In our society and most particularly in America, banking bigshots and speculators are the slimiest, most unproductive and EXPENSIVE welfare-recipients that there are. And this event proves it.
The Enron crowd hurt fundamentally no-one but their shareholders and creditors and most of their creditors were likely bankers who are paid big bucks to avoid this sort of thing. And yet the Enron top brass were hauled before the courts and thrown in jail. They were thrown in jail with sentences longer than that meted out for many murderers.
Yet these weasels that make millions from fundamentally unproductive activities just think it is normal and according to Hoyles that the American taxpayer bail their asses out.
The actual money spent on bailing these dim-bulb song-and-dance men out, isn’t even the beginning of the damage done. Yet from what we’ve seen by those involved in the hypocrisy, having a trillion odd dollars sent your way, even though it will fundamentally weaken the totality of the USA to accept this gargantuan loot… is only their due. And nothing to be suspicious about in the least.
JUST WHEN IS IT THIEVING?
Suppose you micronised each act of theft in order to pretend that it wasn’t thieving.
Suppose the counterfeiter with his inkstained hands claims that he isn’t thieving since when he buys his gear the shopkeeper gets what he wanted. “You see its the shopkeeper who is the thief” says the counterfeiter. “…No harm is done until the shopkeeper spends the money I paid him with..” he says.
Suppose the man from the government cranks up your taxes. He is from the alleged right-wing pro-business party. He is from the alleged free-enterprise wing of that party but he’s cranking up your taxes just the same. Supposing he claims to be a libertarian, runs you down as Keynesian or perhaps a communist. “But don’t you know that its not the taxing that is the thieving..” says the man from the government. “…Rather Its the government spending that is the problem. Thats when the resources are commandeered….” he says.
The next day you come back to him after he announces a new spending program. He then says….” Hey buddy. This isn’t thieving. We have the money and of course we are going to spend it….” Clearly he’s not only a thief. He’s a weasel. He then tells you how superior he is to you on account of the fact that he’s rich and his kids go to the best schools. “Suck shit..” he says.. “You just don’t like it because I’m at the top of the food chain.”… says the man from the government.
Then the weasel from the government steals your wallet and waves his magic wand, makes the prices of all the things you buy double, kicks you in the nuts and tells you you look like a loser.
Every act of theft can be broken down that way. “Its not the addition to the monetary base…..” he might say. “The resources are still there when we print the money” and on another day he might say …. “but we didn’t steal the money off you we borrowed it…. and we owe it to ourselves…” Or on another day he might say…. ” …But its not as if we crowded-out investment locally. We borrowed it on the international money market”. Then the weasel from the government is likely to tell you that “there is nothing wrong with debt!!! Oh what an unsophisticated commie you are. You just don’t understand economics.”
So its bullshit. Crony-communism in capitalist clothes. Its a gyp. He’s telling you he’s got a degree in neoclassical economics. He’s a PHD and he made millions in banking before he went into politics. He’s telling you he’s rich and he’s making out that HIS LIFE is what capitalism and freedom is all about. The ranks of the alleged libertarians are just crowded with these crony-socialist types.
Breaking down an act of theft into its individual stages makes it no less an act of theft. Fractional reserve thieving is easy to understand. Only a banker or an idiot cannot understand it if he is interested and willing to put some thought into it. But fractional reserve thieving usually goes in four steps. So have some self-respect and learn how these people are stealing off you all the time.
HOW IT SHOULD, COULD AND WILL WORK.
Under capitalism, properly considered, banks take in loan money for specific periods of time. They aggregate it, or disaggregate it, and lend it out. They take a margin. This would be a valuable service. They take on the risk of non-payment, they bring borrower and lender together. They assess the likely improvement in cashflow that the act of spending based on the loan will create, and rank their list of potential borrowers accordingly as to who will get the loan first. And it would mostly be done on the speed at which the loan is likely to be paid back.
A marvellous service. And they only get a margin-of-interest for this service. Under capitalism they are therefore about the most important, crucial and highly skilled people around. And it would be no task for dummies. They would need to be the smartest people around too. The microloan people would have great human skills. The venture capital people could well be the renaisance men of business. There are these guys out there. But in practice they are few and far between.
Under capitalism most debt would tend to go into what now would be called micro-loans or alternatively into venture capital. Or it could go into the expansion of business when a clear opportunity to improve cashflow arises. The debt would be channelled with intense thought and discrimination. And all this just for a margin, on the interest of the loan….. or sometimes for a temporary stake in the equity of the company.
But when the banking industry creates new money via fractional reserve they don’t just get a margin. They get the entire value of the loan for nothing. The principal and the interest. They get the full value of the thing that this money has bought without creating anything. Their just reward would have been a margin only of the interest. A small part of the interest. Not all the interest but just a part of it. But instead they get the principal and the interest in total. They don’t get a margin on the interest. They get the totality of the principal and the interest although they have created nothing of value.
When new money is created the bankers are not the least bit discriminating as to where the money goes since they are relying entirely on the inflating value of non-money assets. This is the case for the vast majority of their new money creation. They do other business. But when they create new money, for the most part, it is without discrimination and entirely on the basis that inflation will secure their ill-gotten stake.
Our money supply in Australia in Jun 2001 was 150 billion dollars. In Jun 2008 our money supply was 226 billion dollars. This means that the Australian taxpayer has subsidised these welfare recipients in the financial sector, roughly 76 billion dollars during that time. Its by far the most subsidised industry that there is. It ought to be considered an offshoot of the public sector.
Actually we need to take out the governments winnings from this new money creation. We need to adjust that figure by taking off the increase in monetary base and cash in the hands of the public, that has increased over that seven year period. since this is the governments takings and not a subsidy to the financial sector as such. The tendency was just to throw the figure together since its all the same counterfeiting racket. The government and the financial sector is so bundled up in this racket its seldom worth prising them apart for analysis. But we will do so here.
That would bring the direct subsidy to the financial sector down to around a cool 50 billion subsidy. 50 billions of subsidy in those 7 years to our banks. This is a fundamentally unproductive industry. And if we are talking about the wider costs of fractional reserve inflation itself we are talking a far greater figure. But here it gets harder. Because we are trying to imagine what would be if we had a powerful investment sector that was an unambiguous wealth creator. The 50 billion is a direct subsidy.
But supposing someone who is new to the subject, or someone who is himself a weasel, didn’t believe (or were too stupid to understand) that this new money was a direct subsidy to the industry… Supposing the weasel said..”No its when the banks are bailed out by government increases to cash and monetary base….. thats when the theft occurs… thats when the banking industry is subsidised…”
So I say “OK then we’ll count the 26 odd billion that I was previously saying was the government winnings from the racket… And we’ll say that it is the 26 billion in indirect bailout cash that is the subsidy”
But then the next day or week the weasel will jump to the other foot and say that there was no subsidy to the industry. “That was just the government printing money….” and the weasel continues “…..and you say yourself that if they didn’t follow up with the cash there would be a recession. So in fact that cash is saving main street from accruing recession costs…..”
So you see the weasel act of these people isn’t going to end. Reform isn’t coming out of the banking sector or out of the court-brown-nosing economists who are in awe of these unproductive song-and-dance men. And they are such self-righteous welfare recipients, these weasels, who so identify with their colleagues, that they think that this new trillion dollar subsidy is just fine.
Its not money spent to stop a slaughter in Iraq. Or to avoid leaving Iraqs oil to the terrorist states. Or to honour the fallen by completing the mission. Or to maintain deterrence. People may vary on the plausibility of motives for the continued horrendously costly military involvement in the middle east. I’m not questioning their motives in going there but questioning their sense in staying. But this new gargantuan thieving is not for any of that at all. Its simply to bail out banking executives and Wall Street and thats it.
There is absolutely no advantage to the American mainstreet for this gargantuaan act of welfarism to prop up the standing and earning potential of millionaire bankers who have fucked up. It will not help the United States dollar it will hurt and may destroy it. It will not help the US in wartime it will harm the US drastically. It was not necessary to help mainstreet America: that could have been done with a neutral injection of monetary base and a reserve asset ratio.
Had the institutions been allowed to fall . And if the only assistance given, was the retiring of Federal Government debt with an injection of monetary base…….
….. Had the ABOVE been the strategy this strategy would have GREATLY REDUCED AMERICAN DEBT.
Under this scenario of rational policy, collapsing institutions and people declaring bankruptcy would have had their debts liquidated and forgiven under perfectly fair bankruptcy laws. LIQUIDATED AND FORGIVEN. REDUCING AMERICAN DEBT.
Had rational strategy been applied the increase in monetary base would have been a direct reduction in US debt on top of the debt forgiven through bankruptcy.
Furthermore the reserve asset ratio, to stop the increase in monetary base being inflationary, would have insulated the US taxpayer more generally, from having to subsidise the financial sector in the future, as much as they were forced to in the past.
And that weasel Henry Paulson doesn’t think a good goddamn about this irreponsible bailout of his mates. This is the one chance we would have to see the financial sector broken up the into smaller, less concentrated, entities. The one opportunity to see their assets sold off, including all their offices. Which would be a good thing. Since in the future with a reserve-asset-ratio, and less money creation, the Americans wouldn’t need the banking industries services quite as much as before.
What a skunk. What a weasel. What a sense of entitlement these people must have. I say this because the fact that Paulson could even suggest such an outrage tells us, that his entire industry is full of these self-righteous, rich, weasal welfare-recipients, who cannot even cop it, and be happy about their past winnings, when they are busted for the incompetent dim-bulbs that they are.