It's the question that conspiracy theorists dedicate their lives to answering...
Who REALLY controls the world?
Who is pulling the strings?
Who is hiding behind the curtain?
These questions have long been subject to speculation, scapegoating, and paranoid ravings — some more well-founded than others.
Now, thanks to the science of complex system theory, the answer may actually be right in front of our faces...
This scientific process sheds light on the dark corners of bank control and international finance and pulls some of the major players out from the shadows.
And it goes back to the old credo: Just follow the money.
Systems theorist James B. Glattfelder did just that.
From a massive database of 37 million companies, Glattfelder pulled out the 43,060 transnational corporations (companies that operate in more than one country) that are all connected by their shareholders.
Digging further, he constructed a model that actually displays just how connected these companies are to one another through ownership of shares and their corresponding operating revenues.
The 1318 transnational corporations that form the core of the economy.
Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue.
I'll openly admit that this graphic almost scared me off. Complex scientific theories are not my forte, and this looks like some sort of intergalactic snow globe.
But Glattfelder has done a remarkable job of boiling these connections down to the main actors — as well as pinpointing how much power they have over the global market. These "ownership networks" can reveal who the key players are, how they are organized, and exactly how interconnected these powers are.
From New Scientist:
Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What's more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world's large blue chip and manufacturing firms - the "real" economy - representing a further 60 per cent of global revenues.
When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network.
According to his data, Glattfelder found that the top 730 shareholders control a whopping 80% of the entire revenue of transnational corporations.
And — surprise, surprise! — they are mostly financial institutions in the United States and the United Kingdom.
That is a huge amount of concentrated control in a small number of hands...
Here are the top ten transnational companies that hold the most control over the global economy (and if you are one of the millions that are convinced Big Banks run the world, you should get a creeping sense of validation from this list):
1. Barclays plc
2. Capital Group Companies Inc.
3. FMR Corporation
5. State Street Corporation
6. JPMorgan Chase & Co.
7. Legal & General Group plc
8. Vanguard Group Inc.
9. UBS AG
10. Merrill Lynch & Co Inc.
Some of the other usual suspects round out the top 25, including Morgan Stanley, Credit Suisse, and Goldman Sachs.
What you won't find are ExxonMobil, Microsoft, or General Electric, which I found shocking. In fact, you have to scroll all the way down to China Petrochemical Group Company at number 50 to find a company that actually creates something.
The top 49 corporations are financial institutions, banks, and insurance companies — with the exception of Wal-Mart, which ranks at number 15...
The rest essentially just push money around to one another.
Here's the interconnectedness of the top players in this international scheme:
And here's a fun fact about the number one player, Barclays:
Barclays was a main player in the LIBOR manipulation scandal and was found to have committed fraud and collusion with other interconnected big banks. It was fined $200 million by the Commodity Futures Trading Commission, $160 million by the United States Department of Justice, and £59.5 million by the Financial Services Authority for "attempted manipulation" of the LIBOR and Euribor rates.
Despite its crimes, Barclays still paid $3.9 billion in bonuses last year, including a whopping $27,371,750 to investment banking head Rich Ricci. And yes, that's actually his real name...
These are the guys who run the world.
It's essentially the "too big to fail" argument laid out in scientific setting — only instead of just the U.S. banks, we're talking about an international cabal of banks and financial institutions so intertwined that they pose a serious threat to global economics.
And instead of "too big to fail," we're looking at "too connected to fail"...
Glattfelder contends that "a high degree of interconnectivity can be bad for stability, because stress can spread through the system like an epidemic."
Industrialist Henry Ford once quipped, "It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning."
It's one thing to have suspicions that someone is working behind the scenes to control the world's money supply. It's quite another to have scientific evidence that clearly supports it...
Just another reason to stay on the Outside.
@mengeled on Twitter
Jimmy is a managing editor for Outsider Club and the investment director of several personal finance advisories, The Crow's Nest, and The Adventure Capitalist For more on Jimmy, check out his editor's page.
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