The Collapse Of Our Corrupt, Predatory, Pathological Financial System Is Necessary And Positive
by Charles Hugh Smith
ZeroHedge.com
11/05/2011
We are being throttled by the Big Lie: we’re told that if the predatory financial system implodes, we’ll all be ruined. The opposite is true: the only way to save our economy is to let the corrupt, pathological and flawed financial system implode.
I was recently challenged by a contributor to write something positive, and so I decided to write about the single most positive outcome of the current financial crisis in Europe: the complete collapse of the corrupt, predatory, pathological global banking sector and its dealers, the central banks. Exploring why this is so reveals the insurmountable internal conflicts in our current financial system, and also illuminates the systemic political propaganda which is deployed daily to prop up a parasitic, corrupting, pathologically destructive financial system.
Our first stop is modern finance itself. Modern financial “products” and “instruments” are often highly complex and abstract, but the entire edifice can be distilled down to this: the system is based on the assumption that all risk can be hedged, and the difference between the initial position’s yield/gain (i..e. placement of capital at risk for a gain) and the cost of hedging the risk of the wager to zero can be skimmed from the system risk-free.
That is the entire system in a nutshell, and we can immediately see the advantages of this system over traditional Capitalism, where risk can be hedged but never to zero, and the return is correlated to the risk taken on.
In modern finance, high-risk “investments” (wagers) with high returns can be taken on without worry because any and all risk can be hedged to zero, even in super high-risk wagers.
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