Economics and Government and Social Issues03 Feb 2013 03:07 pm

Imagine if you were in a casino and you were able to gamble with house money or money given to you by investors of your business. Your winnings in this casino are yours except for any chips you want to give to investors of friends. Yet, if you lose, the casino’s bank would bankroll you for more, and pass on your debt to investors and to the public at large (taxpayers).

The above image pretty well captures the practices of modern capitalism in our current economy. The leaders of industry who are too big to fail are receiving huge loans and gifts to use at their discretion, and who can depend on bailouts and additional loans if they were to fail with the money currently in their possession. In addition, all of their debts are excused or passed on to the tax payers (government) on a regular basis and not just during a crisis.

One way in which this is happening is through the Federal Reserve and its various forms of quantitative easing and the buying of Mortgage Based Securities (debt). First the Fed further tilts the tables in the uber-wealthy’s favor by giving them almost all the newly printed money (liquidity) at near zero interest with no demand that they “trickle down” this money through job creation, loans or expansion. Then the Fed buys their bad debt and unserviceable mortgages and while keeping ownership of the assets passes on the responsibility to pay off these toxic debts to the government (tax payers).

This taking from the poor and giving to the rich has been running at full speed since early in 2009 in response to the financial crisis. How long can this go on you might ask? Well, this grandest heist in all of economic history can last as long as the American taxpayers allow it to, and as long as the economy does not substantially improve.

If the economy improved it would be harder to justify bailouts, endless money printing and trillions of dollars in loans to the wealthy. If the economy improved interest rates would rise making it harder to rationalize low interest loans to the wealthy, and the rise in interest rates would make their loans harder to pay off.

The fact of the matter is that the stock market is not rising in spite of the struggling economy, but because of the struggling economy. Since 2008 the stock market’s steepest rallies have come on the heels of the Fed’s announcing that low interest rates (hence free liquidity) would continue, or sky rocketed following a poor economic report. While the media is fond of saying the stock market rallies are counterintuitive, climbing a wall of worry, or they have already discounted the bad news, the truth of the matter is that the market is rallying because the economy is poor.

A poor economy means low interest rates, more money printing, more potential of bailouts, no need to expand business (low overhead), and the more likelihood that the shifting of debt and responsibility to the public can continue unabated. In addition to this, the poorer the economy the easier it will be for the wealthy via the government to raid the last remaining storehouses of wealth of the 99.999% of the people that being social security, and the other social safety nets which come out of our paychecks.

So a short recap to this point is that our economy has become a casino in which the casino continues to print money to greatly enlarged the pool of money with which to gamble. Almost all of this new casino money is given to the wealthiest gamblers via near zero interest loans. The wealthy recipients are then free to raise the stakes in their gambles and make quite a killing. If they fail, they receive more newly printed money via bailouts, or their debt is purchased by the casino and passed on to the people in the community via the national debt.

Okay lets use a few more images to highlight and expand upon a few points regarding the social/economic road we’re on.

In many ways it appears as if those in the know feel that our current monetary system is unsustainable and that they are grabbing as much money and ownership as they head for the exits. It is as if the Titanic is going down and they are getting on their life jackets and getting into life boats. The irony, is that only the captains and crew are getting into the boats and all the women and children are being left on the sinking ship.

While the captain and the crew continue to get the proverbial “golden parachutes” as they cash out during the coming collapse, the overwhelming majority of us will be lucky to retrieve a snot ridden hanky.

It is amazing to me how many people support the financial elite and act as if they are themselves a member of the 1%. Ten years ago we talked of the top 10%, soon it became the top 5%, now we speak of the top 1%. Yet, each day when the market closes and the business day ends the music stops and more chairs are removed from the dance floor. The 1% is already the .1% and the zeroes in front of the decimal point will grow at a mind numbing speed. The number of chairs when the music stops is getting close to a handful, and the problem with this dance game is there is no intention to start over when there is a lone standing winner.

Those left in the dance are the biggest and most ruthless risk takers who have no social conscious or fear, and depend on others fears and ethics making their future success possible. It is like two speeding cars heading towards each other in a game of chicken waiting for the other driver to swerve out of the way to avoid their demise.

The truly successful businesses are the large ones who are hoarding cash making their money through loans, bailouts, and the use of financial instruments. Their businesses are similar to the old mafia fronts in which the business was used to detract attention from their true forms of money making. In some ways you need to have a business to use as collateral for the obscene loans or to go into bankruptcy to qualify for a bailout.

As the title of this post states, heads they win tails you lose. This is definitely the game that the financial and political elite are playing. Lucky for the elite we have a president who is gifted at this game, while appearing to most to be a humane and caring person. When watching him speak it is easy to get that impression, but when you look at his actions, policies, and the people he surrounds himself with his true alliances are hard to ignore.

At certain moments in history the financial and political elite make statements which seem to reveal their deepest feelings and convictions I’ll leave you with two quotes attributed to the Rothschild family, who are still reportedly the richest family in the world and deeply imbedded in the world of central banking.

“Give me control of a nation’s money and I care not who makes the laws.”

“I care not what puppet is placed on the throne of England to rule the Empire, …The man that controls Britain’s money supply controls the British Empire. And I control the money supply.”

Jim Guido

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