The Fiat Money System and Lehman Brothers

The Fiat Money System and Lehman Brothers

 

As we come to a close on 2011, like every morning that we wake up to a new day, we wake up to the opportunity to live – not as scavengers, or leeches, not as victims, or exploiters, but to the real possibility of dismantling the walls we have built around our respective lives that prevent us from truely living.

Some of those walls we hold onto take the form of systems created by others – systems that are no longer functional or sustainable. One key system is the one we have been confronted with everyday of our lives since coming into being, the current fiat money system.

Much has been said by experts on this issue, now for a word from a complete novice.

The fiat money system is not based upon the real wealth that is created by the 99%, but exploits the 99%. It is a system that is used to stand for capitalist demcracy, which in real terms affords the 1% to keep on doing what it is doing. The fiat money system is represented by what we hold in our hands everyday, and and even fight, beg, steal and kill for becuase for those without land to provide a self-sustainable way of life it is perceived to be the only way to survive, to live, and to build a future.

As the fiat system totters on the verge of collapse, we have all been confronted by the realities that we have created to support myths that we deem as truths from a monetary system that is corrupt in nature.

The fiat monetary system is not based on a real commodity, quite literally, an illusion unlike the gold standard. The irony is, this has never been hidden from us, becuase the fact that a currency can be upgraded or downgraded – depreciated is a clear example of having no real value! It is a creation, a creation that allows the 1% to keep on creating money out of real money, the real money that is a product of the real wealth produced by the 99%. It is this ability to creat pseudo-money that is the real cuase of the global economic and debt crisis becuase it has no limits in theory to the availability and access to credit. In real terms, the illusory bubble burst when debt can no longer expand, and therefore inevitably contracts. In real terms, the fiat monetary system that we have taken as a reality that has shaped all our lives only exists as a result of excessive public debt. For it to continue shaping our realities, the fiat monetary system needs real money that is real value that never depreciates, and that takes the form of silver and gold. For a government to pay its debts, it has to repay with real value, i.e. silver and gold.

The first physical example of the fiat monetary system in the U.S. is the Greenback in 1862, which was used to pay for the Civil War becuase there was no others sustainable means to pay for that war! Issued as Gold Certificates, the government promised to pay back in gold. In WWI, in order for countries to pay for the ‘war effort’ alot of false money had to be created, but there was not enough gold to support the paper/fiat money.

Once that link between false money – the fiat monetary system, and real value, silver and gold is broken as in the case when former U.S. president Richard Nixon removed the link between the two in 1971, by putting to end the international gold standard and no paper/fiat money had no real value to back it – like the Tower of Babel, it has to fall eventually!

The London Times wrote in 1865:

“If that mischievous financial policy, which had its origin in the North American Republic, should become [established], then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed, or it will destroy every monarchy on the globe.”

The Beginning of the End

The Lehman Brothers to us novices is important becuase this global financial service collapsed at the beginning of the end of the global economic crisis in 2008 – the heart of the global banking system. By  September 15, 2008, the 4th largest investment bankers in the U.S., filed the largest banckruptcy in history, with 25, 000 employees around the world. Lehman Bros. Collapse sent a tsunami through the global fiat  economic system as a key mortgage broker.  U.S. house prices fell, and ‘investors’ which I find a dubious term rushed to sell stocks that no longer had value. By October 2008, U.S$10tr left the global market markeing the global economic meltdown, and $46 billion of Lehman’s market value was wiped out.

From Rags to Riches: The Lehman Brothers

How the mighty will fall is the story of Lehman Brothers. The Lehman Brothers are also important in this equation becuase it is a rags to riches story, a story that many aspire to under the capitalist democratic fever that is still present with us today, and why so many of us are not so willing to let go of an American Dream that has become a global dream. The growing cut-throat competitiveness by governments is a clear example of that. If we drink from the same spring, out lives will be reduced to that; a cut-throat mentality that on waking every morning will always have something or someone to fear!

The most powerful Jewish banking house in the U.S., began as a rags to riches story before the American Civil War in 1844.  Twenty-three year old German-Jew, Henry Lehman migrated to Alabama, U.S. from Rimpar, Bavaria to fulfil a young mans’ dream during a time when a wave of migration increased the U.S. population by 35%.  Not wasting time, Henry made the most of what was available, a wagon filled it with goods which he peddled along the Alabama River in exchange for cotton to people who were far from any store. Once familiar with which customers to target, Henry was able to open a groceries, utensils, and dry goods store which targeted local cotton farmers by 1847 on Montgomery’s Commerce Street and called it simply “H. Lehman.”

It was in 1847, that younger brother Emanuel arrived, and by 1948 the business became “H. Lehman and Brother” on Court Square. When younger brother Mayer arrived in 1850 the business became Lehman Brothers, by which time, the business was doing very well with ready credit from their German Jeiwsh suppliers in New Orleans. In those times, cotton was the main cash crop, and Alabama’s main export crop, hence why the Brothers accepted cotton as payment for their merchadise, which became a second business i.e. trading in cotton.

In 1855, brother Henry died of yellow fever aged 33, leaving the others to continue. They formed a partnership with cotton merchant John Wesley Durr, and built a cotton storage warehouse, which meant that the Brothers could trade much larger, however, this partnership was interrupted by the Civil War.

As the largest cotton brokers in Alabama Civil with connections in Germany and Liverpool,  the remaining Lehman Brothers supported the Confederates during the Civil War as merchants and financiers as the Conferation of Southern States lacked the financial prowess of the North and the credit to go with it.  They raised money to release Alabama prisoners, and by 1864, Mayer Lehman became  a commissioner to visit Confederate soldiers in Union prisons, and Lehman Brothers became Alabama’s fiscal agents to help sell bonds in 1867, to service the states debts, and interest payments. The Lehman Brothers also ventured into profiteering of African-American slaves, which ended after the American Civil War becuase it was no longer profitable.

The focus of the remaining Lehman Bros., was commodities trading, and brokerage services in New York where they relocated after the War in 1858 giving Lehman Brothers a strong presence in commodities trading, and the financial market. By 1870 the Lehman Brothers joined the Coffee Exchange, and established the New York Cotton Exchange, and got involved in emerging markets for railroad bonds, Southern reconstruction, and financial advising. This wheeling and dealing placed the Lehman Brothers among the top 60 wealthiest American families according to Ferdinand Lundberg. Brother Emmanuel was on the first board of directors until 1884.

In 1887, they became a member of the New York Stock Exchange, and by 1899, Lehman’s got more involved in underwriting, and during the Great Depression, Lehman’s went for venture capital, and helped to finance Halliburton.

It all sounds good, but it is all fiat (‘pseudo’) money.

By 1906, Lehman’s partnered with one of the current top 1%, Goldman Sachs, and made that move from cotton to investment banking, with Emanuel’s son, Philip Lehman, and Henry Goldman underwriting securities for Sears,  Roebuck & Co.; F. W. Woolworth Co.; and R.H. Macy & Co for example. 1920’s saw Lehman’s expanding into air travel, communications, Paramount, and 20th Century Fox. With Philip at the helm, Mayer’s son Herbery left Goldman’s Sach’s for politics, to become Governor of New York, and a U.S. Senator.

1950s saw the Lehman’s expanding into the dawn of informationa technology, through Litton Industries, and Digital Equipment Co, and capital markets in the 1960s making Lehman’s as an official dealer for U.S. Treasuries. Expanding across Europe and Asia, Lehman’s merged with another Jewish giant in financial services, Kuhn, Loeb & Co., better known as the Warburgs In 1977 to become the 4th largest U.S. investment banker.

Money needs money, no matter how real it is, and in 1984 Lehman Brothers was acquired by American Express to become Shearson Lehman Brothers, which through divestment became Lehman Brothers again.

After Lehman’s HQ was destroyed in the World Trade Center, Lehman’s moved to Manhattan in 2002, and got caught up in the mortgage lending crisis by acquiring 5 mortgage lenders, specializing in  borrowers without full documentation. It was the 1920s that saw the end of the family business being run by the family, bringing in new expertise!

One can blame taking on poor credit rating clients, but the reality is that the crisis has spread beyond that forcing up prices alround to the extent that the markets have become saturated, pricing out consumers, the bread and butter of the greedy giants. As certain giants, especially within the food and pharmaceutical industry look to Africa to pay the price, the fact that December 2011 saw European bankers being told to prepare for an economic collapse and to make no more loans, exposes an illusion that has been created for so long. All desperate measures have been taken, including the NATO bombing of Libya to regain control of the only state controled Central Bank, as a private entity that feeds into the global elite network.

As the Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, the Bank of Japan and the Swiss National Bank coordinate to provide liquidity for the global financial system, but to do that. The Federal Reserve will create money out of thin air, as is the nature of the fiat monetary system, a decision that was made late November 2011.  This was the same step taken after the collapse of Lehman Brothers, so what are the chances that it will make any difference between the real world and the game of Monopoly.

This is only the beginning of the end, as many argue for the return of the gold standard, but the gold standard cannot provide the illusion so badly needed by the global 1% that will continue to support their positions, their sphere of influence and their (our) wealth. This practice as led to all the inequalities in societies around the world, and is not just about the complaints of the 99%, but about addressing the balance for the future development of all.

Just say that it is possible to remain as we have done since the invention of the fiat monetary system, the other reality is, is that the world’s natural resources, the environment, and humanity cannot sustain it anymore, and as such, there is no choice in the matter. What goes round, comes round to the dismay of the European monarchs, the global elite, and to those who cannot see that there is something better than what we have had for so long, by so few, killing, oppressing and impoverishing so many. American wars are fought for one reason only MONEY as stated here by General Smedley Butler who wrote ““War Is a Racket” in 1915…

“I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism.

I helped make Mexico and especially Tampico safe for American oil interests in 1914.

I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in.

I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.

I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912.

I brought light to the Dominican Republic for the American sugar interests in 1916.

I helped make Honduras right for the American fruit companies in 1903.

In China in 1927 I helped see to it that Standard Oil went on its way unmolested.

Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.””]

Sources:

“A Classification of American Wealth.” http://www.raken.com/american_wealth/bankers_gilded_age/Bankers_index3.asp

“Case Study: The Collapse of Lehman Brothers.” http://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp#axzz1hwwKp3aB

Chinyelu, M. “Lehman Brothers’ Profiteering Includes African Slavery And War on Terrorism.” http://connection.ebscohost.com/c/articles/11636590/lehman-brothers-profiteering-includes-african-slavery-war-terrorism

“Fiat Money History in the US.” http://kwaves.com/fiat.htm

Herbert H. Lehman Suite and Papers at Columbia University. “History of Lehman Brothers.” http://www.library.hbs.edu/hc/lehman/history.html

‘Lehman Brothers.” http://www.encyclopediaofalabama.org/face/Article.jsp?id=h-2160

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One thought on “The Fiat Money System and Lehman Brothers

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