Is Homeland Security Preparing for the Next Wall Street Collapse?

Reports are that the Department of Homeland Security (DHS) is engaged in a massive, covert military buildup. An article in the Associated Press in February confirmed an open purchase order by DHS for 1.6 billion rounds of ammunition. According to an op-ed in Forbes, that’s enough to sustain an Iraq-sized war for over twenty years. DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why?

Recently revealed statements by former UK Prime Minister Gordon Brown at the height of the banking crisis in October 2008 could give some insights into that question. An article on BBC News on September 21, 2013, drew from an explosive autobiography called Power Trip by Brown’s spin doctor Damian McBride, who said the prime minister was worried that law and order could collapse during the financial crisis. McBride quoted Brown as saying:

If the banks are shutting their doors, and the cash points aren’t working, and people go to Tesco [a grocery chain] and their cards aren’t being accepted, the whole thing will just explode.

If you can’t buy food or petrol or medicine for your kids, people will just start breaking the windows and helping themselves.

And as soon as people see that on TV, that’s the end, because everyone will think that’s OK now, that’s just what we all have to do. It’ll be anarchy. That’s what could happen tomorrow.

How to deal with that threat? Brown said, “We’d have to think: do we have curfews, do we put the Army on the streets, how do we get order back?”

McBride wrote in his book Power Trip, “It was extraordinary to see Gordon so totally gripped by the danger of what he was about to do, but equally convinced that decisive action had to be taken immediately.” He compared the threat to the Cuban Missile Crisis.

Fear of this threat was echoed in September 2008 by US Treasury Secretary Hank Paulson, who reportedly warned that the US government might have to resort to martial law if Wall Street were not bailed out from the credit collapse.

In both countries, martial law was avoided when their legislatures succumbed to pressure and bailed out the banks. But many pundits are saying that another collapse is imminent; and this time, governments may not be so willing to step up to the plate.

The Next Time WILL Be Different

What triggered the 2008 crisis was a run, not in the conventional banking system, but in the “shadow” banking system, a collection of non-bank financial intermediaries that provide services similar to traditional commercial banks but are unregulated.  They include hedge funds, money market funds, credit investment funds, exchange-traded funds, private equity funds, securities broker dealers, securitization and finance companies. Investment banks and commercial banks may also conduct much of their business in the shadows of this unregulated system.

The shadow financial casino has only grown larger since 2008; and in the next Lehman-style collapse, government bailouts may not be available. According to President Obama in his remarks on the Dodd-Frank Act on July 15, 2010, “Because of this reform, . . . there will be no more taxpayer funded bailouts – period.”

Governments in Europe are also shying away from further bailouts. The Financial Stability Board (FSB) in Switzerland has therefore required the systemically risky banks to devise “living wills” setting forth what they will do in the event of insolvency. The template established by the FSB requires them to “bail in” their creditors; and depositors, it turns out, are the largest class of bank creditor. (For fuller discussion, see my earlier article here.)

When depositors cannot access their bank accounts to get money for food for the kids, they could well start breaking store windows and helping themselves. Worse, they might plot to overthrow the financier-controlled government. Witness Greece, where increasing disillusionment with the ability of the government to rescue the citizens from the worst depression since 1929 has precipitated riots and threats of violent overthrow.

Fear of that result could explain the massive, government-authorized spying on American citizens, the domestic use of drones, and the elimination of due process and of “posse comitatus” (the federal law prohibiting the military from enforcing “law and order” on non-federal property). Constitutional protections are being thrown out the window in favor of protecting the elite class in power.

The Looming Debt Ceiling Crisis

The next crisis on the agenda appears to be the October 17th deadline for agreeing on a federal budget or risking default on the government’s loans. It may only be a coincidence, but two large-scale drills are scheduled to take place the same day, the “Great ShakeOut Earthquake Drill” and the “Quantum Dawn 2 Cyber Attack Bank Drill.” According to a Bloomberg news clip on the bank drill, the attacks being prepared for are from hackers, state-sponsored espionage, and organized crime (financial fraud). One interviewee stated, “You might experience that your online banking is down . . . . You might experience that you can’t log in.” It sounds like a dress rehearsal for the Great American Bail-in.

Ominous as all this is, it has a bright side. Bail-ins and martial law can be seen as the last desperate thrashings of a dinosaur. The exploitative financial scheme responsible for turning millions out of their jobs and their homes has reached the end of the line. Crisis in the current scheme means opportunity for those more sustainable solutions waiting in the wings.

Other countries faced with a collapse in their debt-based borrowed currencies have survived and thrived by issuing their own. When the dollar-pegged currency collapsed in Argentina in 2001, the national government returned to issuing its own pesos; municipal governments paid with “debt-canceling bonds” that circulated as currency; and neighborhoods traded with community currencies. After the German currency collapsed in the 1920s, the government turned the economy around in the 1930s by issuing “MEFO” bills that circulated as currency. When England ran out of gold in 1914, the government issued “Bradbury pounds” similar to the Greenbacks issued by Abraham Lincoln during the US Civil War.

Today our government could avoid the debt ceiling crisis by doing something similar: it could simply mint some trillion dollar coins and deposit them in an account. That alternative could be pursued by the Administration immediately, without going to Congress or changing the law, as discussed in my earlier article here. It need not be inflationary, since Congress could still spend only what it passed in its budget. And if Congress did expand its budget for infrastructure and job creation, that would actually be good for the economy, since hoarding cash and paying down loans have significantly shrunk the circulating money supply.

 Peer-to-peer Trading and Public Banks

At the local level, we need to set up an alternative system that provides safety for depositors, funds small and medium-sized businesses, and serves the needs of the community.

Much progress has already been made on that front in the peer-to-peer economy.  In a September 27th article titled “Peer-to-Peer Economy Thrives as Activists Vacate the System,” Eric Blair reports that the Occupy Movement is engaged in a peaceful revolution in which people are abandoning the established system in favor of a “sharing economy.” Trading occurs between individuals, without taxes, regulations or licenses, and in some cases without government-issued currency.

Peer-to-peer trading happens largely on the Internet, where customer reviews rather than regulation keep sellers honest. It started with eBay and Craigslist and has grown exponentially since. Bitcoin is a private currency outside the prying eyes of regulators. Software is being devised that circumvents NSA spying. Bank loans are being shunned in favor of crowdfunding. Local food co-ops are also a form of opting out of the corporate-government system.

Peer-to-peer trading works for local exchange, but we also need a way to protect our dollars, both public and private. We need dollars to pay at least some of our bills, and businesses need them to acquire raw materials. We also need a way to protect our public revenues, which are currently deposited and invested in Wall Street banks that have heavy derivatives exposure.

To meet those needs, we can set up publicly-owned banks on the model of the Bank of North Dakota, currently our only state-owned depository bank. The BND is mandated by law to receive all the state’s deposits and to serve the public interest. Ideally, every state would have one of these “mini-Feds.” Counties and cities could have them as well. For more information, see

Preparations for martial law have been reported for decades, and it hasn’t happened yet. Hopefully, we can sidestep that danger by moving into a saner, more sustainable system that makes military action against American citizens unnecessary.


Ellen Brown is an attorney, president of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200-plus blog articles are at


31 Responses

  1. It certainly looks like Wall Street has decided we’re ripe for picking again—and there’ NOTHING, absolutely NOTHING, to stop or slow them down! Dodd-Frank doesn’t rise to the level of even a bad joke!
    WORTHLESS! Is it time for pitchforks in the streets—before the DHS reloads?

    • How could anyone have ever thought that Chris Dodd, who was a major Dem party leader (along of course with Slick Willie) behind the deregulation of Wall Street (which led to the then Quadrillion dollar derivatives scam, which is still ongoing) and the meltdown of 2008 was going to be part of any solution?

      They would have to be the very same NY Times readers (the enablers) who think that Obama has done the best job he could under the circumstances, that he really cares about the little guy and is a truly peaceful man.

      And George as for your pitchforks, you are only 100 years too late. The time for that was when the traitor Wilson turned his back on the founding fathers and after promising to keep America out of the war allowed Colonel House to create false flags to put the US in a completely meaningless war that wiped out a generation of professionals.

      He simultaneously gave the US the income tax amendment, fractional reserve banking and of course who can forget his greatest hit the Federal Reserve Act. All of which gave the MONEY fuel to Washington to begin Imperial activities that had been cut off a century before that with the death of Alexander Hamilton. Go Aaron Burr Go.

      There is actually a history to all of this George.

  2. I’m surprised you link to John McAfee as someone who is working to free the internet from NSA surveillance when you could have more effectively cited people like Bruce Schneier, Jacob Appelbaum or Richard Stallman. That said, there are scads of developers working on free software security solutions for average users of computer driven devices. As a start, one could look at, for instance, which provides a list of free software secure alternatives to the proprietary spyware garbage that currently prevails on both PC/Microsoft and Macintosh based computing systems.

  3. I’m not certain that we are heading towards economic collapse, although there are indications that it is rapidly approaching. I’m limiting my exposure to counterparty risks, such as bank deposits, stocks and bonds and credit cards. Public banking is a viable alternative, however we don’t have one here in Nevada. And, I’m not sure that US dollars are safe.

  4. Historically, economic collapse does not generate regime change. Ms Brown herself cites Argentina, which suffered a total economic collapse, but there was no revolution. More than that, in a region where democracy is still a fairly fragile plant, Argentinian democracy survived the crisis. There was no coup and no generals in power. Indeed, if you look at the levels of poverty in the world, including in the US, you see lots of destitute people but no revolutions! People’s normal reaction to economic collapse is to protest, even riot, but once they have let off steam, they knuckle down to the vital everyday task of simply surviving. Ms Brown also cites Greece, but the events in the article she links to are already past history. The disturbances fizzled out after a few days. The classic pattern. The same is true in the other EU Member States that were attacked (including my own). Thus, if Homeland Security are expecting some sort of “revolution”, then they’re even stupider than they look! More likely, they’re buying up ammunition in case the debt ceiling isn’t raised and the government simply has no money to pay for anything (or anybody).

    • Michael the name of the game has been 70 years of central banker debt induced growth on steroids. People especially in the West have had, by historical standards a short period of riches undreamed of by their ancestors.

      So during this period even in “bad times” people have had limited anger. Check out the GDP of Greece today. They are hardly a “poor” country.

      But what happens when those endless trillions of Dollar- Euro- Yen debts become unpayable? What happens when populations cannot pay the interest on their debts and still have a standard of living anywhere near what they have become accustomed to?

      While a global collapse of the dollar may not lead to chaos in the streets, no one really KNOWS what it will lead to. So homeland security puts a military contingency in place.

      Why not? After all Americans pay for it.

  5. […] liberties, ruthless prosecution of suspected whistleblowers with the increased spending by DHS: Is Homeland Security Preparing for the Next Wall Street Collapse? Posted on October 7, 2013 by Ellen Brown Reports are that the Department of Homeland Security […]

  6. With government deposits in the “commercial” banks a “bail in” would still amount to a “bail out”. The economy is in rough shape for sure but it could get a whole lot worse as insolvency is stalking the system looking for a weak link.

  7. There is no oversight of spending by Congress. As currently structured, there exists no one, no entity, no branch of government or government agency, no competing power center with the incentive to say “NO” to spending; let alone the ability to enforce it. Publicly owned banks will in no way address this problem. If they are created by Congress, they will be subordinate to the whims of Congress. In there lies the heart of the problem.

  8. The US Justice department has a lot to answer for, because of it’s failure to prosecute the CEO’s of the big banks on Wall st, who have gotten away with the greatest theft in history. And because they got away with it the first time, they will be very confident they can do it again.
    The American people may be about to suffer the ultimate indignity, of being fired upon by the Department of Homeland Security’s bullets, which they have had to pay for.
    Good luck America.

  9. […] DHS has also acquired heavily armored tanks, which have been seen roaming the streets. Evidently somebody in government is expecting some serious civil unrest. The question is, why? …read more […]

  10. […] Ellen Brown Writer, Dandelion Salad The Web of Debt Blog October 7, […]

  11. If these developments can take place in an advanced economy what to say about the still developing countries where chaos still rules even when slight tremors can cause great consternation and contempt for the ruling class.

  12. The Fed is creating a drama about a the forthcoming brink. I feel our government wants to convince us that the U.S. will lose its prestige in the global economy, etc, “if something is not done about it”. That “something” is the scheme of the international banking community. They’ll truly break the bank when they create unlimited debt. We may not realize our amount of debt as clever accountants will possibly balance the debt off with an increase in the asset called “amount of money in circulation”.
    The devastating inflation of Germany’s 1930-1933 post-war Weimar Republic ushered in a person named Adolph Hitler to create a war against the international banking community. We know the rest: Deja vu, all over again.
    WWIII is inevitable, the Rothschild dynasty needs to govern the entire Levant to create their International New World Order.

  13. […] Continue reading at Is Homeland Security Preparing for the Next Wall Street Collapse? | WEB OF DEBT BLOG. […]

  14. The Quantum Dawn 2 is not scheduled for October 17th, it was already carried out in July of 2013. Can Ellen comment on this? thanks

  15. […] the Economy: Is Homeland Security Preparing for the Next Wall Street Collapse?  by Ellen Brown,, Reports are that the Department of Homeland Security (DHS) is […]

  16. With government deposits in the “commercial” banks a “bail in” would still amount to a “bail out”. The economy is in rough shape for sure but it could get a whole lot worse as insolvency is stalking the system looking for a weak link.

  17. Ellen while I must admit that based on your writings I have a bit of a crush on you, I have always believed you to be naive.

    In the event of a US dollar crash, as you envision, the global economy is going to crash with it. There will be financial chaos everywhere.

    You assume that the top people who own or control the central banks of the West as well as Wall Street are so short term greedy that they have no idea what they are doing longer term.

    I don’t believe for a moment that minions of the financial power elite like Larry Summers, Glen Hubbard, Greenspan or Bernanke can’t figure out that there is going to be a bad and dramatic end to all of this.

    So if what you wrote is well understood, then it is not happening accidentally.

    There is a very obvious end game and that is a new world currency and a global central bank controlled and/ or owned surprise, surprise by the same people who control- own the Western central banks today.

    To create something new you have to destroy the old. So the powers that be will not allow any kind of competition to their financial racket, that could in any way disrupt their well laid out plans.

  18. Re: Quantum Dawn 2..the link goes to a Bloomberg tape dated July of this year, which is when the test actually occurred.
    There does not appear to be a Quantum Dawn test scheduled for Oct. this year, it has already happened.
    Article is quite mis-leading and was printed also in Global research with today’s date.

  19. […] Is Homeland Security Preparing for the Next Wall Street Collapse? […]

  20. […] Source: by Ellen Brown, Web of Debt: […]

  21. Nice article – as usual from Ellen. Just when the US issues large value coins they should be billion not trillion. How many banks could accommodate a deposit of 1 trillion or more from U S Treasury? Only the ones we are trying to quash. BOA, Morgan, Citigroup or a Fed Reserve Bank. So lets say billion dollar coins will solve the debt ceiling problem..

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