Money is an Arbitrary Value System*

* If you think otherwise, do you care to debate the following video?

"Perhaps the only lessons learned by the banks in the crisis is that the rules don't apply to them." Ain't that the truth. The video is completely accurate:

Richard M. Bowen, former chief underwriter for Citigroup’s consumer-lending group, said he warned his superiors of concerns that some types of loans in securities didn’t conform with representations and warranties in 2006 and 2007.

“In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”

Read that bold sentence again.

The bankers KNEW they were committing fraud that would create trillions of Dollars in losses.

Rather than suing them for the appraisal fraud, accounting control fraud, securities fraud, mortgage fraud & foreclosure fraud, instead we have a government that assists them in the fraud by papering over their mistakes and forcing other institutions to waive the right to sue over the fraud.

Everyone else is forced to eat the socialized losses that mirror the "profits" generated by the banks in years past. We have a central bank holding rates at 0 while running the printing presses in overdrive. That is destroying pension accounts and the living standard of the elderly as their life savings is literally stolen from them to prop up a bunch of criminal thugs on Wall Street.

The goal is not to create value or stability, but rather to engineer instability, with sharp market moves which can be profited from on the way up AND on the way down:

Bubble, Crash, Bubble, Crash, Bubble ...

We will continue this cycle until we catch on. The problem isn't only that the Fed is treating the symptoms instead of the disease. Rather, by irresponsibly promoting reckless speculation, misallocation of capital, moral hazard (careless lending without repercussions), and illusory "wealth effects," the Fed has become the disease.

The average person is fed backwards looking misinformation by the media, which is sponsored by those selling the bag to others.

If you are in debt for consumption driven reasons it is worth noting that the game is rigged. These people have done, are doing, and will continue to act as criminals to rip you off. There is no reason to go out of your way to make yourself easy prey.

Are you anti-American? Do you have an axe to grind? Did you somehow fail at life? These are questions we are trained to think when anyone complains about scams embedded in the political economy.

Speaking for myself, I have never been as successful as I am today, and much of that success comes from the free market ideals that have been preached (and meeting my wonderful wife). The issue I have right now is that we still preach those free market ideals, but are doing nothing to follow them (and are actively undermining them). If I was born 5 years or 10 years later I might be a street beggar, simply because my opportunity to succeed had been marginalized by the market corruption of the bankers. Maybe I still would have done ok, but a lot of people are being driven to the margins and off a cliff. Many of them are even sadly conned into believing it is their own fault.

Certainly consumers are to blame for some stuff, but they had no idea how much fraud was embedded in the financial engineering going on beyond the headlines. They didn't know that the central banker believed that there was no reason police fraud. Most people are too busy to be macro-economic experts on the side, and yet if you made the mistake of trusting the bankers in some cases they may have destroyed your life savings or left you living a meager life as a debt serf.

Back when the FBI warned that there was an epidemic of mortgage fraud (in 2004), the US federal government shifted some of those resources to policing other areas like homeland "security." When states tried to protect their citizens against predatory loans the federal government used preemption to block them, allowing the fraud to continue. As Alan Greenspan states: there was fraud, it was intentional, and it was indeed a series of criminal acts.

None of that is a matter of debate.

And none of the banking executives are in jail.

The federal government sided with the criminals on the way up. And it is siding with the criminals on the way down. They would rather debase the currency and steal your savings than let their criminal buddies on Wall Street go bankrupt.

Society is nothing more than a system of laws and the culture they promote. Betray someone's trust and they become less trusting toward everyone else. That creates friction in the marketplace which shrinks the economy and living standards. Make heroes out of criminals & at some people a lot of people are going to say "screw it, the laws do not apply to me either." When that happens (as it will) then at some point there will be a sharp increase in violence.

This is not about promoting communism, or some other such label. What we have now in the capital markets is far worse than communism, as they have privatized profits AND socialized losses. If you believe in capitalism OR communism then what is happening now is broken.

And yet the people who just privatized the profits and socialized the losses are to be worshiped and followed. You should be thankful that the government bailed them out & you should just suck it up. The role of government is to protect the wealth of the opulent from the stupid majority. It has always been.

The stupid thing about it is that all (or at least most) of that pain & suffering is easily avoidable by letting the people who preach free market values to eat their losses and fail. By pushing those off onto everyone else, ultimately the government just creates uncertainty and makes people less trusting. And as society breaks down, the government won't be able to sort out the issues, as they already gave away all the money to a bunch of brigands on Wall Street.

They will dance while your family starves.

"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." —Thomas Jefferson

Published: November 8, 2010 by Aaron Wall in business


November 8, 2010 - 4:09pm
November 8, 2010 - 8:32pm

Such post should have thousands of comments because everyone who THINKS should appreciate them and forward to others.

But instead, people are busy on Facebook, Twitter, and similar useless cr@p and 'socializing' and 'talking' about cr@p. If they have a sudden urge to use their brains they turn on TV to be fed by propaganda. Maybe they will start to think when they really start to starve.

November 8, 2010 - 9:56pm

If you want a real scare, think about who controls the money. Who controls the financial institutions. Your first thought might be "corporations" - but who controls them? The answer won't come easily :(

November 8, 2010 - 11:43pm

I realized that from the fraudsters (ie. banks) point of view it makes a perfect sense to lend as much money as possible; since they create money out of nothing they lose nothing on bad credits and the more they lend the more chances of making maximized profits. Borrowing money to 1,000 people brings more profits than borrowing money to 10 people.

They don't care about possible losses because, again, they create money out of thin air. They risk nothing, they are the only ones who can win this 'game.'

November 9, 2010 - 2:43am

Many many people are too busy making a living to track the details of much of this. That is how it is. Personally I would have been happy to see hundreds of wall street people hung by the neck from light posts on wall street. Obviously that is going overboard but it's not like they don't deserve it. While they are blowing coke in the Hamptons with their whores someone just blew his brains out because the sheriff came to throw him out of his foreclosed home. That really is how it is.

So what can any one person do about any of this? Damn little. Are any of these people going to jail? Fat chance.

I pose the question again, what can any one person do to take these people down? Most likely the big bills about this in congress will further crush free economy and create new and different ways for these bankers and their lawyers and accountants and brokers and analysts and their paid for legislators to screw us more.

The people who regulate the financial industry were busy beating off to porn in their offices while all this happened this time, this is a well documented news fact. So don't be expecting them to do anything.

Maybe some of the people, who sound a little looney to me, who say there is a goal to destroy the economy in order to bring a new form of government are not as looney as they appear.

The congressman I saw interviewed said they did the stimulus bill after seeing a run on the money market funds and it scared them a lot. Well it would only take about 20 people in the right positions to create that run. Maybe that happened that way, maybe not. Who knows?

November 9, 2010 - 4:19am

"So what can any one person do about any of this?"
One word: BOYCOTT.

November 9, 2010 - 8:49am

The underlying structures create an environment which drives the behavior of people.

Whether it's banks, the political system, corporations, education, health services etc. We are all driven by the underlying structure.

The psychology of group think will nullify any dissenters who will see the truth and want to do something about it.

In a way, as sentient thinking beings we are all guilty of allowing this to perpetuate.

I'm all for a capitalist system but I am concerned that in this case the system wasn't allowed to do it's work. In fact we have been sold a pup by a democratic system which is not really democratic (it just looks that way).

Tinkering with some of bankings or any systems problems does not provide the solution. It merely papers over the cracks. Cracks which will grow into chasms at some future point. (we often have short memories).

The only real answer is a wholesale rethink.

I happen to believe this is unlikely to happen because the very system that's broken is perpetuated with and by people who need the system for their power.

Happy days!

Steve (Based in the UK)

November 9, 2010 - 11:25am

Hi Steve,

As Jacque Fresco put it in Bristol at the end of August:

"If you don't do anything, nothing will change"


November 9, 2010 - 5:20pm


Thanks for the link, I have signed up.



November 9, 2010 - 6:31pm

I couldn't agree more. I'm pretty politcally agnostic, but my one belief is that you must be consistent. You can socialize and let everyone take care of everyone, or you can privatize and let people take their own responsibility. As an entrepeneur I prefer the latter, but to be honest I'd do what I do regardless.

November 10, 2010 - 4:59pm

Great post Aaron.

Here in the UK we have followed the US example of printing more money, the banks are obtaining credit at post war record lows, yet lending it (even to those with 999 Experian scores) at record spreads, as they still prefer to make money creating financial instruments instead of lending to businesses and consumers.

Much of the home owning public believe that house prices falling are a good thing, but believe their own homes are worth more than the house next door. First time buyers of homes now need a deposit of 15-20%. But there are signs of change. A specialist US lender has just entered the UK mortgage market this week offering full mortgages to those with bad credit. This time they're not calling it sub prime, but the merry go round is slowly starting up for the next boom.

Don Amodeo
November 11, 2010 - 5:48am

"The stupid thing about it is that all (or at least most) of that pain & suffering is easily avoidable by letting the people who preach free market values to eat their losses and fail."

And there you have it.

Unfortunately, like a bunch of new-agers who want religion without Hell, too many in our soft scoiety want capitalism without failure. They've forgotten that loss, and the risk of loss, is an integral part of what makes the system work.

And it's not just an economic problem. I'd go a step further and say it's also a social one. People today are obsessed with safety nets - obsessed with security. They'd rather live as slaves, just so long as their masters keep their stomachs full and their minds distracted.

After all, slaves never have to worry about paying the bills.

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