The Power of Money

No other artificial force affects us on daily basis the way money does. From institutions and individuals, governments and churches, to the wage earner and the illegal immigrant, money is the primary concern and motivating factor for much of human action within society, even if it isn’t always admitted as such in public discussion. In this regard we are all economic entities enmeshed within an artificially constructed economic grid that regulates our choices, influences our thoughts, affects our identity, and remains nearly impossible to escape.

In a world where billions of people struggle every day just to find enough food to eat it’s peculiar that nuclear weapons are so often considered the greatest threat to human life; money is far more dangerous. Millions of people literally live or die based on the economic polices established in New York and Washington DC. Money is ubiquitous and possesses a deadly corruptibility on large scales; perhaps only disease can rival it in capacity for widespread harm.

As important as it is economics remains a confusing topic with actual events difficult to predict using established theories because cause and effect are often unclear and billions of individuals are all making different decisions based upon a constantly changing series of events.

This artificial grid that distributes wealth and resources in our society is called an economy. An economy is a system for allocating resources, but where the resources go and who gets them is ultimately determined by some form of values. Yet established economic systems are based mostly on assumptions and ideology. Verifiable research is thin but theory is great. And although allocation of resources within the framework of an economy is initially justified based upon ideological or theological guidelines in practice wealth and resources accumulate in the greatest degree with those that already have the most of both. In other words the rich get richer. At this point the economic order becomes an exercise in power and authority justifying its own excess through ideology and religion. This makes the rich inherently conservative in political and social outlook because they need stability in order to preserve their wealth and status. It’s interesting that all U.S. currency is marked with the statement “In God we trust” intermixing, money, government, and divine authority into one piece. This official statement must refer to the royal ‘we’ because I’m not putting any trust in this economic system, and after you finish reading you won't either!

Economics has long been a watering hole for cranks and charlatans. Convincing theory is easy to concoct and just as easy to foist on the gullible and the greedy. Economics remains a warren of fraud because it’s impossible to predict how millions of individuals are going to act or react to any given economic situation. About all we can be certain of are the basic elements of supply and demand and after that economics is in many ways just a mislabeled branch of psychology. Nevertheless demand for predictive economic theories is as insatiable as capitalism's demand for increasing profits. Economists along with their unverifiable crystal-ball theories are the modern equivalent of the sawbones doctors of medicine 150 years ago. Regardless of whether they kill the patient or accidentally save a life the public is often compelled to seek their services for lack of a superior alternative.

With wealth and power intricately linked the few that posses it have the greatest influence upon choosing and propagating contemporary economic theory, and so established economic theory is, not coincidentally, conservative in outlook and structured to support those already in power and those that are already wealthy. The validity and actual efficiency of the economic theories and guidelines that emerge from this money morality are rarely, if ever, questioned by establishment society. Indeed the fact that these economic theories and beliefs are socially dysfunctional, strategically counter-productive, and often antithetic to social development and cohesion is either ignored or attacked. For example Milton Friedman, treated as something between a genius and the god of modern economic theory by establishment authorities, encapsulated his attitude with the statement, "So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no, they do not." Ayn Rand (born Alissa Rosenbaum) developed a flimsy ideology now used to justify greed, personal excess, and obscene wealth-disparity that is increasingly popular amongst CEOs and other overpaid corporate executives [1]. Ayn Rand was a personal mentor to Alan Greenspan the former Federal Reserve Chairman and maestro of massive monetary inflation. The current Federal Reserve Chairman, Ben Shalom Bernanke, has quickly picked up where Greenspan left off despite initial rhetoric to the contrary.

Although most of the economic pain in the U.S. has manifest during the W. Bush administration both political parties participated in hollowing out the US economy. Most notable was the Clinton administration’s economic ‘miracle’ performed by Robert Rubin, another god of the money morality and sage of modern economics, in the form of ‘Rubinomics’. Rubin’s strategy was to work with Greenspan at the Federal Reserve to inflate the money supply and use creative accounting techniques to make a bleeding federal budget deficit look like a surplus while slashing government regulation of the financial sector to generate a frenzy of foolish speculation, boosting the stock market and creating the superficial appearance of a robust and healthy economy.

Rubin used the enormous volume of Dollars in circulation as a foreign policy weapon offloading inflation overseas onto to manufacturing countries and compelling everyone to adopt the U.S. Dollar for trade or as their primary currency. This system of Dollar hegemony robs smaller nations of the ability to manage or regulate their own economies and generates widespread suffering and social turmoil as manufacturing countries compete against each other in a race to cut wages and lower costs for exporting products to the U.S. market.

Most developing nations now realize after painful experience that by using currencies other than the U.S. dollar and shunning loans from U.S. controlled pseudo-economic assistance agencies, such as the IMF and World Bank, they can actually raise wages and grow a healthy domestic economy in reality and not just in meaningless rhetoric. But due to the wizards of monetary fraud like Friedman, Greenspan, and Rubin, America’s financial capital and international credibility have vanished like a malevolent magic act, while concocting the greatest wealth disparity in world history between the ultra-rich and everyone else.

What is Money?

Money has historically been a physical object, usually of uncommon substance – it could be seashells, it could be feathers, it could be shiny metal. Form is not particularly important, although one has to wonder about the giant stone money of Yap Island, how practical was that? But at least theft was unlikely!

The stone money of Yap, though not legal tender in the international currency market, is still used as legal tender on the island. The value of these limestone, donut-shaped coins varies, though not according to size. Today the money is still owned but not moved, even though ownership may change. [2]

The important aspect of traditional money is that it’s of a finite quantity because when the supply of objects used as money increases so do the prices of everything being traded since the seller wants to get as much in trade as they can, and with more money floating around in everyone’s pockets it’s easier to charge more for products. This effect of rising prices stemming from a growing supply of money is called inflation, but more on that in a moment.

Your Money is the Government's Debt

In 1971 President Richard Nixon removed the U.S. Dollar from the gold standard creating a currency that can be produced in unlimited amounts and cannot be redeemed for anything but more debt, employing the bogus economic notions of Milton Friedman as theoretical justification for unlimited expansion of the national money supply. The disastrous and expensive war on Southeast Asia made it abundantly clear to Nixon and the military-industrial complex that they needed cash – and lots of it, and having already burned through the national gold supply and generated a financial crisis of confidence the switch to a fiat currency was a welcome, if extremely short-sighted maneuver.

Before 1971, the introduction of $1 new debt used to increase the GDP by as much as $3 or more. Since 1971, this ratio started its precipitous decline that has continued to this day without interruption. It went negative in 2006, forecasting the financial crisis that broke a year later. The reason for the decline is that irredeemable debt causes capital destruction. It adds nothing to the per capita quota of capital invested in aid of production. Indeed, it may take away from it. As it displaces real capital, which represents the deployment of more and better tools, productivity declines. The laws of physics, unlike human beings, cannot be conned. Irredeemable debt may only create make-belief capital.

By confusing capital and credit, Friedmanite economics obliterates truth. It makes the cost of running the merry-go-round of debt-breeding disappear. It makes capital destruction invisible. The stock of accumulated capital supporting world production, large as it may be, is not inexhaustible. When it is exhausted, the music stops and the merry-go-round comes to a screechy halt. It does not happen everywhere all at the same time, but it will happen everywhere sooner or later. [3]

Modern money has lost the connection to finite physical substance becoming a fiat currency that can be produced without limit. Since governments control the supply of official currency through a legal monopoly, and since the currency has no backing by gold or silver or any other finite substance, the temptation to create more money for the government to spend is enormous and always abused. Fiat currency creates speculative bubbles that are inevitably followed by crashes or economic recessions. The unlimited money supply is its own problem and its own solution, because adding more money to the economy in the right places and at the right time can give the economy a boost and potentially lessen the impact of a recession. In this process the economy rises and falls like a roller-coaster over the decades but one trend increases consistently and that’s inflation, because the loans used to fund new money are not repaid. Indeed they cannot be repaid because our money is debt, and the debt is money. This system of fiat currency that we are all forced to interact with is also one of irredeemable debt. The money supply is the debt, and the more debt issued the more money can be injected into the economy. Not only that but since interest is being paid on all of this debt it means that the money supply must keep expanding in order to meet the need for more and more funding to pay for it all. And since none of this money is backed by anything of value, not gold, not silver, not even copper, nothing but pure perception, this monetary system is inherently inflationary. Inflation will inevitably ruin the value of our artificial absurdity called fiat currency. The U.S. Dollar and all other fiat currencies are simply fictional capital.

And since almost every dollar in existence was created out of thin air at the instant someone borrowed from a bank (as that is the bizarre kind of economy that we have in the United States), every one of these borrowers was then obligated to pay back more than was borrowed, and all that interest compounds and compounds, which means that the money supply must keep growing in a geometric fashion forever, too, compounding and compounding. [4]

The Almighty Dollar

In the post-Word War II era the United States with its almighty Dollar has dominated the world economy and acted as the currency of choice for savings and investment. This system is known as Dollar hegemony and it has conferred significant benefits to the United States both economically and politically, but turmoil and uneven gains to the rest of the world. Succinctly, the producing countries sell their products to the largest market in the world, the U.S.A., and in return they have to take Dollars as payment, yet the U.S. government can produce as many Dollars as they desire thereby keeping prices low and sending inflation back overseas. However, in order to keep the Dollar hegemony scheme in operation the United States has to continually create new capital or otherwise entice back home the Dollars sent overseas. Creating new money is relatively easy but it comes with a steep price, bringing the Dollars back to the US is less painful but it requires interest bearing loans called Treasury bills.

How the Great American Money Scam Works

The simplest way to manufacture more money is to print it and distribute it throughout the economy. This method is easy but also the most inflationary. The typical method is to sell bonds i.e. loans to the government in the form of Treasury bills. The cash from these sales is then distributed in various ways throughout the economy, deposited in banks, spent on building roads, spent on war, etc.  By using bonds to create money the overall supply is closer to a balance and thus less prone to inflation. However the word ‘bond’ in this case is very misleading because federal debt is not like a car or home loan that is steadily being repaid interest and principle. Only the interest on the debt is ever paid back and the more debt the more interest. And since the interest has to be paid no matter what, new money has to be created. Thus this system is not only inherently inflationary but also inflationary at a rapidly escalating pace! So, more loans are issued in order to generate more capital and this new money is then used to pay the interest on the existing loans. This is the definition of a check kiting scheme and it is of course illegal, except when government does it.

As long as someone is willing to trade his or her cash for another loan paying a small amount of interest then the scheme continues, at least until hyperinflation sets in and everyone has to use a wheelbarrow full of 1,000,000 notes to buy a loaf of bread.

Treasury bonds, contrary to appearances, are no more redeemable than Federal Reserve notes. It’s all very neat: the notes are backed by the bonds, and the bonds are redeemable by the notes. Therefore each is valued in terms of itself, rather than by an independent outside asset. Each is an irredeemable liability of the US government. The whole scheme boils down to a farce. It is check-kiting at the highest level.

At maturity the bonds are replaced by another with a more distant maturity date, or they are ostensibly paid in the form of irredeemable currency. The issuer of either type of debt is usurping a privilege without accepting the countervailing duty. They issue obligations without taking any further responsibility for their fate or for the effect they have on the economy. Moreover, a double standard of justice is involved. Check-kiting is a crime under the Criminal Code. That is, provided that it is perpetrated by private individuals. Practiced at the highest level, check-kiting is the corner-stone of the monetary system. [3]

In the United States the Federal Reserve is specifically charged with maintaining the stability and integrity of the national money supply. In practice this requires keeping inflation low and interest rates high enough to promote savings but not so high as to stifle growth by making loans for new development too expensive. The Chairman of the Federal Reserve is supposed to be an independent and objective force for carefully managing the financial integrity of the national money supply. Yet from 1987-2006 the powerful and (once) highly revered Fed Chairman Alan Greenspan didn’t do any of these things. Instead Greenspan worked hand in glove with the political establishment to fulfill patently political objectives, abusing the monetary system like it was a giant campaign donation fund while printing money to bail out the super-rich who made terrible investment decisions. His policy of monetary inflation has made the rich richer, the poor poorer and the economic order far less stable. Following Greenspan’s disastrous lead, central Banks across the world, fearing the collapse of their own fiat currency scams, are in the process of selling massive hordes of their gold to buy up paper currency! If ever there was an insane investment that would qualify. But they need to keep the price of gold low in relation to their money otherwise gold will become an attractive alternative and they will lose the central bank luxury of printing new cash at will. So now our national currencies are competing in a race to reach the bottom in value.

Fed policy is creating widespread economic distortions. By re-inflating the economy to rescue banks and housing markets, the Fed is making the public liable for mistakes it did not make and pay for the gains reaped by speculators and debt holders. Private gains from speculative booms remain private, while the Fed passes on private losses to the public. The homeless, eating much less, are paying for bolstering the value of homeowners' asset.

Indeed, inflation is known to impose a heavy tax on cash balances and incomes in favor of debt holders be they government or private. The higher is inflation, the higher the tax burden imposed by the Fed. As inflation accelerates and the dollar depreciates, real incomes fall; consequently, vulnerable people in many countries can afford less food and the basic amenities of life. [5]

The Problem of Inflation

Massive inflation of the money supply coupled with deregulation of markets has turned the world economy into a casino where the rich and the ultra-rich spend billions of dollars in a frenzy of speculative investment searching for a profit in the latest economic bubble and buying controlling stakes in national assets formerly considered to be public goods protected from speculation and private ownership, like housing, water, power, and transportation infrastructure.

Inflation doesn’t harm the rich, they don't worry about having enough money to buy food, they’re concerned about the hedge fund going bust that they have $500 million parked in, so they do all they can to prop up the stock market and give the middle finger to middle America (and the rest of the world too). Indeed the wealthy actually enjoy inflation, at least in moderation especially when it’s channeled into the price of assets like property, stocks, and commodities. The rich benefit from inflation because it makes them even richer but everyone middle class or with even less money suffers, particular when inflation moves into commodity prices and consumer products as this makes buying the daily necessities, like food and fuel, increasingly difficult. Business and industry owners also enjoy inflation just as long is it doesn’t translate into higher wages for employees.

After inflating assets for decades the rapidly growing surplus of money has finally begun to affect the prices of consumer products. Inflation reaching average consumers has hit extraordinary levels as I write this in May 2008, in one year oil prices have doubled, gasoline prices have increased nearly 40 percent, heating oil 90 percent, egg prices have jumped 40 percent, corn 72% and flour has risen 50 percent just since January! Fertilizer prices have soared with phosphate up 200% in 2007 and potash 100%, the important industrial chemical sulfur has increased in price 1000% in just a year, and primary and precious metals have all jumped in cost; basically every major commodity has risen in price feeding into even greater cost increases in every finished product. And this is only the beginning.

Measuring Inflation in the Money Supply

Measuring the total money supply in order to gauge the scale and pace of inflation has been fairly simple using the measure called M3, however since 2006 the Federal Reserve discontinued tracking of M3 (surprised?) making this task more difficult. Another measurement called MZM (Money of Zero Maturity) tracks growth in the money supply as a close proxy for M3 and can be viewed at the St. Louis Federal Reserve website. Recent expansion of the total money supply is stunning; the 5 year MZM chart is nearly vertical during the first four months of 2008 and has increased by an incredible 1.3 trillion dollars between May 2007 and May 2008!

Another measurement tool of more practical application to the consumer for tracking inflation, and thus the continual devaluation of the Dollar currency, is available here at the Minneapolis Fed's website, it calculates the value of the Dollar for any given year based on CPI. But, as you'll learn in a moment, CPI understates the actual scale of inflation eating away at the value of the Dollar.

As a side note, for about a decade the U.S. government has been redesigning the Dollar for the official purposes of making the paper currency more difficult to counterfeit. Yet no private counterfeiter in the world can compete with the federal government expanding its own money supply by billions of dollars every day! The threat from counterfeiting pales in comparison to the inflationary damage the government is inflicting on its money. It seems to me that the currency redesigns have much less to do with defeating counterfeiters than acting as a covert method of pumping more cash into the economy. After all, they never recall the old money, both the new and the old are legal tender and where’s the need to redesign the $10 and $5 bill? Who’s going to counterfeit a $5 bill, I mean really?!

"Charles Ponzi was deemed an unprincipled conman to insulate unregulated capitalism itself from being revealed as a systemic Ponzi scheme." - Henry C K Liu

Mismanage an economy badly enough and you get not just creeping inflation but hyperinflation. The African country of Zimbabwe is experiencing hyperinflation thanks to the foolish economic guidance of tyrant Robert Mugabe. In this photo a man in the capital, Harare, is purchasing bananas with a stack of 500,000 dollar notes in January 2008. Inflation is running over 1,000,000%! A loaf of bread costs 200 million Zimbabwe dollars, enough to buy 12 new cars ten years ago.

The Official Statistics are Bogus

The Federal government intentionally hides the true scale of inflation for several reasons, obviously because they’re the cause of it for one, second because it raises prices and that’s highly unpopular, and third because higher inflation means that the federal government has to pay more for all inflation indexed outlays such as Social Security for retirees.

Official government statistics are manipulated in order to put the spin on the numbers that the political establishment wants the public to receive. Some statistics are conveniently left out, many key statistics are just buried in the data dump and ignored by the financial mass-media, and some are corrupted through outright fraud. For example the official rate of economic growth in the U.S. is positive, currently a very anemic amount of less than one percent. But to get the real rate of growth you have to subtract inflation, so in reality the national economy is actually shrinking in size! Similarly the official Federal Reserve determined interest rate is positive, a few percent, but the real interest rate is actually negative because inflation has to be factored in. So the government is actually paying banks to take loans and the national economy is still declining! The Consumer Price Index (CPI) is supposed to measure inflation affecting consumers by tracking price changes for household products. But CPI is notoriously bogus because it removes the most inflationary elements as officials claim the numbers are too ‘volatile’ or ‘cyclical’.

In other words, when prices of basic food commodities, including bread and butter so necessary for children, triple or quadruple, this causes no concern to the Fed, because they are not part of core inflation. However, when toys prices go up by 10%, they may become of some concern to the Fed, signaling that core inflation is rising! But with workers struggling to put food on table, they are less concerned with buying toys. Hence, toy prices may never increase, core inflation may not rise, and the Fed may never respond to racing energy and food prices. [8]

Unemployment numbers are highly questionable as well. The official US unemployment rate is about 5% but honest assessments place it closer to 12%. The demographic and regional unemployment rates vary greatly throughout the country, anyone that has been unemployed for awhile or has to take a part time job or take a pay cut doesn’t get counted, the massive prison population is excluded from unemployment statistics, and the official numbers still don't characterize how many people actually earn a living wage.

Worker productivity statistics prop up another capitalist canard, that greater worker productivity (the amount of output per hour of work) creates higher living standards for workers. The cruel corollary implies that if your living standards don’t increase then you have to work harder for longer hours in order to make it happen. Yet living standards in the U.S. have been falling for at least 30 years, while at the same time worker productivity has been rapidly increasing. In fact the connection between effort and gain only holds if production actually benefits the people doing all the work! It’s clear what's really happening is that people are working harder for longer hours and still experiencing a very tangible decline in living standards just so that a tiny oligarchy can become even wealthier at an ever quickening pace. "According to the US Census Bureau, the median US Household income fell by $1,043 from 1999 through 2006, the last year for which figures are available. Labor Department statistics suggests that real wages have fallen a further 2.4 percent in the past year alone." [13] So why does anyone continue to support an establishment that, unless you are already fabulously wealthy, guarantees that you will be poorer a few years from now?! The simplest rule of macroeconomics is the first one ignored in a corporate-friendly political environment: wages are directly proportionally to genuine economic growth. Workers with less income spend less and economic decline invariably ensues, while greater wages deliver greater prosperity.

The view that official statistics present is the attitude of those with wealth and political power. Information like unemployment statistics need only affirm that most everyone has some kind of job that keeps them tired, occupied, and paying taxes so they aren’t out protesting or otherwise causing trouble for authorities. Palpable problems that should be numerically represented such as inadequate wages, a rapidly escalating cost of living, and socially destabilizing income disparities between executives and general employees are simply irrelevant to billionaires and their sycophantic policy-makers.

The 'Free-Market' is a Myth (and the Casino is Rigged)

Proponents of a laissez-faire economic system like to claim the ‘free-market’ is a natural evolutionary product, a result of the strong triumphing over the weak, but in reality it’s merely a self-justifying morality as short-sighted as it is contrived. In the same mindset notorious Enron con-artist Jeffrey Skilling looked at Richard Dawkins’ book The Selfish Gene and conveniently misinterpreted it as a biological justification for greed and anti-social selfish behavior!

Yet survival of the fittest among the animal kingdom is practiced only between species, while intra-specie cooperation is the general law. The symbiotic interdependence of different species is well recognized in all ecological systems. Moreover, the laissez-faire market system is far from a natural phenomenon, but a contrived mechanism with the purpose of reconciling individual pursuit of self interest with the welfare of society. [10]

The very existence of a central bank in the guise of the Federal Reserve blatantly contradicts the supposed existence of a free-market. No such thing as a free-market really exists and indeed economic regulation of at least minimal form are both necessary and unavoidable. The US Treasury and the Federal Reserve are continually intervening in the marketplace to prevent crashes, for instance through the covert Plunge Protection Team (PPT), to boost the appeal of the national currency (by suppressing the price of gold for instance), to support political agendas, and even to aid political campaigns through market manipulation! Not to mention extensive financial manipulation on an international scale aimed at achieving foreign policy objectives favorable to the New York and Washington DC establishment.

Very large banks and corporations operate on the assumption that they are Too Big To Fail (TBTF) and will receive a government bailout if they ever get into serious financial trouble because their collapse would simply be too devastating to the national economy. Not only does this secret insurance create an unfair business advantage it also injects a very dangerous hazard into the marketplace by tempting the TBTF into reckless behavior. On Friday March 14, 2008 the Federal Reserve made the unprecedented decision to directly fund JP Morgan Chase bank’s purchase of the insolvent Bear Stearns investment company to keep them from collapsing after incurring billions of dollars in losses on bad investments. Founded in 1923 Bear Sterns was the fifth largest investment bank in the U.S. and the U.S. Securities and Exchange Commission (SEC), undoubtedly knowing otherwise, claimed the company was “well-capitalized” right up until the moment it (surprise) wasn’t!

We need to drop this erroneous myth of a free market and start calling things as they really are not what some wish them to be. Exploding the free-market myth has enormous consequences since it forms the foundation of modern economics. Maintaining the lie means that the people cannot adequately prepare or respond to events and the elite cabal of insiders can exploit the national treasury to manipulate the financial markets behind the curtain like malevolent magicians. In addition to creating a privileged class, the manipulation also has little democratic legitimacy in the sense that the citizenry has not given its consent. This has tangible ramifications. By not informing the public, successive U.S. administrations have employed a dangerous policy response that is subject to the worst possible abuse. In this regard, the line between national necessity and political expediency has no doubt been perilously blurred. [6]

Welcome to the Debt Trap

Having established a fiat currency system based on irredeemable public debt the working class public have had little choice but to follow the lead of officials and structure their own finances upon debt and private loans, racking up more and more as the national currency inflates and the purchasing power diminishes.

Households are simply not saving anything. Real average weekly earnings of production and non-supervisory workers - over 75% of all us payrolls - have been stagnant since the mid 1970s. If we use 2005 dollars and the CPI-U (consumer price index for urban consumers), average weekly earnings decreased by about $1 per week over the 30-year interval 1975-2005. The folks have thus stopped saving and have taken on massive amounts of housing and consumer debt.

A look through the Federal Reserve's Flow of Funds Accounts of the United States, or Z1, released in September 19, is a traumatic experience. It reveals the contours of America's debt disaster in stark statistics that grow worse with each passing quarter. In 1999, total outstanding household debt was $6.4 trillion. As of the end of the second quarter of 2006 total outstanding household debt was $12.3 trillion.

Household debt has increased by almost as much since 1999 as the sum total of all debt accumulated by all households across the preceding 220-year history of the US. In 1999, household mortgage debt stood at $4.4 trillion. At the close of the second quarter of 2006 it had more than doubled to $9.33 trillion. In 1999, consumer credit outstanding was measured at $1.6 trillion. [7]

A commonly held and erroneous belief, particularly prevalent in the United States, is that ‘if you’re not rich yet then it’s your own fault, so shut-up and work harder’. Yet the capricious cruelties of debt and finance within the capitalist structure contradict this perception on a daily basis. This situation of rising personal debt and declining income eventually leads to a debt trap where obligations exceed assets and income, and the only recourse is bankruptcy. Until then delusions remain an ever popular alternative to facing a bleak but correctable reality. Widely held assumptions also aid in this process of passive oppression.

Capitalist authority’s best defense against popular insurrection continues to be the lottery, successfully preying upon the average human mind’s incapacity to comprehend large numbers to generate an illusionary incentive to participate within an exploitative economic system all with the vain hope that great wealth can easily be achieved by anyone! The lottery sates the greed need without any fundamental shift in wealth or progressive changes to society; it’s a marvel of social-engineering through psychology. The multi-million dollar lottery is probably the ultimate tool for pacifying the public's materialistic desires - it is the state's insurance against revolution.

Widespread Institutional Failure

Accounting companies play an important role in maintaining the integrity of the economy by producing accurate and trustworthy financial records, yet since the Enron scandal all of the major U.S. public accounting firms such as Arthur Andersen, KPMG, and PricewaterhouseCoopers, have been involved in fraud and/or negligence by actively supporting, or failing to reveal, billions of dollars in falsified financial reports and bogus accounting practices on the part of their corporate clients. Even within the boundaries of the law, thoroughly skewed to favor private wealth, corporate accounting has become so rife with deception and fraud that U.S. companies can now, after a successful lobbying campaign, claim losses on debt as gains in revenue! Bear Sterns for instance legally claimed a $305 million profit using this accounting trick in February 2008 and then promptly melted down the next month. [11]

Ratings agencies too are crucial elements of the modern financial system, entrusted with making accurate and reliable determinations on the quality and integrity of corporations, stocks, bonds, and even governments. Trust placed in ratings agencies has been ruined by the collapse of the repackaged debt market. Investments that the ratings agencies claimed to be rock-solid safe and low risk have turned out to be worthless, leading to billions and billions of dollars in losses for banks and investment companies around the world.

Agencies like Moody's, McGraw-Hill, Standard & Poor's, and Fimalac's Fitch Ratings have been under pressure by investors, regulators and critics for the past year for incorrectly rating subprime mortgage debt. Losses from deteriorating subprime mortgage and repackaged debt have led to more than $400 billion of market losses, according to Fitch Ratings. [9]

Official agencies tasked with oversight of the marketplace, such as the SEC, have facilitated systemic collapse through inaction and outright corruption. Called the largest Ponzi Scheme in history, in December 2008 Bernard Madoff, former chairman of the NASDAQ stock exchange and treasurer of the American Jewish Congress, was arrested for perpetrating an estimated $65,000,000,000 swindle on investors. Besides neatly typifying the inane avarice of contemporary finance-capitalism, Madoff is just one of many egregious examples of the SEC completely failing to do its official job – protecting fairness and integrity in the national financial system. Not only did the SEC fail to address specific allegations sent to them regarding Madoff's scheme going back to at least 1999, but a former SEC attorney named Eric Swanson is married to Madoff's niece and was part of a team tasked with investigating Madoff in 1999 and 2004; both instances resulted in no action. Not only that, but the U.S. attorney general Michael Mukasey had to remove himself from the criminal investigation due to a conflict of interest. [14] In an ironic twist, since Madoff is Jewish, just like Attorney General Mukasey and like the majority of hedge-fund money-magicians, his enterprise was granted millions of dollars from Jewish funds through personal connections. The spectacular collapse of Madoff’s swindle not only further undermines a rickety economic system but will also impair worldwide Zionist machinations. [15]

"People lost money because they had faith in government.” - Harry Markopolos, speaking to the House Financial Services subcommittee about the SEC colluding with Madoff, February 2009.

These problems aren't limited to just the United States. In January 2009 we were treated to the scandal dubbed ‘India’s Enron’. The Indian company Satyam, a multi-national business empire built on job outsourcing to low-wage locations, was using fictional accounting and claiming at least a billion dollars in cash that did not exist, among other things. Adding irony to fraud the name Satyam is from satya meaning ‘truth’ in Sanskrit, and yet this was a mainstream and respected operation that even earned multiple awards. Byrraju Ramalinga Raju, the CEO, won the Ernst & Young 2007 entrepreneur of the year award, and in 2008 one for excellence in corporate governance from the London-based World Council for Corporate Governance. Even more pathetic, Satyam’s accounting was being managed by PricewaterhouseCoopers – how did they miss a billion dollar discrepancy, again?

The rot and corruption pervading the world financial system goes all the way to the very top. The Bank for International Settlements (BIS) in Switzerland, the central bank for all the other central banks of the world, embraced the popular foolishness of irredeemable fiat currency in 2003, abandoning gold as a monetary basis and eliminating the final source capable of providing real capital to stop a global credit crash. This is capitalism without any capital!

The banks no longer trust each other. Last August, as mortgage-backed securities unraveled, finances froze up worldwide. Why? Because the banks knew how much undisclosed junk they had on their own books. Who could say what the next fellow had? Overnight lending between banks—the process that ensures that every bank has funds when it needs them—fell apart. This is a very big deal.

Since August [2007], America's big banks have been wards of the Fed, and those in Europe equally so of the Bank of England and the European Central Bank. The system survives because central banks keep the lending windows open, and the result is that—except for one instance in Britain— the public has not pulled out of the banks. Let's be clear. The private financial markets did actually fail. It's only the fact that the public trusts government that keeps the system from dissolving in panic. [12]

Our fraudulent monetary system indicts nearly every institution and pillar of society -- the universities teaching bogus theory, the elected leaders making foolish and near-sighted decisions based on conveniently selective interpretations of economics, the legal system upholding the scam, and of course the commercial mass-media for failing to do any critical analysis or skeptical inquiry despite the obvious failings engulfing us all.

The captains of the banking system in effect deny and defy that basic law. They are leading a blind crowd of mesmerized people to the brink where momentum may sweep most of them into the abyss to their financial destruction. Yet not one university in the world has issued a warning, and not one court of justice allowed indictments to be heard from individuals and institutions charging that the issuance of irredeemable debt is a crude form of fraud, calling for the punishment of the swindlers issuing it, whether they are in the Treasury or in the central bank. The behavior of universities and courts in this regard could not be more reprehensible. Rather than acting to protect the weak, they act to cover up plundering by the mighty. [3]

Widespread institutional failure doesn’t merely describe contemporary finance it aptly describes every other element of society as well. Economic turmoil is just one symptom of a much deeper and more severe illness. When large corporations are on the verge of bankruptcy they tell the world they’re more financially sound than ever, and as major recession looms and consumer prices soar governments and establishment stooges proudly proclaim everything to be sunshine and rainbows. But now more than ever it's clear to objective and honest observers that we live in a hollow artificial world based on lies and manufactured from theft that can only be sustained though a concerted campaign of deception and subterfuge.

The Beginning of the End

By October 2008 prices and world markets are being wildly distorted as financial institutions make increasingly desperate speculative bets in the casino economy, trying to recover from enormous losses by ‘doubling-down’ on market gambles. Government intervention has expanded to include virtually every aspect of the economy including buying stocks to sustain the stock market and providing massive loans to banks and major corporations at low interest rates while trading the worthless paper collateral of financial institutions for taxpayer money in the ‘trash for cash’ scheme. Widespread reactionary government intervention is further distorting markets by removing the constraints of supply and demand and preventing broken companies and institutions from going bankrupt. Stock markets are rising while consumer confidence plunges to record lows. Home prices throughout the U.S. continue to fall – a situation previously considered impossible for any length of time. Precious metal prices on traded paper are falling but physical supplies are quickly vanishing in the face of massive demand! U.S. banks are racing to get cheap loans from the Federal Reserve so they can buy up rivals and eliminate competition.

Public Pain for Private Gain

Everything that political authorities and establishment economists have been preaching to us on how our economy is supposed to operate, on the importance of the free market and free-trade, it’s all been completely inverted or discarded without a second thought or official explanation! Now this scam of epic proportions has nothing left to hide behind and all the values that sustained if have turned out to be lies and illusions. And yet authorities still try to perpetuate the same system as if it only needs a few minor repairs and it’s back to business as usual! What kind of economic system crashes every ten years (1987, 1997, 2007) and has to be bailed out by the government?

Ever greater wealth is being concentrated into fewer and fewer hands. It’s apparent that regardless of what establishment economists and similar pseudo-experts claim the only purpose of this system is to take money from the public and convert it into private profit with the direct result being increasing poverty, unemployment, and government funding cuts for everything that doesn’t assist this process. Authorities behind this scam will do whatever it takes and say whatever they have to in order to perpetuate it. The bankers, the billionaires, the central banks, the presidents, and the prime ministers, they’re all doing everything they can to keep the political and economic power structure exactly the same and they’ll spend any amount of national treasure and change any laws in order to do it. They may disagree on the methods but the ultimate aspiration is the same.

Nonetheless it's clear to honest observers that the world economy is in a serious state of decline and genuine recovery is unlikely any time soon. Indeed the current situation is unusually grim with major banks and financial institutions failing and central banks in Europe and the USA pumping billions of dollars into the economy every day desperately trying to keep their world afloat and prevent a credit crash. We may well be in the beginning stages of a new great depression. With food and fuel prices skyrocketing riots over inflation and high prices are breaking out all over the globe. Governments are feeling the heat and millions are going hungry while wealthy speculators reap billions in profits from the turmoil.

The ultra-rich aren’t going to suffer in a national bankruptcy, they will profit from it buying up public assets to turn a private profit. Then we’ll be subservient not to a government that at least has to feign the trappings of democracy and at least make the attempt to receive public criticism, but to a new clique of tyrants unaccountable to anyone who maintain their authority simply by having more money than most everyone else!

But it doesn’t have to be this way. Much of the problems stems from the fact that those holding the greatest degree of economic power or influence are not held accountable for their actions and decisions. Social responsibility is not in proportion to the scale of personal wealth and the disproportionate influence that it confers upon the rich within capitalist society. We desperately need to call things what they really are, and we need political and economic transparency. The public barely even knows who’s doing what when it comes to economic policy or macroeconomic decision-making and economic leaders are treated like gods or mystics that shouldn’t be questioned or criticized. When the people can no longer afford food and gasoline then they will start to care about these things even if they aren’t able to understand what’s happening or who’s really responsible.

The Problem of Capitalism

The established capitalist economic order is collapsing around us, even as authorities do everything they can to prolong a hopelessly broken system and to prevent any alteration in the status quo or (heaven forbid) a redistribution of resources. But an economic collapse won’t fix what is broken, nor will it resolve the root of the problem. Unless the root values, beliefs, and assumptions are revaluated and rectified another economic order will be reconstructed within the same diseased environment, perpetuating the same injustice and hypocrisy.

History has shown that money is just as inescapable as authority, so the issue is not the tools and technology but the values driving the minds using the tools! The trouble results from the meaning and the representation ascribed to the symbols, the moral interpretations. The problem of capitalism is the belief in money as a social savior and as a valid solution to human problems. Indeed, it’s painfully clear amid widespread damage to the natural environment and similar socially unstable practices that establishment capitalism doesn’t encompass the full consequences of cause and effect. Establishment capitalism narrowly proscribes the boundaries of causality to concoct a convenient ideological view of events that fails to factor in the future costs and consequences of actions and decisions.

The politico-economic order cannot be saved, but it can be replaced

We have to envision a radical departure leading to a superior alternative but the landscape of contemporary economic thought is being monopolized by outdated ideologies and dominated by the dead gods and false saviors of debt-based economics, such as John Maynard Keynes. Our economic order has failed because it was built on fictional wealth and flawed assumptions instead of factual evidence and real resources, because the unchallenged gods of economics sold us convenient fictions like the belief that people with the most money are more valuable than those that have less, and that in a free market money only goes to those that earn it or deserve it most. Today the chosen few that possess the most money define morality, but their days are numbered and their time remaining is very short.

The decay of establishment capitalism and widespread economic disorder provide us with an unparalleled opportunity, one not seen in nearly 100 years. Now we have a chance to separate money from political influence, to demolish the money morality where right and wrong are determined by the quantity and possession of cash, and to overthrow the gods and usurp the beliefs that support this fraudulent and failed order that denigrates everything that doesn't have a price tag on it. It’s imperative that we demolish the power structure that sustains the ultra-rich and allows them to function with impunity regardless of the state of the economy. We have to undermine the American culture that admires and adulates the wealthy largely based upon the mistaken belief that they can become super-rich too.

Consider these things now and prepare to act because I can hear the sound of rioting getting louder and I can see the glow of fires in the street getting brighter.

Solution

The solution to our crisis of massively broken debt-based casino-capitalism already exists in nascent form. For the first time in history we have all the tools we need to seize control of capital from the bankers and billionaires and to finally place it under the control of the rightful owners – the people who work every day to produce it. We don’t need Marx or Mussolini, financial 'experts' or ideology, all we need is an impartial network for sharing capital (Internet) built on a set of clear and simple, fairly-enforced rules that everyone can follow. A universal network of peer-peer direct lending will form the basis for the radically different financial architecture of the 21st century, flattening the authority-pyramid and forming a natural balance of power.

1. CEOs Pushing Ayn Rand Studies Use Money to Overcome Resistance, by Matthew Keenan, Bloomberg news, April 11, 2008.

2. Sights of Yap, Federated States of Micronesia tourism office

3. The twilight of irredeemable debt, by Antal E Fekete, Asia Times, May 2, 2008.

4. TFC goes down on the upside, by The Mogambo Guru, Asia Times, February 29, 2008.

5. The Fed's deformed maturity, by Hossein Askari and Noureddine Krichene, Asia Times, May 8, 2008.

6. Move Over, Adam Smith: The Visible Hand of Uncle Sam, by John Embry and Andrew Hepburn Sprott Asset Management, August 2005; for more read Myth of the Free Market Revealed by Freydis at Holology.

7. Hard US lessons, harder landings, by Max Fraad Wolff, Asia Times, November 21, 2006.

8.  Fed pause promises financial disaster, by Hossein Askari and Noureddine Krichene, Asia Times, May 20, 2008.

9. Moody's stock suffers record plunge on rating error, by Walden Siew, Reuters, May 21, 2008.

10. Rubin's poisoned chalic, by Henry C K Liu, Asia Times, May 21, 2008.

11. Wall Street Says -2 + -2 = 4 as Liabilities Get New Bond Math, by Bradley Keoun, Bloomberg, June 2, 2008.

12. December Surprise, by James K. Galbraith, Mother Jones Magazine, July/August 2008, p. 40.

13. Banks sharply increased fees as US households fell deeper into debt, by Andre Damon, WSWS, July 25, 2008.

14. AG takes himself out of Madoff fraud probe, by Pete Yost and Marcy Gordon, AP, December 17, 2008.

15. Madoff scheme hits Jewish charities hard, by Jocelyn Noveck, AP via Business Week, December 16, 2008.