AS A YOUNG WOMAN, I DESPERATELY WANTED TO BE TALL. I envied Suzy’s five-foot-ten stature. The thought always left Pitou perplexed.
“But, you’re perfect,” he would tell me, “just as you are.”
Shaking his head, he would remind me at night while we were in bed how I had been made to fit inside of his arms. Grabbing me by the waist, he would pull me in towards his stomach, his knees up against the nape of mine, and wrapping his arms around me, kiss my head. Then, as I slipped softly into an intimacy from which I never wished to escape, he would whisper into my ear:
“Good night, mon chou. Dors bien.”
I shudder at the thought that I might never have met this man, that I might never have felt the imprint of love he had stamped upon every cell of my body and soul.
It was the beginning of September, and we had just settled back in Paris after a week in the south of France. Alain Demachy had given us his house in Cogolin, and Pitou had taken the opportunity to give me a glimpse of his childhood. Because of its proximity to St. Tropez, we spent most of our late afternoons on the Port, sipping aperitifs while people watching before dining at one of the cafes in the old village. But in the early morning hours, he would take me to the Hôtel du Cap where he used to swim as an adolescent, growing up during the War. He spoke often of those years, as if they existed out of time–a place rather than a moment, where the young had not yet been touched by the virus of consumerism and the need to be anything more than themselves.
He wasn’t particularly fond of the hotel. It was the lush park grounds that he loved, filled with alep pines, palms and olive trees. And the smell of mimosa that penetrated the air. Nothing reminded him more of being a kid than the smell of mimosa. Taking off his shoes, he would walk barefoot in the grass toward the cliffs overlooking the Mediterranean Sea. Eden Roc was the place he held most dear to his heart.
It is perched at the tip of the Cap d’Antibes–a mythique haven of such singular and incomparable beauty, it has attracted the rich and the legendary from around the world since its opening in 1870. Each morning, he would reserve a table for lunch at the restaurant overlooking the seawater pool that had been blasted out of the rocks below. With nothing on our minds, we would bath in the sunshine all morning, diving into the cobalt blue water when we began to sweat, and swimming to the hotel raft before feasting on lobster and peach infused champagne at the outdoor crustacean bar.
So many fall deeply in love only to think they have fallen out of it once the exhilaration, inevitably, leaves. Our love was still young, and although I knew that it would change, I reminded him of the words that F. Scott Fitzgerald had given to Nicole in “Tender is the Night.”
“I don’t ask you to love me always like this, but I ask you to remember. Somewhere inside of me, there will always be the person I am tonight.”
Fitzgerald is one of my favorite authors. As I gazed out to sea, I imagined the great American writer, fifty years before me, sitting exactly where I sat. His tragic romance takes place against the backdrop of the Hôtel des Etrangers, a fictionalized version of the Hôtel du Cap. Back in 1934, Scribner’s had published a four-part series of the novel he considered to be his best work, giving readers a peek of the now classic that had taken the famed writer nine years to complete. The first of the series, released in January of that year, had the intriguing sub-banner of “Honest Inflation” emblazoned across its cover—a concept explained by the ex-pat American banker and philanthropist Edward Tuck. Forty years after the article was written, it was clear that the misnomer was a complete contradiction in terms. Inflation is an economic sleight of hand, the implications of which I had not understood, before my education at Merrill. They now preoccupied me completely.
Upon our return to Paris, every muscle in my body was completely relaxed. Kissed by the sun during the day, and Pitou’s sweet lips at night, that September, I was happier than I had ever been in my life. But the markets would quickly change that. In the two years that I had been studying them, I had watched as the Dow Jones plunged 44%. By October, I got my first taste of what my grandfather must have felt back in that month in 1929.
There was a heist occurring, in broad daylight—a theft that had begun sixty years earlier. Yet, it was looked upon as a normal occurrence. While the life savings of millions of Americans disappeared in a downward whirlpool of descending stock quotes, the investing public blamed themselves, for their lack of judgment, their ignorance—their greed. Unable to comprehend the inevitable effect of decades of counterfeited prosperity at the hands of the bankers in control of the US money supply, they watched in disbelief as the rest of the world threw in the towel by selling short an overvalued dollar that had been printed into oblivion while remaining pegged to a fictitious price for its contrepartie: gold.
The words written by Edward Tuck in the 1934 edition of Scribner’s were proving true. “Nature alone, and not man, can be trusted with the vital problem of the world’s money supply.”
The financial education I had acquired in the span of those months was precious. But it was the edification on human nature that was priceless. I had been a registered rep for only a few months and, as the new kid on the block, had received all the garbage accounts that the other seasoned brokers in the office no longer wanted.
“See if you can do something with these, kid,” Eric Kuhn joked, while dumping a series of account files on my desk and giving me a wink.
He reminded me of Gene Kelly, a somewhat short and muscular man in his early forties with a strong jaw line, prominent nose and a set of white flashing teeth. As I perused the carnage that, systematically, ran through each of his discarded accounts, I thought of the lessons he had taught me over the past two years. He was successful, and I couldn’t figure out why.
“Enlighten me, Eric,” I asked one afternoon, while the markets were tumbling and he was in a particularly chipper mood. “Your clients all lose money. And yet, you are one of the most successful brokers in the office. Why do they stay with you?”
As his cigar dangled from his lips while his hands occupied themselves with the papers on his desk, he grinned, unoffended by my seeming aspersions.
“Lesson number one, Bérénice. Clients who make money cash out. They take vacations, and buy houses with their profits. But the client who loses his dough? He stays with you forever…always trying to win it back.”
My job was to convince these poor unsuspecting souls that their funds weren’t lost, that by averaging down into the descending spiral they could turn a fiasco into an eventual triumph. But, for the clients that Eric had abandoned, most of whom had speculated on margin, there was nothing left to average down with.
“There was once more than two hundred thousand dollars in that account,” one woman said to me over the phone. “It was everything we had. And now there’s nothing.”
Wrought by anxiety, she was crying.
“I told my husband to sell everything while we still could,” she continued. Sensing that I was still an ingénue, she must have felt safe taking me into her confidence. “But he just told me what they have told you to tell me now. Buy more.”
They. The one and only, incomparable they. Them. That unique and peerless group of men whose identities remain shrouded in mystery, but who are out there—ruling our lives. Or so we seem to think. I wanted to put a face to them. Unlike the woman on the phone, I wanted to understand who they were and what they were up to.
She couldn’t sleep at night. But Eric could. An aficionado of French Bordeaux, as his former clients lamented to me over the telephone, he was quietly stocking his cave with vintage Grands Crus Classés from the Margaux region of the Haut-Médoc. It had me questioning the elation I had experienced upon being told that the decision was taken to promote me to the ranks of account executive.
And yet, there had been a moment when I had doubted the chance would ever come. My suspicions of David Rosenthal’s misogyny had proven correct. While he had actively encouraged me to study for the NASD exams, once I had passed them, he showed no sign of willingness to take a gamble on me.
Fortunately, fate intervened. Was it a coincidence that a margin account would be responsible for my being promoted? I won’t go there.
It belonged to a commodity trader who had gone wild on pork bellies while Rosenthal wasn’t looking. His broker, a young Merrill recruit eager for commissions, somehow, allowed the man to average down… with the company’s money. Once the bellies had gone limit down, and the losses had piled up to a cool million, Rosenthal panicked. Pacing the hallway that led from his corner view office to the glass encased commodity pit at the end of the building, I watched as, with each trip, the man’s blood pressure rose—his face turning crimson upon learning that the client had no intention of making good on his speculative debts. Absent litigation, he was refusing to meet the calls.
Over the next few weeks, the President of Merrill Lynch, France, went from a daily schedule replete with business meetings and lunches he could not keep track of, without the constant tapping on his shoulder of Fiona, to creating his own personal “to do” lists where he openly admitted that his single greatest achievement for the day was in “checking off the boxes.”
“Pick up the laundry,” he joked, as he licked the tip of his pencil. “Buy wine for dinner.”
In his fall from grace and inevitable demotion by the top brass in New York, David Rosenthal never lost his sense of humor. Fortunately for me, however, he lost his job.
And, to replace him, in walked Ramiro Peñaherrera.
Originally from Ecuador, only his name gave him away. His English was perfect, his appearance more of a Madison Avenue advertising executive from the early Sixties than a South American financier. Tight-fitted gray silk suits with slender notched lapels, crisp white dress shirts under skinny ties, and French cuffs with simple links turned his short, lean physique into something oddly and aggressively masculine. In heels, I towered over the man; yet, in his company, he never let you forget who was in command. He was a stunted version of Don Draper, with the Brylcreem but minus the hat.
A chain smoker, he carried a silver-chrome Zippo flip top pocket lighter everywhere he went, the clicking noise from its lid always warning you of his approach. He didn’t need to speak. He would just look at you from across the room, wave his thumb to the right of his head and, instantly, whomever he had chosen for the gesture would rise from his seat and file into his office. The man had presence.
You would think that, being of Latin descent, the prejudice against the female sex so prevalent in those days would have been strikingly apparent in Ramiro. But he held a noticeable reverence for women, especially if they were ballsy. A cool female who could not be intimidated set his eyes twinkling. I knew he would approach me eventually; in Ramiro’s mind, with NYSE certification, I would be a wasted asset, were I to continue just licking stamps.
“What do I say to him?” I asked Pitou one evening, while he parked the Mini-Cooper on a small side street in the sixteenth so that we could shop for our dinner. “When he finally does get around to hauling me into his office, how do I convince him that I am worthy of his trust?”
“Why do you think you aren’t?” Pitou asked, while searching his jacket pockets for some spare change with which to buy our baguette.
“Because I have no credibility.” I answered. “I’m too young.”
“Bérénice,” he cajoled, not even bothering to look at me. “Napoleon conquered the world at twenty-two.”
He was actually twenty-seven when he led the Italian campaigns of the French Revolutionary Wars against the Austrians. But the imagery Pitou evoked with those seven little words did the trick. They were so striking, they shut me up instantly.
Commissioned at the age of sixteen as a second lieutenant in La Fère artillery regiment, and promoted to brigadier general by the age of twenty-four, Pitou found it difficult to understand how I could be fretting over the prospect of an office promotion when Bonaparte had risked his life, as a teenager, to advance through the ranks of the French military.
“You’ve come this far,” he added. “Don’t go drowning yourself in other people’s dogma.”
When Ramiro finally did get around to flipping his thumb at me, I was prepared. Nevertheless, the mood in that corner office had shifted so drastically with his arrival, it took a while for me to relax.
A call into the office of David Rosenthal had always left me on the edge of my seat. With his reserved demeanor and laser eyes that dissected your every thought while, silently, he listened to you, one could never feel completely untremulous in his presence. Ramiro, however, took you in with his entire aura, freely laughing from his gut at any commentary that surprised him and, in the process, placing you entirely at ease. As I sat down in front of his desk, he flicked the lid of his Zippo to light the last cigarette in the pack. I was in a heightened state of alert. This was my moment. Every sound seemed magnified, even that of the crumpling cellophane that had encased the empty box of Lider Suaves as he through it into the wastebasket.
“I’m thinking of promoting you,” he said. “But, first, I want you to tell me why I should. It’s the firm’s policy not to promote anyone to the rank of Account Executive prior to their attaining the age of twenty-five. Why should I make an exception for Bérénice ?”
My automatic response about Napoleon had him choking on his smoke. While gasping for air, he gave me that laugh– from the belly.
After I had left his office, he picked up the phone and called New York to speak with Merrill’s Chairman and CEO, Don Regan. Recounting my quip to the future Secretary of the Treasury and Chief of Staff under the Reagan Administration, he chuckled:
“Should I promote her, Don?”
The next day, Fiona was given the order to have my business cards printed.
As I walked home that night, the thought of sharing with Pitou the news of my brilliant success sent me, briskly, into a state of elation from which I was sure I would never recover. But, when I opened the front door of our apartment, the look on my love’s face instantly shattered my joy. He was in a bad humor, the first of many that, over the years, would leave me utterly perplexed.
Born under the sign of Cancer, the alignment of the stars at the moment of his birth is the only explanation that I have for the mood swings that tormented Pitou throughout his life. Few were those who ever witnessed them; many, who disbelieved me when I attempted to explain that, like all of us, he, too, had his rough edges. Pitou only revealed his weaknesses to those with whom he felt utterly safe–those who, he was sure, would never abandon him. Or to those who simply didn’t count.
We had taken on a huge financial commitment.
A three hundred and fifty square meter apartment, overlooking the Champ de Mars at le 2 avenue Frédéric Le Play, was in the process of being stripped bare by Alain Demachy’s personal work crew. With doors lying off their hinges and broken walls exposing the antiquated plumbing and electrical wiring to be replaced, the second floor of the building, all of which was ours, looked like a war zone—one of those bombed out structures that Pitou’s mother had abandoned in Antwerp. The cost of remodeling the living space, untouched since its Art Deco heyday, was prohibitive—and Pitou was, rightfully, worried.
Worry. It was the only emotion capable of sending him into a fit of rage. And, as I felt the brunt of it that night, the laughter I had so gleefully anticipated for our evening dissolved in to tears. The only space in the small apartment where I could close a door was the bathroom. Sitting on the edge of our pink ceramic tub, sobbing to myself, alone, I wondered how this state of grief could have occurred.
This isn’t the way it was supposed to be, I thought. Not on this night.
I had only been left alone for a few minutes when, quietly, Pitou slipped into the bathroom and sat down beside me.
“They made me an account executive today,” I said sadly. “I thought we would be celebrating…”
Taking me into his arms, he was overcome with sudden remorse.
“Oh, mon chou…pardon moi,” he asked, while wiping the tears from my face. “Je suis désolée.”
He hated himself for losing control of his emotions. But there were times when he couldn’t help it.
I believe that the greatest sign of a woman’s love for a man is her acceptance of him as he is. I am always perplexed by a woman who criticizes her mate without realizing that, were he any different, she never would have fallen in love with him. The qualities that you admire in a man, that attracted you to him, are the very aspects of him that would most probably shrivel and die were you to attempt to perfect him.
I am not talking about condoning conduct of the man who beats his wife, who is perpetually unfaithful to her or who, destructively, ignores his health thus leaving his partner to contemplate the prospect of life without him. But I do believe that, if we choose a man who does not have all of the characteristics we consider ideal in the opposite sex, it is possibly because somewhere, deep down in side of us, we wish to cultivate those missing qualities in ourselves. The ability to overcome my fears, to walk with my head held high in the face of worry, has been my lifetime battle. Perhaps wrongly, but because of this, I could easily excuse Pitou for his momentary bursts of anger. I knew from where they emanated—from the same dark cave I, too, could dwell in when overcome by fear.
“Let’s open a bottle of wine,” he said, while awkwardly trying to apologize for his unrestrained fury.
Pouring two glasses, he smiled warmly while making a toast to my future. As he did, I was overwhelmed by the strange sensation of déjà vu. Someone once said that it’s the mind’s way of letting you know that you are in the right place at the right time. But I have always wondered if it is but the memory of an experience already planned. Because I believe that we live many lives, that each one is but a chapter in a continuing mystery novel leading to the dénouement of a complicated plot, I often think of what the spirit is doing in between the writing of each passage.
In those moments, I ask myself: “In that instant, where space and time stand still, did I choose to be exactly as I am?”
Did I pick the people who would form my intimate circle for their faults as well as their attributes? You may laugh at my musings, but they help to make sense of my life. Instead of wondering why things have happened to me, I wonder who I might be had they not. If there is such a thing as destiny, I believe it is a path we have chosen for ourselves, rather than one chosen for us.
I kept that thought in mind over the days that followed, as the financial markets crashed and traders everywhere exclaimed “the sky is falling!”
There is an adage that, over the long-term, the market always goes up. It does. Yet, what many don’t realize is that, factored for inflation, the average return over the past one hundred years has only been about 1.9% per annum. And, by the time you take a 15% capital gains tax into consideration, which, interestingly, is not adjusted for inflation, even that feeble figure gets cut—down to a slim 1.1%.
What is more disconcerting is that, with a severe decline such as the one I was witnessing that autumn, at an average return of 1.1% per year, it can take an entire lifetime for an individual to recoup his losses. Intuitively, the woman crying over the phone to me knew this. She sensed what the charts I had been studying would, eventually, show me; that, once adjusted for inflation, the stock market peak of 1929, where my grandfather had lost 11 million dollars, would not be exceeded until 1992; and that, when the market would finally reach its true bottom, in 1982, its real value would be nearly equal to its value back in November of 1910.
If you are wondering why I am giving you a discourse on finance when what you bargained for, when you decided to read this, was a love story, it is because so much of the admiration that I felt for my husband was due to his persistent pushing of me to uncover, by myself, the true workings of the world instead of complacently accepting the revisionist versions taught by those in control of it. Pitou was always digging for the truth. At first, it irritated me. So often, the truth felt like a slap in the face. But he was a man who was not led astray by appearances.
“Look beyond them,” he’d tell me. “Pige.”
The appearance of a robust stock market for so many decades had been essential to the theft I was now witnessing. It had been the pacifier—the sedative—that had put to sleep the disappearing middle class as the bankers made their transfer of wealth.
With the markets plummeting, and Eric Kuhn’s past clients hanging up the receiver after I had barely managed to utter the word “Merrill,” I decided to be more like Pitou. I decided to dig.
What is really happening? I wondered.
Rising interest rates, the skyrocketing price of oil, and the arrogant OPEC sheiks in control of it. These, we were told, were the problem. Like a crashing bore that drowns you in a sea of chatter without ever really saying a thing, news reporters jabbered incessantly about them.
“They’re the result,” Pitou exclaimed, “not the cause.”
He had a glass of Jack Daniels in his hand, as he sat watching a Wharton economist being interviewed on the evening news. As he took a swig from the butterscotch colored liquid, I wasn’t sure if the grimace on his face came from the bitter taste in his mouth or his annoyance with the broadcast.
“When it comes to the loss of money,” he asked me, “have you noticed how the wise men of finance never address the real reasons? They only give us the repercussions…the better to confuse us with.”
He was echoing the belief of John Kenneth Galbraith, a towering man who stood 6 feet 8 inches tall, and who had once noted:
“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.”
We work our entire lives for it, save it, hoard it, dissipate it, worry about it, fight wars for it—worship it. Yet, how many of us know what money is? Or where it comes from? Or who controls it?
Given its central importance in our lives, I was embarrassed and perplexed that at 22 years of age I had no real idea of what money is, let alone who truly controls it. Then again, not one person in a hundred does.
To understand requires taking a trip back in time to that seminal year of 1910 when, on the 22nd of November, Senator Nelson Aldrich embarked upon a little trip. Accompanied by the Assistant Secretary of the Treasury, Abraham Piatt Andrew, the head of J.P. Morgan’s Banker’s Trust Company, Benjamin Strong, and the representative of the Rothschild banking dynasty in England and France, Paul M. Warburg, along with a number of other leading financiers who, together, represented about 1/4 of the world’s wealth, Aldrich left Hoboken, New Jersey in the dead of night on a train destined for the coast of Georgia. His traveling companions had been given strict instructions to drop their last names in favor of first code names upon entering the railway station that evening, so that no one would know who they all were. Dressed in his fur collared coat and silk top hat, with his private secretary in tow and a bevy of porters to carry his trunks and cases, he would have been easily recognized as he strode briskly toward his private railroad car. Which is why it was so important that his guests not be. You see, Nelson Aldrich was much more than just a senator; he was the Chairman of the National Monetary Commission and Republican “whip,” one of the most powerful men in Washington D.C.
The political spokesman of his time for big business, an investment associate of J.P. Morgan, and the father in law of John D. Rockefeller, Jr., Aldrich had extensive holdings in manufacturing, public utilities and, above all, banking.
His excuse for the stealth escape was a “duck hunting trip” at the élite Jekyll Island Club—the winter playground of the Morgans, the Rockefellers, and the Rothschilds where, mysteriously, the Queen Anne club–house had been closed and the regular employees changed out for temporaries who wouldn’t recognize the powerful faces of the men who accompanied the illustrious senator. Sequestered at the exclusive lodge, they stayed for an entire week while discussing monetary policy and the banking system. During the prior year, both had been under heavy fire from Congress and the public at large. Reform was in the air, and these Masters of the Universe were determined that, if new rules regarding their conduct must be adopted, they would be the ones to draw those rules up.
Initially referred to as the Aldrich Currency Reform, it was, in effect, a draft legislation package of the nation’s banking industry so vast, it codified the future confiscation of the wealth of an entire nation. Americans are suckers for the word “reform.” You can label just about any corrupt piece of legislation as “reform” and the citizens of the United States will accept it. But, this piece of legislation was exceptional.
A plan for a central banking system that would be owned by the banks themselves—a private cartel with sole control over the money supply itself–they baptized it the Federal Reserve System. Yet it would receive no funding from Congress, and its monetary policy decisions would not require the approval of the President or anyone else in the executive or legislative branches of government. It would stand as an independent agency, with no other department of government that could overrule its actions. In other words, it was designed from the get-go to be about as Federal as Federal Express.
Brazenly, Aldrich’s men had decided to yank the sovereign right and authority of the people to issue their own money out from under them, in essence, re-writing the Constitution of the United States. Was it any wonder that, in drafting the legislation, complete secrecy was of paramount importance? Designed by the very men whose past banking actions were the object of “reform,” with Woodrow Wilson’s passage of the ensuing Federal Reserve Act of 1913, a century of booms and busts, bubbles and depressions, would follow that would redistribute the wealth of the world toward the one percent at the very top of the system, while the quality of life of the remaining 99% would slowly erode as the Federal Reserve Notes, that replaced U.S. dollars once backed by gold, were rendered worthless.
The former president of Princeton University and future founder of the League of Nations, Wilson knew exactly what he was doing when he signed the bill into law. While campaigning for the Presidency in 1912, he said:
“A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men … [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”
Yet, under the thumb of this shadow government, a power he referred to as “so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that (one) had better not speak above their breath when they speak in condemnation of it,” he obsequiously succumbed.
As I studied, for the umpteenth time, the Modern Money Mechanics pamphlet given to me by David Rosenthal during my first week at Merrill, I considered a disturbing fact. Even when measured against official Bureau of Labor Statistics, by the fall of 1974 the dollar had already lost 80 % of the purchasing power it had held in December of 1913, when the Federal Reserve Act was passed. Today, it buys only 4% of what it could buy back then. Only 2 %, if measured against gold.
This was the inconvenient truth that had pushed the members of OPEC to quintuple the price of oil. For decades, they had exchanged a precious, and finite, asset for one that could be created infinitely upon a whim: paper.
Back then, when I contemplated this absurdity, the image of a printing press naturally came to mind—one that allowed the bankers to create the paper money required by our nation to purchase the oil and other precious resources needed to maintain the American standard of living. It would take a bit more digging before I would come to understand what they were truly creating: debt. An excavating quest to understand what none of us are ever taught; that, without debt, there is no money—that, every dollar in circulation owned by one person represents a dollar of debt owed by someone else. When you consider who owes the debt (you) and who owns it (the bankers), you begin to understand how the majority of the world is locked into a feudal system of indentured servitude where the only things that have changed since the Middle Ages are the titles of the vassals and their serfs.
It is said that ignorance is bliss. Perhaps. Awareness takes great courage; the ability to remain positive in the face of it, even more. Yet transcendence is impossible without it. For, without awareness, what is there to transcend? Without awareness, our ability to eclipse is as impossible as H.G. Well’s Eloi overpowering their Morlock masters whom they’ve never seen. Somnambulated, they heed the call of the siren that leads them to their death, unaware of their only purpose: as meat for their keepers.
This said, don’t beat yourself up if, until now, you have been one of the somnambulent. Practically all the members of Congress were, before September of 1941 when Marriner Eccles, the Governor of the Federal Reserve System, gave testimony before the House Committee on Banking and Currency. The purpose of the hearing was for the committee members to gain an understanding of the role played by the Federal Reserve in creating the conditions that led to the Great Depression of the 1930s.
Congressman Wright Patman, who was Chairman of the committee, had asked a seemingly naïve question: How did the Fed get the money to purchase two billion dollars worth of government bonds in 1933? Eccles replied:
“We created it.”
“Out of what,?” Patman asked.
“Out of the right to issue credit money.”
“And there is nothing behind it, is there?” Patman continued, “except our government’s credit?”
“That is what our money system is,” responded Eccles. “If there were no debts in our money system, there wouldn’t be any money.”
When I first stumbled upon this testimony, I had to read it several times. I had grown up thinking that debt represented the absence of wealth, the lack of money. And yet, here was a former Chairman of the Federal Reserve stating that they are one and the same. Just why this is the case is alarmingly simple. Debt is money because money is created only when somebody receives a loan. It is money printed out of nothingness, by banks that extend “credit” in exchange for receiving interest—interest on money that they did not earn but, rather, have counterfeited; interest on money that, once issued, devalues every other dollar already in existence; interest on money that, honestly, the bankers are not entitled to.
The template for this legalized fraud was drawn up at the end of the seventeenth century. It was the brainchild of the Scottish banker William Paterson who, on obtaining the charter for the Bank of England in 1694, openly revealed the essence of his scheme. “The bank hath benefit of interest on all moneys,” he noted, “which it creates out of nothing.”
“It’s brilliant, when you think about it,” Pitou remarked one Sunday afternoon while lunching with me at Le Stella, the bourgeois brasserie on the corner of the avenue Victor Hugo and the rue de la Pompe that we both loved. “A private bank,” he added, “owned by private shareholders for their private profit, with a charter from the king that allowed the bank to print the nation’s money out of thin air and, then, lend it to the crown…at interest paid by the general public.”
He was laughing as I filleted my sole meunier. The waiter had placed a bottle of Pouilly Fume in a bucket of ice next to the table. Pouring himself a glass, he took a gulp from it before continuing:
“But, what is really extraordinary is that, over the next two centuries, the scheme would be sold as ‘in the public’s interest,’ and repeated in country after country around the world!”
I can still see his face. Absurdity always made Pitou laugh.
“Well,” he said, with a shrug of his shoulders, “what can you expect in a world that values learning by rote above the ability to think critically? You can tell people anything. And, if you repeat it enough times, they’ll swear it’s the truth.”
“The United States economy is like a poker game,” Eccles wrote, “where the chips have become concentrated in fewer and fewer hands, and where the other fellows can stay in the game only by borrowing. When their credit runs out, the game will stop.”
The following Monday, I resolved to question the one man at the office whom I knew understood exactly what was happening in the markets, and why.
“They speak about the inflation they create,” Henri Tasso remarked, “as if it equates to an increase in the general level of prices.” He was using a ruler as he spoke, to tear a twelve-foot roll of news clips he had collected from the floor around the Reuter’s machine into neat eight-inch strips. Stacking them on a clipboard, he hung the pink pieces of carbon paper on a hook to the side of his desk before giving me his undivided attention.
Monsieur Tasso, as he insisted on being called by all the young women in the office, was a man of lumbering build yet erudite mind who always wore a bow tie. Balding at the top of his head, he had the tick of passing his hand over the surface of it while thinking, as if to better make contact with the impressive brain underneath. Born in Egypt, he spoke perfect Arabic. Bookishly highbrow, he is the only man I have ever met who could weep at the mere thought of the ancient library of Alexandria having been destroyed back in the first century B.C.
“A center of scholarship and cultural knowledge like that,” he’d say, “it had to be wiped from the face of the earth, if barbarians are to rule us.”
He once told me that, were it not for his need of money—without a doubt, the bane of his existence—he would have dedicated his life to the pursuit of academic learning. I sat at the desk behind his, and entered into the recesses of his mind every chance he gave me. Monsieur Tasso taught me much.
“But, inflation IS an increase in the general level of prices,” I remarked naïvely. “It is an increase in the general price level of all commodities.”
Resting his elbows on the front edge of my desk, his right wrist on top of his left, he smiled, clearly amused by my young notions.
“Mais, non, Bérénice. Price increases are merely the result of inflation. You will never understand inflation, unless you look for its cause.”
“Supply and demand,” I quipped, thinking back upon the chapters of Nichols and Reynolds “Principles of Economics” that, by now, I had mastered.
Tasso just chuckled.
“Yes,” he answered. “But supply of what?”
After everything I had learned about the banking cartel, I still wanted to say “goods.” But something kept me from blurting it out. Frozen, I stared at the wiry eyebrows of my tutor’s face—eyebrows moving up and down in inquisitive anticipation of my response. Realizing that I was paralyzed, he answered his own question for me.
“Inflation, Bérénice, is simply an increase in the supply of money. That’s it…that’s all there is to it.”
The accounts I had been given were kept in a three-ring binder and, flipping through the pages, I tried to muster the courage to, once again, pick up the receiver and resume telephoning a number of my impoverished clients. Because they were already on Merrill’s books, such a practice wasn’t considered “cold calling,” although the financial pulse of the people at the other end of the line was so weak, I thought of the exercise as “corpse calling.”
I sensed Ramiro at my back. His energy field had come in contact with mine, forewarning me of the dreaded question that I knew would follow. I waited for the sound of his Zippo lighter. In quick succession, the chrome flip top lid clicked open and shut, just long enough for him to light another cigarette and draw in that first breath of smoke. Paying attention to blow it away from my face, he bent over my shoulder.
“How we doin?” he asked.
What he really meant by that was: “How much have you racked up for the firm in commission dollars today, Bérénice?” Yet, with everything I was beginning to understand, I couldn’t help but take Ramiro’s question literally.
Staring up at him, I said: “You tell me.”
 “Catch on, get it.”
 Woodrow Wilson, The New Freedom: A Call for the Emancipation of the Generous Energies of a People (New York and Garden City: Doubleday, Page & Company, 1913)
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