Why Real Reform Is Now Impossible

It’s difficult for well-meaning pundits to abandon the fantasy that meaningful reform is possible. Indeed, a critical function of the punditry and corporate media is to foster the fantasy that the status quo could be reformed if only we all got together and blah blah blah.

As I explain in my new book Why Our Status Quo Failed and Is Beyond Reform, real structural reform would trigger the collapse of the status quo. (As a reminder, the status quo benefits the few at the expense of the many.)

But there’s another dynamic that makes reform impossible. I’ve prepared a chart to explain this dynamic:

Central banks have transformed the market–in stocks, bonds, commodities and risk–into the signaling mechanism that tells us all is well. Even though the real-world finances of the bottom 95% continue deteriorating, a rising stock market and suppressed measures of risk signal that the economy is doing well. If you’re not doing well, it’s your personal problem; the status quo is fine and needs only minor tweaks.

Elevating the market into the oracle of economic health creates a systemic risk:If the market tanks, the status quo is called into question. People start asking, is it truly a wonderful arrangement that benefits us all, or is it really just a skimming machine that funnels money and wealth from the many into the voracious maws of the few?

Central banks thwart this existential danger to the status quo by rescuing the market every time it approaches the market clearing event level. (see chart) In a market clearing event, risky loans and bets are liquidated, credit dries up, risk soars and the price of assets falls to levels that once again make fundamental sense.

Market clearing events are a necessary part of a healthy credit and asset-allocation system. If the market is never allowed to clear away the dead wood of mal-investments, high leverage, nose-bleed valuations, bad bets and risky loans that should never have been issued, all this dead wood eventually chokes off healthy expansion.

The problem for central banks is a market clearing event pushes markets to levels that call the entire travesty of a mockery of a sham status quo into question. That is too dangerous to risk, so central banks quickly defend the fantasy that markets only drift higher, stopping any market clearing event in its tracks.

This leaves the economy increasingly vulnerable to the financial equivalent of an uncontrollable forest fire that burns away all the collected dead wood that has been protected by the central banks.

At some difficult to predict point, a random financial flame ignites the accumulated dead wood and the markets are torched in a conflagration so intense not even massive central bank intervention can extinguish the flames.

Structural reform is only possible when markets and sentiment crash far below the market clearing event level. Meaningful reform only becomes politically, economically and socially possible when the status quo has failed so obviously and so painfully that even its most entrenched defenders concedes that the choice has boiled down to either full-blown revolution or meaningful reforms that limit the power of the few at the top of the wealth/power pyramid.

The pyramid by the number of people in each wealth bracket:

The pyramid by the assets and income held by each wealth/income bracket:

But the process of real reform is quickly hijacked by vested interests once the markets recover back to the market clearing event level. Once the crisis has passed, the well-oiled machine of lobbying, grift, graft and campaign contributions kicks into gear and waters down or co-opts the reforms into PR facades designed to fool the masses into believing the reforms will work as advertised (for example, all the “reforms” passed in the aftermath of the 2009 meltdown: thousands of obfuscating pages of Obamacare, bank regulations etc.)

The only time meaningful reform is possible is in a crisis that reveals the true nature of the status quo, and central banks will create as many trillions of dollars, yen, yuan, euros etc. as are needed to erase that moment of clarity and truth.

The endless bleating of well-paid pundits in the corporate media about “reform” is just more circus designed to distract us from the much colder truth:the status quo is beyond reform. The choice is either collapse or well, collapse: letting the status quo strip-mine the bottom 95% will eventually lead to collapse and so will structural reforms that deprive the few of their power to create near-infinite sums of money and credit for their cronies.

My new book is #2 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, a 20% discount thru May 1, $8.95 print edition) For more, please visit the book’s website.

This entry was posted in General and tagged , , , , , , , . Bookmark the permalink.
  • Dow Jones

    Hillbillie Klingon the psychopath’s psychopath or Pompadour Don, (pedophile Jeffrey Epstein’s Lolita Express to Orgy Island buddy) “deranged you can believe in” …to paraphrase Barry Obomber, the wilted Hawaiian. USSA is fukked but is gonna get a lot more so in the inevitable and unstoppable collap$€.

  • yEshUA ImmAnUEl

    “Truly does the Path become narrowed— as it were, more one-pointed— as man climbs upward, ever nearer the great Portal of Love through which he must pass to Liberation. True Liberation can come only through Love in which there is no thought of self, but a complete consciousness of selflessness, as man knows the self in his varied emotions and desires. Truly, when he reaches the Portal of selflessness does he find Self.”

  • yEshUA ImmAnUEl

    “He must overcome, for unless he overcomes he is weak and will always remain weak. Only the soul that over- cometh is might. You ask what he is to overcome? His selfishness. Selfishness stands in the way of all true de- velopment; man’s selfishness must be changed, transmuted into love and the feeling of selflessness.”

  • yEshUA ImmAnUEl

    “Love makes us greater and stronger. Love gives us understanding, when nothing else will.
    There is no power greater than Love. It can surmount all obstacles. It can give life and create worlds. The secret of the power is yours to have if you will go the way.”

  • I really enjoy this man’s understanding about Banking in the whole.

    May 21, 2013 Why the whole banking system is a scam – Godfrey Bloom MEP

    • European Parliament, Strasbourg, 21 May 2013

    • Speaker: Godfrey Bloom MEP, UKIP (Yorkshire & Lincolnshire)


    • colinjames71

      I’d seen that, but dang if it don’t keep getting better and better. Thanks, I’m gonna use that clip.

      • It is the absolute best I have come across with a zero beating around the bush explanation I have ever seen or heard. Thanks colinjames71!

  • yEshUA ImmAnUEl

    “Greater things can no man do than to love others. Not only shall he love his friends, or those that do good to him, but also those that he thinks are his enemies and that do ill to him ; for, if he knows the Divine Law, he will understand that none can be his enemy except the one that dwelleth within him.
    If he knows his own Sol and does it’s will he can have no enemies: but, if he does the will of the flesh, the carnal and sensual self, there is an enemy within.”

  • yEshUA ImmAnUEl

    John 15:13
    Greater love has no one than this: to lay down one’s life for one’s friends.

    • Psalms 23:4 – Yea, though I walk through the valley of the shadow of death, I will fear no evil: for thou art with me; thy rod and thy staff they comfort me.

    • unheilig

      The Electric Monk was a labour-saving device, like a dishwasher or a video recorder. Dishwashers washed tedious dishes for you, thus saving you the bother of washing them yourself, video recorders watched tedious television for you, thus saving you the bother of looking at it yourself; Electric Monks believed things for you, thus saving you what was becoming an increasingly onerous task, that of believing all the things the world expected you to believe.

      Unfortunately this Electric Monk had developed a fault, and had started to believe all kinds of things, more or less at random. It was even beginning to believe things they’d have difficulty believing in Salt Lake City. It had never heard of Salt Lake City, of course. Nor had it ever heard of a quingigillion, which was roughly the number of miles between this valley and the Great Salt Lake of Utah.

      The problem with the valley was this. The Monk currently believed that the valley and everything in the valley and around it, including the Monk itself and the Monk’s horse, was a uniform shade of pale pink.

      — Douglas Adams

      • colinjames71

        “It’s possible using math logic to prove black is white and white is black, then go and get yourself killed at a pedestrian crossing.”

        Douglas Adams. Again. He’s got some good ones, both in life and his work.


    The financialization of companies is the reverse of everything classical economists were saying. They can get wrap themselves in this cloak of classical economics by dropping history of economic thought from the curriculum. Following the banks and the Austrian school of the banks’ philosophy, that’s the road to serfdom. That’s the road to debt serfdom.