The Corruption Of Capitalism

The Anglo-American economic paradigm, generally referred to as Capitalism, collapsed in September 2008 when the bankruptcy of Fannie Mae, Freddie Mac, AIG and Lehman Brothers came close to destroying all the capital in the financial industry, globally. Within a month, the greatest part of the US and European banking industry had been nationalized. Within two months, the US government had committed $7 trillion, a sum greater than the government?s entire outstanding debt, to recapitalize the banks and guarantee their liabilities in the attempt to prevent the complete breakdown of the global financial system. If these measures fail, the United States will sink into an economic depression and the global economy will collapse. Unemployment and poverty will soar, international trade will wither and geopolitical tensions will intensify dramatically. The potential consequences of a new global depression should not be underestimated. The social and political repercussions could be catastrophic. Just as the Great Depression unleashed the worst horrors of the twentieth century, a new depression would put much more than economic prosperity at stake. This crisis has long been in the making. It was set in motion 40 years ago when the United States abandoned the two principles upon which capitalism was founded, balanced budgets and sound money fully backed by gold. President Johnson rejected balanced budgets in 1967. President Nixon severed the link between dollars and gold in 1971. The abandonment of those principles corrupted the American political process by giving the government the power to create money from nothing. It also removed all constraints on credit creation by the financial sector. Over time, uncontrolled credit creation destabilized the global economy and ultimately culminated in disaster.