A giant pyramid game

On March 6, 2013, the 51-year-old bank director David Red reportedly having jumped backwards out of the window of his office. With bruises on both arms and a deep cut from an assault weapon in the head, Rossi landed on his back 10 meters down. The surveillance camera shows that Rossi's watch dropped from the window after Rossi himself hit the ground, then that two colleagues calmly walk over to Rossi and find that he is dead.

Rossi was head of communications at the world's oldest bank, Monte dei Paschi di Siena (MDP), founded in 1472. In 2008, the MDP was insolvent and had to be rescued, and "Project Santorini" was conceived. In short, MDP was able to borrow large sums internally in the banking and finance sector, which were used for risky projects. When the financial crisis came, things went wrong, and the MDP had to borrow more and more to cover the losses. Then Rossi disappeared out the window. More and more bankers were found dead under mysterious circumstances, a total of 72 (see EB Tucker, Casey Research, 2016).

"Too big to fail"

Sabotage is a book where the authors Nesvetailova and Palan try to give us insight into, and understanding of, the internal interaction in the banking and finance sector. It is a provocative book that looks behind the scenes and provides examples of how banks and financial institutions destroy personal wealth and companies to serve the interests of bank directors and shareholders. The question that is sought to be answered is how this can happen without the authorities intervening. According to the authors, the answer is simple: the goal of any banking and financial institution is to become "too big to fail" (too big to fail).

Banks and financial institutions deliberately sabotage and circumvent all forms of government regulation.

When: bankone or finansthe institution has obtained such a "state" guarantee, it can create almost unlimited "cheap newly printed money". This is credit / lending that it can use on speculative customer and own investments in various financial instruments in the knowledge that the authorities will let the taxpayers take the bill when these speculative and risky investments lead to insolvency and threaten bankruptcy in the financial sector. Hence the title sabotage, which means that banks and financial institutions deliberately sabotage and circumvent all forms of government regulation. The authorities tacitly accept this as a result of the "Too big to fail" doctrine, at the same time as the bill for the accident is actually passed on to the taxpayers.

The authors conclude that the sabotage of regulations and laws intended to protect society and the individual from fraudulent banking activities is crucial to this sector's income. The opportunity for profit is so lucrative that sabotage serves as the largest source of income for some of the largest banking and financial institutions in the world. In the authors' own words: «The world economy is gigantic #pyramid schemes – the authorities allow it to continue rather than deal with the background of its collapse.»

Taking real risk

The authors address the problem, but without being able to fully explain how the interaction between governments, central banks and banking and financial institutions works. They let the conspiracy theory about this "giant pyramid game" hang in the air. For as the car founder Henry Ford pointed out almost 100 years ago: "If the people had understood how the banking and money system worked, there would be a revolution tomorrow."

When the US Federal Reserve (FED) and the European Central Bank (ECB) these days issue huge amounts of electronic money, which is nothing but debt that must be repaid by current and future generations of taxpayers, we also get the confirmation of the authorities' kneeling for the speculative spending of banks and financial institutions at the expense of the people. As the Austrian economist Ludvig von Mises once correctly concluded: "Banks and financial institutions could never have expanded unhindered with credit without the authorities first giving their blessing to it."

The authors 'proposal for a solution is that the authorities must acknowledge that the banking and financial services' business model is built on extensive sabotage of laws and regulations introduced by the authorities. The authors believe even more regulations are the solution.

It is a disk boom, precisely because it is the authorities who represent the problem itself. Ever since King William and "his court" established the Bank of England in 1694 to finance war with France and military operations in the colonies, as well as to enrich themselves, the authorities and the banking and finance sector have been "in bed" with each other.

The solution is therefore to deregulate this sector so that it functions as intended – not free of regulations, but to safeguard the interests of the people / customers – not the authorities. Under such a system, a bank's / financial institution's expansive lending – both to customers and to proprietary trading – will immediately lead to the accumulation of this one's debt with competing banks and financial institutions. This would quickly lead to demands for repayment of debt to the competing banks / financial institutions that provided credit in the first instance. This form of self-justice would effectively weed out banks / financial institutions with too much willingness to take risks.

The sabotage Nesvetailova and Palan are so preoccupied with would then disappear by itself, since the authorities' "implicit guarantee" of protecting the financial sector at the expense of the people is no longer a relevant issue. Since all political activity and state administration depends on the banking and financial elite, such a banking and monetary system – for the good of the people – is probably utopian.

In any case, the book is well worth a look, because it sheds light on many interesting issues and creates the necessary debate about an ingenious financial system that is about to become a world economic bubble.