The Real Face of Capitalism

This article was first posted on this blog on 19th September 2008.

The Stock Markets are rallying today (Friday, September 19th), having sunk to three-year lows. Up and down the markets go, as news of government bail-outs follows news of bank failures. Only one thing’s for sure, and that is that anything can happen.

All the leading players are happy now because a little bird has told them the US Government is set to rescue AIG Insurance and has established a new fund to cover most of the mess left by the  sub-prime mortgage affair. Worldwide, central banks have  pumped around £100 billion, or roughly $170 billion, into their various economies. And here in the UK the government has supposedly banned city traders from “shorting” stocks (selling them in order to buy them back later at a lower price, pocketing the difference).

Yes, those shirtsleeves on the Stock Market floor might be allowed to move billions of stock around and afford to drive around in Porches and Ferraris, but when it comes to determining the value of stock belonging to the big boys, well, a line has to be drawn.

That’s actually a minor issue. The real news is that the American and British governments are prepared to mortgage our future recklessly by borrowing billions upon billions of dollars or pounds from the “Fed” or the Bank of England to prop up the unworkable debt based financial system. And they are borrowing all this fictitious money, that will have to be repaid by future generations of tax payers, from the very people and institutions who have caused the problem in the first place.

For a simple and entertaining explanation of how the financial system works, download the brilliant book Promise To Pay, by Dr R. McNair Wilson, from our home page at

Philip Gegan


£35 billion More Money – And Yet No Inflation!?!

This article was first posted on 17th September 2008.

The last couple of days have seen not only two of the largest US
financial giants go under (Lehman Brothers - now said to have a chance of a cheap buy-out from Barclays after all, and Merrill Lynch - bought for a song by Bank of America), but also signs of real panic in the financial establishment as billions are wiped off the value of leading companies, including banks.

The chickens really are coming home to roost, with a vengeance. After years of lending fictitious money fast and furiously, mostly to fuel an insane property inflation (itself used by so-called economists and politicians as evidence of a “healthy” economy), the whole sick system seems to be on the brink of collapse.

That is good news in itself, but the trouble is that it threatens to take everything else with it. Of course, if that did happen there would be a real chance of an independent inquiry into the rotten banking system and the truth about it would possibly get out somehow.

There would be a high price in the meantime in terms of the social and economic misery that would have to be endured, but surely a small price to pay to rid the world of international debt-slavery.

For that reason alone it’s almost certain the power brokers at the top of the international financial system will take any steps to produce a kind of “soft landing”, which will preserve their status and at the same time eliminate a great deal of the competition in the banking system, leaving more riches and power for themselves in the future.

Hence, most failing banks are being bought up on the cheap by other banks, who have managed to avoid the worst of the losses. Take note of who those banks are, for they are the banks most likely to be directly controlled by the financial elite, who encouraged the lunatic lending spree in the first place and then pulled the rug and started what has become known as the Credit Crunch.

So in the United States Merrill Lynch is being snapped up by Barclays from the UK. And here in the UK Halifax Bank of Scotland, whose shares fell by another 40 per cent this morning alone, looks like being gobbled up by the awful Lloyds TSB, also in the UK. But Lloyds TSB is the UK’s third biggest house mortgage lender, so how do we know it will still be around in six months?

Some casualties are too big to be rescued by other big players, so governments have to step in, as in the case of American insurance giant AIG, “saved ” by a loan of a mere $85 billion that the Federal Reserve just happened to have lying around awaiting a rainy day. We’re told that the US Government stepped in to the rescue, but of course the government only borrows the money from the illegal Federal Reserve System, which creates it out of nothing and then claims the money itself and interest as a debt owed to itself. What a racket!

And here in the UK, the Bank of England, having weighed in yesterday with £5 billion to pump into the money markets, came back with another £30 billion this morning. At the same time the Bank’s Chairman is claiming that inflation will be coming down next year! Another day, another lie. Just how inflation can come down when billions of pounds are being pumped into the economy without any corresponding increase in value of the goods and services being produced, isn’t explained.

Things are getting pretty exciting. Watch this space, and don’t forget to download your free copy of Dr R. McNair Wilson’s Promise To Pay, which explains in simple and entertaining terms how the financial racket works (or doesn’t work) - available from the home page of Ancient Banking Secret.

Philip Gegan



What You Need To Know About The Credit Crunch

Note: This article was first published on this blog on 19th March 2008.

It's frightening, especially when your savings or pension is at stake.
A number of big name banks and financial institutions, pillars of
fortitude and strength, are suddenly being shaken to their
foundations. Already here in the UK we've had Northern Rock go under
and now in the U.S. Bear Stearns has gone the same way. What's
happening, and how can we protect ourselves and our savings?

This article will attempt to answer that question and cover the
underlying and immediate causes of the crisis.

The Underlying Cause

The Federal Reserve Act of 1913 set up the Federal Reserve System as
the financial institution that controls US financial policy. It's
privately owned by foreign banking interests and lends the people and
government of the United States their own money, repayable at interest
on demand. That's why we have a debt-based economy.

The money we use as our means of exchange isn't real money and never
has been. It's only "promise to pay" money. That means it's only as
good as the private banking consortium that owns the Federal Reserve.
And they are bankers engaged in enriching themselves. They do this in
many ways.

One of those ways is by lending many times the amount of real money
(gold and silver deposits) that they actually have, and collecting
interest on all of it. Sometimes they lend just a little too much of
what they don't really own, and a panic ensues. This has happened
regularly throughout US history - 1884, 1890, 1893, 1907, 1929-33,
1987, and now, to name just a few.

Another way they make their money is by trading in options and
derivatives. This is separated from gambling by only a fine line, and
when things go wrong, as they invariably do sooner or later for a
gambler, they will seek to deflect the losses away from themselves on
to everyone else. This brings us to the immediate cause of the present

The Immediate Cause

This time the trouble started in the "sub prime" market. Many of the
smaller banks lent money as home loans to people who couldn't raise a
loan in the regular financial markets owing to adverse credit history
or simply not having a sufficient income to cover the amount they
needed to borrow. In a large percentage of such cases it wasn't a
question of "if" they defaulted, it was "when".

With the rapid inflation of house prices that took place in recent
years, this problem became extremely widespread. Many loans were
placed by corrupt brokers who simply lied on the application forms
that their clients were earning more than they actually were. At the
same time, many loans were fixed at an artificially low rate for a
limited time, creating a financial time bomb due to detonate when the
fixed rate period expired and the borrower suddenly had to pay a
larger repayment each month, which in many cases was just not

Meanwhile many of the smaller lenders were becoming aware of the
dangers just around the corner, and bundled up many of these "sub-
prime" mortgages, the good with the bad, and offered them as packages
to larger banks anxious to get in on the act of profiting from the
house price boom.

The more risky loans were supposed to be counter balanced by the fact
that the safer loans carried a by now higher rate of interest,
ensuring a profit for the purchasers of these packages. This practice
was only made possible by the fact that banks can lend far more money
than they actually have deposited with them - up to ten times the
amount is the rule of thumb. It's called "fractional reserve". Or
"fraud" where I come from. It's perfectly legal, though. You see, the
bankers and their lawyers wrote the laws.

You may ask why there's a problem, bearing in mind that these loans
are secured on the borrower's house in each case. Therefore, surely,
if the borrower defaults the bank, or whoever now owns the equity,
simply repossesses, sells the house and recovers the money owed,

Well, no. Many of the loans were made on the basis of highly inflated
property valuations in the first place. And in the second place, as we
all know, house prices have tanked in recent months. It's a vicious
circle, with house prices falling and making matters worse, and the
worsening credit crisis in turn causing yet further falls in property
values as buyers dry up and banks become reluctant to lend for fear of
over extending themselves.

As cash flow worsens, more and more financial institutions are finding
themselves in trouble. As of mid March 2008 it's only Bear Stearns
that has gone under. Soon there will be a whole lot more, I'm afraid.
What we are witnessing may well be the unraveling of the whole
financial system of the west. The only beneficiaries will be those
huge institutions that own the Federal Reserve. They will be able to
consolidate their power over the world economy.

But what of us? The ordinary folk of the United States, Canada and
most European countries, and the other industrialised countries of the
world. How can we protect ourselves from what is happening?

Well, it's not the objective of this article to give financial advice,
but it would seem prudent at the present time to divest our money, as
far as possible, from anything to do with mainstream financial
institutions, and to place it into the only assets which seem likely
to come through unscathed. And in this writer's humble opinion they
are gold, silver, oil and water - real, tangible assets that can't be
created out of nothing, manipulated and then withdrawn from

Philip Gegan