Once a-ponzi time, millions worshiped at the feet of the Wizards of Finance. These Wizards preached an economic religion that promised security and an abundance of riches from the 'Emerald City' -- Wall St.
Investors following this religion were led to believe that they could make capital gains effortlessly and endlessly.
To make these gains, it was argued, there was no need for protection from the authorities. 401(k) plans were safe in the hands of the Wizards. There was also no need for investors to engage in hard work: to invest in research; to engage more labor; to sweat at making goods or delivering services.
There would be no need to save. Money would be made effortlessly.
Above all, argued the Wizards, there would be no need to consider limits -- financial, environmental or human. There would be no limit to consumption. No limit to the amount of credit created by private bankers. No need to consider the limits imposed by the ecosystem, or limits to the exploitation of labor -- whether in the US or China.
And so investors, armed with a firm belief in Wizards, unlimited credit, economic growth and exploitation, marched down the yellow brick road. They borrowed and invested. Then they went shopping.
Even though the average business enterprise makes returns of roughly 3-5% each year, Junior Wizard Madoff promised, and delivered to investors a 10% annual return on investments. Some like Eli Wiesel, invested $15 million with him and thought he 'was God".
Millions more gathered behind the TV tipster, Jim Cramer and hailed his idolatrous motto: "In Cramer we Trust".
Some believers raised questions about how the Wizards made such extraordinary capital gains? They were quickly silenced, and told by the Sorcerers at the Fed and in Congress not to worry their pretty heads about the complexities or duplicities of these capital gains.
Instead they were simply to have faith.
The Chief Wizard -- Alan Greenspan -- waved his magic financial markets wand, and with the help of politicians, effectively dispensed with government regulation of credit-creation. He and his friends in the 'Emerald City' then rustled up a gigantic credit bubble. This bubble financed the inflation of assets, and immeasurably increased the wealth of those who owned assets: e.g. property, stocks and shares and works of art.
Those without assets -- the poor, and those known as 'sub-primers' -- were forced to borrow at very high rates of interest. If they could not borrow or had to rely just on their wages, they were denied access to the 'Emerald City'. They became poorer.
As the rich got richer, they fell worshipfully at the feet of Chief Wizard Greenspan, who promised each and all the equivalent of a pair of 'ruby slippers'.
All they had to do was believe. And so they did.
But then came the tornado. Investors were rudely awakened from their dream.
Now there is a dawning realization that while millions may have felt enriched, they were in fact, duped and robbed.
While they thought they had 'gained the whole world', in fact something much more valuable was lost.
Now it seems, Americans are ditching the Greenspan belief system, and losing faith in the Wizards of Finance. It turns out they are mere gnomes, and have no supernatural powers at all.
This is disastrous. The loss of faith and trust in finance undermines not just the reputation of the Wizards, but the financial system, sound businesses, hard-working Americans -- and the entire global economy.
To stabilize the financial system, and to right the global economy, we need to restore faith and trust in the way banks do business.
For that to happen, it is vital that the money-lenders and their lobbyists are chased from the temple, and the temple is restored 'to the ancient truths' to quote Roosevelt's 1933 inaugural speech. 'The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.'
These values are common to all the Abrahamic faiths -- Jewish, Christian and Muslim, and are well known to most Americans. These are some of them:
I am the Lord your God, who brought you out of the land of Egypt, out of the house of slavery;
Do not have any other gods before me.
You shall not make for yourself an idol.
You shall not bow down to them or worship them...
Remember the Sabbath day and keep it holy.
The seventh day is a Sabbath to the Lord your God; you shall not do any work -- you, your son or your daughter, your male or female slave, your livestock, or the alien resident in your towns.
You shall not steal.
You shall not bear false witness against your neighbor.
You shall not covet your neighbor's house... or anything that belongs to your neighbor.
The point about these 'ancient truths' is that they are rules. Regulations that underpinned the values of all civilizations. And to our great cost, we have ignored them. We have de-regulated.
The one most ignored by the Wizards was the rule of the Sabbath -- a form of regulation that periodically corrects imbalances -- every 7 days, every 7 years (think of sabbaticals) or every 7 x 7 years (think of Jubilee). A form of regulation that underpins a system defined by Ched Myers as 'Sabbath Economics'.
Sabbath economics places limits on the exploitation of labor, of livestock and of the land, in the broadest sense. It is environmental law, and it's labor law.
During the decades of de-regulation, the concept of 24/7 was introduced. Money markets whirred 24 hours a day, each working day. There was to be no limit to the exploitation of labor, or livestock or land; or to consumption. The ecosystem would expand, it was believed, just like the credit bubble -- into eternity.
If we are to restore stability to the financial system, to tackle this spiritual crisis, and to restore faith, we will have to first revive the ancient truths and regulations. Including the truth about limits.
We will have to bring an end to the idolatry of these past few decades, and return to a system of regulation that periodically corrects imbalances -- and reminds us of limits. A system of Sabbath economics.
The Morning Email helps you start your workday with everything you need to know: breaking news, entertainment and a dash of fun. Learn more