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The Financial Con Of The Decade Explained So Simply Even A Congressman Will Get It

Tyler Durden's picture


Sometimes, when chasing the bouncing ball of fraud and corruption on a daily basis, it is easy to lose sight of the forest for the millions of trees (all of which have a 150% LTV fourth-lien on them, underwritten by Goldman Sachs, which is short the shrubbery tranche). Luckily, Charles Hugh Smith, of has taken the time to put it all into such simple and compelling terms, even corrupt North Carolina congressmen will not have the chance to plead stupidity after reading this.

Of course, to those familiar with the work of Austrian economists, none of this will come as a surprise. 

1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.

2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.

3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.

4. Leverage each $1 of actual capital into $100 of high-risk bets.

5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).

6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.

7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.

8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.

9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.

10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.

11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.

12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.

Charles' conclusion does not need further commentary as it is absolutely spot on:

Since the Federal government could potentially inflate away these trillions in Treasuries, buy enough elected officials to force austerity so inflation remains tame. In essence, these private banks and corporations now own the revenue stream of the Federal government and its taxpayers. Neat con, and the marks will never understand how "saving our financial system" led to their servitude to the very interests they bailed out.

The circle is now complete: in "saving our financial system," the public borrowed trillions and transferred the money to private Power Elites, who then buy the public debt with the money swindled out of the taxpayer. Then the taxpayers transfer more wealth every year to the Power Elites/Plutocracy in the form of interest on the Treasury debt. The Power Elites will own the debt that was taken on to bail them out of bad private bets: this is the culmination of privatized gains, socialized risk.

In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better.

As for part two of this epic con we are all living through, Charles explains as follows:

The Con of the Decade (Part II) meshes neatly with the first Con of the Decade. Yesterday I described how the financial Plutocracy can transfer ownership of the Federal government's income stream via using the taxpayer's money to buy the debt that the taxpayers borrowed to bail out the Plutocracy.

In order for the con to work, however, the Power Elites and their politico toadies in Congress, the Treasury and the Fed must convince the peasantry that low tax rates on unearned income are not just "free market capitalism at its best" but that they are also "what the country needs to get moving again."

The first step of the con was successfully fobbed off on the peasantry in 2001: lower the taxes paid by the most productive peasants marginally while massively lowering the effective taxes paid by the financial Plutocracy.

One Year Later, No Sign of Improvement in America's Income Inequality Problem:

Income inequality has grown massively since 2000. According to Harvard Magazine, 66% of 2001-2007's income growth went to the top 1% of Americans, while the other 99% of the population got a measly 6% increase. How is this possible? One thing to consider is that in 2001, George W. Bush cut $1.3 trillion in taxes, and 32.6% of the cut went to the top 1%. Another factor is Bush's decision to increase the national debt from $5 trillion to $11 trillion. The combination of increased government spending and lower taxes helped the top 1% considerably.

The second part of the con is to mask much of the Power Elites' income streams behind tax shelters and other gaming-of-the-system so the advertised rate appears high to the peasantry but the effective rate paid on total income is much much lower.

The tax shelters are so numerous and so effective that it takes thousands of pages of tax codes and armies of toadies to pursue them all: family trusts, oil depletion allowances, tax-free bonds and of course special one-off tax breaks arranged by "captured" elected officials.

Step three is to convince the peasantry that $600 in unearned income (capital gains) should be taxed in the same way as $600 million. The entire key to the U.S. tax code is to tax earned income heavily but tax unearned income (the majority of the Plutocracy's income is of course unearned) not at all or very lightly.

In a system which rewarded productive work and provided disincentives to rampant speculation and fraud, the opposite would hold: unearned income would be taxed at much higher rates than earned income, which would be taxed lightly, especially at household incomes below $100,000.

If the goal were to encourage "investing" while reining in the sort of speculations which "earn" hedge fund managers $600 million each (no typo, that was the average of the top 10 hedgies' personal take of their funds gains), then all unearned income (interest, dividends, capital gains, rents from property, oil wells, etc.) up to $6,000 a year would be free--no tax. Unearned income between $6,000 and $60,000 would be taxed at 20%, roughly half the top rate for earned income. This would leave 95% of U.S. households properly encouraged to invest via low tax rates.

Above $60,000, then unearned income would be taxed the same as earned income, and above $1 million (the top 1/10 of 1% of households) then it would be taxed at 50%. Above $10 million, it would be taxed at 60%. Such a system would offer disincentives to the speculative hauls made by the top 1/10 of 1% while encouraging investing in the lower 99%.

Could such a system actually be passed into law and enforced by a captured, toady bureaucracy and Congress? Of course not. But it is still a worthy exercise to take apart the rationalizations being offered to justify rampant speculative looting, collusion, corruption and fraud.

The last step of the con is to raise taxes on the productive peasantry to provide the revenues needed to pay the Plutocracy its interest on Treasuries. If the "Bush tax cuts" are repealed, the actual effective rates paid on unearned income will remain half (20%) of the rates on earned income (wages, salaries, profits earned from small business, etc.) which are roughly 40% at higher income levels.

The financial Plutocracy will champion the need to rein in Federal debt, now that they have raised the debt via plundering the public coffers and extended ownership over that debt.

Now the con boils down to insuring the peasantry pay enough taxes to pay the interest on the Federal debt--interest which is sure to rise considerably. The 1% T-Bill rates were just part of the con to convince the peasantry that trillions of dollars could be borrowed "with no consequences." Those rates will steadily rise once the financial Power Elites own enough of the Treasury debt. Then the game plan will be to lock in handsome returns on long-term Treasuries, and command the toady politicos to support "austerity."

The austerity will not extend to the financial Elites, of course. That's the whole purpose of the con. "Some are more equal than others," indeed.

h/t Andrew


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Sun, 07/11/2010 - 12:36 | 463134 Bendromeda Strain
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He has a blog that can be bookmarked...

Here you go, pts. I & II


Sun, 07/11/2010 - 16:16 | 463372 agrotera
agrotera's picture

thank you Bendromeda Strain!

Sun, 07/11/2010 - 00:39 | 462770 pitz
pitz's picture

Who exactly are these 'private corporations' that are profiteering?

Certainly they're not Dow 30 or S&P500 components, because those companies have seen no growth in share prices over the past decade, and even longer in real terms.

Aren't the 'profiteers', the people in the real estate industry, who extracted insane amounts of wealth from the economy, merely for flipping houses?  The contractors who were making insane amounts of money.  The carpenters and other trades who were pulling salaries that were multiples of what a typical engineer would earn? 

Diss the 'corporations', but its pretty hard to believe that the mess of the past decade has accrued any value to them.  Basically house sellers (ie: the elderly, and the deceased) house builders, and big government has been raping the economy blind, not big business.  Not big oil.  Not big banks.

Sun, 07/11/2010 - 01:03 | 462782 Reese Bobby
Reese Bobby's picture

Big banks created the real estate bubble, enabled by big government.  Big government created our $13+ trillion of debt and $1+ trilllion dollar budget deficits, enabled by the Fed, the Treasury and big banks.  Buying votes with printed money is the core problem.  NAFTA sent our jobs overseas.  The party is over for the average American.  But you can still vote.  Make 'em pay...

Sun, 07/11/2010 - 02:17 | 462816 pitz
pitz's picture

Sure, I don't disagree about the banks creating the bubble.  But did they profit from it?  Hell no.  Were they out there paying crazy dividends to their shareholders?  No. 

The huge employee bonuses were a raping of the shareholders by the banks' employees.  Not a raping of the American public.  Credit spreads in the past decade have almost never been lower.  The return on each dollar lent has never been lower.  ROA, and bank profitability was consistently low throughout the past decade.  So bad in fact that the entire US banking system collapsed.

Oh, and in my previous post, I forgot to blame Joe Sixpack, who extracted, in many cases, more 'equity' from his house, than he ever paid in, and gets to keep the goods, the memories of the vacations taken on that equity.  Joe Sixpack who lived beyond his means on illusory home equity that never really existed.  Its the Joe Sixpacks, ordinary Americans who thought they could "make money" on housing, that benefited enormously from the past decade of lending excesses.

Sun, 07/11/2010 - 09:28 | 462963 williambanzai7
williambanzai7's picture

Yeah they belong in the same cell as Madoff.

Sun, 07/11/2010 - 12:00 | 463086 chrisina
chrisina's picture

You must be joking, Banks didn't profit from the bubble ?

FYI, 30 years ago, Banks and other financial services entities took on average less than 10% of all corporate profits of all economic sectors. At the height of the bubble in 2006 that share had grown to 46%. That's right, BANKS reaped almost as much profits from the bubble as ALL other sectors COMBINED. 

Sun, 07/11/2010 - 12:16 | 463106 Reese Bobby
Reese Bobby's picture

And in 2008 half of them blew-up into hopeless insolvency.  Which was fine because they just pulled their Government levers to shift their recapitalization onto the Federal balnave sheet for the poor taxpayer.  Nice.

Wed, 01/05/2011 - 16:44 | 850244 Lord Koos
Lord Koos's picture

Many banks are gone, sure.  But the guys that ran them are set for life.

Sun, 07/11/2010 - 14:35 | 463279 sgt_doom
sgt_doom's picture

Outstanding comments, chrisina.

Yup, the chief beneficiaries (and architects) are the hedge fund, private equity LBO firms, and the next layer of banksters (JP Morgan Chase, Goldman Sachs, Morgan Stanley, Citigroup, BofA, Credit Suisse FB, and Deutsche Bank).

Their financial structure is completely interlocking.

And once again (I realize many will think me crazy, but this be the truth), Dr. Goldberg (University of Sydney) completely nails it with his bulleted items on a two-page executive summary of an analysis on public-private partnerships involving the banksters and the Aussie government (underlying financial construct exactly the same, be it hedge funds, LBO firms, banksters and public-private partnerships --- just follow the thread of any cash CLO -- notes -- ABCP conduit, etc., etc. ad infinitum):


Sun, 07/11/2010 - 13:25 | 463197 Seer
Seer's picture

"The huge employee bonuses were a raping of the shareholders by the banks' employees.  Not a raping of the American public."

Where did those big bonuses come from?

No, ALL money comes from the public.

And... I thought that people understood that this was all just a clear misappropriation of capital.  Look at all those huge mansions (and then the token "wealth" that was handed out like candy to the masses).  If I didn't know any better I'd have to say that this would have been something that a bunch of drugged up people would have done: unfortunately this gives a bad rap to the druggies, who probably have had a far less negative impact on society.

Sun, 07/11/2010 - 13:26 | 463199 Temporalist
Temporalist's picture

Even now the banks are benefiting.  Did not the top TBTF banks just have a record quarter without a loss? 

Sun, 07/11/2010 - 08:34 | 462912 Canoe Driver
Canoe Driver's picture

yeah.  vote.  right.

Sun, 07/11/2010 - 09:04 | 462945 Gully Foyle
Gully Foyle's picture

Canoe Driver

I don't vote. Two reasons. First of all it's meaningless; this country was bought and sold a long time ago. The shit they shovel around every 4 years *pfff* doesn't mean a fucking thing. Secondly, I believe if you vote, you have no right to complain. People like to twist that around – they say, 'If you don't vote, you have no right to complain', but where's the logic in that? If you vote and you elect dishonest, incompetent people into office who screw everything up, you are responsible for what they have done. You caused the problem; you voted them in; you have no right to complain. I, on the other hand, who did not vote, who in fact did not even leave the house on election day, am in no way responsible for what these people have done and have every right to complain about the mess you created that I had nothing to do with.”

“The next time they give you all that civic bullshit about voting, keep in mind that Hitler was elected in a full, free democratic election”"Now, there's one thing you might have noticed I don't complain about: politicians. Everybody complains about politicians. Everybody says they suck. Well, where do people think these politicians come from? They don't fall out of the sky. They don't pass through a membrane from another reality. They come from American parents and American families, American homes, American schools, American churches, American businesses and American universities, and they are elected by American citizens. This is the best we can do folks. This is what we have to offer. It's what our system produces: Garbage in, garbage out. If you have selfish, ignorant citizens, you're going to get selfish, ignorant leaders. Term limits ain't going to do any good; you're just going to end up with a brand new bunch of selfish, ignorant Americans. So, maybe, maybe, maybe, it's not the politicians who suck. Maybe something else sucks around here... like, the public. Yeah, the public sucks. There's a nice campaign slogan for somebody: 'The Public Sucks. Fuck Hope.'"

"I have solved this political dilemma in a very direct way: I don't vote. On Election Day, I stay home. I firmly believe that if you vote, you have no right to complain. Now, some people like to twist that around. They say, 'If you don't vote, you have no right to complain,' but where's the logic in that? If you vote, and you elect dishonest, incompetent politicians, and they get into office and screw everything up, you are responsible for what they have done. You voted them in. You caused the problem. You have no right to complain. I, on the other hand, who did not vote -- who did not even leave the house on Election Day -- am in no way responsible for that these politicians have done and have every right to complain about the mess that you created."

George Carlin

Sun, 07/11/2010 - 12:11 | 463101 Reese Bobby
Reese Bobby's picture

"Do you realise, that right this second, right now somewhere around the world some guy is getting ready to kill himself. Isn't that great? Statistics show that every year a million people commit suicide. Thats 2800 a day. That's one every thirty seconds."

George Carlin  (aka Asshole)

Stop feeling sorry for yourself man.  If you're going down, go down swinging.

Sun, 07/11/2010 - 13:56 | 463237 Gully Foyle
Gully Foyle's picture

Reese Bobby


Why would Carlin be an asshole?

And how is voting, participating in a corrupt and rigged system, going down swinging?


Sun, 07/11/2010 - 01:20 | 462794 AccreditedEYE
AccreditedEYE's picture

Not big banks.

WTF?!!! AHAHAHAHAHAHA! Seriously, how much did The Squid pay you?

Sun, 07/11/2010 - 01:57 | 462801 KTV Escort
KTV Escort's picture

I was wondering the same thing

Sun, 07/11/2010 - 09:57 | 462995 Sean7k
Sean7k's picture

In the words of Cheeky Bastard, you sir, are a fucking idiot.

Were ALL banks making big money, yes. On fees. However, some elites are more elite than others. They made money on fees, on MBS, on shorting the same interests and on the interest from insurance of said contracts as they manipulated the economies using ffree money from the FED. Trillions- not millions or billions. 

Big oil and banks are the largest corporations in the world. The fact that their shareholders don't share in the profits is the best example of how well they have gamed the system. Or did you forget the payoff for the chairman of Exxon when he retired?

Carpenters? Really? Sure, I see them all over the forbes list of richest americans. You flip

20 houses and you make 7 million. Wow! That destroyed the economy. 

Big government rapes at the behest of the big banks. They are complicit. 

Please do us a favor and edit your crap.

Sun, 07/11/2010 - 00:55 | 462776 Cyan Lite
Cyan Lite's picture

What's even more hilarious is that the true "con" is being played on those who say they have seen the light.  Every Tea Partier around the country is begging for austerity measures and reducing the deficit.  They really have no idea what they're asking for....

I say we default.

Sun, 07/11/2010 - 01:06 | 462787 Reese Bobby
Reese Bobby's picture

Or they might understand the crowding out effect and the powerful multiplier on private investment.  You smug know-it-all, you...

Sun, 07/11/2010 - 01:14 | 462790 dnarby
dnarby's picture

All the Tea Party members I know want to end the Fed.

Sun, 07/11/2010 - 13:30 | 463206 Temporalist
Temporalist's picture

One thing the banksters and politicians and NWO planners didn't plan was the great awakening.  The day the Internet is shut down there will be a real revolution.

Wed, 01/05/2011 - 16:50 | 850253 Lord Koos
Lord Koos's picture

Sure, they really blew it with the internet, which allows them to spy on everyone's communications 24/7 unless you are smart enough to browse with Tor and use encrypted email at all times.

The internet will not be shut down, it is too intertwined with American commerce.

Sun, 07/11/2010 - 10:03 | 463003 pan-the-ist
pan-the-ist's picture

I agree, but we better make sure they are holding the chips before we default.  How long will it take them to transfer their wealth out of treasuries and into the public assets?  End result, we will be holding the 'chips' that get defaulted on.  They've been playing the game much longer then we have.

Sun, 07/11/2010 - 13:44 | 463217 docj
docj's picture

Every Tea Partier around the country...

You evidently don't know any personally.  Which is pretty ironic coming from a guy who surmises "Every Tea Partier in the country" has no idea what he's asking for.

Why don't you actually get to know some of "Every Tea Partier around the country" and not rely on the media's characterization of same, eh?  Never know - you might learn something.

Mon, 07/12/2010 - 01:52 | 463961 Lucky Guesst
Lucky Guesst's picture

i was really trying to add a pic, oh well

Sun, 07/11/2010 - 01:04 | 462784 killben
killben's picture

The conniving scoundrel, Ben Bernanke, is the master of this con job .. Oh I forgot he was the Times "Man of the year"

Well deserved! I applaud the architext of the greatest swindle of all times!!

Sun, 07/11/2010 - 03:06 | 462834 molecool
molecool's picture

Well, Hitler made that list back when - so he's in good company.

Sun, 07/11/2010 - 01:16 | 462791 Akrunner907
Akrunner907's picture

The number of firms that have turned into "bucket shops" has probably eclipsed what they were in the early 1900's.  Yep.......right before the crash.

Sun, 07/11/2010 - 01:18 | 462793 Quinvarius
Quinvarius's picture

The public is still giving the gov one last chance to fix it.  I hope no one mistakes that for apathy.  Human beings live in this country.  They are no different than anywhere elese.  NO ONE is going to pay a 50% Federal tax rate to hand interest money to the Fed for loaning us money to bail out its own banking system's screw ups.  It is simply not going to happen.  Talk sheeple all you want.  They are Jeckle and Hyde Chupacabre.  People are vicious animals at the core.

The Gov better stop watering the fix down and get this right.

Sun, 07/11/2010 - 04:05 | 462849 BurritoGas
BurritoGas's picture

I'd like to know more. Seriously.

All people I know of, could not name the first person who according to them is responsible. They could not name a single lawmaker who could share the blame for enacting (or repealing) legislation.

So please, elaborate further.

Sun, 07/11/2010 - 07:24 | 462890 Quinvarius
Quinvarius's picture

LOL.  I am sure your illogical brand of arrogance and denial would have been a big hit just prior to the French Revolution, or even the Greek riots.  The burden of proof is on you to prove this time it will be different.

As far as everyone you know being unable to name a congressman or find DC on a map, perhaps you should refrain from making such blanket statements with no proof after having polled only members of your own family.

Sun, 07/11/2010 - 13:42 | 463215 Seer
Seer's picture *

* I'm sure that I could find as equally stupid stuff from the left-wing crowd.  This is just a quick grab.


Sun, 07/11/2010 - 16:50 | 463399 BurritoGas
BurritoGas's picture

I stand by the things I said in my post. While you resorted to personal attacks.

A simple example that even you should understand: creation of money. I volunteer locally at a library. In fact, I do more than that. I teach people just like you and me on how to cut costs by using the Internet/Technology to solve problems that they otherwise would pay exorbitant fees to others. Furniture repair, Online resources to save money on Gas, etc. I save people real money, and in a way generate value.

It is no surprise to them, that the economy is in the dumps. It has been for quite some time. I am somewhat more knowledgeable than the people I deal with. Those people range from teenagers, to middle class folks and sometimes rich retirees who are curious about the lessons I give.

There is one thing common to all of them: none of them know what the Federal Reserve is. Further, none of them even remotely understand the meaning of terms, that you and I would be quick to define. Terms like treasuries, CDO's, MBS's. Sometimes I like to ask on their opinion regarding politicians and the laws they pass. No clue.

Now how are these people suppose to understand the complex terms conjured out of thin air, by the likes or the Oligarchy such as TALF,TARP. How are they suppose to understand all the ways they are being raped. Sure, there will be eventual lashing out in anger, fear. But without knowing who to blame, it will be impotent anger.

From what I can see, things will be burnt, the have-not's will burn and pillage the have's who I comfortably assume created something of value to earn it. After all, the people who are truly responsible, don't live within suburbs of Seattle, Boise, or Phoenix.

The people up above, control things in an overt manner. IMO the truth is that, a successful "revolution" requires that people know what the problems are and WHO caused them and HOW. If the people were to know this beforehand, none of the events would have come to pass.


Sun, 07/11/2010 - 17:07 | 463411 Kali
Kali's picture

Agreed, Burrito Gas.  Like the South Side in Chicago in the 60s, I witnessed the people burning down their own neighborhoods, how did that punish the elite?  My friends from Ethiopia, lucky to escape with their lives, told me of their parents.  Teacher and scientist.  Had nothing to do with what ailed Ethiopia, but when the wrath of the masses erupted, killed everyone who had any education or "wealth" of any kind.  The parents were killed, even though they were sympathetic with the masses' views.

In a few countries I have visited, I have seen the same thing.  The poor, rebel against the "rich".  Destroying everything and anything they perceived as part of the problem.  Mob rule is never a good thing.  Remember what happened in France after they killed the aristocrats.  Reign of Terror, rain of blood.  Mindless wrath.

Sun, 07/11/2010 - 18:58 | 463524 Cathartes Aura
Cathartes Aura's picture

all true, and inevitable, Kali.

as BurritoGas said above, the people haven't a clue about who exactly they're angry with, so the anti-social neighbour with a barking dog, or late night stereo blasting will do for starters. . . all these angry dudes with their precious guns 'n' ammo, yeah, can't wait for lawless times, acting out cinema-video game fantasies. . .

reality is, all rioting is localised, do you really believe people are going to hike to DC? 

and then what?

Sun, 07/11/2010 - 22:25 | 463789 BurritoGas
BurritoGas's picture

This is indeed a heavy discussion. I had to take a nap after reading all 2 pages to absorb how it all fits.

Honestly, it's quite depressing. But I really am starting to believe a quote I read some time back and always keep in my mind:  "The more things change, the more they stay the same."

At first, I used to think that all this happened in the 1913's because the people were bombarded at different times with trivial news to get the act passed. I mean, the whole nation would have to be asleep for people to pass not one but three amendments in relative unison:

-Federal Reserve Act.

-Income Tax.

-Direct Election of Senators. 

Think about this for a second. It is modus operandi of the elites, to never push too much too much as to blow their cover. Slow and steady as to garner no further inquiries into suspicious behavior by anyone's standards. 

I used to think, why in the hell would people agree to go from taxes on wages earned by labor. Taxes earned by consumption of imports would be acceptable. That was the first step, to convince the people that their wages were fair game.

I am 22, so I really never gave two shits, as to Federal Reserve. I tried to understand from Wikipedia, and then I realized so many other countries had central banks, and that it got to be what it is because it truly is the best way to run the monetary policy of a country.

This made me realize another thing: the people are more likely to believe a big lie, than a small one. Repeat it enough times, and it eventually becomes the truth. How so? I watched a video to a book signing by Sarah Palin here:

Look at those people. It makes me sick, despite the fact that they are countrymen and women. They have kids, and they like all others have the best intentions for everyone. But to be ignorant to the level that they are on issues that they so deeply 'care' about, it's almost criminal.

Why would you deride anyone other than Sarah Palin, when you don't have the slightest clue on what her foreign policy is, or for that matter, what the hell a foreign policy is in the first place.

On a day to day basic, like all human beings I go through several scenarios:

- ZH and the Clan obviously got their panties in a bunch

Slowly I realize that everything is true, and that short of an emotional response, there is nothing I can say or do, to change the facts. I cannot change what already is.

Destroying this country from the within and erode away all confidence would make Pearl Harbor attack look like a fire drill.

Again I come to realize that if not destruction, what other will be the result of the policies that they undertake. If it becomes obvious to someone like me, who is well versed in technology and not so much finance, that the end-game does not look too good. How can it be the people who are paid $170,000 a year cannot see this coming. You don't shit where you sleep, and money used to bribe will do no good, if your very subjects will wish to burn you at the stake. Likewise, the policies that politicians make will bring about the end of present government, leaving your position as a senator or representative - hardly representative of the people.


-This is the land of the free, and someone will come and do something. There are people who are on the opposite side of the Fed et all.

This is something that I am not sure of. So far, hands are tied, and when you control the highest reaches of the supposed government that is the only party capable of changing the present course of events - not much hope there.

-Apathy; I am sure all this will be sorted out. After all, what can I do. I am nowhere near versed in credit spreads of fucking AUDJPY or whatever the fuck.

Then I realize if someone like me, who spends every moment free to try to understand what is really under the 'hood' is experiencing these feelings. How is Joe 6pack suppose to get anywhere near. I would know, these people I have taught in everything from Excel, to sending resumes to checking the fucking temperature outside by going into Google.

I have no choice but to think that it is much worse outside.


Sorry to carry on so long, but I am just trying to put the pieces together, and perhaps have something to contribute into the 'collective' that is the ZH Forums, with its comment monkeys trying to piece of together.


I used to be oh so curious about the Federal Reserve. I watched this video on Google Video:

Google Video - Money, Banking, and Federal Reserve.

Honestly, I am fucking horrified. This is the kind of information that the elites back in the day poisoned Senator Louis McFadden for. 

This is a transcript of speech given by Senator Louis McFadden in the Chamber regarding the Federal Reserve:

If they are brazen enough to try this without any fear of consequences (no different than assasination of Kennedy AND his brother Attorney General Robert Kennedy). I mean, there are fucking records available electronically.

Why is it that anyone has a excuse to plead ignorance, when the information is laid bare thanks to the internet. A truly game-changing force. This is not some talking dummy, this is a sitting senator.

If I can take 41 minutes and understand the whole scam that is the federal reserve, why can't other's. I don't know whether American Idol is 30 or a 60 minute program, but at least American Idol judges aren't being surversive and pocketing your money.


There is something my mom taught me(cuz she is the most amazing, etc) that what happens in homes, is what will happen in the country. For families make a community, and from which is made cities, from which are made states, from which is made society, and finally it all morphs into what me and you refer to Countries.


And you know what I see happening in homes, the young women who are supposed to instill morals, and teaching into their kids - they are busy reading complete mind trash as How to please your man in 30 steps featured in complete trailer trash magazines. I come from a 3rd world country, and even this type of debauchery is looked down upon.

How is it that women being allowed to fuck 5-6 men starting at the age of 13 before they decide to "marry" are going to be raising future citizens who will add more value than they take from society. How that will happen - is beyond me. From what I know, those teenage girls never get to emotionally mature thanks to trash they watch on the tv they are glued to. Without that emotional maturity, you become a part of a brigade that is the sheeple.

All I see and understand is, without the people understanding the intricacies of the financial system, and the political system - essentially all the topics they have be diligently ignoring for the past 3 decades nothing will change.

Revolution, or no Revolution.


Sun, 07/11/2010 - 23:24 | 463852 Kali
Kali's picture

Pretty shitty, huh?  I admire that you have come to this realization at such a young age.  Good for you.  Keep your will to stay and fight and try to change the things that happen.  The change will not come externally.  It will have to come from within all of society and humans, from their brains, their hearts.  My only fear is none of us will survive all of the shit happening in the world before we do change, if, (and here is my second fear) we ever do change. 

A friend of mine considers this "place" hell.  The longer you are here, the more evil you have been.  So, if you are a Redwood tree, you were very, very bad.  A butterfly, probably not so bad.  We are being punished by being here.  We can only perceive 4 dimensions (including time), but yet, theoretics conclude there may be 11 or more.  So, we are basically in prison, by virtue of our corporality.  I like it, that thought. It comforts me somehow.  Makes the existential angst not so bad.

Mon, 07/12/2010 - 01:48 | 463962 thefatasswilly
thefatasswilly's picture

Of course this place is hell. Evil and deception produce success, whereas honesty and altruism garner disdain and failure.

The problem is, our minds have grown accustomed to the hellfire. We see decay as normal.

Mon, 07/12/2010 - 01:56 | 463968 Cathartes Aura
Cathartes Aura's picture

that's some post, BurritoGas, particularly given your stated age of 22. . .

you say you "come from a third world country" - although you may not see this as your "advantage" - it is. . . you gain the perspective of an "outsider" which may give you a chance at seeking a deeper truth throughout your life, in a way that those people you mention at the Palin book signing perhaps will never have. . . those people tend to have "faith" - in the untruths they've been taught since they were born, in their inherent "specialness" and how much they "deserve" all their blessings, etc. - it's the amrkn myth that's being busted here, but it will be very hard for people to give up.

If I can take 41 minutes and understand the whole scam that is the federal reserve, why can't other's.

part of the reason is you don't start at the same place - think of what the average american has to give up relative to their beliefs just to start where you are now. . . this nation's myths include inherent superiority, and to bust that myth means all the other lies will stare them in the face too - that's not going to be easy.

you are obviously observant, and what you see doesn't mesh with what you're "sold" (as in told / asked to buy into). . . you mention the young women reading trash magazines teaching them to be sexual objects - this is fundamental, setting up opposing "behaviours" for the sexes, teaching each how to behave in their "gender roles" - the more polarised the better - just roleplaying, learned behaviour that is then exploited by the culture - men fight for their country, women shop or primp, it's more about one's "appearance" than who they are, their morals or beliefs. . . once culture frowned on women "sleeping around" (though it's always been expected of men), and now, with porn culture so prevalent, women are expected to be "up for it" whenever. . .

. . .which, of course, is a sign of cultural breakdown - as you're understanding - how can relationships last? how will children be raised? if men aren't "domesticated" by careers/marriage/raising children, how can they be "contained" within the system? because gender roles are there for a reason, hmmm?  a stable family environment is productive, they earn, buy houses, spend on their house upkeep, buy vehicles, go on vacations, send kids to school, etc. etc. - you see how this is set up?  who it benefits? 

it's important to study history, definitely, but look for writers that bring "culture" into their perspective, because it's all played out in the "actors" - the people - and sure, we are expendable in the elite's eyes, but while we're here functioning, we may as well stay true to who we know ourselves to be, and not adopt the "role" that culture, or nationstates, or religion, or whatever, has on offer.

you may enjoy watching "The Century of the Self" - it's good for seeing the constructed roles on offer.

I know I've only touched on some of what you wrote - stick around here, there is some great thinking going on in some of these posts - I'd recommend Cognitive Dissonance's "series" from a few weeks back as well - those threads had some wonderful posts, and he works hard at picking at the threads to unravel the truths.

take care!


Mon, 07/12/2010 - 05:03 | 464011 BurritoGas
BurritoGas's picture

Indeed I am 22, luckily thanks to the Internet, sophisticated discussions such as this have no barrier to entry, and I feel more at home here rather than talking about lebron james, or why Mel Gibson is racist.

I am an Indian, and living here - I truly consider this place home. After living here about a decade, I know a few things, I'd rather be nowhere else than here and am truly lucky to be here because after 9/11 the door's were closed and now you get to wait decades(if at all). My mother always sent me to english schools, and because of my American cousins who used to visit - I learned my English well fairly early on. That's that.

As to this topic, I am thankful for 3rd world background. I came here to know and remember both sides of the world. The one I live in now, and the one I used to. I have always been moderate, so my thoughts ring with the people here, who are only used to the one side of the equation.


"Everything in moderation...including moderation" - Julia Child

Even going to high school here, I learned fairly on, thanks to guidance from mother, on what NOT to do. That and just my questioning nature made me the person I am today. Sitting and staring out the window and starting in the sky to piece things together is my favorite pastime.

I have always questioned the "mob" mentality. Whenever I see the crowd moving in one direction, rather than follow, I always look for a second/alternative way. It is just my style. I'm more of a out-of-box thinker.

There are things that are different here, than over there. Yesterday for example, I was appalled to watch on a news show the fact that people over there in "farmers' markets" inject their vegetables with chemicals to make them appear fresh longer. So that if unsold, they can come back next week and the vegetable will look the same. Then i saw, truly horrifying video of how they take vegetables, and dip them in coloring, to make all the veggies appear "green".

As much as I hate to think of the sociopaths who are currently in charge - I feel bad for the people living over there, because they truly have no idea that such a thing was happening and were ingesting all these chemicals. If you thought people making crystal meth with cat litter was bad - this was worse. 

It led me to think that, maybe it is just a human condition. To not want to give a shit about others. I mean, those people go as far as to purchase chemicals and inject them into every cucumber to make it appear fresh for weeks on end. I feel bad for people who buy milk from farmers who put in chemicals. Food stuffs being bought by street vendors were the food is openly being touched by flies.

At this stage in my life, I am truly a confused being. Sometimes I think, I know too much too early, and that maybe things would be better if I was the type who would take the time to spend on why Mel Gibson is so racist

As a defensive measure, I have made my world smaller and smaller. I find comfort in doing what I do best dealing with Languages, submitting bug reports to open source software, going the extra mile in education. I truly have become a bookworm. When I got my first job, my peers would buy food, unneeded shoes clothes, go take their mates on dates - typical consumerist mindset. I would save money, and go to Barnes and Noble and put all the money into books.

I remember, because we were (and still are) fairly poor ( high debt servicing leaves little room - Like the soon to be US Budget - HA!) when I got my first job, I did not cash single check for 4-5 months, and went in all at once and cashed $3,200. It was the greatest moment of my life, when I used that cash and bought my own laptop with hard earned cash, which I am sitting next to (I type this on desktop I assembled).

I went from being fairly social to diving completely into education - which I have to say is fantastic. I cannot be thankful enough for the chance. I'd rather not graduate from an Indian University. I see my cousins getting degrees in Hotel Management which doesn't inspire much confidence knowing the level of forgery that exists there.

Anyway, enough ranting, before I get back to work. I have to earn some cash to elevate our social standing.


To everyone else who is taking part in the discussion: I ask that you look into author and my personal hero: Damon Vrabel:

Mr Vrabel is truly inspiring. Oh and Max Keiser. Watch the video on Mr vrabel's blog.

Mon, 07/12/2010 - 16:14 | 464937 WaterWings
WaterWings's picture

Very much enjoyed your posts and the responses from others. I'm late to the conversation!

Mon, 07/12/2010 - 16:32 | 465003 Cathartes Aura
Cathartes Aura's picture

yup, you've definitely been cursed / blessed with the "observer" bug Sir!

thanks for giving more background to your story. . . you say you came to the US at about 12 years old - that's an "interruption" in your cultural conditioning - a movement from one type of culture to another that is different (and I recognise that the world is being "overtaken" by a single, homogenised-western-type culture), which suggests you didn't get all that daily cultural reinforcement - your training was interrupted. . . you also have the duality of language, which forms thoughts, and that way of "thinking" was interrupted too. . .

then you come to the US, and you have memory of one way of being, and are asked to blend into another way of being - and it's THERE, that space in between, that your sky-gazing is working to expand your awareness of simultaneous, co-existing realities. . . hmm?  not one only way to "see" the world, but the understanding that individuals "see" the world through many different points-of-view. . . and some suppress their individuality to be accepted as "normal" or one of the group, peer pressure. . . and groups have "leaders" that keep the thinking in line, and leaders means group hierarchy, pecking orders, and there is jostling to move up or down the ladder based on how well you toe the party line. . .etc. etc. eh? lol

so you stare out the window, looking for a clear space in the sky to piece all these thoughts into a world-view. . . and you read, remembering that books are an-other('s) point of view, one you can agree or disagree with. . . and you listen to the people around you, same. . . most opinions will be discarded, some you can use as bridges to other ways of thinking, perceiving the world around you. . .

there's an old saying about feeling lonely in a crowd, which can mean you "see" that others are playing their role, and you "see" yourself responding within that role, and it feels inauthentic to your "soul". . . it's okay to do or feel that occasionally, as a touchstone, but if you do nothing else with your life, work towards finding others that allow you more space to be authentic. . . it's better to be alone (all one), than to feel lonely in that crowd.



Sun, 07/11/2010 - 01:29 | 462797 djrichard
djrichard's picture

Whoever holds the bonds in the end-game won't be caring about the interest rate.  Those bonds will have been created with inflated dollars and will have to be paid back with deflated dollars.   The bond holders will be wealthy beyond their dreams when they can use those bond payments to buy everything else on the cheap.  The con will be to convince the poor saps paying off the bonds to not default.

I'm beginning to think that's why US Bonds are considered the safest of all.  We're the dumbest saps out there.

Sun, 07/11/2010 - 13:22 | 463191 trav7777
trav7777's picture

Bingo.  That's exactly what it is.

It should stun people that Thomas Jefferson made this observation 250 years ago in his famous "inflation/deflation" quote. 

What we are experiencing is NOT in any way new or novel.  The elites are using inflation to acquire claim tickets to our productive economy.  When inflation dies, they will use those tickets to acquire REAL assets.

How the fuck do people think that the Rothschilds became so powerful or that these elite families in S. America with European names came to own unimaginably vast tracts of productive land?

This shit is what the Founders were running from and why they phrased the Constitution the way they did, to try to prevent central banking, debtmoney, and this entire con.

There are people out there who like being victims.  They appear to like the abuse.  They're afraid to be free.  It gives them moral comfort to suffer needlessly.  I cannot identify with them.  Many of these people are now saying "well, we need to repay our debts."  Meaning "we" need to suffer more.

Go over to TF and see how they bleat about homeowners who walk, or people who don't repay their CCs.  These people phrase a debt contract as tantamount to a moral obligation to repay.  Meanwhile the rich and businesses WALK the instant it makes pecuniary sense to do so, without remorse.  The rules that the little people teach their kids are DIFFERENT from those that the big people teach theirs.  You probably remember your granpappy speaking of paying debts as a badge of honor and a moral imperative.  That's why he was fucking poor.  Across town in the penthouse, similar bedside chats were not occurring.  Those children were being taught that sociopathic use of you was their entitlement.  I have legacy rich friends who cannot even bring themselves to lift FIREWOOD to bring into their giant house to light a fire, much less help me lift a television.  This type of stuff is for OTHERS to do.

There are a few types of people in this world, some like to suffer and some like to see others suffer. There are a few of us who don't want either.

Sun, 07/11/2010 - 13:38 | 463212 Temporalist
Temporalist's picture

There are people out there who like being victims.  They appear to like the abuse.  They're afraid to be free.

My father's stable hand one day had his woman friend come to the paddock and they were physically fighting when the man hit the woman so hard that she collapsed.  My father rushed over to help her and then pulled the man away to separate them.  With my father's back turned the woman got up and started beating my father with her fists, presumably so she may resume fighting with her man again.

That is all I needed to know growing up about the human condition.

Sun, 07/11/2010 - 13:54 | 463233 Gully Foyle
Gully Foyle's picture


Yesterday I was out front with the dog. These two young girls, looked to be under fifteen, were speaking loudly. I heard them from around forty feet away. It was fuck this and beer.

As they passed one said she drank a lot of BEER during her FIRST pregnancy and it didn't hurt, the other then proudly proclaimed that last summer she drank so much Beer...I missed the rest.

When dod people become so ugly. Loud ugly and not proud.


Sun, 07/11/2010 - 19:04 | 463535 Cathartes Aura
Cathartes Aura's picture

shit yeah. and it's always the fuckin' girls too!

Sun, 07/11/2010 - 17:43 | 463443 Ardent Spirits
Ardent Spirits's picture

This is why cops hate to respond to domestic disturbances. It's almost like a law of nature; Don't interfere between a man & woman when they choose to go there. You only end up taking on both of them.

Sun, 07/11/2010 - 01:50 | 462806 dark pools of soros
dark pools of soros's picture

can we also get an 'animated white board' session video to accompany this?? that would go viral to the world...

Sun, 07/11/2010 - 11:00 | 463051 Iam Rich
Iam Rich's picture


Youtube with the UPS white board guy.

Many, many people are simply visual learners.  Our brains developed for visual cues long before reading/writing.  Written word is very inefficient by comparison.

Sun, 07/11/2010 - 17:58 | 463453 francis_sawyer
francis_sawyer's picture

 UPS?... "Those guys are fags"...

-Jeff Spicoli

Sun, 07/11/2010 - 02:00 | 462810 Caviar Emptor
Caviar Emptor's picture

Ok when they say "austerity" they really mean "default". Governments in developed countries have conspired to default on a long list of liabilities which they like to call "entitlements". No matter what you call it the result is the same: you won't get what you paid for.

The plan is to "soft default" by gradually legislating down benefits like medicare and social security, education and biomedical research using all the tricks like raising age limits, phasing benefits in over longer time intervals, indexing to location, income, marital status, net worth etc...

The proclamation of austerity by the G20 in Toronto last month was actually a trial balloon aimed to gauge public outcry and resistance to "austerity". Since push back was minimal we can expect more of the same. 

Sun, 07/11/2010 - 09:02 | 462942 Gully Foyle
Gully Foyle's picture

Caviar Emptor

After WW2 the NWO plan has always lower the standard of living in the US while raising it in the rest of the world. We needed to pass a fiction of health care to seem as progressive as Canada or Europe. We needed to lower wages and life style to equalize with Mexico.

Next step is the American Union, after that NWO.

One of the reasosn there is a war on Islam is they still retain strong beliefs which are not corrupted with destructive government education. They have a pool of females who need to be incorporated into the work force doubling buying power and incresing profit.

Definitely unlike Christians who promote and support the government fictions and propaganda.

Sun, 07/11/2010 - 10:50 | 463043 Caviar Emptor
Caviar Emptor's picture

Yup. It's the same old fight that we've fought for thousands of years. Should power be concentrated into the hands of a few? Into the hands of one? Or do we distribute power to the benefit of the survival of all. Both sides have their arguments, convictions, backers and sugar daddies. Striking a balance is the exception rather than the rule. In times of crisis the balance gets shifted.

Sun, 07/11/2010 - 10:40 | 463031 Ardent Spirits
Ardent Spirits's picture

American workers, despite being the most productive in the world, are being forced to compete head to head against workers who dream of nothing more than having a motorbike, a fan & a steady food supply. There are Billions of these workers. Giant, ruthless banks & corporations are now the true world government. To them you & me are no better than those billions. As a matter of fact they are mad at us because we show signs of not falling in with the New World Order. Just what do you think you can do about all this, LITTLE MAN?

Sun, 07/11/2010 - 13:48 | 463225 Seer
Seer's picture

"American workers, despite being the most productive in the world"


Sun, 07/11/2010 - 14:53 | 463302 Ardent Spirits
Ardent Spirits's picture

Our productivity is a statistical fact. Probably correct that it is due to leveraging advanced technology (robots). So then would your point be that when the process is complete nobody but robots will be employed? Not the first time a promise of utopia was turned into a nightmare. Just ask any Russian. At least USA might own most of the robots (if we don't lose out to China). What happens to those billions & billions when a cheap robot can do their job better, faster & cheaper still? What happens when they are expected to go away & die or better yet just die. I don't think they will go softly into that dark night, I know I won't.

Sun, 07/11/2010 - 15:26 | 463328 Kali
Kali's picture

Watch the movie "Brazil".  Even if you fight or try to do the right thing, doesn't mean you will survive it.  But, agreed, I won't go softly either.  It is a good day to die.  Soon.

Sun, 07/11/2010 - 15:48 | 463352 Gully Foyle
Gully Foyle's picture


"But, agreed, I won't go softly either."

Why does everyone want to think like Cannon fodder? Is it because of those Die Hard movies?

Think like a Thief. Think like an assassin. Think like a Ninja.

Think like a Criminal.

Sure death and shootouts with the man look all fun on the big screen, but in real life most people shit their pants before the intense pain of being shot ever becomes a reality.

Infiltrate and manipulate.



Sun, 07/11/2010 - 15:58 | 463363 Kali
Kali's picture

As you do?  I have tried that. It doesn't work.  Unless you are willing to do the very evil you are fighting and even then you will be found out and dealt with.  Now, I just try to live outside the "system" as best I am able.  And still pay a heavy price just doing that. 

What I believe is, for all the efforts any or all of us are expending, doesn't mean it will do shit.  And probably won't.  Eventually, I am anticipating it will come down to actual confrontation, if I am not wiped out by forces beyond my control anyway.  And when that actual confrontation happens, I will not go quietly and put up one hell of a fight, not that it will make any difference anyway.  I wish it weren't so, but have seen no evidence to the contrary.

Sun, 07/11/2010 - 17:04 | 463409 Gully Foyle
Gully Foyle's picture


You are saying you would rather die in glorious but in the end senseless battle than survive and work to bring down a corrupt regime?



Sun, 07/11/2010 - 17:24 | 463426 Kali
Kali's picture

No, I said I have worked all my life to bring down the corrupt regime, hasn't done any good, in fact, it has gotten stronger and more corrupt over the course of decades and I have suffered greatly for my battles. 

 Too many have sold out or don't recognize what is going on or are too impotent to tryor fight.  I still work to bring it down by the way I live my life, but I am getting too old to battle on the front lines anymore.   I don't see too many younger folks stepping up to the battle. But, the reality is, I haven't made a dent, we will have chaos in this country and I expect to either die from forces beyond my control or die fighting it.  Not my preferred option, but the realistic one I see coming. 

What work is it you have done to bring it down?  Have you sacrificed career, wealth, safety?  I have done all those things.  Usually backed by people who talk as you do.  But when the battle ensues, I turn around and see those same people turn and run off into total retreat, total cowards or, even worse, traitors.  So, I am very doubtful and cynical when I hear people talk as you do.

And when the masses do finally revolt, I expect it to be as mindless as I have seen it elsewhere. So, I do what little I can, try to enjoy the dusk of my life and expect to defend my friends, family as best I can when TSHTF.  That's all.



Sun, 07/11/2010 - 19:11 | 463545 Cathartes Aura
Cathartes Aura's picture


Kali Yuga. no one gets out alive.

Sun, 07/11/2010 - 17:35 | 463436 Ardent Spirits
Ardent Spirits's picture

There is a legend/story they tell about the VC in the Nam. Could even be true. They (The VC) were behind this big rock & only had one AK. So they tied it up with a length of rope & started smoking opium. When the spirit moved one he would take up the AK & charge. Then they would pull back the one AK with the rope & smoke some more opium. Probably doesn't mean anything.

Mon, 07/12/2010 - 03:21 | 463997 Temporalist
Temporalist's picture

It means don't smoke opium.

Sun, 07/11/2010 - 16:35 | 463384 joe90
joe90's picture

When "they" say austerity it means means reduce Government deficits.  Deficits increase bank deposits, liabilities of the banking system, which is why they want austerity.  What if the only thing a central bank was allowed to buy was it's own Government bills/bonds (and some short term commercial paper), and what if each currency was left to float, and Govt's free to spend but exclusively in their own currency?  Austerity would be imposed by the market as a result of reduced buying power.

Mon, 07/12/2010 - 02:42 | 463985 bingocat
bingocat's picture

The problem with "getting what you paid for" when politicians always try to promise you a good deal, is that population growth rates must always be positive, and the derivative of population growth cannot go negative (i.e. the rate of population growth cannot decline).

If there are "waves" in population growth, they will create "short-term" (decade-long) bumps in the fair value of assets vs NPVs of future liabilities. If there are larger waves (like baby booms lasting a generation), then the laws passed to please the masses (i.e. how much they will get out of Social Security) will simply be untenable. It is not a matter of not getting what you paid for, it is a matter of the assumptions embedded in the promises being completely out of whack with reality.

I agree with your expectations of a "soft default." It is, practically speaking, the only way to reduce debt vs GDP ratio in the long-term. It is the only way to simultaneously have "austerity" AND maintain short-term Keynesianism (which is required to keep the "austerity" palatable short-term.

Sun, 07/11/2010 - 13:53 | 463231 Seer
Seer's picture


Sun, 07/11/2010 - 02:13 | 462815 SilverIsKing
SilverIsKing's picture

This article is not complete.  It should come with a motion sickness bag so the reader can throw up without soiling his or her clothing.

Sun, 07/11/2010 - 02:18 | 462818 williambanzai7
williambanzai7's picture

Bernie Madoff will pay for their collective sins...

Sun, 07/11/2010 - 10:15 | 463011 Ardent Spirits
Ardent Spirits's picture

Not quite an Antichrist but saint & martyr,YES.

Sun, 07/11/2010 - 19:14 | 463548 Cathartes Aura
Cathartes Aura's picture

single names are a distraction.

it's the ones whose names you don't even know that do the most harm.

Sun, 07/11/2010 - 02:24 | 462821 Caviar Emptor
Caviar Emptor's picture

Financial Con of the Decade: Great piece, TD!

Just more evidence that we're gradually descending into a world of autocratic global corporatism. Just look at some recent events: BP and Big Oil socked it to the Presidency by having the GOM drilling ban overturned twice! Now executive orders are being overruled by 2 bit judges who own stock in big oil. Never thought I would hear that one outside of a movie. Massey Energy and BP flaunt their disregard for Federal safety regulations and they were both the biggest offenders in their industry. Financial services lobby guts the Financial Reform Bill to absolute neuter status. No criminal charges or investigation of large Wall Street firms for actions leading to the crisis. They're free to proceed at will. The world and the Treasury are now their oysters!

So the con of the decade is to me just another stepping stone on the way to consolidating power. They have the Fed and Treasury by the balls. In the 90s the bond vigilantes were able to push a bit of fiscal austerity through the markets. Now they own the White House lock stock and barrel. They don't need to manipulate, they just dictate directly to the Oval Office and it gets done. The same magic has been repeated in nearly all developed nations since the start of the crisis.

There is now very little alternative to complete dominance of the Executive and Legislative branches by interests like Wall Street and Big Oil. When Congress pretends to haul these guys on the carpet it's a total embarrassing joke. Just look at the Tony Hayward hearings, or the bankster hearings of 2009 (Vick Pandit almost didn't go). 

I think we have a collective denial about the significance of these events. Yeah, it's a joke and a travesty and a circus to watch on the day to day level. But if you put it together, if you take the overview, there is a clear and unmistakable pattern emerging. There are few incentive to follow laws, there is precious little enforcement, every branch of the government is fungible. It seems clear that, on balance, it is a better choice for large corporations to operate outside the law considering the ever so slight risks. 


Sun, 07/11/2010 - 08:09 | 462901 aheady
aheady's picture

I don't think anybody here has any denial about what's going on. It's just that trying to wrap your brain around that level of corruption is difficult. At least it is for me... Everything I thought about the world is wrong. That realization is soul-crushing.

Sun, 07/11/2010 - 10:28 | 463018 Caviar Emptor
Caviar Emptor's picture

Existential angst bites. But it's also liberating. And very essential. If we aim to survive as a republic, we need eyes wide open, not wide shut

Sun, 07/11/2010 - 10:55 | 463046 Ardent Spirits
Ardent Spirits's picture

I think this was the message in Stanley Kubrick's last film, "Eyes Wide Shut," but it wasn't obvious at the time.

Sun, 07/11/2010 - 09:15 | 462952 Ardent Spirits
Ardent Spirits's picture

A possible unintended consequence. What happens when the peasantry loses faith in the rule of law. What happens when they realize that only they will be forced to play by the rules. What is known as the 'Foreclosure Crisis' has already moved us much closer to that day. Could it have anything to do with the fact that America has more people in jail & prison than any other country? When the corruption trickles down from the top it makes for a very dangerous situation. America has many bold & hungry enemies & they are waiting patiently for us to stumble.

Sun, 07/11/2010 - 09:23 | 462960 aheady
aheady's picture

Sheep in the headlights.

Sun, 07/11/2010 - 10:40 | 463030 Caviar Emptor
Caviar Emptor's picture

There's a built in incentive to deny away the threats to freedom. After all, to hear "them" tell it, we're living in a capitalist utopia, no? A consumerist, aspirational culture with a shop-till-you-drop addiction being fed a steady diet of ever bigger homes, SUVs, flat screens, and serving sizes. Even boob sizes. Of course every addict knows but tries to forget that control over his life and his destiny is slowly slipping away.  The only revolt possible in our culture would be to not shop, not supersize, in essence not live the yuppie version of the American dream. That would take some major cold turkey. Is our society up for that? Can people actually do anything more than talk and complain? I'm just asking what needs to be asked.

Sun, 07/11/2010 - 13:58 | 463240 Seer
Seer's picture


Unfortunately (or fortunately, depending on your view) it's not only crap products that are being recalled, but all the duped masses.  Bad programming...

Sun, 07/11/2010 - 09:49 | 462987 doublethink
doublethink's picture


Can't Beat 'Em?


Mark-to-fantasy accounting is going to work well for me too come April 15th.



Sun, 07/11/2010 - 10:44 | 463035 Caviar Emptor
Caviar Emptor's picture

Exactly. We have an economy based on fantasy. That was a choice that we all made, willingly or not, since the response to the bust in 2008-2010. Now it seems we've committed ourselves irrevocably. It'll work until it doesn't. Most of TPTB are just hoping it holds until after they die. Apres moi le deluge.

Sun, 07/11/2010 - 11:05 | 463054 nmewn
nmewn's picture

PING !!!!!!

Sun, 07/11/2010 - 14:02 | 463242 Seer
Seer's picture

Unless you're rich your fantasy will end up including a small living quarters with a roomate who thinks you're his bitch...

No one is to try and take the money and run (unless you're able to provide a sufficent enough bribe, or know friends in high places) without paying!

Sun, 07/11/2010 - 11:53 | 463083 ozziindaus
ozziindaus's picture

Oil spill in the GoM is symbolic and highly reminiscent of the 1930's dustbowl. Both are man made catastrophes turned natural disasters. Big Ag was the Big Oil of our time. Governments now and then were highly involved, protected and used them as both scapegoats and saviors of the US economy. Timing is too coincidental for my liking. 

Sun, 07/11/2010 - 21:53 | 463748 Real Estate Geek
Real Estate Geek's picture

Now executive orders are being overruled by 2 bit judges . . .

That can be a good thing, when one considers some recent executive orders.


Sun, 07/11/2010 - 04:13 | 462848 Dr Hackenbush
Dr Hackenbush's picture

Great Article. The only good thing about this deflationary period is that it has pulled back the curtain on the power elite. 

When you give someone the keys to control deflation/inflation they are able to dictate who the winners and losers will be.  That's the magic behind the Keynesian system - It  guarantees birth right and it makes each generation of the power elite more powerful, with none of the untidy risk associated with a free market.

The only trick is to muck up the waters enough so that the lower class remains unsuspecting, and distribute just enough wealth to them so there will be a sufficient number 'above water' to reconcile the lofty books, provide good/services (for them) and maintain order among the 'peasantry'.

Sun, 07/11/2010 - 04:17 | 462855 Coldcall
Coldcall's picture

Excellent summary, and as Tyler pointed out; its necessary to articulate the explanation of this fraud in simple terms, because most folks dont have the time or inclination to read complex descriptions of financial scams.

The FT really disgusts me as they know whats transpired and they still shill for the financial system and the various bogus claims of reformation. I stopped buying the FT a while ago and just read the blog now.

Sun, 07/11/2010 - 05:22 | 462863 bingocat
bingocat's picture

Can someone explain #6 to me? Where does the zero rate money come from? What is the mechanism?

Also, how does #7 work? How does the Fed pay 3-4% (to the people who borrowed at 0%)?

It is nice that some poster asserts it, and the next 95 people don't question it, but I don't see any part of the government paying 4% these days.

If this is simply a rant against the steepness of the curve and the fact that banks (and hedge funds, mutual funds, etc, and anyone who understands secured funding markets (repo) and leverage) can do that trade, then so be it. Go start a bank if you want to do the same. But calling the existence of curve steepness and repo markets a fraud perpetrated by the powers-that-be is awfully sloppy analysis.


Sun, 07/11/2010 - 08:41 | 462921 Canoe Driver
Canoe Driver's picture

The 10-year Treasury rate has been 3-4%. 

Sun, 07/11/2010 - 10:13 | 463009 Sean7k
Sean7k's picture

Actually, .25%. The FED overnite fund rate. Like free money. Leveraged money is also free. Therefore the banks deposit with the FED and receive an additional 900% to be invested in treasuries. Some paying 3-4%. This could become much greater if the FED is ever forced to raise rates. Guaranteed by your tax indebtedness.  

Sun, 07/11/2010 - 11:40 | 463063 Dr Hackenbush
Dr Hackenbush's picture

The article was mostly an organized compilation of what is now common knowledge.  Incapability of deciphering 6 & 7 or where the 0 rate comes from doesn't make one dumb, just ignorant on this subject.  What makes one appear dumb is arrogantly stating ones opinion based on your limited knowledge.

Sun, 07/11/2010 - 22:41 | 463801 bingocat
bingocat's picture

My questions were to see if anyone else had an answer. There is so much "common knowledge" that is wrong (and assumed correct because it is so commonly repeated here)  that I was intrigued to see if someone could come up with why.

Based on your definition of "dumb" ('arrogantly stating ones opinion based on your limited knowledge'), I imagine we'd have to indict most ZH commenters as "dumb." My time working with treasury departments and repo desks, and being intimately involved in bank funding structures means that my "limited knowledge" is probably more than adequate.

Borrowing at "zero" (or close to it) is indeed "possible" through the medium of overnight Fed Funds loans. #7's "Deposit these funds at the Federal Reserve, where they earn 3-4%" is not possible.

Buying Treasuries which yield "3-4%" has been possible (though now it's 3.05%), and banks do run the carry trade to some extent, but it has been possible to put on a 300bp Fed-Funds-to-10yr carry trade in every major recession since the mid-70s (for history's sake - late '75 to mid '76; summer '84 and late '84, early '85; late '91 to mid '94; Dec '01 for a few quarters then again from late '03 to mid '04). I guess all those times were also "fraud." And I'm sure each one, at the time, was also "The Financial Con of the Decade."

The implication that buying Treasuries at 3% and funding them on a leveraged basis is  risk-free is cute. Look at all the buyers of Greek 10yr trading at 800bp over the ECB repo rate. They are earning 800bp a year. Must be fraud. Oops, if I'd been levered 10:1 on those buying at 8% I'd be blown out of my bonds now... hmmm...

Anyone here can do almost the same trade by buying long bond levered ETFs on margin. See how risk-free that is.

The 'explanation' of how Mr. Financial Power Elite is going to make hundreds of billions by being long Treasury debt paying 3% as T-Bill rates go through the roof is kind of funny...  I guess I must be arrogant for calling that "sloppy."





Mon, 07/12/2010 - 20:28 | 465320 Dr Hackenbush
Dr Hackenbush's picture

The example of using the Fed discount arb is only ‘sloppy’ in that it is incomplete. It’s really the control over inflationary and deflationary cycles that puts the elite in the driver’s seat. The real question that needs to be deconstructed is how do the super elite manage to become richer and even more powerful during every deflationary cycle since fiat inflation began?

in 2006 - 2% owned half the world wealth..  More since...(?)  Now there would be a risk free assumption.   

Whether it grew organically or something more diabolical, to ignore the subsequent and growing sophistication of the upper class to capitalize on policy that they themselves shape into being, would be worse than negligent to future generations and any believer in the hope of a free market.  

Buy Low…

Tue, 07/20/2010 - 09:28 | 478524 bingocat
bingocat's picture

Nobody in the entire board, with 550 some-odd replies, has come up with the math to get any "arbitrage" done. Saying this is an "organized compilation of what is now common knowledge" suggests it has some validity somewhere. Suggesting bond math which is outright wrong doesn't do it. The only "Fed discount arb" is the "garbatrage" involved in believing the Fed is going to act to boost the economy. This is Bagehot 101. Very few Fed chiefs have been anything other than closet Keynesians. 

The concept that the financial "elite" make more money than the financially non-elite is, unfortunately, a truism. 

I do not have data to prove that the "super elite manage to become richer and even more powerful during every deflationary cycle since fiat inflation began." I suspect you do not either. That would suggest as a counterpoint that the super elite really underperform the rest of us regular joes during the bull part of the cycle. I suspect that what really happens in every deflationary period is that certain people who were among the super-elite before the deflationary period started became richer, and they became even better known. Less well-known are the many thousands of business owners who go under and afterwards farm, tend bar, or spend all day mumbling into their Thunderbird on the corner. I am open to seeing data but proof by assertion doesn't do much for me. A ZH contributor on this site posted a datatable the other day, asserting that it PROVED that the top decile of the population in terms of income owned more of the market than ever before. Unfortunately, the data IN the datatable proved nothing of the sort. The slope of the graph went in the opposite direction. 

While I would never say the monied classes are "innocent", I do not think it out of place in a democracy for small groups of people to use whatever legal means they see fit to try to obtain the result they want. This is the case for every "special interest" out there. It is used by doctors to suggest health care reform is anti-capitalist. It is used by Big Tobacco to deny smoking causes any health problems. It is used by large employers to try to lower payroll taxes. It is used by farmers to get special treatment so Americans pay more for sugar than any other major country does. It is used by worker unions to besmirch companies which are non-union. It is used by autoworkers to save auto companies which don't need to exist. It is used by environmentalists to stop logging so as to save the habitat of some bird most people have never seen and never will. It is used by loggers to rip apart vast swaths of virgin forest so that we can all have our McMansions.

The opposite side of this is that the majority can vote out people who go against the interests of the majority.  The majority of eligible voters will pay something approaching zero percent of the Federal tax burden over the next few years. That majority can vote people in who will do as the voters want. That majority will NOT vote to raise its own taxes. That majority can capitalize on policy that they themselves shape into being. To ignore that would be worse than negligent to future generations and to any believer in the hope of a free market (because the assumption of a free market is that one is free to pursue making a profit, but when the marginal tax rate goes to 100%, what's the point?).

Sun, 07/11/2010 - 05:54 | 462868 JethroBodien
JethroBodien's picture

It’s much simpler than that.  We are effectively paying a cartel of private banking interests (federal reserve)... interest on the money we borrow into existence.  That is the greatest con the world has ever known.  Of course every dollar brought into existence under such a system is debt which eventually needs to be repaid.

This means for every dollar borrowed into existence there is an equal and corresponding amount of debt created.  Now when one factors in the interest paid on the debt you begin to realize no amount of money can ever extinguish that debt.  Therefore world monetary system = largest ponzi scheme ever conceived.

Everything else is just noise.


Sun, 07/11/2010 - 21:17 | 463693 Mako
Mako's picture

You have it right on the mark.  It's really simple, what you are seeing now is "noise" and will be used to pass the blame.

The excuse: It wasn't the foundation of the system you see, it's was a few bad apples making loans or creating derivatives, or (insert excuse here).

Nice post.


Sun, 07/11/2010 - 05:38 | 462869 Mark Beck
Mark Beck's picture

Having lived through it, it did not really go as smooth as postulated, although the end result has benefitted FED member banks.

There are some rough spots in the premise however.


It is too bad the artical did not provide a profile of one of the Elites. It would be helpful if an example was given to see if their net worth reflected the transfer of wealth.

It is interesting that Lehman and Bear-Sterns did not somehow make the Elite list, especially given the Sub-Prime exposure as a way to game the system.

Also in 2009 the FED purchased $300B in Treasuries to effect rates, this was significant. It would have been better for the elites if rates had been higher.

For the Multinational bank, a better investment for money received for worthless MBS would be in off-balance sheet derivatives rather than Treasuries. Especially for low rate long duration Treasuries.

Even the peasentry can benefit from low tax rates on capital gains.

The top 5 percent of taxpayers paid more than one-half (53.8 percent) of all individual income taxes

We also know that many people who make under $35K do not pay any income tax or very little.

From a Corporate profit standpoint, the on-going investment in military spending over the past 8 years is significantly higher than TARP for example.

It is clear that our debt cannot be repaid through an increase in tax revenue on the peasentry. The debt is just too large, especially if T rates marginally increase. When rates hit 6% for the 10Y, the FED will probably need to monetize some of the debt in real-time to keep the treasury cash flow positive. At this point it would probably be better not to be holding USD denominated debt.

The larger transfer to wall street is our 401(k) system. Perhaps the 401(k)s only real ability is how effectively it channels money to the fund managers through corporate programs. As a retirement program it is lacking in many ways.

In closing, I would like to say that if the elites are really the FED member banks, that these elites have enjoyed this fleecing of the tax payer for decades.

Mark Beck

Sun, 07/11/2010 - 08:53 | 462936 Ardent Spirits
Ardent Spirits's picture

Lehman and Bear-Sterns Were weak hands & were used to feed the market. The peasantry are being pauperized; they have no capital to invest. As for the top 5% they should pay more; The basis of progressive taxation is that those most able to fund society, fund it & keep the burden off the peasantry. True enough the 401K program is not so great of a deal, all that is needed is to sweeten it & get it out of the fund manager's clutches.That DOES NOT mean gutting Social Security although reforming it with greater withholding & laws to prevent congressional looting would be nice. You're preaching to the choir about the FED, it needs badly to be brought to heel. Lots of luck with that one.

Sun, 07/11/2010 - 11:26 | 463065 New_Meat
New_Meat's picture

The big bonuses are also a conduit to local and state taxes. See e.g.: (yes, it is Bloomberg, but they didn't mess up the numbers)

Thus, the local authorities were complicit in supporting rising housing prices and bonuses, as it kept them growing.

Mayor Bloomberg gets it, early 2009, about 40,000 New Yorkers pay 1/2 of the city's taxes, e.g.

I applaud Bloomberg's and Patterson's efforts to drive out these rich folk.


- Ned


Sun, 07/11/2010 - 07:34 | 462891 Tic tock
Tic tock's picture

The first rule of Fight Club... don't go revealing what you plan to do in any specifics, before you do it. Your enemy will know your position and halt you.   

Sun, 07/11/2010 - 08:10 | 462902 Cursive
Cursive's picture

We can say goodbye to the "investment class" that the Republicans were so giddy about buying votes with in 2000 and 2004.  Not a partisan rant; I voted for Bush twice.

Sun, 07/11/2010 - 08:11 | 462905 Ardent Spirits
Ardent Spirits's picture

So then; To put the most optimistic spin on this the American People are being gang raped to death.

Sun, 07/11/2010 - 08:55 | 462938 Gully Foyle
Gully Foyle's picture

Ardent Spirits

Same as it ever was.

Sun, 07/11/2010 - 08:30 | 462911 Ardent Spirits
Ardent Spirits's picture

I think the Tea Party movement has been cleverly co-opted by these Financial Elites to further their own interests. They didn't invent it & many of it's core values are anti-elitist but they have found The Tea Party useful. It can be used to muddy the waters, associate elitist goals with 'True Patriotism' & generally harass & frustrate the more responsible politicians who have not yet sold out. It appeals to frightened, confused & unsophisticated Americans who are well aware that the American Dream is being stolen but can't understand how or why. The Elitists use the Tea Party to feed their line to these citizens. We can only hope the people attracted to this movement will grow up politically & cast off this manipulation.

Sun, 07/11/2010 - 08:55 | 462937 Gully Foyle
Gully Foyle's picture

Ardent Spirits

"I think the Tea Party movement has been cleverly co-opted by these Financial Elites to further their own interests"

The Reform party was destroyed when TPTB sent Pat and Bay Buchanon to infiltrate it.

Even being batshit insane, or maybe not, Perot won about 20% of the vote.

A Gallup poll showed Perot with a slim lead, but on July 16 he suspended his campaign, accusing Republican operatives of threatening to sabotage his daughter's wedding, and was accused by Newsweek Magazine of being a "quitter" in a well-publicized cover-page article. After resuming his campaign on October 1, Perot was dogged by the "quitter" moniker and other allegations concerning his character, to the extent that on Election Day many voters were confused as to whether or not Perot was actually still a candidate. He ended up receiving about 18.9% of the popular vote, a record level of popularity not seen in an independent candidacy since former President Theodore Roosevelt ran on the "Bull Moose" Progressive ticket in 1912.


Then further bolstered when Ventura won the three way race.

... Mid-term elections of 1998

In 1998, the Reform Party received a boost when Jesse Ventura was elected governor of Minnesota.

According to the League of Women Voters, Reform candidates obtained more votes nationwide in 1998 than did any other third party in America, even without those garnered by Ventura. Counting Ventura's performance, Reformers took in more votes than all other third parties in the United States combined, establishing the Reform Party as America's third largest party.

This was a particularly impressive feat when one considers that none of Perot's money, influence or organization was involved in any of the candidacies, including Ventura's. The party was operating entirely on its own resources, and had in fact run fewer candidates with less money than the next most-popular party, the Libertarians.



Sun, 07/11/2010 - 14:28 | 463266 Seer
Seer's picture

I kind of liked Perot.  But the problem with him was that he was attacking the very system that got him his wealth (

EDS received lucrative contracts from the U.S. government in the 1960s, computerizing Medicare records. EDS went public in 1968 and the stock price rose from $16 a share to $160 within days. Fortune called Perot the "fastest, richest Texan" in a 1968 cover story. In 1984 General Motors bought controlling interest in EDS for $2.4 billion.

Just another fucking elite...

Sun, 07/11/2010 - 09:23 | 462957 Ardent Spirits
Ardent Spirits's picture

Gully Foyle, Don't get me started about Ross Perot. He may just have been our last hope. I need a drink.

Sun, 07/11/2010 - 10:37 | 463026 Gully Foyle
Gully Foyle's picture

Ardent Spirits

Even without Perot they were still relevant until the Buchanons ripped it to shreds.

Perot took nearly 19% even after his supposed meltdown. 34% would have been a win in a three way race.

TPTB did virtually the same thing to Nader.

Obviously they fear anyone with even minimal clout. Far too many obvious flaws and too much weakness in the system.

Thus the need, the obsessive need, to control the message 24/7/365

Sun, 07/11/2010 - 11:12 | 463058 Ardent Spirits
Ardent Spirits's picture

Political hit jobs have become the tool of choice to silence any opposition. Everyone (except possibly Jesus) has some little skeleton in the closet, someone knows where a body is buried. With billions at stake & billions in resources they can be turned up & used. If nothing can be found, everyone has some weakness that can be exploited. Some sort of frame or setup can be arranged as a last resort.

Sun, 07/11/2010 - 11:30 | 463068 New_Meat
New_Meat's picture

Chicago politics? - Ned

Sun, 07/11/2010 - 11:20 | 463061 nmewn
nmewn's picture

"I think the Tea Party movement has been cleverly co-opted by these Financial Elites to further their own interests."

"It appeals to frightened, confused & unsophisticated Americans who are well aware that the American Dream is being stolen but can't understand how or why."


First the Party is called a bunch of bigots & racist's by the political, academic, financial & media elites. Now it is apparently controlled by these same elite's?

Spin much?



Sun, 07/11/2010 - 13:50 | 463228 docj
docj's picture


Sun, 07/11/2010 - 15:18 | 463321 Ardent Spirits
Ardent Spirits's picture

I haven't heard a peep out of the Financial Elites against the Tea Party. They're the only ones who really count anymore.

Sun, 07/11/2010 - 21:04 | 463669 nmewn
nmewn's picture

"I haven't heard a peep out of the Financial Elites against the Tea Party. They're the only ones who really count anymore."

Well I guess it's all in how you define "financial elites".

Because someone doesn't talk openly against the Party doesn't mean they support it.

I would go out on a very strong limb and say they don't support it.

It's at cross purposes to what they believe and want America to be for them. They believe in debt bondage. The Tea Party, as you know, forcefully does not.

For example, Paul Krugman (a them), has a rather high opinion of himself, he works for the NY Times. The Times won't wipe it's financial ass until it's cleared with Wall Street first. Wall Street also owns DC, as acknowledged by the BOTH right and left political spectrums. Peeking in the opening of the labrynthian maze of GE media holdings reveals CNBC, MSNBC to name two, along with Universal Pictures.

They are all cut from the same cloth. Bought and paid for by elites to the detriment of the poor and middle classes. First the CRA "promise" of home ownership to the poor, next a VAT tax to pillage what is left of their dignity, this is criminal guillotine type offenses they have done to them and the country as a whole, in my opinion. The middle is a little better off as they can and do hide what they manage to put aside, cash and convertible's wise, but they are quite pissed at events I can assure you.

Everyone has the right to revise and extend their remarks Ardent.



Sun, 07/11/2010 - 14:08 | 463244 Temporalist
Temporalist's picture

In the simplest way the Tea Party message is to know who you are voting for.  You don't even have to consider yourself a Tea Partier to listen to the message that the Rep. and Dem. establishment have their horses and if you want to make real change don't back those same horses.  Avoid the party candidates and you stand a better chance of eliciting the change that you may desire.  The Tea Party can't be co-opted it is too diverse and not centralized.  They can try but it won't work.  Just like they tried to figure you how Ron Paul was getting all the money from his original Tea Party moneybomb.  He could raise money because people agreed with his message and supported it not because of some trickery.  Any other party that thinks they can use some scheme or gadget to influence the Tea Party will most likely out themselves.

Sun, 07/11/2010 - 15:13 | 463318 Ardent Spirits
Ardent Spirits's picture

There is still the heavy hand of the extreme right in the party message. Who stands to gain from the status quo? The Financial Elites, that's who. They mask & cloak themselves well but their imprint is everywhere bending & twisting the movement to their purpose.

Sun, 07/11/2010 - 21:16 | 463687 nmewn
nmewn's picture

"Any other party that thinks they can use some scheme or gadget to influence the Tea Party will most likely out themselves."

Spot on...fake Tea Party candidates.

Scott Ashjian in Nevada is one. In my opinion Richard Scott here in Fla. is another one.

They have an odor about's really not hard ;-)

Sun, 07/11/2010 - 08:34 | 462914 Privatus
Privatus's picture

No wonder they want an internet kill switch. But that won't come close to trumping the federal government kill switch, which is to default on the "national" debt. Godspeed.

Sun, 07/11/2010 - 09:04 | 462917 Mako
Mako's picture

An Ultimate capitalist changes the rules of the game as it goes along to making him the ultimate winner. 

As far as the fraud, sorry this article has made it way more complex than what it is.  Those are just symptoms of the end of the system. 

The fraud is the use of an equation to extract more than you put in, eventually you can no longer take out more than what is put in... collapse.   The system expands exponentially until it can no longer expand, collapses in a mess, and then liquidates.  The use of an unsustainable equation.  

Expand>Peak>Fail to Expand>Collapse>Liquidate>Rinse and Repeat

The ultimate capitalist understand this, the lemmings do not.  The lemmings always point out the symptoms instead of the root cause, which means rinse and repeat is on the way eventually after the liquidation process.

"All the pigs are all lined up"  ... and pigs get slaughtered.  

The ultimate capitalist will probably throw the pigs some bankers and people in office to satisify their hunger, at the end of the line the pigs always get slaughtered.  As the pigs getting slaughter the ultimate capitalists will go into hibernation for many decades why the liquidation process works it's magic. 

The ultimate capitalists known exactly what is coming down the pipe, the pigs always think this conclusion is avoidable if you do this or that, the ultimate capitalists use this to start the same fraud right back over again.

The current pigs are the ultimate capitalists wet dream.  They all believe the lie, even people on this board believe the lie.   They say they don't believe Ben and the Fed but they eat up the ultimate lie, they believe in Helicopters. 

Oh yes, the pigs will get slaughtered, it is unavoidable once you go down this path.

Sun, 07/11/2010 - 14:37 | 463287 Seer
Seer's picture

Unless the "capitalists" really understand God/Mother Nature, then they too are naive and are doomed.

Sun, 07/11/2010 - 18:14 | 463476 JethroBodien
JethroBodien's picture

Bingo Mako.  See my earlier comment which did not garner a single response.


Sun, 07/11/2010 - 21:19 | 463697 Mako
Mako's picture

It is very easy to overlook posts on this blog, your post was excellent. 

"noise" is an excellent word. 

Sun, 07/11/2010 - 22:55 | 463820 Hulk
Hulk's picture

Read your comment Jethro, spot on. didn't comment to keep the noise down.

Keep posting

Mon, 07/12/2010 - 02:26 | 463979 JethroBodien
JethroBodien's picture

Touche :)



Sun, 07/11/2010 - 08:41 | 462920 spanish inquisition
spanish inquisition's picture

I have an issue with the way Number 7 is written. No way the Fed is paying a 3-4% spread and incurring a loss (that's why you will never see a negative interest rate). I don't know what the mechanism is, but through the Treasury, the American taxpayer is picking up the tab.

Sun, 07/11/2010 - 08:43 | 462925 Canoe Driver
Canoe Driver's picture

Why do so many of you have trouble with the concept?  The fed funds rate is at or near zero, and the 10-year Treasury is paying 3-4%. End of story.

Sun, 07/11/2010 - 08:48 | 462930 Freewheelin Franklin
Freewheelin Franklin's picture

...even corrupt North Carolina congressmen will not have the chance to plead stupidity after reading this.


Hmmm? Who might that be? Are his initials MW? Just say it, damn it.



Sun, 07/11/2010 - 09:10 | 462947 Mercury
Mercury's picture

On income inequality:

As long as the US has a continual flow of essentially penniless immigrants ANY upward movement in income among those already here will widen income "inequality."  Even if every new immigrant becomes a millionaire by the following year the bottom of the scale is always zero or close to zero because new poor immigrants keep replenishing the old. If you then make one dollar more this year than you did last year then you have just exacerbated the dreaded income inequality gap.

I'm not saying Latin-American type levels of income inequality are desireable or that there aren't a whole host of systemic financial problems in this country but this "income inequality" business gets thrown around like it's the national blood pressure and I'm not sure many people ever sit down to think about it for five minutes.

Sun, 07/11/2010 - 09:43 | 462976 Ardent Spirits
Ardent Spirits's picture

Two things; One- sadly we do need farm workers, I have worked the crops in CA but never the fields. Only desperate citizens will do field work. Perhaps highly advanced machine harvesters could end that need. Almost anything can be done with computerization. Two- almost nobody wants all these foreign workers to become citizens. The country is full up. We don't really need any immigration. CA used to have the Bracero Program; guest workers only & strictly regulated. It worked then, why not now.

Sun, 07/11/2010 - 10:42 | 463022 Mercury
Mercury's picture

Actually I think it's deplorable that all of the sudden it's perfectly acceptable to declare all kinds of manual labor as unsuitable for Americans (or non-hispanic Americans). Politicians, wonks and pundits openly state "I don't want my kid doing those jobs and neither do you..."  and that seems to be totally cool.  What the hell?  If you have dirty work to do you're supposed to drive down to the Home Depot parking lot and rent another human being for the day I guess.

I can't believe that fully half the jobs I've had in my life are now officially beneath my dignity as a white man (or black men for that matter): dish washing, house painting, roofing, landscaping...mostly high school/college summer work but still I got the W2 and paid taxes on that income. Back in the day I know my dad even performed much dreaded farm labor out West between college and medical school and  I don't think that was a particularly bizzare thing to do back then. 

If this country isn't as rich as it thought it was a few years ago and unemployment keeps marching up it follows that certain expectations are going to have to readjust as well.  We can't just sit around and vote ourselves more stuff forever.

Sun, 07/11/2010 - 13:50 | 463227 Gully Foyle
Gully Foyle's picture


Ever watch Mike Rowe's TED talk on various jobs?

Rowe points that labor jobs are not getting filled.

I read that due to retirement 100k Welding jobs will open up. But I have also heard that stricter requirements make it harder to become a liscensed Welder now.

Everyone wants to be an owner and not a creator.



Sun, 07/11/2010 - 14:31 | 463274 Jendrzejczyk
Jendrzejczyk's picture


Thanks for that link. People think plumbers and welders are too expensive now, just wait till all the old guys retire and there are no trained workers to take their place.

It's going to cost you twenty chickens and a case of Jack Daniels to get your toilets unclogged.

Sun, 07/11/2010 - 15:32 | 463332 Kali
Kali's picture

Machinists too.

Sun, 07/11/2010 - 13:55 | 463235 docj
docj's picture

Take away that teat - be if from Mom and Dad (how may of us know at least a couple of able-bodied 20-somethings living in their parents' basements waiting for their "dream job" to come along?) or Uncle Sugar - and all of a sudden most of those "jobs Americans won't do" (many of which I've done at some time in my life as well) will pretty quickly become "jobs American will LOVE to do" once the hunger pangs start to kick in.

Sun, 07/11/2010 - 15:33 | 463333 Ardent Spirits
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Lots of people were born to work with their hands & there's nothing wrong with that. Well paid trades work is the way for those people to go, not a dead end college career job. Working with just your mind is only for a minority of folks & the number of jobs there matches the supply. College has become a risky gamble if you have to make your way into a tight little field, Aerospace Engineer let's say. Miss the boat & you end up in a cubicle job somewhere with six figures of educational loans to pay off. The arts require both hands & brain work. They also reward with rich life experiences. Those who can survive there are twice blessed.

Sun, 07/11/2010 - 16:06 | 463366 Gully Foyle
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Ardent Spirits

I have a Ukranian neighbor. His Uncle was in one of the camps during WW2. He said that the Jews interned died because they were not used to common labor and harsh conditions.

I see the same today with the majority of Americans versus Third worlders. We will die in the camps before the Immigrants do, except maybe the Canucks. We were sold white collar. We were sold a sit on your ass job so you can get a Samantha Stevens wife.

What did Labor get, Archie Bunker and Good Times. Even George Jefferson was a sellout.

The funny part is people will bust their asses for Art but not a job. I find that strange, you will work with stone wood or molten metal to pawn it off as some asthetic work of genius but won't pick lettuce, or dig ditches.

I read an article about these young hipsters heading to Portland for easy jobs, like copy editor. They get there and those jobs don't exist, so they take some part time employment while waiting for the dream job to magically appear.

Or the recent BULLSHIT! episode on Multi level Marketing.

Mike Rowe said that the guys making profit aren't in their dream jobs. They are the ones providing a service and busting ass every day.

I once worked for this asshole painter. Paid shit. He was kind of a drifter and loser, dope/booze and slacking off. He said one day he was driving around town with an Uncle and the Uncle commented on how many houses needed painted.

His painting company expanded into one of the most profitable in the area.

I know another guy, a fucking dimwit. I thought he was brain damaged.

Now the fucking guy owns a home renovation company in Texas pulling down around 500k a year. He was in the area one weekend and he actually avoided taking calls for work because he had so much.

He got there by busting ass and working like a dog. Hard labor, no dream job and little brain.




Sun, 07/11/2010 - 16:52 | 463379 Kali
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Agreed.  "work" is a foreign concept for most people anymore.  My former colleagues would never dream of working the way that I do.  Too risky, too hard, too lowly,"not in my field", not enough money.  Yet, they are the ones losing their jobs, their "reality" crumbling and being hated by an ever increasing number of people.  Good for me, I have less competition that way and I am doing fine, happy for the most part and providing good jobs for like minded people.  As sour as I sound on ZH, it is because of the dark future I see coming, but, in my personal life, have a very rich life  with good friends, a happy home life, love and much humor.

And a huge ha ha about the Portland "creatives".  I live in PNW, so have witnessed this first hand.  One of the many reasons I don't see much hope for the future. 

Sun, 07/11/2010 - 17:15 | 463419 Ardent Spirits
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There comes a time when you either take what's there or go under. I remember the last time I worked the crops, loading at a packing shed in my 40's, now that's failure (not really, it was survival). We started at dawn, me, losers, Mexicans. We sort of strung ourselves out in a row facing away from the rising sun, warming our backs to losen them up for the work. Almost like a line of birds. It was a good time, looking back.

Sun, 07/11/2010 - 18:01 | 463459 Kali
Kali's picture

Take, being the key word.  To many will "take" what they want now, rather than exert real labor to earn what they need.  And yes, nature in its pure form is therapeutic.  Got back from a two day river rafting trip earlier today, refreshed. (my own raft, camping on the river, not some yuppie/elite package deal) Simple things.  One of the reasons I try to stay away from "civilisation" as much as possible. : ) 

Mon, 07/12/2010 - 02:03 | 463971 Lucky Guesst
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 He said that the Jews interned died because they were not used to common labor and harsh conditions.


Then what was the gas for?

Mon, 07/12/2010 - 15:16 | 464756 CD
CD's picture

There were forced labor camps for all kinds of second- and third-class citizens in Eastern European countries occupied by or allied with the Reich. Journalists, communists, union leaders, gays, partisans, gypsies were rounded up along with Jews, and forced to mine, break rocks, manufacture armaments, etc. These were distinct and separate from 'death camps' -- there was at least a minute chance of survival, provided one could stay upright long enough to avoid being shot in the back of the head for inability to continue working. The focus was on maximal exploitation of slave labor vs. efficiency of termination. Many camp inhabitants survived, and several camps were sent on long marches back towards Germany  (which of course was again not too healthy for the camp inmates) as the Red Army advanced from the east.

Sun, 07/11/2010 - 14:51 | 463301 Seer
Seer's picture

While you all are looking to distance yourselves from food production I'm looking to embrace it (and actually contribute to it) for exactly the reasons why you state.  Because there is no way in hell that we're going to INCREASE mechanized food production.  Got fuel?  Got enough soil-killing pesticides?  How about fertilizer?  Oh, that's right, much of that depends on fossil fuels.

The hubris of it all.  Turning our food system completely upside down, making it dependent upon foreign inputs (and even foreign labor)!

I'll be growing food when all of your immigrant-deporting machines fall silent.

One way or another we're all going to be paying a LOT more for our food.  Pay immigrants or pay OPEC, take your pick... Or, take the farms back and get yer butt out there and work.

Sun, 07/11/2010 - 14:41 | 463293 Seer
Seer's picture

2/3 of the world's population lives on $3/day or less.  Goi ahead, sit down and Think about That for five minutes.

I've seen this reality (even under $2/day).  It's not working with modern capitalism, which will completely fail precisely because people don't Get what inequality really means...

Sun, 07/11/2010 - 09:10 | 462948 Dapper Dan
Dapper Dan's picture

Chinese credit firm says US worse risk than

Is this an oxymoron?

Sun, 07/11/2010 - 09:20 | 462956 brodix
brodix's picture

It should be noted that debt peonage is a historic source of slavery, right up there with war bondage. Seems like very little changes.

Sun, 07/11/2010 - 14:58 | 463307 Seer
Seer's picture

Someday people will wake up and shake their chains.

NOTE: Google brings this up as the first hit when searching "we don't need them."  Think about this for a bit.  It's not like Dissident Voice is paying Google to be perched there!  This article is far more widely read than you can imagine.

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