There’s a reason I put that statement on a bunch of T-shirts last year. You can’t believe everything told to you. You can’t let yourself get distracted by BS that doesn’t matter. You are responsible for the knowledge you possess, or don’t possess. Life isn’t anything like we expected it to be. Things are changing and we are part of the generation that’s going to have to deal with it. With that said I urge you, to read this article about how financialization is what’s bringing our country down. Karl Denninger put together an easy to read, and excellent commentary on the current Capital Markets. I’ve posted a little snippet below. click here to read the full story

What is leverage?  Leverage is simply the ability to act as though you have much more of something than you really do.  For example, you can use leverage to pry off the lid on a beer bottle.  Your raw strength is multiplied by the lever (the bottle opener) to lift the cap.

But note that there is no free lunch.  While the opener may multiply the force applied to the cap, the distance the opener moves is proportionally reduced compared to the movement of your hand.

In economics, leverage is the use of debt to pretend to have more economic surplus (that is, purchasing power) than you really have.

Let’s take a TV set.  If you save up the money to buy one, then go into the store and pay for it, you now own a TV set.  There is no leverage involved; you took your economic surplus from working (which you didn’t need for food, energy, shelter and clothing – thus, it’s a true surplus to you) and you expend it on a TV set.  The transaction is simple; once it is completed there are no residual effects.  If you lose your job the next day, you still have the TV set and will forever more until it either breaks, wears out or you dispose of it in some way.

But what if the TV set costs $500 and you only have $100?  Well, you could financialize your acquisition of the TV.  That is, you could borrow $400 by buying the TV on installment payments with a $100 down payment, and now you have a TV.

Or do you?

Actually, the bank (or the store) owns a TV.  You may have custody of a TV set, but you don’t own a TV set. You owe a debt.  You have promised to work tomorrow to cover the expense of the television. You don’t own the TV until you pay it off.

This is all fine and well up until you lose your job.  Now the bank comes after you and wants the TV back, plus whatever deficiency there is on reselling the TV set to cover your debt.  You suddenly discover, much to your chagrin, that you never owned it at all.

This all sounds pretty ordinary, except that the economic effect of financializing that transaction isn’t, in fact, ordinary at all.
Read the rest here.