Fake money is the root of economic problems

If I had to boil more than 4000 hours of economic study down to one simple idea that I could tell the world it would be this: fake money is the root of all our economic problems.  I'll go further to say that most social problems are economic ones.  People can be happy if they are poor if they think the rest of the herd is poor too.  This is a fact that most people just don't get.  The Eagles nailed it in their song After The Thrill Is Gone.  They wrote/sang, "you don't care much about winning but you don't want to lose".  That is herding 101 and the human species is a herding species.  We can't help it.  It's in our DNA.  If people see others prospering while they themselves are suffering and if they believe that the prosperers are stealing the prosperity of the sufferers then all sorts of social problems arise.

Fake money is money that you don't have to earn before having it.  Fake money is money that "special" or "connected" people get while at the same time mere mortals like you and I have no access to it (cronyism).   It allows the connected few to use massive leverage while normal people have to play with only what they earn by the sweat of their brows.  If the gambles don't pay off then too bad so sad, nothing happens to the con men.  The transgression is forgiven and the weight of their mistakes falls on the backs of everyone else who was playing honestly.  If you have physical commodity money like gold and silver, or even a metallic standard backed paper currency then you cannot make it up from thin air on a whim.  But fraudulent, fake fiat currency and fractional reserve banking?  That's just funny money that can be created or destroyed in massive quantities by the big boys running the show and its use is tearing our society apart.

The herd does well when it believes fairness is in effect.  Even if times are hard and pastures are lean, the fairly treated herd sticks together.  In fact, in hard times the herd sticks together even tighter knowing that there is strength in undivided numbers.  But when faced with gross unfairness, the herd does not do well. Those that feel they are getting the short end of the stick eventually break away and begin a new herd or there is massive infighting to decide who is going to be in charge.  But even before that we see a rise in discontentment, complaining, acting out, theft, etc. as the weaker players do whatever they can to strike back at the old guard running the status quo.

Fiat currency and fractional reserve banking allow the elite to get rich off of playing the game of life using fantastic leverage.  After they've made enough cash they can have a Jack Welch moment and retire into the sunset leaving the rest of society saddled with the debt they created.  Then they can sit back and make comments from the sidelines about how things have degenerated since when they were running the show.  Of course, they know that they were instrumental in running the Ponzi and they just got out before it began to collapse.  The reason they run their mouths is in order to try to fool people into thinking they had nothing to do with it.  Thus when it collapses they hope they will not be targeted.  Good luck with that.

When people see all the bad things going on in banking, they go after the symptoms as if that will do any good.  They fail to see the root cause.  So the cry goes out for more regulation and laws and bigger government to drive fairness and sanity into the system.  And now we have an increasing number of nut jobs shooting up theaters and grade schools and going Rambo on the LAPD.  If you found the root cause of each of these things it would eventually come back to an economic situation that made someone feel like they were getting screwed.  These people read the news and got angry at how the fat cats were bailing themselves out while the man on the street is left with rapidly diminishing prospects for a happy and fulfilling life.  And so, not being particularly bright, they act out.  They kill strangers.  They cry for attention in the only way they can get it.

I have been writing these things for YEARS now yet so few people actually see it.  I'm convinced that they do hear me and that they do understand my argument but because I am not an important person with a bunch of official proclamations of importance (like PhDs or appointment to government positions), my logic falls on deaf ears.  This is why it is so very satisfying to see someone like Mike Shedlock provide the exact same insight in his own unique way.

Read for yourself (2nd half of the article):
http://globaleconomicanalysis.blogspot.com/2013/02/top-1-received-121-of-income-gains.html