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October 12, 2010

Capitalism is Dead - Long Live the Mighty Con

By Chaz Valenza

Capitalism is Dead - How the System was Worked to Death in easy to understand terms. Throw away your calculator. Here's how the Big Greed Boy & Girls make the big bucks.


Throw away your calculator. Here's how the Big Greed Boy & Girls make the big bucks!

"The long run is a misleading guide to current affairs. In the long run we are all dead." John Maynard Keynes

And, therefore, the trick ("The Game") is to leave the biggest bill for the next guy. A painful lesson most of America learned from Big Greed when we all got stuck with the bill from Wall Street pyramid scheme called "securitization" or "derivatives" or "collateralized debt obligations" or any other word or phrase as a euphemism for fraud.

Keynes Distorted by Author Chaz Valenza
(Image by International Monetary Fund)
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Keynes Distorted by Author Chaz Valenza by International Monetary Fund

Here's the math: Sales $ minus Cost = Profit or (Loss). Run such a business in today's world? Good luck little man or woman.

I make you a sandwich at my store: $5. Cost of bread, mustard, cold cuts, wrapper: $1. Cost of store rent, insurance, taxes, utilities, et cetera per sandwich sold: $2. Gross Profit: $3.

Here's where we bring in "The Players," namely accountants, rating agencies, investment bankers, rocket scientists, statisticians, security traders and other notable geniuses in on "The Game." Note: Without complicity of "The Players" you are otherwise not allowed to entry the world of big business fraud, "The Game."

Business Plan ("The Plan"):

Build 1,000 sandwich shops at $1 million each (prima facie absurd, but currently done every day).

Proposal: $1 billion to build shops

$1 billion working capital to pay everyone

Sell long term, forever outstanding or until bankruptcy, investments to raise $2 billion.

Grow at 1,000 more stores per year.

Fund store growth from cash flow "profits," but never figure in paying back investors.

Let nobody use a calculator to consider paying off investment, as we will all be dead in the long run.

Pay "The Players," again everyone in on "The Plan," exorbitant returns in the short run, while they are alive, so nobody blows the whistle.

Pay workers (non-willing "Sub Players" with little choice), making and selling the sandwiches, as little as possible.

Out-source any work possible to countries with even lower wages ("Sub-sub Players?")

Under cut competition and employ predatory pricing via national advertising to eliminate small potatoes competition since you don't really care if you make a profit in the short term.

Shift any and all possible costs to others. In "The Game" such costs are called externalities. For example: pollution, health care, retirement, roads needed to reach your stores, gas to run the cars to get to your cheap prices, etcetera.

Run business at loss giving huge paydays and bonuses to "The Players" in "The Plan" until bankruptcy or death, otherwise known as the end of "The Game."

Or, cook books to show paper profit and continue making pay-offs to keep "The Players" and "Sub Players" silent for as long as possible.


Diversify using same obfuscation in as many industries and sectors as possible: retail shopping, hardware, casual dining, etc.

Employ twists to "The Game."

Find ways to have government purchase product or grant loans to purchase product from you. For example: for profit education, housing, gambling, oil, farming, military industrial products, etcetera.

Find ways to have government mandate that your product must be purchased by everyone. For example: auto insurance, home insurance, medical insurance, vaccinations, code required building products, mandatory inspections, etcetera.

Now, not all of the above is necessarily bad, building codes for example, but all of it has now been taken to an extreme with capital flowing only to "The Plans" that are playing "The Game" and are sure bets for "The Players" leaving the rest of us soon to be, if not already, "Sub Players" or "Sub-sub Players" or out in "The Cold."

So, keep using your debit and credit cards, buying fast food, going to Big Box stores, banking at corporate banks, playing the stock market with your retirement, etcetera. In the long run we are all dead. What a wonderful world to leave to your children.

Submitters Bio:

Chaz Valenza is writer and small business owner in New Jersey. He earned his MBA from New York University's Stern School of Business. His current feature film project is "Single Point Failure" an insider's account of how the Reagan Administration caused the greatest tragedy of the space age based on Richard C. Cook's book "Challenger Revealed." He is a former Director of Public Information for Planned Parenthood of NYC. His website is: www.WordsWillNever.com