Wednesday, April 01, 2009

De-Regulated Capitalism

We have arrived! The conservatives have won their de-regulation battle. We now have at the top levels, a completed De-Regulated government and a De-Regulated Banking System.

There are no longer any rules, or laws, to limit what they do.

They are free to pursue capitalism in any manner they choose. No action is out of bounds in the pursuit of profits.

So we have devolved to outright theft. Stealing, without fear of justice or recrimination, can return a 100% profit. And the De-Regulated Banks are doing just that. They are now stealing our money.

And no one can stop them. Our government is aiding and abetting these crimes. They are helping the banks steal trillions of dollars from us. And no one can stop them.

The White House and Congress no longer have laws or constitutional restrictions constraining their actions. They are De-Regulated. After all, who's gonna tell them what they can and can't do? The top law enforcement officials are standing idly by, napping on the porch of the sheriff's office, as the bankers go on a looting spree.

Our Justice Department doesn't legislate from the bench thank goodness, nor do they bother to uphold and defend the US Constitution. They don't like it, they don't care for it. They collect checks and laugh at us, for demanding justice. Justice isn't just blind, it's in a coma.

This is what De-Regulation looks like. Make no mistake. With no rules, the bankers just loot what they want. They smash and grab.

With no rules, no laws, no Constitution guiding their behavior, the White House Gang are also just smashing and grabbing what they want. Now the White House Gang are in control and defacto owners of the automakers. What will they do with their new toys? Obama says that the government model of spending more money than you can steal or borrow, printing what you can't get from others, is the best example of how to run a business. That's what the banks are doing. But when GM tries it, Obama steals the whole corporation for himself and his buddies.

This is another great example of De-Regulated Capitalism. If you don't like what someone is doing with their business. Just steal it, and do with it as you please.

The final outcome of De-Regulated Capitalism is that a handful of corporations will hold a complete monopoly on all business in the US. They will destroy all smaller competitors (by theft and murder), and they will rule the government.

Over on the Market Ticker, I got into a heated discussion on this topic. I pointed out that Al Capone ran a De-Regulated Business. Folks pointed out that the tax man got him, or laughed at the idea that he was De-Regulated, or that stealing can be considered a business model. I was a bit surprised that so many folks didn't understand that organized crime is a business and uses business models. they buy and sell, extort, eliminate competition, engage in marketing wars, provide services, or withhold service, etc... all to chase profits.

Al Capone's business was Un-Regulated in the sense that he ran his business as he chose. Elliot Ness never dictated to Al Capone, what he should or should not do. Al Capone committed crimes daily as a part of his regular business operations. To argue that this is false, because Al Capone was removed from power by the tax man, is akin to arguing that Automakers don't run a business because Wagoner was removed from power by the US President. Wagoner and Al Capone both, did run businesses.

Now that the US Banking model is free from all regulations, they are free to conduct business in any manner they choose. In Argentina, politicians, community organizers, etc... that tried to stop them, had horrible crimes committed against them or their families. They will be forced to do the same thing in the USA, in order to keep their power. And power is all you need in a De-Regulated Economy. Whomever can wield this power most brutally and successfully, will get all of the money.

Congratulations you dyed in the wool conservatives. You got your dream. Complete De-Regulation. No Laws, No Rules, no US Constitution. It's simply survival of the fittest predator.

I hope we can survive this.

And let me reiterate, I do not believe in political parties. I recognize that they exist, but I do not have a religious faith in them. They exist solely to divide us as a people. So long as we're divided by parties, and fighting each other, they'll keep stealing from us. Republicans call me a liberal and Democrats call me a conservative. I truly am a man with no party. All I care about at this time is restoring the Rule of Law, based on Constitutional Principles, to the US Government. But I realize that this may not happen in my lifetime. I am after all 46 years old. I won't live forever. If we never do this one thing, then nothing else matters. So long as there are no laws constraining the actions of those who rule, then our interests can never be served. No other victory can be gained in our favor.

Far right Republicans, worked hard to make the US Government immune to the constraints of the US Constitution. They fought long and hard to insure that the President, could break any law, commit any crime with impunity. Because an all powerful president, would make them feel safer. And Obama is clearly not giving up the power that the Republicans granted to the office he now holds. Nor will the next President. True Red Republicans worked to make sure that Obama will have the power to ignore the law and the Constitution. I hope they are pleased with themselves.

We have become a nation, completely in service to Mammon. And in the purest sense of the word, it's not only the worship of money, but the worship of power. Our top banks and our top levels of government, now have complete power. They can do anything they want, commit any crime, openly, with no fear of repercussions. Under eight years of Bush II, the Rule of Law was finally, utterly, dismantled. And here we are today, living with that legacy.

Good luck folks. Keep your heads down. Protect your families. As I've said before, the system will need scapegoats. Try not to be one. People love you, they don't need you to be disappeared.


At 3:53 PM, Blogger an average patriot said...

You know, it really sucks to know this and worse is being done to us and we are just lied to and powerless to stop it! After warning for years now I use to warn, relax and hunker down. At this point I just observe. It stinks!

At 1:20 PM, Anonymous Applesaucer said...


Great post; I agree with a lot of what you're saying.

However, here's a compelling counter-argument -- at least in my humble opinion -- to the need for more regulation:


At 2:34 PM, Blogger Weaseldog said...

Applesaucer, Michael S. Rozeff makes some interesting points, but I can't see that he really proves his point. We've seen banking without laws or rules, and society soon discovered that they needed protection from the bankers, to keep from being robbed blind.

I think that Michael starts from the assumption that bankers are noble, honorable and ethical human beings, simply because they are bankers. If we accept this assumtpion, then do we assume that Geithner the tax cheat is and honorable, noble, and ethical human being? I don't think that passes the smell test.

Without rules and without enforcement, many bankers would just steal depositor's funds. They'd keep crappy paperwork, and simply deny that people ever made deposits.

If I extend his argument to society in the aggregate, then it boils down to the idea that in spite of the fact that there are laws, there are still criminals. Many cops don't do their job, or are crooked. So we should have no laws, and no police. Let people murder one another with no threat of arrest or justice...

Letting bankers police each other is what got us into this mess. Successive administrations removed the powers to audit and enforce regulations from the Feds. They installed cronies that let the bankers do as they please.

We got where we are because we have been trying to implement Michael S. Rozeff's plan. Derivatives, CDS's and the like are completely unregulated. That is the problem.

At 3:05 PM, Anonymous Applesaucer said...


Thanks for the reply.

I can assure you that Rozeff does not start from the assumption that bankers are noble, honorable and ethical human beings. You can go through his archive to see that -- and I suggest that you do, since I think he understands economics better than most.

You are right that we do need some rules, but I think that to get to the underlying problem currently vexing us, it is not a "lack of rules."

Rather, I think it's the fact that banking is a subsidized and favored "industry." Take away the Fed and deposit insurance and there's no way that we'd have today's current banking monstrosity.

Also, while we have lots of regulations and regulators, they mostly do a lousy job. Why? Because they are captive to the financial industry, along with pretty much the rest of our government. Who do you think writes most of the laws in this country? My hypothesis is that it is lobbyists.

Anyway, here's another article for you to chew on:


At 5:18 PM, Blogger Weaseldog said...

Applesaucer, I think you and I are pretty much in agreement.

Corruption is at the heart of the problem. Many different kinds of systems work very well, so long as the people involved, act with honesty and integrity.

It's how unfair dealing is dealt with, that lies at the heart of most of our problems.

At 7:18 AM, Blogger Weaseldog said...

Thanks for the second article.

The problem I have is the use of some false logic.

The logic is that because some regulations were poorly constructed and politically apppointed regulators did a poor job, all regulations should be abolished.

If we applied this same logic, we can clearly see the fallacy in it. "Because almost all businesses eventually fail and many businesses are poorly run, and further because nine out of ten startups fail, all businesses and commerce should be abolished."

Or, "Because all humans get sick and die or just die, we should abolish human life."

The logic is really cruddy, and it exposes the underlying agenda, and that is banking with no rules or laws. And in both articles no substantive case was made as to why these would work. The arguments are only superficially related. We're shown that one system had problems, so this proves that a different system is the solution. If we replaced banking with another endeavor, we could argue, "I burned the toast, so we must only eat turnips." With no real case made as to why rules free banking is the solution, and no discussion is made of it's problems, the argument is left lacking.

Now I'm sure that people that right now that are committing banking crimes, are behind the law free banking movement. They would prefer not to risk jail time for creating Ponzi schemes and stealing depositors funds and running away with them. For this reason, I can't get behind this movement.

I believe that such a move would lead to the complete collapse of the economic world and destroy capitalism.

I understand Applesaucer, that you do agree that we need reasonable rules and laws, and we need impartial enforcement. But that isn't what the authors of the articles you presented, are saying.

The market needs rules to insure fair play. Without rules, the market devolves to promote those that don't out compete, but simply destroy their competition. It destroys the health of the market economy.

Nature evolved it's abundance and variety of life, because it's rules are consistent, and completely and impartially enforced. Ecosystems evolve to become such vibrant societies, because the rules are clear and enforced, not in spite of this.

Likewise a vibrant economy and market place needs clear and fair rules and swift and impartial enforcement.

It's the cheating and the disregard for laws and regulations that caused this problem. Legalizing the bad behavior won't solve the problem.

At 8:33 AM, Blogger Brother Tim said...

Bankers are the scourge of mankind, always have been, and always will be. Jesus spent much of His time chastising the money-changers.

At 8:58 AM, Anonymous Applesaucer said...


Thanks for taking the time to read and respond to both articles. Over the years I've read much from each author and I can assure you that neither is "pro-banker."

In fact, if you read through Rozeff's archive, you'll see that he is explicitly and vehemently "anti-banker." Grant is more polite, so you have to read between the lines with him.

In any event, as I've said before, here and elsewhere, I believe that the current regulatory framework -- particularly insofar as it assumes (1) a quasi-private, quasi-government-issued fiat currency; (2) a lender-of-last resort Federal Reserve System; (3)fractional-reserve, duration-mismatched, lending; and (4) federal deposit insurance -- is, at bottom, a fraud.

Banks lend money into existence at multiples of their current reserves. Moreover, a large portion of their custodial accounts are available on demand, while a large portion of their loans will not be repaid, in-full for years.

It would take a small percentage of depositors to ask for their money back to crush this sort of banking system.

Federal deposit insurance keeps this confidence game going. But even that would fail if there weren't an entity ready, willing and able to run the digital printing press in a crunch.

No matter how much one tries to dress up such a system with rules and regulations, it is bound to fail -- probably in the form of a horrendous currency crisis.

Now, I grant you, this inevitablity can be forestalled for quite some time with sensible regulations and honest, competent regulators. Something that we had, off-and-on, from WWII to mid-80s'/maybe early '90s.

Unfortunately, I think both of us would agree that the regulators have been completely captured by the regulated.

But, if we were to start over, I, personally, am not going to categorically reject a banking system that operates under a fudamentally sound regulatory regime.

But that would have to start with a gold-standard, or some other such backed currency; a ban on fractional-reserve lending (i.e., banks would be prohibited from lending out more than what they had in reserves); and a requirement that banks matched the duration of their deposits to the duration of their loans.

Many among the libertarian-leaning crowd call for such a regulatory regime. The "free-bankers" on the other side of the libertarian-leaners counter that the market would punish the wicked or incompetent out of existence more effectively than any regulatory regime could.

Of course, I don't mean to say that a free-banking regime would have no rules. You are right -- we need rules to cover the basic things you mention.

The problem we both face is that in order to get a regulatory regime in which we could place our trust -- or even to move to a free banking system -- would require honesty and integrity "at the top."

But the top is totally dishonest and crooked. So the one thing that I'm sure we would agree on would be that for any meaningful and productive change to take place would require a massive overhaul of government and banking personnel -- from the President, to the Treasury Secretary, Federal Reserve Chairman, financial institution management...all the way down the line.

If just that change occurred, I could live with any regulatory regime that replaced the current, rotten one. And, until that change occurs, I won't have confidence in any plan that all these crooks cook up.

In the meantime, I think you will really appreciate this Bill Moyers' interview:



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