God... a being whose only definition is
that he is beyond man's power to conceive.
Ayn Rand
I think, if you look it up, Sir Francis
Bacon is credited with saying, “money is a good servant but a bad
master”. Actually, it was an old French proverb, far older even
than the Elizabethan politician, and Sir Francis merely quoted it –
and in French, “L’argent est un bon serviteur, mais un méchant
maître.” His own original observation (in English) about money
said the same thing, but was as prosaic as fertilizer. “Money is
like muck,” he said, “not good except it be spread.”
The alleged short-cut to knowledge,
which is faith, is only a short-circuit destroying the mind
Ayn
Rand
You see Sir Francis believed in the
biblical warning that “The love of money is the root of all evil”
(Timothy 6:10) , and that a buck in your hand is worth a buck, but a
dollar spread through the economy is worth several more. You buy a
loaf of bread and you employ the baker and the driver who delivers
it, and the check-out clerk, etc. Amongst economists this is called
the “velocity of money multiplier effect”, or the VMME, and most
economists multiply each dollar spent on bread by six.. This is the
material logic which – in addition to Judeo-Christian and Islamic
morality - justifies food stamps and unemployment insurance. And
yet, today's devotees of Ayan Rand, like Republican budget committee
chairman Paul Ryan, do not believe in the VMME. They believe wealthy
Americans should act only out of self interest while the working
poor, aka the middle class, should sacrifice for the good of the
nation. Heads the bankers win, tails, the people who borrow, lose.
We will rebuild America’s system on
the moral premise...that man is an end in himself.
Ayan Rand Atlas Shrugged
According to Wikipedia, “A bank
connects customers that have capital deficits to customers with
capital surpluses.” But in the post “Citizens Untied” world,
where a Supreme Court majority can believe that corporations have the
same rights of free speech as individuals – and enough money to
reduce “Free Speech” to an oxymoron - money has become the
master. Five American banks now hold – hold - more than $8.5
trillion in assets – 56% of America's $15 trillion economy, while
most small businesses cannot buy a loan. These mega-bankers practice zombie capitalism, trading their cash surpluses back and forth between themselves, hedging their
equity by shifting the money from this pocket to that, paying
themselves a bonus every time their computers shift the funds. At some
point reality must intervene in this monetary computer game world,
as J.P. Morgan discovered yet again in recent weeks. And when it
does, the destructive effect is suffered by the nation as a whole.
Sacrifice might be required, but only for those who cannot afford to
live in the fantasy world of 21st century mega-bankers.
I will never live for the sake of
another man.
Ayan Rand Atlas Shrugged
It brings to mind an observation made
by a very angry young man. He wrote, “There have been gambling
manias before... (but) the ruling principle of the...the present
mania, is... to speculate in speculation...” The angry man was Karl
Marx, and he was writing about the swindle of the moment in September
of 1856, the collapse of the Royal British Bank. It was a fabulous
enterprise which seemed solid as granite at one moment and in the
next a cruel fraud and a fantasy. And the most interesting thing about the
case, besides the moral lessons the father of Communism saw in it,
is that the bankers who perpetrated it actually went to jail,
briefly, without bringing down capitalism.
Until and unless you discover that
money is the root of all good, you ask for your own destruction.
Ayn Rand Atlas Shrugged
The Royal British Bank, created in
1849, was innovative. Previously, banking had been a rich man's
game. Those with money had banded together to lend to those who could
afford to borrow it. But the fortunes created by the industrial
revolution trickled were not exclusively blue bloods, and both blue blood and non-blue blooded advanced thinkers in Scotland invented the
publicly owned bank, in which small investors with some extra cash
could combine their money, and once they had sold L50,000 in stock, could
open their doors and begin accepting accounts and lending money to
make a profit. In this case the idea belonged to Londoner John
Menzies, who suggested the idea to his lawyer, Edward Mullins. They
printed up a prospectus, and went looking for investors. But as
England was in the middle of a recession (its fourth “Panic”
since 1817) they found little money around, until they approached
John McGregor, a Liberal Party politician representing Glasgow,
Scotland. For the price of ten shares – at L10 per share –McGregor
achieved a seat on the board of the bank. He immediately suggested
the board hire an old friend of his who had knowledge of the
“Scottish style” of banking, fellow MP Hugh Innes Cameron.
If any civilization is to
survive, it is the morality of altruism that men have to reject.
Ayn
Rand Atlas Shrugged
Cameron was offered the position of
Managing Director of the Royal British Bank. And with McGregor's
help, Mr. Cameron obtained a seven year contract which would impress
any modern equity or hedge fund manager. The first year Cameron
would be paid L1250 (equivalent to $2 million today) , rising to
L2,000 a year ($4.5 million today), with an annual housing allowance
of L200 (about a hundred thousand dollars today). Within a few months he had
squeezed out Mr. Menzies, buying out the bank's founder with L400 of
investors' money. Now there was nobody looking over his shoulder.
If you ask me to name the proudest
distinction of Americans...they were the people who created the
phrase "to make money”.
Ayan Rand Atlas Shrugged
From that moment, the bank never stood
a chance of surviving. Instead of the L50,000 the law required and
appeared on it's books, at its opening the Royal British Bank actually had no
more than L18,000 in its vault. Over the next six years, while the
6,000 depositors supplied the salaries, advances and loans never repaid to the officers and directors of the bank, each of those men became involved in
enumerable kickbacks, scams and frauds which siphoned off even more
customer's funds. It was later figured the accounts were looted to
the sum of L130,000, (equivalent today to $247 million today). The
whole thing collapsed in the summer of 1856, producing, yet another
nation wide “Panic”.
The question isn't who is going to let
me; it's who is going to stop me.
Ayn Rand Atlas Shrugged
John McGregor had left the bank two
years earlier, but was still forced to escape his creditors by
sailing to Boulogne, France. He died
deeply in debt in April of 1857. In February of 1859 the seven
surviving board members were finally tried on seven counts of fraud.
The jury convicted them of six. At sentencing the judge, Lord
Cameron, could have been speaking directly to Jamie Dimon, the
present day CEO of J.P. Morgan whose firm recently lost between $2 billion and $7 billion in
a yet another derivative gamble. “It would be a disgrace to the laws
of any country” said the judge 150 years ago, “if this were not a crime to be
punished. It is not a mere breach of contract with the shareholders
and the customers of the bank., but it is a criminal conspiracy to do
what must inevitably lead to a great public mischief, in the ruin of
families and the reduction of widows and orphans from affluence to
destitution; I regret to say that in mitigation of your offense it was
said to be common practice. Unfortunately a laxity has been introduced
into certain commercial dealings...and practices have been adopted
without bringing in a consciousness of shame...”
When I die, I hope to go to Heaven,
whatever the Hell that is. And I want to be able to afford the price
of admission
Ayn Rand
Because it was his first conviction,
Hugh Innes Cameron could only be sentenced to a year in jail. All
the other board members received lesser sentences, and one was only
fined a single shilling. The scandal sold a few newspapers, and
produced a marvelous pamphlet, “The Curious and Remarkable History
of the Royal British Bank showing how We Got it Up and How it went
down.” But judging by recent history, no one learned a thing from
the affair, or any of the other enumerable “Panics” which have
stricken capitalist economies once or twice every decade since. I
think we learn nothing because greed makes you stupid, and the
mega-bankers and their political apologists are purveyors and
advocates of greed and thus they are selling and buying stupidity . And we have known how that philosophy plays out since
bible days. To not acknowledge this reality and yet not deal with it is to acknowledge you are a zombie, addicted to greed, and without hope of ever learning a better future.
You can avoid reality, but you cannot
avoid the consequences of avoiding reality.
Ayn Rand
Very good, I enjoy your blogs everyweek, you always hit the mark.
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