In the first “Asset-Stripping” post I explained how fractional reserve banking worked by using “leverage.” I outlined how this money could be lent by banks to investors and used to buy public assets like public roads. The investors would then charge tolls on them, the tolls payable to the “private” investors who now own the roads. Remember, the roads were built with your tax money.
I didn’t know this series was coming out, but Huffpo just launched a series of articles about the privatization process. I am going to review and, as suitable, reference the content of these articles. I truly hope that subsequent articles don’t contain a lot of socialist claptrap about evil capitalists. There is nothing capitalist about what is going on in America. Nothing. I have held out some hope that some kind of agreement could be reached by the left and the right to join together and rout out the Kleptocracy that seems to be in charge of stealing America’s lifeblood.
I tried to make a distinction in my first Asset-Stripping piece: I believe, at its core value, privatization is a good idea. I believe this because I believe everything government touches turns to crap faster than you can say “shared sacrifice.” My objection to privatization now is very simple: we just bailed out the banks, and the Fed just stuffed them full of free money. Over $1.5 Trillion currently sits in the banks’ “Excess Reserves” accounts. And math will tell you that at 10:1 leverage, the banks can lend out $15 Trillion. Now, what assets are both the kind that investors want to buy AND the kind that banks would be willing to lend against? The kind that have guaranteed returns. What assets have guaranteed returns? The ones that are either monopolies or have legal tax collection authority. The final, question, then, is what kind of assets are either monopolies or have tax collection authority? PUBLIC (GOVERNMENT) ASSETS LIKE ROADS, BRIDGES, PARKING METER AUTHORITIES, MUNICIPAL WATER SYSTEMS, ETC. From the linked first installment article on Huffpo, written by Dylan Ratigan:
- On Wall Street, setting up and running “Infrastructure Funds” is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman’s 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with “ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States.”
The funds themselves are clear when communicating with investors about why they are good investments — a public asset is usually a monopoly. Says Quadrant Real Estate Advisors: “Most assets are monopolistic in nature and have limited competitors, creating the opportunity for stable, long-term investment returns. Investment choices include economic assets and social assets.” Quadrant notes: “Given the market and potential return opportunities, institutional investors should consider infrastructure a strategic investment allocation.”
Ladies and gentlemen, we have to stop this. I have no intention of seeing what’s left of America turned into a rentier society where we all get to pay rent for the privilege of using roads, bridges, power companies, water systems, and other public assets that we paid to build, nor to see them bought with money that was stolen directly from us by some central bank’s printing presses.