Charlie Rose interviews Charles Ferguson (Inside Job the movie)

Zero Hedge reports the full interview here.

Inside Job is a good movie to the extent that it may make people realize this debacle is entirely man made if not down right intentional.

But… there is a “but”!

Despite Charles Ferguson’s courage, he too fails to make the connection as to the why what happened happened. When asked what it would take to fix the broken system we find ourselves in Mr. Ferguson suggests: “(i) change the role of money in elections, (ii) to pay regulators well, and (iii) have law enforcement that is necessary to enforce the laws we have.”

Readers of this blog will by now know that the reasons mentioned by Mr. Ferguson are but the proximate causes of socioeconomic failure. But Mr. Ferguson fails to identify the ultimate cause and the prime driver of scioeconomic failure.

Allow me here to be absolutely clear about something that seems to be missed by the wider public. As everything else in life, one man’s crisis is another man’s bonanza. As has been been made abundantly clear already, this quick succession of failures of social and economic constructs we are witnessing today is in fact a God send for a handful of global banks. This you must not forget.

As to the ultimate cause of this phase we are living in today, we must go straight up to the one dynamic that frames all other dynamics: the monetary system.

When asked what it would take to fix the broken system, Charles Ferguson should first and foremost clarify whom the system is broken for because it sure as heck ain’t broken for the global banks and for the US Primary Dealers in particular. In fact, this is the single best possible universe the Primary Dealers can evolve in. That done, Mr. Ferguson could simply point the finger at the monetary system. And guess what! It is exactly what today are the Primary Dealers that have sold this particular variety of monetary system to the politicians whom, in turn, impose it on society.

We can argue today whether politicians are truly witting accomplices of the banks or whether they are mere useful idiots. But we can certainly not overlook the primary and central role the monetary system plays in our lives. This particular variety of monetary system in use today in the West is predicated on inflation. Thus our monetary system is predicated on discouraging savings and encouraging rampant expenditure. Rampant expenditure can be encouraged via aberrant fiscal and monetary policies of which low interest rates is the first and most basic. Debt based fiat money is predicated on hollowing out the productive capacity of society transferring said productive substance to the entity that has the privilege to create the currency…. this may appear too abstract to wrap your head around so picture the following…

Draw two separate circles on a piece of paper. One circle is much larger than the second. Now imagine that the larger circle represents society as a whole – all men, women and children, all governments, all factories, all schools… everything. The second circle stands apart from the first circle and it represents the entity tasked with the authority to create money.

Now think about this.

The small circle is arbitrarily bestowed three privileges. 1) It can create a substance that has zero cost of production 2) It is allowed to inject said substance into the larger circle. 3) It can demand said substance must be returned in its entirety PLUS more of it.

The large circle is forced to make use of said substance but at cost.

In the above construct, simple arithmetic says that if the large circle is forced to make use of the substance that is the exclusive privilege of the small circle to create, because the small circle has no cost of production and because the same amount of substance PLUS more must be returned to the small circle, eventually the large circle will transfer all productive capacity to the small circle.

In the construct above, it is clear that the politicians and, indeed, the banks have a vested interest in concealing the true nature of the monetary system and in avoiding as well as discouraging any discussi0n of same. But what is also painfully clear from the above construct is that the politicians and the banks have an interest in not pursuing regulation too vehemently particularly with regards to selected entities of which the banks are the most prominent example.

Thus, identifying “the role of money in election” is not a useful observation not only beacuse as long as there is politics, money will always play a role and this is particularly so in the context of electoral politics. But because Debt Based Fiat Money is predicated on spending money far and wide regardless of how or why. We cannot alter the reality of politics but we can change the nature of money.

Similarly, “paying regulators well” is not a solution. This is a concept that harkens back to 18th century political theory that says that civil servants should be well paid in order to discourage them from succumbing to corruption. Obviously that hasn’t really panned out well particularly in Europe where for example civil servants in France and Italy are by far the best paid in the world and yet corruption is rife in both countries. And, anyway, in a Debt Based Fiat Monetary System, regulation must be loose so as to allow the expenditure of great sums far and wide. Once again, we cannot alter the nature of man but we can change the nature of money.

And of course, “have law enforcement that is necessary to enforce the laws we have” isn’t going to be much more helpful because in a system predicated on spending money far and wide, law enforcement must by necessity be fairly lax particularly with regards to laws that may regulate the spending of money.

The corollary to all of the above is that this system lends itself to aberrant policy. Take the issue of “money in elections”. Debt Based Fiat Money allows politicians to promise outlandish expenditure to various interest groups. In turn, this dynamic fosters the creation of more interest groups thus always requiring more extravagant projects to be proposed as political platforms. Rinse repeat.

Take the issue of “paying regulators well”. In a debt based fiat monetary system, the inflationary dynamic dictates that government must progressively but necessarily become the largest actor in the economy thus the largest employer and the most munificent. This dynamic along with the dynamic of “money in elections” ensures that civil servants and regulators are fully aware which side their toast is buttered on. So that as the recipient of special interest money regulators are hired by the politicians that have been put in place by the interest groups because they agree to pursue a certain regulatory policy.

The same goes for law enforcement.

What is afflicting society today is the monetary system. But it is afflicting society. It is most certainly not afflicting the Primary Dealers. Quite the contrary.

So, “Inside Job” is a good movie and a worthy subject to explore. But we must not lose sight of the fact that our problems stem far upstream than mere regulators or law enforcement officials.

We must take the monetary system to task along with the sponsors of the system

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One Response to “Charlie Rose interviews Charles Ferguson (Inside Job the movie)”

  1. pat00donnelly Says:

    Steve Keen has told us he can calculate the busts. Mathematically.

    Who cares? The system is rigged and the media ensure the sheep graze…. But who controls the media?

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