CAPITAL EXTRACTION - The Root of All Evil

...and the foundation of the Wall Street backlash.

When productive capital, the real key to stimulus, is extracted wholesale from the economy, the result is malaise, the debilitating economic ennui we now know so well. Where is the economic muscle, the economic engine of productive capital; where does it now reside? It once dwelt in the hands of capitalistic giants like Carnegie, Macy and Ford, who knew how to apply their capital muscle where it mattered, in the factories and selling floors that drove our country to greatness. Those individuals created and sold Value, in a market driven by value-creation.

What now? Now we have "derivatives" and a class of derivative-driven wealth that drains the heartwood of its sap. Some trading house now dreams up a "derivative" that bundles the wealth of some real asset into some paper concept, with all the illusion of substance. This derivative is drummed and wheedled into the mainstream, until it reaches the point of saturation, then collapses, only to be replaced by some new sensational abstract.

So too an ever-widening circle of wealth Holders is created, individuals ever farther removed from productivity; the extraction not only complete but permanent, since the Holder has no idea how to put the intrinsic muscle of capital to use. This new group, not "old money" but rather "new money", walks away with a massive chunk of capital, and places it wholesale in some safe place. Here it must remain, as the happy Holder hasn't the slightest notion how to put capital to productive use, how to create Value. Another massive extraction has taken place, and sadly, a permanent extraction.

So the capital extraction goes on. Those who drew out their capital from subprime mortgages move on to Euro-bonds, until that too must collapse; all our powerful capital now bound in the hands of the economically atrophied, those without the slightest notion how to use its universal muscle. So it goes on; ever more exotic derivatives, ever further removed from the productive reuse for which capital was invented, and once exercised its great strength.