TL;DR Watch this video it is visually pleasing you won't get bored
https://youtu.be/hXi_3suD04wWhat do you call it when a bunch of companies collude to set prices, fix markets, close off competition, capture regulators, and bribe politicians?
We call it a "cartel," right? Like the oil cartel. You have heard of that term before, "cartel"?
Who here has heard of the term 'banking cartel'? Oh, we don't hear that term.
We don't talk about the banking cartel. We don't talk about the information cartel.
Cartels are the most insidious when we don't talk about them, when they hide in the shadows but in plain view.
The banking system, payments, finance are the biggest cartels in the world.
Nobody calls them a cartel because they're the biggest cartel in the world.
They own all of the media channels, politicians and laws; that makes it easy for them to get away with crimes. In fact, mega-crimes.
Just after the crisis in 2008, instead of some bankers going to jail, they set up an additional layer of crime:
a series of fraudulent foreclosures called robo-signing.
That is how cartels work.
First they capture the market.
Then they capture the regulators (who are always, of course, about "consumer protection").
The regulator is there to protect against "evil things" happening. For example, money laundering.
If you don't have a banking license, no money laundering for you!
But if you do have a banking license... Well, I mean we [must] protect "the system." There will be a fine.
Usually the fine will be less than what you made actually money laundering. You will get away with it, right?
Of course, we don't want to see any financing of terrorists...
except for the ones we do through the State Department, the CIA, or the banks...
-- in which case, those are good people.
We have the regulators and they are captured.
That kind of situation encourages behaviours that are fundamentally parasitic.
When capitalism fails in this particular mode, when you end up with full-blown crony capitalism,
The thieves are in power, literally. That is kleptocracy, when the most parasitic behaviours get rewarded.
When you run a business at that scale, it is not about competing.
It is about finding the biggest pipe, the biggest flow, of money in the economy,
straddling that pipe, sticking a straw in it, and sucking as much of that money out as you can.
You establish yourself as a parasitic leech on a flow of money, which describes the entire banking system.
The idea is, you find a job that requires an intermediary; it requires an intermediary because you made sure to...
buy some lawyers, some Congress people to write a law, to make it require an intermediary (specifically, you).
Then you stick a straw into that flow of money and start extracting rents. It's called rent-seeking behavior.
You take half a percentage point here, half a percentage point there...
We have this wonderful thing called "fractional reserve banking."
If you try to describe it to a five-year-old, they would probably turn around and say, "That sounds like fraud!"
They would be right.
Of course, there is a big difference between fraud and something that is "legal."
It depends on which politicians you buy to make sure it is [considered] legal.
We have these parasitic companies, sitting on top of these flows of money, extracting rent.
They create this rent-seeking behavior. In doing so, they disrupt competition by buying and suing competitors,
or even better making sure that competitors can't keep up with regulation.
[They capture] regulators [to keep] the competition at bay. In doing that, they have built a cartel.
Then they make sure nobody calls it a cartel. Instead, we call it "the shining example of American capitalism."
The end result of this would be appalling in its own self. Obviously, this is not a good model to run an economy.
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