On CNBC this morning, they asked viewers- if they thought banks were responsible for the depression we are all experiencing and whether or not banks were getting a bad rap.
I want to explain something here for anyone who thinks banks are getting a bad rap.
Joe and Mary Citizen are marks. They don't know it. They had no control over home prices. They had no control over hybrid mortgages which required essentially nothing down, they had no control over all the cheap money that flooded into the marketplace prior to 2007, they had no control over houses that appreciated 100% in two years. They had no control over loans that were made to people who mis-stated their income. They had no control over the QUANTITY of money (debt) available. It was the QUANTITY of our debt that fueled the feeding frenzy that enabled everything else to happen; and the fractional banking rules that allowed banks to lend 9 times what they actually had on deposit and thus leverage some leverage.
Banks fueled and stoked the fire. Banks were more than willing to let virtually anyone participate. Thus the great Ponzi scheme imploded when it ran out of marks.
It is the QUANTITY of money controlled by the FED that allows this shit to happen. Always.
All Joe and Mary Citizen did was react to a market place gone nuts. They were used quite honestly, by bankers. They were marks. Fleeced.
In the law enforcement world we call this a confidence game. In fact famous movies like the "Flim Flam Man", "The Sting", or "Paper Moon" demonstrate how people are exploited by hustlers. Here is a definition from wikipedia on a confidence game...
A confidence trick or confidence game (also known as a bunko, con, flim flam, gaffle, grift, hustle, scam, scheme, swindle or bamboozle) is an attempt to defraud a person or group by gaining their confidence. The victim is known as the mark, the trickster is called a confidence man, con man, confidence trickster, or con artist, and any accomplices are known as shills. Confidence men or women exploit human characteristics such as greed and dishonesty[dubious ], and have victimized individuals from all walks of life.
When using that definition, I'll let you decide who got swindled. It sure as hell wasn't bankers. In fact bankers were always in control. They were in control of the money and the math. And in the end, when their con game went to hell, government didn't bail out the victims of this con game. They bailed out the con men.
And they hosed us all. Not just the participants. We all lost equity, houses, investment dollars, jobs. Our taxes and inflation are rising as the FED tries to keep the lid on this worldwide mess- bailing out the con men. Their stockholder member banks- are who they work for. The FED doesn't exist to help taxpayers- they exist to fleece taxpayers and provide wealth for the banking system.
I was neither con man nor mark. I wouldn't have particularly cared if all the con men and marks got flushed. But the damage wasn't limited to them. Nobody is giving me a good conduct medal for my decisions, either. But I am damn sure paying for them. I keep wondering if even one of these crooked bastards is ever going to see a jail cell.
The big finish follows.
This boom and bust cycle will continually repeat itself until we accept the following truths as self evident.
1. Currency issuance and control is always a MONOPOLY. Allowing private banks to control this is insanity. Like asking a sex offender to run the daycare.
2. Fiat currency works. It is the QUANTITY of that currency that causes the boom and bust cycles. The gold standard is a myth. All of the world's gold would fit in three olympic sized swimming pools. There is simply no way for all of the world's fiat currencies to get on the "gold standard." Gold would be priced in the stratosphere with no objective price point.
3. Banks almost single handedly caused this crisis. Go ahead and blame the marks if it makes you feel better or if you happen to be a FED supporter.
I can't completely dismiss the individuals who acted and spent recklessly. But their ability to do that was completely governed by a banking system that preyed on the greed and stupidity of the marks to lure them in. That's how confidence men and games work. Go rent a movie and see for yourself.
The perfect con game always occurs when the mark doesn't know what hit him. It is a complete and utter success if the con men can convince the marks that they didn't even exist to begin with.
For a perfect illustration- read this speech delivered days ago by Ben Bernanke of the FED. These are the same guys that engineered the collapse and are now pretending to offer the solution. The perfect con.