An interview with currency expert Andrew Gause, author of The Secret World of Money and Uncle Sam Cooks the Books
In their 2016 campaign platforms, both the Republican and Democratic parties have called for reinstatement of all or part of The Glass-Steagall law. Also known as the Banking Act of 1933, the law was passed by Congress to prohibit commercial banks from engaging in the investment business. It was enacted as an emergency response to the failure of nearly 5,000 banks during the Great Depression.
“The law protected average bank customers from having their deposits used (and subsequently lost) in risky investments,” says currency expert Andrew Gause, author of The Secret World of Money and Uncle Sam Cooks the Books.
Gause says in 1998, at the urging of President Bill Clinton, Federal Reserve Chairman Alan Greenspan and US Treasury officials Glass-Steagall was repealed.
“Ten years after Glass-Steagall’s repeal we saw a near-total collapse of the US economy in the form of the sub-prime mortgage meltdown which required emergency bailouts ultimately costing trillions of taxpayer dollars — all as a result of unregulated, greed-driven activity by America’s banks and financial institutions,” says Gause.
Gause says the call by Republicans and Democrats for reinstatement of Glass-Steagall while correct in theory, is in reality ‘a-day-late-and-1.6-quadrillion-dollars-short.’
What America needed was legislation which not only regulated US investment banks, but also regulated the behavior of foreign investment banks with ties to the US banking system, “says Gause. “The emerging problem with Germany’s largest bank, Deutsche Bank, illustrates why.”
“Deutsche Bank has been fraudulently propping up the balance sheets of economically challenged European nations in order to help those nations qualify for participation in Eurozone,” says Gause. “The problem is that now Deutsch Bank itself is struggling to stay afloat and remain solvent.”
Gause says if Deutsche Bank fails, the fall will trigger the immediate collapse of banks in Spain, Greece, and Italy, as well as other major commercial banks like Citi, Barclays, HSBC, Morgan Stanley, and others.
“Deutsche Bank is involved very closely with all of the Eurozone currencies and bonds, and they share massive derivative exposures with all the major Western banks,” says Gause.
“Deutsche Bank is at the hub of the 1.6 quadrillion global derivatives market, and they will not break down alone. In fact, the bank’s failure could mean the end of the European Monetary Union.”
Gause says a Deutsche Bank failure would not only be catastrophic for EU citizens: It would also be devastating for US citizens, especially for those who have accumulated retirement savings.
“Your pension, your 401(k), your profit-sharing plan, your money market fund, your local commercial banking institution, your savings bank, and your credit union could each be a counter party in a Deutsche Bank relationship,” says Gause.
Gause says that even if your financial institution remained open for business and your account balance remained unchanged, the Federal Reserve would have no choice but to create new money to help purchase the 72 trillion dollars’ worth Gause says if Deutsche Bank fails, the fall will trigger the immediate collapse of banks in Spain, Greece, and Italy, as well as other major commercial banks like Citi, Barclays, HSBC, Morgan Stanley, and others of derivatives issued by Deutsche Bank.
“The printing of that new money would immediately and dramatically decrease the purchasing power of the dollars in your account, and negatively affect your ability to live comfortably in retirement,” says Gause.