The Key to Prosperity

Dear George,

The key to prosperity is simple—cook the books.

Wealth no longer bears any relationship to how much gold you have in the vault. Instead, wealth has been reduced to the figures on a spreadsheet. If the figures look good, and if they fool everyone, you are prospering.

Book cooking has a long and honorable tradition. The mining industry pioneered the practice when the owners’ built company towns that featured company stores where miners could buy food and clothing on credit.

Creative bookkeeping insured that the miners were perpetually in debt. This indebtedness was an efficient management tool. If a miner became fed up with working sixteen hours a day, six days a week and decided to leave, the owners simply got the sheriff after him for skipping out on his debt.

In the years following the Civil War, the practice found its way into the sharecropping that replaced, but didn’t change, slavery. In the “forward”, the landowner would advance the sharecropper seed and other supplies. When the crops were in, there was the “settle” in which, in theory, the sharecropper kept the profits from his endeavors. Again, the landowner employed some creative figure juggling, and the poor sharecropper never produced enough to pay off the “forward”.

The practice is still with us, but now instead of a forward and a settle, we have the usurious interest charged on credit cards. Debt remains an effective form of enslavement.

Of course, the irony of book cooking is that our capitalists have built a similar trap for themselves through their credit-default swaps. By entering into counterparty agreements, the banks preserved the illusion that they were solvent. Because these swaps were unregulated, those issuing them didn’t have to have the assets to cover their butts in case the economy went bust.

The economy went bust, the issuers of CDSs didn’t have the assets to cover their butts, and wholesale credit froze.

It’s the stupid trapper who becomes trapped in his own trap.

But, that’s expertise for you. Fortunately, all we have to do to get out of this crisis is to cook some more books.

Your admirer,
Belacqua Jones