The Biggest Bubble In History: Fraud

Bursting Gas Bubble 60 Light Years Across. Courtesy of ESA

Forget the Housing, Bond or Derivatives Bubbles … Fraud Is the Biggest Bubble of All Time

The housing bubble which burst in 2007 or so was the biggest bubble of all time.

Many argue that the bubble in U.S. bonds has surpassed the housing bubble as the largest ever.

Of course, given that the derivatives market is more than a thousand trillion dollars, and that is is backed by thousands of times less collateral, a good case can be made for arguing that derivatives are the biggest bubble.

But if you really think about it, the largest bubble in history is fraud, because it includes all of the above and more.

Specifically, the housing crisis was caused by fraud.  The government encouraged fraud, and helped cover it up.

Huge swaths of the derivatives market are manipulated by fraud.  See this, this, this and this. But instead of cracking down on the fraud, the government is backing it.

And the bubble in bonds was caused by super-low interest rates.  See this, this and this.

Low interest rates – in turn – are caused by the government’s zero interest rate policy and quantitative easing.

And how did the government sell these programs? By saying that they were necessary to help the economy and create more jobs.

But in reality, zero interest rate policy is just another stealth bailout for the big banks.  And quantitative easing only helps the super-elite … and hurt the economy and the little guy (Bernanke knew back in 1988 that QE doesn’t work for its advertised purposes.)

In other words, the government’s low interest rate policies were based upon a fundamental misrepresentation as to their purpose and probable effect.

Indeed, experts say that all bubbles are enabled by fraud.

But there are signs that the fraud bubble is collapsing.

Trust is falling to all-time lows as to many government and private institutions.  Why?  Because institutional corruption is so rampant that it is becoming obvious to everyone from Joe Sixpack to amateur and sophisticated professional investors.

While liberals tend to distrust big corporations and conservatives tend to distrust the federal government, we all agree that the malignant, symbiotic relationship between the two is the root problem.  Indeed, when government and corporatism merge, it is hard for anyone to trust what is going on.

When government officials are as corrupt as the criminal enterprises they are suppose to regulate, even the mainstream media can’t ignore it any longer.

And the people lose all trust in the system.

No matter how hard the boys work to cover up their ongoing misdeeds, the fraud bubble may finally be popping …

See examples of a popping fraud bubble here, here and here.

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  • ShankyS

    Wonderful post GW. No question fraud is rampant and to root it out will be next to impossible. We’re gonna need a total reset of the system (which should have happened in ’08).

  • Shorty Dawkins

    Fraud is, indeed, the biggest bubble. I commend you on your fine article. It seems that the entire 20th Century was a period of immense fraud. It was very Orwellian in nature. Until the Central Banks and fractional reserve banking are eliminated, along with the CIA and DHS, we will continue our downward spiral. There is a shadow government that preys on us. First, is to recognize its existence. Many refuse to believe it. Those who understand are growing in numbers, which has pushed the shadow government to clamp down harder on us. There will be a time, (and not far from now), when the economy will collapse and the shadow government will begin pointing their drones and rifles at us. I pray the people wake up fast enough to overwhelm them.

  • From now on, whenever I see the word “bubble” in connection with the economy, I will say “fraud.” It will put things into perspective for me. It makes reading mainstream media info easier to understand though.

  • BlankReg

    Greetings from Yorkshire, England .. A place where we characteristically “speak as we find” or tell-it-how-it-is .. Interesting blog this – commendable .. However, it seems to me that, considering the global nature of both ficticious finance and corporate control, the biggest ‘Bubble’ would be the one that you Americans continue to occupy .. A very large (playground bully sized), self-centred, world-blinkered, me,me,me coloured bubble .. Within which, predominantly, only the ‘downtown’, ‘joe-sixpack’, my-back-yard consequences of this rape and theft of our world are presented .. And only homegrown ‘FED’, ‘CIA’, Wall St. & Capitol Hill cures considered .. Open your eyes and see the world properly for Christs sake, ‘sted of chewin’ on your own tail whilst salivating to order .. Truth and honour to youse .. Reg

  • Brian Harry, Australia

    Go to and watch “Frontline” which aired on 22/Jan/2013, and watch how the Banking industry on Wall st made rediculous loans to people who were never going to be able to pay back the loans. The Banks then repackaged these ‘dodgy’ loans, and sold them as AAA rated “Assets” to investors around the world. Then they insured these loans for failure (ie, bet against them). And, the Dept of Justice couldn’t find enough evidence to convict the Banks of fraud. One could be easily convinced that there was a conspiricy here between the Banks, the Law, and the US Govt. Who ever said “Crime doesn’t pay”?

    • I saw this on PBS and posted it on my facebook timeline. I find that a lot of people now days don’t want to hear about what went on, or is still going on in this country. They bury the head in the sand and talk stupid on facebook.

  • Cliff

    Hey George, I clicked thru to your post about the massive money laundering schemes of Wachovia and HSBC and was wondering….what happened to all those $$$ that have been identified as “laundered”? Confiscated? Returned with an apology that the laundry is closed????