Punchinello’s Chronicles

January 26, 2010

The Death of Capitalism

I don’t usually link to another blog post, but this particular essay posted on ZeroHedge.com is exceptional! The essay is long, well-researched, includes source references, and brilliantly lays out the situation we’re facing. We’re being lied to by a large segment of our government, journalists, bankers, educators, scientists, and opinion makers. The only real way to protect yourself is to learn what’s going on and to understand just how badly we’re in trouble. Educate yourself!

Below are various extracts that I consider to be major principles of economic destruction. They’re only extracts, and I would urge to you take the time to read the essay in its entirety. These are the details of what’s been going on over the past few years, and this is the explanation of our so-called economic “downturn.”

The Death of CapitalismJS Kim (Posted 1/24/10 on ZeroHedge.com)

(Read the entire article…)

In 2009, almost every major US bank manufactured profits out of thin air and declared themselves financially healthy by (1) changing their regular reporting periods to exclude months in which huge losses occurred; (2) changing their definitions of bad debt, and (3) by revaluing their assets courtesy of FASB, particularly their commercial real estate portfolios, at fantasy-land valuations that they will never receive in the open market. These events all marked the continuation of the Enronization of America that is ushering in the death of capitalism.

The systemic injection of fraud and deceit into nearly every aspect of American life, has been unfolding for decades, even prior to the Enron scandal itself. In 2009, Bank of America CEO Ken Lewis testified that former US Treasury Secretary and ex-Goldman Sachs CEO Hank Paulson instructed him to disobey securities law and conceal material losses in the Merrill Lynch merger from investors. Lewis additionally testified that Paulson threatened to fire him and his entire board if he tried to back out of the Merrill deal.

These kinds of activities, devoid of all morals and ethics, have been occurring regularly within the financial industry for decades. It only seems as if such transgressions are more numerous today because of the recent attention given them in the media, but in reality, they have neither proliferated in frequency nor in expanded in their level of egregiousness.


The essay was put together by JS Kim, Managing Director and Chief Investment Strategist for SmartKnowledgeU, LLC. I’m not in any way affiliated with Mr. Kim, but I think this essay is one of the last real warnings we’re going to have before major trouble. Consider this quote from the leader of history’s most renowned (failed) communist nation, the Soviet Union:

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Now consider the ramifications in your life, your family’s life, and the lives of all American citizens if we fail to understand the principles of money, economics and banking. From the author’s essay:

If you don’t understand the above statement, then I urge you to research Central Banks and how they operate until you do. And when you do, you will understand why I claim that no man or woman that calls himself a good Christian, a good Muslim, a good Catholic, or a good Hindu could support our monetary system or work for a bank today in good conscience.

If you are skeptical of this comment, as you should be, then I urge you to investigate and understand how the monetary system truly operates before you declare your opposition to this statement. Try to explain in words to another friend the complete process of how money comes into existence from the first step of being printed by Central Banks until it ends up in your wallet, along with every party that is charged interest or taxed along the way during this process (through multiple mechanisms) including the government and the government’s transfer of this “interest tax” to the people.

Until you can verbalize every step of this entire process, one should not claim that he or she understands our monetary system. But when you can verbalize this entire process, it will become very clear to you why Lenin stated that the best way to destroy Capitalism is to destroy the purchasing power of money. You will understand the extreme hypocrisy of Goldman Sach’s CEO Lloyd Blankfein’s statement that bankers were doing “God’s work” when you realize that our modern monetary system breaks the 8th commandment of “Thou shall not steal.”

Furthermore, you will understand that while Goldman Sachs undoubtedly deserved the bulk of criticism levied against it last year, private banking families that established Central Banks, not Goldman Sachs, have created our fraudulent monetary system. As is the case with other large commercial banks, Goldman Sachs is just an enabler, participant and beneficiary of the corrupt system.


Mr. Kim lays out the road map of fraud, theft, misdirection and general criminal behavior that’s led to this mess. He takes each major area of society, pointing to the rot in the foundations and what happened as a result. What’s important is that the essay also offers some suggestions as to what we can try to do about the systemic, society-wide disaster before it’s finally too late.

The first phase of the Enronization of America occurred through our legal system. Most of us make the grave mistake of equating our legal system with morality, but law and morality are creatures that often reside at opposite ends of the spectrum under our current legal system. Since those that make our laws are also the same immoral people that control our financial system, often our laws have very little concern with governing morality and much more focus on ensuring that the very elements that hold power maintain or expand their power.

Most Americans automatically equate a behavior as right or wrong depending on whether a law defines such behavior as legal or illegal without any critical thought, and this is a mistake. The fact is that today, many laws have nothing to do with morality. In fact, our legal system is laden with such hypocrisy at times that it allows for the very same behavior to be defined as legal if a financial elite is engaging in the behavior but illegal if a “regular Joe” is engaging in it.


. . .Since the above statement is sure to stir up cries of conspiracy regardless of the fact that it is directly attributable to a member of the financial oligarchy, let us take a minute to consider the disappearance of our critical thinking skills. Why do those with a keen interest in suppressing the truth about the origins and nature of our current global financial crisis have great success in doing so merely by simply using the word “conspiracy” to marginalize the well-constructed arguments of others?

Why do the people that attempt to discredit these truthful revelations never offer more than flimsy verbal accusations devoid of any evidence to validate their accusations? And why do we rarely, if ever, challenge the fact that the vast preponderance of people that provide the strongest opposition to the dissemination of truth are those whose personal wealth depend upon delusional beliefs about the health of our stock markets and the soundness of our financial institutions and monetary system?

Today, the fraud of our institutional education system has dulled our aptitude of critical thinking to such a degree that we now look to others to do our thinking for us. Instead of challenging the propaganda that makes zero sense (link to my gold article), we are all too willing to be duped into believing erroneous concepts just because they are written in a textbook or a newspaper.


It amazes me that people still foolishly follow the words of this administration and not its actions. It amazes me that I still hear people praising Obama’s proposed plan (proposed being the key word here) to impose limits on the size and trading activities of the nations largest banks without awaiting the resultant actions from such talk. I read one financial journalist that stated high praise for this proposal as he inferred that banks have become too big and that a freeze on mergers and acquisitions in the US banking industry would be welcomed.

Did this journalist even consider that the biggest consolidation of power on Wall Street in the last couple of decades just happened within the past two years when Goldman Sachs and JP Morgan virtually eliminated all of their competition and the US Federal Reserve utilized the very crisis they created to seize even more power?

Did this journalist even pause to consider that this administration’s cabinet and advisory boards consist of more Wall Street executives than any administration in the last several decades? Did this journalist consider that the greatest theft of American taxpayer money occurred under this adminstration’s watch with the $850 billion bailout plan that is now morphing into trillions of dollars?

Did this journalist bother to note that the Senate Finance Committee is now seeking to increase the debt ceiling by a radical $1.9 trillion after just approving a $290 billion increase at the end of last year that was necessary to avoid an unprecedented default on US Treasury bonds? And did this journalist miss the CFTC hearings regarding the imposition of position limits on energy commodities and somehow miss that the true nature of discourse during these hearings was not to ban speculators from creating and bursting bubbles in the commodity markets but only to ensure, in a round-about-manner, that Wall Street can continue this speculation?


The single most important thing you can do today is to understand what’s real and what’s only being presented as objective truth and “news.” We are not going to “recover” from the supposed recession (or more properly, depression). There’s no possible way, and we’re now facing a new “normal.”

You can buy into the nonsense coming from the top-of-the-hour news reports, the 10 o’clock nightly news, and the various oh-so-brilliant television pundits. Or, you can learn how money works, how money is created, what banks do, and how your money moves through the system. Just so, the voters in Massachusetts had the option of sticking with the party line or educating themselves on the issues.

All of us have helped to create the coming financial collapse. We’ve allowed it through ignorance, apathy, disregard, and a belief that someone else is in charge of running things. We’ve mostly focused on our job, our family, our lives, and the various problems of getting ahead in careers. We’ve spent money we didn’t have, accepted the loss of manufacturing, and enjoyed the cheap imports coming from abroad.

Now we’re facing maxed out credit cards, no more borrowing, doubled minimum monthly payments. We’re facing more and more jobs disappearing as horribly run mega-corporations go bankrupt. It’s our fault for voting (or not voting) into office people without character or principles. The only question is what are we going to do about it?

Read this essay, then think about what we each can do in the time remaining. Given the massive, multi-trillion-dollar debt our government continues to pile up, the likelihood of a devaluation of the US dollar only increases. Educate yourself as to what this means, and consider what life (and your checkbook) will be like under such conditions.


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