Category Archives: Debt

The Key to a Sustainable Economy Is 5,000 Years Old

We are again reaching the point in the business cycle known as “peak debt,” when debts have compounded to the point that their cumulative total cannot be paid. Student debt, credit card debt, auto loans, business debt and sovereign debt are all higher than they have ever been. As economist Michael Hudson writes in his provocative 2018 book, “…and forgive them their debts,” debts that can’t be paid won’t be paid. The question, he says, is how they won’t be paid.

Mainstream economic models leave this problem to “the invisible hand of the market,” assuming trends will self-correct over time. But while the market may indeed correct, it does so at the expense of the debtors, who become progressively poorer as the rich become richer. Borrowers go bankrupt and banks foreclose on the collateral, dispossessing the debtors of their homes and their livelihoods. The houses are bought by the rich at distress prices and are rented back at inflated prices to the debtors, who are then forced into wage peonage to survive. When the banks themselves go bankrupt, the government bails them out. Thus the market corrects, but not without government intervention. That intervention just comes at the end of the cycle to rescue the creditors, whose ability to buy politicians gives them the upper hand. According to free-market apologists, this is a natural cycle akin to the weather, which dates all the way back to the birth of modern economics in ancient Greece and Rome.

Hudson counters that those classical societies are not actually where our financial system began, and that capitalism did not evolve from bartering, as its ideologues assert. Rather, it devolved from a more functional, sophisticated, egalitarian credit system that was sustained for two millennia in ancient Mesopotamia (now parts of Iraq, Turkey, Kuwait and Iran). Money, banking, accounting and modern business enterprise originated not with gold and private trade, but in the public sector of Sumer’s palaces and temples in the third century B.C. Because it involved credit issued by the local government rather than private loans of gold, bad debts could be periodically forgiven rather than compounding until they took the whole system down, a critical feature that allowed for its remarkable longevity.

The True Roots of Money and Banking

Sumer was the first civilization for which we have written records. Its notable achievements included the wheel, the lunar calendar, our numerical system, law codes, an organized hierarchy of priest-kings, copper tools and weapons, irrigation, accounting and money. It also produced the first written language, which took the form of cuneiform figures impressed on clay. These tablets were largely just accounting tools, recording the flow of food and raw materials in the temple and palace workshops, as well as IOUs (mainly to these large public institutions) that had to be preserved in writing to be enforced. This temple accounting system allowed for the coordinated flow of credit to peasant farmers from planting to harvesting, and for advances to merchants to engage in foreign trade.

In fact, it was the need to manage accounts for a large labor force under bureaucratic control that is thought to have led to the development of writing. The people willingly accepted this bureaucratic control because they viewed the gods as having decreed it. According to their cuneiform writings, humans were created to work in the fields and the mines after certain lower gods tasked with that hard labor rebelled.

Usury, or the charging of interest on loans, was an accepted part of the Mesopotamian credit system. Interest rates were high and remained unchanged for two millennia. But Mesopotamian scholars were well aware of the problem of “debts that can’t be paid.” Unlike in today’s academic economic curriculum, Hudson writes:

Babylonian scribal students were trained already c. 2000 BC in the mathematics of compound interest. Their school exercises asked them to calculate how long it took a debt at interest of 1/60th per month to double. The answer is 60 months: five years. How long to quadruple? 10 years. How long to multiply 64 times? 30 years. It must’ve been obvious that no economy can grow in keeping with this rate of increase.

Sumerian kings solved the problem of “peak debt” by periodically declaring “clean slates,” in which agrarian debts were forgiven and debtors were released from servitude to work as tenants on their own plots of land. The land belonged to the gods under the stewardship of the temple and the palace and could not be sold, but farmers and their families maintained leaseholds to it in perpetuity by providing a share of their crops, service in the military and labor in building communal infrastructure. In this way, their homes and livelihoods were preserved, an arrangement that was mutually beneficial, since the kings needed their service.

Jewish scribes, who spent time in captivity in Babylon in the sixth century B.C, adapted these laws in the year or jubilee, which Hudson argues was added to Leviticus after the Babylonian captivity. According to Leviticus 25:8-13, a Jubilee Year was to be declared every 49 years, during which debts would be forgiven, slaves and prisoners freed and their property leaseholds restored. As in ancient Mesopotamia, property ownership remained with Yahweh and his earthly proxies. The Jubilee law effectively banned the outright sale of land, which could only be leased for up to 50 years (Leviticus 25:14-17). The Levitican Jubilee represented an advance over the Mesopotamian “clean slates,” Hudson says, in that it was codified into law rather than relying on the whim of the king. But its proclaimers lacked political power, and whether the law was ever enforced is unclear. It served as a moral rather than a legal prescription.

Ancient Greece and Rome adopted the Mesopotamian system of lending at interest, but without the safety valve of periodic “clean slates,” since the creditors were no longer the king or the temple, but private lenders. Unfettered usury resulted in debt bondage and forfeiture of properties, consolidation into large landholdings, a growing wedge between rich and poor, and the ultimate destruction of the Roman Empire.

As for the celebrated development of property rights and democracy in ancient Greece and Rome, Hudson argues that they did not actually serve the poor. They served the rich, who controlled elections, just as rich donors do today. Taking power away from local governments by privatizing once-communal lands allowed private creditors to pass laws by which they could legally confiscate property when their debtors could not pay. “Free markets” meant the freedom to accumulate massive wealth at the expense of the poor and the state.

Hudson maintains that when Jesus Christ preached “forgiveness of debts,” he was also talking about economic debt, not just moral transgressions. When he overturned the tables of the money changers, it was because they had turned a house of prayer into “a den of thieves.” But creditors’ rights had by then gained legal dominance, and Christian theologians lacked the power to override them. Rather than being a promise of economic redemption in this life, forgiveness of debts thus became a promise of spiritual redemption in the next.

How to Pull Off a Modern Debt Jubilee

Such has been the fate of debtors in modern Western economies. But in some modern non-Western economies, vestiges of the debt write-off solution remain. In China, for instance, nonperforming loans are often carried on the books of state-owned banks or canceled rather than putting insolvent debtors and banks into bankruptcy. As Dinny McMahon wrote in June in an article titled “China’s Bad Data Can Be a Good Thing”:

In China, the state stands behind the country’s banks. As long as authorities ensure those banks have sufficient liquidity to meet their obligations, they can trundle along with higher delinquency levels than would be regarded safe in a market economy.

China’s banking system, like that of ancient Mesopotamia, is largely in the public sector, so the state can back its banks with liquidity as needed. Interestingly, the Chinese state also preserves the ancient Near Eastern practice of retaining ownership of the land, which citizens can only lease for a period of time.

In Western economies, most banks are privately owned and heavily regulated, with high reserve and capital requirements. Bad loans mean debtors are put into foreclosure, jobs and capital infrastructure are lost, and austerity prevails. The Trump administration is now aggressively pursuing a trade war with China in an effort to level the playing field by forcing it into the same austerity regime, but a more productive and sustainable approach might be for the U.S. to engage in periodic debt jubilees itself.

The problem with that solution today is that most debts in Western economies are owed not to the government but to private creditors, who will insist on their contractual rights to payment. We need to find a way to pay the creditors while relieving the borrowers of their debt burden.

One possibility is to nationalize insolvent banks and sell their bad loans to the central bank, which can buy them with money created on its books. The loans can then be written down or voided out. Precedent for this policy was established with “QE1,” the Fed’s first round of quantitative easing, in which it bought unmarketable mortgage-backed securities from banks with liquidity problems.

Another possibility would be to use money generated by the central bank to bail out debtors directly. This could be done selectively, by buying up student debt or credit card debt or car loans bundled as “asset-backed securities,” then writing the debts down or off, for example. Alternatively, debts could be relieved collectively with a periodic national dividend or universal basic income paid to everyone, again drawn from the deep pocket of the central bank.

Critics will object that this would dangerously inflate the money supply and consumer prices, but that need not be the case. Today, virtually all money is created as bank debt, and it is extinguished when the debt is repaid. That means dividends used to pay this debt down would be extinguished, along with the debt itself, without adding to the money supply. For the 80% of the U.S. population now carrying debt, loan repayments from their national dividends could be made mandatory and automatic. The remaining 20% would be likely to save or invest the funds, so this money too would contribute little to consumer price inflation; and to the extent that it did go into the consumer market, it could help generate the demand needed to stimulate productivity and employment. (For a fuller explanation, see Ellen Brown, “Banking on the People,” 2019).

In ancient Mesopotamia, writing off debts worked brilliantly well for two millennia. As Hudson concludes:

To insist that all debts must be paid ignores the contrast between the thousands of years of successful Near Eastern clean slates and the debt bondage into which [Greco-Roman] antiquity sank. … If this policy in many cases was more successful than today’s, it is because they recognized that insisting that all debts must be paid meant foreclosures, economic polarization and impoverishment of the economy at large.

• This article was first posted on Truthdig.com

Neoliberalism Has Met Its Match in China

Ellen Brown chairs the Public Banking Institute and has written thirteen books, including her latest, Banking on the People: Democratizing Money in the Digital Age.  She also co-hosts a radio program on PRN.FM called It’s Our Money.

When the Federal Reserve cut interest rates on July 31 for the first time in more than a decade, commentators were asking why. According to official data, the economy was rebounding, unemployment was below 4%, and GDP growth was above 3%. If anything, by the Fed’s own reasoning, it should have been raising rates.

The explanation of market pundits was that we’re in a trade war and a currency war. Other central banks were cutting their rates and the Fed had to follow suit, in order to prevent the dollar from becoming overvalued relative to other currencies. The theory is that a cheaper dollar will make American products more attractive on foreign markets, helping our manufacturing and labor bases.

Over the weekend, President Trump followed the rate cuts by threatening to impose a new 10% tariff on $300 billion worth of Chinese products effective September 1. China responded by suspending imports of U.S. agricultural products by state-owned companies and letting the value of the yuan drop. On Monday, August 5, the Dow Jones Industrial Average dropped nearly 770 points, its worst day in 2019. The war was on.

The problem with a currency war is that it is a war without winners. This was demonstrated in the beggar-thy-neighbor policies of the 1930s, which just prolonged the Great Depression. As economist Michael Hudson observed in a June 2019 interview with Bonnie Faulkner, making American products cheaper abroad will do little for the American economy, because we no longer have a competitive manufacturing base or products to sell. Today’s workers are largely in the service industries – cab drivers, hospital workers, insurance agents and the like. A cheaper dollar abroad just makes consumer goods at Walmart and imported raw materials for US businesses more expensive. What is mainly devalued when a currency is devalued, says Hudson, is the price of the country’s labor and the working conditions of its laborers. The reason American workers cannot compete with foreign workers is not that the dollar is overvalued. It is due to their higher costs of housing, education, medical services and transportation. In most competitor countries, these costs are subsidized by the government.

America’s chief competitor in the trade war is obviously China, which subsidizes not just worker costs but the costs of its businesses. The government owns 80% of the banks, which make loans on favorable terms to domestic businesses, especially state-owned businesses. Typically, if the businesses cannot repay the loans, neither the banks nor the businesses are put into bankruptcy, since that would mean losing jobs and factories. The non-performing loans are just carried on the books or written off. No private creditors are hurt, since the creditor is the government, and the loans were created on the banks’ books in the first place (following standard banking practice globally).

As observed by Jeff Spross in a May 2018 Reuters article titled “China’s Banks Are Big. Too Big?”:

[B]ecause the Chinese government owns most of the banks, and it prints the currency, it can technically keep those banks alive and lending forever.…

It may sound weird to say that China’s banks will never collapse, no matter how absurd their lending positions get. But banking systems are just about the flow of money.

Spross quoted former bank CEO Richard Vague, chair of The Governor’s Woods Foundation, who explained, “China has committed itself to a high level of growth. And growth, very simply, is contingent on financing.” Beijing will “come in and fix the profitability, fix the capital, fix the bad debt, of the state-owned banks … by any number of means that you and I would not see happen in the United States.”

To avoid political and labor unrest, Spross wrote, the government keeps everyone happy by keeping economic growth high and spreading the proceeds to the citizenry. About two-thirds of Chinese debt is owed just by the corporations, which are also largely state-owned. Corporate lending is thus a roundabout form of government-financed industrial policy – a policy financed not through taxes but through the unique privilege of banks to create money on their books.

China thinks this is a better banking model than the private Western system focused on short-term profits for private shareholders. But U.S. policymakers consider China’s subsidies to its businesses and workers to be “unfair trade practices.” They want China to forgo state subsidization an it’s d other protectionist policies in order to level the playing field. But Beijing contends that the demanded reforms amount to “economic regime change.” As Michael Hudson puts it:

This is the fight that Trump has against China.  He wants to tell it to let the banks run China and have a free market.  He says that China has grown rich over the last fifty years by unfair means, with government help and public enterprise.  In effect, he wants the Chinese to be as threatened and insecure as American workers.  They should get rid of their public transportation.  They should get rid of their subsidies.  They should let a lot of their companies go bankrupt so that Americans can buy them.  They should have the same kind of free market that has wrecked the US economy. [Emphasis added.]

Kurt Campbell and Jake Sullivan, writing on August 1 in Foreign Affairs (the journal of the Council on Foreign Relations), call it “an emerging contest of models.”

An Economic Cold War

In order to understand what is happening here, it is useful to review some history. The free market model hollowed out America’s manufacturing base beginning in the Thatcher/Reagan era of the 1970s, when neoliberal economic policies took hold. Meanwhile, emerging Asian economies, led by Japan, were exploding on the scene with a new economic model called “state-guided market capitalism.” The state determined the priorities and commissioned the work, then hired private enterprise to carry it out. The model overcame the defects of the communist system, which put ownership and control in the hands of the state.

The Japanese state-guided market system was effective and efficient – so effective that it was regarded as an existential threat to the neoliberal model of debt-based money and “free markets” promoted by the International Monetary Fund (IMF). According to William Engdahl in A Century of War, by the end of the 1980s Japan was considered the leading economic and banking power in the world. Its state-guided model was also proving to be highly successful in South Korea and the other “Asian Tiger” economies. When the Soviet Union collapsed at the end of the Cold War, Japan proposed its model for the former communist countries, and many began looking to it and to South Korea as viable alternatives to the U.S. free-market system. State-guided capitalism provided for the general welfare without destroying capitalist incentive. Engdahl wrote:

The Tiger economies were a major embarrassment to the IMF free-market model.  Their very success in blending private enterprise with a strong state economic role was a threat to the IMF free-market agenda.  So long as the Tigers appeared to succeed with a model based on a strong state role, the former communist states and others could argue against taking the extreme IMF course.  In east Asia during the 1980s, economic growth rates of 7-8 per cent per year, rising social security, universal education and a high worker productivity were all backed by state guidance and planning, albeit in a market economy – an Asian form of benevolent paternalism.

Just as the U.S. had engaged in a Cold War to destroy the Soviet communist model, so Western financial interests set out to destroy this emerging Asian threat. It was defused when Western neoliberal economists persuaded Japan and the Asian Tigers to adopt the free-market system and open their economies and their companies to foreign investors. Western speculators then took down the vulnerable countries one by one in the “Asian crisis” of 1997-98. China alone was left as an economic threat to the Western neoliberal model, and it is this existential threat that is the target of the trade and currency wars today.

If You Can’t Beat Them …

In their August 1 Foreign Affairs article, titled “Competition without Catastrophe,” Campbell and Sullivan write that the temptation is to compare these economic trade wars with the Cold War with Russia; but the analogy, they say, is inapt:

China today is a peer competitor that is more formidable economically, more sophisticated diplomatically, and more flexible ideologically than the Soviet Union ever was. And unlike the Soviet Union, China is deeply integrated into the world and intertwined with the U.S. economy.

Unlike the Soviet Communist system, the Chinese system cannot be expected to “crumble under its own weight.” The US should not expect or want to destroy China, say Campbell and Sullivan. Rather, we should aim for a state of “coexistence on terms favorable to U.S. interests and values.”

The implication is that China, being too strong to be knocked out of the game as the Soviet Union was, needs to be coerced or cajoled into adopting the neoliberal model. It needs to abandon state support of its industries and ownership of its banks. But the Chinese system, while obviously not perfect, has an impressive track record for sustaining long-term growth and development. While the U.S. manufacturing base was being hollowed out under the free-market model, China was systematically building up its own manufacturing base, investing heavily in infrastructure and emerging technologies; and it was doing this with credit generated by its state-owned banks. Rather than trying to destroy China’s economic system, it might be more “favorable to U.S. interests and values” for us to adopt its more effective industrial and banking practices.

We cannot win a currency war by competitive currency devaluations that trigger a “race to the bottom,” and we cannot win a trade war by competitive trade barriers that simply cut us off from the benefits of cooperative trade. More favorable to our interests and values than warring with our trading partners would be to cooperate in sharing solutions, including banking and credit solutions. The Chinese have proven the effectiveness of their public banking system in supporting their industries and their workers. Rather than seeing it as an existential threat, we could thank them for test-driving the model and take a spin in it ourselves.

Greece:  Suicide or Murder?

Pundits from the left, from the right and from the center cannot stop reporting about Greece’s misery. And rightly so because the vast majority of her people live in deep economic hardship. No hope. Unemployment is officially at 18%, with the real figure closer to 25% or 30%; pensions have been reduced about ten times since Syriza – the Socialist Party – took power in 2015 and loaded the country with debt and austerity. In the domain of public services, everything that has any value has been privatized and sold to foreign corporations, oligarchs, or, naturally, banks. Hospitals, schools, public transportation – even some beaches – have been privatized and made unaffordable for the common people.

While the pundits – always more or less the same – keep lamenting about the Greek conditions in one form or another, none of them dare offer the only solution that could have rescued Greece (and still could) – exiting the euro zone; return to their local currency and start rebuilding Greece with a local economy, built on local currency with local public banking and with a sovereign Greek central bank deciding the monetary policy that best suits Greece, and especially Greece’s recovery program. Why not? Why do they not talk about this obvious solution? Would they be censured in Greece, because the Greek oligarchy controls the media as oligarchs do around the (western part of the) globe?

Instead, foreign imposed (troika: IMF, European Central Bank (ECB) and European Commission (EC) — the latter mainly pushed by German and French banks and the Rothschild clan — austerity programs have literally put a halt on imports of affordable medication, such as like for cancer treatments and other potentially lethal illnesses. So, common people no longer get treatment. They die like flies; a horrible expression to be used for human beings. But that’s what it comes down to for people who simply do not get the treatment they humanely deserve and would have gotten under the rights of the Greek Constitution; however, they simply do not get treated because they can no longer afford medication and services from privatized health services. That is the sad but true story.

As a consequence, the suicide rate is up, due to foreign imposed (but Greek government accepted) debt and austerity, annihilating hope for terminally ill patients, as well as for pensioners whose pensions do no longer allow them to live a decent life and especially as there is no light at the end of the tunnel.

Now, these same pundits add a little air of optimism to their reporting, as the right wing New Democracy Party (ND Party) won with what they call a ‘landslide’ victory on the 7 July 2019 elections; gathering 39.6% of the votes, against only 31.53 for Syriza, the so-called socialist party, led by outgoing Prime Minister Alexis Tsipras, who represents a tragedy that has allowed Greece to be plunged into this hopeless desolation. The ND won an absolute majority with 158 seats in the 300-member Greek parliament. Therefore, no coalition needed, no concessions required.

The new Prime Minister, Kyriakos Mitsotakis (51), son of a former PM of the same party, in his victory speech on the evening of 7 July, vowed that Greece will “proudly” enter a post-bailout era of “jobs, security and growth”. He added that “a painful cycle has closed” and that Greece would “proudly raise its head again” on his watch.

We don’t know what this means for the average Greek citizen living a life of despair. What the “left” was unable to do – stopping the foreign imposed (but Greek accepted) bleeding of Greece; the strangulation of their country – will the right be able to reverse that trend? Does the right want to reverse that trend? Does the ND want to reverse privatization, buy back airports from Germany, water supply from the EU managed “Superfund”, and repurchase the roads from foreign concessionaires, or nationalize hospitals that were sold for a pittance and – especially – get out from austerity to allow importing crucial medication to salvage the sick and dying Greek, those who currently cannot afford treatment of their cancers and other potentially deadly diseases?

That would indeed be a step towards PM Mitsotakis’ promise to end the “painful cycle” of austerity, with import of crucial medication made affordable to those in dire need, with job creation and job security – and much more – with eventually a renewed Greek pride and Greek sovereignty. The latter would mean – finally – it’s never too late to exit the euro zone. But, that’s an illusion, a pipe-dream. Albeit  it could become a vision.

If the ND is the party of the oligarchs, the Greek oligarchs that is, those Greeks who have placed literally billions of euros outside their country in (still) secret bank accounts in Switzerland, France, Lichtenstein, Luxemburg and elsewhere, including the Cayman islands and other Caribbean tax havens, hidden not only from the Greek fiscal authorities, but also impeding that these funds could, crucially, be used for investments at home, for job creation, for creation of added value in Greece. If the ND is the party of the oligarchs, they are unlikely to make the dream of the vast majority of Greek people come true.

Worse even, these Greek oligarch-billionaires call the shots in Greece not the people, not those who according to Greek tradition and according to the Greek invention, called “democracy” (Delphi, some 2500 years ago) have democratically elected Syriza and have democratically voted against the austerity packages in July 2015. Now, that they are officially in power, they are unlikely to change their greed-driven behavior and act in favor of the Greek people. Or will they?

Because, if they do, it may eventually also benefit them, the ND Party and its adherents — a Greece that functions like a country, with happy, healthy and content people, is a Greece that retains the worldwide esteem and respect she deserves — and will, by association, develop an economy that can and will compete and trade around the world, a Greece that is an equal to others, as a sovereign nation. A dream can become a reality. It just takes visionaries.

Back to today’s reality. The Greek Bailout Referendum of July 5, 2015, was overwhelmingly rejected with 61% ‘no’ against 39% ‘yes’, meaning that almost two thirds of the Greek people would have preferred the consequences of rejecting the bailout, euphemistically called “rescue packages”, namely exiting the euro zone, and possibly, but not necessarily, the European Union.

Despite the overwhelming, democratic rejection by the people, the Tsipras government reached an agreement on 13 July 2015 – only 8 days after the vote against the bailout with the European authorities for a three-year bailout with even harsher austerity conditions than the ones rejected by voters. What went on is anybody’s guess. It looks pretty obvious, though, that “foul play” was the name of the game which could mean anything from outright and serious (life) threats to blackmail, if Tsipras would not play the game and this to the detriment of the people.

President Tsipras’ betrayal of the people resulted in three bailout packages since 2010 and up to the end of 2018, in the amount of about €310 billion (US$ 360 billion). Compare this to Hong Kong’s economy of US$ 340 billion in 2017. In that same period the Greek GDP has declined from about US$ 300 billion (€ 270 billion) in 2010 to US$ 218 billion (€ 196 billion), a reduction of 27%, hitting the middle- and lower-class people by far the hardest. This is called a rescue?

The democracy fiasco of July 2015 prompted Tsipras to call for snap elections in September 2015, hélas – he won, with a narrow margin and one of the lowest election turnouts ever in Greek postwar history; but, yes, he ‘won’. How much of it was manipulated – by now Cambridge Analytica has become a household word – so he could finish the job for the troika and the German and French banks, is pure speculation.

Today, the ND has an absolute majority in Parliament, plus the ND could ally with a number of smaller and conservative parties to pursue a “people’s dream” line policy. But they may do the opposite. Question: How much more juice is there to be sucked out of broken Greece? Of a Greece that cannot care for her people, for her desperate poor and sick, cannot provide her children with a decent education, of a Greece that belongs into the category of bankruptcy? Yes, bankruptcy, still today, after the IMF and the gnomes of the EU and the ECB predict a moderate growth rate of some 2%?  But 2% that go to whom?  Not to the people, to be sure, but to the creditors of the €310 billion.

Already in 2011, the British Lancet stated “the Greek Ministry of Health reported that the annual suicide rate has increased by 40%”, presumably since the (imposed) crisis that started in 2008. From this date forward the suicide rate must have skyrocketed, as the overall living conditions worsened exponentially. However, precise figures can no longer be easily found.

The question remains: Is the Greek population dying increasingly from diseases that could be cured, but aren’t due to austerity- and privatization-related lack of medication and health services and of suicide from desperation? Is Greece committing suicide by continuing to accept austerity and privatization of vital services, instead of liberating herself from the handcuffs of the euro and very likely the stranglehold of the EU?  Or is Greece the victim of sheer murder inflicted by a greed-driven construct of money institutions and oligarchs, who are beyond morals, beyond ethics and beyond any values of humanity? You be the judge.

• First published by the New Eastern Outlook – NEO

U.S. 2020 Presidential Election: A Watershed Moment for Humankind and the Planet

The 2020 presidential election in the United States may be the most critical political event in human history. At no time in the history of global civilization have human beings faced existential crises on a global scale. Regional crises of the past 10,000 years reveal that economic regimes have often outstripped local and regional resources, but these crises remained regional in scope. Today, however, the excesses of global capitalism have driven all of humanity to the brink of ecological and civilizational collapse.

Our addiction to fossil fuels has significantly warmed the global atmosphere and accelerated the loss of polar ice caps faster than predicted. Capitalism has fueled industrial activities that have ravaged large portions of the planet, destroying habitats and endangering innumerable animal, plant and insect species worldwide, according to a recent UN report on global biodiversity. Our oceans are contaminated with heavy metals and plastics. Global population pressure, inefficient and wasteful industrial practices combined with climate change have placed enormous pressure on fresh water sources.  Destructive superstorms, wildfires and persistent drought will likely bring profound economic instability and declining food production in coming decades.

Global capitalism has also generated vast disparities in wealth distribution, destabilizing social systems as well as ecosystems. As global and national wealth concentration grows rapidly, the poverty of billions and declining living standards for millions more strain social relations throughout the world. These injustices give rise to disillusionment, desperation, terrorism and mass migration, to epidemics and resistant bacteria and fungi. Armed conflict is endemic in many of the world’s poor regions and wars have brought invasions of poor countries by wealthy countries to stem perceived terrorists’ threats and protect geopolitical interests.

In less than a year and one-half the 2020 U.S. presidential election will occur and the candidate and policies the majority of Americans embrace will help lead the world in one direction or another.  American voters will decide whether the most powerful leader in the world will aggressively tackle the world’s unprecedented and unfolding environmental and social crises or will exacerbate these crises by facilitating unrestrained capitalist exploitation and accumulation. Working Americans are primed for an alternative to global economic system, having recently lost millions of jobs and much of their modest wealth during the Great Recession. Universal healthcare and child care, a higher minimum wage and equal pay, student debt relief, tuition-free higher education, climate change and a green economy as well as a truly progressive tax policy to fund social and environmental initiatives are on the minds of ordinary Americans, if not the majority of them. This is an opportunity for progressive voices across the nation to demonstrate that unregulated capitalism threatens American families and the lives of their children and grandchildren.

Certainly, ingrained capitalist ideology and vested institutions present formidable political obstacles leading to the 2020 presidential elections. Donald Trump and the Republican Party actively resist reform of capitalism, rejecting the Paris Accords and enacting severe cuts in domestic regulations restricting corporate activity and protecting the environment. Conservative strategists are clearly framing the 2020 election to protect the advantages in wealth and political power conservatives have gained in the global economy. Trump’s abject disregard for global warming and the failure of Republicans to address it is a clear threat to the future of the planet. His nuclear war-mongering, with the tacit endorsement of the Republican Party, has flirted with planetary annihilation. For these reasons renowned linguist and ferocious political critic Noam Chomsky has stunningly and aptly dubbed the Republican Party “the most dangerous organization in human history”.

While it will likely take decades and even generations to rein in and reform our global economy enough to achieve some practical level of global sustainability, the magnitude and urgency of the challenges we and the world face make the 2020 U.S. presidential elections an extraordinary watershed moment. This is no time for a program of tepid, incrementalist reforms.  If the Democratic Party fails to embrace an agenda of far-reaching regulation of global capitalism that focuses on climate change and wealth disparity, it risks losing the presidency. Should a moderate Democratic candidate lacking the necessary vision and resolve be elected president in 2020, it may prove to be a kind of hollow victory.

The fundamental questions before American citizens could not be more crucial to the future of our nation and the world: Can we afford to ignore the ravages of climate change and the deleterious impact of our unsustainable production and consumption on the planet’s health? Can we fail to confront the concentration of wealth in fewer hands while poverty, lack of opportunity, ill health and violence driven by these realities rob generations of their potential as human beings? Should we discount, or even underplay, the fact that environmental degradation and wealth disparities on a global scale are exacerbated by inadequately regulated global economic regime?

You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three

The central argument of Amusing Ourselves [Neil Postman] is simple: there were two landmark dystopian novels written by brilliant British cultural critics – Brave New World by Aldous Huxley and Nineteen Eighty-Four by George Orwell – and we Americans had mistakenly feared and obsessed over the vision portrayed in the latter book (an information-censoring, movement-restricting, individuality-emaciating state) rather than the former (a technology-sedating, consumption-engorging, instant-gratifying bubble).

Andrew Postman

So what would Neil Postman say about this fellow [note title of this essay, referencing Jeff Bezos’ proclamation on what work should mean to every breathing American], or the many fellows like Bezos who have zero patience for a world without disrupting economies tied to their authoritarian business plan of more billionaires deserving (sic) more power. Disruptive and destructive, and not just economies in the book sense, but structural violence and community disintegration, murdering people with debt, lack of housing, no medical care, suicide, that’s Bezos, et al looking to capitalize on every penny gathered from every nanosecond in our individual human lives.

Amazon CEO Jeff Bezos has seen his company grow into one of the world’s biggest companies.

Back in 1997, Bezos told shareholders that employees at other companies “can work long, hard, or smart, but at Amazon.com, you can’t choose two out of three.”

Bezos acknowledges his high standards for employees every year, telling shareholders that “it’s not easy to work here.”

In the 24 years since Amazon was founded, CEO Jeff Bezos has seen his company grow from a modest online bookshop to one of the most valuable companies in the world.

Back in 1997, Bezos was already expecting big things out of his young company. In his annual letter to Amazon shareholders, Bezos described how much effort he expected from his employees.

“When I interview people I tell them, ‘You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three,” Bezos wrote in the 1997 letter.

“Setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of Amazon.com’s success.”

The New York Times reported in 2015 exactly how bruising the work environment at Amazon could be. Employees were reportedly expected to routinely work late, were encouraged to criticize coworkers‘ ideas at meetings, and were often found crying at their desks. Amazon disputed many of the claims in the Times investigation, though the newspaper defended its reporting.

God forbid we call Amazon Boss Bezos a plantation owner of a different mother, for sure. That Americans — living in small and large cities, far and wide — depend on the Amazon way as if Amazon is sutured into all aspects of American culture (sic) and hardwired into every new born’s head. Same day delivery. A shopping cart that would be the envy of any Rothschild or Leona Mindy Roberts Helmsley.

See the source image

This essay, first, was going to address those other masters of the Universe — Google Guys and Algorithm Titans. I barely criticized a billionaire in a DV article —   Household Income, or Higher Planes of Consciousness?*

I criticized Nick Hanauer for his false balance, contrived bifurcation, and his new wind as a billionaire fighting what he calls the educationalism mindset that says that a good, grounded, deep and holistic education might be a thing of kings, whereas Nick says education backing and financing ain’t worth diddly squat in capitalism until more people make more money to buy more things, or just to survive in his nihilistic world.

Taken with this story line, I embraced education as both a philanthropic cause and a civic mission. I co-founded the League of Education Voters, a nonprofit dedicated to improving public education. I joined Bill Gates, Alice Walton, and Paul Allen in giving more than $1 million each to an effort to pass a ballot measure that established Washington State’s first charter schools. All told, I have devoted countless hours and millions of dollars to the simple idea that if we improved our schools—if we modernized our curricula and our teaching methods, substantially increased school funding, rooted out bad teachers, and opened enough charter schools—American children, especially those in low-income and working-class communities, would start learning again. Graduation rates and wages would increase, poverty and inequality would decrease, and public commitment to democracy would be restored.

— Nick Hanauer

In my email box, Google, of course, I get an unsolicited email from an organization for which I have never associated with or even pursued. It’s the old surveillance state of Google and the internet Stasi, for sure —

Image result for stasi

Alas, Neil Postman was correct, in so far as what we say and do as writers really does not count — we are only as smart and deep and truthful as our masters will allow:

In my college economics class, we were taught that wages depend on productivity. The more productive or skilled workers are, my professors used to argue, the more they will be worth on the labor market and, therefore, the higher their wages will be. That’s bunk.

Under this logic, the way to cure our economic woes – whether poverty, inequality, underemployment, or unemployment – is through education. By educating our citizens, we increase their human capital, making them more productive and, therefore, increasing their expected income.

It sounds good, right?

This seductive myth – of education as an economic cure-all – is something Civic Action founder Nick Hanauer calls “educationism.” As Nick writes in a recent article for The Atlantic, it’s a myth he used to believe, and it’s a myth many wealthy elites still propagate. It’s what leads philanthropists to donate billions of dollars to public schools and educational institutions.

There’s just one problem: Educationism doesn’t work. If it did, our middle class would be much better off.

In the last 40 years, while the real incomes of most Americans have been stuck, we’ve gotten a lot more educated. Almost everyone has a high school diploma and the share of Americans with a college degree has more than tripled since 1970.”

But all that education hasn’t translated into higher wages. In fact, if our incomes had done what my college profs told me – gone up with productivity – the average family today would be earning $29,000 more a year. An average of $105,000!

Of course, it’s true that getting an education is likely to increase your own income. But that’s not the same as raising incomes throughout the economy. Not when four out of five of the fastest growing jobs pay very low wages – jobs like cashiers and health care assistants. Meanwhile, the pay of most people who do have a college education barely keeps up with inflation.

What we do need to do is raise incomes for working families and the middle class throughout the economy. That’s how we build an economy that works for all of us, not just the wealthy few. As Nick writes:

“In short, great public schools are the product of a thriving middle class, not the other way around. Pay people enough to afford dignified middle-class lives, and high-quality public schools will follow. But allow economic inequality to grow, and educational inequality will inevitably grow with it.”

—  Stephen Paolini, Civic Action, email with an ask for $ support

But then, this essay takes a twist, as they always seem to do when I deploy some ground-truthing. You see, most of us in the USA, the 80 percent of the population —  many of which are on the skids, on the near skids, or those of us barely scraping by, and those of us who are unseen but are many short steps away from working for one of those sweatshops like we see with Amazon (there are so many warehouse jobs, forklift gigs, sorting careers) and finding down time in the back seat of our cars)  —  so-so tire of, really, the prognosticators writing away hard in semi-secure status —  even the smartish ones on leftish magazines like The Nation, or digital forums like Truthout or Truthdig or The Intercept.

They have NO idea of what is real in the world, and that rarefied realm of citing this study or making this or that prediction, well, it is bombast at best, propaganda at worst, denuded of humanity in many cases.

Case in point — tens of millions of men and women wandering the land (US), in some warped version of Steinbeck’s Grapes of Wrath, really, in a society that eats-sleeps-dreams-believes the crap that Huxley warned of, and that which Neil Postman discussed. Oh the irony, those, that billionaire book salesman, Bezos, dead to the world, dead to us, the 80 percent, living, barely, in the middle of their hellish barbecue.

I was with three fellows — two literally are sleeping in campgrounds, and one fellow living with his parents. A million miles away from what any social worker or Sheryl Sandberg or Joe Biden or Elizabeth Warren or any of the scions of Holly-dirt or anyone in the Trump Loony Bin Show, or those clamoring around an Obama or Oprah or Rachel Maddow. It’s a triple sick experience even thinking about how vapid that so-called debate was yesterday with half of the half-wits of the Democratic Party wanting to play president.

So, a life of men truly on the extinction block, in several demographics. These fellows I hired on to help my spouse and I move from a rental to a house we had the temerity to purchase in a Time of Climate Heating, Oceans Rising, Food Wilting, Water Draining, Economies Imploding, Saber Rattling, and ICBM Immolating.

Their lives, broken down, seem to hold the familiar life story of many people I have worked with as a non-traditional social worker for the homeless, the just-out-of-prison returnees, and chronically physically and mentally ill. They work jobs, stacking halibut,  packing shrimp, pounding two-by-fours, hauling goods, sorting things, cutting trees, landscaping, roofing. Both of these fellows are 50, living in campgrounds, one with false teeth, the other with nubs and rotting teeth.

Child support for children they have never seen, or can’t see now. Felonies for this or that charge keeping them from even getting to first base on an apartment application. Vagabonds harassed by cops, and living life in a constant move. For my other helper, Brian, he’s a former marine, working as a social services provider, has a wonderful child on the spectrum (autism) and is currently living with aging and sickly parents. All three fit the bill for zero tolerance in this society. Never reflected in the news stories, in the Mass Murdering Media, never on the minds of the One Percent, Point Zero Zero One Percent. I know for a fact, though, that those Little Eichmanns who populate the other 19 percent of the 20 Percenters, well, many of them have one degree of separation when it comes to family members with substance abuse issues, chronic mental or physical illness, depression, suicidal, schizophrenic, and homeless.

You get both barrels of human pain and human survival and some human triumphs when talking with real people, albeit, denigrated folk, disenfranchised humans.

They are really rough around the edges, but these fellows, Tommy and Devon, they are examples of struggle and defeat and some triumph, as Brian and I note and agree. They are so far from any of the discourse going on around the world — the complete irrelevance of all the trolling, all the internet crap, all the stuff that makes for an echo chamber that sucks humanity and human connection from the ether.

You look at Tommy, and you see a man on the skids. Big laughing screwed up face, almost Dickensian, crazy might be one moniker. Hustling and wanting to have people know that there was once a time when he had some normalcy, some sense of being a man in society — not on the skids. Though, Tommy would not see himself on the skids.

Brain injury 23 years ago when a van hit him head on as a pedestrian. And he still works, moves heavy furniture, and hammers roofs.

Devon, a former truck driver, someone who has a few years in the Marines, and as Brian states — people are only awakened to the level of how they have been able to access those tools necessary to be woken up. Yet, Brian states that he’d much rather be in the company of these men than the MSWs and other graduate-level punishers he’s worked with, as I have also worked with, in the non-profit arenas as supposed social services workers.

They probably know nothing about this movement, which could affect Tommy and Devon:

When reporters for the International Amazon Workers Voice interviewed part-time Amazon “associates” (a cheap euphemism for “employees” used to disguise the exploitative relationship between workers and management at the company) in Baltimore to discuss their attitude toward Bezos’ fortune, they were met with a torrent of disgust, calls for sharing the wealth, and social anger.

“Tell Mr. Bezos and the rest of management to come out of their offices and get on the shop floor” said one worker who identified herself as a single mother of two. “At the end of the day, they never feel what we go through in a day for $12 an hour. They get to sit down in their offices and get paid more than we will see in a year,” she said.

Bezos’ wealth typifies the way an increasingly small number of multi-billionaire CEOs and finance operatives extract ever more obscene sums from the international workforce. This process of ever-increasing wealth for the few and exploitation for the majority is reaching a political breaking point.

Explaining her work environment during the holidays, the working mother said, “they just had us move 100,000 packages in 5 hours, and at the end we aren’t even paid enough to take care of our kids. I’m a single mother, I don’t receive food stamps. My rent is $850 a month. I have to pay for gas, electricity, bus passes, plus raise two kids.

“If we decided to quit, who would move these packages out of the door?” she said, noting the social power of the workers employed by the company. “We are the ones making you rich.”

Brian and I talk about Amazon, and the nefarious nature of how the guy at the Washington Post attacks the fourth grader Trump and others, while he is part of the Military Industrial Complex. From The Intercept:

Amazon’s extensive relationship with the NSA, FBI, Pentagon and other surveillance agencies in the west is multi-faceted, highly lucrative and rapidly growing. Last March, the Intercept reported on a new app that Amazon developers and British police forces have jointly developed to use on the public in police work, just “the latest example of third parties aidingautomating, and in some cases, replacing, the functions of law enforcement agencies — and raises privacy questions about Amazon’s role as an intermediary.”

Then there’s the patent Amazon obtained last October, as reported by the Intercept, “that would allow its virtual assistant Alexa to decipher a user’s physical characteristics and emotional state based on their voice.” In particular, it would enable anyone using the product to determine a person’s accent and likely place of origin: “The algorithm would also consider a customer’s physical location — based on their IP address, primary shipping address, and browser settings — to help determine their accent.”

All of this is taking place as Amazon vies for, and is the favorite to win, one of the largest Pentagon contracts yet: a $10 billion agreement to provide exclusive cloud services to the world’s largest military. CNN reported just last week that the company is now enmeshed in scandal over that effort, specifically a formal investigation into “whether Amazon improperly hired a former Defense Department worker who was involved with a $10 billion government contract for which the tech company iscompeting.”

Bezos’ relationship with the military and spying agencies of the U.S. Government, and law enforcement agencies around the world, predates his purchase of the Washington Post and has become a central prong of Amazon’s business growth. Back in 2014, Amazon secured a massive contract with the CIA when the spy agency agreed to pay it $600 million for computing cloud software. As the Atlantic noted at the time, Amazon’s software “will begin servicing all 17 agencies that make up the intelligence community.”

Given how vital the military and spy agencies now are to Amazon’s business, it’s unsurprising that the amount Amazon pays to lobbyists to serve its interests in Washington has exploded: quadrupling since 2013 from $3 million to almost $15 million last year, according to Open Secrets.

What would the house-less Tommy and Devon say about this Byzantine world of hyper billions of dollars and hyper trillions of human hours wasted on the things of capitalism, of power and control, consumption?

We were keeping our eye on 1984. But it’s Brave New World we should have feared instead.

I know many friends who wonder why we — people like me — still live in the US? Many wonder what it will take young people to stand down the systems of oppression. Some believe the young people have it, as in Greta the Carbon Dioxide Robin Hood, or AOC, the new face (sic) of American politics.

This system we have now is one where a few voices count (get read, heard, published, followed), and the majority of voices are just bursts of yelling in the woods, in campgrounds, in one’s lovely home in the old sedan, in our own bedlam. People travelling from one insane place to another, but in that realm, a sanity sets in for guys like Tommy and Devon. The world is pretty clear-cut, and on many levels, these people have positive outlooks — toothless, no real estate or swelling investment accounts. Just that hard way forward. Cigarettes and bicycling miles a day. Places to shower. Places to get out of the rain without the bulldozers of misanthropy pushing them further and further into ditches or out on the periphery until they stare us all down, face to face, the coming of a New Brave World. Is it the entertaining ourselves to death cycle, or a little bit of the other — big brother, watching our every move, holding every syllable mouthed in a cloud server, every speck of mole cataloged, and every word penned or typed, collected to hold us at bay, hold us as prisoners of our own faulty beliefs?

 

Needless to say, Charles Dickens grew to hate the system and rail against it in his works. In his seminal novella “A Christmas Carol,” Ebenezer Scrooge is visited by two portly men raising money for the poor.

“At this festive season of the year, Mr. Scrooge,” said the [one of the gentlemen], taking up a pen, “it is more than usually desirable that we should make some slight provision for the Poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.”

“Are there no prisons?” asked Scrooge.

“Plenty of prisons,” said the gentleman, laying down the pen again.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

“They are. Still,” returned the gentleman, “I wish I could say they were not.”

“The Treadmill and the Poor Law are in full vigour, then?” said Scrooge.

“Both very busy, sir.”

“Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it.”

“Under the impression that they scarcely furnish Christian cheer of mind or body to the multitude,” returned the gentleman, “a few of us are endeavouring to raise a fund to buy the Poor some meat and drink, and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?”

“Nothing!” Scrooge replied.

“You wish to be anonymous?”

“I wish to be left alone,” said Scrooge. “Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas and I can’t afford to make idle people merry. I help to support the establishments I have mentioned: they cost enough: and those who are badly off must go there.”

“Many can’t go there; and many would rather die.”

“If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population.”

— Charles Dickens, 1843, A Christmas Carol 

Or, updated for 2020, as illustrated by a commentator on an article about Portland, OR, once the Rose City, now The City of Rocks:

To disrupt illegal camp sites set up by homeless in Portland, the Oregon Department of Transportation (ODOT) is moving boulders onto the roadsides. The project will eventually cost about a million dollars, but ODOT argues this cost is less than the cost of dealing with existing campsites.

Many have pointed out that this policy does nothing to address the underlying problem or help the people in the camp, but only forces them to move somewhere else.

KGW8


odot boulders homeless camps highway 26 1015 2018

—Scrooge/Marley, Edward Sullivan, Planetizen

A debtor's prison in London.

A debtor’s prison in London.

Achikha in Hebrew, “your brother,” but where is he now?

Oh, yeah, it was all planned — I’d write about the 52nd anniversary of the attack on the USS Liberty by Israel, the subsequent cover-up, and alas, half a century of Israel and the Jewish state of Mind holding sway over much of the Western world, certainly here in the USA and Canada. Big impetus to analyze other false flags, yet, life gets in the way. Teaching youth in special education — kids with interventions, behavior plans, learning and retention plans. If only the elites and not so elite knew what is going on in America, in the classrooms, with overtaxed teachers, parents that are checked out and famished for their own self-agency and self-worth.

Image result for photo of USS Liberty

Kids in high school, needing mentors, and then, bam, first graders with all sorts of learning blocks. More and more kids with physical ailments. And, well, the beat doesn’t go on, if you know what I mean. High school kids who don’t know the history of Israel, Nakba, and certainly nothing about the Vietnam War, Korea, WWI & II, and, the USS Liberty?

Emancipation from stupidity, though, is not the purview of the poor and misbegotten and hick and small-town worker. It goes to the top, elite (sic) folk in media, education, board rooms. You won’t hear anything about the murders of those sailors by Israel. No eye for an eye by Yankees or rebels.

Fifty two years, on June 8, 1967, Israel attacked the American naval vessel USS Liberty in international waters, and tried to sink it.

After checking the Liberty out for 8 hours – and making 9 overflights with Israeli jets, within 200 feet … close enough for the pilots and the sunbathing Liberty sailors on deck to waive at each other.

Yet the Israelis attacked it with Mirage fighter jets, torpedoes and napalm. The USS Liberty suffered 70% casualties, with 34 killed and 174 wounded.

The Israeli attack spanned two hours … as long as the attack on Pearl Harbor. The air attack alone lasted approximately 25 minutes: consisting of more than 30 sorties by approximately 12 separate planes using napalm, cannon, and rockets which left 821 holes in the ship. The Israelis fired 30mm cannons and rockets into the boat.

Oh, and the media, oh the media, covering up so much about the attack. And a commission, launched in 2003, yet there is nary a word in the Mainstream Media, and we wonder why?

Liberty

Capitol Hill, October 2003. It is a historic occasion. An independent, blue-ribbon commission is to release its findings from an investigation into an internationally significant 36-year-old attack on a US Navy ship that left more than 200 American sailors killed or wounded.

The commission consists of:

  • A former ambassador to one of the US’s most important allies
  • A US Navy rear admiral and former head of the Navy’s legal division
  • A Marine general, America’s highest ranking recipient of the Congressional Medal of Honor and the former Assistant Commandant of Marines
  • A US Navy four-star admiral, former Chairman of the Joint Chiefs of Staff (the highest military position in the country), former Chief of Naval Operations, a World War II hero, and the only Naval admiral to have commanded both the Pacific and the Atlantic fleets

The excellent group, If Americans Knew, largely spearheaded by Alison Weir, covers this abomination:

This extraordinarily high-ranking commission was reporting on the 1967 Israeli attack on the USS Liberty. Many analysts believe that the Liberty attack could be Israel’s undoing – at least as far as US support is concerned – if Americans knew the facts about it.

But they don’t. Here’s why:

A search of hundreds of the largest news media in this country indexed by Lexis-Nexis does not turn up a single US newspaper that mentioned this commission, a single US television station, a single US radio station, a single US magazine. While it was mentioned in an Associated Press report focusing on one of the commission’s most dramatic revelations, Lexis reveals only a sprinkling of news media printed information from this AP report, and those few that that did failed to mention this commission itself, its extremely star-studded composition, and the entirety of its findings.

Apart from a few members of the alternative press and the excellent Washington Report on Middle East Affairs (not indexed by Lexis), this commission might as well not have existed as far as most of the US media is concerned – and therefore, the American public.

For two documentaries on the Israeli illegal attack and murders of US sailors,  go here, and here!

Then, I was going to riff with some “new” FBI documents released, on the Dancing Israelis, and I am not talking about “I wish I was a rich man” Zero Mostel.

Newly Released FBI Docs Shed Light on Apparent Mossad Foreknowledge of 9/11 Attacks, by Whitney Webb

New information released by the FBI has brought fresh scrutiny to the possibility that the “Dancing Israelis,” at least two of whom were known Mossad operatives, had prior knowledge of the attacks on the World Trade Center.

FBI Docs Shed Light on Apparent Mossad Foreknowledge of 9/11 Attacks

The USS Liberty all over again, but this time, more than 3,000 killed in the so called September 11, 2001 “attacks,” and then countless millions killed, maimed, imprisoned, starved, renditioned, and sickened through the coalition of the killing, err, willing. Here, read on for this unrecognized commemoration of the death of all those sailors!

Yet, in either scenario, Sivan Kurzberg had simulated the burning of the World Trade Center the day before the attacks took place. That the FBI concluded that Kurzberg was party to a Mossad surveillance operation at the time of his arrest would then suggest that Israeli intelligence also had foreknowledge of the attacks.

Notably, the relevant section of the FBI report that asks “1. Did the Israeli nationals have foreknowledge of the events at WTC and were they filming the events prior to and in anticipation of the explosion?” is redacted in its entirety, suggesting that the FBI did not determine the answer to that question to be an emphatic “no.”

And, Benjamin Netanyahu, knew what would happen ahead of the September 11, 2001 attacks. What an ally, what a great Israel First Nation this place has become the past 70 plus years!

One of the detained “Dancing Israelis,” Omer Marmari, told police the following about why he viewed the September 11 attacks in a positive light: ” Israel now has hope that the world will now understand us. Americans are naïve and America is easy to get inside. There are not a lot of checks in America. And now America will be tougher about who gets into their country.”

Then, I got derailed watching the dramatization of what happened during, around, and in the case of the Central Park Jogger and the railroading of 5 innocent youth of color who were tried, prosecuted and found guilty (slammed into prison) through the New York media, through the pigs in the police force, with the assistance of the bigger pigs in the DA’s office, all aided and abetted by the New York Post, dozens of other newspapers, and the biggest pig of them all, Donald Delirium Tremens Trump.

It’s just disgusting,” sighs Ava DuVernay.

The Oscar-nominated filmmaker and TV showrunner is discussing the role of President Donald Trump in the Central Park Five case, wherein five teenage boys of color—Korey Wise, Antron McCray, Yusef Salaam, Kevin Richardson, and Raymond Santana—were falsely convicted of the 1989 rape and vicious assault of Trisha Meili, a white investment banker, and subsequently spent up to 14 years in prison.

At the time Trump, then a PR-hungry NYC real estate baron who occasionally served as his own publicist, sensed an opportunity for some headlines and inserted himself into the case, inflaming racial tensions with frequent comments to news programs along with newspaper ads, purchased for $85,000, calling the boys “crazed misfits” and urging the state of New York to “bring back to the death penalty,” essentially calling for their pre-trial execution. He concluded: “Maybe hate is what we need if we’re gonna get something done.”

More shenanigans with elite New York white Jewish culture, the prosecutor in that lying case, Fairstein, who went on to make money with trashy crime novels. To this day, like fourth grade mentally challenged Trump, she too believes the lies, her own:

And it’s another felon who plays this Fairstein —

Felicity Huffman and Linda Fairstein, former head of the sex crimes unit of the Manhattan DA's office.

And then, the other elite Jewish white woman who also prosecuted the case, Elizabeth Lederer.

As The Times noted, Lederer has a lengthy legal history of unchallenged cases, despite the fact that she’s largely known for her involvement in the Central Park Five’s case. Lederer is no longer discussing the case in public; she did not comment on the petition in 2013.

Though Lederer has made virtually no public comments on her role in the case since the trial ended, archived articles show the trial was an emotionally charged affair, for obvious reasons. The Los Angeles Times notes that Korey Wise, one of the Five, said to Lederer after he was given his sentence, “You’re going to pay for this. Jesus is going to get you. You made this . . . up.”

Elizabeth lederer

I guess I am on a roll, here, since someone sent me this about another Jewish white elite female, this time with the US Supreme Court, Ruth Bader Ginsburg. She first sent me a month ago the Netflix info tag on Ginsburg’s life vis-a-vis a CNN documentary, RBG and then the film, On the Basis of Sex:

But no amount of swag or hagiography can obscure the fact that, while Ginsburg is responsible for a great number of landmark legal decisions, her legacy may be sorely tarnished by one truly terrible one: refusing to retire when President Barack Obama could have named her replacement. That decision came into stark relief this month when Ginsburg fell and broke three ribs—and half of the nation took a collective gasp. Women took to Twitter to offer the justice a rib.

The broken ribs must have mushed her here, for sure, as this old lady just put a few million feet in her mouth:

Supreme Court Justice Ruth Bader Ginsburg praised Justice Brett Kavanaugh in her prepared remarks at Friday’s Second Circuit Judicial Conference. She noted that after Kavanaugh was confirmed the number of female Supreme Court clerks reached an all-time high, given his staffing choices.

Quote: “Justice Kavanaugh made history by bringing on board an all-female law clerk crew. Thanks to his selections, the Court has this Term, for the first time ever, more women than men serving as law clerks. Women did not fare nearly as well as advocate. Only about 21-percent of the attorneys presenting oral argument this Term were female; of the 34 attorneys who appeared more than once, only six were women.”

Amazing, the death star of American elites, east coast Ivy League Lepers —

GettyImages-1041759596-1538177880

Ginsburg, what a work of nothing! And the sad sack demon-crats march her out as some hero!

MANY OF US who watched Thursday’s Senate hearing spent much of the time cataloguing Supreme Court nominee Brett Kavanaugh’s lies. After hours of testimony, during which Christine Blasey Ford answered questions about her alleged sexual assault, the financing behind her lie detector test, and whether she was really afraid of flying, viewers were treated to more hours of testimony from Kavanaugh, a federal judge who struggled to give a single straight answer.

Kavanaugh strained credulity when he argued before the Senate Judiciary Committee that the “Devil’s Triangle” — a phrase that appeared on his high school yearbook page — referred to a drinking game, a definition which, before Thursday, you’d have a hard time finding anywhere. (It actually refers to a sex act involving two men and a woman). He also unabashedly claimed that the term “boof” is a reference to “flatulence,” rather than other butt stuff, and that “ralph,” which means to vomit —implicitly from the overconsumption of alcohol — was a reference to Kavanaugh’s weak stomach.

I guess all of this speaks to a bit of sensitivity around white patriarchy/matriarchy and white dominance, eating away at the soul of us, the 80 percent. I guess I have to square how it is that an elite super minority and so many in that tribe are superior to anyone else on the planet, in their own minds at that, has held sway over much of my own life in education, social services, journalism, and publishing.

This is observation, but in today’s Stephen Miller-Alan Dershowitz  world, with all the backing of the ADL, anyone who dares point out the elitism and the tribalism and the power clique that defines American Judaism, well, the old canard, anti-Semite, comes popping out of clicking tongues.

Something raw, now that I am working to help a veteran who ended up renting an apartment in Wilsonville, Oregon, at age 70, with an amputation from the knee down, and using a wheelchair. He has major eye problems, which have led to vision and pain in his eyes. He is in an apartment that has two steps that prevent him from using a flat surface to go in and out of the abode. He’s fallen twice on sod, trying to maneuver the wheelchair to the parking lot. He lives alone, doesn’t drive and knows no one at the apartment complex. I got him services while working as his social worker in that nefarious place, the Starvation Army.

He is virtually at the whim of people to come and help him get out of his apartment landing onto cement. He has medical appointments several times a week, a long trip from Wilsonville to the VA in Portland.

The apartment complex is being run by the largest multi-family property management company in the USA (self advertised) called Pinnacle Property Management. I have sent letters and emails to upper management, but to no avail. So has he. The discussion about accommodations — putting down a flat walkway from his sliding back door, about 20 feet — has turned into a case of this multi-billion dollar outfit telling him they will do it but at a charge of $5,300. We are being talked down to by the Portland office, some lower ranking person who has zero empathy for the situation, but is clear to cite in reverse logic the state of Oregon’s fair housing laws, which she uses to protect her asinine attitudes.

He’s on a fixed income and was homeless. The idea that the apartment complex is now managed by this outfit, so the owner(s) can hide behind their skirts, is typical of the American Penury Society. They’ve cited fair housing laws in an Orwellian way — “If we put in the walkway at our expense for your client, that would be unfair to other tenants . . . . Then everyone asking for us to pay for an accommodation we’d have to oblige.”

I’ve advocated for the veteran since this veteran is non-confrontational and is traumatized at having to be apartment-bound for more than two months with no end in sight. I have told these nefarious folk that, (a) a new concrete pathway for the only ground floor apartment with a two-step situation would be an enhancement to THEIR property in perpetuity. Then, (b) I explained the obvious: Anyone renting the apartment in the future, when my veteran leaves, would have the advantage of having some handicapped accommodation in the case of a wheelchair bound tenant, or an injured tenant or someone in need of a walker or crutch or cane, or even a family with a newborn in a carriage.

Since I was already stewing around the Dancing Israelis and the Jewish State of Israel’s attack on our own people, sailors; and since the Central Park Five were prosecuted by two Jewish women, well, I was traumatized a bit. I looked up the management of Pinnacle, and alas, the higher ups — many of them — are self-proclaimed practicing Jews:

Eric Schwabe, Executive Vice President – Western Division

Woody Stone, Executive Vice President – Eastern Division

Jason Straub, Systems Training Manager

Deb Kopolow, Regional Vice President

Avery Solomon, Vice President – Client Services

Seth Kaplan, Regional Marketing Director

You know, none of the above people have replied to my respectful and clear emails or letters asking them to be both ethical and community orientated when thinking about my former client and now my friend.

I have looked at their internal documents, Propaganda videos and marketing web pages, and hands down, these people parade out a litany of BS about how humane and resident focused they are!

Pinnacle is a privately held organization that manages multifamily properties nationwide. Established in 1980, we are one of the largest multifamily management companies in the United States with a portfolio of over 172,000 units and 4,300 team members. Our clients include pension funds, private partnerships, international investors, insurance companies, lenders, special servicers, syndicators, government agencies and high net worth individuals.

I have come to my wits end, in this emotionally and economically cursing society, with the One Percent and the Point Zero One Percent having for too many centuries controlled the destinies of the masses. Having studied some of the Jewish tradition with radical Jewish friends 45 years ago, I am always T-boned by the unfeeling and usury-based prevailing attitudes of the rich, both gentile (goyim) and Jew or Arab Prince!

Here, some contradictions to the idea that money is the lifeblood of so many, especially the millionaires and billionaires — Mammon was an ancient god who used to be worshiped by pagans for riches, money and wealthy. Counterpoint to that:

The overarching Jewish attitude toward the poor is best summed up by a single word of the biblical text: achikha (your brother). With this word, the Torah  insists on the dignity of the poor, and it commands us to resist any temptation to view the poor as somehow different from ourselves.

The concept of human dignity is well-ingrained in Judaism. The book of Genesis describes human beings as created “b’tzelem elokim” in the image of God (1:26). At least one early Rabbi considers one of the verses expressing this idea to be the most important verse in the Torah (Sifra K’dosbim 2:4). The insistence that human beings are creations in the divine image implies that any insult to an individual, by extension, is an affront to God. In reminding us that the poor person is our sibling, the Torah emphasizes that, like us, this person is a manifestation of the divine image and should be treated as such.

A rabbinic story tells about a group of people traveling in a boat. One passenger takes out a drill and begins drilling a hole under his seat. The other passengers, quite understandably, complain that this action may cause the boat to sink. “Why should this bother you?” this man responds, I am only drilling under my own seat.” The others retort, “But the water will rise up and flood the ship for all of us!” (Vayikra Rabbah 4:6). The moral of this story is clear: one person’s destructive action may literally drown the entire community. But we might add that the inverse is also true: a single positive change may transform an entire community. Thus, the alleviation of poverty, even in the smallest detail, may help the community as a whole to flourish.

Yet Pinnacle or the Dancing Israelis or the New York prosecutors or any number of thousands of elites and money-grubbing individuals and corporations have zero understanding of the foundation of the golden rule or Gandhi’s sins

In 590 AD, Pope Gregory I unveiled a list of the Seven Deadly Sins – lust, gluttony, greed, sloth, wrath, envy and pride – as a way to keep the flock from straying into the thorny fields of ungodliness. These days though, for all but the most devout, Pope Gregory’s list seems less like a means to moral behavior than a description of cable TV programming.

So instead, let’s look to one of the saints of the 20th Century — Mahatma Gandhi. On October 22, 1925, Gandhi published a list he called the Seven Social Sins in his weekly newspaper Young India.

Politics without principles.
Wealth without work.
Pleasure without conscience.
Knowledge without character.
Commerce without morality.
Science without humanity.
Worship without sacrifice.

The list sprung from a correspondence that Gandhi had with someone only identified as a “fair friend.” He published the list without commentary save for the following line: “Naturally, the friend does not want the readers to know these things merely through the intellect but to know them through the heart so as to avoid them.”

Unlike the Catholic Church’s list, Gandhi’s list is expressly focused on the conduct of the individual in society. Gandhi preached non-violence and interdependence and every single one of these sins are examples of selfishness winning out over the common good.

It’s also a list that, if fully absorbed, will make the folks over at the US Chamber of Commerce and Ayn Rand Institute itch. After all, “Wealth without work,” is a pretty accurate description of America’s 1%. (Investments ain’t work. Ask Thomas Piketty.) “Commerce without morality” sounds a lot like every single oil company out there and “knowledge without character” describes half the hacks on cable news. “Politics without principles” describes the other half.

gandhi-social-sins

 

The Bankers’ “Power Revolution”: How the Government Got Shackled by Debt

This article is excerpted from my new book Banking on the People: Democratizing Money in the Digital Age, available in paperback June 1.

*****

The U.S. federal debt has more than doubled since the 2008 financial crisis, shooting up from $9.4 trillion in mid-2008 to over $22 trillion in April 2019. The debt is never paid off. The government just keeps paying the interest on it, and interest rates are rising.

In 2018, the Fed announced plans to raise rates by 2020 to “normal” levels — a fed funds target of 3.375 percent — and to sell about $1.5 trillion in federal securities at the rate of $50 billion monthly, further growing the mountain of federal debt on the market. When the Fed holds government securities, it returns the interest to the government after deducting its costs; but the private buyers of these securities will be pocketing the interest, adding to the taxpayers’ bill.

In fact, it is the interest, not the debt itself, that is the problem with a burgeoning federal debt. The principal just gets rolled over from year to year. But the interest must be paid to private bondholders annually by the taxpayers and constitutes one of the biggest items in the federal budget. Currently the Fed’s plans for “quantitative tightening” are on hold; but assuming it follows through with them, projections are that by 2027 U.S. taxpayers will owe $1 trillion annually just in interest on the federal debt. That is enough to fund President Donald Trump’s trillion-dollar infrastructure plan every year, and it is a direct transfer of wealth from the middle class to the wealthy investors holding most of the bonds.

Where will this money come from? Crippling taxes, wholesale privatization of public assets, and elimination of social services will not be sufficient to cover the bill.

Bondholder Debt Is Unnecessary

The irony is that the United States does not need to carry a debt to bondholders at all. It has been financially sovereign ever since President Franklin D. Roosevelt took the dollar off the gold standard domestically in 1933. This was recognized by Beardsley Ruml, Chairman of the Federal Reserve Bank of New York, in a 1945 presentation before the American Bar Association titled “Taxes for Revenue Are Obsolete.”

“The necessity for government to tax in order to maintain both its independence and its solvency is true for state and local governments,” he said, “but it is not true for a national government.” The government was now at liberty to spend as needed to meet its budget, drawing on credit issued by its own central bank. It could do this until price inflation indicated a weakened purchasing power of the currency.

Then, and only then, would the government need to levy taxes — not to fund the budget but to counteract inflation by contracting the money supply. The principal purpose of taxes, said Ruml, was “the maintenance of a dollar which has stable purchasing power over the years. Sometimes this purpose is stated as ‘the avoidance of inflation.’

The government could be funded without taxes by drawing on credit from its own central bank; and since there was no longer a need for gold to cover the loan, the central bank would not have to borrow. It could just create the money on its books. This insight is a basic tenet of Modern Monetary Theory: the government does not need to borrow or tax, at least until prices are driven up. It can just create the money it needs. The government could create money by issuing it directly; or by borrowing it directly from the central bank, which would create the money on its books; or by taking a perpetual overdraft on the Treasury’s account at the central bank, which would have the same effect.

The “Power Revolution” — Transferring the “Money Power” to the Banks

The Treasury could do that in theory, but some laws would need to be changed. Currently the federal government is not allowed to borrow directly from the Fed and is required to have the money in its account before spending it. After the dollar went off the gold standard in 1933, Congress could have had the Fed just print money and lend it to the government, cutting the banks out. But Wall Street lobbied for an amendment to the Federal Reserve Act, forbidding the Fed to buy bonds directly from the Treasury as it had done in the past.

The Treasury can borrow from itself by transferring money from “intragovernmental accounts” — Social Security and other trust funds that are under the auspices of the Treasury and have a surplus – but these funds do not include the Federal Reserve, which can lend to the government only by buying federal securities from bond dealers. The Fed is considered independent of the government. Its website states, “The Federal Reserve’s holdings of Treasury securities are categorized as ‘held by the public,’ because they are not in government accounts.”

According to Marriner Eccles, chairman of the Federal Reserve from 1934 to 1948, the prohibition against allowing the government to borrow directly from its own central bank was written into the Banking Act of 1935 at the behest of those bond dealers that have an exclusive right to purchase directly from the Fed. A historical review on the website of the New York Federal Reserve quotes Eccles as stating, “I think the real reasons for writing the prohibition into the [Banking Act] … can be traced to certain Government bond dealers who quite naturally had their eyes on business that might be lost to them if direct purchasing were permitted.”

The government was required to sell bonds through Wall Street middlemen, which the Fed could buy only through “open market operations” – purchases on the private bond market. Open market operations are conducted by the Federal Open Market Committee (FOMC), which meets behind closed doors and is dominated by private banker interests. The FOMC has no obligation to buy the government’s debt and generally does so only when it serves the purposes of the Fed and the banks.

Rep. Wright Patman, Chairman of the House Committee on Banking and Currency from 1963 to 1975, called the official sanctioning of the Federal Open Market Committee in the banking laws of 1933 and 1935 “the power revolution” — the transfer of the “money power” to the banks. Patman said, “The ‘open market’ is in reality a tightly closed market.” Only a selected few bond dealers were entitled to bid on the bonds the Treasury made available for auction each week. The practical effect, he said, was to take money from the taxpayer and give it to these dealers.

Feeding Off the Real Economy

That massive Wall Street subsidy was the subject of testimony by Eccles to the House Committee on Banking and Currency on March 3-5, 1947. Patman asked Eccles, “Now, since 1935, in order for the Federal Reserve banks to buy Government bonds, they had to go through a middleman, is that correct?” Eccles replied in the affirmative. Patman then launched into a prophetic warning, stating, “I am opposed to the United States Government, which possesses the sovereign and exclusive privilege of creating money, paying private bankers for the use of its own money. … I insist it is absolutely wrong for this committee to permit this condition to continue and saddle the taxpayers of this Nation with a burden of debt that they will not be able to liquidate in a hundred years or two hundred years.”

The truth of that statement is painfully evident today, when we have a $22 trillion debt that cannot possibly be repaid. The government just keeps rolling it over and paying the interest to banks and bondholders, feeding the “financialized” economy in which money makes money without producing new goods and services. The financialized economy has become a parasite feeding off the real economy, driving producers and workers further and further into debt.

In the 1960s, Patman attempted to have the Fed nationalized. The effort failed, but his committee did succeed in forcing the central bank to return its profits to the Treasury after deducting its costs. The prohibition against direct lending by the central bank to the government, however, remains in force. The money power is still with the FOMC and the banks.

A Model We Can No Longer Afford

Today, the debt-growth model has reached its limits, as even the Bank for International Settlements, the “central bankers’ bank” in Switzerland, acknowledges. In its June 2016 annual report, the BIS said that debt levels were too high, productivity growth was too low, and the room for policy maneuver was too narrow. “The global economy cannot afford to rely any longer on the debt-fueled growth model that has brought it to the current juncture,” the BIS warned.

But the solutions it proposed would continue the austerity policies long imposed on countries that cannot pay their debts. It prescribed “prudential, fiscal and, above all, structural policies” — “structural readjustment.” That means privatizing public assets, slashing services, and raising taxes, choking off the very productivity needed to pay the nations’ debts. That approach has repeatedly been tried and has failed, as witnessed, for example, in the devastated economy of Greece.

Meanwhile, according to Minneapolis Fed president Neel Kashkari, financial regulation since 2008 has reduced the chances of another government bailout only modestly, from 84 percent to 67 percent. That means there is still a 67 percent chance of another major systemwide crisis, and this one could be worse than the last. The biggest banks are bigger, local banks are fewer, and global debt levels are higher. The economy has farther to fall. The regulators’ models are obsolete, aimed at a form of “old-fashioned banking” that has long since been abandoned.

We need a new model, one designed to serve the needs of the public and the economy rather than to maximize shareholder profits at public expense.

An earlier version of this article was published in Truthout.org.

Insidious “Habituations”…

First, they came and said they would borrow your money and pay you a 2% annual interest rate for it. They called themselves a Savings Bank, so you accepted it.

Then they came and said you could borrow money from them at a variable rate, probably 6% (but just maybe as high as 30%). They called themselves a Financial Service, so you accepted it. Soon, they came and said that home “ownership” was a great personal investment and, that notwithstanding inflated market-”bubbles” and the like, it was a great idea to obtain a 30-year-mortgage with an “adjustable” rate. They called themselves a Lender, so you accepted it. Later, they came and said that, since your taxes were being used to kill foreigners rather than pay for your medical “needs,” you needed to “insure” that your personal medical bills would not cause personal bankruptcy. They called themselves an Insurance Company and said that, notwithstanding deductibles and co-payments and claims examiners, they would protect your interests. So you accepted it. (Some years later, jobless due to automation and “outsourcing,” you were ordered to continue buying such insurance–without the income to pay for it–but at a special, “affordable” rate. They called themselves the Government, so you accepted it.

But soon, as you became dependent on drugs called medications which were very expensive, you realized that cheap “generics,” manufactured in South Asian sweatshops, would have to do. After all, the Government had approved this–so you accepted it.

About this time, the President had suddenly urged all citizens to support, and pay for, a massive military invasion of a distant land. He insisted on starting a war–after all, the distant land in question might at some point threaten to start a war. Although no evidence was ever presented to substantiate such a threat, the President said this–so you accepted it. As the resultant war continued, causing unspeakable, mass suffering, the President periodically demanded an extra $200 billion-or-so to pay for his senseless, criminal war–and you accepted it.

Not much later, it was found that the Lender aforementioned had approved mortgages for millions who could not really, under the provisions, afford them in the long-term. Your Lender, having known this all along, had sold off these bad mortgages as a high-interest, “junk” investment which would certainly fail, then invested in lucrative hedge funds predicting such failure–and then paid bribes to the politicians to receive the usual tax-funded Bail-outs. Since economists and other self-styled experts seldom questioned this chain-of-events, you accepted it.

And right now, as it happens, much-worshiped Technocrats are declaring in commanding tones that you cannot even “live” without their daily, constant, intrusive oversight. They know already– and will monitor you all-inclusively–to calculate precisely what you really want–product-wise and “lifestyle”-wise! No need for you to choose–they will choose for you! Moreover, they will connect everything, from your child’s babbling in the nursery to your toaster in the kitchen, to “help” you! And…since they are all-knowing Technocrats, able to know you as you’ve never known yourself…you are accepting this??

QE Forever: The Fed’s Dramatic About-face

“Quantitative easing” was supposed to be an emergency measure. The Federal Reserve “eased” shrinkage in the money supply due to the 2008-09 credit crisis by pumping out trillions of dollars in new bank reserves. After the crisis, the presumption was that the Fed would “normalize” conditions by sopping up the excess reserves through “quantitative tightening” (QT) – raising interest rates and selling the securities it had bought with new reserves back into the market.

The Fed relentlessly pushed on with quantitative tightening through 2018, despite a severe market correction in the fall. In December, Fed Chairman Jerome Powell said that QT would be on “autopilot,” meaning the Fed would continue to raise interest rates and to sell $50 billion monthly in securities until it hit its target. But the market protested loudly to this move, with the Nasdaq Composite Index dropping 22% from its late-summer high.

Worse, defaults on consumer loans were rising. December 2018 was the first time in two years that all loan types and all major metropolitan statistical areas showed a higher default rate month-over-month. Consumer debt – including auto, student and credit card debt – is typically bundled and sold as asset-backed securities similar to the risky mortgage-backed securities that brought down the market in 2008 after the Fed had progressively raised interest rates.

Chairman Powell evidently got the memo. In January, he abruptly changed course and announced that QT would be halted if needed. On February 4th, Mary Daly, president of the Federal Reserve Bank of San Francisco, said they were considering going much further. “You could imagine executing policy with your interest rate as your primary tool and the balance sheet as a secondary tool, one that you would use more readily,” she said. QE and QT would no longer be emergency measures but would be routine tools for managing the money supply. In a February 13th article on Seeking Alpha titled “Quantitative Easing on Demand,” Mark Grant wrote:

If the Fed does decide to pursue this strategy it will be a wholesale change in the way the financial system in the United States operates and I think that very few institutions or people appreciate what is taking place or what it will mean to the markets, all of the markets.

The Problem of Debt Deflation

The Fed is realizing that it cannot bring its balance sheet back to “normal.” It must keep pumping new money into the banking system to avoid a recession. This naturally alarms Fed watchers worried about hyperinflation. But QE need not create unwanted inflation if directed properly. The money spigots just need to be aimed at the debtors rather than the creditor banks. In fact, regular injections of new money directly into the economy may be just what the economy needs to escape the boom and bust cycle that has characterized it for two centuries. Mark Grant concluded his article by quoting Abraham Lincoln:

The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.

The quote is apparently apocryphal, but the principle still holds: new money needs to be regularly added to the money supply to avoid an overwhelming debt burden and allow the economy to reach its true productive potential. Regular injections of new money are necessary to avoid something economists fear even more than inflation – the sort of “debt deflation” that took down the economy in the 1930s.

Most money today is created by banks when they make loans. When overextended borrowers pay down old loans without taking out new ones, the money supply “deflates” or shrinks. Demand shrinks with it, and businesses lacking customers close their doors, in the sort of self-feeding death spiral seen in the Great Depression.

As Australian economist Steve Keen observes, today the level of private debt is way too high, and that is why so little lending is occurring. But mainstream economists consider the rate of growth of debt to be irrelevant to macroeconomic policy, because lending is thought to simply redistribute spending power from savers to investors. Conventional economic theory says that banks are merely intermediaries, recirculating existing money rather than creating spending power in their own right. But this is not true, says Prof. Keen. Banks actually create new money when they make loans. He cites the Bank of England, which said in its 2014 quarterly report:

[B]anks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits. . . .

In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

Loans create deposits, and deposits make up the bulk of the money supply. Money today is created by banks as a debt on their balance sheets, and more is always owed back than was created, since the interest claimed by the banks is not created in the original loan. Debt thus grows faster than the money supply. When overextended borrowers quit taking out the new loans needed to repay old loans, the gap widens even further. The result is debt deflation – a debt-induced reduction in the new money needed to stimulate economic activity and growth. Thus the need for injections of new money to fill the gap between debt and the money available to repay it.

However, the money created through QE to date has not gone to the consuming public, where it must go to fill this gap. Rather, it has gone to the banks, which have funneled it into the speculative financialized markets. Nomi Prins calls this “dark money” – the trillions of dollars flowing yearly in and around global stock, bond and derivatives markets generated by central banks when they electronically fabricate money by buying bonds and stocks. She writes, “These dark money flows stretch around the world according to a pattern of power, influence and, of course, wealth for select groups.” She shows graphically that the rise in dark money is directly correlated with the rise in financial markets.

QE has worked to reverse the debts of the banks and to prop up the stock market, but it has not relieved the debts of consumers, businesses or governments; and it is these debts that will trigger the sort of debt deflation that can take the economy down. Keen concludes that “no amount of exhorting banks to ‘Intermediate’ will end the drought in credit growth that is the real cause of The Great Malaise.” The only way to reduce the private debt burden without causing a depression, he says, is a Modern Debt Jubilee or People’s Quantitative Easing.

QE-funded Debt Relief

In antiquity, as Prof. Michael Hudson observes, debts were routinely forgiven when a new ruler took the throne. The rulers and their advisors knew that debt at interest grew faster than the money supply and that debt relief was necessary to avoid economic collapse from an overwhelming debt overhang. Economic growth is arithmetic and can’t keep up with the exponential growth of debt growing at compound interest.

Consumers need that sort of debt relief today, but simply voiding out their debts as was done in antiquity will not work because the debts are not owed to the government. They are owed to banks and private investors who would have to bear the loss. The alternative suggested by Keen and others is to fill the debt gap with a form of QE dropped not into bank reserve accounts but digitally into the bank accounts of the general public. Debtors could then use the money to pay down their debts. In fact, Keen says it should go first to pay down debts. Non-debtors would receive a cash injection.

Properly managed, these injections need not create inflation. (See my earlier article here.) Money is created as loans and extinguished when they are paid off, so the money used to pay down debt would be extinguished along with the debt. And the cash injections not used to pay down debt would just help fill the gap between real and potential productivity, allowing demand and supply to rise together, keeping prices stable.

A regular injection of money into personal bank accounts has been called a “universal basic income,” but better would be to call it a “national dividend” – something all citizens are entitled to equally, without regard to economic status or ability to work. It would serve as a safety net for people living paycheck to paycheck, but the larger purpose would be as economic policy to stimulate demand and productivity, keeping the wheels of industry turning.

Money might then indeed become a servant of humanity, transformed from a tool of oppression into a means of securing common prosperity. But first the central bank needs to become a public servant. It needs to be made a public utility, responsive to the needs of the people and the economy.

• This article was first published on Truthdig.com.

Universal Basic Income Is Easier Than It Looks

Calls for a Universal Basic Income have been increasing, most recently as part of the Green New Deal introduced by Rep. Alexandria Ocasio-Cortez (D-NY) and supported in the last month by at least 40 members of Congress. A Universal Basic Income (UBI) is a monthly payment to all adults with no strings attached, similar to Social Security. Critics say the Green New Deal asks too much of the rich and upper-middle-class taxpayers who will have to pay for it, but taxing the rich is not what the resolution proposes. It says funding would primarily come from the federal government, “using a combination of the Federal Reserve, a new public bank or system of regional and specialized public banks,” and other vehicles.

The Federal Reserve alone could do the job. It could buy “Green” federal bonds with money created on its balance sheet, just as the Fed funded the purchase of $3.7 trillion in bonds in its “quantitative easing” program to save the banks. The Treasury could also do it. The Treasury has the constitutional power to issue coins in any denomination, even trillion dollar coins. What prevents legislators from pursuing those options is the fear of hyperinflation from excess “demand” (spendable income) driving prices up. But, in fact, the consumer economy is chronically short of spendable income, due to the way money enters the consumer economy. We actually need regular injections of money to avoid a “balance sheet recession” and allow for growth, and a UBI is one way to do it.

The pros and cons of a UBI are hotly debated and have been discussed elsewhere. The point here is to show that it could actually be funded year after year without driving up taxes or prices. New money is continually being added to the money supply, but it is added as debt created privately by banks. (How banks rather than the government create most of the money supply today is explained on the Bank of England website here.) A UBI would replace money-created-as-debt with debt-free money – a “debt jubilee” for consumers – while leaving the money supply for the most part unchanged; and to the extent that new money was added, it could help create the demand needed to fill the gap between actual and potential productivity.

The Debt Overhang Crippling Economies

The “bank money” composing most of the money in circulation is created only when someone borrows, and today businesses and consumers are burdened with debts that are higher than ever before. In 2018, credit card debt alone exceeded $1 trillion, student debt exceeded $1.5 trillion, auto loan debt exceeded $1.1 trillion, and non-financial corporate debt hit $5.7 trillion. When businesses and individuals pay down old loans rather than taking out new loans, the money supply shrinks, causing a “balance sheet recession.” In that situation, the central bank, rather than removing money from the economy (as the Fed is doing now), needs to add money to fill the gap between debt and the spendable income available to repay it.

Debt always grows faster than the money available to repay it. One problem is the interest, which is not created along with the principal, so more money is always owed back than was created in the original loan. Beyond that, some of the money created as debt is held off the consumer market by “savers” and investors who place it elsewhere, making it unavailable to companies selling their wares and the wage-earners they employ. The result is a debt bubble that continues to grow until it is not sustainable and the system collapses, in the familiar death spiral euphemistically called the “business cycle.” As economist Michael Hudson shows in his 2018 book And Forgive Them Their Debts, this inevitable debt overhang was corrected historically with periodic “debt jubilees” – debt forgiveness – something he argues we need to do again today.

For governments, a debt jubilee could be effected by allowing the central bank to buy government securities and hold them on its books. For individuals, one way to do it fairly across the board would be with a UBI.

Why a UBI Need Not Be Inflationary

In a 2018 book called The Road to Debt Bondage: How Banks Create Unpayable Debt, political economist Derryl Hermanutz proposes a central-bank-issued UBI of one thousand dollars per month, credited directly to people’s bank accounts. Assuming this payment went to all US residents over 18, or about 241 million people, the outlay would be close to $3 trillion annually. For people with overdue debt, Hermanutz proposes that it automatically go to pay down those debts. Since money is created as loans and extinguished when they are repaid, that portion of a UBI disbursement would be extinguished along with the debt.

People who were current on their debts could choose whether or not to pay them down, but many would also no doubt go for that option. Hermanutz estimates that roughly half of a UBI payout could be extinguished in this way through mandatory and voluntary loan repayments. That money would not increase the money supply or demand. It would just allow debtors to spend on necessities with debt-free money rather than hocking their futures with unrepayable debt.

He estimates that another third of a UBI disbursement would go to “savers” who did not need the money for expenditures. This money, too, would not be likely to drive up consumer prices, since it would go into investment and savings vehicles rather than circulating in the consumer economy. That leaves only about one-sixth of payouts, or $500 billion, that would actually be competing for goods and services; and that sum could easily be absorbed by the “output gap” between actual and forecasted productivity.

According to a July 2017 paper from the Roosevelt Institute called “What Recovery? The Case for Continued Expansionary Policy at the Fed”:

GDP remains well below both the long-run trend and the level predicted by forecasters a decade ago. In 2016, real per capita GDP was 10% below the Congressional Budget Office’s (CBO) 2006 forecast, and shows no signs of returning to the predicted level.

The report showed that the most likely explanation for this lackluster growth was inadequate demand. Wages have remained stagnant; and before producers will produce, they need customers knocking on their doors.

In 2017, the US Gross Domestic Product was $19.4 trillion. If the economy is running at 10% below full capacity, $2 trillion could be injected into the economy every year without creating price inflation. It would just generate the demand needed to stimulate an additional $2 trillion in GDP. In fact, a UBI might pay for itself, just as the G.I. Bill produced a sevenfold return from increased productivity after World War II.

The Evidence of China

That new money can be injected year after year without triggering price inflation is evident from a look at China. In the last 20 years, its M2 money supply has grown from just over 10 trillion yuan to 80 trillion yuan ($11.6T), a nearly 800% increase. Yet the inflation rate of its Consumer Price Index (CPI) remains a modest 2.2%.

Why has all that excess money not driven prices up? The answer is that China’s Gross Domestic Product has grown at the same fast clip as its money supply. When supply (GDP) and demand (money) increase together, prices remain stable.

Whether or not the Chinese government would approve of a UBI, it does recognize that to stimulate productivity, the money must get out there first; and since the government owns 80% of China’s banks, it is in a position to borrow money into existence as needed. For “self-funding” loans – those that generate income (fees for rail travel and electricity, rents for real estate) – repayment extinguishes the debt along with the money it created, leaving the net money supply unchanged. When loans are not repaid, the money they created is not extinguished; but if it goes to consumers and businesses that then buy goods and services with it, demand will still stimulate the production of supply, so that supply and demand rise together and prices remain stable.

Without demand, producers will not produce and workers will not get hired, leaving them without the funds to generate supply, in a vicious cycle that leads to recession and depression. And that cycle is what our own central bank is triggering now.

The Fed Tightens the Screws

Rather than stimulating the economy with new demand, the Fed has been engaging in “quantitative tightening.” On December 19, 2018, it raised the fed funds rate for the ninth time in 3 years, despite a “brutal” stock market in which the Dow Jones Industrial Average had already lost 3,000 points in 2-½ months. The Fed is still struggling to reach even its modest 2% inflation target, and GDP growth is trending down, with estimates at only 2-2.7% for 2019. So why did it again raise rates, over the protests of commentators including the president himself?

For its barometer, the Fed looks at whether the economy has hit “full employment,” which it considers to be 4.7% unemployment, taking into account the “natural rate of unemployment” of people between jobs or voluntarily out of work. At full employment, workers are expected to demand more wages, causing prices to rise. But unemployment is now officially at 3.7% – beyond technical full employment – and neither wages nor consumer prices have shot up. There is obviously something wrong with the theory, as is evident from a look at Japan, where prices have long refused to rise despite a serious lack of workers.

The official unemployment figures are actually misleading. Including short-term discouraged workers, the rate of US unemployed or underemployed workers as of May 2018 was 7.6%, double the widely reported rate. When long-term discouraged workers are included, the real unemployment figure was 21.5%. Beyond that large untapped pool of workers, there is the seemingly endless supply of cheap labor from abroad and the expanding labor potential of robots, computers and machines. In fact, the economy’s ability to generate supply in response to demand is far from reaching full capacity today.

Our central bank is driving us into another recession based on bad economic theory. Adding money to the economy for productive, non-speculative purposes will not drive up prices so long as materials and workers (human or mechanical) are available to create the supply necessary to meet demand; and they are available now. There will always be price increases in particular markets when there are shortages, bottlenecks, monopolies or patents limiting competition, but these increases are not due to an economy awash with money. Housing, healthcare, education and gas have all gone up, but it is not because people have too much money to spend. In fact, it is those necessary expenses that are driving people into unrepayable debt, and it is this massive debt overhang that is preventing economic growth.

Without some form of debt jubilee, the debt bubble will continue to grow until it can again no longer be sustained. A UBI can help correct that problem without fear of “overheating” the economy, so long as the new money is limited to filling the gap between real and potential productivity and goes into generating jobs, building infrastructure and providing for the needs of the people, rather than being diverted into the speculative, parasitic economy that feeds off them.

This article was first published on Truthdig.com