ECONOMY - Moral Hazard of Unregulated Financial Markets

"Nobel economist Stiglitz: 'US privatized profits, socialized losses is not capitalism.' It’s fascism" by Carl Herman, San Francisco Examiner

Joseph Stiglitz understands half the US economic disaster when he explains current policy is “no way to run an economy that’s going to work,” “there’s moral hazard everywhere,” and newly-invented and unregulated financial markets have only increased risk, not decreased it.

The Nobel Laureate, former chief economist for the World Bank, and current Columbia university economics professor understands fully that US economic policy is designed to benefit an elite-class of financial market “traders.” He accurately articulates that gambling losses in fraudulent credit default swaps, collateralized debt obligations, and leveraged investments/bets without the capital to back their losses are socialized by the TRILLIONS in an unprecedented transfer of wealth from taxpayers to a financial oligarchy. And Mr. Stiglitz understands the consequences of a shattered economy on near-record unemployment in the US most accurately measured at 22%.

Mr. Stiglitz accurately gives a high school-level definition of such an economic system as “not capitalism.” He explains these central points in the 8-minute interview below.

What Mr. Stiglitz may not fully grasp is that the economic system of collusion between political and corporate leaders has a definition of its own: fascism. While the academic definition of “fascism” has some variance, when we combine unlawful wars of invasion, widespread torture including upon American citizens, rendition, “indefinite detention,” and now a Supreme Court ruling that allows these privileged corporations unlimited purchasing power in elections along with a 5-corporation control of “mainstream” media, that’s far more fascist than the American system of design as a constitutional republic with regulated capitalism.

Mr. Stiglitz might be holding back in the interview, however. In his new book, Freefall: America, Free Markets, and the Sinking of the World Economy, he states that current policies are exactly how to run an economy that is designed to concentrate wealth among an elite class of families, with the unsaid necessity that the elite have representatives who shuffle through revolving doors between benefiting corporations and government policy-making:

This crisis was the result of actions, decisions, and arguments by those in the financial sector. The system that failed so miserably didn’t just happen. It was created. Indeed, many worked hard–and spent good money–to ensure that it took the shape that it did. Those who played a role in creating the system and managing it–including those who were so well rewarded by it–must be held accountable.

Local perspective: Part of my professional duties as a teacher of economics and government is to produce competent adult citizenry. This includes realization that our nation’s policies and money are managed at a broad community level, and these issues have tremendous local impact. Of course, we all want human beings to be individually successful and enjoy their unique, beautiful and powerful self-expressions. Concurrently, we recognize our commitment to local success is strongly dependent upon the success of the community, and that government policy and economics are drivers.

Our status in early 21st Century human history is that we suffer from a long history in government and money of human interrelationship well-described as vicious antagonism. Governments frequently use war as a foreign policy, despite its illegality and dependent upon public ignorance, with horrific consequences. Economic policy is still created within a “Robber Baron” paradigm to concentrate money to an elite few families. For example:

• National taxes effect you dearly, especially the tax to pay interest on the national debt. This costs the American public over $400 billion every year. This is $4,000 per year for every $50,000 of income. Do the math to understand your household’s tax burden for a monetary policy invented by banks for banks to create our money supply as debt. Your competence in this area contributes to our collective voice to simply shift monetary policy to easily pay the national debt, enjoy full employment, collectively save us over a trillion dollars every year, and finally realize what our brightest American minds have been advocating for centuries beginning with Benjamin Franklin. This would have unprecedented local benefits, and requires collective power to accomplish.


• Ending poverty everywhere on our planet would cost just 0.7% of our income and save a million children’s lives every month. This human accomplishment will cause unimaginable joy at our local level.