Poof, gone. And yet no prosecution, no investigation? So what if your bank said to you: "We just don't know where your deposited money went." What if your pension fund said that to you? Yet don't be surprised if you do hear this same "bewilderment" rap from Bank of America and CALPERS (California Public Employees' Retirement System) in the very near future. Why will they have to say this? In order to meet increasing obligations, pension funds invested in the unbacked promises of toxic derivatives, so-called "high return" junk vehicles that were rated "AAA" by Moody's and Standard and Poor's.
As we speak, California's public pension is insolvent, bankrupt. In a classic Ponzi scheme, its current obligations are being met with involuntary "contributions' from members, and the so-called investments that have been made to fund future obligations will eventually be exposed as empty shells when push comes to shove. Required and owed money will soon be "unavailable."
But don't worry, the federal government will rescue California with "debt restructuring" or created-out-of-thin-air (fiat) currency. If the government can bail out banks to the tune of 700 billion dollars up front (and many trillions through the back door), why not throw a 250-billion-dollar federal bailout to the world's tenth largest economy (California) and one with the nation's most electoral votes?
Since unregulated shadow investment banking has been collapsed with regulated investment, there are no guarantees that market values will be realized or that promised monies will materialize when needed. To wit: Almost every unregulated investment scheme seems to be following the Bernie Madoff model: A greater number of current contributors, attracted by great (but utterly falsified) "returns on investments" are paying into an investment fund. Part of that contributor money is funneled to those currently liquidating their positions (cashing out) or who are requiring dividends. (i.e. Ponzi scheme.)
The other parts go to fund financialized "churn," i.e. profit-taking by the managing company and fees (transaction, maintenance, representation, and processing fees). The managing company then simply substitutes promissory notes for the incoming cash as money-equivalent "value" in their reports and in your accounts. These promissory notes, if inspected, are likely based in nothing, backed by nothing, and answerable to nothing. But since unregulated markets are non-transparent, we won't be able to absolutely confirm their illusory value until those markets blow up in our faces.
We can look at patterns, though, and by that means get a pretty good approximation of the scale of the theft. We can ask, "Where is the money coming from?" After the 2008 financial crash, Wall Street and its zombie banks were rewarding themselves with a near-record 144 billion dollars of compensation annually. So, if the money is not coming from them (since they just crashed), where is it coming from? The answer is that it's almost certainly coming from us -- and not just from taxpayer bailouts, but from pensions, deposits, real estate, and any other hard asset or currency that can be scavenged and replaced with mere numbers, e.g. promissory notes -- "based in nothing, backed by nothing, and answerable to nothing."
What are the more general implications of this kind of fraud building upon fraud?
Ever-expanding debt: Lending money into circulation, at interest, in order to pay debts, simply creates more and more debt. The economy is forced to expand, just to meet debt payments! And since there are limits to growth as regards real and productive economies, it logically follows that unreal, parasitic, or shadow economies must grow, to fill the void between skyrocketing debt obligations and normal production.
Unfunded social insurance, pension, and entitlement obligations: Population increases, coupled with a baby-boomer population bubble, ballooning administrative bureaucracies, and governmental raiding of trusts (like social security) have catapulted costs and have stressed the medium-to-long-term capacity of social insurances, pensions, and entitlements, past the breaking point, even as delivery of services and funds are being maintained (at least for the short term).
Austerity measures will be coming sooner than we think, so as to cover future obligations. Limited benefits, increased contributions, and delayed retirement are waiting for us -- but they will still be a better deal than junk "AAA" derivatives that disappear once money has to be paid out.
Destabilized economies: The Fed's current policy of issuing interest-free money to banks appears to encourage excessive private risk-taking, which is converted into public liability in the form of bailouts, thus further destabilizing the economy and increasing national debt.
Conclusion:
How can this widening gap, between ever more multiplied debt, and productivity-backed money, be reconciled? The short answer is, "It can't." Why not? Because this widening gap exists in an inherently unsustainable system, where ever increasing debt must eventually and inevitably eclipse the entire value of all world resources, assets, and productive effort -- unless the debt is simply forgiven at some point. (See the author's arguments for doing just that, in Endgame: When Debt is Based on Fraud, Debt Forgiveness is the Last and Only Remedy
(Endgame), with over 24,000 reads on Zero Hedge when reposted from the Of Two Minds original post of Endgame).
(First National Bank of Montgomery vs. Jerome Daly) (Click here.)
We can also see that we must come to terms with the unjust and completely unsustainable nature of debt-based money.
If fraud is getting something from nothing, then solutions to fraud involve re-establishing exchange systems that are based upon getting something from something. These systems are already being developed with local currency experiments, bartering, and a host of other emerging alternate economic models and practices (see Part 5 of Unleashing the Future: Advancing Prosperity Through Debt Forgiveness, with links to the five-part series) (Part 5) . These options need to be expanded and further developed.
Our task then is to identify fraud in all its forms, stop our participation in them, pursue a counteroffensive and commit to moving our money, time, and value to genuine, prosperous, health-affirming, financial commitments and practices.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
3
2
2
