Robert Scheer SI Podcast

Nomi Prins: How the Federal Reserve and Allied Central Bankers Wrote the Obituary for Competitive Capitalism

Dr. Nomi Prins examines the games the wealthy elites play while the 99% suffer.
Nomi Prins.

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Rising from a world of deep financial sin at Goldman Sachs, where she served as a managing director during the creation of the housing Ponzi scheme that wrecked much of the world’s economy, Dr. Nomi Prins, has written seven books detailing the corruptions of the financial elite that has only intensified its destructive assault on the livelihood of the world’s struggling population.

In her latest book, “Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever,” Nomi writes the ultimate obituary for the competitive capitalism celebrated by classical economists since Adam Smith. This is the evil doppelgänger distortion bereft of any saving grace accountability of a free market conceived by the evil alchemists of the world’s uber powerful central banks led by our own Federal Reserve at the top of a unipolar world of their creation. It is a concentration of governmental power in alliance with the super-rich of the west determined to cut off any “invisible hand” of market forces being it from workers striking for higher wages or competition from smaller producers. The only hand at play is the one using unchallenged government power to prop up the most voracious of the rich.

From the housing crisis to the pandemic, all disasters are an opportunity for plunder of the vulnerable. As Prins writes: “The world’s 10 richest men more than doubled their fortunes from $700 billion to $1.5 trillion at a rate of $15,000 per second, or $1.3 billion a day during the first two years of a pandemic that has seen the incomes of 99% of humanity fall and over 160 million more people forced into poverty.” She adds a quote from Oxfam International executive director Gabriela Bucher that “if these 10 men were to lose 99.99% of their wealth tomorrow, they would still be richer than 99% of all the people on this planet.”

Meanwhile, Prins tells Scheer: “The Fed has been raising interest rates in a very accelerated way. Why? Ostensibly, to fight inflation, which mostly it can’t control oil and food type prices. What it can control is the cost to real people of borrowing. That cost has now increased or doubled since March for actual real people who don’t have access to tons of cheap money to, for example, afford mortgages, which is one of the reasons they’re staying in rents, which is one of the reason the rents are going so high. So, all of these incidents, whether it’s the Fed inflating markets by inflating its balance sheet, or it keeps its balance sheet as high as it was, but it increases rates to tighten the availability of money for real people, ultimately still helps the markets relative to the real economy. Right now, it’s happening in real time. I believe the Fed’s going to ultimately inflate its balance sheet again when the economy ‘gets bad enough’ or Wall Street more particularly asks for more help, which it will, because its loans are starting to deteriorate again because people cannot afford to pay these rates. But in the meantime, we are in the middle of this permanently distorted environment.”

Credits

Host:

Robert Scheer

Producer:

Joshua Scheer

Transcript

Robert Scheer:

Hi, this is Robert Scheer with another edition of Scheer Intelligence, where I hasten to say that the intelligence comes from my guest. This is a guest I’ve had quite a bit of experience with, now Dr. Nomi Prins. She didn’t have a doctorate, which she obtained in International Relations and International Politics and Economy during the pandemic, but this is her seventh book, and I think it’s the third or fourth one that I’ve interviewed…Dr. Nomi Prins on. I must say there’s simply no writer about the financial community, Wall Street, the economy that does a more solid and illuminating job of it.

I mean, this is the dismal science. Most books you try to read about, financial life and the list, they’re filled what kind of movie sex, they don’t really get to anything important. What Nomi brings is, first of all, real life experience. She was a managing director at Goldman Sachs and had real world experience in that ethos. I must say this book, with all due respect to your previous books, is probably the most important and certainly the most disturbing. It’s published by Public Affairs Books that does some really important books, and it’s called “Permanent Distortion: How the Financial Market Abandoned The Real Economy Forever.”

Now, I hasten to say, that doesn’t mean they don’t control or influence or sabotage or undermine the real economy, but what they have done is abandon the logic of the market society as defined in classical economics that I happen to study in graduate school at Berkeley. There was a moral argument for the market that in the dynamic with the invisible hand operating on the wishes of consumers and no manipulation of cartels or anything, you would have a certain logic and indeed a certain fairness.

What has happened with this permanent distortion by the financial market, which is relatively new, and I’ll let Nomi explain this, we have destroyed whatever logic and morality there was to the real economy. I just want to quote one of the most damning statistics or series of statistics that I’ve read in your book, “The World’s 10 richest men more than doubled their fortunes from $700 billion to $1.5 trillion at a rate of $15,000 per second, or $1.3 billion a day during the first two years of a pandemic that has seen the incomes of 99% of humanity fall and over 160 million more people forced into poverty.”

Then you say, “To translate that even more sobering numbers, if these 10 men,” I guess we’re talking about Elon Musk and Jeff Bezos and so forth, “if these 10 men were to lose 99.99% of their wealth tomorrow, they would still be richer than 99% of all the people on this planet.” That is a quote from Oxfam International executive director Gabriela Bucher, and continuing to quote, “They now have six times more wealth than the poorest 3.1 billion people on this earth.” They blame that wealth gap on government politics and tax structure, which is your seven books are largely about.

Why I bit was accused last time, you have so many fans out there, they said, “How dare this Scheer keep talking when he’s got Nomi Prins as a guest?” So I’ve already gone on too long. Why don’t you take it from here and tell us what this book’s all about, and hopefully at the end, what can we do about it?

Nomi Prins:

Well, thank you so much. Actually, you reading that quote, which I deeply appreciate you selecting that particular one because it’s really a good place to start, I mean, it’s a sad place to start, but it is where we’re at right now. When I chose the term permanent distortion, it was not lightly chosen. I want to start by saying that because we know through all of our studies, I mean, through economic studies, historical studies, that there is a gap in terms of wealth between most of the people on the planet and the few at the top and the few companies or entities at the top that control money. That’s a given.

But why is that distortion permanent? Well, what I do is I always follow the money. I did work on Wall Street. It’s something that Wall Street does very, very well. The money that was created by the Federal Reserve in two main buckets of time. One was in the wake of the financial crisis of 2008, which I’ve written a couple books about, and then the second time was in the wake of the pandemic of 2020. It’s these two points that turned a distortion between the money that flows into the markets and how that money behaves and how it propagates itself and how it multiplies itself like a virus, like COVID, effectively means that there isn’t money left, there isn’t patience of that money left to really properly filter into the foundational economy.

When that became permanent was when we saw that the Federal Reserve in a couple of months increased the amount of money they fabricated to $9 trillion from four and a half trillion dollars. Now, it went from $800 billion to that four and a half trillion dollars, give or take a couple hundred billion. The details are in my book, so we don’t need to quibble over little hundreds of billions here and there. But what happened was, without any regulation, without any cap, without any limit, they proceeded to create money.

Now, if that money were to have actually gone into the real economy, which was the story that they told, okay, that would’ve been helpful. The idea was that there was fiscal stimulus coming from the government, the Fed was somehow involved and all this money was going into helping real people. The reality is, as that stat actually encapsulates, that money did not really go into the real economy. Yes, there were stimulus checks here and there, but the magnitude of those compared to the immense magnitude of that fabricated money flowing into the system pales so, so, so, so much in comparison.

What happens with money is when it’s created out of nowhere, as the Federal Reserve did and other central banks did in such an accelerated fashion to complement their already speedy fashion in the wake of the financial crisis 2008 and 2020, that was on overdrive. I talk about that overdrive in the book as well.

So that overdrive meant a couple of things that became permanent now in our economy, in our financial system, in our ethos, I love that word that you used there, and it’s become permanent because Wall Street learned on that day, these billionaires learned on that day that if things get bad enough, whatever that means, whatever things are, whether it’s an economy closing because of a virus, whether it’s any other financial crisis or any other event that’s deemed worthy of its money creation power, the Fed will do what it does in an accelerated turbo manner as long as it has to and that’s what happened.

That’s a permanent promise that permanently distorts financial markets from the real economy. Now today, markets are trading off a bit and some of those billionaires are worth a little bit less, but as you read in the last part of that quote, they’re going to be doing okay and the real economy is always the thing that struggles relative to the markets.

Scheer:

Yeah, let me just note by the way, the guy who presided over this in the first slug of the jug of corruption was Ben Bernanke, the head of the Federal Reserve. He was Obama’s appointee and worked with Lawrence Summers and before that Robert Rubin, two great Democrats. That was the first big gift to Wall Street disconnecting the financial community, which wasn’t even supposed to be so important. After all, they were supposed to be controlled by sound legislation that came from Franklin Delano Roosevelt.

But that got wiped out with Bill Clinton’s great freeing of Wall Street to have ultimate greed and no control, making the collateralized debt obligations and credit defaults, Ponzi schemes legitimate and unaccountable. But then they bailed out Wall Street and despite Elizabeth Warren’s concerns basically did very little for Main Street. That’s what is so compelling. Then once again, that happens in the pandemic. You can blame Trump for that, but you can blame also a lot of Democrats.

I want to bring back one scene that you reminded me of in the book, and that’s the former Treasury Secretary Paulson getting on one knee and begging Nancy Pelosi to give Wall Street what it wants. I don’t think enough has been made of that because we have this idea, they’re somehow enlightened liberals and so forth, and the fact is when big money talks, it’s totally bipartisan.

Prins:

That’s exactly right. In a way, that that moment, which is why I brought it back, I’ve written about that moment before in books, but the reason that I included and expanded it in Permanent Distortion is because it symbolized so many things. Now, that was a begging of Hank Paulson who had been the CEO of Goldman Sachs before he became Treasury Secretary of the United States, which in itself shows a tremendous concentration of power in the hands of one very wealthy human.

But besides that, it was this idea that Nancy Pelosi, who also had power in her own way and she could have been a Republican, she happened to have been a Democrat, but the person in that position could basically work together and heed that begging, that pleading of this former Goldman Sachs CEO and Treasury Secretary of the United States in helping Wall Street to basically get money from some manner because it had effectively leveraged itself into massive losses and was in the process of crippling the banking system, the financial system, and ultimately the economy.

As a result of that incident, couple things happened. One is the federal government did provide $700 billion, which, and I write in It Takes a Pillage, one of my books, was a drop in the bucket compared to what was an offer ultimately from the Fed in trillions of dollars of money in loans. But that was first move just saying, “Look, Wall Street basically screwed up. So we, the taxpayers, need to figure out a way to help them out.” Which is ridiculous in and of itself. That is not indicative of a free market, if you’re a free market person, that’s not indicative of an idea of collective working and collective responsibility for the results. It’s none of those things.

But what it did also symbolize was a moment where the Federal Reserve also came on board and they did this again in the pandemic of 2020 and they amplified that 700 billion to the tune of a $4.5 trillion that they did separately in terms of creating money that went directly to the markets. I have a graph in the beginning of my book in Permanent Distortion, which just shows how immensely robust the markets were because of and in relationship to the Fed and other central banks’ ability to create money out of nowhere, whereas the real economy kind of doddles along in comparison and this is over time through this whole process.

This happened again in the pandemic of 2020. You’re right, it doesn’t matter whether there’s a Democrat president appointing Ben Bernanke, whether it’s a Republican president appointing Powell, who was also loosely involved in that initial Fed. It doesn’t matter. Money doesn’t care money. Money wants to accumulate, it wants to replicate itself. Money is like a virus. I talk about this in the book as well. This is what happened, that there was a CARES Act under Trump, there was another act as well under Biden, that did create trillions of dollars to ostensibly help the real economy.

But what occurred in the sort of ether of all of that was that a lot of that money didn’t go into the real economy, number one, and the Fed overloaded on the money it created that basically turbo boosted these markets upward. Right now, again, we’re in a scenario where those markets are uncertain because they think the Fed is “tightening policy.” The Fed has been raising interest rates in a very accelerated way. Why? Ostensibly, to fight inflation, which mostly it can’t control oil and food type prices. What it can control is the cost to real people of borrowing. That cost has now increased or doubled since March for actual real people who don’t have access to tons of cheap money to, for example, afford mortgages, which is one of the reasons they’re staying in rents, which is one of the reason the rents are going so high.

So all of these incidents, whether it’s the Fed inflating markets by inflating its balance sheet, or it keeps its balance sheet as high as it was, but it increases rates to tighten the availability of money for real people, ultimately still helps the markets relative to the real economy. Right now, it’s happening in real time. I believe the Fed’s going to ultimately inflate its balance sheet again when the economy “gets bad enough” or Wall Street more particularly asks for more help, which it will, because its loans are starting to deteriorate again because people cannot afford to pay these rates. But in the meantime, we are in the middle of this permanently distorted environment.

Scheer:

People forget though, and this whole question of separating Wall Street from the economy, the only reason we should care at all about Wall Street is if there’s bad policies that allow them to take ordinary people’s money and waste it, and then they have to close down the bank and people see their savings lost. That was the lesson of the Great Depression, and that’s why a great Democrat, Franklin Delano Roosevelt, but he was remembered fondly by Ronald Reagan, who I happened to interview at some length because Ronald Reagan’s father worked for the New Deal and their family was saved from starvation by the New Deal, something Ronald Reagan pays tribute to in his autobiographical work, “The Rest of Me,” I believe is the title.

But the fact of the matter is the government was never supposed to save Wall Street investors, financial hustlers or experts. It was supposed to serve ordinary people. The irony is right now, ordinary people are forgotten. They didn’t get their homes saved. If you look at the great swindle of the housing market, here are the Democrats who claim they’re so concerned about black and brown people, well, according to the Federal Reserve statistic, college graduate Black people lost almost 70% of their wealth, and Hispanic people lost 60%. They were the main college graduate Hispanic and Black people were one of the biggest, most glaring exploitation of this whole thing.

Then you bring up the pandemic where ordinary people got hurt quite a bit, losing their jobs and everything. Then you think about a company like Amazon, they’re in business because they can get these Chinese workers to work for next to nothing. Now, we’re going to have a whole war with China because we’re angry with them. But the irony here is government no longer serves, I mean, this is true in just about every so-called advanced economy in the world, it serves the very people who was argued didn’t need to be served. They knew what they were doing, right? Yet, they’re the ones that have now turned government into their gang member. I mean, I can’t think of any other word to describe it. They’re like accountants for the mob, the government.

Prins:

No, that’s exactly right. I mean, the reality is the government has facilitated two things in that saga recently. One is that it has allowed the loosely regulated elements of Wall Street to remain that way. Going back to the financial crisis of 2008, and back to another one of these topics that you and I have talked about at length and that’s in my books, and your books as well, the Glass-Steagall Act, which had basically separated the ability of banks, large Wall Street institutions to use other people’s money as sort of leverage or to hold it hostage basically in its other more trading, investment banking risky endeavors.

I mean, the idea of FDR, the idea of the FDIC, was to be able to separate people’s money from the exploits or the really risky or most risky exploits of Wall Street. We had the opportunity to do that as a country after the financial crisis of 2008 laid them bare again. But with a host of revisionist history and explanation and narrative, that didn’t happen. We got something called the Dodd-Frank Act, which didn’t separate banks and didn’t do anything of that nature.

We also had a spree after that period because of this tacit sort of agreement on the part of the government, but also because of the fabrication of trillions of dollars of money by the Federal Reserve and other central banks that allowed Wall Street and the global community of Wall Street and international mega banks around the world to sort of re-leverage cheap money because interest rates were zero. They had access to 0% interest rates. Real people, of course, don’t get interest at that cheaper level anyway, even if interest rates are that low.

Also all this money that was fabricated ultimately was re-leveraged back into the markets, which is why the markets went on such a tear in the wake of the financial crisis of 2008 relative to the economy, and more so in the wake of the initial period after the pandemic closures in the beginning of 2020 and all this new fabrication of money. So all of these institutions and individuals, you have a Federal Reserve for which the head is not elected by people, even though everything they do and say impacts real people’s economic livelihoods, their pocket books, their home budgets and everything else, it’s basically an appointed official.

It doesn’t matter whether that’s a Democrat president, again, or Republican president. What we’ve seen is whoever appoints the head of the Fed, the head of the Fed will do what the head of the Fed wants to do anyway, but on the part of Wall Street and to an extent the government. So this is one of the problems. It shouldn’t be that a Fed bails out really either of those two entities. The Fed’s supposed to be there technically to provide price stability, which it’s done a completely abysmal job of, as we all know and as we can all feel as we can see on any news show, whether it’s about the markets or the few, the few that talk about the real economy sometimes as an afterthought.

Right now, with rates going up so fast and this idea that the Fed is sort of targeting jobs, where that head of the Fed, again, not elected, not someone you can fire, not someone that can be terminated by the American people or equivalent throughout the world, is not concerned about his job. So it’s okay for him to say, “You know what, the economy can have some pain. Yes, some jobs need to get lost, wages are too high, the labor market’s too high,” without even understanding how people work, how they juggle jobs, what jobs even are today, and how much it costs relative to wages to basically balance one’s life.

So none of these things are part of the discourse of any of these people. I think that’s one of the reasons I think you and I keep writing and talking about this is because it seems that it is so fogged over, this complete disconnect that people don’t even know what they can do or should do or should have.

Scheer:

Well, what they manage to do is destroy the vitality, the moral justification for capitalism. It is the most intensely subversive ideological thought you can have. Because some of these people even claim to be libertarians, some of the trillionaire class, and yet what they’ve done, I want to return to my original point, there was an argument, they make it in grade school and everything about the moral justification for a free market. Then that gets conflated with some notion of monopoly capitalism, which is the opposite of a free market.

What you have here is that the Federal Reserve, which is supposed to, and all these big government banks, which were created to hopefully protect the ordinary person so that their savings would not be lost to some bank and that inflation would not wipe them out and that we could have full employment, their main focus now is to prevent a person working at Subway or Whole Foods or someplace from being able to pay their rent, because they say wages are too high. Oh, we’re now maybe paying somebody 15, 16 bucks an hour. How are they going to live?

No, we have to get rid of that, not the trillionaires. We’re probably paying people too much in China, the ones that are assembling the phones, not their billionaires. So it’s an amazing moral twist and it is endorsed by Democrats and Republicans. I mean, Lawrence Summers was as bad as any of them and you have written about him, and Robert Rubin, the great Democrats, as bad as any Republican. But to think of the moral corruption of saying that somebody now because we have these companies like Subway have to pay a little more to get somebody to make your sandwiches, that’s the problem.

It’s not all of the waste of the money with the zero credit. I would like you to, when we wrap this up, tell us about how money gets created. Because it used to be when I was in graduate school, we laughed at the people who believed in the former gold standard and when that was taken away. But at least the gold standard anchored money with something. Nowadays, these central banks just create funny money at will.

Prins:

Right.

Scheer:

There is actually no adult responsibility here except visiting upon future generations an incredible economic burden to somehow pay all this back.

Prins:

No, that’s exactly right. The problem is there is no adult in the house. There’s no law, there’s no regulation, there’s no cap, there’s no limit. There is literally nothing in the world that can prohibit a central bank from creating money, again, when it deems that it’s necessary, which is also open to the interpretation of said central bank. So for example, just recently, the Bank of England had to basically create money out of nowhere to buy UK government bonds or gilts because the pension system, which effectively relies on the return of gilts to pay out long-term workers who paid into these pensions, was under a complete potential collapse.

So, the Bank of England said, “All right, well, we’ll buy gilts.” They did that out of money they fabricated. So you ask, how is money created nowadays? Well, the reality is, and it’s a little bit more complex than this, but the central bank, the sort of center of liquidity, the lender of last resort, therefore the creator of money, gives the banking system money that it creates electronically. There’s some accounting gizmos that it does, and there’s books that it keeps, but the practice is such that it creates money and it effectively says to primary dealers, generally Wall Street or the big banks in the world, sometimes treasury departments, et cetera, “Look, we’re going to create this money and we’re going to buy from you the debt that you already have on your books.”

Or if you’re a government, debt that you might create later, but for now you have it on your books. So we create money out of nowhere. We purchase the debt that already is out there, so the debt doesn’t go anywhere productively into the economy anyway. That’s just literally a transaction. In return, we’re going to give you money with no strings attached and you can do whatever you want with it basically.

Which is what happened in the wake of the financial crisis, and again, throughout the period, and then again more so in the wake of the pandemic of 2020, is that these institutions use that money however they wanted to use it, which was for the most part, buying their own stock, lending it out to corporations that bought their own stock, leveraging into new kinds of securities that sort of make the subprime toxic assets look tame although we’re not there at that crisis yet, but that’s happening, and effectively used money to multiply money without any sort of responsibility to the real economy for receiving that money in return for that debt.

It also allows the government as sort of a back door as part of this triangle to be able to borrow more and know that somebody is going to buy the bonds that back the borrowing that the government did. So for example, if the Fed goes and buys a few trillion dollars more of U.S. Treasury bonds, it buys them from the government through Wall Street. Wall Street gets a cut, the government knows it can borrow money and it doesn’t have to go anywhere either. The Fed just creates money to keep it on its balance sheet after buying them back from Wall Street. It’s a very, very bizarre system.

None of it leaves room for the real work or the real economy or anything else. Yet, yes, both Democrats and Republicans, it doesn’t matter who’s in leadership from the bottom on up through leadership on all those sides, aren’t willing, able to understand that this connection is what destabilizes our economy. It is what allows markets to so much more ahead of the economy be. It creates these distortions, it creates these effectively poverty and sadness throughout populations. But from the standpoint of the central banks, they just create money. They just create money.

Scheer:

So I want to just end this show really cutting to the chase. We have an election coming up in three, four weeks, and there’s a poll in the New York Times today when we’re doing this, Monday, that for most people in this country, the issues that we argue about all the time, be they gun control, choice, all sorts of things, important as they are, really are judged by most of the public to be main issues for one 5%, sometimes 10%, the big overwhelming issue, and that includes by the way a lot of foreign policy, less important, even though it is very important and those other issues are very important.

But for this election may swing according to this New York Times poll on the feeling that the economy sucks right now, the economy is hurting people and that’s favoring the Republicans. Whatever people think about Trump’s instability or what the Republicans did and so forth, this economy is basically failing ordinary people. What I want to get at is how did that happen? Because I would think the Democrats being the party, claimed party of ordinary people, working people and so forth, would have kept in mind Franklin Delano Roosevelt, after all, he was himself from a wealthy family, but he said, “If we don’t serve the people,” and there used to be moderate Republicans that believe that.

I just want to get your thoughts, how did greed capture both parties? You worked on Wall Street. What is it? I mean, is it a drug? Is it the money they give out? Is it they’re smooth talkers? Is it they graduate from Harvard and Princeton and they all share an ideology? But once again, I’m talking to Nomi Prins who has written yet another brilliant book about how this corruption is destroying us, making life miserable for ordinary people all over the world. There are big strikes in France right now. What is your answer? That’d be a good way to conclude this. Why haven’t these other folks gone the way you have and left Goldman Sachs and tell us the truth?

Prins:

I think most of that is because of money and maybe also power and that kind of influence that comes from the two of those together. On Wall Street, there’s something called quarterly earnings. It’s the thing, it’s the metric by which Wall Street companies want to beat their quarterly earnings. They want to say they have good quarterly earnings because that raises their stock price, which raises the bonuses that CEOs down the line get, mostly at the top of the company when I say down the line, and so forth.

From a standpoint of politics, the more money that Wall Street, that companies can make as a result of the accessibility of cheap money floating not just to the top but to this sort of layer of power, the more that power can come back and reinforce itself. So yes, you can go to the same schools, but also that money comes back. If you’re in politics, whether you’re on the left or on the right, Democrat, Republican, at the end of the day, your mission, just like Wall Street’s mission, is for high quarterly earnings to pay up bonuses, is for yourself to get reelected and that costs money. If you want to have any sort of power, you need to be in office. If you’re in office, you need to be able to afford to get that seat and you need to be able to afford to keep that seat.

I think there is this fear, this lack of courage, a combination that means that anybody who achieves a seat and wants to keep it needs to keep funding. The easiest way to keep funding themselves is through reinforcing the system that got them there. This is sort of where we’re at. When that system also includes, again, the fabrication of money at the top that floats into those two polarities, the financial and corporate side and the political side, and they sort of reinforce each other’s money and power and influence, well then that’s just adding fuel to that same fire.

That is why we have a permanent distortion because that fire, that fuel, everything stays in one place. It stays in sort of like the upper tier of a box and everybody else in the box. The rest of the economy, the rest of workers, the rest of the sort of people at the foundation that build and make things and have to balance budgets and are dealing with in inflationary prices, not just today, but they’ve been dealing with these for decades, the fact that food and fuel is higher now is one more thing that costs more than the average median salary can support in our economy. It’s just another thing to people that already know that they’ve been squeezed throughout these years.

Scheer:

Yes, and let’s just get it back to human beings, those quotes that I use and please get the book, it’s called “Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever.” It’s a Public Affairs Books. It’s Nomi Prins’s seventh book. I would recommend all of them. But if you’re only going to read one, read this now and, yeah, you should probably vote. But when somebody comes and you get all these things, give me $5 for my congressional race, give me $50, I get it all the time. Every time I turn on, look at my email, I got another appeal in the name of progress, in the name of some progressive Democrat.

You have to really ask yourself, “Is this some kind of vicious game we’re playing?” Because after all, no matter who you vote for, you’re going to be voting for the financial gonifs, the financial crooks. That’s who you you’re voting for. That to my mind is the permanent distortion. It’s the destruction of any kind of democratic political, self-governance accountability that was what our constitution was supposed to be preserving. Now, it’s a charade. But don’t take my word for it. Read this book, Permanent Distortion. It’s compelling. That’s all the time we have for another compelling conversation with Nomi Prins.

Maybe if this book works, you won’t have to write anymore. But unfortunately, that probably won’t work that effectively. 

I want to thank Laura Kondourajian and Christopher Ho at KCRW, the great engineers and producers at KCRW, the NPR station in Santa Monica, terrific station, for carrying these shows now in the sixth year. Joshua Scheer, our executive producer, and the JKW Foundation and the memory of Jean Stein, a terrific writer, for helping fund these shows. See you next week with another edition of Scheer Intelligence. 


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27 comments

  1. Unfortunately Prins and Shreer ignores the forest by bringing in numerous facts to explain the real problem. This is not the problem. The person who appointed the Fed chief was Trump and he was reappointed by Biden. Can’t you see it is planned disaster. Both the 2008 and pandemic were planned to increase the power of the wealthy. This what happened pure and simple.

    1. Richard, Prins and Scheer have not ignored the forest. It goes back before Biden or Trump. It was Slick Willy Clinton (I voted for him twice, unfortunately) who, under recommendation from Alan Greenspan and their co-conspirators, to overturn the protective measures of the Glass-Steagall Act.

      But if you want to go back to the origins of this banking pandemic, it was the Federal Reserve Act of 1913, which was created by private bankers and is not a federal institution in spite of the words, Federal or Fed used in describing it. Woodrow Wilson supposedly said, before passing away that it was a big mistake, and felt he sold out the American people by letting private bankers and investors control the money supply of the United States. Words to that effect.

      Both the Republicans and the Democrats serve the same $$$ masters but have dueling matches for giving the citizens the illusion that each party is working for them. Meanwhile, as both Nomi and Bob said during this interview that things are getting worse for the average person, especially during the recent Covid scamdemic, while the billionaire class increased their wealth by … reread the article, sir!

      1. The problem is actually more subtle than any of the quite correct but mere reforms out there. In fact the problem is all of the current reforms like Keen’s Minsky’s financial instability hypothesis, Michael Hudson’s financial parasitism, UBI, Ellen Brown’s Public Banking and the late David Graeber’s book Debt: The First 5000 Years…are mere reforms instead of a paradigm change. A paradigm is an entire pattern and a new paradigm concept, emphasisa SINGLE OPERANT concept that changes the nature of an entire pattern. Hence what we need is paradigmatic analysis. All of the above reforms deal with money, debt and banks. They’ve got the area well covered. THEY JUST DON’T HAVE THE SINGLE OPERANT CONCEPT WELL DEFINED AND THE WHERE, WHEN AND HOW TO IMPLEMENT THAT CONCEPT SO AS TO EFFECT THE PATTERN CHANGE. You can find that concept and the policy program to implement it here: https://www.amazon.com/dp/B07PLNJLRN/ref=sr_1_1?keywords=wisdomics-Gracenomics&qid=1552358772&s=books&sr=1-1-catcorr

      2. Frank I agree it is not the disasters of 2008 and the scamdemic but the reliance on the Fed which creates the problem. I agree it is the change in the Glass-Steagall Act. I too voted for Clinton. But it won’t be addressed by relying on the Democratic party which has aligned with the military industrial complex the MSM etc. Our only hope, if any, is a total change in attitude to address climate and our crazy reliance on war to address the worlds problems. We need to work with China, Russia and all peoples of the world. But I don’t see this happening.

  2. Wonderful interview! Thank you Mr. Scheer, as you’ve been a hero of mine for decades, and I will purchase Ms. Prins book. As a former “insider,” Nomi knows of what she writes about, and my late wife and I had the honor of seeing her speak in Oakland or Berkeley at a packed house in a kpfa.org sponsored event, and we, (the audience) were mesmerized by the breadth of her knowledge and her clear and concise way of “spilling the beans” about Wall Street. THANK YOU BOTH!

  3. It is deeper and more sinister than the billionaire class gaining more wealth. It is about control. The best way to control the 99% is to impoverish and indebt them so they become wage or welfare slaves or both. The billionaire class or by now trillionaire class are afraid of the 99% and so stay hidden. Bezos, Gates, Musk et al on Forbes’ list are not the most wealthy. You will not find a Rockefeller, Morgan, Rothschild, Wallenberg, or a member of European royalty on the list. Thomas Piketty in his book “Capitalism in the 21st Century” said that over the last 200 years the average annual increase in GDP was 2%. The average return on investment was 5%. Wealth in investments at 5% will double every 14 years. No family doubles every 14 years. That means individual family members become wealthier as the 99% become poorer. David Rockefeller was on Forbes’ list at $5 billion in 2014. In 2016 his net worth was listed as $3 billion. No one especially a Rockefeller loses $2 billion in the runup of the Dow after 2008. That wealth somehow disappeared along with the wealth of the Vanderbilts and Rothschilds.
    John D., J. P. Morgan and Carnegie have all been quoted as saying competition is a sin. Those that own and control the privately held central banks are afraid of any that threaten their control of domestic and international money creation and flow. There are currently 5 government owned and controlled central banks, Russia, China, Cuba, Venezuela and Syria, all heavily sanctioned, which is enforced by the privately owned central bank of central banks, The Bank of International Settlements. The last to leave the exclusive club of government owned central banks were Ukraine, Afghanistan, Iraq and Libya. A casual observer would tend to conclude that it is dangerous to live in a country that independently owns its central bank.

    1. Antisandman: Very true and well said. And not to forget that Iraq and Libya wanted to start selling oil for Euros rather than dollars. Fit all of what you said in with John Perkins’ book, “Confessions of an Economic Hitman” and these types of crooks make the old-fashioned Mafia or national crime syndicate look like juvenile delinquents by comparison.

  4. Richard, thanks for your comments. I agree with you on not relying on the Democratic Party as they are part of the problem. In his classic, but now dated book, “THE RICH AND THE SUPER-RICH’ published in 1968, Professor Ferdinand Lundberg of Columbia University said back then that there is one political party in the United States, which is the “property party” subdivided in two (the R’s & the D’s) giving the illusion we have a two=party system. As you and everyone on this website knows, the voters go back and forth every four to eight years voting for the R’s & D’s as if there aren’t alternative parties, which, sad to say, have no power in this country as they do or did in Western Europe, and still don’t see the big picture on how they are being “taken,” save for the wealthiest 10% of people.

    Dr. Jack Rasmus, a Professor of political economy, in answering a question for one the readers on his website earlier this year said that “you have to change the political system first” meaning if the citizens want a fairer society, they can’t keep the same folks in office who cater to big wealth and expect progressive change.

    1. This was obvious at the time of the Iraq War (the Cheney/Nuland one fronted by the Bush dummy).

      I describe the Anti-War movement of that age as the most successful anti-war movement of all time. It had enormous success, eventually leading to a firm majority of Americans saying that they wanted the wars to end.

      However, this was not able to become an actual change in the policy of the nation. Thus, it was obvious, that while America had a very successful Anti-War Movement, what it lacked was a Democracy Movement.

      America is still in very desperate need of a Democracy Movement.

      Although, by this time, both the educated citizenry and the free press that a Democracy requires are both weak or completely lacking as well. Fortunately, people will educate themselves if given half a chance, and a free press will naturally emerge when it is allowed to do so. Thus, while there is much to do, all is not lost …. not until Joe starts punching at that Big Red Button on his desk that is bigger and prouder than the North Korean red button.

      1. We have the “American Democracy” movement where the US destroys any country with resources our Elites want, killing, maiming and displacing millions of unworthy victims from their homes. John Bolton lauded this “American democracy” as the Libya Model.
        Anyone who compares Libya (or Afghanistan) to that country before “American Democracy” arrived knows what our brand of DEMOCRACY means.
        Ukraine will soon discover the same, much to their chagrin.

  5. Make no mistake Sheer and Prins are representing righteous indignation of those who are not really interested in fundamental socioeconomic and political change that would make difference to 70+% of America living in depression at least for last 22 years but as nearly extinct middle class want to return to old good days of their own class prosperity that enabled and guaranteed their successful careers all in time when most of Americans already suffered horrendous psychological terror, pain suffering and misery struggling to survive as their basic human right of economic stability and confidence in future of their children were constantly threatened due to inherent cruelty of socioeconomic system of capitalism.

    Nobody dares to tell the truth that it was not capitalism but nearly complete abandoning of capitalism in 1950s facing ideological Cold War with Soviet Union that brought American prosperity by means of imposing total economic command and control structure of governance of capital investments. Principles of equality, equity and egalitarianism if not implemented were at least given a forum and social value as was taxing rich at 90% rate.

    The same command and control system was orchestrated by occupation forces in West Germany and Japan industrially obliterated by allies and was responsible for their miraculous recovery just after a decade or so since 1950.

    Any reform short of abolishing socioeconomic system of capitalism would make no difference to peoples who work for living as capitalism simply means rule of capital while any consideration of Fundamental needs of entire society and fate of all the people is rescinded. Many libertarians who complain about monopoly global capitalism of today must realize that historically monopoly it is not abomination of capitalism but result of its natural evolution stemming from systemic promotion of unlimited capital accumulation and concentration of capital in few private hands via means of unfettered competition. Historically it were repeated social Revolutions that acted to disperse capital among society only to return capitalism back in matter of decades into its final state of natural monopoly already Adam Smith and Marx decried.

    So let’s no fool ourselves, anybody who advocate sham of economic/financial reform are promoting theirown narrow agendas of phony Revolution that serves their own benefit alone leaving the rest in a rot as they were before. Such social de cohesion, lack of solidarity and empathy toward fate of others is a result of brainwashed capitalist mind most so called liberal posses and are imprisoned in.

    No reforms would work as long as capitalism is left intact meaning rule of capital and commodity exchange markets, legality of exploitation, alienation of labor, legality of production and accumulation of surplus value, centralization of capital , legality of profit and usury of speculative financial capital formed from socially destructive arbitrary individual or narrow production decisions, etc.,

    Such capitalism whitewashing positions today represent perverted marriage of leftists and libertarians.

    Moreover, imposition of artificial individualism of economic decisions that must be inherently collective based on community consensus, legalization of always destructive socioeconomic competition or allowing individual failures of human endeavor which are always damaging to society at large and most of all legality of property and individual ownership of means of production and many other features of capitalism preclude any socioeconomically stable society regardless of role of money which always was used as most effective tool of looting, parasitic appropriation of forcefully alienated labor but not required in capitalism.

    Capitalist socioeconomic system is not aimed at producing goods to satisfy human needs but via private or state capital accumulation to economically and hence politically control population by groups of elitists, like energy elitists or food elitists, media elitists and political elitists etc.,local or global.

    Also the system effectively produces social outcomes of small or large scale inequality, inequity and elitarianism that is the core of people’s social misery, suffering which is the real product of capitalism as a social system where social relations and human bonds are negotiated by power, dominance and/or money. Selfless Caring and sharing are condemned, taxed and delegalized.

    Not many know in the west that their perceived wrongly past prosperity considered a “proof” of viability of capitalism like in US or Scandinavia 1950s-70s was paid by blood sweat and tears of countless of millions of enslaved somewhere else out of sight and mind of millions of mindless western ignorants who thanked non existent human face of capitalism for it.

    Not a cent of profits were ever shared by capitalists even in days of so called western prosperity, none. What western societies were allowed to consume in those “good days” was blood, sweat and tears from Soylent Green of humanity at large in the so called third world.

    What we need is socioeconomically and environmentally, self sustainable, democratically self-governed by consensus equal, equitable and egalitarian society of caring and sharing aimed at one thing alone to satisfy basic human needs of healthy food, safe shelter, companionship and opportunity to create what people need after asking them first.

  6. As I said previously all of the leading reform theories and movements (correctly) revolve around money, debt and banks. Now we just have to “up our game” to the level of paradigmatic analysis. Reforms never last. It’s how Keynesianism got morphed into neo-classical macro. Paradigm changes on the other hand change entire patterns and are evolutionary phenomenons. The truth is everything adapts to a new paradigm…not the other way around. Did we go back to nomadic hunting and gathering after agriculture, homesteading and urbanization took root? Did we go back to geo-centrism when helio-centrism and elliptical orbits proved more accurate astronomical calculation? Are we going back to paper records or even micro-phyce now that we have cybernation? Of course not. And if we ever wake up and integrate the new paradigm for the creation and distribution of new money, namely Direct and Reciprocal Monetary Gifting with the policy equivalent of Kepler’s discovery of the ellipse…which incidentally is what made helio-centrism actually more accurate than Ptolemaic cosmology…of a 50% Discount/Rebate at the point of retail sale…we will never look back. Why? Because it fulfills all of the signatures of authentic historical paradigm changes and because that single policy will end the biggest bugaboo in economic theory and the biggest issue of the day…inflation. How? By implementing BENEFICIAL macro-economic price and asset DEFLATION. Holy mind blowing inversion of both mental orthodoxy and temporal universe reality! How can you have inflation when the price of virtually EVERYTHING from a package of chewing gum to an automobile to a home is now reduced by 50%. And with the rebate aspect of the policy the retailer still gets their full price so they’re happy and ecstatic in fact because that single policy potentially doubles the available demand for every one of their products and services. Think about it. And check out the book in my former post for the rest of paradigm changing benefits of the entire policy program.

    1. Those 50% rebates you encourage will only happen, repeatedly, at the Wall Street/ Big Bank level. The role of the 99% is to be bled dry to support Casino banking.

      “Are we going back to paper records or even micro-phyce now that we have cybernation? Of course not. ”
      I don’t know. But I miss paper ballots.

  7. “statist Russia is far more free and just than America where corporations rule and robbery and thievery is made official”. visarron Belinsky

  8. Hi Dr. Pins,

    I use Apple to purchase and read books. Apple offers the narrated version of your book “Permanent Distortion” but not the text version. If you have any influence over the Apple bookstore, could you encourage them to offer the written version of your book as well? Thank you.

  9. “Competition” is a dirty word to any capitalist.

    Oh, they’ll talk about it in theory. Praise its good effects in rhetoric. But, given half a chance, any capitalist goes for ‘monopoly’ any time. Because under capitalism, if they don’t, then their competition will become the monopoly instead, and they’ll be flipping burgers. That is the nature of capitalism.

    Capitalism thus requires strong and effective regulation to exist. And, since the motto of capitalists is to grab everything any way they can, and that anything is legal, especially if you can buy legislators, because all is fair in love and war and business is more important than either, it is of course obvious that by design capitalism will attack and destroy the very regulation that makes it possible for it to work in even a small way.

    The destruction of ‘competitive capitalism’ is a given by the very nature of capitalism. It was always such. Question the people who told you differently.

  10. I offer that the US dollar is the reserve currency because of the confidence many world investors have that the US is strong and will not default on its treasury bills. If anything erodes that confidence, perhaps a combination of blowback from sanctions, Russia/China setting up independent financial systems and economic fallout from a depression in Europe, the US could not sustain itself as a hegemony. The inability to stop Russia from defeating Ukraine would also contribute to a loss of confidence in US supremacy.

    I’ve come to understand (and I welcome any education on this) that currency speculation, like stock speculation, is a confidence game. Whatever “facts” or “technical analysis” someone offers, at the end of the day, it is a belief that a country is strong or failing, and whether to maintain an investment in that currency.

    1. The confidence in the US dollar is based on backing by Oil/ Gas. When Nixon took the US off the gold standard the petrodollar replaced it. Why do you think the US is provoking Russia since they moved away from Communism?

      1. michael888:

        Just to elaborate a bit, I’m trying to say that the backing of the US dollar is a kind of religious belief, a herd mentality if you will, that is also true about the stock market. Another way to phrase this is that perception is what creates value. If belief in the strength of the US economy and military is shaken by doubt and setbacks, such as domestic inflation, military failure in Ukraine, an alternate reserve currency formed in Asia, the US “empire” will decline rapidly.

        My understanding is the US made a deal with Saudi Arabia to link the US dollar to international oil trades, creating the Petrodollar. As Russia, China and Saudi Arabia collaborate on oil trades denominated in local currencies this can change. The US is provoking Russia (and China) to stop the economic integration of the “World Island” that is Eurasia, and prevent the rise of geo-political rivals.

  11. There are trillion, trillion things in this World that will happen and there are just as many things that won’t ever happen.

    True…real… honest… unencumbered and freely-practiced Capitalism will NEVER, EVER be tried on this Planet. It hasn’t so far… and never will be. It just does not and will not serve the interests of the Financial and Business Vultures that grabbed the World by the throat and will never let that go.

    Even if that Big Meteor that so many are hoping for comes along one day. and clears the deck.. the economic and financial systems that emerge after the destruction will soon be exact copies of our current financial ‘system’ of pillage and abuse.

    There is a deeply serious flaw that exists within the human mentality and human family at large that Predators will always emerge and seize and take control of the economic, financial, political, and social systems of the Planet.

    Honest people try to ‘play fair’. The Vulture Predator Class doesn’t know the meaning of the word. All They know is to take advantage of every situation for their own benefit and gain. There is no humanity or compassion in them.

    We are surrounded by Vultures and They circle over our heads every moment waiting to strike. And They don’t restrict themselves to economic matters only.

  12. “as one digs deeper into the national character of americans one sees they have sought the value of everything in this world according to the answer to a single question: how much money will it bring in?” Tocqueville
    “americans are farcical when it comes to money and force majeure—the 2 things they worship”. gore Vidal
    “the double symbolism americans assign to money is considered paradoxical by Europeans”. Geoffrey Gorer

  13. The way I see it, the only way this can be fixed is if the dollar becomes like any other currency in the world. If the dollar hegemony is broken so too is the power of these elite gangsters. That is why a multipolar world with the rise of competitors like China, India, and Russia trading in their own currencies is so threatening to them.

  14. After Scheer mentioned complaints that he dominates these discussions with guests, he did it again. While I appreciate Scheer’s many insights, he can write his own article to espouse his own views. He harped on and on about the financial perversions of the Democrats since Clinton, while both he and Prins note the problem is bipartisan, and pointing fingers at our elected crooks is not germane.
    I suggest Scheer listen to some interviews by Joe Rogan, Lex Friedman, Briahna Joy Gray or even Katie Halper; ask “gotcha” questions, keep away from too many tangents and make the expert clarify her answers. While the point always seems to be selling books, some of us cannot afford them, and a short interview should make the work accessible, not be a tease for a book.

  15. Blah blah blah. We have know for decades about the world elites controlling our lives. Let’s do something about it. Unfortunately the lazy malaise of the financially squeezed general population who have been tricked/marketed/indoctrinated by hollywood, etal, into believing that life should be constant entertainment and that the highest calling for humans is to pursue wealth, is tired and asleep. BUT one day a deep anger will erupt, as it eventually does, (King Louis XVI and Marie Antoinette) and revolution will occur. BTW, the 10 richest people in the world are not the advertised people. The 10 known richest people are merely a distraction/cover for the true richest people in the world. Nothing on the world scene is as it appears.

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