You pretty much hit the nail on the head. Strip away and the details and it’s basically a bait and switch. Everyone puts up what they have on the promise of more and lose it all. It’s not that the underlaying premise isn’t valid. Life is a process of bootstrapping itself upward and each stage builds on what came before, but that’s why people will fall for it when it’s a trap.
I think though that they seriously overshot their mark. Like you, I’ve been discussing these ideas for years and generally get little response and less positive response, but that’s been changing. I posted a shorter version of my first post in the comments to a Maureen Dowd column last week and it even made the editor’s selections.
http://community.nytimes.com/article/comments/2009/02/11/opinion/11dowd.html
A year ago and I would have been called a Marxist.

Kudos from me to both of you. I fully fully appreciate not only all your comments that agree with my own understandings, but also the ones that don’t. This dialogue (trialogue?) is the most fruitful I’ve participated in, in several years of blogging (and that is a lot of blogging).

John, in this: “Creating a massive bubble of extraneous circulation is not as productive as they would have us believe…” might the word “artificial” be better than “extraneous”? I agree with the sentiment.

John, I also agree that money is a public utility. That is exactly why I ask in all seriousness why we need private profit-making entities to manage it for us. While the free marketeers all think that anything and everything can be better dealt with by private concerns, one does wonder if even a 3rd world government could have mismanaged things worse than these oligarchical potentates. It is because I see money as a utility that I ask if banks aren’t actually part of our infrastructure, and as such, might they be better off run publicly, and possibly as non-profits. WHY does everyone see money as a commodity to be bought and sold, rather than as a utility there for our use? Once printed (or in use as cyber money in our computerized world), money is are just for use, like highways and bridges are. We trust government to keep roads reasonably available (maintained) and adequate for our use. Government could easily do that for our money – just make it available and adequate for our use. Most of us only need it for that, with storage concerns for safe-keeping. Investment is another issue! It is spending/betting for those who want to play with it and hopefully get something for nothing. Most of us injured in recent weeks had done SOME of that, but we have all also been brainwashed into believing that if we didn’t, our stored money would lose value. We’d also been brainwashed into believing if we did not think of our houses in that same vein, we were suckers and rubes.

Now we are all suckers and rubes, but for the opposite reasons – the ones behind our grandparents hiding money under mattresses. Our simple utility – money – became a game for players, and we all got taken in by their shell game. Shame on us? Yep. Grandpa could have warned us. Even those who didn’t play are now injured. The gangbangers of high finance have effected a drive-by shooting of Biblical proportions.

None of us prudent citizens wanted anything to do with this. But here we sit.

Given a choice between the private corporations and the government, give me the government. At least I can vote every 2 years and convince myself I have a say in things.

“…”We were told to take it so that we could help Darwin synthesize the weaker banks and acquire those and put them under different leadership,” he said. “We are not even allowed to mention that. … We were supposed to say the TARP money was used for lending.”

Your assumption seems to be that the public sector is inherently noncompetitive, but that’s a fallacy. Non-competition entails a monopoly and we assign the monopoly of power to the government for very good reason, since competition between governments is war. In those cases, there is little to no economy anyway. In fact, the function of government started as private enterprise and became formalized as monarchy. It was only by making government a public trust through the development of democracy that we institutionalized competition within government. Local governments can be very competitive with one another when it comes to attracting and developing resources and business. The real advantage of public institutions over private ones is freedom of information and the economic power of an expanded knowledge base.
The fact is that money is a public utility that depends on the faith of the community and it is the government which insures its value, so the public is responsible for the real risk, as is currently obvious. With a private banking system, not only do private investors garner most of the profits from managing this utility, but use these rewards to further leverage their power and reduce their risk. The simple fact remains that they have massively mismanaged the process because they have lost sight of the basic economic reality, as I mentioned in my first post. Creating a massive bubble of extraneous circulation is not as productive as they would have us believe and when it pops, as it is currently doing, will be very destructive.

Steve,

There are far deeper philosophic issues at work here as well. Our moral model is based on an elemental attraction to the beneficial and repulsion of the detrimental, good vs. bad. This creates a linear view of reality that doesn’t seriously consider reciprocity, reaction, the laws of unintended consequences, etc. In fact they are derided as moral relativism. So we naturally assume that if a little is good, a lot must be that much better. Thus we create effectively infinite amounts of notational wealth, because zeros in the bank account is good and then must sacrifice our communities and environment to feed this illusion. Suffice to say, economics isn’t my specialty, but the economy is where the rubber meets the road. Your are right that money is a tool, it’s not a god. Now it’s a broken tool.