Ponzi Capitalism | by Frank Scott / August 17th, 2007
Charles Ponzi was criminalized in the 1920s for using people’s money to pay interest to themselves as well as others, all of them being invested in something that did not really exist. Their profit resulted from unprincipled capital accumulation. Just like what the market does when it sells what it calls derivatives now , Ponzi’s investors derived value from other investors, until the number of gullible people declined once the ruling class squelched his small time imitation before their own schemes were seen to be much bolder methods of producing money out of thin air. The credit creation which has supported our consumption binge for many years now is merely an updated, far more vast and dangerous expression of Ponzi’s hustle, carried to global extremes.
Purists can deny that the present shakeup in the home mortgage sector is anything like a Ponzi Scheme, because an actual product exists: a home. But rare is the buyer in America who sees real estate simply as a procedure to acquire shelter. Rather, it has become a money making proposition in which the commodity, and especially the speculative paper that is its tenuous foundation, changes hands often, sees its value fluctuate, and all with no more than religious faith in a steady stream of new investors to buy the paper.
Once a mortgage is taken on by a hopeful future home owner, it passes through many financial hands, bundled and rebundled to create greater packages of funny money that exists only in the speculative minds of manipulators who make some people rich, and most people debtors.
This market division is only a part of the casino credit scheme that has been propping up capitalism in America for the past generation. ...
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