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The 2008 financial crisis, also known as the Global Financial Crisis, was a severe economic downturn that was triggered by a housing market bubble burst in the United States. The crisis began in 2007 and lasted for several years, affecting many countries around the world.

Widely referred to as ‘The Great Recession’, ordinary citizens worldwide felt the impact.  Millions of jobs were lost worldwide, with the global unemployment rate rising to over 8%. Millions of homes were foreclosed, leading to a surge in homelessness and a decline in housing values. Governments around the world accumulated significant debt to finance their commercial bank bailouts and stimulus packages, which much of the public interpreted as bankers being rewarded for recklessly tanking economies.

But was it caused by banks acting recklessly? In 2016, Mark Arnold found evidence that it was not.  He discovered that the Bank for International Settlements (“BIS”) imposed an accounting policy on US commercial banks only months before which helped set the world up for The Great Recession.

Mark Arnold has always had a keen interest in economics. In 2008/2009 he researched the cause of the 2008 sub-prime mortgage debacle leading up to the Global Financial Crisis and delved into the depths of collateralised debt obligations, credit default swaps, investment banks and bailouts. In early 2009 he published his findings in a manuscript entitled ‘Bailout is the Name of the Game’.  We were unable to find a copy of Arnold’s manuscript online.

In 2016, he published a series of articles on his website ‘From a Native Son’ about the unknown history of the BIS. You can read Part 1 HERE, Part 2 HERE, Part 3 HERE, and Part 4 HERE.  The following is adapted from the introduction to the series: ‘Hitler’s Bank: The Unknown Story Of The Bank For International Settlements – Introduction’

While researching ‘Bailout is the Name of the Game’, among the various financial mechanisms he encountered was an accounting principle called “mark-to-market”.

Mark-to-market is an accounting valuation method used to determine the current market value of an asset or liability on a company’s balance sheet. It involves re-evaluating the value of an asset or liability that can fluctuate over time.  The aim is to provide a realistic appraisal of a company’s or institution’s current financial situation.  In the case of financial instruments, such as futures and mutual funds, this means they are re-valued and disclosed in financial accounts at current market value as opposed to showing them at the original transactional value.

For those who are not familiar with accounting principles and standards, here’s a practical example to explain.  Suppose an investor buys a futures contract at £10 and the market price increases to $10.50. The investor must mark the contract to market, recognising a gain of £0.50. If the market price then decreases to £9.40, the investor would need to mark the contract to market again, recognising a loss of $0.60.

In the introductory article to his series, Arnold wrote:

[The mark-to-market] principle played a devastating role in the [2008 financial] crisis because in implementing it banks were forced to mark their portfolios of mortgage-backed securities to the market for those securities, rather than to their face value or any other value; and the market at the time, as we all know, was collapsing.

In many instances, the underlying mortgages backing the securities were still sound and had not defaulted, yet the bank was still forced to “mark the value to the market.” The result was crashing balance sheets and capital reserves which made it impossible for banks to loan money, which in turn caused the credit crunch we all experienced.

Hitler’s Bank: The Unknown Story Of The Bank For International Settlements—Introduction, Mark Arnold, 23 April 2016

His research indicated that the mark-to-market principle had begun years before in the wake of the Enron scandal as a means to prevent fraudulent accounting:

Shortly after the Enron collapse a law was passed called the ‘Sarbanes-Oxley Act’, which included in its provisions the implementation of “mark-to-market” as a means of inhibiting corporations from over-valuing their assets. “OK,” I thought. “They passed this law in 2003 that ended up having this bad effect in 2008 … an honest mistake?” I wondered, but I had no data to indicate otherwise, so I let it go at that.

I should have kept digging.

Hitler’s Bank: The Unknown Story Of The Bank For International Settlements – Introduction, Mark Arnold, 23 April 2016

By the time he published his 2016 series on BIS, Arnold had long been aware of the various theories of conspiracy that there is an effort to bring about a one world oligarchy under the thumb of a privileged few.

Arnold noted that it is an old intelligence trick to cause a disaster to happen which is then used to facilitate some other covertly wanted action. “There are many examples in history and I have been aware of this for a very long time. The 2008 crash had the earmarks of this, but I did not succeed in establishing any real connection based on confirmable data between the crash and this conspiracy,” he wrote.

In 2016 Arnold began reading the book ‘The Coming Financial Crisis: A Look Behind the Wizard’s Curtain’ by John Truman Wolfe published in 2015.  Wolfe, who had a career as a banker earlier in his life, clearly states in this book that the purpose of the 2008 financial crisis was:

“… to take down the United States and the US dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority – a planetary financial control organisation to ‘ensure this never happens again’.”

Hitler’s Bank: The Unknown Story Of The Bank For International Settlements – Introduction, Mark Arnold, 23 April 2016

In the book’s next chapter entitled ‘Hitler’s Bank Goes Global’, Wolfe described the BIS, located in Basel, Switzerland.

Although it is headquartered in Switzerland, the Swiss government has no legal jurisdiction over it, no jurisdiction over its premises and no government agency or authority on the planet has oversight over its operations, Arnold explained.

Neither the BIS … nor its personnel are subject to Swiss taxes and Swiss governmental authorities need the permission of the BIS management to even enter the bank’s buildings. BIS communications and personnel are protected exactly as are those of embassies in foreign nations – its “diplomatic pouches” cannot be opened except by those for whom they are intended.

The BIS is, in effect, its own sovereign state; and is where all the world’s central banks (55 are members) meet to analyse the global economy and determine what actions they will take, thus pulling the strings of the world’s monetary systems.

The stock of the BIS is owned by the member central banks, much the same as the stock of most national central banks is owned by the banks in orbit around them. In other words, just like the US Federal Reserve Bank, the BIS is privately owned.

It is controlled by a board of directors comprised of central bankers from 11 different nations; the United States, the United Kingdom, Belgium, Canada, France, Germany, Italy, Japan, Sweden, the Netherlands and Switzerland.

Within the BIS the single most powerful and elite group is the Economic Consultative Committee (ECC), current members of which include US Federal Reserve Chairman Ben Bernanke, Bank of England governor Mark Carney, Mario Draghi of the European Central Bank, Zhou Xiaochuan of the Bank of China, plus the central bank governors of Germany, France, Italy, Sweden, Canada, India and Brazil.

According to Adam LeBor [in the book ‘The Tower of Basel: The Shadowy History of the Secret Bank that Runs the World’]… the ECC (formerly called the “G-10” – short for “Group of Ten”) “makes recommendations on the membership and organisation of the three BIS committees that deal with the global financial system, payments systems and international markets.”

The committee also provides the agenda and makes proposals for another of the major BIS meetings – the bi-monthly Global Economy Meeting.  According to LeBor, “The BIS strictly guards the bankers’ secrecy. The minutes, agenda, and actual attendance list of the Global Economy Meeting or the ECC are not released in any form. This is because no official minutes are taken, although the bankers sometimes scribble their own notes. Sometimes there will be a brief press conference or bland statement afterwards but never anything detailed. This tradition of privileged confidentiality reaches back to the bank’s foundation.”

Hitler’s Bank: The Unknown Story Of The Bank For International Settlements – Introduction, Mark Arnold, 23 April 2016

You can listen to the full audiobook of ‘Tower of Basel: The Shadowy History of the Secret Bank that Runs the World’ on YouTube HERE.  In the video below Adam LeBor joined The Economist to discuss the BIS.

“[BIS] was set up in 1930 to manage German reparations payments for the First World War,” LeBor explained.  “But those ended by 1932 which meant that the BIS, really, could have been closed down … It’s the world’s only commercial bank that is protected by an international treaty.”

During the Second World War, BIS was, essentially, “the main point of covert contact between the Allies and the Axis powers, the Allies and the Nazis, for post-war financial planning for Europe,” LeBor said.

How does the mark-to-market accounting principle fit in with the privately owned BIS, the central bankers’ bank?

Wolfe’s book also described a meeting of BIS members that took place in Basel in 2004 at which an accounting rule was adopted that was to be implemented by all member banks. That accounting rule was “mark-to-market.” US banks effected mark-to-market accounting in the autumn of 2007, a few months before the 2008 global financial crash.  Arnold wrote:

Here was the evidence I was seeking that clearly demonstrated an unseen hand in the 2008 debacle. “Mark to market” wasn’t just implemented as a result of the Sarbanes-Oxley Act as I had thought; it was enforced specifically on the banks themselves by the agreement of each nation’s central bank at Basel.

I began to see that the 2008 crash was a set-up. By adopting “mark to market” while being loaded up with sub-prime mortgage securities, when the bubble broke in 2008 the banks were stricken, and everything had been carefully put in place to make it so.

Hitler’s Bank: The Unknown Story Of The Bank For International Settlements – Introduction, Mark Arnold, 23 April 2016

If you are a person who loves freedom and your country, the scene just described should concern you, Arnold wrote and pointed to the Preface of Wolfe’s book which summed up our predicament:

“The current financial crisis that began in 2007 and in which we are currently digging ourselves ever deeper is causing us to question many of the ideals we hold dear. Our current president [2015] is leading us down the path of socialism – a form of government that controls everything – not just our healthcare.

“More to the point, the ‘leaders’ of our nation have made decisions and signed financial agreements with international financial bodies that may determine the way our very lives are to be handled. They have done this without consulting not only us – the people it most affects – but Congress, the body that is meant to provide oversight in such matters.

“These are challenging times for America. We are truly at a watershed moment.”

Hitler’s Bank: The Unknown Story Of The Bank For International Settlements – Introduction, Mark Arnold, 23 April 2016

Wolfe’s book inspired Arnold to investigate BIS and publish his series of articles titled ‘Hitler’s Bank: The Unknown Story Of The Bank For International Settlements’.

Featured image: François Villeroy de Galhau, chair of BIS board of directors.  Source: Adapted from BIS