Wealth without production has costly consequences

Harvey Waxman

11/14/2009

It seems the more ethically challenged of Wall Street and our financial markets have achieved the alchemist’s dream; they found a way to create something out of nothing, which they then sold at a profit.
They convinced gullible and/or naive buyers that the rising home prices will continue and that market values are no different than real money, just like money in a bank. These buyers then borrowed on that so called “market value,” often more than they could afford to pay back, believing that if they got into financial trouble, they could always sell their homes at a higher price, and come away with a profit.
The predators in the financial and banking industries then took these mortgages, bundled them together so that they were impossible to analyze and price fairly, then sold them as “investments,” taking their cut of course, thus creating wealth for themselves without actually producing anything of true value.
The goal was no longer the production of quality products or services to produce a profit. The goal now was only to create capital, money.
And worse still, it was based on an illusion – the idea that the market value of anything is no different than real money, instead of what it actually is; a best guess, a hope, a gamble. We have built our financial markets on illusions and we are suffering the consequences. &#8226

Harvey Waxman is founder of Rhode Island Gets Honorable Taxation (R.I.G.H.T).

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