification it used to be that with paper certificates they were numbered you had a specific numbered Bond or stock share certificate so now they&#39;re fungible fungible bulk book entry form cooled further we know and it is absolutely irrefutable from the fed&#39;s own response to a questionnaire from the EU that even segregated accounts even people or institutions that have been told that their Securities are segregated are in the same pool and entitled to only a Prat a share in the event of an insolvency of the custodian so again segregation is just an appearance people are told that it&#39;s an absolute subterfuge and the shocking thing is that even sophisticated institutional investors do not understand this or they don&#39;t want to know it further even if fraud outright fraud is committed by the custodian that does not obviate the ability of the secured creditors to take the Securities from these pools ahead of the people who thought they owned them then there was in 2005 a change to the bankruptcy law in the United States creating something called Safe Harbor again that sounds nice but what Safe Harbor means is Safe Harbor for the secured creditors to take the client assets and to make that absolutely certain that even in the event of fraud they will take client assets so prior to this change in bankruptcy law there is something called fraudulent transfer fraudulent conveyance and the trustee the bankruptcy trustee had a duty to claw back any assets that had been fraudulently transferred so this change was made in 2005 and then with the failure of Leman Brothers this was cemented in case law and we concede the Judgment by the bankruptcy court Court related to this what happened there was that JP Morgan was both the custodian for the client assets and the secured creditor that took the client assets which prior to 2005 everything that happened there would have been constructively fraudulent but the bankruptcy judge this is the southern district of New York which is Manhattan found in FA of JP Morgan that JP Morgan absolutely was entitled to take the client assets the only question was whether JP Morgan was an entitled person basically to take the client assets this is an important point because it&#39;s not all secured creditors that have this power to take the client assets it is only the very biggest banks that are entitled to take the client assets so they don&#39;t want anyone else elbowing in there to take anything only they will take them and in this judgment the judge asks the question is JP Morgan a member of the protected class used explicitly those words and said quite obviously as one of the biggest banks in the world the biggest financial institutions JP Morgan is quite obviously a member of the protected class to see this in a bankruptcy case law from the court I think that&#39;s pretty strong stuff it&#39;s like that document directly from the FED provided to the legal certainty group this is hard to refute a custodian has the records of who owns what it&#39;s in their books and Records but that&#39;s all it is it is the records the system has been changed so that the property itself is then transferred up to a higher level and held in pooled form so you deal deal with your broker to execute a trade to buy or sell something and you get a representation of an account that shows you what you have in it but the assets are not held even at what you think is your custodian it&#39;s transferred to a higher level in the US that is the depository trust Court which holds all Securities in the United States in pooled form so the Brokers themselves are low down in the food chain in Europe there are Central security depositories at the national level that give an appearance of a registry of ownership at the national level but by law under something called the Central Security depository regulation csdr which was imposed in 2014 by law these Securities are transferred by a mandatory link to an international Central Securities depository so they want crossboard mobility of the collateral to occur so in Sweden for example you have a local registry but then the Securities go up to Euro CLE Belgium so they are subject to Belgian law not Swedish law at that level and then the collateral is transported to underpin the derivatives complex which is housed at the central clearing County parties the acronym is the ccps so this is the purpose to take the collateral up to this uh Central clearing counterparty level and we know from a bis document that is now over 10 years old that the systems are in place for the movement of this collateral on a global basis nearly instantaneously especially in a crisis to be swept to to meet the collateral demands of the system the secured creditors also associated with this we have to understand derivatives used to be bilateral you knew when you entered into a contract who your counterparty was and you look to the credit quality of that counterparty they were on the other side in the name of reducing risk they actually increased risk they created a monolithic risk because they forced Central clearing so that the CCP is the counterparty on all derivatives contracts the central clearing parties are the counterparties now what does that mean if the central clearing party itself fails that means there is no counterparty there to honor the derivative contracts for all manner of things but especially people that think that they have hedged their downside risk in the collapse there&#39;s no counterparty and the central clearing parties have been delivering liely under capitalized so in Europe and the us there are discussions by the participants themselves about the possibility of the central clearing parties failing in the last few years there have been discussions of this and if you look at DTC itself which houses all the Securities in the US Securities complex and is the central clearing party for most derivatives they have discussion of how they will start over again when the central clearing party collapses and explicitly that they will not put more Capital behind it but they have prund the startup of a new Central clearing party when one of the existing ones fails so it&#39;s essentially planned and the entire Capital base of depository trust so essentially the entire us Securities complex is housed there in all derivatives the entire capital is $3.5 billion individual banks have derivative positions the size of the global GDP so something will happen to trigger this collapse implosion I would say the cake is already baked at this time it&#39;s been made to happen because to take interest rates after having kept them at zero for 15 years which was insane to begin with and did not have to happen was made to happen and then in essentially a year to take that back to over 5% and if you&#39;re noticing they&#39;re not stopping the rates are continuing up I&#39;ll go through what that means for the Global Financial system when interest rates were at 5% if a bond paid $5 to simplify this let&#39;s say it&#39;s a perpetuity which means you don&#39;t have to take into account a maturity date so if it pays $5 it&#39;s worth $100 you would pay $100 for that because interest rates are 5% now if interest rates are driven down by the central bank to 1% and the bond still pays $5 now 5 is 1% of $500 so the value of the bond goes up fivefold by dropping interest rates like that and it was even further because they took it to zero so this is the source of the bubble the financial bubble that we&#39;ve experienced the everything bubble as some people call it and the entire Financial system is basically a perpetuity so everything is based on discounting cash flows so all real estate the entire stock market is based on discounting back theoretical future cash flows from companies as well as bonds now if you do round trip on this and you take interest rates back from 1% back to over 5% which is something like what has happened here you reverse the entire thing and you have an 80% fall in value of everything everything all commercial real estate the stock market everything now imagine what happens to you if you own these things on Leverage if you borrowed to own these things that&#39;s the problem so the entire runup the entire bubble was artificial and the decline will be something like a decimation where indexes will go to maybe 10% of the peak because a lot of things will just go out of business and this is what happened with the whole dot sector when that bubble collapsed this is what happened in the 1930s this is what happened to the Nicki with Japan all bubbles end this way and when you step back and look at them it&#39;s like a very sharp mountain peak it goes into like a needle blowoff and you get a first break and then a second run for the top that fails and that&#39;s where we are now if you step back and you look at something like the NASDAQ index the second top is failing now which is understandable given that bond yields are continuing straight up so when this begins imploding the insolvencies will increase due to the level of debt and there will be an automatic call for more collateral that will be transferred into the derivatives complex in these Central clearing counterparties but the central clearing counterparties are themselves likely exposed to the collapse because I say to people people that you may think that you&#39;ve hedged your exposure to a decline here but you&#39;ve done it through the derivatives complex so the risk is in the derivatives complex it doesn&#39;t disappear doesn&#39;t go away it&#39;s all there and this pain will accumulate in the central clearing counter parties and then they will fail and they&#39;re basically telling us they will fail and when that happens the people that thought that they had hedged their exposure included the most sophisticated institutions and the Pension funds will have no protection and the secured creditors will take all of the underlying stocks and bonds which then gives them control of all public corporations and once you control the capitalization structure you then control all of the underlying real things so this is something like what happened in the 1930s when there was stress globally everywhere due to debt levels and you would think that there were no winners but there were because the banks that were controlled by the Federal Reserve for example in the US were slated to survive 9,000 banks in the United States were forced into failure the people who had money in those Banks lost all their cash but their debts were not cancelled their debts were then Consolidated into the Federal Reserve System and enforced so people that were in debt were in trouble even wealthy people lost everything the difference this time around is they&#39;re not going after just property that is encumbered by debt they&#39;ve engineered this so they can take things all Securities as collateral from people and entities that have no borrowings against them they own them clear clear and outright now let me give you an example as analogy to explain the horror of this so you have bought a car and you paid cash for it you think you&#39;re being very conservative you have no debt against the car but unbeknownst to you the dealer continues to control your car as collateral you&#39;re not told this the dealer uses your car and all the other cars sold by the dealer as collateral for his borrowing in his business now the dealer goes bust and only certain secured creditors are empowered to immediately take your car and all the cars ever sold by the dealer without any judicial review immediately when I describe this to people they get worried about their cars this is not about your car this is an analogy for what has been done it&#39;s much worse than this being about your car because it is literally about the entire Securities complex globally so it is not about your insolvency that causes the loss of your assets it&#39;s the insolvency of the people that secretly used your collateral as their property without telling you that or disclosing [Music] it how could this happen legally it&#39;s a good question and perhaps there is some Hope For Humanity in avoiding this in challenging this whole construct cuz it is a construct none of this is real there are real things in the world this is not a real thing but they will try to convince us that well I&#39;m sorry you&#39;ve lost everything it&#39;s an elaborate story so yes they have changed law can that be challenged that&#39;s what has to happen so this was the process they changed it in the Uniform Commercial Code this was beginning in 1994 the efforts to affect this actually go back further than that into the 1960s when they began the process of dematerialization of Securities to hold them all electronically which some people were suspicious about then and they were right to be suspicious it is clear that that beginning process was literally run by the CIA and this is not Conspiracy Theory the man who was charged with forming the depository trust Corp to do this in his own Memoir and in interviews discloses that he was a career CIA operative from the time he was a young man so there was a grand strategic purpose behind this they&#39;ve been able to do it because it has been run from the highest levels of the US government so the involvement of the CIA then when this construct of the Securities entitlement was put into the Uniform Commercial Code that was pushed through all 50 states done quietly that change was made in 1994 so it took maybe 10 years to get it done in all the states then they changed the bankruptcy law in 2005 and then it was ready to go with the testing of the Leman Brothers case in 2008 so there&#39;s a plan that&#39;s executed over decades to do this then they began a process of harmonization which was to force this model in law globally and they did this through the EU the first discussion in documents in the EU is in 2002 so that&#39;s when the process was beginning then in the aftermath of the com bust and the EU created something they called the legal certainty group and again that sounds like a good thing but what they mean is legal certainty that the secured creditors will take the client assets and they worked at this for years figuring out how to subvert local law when you think about it rights to property is kind of a sacred thing it&#39;s something that all people should care about and oddly enough even the people participating in making this happen should care about this in a big way so there in lies the hope of addressing this we can come back to that but the legal certainty group identified the problematic local law and then it took maybe another 10 years to come up with this csdr regulation Central Security ities depository regulation in 2014 that mandated the transport of the collateral from the local or the national level Central Securities depository where people think they own their things out right their record of ownership is there and the Securities are transferred up to this International Central Securities depository level and then on to the central clearing counterparties so it has been done in law it&#39;s been done legally it must be attacked legally it must be dismantled legally the power behind all of this is the private control of the central banks and when you look around the world they are all privately controlled you are not allowed to know actually who controls the Federal Reserve and how it is controlled we know that it is controlled some somehow by a set of banks so there is some kind of an ownership structure that extends through the banks that own and control the FED but something like this is done in all central banks around the world if you notice any country that has attempted to have a National Bank is literally attacked and destroyed they&#39;re not allowed to exist so it is linked with the war machine this private control of money the intelligence agencies the militaries globally would not be able to function as they are if they weren&#39;t linked with this money creation power we now know that when we were kids perhaps we thought that the money you borrow from the bank is someone else&#39;s savings that they&#39;re giving you it&#39;s a zero some game I think we now know with the scale of the money created during the covid period that that is not the case the scale outstrips any real world activity and it&#39;s just created out of thin air so this is the power that controls everything they control all political parties all governments all the major corporations the media and this was the case leading into the 20th century in this period when the velocity of money was collapsing that is basically a collapse of their control system the money is a very sophisticated control system system because it requires almost no energy input people are directed by chasing money incentives but this power through chronic overuse when it reaches this point where no matter how much money is created it&#39;s not translating into actual economic growth then it goes into a financial bubble and then you get the major collapse of the whole system then they must have a plan to stay in control control through that collapse which will require physical control over people through the reset because the money control system has broken down so this is why you have a period of terrible instability so as we were entering the 20th century velocity money was collapsing then the Ching Dynasty collapsed it&#39;s a global phenomena that ended dynastic rule in China then in the period 1914 to 1918 The Turk Ottoman Empire collapsed the austr Hungarian Empire the Russian Empire Germany was destroyed and the British Empire had passed its enith and was really collapsing at that point so it&#39;s a global collapse and the people that controlled the banking power through that managed to stay in control and they did it by subjugating populations it&#39;s not about taking their money it&#39;s not about taking their stuff which they don&#39;t need it&#39;s about suppression and subjugation and that&#39;s the lesson when you look at this period in the 1930s and that is what they have planned for this kind of a cycle again and they&#39;ve set up for it so this plan to take all collateral globally and to collapse the system in a kind of controll demolition where they end up controlling everything this design was set in motion over 50 years ago it may have had a longer planning Horizon than that but we can see actual concrete steps beginning in the 1960s with the dematerialization so when this is unfolding this wave of insolvencies and it creates an urgency to take the collateral people will be terrified they will be panicked and we know that fear shuts down critical thinking so people people will be in panic mode I&#39;ve always been interested in what happened in the 30s because of talking about these things with my father who lived through that and what I saw happening in Cleveland when I was a boy I&#39;d try to talk with anyone who would lived through that time and I asked my aunt uh what had happened in the 30s and she said well suddenly no one had any money and I said what do you mean how could that be and she said well no one had any money and even wealthy families didn&#39;t have any money and she knew families in which their daughters had been going to private schools and they couldn&#39;t afford to go back to school when you really look at what happened there if you close all the banks which is what FDR did he suddenly literally closed all the banks and then only certain Banks were allowed to reopen which were the ones controlled by the fed well then suddenly no one had any money it&#39;s not hard to imagine when when it&#39;s all just shut down suddenly and then you have the problem that there was a drop in price level drop in activity and they kept the economic activity very suppressed for years and I know that from family history through the 30s my grandfather&#39;s engineering business I know from a family letter by 1936 which was 3 years after the banks had reopened there was still no business 3 years later they managed to get through this both sides of my family because they had no debt people were more conservative then but it was very difficult now the other thing that happened was the Federal Reserve was set up with a kind of inevitable logic that they would have to take the gold from the public which was of course the monetary asset backing everything then so the go gold of the public was confiscated under the complaint that the public was hoarding the gold but then what did the FED do with it the FED hoarded the gold and did not use it to expand credit they kept the conditions tight so what do we have this time around gold is not the underlying collateral in this system it&#39;s all Securities globally so they will be taken under the argument that well we have to save these systemically vital institutions so that we can restart the economy again how could we restart the economy if they are not protected so that will be the reason given and it&#39;s like a game of Monopoly where all of the pieces all of the money on the board are pulled back to the bank and then they say let&#39;s start a new game and we&#39;ll start over from the basis that we have everything and you don&#39;t so would you like to borrow something and this is what the CBD C the Central Bank digital currency will be it will be very difficult for people to refuse to use it because they literally won&#39;t be able to eat they will have an app they can download this will be the help this will be the calvary riding to the rescue just download this app and you can load your phone with some currency to allow you to go buy milk but every time you use that you actually borrowing money from them they had have you again it will happen very fast this will unfold in a very frightening crisis kind of environment and people will have difficulty refusing that&#39;s why it&#39;s so important to spread this awareness of this beforehand so that people understand what is happening and so that people can become engaged in this all the way to the top of the system it has the potential to activate very capable people all the way to the the top of the system it has the potential to unify people against this what I tried to do with this book was to stick with things I absolutely know and to make it a kind of ho in terms of allowing one to see a ear reputably the whole thing with the aim of pulling it out on the table so that everyone can have a good look at it including the participants including the people that are making it happen I have the premise that this is largely being done unconsciously that the end result of this has not really been fully understood by the participants and that her perhaps even the people at the very top of this do not understand what is about to happen and that they will be destroyed by their own hand if they do this so it&#39;s the result of a kind of inevitable logic that they have that they have to control everything that has now been taken to the ultimate degree where one can see while it&#39;s an intelligent design it is Liv literally insane to actually do this because no one wants this and that the people that have inherited this ownership layer at the very top they did not Design This they did not put it in motion they have allowed the Juggernaut to continue there has been no pruning in the garden there&#39;s been no oversight it&#39;s literally never been looked at never been checked it is basically run out of control unconscious ly so we have to make it conscious all the way to the top of the system now another way I think about this is they study us we have to try to imagine who we&#39;re dealing with here so I&#39;m getting into conjecture about this I have known people pretty high in the system I have this idea that people are intimidating if you have not met them but once You&#39; met them you see that they are just people and I think we have to understand these are just people they are not lizards eating babies like potato chips that is not helpful to think of it that way so they are actually not particularly capable people so there is a head of the snake but it can&#39;t do anything alone it is ryant on the muscle beneath the head of the snake to do everything for it and that part of the purpose of this is to push this awareness up to that muscle now what what would that look like it might look like people that control corporations that are doing all the work to implement this that would realize when they see this that they didn&#39;t know anything about this which means they do not actually have a place at the table how might that affect their thinking could they have some interesting conversations with someone when they&#39;re asked to do something could they perhaps decide to withdraw participation that kind of thing we need to happen so we have to reach people at high levels in this system another principle is that there&#39;s not just one head of the snake it&#39;s like a Hydra there are lots of heads and if you cut one off another one grows back so you have to be able to show the entirety of this because they only understand one piece of it so this is like a mirror to be able to see concisely ly the hole of where this is going so that you can address the many headed Hydra you know people consider that the CIA and all the intelligence organizations are much like that as I said the garden has not been pruned there&#39;s been no oversight here so they&#39;re all running within their missions essentially out of control those people also need to be aware of where this is going now there are people that are actually criminals that are killers in this but they are not the people running things actually if the money is just cut off to these entities it [Music] stops I think that we&#39;re very close to this collapse being triggered what are the indications for that well most profoundly what has been done to interest rates and where they are now in the scale of the insolvencies that are out there they&#39;re not being discussed they&#39;re being covered up the only way that the financial system has not collapsed is that there is a big Hidden Hand injecting lots of created money directly into the financial markets holding them up right now as well as allowing institutions to believe they have downside Risk by buying protection in the derivatives Market the combination of those things so this support The Hidden Hand as I call it can be withdrawn at the time of their choosing but we&#39;re getting late in this process given what&#39;s already happened to the interest rates the other indication of timing is the bank resolution the documents of the bank resolution Authority in Europe their planning cycle documents were mandating all of the globally systemically important Banks to be ready for solvent wind down at the end of last year 2022 now what they mean by solvent wind down is not wind down of the entire Bank on a solvent basis it will be parts of the bank that will remain solvent but they&#39;ve literally mandated that they have to be ready the biggest banks to go flat on all of their derivatives positions in a controlled way suddenly so they&#39;ve prepared for that that is operational as at the end of last year now in this year&#39;s planning cycle document they are saying that they are on track to have completed all their work by the end of this year 2023 so these are indications to give you another idea of the seriousness of this they&#39;ve been running these trilateral exercises with Britain and the EU and the US for six of the seven past years I think they may have missed a year during Co but in these exercises from the US side the participants are the US Treasury secretary the chairman of the Federal Reserve the chairman of the FDIC the heads of all these entities in this exercise which I&#39;ve never seen before with anything so they&#39;re very very serious about this and these exercises are about assuring the crossborder transfer of the collateral when the banks are put into wind down so you&#39;ve noticed in the news that there have been some failures of banks in the last year and that is due to this increase this backup in interest rates and the idea that this is a bank specific problem is not the case these are the canaries in the coal mine this is absolutely systemic again looking back at the 1930s for guidance here the first big bank failure was in 1930 it was allowed to happen and there was a kind of trickle of bank failures so the bank holiday when they closed everything was until 1933 so it was an unfolding banking crisis for 3 years so it&#39;s not unusual that you would have an opening stage here of a number of banks that have failed but it doesn&#39;t all let loose immediately it unfolds over months and perhaps a couple of years before you hit the point where everything&#39;s in fre [Music] [Music] fall well how could things be better here how could this go well we have to imagine that it seems to be overwhelming but the first step is to get this awareness up to the highest levels so that people realize we don&#39;t want this to happen it&#39;s been taken to an insane extreme and it&#39;s not going to go well for anyone then people are left with this idea that well everything will just collapse and I don&#39;t believe that at all there is a real world with real economic activity that goes on despite this system that extracts resources from people and places enormous stress on them that funds psychological operations that are of course public facing they&#39;re used against the population so the the resources of the public are extracted tremendous burdens are placed on people stresses it&#39;s a system that subjugates people and if that simply stops everything gets better immediately now how could things be different Central Banking should be a public utility the very idea that it should be controlled by private interests that is the source of all the problems for Humanity that must stop as a public utility you know of course banking is a useful thing to have we have to realize we don&#39;t have to go back to Sticks and Stones we don&#39;t want everything burned to the ground we have to take back control of our society which has largely been created by good people all the Innovations and usurped so we don&#39;t owe them anything we have good things that have been created we just have to not allow them to control these things any longer so public banking would be like a utility any profits would be returned to the public or used to support government we have to have government we have to have some way to operate society and have roads and do things that work for society so Anarchy and Chaos we can&#39;t have that so this has to be done peacefully it has to be done legally another concept and these are not my IDE is on borrowing these things in terms of public banking but also something like the tax system which is really a way of harassing and again subjugating people we know with the scale of money creation things are not being funded from our tax dollars but if we had a stable system some kind of share of economic resources are needed to operate the government a very simple way to do that is to place a simple fee on every electronic money transfer wouldn&#39;t be needed for paper currency just every electronic money transfer we know today that the major corporations don&#39;t pay any taxes they aren&#39;t supporting anything so money flows it could be a fraction of a percent and especially if you end all of the wars if you wind down the military bases if you stop all the covert actions which are criminal the scale of government can be right sized to what is actually beneficial to humanity as I say we&#39;re being governed by constructs they aren&#39;t even real and if they don&#39;t serve Humanity they must be stopped and if we&#39;re going to have artificial constructs they must serve Humanity so imagine how people would feel if they were told you don&#39;t have to file taxes in anymore that&#39;s all going to be handled just pay a tenth of a percent on whatever electronic transfer you&#39;re doing but the people that run this system don&#39;t want those kinds of solutions because it would eliminate their control so my purpose with this book is to create something that will show the entirety of what this is and where it&#39;s going to do it with an economy of information and just hard irrefutable information and put this in something that can travel and that is happening and I know already that it has reached billionaires it&#39;s reached people all over the world it&#39;s Reach people that manage a lot of money have responsibility for that people in weris and Vancouver and New Zealand and Monaco London so it is happening that&#39;s what we have to have happen and we need people at the top of the system that are not 6° separation from the head of the snake but are more like one or two degrees from the head of the snake to become aware of this and start to say something about it and start to do something about it because they realize that they are not going to be protected as I say toward the end of the book wealthy people think they&#39;re special you are special they&#39;re saving you for [Music] dessert and you let that sink in so everybody has to get busy with this including people who believe that they are powerful and they can make a difference and it needs to be done legally needs to be opposed through legal means I mean imagine what would happen if judges in important position Ians become aware of this prosecutors this has never really been examined in terms of how it can be dismantled and there will be ways to do this because it is just a construct so in terms of advice to people and again I can&#39;t give you a financial advice I don&#39;t know your personal situation I would start by saying that your happiness is important and the happiness of your family and you should not let Financial considerations cause you to do something that will drive your family into despair you have to be able to get through these years but if there are things you can do that might actually give you a relief of stress you should consider doing those things and one of those might be to eliminate all debt so you have to get over this notion that you should use borrowed money to control more stuff they want you to do that because when the price level Falls you won&#39;t be able to service that debt so you take advantage of this time remaining to sell things to pay off your debts it doesn&#39;t make sense to have money in the financial markets when you also have debt there are people I know who have sold their homes which is a tough decision to make and are simply renting to make sure that they&#39;re not in debt at all so you have to ask yourself these are personal decisions how that feels for you to do that another principle is to get real so to speak to invest in real things avoid constructs and intermediaries you want to hold things directly have good title to them things that you can hold like that such as land buildings in land and you want to think about if this goes into a difficult period of years and this can be a positive thing is to have an ability to produce food in the 30s for both sides of my family they weren&#39;t Farmers but they had to have recourse to family that had farms in order to supplement their food it was important so again that can be done in a positive way you put money into building a green House have a big garden and Orchard might choose to live in a more rural area talking with people who went through the depression there was one friend of mine much older than me I knew he had lived through the depression and I asked him about it and he said well you know both my parents were killed in an automobile accident so I was on my grandfather&#39;s farm and I was not aware that there was a depression so he was on this farm with his cousins that tells tells you something as a child they were just [Music] fine the book I&#39;ve written is called the Great taking and you can find it on a landing page at the great tak.com there is a free pdf you can download I&#39;ve done it this way because it will make it close to zero friction so it can spread globally and that is really happening some people would say well surely you must be paid something for this and I know that if I had been paid anything I would just use it to spread the book so why do that make it zero friction this is the most important thing I can do right now there are hard copy books you can get through Lulu and those cost something because it cost something to produce them and they can be delivered globally there is some small profit in that but I am directing that to another person who is a scientist and has done very important [Music] work [Music] [Music]

Transcript for:David Webb Lecture on Financial Markets and Money Creation

Transcript for:
David Webb Lecture on Financial Markets and Money Creation