David Korten: Money From Nothing? ... What looks like magic is really illusion

[marmar]

from YES! Magazine:




Money From Nothing?
Many economists and financiers believe it's possible. But what looks like magic is really illusion.

by David Korten
posted Feb 01, 2011


The ancient alchemist and modern Wall Street capitalist have much in common. The latter has achieved the modern equivalent of the alchemist's dream of turning cheap metals into gold. He creates money out of absolutely nothing and wholly free from exertion or the inconvenience of producing anything of real value.

Making money with no effort can be an addictive experience. I recall my excitement back in the mid-1960s, when Fran, my wife, and I first made a modest investment in a mutual fund and watched our savings grow magically by hundreds and then thousands of dollars with no effort whatsoever on our part. We got a case of Wall Street fever on what, by current standards, was a tiny scale.

Of course, most of what we call magic is illusion. When the credit collapse pulled back the curtain to expose Wall Street’s secret inner workings, we learned the extent to which Wall Street is a world of deception, misrepresentation, and insider dealing on a breathtaking scale. It was such an ugly picture that Wall Street’s seriously corrupted institutions stopped lending even to each other for the simple reason that no one trusted the other guy’s financial statements.

Much of what Wall Street celebrates as financial innovation involves borrowing to inflate the value of financial assets to create collateral to support more borrowing to further inflate the assets to create more collateral… Whether you call it a loan pyramid or a Ponzi scheme, it is a form of theft.

A responsible Federal Reserve would have raised interest rates to dampen asset bubbles like the tech-stock bubble of the 1990s and housing bubble of the 2000s. Instead, captive to Wall Street interests, it pursued cheap money policies to encourage and facilitate ever more borrowing by speculators to keep the bubbles growing. ...............(more)

The complete piece is at: http://www.yesmagazine.org/blogs/david-korten/money-from-nothing

[FiveGoodMen]

1. When you get to the bottom of the shell game they're playing, it's this:

They pretend they have money coming (but really they're just making it up), then they demand that we all give them our real money to make up their losses.

Just fancy robbery.

[Toon Me Out]

2. thaz right!

You're 100% correct.

[patrice]

4. Have you ever seen someone "ride the gain" in a recording studio? It's kind of like that, with compu

ters. The brokers/computer programs track various aspects of economic and market activity and, of course, since they're buying and selling to other computers, all of it has to happen VERY VERY fast. There are even urban legends about famous brokerage houses competing for office real estate that's closer to the nearest internet trunk, to shave nano-seconds off of their trades.

:wow:

[angstlessk]

3. Reminds me of how I felt when I was 8 years old and playing marbles...I WANTED THEM ALL!

but alas...THANK GOD...I lost more than I won..so I decided not to gamble...and since then I posted 50 cents on dogs in Florida..and did a trifecta when the owner had three horses in the race...so it was really a (what is a 9 chances to win called...a sincoverta???) Played the owner..not the horse to win/place/show...won about 10 bucks!!!! Since that ...nothing on the gambling front...

Since I do not have some sort of GREED GENE...I am not interested in gambling...Even if I am the house!