CWT Ideology. Aleksey Muratov

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      the amount money than they had gold in stock. But the

      bankers were legally obliged to make such an exchange if

      demanded. If all the bank customers came at the same time

      requiring the exchange of money for gold, their system

      would collapse there and then.

      So they decided to change this obstructive law with

      the help of the then president of the US, Richard Nixon.

      He implemented a series of economic reforms in 1971

      known as the “Nixon shock”. The most significant reform

      was the refusal of the US to secure the dollar rate with a

      gold equivalent, which resulted in a virtual collapse of

      the Bretton Woods system. The bankers were now free to

      produce as much paper money as they needed. Money truly

      became paper, as the Nixon decision gave the dollar note a

      value which was not backed by anything.

      The way to organize

      and control crisis

      The same banking system caused the mortgage crisis

      of 2007—2008, which gave hundreds of thousands of US

      households to the banks. A huge number of Americans were

      unable to pay their financial obligations to the bank. The

      banks took the debtors’ houses and put them up for sale.

      Why had lots of Americans suddently become insolvent?

      The reason is that the creditors gave loans to questionable

      borrowers who defaulted on these loans.

      This play started in 2001, the bankers began to give money

      to all takers. They were considerable amounts, as it was for

      real estate purchases. Some banks offered loans with a floating

      interest rate, adjusted yearly from the start of the third year.

      At the beginning the rate was unusually low. Others advertised

      loans that pushed even the first payment for a new house into

      the future. No first payment or security was needed.

      The seductive conditions that they offered Americans

      were tempting to those who were not even considering

      buying real estate. Everybody began to take loans trying to

      improve their living conditions. People, who had no money,

      took out loans from institutions, who also had no money

      but borrowed and raised the funds in order to loan them out

      under this scheme.

      One debt caused another one, debt was everywhere. But

      the system of selling debt had its industrial logic. The sale

      of mortgage bonds and loans was performed like this: the

      rating agencies assessed the degree of credit non-repayment

      risk and depending on that degree, the securities had various

      degrees of “freshness”. Extra Grade and Grade I were more

      expensive but had less risk and found their buyers quickly.

      However, second and third grade ratings were also quite

      popular. The price of the risky mortgage “package” was low

      and had a large demand.

      Everybody was satisfied. Banks ended contracts with

      private persons, got its money from investors and could start

      the affair again. Investors had invested and were waiting for

      profits as skeptical yet willing customers could apply for

      loans again.

      The hilarity of the situation was that investors, or

      speculators, who bought cheap “second-rate” mortgage

      obligations on the so called scientific basis propagated by

      rating agencies divided them into more grades. This time

      the “highest grade” (reliability rating) was not the best of

      the best but the best of the worst.

      This went on for 6—7 years! The US economy was

      growing, GDP was increasing, everyone was happy. Many

      people were not only kept occupied but also made large amounts

      of money, but produced nothing. This debt pyramid was supported

      with constant growth of real estate prices, which enabled attraction

      of new players with new financial resources to the housing and

      mortgage market.

      Banks, major reputable companies with many years or even

      a century or two of operation started the same game, let’s call it

      “give everybody as much of your money as you can”. This resulted

      in filled postal boxes but no prospectuses of some productive and

      beneficial business opportunity, only thick envelopes with bank

      contracts. Each envelope contained a credit card. Its activation

      required nothing. Just take it and start to buy, the agreement was

      straightforward and endorsed by the bank. “Real” money has been

      sent out by mail, carelessly, to everyone en masse.

      The logic of this mailing system was straightforward:

      mass non-payment of debt on credit cards. The USFRS

      data stated the cumulative “plastic debt” of Americans

      amounting to approximately СКАЧАТЬ