(Article changed on January 21, 2014 at 12:42)
The world's best blogger about government and politics, who goes by the pen-name of "George Washington," headlined on January 16th, "Top German Regulator: Precious Metal and Currency Manipulation Are WORSE Than Libor," and he linked to a news report from BusinessWeek datelined the very next day, titled "Metals, Currency Rigging Is Worse Than Libor," which reported that gold prices and currency prices are probably manipulated by the mega-banks at least as much as the interbank loan rate, or "LIBOR," is, and that the mega-banks are probably skimming even more by manipulating these prices than they are by manipulating LIBOR -- which is already trillions of dollars of manipulation.
"George Washington" also linked there to numerous other reports, showing that the mega-banks systematically skim from trading derivatives, oil, all commodities, "and everything that can be manipulated by high-frequency trading." He also documented that they are "engaging in Mafia-style bid-rigging fraud against local governments," and are "shaving money off of virtually every pension transaction," and "charging 'storage fees' to store gold bullion ... without even buying or storing any gold," and "pledging the same mortgage multiple times to different buyers," and so forth.
He didn't even get around to mentioning their laundering of billions for drug-traffickers, violations for which some wrist-slap fines were issued, but he had already covered that in an article just two days earlier, where he noted that "The HSBC employee who blew the whistle on the banks' money laundering for terrorists and drug cartels says ... : "America is losing the drug war because our banks are [still] financing the cartels', and "Banks financing drug cartels 'affects every single American'."
What these mega-bank crimes show is that the aristocracy, the people who move big sums of money, function by colluding together within their specialties so as to make their profits not really from investing but from their insider knowledge of which way prices (which they can manipulate) will head, of gold, currencies, loan-rates, bond-yields, commodities, etc., so that these individuals can profit from these changes in prices, not from the prices themselves. They make their money "on the margin," not on the goods themselves; they make it by the change in prices. They manipulate prices merely in order to make money by their advance-knowledge of the direction prices will head.
In addition, they make money by charging gangsters for laundering their money. In other words: they make their vast sums of money not by producing goods or services, but instead by secretly skimming money from everyone else: the people who are actually producing goods and services.
A good example is Wall Street's buying up of aluminum warehouses, so as to be able to store enough aluminum so as to pull more from the market and force prices up, when they have decided to profit from its going up, and to flood more onto the market and force prices down when they have decided to profit from its going down. On 17 June 2011, the metals-trading organization, the Inter-Continental Exchange (ICE), headlined "Summary Disciplinary Proceedings Against Goldman Sachs," and reported an approximately $40,000 fine against GS for "disorderly trading ... of a serious nature." The Wall Street Journal bannered "Wall Street Gets Eyed in Metals Squeeze," and reported that, "Goldman Sachs Group Inc. and other owners of large metals warehouses are being scrutinized by the London Metal Exchange after being accused by users like Coca Cola Co. [buyer of aluminum for cans] of restricting the amount of metal they release to customers, inflating prices." On June 20th, Katya Wachtel at Business Insider headlined "Coca-Cola: Goldman Sachs Is Manipulating Metals Prices," and she noted that, "the complaining companies single out Goldman as the worst offender," but that all "operators of warehouses, which include J.P. Morgan Chase & Co. and Glencore International PLC, should be forced to allow the metal out more quickly to meet demand."
Goldman, J.P. Morgan, and other investment banks are renting enormous warehouses, filling them with metal, and then manipulating metals prices by using their resulting market-power to control the supply-demand relationship via releasing (or not) metal onto the market. Their advance knowledge of when prices will go up and down enables them to make huge profits even after paying their warehousing costs. Outside investors (as well as the users of those commodities) lose money that these warehousers gain via their market-manipulation.
Thus, at the very top of society, theft is being treated by means of mere wrist-slap fines against the offending corporation, while the top executives (who are hired by their own boards, who are each other, their fellow mega-finance insiders), who actually receive the gigantic bonuses and pay-packages from these crimes, don't even have to pay anything at all. These people -- the people who move trillions of dollars -- are instead called, by Republicans, "the job creators." They finance political campaigns. But the people who actually vote, and perform jobs and get paid a wage, by "the job creators," are often actually despised and abused by Republicans, such as when Mitt Romney heaped contempt upon the lower 47% (none of whom have much money to move).
This is the reality of what Adam Smith called the "invisible hand". This reality is no "invisible hand," but instead merely the hidden hand, of top organized criminals. These elite criminals, our aristocracy, buy their selected politicians, in our "democracy," in this "capitalism."
Andy Denis's brilliant and devastating 2005 "The Invisible Hand of God in Adam Smith" in Research in the History of Economic Thought and Methodology, traced the origin of the "very significant apologetic aspect to Smith": "The message is clear: what is good is good and what is bad is good as well; everything is for the best, so whatever happens rejoice, and accept." Smith himself, in 1790, explicitly heaped praise on the "all-wise Being, who directs the movements of nature," and he said that, "God himself is the immediate administrator and director" of everyone. Smith wrote, there, that, "All the inhabitants of the universe, the meanest as well as the greatest, are under the immediate care and protection of that great, benevolent, and all-wise Being, who directs the movements of nature; and who is determined, by his own unalterable perfections to maintain in it, at all times, the greatest possible quantity of happiness." He went on to urge "magnanimous resignation to the will of the great Director of the universe," and he said that, "The care of the universal happiness of all rational and sensible beings, is the business of God and not of man." So, unquestionably, it's God's "hand." A writer like that is the perfect propagandist for the aristocracy; so, his career was financed by them, and they still spread his fabrication. They call it "the free market." Of course, back then, buying and selling slaves was a booming part of it. That's how "free" it really was.
Is this updated feudalism really just fascism, not "capitalism," at least not any democratic form of capitalism? Is it just a Big Lie?
Whose hand is it, really, that's secretly rummaging through our pockets, while we would get life imprisonment for stealing just a millionth of what they have already filched?
And celebrations are held in their honor? Why? Who is paying for this party?
Investigative historian Eric Zuesse is the author, most recently, of They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST'S VENTRILOQUISTS: The Event that Created Christianity.