Save your bile for more nefarious scammers those that actually steal from the destitute. It seems like the majority of the scammed were rich folks with extra $$ to burn, and eventually got burned by their greed; and as for the ones that lost all their fortune they're just too stupid to be rich in the first place. This was simply a case of dogs eating dogs. I would even venture to say that Madoff is enjyoing this a bit hence the slight smirk:Originally Posted by lofter1
Last edited by TREPYE; December 21st, 2008 at 02:32 PM.
Agreed...no tears for the super wealthy but unfortunately he ripped off plenty of charites as well:
http://www.reuters.com/article/idUST...dChannel=10272
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Really dumb question: What did he do with all of this money? How do you lose 50 billion dollars? Where does it go? Aren't all money transfers traceable and etc.?
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Last edited by Fabrizio; December 21st, 2008 at 02:04 PM.
I agree, if by "drugs" you mean marijuana. What other drug is relatively safe? LSD? Mescalin?
Sounds promising, but to prevent abuse, you'd need the government to oversee it.
Starry-eyed dreaming, I'm afraid.
I'd go a lot further with relaxing zoning restrictions; I'd let them lapse altogether, and maybe adopt a few entirely new provisions after enough years had gone by to allow us to make sensible judgments based on what we'd learned.
Thought you'd come up with more. Come on, now; Utopia is at stake.
Didn't like converting foreign military bases to Universities?
^ Didn't know what to say.
What May Come of Ponzi Schemes?
December 20, 2008
by Karen Kwiatkowski
I may have lauded governmental omniscience too soon – just today I found out that almost a year ago, in the eighth year of his missile-throwing, shoe-blocking sway, Mr. Bush formed the President's Advisory Council on Financial Literacy. He did this by signing his 251st unclassified executive order.
No doubt, the president and his financial advisors definitely need to hear from an advisory council on financial literacy. Establishing such a group in the eighth year of horrendous growth of the warfare-welfare state, in the eighth year of a federal lavishness that makes the dead czars of Russia look as careful as dear Tonya Zhivago in winter after the revolution – well, that’s just George being George, I guess.
The council doesn’t actually advise the President. It looks like Paulson’s cheer-squad, a Treasury chorus, or maybe a chorus line. I guess it’s really a top level U.S. government effort to help educate common folk on money matters. Now that’s just rich.
In 2008, the Washington Times reports that federal spending went up 25% before the more obvious credit and financial sector meltdown, before the two trillion dollars the Federal Reserve made available to recipients who shall remain a mystery, and before the $850 bailout bill and other known bailouts.
As I read the article, I got more and more confused, not being overly familiar with official government Ponzi schemes. I mean, I know they exist, of course. The Times also explains "The deficit in fiscal 2008, which ended Sept. 30, was $454.8 billion, up from $162.8 billion in fiscal 2007. The deficit itself is expected to be about $1 trillion in fiscal 2009."
There is also a bit on future debt and obligations, especially the one relating to all those military veterans and other retirees, and their health care. This future spike in the future costs in veterans benefits was "unforeseen." That’s a euphemism for the two words the warfare-welfare state usually uses to explain itself to the rest of us.
A warfare-welfare state is precious, you see, and it has a price. Your freedom today, and your children’s tomorrow.
The hell we must pay for the obscenity of federal spending, federal monetary policy, including the Federal Reserve’s very existence is coming due. As it does, we discover that one of the gatekeepers was an SEC that instead of promoting vigilant justice jousts with those "at the margins" in Jim Grant’s words a few days ago on Bloomberg, while treating the elephants to all the comfort and coziness of a long marriage.
There is an alternative ending to this story, and we have examples from other places – even our own history – to show us how it might work.
Shays Rebellion comes to mind, shortly after the war for independence from Britain. There’s an example of soldiers expecting pensions and respect, and instead getting their property taken by the government in lieu of back taxes.
Zimbabwe is a case in point. Mugabe runs a political machine that ensures friends of the government have rule of law on their side. Mugabe’s megalomania has brought the Zimbabwean inflation rate to 11 million percent. That’s pretty impressive, as worthlessness goes! (Don’t tell George, he still has a few weeks!) But the interesting thing is that life goes on, and the central bank of Zimbabwe was recently forced to allow alternative currencies in country. It had no choice. Much like our own Federal Reserve, it had become fundamentally irrelevant.
Albania had a bad time some years ago, when the people reacted to a government-backed Ponzi scheme – and the loss of all their money – with the Rebellion of 1997. This rebellion was sparked by a loss of $1.2 billion, a loss that averaged $400 per Albanian. For that, they went into the streets and overthrew their lousy government.
Our government today owes something like $37,000 per American – which means, we the people must ultimately pay the bill, or default on the promises, mostly to each other. When the government defaults – obviously the payers shouldn’t mind – but the receivers will. That group of receivers is as large as the group of payers, but the trendline is in the wrong direction. As the fiat economy tanks, more and more people become dependent on the government’s largesse, and fewer – whether at the Bernie Madoff level or just the little guy, are actually producing value.
The tipping point could be inflation, and it would appear that the Fed is doing its best to make that happen. How to handle it? Call the Zimbabweans, if you can find a number to the one in thirteen who have a cell phone.
Will the point of no return – or a welcome return to real liberty and truly emasculated government – be reached as Americans lose their personal portfolios, their retirement promises, and their homes? The Albanians were already poor – and poorly educated – courtesy of their own warfare-welfare state. Communism had just fallen, and their hopes were high – it’s the worst time to disappoint people, you know, after they have had a taste of future change. As the Bush gangsters recede in the imagination of the people who were heard in the last election – we should keep in mind the Albanian experience. Of course, Albania was just a small, impoverished, unproductive kleptocracy. We are much larger.
In a country with a 20th century tradition of war, of celebrating men in uniform who boldly go wherever their politicians tell them to go, the stars could be lining up for some kind of replay of Shays rebellion – economically struggling veterans, promises broken, take it out on the government scammers. We got a glimpse of how this could happen some years ago when an unhappy veteran stole a tank from a National Guard armory and drove it around San Diego. Apparently unhappy people also steal bulldozers, and with all the new infrastructure construction planned for the next installment of Keynesianism, who can say which vehicle funded by the state makes a better, er, statement, if you will.
What may come of government facilitated and supported Ponzi schemes? We know that they collapse when they are discovered. Or maybe, they collapse, and then they are discovered. But what matters is that they fail, and fail publicly. It’s happening now. What to do? I am not a certified financial planner, but the stock value of Mises Institute and other free market educational websites and institutes is rising rapidly.
LRC columnist Karen Kwiatkowski, Ph.D. [send her mail], a retired USAF lieutenant colonel, has written on defense issues with a libertarian perspective for MilitaryWeek.com, hosted the call-in radio show American Forum, and blogs occasionally for Huffingtonpost.com and Liberty and Power. To receive automatic announcements of new articles, click here.
Copyright © 2008 Karen Kwiatkowski
This is a Ponzi scheme like Enron was a Ponzi Scheme, like Lehman was a Ponzi scheme, like AIG was a Ponzi scheme, like Bear Stearns was a Ponzi scheme, etc.
Fraud that the government endorsed through an SEC that was politically motivated and run by unqualified political cronies.
The article in Post #21 is mostly nonsense. It continues the theory that economic woes are the government's doing, when it's clear that unregulated business dropped the ball; that could hardly be more evident, and whatever plausibility the theory may have had evaporated when Lehman Brothers collapsed and Greenspan made his admission.
The delusional, however, will distort observed reality till it fits their theory, which is immortal. The process of doing this is called cognitive dissonance.
Cognitive dissonance is the fate of all ideologues, since reality is invariably more complex than their simplifications make it out to be.
Don't worry ablarc, I don't doubt you'll get your socialist paradise.
I nominate you for chief architect of the banal committee designed make-work building projects that will keep the construction unions occupied and docile.
First thing I'd have them do is build the Second Avenue Subway (with a crosstown spur).
Then they could get started on high speed rail in the northeast corridor and California, and then expand Stewart for international flights with a high speed link to Grand Central.
Boston would get a heavy rail link from Harvard Square to UMass via Mass Ave. And Philadelphia, Chicago, San Francisco and Washington would all get additional lines.
It could be paid for by bringing the troops home. (And maybe by converting overseas military bases to American University.)
Good question. It would be interesting to see the flow. One thing that would not occur is the compounding of the "investment".
Last edited by 195Broadway; December 22nd, 2008 at 02:25 AM.
Some went to pay investors, some went to him.
'Investors' who cashed out may be liable for something called fraudulent conveyance requiring them in some cases to partially reimburse ripped off 'investors'.
Madoff Explained
December 22, 2008
by Llewellyn H. Rockwell, Jr.
The mystery of Bernard Madoff will be storied a hundred years from now. As history's biggest financial criminal, he took a cheap rip-off that you can use at home – the Ponzi scheme – and turned it into a global empire worth some $50 billion.
One ingredient was financial intelligence. Madoff had buckets of it. Early in his career, he was the real deal, an actual innovator. He combined this with an amazing lack of conscience, for his scam was rooted most fundamentally in lying and stealing. The difference between him and all who came before was his grand scale, the grandest scale imaginable.
There is a saying in the world of Austrian economics about the business cycle. The puzzle is not to explain business failures. Those are part of the normal course of life, and the sign of a healthy economy. The puzzle is to explain the "cluster of errors" that appears at the beginning of a recession. How could so many have been so wrong about so much at the same time? The business cycle is a system-wide failure, not merely the mistaken judgment of a few.
So it is with Madoff's scheme. The mystery isn't how one person was able to fool a few. The scheme in which yesterday's "investors" are paid off with the money of today's victims is known in all places and probably all times – and it always goes belly-up to the originator's complete disgrace. It is a classic example of how moral laws are self-enforcing in the world of economics.
The critical difference this time is that Madoff ran his scheme during an economic boom, a time when people's normal sense of incredulity is put on the shelf. This is part of the grave cultural distortion introduced by funny money. Money is the most widely demanded good in society, and the Fed is making new quantities of it not as a reflection of new real wealth, but purely as an administrative decree.
There is a sense in which funny money literally drives everyone crazy, leading to what is sometimes called the "madness of crowds." Guido Hulsmann explains it all in his remarkably timely and revealing new book: The Ethics of Money Production. With artificial stimulation from the credit machine, multitudes are willing to believe in something that cannot possibly be true. In Madoff's case, it was that he could, even in falling markets, earn 15–20% a year without risk.
Why not? Most everyone believed in some version of the myth. We believed that house prices would go up and up despite the reality that houses are physical things that deteriorate from the instant they are finished, just like cars or computers or anything else. Why did we believe this about houses? Again, you have to look to the fraudulent money system to see why.
And we believed that we could all become millionaires by putting our money in the stocks of companies that weren't actually earning money or paying dividends, companies whose wealth was entirely based on infusions of cash from the stock market which in turn were based on the belief that others would buy the stocks and so on. In other words, we believed that something out of nothing was possible, and anyone who didn't believe it was a chump. It’s exactly what people believed during the other great inflations of history.
What's more, we believed that buying these stocks constituted not consumption, but savings for the future. In fact, people routinely attacked official savings data on grounds that they did not include what people were "saving" in terms of their stock market accounts. In a similar way, people were measuring our national wealth not in terms of accumulated capital, but rather through consumption data, as if granite kitchen counters in bigger houses were a measure of wealth instead of the opposite: the depletion of wealth.
The left is big on attacking the salaries of investment bankers, and they were indeed outlandish. But these too represented not a unique problem, but more evidence of inflationary finance. In a bubble economy, the money chases what is most fashionable, and financial services qualified. So the salaries represented market rates. What was wildly distorted was the market itself.
Now let's talk about government finance during these years. The market tried to correct itself from 1999–2001, but the government wouldn't tolerate it. Instead, it used every sign of downturn as an excuse to keep the illusion going, creating billions and billions in new dollars. The Fed drove interest rates lower and lower despite the non-existence of savings available to back them up.
(Low interest rates in a sound money system are a reflection of accumulated capital and deferred consumption. When you see the Fed pushing them down during a boom, it is creating a dangerous mirage.)
Did anyone stop and wonder where the government was getting all this money to pump up the system? Yes, the Austrian economists warned us. The pages of Mises.org and LewRockwell.com were filled with alarms. But it was something people wanted to ignore. We are talking about human nature: the desire to believe in things that do not exist. The government was happy to fuel this sense because it gave the Fed, its connected industries, and the state more power and more money in the short term.
Madoff's scheme played into the belief that wealth was not something to work for, but something to scheme for. It could be generated by playing your cards right, hooking into the right networks, and finding the right "investments." The people with whom he dealt had, it turns out, some internal sense that there was something a little bit shady about the whole operation. But they dispensed with this sense when the fat checks arrived, and concluded that whatever was making this perpetual motion machine operate, it did work.
But listen: the government right now is using the same tactic to convince you that it is saving you from the recession. The whole scheme partakes of the same sense of denying reality that characterized Madoff's scheme. And I'm not just talking about Social Security, which is almost an exact replica of the Ponzi version, except that at least Charles Ponzi didn't force people to give him money. I'm speaking of something broader. The entire financial system that is propped up by the Treasury and the Fed is based on the same idea: that something out of nothing is possible.
So they will jail Madoff. Wall Street would flog him if it could. He is disgraced for all of history. But meanwhile, the likes of Bush, Bernanke, Paulson, Obama, and all the rest are still riding high, even though their scheme is far larger and more egregious.
Most of us like to believe that we wouldn't have been tricked by Madoff. But are you being tricked by the elites who claim that they can conjure up a trillion dollars to stabilize our economy by clicking a few buttons on a computer screen? Most people are. Certainly the press seems to have bought it. Many people were outwitted by Madoff. Many more people are today being outwitted by the government and its central bank. And it will all end in disgrace and disaster, only on a far, far grander scale.
Llewellyn H. Rockwell, Jr. [send him mail] is founder and president of the Ludwig von Mises Institute in Auburn, Alabama, editor of LewRockwell.com, and author of Speaking of Liberty.
Copyright © 2008 LewRockwell.com
I liked that one, but unfortunately they would be rather isolated. Kind of hard to convert military bases into things other than Military (maybe just in feel or spirit though).
I do agree that in this day and age, we REALLY do not need so many military bases. Maybe the military should be re-trained to become its own infrastructure construction force. Like the ACE. Time to get these people to put down their guns and pick up their hammers.
Build, terraform, construct!
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