We live in a divided America and it is not the one you think. It is not Republican or Democrat, Black Lives or Blue. Yes, there are some people divided on these lines, as there will always be people divided on any political issue, but The Great Divide is between the rich and the poor. There is “one [set of rules] for the grifter class, and one for everybody else,” Taibbi writes. For us ordinary citizens, the government is a scary beast that cracks down when we don’t follow the rules. For the elite grifter class, the government is a collaborator in extracting money from the lower rungs of society and distributing it to the ruling class.
If you want to understand how this happened, a good place to start is with Alan Greenspan. He is the human embodiment of a political and economic hypocrite; the trends he set during his twenty-year tenure as President of the Federal Reserve have left us with a broken system. On the one hand, he preached free market economics, while on the other hand he gave massive governmental bailouts to the banks on Wall Street. These two ideas cannot co-exist, as the definition of a free market is one with no financial safety net. It is a contradiction of dire consequences, and if you match it with his deregulatory approach to macroeconomics, you have the perfect template for what we have today: a system that rewards the rich elite politicians and bankers and punishes the rest of us. The founders of this country ultimately decided against setting up a Federal Bank for this exact reason—they understood human nature well enough to know that if the wrong people were put in charge of a Federal Bank, corruption would inevitably ensue.
Bankers, like everyone in a capitalist society, want to make as much money as possible. The more you give them the ability to do this, without holding them accountable for screwing people over, the more they will take advantage of whatever amount of leeway you give them. This is the same human nature the founding fathers intrinsically understood, but that has now been backed up by psychological studies showing how people will cheat at games more egregiously if they believe nobody is paying attention and that they will get away with it. This is how we came to live in a ‘bubble economy.’ First it was the dot com bubble, then the commodities bubble, then the famous housing bubble of 2007-08. What these all have in common is a foundation of Wall Street corruption. They put a mask on the economy. To any regular investor, things looked safe and reliable. Behind the scenes, however, they knew they were selling crap packaged with a pretty bow. They propped up stocks in websites and businesses that were going nowhere and invested their client’s money in houses that were bought with no money down. Make no mistake, this is fraud. It is the literal definition of fraud. And yet, none of them have seen a minute of jail time.
The worst of these players is Goldman Sachs. During the commodities bubble of the 2000s, when prices on food, oil, metals, and most notably gas rose significantly, Goldman Sachs had an exclusive contract with the Federal Reserve on trading rights. Historically, commodities were restricted from outside trading because, well, they’re essentials. If food prices spike and all of a sudden people can’t afford to eat, society collapses. So, the government separated commodities from regular business stocks and passed into law the 1936 Commodity Exchange Act in order to keep a watchful eye on them. What happened next? You guessed it, the higher ups at Goldman Sachs wanted a piece of the action. There was money to be made! And Alan Greenspan and the rest of the executives at The Federal Reserve were happy to grant them exclusive rights to do so. While you and I saw gas prices rising and thought there was a shortage of natural gas in the Middle East, or whatever other lie the media fed the public on that particular day, the truth is that Goldman Sachs was intentionally raising the prices so that they could line their own pockets.
The culture of Wall Street and high ranking politicians has become one in favor of short term gain over long term prosperity. It has trickled down to state and city levels. For example, “Mayor Richard Daley had struck a deal with Morgan Stanley to lease all of Chicago’s parking meters” Taibbi writes, “The final amount of the bid was $1,156,500,000, a lump sum to be paid to the city of Chicago for seventy-five years’ worth of parking meter revenue.” This is an absolutely ludicrous business deal and when I looked it up, Wikipedia informed me that the money was spent and gone within 3 years. My jaw literally dropped. Any fool with half a brain knows you don’t sell out your future to put a band-aid on your present. The potential revenue from the meters is $3-5 billion dollars. What’s crazier is that this was only a template, quickly followed by many cities leasing the future revenue rights to everything from their parking meters to their public highways and airports. A majority of our major cities have condemned themselves to decades of financial hardship and the citizens don’t even know it.
By this point in history, this repeating trend has grown tiresome. Every single time ordinary citizens get screwed over, the banks on Wall Street walk away richer. Whereas we once had bubbles, now we have Coronavirus. The CARES act that was passed in congress in March of 2020 gave the people one single $1,200 check. How much did Wall Street get? $500 billion. While 30 million people filed for unemployment, the stock market was saved! It’s almost as if the people in this country don’t matter, so long as Wall Street is being taken care of. Taibbi writes: “This dynamic allows the bank[s] to suck wealth out of the economy and vitality out of the democracy at the same time, resulting in a snowballingly regressive phenomenon that pushes us closer to penury and oligarchy at the same time.”
The recent Reddit mobilization and use of Wall Street’s crooked tactics against them is a glimmer of hope, although the reality is that the fight against this type of historic corruption will be a long and ugly one. The truth is obvious, and there is no other way to summarize this book, and ultimately our political and economic situation, then this: If we do not hold these people accountable and begin to undo what they have done, our country will fall into ruins.
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If you want to understand how this happened, a good place to start is with Alan Greenspan. He is the human embodiment of a political and economic hypocrite; the trends he set during his twenty-year tenure as President of the Federal Reserve have left us with a broken system. On the one hand, he preached free market economics, while on the other hand he gave massive governmental bailouts to the banks on Wall Street. These two ideas cannot co-exist, as the definition of a free market is one with no financial safety net. It is a contradiction of dire consequences, and if you match it with his deregulatory approach to macroeconomics, you have the perfect template for what we have today: a system that rewards the rich elite politicians and bankers and punishes the rest of us. The founders of this country ultimately decided against setting up a Federal Bank for this exact reason—they understood human nature well enough to know that if the wrong people were put in charge of a Federal Bank, corruption would inevitably ensue.
Bankers, like everyone in a capitalist society, want to make as much money as possible. The more you give them the ability to do this, without holding them accountable for screwing people over, the more they will take advantage of whatever amount of leeway you give them. This is the same human nature the founding fathers intrinsically understood, but that has now been backed up by psychological studies showing how people will cheat at games more egregiously if they believe nobody is paying attention and that they will get away with it. This is how we came to live in a ‘bubble economy.’ First it was the dot com bubble, then the commodities bubble, then the famous housing bubble of 2007-08. What these all have in common is a foundation of Wall Street corruption. They put a mask on the economy. To any regular investor, things looked safe and reliable. Behind the scenes, however, they knew they were selling crap packaged with a pretty bow. They propped up stocks in websites and businesses that were going nowhere and invested their client’s money in houses that were bought with no money down. Make no mistake, this is fraud. It is the literal definition of fraud. And yet, none of them have seen a minute of jail time.
The worst of these players is Goldman Sachs. During the commodities bubble of the 2000s, when prices on food, oil, metals, and most notably gas rose significantly, Goldman Sachs had an exclusive contract with the Federal Reserve on trading rights. Historically, commodities were restricted from outside trading because, well, they’re essentials. If food prices spike and all of a sudden people can’t afford to eat, society collapses. So, the government separated commodities from regular business stocks and passed into law the 1936 Commodity Exchange Act in order to keep a watchful eye on them. What happened next? You guessed it, the higher ups at Goldman Sachs wanted a piece of the action. There was money to be made! And Alan Greenspan and the rest of the executives at The Federal Reserve were happy to grant them exclusive rights to do so. While you and I saw gas prices rising and thought there was a shortage of natural gas in the Middle East, or whatever other lie the media fed the public on that particular day, the truth is that Goldman Sachs was intentionally raising the prices so that they could line their own pockets.
The culture of Wall Street and high ranking politicians has become one in favor of short term gain over long term prosperity. It has trickled down to state and city levels. For example, “Mayor Richard Daley had struck a deal with Morgan Stanley to lease all of Chicago’s parking meters” Taibbi writes, “The final amount of the bid was $1,156,500,000, a lump sum to be paid to the city of Chicago for seventy-five years’ worth of parking meter revenue.” This is an absolutely ludicrous business deal and when I looked it up, Wikipedia informed me that the money was spent and gone within 3 years. My jaw literally dropped. Any fool with half a brain knows you don’t sell out your future to put a band-aid on your present. The potential revenue from the meters is $3-5 billion dollars. What’s crazier is that this was only a template, quickly followed by many cities leasing the future revenue rights to everything from their parking meters to their public highways and airports. A majority of our major cities have condemned themselves to decades of financial hardship and the citizens don’t even know it.
By this point in history, this repeating trend has grown tiresome. Every single time ordinary citizens get screwed over, the banks on Wall Street walk away richer. Whereas we once had bubbles, now we have Coronavirus. The CARES act that was passed in congress in March of 2020 gave the people one single $1,200 check. How much did Wall Street get? $500 billion. While 30 million people filed for unemployment, the stock market was saved! It’s almost as if the people in this country don’t matter, so long as Wall Street is being taken care of. Taibbi writes: “This dynamic allows the bank[s] to suck wealth out of the economy and vitality out of the democracy at the same time, resulting in a snowballingly regressive phenomenon that pushes us closer to penury and oligarchy at the same time.”
The recent Reddit mobilization and use of Wall Street’s crooked tactics against them is a glimmer of hope, although the reality is that the fight against this type of historic corruption will be a long and ugly one. The truth is obvious, and there is no other way to summarize this book, and ultimately our political and economic situation, then this: If we do not hold these people accountable and begin to undo what they have done, our country will fall into ruins.
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