Dr. St. Onge has an important article on his substack, explaining how the US is becoming a financial basketcase banana republic. The following is a summary. Read the entire article here.
After the 2008 Financial Crisis, Simon Johnson, the former chief economist of the IMF, warned that the same dysfunctional policies he saw in his basketcase banana republics had taken hold in the United States.
Johnson warned that if America didn’t act fast, we would plunge into a “Quiet Coup” as the American financial system effectively captures the government, bailing itself out until we run out of money.
At some point, it gets too big to bail out. Now, [Harris plans] to fleece the middle class and the working people until nothing is left.
Johnson Explained How It Happens in Banana Republics
First, a small group of powerful elites takes over policy. This is typically the financial elite or large companies when the country has them. Because these elites know they’ll be bailed out, they take excessive risks in good times. An iron law of finance is that risk pays reward. In other words, they get bailed out.
Johnson lays out his numbers: from 1973 to 1985, America’s financial sector never earned more than 16% of the domestic corporate product. But by the early 2000s, it was earning 41%.
In other words, freeing banks to gamble with taxpayer-guaranteed funds.
The end result was the 2008 crisis, during which banks made trillions in risky loans to people with no income, assets, or credit.
The leverage meant they had bet the farm and then some — keeping all the profits.
Then it went south.
The Racket:
They gave politicians and their staff plum positions or even outright bribes in return for the bailouts.
Ben Bernanke received $250,000 for a single speech, and Janet Yellen was paid $7 million in speaking fees by Goldman Sachs and other Wall Street banks, among other companies.
The American financial system is kept alive by endless bailouts.
Given their lobbying power, the odds of breaking up America’s megabanks are slim to none.
Unless D.C. reins in the banks, we are in for it. There is little chance they will come through [especially as Harris talks about building three million homes for illegals who can’t afford them and giving them $25,000 for the down payment].
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