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https://www.oftwominds.com/blogjuly20/demise-finance7-20.html

Welcome to the Crazed, Frantic Demise of Finance Capitalism

When scams start unraveling, the scammers become increasingly frantic to maintain the illusion of legitimacy and the delusion of guaranteed gains that are the lifeblood of every scam. One sure sign that the flim-flam is about to collapse is the manic rise of FOMO, fear of missing out, as the scammers jam the Ponzi scheme's stellar returns to new extremes.

What greedy human can resist guaranteed gains, especially of the enviously grandiose variety?

The greatest scam of the past century is unraveling before our eyes. I'm calling it finance capitalism as a general descriptor of the dominant form of what's called "capitalism" because calling it what it actually is--a fraud that's destroyed the foundations of our economy and society--is, well, a much more difficult sell than "capitalism," which still has some faint echoes of the open markets, etc. that characterized traditional capitalism, which I call naive capitalism because it is incapable of differentiating between the parasitic, predatory finance version cloaking itself as "capitalism" and actual capitalism, in which capital is put at risk, markets are transparent, etc.

There are many labels for the distorted, corrupted "capitalism" that dominates our economy and society: I've long used state-cartel capitalism, others prefer monopoly capitalism or crony capitalism.

I now favor finance capitalism because the heart of the fraud is finance: printing "money" out of thin air without creating any value or any goods and services. If you can't print "money," then borrow it into existence--that's just as profitable a fraud as printing it.

As I explained in Our Wile E. Coyote Economy: Nothing But Financial Engineering (June 11, 2020), the fairy tale that America has a truly capitalist economy no longer aligns with the reality that the U.S. economy is now a decaying billboard of "producing goods and services" behind which the real money is made in financial engineering, a.k.a. legalized fraud.

I've discussed this fraudulent distortion of capitalism for years:

Has "Financial Innovation" Capitalism Run its Course? (June 22, 2010)

When Capitalism Turns to Cannibalism (July 15, 2015)

What Makes You Think the Stock Market Will Even Exist in 2024? (July 6, 2020)

Just as Communism was a god that failed, finance capitalism is also a god that failed, an extreme version of crony-capitalism that is nothing more than a mechanism for concentrating wealth and power at the expense of everyone toiling in the real-world economy.

And if we understand this, then we also understand that with its stock buybacks, high-frequency trading and after-hours manipulation, the stock market is nothing more than finance capitalism's primary mechanism for increasing the concentration of wealth.

How did outright fraud come to dominate our economy? The answer is simple: infinite greed plus the decline of gains from "real capitalism," i.e. increasing productivity via producing goods and services. The appeal of something for nothing is irresistible when "money" can be printed / borrowed out of thin air and used to run a fraud that exploits human greed.

Like every good Ponzi scheme, those invested in the scam promote the fraud and cajole new marks to sink their cash into the "guaranteed gains" scheme because everyone already in the fraud will lose if there aren't enough new marks joining to keep it from collapsing. That perfectly describes the entire financial media, the financial "industry" and everyone in it.

Unfortunately for everyone invested in the scam, all the "wealth" created by financial engineering / legalized fraud is fictitious, i.e. phantom. All Ponzi schemes collapse once the supply of greed-blinded marks dries up, and so the "solution" in our finance capitalism fraud is for the central bank, the Federal Reserve, to become the mark with an infinite checkbook: the Fed is busily conjuring "money" out of thin air to buy corporate junk bonds and other "assets" (ha-ha, as if these are actually worth anything--the joke's on you) to prop up the Ponzi scheme.

This works until it doesn't, of course. In the meantime, the folks running the fraud are pulling out all the stops to keep it from imploding--goosing the FOMO frenzy, printing and throwing trillions into the scam to maintain the illusion of legitimacy and the delusion of guaranteed gains and talking up the god-like powers of the Fed to prop up the fraud indefinitely.

Despite these massive manipulations, the cracks are increasingly visible. Volatility refuses to sink back to near zero, and the swings in the skimming machine, a.k.a. the stock market are becoming more extreme.

The cognitive dissonance required to ignore the widening gap between the real economy and the fraud's basic machinery--speculation funded by "money" conjured out of thin air--has reached a level of denial that can only be termed psychotic.

All bubbles pop, all frauds implode, all scams collapse. That ominous clicking coming from behind the tattered billboard is the sound of dominoes falling.

....

https://kunstler.com/clusterfuck-nation/a-bigger-picture/

A Bigger Picture

The Covid-19 virus itself didn’t run the United States into a ditch but it exposed the weakness and rot in the nation’s drive-train, and now all of us passengers on that disabled bus must decide whether to stay helplessly inside the smoldering wreckage arguing over who’s to blame, or begin a long, uncertain march down the road on our own two feet to a place of new arrangements.

In 1918, the country was lashed by a far deadlier pandemic disease at the same time it was fighting a world war, and daily life barely missed a step. The economy then was emphatically one of production, not the mere consumption of things made elsewhere in the world (exchanged for US IOUs), nor of tanning parlors, nail salons, streaming services, and Pilates studios. The economy was a mix of large, medium, and small enterprises, not just floundering giants, especially in the retail commerce of goods. We lived distributed in towns, cities not-yet-overgrown, and a distinctly rural landscape devoted to rural activities — not the vast demolition derby of entropic suburbia that has no future as a human habitat. Banking was only five percent of the economy, not the bloated matrix of rackets now swollen to more than forty percent of so-called GDP. Government at the federal and state levels was miniscule compared to the suffocating, parasitic leviathan it is now.

What happened? Like Hemingway’s old quip about a man going broke slowly and then all-at-once, we allowed everything in American life to creep into hapless giantism too cumbersome to adapt to new conditions, and suddenly conditions have changed. And now it’s all coming apart: the dying chain stores, the giant zombie companies that can only exist by borrowing money to buy back their own stocks, the auto-makers who have run out of lending schemes for non-creditworthy customers, the shale oil fracking companies that could never make a red cent, the agri-biz farmers grown morbidly obese on a diet of credit and government subsidies (just like their end-customers grew obese on engineered snack-foods), the Wall Street lords of financialization hypothecating fortunes by leveraging the stripped assets of everything not nailed down from sea to shining sea, the swelling underclass conditioned to helplessness, addiction, and vice, the inescapable ambient tyranny of media hype, propaganda, and disinformation, and, of course, the catastrophe that government has become.

Get this: none of these things now wobbling and staggering will be resurrected. They’re all going extinct, like the Baluchitherium of the Oligocene. To keep propping them up — as the Federal Reserve sedulously props up financial markets — will only promote the illusion that we don’t have to move on and conduct daily human life differently. A worldwide contraction was already underway before Covid-19 stepped onstage. The contraction was sending a very loud and clear message: gigantism went as far as it could go and now it’s up to the smaller and nimbler to carry on. Beware the promises of the sclerotic authorities asking you to remain in thrall to them — and dependent on them.

Expect these authorities to screw up even the next big exercise in their own franchise: the 2020 election. It will be the climax to a season of political hysteria and will complete the chapter of our history that left us on that smoldering big bus in the ditch. The scramble away from that disaster scene will be frightful and desperate. No matter who ends up in control of the government — or pretends to be — the same forces of contraction and decomplexifying will actually rule and you will have to act accordingly.

Many people will seek to escape the places they live now to find new homes and livelihoods elsewhere. These demographic movements are already underway. New York City is hemorrhaging much of its tax base as the wealthy flee, Chicago too, and the whole state of California. These places will be overwhelmed by functional bankruptcy, even if legal legerdemain allows them to avoid declaring it. Other states, counties and municipalities — including many suburban blobs — will also founder, meaning all the usual support systems and safety nets vanish. Many supply chains will break. Money may either be scarce or worthless, which are two ways of going broke.

Right now, start planning where you might go and what you can do. The turmoil will be filled with opportunity to find ways to be useful to other people, to devise work-arounds for ruptured systems and relationships, in getting food to people, making things they need, distributing them, fixing things that are broken where possible, and moving people and stuff from point A to point B. There will be plenty of work for people who are willing to do it. Keep in mind that it’s entirely up to you to make good choices.

Don’t despair, and if you find yourself veering toward it, get over yourself. It’s just part of becoming stronger than you thought you could be, and the times will require it of you anyway. The offices that gave out brownie points for avouched victimhood will also be shutting down. Won’t that be a relief? Welcome to the joyful illumination that life is difficult for everybody. Who is ready for this epic journey?