Saturday, June 15, 2013

Day 32 - The Tyranny of Financialization






Tonight we will be looking at the power and the influence of the wealthy - namely those who control and influence how money is circulated and concentrated - and how politics and the economy of the world can NOT serve their proper purpose unless the problem of "financialization" is understood.

 We all have a common understanding that there is a major problem with the way financial power accumulates in the hands of only the few major corporations and financial institutions while the remaining majority become increasingly disempowered - but what we have not been clear on is the understanding of "financialization" and how this concept has radically impacted every aspect of politics, economic theory, and global financial systems in a way that is now becoming too dangerous and consequential to ignore.

 But HOW did it get this way? At what point did it all really get out of control? How is it that so much money was able to be concentrated while more and more debt was being created and pushed onto the majority of people who were not fortunate enough to be part of the financial elite? We have to understand financialization's part in creating the current situation in the world. 

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 From Wikipedia:
Financialization is a term sometimes used in discussions of financial capitalism which developed over recent decades, in which financial leverage tended to override capital (equity) and financial markets tended to dominate over the traditional industrial economy and agricultural economics.
Financialization is a term that describes an economic system or process that attempts to reduce all value that is exchanged (whether tangible, intangible, future or present promises, etc.) either into a financial instrument or a derivative of a financial instrument. The original intent of financialization is to be able to reduce any work-product or service to an exchangeable financial instrument, like currency, and thus make it easier for people to trade these financial instruments.
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 Before we begin, it is important for us to NOT give in to the idea that we are in any way less qualified to speak on or take responsibility for the concepts that I will be opening up here. There is a very dangerous assumption within humanity that economics and finance are "complicated" and cannot be understood by the "lay person" - this is a very specific piece of propaganda that is being pushed into the awareness of the majority each time we see a "financial expert" in the media explaining what is happening in the economy and will speak in a technical language that seems so scientific and mathematically complex that we do not strain ourselves to question it, simply because we do not have an equal understanding of the words being used and so we simply "trust" that what we are told and what we are shown is accurate when in fact NO SINGLE economist or financial expert has been able to actually explain the full detail of the situation or the actual consequences involved - because they either have no clue about how it actually works, or they have some understanding and insight but are deliberately controlling the information they give and how they give it - because they understand the value of "trust" in a way that the majority has not understood - they understand that "trust" is asset that can be traded and used for profit as long as people rely on trust instead of actual understanding.

The secret of finance and manipulation is that it is deceptively SIMPLE. The amount of confusion that comes from manipulating financial systems is what creates the profit - because the complexity creates room for all manner of things to happen and creates a kind of chaos that hides the actual nature of the transactions - things that if left exposed and open would cause the general public to react in a way that will remove "trust" in the system, and would in turn drastically reduce or remove the ability of financial "experts" to create "profit" from the confusion.

 In "financialization" the more profit you want to create - the more confusion you have to generate - because in the confusion and chaos and artificial 'complexity' there is movement and there are people who "trust" the movement of the system, and will pay money and invest in it believing that they can make a profit and willingly make themselves part of the movement and part of the complexity - part of the very chaos that is necessary to hide the fact that all of this activity that is apparently generating "wealth" and "profit" is actually entirely made up and based on bogus accounting designed NOT to create a stable financial system where all are able to benefit, but instead to create the most confusing and needlessly complex system possible so that in the ensuing chaos huge amounts of money are able to be concentrated into the hands of a few at the expense of the many, who end up caught in the trap of trying to solve an impossible and illusionary puzzle, still believing that there must be some legitimate way this system must work, which will eventually make them wealthy when in fact the system was only meant to keep them investing more and getting less in return.  

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The Roots of Financialization

 It is difficult to say exactly when financialization became what it is today, but it's roots can be seen as early as the 1960s in America when more and more people were becoming interested in the notion that having less regulation and more freedom to invest and be creative with money would produce greater welfare for everyone, and in the 1970s this idea became more popular due to the works of economists such as Milton Friedman who spoke about the benefits of having a free market system where there was little control or constraint and popularized the idea of minimal government oversight especially when it came to economic activity.  

By 1999 this idea lead to the official repeal of the Glass Steagall Act which was a set of banking regulations put into place in the United States in 1933 which meant to prevent commercial banks from investing pensions and depositor money in financial instruments that are handled by investment and securities firms. This meant that officially, the money in a commercial bank would be available to use in order to "speculate" or make bets in the financial market. On the one hand, commercial banks had an opportunity to make money on money that they were holding for their customers, and on the other hand investment firms now had even more money with which to create "financial instruments" based on the new influx of capital and money from commercial banks.

 To break this down further - this means that banks no longer had to worry about having to make profit through making loans to people and having to make sure that they only loaned to people who can pay back the bank plus interest which the bank needed to remain profitable and stay in business. Now, banks can make all kinds of loans to all kinds of people and they could now trade these loans with investment firms who would turn these loans into "financial instruments" that could then be further repackaged in many different ways and then resold to other investment firms or fund managers - all of this creating a large amount of activity and complexity - and in this complexity the concept of "financialization" was born - the idea that you could take something of value such as manufactured products, labor, or agricultural goods and resources, property, or even debts owed to a bank - and convert that into a "financial instrument" that can be sold, converted again into another kind of financial instrument, and sold again and again.

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Frankenstein's Monster

The ability to create money out of nothing and collect interest on lending it out to borrowers, and being able to sell and repackage those debts into financial instruments that could then be used to speculate on and influence other markets such as food, government bonds, and commodities spread like wildfire throughout the financial system - and across the world these financial instruments were sold, repackaged, and then sold again so many times that its original value (if indeed it had any) can no longer be determined, but the debt that was created when the instrument was sold could not be discharged or forgiven because it was impossible to pay back something that was created out of nothing, and demands more than nothing as repayment.

To break this down even simpler -

Being able to understand that you cannot give back more than what is given to you unless you take from somebody else is the only key that anyone needs to be able to see THROUGH the trickery and deception of the financial system and anything that has come out of its hybrid breeding chambers that have produced the illusion of profit and growth - because the only thing that has grown is the amount of money the financial elite have been able to keep for themselves while the debt is constantly being pushed onto the majority trying to pay back something that can never be repaid. 

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Frankenstein's Master


Through the use of financial leverage - the ability to use greater amounts of capital (money) in exchange for greater returns on investment - money is very quickly accumulated to those who have access to money - which creates a situation where those who have the most money will be chronically unable to STOP making money - simply because the act of having a large sum of money itself creates profit through interest that the rest of the economy is busy trying to pay back but NEVER WILL because it is mathematically impossible. 

This is a big reason for why, within a few decades so much wealth inequality has developed all across the world - and how it is that money becomes concentrated in the hands of those who have the most money and access to financial leverage while those who don't will have little or no access and will instead be completely distracted by the ILLUSION that they apparently require to pay back their debts and continue participating in the deliberate chaos and confusion of the financial systems of the world so that they can eventually become wealthy as well, or at least stop being poor. 

It is no wonder that those with large amounts of financial power also have the most political and economic influence. They have the ability to afford what the majority cannot - because they determine the prices and they determine the availability of money. The financial elite have access to the best education, the best health systems, the best in new innovations, the best opportunities for new investment, the best chances to succeed or at least pass on the losses to others, the best access to lawyers, politicians, lobbyists, fund managers, accountants, media outlets, and public relations agents all of whom must labor so that they can become wealthy and gain influence and power, or at least pay off and cancel some of the debt that they had either been born into, or had to take on as a matter of survival within the current system. 

This is how the financial elite accumulate and concentrate power through financialization - putting a price on everything and then controlling who gets access to money and financial leverage and thus controlling who gets to buy and who doesn't. 

If financialization and endless combinations of debt that are sold for profit and distorts the value and price of actual goods and services (as well as government bonds and securities that entire cities and counties depend on) is the Frankenstein Monster that threatens to choke the life out of everything in it's path - then the financial elite can be said to be the master of that very monster.

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The Road Ahead

The current economic system as well as the political systems of the world are held captive by the Frankenstein's Monster that has been created through financialization - and here what must be understood by the REAL Politicians of the world - is that financialization is not something that was done to us by the financial elite alone. Financialization happened and continues to happen because of the way we each INDIVIDUALLY continue to accept without question the values and prices that have been set based on fraudulent accounting, and continue to believe that just because we do not "understand" the complexity of the financial system, that it means we are not principally responsible for its design or function.

We have got to consider that the financial system is not meant to be "understood" and it is NOT meant to "make sense" - it is a scheme that we have allowed ourselves to fall for to such an extent that questioning it seems blasphemous and we would sooner accept a warped and distorted version of financial reality than the actual truth.

Each day, we look at the prices of the goods and services we want without questioning how such a price was arrived at. We demand that our goods be affordable without understanding the process that went into the manufacture and processing of what we are buying. We do not concern ourselves with who gets paid how much, and how much of their labor actually went into what we are buying because we assume it is too 'complex' for us to understand. We allow our corporations to put us into billions of dollars of debt and then we pay for them to stay in business after gambling away our money, our labor, our investments and creating exotic financial instruments that have sucked away all actual value and replaced it with an I.O.U that can NEVER be repaid.

We allow corporations and institutions to bid against each other using our labor and our money, and we pay for their losses while they keep all of the winnings. We are NOT victims of some complex scheme beyond our comprehension or skill, but victims of our fear of responsibility. We have allowed a monetary system of financialization to take over and distort ALL real value on earth - and we have allowed PROFIT to become the only thing that matters in this world even if it means we must destroy the environment, displace countless species of animals, disrupt the ecosystem, poison our waters, keeps BILLIONS of people in poverty and economic suffering - all because we accept the notion that we are not responsible or capable of understanding or directing our own economic policies - all because we continue to use a value system based on financial instruments made out of nothing - based on entirely fictional arrangements of value.

The earth, the resources that are here, and the many lives that are currently sharing in this ONE physical reality CANNOT be created out of thin air, cannot be repackaged and revalued and resold countless times, cannot be "bailed out" when the inherent value of LIFE has been expended - and yet we allow ALL of this to happen because our financial systems deem it necessary for "profit", because "profit" can only come from confusion, chaos, displacement, and exploitation - because that is where money derives it's value.

But through the very same method by which our economic system has become corrupt and untrustworthy - we are able to establish a new system - a new agreement and understanding - and a new "financial instrument" that will be the pinnacle achievement of our species if we dare to do the simplest thing - if we simply would agree that LIFE has a real value and that our financial systems should align itself to REAL value, and to ensure that all people and all life are properly considered in this value system. 

This is why it is of great importance for all to study and become educated in terms of how these world systems work - because in our absence there has been great abuse and atrocity committed to a degree that now threatens the stability of the world. 

It is a matter of urgency that an Equal Money Capitalism be understood and implemented while there is still sufficient time, and that we the rightful political majority of this world organize and democratically begin to shift our value systems away from false concoctions designed only for the profit of the financial elite, and back to a value system that reflects the dignity, honor, and equal right to life and resource that is inherent in all through an Equal Life Foundation - so that we have a world WORTHY of the children we will bring into this world - so that we can be proud and confident in introducing our future children to the world that they will inherit - the world that is our gift and our legacy that will live on through our future generations who will enter a world fully cared for, fully supported in the best possible way, fully enabled and educated to be responsible and equal within all things, so that this legacy becomes the birthright and thus responsibility of all that will follow. THAT is a world worth living in, and worth fighting for now - because this is the ONLY place where such a world can come into being, and this world will not survive the corruption of financialization without the intervention of the awakened political majority of REAL Politicians.