The Book in a Nutshell
The Great Taking by David Rogers Webb aims to explain what he calls “the end game of a globally synchronous debt accumulation super cycle”, whereby central banks will take collateral from people on a scale of the likes never seen before in history. This great taking will encompass securities, bank deposits and private property financed with any amount of debt. Webb suggests that the foundations of this plan have come about through private control of central banks in the hands of very few people, permitting control of political parties, militaries, corporations and nations. The execution of this plan has involved long-term changes to legislation and regulation, and will be facilitated by new innovations that consolidate central bank power and control. Webb believes that our current economic circumstances set the stage for this great taking, beginning with the bursting of our unprecedented “Everything Bubble”.
Book Summary: The Key Ideas
#1: The Legal Mechanisms for the Great Taking. Over many decades, central banks have designed a legal and institutional framework that will allow them to take financial assets, bank deposits and property financed with debt from customers as collateral. Among other steps, they have achieved this through the design of central clearing parties, the replacement of securities ownership with ‘securities entitlement’, the holding of securities in unsegregated pools, and prohibition of re-vindication.
#2: The Historical Precedent for the Great Taking. The idea of a great taking is not without precedent. During the Great Depression, bank holidays ended with only a select few banks being reopened, with deposits taken from customers and loans transferred to permitted banks. Gold ownership was also prohibited with a national requirement to hand in gold to the Federal Reserve.
#3: The Economic Backdrop for the Great Taking. While the current narrative is focused on inflation, the real underlying forces in the economy are deflationary. In the near future, these deflationary forces will prevail, the Everything Bubble will burst, and the great taking will begin.
Book Summary: The Key Ideas in Detail
The below are slightly more detailed book notes on the key ideas from The Great Taking by David Rogers Webb. As usual, these notes do not by any means cover the full breadth of the book and are instead intended as our interpretation of the key themes, from which to decide whether to read the full book. In this case, I would strongly recommend visiting the author’s website and downloading this informative book for free. The author is clearly keen to get this information out, perhaps without financial benefit, so take from that what you will.
#1: The Legal Mechanisms for the Great Taking
A plan for a “great taking” has been in the works for decades, with central banks driving regulatory and legislative change. This began with dematerialisation of securities, replacing physical stock certificates with book-entry transfers of ownership via computerised entries in a trust company. Central Clearing Parties (CCPs) were established to provide clearing and settlement.
In parallel, the idea of the “security entitlement” was born. The salient point here is that security entitlement is not the same as ownership. It means, in legal effect, that all securities “owned” in custodial accounts, brokerages, pension plans and investment funds are collateral for a few large creditors. Assets are pooled with other customers’ assets and can be called upon as collateral in the face of financial distress. This illusion is facilitated by a chain of hypothecation (using assets as collateral), with secured creditors ultimately using the same assets held in pensions and funds many times over. This presents a serious risk to the everyday individual in the context of an astonishingly large derivatives complex.
“The greatest subjugation in world history will have been made possible by the invention of a construct; a subterfuge; a lie: the “Security Entitlement”.”
While the United States appears to have led the legislative charge, the changes are not unique to the US. Harmonisation has taken place internationally, ultimately giving control over to a few secured creditors. In the EU, for example, clearing organisations have been set up with a similar legal structure.
The legal capacity to perform the great taking will be supported by collateral management systems that have been created, which allow for the cross-border movement of all securities through security depositories and on to Central Clearing Parties (CCPs). Webb believes that the “Everything Crash” is the inevitable conclusion to the “Everything Bubble”. During this process, as prices of everything crash and financial institutions rapidly enter insolvency, these collateral management systems will automatically sweep all the collateral (your assets) into the CCPs and central banks.
Webb later notes that these Central Clearing Parties (CCPs) are practically designed to fail – in their own words. They take on the counterparty risk between parties to a transaction and provide clearing and settlement for trades in FX, securities, and most importantly, derivatives. If a participant fails, the CCP assumes the responsibility of the failed participant. The failure of CCPs would fall directly into the path of secured creditors taking the assets of entitlement holders.
“The trap, into which all nations have been herded, is ready and waiting to be sprung. There will be an epic end point to the decades of seemingly out-of-control financialization, which served no beneficial purpose for humanity, but the devastating effects of which are apparent even now.”
The great taking is further enabled by so-called “safe harbour” provisions in bankruptcy rules. These are not designed to protect everyday asset owners. Rather, they are about protecting secured creditors from claims of customers to their own assets. These provisions allow the transfer of customer assets to creditors during financial distress and extend across the entire derivatives complex.
#2: The Historical Precedent for the Great Taking
The taking of general public assets is unfortunately not without precedent. Webb reflects on the actions of the Federal Reserve during the Great Depression. In terms of bank deposits, the Federal Reserve implemented a bank holiday, closing all banks for a period of time. When the holiday ended, only a specific list of FDR approved banks were permitted to reopen. Those who held money in other banks lost their money, but their debt was retained and transferred to new banks.
The taking extended to gold confiscation, too, with laws prohibiting gold ownership and requiring gold to be handed into the Federal Reserve. Thus, the Great Depression brought about a form of Great Taking, though not on the scale Webb sees ahead.
While Webb believes that the next taking will be of a scale much larger than the Great Depression which would impact financial assets, bank deposits and property financed by debt, he does not rule out the possibility of other confiscations taking place again outside this scope. Notwithstanding, the probability of gold confiscation would seem lower in the absence of a currency-related pretext.
The role of technology cannot be ignored in this picture, either. While there is precedent for the central banks stealing the public’s assets, there is no precedent for tools like CBDCs. Webb briefly discusses this idea and its role in the aftermath of the taking, suggesting it might be launched and used to lend money to the public in the aftermath, with various conditions.
#3: The Economic Backdrop for the Great Taking
So, when will the great taking happen? Webb believes it is imminent and our macroeconomic struggles will be the launchpad. Our current economic difficulties echo many of the challenges of 100 years ago. While velocity of money has slumped, stunting growth in the real economy, money creation has driven unprecedented financial bubbles. With velocity of money at all-time lows, Webb suggests that no amount of money creation will drive real economic growth. This monetary spot therefore sets the stage for the great taking.
While inflation is the leading narrative, Webb believes we are headed for a deflationary depression, perhaps of unprecedented scale. Most real economic forces are deflationary, and inflation we see today is “illusory”, driven by money printing and artificial scarcity. When the enormous financial bubbles we face finally implode, we will face a significant deflationary period.
This will first come with an “Everything Crash” of the “Everything Bubble”. This will in turn create significant financial distress, particularly within the derivatives complex. And this will then trigger the mechanism for taking of customer assets as collateral for secured creditors.
The deflationary period itself will likely last years, perhaps decades. This period of prolonged deflation will weigh heavily on those in significant debt, meaning they cannot service the debt. This will lead inevitably to property and businesses financed by debt being taken. As Webb sums it up:
“This coming Great Deflation is intrinsic to the Great Taking. […] With profound and persistent deflation assured to stretch over many years, debt becomes a powerful weapon of conquest. Debt is not a real thing. It is an invention, a construct designed to take real things.”