Capitalism is NOT Wall Street. In order to correctly comprehend the nature of the Free Enterprise system, one needs to understand the fundamentals of a business transaction. Real business requires that goods or services are purchased from a seller by a buyer, at a price that both agree upon. A tangible product, skilled service or intellectual property may qualify as an entity of substance. But when we closely examine the composition of equities, warrants, bonds, options, futures or derivatives; we enter a realm that falls outside the scope of normal business transactions.
Some will claim that a stock represents the equity ownership of a particular enterprise. In theory, that would be correct; but in practice the average shareholder has vitally no input into the management of a publicly traded company. A warrant is a right to exercise a future defined claim. Bonds are fixed promises to repay that trade in value as interest rates vary. An Option is the ability to buy or sell purchased at a strike price during a specified time period, for an agreed cost. Futures are leveraged speculation or hedged bets on price movements. And it’s anyone guess what a derivative is . . .
Wall Street was created ostensibly as an auction market for raising capital to finance new business ventures or additional funds to grow a company. The underlying value of the stock price of a company would trade as shareholders wager on the direction of the equity or changes in their needs. Bonds were sold as loans that companies have an obligation to pay and retire the debt. Warrants, options, futures and derivatives emerged as sophisticated methods of refining the general purpose of funding business endeavors.
As any investor knows, they assume the risk or loss of their capital when they gamble on any specific instrument in a financial venture. The Capital Markets offer no guarantee that profits are assured, and provide no pledge that losses will not result. Risk is always present. But the essential question is whether this culture of finance qualifies as legitimate business?
To answer that question we must define Money. Well, money is whatever anyone is willing to accept as payment for a transaction. As any student of business and history will attest, “No state shall …coin money; emit bills of credit; [or] make anything but gold and silver coin a tender in payment of debts.” From Article I.10.1 Specie money as mentioned in the ninth article of the bill of rights, is stated to be a dollar. The coinage Act of 1792 established the definitions for coinage.
Fiat money is issued by a government and its value varies with expectations and backed by the faith and trust of that regime. Credit money is issued by commercial banks, using fractional reserves that are debt issued, which require future repayment with interest. This system creates and regulates original bank reserves, determines fractional reserve ratios and dictates the discount rate. When the Federal Reserve was fraudulently enacted, the Constitution was discarded, and with the issuance of what is known as Federal Reserve Notes; we embarked upon debit ridden, credit currency.
Add the legal tender laws that place the entire weight of the government to force you to accept and be paid in this bogus currency and you have all the ingredients for a tyranny that the Founding Fathers fought a revolution to overthrow. The conditions of today would make the Stamp and Tea Tax look like a society in paradise.
The Merchant Class represents the most fundamental organization of business activities. Ownership of these ventures is private and usually managed by the proprietor. They may be small operations or large in scope, but they all hold in common the independence in management control that private ownership affords. Salaried managers are ‘hired help’ and lack the sole authority for mergers and acquisitions. This distinction is crucial from a public company where senior management routinely compromise the interest of the operations for self enhancement or ‘so called’ share holder value. Corporate buyouts and takeovers seek to purge the expenses of the operation, usually translated into employee termination. Increasing the quarterly reporting of bottom line return on equity becomes the only objective. The real work of the company takes a back seat to cooking the books.
Wall Street is the direct benefactor and architect of this rush to inflate stock prices to unsupported levels. Necessary capital in the form of commercial loans for the small businessman have evaporated from the banking system. Personal loans are now cash advances off credit cards. The life blood of commerce has been systemically denied from the merchant class and diverted to feed the frenzy of corporate acquisitions. You don’t have to be a Milton Friedman to understand that control of commerce is now concentrated in fewer hands. The notion that these captains of industry are responsible to their shareholders is as laughable as saying that your elected politician will turn down the contributions from these corporations.
Honest business disappears when the merchant class is forced out of the market place. Prices are fixed when monopolies are allowed to dominate an industry. Former owners, are now forced into working for a company where they were once the competitor. Consumers are subject to pay higher prices, bear non existent service and dumbed down support. All the while the Banks prosper, the Street gets its bonuses and the Government increases their taxes and expand their bureaucracy.
False euphoria in retirement accounts can and have been shaken to the core. Your money is not real, but invariably will diminish in stable value in order to satisfy the debt that brought it into circulation. You have faced the prospects of business bankruptcy because of predatory pricing and oppressive business practices of corporate rivals. And Wall Street claims they are the Capitalists! Personal freedom is the ultimate casualty of this corrupt manipulation. The axis among the heirs of the House of Morgan, Corporate International and Federal Government, is the death of real business. With the demise of the Merchant Class, the last vestige of LIBERTY ceases to exist and the transition into an Empire of the ‘New Work Order’, becomes complete. The Republic is dead, so is our independent wealth, and we are doomed into an existence of serfdom and vanished expectations. Free Enterprise is the arch enemy of the Elite’s, business is now denied to the People and ‘TC’ Totalitarian Collectivism is their final goal. And they call this Capitalism . . .
SARTRE – August 4, 2001
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