Securitization and Inflation

We are in roaring twenties mode. All asset prices are inverted to value. Value in any society is completely dependent, in any society, on median income. If you want to have a rising tide for the economy as a whole, median income must rise. It is an immutable principle. But periodically speculative irrational fever takes over and this time it is being promoted and aggressively pushed by Wall Street banks.

Practically all of the current inflation is directly related to securitization. Wall Street has found a way to put money into the hands of consumers in exchange for an unlimited license to issue, sell and trade unregulated securities. As a result, the incentive is to complete deals with consumers/homeowners without any risk of loss and with profits that far exceed the deal with consumers. It doesn’t matter if consumers don’t pay or if the deal with consumers makes no sense and will not succeed as the consumer intended. What matters is maintaining the illusion of a loan deal.

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So the payments to consumers are merely incentive payments to sign the deal. Wall Street can pay whatever is necessary to get the consumer to sign. It can offer any incentive that is necessary. Offering low rates on what appear to be loan products accomplishes two objectives — it gives unwary consumers a cheap source of what they think is credit and it maintains the illusion of a loan.
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It wasn’t housing demand that pushed housing prices far into the stratosphere over the median values in 2008 and it isn’t demand for assets that is pushing up those prices now. The value remains the same — tied to median income.
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So we are all stuck in a maelstrom of furious speculation. The tulip craze in Holland comes to mind, where many who had built considerable wealth lost everything because they switched from making things and providing service to speculation in a flower that could be grown almost anywhere.
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The Fed is also fueling the nuttiness by issuing more currency into a marketplace that is already overstocked with currency. But the main problem is the aggressive marketing and sales of investments that are masquerading as loan products.
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Hardly any average consumer knows that they are investing in a securities scheme every time they accept the “loan product” labeled by Wall Street firms whose business has never been lending. It has always been about the creation, issuance, sale and trading of securities. Consumers get nothing out of the profitable scheme and get all the risk of loss on the apparent loan.
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Capitalism will invert and self-destruct unless we are able to get back to something resembling free market forces. Lying to people is not capitalism or representative of a free market. It is theft. There can be no self-correction in a market where most people do not have any access to information or clue about the nature of the transactions in which they are investing their time, money and effort. All markets will continue their corruption until the basic element of commerce is corrected — money.

2 Responses

  1. Yeap. Federal Reserve -unregulated and uncontrolled private organization which is owned by the same families who own major Investment Banks who operate it as a common fund for Big Banks and to control American Government by loaning them money which Federal Reserve prints without limitation.

    Morgans, Rockefellers, Sachs, – all the same, since 19th century

    FR was given 10 years chapter in 1913, but in 1923 bankers said that Federal Reserve is permanent – and the Government was unable to do anything because they are Borrowers from Federal Reserve.

    Federal Taxes are covering Government’s debt to Federal Reserve bankers, not help to build society.

    Depostirory Trust Corporation and Cede (unregulated branches of Federal Reserve aka “Street Names” for fake securities) own EVERY publicly traded company.

    They own EVERYTHING. Everyone works to transfer their wealth to Federal Reserve whose owners – Big Banks – sell and trade their modern slaves on the open market every day, without any disclosures

    Companies are allowed to keep their names to serve a window dressing for Big Banks. Management is facilitated via additional placeholders who report to Federal Reserve who collect money for Federal Reserve Banks.

    For example, If you think you pay your cable bill to the cable company, you are wrong. You pay to Federal Reserve banks via intermediaries.

    Cable companies do not even touch your payments, they merely perform technical support.

    When John Kennedy tried to put Federal Reserve out of business and transfer money supply under Government’s control – he was killed

  2. The Federal Reserve and their “City of London” backers initiated WW1 just a year after the Fed came into existance… The roaring 20’s was the Fed juicing the economy with free money in the form of easy loans… same as today… we all know what happened in the 1930’s … The banksters crashed the economy and foreclosed on every valuable asset ,,, same as today…

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