The Market Is Rigged—Introduction and Rationale
Madis Senner, CPA
Newsflash! The market doesn’t work! From the California electricity debacle, to the airline industry bailout, to Enron, to NYC held ransom for $1,100,000,0000 by the threatened Stock Exchange relocation, even to the privatized rail system of the United Kingdom — the market is failing to deliver. Worse, the market system under which we operate is not the free, open and fair system we perceive it to be:It is rigged
Almost three decades ago, beginning with floating exchange rates and accelerating during the Thatcher/Reagan years, the function and purpose of government gradually began to be reduced as society increasingly came to rely upon the market for direction. Capitalism shifted into high speed and became, as Lutwak says, ‘Hyper-Capitalism’. The rationale for the shift was that the market was believed to be the most effective and efficient tool for not only allocating resources, but also for weeding out the unsuccessful and rewarding the successful. And, as its inherent system of checks and balances was believed to be almost infallible, it was held by politicians and financiers alike that the market must be left to its own devices, free from government control or meddling. The market must be left to itself to allow the proper balance of growth and inactivity run its course! This laissez-faire attitude toward the market appeared on the surface to be working as the U.S. economy grew stronger, corporations grew richer, and with astonishing frequency, individuals suddenly found themselves millionaires, at least on paper. Prosperity was here. The market rules! (For a related analysis see ; The Japanese Paradigm)
Sadly, as most Americans are beginning to find out, the market is a failure and is neither capable of operating as it is supposed to, nor is as tamper free or as fair it is made out to be. Critical debates in the California energy crisis highlighted the difficult decisions facing us now to correct the flaws. What to do? What went wrong? Whom to blame? We could spend years analyzing the problem, or we could cut to the chase. I prefer the latter. Forget trying to fix something that does not work. We must abandon the market system! Cost accountants advocate not looking at the sunk cost of a project (the costs that have already been spent) but looking to future expenses. It is time we looked at the market system as a sunk cost, realize it was a bad investment that did not work, and stop throwing good money at bad!
To make our point we will examine the financial services industry, targeting Wall Street and its insidious relationship with the Federal Reserve – the puppet master responsible for the rigging. (For a more detailed analysis of the abuses of the Federal Reserve go to: Federal Reserve Resource Center). And, finally, we will be considering the difficulties inherent in any government system using economics as its driving force: Money Rules! Our analysis will emphasize a practical common sense approach rather than theory and numbers. If you are interested in being on the mailing list please sign up below. All information you provide will be kept confidential.
It is time we had a real democracy. It begins by abandoning a system based upon economics--Whether it be communism or capitalism.
One wall down (Berlin)
One to go (Wall Street)!
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