Ours Is a System of Fraud, Swindles and Corruption

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But all bubbles pop, and there are no tricks left to fund both the greed of the few and the needs of the many.

Every society / economy is a distribution mechanism that distributes:

1. Gains

2. Losses

3. Risk

4. The costs of securing the sources of gains.

As a general rule, markets / economies don’t really care who ends up with the losses, and this is why markets / economies are fundamentally pathological structures: the single-minded focus is to maximize gains and minimize costs and losses by distributing them to others by any means available.

As a general rule, societies have to manage the distribution in a slightly less pathological manner to keep the status quo from being overthrown by those forced to bear the costs and losses. As Mao famously observed, “political power grows out of the barrel of a gun,” and so the sociopaths sluicing the gains into their own pockets and dumping the costs and losses on the economically / politically powerless without regard for social stability find the way of the Tao is reversal as those getting the crumbs eventually have nothing left to lose.

In other words, markets / economies are embedded in a social structure, not the other way round. And the social structure has to balance the distribution fairly enough to keep the majority from concluding they have nothing left to lose by throwing their lot into overthrowing the status quo.

We can gussy this structure up with a lot of theorizing and references to Plato, Marx and Machiavelli and hundreds of other players in the longstanding drama, but these are the fundamental forces in play: do the sociopaths have enough political and financial power to channel most of the gains to themselves and dump the costs and losses on others, or is the system capable of enforcing some limits on the sociopaths?

I submit that the United States is in the firm grip of the single-minded few focused solely on maximizing their gains and distributing costs and losses to others by any means available. The social and political restraints that placed modest limits on the aggregation of power and wealth into the hands of the few have crumbled, and this structural collapse has been hidden behind flimsy billboards hyping the latest in distractions: AI, tariffs, stablecoins, Rich Mom fashions, etc.

These flimsy distractions are about to be blown over by the windstorm of recession and social disorder as the American households clinging on to the fantasy of The American Dream as all the costs and losses are dumped on them as the gains flow to the top 10% finally throw in the towel on the status quo.

The entire bloated, distorted beast has been living on buy now, pay later skims and scams, and the debt pushers have turned enough of the populace into debt-junkies that there’s few new customers left to addict.

The entire travesty of a mockery of a sham is out of balance and cannot be restored with the usual magic tricks. The interests of the citizenry–supposedly respresented by elected officials–have been trampled underfoot by a thundering herd of fraud, swindles and corruption, the means by which the sociopaths control the distribution of gains, losses, costs and risks.

This systemic dominance of fraud, swindles and corruption has been not just normalized but hyper-normalized: we all know the entire system is hopelessly compromised by corruption, but since we’re powerless to change this distribution, we act as if this is normal, and go about our business, debating AGI (artificial general intelligence) and other absurdities to pass our time while we await the inevitable reversal of fortunes.

Here is the real distribution of gains, losses, costs and risks in America: the gains go to the most corrupt few and the losses, costs and risks are distributed to the many. Here are three of the latest manifestations of fraud, swindles and corruption among a seemingly countless stream of self-serving outrages that are no longer outrages, they’re just the way things work now.

Here’s how Corporate America takes care of its customers: the gains are ours, the risks are yours. It’s taboo to call things what they are, so we can’t say that Corporate Anerica is pathological–even when it is:

A Devastating New Expose of Johnson & Johnson Indicts an Entire System.

Revealed: UnitedHealth secretly paid nursing homes to reduce hospital transfers.

Owner-Occupancy Fraud and Mortgage Performance. (rampant mortgage fraud… again)

As always, I am honored to share a remarkable data base of Corporate Fines and Settlements from the early 1990s to the present compiled by Jon Morse. There are 2700 entries, updated through December 2024.

What’s finally happening is the system can no longer collect enough resources to fund the minimum required to satisfy the sociopaths and the minimum required to satisfy the bottom 90%, so something’s gotta give. The solution has always been straightforward: print or borrow another couple trillion dollars to fund the greed of the sociopaths and whatever it takes to keep the herd from stampeding.

The trillions are getting harder to print/borrow, and so it’s finally squeeze-time. Gosh, this is actually kinda hard: do we squeeze the sociopaths, who scream bloody murder at any reduction of their gains, or do we squeeze the bottom 60% who are already on the cliff edge? Can we sorta kinda squeeze both enough to keep the status quo intact?

This isn’t sustainable stability: it’s entropy dressed up in the finery of stability. The sociopaths have concentrated sufficient financial and political power to stave off any real reductions in their distribution of the gains, and so the costs and losses will be distributed to the bottom 90% in various forms, as usual. Only some percentage of the bottom 90% no longer has sufficient credit or income buffers to absorb more losses, costs and risks.

The last trick in the status quo’s hat is a credit-asset bubble that generates an illusion of unending wealth for everyone: wealth for those who own the assets, of course, and wages for everyone below due to the trickle down effect where you buy a $1 million vacation home and I live in my car in a parking lot working in town:

In a Snow Paradise, They Live in This Parking Lot: People experiencing homelessness can sleep in their cars in this wealthy ski town in Colorado, but only if they have a job.

But all bubbles pop, and there are no tricks left to fund both the greed of the few and the needs of the many. The top 0.01% own five times as much as the bottom 50%–170 million Americans. That’s some very pretty entropy dressed up as stability.

Look, I wish it were different, but the facts speak for themselves:

Do we hear the chorus of complaints of the top 0.1%? Why oh why aren’t the bottom 50% delighted to own 2.5% of total household net worth? It’s more than enough, right?

This makes the impossible–a reshuffling of the social order on a grand scale–not just possible but inevitable. Nobody saw it coming, etc. Um, yeah, sure, whatever.

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Source: http://charleshughsmith.blogspot.com/2025/05/ours-is-system-of-fraud-swindles-and.html