Incest is Perfectly Legal on Wall Street
In real life, incest is a crime, but in the world of Wall Street, which operates in an entirely different universe than you and me, it’s perfectly legal.
I’m not saying that Wall Street bankers are marrying their mothers, brothers or first cousins—that’s not the incest I’m talking about. I’m talking about financial incest, which is the kind that takes place when the fox guards the henhouse and loose money rains down on the chosen ones.
Let’s first start by defining what I mean by Wall Street. When I say Wall Street, I’m talking about the Wall Street banks, which are composed of the large, global, full-service investment banks. The biggest bank in the world is HSBC, while the largest in the U.S. is JP Morgan Chase. Some of the most well-known of these banks are Goldman Sachs, Bank of America, Morgan Stanley, Citigroup, Deutsche Bank, Credit Suisse, Wells Fargo, Barclays, and UBS.
These banks, as Matt Taibbi wrote in Rolling Stone magazine while covering the financial crash of 2008, are “great vampire squid wrapped around the face of humanity, relentlessly jamming their blood funnel into anything that smells like money.”
The banks are overseen by the Federal Reserve, the central bank of the U.S. The Federal Reserve, or Fed for short, oversees monetary policy in the U.S. The Fed’s job is to maximize employment, stabilize prices, and moderate long-term interest rates. The Fed also supervises and regulates banks.
The Fed is made up of 12 Federal Reserve Banks, one in each of the 12 Federal Reserve Districts. The most important of the 12 Federal Reserve Banks is the Federal Reserve Bank of New York, located in the financial district of New York City.
Numerous presidents of the Federal Reserve Bank of New York have gone on to prominent government positions: two of the most noted are Timothy Geithner, who was president of the Federal Reserve Bank of New York from 2003 to 2009 and then went on to be Treasury Secretary under Barack Obama; and Paul Volcker, who served as the president of the Federal Reserve Bank of New York from 1975 to 1979, and then went on to be Chair of the entire Federal Reserve system, from 1979 to 1987.
This is where the incest is: the Federal Reserve Bank of New York is owned by five Wall Street banks—JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, and Bank of New York Mellon.
Those five banks represent two-thirds of the eight Global Systemically Important Banks (G-SIBs) in the United States. The other three G-SIBs are Bank of America, a shareowner in the Richmond Fed; Wells Fargo, a shareowner of the San Francisco Fed; and State Street, a shareowner in the Boston Fed.
The five megabanks that are the major shareowners of the New York Fed are supervised by the New York Fed; yet at the same time, the five megabanks participate in the election of two-thirds of the Board of Directors of the New York Fed. Usually at least one of the CEOs of the banks that own the New York Fed sit on its Board.
One important function of the Federal Reserve is the printing of money. The process of the printing of money was once described by famed economist John Kenneth Galbraith in this way: “The process by which banks create money is so simple that the mind is repelled.”
It’s simple because the Fed is a money conjurer—they press a few buttons on their computers and voila, money is conjured out of thin air.
Wouldn’t you love to be able to conjure money out of thin air?
In 2008, the Federal Reserve Bank of New York was given the authority of money conjuring, in order to rescue the Wall Street banks that had crashed the economy. The New York Fed electronically engineered $29 trillion to bail out the Wall Street banks, from 2008 to 2010. And from September 17, 2019 to July 2020, the New York Fed pumped another $11 trillion into Wall Street banks.
You got this? The Wall Street banks own the New York Fed, and by virtue of the ownership, can give themselves (technically it’s loaning themselves, but because the money they receive is at virtually 0% interest, it’s free money) unlimited amounts of money.
Nice job, if you can get it.
Now you understand what I mean by financial incest.
No one knows how the money gets used and who exactly gets what sums. That’s because it’s all done in secret. The Federal Reserve requires no Congressional approval for their actions; they are free to do as they please. The only reason Congress discovered how much the Fed gave out from 2008 to 2010 was because Senator Bernie Sanders was able to get a Government Accountability Office audit of the Fed’s bailout programs. Without that, the Fed’s generosity would have been fully shrouded in secrecy.
In my prior essay, A Hole in the Head, The Flaw, and High Hopes for the Future
I said how Alan Greenspan, in October 2008, admitted to the Congressional committee that was investigating the financial crash that he had discovered The Flaw in his thinking.
Greenspan believed the banks could regulate themselves, and he came to see that the banks took advantage of this largesse on Greenspan’s part to do whatever they damn well pleased. And whatever they damn well pleased crashed the global economy in 2008.
But no worries, when you live in a universe where incest is legal. In 2008, the Wall Street banks used their incestuous ties to the New York Fed to print up more money than you could shake a stick at—in this case, 29 trillion sticks.
Wall Street banks are casinos, gambling money all over the world, and with no regulation from the Fed, the banks do what they want. Like drunken sailors at a casino, they gamble excessively, making short-term bets in which they make money here and lose money there. They move money around the world in search of the best currency exchange rates, and if necessary, manipulate those rates to profit.
The Wall Street banks also trade in the worldwide derivatives market, to the tune of $4 trillion to $5 trillion a day.
And when they screw up, they get bailed out—$29 trillion in 2008, and $11 trillion in 2019.
But don’t you worry, as sure as the sun sets in the West, they’ll be getting more at some point in the future. That’s because they know how to get blood from a stone and money out of a money conjurer.
You and I won’t see a penny of those trillions. It goes into the coffers of the upper strata, shared among the ultra-wealthy. The banks distribute that money to private equity firms and hedge funds, finance the stock buybacks of public corporations, and in general help the elite buy stocks, yachts, art, NFTs, and most importantly, real estate.
All of these are considered assets, and when the elite buy them up like hotcakes, they create asset bubbles. And like all bubbles, sooner or later they burst, as it did in 2000 when the tech bubble burst and the stock market crashed, and as it did in 2008 when the real estate bubble burst and the financial markets and banking industry crashed.
What the banks have done with all this money is this: they’ve created the financialized economy, where everything is a commodity, and everything has a price. And in the process, they have overseen the greatest transfer of wealth in history, where tens of trillions of dollars have been extracted from the pockets of you and me and into the hands of the wealthiest sliver of society.
One of the things the elite do with the money they have extracted from you and me is to buy real estate all over the world using shell companies, which means no one knows who exactly is buying it. They pay cold, hard cash as a means to launder the money, in order to hide it from the tax authorities. Besides allowing them to evade paying taxes by buying real estate in this manner, their buying up of real estate, which creates an asset bubble, drives the price of housing through the proverbial roof.
That’s the main reason the cost of buying a house is out of control, in the U.S. and some parts of the world. The real estate website Zillow reports that there are now 481 cities in the U.S. in which the typical home value is $1 million; Zillow also reports that another 49 could join this club by mid-2022.
These days, if you want to buy an affordable house, you have to find an area that the rich have no interest in—like Yuma, Arizona, or Waco, Texas, where the average temperature is over 90 degrees year round. Otherwise, you may just be priced out of the market.
To make matters even worse, the Wall Street banks get a slap on the wrist when they are caught performing their financial crimes. JP Morgan Chase, over the last 10 years, has been cited for five felonies and has paid fines of over $38 billion. At the same time, no one at the bank has gone to jail.
Meanwhile, the CEO of JP Morgan Chase, billionaire Jamie Dimon, received $34.5 million in salary for 2021, which happens to be 1,000 times the salary of the least paid employee of the bank.
Bank of America is the biggest scofflaw of them all, having paid fines of over $90 billion over the same time period.
The same routine holds for all the other Wall Street banks—big fines, no one goes to jail.
Here’s the reality: the Wall Street banks are criminal enterprises with rap sheets that would make most career criminals green with envy. And they have no interest in stopping their brazen conduct.
But to make you think they are your friend and are doing good for the world, the banks have now embarked on a new mission: Improving the State of the World.™
I put the small TM sign—the symbol for Trademark—after the Improving the State of the World phrase as a manner of explaining that the expression is more of a branding mechanism than anything else.
The bankers go to the World Economic Forum in Davos, Switzerland, where they talk up green solutions to combat climate change, reversing wealth inequality, eradicating hunger, ending poverty, and in general, making the world a better place.
The problem is that they want to sit on top of the pyramid structure of Improving the State of the World,™ which means they have to make money and protect their assets while they’re doing good. All while they are the ones who have created the problems we face.
That’s what you call the fox guarding the henhouse.
But there are solutions: More regulation of banks, raise the marginal top tax rate, a wealth tax, the creation of public banks, and bringing back Glass-Stegall, the Great Depression-era law that was created to rein in big banks—Glass-Stegall got repealed in 1999, which is when banks put into overdrive their money gluttony and financial incest.
These solutions are not complicated. All it takes is the will—the political will and the will of the people. As opposed to the will of the banks.