The 2008 Crash, Debt Money, and Goodson's Last Chapter
Chapter VIII is the last real chapter. Goodson wants 2008 to prove a 300-year rule: private banks create money as debt, blow the system up, then sell the next rescue. The first half is the strongest stretch of the book, and the last stretch is a rant.
Book: A History of Central Banking and the Enslavement of Mankind
Author: Stephen Mitford Goodson (former non-executive director of the South African Reserve Bank)
ISBN-13: 978-1-910881-49-1
Publisher: Black House Publishing Ltd
Editions: 1st 2014; 2nd and 3rd 2017
Banks create and destroy money
He opens with Reginald McKenna, former UK Chancellor of the Exchequer. McKenna said ordinary people will not like being told that banks create and destroy money. Deposits rise and fall with what banks do. Whoever controls a nation’s credit, he said, directs government policy and holds the destiny of the people.
Then Goodson sorts crises into three types. One bank fails after a run. Several banks fail at once. Or the whole system implodes. A local failure and a systemic crash are not the same event.
Eighteenth-century messes, then a US drumbeat
In the 1700s, he says, banking crises only hit countries that practiced usury and already had central banks: England, the Netherlands, Sweden.
1720 is the Sword Blade Bank and the South Sea Company. Both took slices of the national debt in exchange for shares. South Sea, he says, was a shell with no trading assets. Sword Blade liquidated on 24 September 1720. South Sea shares lost almost 90 percent from a peak of £1,000.
1763, after the Seven Years’ War: wissels (bills) from Dutch banker Leendert Pieter de Neufville could not be redeemed. Runs hit the Netherlands, Germany, and Sweden.
On 10 June 1772 the London house of Neal, James, Fordyce and Down crashed. It had been shorting East India Company stock and covering losses by raiding customer deposits. Twenty-two significant banks and almost all private banks in Scotland went under. Amsterdam caught it next.
Then the United States. Panics in 1792 and 1796-97, which he pins on the First Bank of the United States withholding credit on purpose. 1819, blamed on the “Rothschild owned” Second Bank. 1857 follows a “fabricated” gold shortage and the failure of Ohio Life Insurance and Trust. The gold standard arrives in January 1873. A recession starts that September. Then a drumbeat: 1884, 1890, 1893, 1897, 1903, 1907. He says 40 years of planned boom and bust plus a media campaign delivered the Federal Reserve on 23 December 1913.
Some of those crashes were real. The “all of them were staged” line is the same template he used on every earlier chapter.
Glass-Steagall comes down
The 2007 crash, he says, starts on 12 November 1999, when Glass-Steagall was repealed. That 1933 law had kept commercial banks and investment houses apart. He quotes Senator Carter Glass: with a gun a man can rob a bank, with a bank a man can rob the world.
Late in the Clinton years, HUD pushed the National Homeownership Strategy. Credit standards loosened. Teaser rates for two years, then a jump. He also cites an $8,000 tax credit. That credit was a later program, around 2008, not a Clinton-era law. He is bundling a decade of housing policy into one pile.
House prices, he says, rose 124 percent from 1998 to 2006, then fell 20 percent in 2008. The ratio of average house price to median household income sat near 3.0 from 1980 to 2000, then hit 4.6 by 2006.
Credit default swaps, in his telling, grew a hundredfold from 1998 to 2008 to $47 trillion, with a notional value of $683 trillion. Mortgages of mixed quality were bundled into CDOs, stamped AAA by rating agencies, and sold to people who trusted the stamp.
Lehman, TARP, and the treadmill
Lehman Brothers failed on 15 September 2008. Congress approved TARP at $700 billion. Goodson says that was only the tip. The Fed, he writes, later granted over $16 trillion in assistance to domestic and foreign banks.
Dodd-Frank became law on 21 July 2010. More mortgage rules, higher underwriting, an “ability to repay” test. Basel wanted higher capital and liquidity by 31 March 2019. He thinks those rules will shrink the money supply and deepen the recession.
Here is the core of the chapter, and the part I still take seriously.
In a debt-money system, almost all money is a loan. If people stop borrowing, the money supply shrinks. If every loan were repaid, he says, you would be left with notes and barter. So the system needs new debt just to stand still. “Growth” is not a slogan. It is how the treadmill keeps turning.
He adds planned obsolescence, globalisation, and deindustrialisation. Factories leave. Wages sag. Households borrow to keep the same life. US private debt required per $1 of GDP growth, in his figures: $2.37 in the 1980s, $2.99 in the 1990s, $5.67 in the 2000s. Energy costs rise as EROEI (energy returned on energy invested) falls. Water use quadrupled in a century. He cites 1.6 billion people already facing scarcity, and a June 2014 US report that demand could beat supply by 40 percent by 2030.
You can argue with the numbers. You cannot pretend the treadmill logic is empty. If money is born as interest-bearing debt, paying the interest always requires more debt somewhere, or a default, or new money from the state.
Then the book goes off the rails
Then Goodson turns the last chapter into a racial and demographic pamphlet.
White share of world population, he says, went from 36 percent around 1900 (590 million of 1.65 billion) to 13.3 percent in 2016 (1 billion of 7.5 billion). He prints fertility tables. Replacement is 2.11. Nigeria 5.32. The US 2.05. Germany 1.41. Italy 1.38. Japan 1.27. South Africa 2.64, with a white rate of 1.5. Two world wars fought “over the usury system,” he says, started the decline.
Then feminism. Married women, “deluded” by gender equality, went out to work so families could service mortgage interest on money banks created from nothing. Aaron Russo, he says, claimed the Rockefellers designed this: tax women, park kids in school for indoctrination, destabilise society, and set up a New World Order.
This is the author trying to make money theory explain civilisation collapse and race. That is not analysis. That is a rant.
Fertility decline has a pile of causes: city life, cheap contraception, housing costs, later marriage, women’s education, the cost of raising kids. Interest on a mortgage is one household bill. It is not the master key to “extinction.” You can think debt-based housing is a bad design and still refuse this story.
A world bank, some appendices, a prince
The hidden purpose of the crisis, he says, is to soften the public for a World Central Bank, the same way US panics supposedly softened people for the Fed. He is not sure the bankers will get there. The “host” may vanish first.
The book ends with a thank-you from Prince Dimitri Romanovich Romanov, dated September 2015, from Rungsted, Denmark.
The appendices are a short stack. A December 1864 letter from Lincoln to Colonel E. D. Taylor crediting Taylor with the greenback idea. A May 1939 letter from C. H. Douglas to Hitler, urging him to oppose the “Jewish Financial System.” And the JFK story: Executive Order 11110 on 4 June 1963, $4 billion in silver-backed $2 and $5 bills, then Dallas. The JFK and Fed story is a popular myth. EO 11110 dealt with silver-certificate authority at Treasury. It was not a secret plan to kill the Federal Reserve, and it is not why he was shot.
What holds
The debt-money treadmill is the strongest idea in the last chapter. Repeal of Glass-Steagall and the housing and CDO machine are real. McKenna’s point about banks creating deposits is still the sentence most people never hear in school. The panic chronology is a tour, not a proof of a single plot. The fertility ending is Goodson forcing every social fact through one keyhole. Keep the money argument. Leave the extinction sermon on the table.