A Quick Guide To What's Fake: Everything That's Officially Sanctioned
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Neofeudal financialization and unproductive State/corporate vested interests have bled the middle class dry, yet we accept the officially sanctioned narratives. Why?
Let's cut to the chase and generalize "what's fake": everything that is officially sanctioned: narratives, policies, statistics, you name it--all fake-- massaged, packaged, gamed or manipulated to serve the interests of the ruling Elites.
Anything that might introduce a shadow of skepticism or doubt about the sustainability, fairness and transparency of the status quo (i.e. anything authentic and genuine) is recast or repackaged into a fake that can be substituted for the authentic when everyone's gaze is distracted by the latest fad/media sensation/scandal.
ObamaCare: fake, a simulacrum of insurance and healthcare.
The National Security State: fake, a cover for global Empire.
The Patriot Act: Orwellian cover for state-corporate fascism.
Student loans: parasitic, exploitive loan-sharking enforced by the Central State for often worthless "higher education."
And so on.
Yesterday I explored the peculiar dynamic that motivates us to accept forgeries, fakes and illusions as authentic: What's Real? What's Fake?. If the fake enables our fantasy (of free money, of owning an authentic canvas by a famous artist, that rising wealth inequality is just a side-effect of freewheeling capitalism, etc. etc. etc.), then we wantto believe it so badly that we overlook all the evidence of chicanery, forgery, illusion and fakery.
Consider our willingness to accept the conventional narrative about why the Great American Middle Class has been in decline since 1973: rising energy costs, globalization, and the declining purchasing power of the U.S. dollar.
While these trends have certainly undermined middle-class wealth and income, there are five other more politically combustible dynamics at work:
1. The divergence of State/corporate vested interests and the interests of the middle class
2. The emergence of financialization as the key driver of profits and political power
3. The neofeudal “colonization” of the “home market” by ascendant financial Elites
4. The increasing burden of indirect “taxes” as productive enterprises and people involuntarily subsidize unproductive, parasitic, corrupt, but politically dominant vested interests
5. The emergence of crony capitalism as the lowest-risk, highest-profit business model in the U.S. economy
The non-fake narratives are considerably different from the status quo ones. Please consider two: The Neofeudal Colonization of Home Markets and the Happy Marriage of the Parasitic Central State and Crony Capitalist Cartels.
The Neofeudal Colonization of Home Markets
The use of credit to garner outsized profits and political power is well-established in Neoliberal Capitalism. In what we might call the Neoliberal Colonial Model (NCM) of financialization, credit-poor developing world economies are suddenly offered unlimited credit at very low or even negative interest rates. It is “an offer that’s too good to refuse” and the resultant explosion of private credit feeds what appears to be a “virtuous cycle” of rampant consumption and rapidly rising assets such as equities, land and housing.
Essential to the appeal of this colonialist model is the broad-based access to credit: everyone and his sister can suddenly afford to speculate in housing, stocks, commodities, etc., and to live a consumption-based lifestyle that was once the exclusive preserve of the upper class and State Elites (in developing nations, this is often the same group of people).
In the 19th century colonialist model, the immensely profitable consumables being marketed by global cartels were sugar (rum), tea, coffee, and tobacco—all highly addictive, and all complementary: tea goes with sugar, and so on. (For more, please refer to Sidney Mintz’s landmark study, Sweetness and Power: The Place of Sugar in Modern History).
In the Neoliberal Colonial Model, the addictive substance is credit and the speculative consumerist fever it fosters.
In the financialization model, the opportunities to exploit “home markets" were even better than those found abroad, for the simple reason that the U.S. government itself stood ready to guarantee there would be no messy expropriations of capital or repudiation of debt by local authorities who decided to throw off the yokes of credit colonization.
In the U.S. “home market,” the government guaranteed lenders would not lose money, even when they loaned to marginal borrowers who could never qualify for a mortgage under any prudent risk management system. This was the ultimate purpose of Freddie Mac, Fannie Mae, and now the FHA, which is currently guaranteeing the next wave of mortgages that are entering default.
In my analysis, the Status Quo of “private profits, public losses” and the incentivization of gargantuan household debt amounts to a modern financialized version of feudalism, in which the middle class now toils as debt-serfs. Their debt cannot be repudiated (see student loans), their stagnating disposable income is largely devoted to debt service, and their assets have evaporated as the phantom wealth created by serial credit bubbles vanishes as soon as the asset/credit bubble du jour bursts.
The Status Quo: A Happy Marriage of the Parasitic Central State and Crony Capitalist Cartels
In broad brush, financialization enabled the explosive rise of politically dominant cartels (crony capitalism) that reap profits from graft, legalized fraud, embezzlement, collusion, price-fixing, misrepresentation of risk, shadow systems of governance and the use of phantom assets as collateral. This systemic allocation of resources and the national income to serve their interests also serves the interests of the protected fiefdoms of the State that enable and protect the parasitic sectors of the economy.
The productive, efficient private sectors of the economy are in effect subsidizing the most inefficient, unproductive parts of the economy. Productivity has been siphoned off to financialized corporate profits, politically powerful cartels, and bloated State fiefdoms. The current attempts to “restart growth” via the same old financialization tricks of more debt, more leverage and more speculative excess backstopped by a captured Central State are failing.
Neofeudal financialization and unproductive State/corporate vested interests have bled the middle class dry.
Yet we accept the officially sanctioned narratives as authentic and meaningful. Why? Perhaps the truth is simply too painful to accept, so we will reject it until we have no other alternative.
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