We have not learned. And if we don’t learn soon, we will pay once again for our idiocy.
JPMorgan Chase & Co. (JPM) trader Bruno Iksil’s outsized bets in credit derivatives are drawing attention to a little-known division that invests the company’s reserves and fueling a debate over whether banks are taking excessive risks with federally insured and subsidized money.
Debate? There is no debate: They are.
The real problem is found here:
Which produced the following in terms of monetary inflation:
And that, in turn, produced this:
This is effectively counterfeiting of the nation’s currency, and no amount of arm-waving and apologists screaming about “competitiveness” changes what it is.
We have commercial banks, operating with the explicit permission of our federal government, who are creating monetary units in the form of spendable funds that have a debt on the other side of the balance sheet, with exactly nothing behind it in terms of actual assets representing prior economic surplus (that is, previous production.)
This is the essence of the economic scam that has been run on the American public and indeed on the world. The credit derivatives marketplace is a sop to hide the fact that these exposures are an effective naked short on the currency.
The effective argument is that we must allow our banks to be “competitive” by emitting currency, a function that is the very essence of a sovereign government and must be regulated so as to match economic output.
Why? Because it is a tautology that the value of a given unit of currency in terms of good and services is determined by the number of units. If you emit more units then the value of each goes down proportionately and the price of something goes up. This is monetary inflation and allegedly The Fed is charged with regulating the total of currency and credit so as to produce stable (unchanging, natch) prices.
But The Fed is complicit in this scam, as is the government.
Make no mistake folks — it’s a scam and it’s coming right out of your hide. It may be legal counterfeiting but it’s still counterfeiting.
And until we the people put a stop to it there will be no economic balance and no real prosperity — just one scam after another stripping your wealth and economic output to the bone.