(Bloomberg article here)
The New York Review Of Books, Jan 2014 issue:
'The stated opinion of those government entities asked to examine the financial crisis overall is not that no fraud was committed. Quite the contrary. For example, the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in accountability, but also in ethical behavior.'Latest estimate of expense to the U.S. Government of the Wall St. and bank bailout of 2008 is 15 trillion dollars. 15 trillion dollars is the gross national product of the United States. Americans, all 300 million of them, have each given over one year of work, one year of everything they produced or one year of the money they made from it, to Wall St. stock speculators and banks.
"If you have a gun, you can rob a bank. If you have a bank, you can rob the world." (B. Brecht)1.
- If you have a bank, with a deposit of 10 dollars you can by law loan out something like 9, leaving you with one. The money loaned ends up in a second bank; with the nine it has on deposit, it loans out something like 8; the money ends up in a third bank, which out of the 8 on deposit can loan out something like 7... eventually there is no more money left to loan in that series. (But not to worry: another series is easily begun. Since deregulation, banks have created their own money, financial instruments that serve as security borrowed against, that is, become the basis of new loans.)
- Remember that real property, land and possessions, is signed over by borrowers in security for the loans.
- As more and more money circulates, with the same, original 10 dollars behind it, the value of money decreases. Prices rise. Rising prices need to be balanced by rising income. When that is not managed social disruptions result. People start worrying. The story goes round that those who make investments do so on the basis of trends. When the trend is discouraging, they sell, heightening the trend and leading more people to sell.*
- With fewer wanting to buy, investment decreases, production decreases, employment decreases.
- Unemployed people and producers of unsold products can't pay back their loans.
- Their property is repossessed.
- The banks, possessed of the property of the borrowers, now make new loans to those who have property left to leave as security.
- This cycle, discovered many centuries ago,** is set in motion to extend ownership of real property by means of the private creation of money, unreal property, until there is no property left to leave as security, all property is in the possession of the banks.
2.
- Now you probably have heard a different story. In 2008 the banks owned bad investments in home loans, and loans to other banks, and when the homeowners stopped paying their mortgages, the banks couldn't pay the interest on money they borrowed from other banks. Do you now see something wrong here?
- The banks, to create an infinite amount of money, need only loan money to each other.
- 1 dollar becomes 10 becomes 100 becomes 1,000 becomes 10,000...
- Banks always have money.
- What they don't have is all your property. But they're working on it.
Further Reading: Sixty Seconds
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* In fact, the crowd behavior of investors trying to make a profit by ignorantly chasing upward trends, and then losing confidence suddenly and becoming "reasonable", is a false explanation of market collapse. Rising markets are created by creating money, falling markets are caused by the deliberate withholding of more money. Governments of course can at any time act as banks, creating infinite amounts of money and paying any and all debts, public and private.
** See: David Graeber: Debt: The First 5000 Years
