HAVE WE REACHED “PEAK WALL STREET”? IS THERE ...May 30, 2015
This very thought-provoking article was shared by "Mr. A.B.," who, shall we say, lives in one of those places known to be one of the world's great financial hubs. And I have to admit, I found the article not only confirming a number of my suspicions, but referencing an important article that may indicate the global financial oligarchies are doing a major "re-think" on global financial architecture. As prelude to this article, permit me to share my "suspicions". For a number of years, watching this financial circus that has been going on, more or less since just prior to the 2008 bailouts, but really (if we're honest), back to the Clinton administration, I came to the not terribly profound conclusion that there was increasing factional infighting within "the elite." As the financial crises loomed, the infighting became more visible and pronounced - if one bothered to look. To this day, there are still people, however, who insist that all this is merely theater, that the omnicompetnt Mr. Globaloney is orchestrating all this for our benefit while his nefarious schemes for world domination march inelectuably forward.
Then came this link, which is referenced in the article that Mr. A.B. sent me:
You'll note immediately that this "working paper" is the product of that most elitist and oligarchical of elitist and oligarchical institutions, the Bank of International Settlements, brainchild of yesteryear's elitists, Montagu Norman of the Bank of England, and Dr. Hjalmar Schacht of Germany's Reichsbank. Norman, and particularly Schacht, were both early versions of Mr. Globaloney, believing in the power of finance capital to create a "community of interests" that would be powerful enough to avert war. At least, that was the line Herr Schacht used in getting powerful American interests to sign off on the creation of the bank, while he also was busily helping lay the foundations for German rearmament.
One paragraph toward the very beginning of this paper says it all:
The purpose of this paper is to examine why financial sector growth harms real growth. We begin by constructing a model in which financial and real growth interact, and then turn to empirical evidence. In our model, we first show how an exogenous increase in financial sector growth can reduce total factor productivity growth.This is a consequence of the fact that financial sector growth benefits disproportionately high collateral/low productivity projects. This mechanism reflects the fact that periods of high financial sector growth of ten coincide with the strong development in sectors like construction,where returns on projects are relatively easy to pledge as collateral but productivity (growth) is relatively low. (BIS: "Why Does Financial Sector Growth Crowd out Real Economic Growth?, p. 5)
In this paper, we study the real effects of financial sector growth and come to two important conclusions. First, the growth of a country's financial system is a drag on productivity growth. That is,higher growth in the financial sector reduces real growth. In other words, financial booms are not, in general, growth-enhancing, likely because the financial sector competes with the rest of the economy for resources. Second, using sectoral data, we examine the distributional nature of this effect and find that credit booms harm what we normally think of as the engines for growth – those that are more R&D- intensive. This evidence, together with recent experience during the financial crisis, leads us to conclude that there is a pressing need to reassess the relationship of finance and real growth in modern economic systems. (Emphasis added)
Peter Phillips: We’re really happy to have you here. I’ve just finished reading your book, The American Deep State: Wall Street, Big Oil, and the Attack on U.S. DemocracyIn your new book you talk about the egalitarian mindset culture of America. We believe in the Constitution, the Bill of Rights, open government, transparency. And then you say also that there’s a dark side, or a deep side inside America that’s repressive, that is looking to be able to detain people without warrants, warrantless wire tapping and all of that – there’s a repressive side. Can you tell us a little bit more about how you frame this understanding of this culture of repression?
Peter Dale Scott: Actually, I think there’s always been a deep state in America and there have been times when it has been very repressive. We’re in a period of, you might say, surplus repression – repression that doesn’t serve anyone’s interests, not even the interests of the ruling class. (emphasis by CHS)