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Why Are They Persecuting Bernie Madoff?

March 1, 2009

I can’t for the life of me understand why everyone is so mad at poor old Bernie Madoff. I read that he is accused of perpetrating a Ponzi scheme. The way I understand it, a Ponzi scheme is where you get people to give you money and promise them that you’ll give them their money and more at a later date. Apparently the illegal part comes in when you don’t invest the money in anything tangible; but instead, you pay back the early investors with money that is given to you by later investors. As long as you can keep bringing more and more people into the scheme everything works out great. The problem is that eventually you run out of people to bring into the scheme, and the whole pyramid collapses.

How, I ask you, is this any different from the whole American economy? Think about it. Our whole economy is based on consumption. You have to have more and more people consuming more and more goods in order to keep the economy working. Years ago people bought what they needed and saved the rest of their income against a rainy day. The U.S. economy grew because the increasing population kept moving West, opening new land to agriculture and ranching, and discovering vast new mineral wealth. When the westward expansion grew to a close, no new real wealth was being created or discovered so businesses and financial institutions had to come up with a new way of keeping the economy rolling. “Presto!” they said. “Let’s just get the people to buy more. That way we can continue to increase production and continue to grow richer.” And there, my friends, is the birth of advertising. An entire industry dedicated to convincing you to buy things that you don’t need. They convinced you that you’re wife wouldn’t love you if you didn’t buy her a diamond. They convinced you that you’re “friends” would think you were are loser if you didn’t drive an expensive car. They made up holidays like mother’s day and Valentine’s Day and secretary’s day so they could sell you more. And they perverted holidays like Christmas to turn them into two month long buying sprees. And it all worked great. You spent more and more, and saved less and less; and the economy grew like a Brontosaurus. But then a tragedy occured. You were spending everything you had. You couldn’t spend any more, and the economy couldn’t keep growing. “But wait'” the businessmen and bankers said. “All they need is more money. Let’s loan them the money. Then they’ll keep buying our stuff that they don’t really need, and they’ll have to pay us interest for the money that we loan them. Brilliant!!” And so now you really went to town. A mailman could live in a 16 room house. A barber could drive a exotic sports car. A secretary could vacation in Europe. A school teacher could buy a vacation home. All you had to do was take out a loan or put it on the card. So you consumed more and more. And the economy grew like a super nova. And then another tragedy struck. One day you woke up and realized that you could never pay it all off. The bankers kept loaning you money, even though they knew that you could never pay it back. You see the bankers had also loaned money to the businessmen so the businessmen could buy more machines to build more stuff for you to buy to keep the economy growing. And the only way they could get their money back from the businessmen was to loan you more money to buy the stuff that the businessmen were making. So they loaned you more money even though they knew you could never pay it back, and incidentally, they sold your loans off to investment groups. One of those investment groups was probably your retirement fund. You know, the thing that you were counting on in your old age. So, those clever bankers actually sold you your own loan. And then another tragedy struck. Your neighbor couldn’t pay his loan back, so he gave up. He told the bankers, “I can’t pay for it. You can have it back.” And then another neighbor did the same thing, and another, and another. And the dominoes feel, and the pyramid collapsed. And that’s where you are today. The whole thing was one big Ponzi scheme, and it finally fell in.

So why are they persecuting poor old Bernie? I’ll tell you why. He made the mistake of stealing from the thieves. They’ve been doing it to us for years with their banks, and their investment firms; and they’ve packed it all away in the form of trust funds, and non-profits, and foundations. And Bernie broke the code and turned on them. Now they’ll have their pound of flesh as surely as a South American drug lord would deal with his accountant ripping him off. The people that Bernie ripped off own the law, bought and paid for; and they own the media that’s reporting on it. They will bring the full fury of these institutions to bear on him. Personally I care about this whole Madoff thing about as much as I care about rival gang members killing each other. Where has the outcry been about the Ponzi scheme that’s been perpetrated on the American public for the past 100 years?

Will the economy recover? Yes. Will the powers that be want you to keep consuming? Yes. Take my advice. Don’t be a sucker again. Live within your means. Don’t buy it if you don’t need it. And if I may contradict the words of our former illustrious President, “Don’t go shopping.”

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One Comment
  1. Paul permalink

    Great post. Just found it. Love the web site. An interesting post here http://charleshughsmith.blogspot.com/2013/01/the-grand-tradeoff-of.html
    Combing the two thoughts may explain todays uneasy feeling that many have but can’t explain about our future. Peace.

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