How The Fed and Banks Destroyed Our Economy
August 28, 2009
– Comments (15)
First, create a finanicial instrument where the banks can make piles of money when the loans they issue default.....call it a credit default swap. Could you imagine if surgeons could make money buying life insurance on their patients before surgery?
Second, infect every aspect of our economy with piles of debt. Lower interest rates to unprecedented levels. Send out solicitations to everyone and their cousins....and loan loan loan....the more loans that eventually default, the more money you make.
Third, tell everyone the economy is growing as spending surges with the new found temporary money.....and then convince people to borrow even more....lots more...over 2X the total GDP.
Fourth, buy all the politicians with the new found tax revenues from the crack like boost in the economy and tax receipts.
Fifth, make sure no segment of the economy is left unlevered and loan massive amounts to Cities, Counties, States, Hospitals, Schools, Families, Commercial Real Estate, Businesses and the Federal Government.
Confirm you have loaned out the maximum and more than the system can afford to repay.
AT THIS POINT....remind everyone how the economy is going gang busters and start to raise interest rates....raise them 17X....nobody will be able to see what is going on, it is party time.
When the loans start defaulting, just so you can really profit from your credit default swaps.....start to tighten credit and watch everything crash.
As the entire economy crashes, few really know you are profiting because the defaulting loans are offsetting the profits from the swaps....plus you have a bunch of swaps hidden in quiet private equity and offshore hedge funds.
Then to really conceal your behavior, go crying to Congress and threaten them if they don't hand you Trillions of taxpayer dollars to cover the defaulting loans, the economy will implode as millions are losing their jobs and getting kicked out of their homes by the same people who caused this mess.
As this is all taking place, put a few colocated computers on the exchange floors and start high frequency trading stocks back and forth to each other so the masses think things are turning around. HF trading can even make bankrupt finanicials control volume and increase in price many times.....
Make sure your analysts and economists portray the same story as revenues and earnings are evaporating, government tax receipts are shrinking, and tens of millions are suffering massive wage cuts.....after all, it is the goldilox economy.....and there are no bears left to tell a different story.
Then one day, turn off the computers, watch the market crash and everyone's retirement dreams go up in smoke... and you and the politicians tell all that no one could have foreseen it coming as the over leveraged economy is left in shambles and you own the remaining assets of the nation....along with the politicians.
The problem now is how will people react when they find out that our entire nation is broke.......and even those few remaining with savings will be forced to turn it over to the government to defend our country and keep our politicians employed?
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