Memories of the 28th Century

The passage of the Senate bill to end the shutdown brought to mind other confidence games; the whole shutdown was a scam; it was just some troublesome children making life inconvenient for other people. But that scam was nothing compared to the great scams of the past, and Ponzi doesn’t even deserve this much of a mention, but the financial industry has been responsible for some good ones. The insurance crisis that led to the Great Recession was a good one, but it never fooled any except the silliest people.

An even better financial scam was, and it is still in business, the government guarantee of residential mortgages. The politicians make it sound like the housing industry would die without it, but all it does is guarantee incomes to some players in the mortgage industry, so they keep moving money into mortgages. Of course, it puts the federal government on the hook for many mortgages that go bad, but that gets paid for by the people who continue paying their mortgages. It almost makes me want to sell mortgages on the wholesale level.

You may not remember it, but there were a couple of good scams that investment banks played on each other: portfolio insurance and credit default insurance. Both are pure gambles on investments going south. They were used in different periods, and I think that we can be sure that the same game will appear in the future. These things were responsible of several billions of losses at various companies back in 2008 and lesser amounts during the crash of 1987 and the following recession.

Then there’s the big one that no one trying to destroy, mutual funds. A rather large part of the value of publicly traded companies is held by mutual funds. There is so much value there, that the stock markets can’t fall all that much, because there aren’t enough other buyers. In one form or another, this scam goes back well over one hundred years and keeps on growing.

I could go into the insurance industry in general. Everyone knows that is a scam, but some parts of it are useful, so we continue to put up with life insurance and the other complete scams.

On the non-financial side of things there haven’t been as many really big scams, but there has been at least one that deserves mention. I first read about this several decades ago, but Wikipedia and snipes think that it may never have happened. A con man convinced the City of New York that Manhattan Island was going to sink, unless they cut it in half. In short, he got a lot of money for saws and so on, and on the day when sawing was to start he was nowhere to be found. There are more details, but they vary from teller to teller, so read the link below, and check what snopes says, if you are interested.
http://www.historybuff.com/library/refmanhattan.html
http://www.snopes.com/history/hoaxes/sawingny.asp
The snopes story is what I remember, and the article makes it clear that it is doubtful that this happened, but I have read that the saws were around for decades.

Another one that has people questioning the facts after several millennia is religion. This is a complicated one, and there are so many variations that it’s impossible to tell where the facts end and the lies start, and everyone has a different set of facts and lies. Truly the father of lies invented religion. He should have left it alone and let us love our nature gods and goddesses. While the facts are churned up with the truth in religion, things are at least as bad with what may be the biggest scam: money.

Money is purely a confidence game. People give useful things to people, and all they get in return are media of exchange. Things that someone said are worth so much, and they are only worth anything, because people keep accepting them. Money, especially paper money and money of account, are almost humorously worthless outside of their defined place. Have you ever considered what the intrinsic value of a $100 bill was? Don’t even bother; the time of specie has passed, unless the people who write post-apocalyptic novels will be proven right, and you’ll have to pay for a restaurant meal with two hours of work in the gardens.

Those clowns in Congress are tyros compared to the great conmen of the past, but they did make life difficult for some people, and they gave plenty of work to the newsies.