“The political and financial alliances between bankers and presidents and their cabinets defined, and continue to define, the policies and laws that drive the economy.”
So reads the preface of Nomi Prins’ book, All the Presidents’ Bankers: The Hidden Alliances That Drive American Power.
“My research,” she goes on, “shows that the revolving doors between the public and private service weren’t created in the 1980s, as many recent works claim. They were always present.”
We haven’t had the chance to pick up a copy yet, but the book, says Pete, “explains the 100 year bedfellowship between Wall Street and D.C., and how those power relationships affected American public policy, the economy and you.
“The short version, as you might expect, is that they’ve affected policy, the economy and you a lot. And not in your favor. The extent of it, though, is greater than we originally thought, and we’re only barely into the chapter on the 1920s!”
Pete recently sat down with Nomi at Sorriso Restaurant in D.C.
“Ms. Prins,” he said, “is a brainy mathematician, author, journalist, ex-Goldman Sachs managing director and more.
“Her convictions are why we took an interest in her work.
“In 1999, Addison Wiggin and Bill Bonner founded Daily Reckoning to pull back the curtain so everyday investors can see what goes on in the boardrooms of Wall Street’s biggest banks and in the corridors and meetings rooms of the Capitol in Washington, D.C.”
More than that, the men behind the Daily Reckoning work tirelessly to provide credible alternatives to political economic meddling.
And to spread the ever-widening message, which is…
The endgame of all this economic meddling is coming. You know it. We know it. No human knoweth the hour… but it’s on the horizon.
“That endgame,” Pete says, “will be a paradigm shift — a fundamental change in the way people view, model and explain economic reality.”
Jim Rickards often cites Thomas Kuhn’s example of the paradigm shift from the geocentric model of the universe (the Earth’s center of the universe) to the heliocentric model (the sun’s the center of the universe).
That bad model persisted for about 1,500 years, until Galileo’s paradigm finally prevailed. The church and all the smartest people in the world used very good math, physics and astronomy to embellish the old model despite more and more evidence that appeared to the contrary. And they were completely wrong.
Today, the Fed’s models are the economic and financial equivalents of believing the Earth’s the center of the universe. We firmly believe that if you, like the Fed, buy into those wrong models, you’ll disastrously get the wrong results. They’re the same models you’ll find in the mainstream financial press. Bell curves… general equilibrium models… mean reversion… Monte Carlo simulations. They might be elegant models in and of themselves. But they don’t reflect reality.
And guess what…
The more economic uncertainty that bubbles up as a result of these faulty models… the more the embers of distrust are fanned.
And the more people realize we’ve been swindled by idiots in sheep’s clothing.
The central banks have, Prins explains, “coddled the bank and markets while neglecting the real economies on the ground. And they’ve done it all under the guise of ‘helping the economy.’
“Meanwhile, the central banks have no Plan B to unwind. And a safe exit from zero interest rates is the true mettle test for this near-decade-long monetary experiment.
“There is no way that the Fed’s going to raise rates in December,” Nomi predicts. “Jim Rickards and I are in agreement on that. They won’t. Meanwhile, expect more heightened volatility to the downside. The more uncertainty there is, the more that every tiny event exacerbates the downward cycle.
“Ultimately, the system has to be recalibrated to some sort of normalcy. But right now we’re there. We’re still in this transition away from what is happening today to what will be. We’re in the seventh or eighth year of that transition.
“It’s just getting very bumpy now very quickly because everyone is noticing, and every player in this market is scared but still using and squeezing whatever they can and whatever’s left for as long as it lasts in this fabricated financial system. And it is a system — and all of the relationships that comprise it are out of whack.”
As we’ve said before… it’ll get worse before it gets better.
“When things become really bad, again, the conversation will turn to bail-ins and the elimination of physical cash. You can expect it, because they’re simply looking for another way to escape the consequences of their actions.”
And that’s when the people, we believe, will begin to rise up.
The masses are already beginning to wake up in ways that are surprising to many freedom-minded individuals. Simon Black of Sovereign Man will talk about this phenomenon a moment.
But… please… don’t count on ‘power of the people’ to save you.
Treat our current economic situation as if it were an emergency on a plane. Put your oxygen mask on first. You are much more valuable to others if you’re not dead.
In a moment, we’ll let Simon take it away on a positive note.
First, a quick note…
People Are Really Starting to Understand
By Simon Black
I have a pretty bad travel habit of always waiting until the last minute to head to the airport. Some people like to get to the airport three hours early. I’m not one of those people.
In fact, when I flew to Bogota a few weeks ago from Santiago, I arrived to the airport at 7:50am for an 8:25am flight.
That’s cutting it pretty close, and it doesn’t leave any room for error.
This morning I was in the same boat, leaving my hotel in downtown Denver at a time that left very little room for error.
Then ‘error’ happened. Standing outside in the cold drizzle waiting for the car to pull up, the concierge told me that the driver had just been pulled over by the police and would be at least another 15 minutes… 15 minutes that I didn’t have.
The next car that pulled up had been ordered by another guest at the hotel. So without hesitation I asked him if he was heading to the airport. He was, and graciously offered me a ride.
It turned out to be one of those great opportunities that the universe presents from time to time… lemons into lemonade.
We started chatting, and, I’ll call him ‘John’, told me he was in finance, and he was in town for a conference of financial professionals.
Then he asked me what I do.
Now, this is always a difficult question to answer. Usually I try to get off lightly by saying something like, “I’m a writer, investor, and entrepreneur,” and leave it at that.
But we had another 40 minutes to go.
So I talked about the agricultural fund in Chile, our bank, the clothing company in Australia, our entrepreneurship foundation, the various web-based businesses, etc.
Then I got to Sovereign Man, bracing myself in case John happened to be a state-loving socialist. Thankfully he wasn’t.
I explained my view of the world, how I harbor serious concerns that the government’s plan to create prosperity is to conjure trillions of dollars out of thin air and go even deeper into debt.
I talked about how the thousands upon thousands of regulations they have created only serve to make it more difficult to be productive and successful.
And that it makes sense to have a Plan B… that rational people always have a Plan B.
As an example, we talked about second passports. I told him about a discussion I’d had over the weekend at our Total Access meetup in Dallas with the United Nations ambassador for a small island in the Caribbean.
They’re offering an incredibly unique program whereby you can make a real, credible, reasonable investment on the island, and in exchange they’ll award you a fantastic passport that can be used to travel all over the world, including to Europe and Canada.
John liked the idea of that, saying, “Well it’s a great idea to have another option; I mean, you never know what’s going to happen in this country.”
I was stunned. It was almost the exact same way I typically describe second passports. Or really any other international solution that’s part of a Plan B.
It’s all about having options. More options mean more freedom. And more freedom means more prosperity and more security.
The fact that John understood the benefit immediately gave me a lot of hope that perhaps people really are starting to understand what’s happening.
When I was on stage with Ron Paul last weekend in Dallas, I told our audience about a hilarious interview I saw on ESPN with a professional football player from the Seattle Seahawks.
The interviewer basically asked him what he would do if he were king of the world for a day, and the football player said, “I would do away with property taxes!”
The interviewer looked at him a bit perplexed, and then asked why-
“Think about it, you buy a home, but then you have to keep paying the government forever?!?! I mean, how do you ever really own something if you just have to keep paying the government. Even with alimony you don’t have to pay forever.”
There was a smattering of applause in the studio. Same deal — I thought, wow, people are really starting to understand. It’s embryonic, but it’s happening.