Catching

THE GREAT AMERICAN BUBBLE MACHINE

I AM THE WOLF OF Wall Street, so it should come as no surprise to you that every

once in a while, when something really gets my blood boiling, I get an

uncontrollable urge to bear my fangs.

In this particular case, the “something” that caused me to lose my shit and

unleash my inner carnivore was an article I read in Rolling Stone magazine.

Written in 2010 by an investigative journalist named Matt Taibbi, the article,

titled “The Great American Bubble Machine,” was a bloodcurdling takedown of

Goldman Sachs, the world’s largest, most powerful, and most cutthroat

investment bank. In short, the article likens Goldman Sachs to a “giant vampire

squid wrapped around the face of humanity, jamming its blood funnel into

anything that smells like money.”

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At 9,800 rage-inducing words, the piece was shocking, sobering, and

downright infuriating. It was so infuriating, in fact, that putting aside all the

criminal indictments that the piece should have obviously triggered, just how it

didn’t instigate a modern-day version of Mary Shelley’s Frankenstein, where

outraged Main Streeters take up torches and pitchforks and march down to Wall

Street to lynch their greedy asses, is still a mystery to me. After all, the article

describes a level of greed and corruption that was so systemic, and on such a

grand scale, that even I, the Wolf of Wall Street, who spent two years behind bars

for securities fraud and money laundering, found it hard to imagine that what I

was reading was even possible.

Ironically, I had read the article when it first came out, but it didn’t have the

same visceral effect on me back then. Just why is difficult to explain, although it

had mostly to do with the fact that I was still coming to terms with my own

misdeeds on Wall Street, so it was difficult to work up a healthy head of

righteous resentment. But twelve years later, with more than a decade of good

deeds behind me and the perspective that comes with it, I felt very different. I felt

that, as wrong as I had been for my own past misdeeds, in the general scheme of

things, I had been nothing more than a tiny wolf cub, nipping at the heels—no,

feeding at the scraps—of the big, bad wolves at Goldman Sachs.

In any event, before I was even halfway through the Rolling Stone article, I

felt like I was reading a Wall Street–based adaptation of Game of Thrones.

In the Wall Street version, the entire world was represented by Lady Olenna

of the benevolent house Tyrell, while Goldman was represented by the evil

Queen Cersei of the malevolent House Lannister. As the story goes, Lady

Olenna, a cunning, ruthless, world-class manipulator, who openly admitted that

she did whatever she imagined necessary to protect her house, was ultimately

defeated by Queen Cersei, who was the most cunning, ruthless, and evil bitch of

them all.

Why was Lady Olenna defeated?

As she explained, in her own inimitable words: “It was a failure of

imagination.”

In essence, even in her darkest fantasies of backstabbing, scheming, and

outright skullduggery, she couldn’t imagine the type of pure evil that Cersei

could.

So, she was murdered. (By Cersei’s twin brother, Jaime Lannister.)

Anyway, pop-culture references aside, before I go any further, there’s one key

point that I want to quickly share with you: namely, that my goal here is not to

make you hate Wall Street any more than you currently do—and it’s certainly

not to make you hate any individual person who currently works there. In fact, I

still have some very close friends who work on Wall Street, and they’re very good

people whom I totally trust. Of course, that’s not to say that I would let them

manage my money. I don’t need them to, and neither will you when you’re done

with this book.

My point here is that the problem with these types of large, out-of-control

institutions seldom rests with the rank-and-file employees, but with a small

group of ethically bankrupt leaders at the top who think they’re above the law.

So, with that caveat in mind, over the next few pages, I’m going to show you

how Wall Street has been screwing the average investor for the last hundred years

and continues to do so to this very day. I’m going to go back to the beginning, to

how it all got started and to where it all went wrong—and show you how Wall

Street continues to try to pick your pocket on a daily basis, and how you can

easily avoid that and ultimately beat them at their own game.

HERE’S A SAD REALITY: Over the last forty years, Wall Street has brought the world to

the brink of financial collapse not once, not twice, but four fucking times—

that’s right, four fucking times—and they’re about to do it again, and again, and

again, and again.

In other words, they’re never going to stop.

Why?

Because there is no one left to stop them.

Simply put, the Giant Vampire Squid—aka Goldman Sachs and the rest of

Wall Street’s infamous banksters—has cemented an unholy relationship with

Washington, DC, that allows them to financially ass-fuck the rest of the world

with near-total impunity, as long as the billions of dollars keep flowing into their

respective coffers.

It’s a profitable deal for both sides.

Think I’m exaggerating?

In the last forty years, they’ve bankrupted Iceland, busted out Norway,

decimated Greece, ransacked Poland, looted Argentina, eviscerated Europe,

gutted the Ukraine, fucked over Mexico, backstabbed England, corrupted the

commodities market, pumped-and-dumped the NASDAQ, crafted the savings

and loan crisis, monetized global warming, and sold out to China, and to top it

all off, in 2008, they were a heartbeat away from destroying the one country in

the world that everyone thought was indestructible—namely, the good ol’ US of

A—because they were the ones who were doing all the destroying.

Now, in all seriousness, you really have to ask yourself, what kind of depraved

ass-clowns would attempt to destroy the one country whose unparalleled

military might prevents the rest of the world from marching down to Wall Street

and going Frankenstein on their asses?

It’s totally insane.

Yet the fact remains that, on September 16, 2008, the day after Lehman

Brothers went bankrupt and created that giant “pop heard round the world”—

the sound of a trillion dollars’ worth of dogshit mortgages evaporating into thin

air—you were literally a heartbeat away from going to your local ATM machine

to make a withdrawal, sticking your bank card into the slot, punching in your

code, and having nothing more than a puff of air come out, along with the

following ransom note:

Dear Foolish Depositor:

Yes, the rumors are true. The greedy bastards on Wall Street, including me,

the CEO of this national bank that you were foolish enough to deposit your

money in, have finally done it.

We have stolen everything.

There is nothing left for you or anyone else in the United States to

withdraw from your bank accounts, because it has all been transferred from

your pockets to ours.

So, on behalf of myself and all the other greedy banksters on Wall Street,

who have robbed you and your loved ones of your financial futures, in the

name of bigger mansions in the Hamptons, more expensive yachts to sail on,

more overpriced artwork to hang on our walls, and more luxurious gasguzzling private jets to fly to global warming conferences in, we have

nothing left to give you but our collective middle finger.

So, go home, load up your shotgun, and wait for the looting to begin.

Or…

You can pick up the phone and start fucking dialing.

We demand that you call your congressman, your senator, and the

president of these very United States—George W. Bush himself—and tell

them all that they had better put the screws to their chief henchman, Hank

Paulson, over at the Treasury Department, and their money-printer-inchief, Ben Bernanke, over at the Federal Reverse, and have them bail us the

fuck out. Otherwise, life as you know it shall cease to exist.

We demand a sum of $1 trillion, paid in consequence-free, electronic

wire transfers, plus an open line of credit at the Federal Reserve’s secret

discount window, which we must have unfettered access to, day or night, to

borrow as much as we want, for as long as we want, and with zero interest.

In addition, despite being well aware that it was our own actions that led to

the bankrupting of the entire global financial system, we will not accept any

new controls being placed on us whatsoever, especially if they have anything

to do with limiting our own inflated paychecks, as we have absolutely no

intention of accepting even one penny less in annual compensation. So don’t

even think about it.

With Zero Respect and Even Less Contrition,

Your No-So-Humble CEO

P.S. Don’t worry about Hank Paulson or Ben Bernanke not agreeing to any

of these obviously outrageous demands. Like me, they both used to work at

Goldman Sachs, so they’re in on it too. All they’re looking for here is a bit of

plausible deniability, so they can go to Congress and tell them that the

bailouts weren’t their idea. It needs to look like their backs were to the wall,

and that they had no other choice but to do this.

FOR BETTER OR WORSE, it never came down to this.

The powers that be in the federal government all got together behind closed

doors—Hank Paulson at the Treasury Department, Ben Bernanke at the Federal

Reserve, and President Bush and his cronies at the White House—and did the

dirty deed without the need of a ransom note. In the end, US taxpayers ponied

up over $1 trillion to bail out Wall Street and right the global financial system, at

least temporarily.

And did Wall Street at least say thank you?

No, of course not!

In fact, from their warped, greedy, self-serving perspective, it’s you on Main

Street who should be thanking them! After all, without all the hard, treacherous

work they do on Wall Street (Lloyd Blankfein, the then CEO of Goldman Sachs,

referred to it as “God’s work”), this little capitalist utopia of ours would not even

be close to its current level of wealth and prosperity. And while that happens to

be true—that a thriving capitalist economy requires a properly functioning

stock market and a trustworthy banking system that extends credit to borrowers

who have the ability to pay it back—the fact that you serve a mission-critical role

in the functioning of a much larger organism doesn’t give you the right to slowly

eat away at the organism until it’s so weakened that it withers and dies.

There’s actually a name for this type of disorder—where a single cell from

one of the body’s mission-critical systems figures out a way to evade the

customary checks and balances that normally stop it from growing wildly out of

control.

It’s called cancer—and if you don’t cut it out, it will ultimately kill you.

Unfortunately, over the last fifty years, even the federal oversight committees,

which were meant to act as checks and balances on Wall Street, have been

compromised by a combination of dark-money campaign contributions and

political infighting. If you think I’m exaggerating, then just turn on C-SPAN for

fifteen minutes and watch the insanity. Even the small handful of honest

politicians who try to protect the American public are drowned out by the

arguing of corrupt partisan hacks, who have been bought and paid for ten times

over. Financed by a tsunami of dark money funneled through Wall Street’s

lobbyists, the conversation gets hijacked to the radical extremes. The far left

blames the far right, and the far right blames the far left, and at the end of the

day, despite 90 percent of the country agreeing somewhere in the middle, the

status quo remains and Wall Street wins.

Now, I know what you’re probably thinking:

“What about the FBI? Don’t they have the power to round up the bad guys?

After all, they were able to stop you, Jordan. All it took was the dogged

determination of one special agent to bring you down. So, while the FBI’s

leadership might be compromised, the rank-and-file agents are loyal citizens who

would never let this happen!”

If that’s what you’re thinking, then you’re partially correct: the rank-and-file

agents are solid people. But alas, they’re powerless.

Through a combination of a corrupt electoral system that allows donations

from Wall Street’s biggest firms to purchase political influence at an

unimaginable level and the sheer complexity of the thievery, in terms of its

depth, breadth, and multiyear time spans, it’s impossible for even the most

committed prosecutor to prove Wall Street’s crimes to a jury beyond a

reasonable doubt.

And that’s the story.

From the White House to the Treasury Department to the Federal Reserve, a

series of fully grown squidlets, who were spawned, trained, and then sent back

into the wild in order to further the interests of their Vampire Squid mama, have

been strategically placed in positions of power. It’s almost like a bad plot from a

B movie, where the bad guys control everything, including the court system

itself. But like any B movie, there’s always one brave man who has the courage

and strength to go public with the truth and expose everything, or all will be

lost.

Ironically, in this particular case, it wasn’t just one “brave” person who came

forward, thousands of people did—spawning an entire movement called Occupy

Wall Street.

Indeed, in 2011, a mob of twenty thousand angry people descended on Wall

Street, demanding change. They camped out, they barbecued, they played

music; they even made clever signs, sporting slogans that bashed Wall Street. The

news covered all of it.

But alas, after fifty-nine days, nothing had changed, so they got bored and

left.

Whether the “brave” occupiers were simply too lazy and too disorganized to

effect any change, or the bad guys on Wall Street were simply too powerful and

too well protected by their cronies in Washington, when the whole thing was

over, it was business as usual, and it remains that way to this very day.

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With a record-breaking deficit of $30 trillion, an industrial base that’s been

thoroughly gutted, the highest inflation rate since the 1970s, and the revolving

door between Washington and Wall Street rotating with the speed of an F-5

tornado, the US seems to be suffering from stage 4 cancer—living on borrowed

money and borrowed time.

However, I wouldn’t count out the United States just yet.

For starters, the people who live, work, and start businesses on Main Street

USA are not only incredibly resilient, but they also possess an entrepreneurial

spirit that I have not witnessed in any other country in the world (and I’ve

personally coached business owners in over fifty of them). So you can count on

the fact that the United States will not go down without a fight; they’ll be

kicking and screaming the entire way. Besides, the larger the organization, the

slower its demise, and given the fact that it took over five hundred years for the

Roman Empire to fully implode—and the United States is infinitely larger and

more prosperous than Rome ever was—there’s probably still a good few

hundred years left before the shit really hits the fan.

Either way, since there’s no way of knowing precisely when that will happen,

the best advice I can give you is that, until that moment comes, you should make

as much money as you can, without breaking the law, and then invest that

money wisely using the strategies in this book.

So, with that in mind, let’s dive into a brief history of Wall Street, Wolf-style.

8 https://www.rollingstone.com/politics/politics-news/the-great-american-bubble-machine195229/amp/.

9 In fairness to the occupiers, the New York City Police Department raided the park where they were

camped out, insisting that they temporarily clear out so the police could take down their tents, which

were against park rules. Despite the police informing the occupiers that they could return in a few

hours, with their tents gone, it wasn’t nearly as much fun anymore, nor was it practical for people who

lived in other parts of the country to continue protesting. This was a significant contributing factor to

the end of the protest.

OceanofPDF.com

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A BRIEF HISTORY OF WALL STREET

I’M SURE YOU’VE SEEN THE movie The Matrix, correct?

If you haven’t, you definitely should, because it’s an absolute classic.

Either way, at somewhere around the thirty-minute-mark, there’s an

especially poignant scene where Morpheus escorts Neo inside a virtual-reality

construct to drive home a point that Neo can’t quite accept—that the world as

he knows it has actually ceased to exist. It’s been destroyed by an army of

intelligent machines in a dystopian nightmare caused by AI run amok. The

problems started when the machines got smart, turned on their masters, and

then the nukes got launched and the world turned to shit.

In the end, the machines won the war, and the world is now uninhabitable.

Even worse, what few humans do remain are being mercilessly hunted by these

same evil machines.

All in all, it’s a sad state of affairs, to say the least.

Anyway, toward the end of the scene, Morpheus asks Neo a famous rhetorical

question from which the movie gets its name:

“What is the matrix?” Morpheus asks.

“Control,” he continues. “The matrix is a computer-generated dreamworld,

built to keep us under control, in order to change a human being into this…”

Then he holds up a Duracell battery—a “C,” to be exact—to illustrate the grim

reality that the human race has been transformed into one giant battery in order

to power the machines.

As I said, it’s a sad state of affairs, to say the least.

So, with that in mind, let me ask you a Wall Street–based version of that same

rhetorical question that Morpheus posed to Neo:

What is the Wall Street Fee Machine Complex? I ask.

My answer starts off the same way as Morpheus’s, with one simple word:

control.

But then we part ways.

You see, unlike in The Matrix, where the evildoers are machines trying to

turn us into a battery so they can power their empire, the Wall Street Fee

Machine Complex is an unholy alliance between Wall Street, Washington, and

the financial media, trying to turn us into sheep so they can slowly shear us until

they’re ready to carve us into lamb chops.

That is the Wall Street Fee Machine Complex.

Like the Matrix, the Complex is all around us, and we can see it everywhere.

From major TV networks like CNBC and Bloomberg News, to respected

financial publications like the Wall Street Journal and Forbes magazine, to

popular financial websites like Reuters.com and TheStreet.com, to retail stocktrading platforms like E*TRADE, Schwab, and Interactive Brokers, to banks

and brokerage firms and financial planning firms and insurance agencies and

hedge funds and mutual funds, and to the people who are employed there and

make the whole thing work—the Wall Street Fee Machine Complex constantly

bombards you with half-truths and outright lies, with all of it taking place under

the seemingly watchful eye of the US Securities and Exchange Commission,

which turns a blind eye to the thievery and lets the self-dealing continue.

To understand just how this incestuous relationship was able to evolve, we

need to go back to the beginning, to the earliest days of Wall Street and colonial

America in the 1600s—and given the sordid way in which things ended up, it

should come as no surprise to you that the history of Wall Street is a long and

troubling one, starting with how this long, narrow street in Lower Manhattan

originally got its name.

As the story goes, in 1642, a depraved Dutchman named Keif decided to

engineer the slaughter of a village of friendly Native Americans, whom he’d just

shared a peace pipe with earlier that day. In consequence, he was forced to build

a “defensive” wall to prevent against reprisals from these “vicious” Native

Americans. Featuring a solid mud face and wooden ramparts, the wall was

located at the southernmost tip of Lower Manhattan and ran some seven

hundred feet east to west, from shore to shore.