Home > Economic, Justice > The Money Masters Live in Fear

The Money Masters Live in Fear

“Whoever controls the volume of money in our country is absolute master of all industry and commerce…and when you realize that the entire system is very easily controlled, one way or another, by few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – President James Garfield, 2 weeks before his assassination.

Most people in the United States have long suspected that a “shadow government” exists and that the real power in the country resides in that dark location, not in our elected government. The citizens instinctively know that our elected officials are really nothing more than the hired servants of the money masters and are beholden to them if they wish to retain their positions of power.

International Swaps & Derivatives Association ISDA

A quick look at the curtain which they hide behind reveals one shadowy organization that represents the interests of these money masters, the International Swaps and Derivatives Association also known as ISDA. The officers and directors of this organization include some of the largest hedge funds and most of the major banks in the world including the largest banks in the United States. One of the purposes of the ISDA is determine if a “credit event” is actually a default. If a “credit event” is declared to be a default, then Credit Default Swap (CDS) contracts come into play.

Most people have heard of Credit Default Swaps and derivatives, but are not quite sure of what they really are. Before I can continue with this article, I will present a short description of these two financial instruments. Please bear with me on this as things will get interesting shortly.

Credit Default Swaps (CDS) can be generally considered to be insurance policies issued by banks (sellers) and taken out by investors (buyers) to protect against failure among their investments. The problem with them is that while insurance companies are regulated to make sure that the companies have the ability to pay their claims, the CDS issued by the bankers are largely unregulated.

Derivatives are financial instrument whose value is based on the value of another financial instrument. If one looked at a football team: it owns the stadium, has contracts with players, has advertising rights, has television contracts etc. Each one of these is an economic entity capable of generating income. Derivatives could be considered the bets that people place on these teams. (Credit Default Swaps are a form of derivatives).

So what do derivatives and Credit Default Swaps have to do with all this, how do they affect people on the street, and why are the money masters so concerned about them?

Take a look at the ,following table in a report created by the Bank of International Settlements.

Derivatives keep growing

Source: Bank for International Settlements

If you look at the highlighted area, you will see that the total value of Credit Default Swaps for 2011 is a staggering $32,409 BILLION dollars! That is $32 TRILLION, with a “T”! To put this into perspective the gross domestic product (GDP) of the United States in 2010 — the total value of all the goods and services generated in the entire country that year — was $14.6 trillion. The amount of credit default swaps held by the banks dwarfs the entire economic output of the United States. There is no way in hell that these banks could ever pay even a small fraction of these claims. The TOTAL amounts of derivatives is a staggering $707 TRILLION plus a measly few hundred billion more. This entire system is a house of cards just waiting for a single card to fall. There is not enough money on this planet to cover these contracts.

A report by the Comptroller of the Currency has the nation’s five largest banks — JPMorgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs — holding nearly 95 percent of the industry’s total exposure to derivatives contracts. This means the 5 largest banks are on the hook for over $30,000 billion for just the CDS they issued.

This is where it starts to get interesting.

Remember earlier in this article I stated that one of the purposes of the ISDA is to determine if a “credit event” is actually a default? If a “credit event” is declared to be a default, then Credit Default Swap (CDS) contracts come into play. Think about this, the very same banks that would have to pay the claims by those who bought these contracts, are in the position of determining if a “credit event” is really a default. All the banks have to do is to NOT declare any default and they do not have to pay! If they did have to pay, and then the house of cards would collapse. The big banks would immediately be insolvent and the money masters live in fear of this.

This lack of a declared default by the ISDA is exactly what brought down MF Global which was speculating heavily on European bonds. What ultimately happened was that an agreement was reached in Europe that that investors would have to take a write-down of 50% on Greek Bond debt. Now MF Global was leveraged anywhere from 40 to 1, to 80 to 1 depending on whose figures you believe. Let’s assume that MF Global was leveraged 40 to 1, this means that they could not even absorb a small 3% loss, so when the “haircut” of 50% was agreed to, MF Global was finished. It tried to stem its losses by criminally dipping into segregated client accounts, and we all know how that ended with clients losing their money.

MF Global may well be just the tip of the iceberg on what still awaits us.

However, MF Global thought that they had risk-free speculation because they had bought these CDS from these big banks to protect themselves in case their bets on European Debt went bad. MF Global should have been protected by its CDS, but since the ISDA would not declare the Greek “credit event” to be a default, MF Global could not cover its losses, causing its collapse.

Think about this for a minute, if you or I paid 50% of our mortgage payment, this would certainly be declared a default. However, in the Greek bond write-down the ISDA did not declare it a default. What you essentially have here is a situation where the banks controlling the ISDA and are essentially determining their own fate.

Now with the talk in Europe being that investors may have to take a write down of 70% on some European debt, will that be declared a default? I doubt it, again because that would drive the 5 biggest banks in the United States into insolvency. The problem becomes, at what point does the ISDA declare a default? At 70%, at 80% , or at 100% if Greece or another country just walk away from their debt? Once a default is declared by the ISDA, the banks are done, and the money masters know this! The conflict of interest in this situation is clear. These banks got to write the insurance , get paid the premiums and yet they have total control over whether they will have to pay.

The money made by selling these derivatives is directly responsible for the huge profits and bonuses we now see on Wall Street. The money masters have reaped obscene profits from this scheme, but now they live in fear that it will all unravel and the gravy train will end. What these banks have done is to leverage the system to such an extreme, that the entire house of cards is threatened by a small country of only 11 million people. Greece could bring the entire world economy down. If a default was declared, the resulting payouts would start a chain reaction that would cause widespread worldwide bank failures making the Lehman collapse look small by comparison.

The ability of these large banks to not pay on the Credit Default Swaps that they wrote, sold and profited from is a travesty. What will happen once other countries like Italy, Spain, and France have bond write downs? This criminal abrogation of contracts exposes something much bigger, the unregulated shadow banking system of derivatives. The Dodd-Frank bill that people thought would regulate the finance industry does little to address the problems of derivatives, largely due to the money masters’ lobbyists that influenced the bought politicians to not put limits on the gravy train. We have a system where: laws are written by the servants of the money masters, the regulators are appointed by these same servants, CDS policies were written by the money masters, premiums were paid to the money masters, fees were taken by the money masters , but no payouts will be permitted by the money masters. Do not expect the paid politicians or regulators to do anything about this.

These titans of Wall Street do not answer to any government or to the public. They have set us all up for a second financial crisis far worse than in 2008. These money masters are humanity’s worst enemy. This is another example of a paper game they have created to enrich themselves, but puts the entire world at risk.

Well, these Masters of the World will be having a themselves a get-together to plan the future of their world.

*The ISDA 27th Annual General Meeting will be held on April 30-May 2, 2012 in Chicago.

*This will be followed by the G8 summit meeting in Chicago on May 19 and May 20.

*Then this will be followed by the NATO summit in Chicago on May 20 and May 21.

During 9-11, it was said that our security services failed to connect the dots. However, here we have a situation where if you analyze this carefully, it is easy to connect the dots.

There is a reason that the ISDA meetings are held first. The G8 and NATO events are the window dressing for public consumption. The real decisions will be made by the money masters so their meeting needed to be held first. At this meeting, the money masters will develop their marching orders for their puppets, the paid servants who are the political leaders who will be in attendance at the G8 conference.

These puppets at the G8 Conference will then create the marching orders for the militaries that they control. However, all the “big picture” planning will have been developed at the ISDA meetings. The money masters live in fear of an economic collapse that they have brought about and they may have need of a military adventure to distract the masses from their crimes. Of course the paid servants will go along with this plan because they do not want to do anything that would change their positions of power. Watch for signs of a bogeyman country orchestrated by the mass media to whip up frenzy in support of war, or possibly even a false flag attack. This media campaign will be another symptom of the fear of the money masters.

The militaries will do what they always do and will blindly follow their orders. The NATO meeting will be used to develop the planning for the execution of the orders developed by the money masters.

With the continued austerity being imposed on the world by these bankers and their agencies such as the IMF, World Bank, and their hired servants our political leaders, a meeting of so many tools in one location is a natural magnet for protestors who are tired of the corruption and greed in the system. The demonstrators will be targeting the puppeteers, not just the puppets.

It is not difficult to imagine that the money masters do not want any of these meetings to be disrupted and that plans have already been made for an overwhelming police presence. There have already been reports of joint military exercises between the Los Angeles police and the military. You can count on the fact that the 1st Amendment will sustain “collateral damage”.

Chris Hedges, a Pulitzer prize winning journalist, has speculated that since the NDAA was opposed by the agencies in the national security establishment including the FBI, NSA, that what might be driving these military exercises is the fear that the bankers do not trust the police to protect them if things turn south.

“And I think, without question, the corporate elites understand that things, certainly economically, are about to get much worse. I think they’re worried about the Occupy movement expanding. And I think that, in the end—and this is a supposition—they don’t trust the police to protect them, and they want to be able to call in the Army.” – Chris Hedges

It is no mistake that Chicago was chosen for the site of these meetings. The powers that be know that the police will meet the protests with violence, but in Illinois, it is illegal to record the police. So the documentation of violence perpetrated in the protection of the interests of the money masters will be significantly reduced. The choice of Chicago for the site of these meetings is another example of the fear of the money masters.

The number and behavior of law enforcement as well as the myriad of other security agencies that will be present during these Chicago meetings will certainly be an indicator of the level of fear that the money masters are feeling as the world they have created on a foundation of theft, fraud, leverage and debt crumbles around them.

The Occupy Movement has been shining a light into the dark recesses that these money masters inhabit. The movement represents a real threat to their privileged positions as the public becomes more and more aware of the fraud and greed perpetrated by them, as they continue to extract even more money from the public. The money masters had their paid servants, the politicians evict the Occupiers from their parks in most cities across the United States. Another example of the fear the money masters have.


These money masters know now that all they accomplished was to scatter the movement which ultimately only strengthened it even more. The message is now quietly spreading to college campuses and to communities where foreclosures are being fought (further threatening the bottom lines of these same bankers). Every time that the hired politicians send their enforcers, the police to violently repress the movement, the movement grows in strength.

The money masters live in fear that they will not escape the blame for creating the next economic crisis as conditions continue to worsen. The money masters know that nothing has changed since the 2008 collapse and that the number of derivatives has actually grown since then (see chart). You would think that the bankers would have learned their lesson, instead with their myopic focus on their own wealth and greed the derivatives grew to significantly higher levels. These money masters now live in fear of the repercussions of these actions.

Eventually even the police will realize that their pensions are being raided by these money masters. The money masters have been manipulating their politician puppets to enact “pension reforms” that hide their theft in the name of “necessary cutbacks”. The money masters live in fear that ultimately even the police will refuse to protect their interests.

The money masters live in fear that the Occupy Movement will awaken the country from its deep sleep, and that the wrath of the people will turn against these sociopaths who have so manipulated the system in order to enrich themselves with no regard for anyone else. They may have their psychological and physical bunkers to hide in, but the very fact that they need these bunkers, shows their fear.

For more articles by many authors on economic, social, justice, media, and community issues:

  1. February 9, 2012 at 4:56 PM

    The moneyed elites have been called The Masters of the Universe. They graduated from Harvard and Yale and are brilliant economists and financiers. The only thing they forgot to learn is ethics and morality.

    Corporations are supposed to serve more than their stockholders. They were originally chartered by the states to serve the interests of the comonwealth. Their lawyers, accountants and lobbyists have protected them from crimes against humanity.

    Millions of people are suffering and dying because of their greed and illegal activities. This is class warefare in spades, and they are winning…and we are loosing bigtime. When there is another economic collapse the government will bail them out again, and we will pay the price in lower pay and loss of benifits…including Social Security and Medicare.

    We will not get to vote on this. By the time we here about the sellout it will be a done deal. Our democracy, weak in the first place, has been hijacked by the powerful, controling interests of the plutocracy. It may already be too late to forstall this tragedy. But if there is any hope it is with Occupy and the Green Party. Resist much, Obey little.

    Bill Reitter

  2. Anonymous
    February 18, 2012 at 1:48 PM

  3. February 18, 2012 at 3:36 PM

    Mr. Bernancke, I am sure that the millions of homeowners in foreclosure and millions of desperate, unemployed American workers with no health insurance could use that half trillion dollars (that you gave away) in the form of decent jobs and health care… But we wouldn’t want your corrupt house of cards to come crashing down on you, or any of your rich friends! That would create too much embarasment and hardship for your elite circle of parasites. So you prop up the rotten system for another year or two, with our money, and when it crashes again you will ask us to bail you out… again. You have a rude awakening coming…see you in court.

  4. Rockument
    February 21, 2012 at 5:15 PM

    Thank you for explaining derivatives. I was never sure of they were. Scary stuff!!!

  5. Jenn W.
    February 27, 2012 at 12:27 PM

    looks like the entire system is ready to collapse and no one seems to care

  6. Anonymous
    February 29, 2012 at 12:44 PM

    The author of this has no idea what he’s talking about and the entire bit about Chicago is utterly ridiculous and untrue. Thanks for the amusement though.

  7. February 29, 2012 at 6:31 PM

    Dear Anonymous,

    So you think the story about the ISDA is not true? Just look up the website run by ISDA itself, then followup with the Bank of International Settlements, and connect the dots. Of course if your mind is closed, then facts will not change it.

    You think that the bankers have been acting wisely by siginificantly increasing their derivative positions since 2008? Hopefully you did not have any accounts with MF Global.

    Regarding what will happen in Chicago:
    Are you aware of the level of police presence during the Denver convention where police attacked peaceful crowds?
    Are you aware of the level of police presence during the St Paul convention where police attacked peaceful crowds?
    Are you aware of the level of police presence during the Seattle WTO convention where police attacked peaceful crowds. (The police chief has even admitted that serious errors were made at that time)
    Are you aware of the level of police presence during the Ontario G8 summit where police attacked peaceful crowds?

    Just search You Tube and you will SEE how “vigorously” the police were doing their work at all these events.

    Who do you think these police are protecting?

  8. BuffaloLink
    March 7, 2012 at 5:30 PM

    Looks like the 1st prediction was true. The ISDA did vote 15-0 that the greek bond swap was not a default.

  9. April 7, 2013 at 5:36 AM

    I have to agree with Anonymous. This report makes the usual mistakes that other journalists who don’t know about finance have previously made. The $30 trillion and $700 trillion figures are always used to grab headlines, but they are really not as bad as they seem. A large proportion of the $700t is from interest rate swaps and is just “notional amount” rather than actual physical transactions. Even after that, the actual cash impact is impossible to work out, because of leveraging and inter-bank transactions. That is the real risk – we don’t know what the true underlying impact of these derivatives are and how they interact through the banking system. However, it is definitely not the $700t figure that is often cited, and the system is not a house of cards ready to collapse. It is a bit more robust than that (maybe a house built on sand is a better analogy). Interestingly, shortly after this article was written, Greek CDSs were triggered by the ISDA…something the author seems to think would never happen. The impact of this was fully absorbed within the banking system and the house didn’t collapse. The point is you shouldn’t be looking at total outstanding value of derivatives to gauge their risk. This is actually a much more difficult task (which is why all the regulators have been stumped).

    • April 12, 2013 at 2:03 PM

      Dear Clone,
      You are correct that Greece did not bring out the collapse I predicted might happen, however the “robust” system was saved by huge infusions of cash from the Euro central Bank and from the Federal Reserve. This is not sustainable and doesn;t indicate a “robust” banking system.

      You are also correct in stating that the huge $700 trillion figure is the NOTIONAL amount of these contracts. However, the huge risk these derivatives pose will certainly be shown once interest rates start to rise, which they inevitably will have to in the future. The banks will do ANYTHING to save their insolvent butts. As Cyprus has shown us, even “private” deposits in banks at risk. Think it cannot happen here?

      Think MF Global where private funds were raided and “creditors” were first in line for compensation instead of account holders.

      The following article will outline how derivatives will supercede deposits if another too big too fail bank will “fail” and how the FDIC has regulations in place to make this happen. Similar “reguilations” are in place in the UK and in Canada. In the Eurozone, Cyprus will now serve as model for the vulnerable Spanish, Portugese, and Itlian banks.


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