In A Perfect World…. According to Whom?

In a perfect world, every man who seeks his fortunes finds them where he expects them to be… the road to success is one of hard work and determination to the desired goal. No fictional “higher” authority demands a cut of the “action” or re-writes the rules to extort Rent-Seeking from the dividends of success. You earn what you keep and no man can argue with you over the spoils of the achievement. The possibilities to the desired goal are as endless as those that seek them out. The cookie-cutter approach to riches rarely works, but methods in themselves are ripe for exploiting— helping people become richer is after all a major factor in the game itself— and when rules are based on keeping that dynamic like an engine in high rev— an entire industry can thrive to service that demand. Quite profitably.

The “system” as we know it today has essentially remained unchanged since those banking experts of Lombard Street— specifically, a quote from the common ancestor of all of today’s central bankers, Walter Bagehot:

“Under a good system of banking, a great collapse, except from rebellion or invasion, would probably not happen. A large number of banks, each feeling that their credit was at stake in keeping a good reserve, probably would keep one; if any one did not, it would be criticised constantly, and would soon lose its standing, and in the end disappear. And such banks would meet an incipient panic freely, and generously; they would advance out of their reserve boldly and largely, for each individual bank would fear suspicion, and know that at such periods it must ‘show strength,’ if at such times it wishes to be thought to have strength. Such a system reduces to a minimum the risk that is caused by the deposit. If the national money can safely be deposited in banks in any way, this is the way to make it safe.” W. Bagehot.

“Even more surprising: the spiritual leader of all of today’s central bankers was actually…against central banking. That’s right. Time and time again in Lombard Street he claimed that Britain’s central banking system was ‘unnatural’ and only due to special privileges granted by the state. In chapter 2, he said:

 “I shall have failed in my purpose if I have not proved that the system of entrusting all our reserve to a single board, like that of the Bank directors, is very anomalous; that it is very dangerous; that its bad consequences, though much felt, have not been fully seen; that they have been obscured by traditional arguments and hidden in the dust of ancient controversies.

“But it will be said—What would be better? What other system could there be? We are so accustomed to a system of banking, dependent for its cardinal function on a single bank, that we can hardly conceive of any other. But the natural system—that which would have sprung up if Government had let banking alone—is that of many banks of equal or not altogether unequal size. In all other trades competition brings the traders to a rough approximate equality. In cotton spinning, no single firm far and permanently outstrips the others. There is no tendency to a monarchy in the cotton world; nor, where banking has been left free, is there any tendency to a monarchy in banking either. In Manchester, in Liverpool, and all through England, we have a great number of banks, each with a business more or less good, but we have no single bank with any sort of predominance; nor is there any such bank in Scotland. In the new world of Joint Stock Banks outside the Bank of England, we see much the same phenomenon. One or more get for a time a better business than the others, but no single bank permanently obtains an unquestioned predominance. None of them gets so much before the others that the others voluntarily place their reserves in its keeping. A republic with many competitors of a size or sizes suitable to the business, is the constitution of every trade if left to itself, and of banking as much as any other. A monarchy in any trade is a sign of some anomalous advantage, and of some intervention from without. ”

And from this same blogger [Spontaneous Finance ] another major insight into the modern, central-banker scheme:

“This makes me feel slightly uncomfortable and instantly remind me of the – now classic – 2010 article by Jeff Hummel: Ben Bernanke vs. Milton Friedman: The Federal Reserve’s Emergence as the U.S. Economy’s Central Planner. While I believe there are a few inaccuracies and omissions in Hummel’s description of the financial crisis, his article is really good and his conclusion even more valid today than at the time of his writing:

“In the final analysis, central banking has become the new central planning. Under the old central planning—which performed so poorly in the Soviet Union, Communist China, and other command economies—the government attempted to manage production and the supply of goods and services. Under the new central planning, the Fed attempts to manage the financial system as well as the supply and allocation of credit. Contrast present-day attitudes with the Keynesian dark ages of the 1950s and 1960s, when almost no one paid much attention to the Fed, whose activities were fairly limited by today’s standard. […]

As the prolonged and incomplete recovery from the recent recession suggests, however, the Fed’s new central planning, like the old central planning, will ultimately prove an unfortunate and possibly disastrous failure.”

“The contrast between central bankers’ (including Haldane’s) beliefs of a tightly controlled financial sector to those of Hummel couldn’t be starker.

“Where it indeed becomes really worrying is that Hummel was only referring to Bernanke’s decision to allocate credit and liquidity facilities to some particular institutions, as well as to the multiplicity of interest rates and tools implemented within the usual central banking framework. At the time of his writing, macro-prudential policies were not as discussed as they are now. Nevertheless, they considerably amplify the central banks’ central planner role: thanks to them, central bankers can decide to reduce or increase the allocation of loanable funds to one particular sector of the economy to correct what they view as financial imbalances.”

–Moreover, central banks are also increasingly taking over the role of banking regulator. In the UK, for instance, the two new regulatory agencies (FCA and PRA) are now departments of the Bank of England. Consequently, central banks are in charge of monetary policy (through an increasing number of tools), macro-prudential regulation, micro-prudential regulation, and financial conduct and competition. Absolutely all aspects of banking will be defined and shaped at the central bank level. Central banks can decide to ‘increase’ competition in the banking sector as well as favour or bail-out targeted firms. And it doesn’t stop here. Tighter regulatory oversight is also now being considered for insurance firms, investment managers, various shadow banking entities and… crowdfunding and peer-to-peer lending.

–Hummel was right: there are strong similarities between today’s financial sector planning and post-WW2 economic planning. It remains to be seen how everything will unravel. Given that history seems to point to exogenous origins of financial imbalances (whereas central bankers, on the other hand, believe in endogenous explanations, motivating their policies), this might not end well… Perhaps this is the only solution though: once the whole financial system is under the tight grip of some supposedly-effective central planner, the blame for the next financial crisis cannot fall on laissez-faire…”

When an expert throws out a red-flag— it is worth the extra effort to understand why, and once again this same blogger delivers the answer:

“According to Larry White in a recent article summing up the history of thought and historical occurrences of free banking, Kurt Schuler identified sixty banking episodes to some extent akin to free banking. White’s paper describes 11 of them, many of which had very few institutional and regulatory restrictions on banking. He quotes Kevin Dowd:

“As Kevin Dowd fairly summarizes the record of these historical free banking systems, “most if not all can be considered as reasonably successful, sometimes quite remarkably so.” In particular, he notes that they “were not prone to inflation,” did not show signs of natural monopoly, and boosted economic growth by delivering efficiency in payment practices and in intermediation between savers and borrowers. Those systems of plural note-issue that were panic-prone, like the pre-1913 United States and pre-1832 England, were not so because of competition but because of legal restrictions that significantly weakened banks.”

–Yet, there is no trace of such events in conventional/mainstream financial history. Central bankers seem to be completely oblivious to those facts (this is surely self-serving) and economists only partially aware of the causes of financial crises. Moreover, free banking episodes also proved that banks were not inherently prone to take “too much solvency and liquidity risk”: indeed, historical records show that banks in such periods were actually well capitalised and rarely suffered liquidity crises. In short, laissez-faire banking’s robustness was far superior to our overly-designed ones’. Consequently we keep making the same mistakes over and over again in believing that a crisis occurred because the previous round of regulation was inadequate…

–What we end up with is a banking system shaped by layers and layers of regulations and central banks’ policies. Every financial product, every financial activity, was awarded its own regulation as well as multiple ‘corrective’ rules and patches, was influenced by regulators’ ‘recommendations’, was limited by macro-prudential tools and manipulated through various interest rates under the control by a small central authority. On top of such regulatory intervention, short-term political interference compounds the problem by purposely designing and adjusting financial systems for short-term electoral gains. Markets are distorted in all possible ways as the price system ceases to work adequately, defeating their capital allocation purposes and creating bubbles after bubbles.

–Studying banking and financial history demonstrates that it is quite ludicrous to pretend that banking systems are inherently subject to failure through endogenous accumulation of risk. In the quest for an explanation of the crisis, better look at the intersection of moral hazard, political incentives, and the regulatory-originated risk opacity. It might turn out that imbalances are, well, mostly… exogenous.”

 Endogenous just means having an internal cause or origin. Say, that big-wig noting he needs more profit to buy some new asset he wants, so he manipulates the system to get what he wants. Whereas a politician serving the needs of his special interests causes an external change to the system to obtain what is wanted. Both methods only work due to the salient fact it is a system and it can be gamed successfully. These [insider] rules are the hidden rules— that is to say, a Joe schmoe walking down the street and deciding he needs some play money simply cannot game the bank by these very same methods.

Thus, as one contemplates the bigger picture, to understand why nothing ever changes to even a slim definition of a level playing-field–equal access to money at the same Rates— for all citizens, regardless of their profit producing capability, assuming all can do so and will— thereby insuring they pay the same rate for that “money” “credit” “debt” where the Risk factor is a Metric under Independent control.   The Lender cannot game the system to only favor the most profitable “activities” where they alone are the sole beneficiary of the increases in profit, no more than the government can do the same to boost themselves at the expense of the tax paying public.

The C-banking system as it now stands has Excluded the very best Competition to themselves— and could not have done so without politicians doing their dirty-work for them. The fire-wall between bankers and politicians is always just a lobbyist phone-call away. If a banker says, I will ensure a pet-project will be promptly funded, and the politician writes up a new regulation for the banker, which is twice as profitable as the expense of the loan, the banker now has twice as many reasons for making the same call again. The merry-go-round between the regulators, bankers, politicians and corporate top exec.’s is just a part of the game as well–as Influence is the King of commerce.

Whose influence is greater, on the other players, when such causes are hidden from history? Insider influence, also hides the underlying reasons for such success– criminal graft pays very well and is never-ending when the bad guys on all sides of the deal, cannot be punished at the same time–financial regulation is just an illusion of required legal distance. In truth, neither side has any reason to out the other sides for such graft, and every reason to keep such “influential cooperation” out-of-sight period. Or better yet, blame the ills on some lower somebody, or something else altogether. I imagine there are more clever reasons for how to blame defects on any other possibility, other than admitting the system is gamed. Thus, those layers of lies, will keep building on top of previous layers, going ever skyward until the truth one day crashes it all back down once more.

How many hidden scandals are still lurking behind the LIBOR rigging scheme? Who knows… the criminal cases are never settled in an open Court… cash simply flows from the bad-hand into another, perhaps almost as bad-hand. Two bad-hands, pass money more like a lost bet, than an actual point of Justice served.  That favored solution technically would be a form of collusion. As one interest merely trespasses on another competitors turf a price is paid, but it has nothing to do with making the banking system a better system.  Or more honest. Those rigged Rates— defeated the entire purpose of the system, but it was so damn profitable the governments of the world greased the skids even more— both branches of the crooks made off with untold billions, even trillions— as nobody can say with a straight face where the shadow-bankers meet the so-called private or central banks, so long as unaccountable systems inter-weave with the regulated ones. And on purpose.  Nature does not create banks or money— so what we have is pure fiction with a hard dose of reality— play their game or die.

Financial extortion, no matter what fancy name economists may tag to its red-fangs– is simply the means to take more for less. Every year, it requires more money to buy even less food, and so the dollar is factually worth mere pennies to the face-value of the note— but the ultra-wealthy enjoy a even bigger Share of Income and the bankers who serve their needs, have nothing to worry about as they chortles that’s business! This monstrosity of a system, is too big to be spanked like a spoiled rug-rat. It is too complicated to be solved by yet more regulations, whose real costs are simply added to the next big pile of toxic waste clogging the systems bowels. Guess what end the public faces— yeah, that bull’s ass is your only sign of the future— that actually counts. The dirty truth is the best banking solutions had to be destroyed, so the public could be trapped in the worst system, of which they have the least control or actual security. If bad money chases away good money then only bad banks make more money when the good money is gone.

The trick is to make banks look and operate in such a way that nobody can simply point to them and say that is one evil bank. Evil has to look better than average to entice confidence. Your confidence is your asset. The bankers have known for a very long time nothing sells bullshit better than a big dose of class envy. Make people feel inferior and they will compensate by extending themselves, and in doing so, they can be steered through the process, so long as their confidence is equal to their greed. Yes, greed. Naked greed greases the wheels and ensures another sucker for the taking. People believe in riches, especially, when it is aggressively promoted across the mass-media in every way possible.  To sell riches is to make that big-wheel turn, and the system can deliver what it promises–when it has to in order to receive what it wants. But this is where the dense-fog settles in as no general theory can capture like a picture the deep players at work.

A pirate-banking system operates on the regulated one in public view— or this world would be a very different place. Good money needs a good bank or one vanishes to serve the opposite need. Bankers did not need good money, they needed the absolute worst money because it is CHEAPER—- has less real liability. Bad FRN dollars are a safe buffer, and hence, the real reason they came into play as the international trade-dollar. This also required a huge, military apparatus to insure the “acceptance” was not to be questioned. Terrorism is just the modern version of the mafia trick of protection. Better watch out those big, bad terrorists are going to blow your house down. Or take out a nations duly elected officials. That’s what the CIA did and the government paid them well. Money is a Racket and those who fail to play along, on the bigger stage, are fed to the worms. Now is that really too hard to understand why, so many go along with the dog-and-pony show? It is much safer of course to say nothing, as that “influence” is not to be trifled with as so many dead men can attest.

Reclaiming the banking system is probably about doable as reforming the system. Like a long-term heroin addict, the body is severely compromised and what is left barely functions as it is… so too is banking as a creature of Dr Jekyll and Mr Hyde, duality, which only shows one face to the public and another to the mirror of its own evil. Marx [who is my favorite communist to hold up as a bag-man for fools in general]  was never a threat to the banking syndicate. He was the knife they needed to slit the throats of those— that at the time dared to oppose them. Communism is no threat to central banks, or none of them would tolerate any communistic governments period. Simplicity speaks the truth. History is written by the victors, who have no desire to speak the truth of themselves, or their enemies. Who did the communists go after first tells the truth, but not the reason for the truth. Communism needs enemies to hide the truth of itself— a means to topple anti-central-bank governments, or perhaps, any financial institution not owned by the Rothschild/BOE syndicate. Let us make you a deal or else.

Communists are simply the useful dupes and not the brains they pretend to be or once again, they would be long gone by now. Ideology is just window dressing for whatever is being sold under its false-intellectual mantle. Somebody had to do the killing and very few things will make fools into cold-blooded killers more so than religion, or money. Communism simply took the economic simplicity of the world and wrapped it in a foul excuse for revolution— but what was at the end of that revolution was worse than the reason itself, right from the start. How do communists ignore the downfalls of the inferiority they claim as superiority? Easy, they kill as many people as possible that disagree with them. Central bankers needed the communists to take down governments they could not touch by conventional warfare.  Hold-outs are liquidated and the bloody-wealth goes to the very hands those communists claim to oppose, but never actually do in practice. Communists didn’t have any money and neither did Mr. —I do not have a soul— Marx.

That painted-corner cannot be ignored for what it is— a self-defeating absurdity. The mind is only the brain, so they claim, and mankind is nothing, but a biological robot whose existence is pointless, unless he submits his will to the all-powerful State. There are no States in Nature— evolution is not a political state of biology, but communists took the turf like all bullies do and have done nothing since, except kick mud in the eye, of anyone who opposes their narrow-minded, perversions of the world at large. High-order community living–sharing the expenses and liabilities, while distributing fairly the profits and gains. One sentence— the rest is the work to make it real. As for labor Marx was a moron times two. Instead of giving people a better set of tools to defend their value he destroyed the incentive to improve ones labor value, by appealing to people’s ingrained hatred of class privilege— like taking candy from a baby— simple as well. Political unions trumped honest ones at the expense of all consumers. Who did that benefit? Lets see— yeah, that would be the Lenders. Do communist teachers really teach kids better than a christian one? I sincerely doubt the credibility of anyone who never questions the authoritarian dogma of their political interests, especially when it comes to claiming a larger Share of the pie. Whom the central bankers favor speaks volumes of the truth in action. Look across America and who is favored right now? Is that a coincidence? Of course not–central planning never is just a novel moment in passing. The Masters of Lending wanted absolute control for a reason and anything, or anyone, which stood in the way, is long since gone from this nation and so many others.

So what is left? A grim future as it now stands, as I do not expect people to suddenly embrace contrarian analysis as a way to defeat the evil bankers. However, knowing why the system was no good to start with might be the first step in replacing it with something that will work, when it blows up one fine afternoon under its own pretensions.  Nature ultimately defeats the folly’s of men… so man needs to wise up and if no political parties have the answers, and religion is fiddling as usual, people need to re-think the strategy at hand. An obsolete banking system demands a new approach to the age old economic problems of social survival, but the experts are only cheerleader’s for the system that employs them— until perhaps they too, are so disgusted by the overt criminality they become the rebels with a cause. Money has no Authority— and no system which is used in its functions— can have any authority which is by its nature based on a conflict of self-interest. False power is reduced when no government can violate its promises, or escape its enumerated squares of purpose. If money is so derelict by function it has to be propped up by a million lies— then money has ceased to be money. Money like an apple has to have substance of worth— no worth and it is no better than a plastic apple is for eating. Can a man live on plastic apples? Of course not, so why pretend Central-Bank [money] is so special— that it can defeat common sense and still have value at all?

The real battle has always been with the oligarchy hiding behind the facades of their central-banks. Now why would they only want atheist slaves? Perhaps, that old adage of not being able to serve two Masters is more literal than many want to believe. As this odd illusion proves so well.

obama-captured by- videoSixteenByNine540

Odd optical illusions—




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