Category Archives: Debt

A Reset that Serves the People (Part 2)

Instead of buying into the World Economic Forum’s dystopian “Great Reset,” we can build an alternative system with a mandate to serve the people.

This is part two to a May 4, 2022 article called “A Monetary Reset Where the Rich Don’t Own Everything,” the gist of which was that national and global debt levels are unsustainably high. We need a “reset,” but of what sort? The “Great Reset” of the World Economic Forum (WEF) would leave the people as non-owner tenants in a feudalistic technocracy. The reset of the Eurasian Economic Union would allow participating nations to opt out of the Western capitalist system altogether, but what of the Western countries that are left? That is the question addressed here.

Our Forefathers Had Some Innovative Solutions

Fortunately for the United States, our national debt is in U.S. dollars. As former Federal Reserve Chairman Alan Greenspan once observed, “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”

Paying government debt by just printing the money was the innovative solution of the cash-strapped American colonial governments. The problem was that it tended to be inflationary. The paper scrip they issued was considered an advance against future taxes, but it was easier to issue the money than to tax it back, and over-issuing devalued the currency. The colony of Pennsylvania fixed that problem by forming a government-owned “land bank.” Money was issued as farm credit that was repaid. The new money went out from the local government and came back to it, stimulating the economy and trade without devaluing the currency.

But in the mid-eighteenth century, at the behest of the Bank of England, the colonies were forbidden by King George to issue their own currencies, triggering a recession and the American Revolution. The colonists won the war, but by the end of it the currency was so devalued (chiefly from British counterfeiting) that the Founding Fathers were afraid to include the power to issue paper money in the Constitution.

Hamilton’s Solution: Debt-for-equity Swaps

That left Treasury Secretary Alexander Hamilton in a bind. After the war, the colonies-turned-states were heavily in debt, with no way to repay it. Hamilton solved the problem by turning the states’ debts into equity in the First United States Bank. The creditors became shareholders in the bank, earning a 6% dividend on their holdings.

Might that work today? H.R. 3339, a bill currently before Congress, would form a National Infrastructure Bank (NIB) modeled on Hamilton’s U.S. Bank, capitalized with federal securities acquired in debt-for-equity swaps. Shareholders would receive a guaranteed 2% dividend on non-voting preferred stock in the bank, with the option of recovering the principal after 20 years.

If the whole $30 trillion U.S. federal debt were turned into bank capital, leveraged into loans at 10 to 1 as banks are allowed to do, the bank could do $300 trillion in infrastructure loans. To start, the Federal Reserve could buy NIB stock with the $5.76 trillion in U.S. Treasury securities currently on its balance sheet, capitalizing potential loans of $57 trillion. The possibilities are breathtaking; and because the money would enter the money supply in the form of low-interest loans to local governments that would be paid back over time, the result need not be inflationary. Loans for infrastructure and other productive ventures would raise supply to meet demand, keeping prices stable.

Lincoln’s Solution: Just Issue the Money

Hamilton’s solution to an unsustainable federal debt was terminated when President Andrew Jackson closed down the Second U.S. Bank. That left Abraham Lincoln in a bind. Faced with a massive debt at usurious interest rates to fund the Civil War, he solved the problem by reverting to the solution of the American colonists: just issue the currency as paper money.

In the 1860s, these U.S. Notes or Greenbacks constituted 40% of the national currency. Today, 40% of the circulating money supply would be $7.6 trillion. Yet massive Greenback issuance during the Civil War did not lead to hyperinflation. U.S. Notes suffered a drop in value as against gold, but according to Milton Friedman and Anna Schwarz in A Monetary History of the United States, 1867-1960, this was due not to “printing money” but to trade imbalances with foreign trading partners on the gold standard. The Greenbacks aided the Union not only in winning the war but in funding a period of unprecedented economic expansion, making the country the greatest industrial giant the world had yet seen. The steel industry was launched, a continental railroad system was created, a new era of farm machinery and cheap tools was promoted, free higher education was established, government support was provided to all branches of science, the Bureau of Mines was organized, and labor productivity was increased by 50 to 75 percent.

The Japanese “Free Lunch”

Another option is for the U.S. government to “monetize” its debt by having the central bank purchase and hold it or write it off. The Federal Reserve returns interest and profits to the Treasury after deducting its costs.

This alternative, too, need not be inflationary, as has apparently been demonstrated by the Japanese. The Bank of Japan (BOJ) started buying government bonds in 1999, after reducing interest rates to zero, then dropping them into negative territory in 2015. Today Japan’s government debt is a whopping 260% of its Gross Domestic Product, and the Bank of Japan owns half of it. (Even the outsized U.S. debt to GDP ratio is only 126%.) Yet annual inflation is now only 1.2% in Japan, not even up to the BOJ’s longstanding 2% target. To the extent that prices are rising, it is not from money-printing but from lockdowns and supply chain disruptions and shortages, the same disruptions triggering price inflation globally.

Hedge fund manager Eric Peters discussed the Japanese experiment in a recent article titled “Can a Modern Nation Pull Off a Debt Jubilee Without Full Monetary Collapse?” Noting that “core prices in Japan’s economy remain almost identical today as they were when its zero-interest-rate experiment began,” he asked:

Could the central bank create money, buy all the outstanding bonds, and simply burn them? Execute a modern version of an Old Testament debt Jubilee? …. [M]ight it be possible for a country to pull off such a feat without full monetary collapse? We don’t know, yet.

A Treasury Issue of Special Coins or E-cash

For future budget expenses, rather than borrowing, the government could follow President Lincoln and just issue the money it needs. As Thomas Edison observed in the 1920s:

If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%.

When the Constitution was ratified, coins were the only officially recognized legal tender. By 1850, coins made up only about half the currency. The total face value of all U.S. coins ever produced as of January 2022 is $170 billion dollars, or less than 0.9% of a $19 trillion circulating money supply (M2). These coins, along with about $25 million in U.S. Notes or Greenbacks, are all that is left of the Treasury’s money-creating power. As the Bank of England has acknowledged, the vast majority of the money supply is now created privately by banks  as deposits when they make loans.

In the early 1980s, a chairman of the Coinage Subcommittee of the House of Representatives observed that the Constitution gives Congress the power to coin money and regulate its value, and that no limit is put on the value of the coins it creates. He said the government could pay off its entire debt with some billion dollar coins. In a 2007 book called Web of Debt I wrote about this and said in today’s America it would have to be trillion dollar coins.

In 1982, Congress chose to choke off this remaining vestige of its money-creating power by imposing limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allows to be minted in any amount for commemorative purposes (31 U.S. Code § 5112). In 2013, Georgia attorney Carlos Mucha proposed issuing a platinum coin to capitalize on this loophole, in order to solve the gridlock then in Congress over the debt ceiling. Philip Diehl, former head of the U.S. Mint and co-author of the platinum coin law. He said:

In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years . . . under power expressly granted to Congress in the Constitution (Article 1, Section 8).

Prof. Randall Wray explained that the coin would not circulate but would be deposited in the government’s account at the Fed, so it would not inflate the circulating money supply. The budget would still need Congressional approval. To keep a lid on spending, Congress would just need to abide by some basic rules of economics. It could spend on goods and services up to full employment without creating price inflation (since supply and demand would rise together). After that, it would need to tax — not to fund the budget, but to shrink the circulating money supply and avoid driving up prices with excess demand.

A more modern option is for the Treasury to issue “e-cash,” an electronic form of cash transferred on secure hardware not requiring an internet connection. The ECASH Act,  H.R. 7231, introduced on March 28, 2022 by Rep. Stephen Lynch, “directs the Secretary of the Treasury to develop and introduce a form of retail digital dollar called ‘e-cash,’ which replicates the off-line-capable, peer-to-peer, privacy-respecting, zero transaction-fee, and payable-to-bear features of physical cash….”

Unlike the central bank digital currencies now being developed by central banks globally, e-cash would be anonymous and not traceable, having all the privacy attributes of physical cash. Various models are in development, including one already introduced in China in 2021, an offline-capable smart payments card that was part of the government’s digital yuan rollout.

A People’s Reset

Those are alternatives for relieving the government’s debt burden, but what about the massive sums in student debt, medical debt, and rent and mortgage payments now in arrears? Biden promised in his presidential campaign to forgive student debt or some portion of it. But whether this can legally be done by presidential order, without congressional approval, is controversial. Arguments have been made both ways.

For most student debt, however, the creditor is actually the Department of Education, a cabinet-level department established by Congress with some limited power to cancel debt. In August 2021, for example, the Department canceled the student debt of the disabledCongress itself could also write off the debt. The challenge is getting agreement on which debts to cancel and by how much.

What of the student debt, mortgage debt, and credit card debt held by private banks? Private banks have a contractual right to repayment. They also have an obligation to balance their books, meaning they could go bankrupt if unable to collect. But as British economist Michael Rowbotham observed, these debts too could be written off if the accounting standards were changed. Banks don’t actually lend their own money or their depositors’ money. The money they lend is created simply by writing the borrowed sums into the deposit accounts of their customers, so voiding out the debts would be cost-free. The accounting standards would just need to be changed so that the books would not need to balance. The debts could be carried as nonperforming loans or moved off the books in special purpose vehicles, as the Chinese have been known to do with their nonperforming loans. As for which debts to write off and by how much, that is a policy question for legislators.

Would that sort of debt jubilee be inflationary? Yes, to the extent that students and other debtors would have money to spend from their incomes that they did not have before, money that would be competing for a limited supply of goods and services. Again, however, inflation could be avoided by powering up the production of goods and services sufficiently to meet demand.

That means powering up small and medium-sized businesses, which generate most local productivity and employment; and that means providing them with affordable credit. As UK Prof. Richard Werner observes, big banks don’t lend to small businesses. Small banks do, and their numbers are rapidly shrinking. A national infrastructure bank could do it but would have trouble making prudent loans for businesses and farms across the country. The Soviet Union tried that and failed. Prof. Werner proposes instead to form a network of local public, cooperative and community banks.

Arguably, local publicly-owned banks could also be capitalized with debt-for-equity swaps, using the ballooning state bond debts. We have plenty of debt to go around! A network of state-owned public banks on the model of the Bank of North Dakota would be good.

Other Options

To the extent that taxes are needed to balance the money supply, a land value tax (LVT) would go far toward replacing income taxes, without taxing labor or productivity. See “Pennsylvania’s Success with Local Property Tax Reform” in the book Earth Belongs to Everyone by Alanna Hartzok. An LVT excludes physical structures (e.g. houses) and taxes only the value of the land itself, including the natural resources on and under it. It thus returns to the public a portion of any appreciation in value due to public works (new schools, subway stops, etc.), without taxing improvements made by the property owners themselves. It helps curb land hoarding and speculation, and ensures that land sites are put to good use.

Independent community currency and cryptocurrency systems are other possibilities for circumventing debts in the national currency, but those topics are beyond the scope of this article.

In any case, if the global economy comes crashing down as many pundits are predicting, it is good to know there are viable alternatives to the technocratic feudalism of the WEF’s Great Reset. In his 2020 book The Great Reset, WEF leader Klaus Schwab declared that the COVID-19 pandemic “represents a rare but narrow window of opportunity to reflect, reimagine and reset our world,” making way for a polycentric technocracy. It is also a rare opportunity for us to implement an alternative system with a mandate to serve the people. We might call it the People’s Great Reset.

• Read Part 1 here

This article was first posted on ScheerPost.

The post A Reset that Serves the People (Part 2) first appeared on Dissident Voice.

A Monetary Reset Where the Rich Don’t Own Everything (Part 1)

We have a serious debt problem, but solutions such as the World Economic Forum’s “Great Reset” are not the future we want. It’s time to think outside the box for some new solutions.

In ancient Mesopotamia, it was called a Jubilee. When debts at interest grew too high to be repaid, the slate was wiped clean. Debts were forgiven, the debtors’ prisons were opened, and the serfs returned to work their plots of land. This could be done because the king was the representative of the gods who were said to own the land, and thus was the creditor to whom the debts were owed. The same policy was advocated in the Book of Leviticus, though it is unclear to what extent this biblical Jubilee was implemented.

That sort of across-the-board debt forgiveness can’t be done today because most of the creditors are private lenders. Banks, landlords and pension fund investors would go bankrupt if their contractual rights to repayment were simply wiped out. But we do have a serious debt problem, and it is largely structural. Governments have delegated the power to create money to private banks, which create most of the circulating money supply as debt at interest. They create the principal but not the interest, so more money must be repaid than was created in the original loan. Debt thus grows faster than the money supply, as seen in the chart from WorkableEconomics.com below. Debt grows until it cannot be repaid, when the board is cleared by some form of market crash such as the 2008 financial crisis, typically widening the wealth gap on the way down.

Today the remedy for an unsustainable debt buildup is called a “reset.” Far short of a Jubilee, such resets are necessary every few decades. Acceptance of a currency is based on trust, and a “currency reset” changes the backing of the currency to restore that trust when it has failed. In the 20th century, major currency resets occurred in 1913, when the Federal Reserve was instituted following a major banking crisis; in 1933 following another catastrophic banking crisis, when the dollar was taken off the gold standard domestically and deposits were federally insured; in 1944, at the Bretton Woods Conference concluding World War II, when the US dollar backed by gold was made the reserve currency for global trade; and in 1974, when the US finalized a deal with the OPEC countries to sell their oil only in US dollars, effectively “backing” the dollar with oil after Richard Nixon took the dollar off the gold standard internationally in 1971. Central bank manipulations are also a form of reset, intended to restore faith in the currency or the banks; e.g., when Federal Reserve Chairman Paul Volcker raised the interest rate on fed funds to 20% in 1980, and when the Fed bailed out Wall Street banks following the Great Financial Crisis of 2008-09 with quantitative easing.

But quantitative easing did not fix the debt buildup, which today has again reached unsustainable levels. According to Truth in Accounting, as of March 2022 the US federal government has a cumulative debt burden of $133.38 trillion, including unfunded Social Security and Medicare promises; and some countries are in even worse shape. Former investment banker Leslie Manookian stated in grand jury testimony that European countries have 44 trillion euros in unfunded pensions, and there is no source of funds to meet these obligations. There is virtually no European bond market, due to negative interest rates. The only alternative is to default. The concern is that when people realize that the social security and pension systems they have paid into for their entire working lives are bankrupt, they will take to the streets and chaos will reign.

Hence the need for another reset. Private creditors, however, want a reset that leaves them in control. Today a new sort of reset is setting off alarm bells, one that goes far beyond restoring the stability of the currency. The “Great Reset” being driven forward by the World Economic Forum would lock the world into a form of technocratic feudalism.

The WEF is that elite group of businessmen, politicians and academics that meets in Davos, Switzerland, every January. The Great Reset was the theme of its (virtual) 2021 Summit, based on a July 2020 book titled Covid-19: The Great Reset co-authored by WEF founder Klaus Schwab. Some of the WEF’s proposals are summarized in a video on its website titled “8 Predictions for the World in 2030.” The first prediction is, “You’ll own nothing. And you’ll be happy. Whatever you want you’ll rent. And it will be delivered by drone.”

Schwab’s proposal would reset more than the currency. At a virtual meeting in June 2020, he said, “We need a ‘Great Reset’ of capitalism.” But as talk show host Kim Iversen observes, the proposed solution is more capitalism by a new name: “stakeholder capitalism,” where ownership will be with corporate stakeholders. You will have an account with the central bank and a mandatory federal digital ID. You will receive a welfare payment in the form of a marginally adequate basic income – so long as you maintain a proper social credit score. Your central bank digital currency will be “programmable” – rationed, controlled, and canceled if you get out of line or disagree with the official narrative. You will be kept happy with computer games and drugs.

According to WEF speaker and author Prof. Yuval Harari, “Covid is critical, because this is what convinces people to accept, to legitimize total biometric surveillance…. We need not just to monitor people, we need to monitor what’s happening under the skin.”

Harari is aware of the dangers of digital dictatorships. He said at a pre-Covid Davos presentation in January 2020:

In Davos we hear so much about the enormous promises of technology – and these promises are certainly real. But technology might also disrupt human society and the very meaning of human life in numerous ways, ranging from the creation of a global useless class to the rise of data colonialism and of digital dictatorships.…

We humans should get used to the idea that we are no longer mysterious souls – we are now hackable animals. … [I]f this power falls into the hands of a twenty-first century Stalin, the result will be the worst totalitarian regime in human history…

In the not-so-distant future, … algorithms might tell us where to work and who to marry, and also decide whether to hire us for a job, whether to give us a loan, and whether the central bank should raise the interest rate….

What will be the meaning of human life, when most decisions are taken by algorithms?

Clearing the Chessboard by Controlled Economic Demolition?

Before the game can be reset, the board must be cleared. What would make the population accept giving up their private property, surviving on a marginal basic income, and submitting to constant surveillance, internal and external?

The global pandemic and the lockdowns that followed have gone far toward achieving that result. Lockdowns not only eliminated smaller business competitors but drove up the debts of small countries, forcing them to increase their loans from the International Monetary Fund. The IMF is notorious for onerous loan terms, including imposing strict austerity measures, relinquishing control of natural resources, and marching in “lockstep” with pandemic restrictions.

In a June 2020 article on the blog of the IMF titled “From Great Lockdown To Great Transformation,” IMF Managing Director Kristalina Georgieva called the global policy response to the 2020 crisis the “Great Lockdown.” She is quoted as saying to the US Chamber of Commerce:

We call the current period ‘the Great Lockdown’ because we are fighting a health emergency by bringing production and consumption to a standstill….

In March, around one hundred billion dollars left emerging markets and developing countries—three times more than during the global financial crisis.

But in April and May—thanks to this massive injection of liquidity in advanced economies—some emerging markets were able to go back to the markets and issue bonds with competitive yields, with total issuance of around seventy-seven billion dollars. This is almost three and a half times as much as in the same two months last year. [Italics added.]

In other words, by bringing production and consumption to a standstill, the Great Lockdown had already, by June 2020, managed to strip emerging markets of $100 billion in additional assets and to lock them into $77 billion in new debt.

That helps explain why so many countries acquiesced to the Great Lockdown so quickly, even when some had only a handful of Covid-19 deaths. Lockdown was apparently a “conditionality” required for getting an IMF loan. At least that was true for Belarus, which rejected the offer. Said Belarus’ President:

We hear the demands … to model our coronavirus response on that of Italy. I do not want to see the Italian situation to be repeated in Belarus. We have our own country and our own situation. … [T]he IMF continues to demand from us quarantine measures, isolation, a curfew. This is nonsense. We will not dance to anyone’s tune.

Unlike Belarus, most countries acquiesced, and so did households and businesses locked into the debt trap by an economy in which production and consumption were brought to a standstill. Like most emerging economies, they acquiesced to whatever terms were imposed for returning to “normal.”

The lockdowns have now been lifted in most places, but the debt trap is about to snap shut. A moratorium on U.S. rents and student debt is due to come to an end, and cumulative arrears may need to be paid. Debtors unable to meet that burden could be out in the street, joining the “useless class” described by Prof. Harari. They may be forced into accepting the technocratic feudalism of the WEF Great Reset, but is not the sort of future most people want. However, what are the alternatives?

A Eurasian Jubilee?

For sovereign debt (the debt of national governments), a form of jubilee is envisioned by Sergei Glazyev in conjunction with the alternative monetary system currently being designed by the Eurasian Economic Union (EAEU), detailed in my last article here. Glazyev is the Minister for Integration and Macroeconomics of the Eurasia Economic Commission, the regulatory body of the EAEU. An article in The Cradle titled “Russia’s Sergey Glazyev Introduces the New Global Financial System” is headlined:

The world’s new monetary system, underpinned by a digital currency, will be backed by a basket of new foreign currencies and natural resources. And it will liberate the Global South from both western debt and IMF-induced austerity.

The article quotes Glazyev as stating:

Transition to the new world economic order will likely be accompanied by systematic refusal to honor obligations in dollars, euro, pound, and yen. In this respect, it will be no different from the example set by the countries issuing these currencies who thought it appropriate to steal foreign exchange reserves of Iraq, Iran, Venezuela, Afghanistan, and Russia to the tune of trillions of dollars. Since the US, Britain, EU, and Japan refused to honor their obligations and confiscated wealth of other nations which was held in their currencies, why should other countries be obliged to pay them back and to service their loans?

In any case, participation in the new economic system will not be constrained by the obligations in the old one. Countries of the Global South can be full participants of the new system regardless of their accumulated debts in dollars, euro, pound, and yen. Even if they were to default on their obligations in those currencies, this would have no bearing on their credit rating in the new financial system. Nationalization of extraction industry, likewise, would not cause a disruption. Further, should these countries reserve a portion of their natural resources for the backing of the new economic system, their respective weight in the currency basket of the new monetary unit would increase accordingly, providing that nation with larger currency reserves and credit capacity. In addition, bilateral swap lines with trading partner countries would provide them with adequate financing for co-investments and trade financing.

That may largely eliminate the sovereign debt overhang in the EAEU member countries, but what of the United States and other Western countries that are unlikely to join? Some innovative possibilities will be covered in Part 2 of this piece. Stay tuned.

• This article was first posted on ScheerPost.

The post A Monetary Reset Where the Rich Don’t Own Everything (Part 1) first appeared on Dissident Voice.

“Long COVID”: Economic Devastation and Quarter of a Billion Pushed Into Extreme Poverty  

There is a terrifying prospect that in excess of a quarter of a billion more people will fall into extreme levels of poverty in 2022 alone. Without immediate radical action, we could be witnessing the most profound collapse of humanity into extreme poverty and suffering in memory.

That is according to Oxfam International Executive Director Gabriela Bucher.

She adds this scenario is made more sickening given that trillions of dollars have been captured by a tiny group of powerful men who have no interest in interrupting this trajectory.

In its January 2021 report ‘The Inequality Virus’, Oxfam stated that the wealth of the world’s billionaires increased by $3.9tn between 18 March and 31 December 2020. Their total wealth then stood at $11.95tn, a 50 per cent increase in just 9.5 months.

In 2021, an Oxfam review of IMF COVID-19 loans showed that 33 African countries were encouraged to pursue austerity policies. This despite the IMF’s own research showing austerity worsens poverty and inequality.

Barely days into the shutdown of the global economy in April 2020, the Wall Street Journal ran the headline ‘IMF, World Bank Face Deluge of Aid Requests From Developing World‘. Scores of countries were asking for bailouts and loans from financial institutions with $1.2 trillion to lend.

Prior to that, in late March, World Bank Group President David Malpass said that poorer countries would be ‘helped’ to get back on their feet after the various COVID-related lockdowns. However, any assistance would be on condition that further neoliberal reforms became embedded.

Malpass said:

For those countries that have excessive regulations, subsidies, licensing regimes, trade protection or litigiousness as obstacles, we will work with them to foster markets, choice and faster growth prospects during the recovery.

Two years on and it is clear what ‘reforms’ really mean. In a press release issued on 19 April 2022, Oxfam International insists the IMF must abandon demands for austerity as a cost-of-living crisis continues to drive up hunger and poverty worldwide.

According to Oxfam’s analysis, 13 out of the 15 IMF loan programmes negotiated during the second year of COVID require new austerity measures such as taxes on food and fuel or spending cuts that could put vital public services at risk. The IMF is also encouraging six additional countries to adopt similar measures.

Kenya and the IMF agreed a $2.3 billion loan programme in 2021, which includes a three-year public sector pay freeze and increased taxes on cooking gas and food. More than three million Kenyans are facing acute hunger as the driest conditions in decades spread a devastating drought across the country. Oxfam says nearly half of all households in Kenya are having to borrow food or buy it on credit.

At the same time nine countries, including Cameroon, Senegal and Surinam are required to introduce or increase the collection of VAT, a tax that disproportionately impacts people living in poverty.

In Sudan, nearly half of the population live in poverty. However, it has been told to scrap fuel subsidies which will hit the poorest hardest. A country already reeling from international aid cuts, economic turmoil and rising prices for everyday basics such as food and medicine. More than 14 million people need humanitarian assistance (almost one in every three people) and 9.8 million are food insecure in Sudan.

In addition, 10 countries are likely to freeze or cut public sector wages and jobs, which could mean lower quality of education and fewer nurses and doctors in countries already short of healthcare staff. Consider that Namibia had fewer than six doctors per 10,000 people in early 2020.

Prior to Covid, the situation was bad enough. The IMF had consistently pushed a policy agenda based on cuts to public services, increases in taxes paid by the poorest and moves to undermine labour rights and protections. As a result, 52 per cent of Africans lack access to healthcare and 83 per cent have no safety nets to fall back on if they lose their job or become sick.

Nabil Abdo, Oxfam International’s senior policy advisor, says:

The IMF must suspend austerity conditions on existing loans and increase access to emergency financing. It should encourage countries to increase taxes on the wealthiest and corporations to replenish depleted coffers and shrink widening inequality.”

It is interesting to note what could be achieved. For instance, Argentina has collected about $2.4 billion from its one-off pandemic wealth tax. Oxfam estimates that a ‘Pandemic Profits Tax’ on 32 super-profitable global companies could have generated $104 billion in revenue in 2020 alone.

Many governments are nearing debt default and being forced to slash public spending to pay creditors and import food and fuel. The world’s poorest countries are due to pay $43 billion in debt repayments in 2022, which could otherwise cover the costs of their food imports. Oil and gas giants are reporting record-breaking profits, with similar trends expected to play out in the food and beverage sector.

Oxfam and Development Finance International (DFI) have also revealed that 43 out of 55 African Union member states face public expenditure cuts totalling $183 billion over the next five years.

Oxfam says that, despite COVID costs piling up and billionaire wealth rising more since COVID than in the previous 14 years combined, governments — with few exceptions — have failed to increase taxes on the richest.

Gabriela Bucher rejects any notion that governments do not have the money or means to lift all people out of poverty and hunger and ensure their health and welfare. She says the G20, World Bank and IMF must immediately cancel debts and increase aid to poorer countries and act to protect ordinary people from an avoidable catastrophe.

Nabil Abdo says:

The pandemic is not over for most of the world. Rising energy bills and food prices are hurting poor countries most. They need help boosting access to basic services and social protection, not harsh conditions that kick people when they are down.

The ‘pandemic’ is not over for most of the world – for sure. People too often conflate the effects of COVID-related policies with the impact of COVID itself. It is these policies that have caused the ongoing devastation to lives and livelihoods.

What it has amounted to is a multi-trillion-dollar bailout for a capitalist economy that was in meltdown prior to COVID. This came in the form of trillions of dollars pumped into financial markets by the US Fed (in the months prior to March 2020) and ‘COVID relief’.

As the world’s richest people lined their pockets even more in the past two years, COVID IMF loans are now piling more misery on some of the world’s poorest people. For them, ‘long COVID’ is biting austerity – their ‘new normal’.

All this resulting from policies supposedly brought in to protect public health – a claim that rings hollower by the day.

The post “Long COVID”: Economic Devastation and Quarter of a Billion Pushed Into Extreme Poverty   first appeared on Dissident Voice.

These Dark Times Are Also Filled with Light

Shengtian Zheng and Jinbo Sun, Winds of Fusang, 2017.

‘Fusang’ is an ancient Chinese word referring to what some believe to be the shores of Mexico. The work is an homage to Latin America’s influence on China, particularly that of Mexican artists on the development of modern Chinese art.

In early March, Argentina’s government came to an agreement with the International Monetary Fund (IMF) on a $45 billion deal to shore up its shaky finances. This deal was motivated by the government’s need to pay a $2.8 billion instalment on a $57 billion IMF stand-by loan taken out under former President Mauricio Macri in 2018. This loan – the largest loan in the financial institution’s history – sharpened divides in Argentinian society. The following year, the Macri administration was ousted in elections by the centre-left Frente de Todos coalition which campaigned on a sharp anti-austerity, anti-IMF programme.

When President Alberto Fernández took office in December 2019, he refused the final $13 billion tranche of the IMF’s loan package, a move applauded by large sections of Argentinian society. The next year, Fernández’s government was able to restructure the $66 billion debt held by wealthy bondholders and open discussions with the IMF to delay repayment of the debt incurred by Macri’s government. But the IMF was rigid – it insisted on repayment. Neither the Macri loan nor the new deal under President Fernández settles Argentina’s long-term struggle with its public finances.

Carlos Alonso (Argentina), La oreja, 1972.

The term ‘odious debt’ is used to describe the money owed by societies whose governments have been undemocratic. The concept was crafted by Alexander Nahum Sack in his book The Effects of State Transformations on Their Public Debts and Other Financial Obligations (1927). ‘If a despotic power incurs a debt not for the needs or in the interests of the State, but to strengthen its despotic regime, to repress its population that fights against it, etc.’, Sack wrote, ‘this debt is odious for the population of the State’. When that despotic regime falls, then the debt falls.

When Argentina’s military ruled the country (1976–83), the IMF generously lent it money, ballooning the country’s debt from $7 billion at the time the military took power to $42 billion when the military was ousted. Plainly, the IMF’s provision of funds to the Argentinian military junta – which killed, tortured, and disappeared 30,000 people – set in motion the ugly cycle of debt and despair that continues till today. That those ‘odious debts’ were not annulled – just as the apartheid debt was not annulled in South Africa – tells us a great deal about the ugly reality of international finance.

Gracia Barrios (Chile), Desaparecidos, 1973.

The deal cut by the IMF with the Fernández government is exactly like other deals that the IMF has made with fragile countries. During the pandemic, 85% of the IMF’s loans to developing countries came with austerity conditions that sharpened their social crises. Three of the most common conditions of these IMF loans are cuts and freezes to public sector wages, the increase and introduction of value-added taxes, and deep cuts to public expenditure (notably for consumer subsidies). Through its new deal with Argentina, the IMF will inspect the operations of the government four times per year, effectively becoming an overseer of the Argentinian economy. The government has agreed to reduce the budget deficit from 3% (2021) to 0.9% (2024) to 0% (2025); to accomplish this, it will have to cut large areas of social spending, including subsidies for a range of consumer goods.

After reaching the agreement, IMF Managing Director Kristalina Georgieva pointed out the great difficulties faced by Argentina, though these difficulties will not be ameliorated by the IMF plan. ‘Argentina continues to face exceptional economic and social challenges, including depressed per capita income, elevated poverty levels, persistent high inflation, a heavy debt burden, and low external buffers’, she said. Consequently, Georgieva noted, ‘Risks to the program are exceptionally high’, meaning that further default is all but certain.

Shengtian Zheng and Jinbo Sun, Winds of Fusang (close up), 2017.

A few weeks before Argentina came to terms with the IMF, President Fernández and China’s President Xi Jinping held a bilateral meeting in Beijing at which Argentina signed onto the Chinese-led Belt and Road Initiative (BRI). Argentina is the twenty-first country from Latin America to join the BRI. It is also the largest economy from the region to join, pending applications from Brazil and Mexico. Expectations rose amongst sections in Argentina that the BRI would provide a pathway to exit the grip of the IMF. This remains a possibility even as President Fernández returned to the IMF.

Our team in Buenos Aires has been looking carefully at China’s growing ties with the Caribbean and Latin America. These studies resulted in our most recent dossier no. 51, Looking Towards China: Multipolarity as an Opportunity for the Latin American People (April 2022). The main argument of the dossier is that the emergence of programmes such as the BRI offers countries such as Argentina choices for development finance. If Argentina has more latitude in choosing its avenues for finance, then it will be better positioned to reject harsh offers of stand-by assistance from the IMF which come with conditions of austerity. The possibility of these choices opens the door for countries such as Argentina to develop an authentic national and regional development strategy that is not written by the IMF staff in Washington, DC.

The dossier is quite clear that the mere entry of the BRI into the Caribbean and Latin America is not sufficient. Deeper projects are necessary:

It is possible for Chinese integration to further the ‘development of underdevelopment’ if the Latin American state projects produce a new relationship of dependency on China by merely exporting primary products. On the other hand, it will be far better for the region’s peoples if the relationship is based on equality (multipolarity) as well as the transfer of technology, the upscaling of production processes, and regional integration (national and regional sovereignty).

Josefina Robirosa (Argentina), Bosque azul (‘Blue Forest’), 1993-94.

The BRI’s annual disbursement of funds is around $50 billion, with projections suggesting that, by 2027, total BRI spending will be about $1.3 trillion. These capital flows primarily focus on long-term investments in infrastructure rather than short-term bailouts, although new studies suggest that China has offered short-term liquidity to several countries. Between 2009 and 2020, the People’s Bank of China entered into bilateral currency swap arrangements with at least 41 countries. These currency swaps take place between the local currency (the Argentinian peso, for instance) and China’s renminbi (RMB), with the local currency as collateral and the RMB used either to buy goods or to acquire dollars. The combination of BRI investments and RMB currency swaps provide countries with immediate alternatives to the IMF and its austerity demands. In January 2022, Argentina’s government asked China to increase its 130-billion-yuan swap ($20.6 billion) by an additional 20 billion yuan ($3.14 billion) to cover the IMF payment. A few weeks later, the People’s Bank of China provided the necessary swap to Argentina’s Central Bank. Despite this infusion of cash, Argentina still went to the IMF.

The answer to why Argentina took that decision can perhaps be found in the letter written by Martín Guzman (minister of the economy) and Miguel Pesce (president of the Central Bank) to the IMF’s Georgieva on 3 March 2022. In the communication, Argentina promises to ‘improve public finances’ and to restrain inflation, which are straightforward orthodox positions. But then there is an interesting obligation: that Argentina will expand exports and draw in foreign direct investment to ‘pave the way to an eventual re-entry into international capital markets’. Rather than use the opportunity afforded by BRI-currency swaps to develop its own national and regional agenda, the government seems eager to use whatever platform possible to return to the status quo of integration into the capitalist marketplace for finance dominated by Wall Street and the City of London.

On 12 April 2022, the Committee of Creditors of Internal Debt (CADI) announced that the people of Argentina refuse to shoulder the burden of the IMF debt. The people should not pay a single peso: those who squirrelled away the billions that Macri borrowed from the IMF should be the ones who pay the price. Banking secrecy laws need to be suspended in order to draw up a list of those who took that money and hid it in tax havens. The hashtag of CADI’s campaign is #LaDeudaEsConElPueblo – the debt is with the people. It should be paid to the people, not drawn from them.

As the Argentinian poet Juan Gelman (1930–2014) wrote during the reign of the military junta, these are ‘dark times, filled with light’. This phrase resonates even now:

dark times/filled with light/the sun/
pours sunlight onto the city/ torn
by sudden sirens/the police on the hunt/night falls and we/ make love under this roof

Gelman, a communist, fought the dictatorship, which killed his son and daughter-in-law and damaged the spine of his country. Even the dark times, he wrote, echoing Brecht, are filled with light. These are tough moments in world history, but even now there remain possibilities, there remain people gathered on the streets of Buenos Aires and Rosario, La Plata and Córdoba. Their slogan is clear: no to the pact with the IMF. But theirs is not only a politics of ‘no’. It is also a politics of ‘yes’. Yes to taking advantage of the new openings to shape an agenda for the well-being of the Argentinian people. Yes, also yes.

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The Keep Africa Poor and Dependent Project  

Exploited and abused for generations by white colonial powers and manipulative economic structures, there is a growing feeling of solidarity within parts of the African continent, as exemplified by the #NoMore movement. Covid vaccine inequality and environmental injustice, together with recent events in Ethiopia, have galvanized people.

Ideas of African unity and rage against former imperial forces are nothing new; the chain of suppression and exploitation of African nations is long, running from slavery and colonialism (including colonial extraction) to wealth and climate inequality, racial capitalism and now Covid vaccine apartheid.

Despite the fact that many would say Africa was united long before Europe – family to tribe, tribe to nation, nation to continent, with 54 countries spread over a vast area –  establishing a defined Union of Africa seems unlikely, if not impossible. Standing in solidarity, rejecting western intervention, challenging the exploitative status quo and reductive notions of development based on a defunct western model is not; indeed, if African nations are to prosper and create vibrant economies allowing its burgeoning young population to fulfill their enormous potential, they must.

Poverty amidst abundance of resources

Blessed with rich environments and vast natural resources, Sub-Saharan Africa should certainly not be poor. But for huge numbers of people across the continent grinding poverty and hardship are the norm.

According to the World Bank report Accelerating Poverty Reduction in Africa, while those living in extreme poverty (less than $1.90 a day) has fallen in the last twenty years, the number of “poor people [living on $5 a day or less]…has increased from 278 million in 1990 to over 413 million” Over 80% of those living in stifling poverty are found in rural areas where education and  health care are scarce.

Natural resources dominate many African economies and, along with agriculture, are central to the livelihoods of the poor rural majority. African natural resources that are owned by multi-national mining companies, dug out of the ground by grossly underpaid local workers, are exported for production in goods that are sold in the rich developed nations. This has been the role of Sub-Saharan Africa for generations, and is fundamental to the prosperity of advanced countries: they need the raw materials and they need them to be dirt cheap.

The handful of conglomerates that dominate, collude in enabling monopoly buying structures. Contracts agreed at national levels are administered by middle-men, often corrupt, in the pockets of the corporation; the local workforce has little choice but to accept whatever ‘terms of employment’ are offered; poverty entraps and silences rebellion.

It is a crippling model of suppression and exploitation; a form of wage slavery that holds not just the workers in its suffocating grip, but the nation and continent. It is one of the main reasons African nations that are overly dependent on raw materials, whether cotton or oil, coffee, diamonds or Cobalt, are poor. Poverty is political, the result of short-term political and economic decisions taken in The West by duplicitous corporate-controlled governments.

The other reasons that ensure Africa remains poor and dependent are historical and economic: Colonization, which persists as economic and cultural imperialism, together with a certain mind-set of superiority/inferiority. A mind-set that maintains consciously or unconsciously that some people (black, brown) are worth less than others and, as Covid vaccine inequities demonstrate, can be sacrificed. The economic structures, global institutions and economic ideologies championed by abusive self-centered governments and promoted in the business schools around the world are all designed to ensure Africa remains poor: Imperialism never ended, it just changed form.

When colonial powers withdrew from the global south they needed new ways of maintaining the enslavement of Africa and Africans. Three interrelated weapons where used to create dependency: Aid, debt and the toxic Structural Adjustment Programmes (SAPs), the overarching umbrella of control.

In the 1980s SAP’s were introduced; the International Monetary Fund (IMF) and World Bank (WB) gave highly conditional loan packages to African nations in order to aid their ‘development’; in fact, the loans/SAPs, which destroyed African economies and agriculture, were simply forms of debt entrapment. Once a country is indebted it becomes easy to control. SAPs hollowed out national economies and incorporated Africa into the global political economic system, dominated by the US. It’s economic warfare: the rich countries set up these unaccountable institutions and systems to control the poor nations.

The IMF, WB, World Health Organization (WHO) and the World Trade Organization (WTO), were given enormous political influence/control of African governments and economies. Funding for public services (e.g. education and health care) was slashed to repay loans; countries were forced to ‘liberalize’ their economies, and privatize, selling off key areas like utilities to western or western-backed companies.

In his book Confessions Of An Economic Hitman, John Perkins designates this process of economic terrorism as ‘Predatory Capitalism’: he describes how  in an earlier period, during the 1950’s the IMF, CIA and US State Department set up a faceless bank to lend money to African countries that were producing raw materials; any national President that refused the loan was at risk of being handed over to the ‘Jackals’, as Perkins describes the CIA thugs that accompanied him.

At independence, many African countries were self-sufficient in food production and were, in fact, net exporters of food; SAPs and the WTO Agreement on Agriculture, changed all that. Countries were forced to withdraw State subsidies to agriculture (while farmers in Europe and the US receive huge subsidies); farmers suffered, food prices increased, food insecurity was created, dependency on aid and Western benefactors ensured and with it control by the US and her puppets, of Africa, its direction and ‘development’, or, as these paranoid selfish states would have it, its non-development.

‘Development as Westernisation’

Within the narrow socio-economic paradigm that dominates global affairs, ‘development’ and perpetual economic ‘growth’ are regarded as all important. Dominated by quarterly national GDP figures, it is a reductive model designed by donor’ nations to serve not the people of Africa or Asia, but western corporations and the unjust, defunct Ideology of Greed, so beloved.

The very idea of development has become synonymous with ‘Westernization’, including the way of life, the values, behavior and attitudes of the rich, ‘successful’ nations of The West: a hollow, deeply materialistic way of life rooted in division, selfishness and conformity that has poisoned and vandalized the natural environment, created unhealthy, unequal societies of anxious suppressed human beings.

In order to develop, economists maintain Africa must industrialise and manufacture – no country has ever ‘developed’ without manufacturing. All this is true, and some African nations, like Ethiopia, which has a vibrant leather industry, are beginning to do just this. But this is only true within the suffocating boundaries of the existing model of extreme capitalism based on unsustainable consumerism.

There must be another way; perhaps as we sit at this transitional time, not just for Africa, but for the world as a whole, the opportunity presents itself to re-design the socio-economic structures, reimagine civilization, and in so doing save the planet. And perhaps Africa, unburdened, energised and dynamic can play a leading role; working with the West, but rejecting the model of conformity and exploitation, the conditionality of support.

The existing development paradigm sits within the overarching political-economic system, a system of global monopolies, centralized control, massive inequality, grinding poverty, financial insecurity and stress. Not only should this model of development be rejected by Africa, and it would be were it not for the Noose of Debt, and the fact that it is presented as the one and only show in town, but the poisonous spring from which it flows – Market Fundamentalism as some call it – must also be radically dismantled.

It may appear impossible to challenge, but there are alternatives to the current unjust political-economic system. And as the environmental and social impact of the Neo-Liberal experiment becomes more apparent, as well as the economic pain of the majority, more and more people around the world, especially within Africa, where the environmental emergency has inspired powerful movements of activism, recognize the urgent need to reject this way of organizing life and are demanding change.

Western powers (dried-up imperial forces) do not want Africa and Africans to flourish and become strong, this is clear to all. Africa’s destiny must rest in the hands of Africans, in particular young Africans (the median age in Africa is around 20, Europe is a greying 43, US a complacent 39), who are increasingly standing up, organizing, particularly in regard to the environment, and calling for change.

But what should that change look like? Not a shadow of Western nations, but a creative evolving movement of development in which the people have a voice; social and environmental responsibility are championed and lasting human happiness sit at its core. Unity is essential, African unity is essential; together, not necessarily under some defined structure, but coordinated cooperation and support through the medium of the African Union and civil society.

The first and most basic step towards establishing a less brutal, more just system would be the equitable distribution of the resources of the world – the water, land and food; the machinery needed to build infrastructure; the skills, knowledge and expertise.

The world is one: We are brothers and sisters of one humanity. And if we are collectively, within Africa and the world, to establish An Alternative Way, this basic fact needs to form the foundation and provide the touchstone of new systems and modes of living. Only then will we begin to build a global society in which the values of unity, compassion, tolerance and sharing, which are found in tribal societies all over Africa, may flourish.f

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Rather Than Sink Main Street by Raising Interest Rates, the Fed Could Save It: Here’s How

Inflation is plaguing consumer markets, putting pressure on the Federal Reserve to raise interest rates to tighten the money supply. But as Rex Nutting writes in a MarketWatch column titled “Why Interest Rates Aren’t Really the Right Tool to Control Inflation”:

It may be heresy to those who think the Fed is all-powerful, but the honest answer is that raising interest rates wouldn’t put out the fire. Short of throwing millions of people out of work in a recession, higher rates wouldn’t bring supply and demand back into balance, a necessary condition for price stability.

The Fed (and those who are clamoring for the Fed to raise rates immediately) have misdiagnosed the problem with the economy and are demanding the wrong kind of medicine. …

Prices are going up because crucial inputs—labor, electronics, energy, housing, transportation—are in short supply. Normally, the way to solve this imbalance would be to give workers and businesses incentives to increase their supply. …

The Fed has been assigned the job of fixing this. Unfortunately, the Fed doesn’t have the tools to do it. Monetary policy works (in theory) by tweaking demand, but it has no direct impact on supply.

The Dire Effects of the “Wrong Kind of Medicine”

Not only will raising interest rates not fix the supply crisis, but according to Alasdair Macleod, head of research at GoldMoney in London, U.K., that wrong medicine is likely to trigger the next financial crisis. He thinks it is imminent and will start in Europe, where negative interest rates brought the cost of doing repo trades to zero. As a result, the European repo market is now over €10 trillion ($11.4 trillion), far more than the capital available to unwind it (to reverse or close the trades). Rising interest rates will trigger that unwinding, says MacLeod, and the ECB lacks the tools to avoid the resulting crisis. Meanwhile, oil prices have risen over 50% and natural gas over 60% in Europe in the past year, “due to a supply crisis of its governments’ own making,” writes Macleod. Member governments are heavily in debt, yet European Central Bank president Christine Lagarde wants to borrow more to finance the transition to carbon neutral. Macleod writes darkly:

As for the euro’s future, it seems unlikely that the ECB has the capability of dealing with the crisis that will unfold.… The deconstruction of this shabby arrangement should prove the end of the euro and possibly of the European Union itself.

German journalist Ernst Wolff paints an even darker scenario. He contends that the globalist European leaders heading the World Economic Forum (WEF) are crashing the global economy intentionally, in order to clear the chessboard for the WEF’s “Great Reset.” They’re doing this, he says, because they have to. The global bankers’ boom-and-bust financial system is now so top-heavy and debt-laden that it cannot be sustained. Problem/reaction/solution: desperate people will welcome the WEF’s Great Reset, in which they will own nothing but will be offered a marginally adequate Universal Basic Income with onerous strings attached. This subsistence income will be doled out through a central bank digital currency (CBDC) controlled nationally by the country’s central bank and globally by the IMF as issuer of the reserve currency and, ultimately, of a single global currency.

There are indications, however, that the U.S. Fed is not going along with this Eurocentric globalist push. Financial blogger Tom Luongo points to Jerome Powell’s clash with Christine Lagarde in May last year over her insistence that central banks require private banks to monitor the business of their clients, and to the Fed’s raising its repo rate to 0.25% in June, attracting investors earning zero interest in the European repo market into the U.S. dollar and away from the euro. Luongo suggests that the Fed’s resistance to the globalist plan comes from the Wall Street banks that own the New York Fed, which are not willing to give up the U.S. dollar’s status as global reserve currency and could be driven out of business by a CBDC distributed directly through individual central bank accounts.

Preserving the current Wall Street-dominated system, however, hardly helps Main Street. The pandemic added $5 trillion to the fortunes of the billionaire class; but government-instituted lockdowns permanently shuttered more than 100,000 U.S. businesses and left vast portions of the population living on the edge. According to a recent study from Johns Hopkins University, the detrimental impact of global lockdowns substantially outweighed their public health benefits.

Is It Time to Amend the Federal Reserve Act?

The U.S. dollar is backed by the full faith and credit of the United States: it retains its value because the American public is willing to take it in exchange for their goods and services. But the public has not been allowed access to the bottomless pool of central bank liquidity that backstops this public credit.

According to Cornell Law School Prof. Robert Hockett, however, the framers of the Federal Reserve Act intended for Main Street businesses to be able to tap this liquidity pool. He argues that the Fed already has the monetary tools it needs to rescue the real, productive economy. They just haven’t been used – for over a century. The Fed can stay in its own lane and stimulate local production using monetary policy baked into the Federal Reserve Act itself.

Cornell Law School’s Prof. Robert Hockett wrote in Forbes in March last year that the Federal Reserve System was originally designed to be “something akin to a network of regional development finance institutions. … Each of the twelve regional Federal Reserve Banks was to provide short-term funding directly or indirectly (through local banks) to developing businesses that needed it. This they did by ‘discounting’ – in effect, purchasing – commercial paper from those businesses.” Investopedia explains:

Commercial paper is a commonly used type of unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable and inventories, and meeting other short-term liabilities…. Commercial paper is usually issued at a discount from face value and reflects prevailing market interest rates.

In determining what kinds of commercial paper to discount, wrote Hockett, “the Federal Reserve Act both was – and ironically remains – quite explicit about this: Fed discount lending is solely for ‘productive,’ not ‘speculative’ purposes.”

In a follow-up article, Hockett explained that the drafters of the Federal Reserve Act, notably Carter Glass and Paul Warburg, were essentially following the Real Bills Doctrine (RBD). Previously known as the “commercial loan theory of banking,” it held that banks could create credit-money deposits on their balance sheets without triggering inflation if the money were issued against loans backed by commercial paper. When the borrowing companies repaid their loans from their sales receipts, the newly created money would just void out the debt and be extinguished. Their intent was that banks could sell their commercial loans at a discount at the Fed’s Discount Window, freeing up their balance sheets for more loans. Hockett wrote:

The RBD in its crude formulation held that so long as the lending of endogenous [bank-created] credit-money was kept productive, not speculative, inflation and deflation would be not only less likely, but effectively impossible. And the experience of German banks during Germany’s late 19th century Hamiltonian ‘growth miracle,’ with which the German immigrant Warburg, himself a banker, was intimately familiar, appeared to verify this. So did Glass’s experience with agricultural lending in the American South.

According to Prof. Carl Walsh, writing in The Federal Reserve Bank of San Francisco Newsletter in 1991:

The preamble sets out very clearly that one purpose of the Federal Reserve Act was to afford the means of discounting commercial loans. In its report on the proposed bill, the House Banking and Currency Committee viewed a fundamental objective of the bill to be the “creation of a joint mechanism for the extension of credit to banks which possess sound assets and which desire to liquidate them for the purpose of meeting legitimate commercial, agricultural, and industrial demands on the part of their clientele.”

“Liquidating” loans backed by “real bills” basically meant turning a company’s receivables into bank-issued credit that could be spent on the workers and materials needed to produce its goods and services, bringing supply in balance with demand. That “monetization” of debt might not drive up prices, but external factors obviously could. Today those factors include supply chain problems, worker shortages, and resource shortages. In the 1920s, the trigger was speculation in the stock market.

The real bills policy was discredited after the stock market crash of 1929, due to overly-strict application by the Fed. As the tale is told in Wikipedia:

Fed Board member Adolph C. Miller in 1929 launched his Direct Pressure initiative. It required all member banks seeking Federal Reserve discount window assistance to affirm that they had never made speculative loans, especially of the stock-market variety. No self-respecting banker seeking to borrow emergency reserves from the Fed was willing to undergo such interrogation, especially given that a “hard-boiled” Fed was unlikely to grant such aid. Instead, the banks chose to fail (and the Fed let them), which they did in large numbers, almost 9000 of them.

But the policy’s original objective remains sound: “creation of a joint mechanism for the extension of credit to banks which possess sound assets and which desire to liquidate them for the purpose of meeting legitimate commercial, agricultural, and industrial demands on the part of their clientele.”

Walsh noted that discount window borrowing is currently available only for easing very short-term reserve shortages. When the Fed wants to expand bank lending, it purchases government securities from the banking sector, allowing bank reserves to expand. But he observed that this maneuver does not necessarily increase bank lending, and that some commentators argued that the Fed should be allowed to purchase existing loans from banks that could then use the funds to back new loans on the “real bills” theory.

Compare North Dakota’s “Mini-Fed”

How might that work today? For some idea, we can look to the highly successful state-owned Bank of North Dakota, which has been described as a “mini-Fed” for the local banks of that state. Again quoting Wikipedia:

The BND serves as a wholesale bank for the state’s community banks and credit unions. It participates in loans created by the local banks by expanding their size, providing loan guarantees, and “buying down” interest rates. Additionally, it buys loans from bank portfolios as well as community bank stocks. The bank provides other banking services to local banks, such as clearing checks, acting as depository for their reserves, and providing federal funds.

According to a May 2020 article in The Washington Post titled “North Dakota Businesses Dominated the PPP”:

Small businesses there secured more PPP [Paycheck Protection Plan] funds, relative to the state’s workforce, than their competitors in any other state ….

What’s their secret? Much credit goes to the century-old Bank of North Dakota …. According to Eric Hardmeyer, BND’s president and chief executive, BND connected the state’s small bankers with politicians and U.S. Small Business Administration officials and even bought some of their PPP loans to help spread out the cost and risk.

… BND offers few retail services or direct loans, with the notable exception of student loans. Instead it partners with local banks, multiplying their lending power and guiding them through the ever-evolving global financial system….

BND has already rolled out two local successor programs to the PPP, intended to help businesses restart and rebuild. It has also offered deferments on its $1.1 billion portfolio of student loans.

Updating the Federal Reserve Act

The Paycheck Protection Plan was one of many relief programs established in March 2020 that were funded with Fed credit and capitalized with money from the Treasury. But Treasury backing would not actually be necessary to restore the Fed’s Discount Window to its original function. The Federal Reserve Act would just need a bit of tweaking to bring it into the 21st century.

To start, Hockett says we need many more Federal Reserve branches than the original twelve, which are not distributed proportionately to today’s populations. The three-month limit on commercial loans and six-month limit on municipal government loans in Federal Reserve Act §10b also need to be extended; and we need a national funding agency for infrastructure, similar to the Reconstruction Finance Corporation that restored the depression-ridden U.S. economy in the 1930s. Hockett has drafted a bill for implementing his proposals, found here.

That could work for long-term production, but families faced with rising food and energy bills need help right now. Until production catches up with demand, the innovative Cornell professor suggests that the Fed can counteract the speculation that is driving up those prices with “Open Market Operations,” using its new Chicago Fed trading desk to short them in the market. Direct market intervention is highly controversial and could obviously be misused; but the tool exists, and, if properly directed, it could help satisfy the Fed’s mandate to maintain consumer price stability. For more on that rather complicated subject, see here and here.

To sum up: today’s price inflation was triggered not so much by “too much money” as by “too little supply,” due to lockdowns and mandates. The Fed can help restock consumer supplies using tools already in its toolbox. They include Open Market Operations to counteract speculation, and the Discount Window to purchase loans from local banks that would be willing to fund Main Street businesses if they had some help from the national Lender of Last Resort. We need the sort of Discount Window envisioned by the drafters of the Federal Reserve Act, one providing the liquidity to backstop bank advances against the future productivity of local businesses.

•  This article was first posted on ScheerPost.

The post Rather Than Sink Main Street by Raising Interest Rates, the Fed Could Save It: Here’s How first appeared on Dissident Voice.

Miserable Bankruptcy of Mainstream Economics

Capital-centered economics is unscientific and irrational. It does not provide people with a coherent, integrated, and cogent understanding of the economy. Instead it increases confusion every day, leaving people rudderless and disoriented about what is really happening.

The capitalist economic system is always chaotic, anarchic, and violent, but the last two years have been more volatile and disordered than usual. Stability and security remain elusive. Uncertainty and anxiety are ever-present. Sustained healthy economic growth is largely absent.

In the most schizophrenic way, one week the monopoly-controlled media claims that the economy is doing extremely well while the following week we are told the economy is collapsing. We are to accept constant uncertainty and precariousness and conclude that this is the best we can do. A CNBC news article, After a huge year for growth, the U.S. economy is about to slam into a wall, is emblematic of this incoherence and irrationalism. So is this headline from U.S. News & World Report, The Maddening Reality of the Biden Economy, and this one from CNN Business, America’s economic recovery is about to go into reverse. What “growth”? What “recovery”? And why are “growth” and “recovery” suddenly “about to go into reverse” or “slam into a wall”?

The main nagging economic problems are well-known: endless debt of all kinds, ceaseless money printing, high inflation, growing inequality, extensive supply chain disruptions, more poverty, rising insecurity, widespread under-employment, erratic business hours, poor wage growth, prevalent homelessness, additional pay-the-rich schemes, and more.

These grave problems are interrelated and reflect an economy dominated and distorted by a handful of competing owners of capital while the vast majority, the actual producers of wealth in society, remain marginalized and disempowered, reduced to helpless bystanders watching everything decline. We are to believe that conscious human control of the economy is impossible and that all we can do is “make the best” of a treacherous situation, “endure the pain,” and “weather the storm together.” Apparently there is no alternative to this obsolete state of affairs. We are to “wait things out,” cross our fingers, and hope that things magically sort themselves out.

Existing conditions are screaming for new social, political, and economic relations but the present authority refuses to modernize relations to bring them on par with what is needed. The international financial oligarchy is desperately hanging on to a dying and decaying world, determined to block the new.

What are people to make of this untenable situation? What should they do? How can they change the situation in a way that favors them?

Continually engaging in a conscious act of finding out and combing analysis with action are critical to opening the path of progress to society. These are not easy responsibilities, especially under oppressive anti-conscious conditions.

Economic problems cannot be solved without concrete analysis of the conditions and collective action to solve problems. The rich and their allies are not going to solve anything. They have no interest in the balanced extended reproduction of society. They cannot be relied on because they are concerned only with their narrow private interests, not the economy as an integrated whole. They reject public control of the economy. Nor do they want anyone engaging in conscious investigation of what is going on and organizing with others to create new pro-social arrangements. The ruling elite does not want its domination challenged in any way, no matter how many lofty phrases they throw around about being democratic, inclusive, and progressive.

Blindly repeating and supporting the ideas of the rich and their political representatives will not lead to one iota of progress. Embracing the outlook and agenda of the ruling elite and rejecting theory, analysis, and investigation will only perpetuate the destructive status quo. It is only by taking up our social responsibility together that we can overcome the forces dragging society backward. It is both possible and necessary to understand and control the economy to serve the people as a whole. Living and working standards do not have to decline in this modern age. The economy is not a mystery. It can be directed to serve the general interests of society.

Under existing arrangements we have seen what happens when different sectors of the economy are dominated by competing owners of capital interested only in their own profits no matter how damaging this is to the social and natural environment. The economy is prevented from being self-reliant, balanced, and coordinated to serve the broad needs of a modern society based on mass industrial production.

Under capitalism everything is so discombobulated that one “glitch” in one sector leads to disruptions, distortions, and upheaval elsewhere. Why is this unsustainable state of affairs allowed to prevail in 2022? Is there no alternative to this backward state of affairs?

Major owners of capital are a block to progress and progress begins by taking a stand against the old and in favor of the new. It begins by rejecting a capital-centered outlook of the economy and society. Together we can decipher and understand what is going on and collectively improve the social and natural environment. Only we can usher in the alternative to the status quo.

The post Miserable Bankruptcy of Mainstream Economics first appeared on Dissident Voice.

Madness, Mayhem, and Tyranny

Tyranny does not flourish because perpetuators are helpless and ignorant of their actions. It flourishes because they actively identify with those who promote vicious acts as virtuous.

— An academic study into pathocracy

Disgruntled mobs. Martial law. A populace under house arrest. A techno-corporate state wielding its power to immobilize huge swaths of the country. A Constitution in tatters.

Between the riots, lockdowns, political theater, and COVID-19 mandates, 2021 was one for the history books.

In our ongoing pursuit of life, liberty and happiness, here were some of the stumbling blocks that kept us fettered:

Riots, martial law, and the Deep State’s coup. A simmering pot of political tensions boiled over on January 6, 2021, when protesters stormed the Capitol because the jailer of their choice didn’t get chosen to knock heads for another four years. It took no time at all for the nation’s capital to be placed under a military lockdown, online speech forums restricted, and individuals with subversive or controversial viewpoints ferreted out, investigated, shamed and/or shunned. The subsequent military occupation of the nation’s capital by 25,000 troops as part of the so-called “peaceful” transfer of power from one administration to the next was little more than martial law disguised as national security. The January 6 attempt to storm the Capitol by so-called insurrectionists created the perfect crisis for the Deep State—a.k.a. the Police State a.k.a. the Military Industrial Complex a.k.a. the Techno-Corporate State a.k.a. the Surveillance State—to swoop in and take control.

The imperial president. All of the imperial powers amassed by Donald Trump, Barack Obama, and George W. Bush—to kill American citizens without due process, to detain suspects indefinitely, to strip Americans of their citizenship rights, to carry out mass surveillance on Americans without probable cause, to suspend laws during wartime, to disregard laws with which he might disagree, to conduct secret wars and convene secret courts, to sanction torture, to sidestep the legislatures and courts with executive orders and signing statements, to direct the military to operate beyond the reach of the law, to act as a dictator and a tyrant, above the law and beyond any real accountability—were inherited by Joe Biden, the nation’s 46th president.

The Surveillance State. On any given day, the average American going about his daily business was monitored, surveilled, spied on and tracked in more than 20 different ways, by both government and corporate eyes and ears. In such a surveillance ecosystem, we’re all suspects and databits to be tracked, catalogued and targeted. Consider that it took days, if not hours or minutes, for the FBI to begin the process of identifying, tracking and rounding up those suspected of being part of the Capitol riots. Imagine how quickly government agents could target and round up any segment of society they wanted to based on the digital trails and digital footprints we leave behind.

Digital tyranny. In response to the events of Jan. 6, the tech giants meted out their own version of social justice by way of digital tyranny and corporate censorship. Suddenly, individuals, including those who had no ties to the Capitol riots, began to experience lock outs, suspensions and even deletions of their social media accounts. It signaled a turning point in the battle for control over digital speech, one that leaves “we the people” on the losing end of the bargain.

A new war on terror. “Domestic terrorism,” used interchangeably with “anti-government,” “extremist” and “terrorist,” to describe anyone who might fall somewhere on a very broad spectrum of viewpoints that could be considered “dangerous,” became the new poster child for expanding the government’s powers at the expense of civil liberties. As part of his inaugural address, President Biden pledged to wage war on so-called political extremism, ushering in what investigative journalist Glenn Greenwald described as “a wave of new domestic police powers and rhetoric in the name of fighting ‘terrorism’ that are carbon copies of many of the worst excesses of the first War on Terror that began nearly twenty years ago.” The ramifications are so far-reaching as to render almost every American an extremist in word, deed, thought or by association.

Government violence. The death penalty may have been abolished in Virginia in 2021, but government-sanctioned murder and mayhem continued unabated, with the U.S. government acting as judge, jury and executioner over a populace that had already been pre-judged and found guilty, stripped of their rights, and left to suffer at the hands of government agents trained to respond with the utmost degree of violence. Police particularly posed a risk to anyone undergoing a mental health crisis or with special needs whose disabilities may not be immediately apparent.

Culture wars. Political correctness gave way to a more insidious form of group think and mob rule which, coupled with government and corporate censors and a cancel culture determined not to offend “certain” viewpoints, was all too willing to eradicate views that do not conform. Critical race theory also moved to the forefront of the culture wars.

Home invasions. Government agents routinely violated the Fourth Amendment at will under the pretext of public health and safety. This doesn’t even begin to touch on the many ways the government and its corporate partners-in-crime used surveillance technology to invade homes: with wiretaps, thermal imaging, surveillance cameras, and other monitoring devices. However, in a rare move, the Supreme Court put its foot down in two cases—Caniglia v. Strom and Lange v. California—to prevent police from carrying out warrantless home invasions in order to seize lawfully-owned guns under the pretext of their so-called “community caretaking” duties and from entering homes without warrants under the guise of being in “hot pursuit” of someone they suspect may have committed a crime.

Bodily integrity. Caught in the crosshairs of a showdown between the rights of the individual and the so-called “emergency” state, concerns about COVID-19 mandates and bodily integrity remained part of a much larger debate over the ongoing power struggle between the citizenry and the government over our property “interest” in our bodies. This debate over bodily integrity covered broad territory, ranging from abortion and forced vaccinations to biometric surveillance and basic healthcare. Forced vaccinations, forced cavity searches, forced colonoscopies, forced blood draws, forced breath-alcohol tests, forced DNA extractions, forced eye scans, forced inclusion in biometric databases: these were just a few ways in which Americans continued to be reminded that we have no control over what happens to our bodies during an encounter with government officials.

COVID-19. What started out as an apparent effort to prevent a novel coronavirus from sickening the nation (and the world) became yet another means by which world governments (including our own) expanded their powers, abused their authority, and further oppressed their constituents. Now that the government has gotten a taste for flexing its police state powers by way of a bevy of lockdowns, mandates, restrictions, contact tracing programs, heightened surveillance, censorship, overcriminalization, etc., it remains to be seen how the rights of the individual will hold up in the face of long-term COVID-19 authoritarianism.

Financial tyranny. The national debt (the amount the federal government has borrowed over the years and must pay back) exceeded $29 trillion and is growing. That translates to almost $230,000 per taxpayer. The amount this country owes is now greater than its gross domestic product (all the products and services produced in one year by labor and property supplied by the citizens). That debt is also growing exponentially: it is expected to be twice the size of the U.S. economy by 2051. Meanwhile, the government continued to spend taxpayer money it didn’t have on programs it couldn’t afford; businesses shuttered for lack of customers, resources and employees; and consumers continued to encounter global supply chain shortages (and skyrocketing prices) on everything from computer chips and cars to construction materials.

Global Deep State. Owing in large part to the U.S. government’s deep-seated and, in many cases, top-secret alliances with foreign nations and global corporations, it became increasingly obvious that we had entered into a new world order—a global world order—made up of international government agencies and corporations. We’ve been inching closer to this global world order for the past several decades, but COVID-19, which saw governmental and corporate interests become even more closely intertwined, shifted this transformation into high gear. Fascism became a global menace.

20 years of crises. Every crisis—manufactured or otherwise—since the nation’s early beginnings has become a make-work opportunity for the government to expand its reach and its power at taxpayer expense while limiting our freedoms at every turn: The Great Depression. The World Wars. The 9/11 terror attacks. The COVID-19 pandemic. Indeed, the government’s (mis)management of various states of emergency in the past 20 years from 9/11 to COVID-19 has spawned a massive security-industrial complex the likes of which have never been seen before.

The state of our nation. There may have been a new guy in charge this year, but for the most part, nothing changed. The nation remained politically polarized, controlled by forces beyond the purview of the average American, and rapidly moving the nation away from its freedom foundation. Over the past year, due in part to the COVID-19 pandemic, Americans found themselves repeatedly subjected to egregious civil liberties violations, invasive surveillance, martial law, lockdowns, political correctness, erosions of free speech, strip searches, police shootings of unarmed citizens, government spying, the criminalization of lawful activities, warmongering, etc.

In other words, as I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, the more things changed, the more they stayed the same.

The post Madness, Mayhem, and Tyranny first appeared on Dissident Voice.

The Hypocritical Oath

Residency training often claims to focus on training effective physicians. In reality, it’s an intricately designed conditioning process to train physicians to be tools for profit maximization. In order to be truly “effective” physicians, residents, in solidarity with other healthcare workers, must organize to challenge the systems that lead to suffering and illness both in health care and around the globe.

Image of person in a white medical coat holding a stethoscope in their left hand and crossing their arms.

The end of medical school is a moment that, for many medical school graduates, is several years — sometimes several generations — in the making. After four grueling years the graduate is ready to officially get that “MD” behind their name. But what else has the four years of medical school done for the soon-to-be physician? As previously discussed, medical school is not an apolitical environment in which “medical knowledge” is simply passed on to each student. Mechanisms are put in place to condition students to be less likely to question systems of power. Overall, the medical school structure serves as an indoctrination system. By the time they graduate, medical students are forced to take on massive amounts of student loans — the average medical school graduate has around $250,000 in student loan debt — which serves as a form of economic control and coercion. By conditioning thought and using economic coercion, the medical education system helps make the physician more likely to participate in and help maintain a capitalist healthcare system whose focus is extracting monetary value from people’s bodies damaged by capitalism and colonialism.

This indoctrination starts even before medical school as the educational system filters for a medical school candidate from a particular class and racial background. Folks from working-class backgrounds are systematically excluded from medical school education — from premedical courses designed to “weed out” students, few opportunities for mentorship, and unsupportive career counselors to hard-to-meet shadowing or extracurricular requirements to the highly prohibitive costs of standardized testing, applications, and interviews. To be clear, these dynamics are nothing new. In his book Rockefeller Medicine Men: Medicine and Capitalism in America, E. Richard Brown cites concerns raised by education leaders as far back as 1908, when the Association of American Medical Colleges (AAMC) was criticized for changing attendance requirements for medical school. As Brown states, the proposed requirement for a college education before attending medical school would “exclude poorer classes from their [medical school] ranks.”

This trend continues today. According to an analysis from the AAMC, the median family income of matriculating medical students has only increased over the years, and it will likely further systemically skew upward in the coming years. These filtering mechanisms also serve to limit the political perspectives of incoming medical students, making it even easier to structure the collective thought of students once they are in medical school.

After all this, what comes next for the new doctor? Medical residency. Medical residency lasts anywhere from three to seven years depending on the medical specialty. It is considered the place where physicians learn to “practice” the “art of medicine.” But what actually happens in residency? Residents work long hours for large corporations while being told that their work conditions are beneficial to their “learning.” In reality, though, residents work as cheap labor for the medical industrial complex. During residency, trainees learn to respect the corporate hierarchy, keep their heads down, be subservient to authority, and, most importantly for the capitalist medical system, how to more efficiently funnel patients through medical factories for profit.

A Brief History of Modern Medical Education

To discuss medical residency, we must understand how residency serves as a training program to produce physicians who function within and perpetuate the capitalist medical system. The field of medicine supporting the foundational structures of capitalism in a settler-colonial society is nothing new. For example, as E. Richard Brown cites, in Walter Fisher’s study of medicine’s role in the antebellum South, Fisher concluded that enslaved people were given medical care mainly because of “the tremendous economic investment they represented to slave owners.” Additionally, medicine was weaponized to justify the racial hierarchy that serves capitalism. As medicine became more modernized and education more formalized, it was important to ensure physicians were trained to practice medicine in a particular way. A document crucial in setting this path for modern American medical education was the Flexner Report.

As educators of the Health Justice Commons (HJC) discuss, the Flexner Report, a landmark document written by Abraham Flexner and commissioned by the Carnegie Foundation, helped set the standards for modern medical education. The report was critical in helping shift modern American medical education to a strictly biomedical focus. As the HJC discusses, the report alienated traditional healers, criminalized alternative forms of care, and deemed women and people of color unfit to participate in medical education. In Rockefeller Medicine Men, Brown cites Flexner’s views that the practice of Black doctors be “limited to his own race.” Flexner perpetuated racist views about disease transmission by advocating for “improved training for Black physicians” largely because whites lived near Black people. These prejudices translated to medical school reforms and closures. Post-report, Black medical schools were disproportionately affected by closure, with 71 percent of Black medical schools closing compared to 55 percent of white institutions. Of the seven Black medical schools in existence at the time, only Meharry and Howard survived.

The report also helped solidify a medical education system that systematically excludes applicants of working-class backgrounds, arguably institutionalizing the elitism of the medical education system. Flexner believed the previous requirement of just four years of high school before medical school attracted “a mass of unprepared youth drawn out of industrial occupations into the study of medicine.” As Brown notes, “Neither the ‘crude boy’ nor ‘the jaded clerk’ were suitable material for a career in medicine.” Flexner’s prescription was to require college before medical school. Brown emphasizes that this occurred at a time when “only 15 percent of the high school age population was enrolled in high school and only 5 percent of the college age population was enrolled in a college or university.”

In the early 20th century large monopoly families were constantly exploring how to increase their wealth and power by controlling societal institutions. The Rockefellers, for example — a family headed by J.D. Rockefeller, an American capitalist and oil baron who profited off the Holocaust — founded the Rockefeller Institute for Medical Research in 1901 to privately fund medical research. Families such as the Morgans (of JP Morgan) were also active in the research-focused Carnegie Foundation, which they used to exert greater control over legislative and governmental bodies.

The Rockefeller Foundation was headed by Dr. Simon Flexner and notably did not support research investigating the connection between social factors, health, and disease. The ruling elites had no interest in changing society for the general health and well-being of the populace as an end in itself. Instead, research was explored in order to make the public healthy enough to labor, to be further exploited by capitalists. These ruling-class families also hoped to integrate these changes in medical education with contemporary reforms in education more generally to further expand their influence.

In 1907, in the context of these larger reforms, the head of the newly reformatted American Medical Association (AMA), surgeon and professor at Rush Medical College, Arthur Dean Bevan, invited the head of the Carnegie Foundation for the Advancement of Teaching, Henry Pritchett, to discuss the possibility of a Carnegie-sponsored study on medical education. Eventually Simon Flexner’s brother, Abraham Flexner, was appointed director of this study, even though he had no experience in medicine. And thus, Abraham Flexner’s “Flexner Report” was born.

While there can be arguments made around potential benefits of “standardizing” quality in medical education, as HJC notes, medical education’s shift to pure biomedicine has created captive markets of communities seen as disease vectors to be controlled through “healthcare.” In doing so, these reforms helped create vertical, high-profit industries in which patients become dependent consumers. The focus on biomedicine also served the financial interest of the medical industrial complex by not treating the root causes of illness, for self-preservation of the medical industrial complex itself. Additionally, it absolves the other interconnected industrial complexes (military, pharmaceutical, fossil fuel, manufacturing, farming) and allows their catastrophic effects on the well-being of the environment and communities to continue. As Brown notes, “The Flexner report united the interests of the elite practitioners, scientific medical faculty, and the wealthy capitalist class.”

Medical Residency as a Tool for Indoctrination and Labor Extraction

In their book Social Medicine and the Coming Transformation, physicians and activists Howard Waitzkin, Alina Pérez, and Matthew Anderson discuss how the training and education of healthcare workers can serve the interests of the capitalist system. They cite the work of Vincent Navarro, Spanish physician, sociologist, and political scientist who maintained there is a minimum level of health for the working class if it is to work. As a result an alliance must arise between the capitalist class and medical profession, as healthcare workers are needed to perpetuate the belief that the main causes of ill health are personal and biogenetic rather than social and commonly caused by the very occupations in which people work. Changes made to medical education as a result of the Flexner report, which continue to this day, helped to bolster this alliance. It is the job of healthcare workers who want to destabilize these oppressive systems to grapple with and struggle against this system of education. Today an elaborate array of conditioning mechanisms and structures are now in place to uphold these dynamics. Let’s discuss how some of these mechanisms function.

Throughout medical school and residency training, students and trainees are subject to a series of licensing and board certification examinations. Studies have demonstrated that there is little to no correlation between United States Medical Licensing Exam (USMLE) scores and clinical performance in residency. Instead of ensuring the production of competent, compassionate physicians prepared to address the structural factors that cause illness and suffering, these examinations function to promote conformity and the status quo. Studying for these examinations can be all consuming, thereby diverting time from questioning and challenging harmful systems to test preparation.

Additionally, these tests ensure a constant source of revenue for test preparation companies, testing companies, and organizations, such as the Federation of State Medical Boards (FSMB) and the National Board of Medical Examiners (NBME), the licensing and testing bodies, respectively. In fiscal year 2019, the NBME reported a revenue of $180 million, with $177 million operating costs and a profit of $3 million. The FSMB reported a profit of $4.7 million in 2019, and in 2020, their CEO was compensated $726,518. This tax data, available on ProPublica’s Nonprofit Explorer, is an example of how nonprofit organizations function like corporations within the nonprofit industrial complex. Test preparation for USMLE licensing exams and specialty boards is also  highly profitable, forming part of the billion-dollar test prep industry. Preparation courses and practice-question banks all come at a cost, which can be prohibitive to first-generation or low-income students and trainees, which serves to further exclude people of color and working-class people from becoming physicians. In summary, standardized testing with an emphasis on physician competence disguises the real goal of producing physicians for the extraction of profit from bodies damaged by capitalism and is also profitable in and of itself.

Medical residency is also profitable to hospital systems. Let’s look at the data on Medicare Graduate Medical Education (GME) payments, which has been compiled here. Payments consist of direct and indirect costs of resident education, that is, the salary and benefits of residents and their attending preceptors and program operating costs, respectively. The Per Resident Amount (PRA) paid for each resident significantly exceeds the resident salary. For example, in 2018, Howard University Hospital was paid a PRA of $169,206 for primary care specialties, while the salary for a first-year resident was $50,628.36. The 2017 paper “Eliminating Residents Increases the Cost of Care” calculated the cost of replacing residents. Residents are paid less and work more than their replacements (they are not to work more than 80 hours weekly averaged across four weeks, as established by the Accreditation Council for Graduate Medical Education or ACGME, a body further discussed below). By the author’s calculations, the cost of replacing 1.0 Full Time Equivalent (FTE) internal medicine resident with 1.8 FTE Nurse Practitioner would be $168,104. The cost of replacing 1.0 FTE anesthesiology resident with 1.5 FTE Certified Registered Nurse Anesthetist would be $218,111. They conclude that “GME programs are a positive factor in hospital finances and should not be considered a financial risk.” Though hospital leadership pretends they are doing a service by “training the next generation of doctors,” the financial incentive is clear. Hospital CEOs do not care about training competent physicians; they care about improving their bottom line with cheap, overworked resident physicians.

In addition to being inherently profitable, medical residency serves as an indoctrination process for the production of physicians who will be complicit with the medical industrial complex. The Accreditation Council for Graduate Medical Education (ACGME) is the accrediting body for residency and fellowship programs, whose stated purpose is “improving the patient care delivered by resident and fellow physicians today, and in their future independent practice.” How does the ACGME determine when a resident physician has become “competent”? For one, through dictating the number of patients that should be seen during residency, with an emphasis on clinical efficiency during a 15–20 minute “patient encounter.” This number is 1,650 for family medicine residents, with the implication being that volume equals learning.

Does it? Do residents learn to be compassionate listeners? Do they understand their patient’s illness experience and the oppressive systems that cause suffering? Do they have time to fight these systems outside the hospital or examination room? Do they have time to adequately precept and learn from their attending physicians? Do they have the option to slow down to learn if they need more time or support without fear of being placed on academic observation or probation?

No, they learn to see human beings as a “single problem for today’s visit,” interrupt them midsentence, and further traumatize, police, and perpetuate harms of medical racism and the like. This practice is particularly damaging and exploitative given that residency programs commonly provide medical care in oppressed communities. Education about the systems that produce illness would cause the resident to conclude that the healthcare system, which commodifies illness and maximizes financial extraction from bodies damaged by capitalism and colonialism, must be dismantled entirely. Additionally, the ACGME says they value resident “well-being” and “patient safety,” which is why the 80-hour workweek was standardized. Eighty hours a week, however, is the equivalent of two full-time jobs, which leads to exhausted residents attempting to care for patients and increased risk of medical errors. Yet this comical “work limit” is maintained to give the perception of caring about well-being (of both resident and patient) while solidifying the place of the resident as a cog in the wheel of the medical industrial complex.

Residency programs themselves take a crucial role in conditioning physicians. One way programs do this is by co-opting “woke” terminology in discussing the training of physicians without implementing policies that would change the actions of physicians practicing. For example, take implicit bias training, lauded in “social justice”–oriented residencies around the country. A study published in the Journal of Personality and Social Psychology in 2019 titled “A Meta-analysis of Procedures to Change Implicit Measures” brought together 492 studies on procedures used to change the implicit biases that influence behavior. The study “found little evidence that changes in implicit measures translated into changes in explicit measures and behavior.” Yet despite data showing these trainings are ineffective, they continue because they allow residency programs to appear as if they are teaching physicians to address systemic problems.

This sets up a dynamic, which MD/PhD student Ariel Hart references in their piece on Medium titled “what i know to be true:” where “Talking about implicit bias, structural competency, health inequities and even anti-racism can take up a lot of time and energy and most of the times is a checkbox, to make people feel good about doing next to nothing to actually uproot structural violence in our society.” Programs use these checkboxes to pretend they are “doing the work,” but as Hart explains “we will not ‘implicit bias,’ ‘structural competence’ or ‘health inequity’ training ourselves out of this. We need to explicitly name and target colonialism, capitalism, racism, sexism, and other oppressions.”

In residency programs around the country there also is a focus on “wellness” to address higher rates of “depressive disorders, depressed mood, burnout, and suicidal ideation” among medical residents when compared to their nonmedical peers. Studies demonstrate that “male doctors have suicide rates as much as 40 percent higher than the general population, and female doctors up to 130 percent higher.” While the causes of depression and suicide are multifactorial, the continual alienation of physicians inside the medical industrial complex and its factory-like commodification of patients takes its toll on physician well-being.

Yet combating this exploitative system is rarely discussed as a solution to resident issues. Instead, individual solutions are proposed, such as “finding better balance” or “improved time management” or “meditation.” Ultimately, residency programs emphasize individual solutions because combating the factory processes of medicine would threaten their existence, and this process of individualizing systemic issues then extends to a physician’s practice after residency. Residency programs deflect responsibility for exhausting 80-hour resident workweeks, citing the ACGME, when programs could institute hour limit restrictions unilaterally, yet fail to do so. Programs rarely feel threatened to make tangible changes as time in residency is limited (typically three to five years); by the time residents start to organize, they will already be graduating. Therefore, less effort is put into changing exploitative dynamics. Residency programs help create and maintain exploitative conditions for residents.

Prospects for a New Approach

There is a commonly held assumption that it is possible to practice technically “good care” in the current medical setting despite its goal of maximizing profit at the expense of all else, with medical training systematically designed to depoliticize healthcare workers and uphold the current medical structure. It needs to be explicitly stated — it is not possible. The current medical system does not allow for adequate patient care and the medical education system conditions healthcare workers to either mentally suppress that known reality or perform mental gymnastics to convince themselves that they are providing “good care.” The first step in addressing this system is understanding that adequate healthcare under capitalism is not possible. A medical education that trains physicians to recognize, address, and destabilize destructive systems will be attainable only when healthcare workers, both in training and independent practice, politicize themselves to the degree they recognize the need to build new systems of medical education and healthcare.

Current residents must mobilize to help create these new systems. One way residents can begin doing this is to participate in the Committee of Interns and Residents (CIR), a union. If the residency does not have a union, the residents should fight to win one. But in the process of fighting for a union or fighting with a union, residents cannot settle there. Once politicized, residents must demand militant, fighting unions that do not campaign for capitalist politicians and do not sign comfortable contracts for the boss that include “no-strike” clauses. Residents must demand that “their union,” CIR, stop trying to play nice with exploitative hospital systems, “asking” for moderately better working conditions, or “seats at” a table of executives who care about profit maximization above all else. Unions should not be fighting for seats at the table of the medical industrial complex — they should be fighting to cut the legs off the table and destroy it all together. Healthcare workers can collectively run these institutions themselves and do not need bosses who only make their jobs more difficult and obstruct patient care. As we have highlighted, residents keep hospital systems running, and they and their union must use all the tools possible, including work stoppages and strikes, to fight employers that ultimately do not care about workplace conditions or patient health. Healthcare workers must resist and reject the boss’s myth that organizing for better working conditions will harm patients.

While residents fight for combative unions, there is a danger that the focus can become solely on obtaining a union, which misdirects energy from building militant organization between workers in a workplace. Residents can become siloed and lose the view of the exploitation of workers occurring all around them. This must be avoided. At the Institute for Family Health (IFH) in New York City, for example, residents worked to organize across staff lines, combining the struggles among residents, attending physicians, nurses, medical assistants, and all other staff, focusing on the exploitation all workers experienced because of the boss. This fight was ultimately betrayed by workers pursuing their own self-interest instead of maintaining a collective struggle — this serves as another example of the result of the lack of political education among healthcare workers — but fights like these can serve as schools of war for workers organizing together. Another example of the power of resident organizing is advocating for protest as didactics, as done by residents at the Swedish Cherry Hill Family Medicine Residency in Seattle, which now gives didactic credit for participation in political actions within the community.

In this process, it is important to recognize and accept the interconnectedness of all systems of oppression that harm the working class, and ultimately harm all life systems on this earth. Medical students, residents, and physicians who truly care about health — whether that means the health of the patient, the health of the community, or the health of humans and living beings on the earth more generally — must participate in political organizing outside the hospital to challenge the medical industrial complex, capitalism, colonialism, and U.S. imperialism. You cannot #decolonize medicine at historically racist institutions on stolen land, and the changes needed will not come from within those institutions.

Workers both within and outside medicine must participate in political organizations focused on not just challenging the medical industrial complex but the capitalist system as a whole. Ultimately, the fight against the system of medical education comes as part of a fight against the medical industrial complex, which cannot be adequately waged unless it also fights other systems of oppression.

The post The Hypocritical Oath first appeared on Dissident Voice.

One Degree of Separation: There Will be Parasitic Capitalism’s Blood

This year’s NDEAM theme is prescient: “America’s Recovery – Powered by Inclusion.” October 2021.

The power of acceptance in this diverse world will follow the arc of social justice; however,  it’s a long journey, still, in 2021.

When I was 15, I had to do community service for ripping through the Tucson desert with my unlicensed motorcycle while I had no driver’s license.  For three months, I read poetry, drama and letters to people in the last stages of their lives at a hospice.

When I sat with some of these patients, I was both humbled by and shaken awake to life’s fragility. My favorite person was Gloria, who was on her last stages with a tube running from her 60-pound inoperable tumor to draining ghastly fluids.

We  talked about her days in theater, and I read plays to her, including Shakespeare’s Othello and Sam Shepherd’s, Curse of the Starving Class. I met her 55 year old daughter with Down Syndrome.

Disability, or handicap, and other phrases like terminally ill, vegetative state and bed-ridden flummoxed me into a state of wokeness.

I am still working with drama and engaging people who fit the Disability Month profile: adults with developmental and intellectual disabilities.

This awareness campaign — started by Congress 33 years ago – is close to my heart since I’ve worked as a trained customized employment specialist, initially with United Cerebral Palsy of Oregon.

This work was in the tri-county Portland area, and successes were high points in my life, probably more so than the clients’ lives. Helping land jobs for people who have challenges and face unimaginable hurdles tied to discrimination, stigmatization and poverty is rewarding.

There have been big changes in how we relate to people living with disabilities; however, prejudice and disenfranchisement are still prevalent. Discrimination against those with a developmental disability is high.

The “National Snapshot of Adults with Intellectual Disabilities in the Labor Force” was commissioned by Special Olympics. The facts are sobering:

  • Only 44% of adults with ID aged 21-64 are in the labor force. This is compared to 83% of working-age adults without disabilities who are in the labor force.
  • 21% of working age adults with ID are unemployed. This is compared to less than 8% of adults without disabilities who are unemployed.
  • 28% of working age adults with ID have never held a job.
  • Only 34% of adults with ID aged 21-64 are employed.

In Lincoln County, adults with intellectual disabilities work in  grocery stores, hotels, landscaping businesses, restaurants and other settings. State agencies are committed to making sure adults have the opportunity to work in competitive environments.

However, stigma and unique circumstances make it challenging to get job placement: many with DD/ID can’t work more than PT jobs;  transportation is problematic; and many need a job coach on site to ensure successful day-to-day activities.

Historically, in 1941, National Employ the Physically Handicapped week cracked open the nut. In 1962 “physically” was removed. 1973 harkened the Rehabilitation Act declaring discrimination on the premise of disability was illegal. Then, more headway: Education for All Handicapped Children Act (1975).

Thirty years ago, Americans with Disabilities Act was signed into law, guaranteeing access to work and prohibiting discrimination against individuals with physical or intellectual disabilities.

Today, more families and communities are comprised of an increasing number of people who live with intellectual and developmental disabilities.

Still, today, those wanting integrated employment that have an employment specialist assisting in customized employment face roadblocks.

Cultural change must galvanize this philosophy of “it takes a village to ensure the safety, health and well being for all our fellow citizens.” That means business owners must step up to the plate.

In the words of Mister (Fred)  Rogers himself:  “Part of the problem with the word ‘disabilities’ is that it immediately suggests an inability to see or hear or walk or do other things that many of us take for granted. But what of people who can’t feel? Or talk about their feelings? Or manage their feelings in constructive ways? What of people who aren’t able to form close and strong relationships? And people who cannot find fulfillment in their lives, or those who have lost hope, who live in disappointment and bitterness and find in life no joy, no love? These, it seems to me, are the real disabilities.”

2021 NDEAM Poster English

Ahh, that’s the piece coming out in the Newport News Times, above. The reality is I have 750 words to work with, no graphics, and alas, no polemics. And, yes, this concept of disabilities of a wide variety should be on everyone’s minds now, in 2021, the Year of the Jab, the Year of the Long Haul, the Year of Weathering, the Year of the Haves Putting the Screws Down on the Haves Not!

You see, the injuries caused by the felony offenders, Pfizer and their mRNA experimental what not, those are disabilities to be argued over for years to come. Lawyers lines up, judges bought and paid for through the ugly world of Capitalism — adding these prefixes: predatory, usury, chaotic, casino, disruptive, mafia, and so many other terms for this predation and rip-off scam. Structural violence is built into the system, and whether you are injured by glyphosate encrusted foods, or the unending cascade of carcinogens and neuro-toxins put out by the great believers in “better living-chronic illnesses through chemistry”, or injured by the jabs, or the bioweapon that is the perfect triple storm, or just by the endless threat of eviction-incarceration-bankruptcy, homelessness, medical-educational indebtedness, all that Repo that is the Republic, there ain’t no Demon-crat or Repulsive-can to come to anyone’s rescue. Prostitution is honest compared to these continuing criminal enterprise winners in government-big business-big finance-military-tech-Pharma-et al.

Transmission electron micrograph of SARS-CoV-2 virus particles.

Old news:

A GRANT PROPOSAL written by the U.S.-based nonprofit the EcoHealth Alliance and submitted in 2018 to the Defense Advanced Research Projects Agency, or DARPA, provides evidence that the group was working — or at least planning to work — on several risky areas of research. Among the scientific tasks the group described in its proposal, which was rejected by DARPA, was the creation of full-length infectious clones of bat SARS-related coronaviruses and the insertion of a tiny part of the virus known as a “proteolytic cleavage site” into bat coronaviruses. Of particular interest was a type of cleavage site able to interact with furin, an enzyme expressed in human cells.

The EcoHealth Alliance did not respond to inquiries about the document, despite having answered previous queries from The Intercept about the group’s government-funded coronavirus research. The group’s president, Peter Daszak, acknowledged the public discussion of an unfunded EcoHealth proposal in a tweet on Saturday. He did not dispute its authenticity.

Disability — what pray tell is that? There are dozens of chronic illnesses that generate many levels of loss of abilities; i.e., disabilities. I work with all sorts of disabilities, and all sorts of chronic illnesses go hand in hand with disabilities, especially with homeless and those who are fighting addiction and poverty and incarceration. Then, the luck of the roulette wheel — intellectual, developmental and psychiatric disabilities.

Anyway you cut it, this is the Land of Chronic Illnesses. Food and factories, and the filth in prescriptions and in the peddled crap of fast food, junk food, packaged food. The chronic illnesses are at birth, and many are tied to all the hormone disruptors and neurotoxins and gut and brain discombobulations. We are really in a world of hurt, with so many with fatigue, fatty livers, kidney malfunctions, obesity, all the drug injuries from the Pharmaceuticals, and so much more of the pollution, single point source, and all of it mixed together into a veritable pureed mush of poisons in the food, soil, air, water, airwaves and just living in a mass psychosis society. . . . Where the rich, undeserving, celebrity of every dirty kind, play god, and determine who and what and where and why and how we are as people. Elites are the cancer of cancers.

And then, you have this human tick, Trump, and boy what a sick world of people who would never ever let this guy forget who he is — racist, fascist, undeserving, soiled un-Man, Donald Trump (and his followers and bootlickers)

‘The poor guy’

Referring to the 2001 article (published by the Washington Post) at a South Carolina rally on Tuesday night, Mr. Trump called Mr. Kovaleski “a nice reporter”.

“Now the poor guy, you gotta see this guy,” he continued, before launching into an apparent impression of Mr. Kovaleski, waving his arms around with his hands at an odd angle.

“Uhh, I don’t know what I said. Uhh, I don’t remember. He’s going like ‘I don’t remember. Maybe that’s what I said.’”

Mr. Kovaleski has arthrogryposis, a condition that affects the movement of joints and is noticeable in his right arm and hand.

A New York Times spokeswoman told news site Politico: “We think it’s outrageous that he would ridicule the appearance of one of our reporters,”

The original Washington Post article by Mr. Kovaleski said that authorities in Jersey City “detained and questioned a number of people who were allegedly seen celebrating the attacks and holding tailgate-style parties on rooftops while they watched the devastation on the other side of the river”.

Since Mr. Trump’s claims about Muslim Americans celebrating 9/11, the reporter has said he does “not recall anyone saying there were thousands, or even hundreds, of people celebrating”.

Yeah, October, the month when the folks like Fauci and Trump and all the other enablers of pain and disaster capitalism should be set to sea. We all are useless breathers, eaters, walkers, sleepers, in and out of wheelchairs, what have you, to the rich! Hence, the planned demic, bioweapons 6.0. May they all rot in proverbial hell.

LEAKED GRANT PROPOSAL DETAILS HIGH-RISK CORONAVIRUS RESEARCH

The proposal, rejected by U.S. military research agency DARPA, describes the insertion of human-specific cleavage sites into SARS-related bat coronaviruses (source)

Disabilities month, indeed!!!

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