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Guest Post: Money from Nothing - A Primer On Fake Wealth Creation And Its Implications (Part 1)

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Submitted by Zeus Yiamouyiannis, from Of Two Minds

Money from Nothing: A Primer On Fake Wealth Creation And Its Implications (Part 1)

"Only God can create… value out of nothing"—Justice Martin V. Mahoney in First National Bank of Montgomery vs. Jerome Daly.

"(I’m) doing God’s work." – Goldman Sachs CEO, Lloyd Blankfein

Introduction:

What is fraud except creating “value” from nothing and passing it off as something?

Frauds interlink and grow upon each other. Our debt-based money system serves as the fraud foundation. In our debt-based money system, debt must grow in order to create money. Therefore, there is no way to pay off aggregate debt with available money. More money must be lent into the system to make the payments for old debts. This causes overall debt to expand as new money for actual people (vs. banks) always arrives at interest and compounds exponentially. This process is called financialization.

Financialization: The process of making money from nothing in which debt (i.e. poverty, lack) is paradoxically considered an asset (i.e. wealth, gain). In current financialized economies “wealth expansion” comes from the parasitic taxation of productivity in the form of interest on fiat lending. This interest over time consumes a greater and greater share of resources, assets, labor, and livelihood until nothing is left.

Only in a debt-based money system could debt be curiously cast as an asset. We’ve made “extend and pretend” a quaint phrase for a burgeoning market for financial lying and profiteering aimed toward preventing the collapse of a debt- (or lack-) based system that was already doomed by its initial design to collapse. This primer will detail the major components and basic evolution of fake wealth creation, accelerating debt expansion, hollowing out of the economy, and inevitable financial implosion.

Stage one—Fiat money origination, multiplication, and distribution

The U.S. Federal Reserve System (“The Fed”): A private, non-transparent entity, formed in 1913, representing and serving private, profit-driven banks that creates money from nothing (fiat) and to which the U.S. government has delegated and effectively ceded its constitutional power to coin money.

The Fed essentially lends our “sovereign” public money to us at interest, paying for things like government debt with more debt, thus expanding debt. By contrast, the Fed currently gives away money to its constituent private banks at zero percent interest, allowing those banks to buy U.S. Treasury bonds, which yield a 2-3 percent interest mark-up to be paid by taxpayers, adding to citizen debt.

Fractional reserve: Private fiat fabrication of exchangeable public “money” as a bookkeeping entry through “multiplication” of public fiat held in private bank reserves. Holding 100,000 dollars of depositors’ money may allow me, as a bank, to lend out 1,000,000 dollars. By what authority? None, really, just my say-so and my action.

In the court case referenced in the heading quote, Justice Mahoney ruled against a bank acting in conjunction with the Federal Reserve Bank of Minneapolis in its efforts to foreclose upon and “buy” a U.S. citizen’s house by simply creating “the entire $14,000.00 foreclosure purchase in money or credit upon its own books by bookkeeping entry.” Further, “Mr. Morgan (the plaintiff/bank representative) admitted that no United States Law or Statute existed which gave him the right to do this.” (First National Bank of Montgomery vs. Jerome Daly)

Stage two—Delusional, unregulated value assignment, manipulation, and expansion

After money is created out of thin air, other market mechanisms have been propagated to magnify, funnel, and package value-from-nothing further still, creating financial vehicles that add more numbers without adding more value.

Leverage: The practice of arbitrarily multiplying one’s alleged value in order to acquire controlling interest in another property. This mechanism is a favorite of now-discredited corporate raiders and leveraged buy-out firms that currently go under the euphemism “private equity firms”. This claimed private equity can be a fictitious multiplication of self-assessed asset value used to buy a controlling interest in a productive company.

Typically the acquired company is put into debt, its real assets hollowed out and harvested, and then the acquired company is allowed to go bankrupt thus making a killing for the raiders while destroying the ability of displaced workers to make a living. (Unhinged: When Concrete Reality No Longer Matters to the Market (and What to Do About It)).

Over the counter (OTC) derivatives: Purely unregulated, non-transparent, and malignant uncollateralized bets and hedges on market movements requiring no assets or stake in assets. Of the over 700 trillion dollars of “notional value” in disclosed OTC derivatives by International Bank of Settlements for 2011, the majority were supposedly “benign” interest rate and currency swaps, not the more toxic credit default swaps. However, it was a Goldman Sachs currency swap with “a fictitious exchange rate” that sunk Greece, nearly doubling its liability on just one deal from about 2.8 billion euros to over 5 billion euros. (How Goldman Sachs Helped Corrupt Politicians to Screw the Greek People) Also remember the undisclosed OTC derivatives market may easily be bigger than the disclosed market.

Rehypothecation: The process of recycling or using the same collateral with multiple deals and entities. Apparently England has no legal limit on how many times collateral can by rehypothecated (Shadow Rehypothecation, Infinite Leverage, And Why Breaking The Tyranny Of Ignorance Is The Only Solution):

Simply said: when one truly digs in, MF Global exposes the 2011 equivalent of the 2008 AIG: virtually unlimited leverage via the shadow banking system, in which there are practically no hard assets backing the infinite layers of debt created above, and which when finally unwound, will create a cataclysmic collapse of all financial institutions, where every bank is daisy-chained to each other courtesy of multiple layers of "hypothecation, and re-hypothecation." (Why The UK Trail Of The MF Global Collapse May Have "Apocalyptic" Consequences For The Eurozone, Canadian Banks, Jefferies And Everyone Else)

Note: For a concise explanation of the related mechanisms of collateralized debt obligations (CDO’s), synthetic CDO’s, credit default swaps (CDS’s), naked short selling, and high frequency trading (HFT), see When The Market Has Cancer.

Stage three—Usurping democracies and cannibalizing functioning capitalism

A cartel of international wealth counterfeiters have boldly made claims on Greece’s national wealth through super-national entities like the European Central Bank. These claims are not backed by clear legal authority or logic, but they are being enforced anyway, administered by unelected technocrats and “agreed to” by complicit politicians acting against the interests of actual citizens.

Greece (with more countries to come) is being treated like a company town where “costs” (i.e. social services) are to be cut, productivity milked through greater taxation, and debt servitude reinforced. Corrupted capitalism continues thus to metastasize. Now that phantom paper profits are collapsing for the counterfeiters, real assets must be taken over to fill in the gaps.

Greece’s national assets have been put up for sale endangering its national sovereignty and right to control its own property. Greek well-being is being diminished through austerity programs. This has only caused the economy to contract at an accelerating rate. Seizing control of productive assets, and cannibalizing real wealth to feed counterfeit demands seem to be the primary unstated goals of these strategies because the empirical results of these strategies clearly run counter to stated objectives.

Disaster capitalism: (The Shock Doctrine) The intentional infliction of insecurity, suffering, and scarcity on a population to cause panic, compliance, and amenability to exploitation and extraction of wealth. It is a thoroughly vicious business model that operates in plain sight. When abuse no longer has to be organized and covered by conspiracy, one can confirm that capitalism’s illness is in advanced stages. It is amazing how easily assets can be acquired and individual rights denied (as with fraudclosure) when people are overwhelmed by corruption on all sides.

Stage four—Implosion of the body politic or necessary transformation and redirection?

This stage has yet to be fully entered, but the fraying of Greece’s current social and political order sends a strong signal for the future of the wider world: Passivity equates with more abuse and exploitation, more austerity, and greater hijacking of national and personal assets. Active, civil resistance is necessary to stop the loss of public sovereignty to private interests. Creative, viable alternatives to the currently corrupt and fraud-ridden global economic system are vital. These alternatives and the implications of our current counterfeit wealth trajectory will be explored tomorrow in Part 2 of this article.

 

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Mon, 03/12/2012 - 10:51 | 2247155 cat2
cat2's picture

Chicks for free (hotel maids anyway)

Mon, 03/12/2012 - 10:53 | 2247158 Pinch
Pinch's picture

That's what happens when you're in dire straits!

Mon, 03/12/2012 - 10:57 | 2247168 SilverTree
SilverTree's picture

Money from Nothing - Hyperinflation: Buy Silver & Gold Bitches (Part 2)

Mon, 03/12/2012 - 11:18 | 2247228 true brain
true brain's picture

Very instructive article. Any thoughts on what will happen to the balance sheets of the fed and ECB down the line. The ECB three years LTRO is due of course in three years. My guess is that they will come up with some other names to keep the ponzi going, like reverse double down operation twisted, or sterilzed double cooked QE, or stripped naked bernaked QE. Or something like that to keep the money flowing. Maybe they are betting that the system would be in complete collapse in three years anyway. 

Mon, 03/12/2012 - 11:21 | 2247231 Xkwisetly Paneful
Xkwisetly Paneful's picture

Yea lint like interest rates are too much of a burden.

Money for nothing and chick's for free.

 

 

Mon, 03/12/2012 - 12:08 | 2247402 markmotive
markmotive's picture

Maybe it's time to start brushing up on Social Collapse Best Practices...

Dmitry Orlov can help

Mon, 03/12/2012 - 16:36 | 2248392 forexskin
forexskin's picture

agreed, since:

Now that phantom paper profits are collapsing for the counterfeiters, real assets must be taken over to fill in the gaps.

has been the plan all along.

Mon, 03/12/2012 - 11:25 | 2247242 Bansters-in-my-...
Bansters-in-my- feces's picture

..."Money from nothing and chicks for a fee"...............

Mon, 03/12/2012 - 11:37 | 2247279 Biggvs
Biggvs's picture

And risk for free

Mon, 03/12/2012 - 11:50 | 2247334 Widowmaker
Widowmaker's picture

Good comment.

"No one saw it coming."  -- Alan Greenslime

Mon, 03/12/2012 - 13:56 | 2247766 LowProfile
LowProfile's picture

 

 

Current bubbles being considered include the handheld electronics bubble, the undersea-mining-rights bubble, and the decorative office-plant bubble. Additional options include speculative trading in fairy dust, which lobbyists point out has the advantage of being an entirely imaginary commodity to begin with, and a bubble based around a hypothetical, to-be-determined product called "widgets."

 

The most support thus far has gone toward the so-called paper bubble. In this appealing scenario, various privately issued pieces of paper, backed by government tax incentives but entirely worthless, would temporarily be given grossly inflated artificial values and sold to unsuspecting stockholders by greedy and unscrupulous entrepreneurs.

 

Via The Onion.

FROM 2008.

 

http://www.theonion.com/articles/recessionplagued-nation-demands-new-bub...

 

Mon, 03/12/2012 - 10:53 | 2247157 DaveyJones
DaveyJones's picture

...and your chicks suffer from inflation

Mon, 03/12/2012 - 11:00 | 2247176 cat2
cat2's picture

Too much McDonalds?

Mon, 03/12/2012 - 11:10 | 2247208 carbonmutant
carbonmutant's picture

Too much KFC...

Mon, 03/12/2012 - 11:27 | 2247248 DaveyJones
DaveyJones's picture

too many implants

Mon, 03/12/2012 - 11:34 | 2247269 SheepDog-One
SheepDog-One's picture

HA HA! I was reading a story about how some broke chick in a trailer won $10,000 in the lotto, and spent it all on fake boobs. Ah...AMERICA summed up in 1 story!

Mon, 03/12/2012 - 11:37 | 2247281 carbonmutant
carbonmutant's picture

Either that or blowing it on Champage in a London nightclub...

I'm sure she'll get more use out of her investment, you only rent champage.

Mon, 03/12/2012 - 12:04 | 2247379 DaveyJones
DaveyJones's picture

actually, if she spends ten thousand on the first product, some idiot is likely to finance the second.

Mon, 03/12/2012 - 12:39 | 2247537 carbonmutant
carbonmutant's picture

Truely...

Mon, 03/12/2012 - 11:40 | 2247296 resurger
resurger's picture

thats an epic deal ..

Mon, 03/12/2012 - 11:45 | 2247311 Hippocratic Oaf
Hippocratic Oaf's picture

Wasn't that the movie Bad Teacher?

Mon, 03/12/2012 - 11:45 | 2247313 Honey Badger
Honey Badger's picture

That's capitalism for the world's oldest profession.  Boobs for her are a capital asset.

Mon, 03/12/2012 - 11:54 | 2247345 Shleprock
Shleprock's picture

Good Investment I suspect

Mon, 03/12/2012 - 11:58 | 2247363 SheepDog-One
SheepDog-One's picture

She bought another year or 2 on the stripper pole maybe.

Mon, 03/12/2012 - 13:06 | 2247634 MolotovCockhead
MolotovCockhead's picture

Actually, she was rather smart in a stupid way. She was compensating her lack of brain with a large pair of boobs to boost her self confidence. With enough self confidence she may become a high achiever ;)

Mon, 03/12/2012 - 12:15 | 2247433 prains
prains's picture

debt expansion is the pink slime of the world and only causes fatal mad debt serf disease

Mon, 03/12/2012 - 10:58 | 2247171 john39
john39's picture

you could sum it all up in one word, "parasites".

Mon, 03/12/2012 - 11:02 | 2247184 cat2
cat2's picture

leeches of capitalism destroying the host (it's already on life support)

Mon, 03/12/2012 - 11:15 | 2247216 Alcoholic Nativ...
Alcoholic Native American's picture

capital seeking more and more capital.  Capitalism is parasitic to big government.

Mon, 03/12/2012 - 11:00 | 2247177 359766
359766's picture

just hear everybody crying and moaning ... but my question ... what are you gonna do?
this is unsustainable ... but who cares?

Mon, 03/12/2012 - 11:04 | 2247189 cat2
cat2's picture

The real capitalists care.  Who is John Galt?

Mon, 03/12/2012 - 11:26 | 2247223 359766
359766's picture

yeah ... got it. but what are the real capitalists doing? buying gold and making sure their wealth is okay doesn't mean fighting for prinicples.

Mon, 03/12/2012 - 11:35 | 2247275 SheepDog-One
SheepDog-One's picture

People wont do anything until that day when theyre suddenly bankrupted by another designed market collapse. 

Ive planned for this crap for a long time so for the time-being anyway I can just watch the shitclouds gathering.

Mon, 03/12/2012 - 13:01 | 2247615 cat2
cat2's picture

The fight is about liberty and the rule of law.  Some are fighting (and losing).  But fight on we must.

Mon, 03/12/2012 - 13:05 | 2247628 cat2
cat2's picture

In case that wasn't clear, the fight is currently manifested in Ron Paul.  But sadly we are losing the fight.  The only option is to win from the ground up, (from the county level, then state, then national).  So how are YOU fighting?

Mon, 03/12/2012 - 11:02 | 2247181 Waterfallsparkles
Waterfallsparkles's picture

This Video by David Icke explains it very well.  About 33 min long.

http://www.youtube.com/watch?v=gV9A2IGShuk

Watched it over the weekend and loved it.

 

Mon, 03/12/2012 - 11:04 | 2247187 lunaticfringe
lunaticfringe's picture

So I see this article on CNN Money about the great bull market and whether or not it can continue. With this red-hot economy maybe the FED will have to ratchet up interest rates to put the brakes on...

bwawawawawawa...

Mon, 03/12/2012 - 11:04 | 2247190 aleph0
aleph0's picture

Good post ... and while reading , I thought this must have come from the likes of "Of Two Minds"

Well said ... and I was indeed right.

Mon, 03/12/2012 - 11:06 | 2247193 Atomizer
Atomizer's picture

The Law of Diminishing Returns.

Mon, 03/12/2012 - 11:24 | 2247241 SheepDog-One
SheepDog-One's picture

Their only 'trade' left is making .25% laundering fake Treasuries. 

Mon, 03/12/2012 - 11:09 | 2247199 847328_3527
847328_3527's picture

Excellent! ZH needs to set up a glossary defiing all the abbreviations and specialized terms used in the new games of financial trickery and VooDoo.

Mon, 03/12/2012 - 11:36 | 2247278 espirit
espirit's picture

Let's See: 8 Step Primer.

1. Max out all debt.

2. Pay minimum interest on said debt.

3. Through secondary entity, buy insurance against debt default.

4. Withhold debt interest and feign default.

5. Write down debt.

6. Secure more debt if possible.

7. Default on debt.

8. Collect insurance on default amount.

Wash, rinse, repeat. Geez, I guess that's why I'm poor. 

 

Mon, 03/12/2012 - 11:52 | 2247338 Widowmaker
Widowmaker's picture

Actually it's only three steps:

 

1. Lie

2. Print

3. Repeat

Mon, 03/12/2012 - 11:09 | 2247202 LawsofPhysics
LawsofPhysics's picture

Those who can, are using whatever capital they can to purchase physical assets and insure local alliances are in place for the coming correction while keeping our businesses going and employees employed.  I suggest everyone do the same.  Always pay attention to what successfull folks do and not what they say.

Mon, 03/12/2012 - 12:32 | 2247501 Baleful Runes 4 U
Baleful Runes 4 U's picture

"they can to purchase physical assets and insure local alliances are in place for the coming correction"

haha  correction?  that has to be the euphemism of the millenium.  

" Always pay attention to what successfull folks do and not what they say."

   They are buying up land in Paraguay to get the fuck out of dodge.

Mon, 03/12/2012 - 12:57 | 2247597 gwar5
gwar5's picture

Excellent advice. I try to watch what direction the Chinese are going. I sense their information is good and they're market makers. It's clear they are dumping USD for gold, energy, and hard assets for the long term. You're right, it's a no brainer.

 

Squid pro quo? Our current central planner policies seem determined to give the Chinese discounted resources by killing Western demand, eg.,  like the global warming madness. Looks like TPTB intentionally just want to kill Western demand for global resources so it can be reallocated to China, the banker's golden goose for the 21st Century. The Keystone pipeline was just another BRIC in the wall.

WTF?:  A New York bank (JPM?) recently got China to stop PAGE from opening, the Pan Asian Gold Exchange, which would have allowed real price discovery of gold. IOW, China agreed to stop PAGE per just a single Wall Street banker phone call. So, there is high level extra-governmental Wall Street communication and coordination with the Chicoms on many things.

The Good news: The PAGE exchange will move, and still open, probably this summer. 

 

Mon, 03/12/2012 - 11:10 | 2247204 Snakeeyes
Snakeeyes's picture

Seriously, bank regulators have clamped down on lending (forcing government controi of ALL lending) Look at the numbers!

Financial Repression: Banks Increase Treasury Purchases, Deposits Up, Banks Still Not Lending (Thanks to Regulators)

http://confoundedinterest.wordpress.com/2012/03/12/financial-repression-banks-increase-treasury-purchases-deposits-up-banks-still-not-lending-thanks-to-regulators/

Mon, 03/12/2012 - 11:10 | 2247206 buckethead
buckethead's picture

Great post.

 

Understandable to those of us with even the most basic grasp of the markets.

 

C/Ping this all over the intewebs...

Mon, 03/12/2012 - 12:52 | 2247230 mendigo
mendigo's picture

What I think the analysis tend to leave-out in an effort to simplify -

There's two knids of debt:

1) The debit that you and I take - it is expected to be repaid.

2) Sovereign debt - will nevvvver be repaid.

Bank debt is increasingly looking like sovereign debt.

Check it out: http://www.youtube.com/watch?v=FE_nr2t6fKQ

Mon, 03/12/2012 - 11:21 | 2247233 Pinky
Pinky's picture

Daly Case: http://www.lawlibrary.state.mn.us/newsletter/0711.html

 

In the late 1960s, attorney Jerome Daly was a defendant in an unlawful detainer action in the justice of the peace court in Credit River Township in Scott County, Minnesota. The First National Bank of Montgomery foreclosed on Daly's property and sought possession. The jury and the justice of the peace decided against the bank, agreeing with Daly's argument that the bank had not actually lent him any money, but had simply created credit on its books. Daly argued that since nothing of value had been advanced by the bank, it was not entitled to the property that secured the loan. The justice of the peace, Martin V. Mahoney, entered his decision in defiance of the Minnesota Supreme Court. For conspiracy theorists, we note he died "mysteriously" within 6 months of his decision. Ultimately, the decision of the justice of the peace court was nullified and Daly was subsequently disbarred.

This case made its way onto the Internet, where groups who oppose federal banking laws assert that the case invalidated the Federal Reserve and voided Federal Reserve notes. Even though it has no value as precedent, litigants continue to cite to the case, even as recently as 2007. See Sneed v. Chase Home Fin. LLC, 2007 U.S. Dist. LEXIS 46536, 2007 WL 1851674 (S.D. Cal. June 26, 2007).

In cooperation with Scott County Court Administration, the scanned documents from this case are available on our website. For more detailed information on the case, see our FAQ.

Mon, 03/12/2012 - 11:48 | 2247328 gwar5
gwar5's picture

I remember reading about that case. Yes, banks simply create money via the "Mandrake Mechanism" out of thin air, so named because of Mandrake the Magician. Luv the term.

Regular folks are not allowed to referendum or sit in judgement of this system or to challenge it, nor, the income tax 16th Amendment which was never passed by enough  states to be valid. Both are existential threats to TPTB and the status quo.

Mon, 03/12/2012 - 11:23 | 2247234 SheepDog-One
SheepDog-One's picture

They leave you no choice but to buy real assets and commodities. Gun and ammo sales continue to blow out all previous records.

They leave a sane person no choice, then call you an 'anti govt terrorist' for doing what logic shows is the only logical route.

Mon, 03/12/2012 - 11:26 | 2247245 Widowmaker
Widowmaker's picture

HiPoint 9mm for $159 (MSRP)

Shoot and stash, the serial rubs off with a nail file, and it shoots straight!  It's selling like popcorn and if you happen to deplete your clip one can throw it.

Here it is on sale:

http://www.rrarms.com/catalog.php?prod=G00916

Mon, 03/12/2012 - 14:28 | 2247904 oldschool
oldschool's picture

If you're talking about cheap recreation, maybe.  If you're talking about survival, that's not the place to cut corners.  Pay a bit more up front and get something more reliable.

Mon, 03/12/2012 - 15:21 | 2248106 collon88
collon88's picture

Yea, get a Glock.

Mon, 03/12/2012 - 15:31 | 2248137 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Glocks are good pistols. I own one and after 1000 rounds it has jammed twice. No major problems at all.

Mon, 03/12/2012 - 20:45 | 2249114 Widowmaker
Widowmaker's picture

My comment was intended to highlight the disposable nature that some firearms have become.

Mon, 03/12/2012 - 12:33 | 2247505 SillySalesmanQu...
SillySalesmanQuestion's picture

+1000

Mon, 03/12/2012 - 11:22 | 2247237 Widowmaker
Widowmaker's picture

Fraud from top to motherfucking bottom.

The question the author should be asking is what is Western civilization forfeiting to accommodate monetary policy in the name of oppression Inc. and sovereign assault?

Faggots in pinstripes claiming God's work will be the first through the meat grinder -- book it!

Mon, 03/12/2012 - 11:25 | 2247244 resurger
resurger's picture

dont spray Ammonia on that slime..

Mon, 03/12/2012 - 11:34 | 2247256 Widowmaker
Widowmaker's picture

Nothing but piss.

Bankers earned it, I wonder if greed and record bonuses are worth conditional forfeiture of personal safety and demise of one's spawn.   Fraud Street Inc is still jerking off to their pile of money while Joe Sixer sees "two for the banks nothing but fraud for him!"

Joke's on fags of fraud in pinstripes and hubris Inc!   NO ONE SEES IT COMING, AND ITS GONNA BE GOOD!!  I want tears on the MF tube.

Mon, 03/12/2012 - 11:37 | 2247276 resurger
resurger's picture

i would insert a 0.50 calibar hot suppository gutting up all the way out of their brains...

then kick the head of the mother fucker and then piss on it...

Blankfein then Dimon

 

 

 

Mon, 03/12/2012 - 11:39 | 2247293 Widowmaker
Widowmaker's picture

Maybe you get off on that, but I get off on tears on the MF tube eating their own shit.

C'mon Lloyd, say "what" again!

Mon, 03/12/2012 - 11:41 | 2247301 resurger
resurger's picture

sigh man! i cant belive this shit

Mon, 03/12/2012 - 11:45 | 2247312 SheepDog-One
SheepDog-One's picture

Say 'what' again motherfucker!

Mon, 03/12/2012 - 12:20 | 2247463 WonderDawg
WonderDawg's picture

That is a tasty burger.

Mon, 03/12/2012 - 11:22 | 2247238 jover
jover's picture

Great article! Looking forward to part two.

Anyone in the western world who uses dollars and euros should read this.

Mon, 03/12/2012 - 11:23 | 2247240 Bullwinkle Moose
Bullwinkle Moose's picture

In these times, gold is the safe bet, and silver is the smart bet. In other words gold will protect your wealth, but silver may increase your wealth.

Mon, 03/12/2012 - 11:33 | 2247267 359766
359766's picture

nice ... why're you so sure 'bout that?
I'm hinking about buying in for a while now. just interested in your opinion.

Mon, 03/12/2012 - 12:03 | 2247378 Bullwinkle Moose
Bullwinkle Moose's picture

I love history, and economics was my major. I am also fascinated by psychology, so I took most of my electives in this study of the human race. When reading this article, I was amazed how my feelings were verbalized in such a short article. Rest assured, there will be massive amounts of money printing in the near future. Our fed will be the biggest abuser of monetization, but all other central banks will be devaluing people's wealth as well. It is a worldwide phenomenon. There is little time to protect your wealth. This road will be volatile, so buy on the dips and have the courage to ride it out. Your goal should be to come out of this coming disaster better than when you went in. One more thing, buy physical and take delivery, then forget about it.

Mon, 03/12/2012 - 11:30 | 2247260 jplotinus
jplotinus's picture

It's capitalism, stupid.

Mon, 03/12/2012 - 11:34 | 2247271 LawsofPhysics
LawsofPhysics's picture

Would that be the Capitalism where private risk and corporations that had bad business models profitted right before failing and getting bailed out by the public?  Right, does not look like capitalism to me.  Crash thge fucking system, I know the value of my labor and that of my employees, fucking bring it.

Mon, 03/12/2012 - 11:39 | 2247287 realitybiter
realitybiter's picture

You're close.

 

It's a stupid attempt at capitalism.

 

"Capitalism without bankruptcy and failure is like religion without Hell"

 

If you can't observe that, you are hopeless.  We haven't had real capitalism for 40 or 50 years in America.  There is no TBTF in capitalism.  Capitalism cures TBTF by letting them fail, no longer being too big.

Mon, 03/12/2012 - 11:31 | 2247261 Bansters-in-my-...
Bansters-in-my- feces's picture

Hey Ben Bernakne.....!

Jesus loves you

But he still says you have to go to hell.

Eternal flames for you motherfucker,should take gold instead of fiat Benny boy,you know how that paper goes up in smoke around flames.

Mon, 03/12/2012 - 11:31 | 2247262 williambanzai7
williambanzai7's picture

He's bangin on the bongoes like Ben Bernanke...

Mon, 03/12/2012 - 11:35 | 2247273 realitybiter
realitybiter's picture

Zombinomics

 

 

Banks and the corporations that have sprung up around them are near-dead, putrid zombies.  They don't feed on brains to maintain themselves, they feed on new, legit capital and destroy that capital, only surviving to destroy other capital.

You have to shoot them in the head in order to secure your capital.  Lead will work, but silver is best.

Mon, 03/12/2012 - 11:43 | 2247307 espirit
espirit's picture

+1 - Great term and def. "Zombinomics".

Adding that to the ZH dictionary of definitions.

Mon, 03/12/2012 - 11:35 | 2247274 gwar5
gwar5's picture

I think the solution to fake wealth is real money. I don't have much use for Shariah Law but at least it forbids usury and a debt economy. I think they were on to something, perhaps from ancient experience. 

Mon, 03/12/2012 - 11:40 | 2247294 Shizzmoney
Shizzmoney's picture

Dylan Ratigan argues part of the problem with society is that EVERYTHING is Financialized.

Health Insurance companies have stocks, for Christ's sake. 

All of this will be vaporized to dust when the shit finally hits the fan, anyways. 

Fuck these fascist rent-seeking motherfuckers.

Mon, 03/12/2012 - 12:14 | 2247431 adr
adr's picture

Exactly.

The stock market is the entire problem. What is a stock certificate? Essentially it is money from nowhere. But it can be the easiest money to make and the easiest money to fake. It used to mean something when stock was actually sold to enable your business to grow, and when shareholders actually retained power to shape business decisions. When it really comes down to it the worst thing you can actually do for real business is to sell your company to the public. It does great good for personal fortunes but nothing for the health of the underlying economy.

The entire system is set up to extract wealth from individuals and hand them a slip of paper with a claim to that wealth. Stock is no different than fiat money printed by the Federal Reserve. It has no real value, only the notion that is backs something of real value.

Financialization created the need for outsourcing, 80% retail profit margins, massive inflation, and the dumbing down of society. Nearly everything you interact with on a daily basis is a publicly traded ponzi corporation reliant on ever increasing revenues to satisfy small blocks of wealthy shareholders. Quality control is gone, only a small sliver left just to keep products just above the level where the company will be sued. In may cases they just say fuck it, we'll settle the lawsuits for less than the overall cost cutting, so we'll still be on top.

We reached the point where it became impossible to increase revenues any further from the living population, without cannibalizing the fortunes of the 1%. The system failed and was about to collapse when somebody decided that instead of allowing the monstrous corporations to fail, they would extract wealth from future generations to continue to fund the stock scam. It is now no longer necessary to actually sell a product to consumers anymore. Your corporation can essentially just sell stock to investors, with them using money borrowed from future generations to keep the business funded.

Absolute insanity is the only description.

Mon, 03/12/2012 - 12:59 | 2247608 blindman
blindman's picture

http://www.quora.com/Glass-Steagall-Act-of-1933/What-are-the-pros-and-co...
Glass-Steagall Act of 1933: What are the pros and cons of reinstating the Glass-Steagall Act?
Since the financial crisis in 2008, there has been a lot of discussion about whether the repeal of the Glass-Steagall Act in 1999 was one of the primary causes of the crisis and subsequent recession. Reinstating the act has been touted as a way of avoiding future financial crises.
.
comment. the fraud of prices in the market derived from
"credit" caused economic boom and collapse due to malinvestment
and moral hazard in the extreme, ongoing. outright fraud became
somewhat indistinguishable from systemic function, a matter of
pay grade, indistinguishable because they are actually the same.
having lived through this once already glass steagall was introduced
to protect the paper system, along with associated legislation. there a
period of reliability of paper, somewhat, was maintained for 40-50
years. then 1999 and repeal of all reliability of securities.
complete and insane credit explosion ignited by the likes of
(weapons of mass financial destruction) securitization, cds,cdo,
futures markets of all commodities necessary for life ....
the proliferation of the feral swine of financialization and
the permanent war machine to destroy the world to nation build
and reconstruct on the taxpayers dime for the sake of the private
insider's profit, human life taking a backseat
to fictitious paper wealth of greater systemic relevance.
now, it is all a confidence game with no confidence, no mechanism
of pricing or relative value determination available other
than hope and change. we have entered the age of the neo-tyrant
clan, it will be short lived.
time and information moving faster now. imho
.
ps. "There are three classes of people: those who see; those who see when they are shown; those who do not see." Leonardo da Vinci

Mon, 03/12/2012 - 11:46 | 2247317 blindman
blindman's picture

feral swine, the "most destructive mammal out there."
Wily, Elusive Foragers Invade Upstate New York
http://www.nytimes.com/2012/03/12/nyregion/feral-pigs-plaguing-upstate-n...
.
...
"
By LISA W. FODERARO
Published: March 11, 2012
PERU, N.Y. — They roam by night, picking cornstalks clean, making off with apple crops. They have almost no natural predators, but they have razor-sharp tusks and a seemingly bottomless appetite for plants and animals. Their population can triple in one year.
Feral pigs have been ransacking Bob Rulf's farm in Peru, N.Y., on the banks of Lake Champlain, eating apples and other crops.
Peter Glushko, supervisor of the town of Peru, N.Y., stood outside Rulfs Orchard, which includes a farm market and has been hard-hit by an influx of feral pigs.
They are feral pigs, and while they have long plagued parts of the Southern and Western United States, now they have become a problem in the peaceful Champlain Valley of New York, an agricultural heartland on the edge of the Adirondacks.

Actually, they are rarely spotted. Since they hunt at night and steer clear of humans, few people ever see these pigs. But a pack of them was captured on camera foraging on Bob Rulf’s farm here, their eyes eerily aglow in the light of the flash. “I have yet to see one myself,” Mr. Rulf said.
"
...
hmmmm. coincidence? i think not !
back to the story ..
"Perhaps most worrisome is their reputation as eating machines: the pigs devour ground-nesting birds and reptiles, fawns and domestic livestock, native vegetation and crops. Feral pigs have already proliferated in parts of western New York. But state officials are drawing a line in the topsoil, so to speak, determined to protect both the agrarian economy and the fragile ecosystem from the nascent herd — or “sounder” in swine-speak — in the town of Peru.

“There’s a real sense of urgency,” said Ed Reed, a wildlife biologist for the state’s Department of Environmental Conservation. “Once the pigs get established, they are very difficult to eradicate completely.”
"
..
"Rumor has it that Mr. Rulf’s pigs are descendants of Eurasian boars raised by a local man to sell to hunting preserves, although state and local officials have not confirmed that. Regardless of their origin, officials are not taking chances in halting the pigs’ progress, especially toward the six-million-acre Adirondack Park, the largest swath of pristine wilderness in the Northeast.

“They eat everything,” Mr. Reed said. “They’ll eat the understory in a forest and dig up plants by rooting the ground for insects and roots. They compete with wildlife for food. They’re the most destructive mammal out there.”

Mon, 03/12/2012 - 12:05 | 2247390 espirit
espirit's picture

Organic free range pork - Very tasty.

Mon, 03/12/2012 - 14:02 | 2247797 michael_engineer
michael_engineer's picture

Feral pigs have been eating much of Eastern New York too for many decades now, picking clean, making off, devouring everything in sight, with a bottomless appetite, and with a reputation as eating machines.  Rumor has it those pigs are descendants of London bores.  They eat everything.  They'll eat the understories right out from under penthouses.

Mon, 03/12/2012 - 11:46 | 2247320 Kali
Kali's picture

OT but Obummer signed HR 347 now making it illegal to protest.  WTF????? 

http://www.informationclearinghouse.info/article30774.htm

 

Mon, 03/12/2012 - 12:29 | 2247488 PeaceLover
PeaceLover's picture

If anyone out there still thinks any main political  player is for anyone but the elite,banksters..
LOL they still must be watching.. mainstream news.

 

Ron Paul has his issues, but he seem to keep his word..

and being a peace lover  for me Karma make him the only choice. :-)

PL

 

"Great story"

Mon, 03/12/2012 - 11:56 | 2247349 Downtoolong
Downtoolong's picture

Many of the most ardent critiques of wealth transfer from the poor and middle class to the rich still seem to succumb to the idea that this mostly happens because the rich are smarter, more financially adept, , more worldly and politically connected, better able to create new ideas, products, services, better able to influence politicians and governments to do their bidding, etc. They’ve been taught from birth to believe that such rewards ultimately go to those who accomplish, achieve, and perform better than others, even though there is sometimes a moral hazard or conflict of interest involved. To be sure there are remarkable examples of this everywhere which are constantly paraded before us. We see inventors, athletes, celebrities, stock pickers, brilliant business people, and corporate startups go from rags to riches, sometimes almost overnight. But, if you really pick it apart, you find that all this is not the thing most responsible for the bulk of the upward wealth transfer. This still only represents a small fraction of it.  The dark secret is the bulk of all wealth transfer to the upper echelons of society over the years occurred due to the unfair structure of our monetary system itself. The process is built right into the foundation. It would have happened even if monkeys were in charge, although, in that case it probably would have occurred a little faster.

Mon, 03/12/2012 - 12:03 | 2247382 spentCartridge
spentCartridge's picture

It's all very well moaning and bitching about our current predicament, but the architects that are perpetrating this fraud upon us all, it looks to me like they very well may get away with it.

Nobody, short of this place and a few 'crank' sites ever analyse any of it truthfully, for obvious reasons, no doubt.

The ignorant masses are just too, well ignorant. Even the ones who are supposed to be 'educated' haven't got a fucking clue about how any of this shit works, and they don't believe you when you tell them.

So, I think we are all fucked, several ways including on Sunday, but I do hope that I am wrong.

Time, as they say, shall tell.

 

 

Mon, 03/12/2012 - 12:08 | 2247400 Flakmeister
Flakmeister's picture

Financialization is the same as a carny card trick....

Bring forward unsustainable demand and create the illusion that risk is spread...

It works best when basic values are undermined by appeals to greed....

Mon, 03/12/2012 - 12:21 | 2247466 Hugo Chavez
Hugo Chavez's picture

Exacto!

Dont go into debt.
Be disciplined with your consumption
Save up and pay cash for your toys.

Mon, 03/12/2012 - 12:18 | 2247453 bugs_
bugs_'s picture

End the Federal Reserve Bank of Minneapolis.

Mon, 03/12/2012 - 12:20 | 2247460 Hugo Chavez
Hugo Chavez's picture

It is much simpler than all that.

Just dont go into massive debt.

Problem solved.

Mon, 03/12/2012 - 12:23 | 2247472 kayl
kayl's picture

All you savvy investors haven't been reading your business law books very closely. UCC 3-104(1) states a promissory note by statute is a promise to pay in the form of an on demand note (or substitute for money) and/or a credit instrument for the bank when a term longer than a year is noted and an interest rate is specified.

So in a fiat-based monetary system you discharge debt with an on demand promissory note. You should file your UCC Financing Statement first to assume the duties and responsibilities of a Secured Party. Then discharge all debt with honor.

Judge Mahoney was noticed to keep the fiat system under judicial silence. He broke his vow. That is what you get when you join a satanic brotherhood.

Stop creating controversy. Money is an illusion.

Mon, 03/12/2012 - 12:23 | 2247474 Yardfarmer
Yardfarmer's picture


 


"Creative, viable alternatives to the currently corrupt and fraud-ridden global economic system are vital." From a purely financial standpoint this seems unlikely if not impossible. "Purely unregulated, non-transparent, and malignant uncollateralized bets and hedges on market movements requiring no assets or stake in assets."   The system of financial assumption of debt as an asset and subsequent decoupling from any real relation to goods and services precludes any constructive engagement on a purely financial level. However, from a practical standpoint there are alternatives. These include:
  1.  acquisition of real assets bearing 0 collateral, debt, or counter party risk. i.e. precious metals (with reliable and local outlets of exchange) and land with actual or potential agriculture production, animal husbandry and garden.
  2. ability to store and preserve non-perishable foods, water and filtration systems, off grid sources of energy i.e. generator and solar panels, and adequate storage batteries and inverter system.
  3. adequate means of shelter employing straw bale or rubble trench construction with efficient wood burning stove and access to constant wood supply.
  4. self protection with appropriate firearms and ammunition supply.
  5. basic medical supplies and alternative dental options and maintenance 
  6. common interest with a community of like minded individuals devoted to self sustaining off grid living.
  7. trained guard and flock guardian dogs and reliable 4 wheel drive vehicles w/good rubber and snow chains.
  8. basic tools for building, maintenance and auto repair.
  9. basic solar powered internet access.
  10. if all or most of the above are impossible which is probably the case, establish a social network, store non perishable food, establish adequate security measures, get a bugout bag and basic camping supplies together,hopefully make a connection with some relatives or friends in rural areas, pre-establish back routes out of metropolitan areas just in case.
  11. meanwhile get off the f'ing internet and bubblevision and get to work while you still have time.most importantly direct focus away from an already corrupted social and economic paradigm and onto real sustainable ways of living with all the risk, unsurety and hard work that entails. just sayin' .

 

Mon, 03/12/2012 - 12:35 | 2247515 SillySalesmanQu...
SillySalesmanQuestion's picture

You have been rehypothecated and fiancialized! All our worlds are yours.

Mon, 03/12/2012 - 12:37 | 2247523 adr
adr's picture

What makes matters worse is that it is almost impossible to sell a product or service through the current economic system, unless you have the backing of venture capitalists with the intention of filing for an IPO. Corporate buyers don't want to back a small company through buying inventory unless there is an avenue to load up on stock.

The retail board will purchase inventory if it looks like they can control the destiny of the supplier. Working with venture capital firms, which the director board members may be a part of, they will offer to fund the operations of the small company. In turn the retail buyer will place a large order without actually knowing the true intentions of the board, he was just told to buy that vendors product.

The Venture Capital firm using hypothecated, leveraged money most likely coming from previous board member stock scams, enables the small vendor to produce the inventory they need to satisfy the retail order. In return for the money the vendor supplies the venture capital firm with private stock, which is actually stock that will be held by board members of the retailer.

For a few quarters the retailer purchases large amounts of inventory, even if it is never sold to actual consumers, to make it look like the vendor is showing phenomenal growth. The boards all collude with the talk boxes on CNBC and CNN to pump this great new corporation. The Mouthpiece Jim Cramer probably gets some backdoor money to spout that this company will be the next great...

Excitement builds for the IPO and the private stock the board members hold increases in value. The IPO happens and the Venture Capital firm and retail board members cash out. Sure a couple people within the vendors ranks may make some money, but most must hold their stock for a long period before cashing out. They miss out on the IPO euphoria and the highest pricing for the stock.

If it looks like the company has a fairly slim product line and not too much opportunity for real growth elsewhere, the retail board members just instruct the buyer to stop buying and the company dies. If it looks like the board members may be able to eke out some more fraud, they will wait for the lockup period to expire and then load up on shares at a healthy discount. They will then instruct the buyer to purchase more inventory, perhaps even after letting the product line flounder for a quarter to depress the stock price. This will give the vendor much better numbers and cause the stock to rise. Giving the directors who bought the stock another great opportunity to book gains.

This is how the economy works now. This is how you get Skull Candy, Shock Doctor, and all these other bullshit corporations that don't actually sell 1% of what they claim to become stock market darlings for a short time. Real wealth is confiscated and returned to a small portion of the population through the stock market and the real business of producing and selling a product to a buying consumer really didn't need to happen at all.

STOCK IS THE PRODUCT OUR ECONOMY CONSUMES, NOT ANYTHING ACTUALLY PRODUCED.

Mon, 03/12/2012 - 12:49 | 2247582 Bluntly Put
Bluntly Put's picture

"Fractional reserve: Private fiat fabrication of exchangeable public “money” as a bookkeeping entry through “multiplication” of public fiat held in private bank reserves. Holding 100,000 dollars of depositors’ money may allow me, as a bank, to lend out 1,000,000 dollars."

That entirely depends on if the lending is secured or unsecured. Traditionally, most loans banks made were secured loans, with collateral marked to market on a routine basis. Via derivatives and off balance sheet shenanigans that has changed to most debt issed being unsecured. This does not include government borrowing which by definition has always been unsecured based on the "full faith and credit" of the sovereign.

"After money is created out of thin air, other market mechanisms have been propagated to magnify, funnel, and package value-from-nothing further still, creating financial vehicles that add more numbers without adding more value."

I've thought a lot about that statement, "out of thin air" and really that is a misnomer. Our current government/bank induced debt generation is based more on lies fabricated and sold by charlatans who claim to have crystal balls of unquestionable accuracy in terms of "growth". That way, the foundation is always referred to growth and growth estimates are sacrosanct, they are not questioned by the financial community at large.

 

Mon, 03/12/2012 - 12:59 | 2247607 Danjo
Danjo's picture

The article makes an error in assuming that, because banks can manufacture money out of thin air, it follows that  all debt is manufactured out of thin air. That's a significant error. Greece is not being milked dry by hustling banks. Greece's public and private debt was not created through some magical accounting con game, nor was there some diabolical plot to suck the entire country dry. On the contrary, Greece's debt is the product of the country consuming more than it produces, with too little of the capital it borrowed going into profitable investment. It goes without saying that when you do that, you will not have either interest nor principal to return to your lender. The lender is the loser, not the borrower. If I borrow 60,000 euros to buy three cars to start a rental agency, then if I do well, I will make a satisfactory profit and be able to repay the lender with interest. But if I buy three cars and give them to my three kids for their personal use, and I make 15,000 euros net a year, from which I must pay an annual mortgage of 8,000 euros and keep a family of five, then not only will I not be able to pay off the car loan, I will probably also need to fill up one credit card after another to pay the bills. 

Financialization of the economy does not mean using fiat money, or creating value out of nothing. It means "investing" too much capital in financial products that are supposed to derive interest either from other financial products (derivatives, speculative investments in non-productive assets whose prices can rise, such as housing real estate) or from retail debt - mortgages, credit cards, car loans, education loans. Greece's debt is a product of the latter category: massive amounts of borrowed money have actually been consumed, and will not be paid back. The result is the "haircut" of bonds and other bank "assets", such as worthless mortgages. This is not a banking con game; it is banking idiocy.

 

 

 

Mon, 03/12/2012 - 13:46 | 2247767 Xkwisetly Paneful
Xkwisetly Paneful's picture

+1000

When one comes into the game with "nothing" yet leaves with something they are not the loser of the game.

Mon, 03/12/2012 - 16:24 | 2248337 Danjo
Danjo's picture

The banks don't come to the game with "nothing" - they simply leverage what real money they have. When the deleveraging is over, then they might very well leave the game with nothing.

Mon, 03/12/2012 - 16:24 | 2248338 Danjo
Danjo's picture

The banks don't come to the game with "nothing" - they simply leverage what real money they have. When the deleveraging is over, then they might very well leave the game with nothing.

Mon, 03/12/2012 - 16:24 | 2248339 Danjo
Danjo's picture

The banks don't come to the game with "nothing" - they simply leverage what real money they have. When the deleveraging is over, then they might very well leave the game with nothing.

Mon, 03/12/2012 - 14:12 | 2247843 JR
JR's picture

Greece's debt is the product of the country consuming more than it produces....?

Yes, because its corrupt politicians continue to push Socialism, perks and bribes, rewarding their friends and driving the dept deeper much as Congress uses Fed-created dollars to reward their supporters and protect their safe seats. As the debt deepened in Greece, bankers were there to protect complicit politicians (now virtually under their employ) and to fashion elaborate systems to keep wasteful socialism in place, to put bankers in charge of managing the country and to begin the sap of property and resources of the victims – the productive citizens of Greece.

The oligarchs are very serious in their use of socialism, appealing to the mob vote with free largess with unearned money – something for free transferred from someone else’s property - to achieve their world governance.

Have you ever wondered why some of the wealthiest people in the world have financed Communism and Socialism?

And, as Earl Jensen of Eagle Lake, Minnesota asked in a letter to the editor: “How long would it take you to own and control nearly everything if you had sole right to create a nation’s currency as interest-bearing debt owed to you?  Not long. And that is the position banks hold in the United States of America today… Bankers are the shadow government making the decisions.”

Mon, 03/12/2012 - 14:44 | 2247983 saycheeeese
saycheeeese's picture

in about the same line but... done back in 2009   . you sould join forces !!

https://relativemoney.wordpress.com/

 

Thu, 03/15/2012 - 15:06 | 2258896 Hopeless for Change
Hopeless for Change's picture

The "Shock Doctrine"  paragraph is especially infuriating, perhaps because Barry Hussein is executing it to the letter.  Just ask any #occupy dolt.  Capitalism is to blame, right?

 

"Disaster capitalism: (The Shock Doctrine) The intentional infliction of insecurity, suffering, and scarcity on a population to cause panic, compliance, and amenability to exploitation and extraction of wealth. It is a thoroughly vicious business model that operates in plain sight. When abuse no longer has to be organized and covered by conspiracy, one can confirm that capitalism’s illness is in advanced stages. It is amazing how easily assets can be acquired and individual rights denied (as with fraudclosure) when people are overwhelmed by corruption on all sides."

Sun, 05/13/2012 - 23:28 | 2422694 qiongqiong
qiongqiong's picture

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