Let’s begin by thinking about this, a quote from The Daily Bell:
“The problem with where America is now is that the country has been built on one lie after another for the past decade and the lies show no signs of slowing down.”
And then, there’s this from Charles Hugh Smith via Marc Faber:
“[T]he status quo would collapse were systemic fraud and complicity banished… They have become the foundation of the US economy and financial system…”
You will recall how Goldman Sachs wowed the whole world with its dazzling trading. Day in, day out…the traders at Goldman made money. The firm turned in “perfect” trading quarters, with not a single day showing a loss.
Surely, one of the junior traders would have miscalculated at least once? Or a seasoned old pro, after a well-irrigated lunch, take his fat finger and hit the wrong button? Nope. Not once did Goldman’s trading machine err. It was uncanny. Almost unnatural.
Who was on the other side of those trades, we wondered? Trading is a zero sum game. One side wins. The other loses. So some poor schmuck must have taken a loss for every gain earned by Goldman’s geniuses. Imagine him taking his lumps day after day…and still coming back for more. How could anyone stand so many losses? What kind of fighter could take that kind of beating and still be on his feet? And yet, there were no major new bankruptcies announced during that period. How was it possible? Who was losing all that money?
We were perplexed.
But now we know who the schmuck was…the poor sap was us! Had it not been for Senator Bernie Sanders from the Green Mountain State, who insisted that the Federal Reserve expose its shenanigans to the outside world, we would never have known what had happened to the Fed’s $3.3 trillion in bailout cash. Now we know. Goldman helped itself 212 times – roughly every business day – during the 12 month period beginning in March ’09, all the while telling the world that it needed no bailout.
Lies, lies, lies…
Corruption is not only at the top. Like a Christmas pudding steeped in rum, the whole economy – from top to bottom – reeks of it. Here’s the latest proof from Bloomberg:
Americans want Congress to bring down a federal budget deficit that many believe is “dangerously out of control,” only under two conditions: minimize the pain and make the rich pay.
The public wants Congress to keep its hands off entitlements such as Medicare, Medicaid and Social Security, a Bloomberg National Poll shows. They oppose cuts in most other major domestic programs and defense. They want to maintain subsidies for farmers and tax breaks like the mortgage-interest deduction. And they’re against an increase in the gasoline tax.
Let’s see, how does that work again? Yeah, balance the books…says the noble citizen…but make sure it’s at someone else’s expense. Make the rich pay.
That’s how corruption works. People want something for nothing all the time. But only some of the time are they able to get it. Now, Goldman gets free money from the Fed. The taxpayers expect free money too. And so, the whole society lives a lie – that each man can live at the expense of someone else.
But why CAN’T people live by taking money from the rich? Well, of course they can. For a while. Maybe even a long while. But not forever. And every time they spend someone else’s money the less money there is left to spend.
The rich are just as self-interested as everyone else. Take away their money and they dodge. They feint. They play dead. They hire lobbyists, bribe Congressmen and play the game. If that doesn’t work, they hide their loot and flee.
The problem with trying to live at the expense of others is that others don’t like it much. They stop producing and try to live at someone else’s expense too. And pretty soon, you have a nation of poor zombies…feeding on the little living flesh still left alive.
“The idea that we can solve our structural-deficit problems merely by asking more of the well-off is totally unrealistic,” said David Walker, who was US comptroller general from 1998 to 2008 and now leads a group advocating against deficits. “The math simply doesn’t work.”
But that never stops the rabble from attempting it.
“The one place Americans are willing to see sacrifice is in the wallets of the wealthy and Wall Street,” Bloomberg News relates. “While Americans say they strongly support balancing the budget over the next 20 years, when offered a list of more than a dozen possible spending cuts or tax increases, majorities opposed every one of them except imposing a bigger burden on the rich.
“A majority backs raising the cap on earnings covered by the tax on the Social Security retirement program above the current limit of $107,000. Two-thirds would means test Social Security and Medicare benefits. Six of 10 would end tax cuts for the highest-earning Americans. And 7 of 10 favor a tax on Wall Street profits. ”
Taxing the “rich” to fix the budget deficit is a ruse, a charade, a something-for-nothing game.
Lies, lies, lies…
The first lie was the biggest whopper of all – that you could get rich by spending money rather than saving it.
The second was that the stock market would make you rich. All you had to do was to buy a well-balanced portfolio and hold for the long run.
When that one ran into a wall, along came the lie that you couldn’t lose money in real estate.
There was also the lie that the free market would make people rich…and if it didn’t, the authorities would force it to do so!
Then there was the lie that an economy saturated in debt could be stimulated to heights of prosperity by splashing on more debt.
And then there was the lie that you didn’t need real money in the system; the authorities could manage a flexible, paper money system so as to help maintain full employment.
And then, after half a century of adding cash and credit, when the Wall Street speculators cried and moaned, we were told that they were “too big to fail.” They needed to be saved.
Then came the lie that monetary and fiscal stimulus would lead to “recovery.”
When recovery didn’t come, we were told that “quantitative easing” would do the trick – so they pumped hundreds of billions of dollars into Wall Street’s failed institutions. When it didn’t work, we got QEII.
And now, the federal government is headed to bankruptcy. We are told not to worry. No need to change course. Tax. Spend. Overspend. Stimulate.
The same goofballs, liars and incompetents who have brought us this far say they’ll take care of us.
Which is what we’re worried about.
for The Daily Reckoning Australia