Financial terminology for the RM'ers

Earlier this week, a subscriber asked me to define some financial terms to help people understand what goes on with our financial system, and what is affecting you today in regards to money, investing, and economics. So instead of posting a news/informational article this week, I will define a number of terms and see if we can all get an understanding of the ones we don't know.

In the meantime, here is an interesting article I published on a different site for your perusal. -


The Exchange Stabilization Fund was created out of the re-pricing of gold by the government during the Great Depression, and the time of gold confiscation.  The proceeds of this stolen gold went into a fund that would be used covertly by the U.S. Treasury to protect markets against future crashes, and also to manipulate markets whenever the government saw fit.

The Exchange Stabilization Fund (ESF) of the United States Treasury was created and originally financed by the Gold Reserve Act of 1934 to contribute to exchange rate stability and counter disorderly conditions in the foreign exchange market. The Act authorized the Secretary of the Treasury, to deal in gold, foreign exchange, securities, and instruments of credit, under the exclusive control of the Secretary of the Treasury subject to the approval of the President. - New York Fed


The Depository Trust Company became the centralized clearing house for all securities starting in 1973.  Its Subsidiary, the DTC, took over warehousing of all stocks and securities, removing individual ownership of certificates and facilitating swifter clearing of trades under the mandate of the 3-day rule for clearing.

Cede and Company:

Cede and Co is a corporation under the DTCC that now is named as benefactor of all stocks and securities.

Here is information on how the two work together.

There is a busy little private company you probably never have heard about, but which you should. Its name is the Depository Trust & Clearing Corporation. See their website. Looks pretty boring. Some kind of financial service thing, with a positive slogan and out there to make a little business. You can even get a job there. Now, go and take a look at their annual report. Starts with a nice litte Flash presentation and has a nice message from the CEO. And take a look at the numbers. It turns out that this company holds 23 trillion dollars in assets, and had 917 trillion dollars worth of transactions in 2002. That's trillions, as in thousands of thousands of millions. 23,000,000,000,000 dollars in assets.

As it so turns out, it is not because DTCC has a nice website and says good things about saving their customers money that they are trusted with that kind of resources. Rather it is because they seem to have a monopoly on what they do. In brief, they process the vast majority of all stock transactions in the United States as well as for many other countries. And - and that's the real interesting part - 99% of all stocks in the U.S. appear to be legally owned by them.

In the old days, when you owned stocks you would have the stock certificates lying in your safe. And if you needed to trade them, you needed to get them shipped off to a broker. Nowadays that would be considered very cumbersome, and it would be impractical to invest via computer or over the phone. So the shortcut was invented that the broker would hold your stocks instead of you. And in order for him to legally be able to trade them for you, the stocks were placed under their "street name". I.e. they're in the name of the brokerage, but they're just holding them in trust and trading them for you. And you're in reality the beneficiary rather than the owner. Which is all fine and dandy if everything goes right. Now, it appears the rules were then changed so the brokers are not allowed any longer to put the stocks in their own name. Instead, what they typically do is to put the stocks into the name of "Cede and Company" or "Cede & Co" or some such variation. And the broker might tell you that it is just a fictitious name, and will explain why it is really more practical to do that than to put it in your name.

The problem with that is that it appears that Cede isn't just some dummy name, but an actual corporation that DTCC controls. And, well, if you ask anybody about this, who actually knows about it, they will naturally tell you that it is all a formality. To serve you better, of course. And, well, maybe it is. DTCC seems like a nice and friendly company. It is a private company, owned by the same people (major U.S. banks) who own the Federal Reserve Bank. And if they all stick to their job, and just keep the money and your stocks flowing smoothly, I'm sure that is all well and good. But if somebody at some point should decide otherwise, and there's a national U.S. emergency and/or the U.S. government becomes unable to pay its debts, well, they might just not give you your stocks back. Because legally they own them. Something to think about.

City of London:

The City of London, the historic central core of the city, is an independent entity about a mile square. Britain's financial services industry and central bank (Bank of England) are located within the City of London. There is a London Corporation that runs the City; it is not run by greater London. It has its own police force and is headed by a Lord Mayor. About 10,000 people call the City "home" but nearly 350,000 work in the City of London, including many lawyers and litigators. Historically, the City harkens back to Roman London, founded around 50 A.D. and known as Londinium.

The City waxed and waned for centuries but by the 16th century was taking on its modern profile as a banking and commercial center. A stock exchange was eventually founded and many international merchants made their headquarters in the City. By the 18th century, Britain's Industrial Revolution was beginning and the Empire itself was expanding. London spread out far beyond the City of London, but the City itself gained enormous power as the British conquered one-fourth of the world, colony by colony.

All this is somewhat beside the point, however. In reality, the City of London is actually the epicenter of an Anglo-American power elite that has dominated world finance for 500 years or more. The elite's modern genealogy is said to include Venetian bankers who arrived in Britain and intermarried with English royalty. Today, the world's most powerful families make the City of London either their home or base of operations. Even the Queen of England bows before she enters the City of London and when she walks in ceremonial parades, her place is a few steps behind the Lord Mayor.

Today, the City of London is the epicenter of central banking worldwide. It is the place from which world wars have emanated and plans for global conquest are apparently hatched there even today. The fear-based dominant social themes that the power elite uses to extract wealth and power from Western middle classes have their home in the City of London. The UN and League of Nations were given birth there and the EU was likely conceived there. Every centralizing influence in the world today of any note has its roots in the City of London or its sister-municipalities, Washington, DC and the Vatican. These three "independent" city-states function as a trilogy of money power, the building blocks of the New World Order, the epicenter of an effort that apparently seeks to organize the world into one large medieval plantation. - Daily Bell

Bank of International Settlements:

Where each sovereign nation (but 3) has their own private central bank, the BIS is the central bank of central banks, and the hub of organization for the global Rothschild private banking legacy.  Some even call it the Tower of Basil.

The BIS is the most obscure arm of the Bretton-Woods International Financial architecture but its role is central. John Maynard Keynes wanted it closed down as it was used to launder money for the Nazis in World War II. Run by an inner elite representing the world's major central banks, it controls most of the transferable money in the world. It also uses that money to draw national governments into debt through the IMF.

Interest Rate/Bond/Forex Derivatives:

These instruments are simple to understand at face value.  They are insurance policies for financial instruments and are used as a hedge to protect against loss of a primary security or position.

The rise of China in international banking, and its ramifications for the U.S. led Western system.

Following Washington's decision to break a treaty they signed in late 2013 to bring about a global currency reset (and probable return to a gold standard), China began building its own financial infrastructures to mirror the West, and compete head on with the Singular Polar Reserve Currency system that was the dollar and dollar hegemony.

They did this by constructing mirror agencies to the World Bank, SWIFT, the IMF, the London Gold Fix, and very soon, the West's oil futures market via Brent and WTI.

The institutions they built to duplicate and compete with the West are:  The Asian Infrastructure Investment Bank, the BRICS bank, CIPS (China's version of SWIFT), the Shanghai Gold Exchange (SGE), and they are currently working with Russia now to have an oil market featured in the new Shanghai/Hong Kong merged futures market.

In addition, China is going beyond simply copying Western financial structures and is attempting to dominate the Eurasian continent completely with Free Trade Zones, and the new Silk Road.

Hope that helps some people here at Rogue Money out, and can help you understand some of the terminology we use in interviews, articles, and discussions.