Capitalism is like any other religion: it's just a bunch of rules without innate value that mean only as much as we think they mean. America's post WWII forays into other countries are very much the same as the Crusades of the Middle Ages, of men hellbent on forcing their religion on others. It's delusional witch burning on a large scale but it's accepted because we still cling to the idea of witches. How else ya gonna justify putting a(n economic) bullet into somebody??
So I don't much bother myself with what I consider a passing fancy. But that is not conventional wisdom and all but the tiniest minority can move past That Which Is Deemed (TWID). TWID is what we use to tell right from wrong, good from bad. A man born in America is a capitalist while a man born in China is a communist. People generally go with the TWID - even if its death is only a matter of time.
But here I will break my usual pattern and speak wholly within the terms of TWID. After all, we are stubborn and stiff-necked enough to ruin millions of lives over it no matter how false it may be. So for argument purposes we'll pretend money is real and people are not, our lethal TWID that grows stronger every day. Something to be proud of! (OK, there may be some sarcasm in here)
Before we deconstruct our global TWID think of this one scenario first: You have a going enterprise but to keep it going you need a loan. Problem is, the banks are all out of money. What happens then? Do we just print up more and more? And if that's a solution, why not just print up enough to give everyone a million dollars? Sounds like a fricking economic stimulus to me! A Maserati in every garage!
They say in 2008 the global economy failed. That is a falsehood. What happened in 2008 was the economy was exposed as a failure. It failed when we decided to jump off a cliff years before. 2008 was just the body splattering on the ground. Many also like to claim the crisis has been averted and we've been saved. That sort of staggering denial is the equivalent of claiming you're debt free because the debt collector can't find you. But he will - and it will be all the worse the later he finds you.
Time is not our friend here. Some say we're already past the point of no return.
The first trick of the high priests is to enslave you with your own illusions. Like a crack dealer giving out free samples, easy credit was the 21st Century's answer to bringing back indentured servitude - a fancy term for slavery except you have to provide your own food, shelter and medical care. Believing we're free people we gladly took on the chains of big debt, lured in by the high of nice houses, nice cars and nice TVs. We were smiling and thanking the men who were sowing our demise!
Mortgage broker crack dealers and their ilk know at some point their victims will be bled dry, but who cares? By then you've got all their money, they gave it to you of their own free will and you get to walk around like a responsible citizen. That's just scary to think we're so far off the right path we think that's OK. The power of TWID! That's why honest folks will tell you our current predicament was preventable and predictable.
global lending exploded from $900 billion
to more than $6 trillion.
Yup, put a credit card in that five-year-old's hands and you own him for life. In the 80's "greed is good" was accepted into our TWID and we've never looked back. Savings are for losers and debt is for winners! Between 1980 and 2008, American consumer debt tripled to over $14 trillion. Everyone's living the good life! Why aren't you? It's a natural human tendency to want to live well. Nothing wrong with that. But far too many people's esteem is based on living better than their neighbor.
But the bank dealers have to get their crack from somewhere, they can't just make it up (yet). This is true because in our minds we must cling to the idea of money having meaning for our lives to have meaning. Yeah, I know that sounds stupid but such is the nature of religion. So where are the dealers getting their currency? From the few nations that keep cash on hand, i.e. save money: Japan, the oil countries of the Middle East, Germany and most of all, China!
On average, the Chinese save a whopping 50% of their earnings! Worldwide savings ballooned from $36 to $72 trillion in the first few years of this century. Combine this with the massive lowering of interests rates to historically low levels and the global banking system couldn't lend it out quick enough as they were basically playing with rent free money. Thus we have a recipe for by far the greatest economic bubble in history.
Ah, but if only it stopped there! You may have spotted the (monumentally fatal) fly in the ointment at this point. In the orgy of lending even with free money, there's still the risk of never getting it back. But what if you could make that risk disappear? Well, you can't actually but who can resist the financial alchemy of turning lead into gold? Sure, we laugh at those "morons" back in the Middle Ages who self-deceived themselves to the point of believing in alchemy. But one day our descendents will be shaking their heads at us!
Investment bundles of debt derived from the massive lending - aka derivatives - were sold to outside investors by the banks. Now the banks' risk is offloaded onto
But of course you've got to keep upping the dose to get the same high. Derivatives weren't just sold once, but became a market unto themselves, sold over and over, infesting the system to the point of $683 trillion by 2008, ten times the value of the entire global stock markets. As long as the bubble had not burst, this caused profits to explode making derivatives seem a mainstream investment even for pension funds and other institutions of fiduciary responsibility for large numbers of people. The appetite for destruction was insatiable.
As you can see, it would not take much of a movement in a market of that size to wipe out vast amounts of money. And boy did we see a movement when the bad debts could no longer be hidden! And with leveraging of the debts upwards of 30 to 1, we didn't just lose dollar for dollar, but 30 dollars for every dollar. There's no getting out of this, folks, not in a million years. We're only getting in deeper by the day to put off the day of reckoning, the derivatives market now reaching $1.4 quadrillion, jumping off the cliff all over again.
Financially speaking, we're a dead body. But to keep that news under wraps we're transfusing blood from the living into the dead body to make it appear alive. This keeps politicians getting re-elected, bankers from feeling the true wrath and the populace docile because we don't really want to know the truth anyway. How many have to suffer and die before we admit our TWID a failure? The price of that willful ignorance is global catastrophe.
At some point, there will be no more live bodies to drain. Here in America 50% of the population owns 1% of the wealth. To keep the dead heart of the Frankenbanks beating we are being bled dry. Soon, no more Chinese money will rescue us to fund our national debt and our government will default on its loans too. The interest alone is hundreds of billions of dollars per annum. We are not a solvent country, without the continual infusion of Chinese cash we'll grind to a halt which will make our current predicament look like the good old days!
Of course, we could grow up and face the fact all these numbers are just numbers with no reason to control our lives. I don't expect anyone to do that at this point, to put their faith in Nature and trust to mutual cooperation with no strings attached. I'm just covering my ass for historical purposes so I won't get lumped in with the vast majority of morons. Go ahead and vote yourself a savior you can point a finger towards when things go wrong but really the finger should always point towards the mirror.
Information from this post mainly came from the Australian TV series Addicted To Money. I highly recommend watching all episodes to gain a fuller understanding of the architecture of our current economic structure.