The Battle of the Titans: JPMorgan vs. Goldman Sachs, or Why the Market Was Down for Seven Days in a Row

Saturday 30 January 2010 by: Ellen Hodgson Brown J.D.,

Tim Geithner and Larry Summers watched over by Paul Volker. (Image: Jared Rodriguez / t r u t h o u t; Adapted: Wikimedia Commons, eflon, Pete Souza / White House, laverrue)

We are witnessing an epic battle between two banking giants, JPMorgan Chase (Paul Volcker) and Goldman Sachs (Geithner/Rubin). Left strewn on the battleground could be your pension fund and 401K.

The late Libertarian economist Murray Rothbard wrote that US politics since 1900, when William Jennings Bryan narrowly lost the presidency, has been a struggle between two competing banking giants, the Morgans and the Rockefellers. The parties would sometimes change hands, but the puppeteers pulling the strings were always one of these two big-money players. No popular third party candidate had a real chance at winning, because the bankers had the exclusive power to create the national money supply and therefore held the winning cards.

In 2000, the Rockefellers and the Morgans joined forces, when JPMorgan and Chase Manhattan merged to become JPMorgan Chase Co. Today the battling banking titans are JPMorgan Chase and Goldman Sachs, an investment bank that gained notoriety for its speculative practices in the 1920′s. In 1928, it launched the Goldman Sachs Trading Corp., a closed-end fund similar to a Ponzi scheme. The fund failed in the stock market crash of 1929, marring the firm’s reputation for years afterwards. “Former Treasury Secretaries Henry Paulson and Robert Rubin came from Goldman, and current Treasury Secretary Timothy Geithner rose through the ranks as a Rubin protégé.”

Goldman’s superpower status comes from something more than just access to the money spigots of the banking system. It actually has the ability to manipulate markets. Formerly just an investment bank, in 2008 Goldman magically transformed into a bank holding company. That gave it access to the Federal Reserve’s lending window; but at the same time it remained an investment bank, aggressively speculating in the markets. The upshot was that it can now borrow massive amounts of money at virtually 0 percent interest, and it can use this money not only to speculate for its own account but to bend markets to its will.