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Greed and the Pyramid-scheme
The 100th Letter of an Autonomous Thinker



Amsterdam, September 17 2008

Dear reader,  

The present financial crisis – you may wonder how many more crises will follow – has only one cause, the elitist paradigm in which everything turns around money.
The greed of the top of our society is horrifying.
 

The money-making machines, the banks, the insurance companies, the hedge-funds, the speculation on the stock-exchange, the private equity firms, the manipulation with commodities, etc. must grow and grow.
Banks give loans to people who cannot afford to pay the sky-high interest.
Objects are being insured against low premiums – employees have to sell more and more because only then they get a higher income.
The derivatives market is also a criminal racket in which a few people earn a lot of money.

The price of commodities is driven up to extreme heights. The price of copper trebled in a year while production and use hardly changed. The same for oil, foodstuffs and other commodities. There is something fundamentally wrong when the silver price at the beginning of 2008 year was 14.93 dollar an ounce, went up to 20.92 and then went down to 10.66. But traders get more money when they sell more (preferable at higher prices).

 It is a pyramid-scheme, a criminal racket in which some people earn a lot of money at the cost of many others (a lot of tax money is thrown away).
It is based on the idea that all people can make a fortune. But only some people make a fortune. The problem is mathematics. For every person to make a profit many people have to pay. The first people make money, the rest loses. It is not exactly what happens in the financial world but it is not that different.

In 2000 a pyramid-scheme collapsed in Albania.
I quote from an article from the IMF-publication Finance & Development.:
When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed. Albania's experience has significant implications for other countries in which conditions are similar to those that led to the schemes' rise in Albania, and others can learn from the way the Albanian authorities handled - and mishandled - the crisis.”

“In a typical pyramid scheme, a fund or company attracts investors by offering them very high returns; these returns are paid to the first investors out of the funds received from those who invest later. The scheme is insolvent - liabilities exceed assets - from the day it opens for business. However, it flourishes initially, as news about the high returns spreads and more investors are drawn in …......…. When they collapsed, it was clear that their liabilities massively exceeded their assets.” 

Just what happened with the sub-prime mortgages, is happening with the speculation with commodities (maybe the next crisis). 

The IMF tells us that it could happen in Albania because “the wide appeal of Albania’s scheme could be attributed to several factors including Albanians’ unfamiliarity with financial markets, the deficiencies of the country’s formal financial system which encouraged the development of an informal market and within this market, of the pyramid schemes and failures of governance.”
The same words can be said about the USA and all other countries where money and not the interest of people is the leading paradigm. Money together with Power and Elitepersons as the three pivotal points around which our world turns. This Holy Trinity protects the rich and injures the masses. 

This crisis is once more a compelling reason that supports the title of my new book. From Chaos to Change with the subtitle Entering a New Era.

By the way, I have not yet read that even one of the leaders of the bankrupt firms has been arrested and I do not think it will ever happen because all leaders, including McCain and Obama, are involved.  

Your truly, Joost van Steenis

 

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