When scams start unraveling, the scammers become increasingly frantic to maintain the\u00a0illusion of legitimacy<\/i>\u00a0and the\u00a0delusion of guaranteed gains<\/i>\u00a0that are the lifeblood of every scam.<\/b>\u00a0One sure sign that the flim-flam is about to collapse is the manic rise of FOMO,\u00a0fear of missing out<\/i>, as the scammers jam the Ponzi scheme’s stellar returns to new extremes.<\/div>\n
What greedy human can resist\u00a0guaranteed gains<\/i>, especially of the enviously grandiose variety?<\/div>\n
The greatest scam of the past century is unraveling before our eyes.<\/b>\u00a0I’m calling it\u00a0finance capitalism<\/i>\u00a0as a general descriptor of the dominant form of what’s called “capitalism” because calling it what it actually is–a fraud that’s destroyed the foundations of our economy and society<\/b>–is, well, a much more difficult sell than “capitalism,” which still has some faint echoes of the open markets, etc. that characterized traditional capitalism, which I call\u00a0naive capitalism<\/i>\u00a0because it is incapable of differentiating between the parasitic, predatory finance version cloaking itself as “capitalism” and actual capitalism, in which capital is put at risk, markets are transparent, etc.<\/div>\n
There are many labels for the distorted, corrupted “capitalism” that dominates our economy and society: I’ve long used state-cartel capitalism, others prefer monopoly capitalism or crony capitalism.<\/div>\n
I now favor\u00a0finance capitalism<\/i>\u00a0because the heart of the fraud is finance: printing “money” out of thin air without creating any value or any goods and services.<\/b>\u00a0If you can’t print “money,” then borrow it into existence–that’s just as profitable a fraud as printing it.<\/div>\n
As I explained in\u00a0Our Wile E. Coyote Economy: Nothing But Financial Engineering<\/a>\u00a0(June 11, 2020), the fairy tale that America has a truly capitalist economy no longer aligns with the reality that the U.S. economy is now a decaying billboard of “producing goods and services” behind which the real money is made in\u00a0financial engineering, a.k.a. legalized fraud.<\/i><\/div>\n
I’ve discussed this fraudulent distortion of capitalism for years:<\/b><\/div>\n
Has “Financial Innovation” Capitalism Run its Course?<\/a>\u00a0(June 22, 2010)<\/div>\n
When Capitalism Turns to Cannibalism<\/a>\u00a0(July 15, 2015)<\/div>\n
What Makes You Think the Stock Market Will Even Exist in 2024?<\/a>\u00a0(July 6, 2020)<\/div>\n
Just as\u00a0Communism was a god that failed,\u00a0finance capitalism is also a god that failed<\/b>, an extreme version of crony-capitalism that is nothing more than a mechanism for concentrating wealth and power at the expense of everyone toiling in the real-world economy.<\/i><\/div>\n
And if we understand this, then we also understand that with its stock buybacks, high-frequency trading and after-hours manipulation,\u00a0the stock market is nothing more than\u00a0finance capitalism’s\u00a0primary mechanism for increasing the concentration of wealth.<\/b><\/i><\/div>\n
How did outright fraud come to dominate our economy? The answer is simple: infinite greed plus the decline of gains from “real capitalism,” i.e. increasing productivity via producing goods and services.<\/b>\u00a0The appeal of\u00a0something for nothing<\/i>\u00a0is irresistible when “money” can be printed \/ borrowed out of thin air and used to run a fraud that exploits human greed.<\/div>\n
Like every good Ponzi scheme, those invested in the scam promote the fraud and cajole new marks to sink their cash into the “guaranteed gains” scheme because\u00a0everyone already in the fraud will lose if there aren’t enough new marks joining to keep it from collapsing.<\/i>\u00a0That perfectly describes the entire financial media, the financial “industry” and everyone in it.<\/div>\n
Unfortunately for everyone invested in the scam, all the “wealth” created by\u00a0financial engineering \/ legalized fraud<\/i>\u00a0is fictitious, i.e. phantom.<\/b>\u00a0All Ponzi schemes collapse once the supply of greed-blinded marks dries up, and so the “solution” in our\u00a0finance capitalism fraud<\/i>\u00a0is for the central bank,\u00a0the Federal Reserve, to become the mark with an infinite checkbook<\/b>: the Fed is busily conjuring “money” out of thin air to buy corporate junk bonds and other “assets” (ha-ha, as if these are actually worth anything–the joke’s on you) to prop up the Ponzi scheme.<\/div>\n
This works until it doesn’t, of course.<\/b>\u00a0In the meantime, the folks running the fraud are pulling out all the stops to keep it from imploding–goosing the FOMO frenzy, printing and throwing trillions into the scam to maintain the\u00a0illusion of legitimacy<\/i>\u00a0and the\u00a0delusion of guaranteed gains<\/i>\u00a0and talking up the god-like powers of the Fed to prop up the fraud indefinitely.<\/div>\n
Despite these massive manipulations, the cracks are increasingly visible.<\/b>\u00a0Volatility refuses to sink back to near zero, and the swings in the\u00a0skimming machine, a.k.a. the stock market<\/i>\u00a0are becoming more extreme.<\/div>\n
The cognitive dissonance required to ignore the widening gap between the real economy and the fraud’s basic machinery–speculation funded by “money” conjured out of thin air–has reached a level of denial that can only be termed psychotic.<\/b><\/div>\n
All bubbles pop, all frauds implode, all scams collapse.<\/b>\u00a0That ominous clicking coming from behind the tattered billboard is the sound of dominoes falling.<\/div>\n![](\"https:\/\/www.oftwominds.com\/photos2020\/dominoes6-20.jpg\")
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