The Financial CrisisThe Financial Crisis&&

A Father Who CaresA Father Who Cares

Ithaka FellowshipIthaka Fellowship

January 2009January 2009

Personal Background and StoryPersonal Background and Story

In the Last Year…In the Last Year…

Failure of:Failure of: Bear Stearns- Investment BankBear Stearns- Investment Bank Lehman Brothers- Investment BankLehman Brothers- Investment Bank Fannie Mae/ Freddie Mac- Mortgage Fannie Mae/ Freddie Mac- Mortgage

ProvidersProviders AIG- InsuranceAIG- Insurance Wachovia, Washington Mutual, Indy MacWachovia, Washington Mutual, Indy Mac

Near Collapse/ Bailout ofNear Collapse/ Bailout of GM, Ford, Citigroup, Bank of AmericaGM, Ford, Citigroup, Bank of America

Signs of the TimesSigns of the Times $50 Trillion+ total national debt$50 Trillion+ total national debt $10 trillion+ in government debt$10 trillion+ in government debt Personal savings rate is negativePersonal savings rate is negative Oil moves from a record high to decade low in 8 monthsOil moves from a record high to decade low in 8 months Unemployment nearing 10%Unemployment nearing 10% Money supply increased by 70% since Oct*Money supply increased by 70% since Oct* Housing Market collapse/ ForeclosuresHousing Market collapse/ Foreclosures $Trillions in bailouts have been earmarked by the Federal Government$Trillions in bailouts have been earmarked by the Federal Government Iceland BankruptIceland Bankrupt Global BailoutsGlobal Bailouts Federal Funds Interest Rate Targeted at 0%!Federal Funds Interest Rate Targeted at 0%! Debt-GDP ratio over 300%= 3Debt-GDP ratio over 300%= 3rdrd world nation state world nation state

*estimated*estimated

Symbols of the TimesSymbols of the Times

$50 Billion Ponzi Scheme$50 Billion Ponzi Scheme

U.S. Treasury Secretary Personal Income U.S. Treasury Secretary Personal Income Tax issuesTax issues

$150 Million Presidential Inauguration$150 Million Presidential Inauguration

Yankees Keep Spending hundreds of Yankees Keep Spending hundreds of millionsmillions

Is Anyone Asking Is Anyone Asking

What in the What in the World is Going World is Going

on?on?

Main Thesis:Main Thesis:

The current global financial system is The current global financial system is inherently unstable, unethical, and inherently unstable, unethical, and has fueled the fires of greed and has fueled the fires of greed and idolatry that are rooted in every idolatry that are rooted in every human heart. It permeates every human heart. It permeates every crevice of society physically and crevice of society physically and spiritually and needs to be abolished spiritually and needs to be abolished and reformed immediately for the and reformed immediately for the short and long term health of God’s short and long term health of God’s creation.creation.

100 Person Global Village100 Person Global Village

60 Asians60 Asians 14 African-American14 African-American 50 do not have reliable daily food50 do not have reliable daily food 30 suffer malnutrition30 suffer malnutrition 2 have a college education2 have a college education

Global WealthGlobal Wealth 50% of wealth held by 2% of adults50% of wealth held by 2% of adults 37 million Americans live in poverty37 million Americans live in poverty Of the top 100 economic entities, 51 are Of the top 100 economic entities, 51 are

corporations and 49 are countriescorporations and 49 are countries 60% of world pop. (3.5 Billion) receives 60% of world pop. (3.5 Billion) receives

6.3% of total world income6.3% of total world income Per capita income of Third world countries Per capita income of Third world countries

$1,200. (4.6 Billion)$1,200. (4.6 Billion) Per capita of rich countries is $26,000 Per capita of rich countries is $26,000

(900 million)(900 million)

33rdrd World Debt World Debt

1970- $62 Billion1970- $62 Billion 1980- $481 Billion1980- $481 Billion 1998- $2 Trillion1998- $2 Trillion

Ultimate MonopolyUltimate Monopoly

Where does “The Banker” get his Where does “The Banker” get his Money?Money?

““If the American people only If the American people only understood the rank injustice understood the rank injustice of our money system, there of our money system, there would be a revolution before would be a revolution before

morning.”morning.”

President Andrew Jackson- President Andrew Jackson- 18291829

““There are two ways to There are two ways to conquer and enslave a conquer and enslave a

nation. One is by the sword. nation. One is by the sword. The other is by debt.”The other is by debt.”

President John AdamsPresident John Adams

““if the foundations are if the foundations are destroyed, what can the destroyed, what can the

righteous do?”righteous do?”

Psalm 11:3Psalm 11:3

Total U.S Debt GraphTotal U.S Debt Graph

Housing BubbleHousing Bubble

A History of the Financial A History of the Financial SystemSystem

&&The Ethics of Money ProductionThe Ethics of Money Production Real TradeReal Trade

Direct exchange of useful goodsDirect exchange of useful goods Commodities as a MediumCommodities as a Medium

Money promotes market expansionMoney promotes market expansion Available, durable, moldable, intrinsic Available, durable, moldable, intrinsic

valuevalue Every modern currency est. as a unit of Every modern currency est. as a unit of

weight of gold or silverweight of gold or silver

Money WarehousingMoney Warehousing

Warehouse does not owe, it storesWarehouse does not owe, it stores Bailment contract vs. debt contractBailment contract vs. debt contract Homogenous goods open the door Homogenous goods open the door

for embezzlementfor embezzlement GrainGrain MoneyMoney

Temptation to CounterfeitTemptation to Counterfeit

Increase in money supply (Inflation)Increase in money supply (Inflation) Changes distribution of wealthChanges distribution of wealth Alters the structure of relative pricesAlters the structure of relative prices Permanent changes in income Permanent changes in income

distributiondistribution Hidden TaxHidden Tax Bid resources away from genuine Bid resources away from genuine

ownersowners Perversion of genuine money productionPerversion of genuine money production

Legalized CounterfeitingLegalized Counterfeiting

1.1. Government Paper MoneyGovernment Paper Money

2.2. Fractional Reserve Loan BankingFractional Reserve Loan Banking

Establishes a permanent partnership Establishes a permanent partnership between government and banksbetween government and banks

Lobbyists & politicians laxed the laws to Lobbyists & politicians laxed the laws to treat deposits as credit vs. bailmenttreat deposits as credit vs. bailment

1694- Bank of England1694- Bank of England

Financial RevolutionFinancial Revolution Right to Issue money from gov. to private Right to Issue money from gov. to private

banksbanks 1.2 million pounds to 885 million in a century1.2 million pounds to 885 million in a century Direct Taxation of the peopleDirect Taxation of the people

Two major functions of a Central BankTwo major functions of a Central Bank Finance government deficitsFinance government deficits Cartelize private banksCartelize private banks

Alleviates run on the banksAlleviates run on the banks

1815- Rothchild Coup1815- Rothchild Coup

Nathan Rothchild spreads false Nathan Rothchild spreads false rumors that Napoleon had won rumors that Napoleon had won Battle of WaterlooBattle of Waterloo

Would become biggest bank in the Would become biggest bank in the world after buying British bonds on world after buying British bonds on the cheap.the cheap.

1830s- Andrew Jackson1830s- Andrew Jackson

Eliminates Hamilton’s Central BankEliminates Hamilton’s Central Bank Established free trade for the last Established free trade for the last

timetime Paid off the federal debt for the last Paid off the federal debt for the last

timetime Vicious fight with private bankersVicious fight with private bankers

““The bank is trying to kill me, but I will The bank is trying to kill me, but I will kill it.”kill it.”

1862- Lincoln & Greenbacks1862- Lincoln & Greenbacks

Gov. issued paper moneyGov. issued paper money Represented man-hours vs. goldRepresented man-hours vs. gold Financed Civil WarFinanced Civil War Assassinated in 1865Assassinated in 1865

1881- James Garfield1881- James Garfield

““Whoever controls the volume of money in Whoever controls the volume of money in any country is absolute master of all any country is absolute master of all industry and commerce. And when you industry and commerce. And when you realize the entire system is very easily realize the entire system is very easily controlled, one way or another by a few controlled, one way or another by a few powerful men, you will not have to be told powerful men, you will not have to be told about how periods of inflation and about how periods of inflation and depression originate”depression originate”

-Assassinated 4 months into office-Assassinated 4 months into office

1890-1900 Wall Street 1890-1900 Wall Street DiminishingDiminishing

Losing dominance over the banking Losing dominance over the banking systemsystem

Post- Civil War dominance waning to Post- Civil War dominance waning to State BanksState Banks State banks now with more than 50% of State banks now with more than 50% of

business.business.

Robber BaronsRobber Barons

Morgan- FinanceMorgan- Finance Carnegie- SteelCarnegie- Steel Rockefeller- OilRockefeller- Oil

They didn’t build. They boughtThey didn’t build. They bought Hated competitionHated competition Money “Trusts”Money “Trusts” Dominated entire fabric of the economyDominated entire fabric of the economy

House of J.P. MorganHouse of J.P. Morgan

Started as banker during Civil WarStarted as banker during Civil War $3.50 rifles for $22$3.50 rifles for $22

Built extraordinary political cloutBuilt extraordinary political clout Trusts- concentrated money in the Trusts- concentrated money in the

hands of a fewhands of a few Controlled railroadsControlled railroads Progressive spiritProgressive spirit

Bank Panic of 1907Bank Panic of 1907

Rumors that major banks were Rumors that major banks were insolventinsolvent

1900-1907 propaganda1900-1907 propaganda Public stages a run on the banksPublic stages a run on the banks Morgan imports $100 million worth Morgan imports $100 million worth

of gold from Europeof gold from Europe ““The people” now desire banking The people” now desire banking

reform…reform… Money Trust caused the panicMoney Trust caused the panic

Trilateral CommissionTrilateral Commission

Bilderbergers and New World Gov.Bilderbergers and New World Gov. Multinational consolidation of Multinational consolidation of

commercial and banking interestscommercial and banking interests Goal to control 4 centers of powerGoal to control 4 centers of power

PoliticalPolitical MonetaryMonetary IntellectualIntellectual EcclesiasticalEcclesiastical

2 Steps in Cartel-Gov. 2 Steps in Cartel-Gov. RegulationRegulation

1. Pass the Bill and establish the 1. Pass the Bill and establish the structurestructure

2. Select the proper personnel2. Select the proper personnel

Morgan Empire in control of the FedMorgan Empire in control of the Fed Benjamin Strong as Fed Chairmen Benjamin Strong as Fed Chairmen

until 1928until 1928

Jekyll Island Jekyll Island

6 of the most powerful groups 6 of the most powerful groups representedrepresented

Secret meetingSecret meeting Competitors in allianceCompetitors in alliance Aldrich Bill turns into Federal Reserve Aldrich Bill turns into Federal Reserve

ActAct

1913- Federal Reserve Act1913- Federal Reserve Act

Passed through Congress 3 days before Passed through Congress 3 days before ChristmasChristmas

Private central bankers win a 100 year warPrivate central bankers win a 100 year war ““Elastic currency”- Fedspeak beginsElastic currency”- Fedspeak begins Authorized central bank to create $$$Authorized central bank to create $$$ Financial system turned over to profiteersFinancial system turned over to profiteers Obtain greatest profits through use of Obtain greatest profits through use of

other people’s moneyother people’s money Institutional usuryInstitutional usury

The Federal Reserve is BornThe Federal Reserve is Born NOT owned by the governmentNOT owned by the government 12 regional Federal Reserve Banks12 regional Federal Reserve Banks Fractional Reserve BankingFractional Reserve Banking Monopoly on the issue of all bank notesMonopoly on the issue of all bank notes National banks forced to become members National banks forced to become members

of the Fedof the Fed No more need for goldNo more need for gold 10% reserves requirement10% reserves requirement Immediately doubled $$ supply- World War Immediately doubled $$ supply- World War

II

Federal Income TaxFederal Income Tax Previously deemed unconstitutionalPreviously deemed unconstitutional 1913- Sixteenth Amendment w/ Fed 1913- Sixteenth Amendment w/ Fed

Reserve ActReserve Act Congress shall have the power to lay Congress shall have the power to lay

and collect taxes on incomeand collect taxes on income Tax code was 14 pagesTax code was 14 pages Today the tax code is 17,000 pagesToday the tax code is 17,000 pages IRS employs 144,000IRS employs 144,000

Pays interest on the National debtPays interest on the National debt

World War IWorld War I

JP Morgan sole underwriter of British/ JP Morgan sole underwriter of British/ French bondsFrench bonds

Bonds floated in U.S. to pay for arms Bonds floated in U.S. to pay for arms and goods from Americaand goods from America

Morgan now has enormous stake in Morgan now has enormous stake in Britain/ France victoryBritain/ France victory

U.S. enters warU.S. enters war

Gold Stock is NationalizedGold Stock is Nationalized

Americans weaned off of goldAmericans weaned off of gold Gold exports prohibitedGold exports prohibited Gold reserves tripled to 74%Gold reserves tripled to 74% Confiscation of private goldConfiscation of private gold

The Great DepressionThe Great Depression Stock market crash in 1929- largest bank Stock market crash in 1929- largest bank

run in historyrun in history Fed had made money plentiful in “Roaring Fed had made money plentiful in “Roaring

20s” through low interest rates20s” through low interest rates Robber Barons promoted marketsRobber Barons promoted markets Common man can buy stock on marginCommon man can buy stock on margin Gold flowing to U.S. Gold flowing to U.S. Low rates causing inflationLow rates causing inflation 1929-1933 money supply contracts 1/31929-1933 money supply contracts 1/3

1/3 of banks close1/3 of banks close Federal Reserve Scheme FailedFederal Reserve Scheme Failed

FDIC- Shell GameFDIC- Shell Game

Federal Government provides backup Federal Government provides backup money to prevent bank failuresmoney to prevent bank failures

Not really insuranceNot really insurance Payoff- small banksPayoff- small banks Selloff- arrangements made for a large Selloff- arrangements made for a large

bankbank Bailout- “too big to fail”Bailout- “too big to fail”

FDIC covers all bank depositsFDIC covers all bank deposits Wealthy investors are fully protectedWealthy investors are fully protected

FDR- New Deal- KeynesFDR- New Deal- Keynes

Alliance of RockefellersAlliance of Rockefellers Lehman & Goldman SachsLehman & Goldman Sachs

Permanently off the gold standard in Permanently off the gold standard in early 1930s results from annihilation early 1930s results from annihilation of the currencyof the currency

Federal Reserve Notes are legal Federal Reserve Notes are legal tendertender

Fannie Mae created Fannie Mae created

More TaxesMore Taxes

Accounts receivable tax, building Accounts receivable tax, building permit tax, capital gains tax, permit tax, capital gains tax, corporate income tax, unemployment corporate income tax, unemployment tax, Medicare tax, real estate tax, tax, Medicare tax, real estate tax, property tax, road usage tax, social property tax, road usage tax, social security tax, telecom tax, vehicle security tax, telecom tax, vehicle sales tax, sales tax.sales tax, sales tax.

40% of avg. citizens income goes to 40% of avg. citizens income goes to taxestaxes

1971 Bretton Woods1971 Bretton Woods

Foreign investors doubt solvency of U.S.Foreign investors doubt solvency of U.S. Viet Nam War had plunged U.S. into debtViet Nam War had plunged U.S. into debt Nixon takes the U.S. off International gold Nixon takes the U.S. off International gold

standardstandard Oil quadruples in the 1970sOil quadruples in the 1970s Foreign creditors threaten to exhaust gold Foreign creditors threaten to exhaust gold

reserves by turning in paper dollarsreserves by turning in paper dollars Fiat Currency globallyFiat Currency globally Currencies now float in the market in Currencies now float in the market in

competitioncompetition Currency manipulation is bornCurrency manipulation is born

Modern EventsModern Events

InternetInternet Repeal of Glass-Steagal Act in 1998Repeal of Glass-Steagal Act in 1998 Stock Market Bubble in 2000Stock Market Bubble in 2000 Housing BubbleHousing Bubble

Housing Saves the SystemHousing Saves the System

New Borrowers needed to keep new debt-New Borrowers needed to keep new debt-money afloatmoney afloat

Transfer of wealth from public to banksTransfer of wealth from public to banks Public took risk, properties appreciatePublic took risk, properties appreciate Banks created money and lend it to the peopleBanks created money and lend it to the people We spend the money to prop up economyWe spend the money to prop up economy

HELOC & credit cardsHELOC & credit cards Banks own the property and we are on the Banks own the property and we are on the

hook to pay back inflated priceshook to pay back inflated prices

Financial TsunamiFinancial Tsunami

Inflation and deflation collideInflation and deflation collide Money supply pumped up with new money Money supply pumped up with new money

as loansas loans Defaults extinguish money supplyDefaults extinguish money supply

Stagflation- price inflation without Stagflation- price inflation without economic growtheconomic growth

Fed needs high rates to attract foreign $Fed needs high rates to attract foreign $ High interest rates create more housing High interest rates create more housing

defaultsdefaults Defaults extinguish money supplyDefaults extinguish money supply

The A-Bomb- DerivativesThe A-Bomb- Derivatives

A bet on the movement of a securityA bet on the movement of a security Example of 2 people flipping a coin Example of 2 people flipping a coin

for a trillion dollarsfor a trillion dollars 97% of bank held derivatives in the 5 97% of bank held derivatives in the 5

largest bankslargest banks Estimated at $200 trillion for U.S. Estimated at $200 trillion for U.S.

BanksBanks

Credit Default SwapsCredit Default Swaps

Buyers and sellers place bets on the Buyers and sellers place bets on the likelihood that loans will default.likelihood that loans will default.

Insurers are risk counter-partiesInsurers are risk counter-parties Insurers backed corporate bonds backed Insurers backed corporate bonds backed

by subprime mortgagesby subprime mortgages Insuring against a collapse in the Insuring against a collapse in the

housing markethousing market

Bailout Bailout

Bailout legislation is smoke and Bailout legislation is smoke and mirrorsmirrors

We are propping up derivatives gone We are propping up derivatives gone badbad Fannie Mae, AIG, BanksFannie Mae, AIG, Banks

Massively debasing the currencyMassively debasing the currency Deflation then inflationDeflation then inflation Fighting inflation with more inflationFighting inflation with more inflation Dollar headed for collapse…?Dollar headed for collapse…?

Summary ConclusionsSummary Conclusions

Free markets work, but only when the Free markets work, but only when the foundation is laid appropriately.foundation is laid appropriately.

International private bankers create International private bankers create money and control credit and hence, money and control credit and hence, control human society.control human society.

Power of lobbyist bribes have influenced Power of lobbyist bribes have influenced the entire social structure.the entire social structure.

Dollar is dead. The economic system has Dollar is dead. The economic system has been destroyed.been destroyed.

How Then Shall We Live?How Then Shall We Live?

The Current System and the The Current System and the Sovereignty of GodSovereignty of God

Nehemiah 5Nehemiah 5