Show notes
The central theme of Wealth Formula Podcast is that there are two investing worlds. One is for the poor, middle class, and the upper middle class. The other is for the ultra-wealthy. Now the funny thing is, that many of those in the middle and upper-middle classes could be investing like the ultra-wealthy but one thing gets in the way—knowledge. The world of the ultra-wealthy is hidden behind a veil that you have to actively pursue to access. That is the purpose of this show…to illuminate the secrets of the ultra wealthy and make them accessible to anyone who cares to use them to their own advantage. When I started down this path, I had no idea how little I knew and that’s probably still the case. In fact, the more I learn, the less I realize I know. In 2008, when the financial crisis happened, I was just finishing my surgical residency. I was broke so I didn’t lose any money. But I had no idea what was going on in the world. Meanwhile, the global elites were colluding to save the entire economy from collapsing. I didn’t even realize that I should be panicking. Did you? I guess sometimes ignorance, indeed, is bliss. Now, when I read about what led up to the crisis and the inner workings of those deals, it is like reading a gory post-mortem report. Why do I read this stuff anyway? Well, I am a firm believer that history repeats itself and that knowledge is power. I also like to feel in control as much as possible. There is a lot of activity in the world that is the underbelly of the global elite and if you don’t try to keep up with it, you’re not going to know what hit you when the next financial crisis comes along. No one knows this more than my guest on this week’s Wealth Formula Podcast, Nomi Prins. A former Wall Street insider, Nomi Prins left the dark side and now she writes about it. On this week’s show, Nomi tells us about the role of the federal reserve and banks that led up to 2008 and the new world order that has ensued since then. It’s a world that you and I have little access to and it’s something you should not miss! Nomi Prins is a renowned journalist, former international investment banker, author and speaker. Her new book, Collusion: How Central Bankers Rigged the World, explores the recent rise of the role of central banks in the global financial and economic hierarchy. Her last book, All the Presidents’ Bankers, is a groundbreaking narrative about the relationships of presidents to key bankers over the past century and how they impacted domestic and foreign policy. Her other books include a historical novel about the 1929 crash, Black Tuesday, and the hard-hitting expose It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley,2009/2010). She is also the author of Other People’s Money: The Corporate Mugging of America (The New Press, 2004) chosen as a Best Book of 2004 by The Economist, Barron’s and Library Journal. She has appeared on numerous TV programs: internationally for BBC, RtTV, and nationally for CNN, CNBC, MSNBC, CSPAN, Democracy Now, Fox and PBS. She has been featured on hundreds of radio shows globally including for CNNRadio, Marketplace, NPR, BBC, and Canadian Programming. She has featured in numerous documentaries shot by international production companies, alongside prominent thought-leaders. Her writing has been featured in The New York Times, Forbes, Fortune, Newsday, Mother Jones, Truthdig, The Guardian, The Nation, NY Daily News, LaVanguardia, and other publications. Her engaging key-note speeches are thoughtfully tailored to the auidence. She has spoken at numerous venues including the Federal Reserve / IMF / World Bank Annual global central bank conference, Purdue University/Sinai Forum, University of Wisconsin Eau Claire Forum, Ohio State University Law School, Columbia University, Pepperdine Graduate School of Business, National Consumer Law Center, Environmental Grantmakers Association, NASS Spinal Surgeons Conference, the Mexican Senate and the Tokyo Stock Exchange. She was a member of Senator (and presidential contender) Bernie Sanders (I-VT) Federal Reserve Reform Advisory Council, and is listed as one of America’s TopWonks. She is on the advisory board of the whistle-blowing group ExposeFacts, and a board member of animal welfare and wildlife conservation group, the Elephant Project. Nomi received her BS in Math from SUNY Purchase, and MS in Statistics from New York University, where she completed coursework for a PhD in Statistics. Before becoming a journalist, Nomi worked on Wall Street as a managing director at Goldman Sachs, ran the international analytics group as a senior managing director at Bear Stearns in London, and worked as a strategist at Lehman Brothers and analyst at the Chase Manhattan Bank. Shownotes: [00:07] Introduction [06:56] Buck introduces Nomi Prins [12:56] Formation of the FED [27:38] Collusion: How Central Bankers Rigged the World [36:54] Nomi’s thought on our current economy [43:50] Where does cryptocurrency fit? [48:59] Outro Interview Transcript Buck: Welcome back to the show everyone. Today my guest on Wealth Formula podcast is Nomi Prins. Nomi’s a former Wall Street Superstar, that’s where she held numerous positions. She was a managing director at Goldman Sachs she ran the International analytics group as a senior managing director at Bear Sterns in London, she was a strategist at Lehman Brothers, and an analyst at Chase JP Morgan Manhattan. She was as you can, it sounds like the quintessential Wall Street insider before becoming a journalist and really a prolific author. Her latest book is called Collusion: How Central Bankers Rigged the World. She’s got several other books including All the Presidents’ Bankers, Black Tuesday, It Takes a Pillage (I like that name in particular) Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street, and Other People’s Money: The Corporate Mugging of America. She’s appeared on numerous TV programs and documentaries and has spoken, as she’s captured the attention of global elite, having spoken in numerous venues including the Federal Reserve, IMF, the World Bank annual global conference. And I could go on forever really on this I mean this is Nomi’s got incredible accomplishments under her belt. Suffice it to say she’s super smart and she’s here to shed light on some very important issues for us. Nomi, welcome to Wealth Formula podcast. Nomi: Thanks for that intro. And thanks for having me on. Buck: So before we dive in, I mean it’s always kind of nice to get to know somebody a little bit, of where they came from. Your journey, as what I would think is fair to call an insider, really of some of the most powerful banks in the world, to writing incredibly comprehensive and you know actually pretty critical books about them. Tell us a little bit about that journey. Nomi: Well I started out in math, so I start out grounded in sort of numbers and so the reality that those represent. And from there sort of made my way to to Wall Street. Actually I was still in school at the time so I kind of merged into working at Chase when I went to New York and from there I became an analyst. The program I was involved in a lot of the what are now very more types of esoteric securities that all those sorts of things from the very beginning of them in terms to happen to programming them so I really understood the guts of what was what was happening with with money with cash flows of how things reacted to the market to politics to to whatever from from the real ground up and I just sort of parlayed that into grad school I worked at Lehman Brothers and ultimately moved to London, for Bear Stearns, and got involved on the international banking side of things. And you know for a time a lot of that was was actually very it was very interesting. It was an intense atmosphere, there’s a lot of travel involved, meeting a lot of people, going to a lot of different countries ,you know working a lot of hours. But as things started to get more I say predatory on the street, relative to clients in particular, starting with a lot of corporate scandals, about my first book Other People’s Money, which is predominately about the Enron scandal in the WorldCom scandal back in the early part of the 2000s, which was around when I decided to leave the industry, and how banks were really a part of that. Basically a part of sort of faking what books look like and sort of creating these off-book kind of you know aside from public transparency elements of ways that they worked, and that started to sort of get to me and also this general nature of the environment started changing along the same time, and ultimately I left Goldman Sachs, which I moved back to New York to be at Goldman Sachs in the beginning of the third derivatives, credit derivatives market, which became the crux of the financial crisis. So around the time when I left there was a lot of sort of bad credit that was being repackaged as good credit. Now we know that as the subprime mortgage crisis which became the financial crisis back then it was sort of a nascent of that. And I decided that it was time for me to leave personally, like morally it just didn’t work for me. And also from a standpoint of I always like to explain things to people, you know whether they’re clients of the banks are people within the institutions. And so that translated into I think my need to be a journalist and to talk about what’s really going on on the inside how that impacts the outside, and since I left which is back now in 2002 is a long time ago so much has happened on the financial horizon. I’ve had to just basically keep on sort of going back to the well and writing. Buck: They give you plenty of material right? They’re giving you plenty of material. Nomi: No shortage forever. So yeah. Buck: So a year ago, let’s get in sort of around the topics of the current book, I want to just sort of set the framework for that. You know a year ago we had the author of The Creature of Jekyll Island, G. Edward Griffin on the show and he described the formation of the Fed, you know he described this sort of gosh this is, the description is is fantastic the way he describes it a bunch of wealthy bankers on a train you know secretly going to Jekyll Island and creating what he describes ultimately as a banking cartel. Now I’m sorta, I’m curious on your take on the formation of the Fed and and ultimately how did this set the stage for what the Fed evolved into from there? Nomi: Yeah that’s interesting because I mean that that train ride that he talks about in the creature of Jekyll Island happened. I mean a lot of the things that he writes in his books and other people that sort of get away from conspiratorial sort of conjecture and actually I go to the back, actually really did happen. In my last book actually, All the President’s Bankers, I follow the evolution of relationships of bankers, major bankers to Congress to presidents in particular. I went to Jekyll Island, I went to, it’s now a resort hotel, at the time you know it was a club. It was a place where the most elite people in the country, the industrialist, the the bankers, would come you know, their wives and their kids would be somewhere else. They’d have lots of sort of, a ratio of waiting staff to them and etc. And they would sort of talk about matters of the world. And the way the Fed was born not only was it a clandestine sort of train ride there, it came out of, it was an accident actually that it happened there. It happened because Nelson Aldrich was going back with it but try to understand how these things come together, Nelson Aldrich was who was a senator from Rhode Island. He also happened to be the father of a man named Winthrop Aldrich who became the head of Chase after the Fed was was established. He was going to visit his son in New York, he was working at another Bank, and he got hit by a trolley car on Madison Avenue in New York. And as a result of having to convalesce, JPMorgan who actually was the only member of that sort of allowed the people that went to Jekyll Island to be there. You had to have a membership in order to go there. He was not at the meetings in Jekyll Island. He gave his membership to effectively Nelson Aldrich and he said you know you got to go somewhere quiet to sort this out. And that’s really how Jekyll Island even happened. Take some bankers, in other words take my friends who are actually running banks around Wall Street. That’s how that happened, and go there. So the senator and a bunch of major bankers from the largest institutions at the time at the request of the membership of JP Morgan who was the most powerful banker in the world at the time, went there and talked about how to create what became a Federal Reserve or a place where money was held in reserve technically to be lent out in emergencies to banks so that they would continue to function and the idea was that if they could function well the economy would function well. Credit wouldn’t stop, everything would flow it will be all very seamless. But but the personal relationship with JP Morgan was very interesting to this. He died when the Fed was actually created. He died by December 1913 when the Federal Reserve Act came out. But before that he had been basically the money behind other panics and crises. He basically had lent in the past the government money. So he didn’t trust that the government would have money. He wanted a Fed or some other central bank to be there for banks. So it all started because bankers wanted to protect themselves. That’s how the entire thing was fashioned. And that happened most recently in the financial crisis of 2008. That Fed helped its own. And still is. Buck: So when you talk about sort of the changing role of that Fed over the years, you know specifically, you know when I think about the Fed, and one of the questions I asked G. Edward Griffin, actually we were on a cruise one time, that I saw him on was, you know I get the idea, I get the idea with the cartel and the banking cartel, but when you look at who’s actually on that Fed now, they’re a bunch of academics, right? So how it is how does this all work together now, I mean how do you go, how has the work fed evolved into what looks like sort of a pseudo-academic, pseudo-independent, non-governmental institution. I mean how how did that, if you want to talk a little bit about that? Probably ultimately culminating into you know what came with the crisis in 2008 I think things have changed since then. But to that extent, how did that evolve? Nomi: At the beginning, people who sort of made the decisions there in Washington weren’t academics. They were in fact from the banking sector they they had come from being senior members in that arena so they were coming with that experience in the beginning. And yes as things went went forward they were replaced by in some cases bankers and ultimately by academics. A lot of the reason for that was that academics sort of left an extra layer of independence. When the Fed was first created, it was created independent, supposedly, of the government, of the President, and even of the private banks, although they are members of the Fed. The Fed actually exists, is kind of a separate like semi-corporation within Washington. It sits right near the White House and everything else, but it’s it’s comprised of its members its members are the private banks the private banks owned shares in the Federal Reserve. They’re also regulated and receive subsidies from the Federal Reserve. It’s a very symbiotic relationship regardless of who runs it. But over the years, as these academics were chosen, a lot of them were chosen because of the the sort of philosophies they had about banking. So what happened was they allowed the the bankers to kind of take a step back and say, look this is an independent body, you know people that running are running this, you kn…
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