To conceal the economic and social decline that continues to unfold at home and abroad, major newspapers are working overtime to promote happy economic news. Many headlines are irrational and out of touch. They make no sense. Desperation to convince everyone that all is well or all will soon be great is very high. The assault on economic science and coherence is intense. Working in concert, and contrary to the lived experience of millions of people, many newspapers are declaring miraculous “economic growth rates” for country after country. According to the rich and their media, numerous countries are experiencing or are on the cusp of experiencing very strong “come-backs” or “complete recoveries.” Very high rates of annual economic growth, generally not found in any prior period, are being floated regularly. The numbers defy common sense.
In reality, economic and social problems are getting worse nationally and internationally.
“Getting back to the pre-Covid standard will take time,” said Carmen Reinhart, the World Bank’s chief economist. “The aftermath of Covid isn’t going to reverse for a lot of countries. Far from it.” Even this recent statement is misleading because it implies that pre-Covid economic conditions were somehow good or acceptable when things have actually been going downhill for decades. Most economies never really “recovered” from the economic collapse of 2008. Most countries are still running on gas fumes while poverty, unemployment, under-employment, inequality, debt, food insecurity, generalized anxiety, and other problems keep worsening. And today, with millions of people fully vaccinated and trillions of phantom dollars, euros, and yen printed by the world’s central banks, there is still no real and sustained stability, prosperity, security, or harmony. People everywhere are still anxious about the future. Pious statements from world leaders about “fixing” capitalism have done nothing to reverse the global economic decline that started years ago and was intensified by the “COVID Pandemic.”
In the U.S. alone, in real numbers, about 3-4 million people a month have been laid off for 13 consecutive months. At no other time in U.S. history has such a calamity on this scale happened. This has “improved” slightly recently but the number of people being laid off every month remains extremely high and troubling. In New York State, for example:
the statewide [official] unemployment rate remains the second highest in the country at just under 9%. One year after the start of the pandemic and the recession it caused, most of the jobs New York lost still have not come back. (emphasis added, April 2021).
In addition, nationally the number of long-term unemployed remains high and the labor force participation rate remains low. And most new jobs that are “created” are not high-paying jobs with good benefits and security. The so-called “Gig Economy” has beleaguered millions.
Some groups have been more adversely affected than others. In April 2021, U.S. News & World Report conveyed that:
In February 2020, right before the coronavirus was declared a pandemic by the World Health Organization, Black women had an employment to population ratio of 60.8%; that now stands at 54.8%, a drop of 6 percentage points.
The obsolete U.S. economic system has discarded more than half a million black women from the labor force in the past year.
In December 2019, around the time the “COVID Pandemic” began to emerge, Brookingsreported that:
An estimated 53 million people—44 percent of all U.S. workers ages 18–64—are low-wage workers. That’s more than twice the number of people in the 10 most populous U.S. cities combined. Their median hourly wage is $10.22, and their median annual earnings are $17,950.
The Federal Reservereports that 37 percent of Americans in 2019 did not have $400 to cover an unanticipated emergency. In Louisiana alone, 1 out of 5 families today are living at the poverty level. Sadly, “60% of Americans will live below the official poverty line for at least one year of their lives.” While American billionaires became $1.3 trillion richer, about 8 million Americans joined the ranks of the poor during the “COVID Pandemic.”
And more inflation will make things worse for more people. A March 2021 headline from NBC Newsreads: “The price of food and gas is creeping higher — and will stay that way for a while.” ABC News goes further in April 2021 and says that “the post-pandemic economy will include higher prices, worse service, longer delays.”
Homelessness in the U.S. is also increasing:
COVID-driven loss of jobs and employment income will cause the number of homeless workers to increase each year through 2023. Without large-scale, government employment programs the Pandemic Recession is projected to cause twice as much homelessness as the 2008 Great Recession. Over the next four years the current Pandemic Recession is projected to cause chronic homelessness to increase 49 percent in the United States, 68 percent in California and 86 percent in Los Angeles County. [The homeless include the] homeless on the streets, shelter residents and couch surfers. (emphasis added, January 11, 2021)
Perhaps ironically, just “Two blocks from the Federal Reserve, a growing encampment of the homeless grips the economy’s most powerful person [Federal Reserve Chairman Jerome Powell].”
Officially, about four million businesses, including more than 110,000 restaurants, have permanently closed in the U.S. over the past 14 months. In April 2021 Business Insiderstated that, “roughly 80,000 stores are doomed to close in the next 5 years as the retail apocalypse continues to rip through America.” The real figure is likely higher.
Bankruptcies have also risen in some sectors. For example, bankruptcies by North American oil producers “rose to the highest first-quarter level since 2016.”
In March 2021 the Economic Policy Institutereported that “more than 25 million workers are directly harmed by the COVID labor market.” Anecdotal evidence suggests that there are more than 100 applicants for each job opening in some sectors.
Given the depth and breadth of the economic collapse in the U.S., it is no surprise that “1 in 6 Americans went into therapy for the first time in 2020.” The number of people affected by depression, anxiety, addiction, and suicide worldwide as a direct result of the long depression is very high. These harsh facts and realities are also linked to more violence, killings, protests, demonstrations, social unrest, and riots worldwide.
In terms of physical health, “Sixty-one percent of U.S. adults report undesired weight changes since the COVID-19 pandemic began.” This will only exacerbate the diabetes pandemic that has been ravaging more countries every year.
On another front, the Pew Research Centerinforms us that, as a result of the economic collapse that has unfolded over the past year, “A majority of young adults in the U.S. live with their parents for the first time since the Great Depression.” And it does not help that student debt now exceeds $1.7 trillion and is still climbing rapidly.
Millions of college faculty have also suffered greatly over the past year. A recent survey by the American Association of University Professors (AAUP) found that:
real wages for full-time faculty decreased for the first time since the Great Recession[in 2008], and average wage growth for all ranks of full-time faculty was the lowest since the AAUP began tracking annual wage growth in 1972. After adjusting for inflation, real wages decreased at over two-thirds of colleges and universities. The number of full-time faculty decreased at over half of institutions.
This does not account for the thousands of higher education adjuncts (part-time faculty) and staff that lost their jobs permanently.
In April 2021, the Center on Budget & Policy Prioritiesstated that, “millions of people are still without their pre-pandemic income sources and are borrowing to get by.” Specifically:
54 million adults said they didn’t use regular income sources like those received before the pandemic to meet their spending needs in the last seven days.
50 million used credit cards or loans to meet spending needs.
20 million borrowed from friends or family. (These three groups overlap.)
The pandemic’s disruption has created inescapable financial strain for many Americans. Nearly 2 of 5 of adults have postponed major financial decisions, from buying cars or houses to getting married or having children, due to the coronavirus crisis, according to a survey last week from Bankrate.com. Among younger adults, ages 18 to 34, some 59 percent said they had delayed a financial milestone. (emphasis added)
The U.S. economy has seen a long-term decline in capacity utilization in manufacturing, which has averaged 78 percent from 1972 to 2019—well below levels that stimulate net investment. (emphasis added, January 1, 2021).
Capitalist firms will not invest in new ventures or projects when there is little or no profit to be made, which is why major owners of capital are engaged in even more stock market manipulation than ever before. “Casino capitalism” is intensifying. This, in turn, is giving rise to even larger stock market bubbles that will eventually burst and wreak even more havoc than previous stock market crashes. The inability to make profit through normal investment channels is also why major owners of capital are imposing more public-private “partnerships” (PPPs) on people and society through neoliberal state restructuring. Such pay-the-rich schemes further marginalize workers and exacerbate inequality, debt, and poverty. PPPs solve no problems and must be replaced by human-centered economic arrangements.
The International Labor Organizationestimates that the equivalent of 255 million full-time jobs have been lost globally as a result of government actions over the past 13-14 months.
In March of this year, the Food and Agricultural Organization (FAO) of the United Nations reported that, “Acute hunger is set to soar in over 20 countries in the coming months without urgent and scaled-up assistance.” The FAO says, “”The magnitude of suffering is alarming.”
And according to Reuters, “Overall, global FDI [Foreign Direct Investment] had collapsed in 2020, falling by 42% to an estimated $859 billion, from $1.5 trillion in 2019, according to the UNCTAD report.” UNCTAD stands for United Nations Conference on Trade and Development.
The international organization Oxfamtells us that:
The coronavirus pandemic has the potential to lead to an increase in inequality in almost every country at once, the first time this has happened since records began…. Billionaire fortunes returned to their pre-pandemic highs in just nine months, while recovery for the world’s poorest people could take over a decade. (emphasis added, January 25, 2021)
According to the World Bank, “The COVID-19 pandemic has pushed about 120 million people into extreme poverty over the last year in mostly low- and middle-income countries.” And despite the roll-out of vaccines in various countries:
the economic implications of the pandemic are deep and far-reaching. It is ushering in a “new poor” profile that is more urban, better educated, and reliant on informal sector work such as construction, relative to the existing global poor (those living on less than $1.90/day) who are more rural and heavily reliant on agriculture. (emphasis added)
Pew Research Center, using World Bank data, has estimated that the number of poor in India (with income of $2 per day or less in purchasing power parity) has more than doubled from 60 million to 134 million in just a year due to the pandemic-induced recession. This means, India is back in a situation to be called a “country of mass poverty” after 45 years. (emphasis added)
In Europe, there is no end in sight to the economic decline that keeps unfolding. The United Kingdom, for example, experienced its worst economy in literally 300 years:
The economy in the U.K. contracted 9.9 percent in 2020, the worst year on record since 1709, the Office for National Statistics (ONS) said in a report on Friday (Feb. 12). The overall economic drop in 2020 was more than double in 2009, when U.K. GDP declined 4.1 percent due to the worldwide financial crisis. Britain experienced the biggest annual decline among the G7 economies — France saw its economy decline 8.3 percent, Italy dropped 8.8 percent, Germany declined 5 percent and the U.S. contracted 3.5 percent. (emphasis added)
Another source also notes that, “The Eurozone is being haunted by ‘ghost bankruptcies,’ with more than 200,000 firms across the European Union’s four biggest nations under threat when Covid financial lifelines stop.” In another sign of economic decline, this time in Asia, Argus Mediareported in April 2021 that Japan’s 2020-21 crude steel output fell to a 52-year low.
Taken alone, on a country-by-country basis, these are not minor economic downturns, but when viewed as a collective cumulative global phenomenon, the consequences are more serious. It is a big problem when numerous economies decline simultaneously. The world is more interdependent and interconnected than ever. What happens in one region necessarily affects other regions.
One could easily go country by country and region by region and document many tragic economic developments that are still unfolding and worsening. Argentina, Lebanon, Colombia, Turkey, Brazil, Mexico, Jordan, South Africa, Nigeria, and dozens of other countries are all experiencing major economic setbacks and hardships that will take years to overcome and will negatively affect the economies of other countries in an increasingly interdependent world. And privatization schemes around the world are just making conditions worse for the majority of people. Far from solving any problems, neoliberalism has made everything worse for working people and society.
It is too soon for capitalist ideologues to be euphoric about “miraculous economic growth and success.” There is no meaningful evidence to show that there is deep, significant, sustained economic growth on a broad scale. There is tremendous economic carnage and pain out there, and the scarring and consequences are going to linger for some time. No one believes that a big surge of well-paying jobs is right around the corner. Nor does anyone believe that more schemes to pay the rich under the banner of high ideals will improve things either.
Relentless disinformation about the economy won’t solve any problems or convince people that they are not experiencing what they are experiencing. Growing poverty, hunger, homelessness, unemployment, under-employment, debt, inequality, anxiety, and insecurity are real and painful. They require real solutions put forward by working people, not major owners of capital concerned only with maximizing private profit as fast as possible.
The economy cannot improve and serve a pro-social aim and direction so long as those who produce society’s wealth, workers, are disempowered and denied any control of the economy they run. Allowing major decisions to be made by a historically superfluous financial oligarchy is not the way forward. The rich and their representatives are unfit to rule and have no real solutions for the recurring crises caused by their outmoded system. They are focused mainly on depriving people of an outlook that opens the path of progress to society.
There is no way for the massive wealth of society to be used to serve the general interests of society so long as the contradiction between the socialized nature of the economy and its continued domination by competing private interests remain unresolved. All we are left with are recurring economic crises that take a bigger and bigger toll on humanity. To add insult to injury, we are told that there is no alternative to this outdated system, and that the goal is to strive for “inclusive capitalism,” “ethical capitalism,” “responsible capitalism,” or some other oxymoron.
But there is an alternative. Existing conditions do not have to be eternal or tolerated. History shows that conditions that favor the people can be established. The rich must be deprived of their ability to deprive the people of their rights, including the right to govern their own affairs and control the economy. The economy, government, nation-building, and society must be controlled and directed by the people themselves, free of the influence of narrow private interests determined to enrich themselves at the expense of everyone and everything else.
The rich and their political and media representatives are under great pressure to distort social consciousness, undermine the human factor, and block progress. The necessity for change is for humanity to rise up and usher in a modern society that ensures prosperity, stability, and peace for all. It can be done and must be done.
Just over two months into the new year, 2021 has already seen a flurry of public banking activity. Sixteen new bills to form publicly-owned banks or facilitate their formation were introduced in eight U.S. states in January and February. Two bills for a state-owned bank were introduced in New Mexico, two in Massachusetts, two in New York, one each in Oregon and Hawaii, and Washington State’s Public Bank Bill was re-introduced as a “Substitution.” Bills for city-owned banks were introduced in Philadelphia and San Francisco, and bills facilitating the formation of public banks or for a feasibility study were introduced in New York, Oregon (three bills), and Hawaii.
In addition, California is expected to introduce a bill for a state-owned bank later this year, and New Jersey is moving forward with a strong commitment from its governor to implement one. At the federal level, three bills for public banking were also introduced last year: the National Infrastructure Bank Bill (HR 6422), a new Postal Banking Act (S 4614), and the Public Banking Act (HR 8721). (For details on all these bills, see the Public Banking Institute website here.)
As Oscar Abello wrote on NextCity.org in February, “2021 could be public banking’s watershed moment.… Legislators are starting to see public banks as a powerful potential tool to ensure a recovery that is more equitable than the last time.”
Why the Surge in Interest?
The devastation caused by nationwide Covid-19 lockdowns in 2020 has highlighted the inadequacies of the current financial system in serving the public, local businesses, and local governments. Nearly 10 million jobs were lost to the lockdowns, over 100,000 businesses closed permanently, and a quarter of the population remains unbanked or underbanked. Over 18 million people are receiving unemployment benefits, and moratoria on rent and home foreclosures are due to expire this spring.
Where was the Federal Reserve in all this? It poured out trillions of dollars in relief, but the funds did not trickle down to the real economy. They flooded up, dramatically increasing the wealth gap. By October 2020, the top 1% of the U.S. population held 30.4% of all household wealth, 15 times that of the bottom 50%, which held just 1.9% of all wealth.
State and local governments are also in dire straits due to the crisis. Their costs have shot up and their tax bases have shrunk. But the Fed’s “special purpose vehicles” were no help. The Municipal Liquidity Facility, ostensibly intended to relieve municipal debt burdens, lent at market interest rates plus a penalty, making borrowing at the facility so expensive that it went nearly unused; and it was discontinued in December.
The Fed’s emergency lending facilities were also of little help to local businesses. In a January 2021 Wall Street Journal article titled “Corporate Debt ‘Relief’ Is an Economic Dud,” Sheila Bair, former chair of the Federal Deposit Insurance Corporation, and Lawrence Goodman, president of the Center for Financial Stability, observed:
The creation of the corporate facilities last March marked the first time in history that the Fed would buy corporate debt… The purpose of the corporate facilities was to help companies access debt markets during the pandemic, making it possible to sustain operations and keep employees on payroll. Instead, the facilities resulted in a huge and unnecessary bailout of corporate debt issuers, underwriters and bondholders….This created a further unfair opportunity for large corporations to get even bigger by purchasing competitors with government-subsidized credit.
…. This presents a double whammy for the young companies that have been hit hardest by the pandemic. They are the primary source of job creation and innovation, and squeezing them deprives our economy of the dynamism and creativity it needs to thrive.
In a September 2020 study for ACRE called “Cancel Wall Street,” Saqib Bhatti and Brittany Alston showed that U.S. state and local governments collectively pay $160 billion annuallyjust in interest in the bond market, which is controlled by big private banks. For comparative purposes, $160 billion would be enough to help 13 million families avoid eviction by covering their annual rent; and $134 billion could make up the revenue shortfall suffered by every city and town in the U.S. due to the pandemic.
Half the cost of infrastructure generally consists of financing, doubling its cost to municipal governments. Local governments are extremely good credit risks; yet private, bank-affiliated rating agencies give them a lower credit score (raising their rates) than private corporations, which are 63 times more likely to default. States are not allowed to go bankrupt, and that is also true for cities in about half the states. State and local governments have a tax base to pay their debts and are not going anywhere, unlike bankrupt corporations, which simply disappear and leave their creditors holding the bag.
How Publicly-owned Banks Can Help
Banks do not have the funding problems of local governments. In March 2020, the Federal Reserve reduced the interest rate at its discount window, encouraging all banks in good standing to borrow there at 0.25%. No stigma or strings were attached to this virtually free liquidity – no need to retain employees or to cut dividends, bonuses, or the interest rates charged to borrowers. Wall Street banks can borrow at a mere one-quarter of one percent while continuing to charge customers 15% or more on their credit cards.
Local governments extend credit to their communities through loan funds, but these “revolving funds” can lend only the capital they have. Depository banks, on the other hand, can leverage their capital, generating up to ten times their capital base in loans. For a local government with its own depository bank, that would mean up to ten times the credit to inject into the local economy, and ten times the profit to be funneled back into community needs. A public depository bank could also borrow at 0.25% from the Fed’s discount window.
North Dakota Leads the Way
What a state can achieve by forming its own bank has been demonstrated in North Dakota. There the nation’s only state-owned bank was formed in 1919 when North Dakota farmers were losing their farms to big out-of-state banks. Unlike the Wall Street megabanks mandated to make as much money as possible for their shareholders, the Bank of North Dakota (BND) is mandated to serve the public interest. Yet it has had a stellar return on investment, outperforming even J.P. Morgan Chase and Goldman Sachs. In its 2019 Annual Report, the BND reported its sixteenth consecutive year of record profits, with $169 million in income, just over $7 billion in assets, and a hefty return on investment of 18.6%.
The BND maximizes its profits and its ability to serve the community by eliminating profiteering middlemen. It has no private shareholders bent on short-term profits, no high-paid executives, no need to advertise for depositors or borrowers, and no need for multiple branches. It has a massive built-in deposit base, since the state’s revenues must be deposited in the BND by law. It does not compete with North Dakota’s local banks in the retail market but instead partners with them. The local bank services and retains the customer, while the BND helps as needed with capital and liquidity. Largely due to this amicable relationship, North Dakota has nearly six times as many local financial institutions per person as the country overall.
The BND has performed particularly well in economic crises. It helped pay the state’s teachers during the Great Depression, and sold foreclosed farmland back to farmers in the 1940s. It has also helped the state recover from a litany of natural disasters.
Its emergency capabilities were demonstrated in 1997, when record flooding and fires devastated Grand Forks, North Dakota. The town and its sister city, East Grand Forks on the Minnesota side of the Red River, lay in ruins. The response of the BND was immediate and comprehensive, demonstrating a financial flexibility and public generosity that no privately-owned bank could match. The BND quickly established nearly $70 million in credit lines and launched a disaster relief loan program; worked closely with federal agencies to gain forbearance on federally-backed home loans and student loans; and reduced interest rates on existing family farm and farm operating programs. The BND obtained funds at reduced rates from the Federal Home Loan Bank and passed the savings on to flood-affected borrowers. Grand Forks was quickly rebuilt and restored, losing only 3% of its population by 2000, compared to 17% in East Grand Forks on the other side of the river.
What’s their secret? Much credit goes to the century-old Bank of North Dakota, which — even before the PPP officially rolled out — coordinated and educated local bankers in weekly conference calls and flurries of calls and emails.
According 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 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.
Public Banks Excel Globally in Crises
Publicly-owned banks around the world have responded quickly and efficiently to crises. As of mid-2020, public banks worldwide held nearly $49 trillion in combined assets; and including other public financial institutions, the figure reached nearly $82 trillion. In a 2020 compendium of cases studies titled Public Banks and Covid 19: Combatting the Pandemic with Public Finance, the editors write:
Five overarching and promising lessons stand out: public banks have the potential to respond rapidly; to fulfill their public purpose mandates; to act boldly; to mobilize their existing institutional capacity; and to build on ‘public-public’ solidarity. In short, public banks are helping us navigate the tidal wave of Covid-19 at the same time as private lenders are turning away….
Public banks have crafted unprecedented responses to allow micro-, small- and medium-sized enterprises (MSMEs), large businesses, public entities, governing authorities and households time to breathe, time to adjust and time to overcome the worst of the crisis. Typically, this meant offering liquidity with generously reduced rates of interest, preferential repayment terms and eased conditions of repayment. For the most vulnerable in society, public banks offered non-repayable grants.
The editors conclude that public banks offer a path toward democratization (giving society a meaningful say in how financial resources are used) and definancialization (moving away from speculative predatory investment practices toward financing that grows the real economy). For local governments, public banks offer a path to escape monopoly control by giant private financial institutions over public policies.
The social and economic destruction engulfing the U.S. and dozens of other countries remains out of everyone’s control and more chaos, instability, and insecurity now mark the global landscape.
The ruling elite have repeatedly shown their inability to tackle any serious problems effectively. They are at a loss for how to deal with current problems and refuse to consider any alternative to their obsolete economic system. The best they can do is recycle old ideas to maintain their class power and privilege. Their efforts to block the New focus mainly on promoting disinformation about “new and better forms of capitalism,” including oxymorons like “inclusive capitalism,” “responsible capitalism,” and “ethical capitalism.”
Since the outbreak of the “COVID Pandemic” in March 2020 every week has been a roller coaster for humanity. The economy and society keep lurching from one crisis to another while incoherence and stress keep amplifying. It is said that 1 in 6 Americans went into therapy for the first time in 2020.
Unemployment, under-employment, inequality, mental depression, anxiety, suicide, environmental decay, inflation, debt, health care costs, education, and poverty are worsening everywhere. Thousands of businesses that have been around for years keep disappearing left and right.
Top-down actions in response to the “COVID Pandemic” have made so many things worse for so many people. Many are wondering which is worse: the covid-19 virus or the top-down response to the pandemic. Governments everywhere have steadfastly refused to mobilize the people to solve the many problems that are worsening. The moral climate is low and more people are worried about the future.
An atmosphere has been created whereby people are supposed to feel like the exhausting “COVID Pandemic” will last forever and we can all forget about getting back to any normal healthy non-digital relations, activities, and interactions. No society in history has worn face masks for an entire year. We are told over and over again that there is no returning to anything called “normal.” Moving everything online and repeatedly asserting that this is great, “cool,” and wonderful is proving to be unsatisfactory and unfulfilling. People want and need real, direct, non-digital connections and interactions with other human beings. Life behind a screen is not life.
Even with all the restrictions and shutdowns the virus, according to the mainstream media, continues to wreak havoc at home and abroad. It is almost like none of the severe restrictions on people’s freedoms made any difference. People have had to endure this humiliation while also not being permitted any role in deciding the aim, operation, and direction of the economy or any of the affairs of society; they are left out of the equation every step of the way and not even asked for superficial “input” that always goes unheeded anyway. Existing governance arrangements are simply not working to empower people or affirm their rights. The people’s interests and will are blocked at every turn by an outdated political setup that advances only the narrow interests of the rich.
Despite intense pressure to blindly rely on the rich and their political representatives to “figure things out,” this is not working. Nor does it help that the mainstream media approaches multiple crises and issues with endless double-talk, disconnected facts, catchy sound-bites, dramatic exaggerations, angry voices, political axe-grinding, and lots of confusion. Coherence and a human-centered outlook are avoided at all costs. People are constantly left disoriented. Jumping arbitrarily and rapidly from one thing to another in the most unconscious way is presented as useful analysis and information. This is why sorting out basic information has become a full-time job for everyone. People are understandably worn-out and overwhelmed. Disinformation overload degrades mental, emotional, and physical health.
The world has become an uglier and gloomier place—all in the name of “improving health.” It is no surprise that a recent Gallup Poll shows that the majority of Americans are extremely dissatisfied with government, the economy, the culture, and the moral climate.
In this hazardous unstable context, there are two ever-present key pieces of disinformation operating side by side. Both are designed to deprive working people of any say, initiative, outlook, or power.
First there is the “once everyone is vaccinated things will be much better” disinformation. This ignores the fact that capitalist crises have endogenous causes not exogenous causes and that the economic crisis started well before the “COVID Pandemic.” More than 150 years of recessions, depressions, booms, busts, instability, chaos, and anarchy have not been caused by external phenomena like bacteria, germs, and viruses but by the internal logic and operation of capital itself. A so-called “free market” economy by its very nature and logic ensures “winners” and “losers,” “booms” and “busts.” It is called a “dog-eat-dog” fend-for-yourself competitive world for a reason. The modern idea that humans are born to society and have rights by virtue of their being is alien to “free market” ideology.
Despite the fact that millions have been vaccinated at home and abroad, poverty, inequality, unemployment, debt, and other problems continue to worsen. Businesses continue to suffer and disappear. Hospitality, leisure, recreation, and other sectors have been decimated in many countries. Air travel is dramatically lower. So are car sales. It is not enough to say, “Yes, the next few months will be rough and lousy economically speaking but we will get there with more vaccinations. Just be patient, it will all eventually work out.” This is not what is actually unfolding. The all-sided crisis we find ourselves in started before the “COVID Pandemic” and continues unabated. Such a view also makes a mockery of economic science and the people’s desire to decide the affairs of society and establish much better arrangements that exclude narrow private interests and do not rely on police powers.
In the coming months millions more will be vaccinated but economic decline and decay will continue. Both the rate and amount of profit have been falling for years. And owners of capital are not going to invest in anything when there is no profit to be had and when it is easier instead to balloon fictitious capital and pretend everything is a stock market video game. The lack of vaccinations did not cause the economic collapse the word is currently suffering through, nor will more vaccinations reverse economic decline and decay. The “COVID Pandemic” has largely made some people vastly richer and millions more much poorer. The “COVID Pandemic” has significantly increased inequality. Unfortunately, the so-called “Great Reset” agenda of the World Economic Forum and Pope Francis’s recent call for a “Copernican Revolution” in the economy will make things worse for millions more because they will perpetuate the existing moribund economic system. Such agendas are designed to fool the gullible, block working class consciousness and action, and keep the initiative in the hands of the global oligarchy.
The same applies to so-called “stimulus packages.” Various versions of these top-down monetary and fiscal programs have been launched in different countries, and while they have assuaged some problems for people, they have not been adequate or fixed any underlying problems. They have not prevented poverty or mass unemployment. Economies remain mired in crisis. In most cases “stimulus packages” have made things worse by increasing the amount of debt that many generations will have to repay. This is in addition to the many other forms of debt Americans suffer from and rent payments that will one day have to be paid.
Many are also wondering why trillions of dollars can be printed and instantly turned over to the banks and corporations with no discussion but the same cannot be done for social programs, public enterprises, and the people. Why, for example, can all not get free healthcare or have taxes eliminated? Why can’t various forms of personal debt be wiped out instantly? If the government can print money for “them” why can’t they print money for “us”? Who is government supposed to serve? Billionaires?
Nether the CARES Act of 2020 nor the stimulus package passed in December 2020 nor the one President Biden is pushing for in March 2021 will be adequate or solve any major problems. Many felt that the $600 stimulus checks that went out in December 2020 were pathetic and insulting.
The problem lies with a socialized productive economy run by everyone but owned and controlled by a tiny handful of competing private interests determined to maximize profit as fast as possible regardless of the damage to the social and natural environment. There is no way for the economy to benefit all individuals and serve the general interests of society so long as it is dominated by a handful of billionaires. The social wealth produced by workers cannot benefit workers and the society if workers themselves do not control the wealth they produce and have first claim to.
The outlook, agenda, and reference points of the rich must be rejected and replaced by a human-centered aim, agenda, direction, and outlook. The current trajectory is untenable and unsustainable. The situation is dangerous in many ways, but perhaps one good thing to come out of the accelerated pace of chaos, anarchy, and instability are the contradictions that are presenting new opportunities for action with analysis that favors working people.
A self-funding national infrastructure bank modeled on the “American System” of Alexander Hamilton, Abraham Lincoln, and Franklin D. Roosevelt would help solve two of the country’s biggest problems.
Millions of Americans have joined the ranks of the unemployed, and government relief checks and savings are running out; meanwhile, the country still needs trillions of dollars in infrastructure. Putting the unemployed to work on those infrastructure projects seems an obvious solution, especially given that the $600 or $700 stimulus checks Congress is planning on issuing will do little to address the growing crisis. Various plans for solving the infrastructure crisis involving public-private partnerships have been proposed, but they’ll invariably result in private investors reaping the profits while the public bears the costs and liabilities. We have relied for too long on private, often global, capital, while the Chinese run circles around us building infrastructure with credit simply created on the books of their government-owned banks.
Earlier publicly-owned U.S. national banks and U.S. Treasuries pulled off similar feats, using what Sen. Henry Clay, U.S. statesman from 1806 to 1852, named the “American System” – funding national production simply with “sovereign” money and credit. They included the First (1791-1811) and Second (1816-1836) Banks of the United States, President Lincoln’s federal treasury and banking system, and President Franklin Roosevelt’s Reconstruction Finance Corporation (RFC) (1932-1957). Chester Morrill, former Secretary of the Board of Governors of the Federal Reserve, wrote of the RFC:
[I]t became apparent almost immediately, to many Congressmen and Senators, that here was a device which would enable them to provide for activities that they favored for which government funds would be required, but without any apparent increase in appropriations. . . . [T]here need be no more appropriations and its activities could be enlarged indefinitely, as they were, almost to fantastic proportions. [emphasis added]
Even the Federal Reserve with its “quantitative easing” cannot fund infrastructure without driving up federal expenditures or debt, at least without changes to the Federal Reserve Act. The Fed is not allowed to spend money directly into the economy or to lend directly to Congress. It must go through the private banking system and its “primary dealers.” The Fed can create and pay only with “reserves” credited to the reserve accounts of banks. These reserves are a completely separate system from the deposits circulating in the real producer/consumer economy; and those deposits are chiefly created by banks when they make loans. (See the Bank of England’s 2014 quarterly report here.) New liquidity gets into the real economy when banks make loans to local businesses and individuals; and in risky environments like that today, banks are not lending adequately even with massive reserves on their books.
A publicly-owned national infrastructure bank, on the other hand, would be mandated to lend into the real economy; and if the loans were of the “self funding” sort characterizing most infrastructure projects (generating fees to pay off the loans), they would be repaid, canceling out the debt by which the money was created. That is how China built 12,000 miles of high-speed rail in a decade: credit created on the books of government-owned banks was advanced to pay for workers and materials, and the loans were repaid with profits from passenger fees.
Unlike the QE pumped into financial markets, which creates asset bubbles in stocks and housing, this sort of public credit mechanism is not inflationary. Credit money advanced for productive purposes balances the circulating money supply with new goods and services in the real economy. Supply and demand rise together, keeping prices stable. China increased its money supply by nearly 1800% over 24 years (from 1996 to 2020) without driving up price inflation, by increasing GDP in step with the money supply.
HR 6422, The National Infrastructure Bank Act of 2020
A promising new bill for a national infrastructure bank modeled on the RFC and the American System, H.R. 6422, was filed by Rep. Danny Davis, D-Ill., in March. The National Infrastructure Bank of 2020 (NIB) is projected to create $4 trillion or more in bank credit money to rebuild the nation’s rusting bridges, roads, and power grid; relieve traffic congestion; and provide clean air and water, new schools and affordable housing. It will do this while generating up to 25 million union jobs paying union-level wages. The bill projects a net profit to the government of $80 billion per year, which can be used to cover infrastructure needs that are not self-funding (broken pipes, aging sewers, potholes in roads, etc.). The bill also provides for substantial investment in “disadvantage communities,” those defined by persistent poverty.
The NIB is designed to be a true depository bank, giving it the perks of those institutions for leverage and liquidity, including the ability to borrow at the Fed’s discount window without penalty at 0.25% interest (almost interest-free). According to Alphecca Muttardy, a former macroeconomist for the International Monetary Fund and chief economist on the 2020 NIB team, the NIB will create the $4 trillion it lends simply as deposits on its books, as the Bank of England attests all depository banks do. For liquidity to cover withdrawals, the NIB can either borrow from the Fed at 0.25% or issue and sell bonds.
The NIB would be capitalized by purchasing up to $500 billion in existing Treasury bonds held by the private sector (e.g., in pension and other savings funds), in exchange for an equivalent in shares of preferred [non-voting] stock in the NIB. The exchange would take place via a sales contract with the NIB/Federal Government that guarantees a preferred stock dividend of 2% more than private-holders currently earn on their Treasuries. The contract would form a binding obligation to provide the incremental 2%, or about $10 billion per year, from the Budget. While temporarily appearing as mandatory spending under the Budget, the $10 billion per year would ultimately be returned as a dividend paid to government, from the NIB’s earnings stream.
Since the federal government will be paying the interest on the bonds, the NIB needs to come up with only the 2% dividend to entice investors. The proposal is to make infrastructure loans at a very modest 2%, substantially lower than the rates now available to the state and local governments that create most of the nation’s infrastructure. At a 10% capital requirement, the bonds can capitalize ten times their value in loans. The return will thus be 20% on a 2% dividend outlay from the NIB, for a net return on investment of 18% less operating costs. The U.S. Treasury will also be asked to deposit Treasury bonds with the bank as an “on-call” subscriber.
The American System: Sovereign Money and Credit
U.S. precedents for funding internal improvements with “sovereign credit” – credit issued by the national government rather than borrowed from the private banking system – go back to the American colonists’ paper scrip, colonial Pennsylvania’s “land bank”, and the First U.S. Bank of Alexander Hamilton, the first U.S. Treasury Secretary. Hamilton proposed to achieve the constitutional ideal of “promoting the general welfare” by nurturing the country’s fledgling industries with federal subsidies for roads, canals, and other internal improvements; protective measures such as tariffs; and easy credit provided through a national bank. Production and the money to ﬁnance it would all be kept “in house,” without incurring debt to foreign ﬁnanciers. The national bank would promote a single currency, making trade easier, and would issue loans in the form of “sovereign credit.” ’
Senator Henry Clay called this model the “American System” to distinguish it from the “British System” that left the market to the “invisible hand” of “free trade,” allowing big monopolies to gobble up small entrepreneurs, and foreign bankers and industrialists to exploit the country’s labor and materials. After the charter for the First US Bank expired in 1811, Congress created the Second Bank of the United States in 1816 on the American System model.
In 1836, Pres. Andrew Jackson shut down the Second U.S. Bank due to perceived corruption, leaving the country with no national currency and precipitating a recession. “Wildcat” banks issued their own banknotes – promissory notes allegedly backed by gold. But the banks often lacked the gold necessary to redeem the notes, and the era was beset with bank runs and banking crises.
Abraham Lincoln’s economic advisor was Henry Carey, the son of Matthew Carey, a well-known printer and publisher who had been tutored by Benjamin Franklin and had tutored Henry Clay. Henry Carey proposed creating an independent national currency that was non-exportable, one that would remain at home to do the country’s own work. He advocated a currency founded on “national credit,” something he deﬁned as “a national system based entirely on the credit of the government with the people, not liable to interference from abroad.” It would simply be a paper unit of account that tallied work performed and goods delivered.
On that model, in 1862 Abraham Lincoln issued U.S. Notes or Greenbacks directly from the U.S. Treasury, allowing Lincoln’s government not only to avoid an exorbitant debt to British bankers and win the Civil War, but to fund major economic development, including tying the country together with the transcontinental railroad – an investment that actually turned a profit for the government.
After Lincoln was assassinated in 1865, the Greenback program was discontinued; but Lincoln’s government also passed the National Bank Act of 1863, supplemented by the National Bank Act of 1864. Originally known as the National Currency Act, its stated purpose was to stabilize the banking system by eradicating the problem of notes issued by multiple banks circulating at the same time. A single banker-issued national currency was created through chartered national banks, which could issue notes backed by the U.S. Treasury in a quantity proportional to the bank’s level of capital (cash and federal bonds) deposited with the Comptroller of the Currency.
From Roosevelt’s Reconstruction Finance Corporation (1932-57) to HR 6422
The American president dealing with an economic situation most closely resembling that today, however, was Franklin D. Roosevelt. America’s 32nd president resolved massive unemployment and infrastructure problems by greatly expanding the Reconstruction Finance Corporation (RFC) set up by his predecessor Herbert Hoover. The RFC was a remarkable publicly-owned credit machine that allowed the government to finance the New Deal and World War II without turning to Congress or the taxpayers for appropriations. The RFC was not called an infrastructure bank and was not even a bank, but it served the same basic functions. It was continually enlarged and modified by Pres. Roosevelt to meet the crisis of the times until it became America’s largest corporation and the world’s largest financial organization. Its semi-independent status let it work quickly, allowing New Deal agencies to be financed as the need arose. According to Encyclopedia.com:
[T]he RFC—by far the most influential of New Deal agencies—was an institution designed to save capitalism from the ravages of the Great Depression. Through the RFC, Roosevelt and the New Deal handed over $10 billion to tens of thousands of private businesses, keeping them afloat when they would otherwise have gone under ….
A similar arrangement could save local economies from the ravages of the global shutdowns today.
The Banking Acts of 1932 provided the RFC with capital stock of $500 million and the authority to extend credit up to $1.5 billion (subsequently increased several times). The initial capital came from a stock sale to the U.S. Treasury. With those modest resources, from 1932 to 1957 the RFC loaned or invested more than $40 billion. A small part of this came from its initial capitalization. The rest was financed with bonds sold to the Treasury, some of which were then sold to the public. The RFC ended up borrowing a total of $51.3 billion from the Treasury and $3.1 billion from the public.
Thus the Treasury was the lender, not the borrower, in this arrangement. As the self-funding loans were repaid, so were the bonds that were sold to the Treasury, leaving the RFC with a net profit. The RFC was the lender for thousands of infrastructure and small business projects that revitalized the economy, and these loans produced a total net income of over $690 million on the RFC’s “normal” lending functions (omitting such things as extraordinary grants for wartime). The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms, and much more–all while generating income for the government.
HR 6422 proposes to mimic this feat. The National Infrastructure Bank of 2020 can rebuild crumbling infrastructure across America, pushing up long-term growth, not only without driving up taxes or the federal debt, but without hyperinflating the money supply or generating financial asset bubbles. The NIB has growing support across the country from labor leaders, elected officials, and grassroots organizations. It can generate real wealth in the form of upgraded infrastructure and increased employment as well as federal and local taxes and GDP, paying for itself several times over without additional outlays from the federal government. With official unemployment at nearly double what it was a year ago and an economic crisis unlike the U.S. has seen in nearly a century, the NIB can trigger the sort of “economic miracle” the country desperately needs.
It’s an unprecedented coalition of business networks that have come together to raise our ambition. Not just to help our individual CEOs succeed, we’ll do that for sure. But to actually bring their voices together to help shift culture. So that the pushback on the BRT [Business Roundtable] from different business publications or other people within the business community lessens. So there’s less of a headwind culturally for this type of leadership.
— Jay Coen Gilbert, co-founder of B Lab and B Corporations [Source]
[These are not good people, and if anyone thinks otherwise, then, well, War is Peace, Truth is Lies, Hate is Love!]
We Are Big Data’s Dregs
The great data dredge. Everyone’s hired through a digital head hunter, staffing firm, and the result is a continuation of atomizing society with no water cooler, so to speak, from which to complain about working conditions, to discuss the next austerity measure concocted by the boss/management/ CEO/Corporation. No after work bull session at the local Chili’s or T.G.I.F. to compare notes about those exploding gas tanks and caustic chemicals and faulty electrodes in the air bag systems.
This is what Ford would have wanted, and this is what the heads of retail and data and manufacturing want. They’ve already put most of us over a barrel with forced arbitration clauses, non-compete agreements (sic), and rule after penalty after threat after law after delimitation, that, well, in this knowledge (sic) economy and post-Industrial (sic) economy, the white collar and pink collar workers are hemmed in by management. More than the field hands picking this country’s lettuce!
The hemming in is an oppression planned and sealed, and a deep seated zombifcation of the “higher castes” and to be honest, people of the land, even those in struggle, in other countries that have been deemed shit-holes by Trump and Third World by Biden have more gumption about them, more ability to fight the systems, the oppressors, than any member of the Western Civilization.
Just drive around your town or suburb, anywhere. Take a look at what and how the systems have been set up for and about the rich, for the money changers, for the money takers, for the dream hoarders. Take a look. How many bus stations, how many covered and art-imbued public amenities? How many public toilets, public waysides, public paths, public trails, public pedestrian overpasses, public bandstands, public gazebos, public museums, public eateries, public statues, signs, art, historical markers? How many trees and shrubs and open spaces set up for the public? How many picnic tables and interpretive trails, and …? How many tiny home villages for the houseless? How many community gardens? Theaters and cinemas for and by the people?
Talk about dead and lobotomized citizens, as we have allowed the captains of industry and oppressors of finance and the legions of pushers of the realm rule: retailers, consumer crack salesmen/women, middle managers, ant hill after ant hill of processors and facilitators of the entire house of cards built upon the dopamine hits of lizard drips of the brain. “I betcha can’t eat just one Lays potato chip,” now on steroids – “I betcha you can’t just have 3 big screen TVs in your pad … “And now you fill in that blank – Just look at the so-called Black Friday ads.
Amazing, junk, junk and more junk. Families buying deep fryers and rice steamers and any number of electronic junk that they can’t or don’t know how to use. All that plastic and tin, diodes and LED screens. All of that planned obsolescence. Nary a word about the embedded energy, the packaging, the toil and slave labor, the life cycle analysis. Piles and piles of worthless junk, planned to break, parts planned to snap, wires planned and ready to melt.
Planned Human Obsolescence
This is not a difficult thing to comprehend, about socialism for the land and people versus capitalism for the elite and bankers and small group of sociopaths, who will fight tooth and nail (well, with a battalion of lawyers at $1500 an hour each, not really a fight per se) to push the poisons, hawk the faulty products, demand the welfare for the rich and corporations, and deposit all the externalities of their profit schemes onto the public and the commons’ health.
But … Man, those “buts.” I talk all the time with great white saviors, who just start spewing at the mouth of the evils of socialism, and that, well, capitalism is good, and “we let Jeff Bezos and Elon Musk and Bill Gates and Mark Zuckerberg” accumulate so much wealth and power, so it’s our fault, and really, is it that bad we have these Titans who give us goods and services? This is like heaven compared to countries who push that bullshit democratic socialism crap. Do you know what the 10 pillars of socialism/communism/Marxism are?”
Try putting “debunking the critics of socialism” into the Google Gulag Search, and you shall receive so much hatred and polemics around anything tied to socialism on the first 50 pages of the search, that, well, you get the picture why these big white saviors will dare come up to me and challenge me the socialist on how and why socialism is bad-bad-bad while capitalism is god’s work.
As these great white saviors are pushing a cart filled with two TV’s, a new printer, two iPads, and junk junk junk, 50 pounds of kitty liter and a hundred pounds of dog chow. While walking past the two young men I am working with who are taking in shopping carts as part of their competitive work as people who happen to be living with Intellectual and Developmental Disabilities. These Great White Hopes are Blind to “them.”
These great white saviors, well, it’s all about survival of the fittest. All about the colonized mind. All about – “you majored in the wrong subject matter, sucker … born into the most messed up family, sucker grew up on that side of the railroad tracks, dufus … got stuck with those bills and foreclosures, sucker.”
Oh, the invisible hand of the oppressors, and these people – Biden and Trump supporters, what have you – are criminal thinkers, really, because with one huge swath of their inhuman brain, they disregard 90 percent of the planet’s people.
“They are all sucka’s for being born where they are and from the loins of ‘those’ rotten people.”
A Sucker Borne Every Nanosecond
Oh, and I am seeing more and more quasi-leftist stuff, saying, well, the left needs to embrace the Trumpies, to work with them on labor rights, on environmental rights, on health care for all, on all those issues, and not be so hung up on their misogyny, racism, classism, white Duck Dynasty Ted Nugent shit.
Insanity, man. Leftists writing from the comfort of their offices, well, they are a dime a dozen. The reality on the ground is that this country has a cool 100 million or so hateful, resentful, ignorant of the world, pro-war, rah-rah, hate welfare of all kinds sort of people. They don’t have to be Proud Boys and KKK. These people in this USA, the white ones, mostly, have come from that evil spawn stock, back even before SCD, Smith Colony Disease.
Then, again, we have Democrats with a wilted big “D” who need their comeuppance, and who are just one half brain shy of a squid, and somehow, the other squids (sorry about the dispersion to cephalopods) with another load of brain cells missing need to be embraced, because, the GOP and Trumpies and the like want to move toward a truly socialist society?
Again, the reality is some bad-ass slow, consistent and in many cases rapid death by a 1,000 capitalist cuts.
I meet people in my new job, working with Adults with ID/DD, to get job ready and jobs in the community – real jobs, not stuck in some sheltered workshop getting one-tenth the wage of anyone else in the same job.
Sure, I am doing great work, god’s work, the work of an angel (they really say this stuff to me, a commie, a devoted atheist), and while I get the gist of that, we talk about how it is my careers have been shit for pay, highly exploitive and yet highly regarded in some sense: teaching, social services, and, well, community journalism.
“Ha-ha, you are doing these great services knowing you are not going to get rich doing it, but thank you for your service.”
Imagine that stupidity, that dense mentality. Imagine, the hard jobs that need doing in a broken capitalist society with wave after wave of damaged, chronically ill, economically strafed, mentally poisoned, generously precarious, and one paycheck away from bad ass disaster citizens on the precipice? PayDay Loans? That in and of itself defines capitalism. The Mafiosi aspect of this spiritually deserted society.
Yet, now, these great leftist warriors are saying the Trumpies and the GOP of the world – the log cutters, the mill workers, the truckers, the blue collar millionaires – that they want workplace rights, the right to strike, the right to squat, the right to refuse bad and dangerous work; that they want to be able to shut down polluting industries, and the right of the people to take over industries? That these Trumpies and GOP want universal health care, universal rights for all people. That these GOP and Trumpies want real education, more education, holistic education, writing and thinking across the curriculum, across disciplines, across industries. That the GOP-Trumpies will work so-so well with organizers and “the people” over defunding and holding to task “the police-backed” banks-warehouses-fulfillment centers. Right!@#$%
So how does anyone on both sides of the manure pile called USA politics square this fact?
Ahh, the world’s 26 richest people currently have the same amount of wealth as the poorest 3.8 billion—down from 61 people in 2016. As the rich get richer, sea levels are rising, tribalism is flourishing, and liberal democracies are regressing. Even some of the wealthiest nations are plagued by job insecurity, debt, and stagnant wages. Ordinary people across the political spectrum are increasingly concerned that the system is rigged against them. Trust in public institutions is near an all-time low.
So that Google search got one hit on the “other side” of the dividing line (not really) – “What the Right Gets Wrong About Socialism. As Scandinavia shows, it does feature plenty of public ownership—but also a thriving economy.”1
Sure, we get this from the Norwegian:
Norway’s success has not come without costs—wealth accrued through oil and other extractive industries has had harsh ecological consequences. But students there and across Scandinavia graduate without the horrifying debt burdens of their U.S. counterparts. Those who sustain injuries in traffic accidents never have to beg bystanders not to call for an ambulance, for fear of drowning in medical debt. Norwegian diabetics don’t need to crowdsource their insulin. As seniors, they don’t spend their golden years working at Walmart or living in their vehicles. Their homes were not repossessed en masse by banks during the Great Recession. Extensive public ownership shields Norwegians from the harshest aspects of unfettered capitalism.
But then he attacks North Korea and Venezuela for being failing socialist countries, and without the context of the international transnational monetary criminal system of sanctions and debt and theft of Venezuela’s treasury, and war war war with Korea still on the hot plate. Then the illegal maneuvers of governments like the USA and supported by all those others, including Norway, in its attack on Venezuela’s elected leaders and support of the dirty rich racist opposition groups, that is not mentioned.
Yep, there is a link in the Norwegian’s piece to another article – July 2018, “There is Nothing Inherently Wrong with State Ownership” by Matthew Bruenig over at Current Affairs Magazine.
Again, short anemic, and an essay in response to an attack on Norway and Sweden and “socialist” countries in the Nordic category by a New York Times “writer,” a Bret Stephens, who is sloppy and makes untrue claims in this piece, “Democratic Socialism Is Dem Doom.”
No Richard Wolf and no Michael Parenti or any thousands upon thousands of thinkers who know about societies and economies and cultures and ecologies who could put this tripe to rest. This is it?
Hemming Us In
Imagine, a 69-year-old working in a deli at a national chain. “I was once a speech therapist with a thriving private practice. And then my retirement went bust, thanks to Enron.” So, Molly works with a terrible limp, arthritis everywhere and almost no hair left. Fryers, slicers, prepping, and she runs it. Since age 55, when not only her measly retirement went bust, but the speech therapy arena turned more and more into high end certification racket, and gobbled up by, well, monopolies, agencies that scarf up the independents, or make it impossible to compete against the aggregators and services felons.
Then another guy, James, working the parking lot, bathrooms, carts, etc., making a wage when he started at this national grocery chain, of $9.75 an hour. He busts his butt, and we talked about his chronic heart failure, the meds he takes each month, all of that, including the pace maker and other aspects of his life, at age 60. He is at $12 an hour after five years with this outfit, and he tells me his supervisor likes his work, and his helping the other cart people, so much so that he is in for a wage increase to $15 an hour. He has to wait 90 days for the higher ups to approve that.
Hemming in. Working hard jobs at an old age to keep bad health insurance that is part of a for-triple-profit system of penury and theft. Oh, stories of an item being charged 18 times more during this Covid “crisis.”
A study that revealed hospitals may be charging as much as 18 times over their costs.
Nurse Jean Ross – “ Yes. Again, unconscionable, but that seems to be the way in this country. Up to 18 times. So, for example, if your true cost — it’s called the charge-to-cost ratio, or CCR — if your true cost for your service is $100, they are, in many cases, charging up to $1,800. And they do it because they can.” This from a study put out by National Nurses United.
Sit on the Ground and Try and Pull Yourself Up by Bootstraps
Those great white hopes, those big happy white males and big happy white females who voted for Trump and then those that believe Biden is better, well, that’s what we have – “Just let it take place, and that’s the way the Capitalist Cookie crumbles. What would Cuba be doing? The great invisible hand will fix things!”
Where I currently work – a small non-profit – the amount of software and tracking-time management apps and all the government agencies I have to get my mandatory trainings on and get my certifications renewed, well, it’s almost daunting. That’s the squeeze, the money train to the middle men, having nothing to do with my job, my humanity, work.
This is a non-for-profit agency working with adults with ID/DD.
Imagine all those warehouses and factories and office buildings and other places where the atomization was already on overdrive before the plan-pandemic.
Now, with the lockdowns, the on-line doom dungeons, and alas, with more and more AI and IT measures in place to keep us out of each other’s social distance arena, things are really degrading big time.
Teaching to the New Technology
I want to look at another gig I had – substitute teaching. Not just the bad working conditions of the public schools and anxious teachers and idiotic principals and the dictatorial superintendent. Let’s look at the payrate. Look at this – substitute teachers, K12, in Oregon, on the Coast, now managed by a Tennessee outfit. Note the hourly rate, and of course, coming into substitute teaching, a teaching certificate is required, and that means, well, most teachers like me, we have master’s degrees. That Oregon licensing costs another cool $400 to get the license and jump through the hoops. We get no mileage expended to get to and from very remote schools.
Job details — $14 an hour; Full-time/ Part-time; The State of Oregon requires all substitute teachers to hold an active Oregon Teaching License, Restricted Substitute Teaching License, or an Oregon Reciprocal License. As leaders in the education staffing space since 2000, ESS specializes in placing qualified staff in daily, long-term, and permanent K-12 school district positions including substitute teachers, school aides, and other school support staff. With more than 700 school district partners throughout the US, ESS supports the education of more than 2.5 million students every day.
I had been teaching as a substitute a year ago. I had been hired by the District, and my contacts were through the District. I was making $80 for four hours and $160 for seven. In many cases I could get called in late and then get ready, make the drive in the rural county, get to the school and still get the full day’s pay rate. That’s more than $18 an hour, and alas, I got to know the teachers who wanted me when they had planned absences, and the school secretaries also knew me.
There is a shortage of substitutes, and, well, if things were better all around, substitutes could be integrated more seamlessly and holistically to provide amazing outside the box perspectives and teaching.
Not so in Lincoln County, as is true of most counties, with plenty of Administrators, plenty of bullshit curriculum cops, plenty of teach-to-the- test zombies running roughshod over the entire project of working with our youth, our kids, our aspiring young adults.
This staffing “solution” is killing again teachers getting together, working with the district, getting to know people in the district, airing grievances with the district. Everything goes through this Tennessee outfit. Complaints go nowhere, and if you get a complaint leveled against you by a school, ESS will NOT go to bat. They have taken that $18 an hour and whittled it to $14 an hour. Then, they probably charge more than just that $4 per each hour taught to the DIstrict. Add to the fact they will manage who gets called, how they get called. These people are running call centers, data dredging centers, and know zilch about the schools, the roads, the weather, the culture, the teachers, the students.
I am sure they will not be allowing teachers to get a few extra hours pay if they are called in late and end up working a partial day. I am sure there are all sorts of cost-cutting (human-killing measures) this Education Staffing Solutions outfit deploys.
And, they probably pay Google for a net cast to see how many hits on the world wide web Education Staffing Solutions gets mentioned or Yelped or rated on Indeed or Linked In. You can only imagine if I was still employed as a substitute teacher, through ESS, that conversation happening, as ESS would be the outfit that would be managing me, so to speak. Finding this article criticizing them, well, sayonara subbing Mister Paul Haeder.
Management fees, man, and government (local, city, county and state, and federal) giving up oversight and decent livable wages for all the agencies and the public utilities (that we could have) and everything else, gone to middle and middle and middle men.
Again, these warped folk with ESS probably backed Trump and believe in Capitalism on Steroids, while they make bank on all the public entities across the land, AKA, public schools.
That the bus systems for schools is now outsourced from sea to shining sea, that again, defines the bottom line of pathetic capitalism. All the food cooked in cafeterias, outsourced to Sodexo. There is nothing local anymore, and these multinationals, these huge stockholder and stock board run outfits, they are making money off of us, US taxpayer, and in that formula, they are welfare recipients, and mostly welfare cheats, and with ESS, they are ripping off the very people that do the work – teachers, para-educators, more.
My comeuppance it seems was being banned from the entire District because of a few students I was in charge of at a local high school accused me of “upsetting” them when we were having a classroom discussion about homelessness, about epigenetics and families, about poverty, about the potential for many people to become substance abusers. We were talking about the books Of Mice and Men and Animal Farm.
What happened was La-La-Land level stuff, and while I think some students are crackpots, and little versions of really bad parents, I am ready to deal with crackpots and talk them off their cliff.
I did not get my day in court, so to speak, and I was not allowed to explain what could have been the students’ (three of them) hysteria, and I had no chance to query the people involved or bringing in the rest of the classroom students who were both inquisitive and enthralled to have a well-traveled, well-read, well-educated, well-experienced person like me in their classroom, albeit, temporary.
And ESS did nothing to defend me, protect me, or gain some sort of redress. That was a year ago.
Here’s a positive story — “Musings on a Monday After Teaching High School Get You Down? Nope!”
Another — “Professor Pablo and Fourth Grade Enlightenment in Lincoln City”
Education By and Because of the Corporation
The backdrop of my teaching debut … was a predicament without any possible solution, a deadly brew compounded from twelve hundred black teenagers penned inside a gloomy brick pile for six hours a day, with a white guard staff misnamed ‘faculty’ manning the light towers and machine-gun posts. This faculty was charged with dribbling out something called ‘curriculum’ to inmates, a gruel so thin [that this school] might rather have been a home for the feeble-minded than a place of education.
— John Taylor Gatto, “The Underground History of American Education,”
I did get a bird’s eye and on-the-ground look at the elementary, middle and high schools in this District. I have done substituting elsewhere, as in Vancouver, Seattle, Spokane and El Paso. Things are not looking good for youth. And I have written about that fact decades ago, and, yes, way before COronaVIrusDisease-2019, and, now, in a time of stupidity, fear, self-loathing, and complete loss of agency, the world is flipped around and, in most cases, crushed for our young people.
Did I mention fear, and while this Intercept piece below is a superficial look at the digital divide, there is so-so much more to write about this lockdown and social (pariah) distancing. It is a caste system on steroids. Calling it “remote learning” is doublespeak, oxymoronic.
In agro-industrial Watsonville, California, English-language learners struggle with remote learning. It’s much easier for students in a nearby Bay Area suburb.
I have a daughter, a step-daughter and a niece in various schooling situations. One is in med school, one is getting a chemistry degree and one is in esthetician school. Hmm, you’d expect hands-on for med school and chemistry majors. Nope. The fear factor for one of the three young women is high, and she is not wanting to leave campus, and the great reset is not in her vocabulary. There is a bombastic, “I am so glad Trump is gone. I hate him. I wish he was dead” from one of the college students. But that’s about it.
The med school woman, well, she is still having to pay out the nose for the school, yet there are less hands-on classes, again, through this doublespeak system of “remote learning.”
Now the esthetician student is hands-on, learning about the human skin dynamics, the chemistry of things in the body and outside, and working on clients, hands on. Seems very interesting that this one area – not to knock one career choice over another – has more practical hands on work than university-level chemistry majors and medical school attendees.
Now, the chemistry major’s school is introducing an “app of paranoia and tracking 101” – you put it on your smart phone, and all those who accept this app, well, as soon as someone tests (sic) positive for the virus (sic), then the entire network of users will get a notification and a detailed map of that person’s whereabouts. Oh, it’s secure, safe, no personal data shared (or mined – right!) they say, and that is a blatant lie-lie-lie. This is the Great Reset, and it’s pathetic and a gateway drug to implanted RFID’s.
The two college students, well, they are focused on their majors, but because of the siloing (atomization) of schooling, the demands on S/T/E/M do not enter the real of STEAM, science technology engineering arts math as interdisciplinary critical studies and as a praxis of seeing how the world could, should and might work outside the Corporate Thievery of Capitalism.
The net effect of holding children in confinement for twelve years without honor paid to the spirit is a compelling demonstration that the State considers the Western spiritual tradition dangerous, subversive. And of course it is. School is about creating loyalty to certain goals and habits, a vision of life, support for a class structure, an intricate system of human relationships cleverly designed to manufacture the continuous low level of discontent upon which mass production and finance rely.” —John Taylor Gatto, The Underground History of American Education
More atomization, and more dumb-downing, and more caste systems, and more social-economic-intellectual-employment-philosophical-cultural distancing. This is it for us, no?
…. the world’s 26 richest people currently have the same amount of wealth as the poorest 3.8 billion—down from 61 people in 2016. As the rich get richer, sea levels are rising, tribalism is flourishing, and liberal democracies are regressing. Even some of the wealthiest nations are plagued by job insecurity, debt, and stagnant wages. Ordinary people across the political spectrum are increasingly concerned that the system is rigged against them. Trust in public institutions is near an all-time low.” [source]
Read some of this report, and the surface stuff, well, just surface feel good stuff, but dig deep — Oxfam Report. It’s harrowing.
Nick Hanauer, entrepreneur and venture capitalist:
I am a practitioner of capitalism. I have started or funded 37 companies and was the first outside investor in Amazon. The most important lesson I have learned from these decades of experience with market capitalism is that morality and justice are the fundamental prerequisites for prosperity and economic growth. Greed is not good.
The problem is that almost every authority figure – from economists to politicians to the media – tells us otherwise. Our current crisis of inequality is the direct result of this moral failure. This exclusive, highly unequal society based on extreme wealth for the few may seem sturdy and inevitable right now, but eventually it will collapse. Eventually the pitchforks will come out, and the ensuing chaos will not benefit anyone – not wealthy people like me, and not the poorest people who have already been left behind.
Ironically, the woman going into the beauty field is much more keenly aware of the economic and social disasters befalling small businesses in her own city, her own state and her region of the country. She is super left, but is keenly aware of her democratic governor’s insipid lockdown measures.
I have many friends who now are going bankrupt, closing their businesses. Those businesses are part of a multiplier fabric. The town is or was so much better off with all these independent and mom and pop owned businesses. Not just the cool eateries and breweries, but many people I know opened up furniture stores, businesses around building and construction, all kinds of services you can’t find at the national level. Heck, used computer parts and computers, and even car rental places. Things that are not part of the monopolizing Fortune 500 set. Gone.
That means, of course, STEAM is damaged, in that, sure, the arts are hit hard, but the rest of the STEM also are hit hard on many levels. These STEM folk like their food, beer, edgy stuff, locally sourced and owned. The neutron bomb that the lockdowns and lack of financing and wages and deep-deep help for the small guys and gals, well, it is hollowing out and even more hollowed out economy. The STEM folk will follow the money, while the arts folk and those deeply tied to something richer than science for profit and engineering for war and math for building and construction and technology for the Fourth Industrial Revolution will embed and grow a city’s or town’s or area’s culture.
This all leads us back to the semi-liberal class, even the youth who hate Trump and who don’t get all the conspiracies because they go to schools (universities) which are nothing to shake a stick at, since they are tied to social constructs and hierarchies reliant on the investor class; and they pay out the nose, take out loans and go to classes that are on-line, given to them now largely by scared educators, monitored and mashed up by the Titans of Technology, who have colonized every aspect of our society, ESPECIALLY, PK12 and higher education.
The young woman working on beautifying people and supporting their self-esteem and confidence on a superficial level (skin deep beauty, so to speak), well, she is more acutely aware of the lies of the authorities on both sides of the political manure pile than these card-carrying creeps who actually think Kamala Harris is something good. Anyone-but-Trump is what got us here, this evil of two lesser, lesser of two evils. The two college-going/educated ones are more and more tied into getting out and making money, and not to knock them, because they too know the disgusting reality of poverty and more and more people who once had decent lives, who were the fabric of communities, from that baker to the speech therapist, from that teacher to the counselor, from that glass blower to that coffee shop owner, from all those service workers with lives outside just the service economy (if they are budding or bustling artists).
The creative class is not what Richard Florida yammers about. The liberal class, as Chris Hedges writes, is dead. Education has been gutted and sold down the river, as Henry Giroux states. The New Jim Crow, as Michelle Alexander states, is the new normal for not just American mindsets at the citizen level, but on the economic and investor and Capitalist level.
But conditions today favor the amateur. They favor “speed, brevity, and repetition; novelty but also recognizability.” Artists no longer have the time nor the space to “cultivate an inner stillness or focus”; no time for the “slow build.” Creators need to cater to the market’s demand for constant and immediate engagement, for “flexibility, versatility, and extroversion.” As a result, “irony, complexity, and subtlety are out; the game is won by the brief, the bright, the loud, and the easily grasped.” — “The Great Unread: On William Deresiewicz’s The Death of the Artist”
Capitalism is fascism, and it takes over entire cities and states and regions. It operates on the “buyer beware” mentality, which relies on consumers to take it up the rear, no foul called on the billionaires and CEOs and capitalist systems; and it is protected through the fascist laws of the land created by the massagers of the law from the Supreme Court down to traffic court.
More Nazis Than They Knew What to do With
Again, the great reset tied to Dashboards, a million different types of Education Staffing Solutions (ESS), universal buffoon incomes, all of that inculcated by Karl Schwab, Bill Gates, the Aspen Institute, the TED-X-ers, the World Economic Forum, all of them in the elite class, their handlers, their sycophants, all of those billionaires determining the course of cradle to grave predetermination for billions of people (Zuckerberg has encircled the African continent with his cables and lines and fiber optics), that reset was started decades ago. Debt. Foreclosures. Bailing out corporations. Drugs for guns; Crack Cocaine and the CIA; and, well, the CIA is god, into everything, right, making sure the reset has already been ensured. CIA and Nazis, and Mossad and Jihad, and, these are the merry makers of the world of Lords of War, Lords of Disruptive Economies, Lords of Predatory-Parasitic-Vulture-Usury Capitalism.
Operation Paperclip – 1,600 of Hitler’s Angels of Death. Housing, citizenship, and carte blanc living in the United States. Families welcomed. Italy’s and Germany’s intelligent agencies working closely with the National Security State, and this was in the form of so-called the rat-lines. Tens of thousands going to South America. Tens thousand other Nazi’s allowed to come to USA.
And this was the plan, from the last days right before WWII ended with an illegal double bang of Atomic Murdering Tools – all these stay-behind armies from those defeated fascists of Italy and Germany. Check out this interview on RT –Chris Hedges talks to Gabriel Rockhill about the undercurrents of fascism in America’s DNA, and the US role in internationalizing fascism after World War II through clandestine activities such Operation Paperclip and Operation Gladio.
Rockhill is a Franco-American philosopher and the founding Director of the Critical Theory Workshop and Professor of Philosophy at Villanova University. His books include Counter-History of the Present: Untimely Interrogations into Globalization, Technology, Democracy, Interventions in Contemporary Thought: History, Politics, Aesthetics, Radical History & the Politics of Art and Logique de l’histoire.
Try having conversations with liberal (illiberal) college-educated and college-loving Democrats about USA’s bioweapons program dating back to again, WWII, and Japanese scientists who were working on all sorts of bioweapons but were captured by the USA and reappropriated and brought back to the USA for, well, good paying jobs.
That is capitalism, right, reappropriating and stealing and setting up systems of mental, physical, psychological, biological, ecological, cultural repression, and eventually, disease and illness, because it pays more to treat and encourage the disease than it does to have a society living disease-free or at least living with those old time religion concepts of – precautionary principle, do no harm, preventative medicine, treat your fellow human as you would want to be treated. You know, all of that mumbo-jumbo that is not put into practice one iota in Capitalism, but certainly is mishmashed into the systems of propaganda, and, alas the “Si Se Puede” marketing of such criminals at Audacity of Hope Obama. et al makes some feel like there is change where change will NEVER be.
Until we get this liberal archetype who says Columbus was a bad guy, and that the USA was built upon the deaths and murders of Indians and Blacks, but, shoot, when ordering from the Prime Amazon account, or when scrolling up and down the iPhone, and, well, all of that which we take for granted in this First World which comes on the back of people here and now in this country and especially in other countries, then, well, the tune changes.
Because in an economic fascism, when again, old worn out people have to still hoof it to Walmart and stock shelves, and when there is no home health care for the sick and dying, young or old, unless there is always huge exchanges of money going out into the pockets of the purveyors of capitalism, you will be getting variations on a theme of a people hooked on Netflix, hooked on buying, hooked on not knowing, hooked on confusion and chaos and, well, this is what is planned.
The great reset and fourth industrial revolution are no-brainers. We’ve given up our fingerprints for a shit job, we have given up blood and urine for a shit job, we are guilty before we can attempt to prove our humanity, our innocence, and in reality, we are always guilty in the eyes of Capitalists.
Western and ruling class ideologies have played a crucial and cruel role in the violent transformation of the peoples, ecosystems and biosphere. The Fourth Industrial Revolution represents the most violent transformation of all. For as long as the ruling class is allowed to exist, social and environmental justice remain pipe dreams. [Cory Morningstar, source]
We are now taking those supposedly benign things like tracking outcomes – you know, if you have prenatal education and vitamins as a pregnant teen, and if you get the little tikes reading on a Chromebook, watching Sesame Street and if you eat this veggie over that deep friend morsel, and, all of those metrics that the data ditzes love, all of it is now being used AGAINST self-agency, AGAINST not just individuals, but all manner of classes, groupings, economic strata. You do the stuff “right” which Bill and Melinda have studied are right, then there will be s few more digital dollars in your bank account. If you fail to do them, well, no more dialing for dollars.
Because the jobs are going. The mom and pops are folding. Even chains like bowling alleys and movie theaters, all of that, they are shuttering. This revolution was already in the works before Marshall McLuhan and the medium is the message and Herman and Chomsky’s manufacturing consent. Way before deadly at any speed, a la Nader, and way before the lies of better angels of our nature Pinker.
The fix was in long-long time ago, when the food was locked up and the agricultural revolution forced us to stop being human and humane, and made us into the cogs in so many machines of oppression and suppression.
Until today, when the Catholic freaks are coming in their vestments with their exorcising tools for anyone who would dare desecrate the statue of Columbus or any Fray who pushed their stinking selves and their stinking religions onto this continent and the one south.
In response to Indigenous-led efforts that demanded land back and the toppling of statues, Catholic Church leaders in Oregon and California deemed it necessary to perform exorcisms, thereby casting Indigenous protest as demonic. [Truthout]
This is 2020, and the trillionaire Catholic Church is walking in downtown Portland with these conquistadors of nothingness, while the great reset is happening, with the green light of the Pope. “The story did not end the way it was meant to,” Pope Francis wrote recently, deftly excommunicating about a half-century’s worth of economic ideology. [source] In a striking, 43,000-word-long encyclical published last Sunday, the pope put his stamp on efforts to shape what’s been termed a Great Reset of the global economy in response to the devastation of COVID-19.”
Here it is imperative to note the consolidation of power happening in real time. World Economic Forum founder and CEO Klaus Schwab refers to this consolidation as a new global architecture; the new global governance. The following dates of are of paramount significance. On May 18, 2018, the World Bank partners with the United Nations. On June 13, 2019, the World Economic Forum partners with the United Nations. On March 11, 2020, the World Economic Forum partners with the World Health Organization (a UN body) launching the COVID Action Platform, a coalition of 200 of the world’s most powerful corporations. This number would quickly swell to over 700. On this same day, March 11, 2020, the WHO declares COVID-19 a pandemic. The UN-WEF partnership firmly positions Word Economic Forum at the helm of the Sustainable Development Goals (SDGs, also referred to as the Global Goals), which they are frothing at the mouth to implement. This is not because they care about poverty, biodiversity, the climate, or world hunger. Marketed with holistic language, dressed with beautiful images of brown smiling children, SDGs represent the new poverty economy (impact investing/social impact bonds) and emerging markets. Children as human capital data to be commodified on blockchain linking behaviour to benefits. Coercion has been repackaged as empowerment. The human population to be controlled via digital identity systems tied to cashless benefit payments within the context of a militarized 5G, IoT, and an augmented reality environment. A world where every function of nature is monetized, to be bought, sold and traded on Wall Street. — Cory Morningstar, The Great Reset: The Final Assault on the Living Planet [It’s not a social dilemma — it’s the calculated destruction of the social — Part III]
[Pope Francis meets with members of the clergy after his weekly general audience at the San Damaso courtyard, September 30 2020. Image: REUTERS/Yara Nardi]
The Fed’s policy tools – interest rate manipulation, quantitative easing, and “Special Purpose Vehicles” – have all failed to revive local economies suffering from government-mandated shutdowns. The Fed must rely on private banks to inject credit into Main Street, and private banks are currently unable or unwilling to do it. The tools the Fed actually needs are public banks, which could and would do the job.
On November 20, US Treasury Secretary Steven Mnuchin informed Federal Reserve Chairman Jerome Powell that he would not extend five of the Special Purpose Vehicles (SPVs) set up last spring to bail out bondholders, and that he wanted the $455 billion in taxpayer money back that the Treasury had sent to the Fed to capitalize these SPVs. The next day, Powell replied that he thought it was too soon – the SPVs still served a purpose – but he agreed to return the funds. Both had good grounds for their moves, but as Wolf Richter wrote on WolfStreet.com, “You’d think something earth-shattering happened based on the media hullabaloo that ensued.”
Richter noted that the expiration date on the SPVs had already been extended; that their purpose was “to bail out and enrich bondholders, particularly junk-bond holders and speculators with huge leveraged bets”; and that their use had been “minuscule by Fed standards.” They had done their job, which was mostly to be “a jawboning tool to inflate asset prices.” Investors and speculators, confident that the Fed had their backs, had “created wondrous credit markets that are now frothing at the mouth,” making the bond speculators quite rich. However, in Mnuchin’s own words, “The people that really need support right now are not the rich corporations, it is the small businesses, it’s the people who are unemployed.” So why aren’t they getting the support? According to Richter:
Powell himself has been badgering Congress for months to provide more fiscal support to small businesses and other entities because the Fed was not well suited to do so, which was the reason the Main Street Lending Program (MSLP) never really got off the ground.
The reason the Fed is not well suited to the task is that it is not allowed to make loans directly to Main Street businesses. It must rely on banks to do it, and private banks are currently unable or unwilling to make those loans as needed. But publicly-owned banks would. Fortunately, Several promising public bank bills were recently introduced in Congress that could help resolve this crisis.
The reason the Fed is not well suited to the task is that it is not allowed to make loans directly to Main Street businesses. It must rely on banks to do it, and private banks are currently unable or unwilling to make those loans as needed. But publicly-owned banks would. Fortunately, Several promising public bank bills were recently introduced in Congress that could help resolve this crisis.
But first, a look at why the Fed’s own efforts have failed.
The Fed Lacks the Tools to Inject Liquidity into the Real Economy
Congress has charged the Federal Reserve with a dual mandate: to maintain the stability of the currency (prevent inflation or deflation) and maintain full employment. Not only are we a long way from full employment, but the stability of the currency is in question, although economists disagree on whether we are headed for massive inflation or crippling deflation. Food prices and other at-home costs are up; but away-from-home costs (gas, flights, hotels, entertainment, office apparel) are down. Food prices are up not because of “too much money chasing too few goods” (demand/pull inflation) but because of supply and production problems (cost/push inflation). In terms of “output,” we are definitely looking at deflation. An August 2020 Bloomberg article quotes economist Lacy Hunt:
[A]ccording to the figures of the Congressional Budget Office, the output gap will be a record this year and we will have a deflationary gap. In other words, potential GDP will be well above real GDP. And according to the CBO, we’re going to have a deflationary output gap through 2030.
The Fed’s monetary policies, it seems, are not working. On November 11 and 12, according to Reuters:
[T]he world’s top central bankers … tune[d] into the European Central Bank’s annual policy symposium … to figure out why monetary policy is not working as it used to and what new role they must play in a changed world – be it fighting inequality or climate change.
… Central banks’ failure to achieve their targets is beginning to challenge a key tenet of monetary theory: that inflation is always a factor of their policy and that prices rise as unemployment falls.
The Fed adopted a fixed 2% target in 2012. To achieve it, explains investment writer James Molony, they “have implemented unprecedented policies. Interest rates have been slashed, in some cases to near zero, and they have engaged in printing money in order to buy bonds and other assets, otherwise known as quantitative easing.”
Lowering the interest rate is supposed to encourage lending, which increases the circulating money supply and generates the demand necessary to prompt producers to increase GDP. But the fed funds rate, the only rate the central bank controls, is nearly at zero; and the equivalent rates in the European Union and Japan are actually in negative territory. Yet in none of these three countries has the central bank been able to reach its inflation target.
The Fed has now resorted to “average inflation targeting” – meaning it will allow inflation to run above its 2% target to make up for periods when inflation was below 2%. To turn up the economic heat, Chairman Powell has been pleading for more stimulus from Congress. If Congress issues bonds, increasing the federal debt, the Fed can buy the bonds; and the money spent into the economy will increase the money supply. But federal legislators have not been able to agree on the terms of a stimulus package.
Why can’t the Fed do the job, though, itself? In a speech to the Japanese in 2002, former Fed Chairman Ben Bernanke argued (citing Milton Friedman) that it was relatively easy to fix a deflationary recession: just fly over the people in helicopters and drop money on them. They would then spend it on consumer goods, creating the demand necessary to prompt productivity. So where are the Fed’s helicopters?
“The Fed Doesn’t ‘Do’ Money.”
In a recent article titled “Where Is It, Chairman Powell?”, Jeffrey Snider, Head of Global Research at Alhambra Investments, questioned whether the Fed’s policies were creating inflation as alleged at all. He wrote:
After spending months deliberately hyping a “flood” of digital money printing, and then unleashing average inflation targeting making Americans believe the central bank will be wickedly irresponsible when it comes to consumer prices, the evidence portrays a very different set of circumstances. Inflationary pressures were supposed to have been visible by now, seven months and counting, when instead it is disinflation which is most evident – and it is spreading.
The problem, said Snider, is that “The Fed doesn’t do money, therefore there’s no way the Fed can have its monetary inflation.”
The Fed doesn’t “do” money? What does that mean?
As explained by Prof. Joseph Huber, chair of economic and environmental sociology at Martin Luther University of Halle-Wittenberg, Germany, we have a two-tiered money system. The only monies the central bank can create and spend are “bank reserves,” and these circulate only between banks. The central bank is not allowed to spend money directly into the economy or to lend it to local businesses. It is not even allowed to lend it directly to Congress. Rather, it must go through the private banking system. When the central bank buys assets (bonds or debt), it simply credits the reserve accounts of the banks from which the assets were bought; and banks cannot spend or lend these reserves except to each other. In an article titled “Repeat After Me: Banks Cannot And Do Not ‘Lend Out’ Reserves,” Paul Sheard, Chief Global Economist for Standard & Poor’s, explained:
Many talk as if banks can “lend out” their reserves, raising concerns that massive excess reserves created by QE could fuel runaway credit creation and inflation in the future. But banks cannot lend their reserves directly to commercial borrowers, so this concern is misplaced….
Banks don’t lend out of deposits; nor do they lend out of reserves. They lend by creating deposits. And deposits are also created by government deficits. [Emphasis added.]
The deposits circulating in the producer/consumer economy are created, not by the Fed, but by banks when they make loans. (See the Bank of England’s 2014 quarterly report here.) The central bank does create paper cash, but this money too gets into the economy only when other financial institutions buy or borrow it from the central bank in response to demand from their customers. The circulating money supply increases when banks make loans to businesses and individuals; and in risky environments like today’s, private banks are pulling back from Main Street lending, even with massive central bank reserves on their books.
The Tools the Fed Needs to Get Liquidity into the Economy
Private banks are not following through on the Fed’s attempted money injections, but publicly-owned banks would. In countries with strong government-owned banking systems, public banks have historically increased their lending when private banks pulled back. Public banks have a mandate to stimulate their local economies; and unlike private banks, they can do it and still turn a profit, because they have lower costs. They have eliminated the parasitic profit-extracting middlemen, and they do not have to focus on short-term profits to please their shareholders. They can pour their resources into improving the long-term prospects of the economy and its infrastructure, stimulating local productivity and strengthening the tax base.
Three promising new bills are before Congress that would facilitate the establishment of a public banking system in the US.
HR 8721, “The Public Banking Act”, was introduced on Oct. 30, 2020. As described on Vox, the Act would “foster the creation of public [state and local government-owned] banks across the country by providing them a pathway to getting started, establishing an infrastructure for liquidity and credit facilities for them via the Federal Reserve, and setting up federal guidelines for them to be regulated. Essentially, it would make it easier for public banks to exist, and it would give some of them grant money to get started.”
Create $9 billion in revenue for the postal service, saving it from privatization;
Protect low-income or rural families and communities from predatory lending; and,
Reestablish postal banking to provide basic, low-cost financial services to those who cannot access banks
The third bill, HR 6422, “The National Infrastructure Bank Act of 2020,” is modeled on Franklin Roosevelt’s Reconstruction Finance Corporation, which funded the rebuilding of the US economy in the Great Depression of the 1930s. According to its advocates, HR 6422 will build or restore over $4 trillion in infrastructure and create up to 25 million union jobs, while being “revenue neutral” (not burdening the federal government’s budget). The promise of HR 6422 and the model of the “American System” that inspired it – the innovative banking systems of Alexander Hamilton, Abraham Lincoln and Franklin Roosevelt – will be the subject of another article.
Why do political science and neoclassical economics go in one ear and out the other?
A human being who has a fully integrated social body understands that economics is about a social system of circulation of goods and services. In other words, provisioning for the population. Politics is the collective process of evaluating and deciding a) where have we been (our past) and b) where are we going (the future). Politics is about steering. With this framework, it would be inconceivable to steer or govern without referring to how well the economic system is working. How can you steer without an evaluation of how goods and services are circulating? So too, how can you monitor the economic provisioning process without checking on the decision-making process of the steering of our social direction? In fact, a person with an integrated social body only makes a distinction between economic and political processes for analytical purposes. It would be better to call the whole endeavor “political economy”.
However, if you received an undergraduate college degree you probably never had a class in political economy. What you probably had is at least one class in political science and another class in economics. If you are like most people, you found these classes either boring or incomprehensible. Why? The answer is because both fields are riddled with capitalist propaganda that has little basis in most people’s experience. Sure, there are some people who are convinced that political science and neoclassical economics make sense but which social class is this? Chances are it is members of the upper middle class for whom political and neoclassical economics make sense from their class position. But upper middle-class people are 10% of the Yankee population. Even if we take half of the 30% of the middle class, it is still only a quarter of the population. (I exclude the ruling class and the upper class for whom these courses are not relevant for different reasons).
For the rest of the middle class and lower classes, these courses are likely to produce apathy. There is a reason why Yankee masses hate politics and why they pay no attention to economics. For the elites who control political science and neoclassical economics fields, mass apathy is fine because they don’t want the lower classes asking political and economic questions. Mass apathy doesn’t mean they haven’t internalized the propaganda of political science and/or neoclassical economics. It just means some of these assumptions and images exist in the unconscious of people. For example, most people will say, if asked, “we live in a democracy”. So too they will say economically “there are no free lunches”, right out of neoclassical economics guru Milton Friedman’s playbook.
In the meantime, the social body has now slowly been taken over by two zombies: a political science zombie and a neoclassical economics zombie. This zombification process undergoes at least five processes:
Political science and economics are cut off from history, anthropology and sociology.
Political science and economics are separated from each other. In a political science class, if you ask an economic question about politics you will be told that is “not their department”. If you ask a political question in an economics class you will be told the same thing.
Political science and economics classes become reified because both disciplines are presented as changeless and not subject to scandals, false turns or ideological manipulation. Both fields appear as things, dogmas, idols. In the case of the Constitution or the Declaration of Independence, these documents have become dogma. George Washington or Thomas Jefferson have become idols that are uncriticizable.
Both fields focus on very small micro processes that are relatively inconsequential for the average person’s life. In both fields, this is done because smaller processes lend themselves more easily to scientific measurement. In addition, most neoclassical economics theories are presented in mathematical form which is intimidating for working class and even some middle-class people because they do not have formal training.
Scientific method is emphasized over the content in the field. Unless you have some reason for going into each field professionally, knowledge of how they do science is not really relevant. In the case of Trump, if you want to know how someone with no political experience or training could become the president of Yankeedom, you won’t find the answers in your political science or civics courses.
The result is that any zombified Yankee college graduate is filled with self-congratulatory political science propaganda about the nature of democracy as well as self-congratulatory neo-classical economics which is filled with economics propaganda about the wonders of capitalism.
For this article I will draw on the books Tragedy of Political Science by David Ricci and Disenchanted Realists by Raymond Seidelman and Edward Harpham. For the economics section, I’ve drawn on Introduction to Political Economy by Sackrey, Schneider and Knoedler as well as E. K. Hunt’s History of Economic Thought and Polanyi’s TheGreat Transformation.
FROM INTERDISCIPLINARY TO SPECIALIZATION OF POLITICS AND ECONOMICS
In the beginning of both the study of politics and the study of economics each was understood as being inseparable from history, philosophy, sociology and anthropology. So, in the case of politics, we could never understand a form of rule without understanding the economic property relations through which rulers, and ruled interacted. Nor could we make sense of the rise and fall of dynasties without understanding the social class composition of the society. Lastly, how could we know how the current ruler differs from rulers decades or even centuries ago without including history.
In the case of economics, the interdisciplinary field that preceded it was called political economy. In the work of Smith, Ricardo and Marx, no economic transactions could be understood without understanding the machinations of political rulers or how the newly formed industrial capitalist society differed from the agricultural, slave capitalism that preceded it. This way of looking at things began to change in the last three decades of the 19th century with the marginal utility theorists Menger, Marshall and Walras, who gradually isolated economics from these other fields. This isolation continued into the 20th century with the Austrian school economics in the work of Eugen Ritter Böhm-Bawerk, Von Mises and Von Hayek just before World War II.
In the United States during the depression the work of Keynes was carried on as a political economy point of view because Keynes was interested in macroeconomics and he insisted the state needed to intervene to keep capitalism from going off the rails. The work of neo-classical economists Samuelson and then Milton Friedman in the 1950s and 1960s emphasized the independence of the market from all political influences.
ZOMBIE NUMBER ONE: POLITICAL SCIENCE PROPAGANDA FOR DEMOCRACY
How the political ideology of liberal pluralism gets in the way of research into how democratic Yankeedom actually is
American political theory has always fancied itself a democratic politics well before the end of the 19th century. There was never a time when political theory considered that Yankee politics’ “democracy” was ever something to be proven. It was already always the case. Political science was not a neutral approach to the study of politics. It dwelt in a national context of liberal democracy. This political ideology operates with the following postulates:
presumption of human rationality – people are capable of thinking through their situation about what their own interest requires them to do;
the separation of religious from secular institutions (separation of church and state);
separation of political powers into legislative, executive and judicial fields;
the presence of more than one political party to represent factions of citizens who must have their interests checked and balanced by the upper classes (electoral college);
all that is most profound and enduring about politics was laid down by the Founding Fathers in their documents; and,
liberal faith in science as the midwife of social progress and enlightenment.
The infrastructure of democracy – political parties, the electoral college, the constitution, the separation of powers – could not be challenged. This is crucial because it puts a damper on the study of power blocks and the behavior of elites. To the extent that it takes inequalities seriously, it farms them out to other social science disciplines such as sociology or political sociology.
What would happen if the results of actual political scientific research continually denied central tenets of democratic ideology that political scientists in the United States believe in? Supposed research showed that American citizens do not behave much like democratic citizens? Suppose a political scientist has a hypothesis that democratic theory in practice is an illusion. Can you still practice political science if you believe democracy really doesn’t exist? Suppose a scientist insists on studying politics scientifically even though their inquiry cannot insure the health of a democratic society. Hypothetically you should be able to do this research.
What are the chances of a research grant for a hypothesis designed to show how anti-democratic American social institutions are? Of course, political scientists have done this research in these areas and received grants. But the research in political science would be easier if you proposed research that made people hopeful, comfortable or at least neutral, rather than disturbing them. As of around the year 2000 there were two political science textbooks which did not toe the line of what will later be called “political pluralism”. One was Michael Parenti’s Democracy for the Few, which is Marxist. The other is Irony of Democracy by Louis Schubert and Thomas Dye, which are from the Elitist school of political science.
But political scientists work in educational communities and are somewhat dependent on each other. They have political tendencies that are not based on political facts but on political ideologies that inform the facts whether they are conservative, liberal or Marxist. These ideologies inform whether the reception they receive from their work is cool, hostile or enthusiastic. For example, the topic of political disorder is not looked upon favorably by political scientists. It undermines their theories and cracks their time-honored assumptions. This kind of research is far from welcomed, as important a topic as it might be.
As a political scientist, do you try to use the research to change the institutions in a more democratic way or do you leave the institutions alone and rewrite democratic theory to fit the growing problems and weaknesses of its institutions? The field of political science in the United States did the latter. We will focus on how the ideology of democracy kept political scientists from critically analyzing their own institutions.
Generations of Political Science in Yankeedom
The first generation of politics in the US, from 1880-1900 grounded politics in morality and comparative history. The goal was to pass on qualitative, comparative, eternal wisdom through the ages that led to the development of character. Teachers taught many subjects in the humanities. A single teacher would be responsible for teaching rhetoric, criticism, English composition, logic, grammar, moral philosophy, natural and political law and metaphysics. Teachers were not expected to “publish or perish”, as commercial publishers would not publish books on research because they were not profitable. Scholars in other disciplines, however, judged their work. A single organization, Allied Social Science Association (ASSA) housed History, Economics and Anthropology. Teachers were both products and co-producers of breadth-full learning.
Progressive era of muckraking: Charles Beard
The period of muckraking in the Progressive Era (1896 – 1916) was more down-to-earth and left-liberal compared to the previous generation. The desire was to expose the conditions and the workings of corporate capitalism with writers like Upton Sinclair, Lincoln Steffens and Ida Turnbull. Yet they were still interdisciplinary. For example, Charles Beard famously took the Constitution apart and identified the economic property relations that underlined it. Beard’s vision of a new society included the fusion of new state powers with a revived, educated, informed and activist public.
Positivism political science
But after World War I, interest in political muckraking and activism cooled. When the American Political Science Association (APSA) was set up as a field, its connection to research was separated from history, economics or sociology. As capitalists expanded their industry, companies merged into corporations. They increasingly needed more highly trained managers to help in coordinating production, planning and supervising workers. Universities were chosen as the location to train the middle classes for work in these institutions. Some of these folks became political scientists.
Masses seem uninterested in substantive democracy
Beginning in the 1920s and 1930s, the field of politics was taken over by a positivist scientific orientation and was rechristened as “political science”. The emphasis on science meant using techniques of modern empirical research and descriptive studies. Guided by the perspective that the social sciences could be as rigorous as the natural sciences, modern political science was based not on the discovery of eternal truths, but on an ever-expanding body of quantitative research. Science was considered a university affair in which basic research was done, supposedly independent of how the research could be used.
What this new science found was that Americans did not seem to be acting very democratically at all. Many did not bother to vote and masses were susceptible to dictators. The research showed the average American does not conform to the modern liberalism of Dewey and Roosevelt. Merriam and Gosnell wrote about the non-voting public that 44% of non voters gave general indifference or inertia as reasons for not voting. Lasswell pointed out that the findings of personality show the individual is a poor judge of their own interest. In a world of irrational humans, Lasswell argued that a stable order must rely on a universal body of symbols and practices which sustain an elite. This stable order propagates itself by peaceful methods and wields a monopoly of coercion which is rarely necessary to apply, as Graham Wallas said in Human Nature in Politics.
But what if scientific investigations carefully carried out with the intent to improve society might instead contradict popular expectations and undermine faith in democracy? Were political scientists to inquire into the most efficient ways to overthrow America’s government and then publish the results? These are not the types of questions political scientists would be happy to entertain. The tragedy of political science is that in pursuing scientific facts while ignoring political values, those political values became unconscious as they crippled their ability to critically evaluate and challenge the social institutions that stood in the way of a substantive democracy.
Political science fails to explain dictatorships, communism or fascism
Liberal democracy had failed to take hold in Europe after World War I. Instead, in Mussolini’s control of Italy, dictatorships were established in Portugal, Yugoslavia, Austria, and Bulgaria. In 1931 the Japanese invaded Manchuria. In 1932 the Nazis were voted into power and in 1939 fascism triumphed in Spain – and then came World War II.
Political science provided little guidance for understanding the political processes that were shaping Germany (fascism) and Russia and China (state socialism). With regard to key questions of the day such as why fascism existed or how it was possible for peasants to overthrow governments, they provided no serious answer. Even more damning, they could not explain why the politics in their own country were becoming less democratic. The entire corpus of scientific knowledge seemed unable to provide a course for society to follow which would enlighten the population about the rudiments of democratic government. World War I, fascism, Stalinism and World War II signaled a loosening of forces that would make human progress chaotic at best, rather than automatic
In spite of all this, political science proceeded on its merry way as if nothing had happened. Old liberalism counted on the rationality of citizens and the responsiveness of government. Neither was found to be very true. These are not findings that political science wanted to hear because it strongly supported institutions and practices of liberalism. Probably the most famous political scientist of the 1920s and 1930s, Charles Merriam, still held out hope for the public. He promoted a civic education to improve the political life of the average person.
The reification of research methodology
The first thing political science did was to bury itself in research methodology and stop paying attention to voting patterns or even more seriously, the electoral process itself. It worked overtime to be accepted as a kindred spirit to the natural sciences. Its aim was to make its research methods as close to natural science as possible. This meant quantitative measurement and specialization of the field.
Liberal democracy is like scientific method
John Dewey saw science as organized intelligence. When humans work together at science, the methods they employ individually are reinforced by their interaction collectively as an ever-increasingly joint capacity. Dewey developed a system called instrumentalism to organize the findings of science. Dewey believed that discovering the truth was a dynamic process which was forever incomplete yet evolving. Likewise, Dewey thought democracy must be the scientific method applied to politics. He came to think that the method of political science as at least as important, if not more important, than criticizing and changing political institutions.
In 1945, Karl Popper’s The Open Society and Its Enemies was published. For the next decade, this was the stance that informed many polemics of the Cold War. Like Dewey, Popper saw the application of the scientific method as the road to democracy. He wanted to use the scientific method in his professional work so as to make modest proposals for reforming small parts of society one at a time – piecemeal social engineering as opposed to a “dangerous” utopian program for reframing all parts of society totally and simultaneously as in Marxism. Part of the process of distinguishing science from non-science is to make a distinction between what is true as the result of research, and what should be done with the research. The basic concepts and hypotheses of political science should contain no elaboration of political doctrine or what the state and society ought to be or do.
A product of this specialization was the loss of communication with the public. Political scientists talked to fewer and fewer people and those who listened heard more and more about less and less. Their research was guided by statistics, survey research, and later on formal modeling and game theory. These studies created jargon incomprehensible to the lay person. Instead political scientists became more concerned with how the work might interest their colleagues. As this happened political scientists lost touch with their colleagues in other disciplines and only discussed their findings with those already in their field. Associations which once housed many disciples differentiated into specialized bodies: Political science became more on the surface and lost its depth and breath. Only concrete scientific investigations could yield true knowledge and that knowledge was empirical, particular and experimentally verifiable.
Political scientists naively believed that by simply amassing more data, eventually a theoretical breakthrough would occur about how political systems changed. But while political scientists were slowly amassing reliable political knowledge about increasingly smaller political processes, in their insistence on separating fact from political commitment they left the barn door open by not providing political alternatives as a guide for social policy. Their political crisis came when Leninists and fascists did have political commitment while political science had nothing qualitatively to offer their own politicians.
Thin (Procedural) Democracy
Additionally, besides burying themselves in research method, their standards for what constituted democracy slipped badly. Instead of facing the lack of real substantive democracy in their own country they simply compared themselves favorably to “totalitarian societies” to make them seem relatively more democratic. The bad news for substantive democracy in the West was papered over by a comparison with the political life in “totalitarian” societies. As the evidence on individual and group irrationality mounted, many members of the discipline felt constrained to advocate an approach to politics designed to compensate for some of democracy’s shortcomings. This thin theory of democracy would praise existing liberal practices and institutions rather than criticize weak democratic processes such as voting and the electoral college. They needed to find new justifications for accepting the sometimes-disappointing outcome of democratic processes in the real world.
Rise of pluralism: political practice of interest groups as social science
If individuals are irrational, how did American democracy control its rulers? Empirical democratic theorists or pluralists examined the dynamics of group politics and the effect of organized interest groups on electoral competition. A plurality of groups competes with each other to constrain rulers and political parties to some extent. Pluralists claim, following Arendt, that unlike atomized individuals in totalitarian societies, in liberal democratic societies voluntary associations can and do exist for exerting pressure. William Kornhauser argued for the importance of maintaining pluralism, a bevy of competing power centers to guard against “mass society”.
Tinkering Instrumentalism as the invisible hand of politics
Why isn’t democracy the collective process by which we first establish our values, list our alternatives, prioritize the alternatives, weigh the potential consequences of each alternative and then act together to test what works? According to pluralists, this collective rational deduction process won’t work because humans cannot agree as to which values are to be pursued.
Dahl and Lindblom claim there is another way, which they call disjointed incrementalism. In Politics, Economics and Welfare, Dahl and Lindblom claim that democratic politics is incremental. Here small policy steps are taken without reference to unattainable consensus or grand objectives. Since a great many political actors from voters to interest groups to parties to bureaucrats must be consulted before anything gets done, this process will be disjointed. Yet it is a series of policy adjustments and taking small steps via calculated risks where immediate additions to old policy will not at once achieve all goals but at the same time will not unduly invite unforeseen tumultuous consequences.
Political science and the end of ideology movement
The self-congratulatory nature of political pluralism reached new heights with the “end of ideology movement.” From the late 1940’s and well into the 1960’s many leading scholars in the US agreed that Western society had progressed beyond any need for an explicit liberal ideology because liberalism had already won. The fundamental decency and social efficiency of American policy had been conclusively proven between 1930-1950. Daniel Bell (End of Ideology), Seymour Lipset, (Political Man) and Edward Shils agreed that most political parties in the West paid only lip service to ideology anyway. Secondly, there were so few social issues left that only practical tinkering rather than ideological solutions was needed. Daniel Boorstin’s book The Genius of American Politics argued that American political institutions by-passed the need for ideology. Raymond Aron, in the Opium of the Intellectuals, called for the abolition of ideological fanaticism and the advent of skeptics who will doubt all models and utopias. They rejected ideological speculation because its propositions could not be confirmed or disconfirmed. To questions about their ideological use of “the end of ideologies” in the service of the Cold War they responded that the Cold War was largely a military affair. Anti-ideologists represented the dominant American mood after WWII.
Political science pluralism excludes the working class
Seymour Lipset writes about working class authoritarianism. He points out that studies show the poorest strata of Western society were most likely to support Communist parties. Lipset believes the lower-class people simply do not fit the requirements for good citizenship. They are insufficiently pragmatic, open-minded skeptical and tolerant. Therefore, there is a social utility in the relative weakness of the lower classes. Real world democracies operate on the basis of high participation by elites with their superior political knowledge. Low participation by the masses might impair the political process with their undemocratic attitudes. Liberal political scientists had accepted apathy among citizens.
Rough road for political science in the 1960s
As most everyone knows, the 1960s were a time of explosion that neither Popper nor the pluralists predicted. As far back as the mid-1950s C. Wright Mills described a concentrated power elite which controlled society rather than the pluralist theories of a many-centered polity. The civil rights movement, the opposition to the Vietnam War, the rise of the New Left and the women’s movement all went unexplained by political science pluralism. Whether they called for reform or revolution, the politics of the 1960s were far from pluralist instrumentalism. Murray Edelman, in his book Symbolic Use of Politics, says the job of democratic procedures is to provide the public with symbolic gratification. Elections are for expressing discontent, for articulating enthusiasm, for enjoying political involvement and legitimating the democratic regime by giving it the appearance of popular support. Herbert Marcuse attacked pluralism for creating a “one-dimensional man”. John Galbraith argued that capitalism was not creating real public goods such as roads and bridges but was creating or expanding on the fleeting fancies of consumer products introduced by advertising.
Students complained that the universities were machines in the service of churning out passive consumers or beholden to military contractors. Student activists wanted universities to be agents of change, not handmaidens to the status quo. What united all these strands was a vision of politics that was participatory, not consensual. Political sciences had been focusing on conventional political processes, not the quality of the institutions themselves. They dealt with congresses, political parties, but not the content of what these institutions were doing. Students wanted more policy studies – that is, what the government chooses to do or not do. There were too few, if any, quantitative research studies found on powerful bureaucracies like the Department of Justice, the Ford Foundation or Institute for Defense Analysis. Political philosopher Sheldon Wolin advocated a for a renaissance in the vocation of political theory – to read, analyze, appreciate, extend and build upon the great political philosophers of yesterday. He called for a development of “epic theory”. Political science was not neutral. No stance is a stance for the status quo.
ZOMBIE NUMBER TWO: NEOCLASSICAL ECONOMICS
From political economy to neoclassical economics
Just as political science got cut off from its relationship to history, sociology, anthropology and moral theory by end of World War I, so too economics theory also got cut off from history, politics, anthropology and moral theory beginning around 1870. What now passes for economics, which is known in the United States as neoclassical economics, didn’t exist until the mid-20th century. Throughout the 18th-19th century there was a tradition called “political economy” which included Adam Smith, David Ricardo, Karl Marx and John Stuart Mill among others. Political economics assumed that economics could not be separated from history, politics or anthropology. It was only in the last three decades of the 19th century with the work of Jevons, Walras and Marshall – with what was called “marginal utility theory” – that economics began to be treated as if it could be separated from these other fields. The Austrian school of von Böhm-Bawerk, Von Mises and Von Hayek continued this tradition which separated the economy from the rest of social life. In the United States Paul Samuelson and Milton Friedman brought together neoclassical economics fields.
Polanyi’s Great Transformation
In his powerful book The Great Transformation, political economist Karl Polanyi argues that for most of human history there was no such thing as a separate realm called “the economy”. The economy was embedded in social relationships regarding the circulation of goods based on principles of “reciprocity” within families and kin groups. At the level of the state power of kings and aristocrats, these political relationships were regulated by what Polanyi called “redistribution”. What might be called an “economy” was limited to some trade relations between societies, not within them.
Polanyi argues that this began to change when capitalism brought into society the wheeling-and-dealing that was once limited to trade between societies. At the end of the 18th century when industrialization began to pulverize community relations based on generalized reciprocity and redistribution, the state became more centralized and reorganized society as market relations. There is no better account of this great transformation than to examine Adam Smith’s Wealth of Nations. While Adam Smith is considered the “father” of neoclassical economics, in most ways he represented a cross between political economy and neoclassical economics. In the first section below I will contrast him with those harder-line political economists like Marx. In the next section I will show how different he was from neoclassical economists.
Substantive vs formal rationality
If you ask most people what an economy is, they will tell you that it is a social process by which people work to produce goods and then the goods are circulated and consumed. But in the minds of neoclassical economists, the economy is not a society-wide social process involving the transformation of nature to meet human needs through a production and circulation process. For neoclassical economists, the economy is a micro exchange between self-interested, hedonistic individuals who compete with each other. Their decisions about what will be traded or bargained is based on short-term self-interest in which they weigh the pros and cons. Society is no more than the aggregate sum of these micro interactions.
Adam Smith vs radical political economists (Marx)
Turning to Adam Smith’s The Wealth of Nations, the first thing worth noticing is the ahistorical manner in which the origins of capitalism are presented. Smith argues that individuals “trucked and bartered” all the way back to hunting and gathering societies. Ideologically it is important to establish that some form of capitalism has always existed. For Marx and the institutionalist political economy theory, capitalism has a more recent origin in the 15th and 16th centuries. No anthropologist who studied tribal societies would try to make Smith’s case.
Secondly, Smith claims that capitalism starts when frugal, hard-working, shrewd traders identify a need to invest capital in land. In the best of all possible worlds, the product sells and he makes a profit. This capitalist has to compete with other traders and the results of this competition are better products for everyone. Smith called this “the invisible hand” of the market. Marxists and post-Keynesians contest this. Marx argued that capitalism doesn’t begin with trading. It begins with what Marx called “the primitive accumulation of capital” when peasants are thrown off the land (enclosures) and their tools and animals are taken away from him. The capitalist uses the land for commercial farming growing coffee, sugar, cotton and tobacco through the labor of slaves. Meanwhile former peasants are driven to work in cities and eventually work in factories after capitalists have revolutionized industry in the 19th century.
Smith believes that the source of profit is in the circulation process. Capitalist make profits by winning the competition, buying land cheap and selling it dear. His ingenuity and risk-taking are rewarded. For Marx, the key to understanding the source of profit is not primarily circulation process, but the production process. Marx says that the exploitation by the capitalist of the laborer comes in the form of wages paid to the worker. Marx estimated that the wages of work covered the first four hours of labor. This was enough money to reproduce working-class life. The last 4-6 hours were surplus labor that was pocketed by the capitalist. So, the ultimate source of profit was the exploitation of labor power. Smith also has a labor theory of value, but it was not the most important factor.
Adam Smith was sensitive to the cost the specialization of labor might have on the body and mind of the worker in terms of alienation on the job. Despite that, he felt that the massive productivity of volume that would result was worth that cost. In Bertell Ollman’s great book Marx’s Theory of Alienation he points out that workers are alienated from a) the process of labor; b) the products of labor; c) other people on the job while laboring; d) the tools harnessed; e) alienation from himself. Marx’s hope was that once an abundance of goods was produced the worker should work less and have a diverse set of activities, as he said, fishing in the morning, cattle rearing in the afternoon, criticism in the evening.
Human nature for Smith is pretty bleak. He believed that human beings are pleasure-seeking, rational and competitive, but lazy. Most people would prefer to do nothing and it is only by the carrot and the stick of enterprising capitalists that makes workers productive. For Marx, people are naturally collectively creative and want to cooperate. People only appear lazy when they have been performing wage labor and they are tired and miserable. When people control their conditions of labor, they are more productive than under capitalist conditions. This has been shown in evidence of worker cooperatives and workers councils during revolutions.
For Adam Smith the fruits of competitive capitalism led to lower prices for consumers. Marx said this is not what actually happens. Competition between capitalists leads to a concentration of capital in a few corporations and the elimination of smaller capitalists. As Marxists Baran and Sweezy point out, corporate capitalists agree not to engage in cut-throat competition and the prices of commodities are pretty much the same. They compete through advertising, not through the prices themselves. There are many more contrasts that could be made, but these are the most important. Let me turn now to the difference between Adam Smith and neo-classical economists like Milton Friedman. It is Milton Friedman‘s right-wing economics that is propagandized in college courses.
Adam Smith Vs Milton Friedman
Despite Smith’s departure from the more leftist political economists of Marx or Thorstein Veblen, compared to Milton Friedman, Adam Smith would have been considered a left liberal. In the first place, Adam Smith understood that the state was necessary for public works like roads, canals and harbors to provide education and defense. With rare exceptions, Milton Friedman wanted the state completely out of the market. His theory was “let the markets run everything”.
While Adam Smith was sensitive to the impact of the working conditions in factories, Milton Friedman might say that workers are free to find work elsewhere if the working conditions did not suit them. In terms of the source of profit, Adam Smith, like Marx, also included a labor theory of value. That means that the cost of a product depended at least partly on the labor time it takes to produce the product. To my knowledge, Milton Friedman ignored this.
How is wealth measured? Smith had an infrastructural answer to this. For him wealth is measured in a) the increased dexterity of every workman; b) the amount of time saved; and c) the inventions of machines that would shorten the workday for workers. Ultimately for Smith the increase in the standard of living of the poor should be the ultimate determination of social wealth. By today’s neoliberal and neoconservative light, Adam Smith would be to the left of Bernie Sanders! For Milton Friedman, he believed that maximizing the profits of capitalists would have a trickle-down effect on the poor.
Notice there is nothing in Adam Smith’s work about investment in the military or finance as sources of profit. For Adam Smith production of material, physical wealth was how profit was measured. For Milton Friedman, profit should be measured regardless of the field. This means that the profits made on a tractor and the profits made on a tank should all count as profit. This fails to make the distinction between tools which can produce food and tools which destroy land and people. So too, for Friedman, profits made on finance capital, investment in paper which produces no material wealth is the same as profits made on building roads, bridges or houses.
Adam Smith, like political economists such as Thorstein Veblen, included the creativity of farmers, artisan, scientists and engineers as creative sources for the economy. For Milton Friedman, the only fount of creative power was the ingenuity of the capitalist. Apparently, Friedman had little idea that the wealth capitalist possessed was not the result of personal ingenuity but most often from inheritance. Last time I checked about 2/3 of capitalist got their wealth from the inheritance they received.
Playing Hardball: the totalitarian nature of capitalist economics courses
In the fields of psychology, a student is presented with six different theoretical schools: psychoanalysis, behaviorism, humanistic psychology, physiological, evolutionary psychology and cognitive. In the fields of sociology, we might be presented with three founding schools – Marx, Weber and Durkheim. Second generation schools might be added: The Elitists (Mosca, Pareto, Michels), symbolic interactionists and rational choice theory. But in the field of economics, in Economics 101 classes, the student is presented with one school. That school would be the neoclassical economics of Samuelson and then later, Milton Freidman. No matter what the chapter heading, neoclassical economics has an interpretation and analysis. Keynesian theory might be presented somewhat, but only in select chapters. Surprisingly only two schools are presented. Does this mean there are only two schools? Hardly.
In their book Introduction to Political Economy, Sackrey, Schneider and Knoedler identify a number of other schools. In addition to a full presentation of Keynes, also included are the works of John Kenneth Galbreath, Thorstein Veblen, Karl Marx, along with might be called the anarchist economics of worker cooperatives. There are other schools called post Keynesians like Steve Keen and Michael Hudson. These are all first-rate economics, why are they not included?
The reason is solely for propaganda purposes. Neoclassical economics theorists are cheerleaders for what I call market fundamentalism. Other schools vary in calling for more state intervention (Keynes, Galbraith) while some are critical of finance capitalism (Keens and Hudson). Others like Marxists and anarchists are critical of the entire capitalist system. The propagandistic nature of neoclassical economics can be more blatantly seen in the fact that there is not one Marxian economist in the United States that is the head of an economics department.
It has often been said by people living outside of Yankeedom that the Yankee masses are stupid people. We don’t know anything about the history of other societies or where they even are on the globe. As true as this may be, what is even more disturbing is that Yankee masses do not understand our own political economy. This article was designed to show how our social bodies have been snatched away and then inhabited by two zombified entities. A political science body which is designed to persuade us that we live in a democracy despite our own best judgment. The evidence political science offers us is self-congratulatory, contradictory, irrelevant, myopic, filled with deceptive comparisons and anti-communist. The other body is a neo-classical economic entity which is also triumphant, mystifying, naïve, cynical, wooden, anti-social, shallow, obscurant and also anti-communist. Anyone in Yankeedom who manages to recover their social body must go through a process of de-zombification. What does this recovery look like? We must analyze the world through a political economy which is interdisciplinary, which is always undergoing quantitative and quantitative changes and through which we can collectively imagine and then build a new socialist world.
The world-wide collapsing economies and collapsing ecosystems together create such a catastrophic storm that all versions of buttoning down the hatches and weathering it out simply won’t work. The history of economy has been to tear at the earth until life itself cannot be sustained. The western addiction to profit at any cost has opened the floodgates to massive inequality, poverty and starvation across the globe.
The solution? — a global guaranteed income for all, what some social pioneers are calling a universal basic income (UBI). Oh! but who are these people kidding but themselves. Have they forgot that over-population worldwide kills this baby in the crib?
Contrary to belief, one of the first things people do when they have money is to control their family size. Yes, there will continue to be people who will want to be fruitful and over-multiply, but the number of concerned people is so great that a population reduction would immediately begin. At the Institute for Food and Development Policy, Frances Moore Lappé and Rachel Schurman reveal how “poverty is the TNT in the population bomb.” So don’t panic that 7.7 billion suddenly-fed mouths will automatically lead to another 7 billion mouths to feed.
Let’s create a model for a guaranteed income, then discuss background pros and cons. I will use U.S. economic numbers. Every other country can produce its own currency and guaranteed income using this design, creating in totality a world free of poverty and want.
For this model, we’ll use the productive sum total of the entire economy. As context, it started with the industrial revolution. Manual labor began moving from farming into factories of manufacturing. In the year 1760 Britain compiled the total production of manufacturing into a number called the Gross Domestic Product (GDP). In recent times, the GDP was changed to the Gross National Product (GNP).
The latest finalized number for the GNP for the U.S. is for the year 2018 at $20.18 trillion, according to the World Bank. The number of adults over the age of 18 in the U.S. is 209,128,094. If we divide the GNP by the number of adults, we get 99,651.84. This reflects an equal share for all adults of the GNP.
What is to stop us from issuing currency to each adult for the amount of $99,651.84 for the year 2018. Then we add a new differently designed currency again for 2019, the amount depending on the GNP. Let’s add three more years, making it a 5-star economy. So, what happens on the sixth year? The 2018 currency value collapses to zero and a new currency is made in its place. From then on, every year, one currency dies while another one is born. The 2018 currency collapses in 2023. The 2019 currency collapses in 2024, and so on; but a new currency replaces it; it’s just that simple. A perpetual economy is born. Rather than a paltry poverty-level UBI, we create a GNP-shared income (GNP-SI).
Since the Covid-19 disruption has had such a devastating effect on the economy, we can position a second option of using the 2018 GNP for each year of the 2018-2022 five-year rotation, unless unforeseen events snap back the economy to its normal yearly increase. The practical result is nearly the same. Multiplying the 2018 $20.18 trillion GNP by five gives us a $100.9 trillion perpetual economy.
Setting up the disbursement of cash is a straight-forward task. In the U.S., Constitutional money is gold or silver coin. Historically, silver and gold certificates have substituted for coin, which is too heavy to carry around.
The bigger job will be to update the GNP. Much of the work is done without pay and is therefore unregistered and uncounted for as part of the GNP. All service work needs to be included. So, if you have served, for instance, as a caregiver for some sick or elderly person, you should be able to walk into a government office and declare this work. A fair assessment can then be given to the work. The assessed value is then added to the aggregate GNP.
With people having enough money to follow the American dream, what opens up instantly is a vista onto a world that can now be saved from human destruction. Here are a few starters:
• People don’t have to go to work and build millions of new cars that are sending us over the cliff.
• Vast rail and shipping networks can quickly reduce our carbon footprint by leaps and bounds.
• People won’t show up to work in the morning to cut down the world’s forests for some psychopathic billionaire.
• The service work of protecting endangered species and marine sanctuaries will explode. Permaculture seaweed beds can carbon sink enormous tonnage, while creating havens in open ocean for fish and sea life to flourish.
• Plastic pollution is destroying our oceans and planet. New solutions are coming to bear. Watch the new documentary: The Story of Plastic.
• Regenerative localized farming practices can quickly replace destructive corporate land use for profit rather than bio-rich food.
• The application of biochar to the land will supercharge the quality of the global diet.
• Vast quantities of organic compost can be generated, without water, on the semi-arid deserts that constitute 40% of the world’s land surface using the agave plant and mesquite trees. See Ronnie Cummins new book: Grassroots Rising: A Call to Action on Climate, Farming, Food and a Green New Deal.
• Geoff Lawton took permaculture (permanent agriculture) to Australia and within 3.5 years he’s turned desert into an agricultural heartland without irrigation or artificial fertilizer.
• Virginia farmer Joel Salatin demonstrates how incredibly successful and sustainable natural farming can be. He hasn’t planted a seed or purchased a chemical fertilizer in 50 years.
• Warmongers will struggle to find mercenaries. Most people would rather ‘go fishing’ than kill people. Warmongers top the list of most destructive people, killers of people and nature.
• With today’s use of artificial intelligence and robot welders doing most of the manufacturing, service work becomes open to unimagined possibilities.
The beginning of the idea of GNP-SI goes back at least to the dawn of the industrial age. Futurists proscribed a new world order, a Garden of Eden economy for the exhausted masses. Machines would do the work, while government would split the profits created by the machines amongst the populace. But something got in the way.
British royalty and a new class of industrial magnates were aghast by the ideas of sharing wealth and economic liberation. The whole notion of royal ascension to power, the prerogatives and privileges it brings, with class layers of labor would all be put at risk. To think that the toiling masses might enjoy leisure was enough to make an aristocrat choke. Written history is replete with examples of self-anointed demigods belittling what they call the unwashed masses. Feudalism was in place and no uppity futurist was going to spoil the plot.
Expect the equivalent elites of today to fight against any UBI or GNP-SI. Inequality, poverty, sickness, famine, pandemics, and death amongst the masses shall go on just as before. Old excuses and new forgeries will be evoked to prove that equality is forever impractical.
Here are a few:
UBI is inflationary and therefore not reasonable. Not really—the 5 year rotation creates a ceiling amount that endures over time, approximately $100 trillion for the U.S. As described above, money creation is rotational, circular, meaning perpetual.
The current practice of quantitative easing by the Federal Reserve is inflationary. The number of dollars they create has no end in sight. The more they print, the less value the money in your pocket has. The rich get richer and the poor get poorer.
UBI would create a permanent lazy mass class that will only accelerate planetary destruction. Studies show that people want to help rather than sit around. When people get money, the first thing they do is get free from the grinding stagnation of poverty. Money is power. A UBI gives people the freedom to choose their own direction in life. The examples cited above are just a few ways people will respond to help save the planet for posterity. The masses will be set free to explore their creativity. The vast majority have said they want a planet that will sustain life for posterity. UBI gives them the chance to get some skin in the game.
GNP-SI is a breath-taking proposal. With such a huge shift toward sharing common wealth, old suspicions and concern about equal pay for equal work will persist. A commendable human social feature is that we love fairness. If abled persons refuse to put in effort and sacrifice for the overall economy, then why should they divvy up the profits equally with those who did put in effort and made sacrifices?
Flush with money, why would people work? Why should people continue at jobs that are for someone else’s profit, jobs that feed the over-consumption of the planet and tear at the ecosystems that are forced to absorb the shock of aggregate human behavior? Maybe opening a door to less productivity, even laziness, is a welcome feature for survival. It was certainly not welcome in the past.
When humans first lived in tribes, everyone had to pull their own weight or risk the survival of the community. Some sort of “equal” effort was imperative. Thus, we have a natural deep-seated fear of being pulled down by laziness or its equivalent by others.
This inherent fear can’t help but impinge on our ability to adjust to the new artificial world of industrialization where machinery of all kinds yield so much leverage and power over the basic challenges of survival. The levers of industrialization also brought with it new opportunity to continue ‘equality’ in the tribal effort. Industrialists were now in a position to share newly found wealth with their tribe of workers or do otherwise.
Witness to history, another age of greed took hold, preferring to perpetuate a likeness of king over subject, of master over slave, now industrial owner over worker, such that, slave wages well below the cost of living have persisted for the vast majority, which is exactly why it’s long overdue to create a GNP sharing program to adjust for the inability of greed to resolve itself, especially when care for ancient tribe and modern community have been lost.
Moreover, we must not forget that able-body persons are now, more than ever, in competition with super-body robots that can, for instance, weld auto bodies together at a record pace and with near perfect repetition. Automation is geared for profit not job creation, especially when mutual human respect is missing. Bots and advancing artificial intelligence increasingly make up the GNP work output, reducing the average citizen’s chances of entering the workforce as a meaningful participant.
Outstanding remains the question of important jobs not getting done if everyone is off living their American dream. Critical restoration is an example. Long-standing environmental damage and destruction continue because of political corruption and interference.
A case in point is the nuclear industry. Why should nuclear-related stockholders be allowed to profit from making the planet uninhabitable for posterity? If we are going to get serious about saving the planet then we have to make nuclear profiteers responsible for nuclear cleanup. This is a dirty job that needs to be done, and we the people, need to make these profiteers pay for their abuse of the planet and crime against posterity.
GEN-Z is screaming for global productive work to go towards saving the planet. A GNP-SI finally gives the masses the mobility and power to help them. Transforming the economy is essential to kick-starting many solutions begging for attention.
Another criticism will be that some countries are too poor to use GNP—wrong. If they apply fair value to all the goods and resources exported and add to that a fair value for all of the work done with and without pay, you suddenly have a GNP that will work quite well using their own currency.
To be clear, the GNP should reflect all of the work done, not just the work paid for. Many people work for free, helping friends and relatives who are too poor to pay for help. So, a vast store of work is being left out of the equation of GNP to the detriment to all. A fair assessment of all unaccounted for work should be added to the GNP to give the utmost true picture of valued human activity.
The private central banks will never give up their stranglehold on both the market and financial economies. This is the biggest challenge to any UBI proposal. Bankers seem impossible to defeat. The coronavirus is just the latest excuse to gift themselves and corporate elites with a multi-trillion dollar bailout. Trickery seems to never sleep. They manipulate the stock market with derivatives and credit default swaps, hedge funds, mortgage bubbles, and financial instruments that create toxic debt of all kinds.
They have given a nice euphemistic-sounding name to a new fraud called quantitative easing (QE). On the subject of QE, billionaire hedge fund manager Stanley Druckenmiller stated, “This is fantastic for every rich person. This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.” Worse, many people believe that lavishing tax breaks on the rich will cause them to create employment. Druckenmiller confides that the billion dollar give-a-ways to billionaires by megabanks have not led to a trickle down of jobs.
Robbing the masses in not new in history. Kings robbed workers and slaves alike. Then came privately owned banks.
The U.S. privately owned central bank was born in 1913. It was named the Federal Reserve to deceive the public into believing it was owned federally by the people. The federal income tax was introduced the same year. The plan was to transfer wealth from the working classes to the federal government, then from the federal government to the bankers.
A GNP-SI creates a major challenge to this direct theft from workers to bankers. A GNP-SI allows the masses to break free from the mega-bank financial market manipulations. Wall street fraud needs to die on the vine and fraudsters need to go to jail.
The massive financial losses of workers world-wide due to the coronavirus is no accident. Follow the money. Working people daily lose houses to the bankers. The unipolar worldwide financial system is part of the broader project of the Wall Street financial elites to establish the contours of a world government.
Filling the world with fresh cash defeats the digital financial manipulations by the banks to create a unipolar cashless Feudal system. Now is the time to replace the elite’s plan for universal poverty with universal income. Now is the time to make our planet livable. Are you ready for a 5-star economy for all?
Modern Monetary Theory (MMT) has become popularized by some of the liberal-left because it offers an explanation how to achieve full employment, national health insurance, free college education, and the Green New Deal without raising taxes. Political leaders like Alexandria Ocasio-Cortez and Bernie Sanders have espoused MMT. Economist Stephanie Kelton, a leading spokesperson of the theory, served as chief economic adviser to Sanders during his 2016 presidential campaign.
We summarize the basics of MMT on the significance of a “sovereign” currency and consider which currencies meet the conditions of being sovereign in the existing structure of the world economic system. This requires a review of the role the US dollar plays in world trade and how the dollar dominates the world trade system. For MMT, the existence of a sovereign currency explains the US capacity to keep pumping dollars into the economy and not experience inflation. In a subsequent article we address the validity of this last claim.
The Essentials of Modern Monetary Theory
The central idea of MMT states that a country that issues its own currency, a “sovereign” currency, can never run out of money or go bankrupt the way households or businesses can. Any government spending can be paid for by the creation of more money. Therefore, national government spending should not be determined by balancing the budget or limiting deficit levels, but only by whether spending is keeping the economy at full employment and at a reasonable level of inflation.
The US government, being a currency issuer, has its own sovereign currency, the dollar, just as Japan has the yen, and Britain the pound. The US, as the exclusive producer of the US dollar, can create more money whenever it needs. That is not the same for countries without their own currency, such as the eurozone nations which are shared users of the euro. In a similar manner, state and local governments in the US do not possess their own currency, and have to keep balanced budgets.
MMT states national government spending does not have to be paid for with taxes. It can print money and not experience inflation. The purpose of taxes, according to MMT, serves to limit inflation, by taking consumers’ money out of the money supply. This goes against the conventional idea that taxes provide the government with money to spend on the military, build infrastructure, fund social welfare programs, etc.
According to MMT, the only limit the government faces when pumping out money is the availability of real resources: raw materials, workers, construction supplies, etc. It is only when an economy hits physical or natural constraints on its productivity, when these resources have been fully put to use, will inflation result if the government continues introducing more money into the economy. Unemployment itself is the result of a government spending too little.
While the theory is controversial, much of what MMT says about US government creation of dollars and inflation is true. MMTers are not the only economists who say it. Former chair of the Federal Reserve Alan Greenspan remarked: “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.”
Another former Fed chair, Ben Bernanke, likewise commented that the federal government’s $1 trillion bailout of the banks due to the 2008 financial crisis caused by their fraud did not come from raising taxes:
It’s not tax money. The banks have accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed. It’s much more akin to printing money than it is to borrowing. And we need to do that, because our economy is very weak and inflation is very low.
Former IMF chief economist and president of the American Economic Association, Olivier Blanchard declared: “Put bluntly, public debt may have no fiscal cost” given that “The current US situation in which safe interest rates are expected to remain below growth rates for a long time, is more the historical norm than the exception.”
Moreover, the US has run up its national debt, has not reached full employment, nor put in play all economic resources, and has not endured inflation, just as MMT predicted. The US government this spring created $6 trillion out of thin air to fund corporations, banks and to a lesser degree, working people, during the stock market crash and COVID pandemic. Yet the rate of inflation rate is less than 1%, lower than in 2019. The Quantitative Easing program (their term for creating money out of thin air) likewise conjured up $4.5 trillion from 2009-2014, and this also caused little inflation here.
Nations Possessing a Sovereign Currency
The key question for MMT is which nations besides the US have a “sovereign currency.” While definitions of monetary sovereignty provided by MMT authors vary, there are central elements. One, the government issues the national currency and imposes tax liabilities in that currency. Therefore, countries that do not print their own currency, such as those using the euro, do not have a sovereign currency. Two, the currency is fully floating, meaning it has a flexible exchange rate system determined by market forces of demand and supply of foreign and domestic currency, and where government intervention is non-existent. According to the IMF, 31 countries have “free floating currencies;” however, 19 of them use the euro.1 The remaining 12 are Australia, Canada, Chile, Japan, Mexico, Norway, Poland, Russia, Sweden, the UK, Somalia2, and the US. Three, the nation has no debt denominated in foreign currency. It receives foreign loans and repays them in its own currency. A country with an MMT sovereign currency is able to conduct trade with other states in its own currency.
Third World nations, a central MMT economist Randall Wray explains, “are not international reserve currency issuing countries.” If countries peg their currency to the dollar or the euro and if they receive loans payable in foreign currency:
They usually will adopt austerity as a means to obtaining US dollars, and that means that they have slow growth, they’ve failed to develop, and they are dependent on the US, the IMF, and the World Bank. So we recommend moving off the peg and stop issuing government debt in foreign currencies. Now, we know that’s a difficult condition, and it’s only the first step. They’ve got to move toward food independence and energy independence, because those are usually two of the things that they import. And they’ve got many other problems to deal with, political problems, corruption, and possibly foreign intervention.
Fadhel Kaboub, the leading MMT economist on Third World economies, agrees. He points out that Third World nations count on staple food and energy imports and on imported advanced technology. They therefore, accumulate foreign debts, mostly in dollars and euros. When asked if there were any Third World nations follow the conditions MMT recommends to develop, Kaboub replied, “Unfortunately, not that I know of.” The closest, he said, were South Korea under the military dictatorship, and Singapore at some period in the past.
Given the MMT conditions for a sovereign currency, only 12 nations met the first two conditions. Meeting the further conditions, possessing no debt payable in a foreign currency and conducting its trade with other states in its own currency, requires a study of the role of the dollar in the world economy.
The Role of the US Dollar in World Trade
Most International Trade Takes Place in the Dollar
Most traded commodities in the world, including basic commodities such as oil and food grains, are priced in dollars on the global market. Generally, trade contracts between countries take place in the US currency, followed by the euro and the Japanese yen.
Therefore, foreign nations require dollars to conduct international trade. Exchange of goods and services among countries amounted to 39.7 trillion in dollar terms, in 2018, 46% of the global economy. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) reports the majority of global trade takes place in dollars. (SWIFT is a key instrument the US uses to enforce its unilateral coercive measures – US imposed sanctions – to disrupt the international trading of a wide variety of countries.) In 2014, SWIFT determined the dollar makes up a 52% share of the value of international currency usage, a share that has been growing. The euro, used in trade in the eurozone region, is second, with a 30.5% share of total value. The British pound is third, with a 5.4% share. Concerning trade between regions of the world, the dollar’s role as payment currency rose to 79.5%.
Almost all international transactions are done in US dollars. Nearly all of the world’s commodities are priced in U.S dollars. So, an auto manufacturer in Korea importing steel from Japan must first convert Korean won into US dollars, pay for the transaction in dollars, and the Japanese exporter, once receiving the payment, must convert the dollars into Japanese yen. So, the Dollar is key to much of the world’s trade.
Clearly, even the secondary imperial (“developed”) powers rely on the dollar for their economic operations.
A July 2020 IMF study looked at the pricing of worldwide exports and imports in dollars, euros, and other currencies since 1990. The dollar remains the prime currency used to price goods in global trade, even increasingly used for invoicing (as was also the euro) in spite of the decline in US and eurozone international trade, mostly due to the ever-increasing trade of China.
Studies of the Role of the Dollar in Country Imports and Exports
A 2018 Harvard economics report corroborates this: “the vast majority of invoicing is neither in the local currency or in the producer’s currency but instead in a ‘dominant currency’, which is most often the U.S. dollar.” Even other imperial (“developed”) countries’ trade takes place not in their own currencies, but mostly in dollars. Another Harvard study noted that while only 13% of Japan’s imports come from the US, 71% of Japanese imports are priced in dollars, while only 33% of its exports are actually in Japanese yen. For the eurozone in 2018, 56% of the goods imported and 34% of good exported were calculated in dollars.
Most Foreign Central Bank Holdings Are in the Dollar
Central banks worldwide hold a considerable portion of their reserves in dollars, using it as their primary reserve currency. As of 2019, foreign government central banks held $6.8 trillion in US dollar reserves, about 61% of combined central bank foreign exchange reserves of $11 trillion. Nearly two-thirds of the world’s currency reserves are held in dollars, more than the combined holdings of all other currencies. The next closest reserve currency is the euro, which makes up 20% of known foreign central bank currency reserves. Japanese yen accounts for 5.7%, British pound 4.4%. Central banks held only 2% of their reserves in Chinese RMB, amounting to $221 billion worth of RMB.
While the US dollar ceased to be pegged to the price of gold, it continued as the monetary standard for other currencies, which revolve around the value of the dollar. At least 155 countries either directly peg their currency to the dollar, use the dollar as their own currency, or keep their currency in a tight trading range relative to the dollar.7 That constitutes just under 80% of the nations of the world. This means the quantity of dollars the US puts into circulation shapes to varying degrees the monetary policy of most other states. To maintain this relation to the dollar other states must keep a sufficient supply of them, undermining any sovereignty their currency may possess. Nations that peg their currencies to the dollar typically rely on exports to the US. Their companies receive payment in dollars from the US market, which they then normally exchange with their own governments for their national currency.
The US Dollar Dominates the World Trade System
In spite of the US losing the status it held after World War II as workshop of the world, the dollar still exercises control over the world economy. It is the primary currency used in world trade; it is the main currency held in national central bank reserves; it is the currency used for just under two-thirds of all international debt; close to all exchange of world currencies involves one currency’s exchange for the dollar; most currencies’ exchange value is heavily influenced by the value of the dollar. Because foreign nations conduct trade in dollars and have debts in dollars, they are dependent on the dollar and the value of the dollar. This seriously compromises any sovereign power they possess.
Consequently, only in the dollar can we find a currency that meets the MMT conditions for being sovereign. All other countries must rely on the dollar to function, particularly for trade, although the degree of this dependency varies, with the subordinate First World powers exercising more independence than Third World nations. The present set-up of the world economy insures that another currency will not become sovereign like the US dollar. Therefore, the key importance MMT attaches to sovereign currency as a tool for national development loses value given these economic realities.
A gross omission made by MMT — the elephant in the room — is US corporate capital’s rule at home and abroad, which allows it to impose itself and its currency on the world. MMT compounds this weakness by presenting the obstacles nations face in establishing a sovereign currency largely as matters of political will, of choice. Ironically, this may explain MMT’s popularity at home in the liberal-left milieu. Implementing full employment, national health insurance, free college education, and the Green New Deal are presented as choices politicians have not yet made because of their mistaken beliefs concerning the national debt. Just clarify that we do not need to raise taxes and need not worry about inflation and bingo! We have what we want.
The question remains, however, why the US debt has grown over $10 trillion in 10 years with almost no inflation. Is the MMT explanation accurate, that the sovereign nature of the US dollar gives it that power? No. Printing or creating dollars out of thin air, backed by nothing, does create inflation. In Why the US Can Keep Increasing its Debt and not Suffer Inflation we show how the US has been able to export much of it and take many of the new dollars of out circulation. This does result from the US position as sovereign, but not in the sense MMT uses.
It usually makes sense to follow the money when seeking understanding of almost any major change. The strategy of following the money in our current convergence of crises in late summer of 2020 leads us directly to the lockdowns. The lockdowns were first imposed on people in the Wuhan area of China. Then other populations throughout the world were told to “shelter in place,” all in the name of combating the COVID-19 virus.
Understanding of the enormous impact of the lockdowns is still developing. The lockdowns are proving to pack a far more devastating punch than any other aspect of the strange sequence of events that is making 2020 a year like no other. Even when the issues are narrowed to those of human health, the lockdowns have had, and will continue to have, far more wide-ranging and devastating impacts than the celebrity virus.
The lockdowns have, for starters, been directly responsible for explosive rates of suicide, domestic violence, overdoses, and depression. In the long run, these maladies from the lockdowns will probably kill and harm many more people than COVID-19.
But this comparison does not tell the full story. The nature and length of the lockdowns are causing millions of people to lose their jobs, businesses and financial viability. It seems that the economic descent is still gathering force. The assault of the lockdowns on our economic wellbeing still has much farther to go.
The lockdowns have proven to be a powerful instrument of social control. This attribute is becoming very attractive especially to some politicians. They have discovered they can derive considerable political traction from hyping and exploiting the largely manufactured pandemic panic.
The lockdowns are still a work-in-progress. There are past lockdowns, revolving lockdowns, partial lockdowns, mandatory lockdowns, voluntary lockdowns, severe lockdowns and probably an array of many lockdown types yet to be invented.
The lockdowns extend to disruptions in supply chains, disruptions in money flows, drops in consumption, breakdowns in transport and travelling, increased bankruptcies, losses of finance leading to losses of housing, as well as the inability to pay taxes and debts.
The lockdowns extend beyond personal habitations to prohibitions on large assemblies of people in stadiums, concert halls, churches, and a myriad of places devoted to public recreation and entertainment. On the basis of this way of looking at what is happening, it becomes clear the economic and health effects of the lockdowns are far more pronounced than the damage wrought directly by the new coronavirus.
This approach to following the money leads to the question of whether the spread of COVID-19 was set in motion as a pretext. Was COVID-19 unleashed as an expedient for bringing about the lockdowns with the goal of crashing the existing economy? What rationale could there possibly be for purposely crashing the existing economy?
One possible reason might have been to put in place new structures to create the framework for a new set of economic relationships. With these changes would come accompanying sets of altered social and political relationships.
Among the economic changes being sought are the robotization of almost everything, cashless financial interactions, and elaborate AI impositions. These AI impositions extend to digital alterations of human consciousness and behavior. The emphasis being placed on vaccines is very much interwoven with plans to extend AI into an altered matrix of human nanobiotechnology.
There are other possibilities to consider. One is that in the autumn of 2019 the economy was already starting to falter. Fortuitously for some, the new virus came along at a moment when it could be exploited as a scapegoat. By placing responsibility for the economic debacle on pathogens rather than people, Wall Street bankers and federal authorities are let off the hook. They can escape any accounting for an economic calamity that they had a hand in helping to instigate.
A presentation in August of 2019 by the Wall Street leviathan, BlackRock Financial Management, provides a telling indicator of foreknowledge. It was well understood by many insiders in 2019 that a sharp economic downturn was imminent.
At a meeting of central bankers in Jackson Hole Wyoming, BlackRock representatives delivered a strategy for dealing with the future downturn. Several months later during the spring of 2020 this strategy was adopted by both the US Treasury and the US Federal Reserve. BlackRock’s plan from August of 2019 set the basis of the federal response to the much-anticipated economic meltdown.
Much of this essay is devoted to considering the background of the controversial agencies now responding to the economic devastation created by the lockdowns. One of these agencies is empowered to bring into existence large quantities of debt-laden money.
The very public role in 2020 of the Federal Reserve of the United States resuscitates many old grievances. When the Federal Reserve was first created in 1913 it was heavily criticized as a giveaway of federal authority.
The critics lamented the giveaway to private bankers whose firms acquired ownership of all twelve of the regional banks that together constitute the Federal Reserve. Of these twelve regional banks, the Federal Reserve Bank of New York is by far the largest and most dominant especially right now.
The Federal Reserve of the United States combined forces with dozens of other privately-owned central banks thoughout the world to form the Bank of International Settlements. Many of the key archetypes for this type of banking were developed in Europe and the City of London where the Rothschild banking family had a large and resilient role, one that persists until this day.
Along with the Federal Reserve Bank of New York, BlackRock was deeply involved in helping to administer the bailout in 2008. This bailout resuscitated many failing Wall Street firms together with their counterparties in a number of speculative ventures involving various forms of derivatives.
The bailouts resulted in payments of $29 trillion, much of it going to restore failing financial institutions whose excesses actually caused the giant economic crash. Where the financial sector profited greatly from the bailouts, taxpayers were abused yet again. The burden of an expanded national debt fell ultimately on taxpayers who must pay the interest on the loans for the federal bailout of the “too big to fail” financial institutions.
Unsettling precedents are set by the Wall Street club’s manipulation of the economic crash of 2007-2010 to enrich its own members so extravagantly. This prior experience bodes poorly for the intervention by the same players in this current round of responses to the economic crisis of 2020.
In preparing this essay I have enjoyed the many articles by Pam Martens and Russ Martens in Wall Street on Parade. These hundreds of well-researched articles form a significant primary source on the recent history of the Federal Reserve, including over the last few months.
In this essay I draw a contrast between the privately-owned regional banks of the Federal Reserve and the government-owned Bank of Canada that once issued low-interest loans to build infrastructure projects.
With this arrangement in place, Canada went through a major period of national growth between 1938 and 1974. Canada emerged from this period with a national debt of only $20 billion. Then in 1974 Prime Minister Pierre Trudeau dropped this arrangement to enable Canada to join the Bank of International Settlements. One result is that national debt rose to $700 billion by 2020.
We need to face the current financial crisis by developing new institutions that avoid the pitfalls of old remedies for old problems that no longer prevail. We need to make special efforts to change our approach to the problem of excessive debts and the overconcentration of wealth in fewer and fewer hands.
Locking Down the Viability of Commerce
Of all the facets of the ongoing fiasco generally associated with the coronavirus crisis, none has been so widely catastrophic as the so-called “lockdowns.” The supposed cure of the lockdowns is itself proving to be much more lethal and debilitating than COVID-19’s flu-like impact on human health.
Many questions arise from the immense economic consequences attributed to the initial effort to “flatten the curve” of the hospital treatments for COVID-19. Did the financial crisis occur as a result of the spread of the new coronavirus crisis? Or was the COVID-19 crisis set in motion to help give cover to a long-building economic meltdown that was already well underway in the autumn of 2019?
The lockdowns were first instituted in Wuhan China with the objective of slowing down the spread of the virus so that hospitals would not be overwhelmed. Were the Chinese lockdowns engineered in part to create a model to be followed in Europe, North America, Indochina and other sites of infection like India and Australia? The Chinese lockdowns in Hubei province and then in other parts of China apparently set an example influencing the decision of governments in many jurisdictions. Was this Chinese example for the rest of the world created by design to influence the nature of international responses?
The lockdowns represented a new form of response to a public health crisis. Quarantines have long been used as a means of safeguarding the public from the spread of contagious maladies. Quarantines, however, involve isolating the sick to protect the well. On the other hand the lockdowns are directed at limiting the movement and circulation of almost everyone whether or not they show symptoms of any infections.
Hence lockdowns, or, more euphemistically “sheltering in place,” led to the cancellation of many activities and to the shutdown of institutions. The results extended, for instance, to the closure of schools, sports events, theatrical presentations and business operations. In this way the lockdowns also led to the crippling of many forms of economic interaction. National economies as well as international trade and commerce were severely impacted.
The concept of lockdowns was not universally embraced and applied. For instance, the governments of Sweden and South Korea did not accept the emerging orthodoxy about enforcing compliance with all kinds of restrictions on human interactions. Alternatively, the government of Israel was an early and strident enforcer of very severe lockdown policies.
At first it seemed the lockdown succeeded magnificently in saving Israeli lives. According to Israel Shamir, in other European states the Israeli model was often brought up as an example. In due course, however, the full extent of the assault on the viability of the Israeli economy began to come into focus. Then popular resistance was aroused to reject government attempts to enforce a second wave of lockdowns against a second wave of supposed infections. As Shamir sees it, the result is that “Today Israel is a failed state with a ruined economy and unhappy citizens.”
In many countries the lockdowns began with a few crucial decisions made at the highest level of government. Large and proliferating consequences would flow from the initial determination of what activities, businesses, organizations, institutions and workers were to be designated as “essential.”
The consequences would be severe for those individuals and businesses excluded from the designation identifying what is essential. This deep intervention into the realm of free choice in market relations set a major precedent for much more intervention of a similar nature to come.
The arbitrary division of activities into essential and nonessential categories created a template to be frequently replicated and revised in the name of serving public heath. Suddenly central planning took a great leap forward. The momentum from a generation of neoliberalism was checked even as the antagonistic polarities between rich and poor continued to grow.
To be defined as “nonessential” would soon be equated with job losses and business failures across many fields of enterprise as the first wave of lockdowns outside China unfolded. Indeed, it becomes clearer every day that revolving lockdowns, restrictions and social distancing are being managed in order to help give false justification to a speciously idealized vaccine fix as the only conclusive solution to a manufactured problem.
What must it have meant for breadwinners who fed themselves and their families through wages or self-employment to be declared by government to be “non-essential”? Surely for real providers their jobs, their businesses and their earnings were essential for themselves and their dependents. All jobs and all businesses that people depend on for livelihoods, sustenance and survival are essential in their own way.
Was COVID-19 a Cover for an Anticipated or Planned Financial Crisis?
A major sign of financial distress in the US economy kicked in in mid-September of 2019 when there was a breakdown in the normal operation of the Repo Market. This repurchase market in the United States is important in maintaining liquidity in the financial system.
Those directing entities like large banks, Wall Street traders and hedge funds frequently seek large amounts of cash on a short-term basis. They obtain this cash from, for instance, money market funds by putting up securities, often Treasury Bills, as collateral. Most often the financial instruments go back, say the following night, to their original owners with interest payments attached for the use of the cash.
In mid-September the trust broke down between participants in the Repo Market. The Federal Reserve Bank of New York then entered the picture making trillions of dollars available to keep the system for short-term moving of assets going. This intervention repeated the operation that came in response to the first signs of trouble as Wall Street moved towards the stock market crash of 2008.
One of the major problems on the eve of the bailout of 2008-09, like the problem in the autumn of 2019, had to do with the overwhelming of the real economy by massive speculative activity. The problem then, like a big part of the problem now, involves the disproportionate size of the derivative bets. The making of these bets have become a dangerous addiction that continues to this day to menace the viability of the financial system headquartered on Wall Street.
By March of 2020 it was reported that the Federal Reserve Bank of New York had turned on its money spigot to create $9 trillion in new money with the goal of keeping the failing Repo Market operational. The precise destinations of that money together with the terms of its disbursement, however, remain a secret. As Pam Martens and Russ Martens write,
Since the Fed turned on its latest money spigot to Wall Street [in September of 2019], it has refused to provide the public with the dollar amounts going to any specific banks. This has denied the public the ability to know which financial institutions are in trouble. The Fed, exactly as it did in 2008, has drawn a dark curtain around troubled banks and the public’s right to know, while aiding and abetting a financial coverup of just how bad things are on Wall Street.
Looking back at the prior bailout from their temporal vantage point in January of 2020, the authors noted “During the 2007 to 2010 financial collapse on Wall Street – the worst financial crisis since the Great Depression, the Fed funnelled a total of $29 trillion in cumulative loans to Wall Street banks, their trading houses and their foreign derivative counterparties.”
The authors compared the rate of the transfer of funds from the New York Federal Reserve Bank to the Wall Street banking establishment in the 2008 crash and in the early stages of the 2020 financial debacle. The authors observed, “at this rate, [the Fed] is going to top the rate of money it threw at the 2008 crisis in no time at all.”
The view that all was well with the economy until the impact of the health crisis began to be felt in early 2020 leads away from the fact that money markets began to falter dangerously in the autumn of 2019. The problems with the Repo Market were part of a litany of indicators pointing to turbulence ahead in troubled economic waters.
For instance, the resignation in 2019 of about 1,500 prominent corporate CEOs can be seen as a suggestion that news was circulating prior to 2020 about the imminence of serious financial problems ahead. Insiders’ awareness of menacing developments threatening the workings of the global economy were probably a factor in the decision of a large number of senior executives to exit the upper echelons of the business world.
Not only did a record number of CEOs resign, but many of them sold off the bulk of their shares in the companies they were leaving.
Pam Marten and Russ Marten who follow Wall Street’s machinations on a daily basis have advanced the case that the Federal Reserve is engaged in fraud by trying to make it seem that “the banking industry came into 2020 in a healthy condition;” that it is only because of “the COVID-19 pandemic” that the financial system is” unravelling,”
The authors argue that this misrepresentation was deployed because the deceivers are apparently “desperate” to prevent Congress from conducting an investigation for the second time in twelve years on why the Fed, “had to engage in trillions of dollars of Wall Street bailouts.” In spite of the Fed’s fear of facing a Congressional investigation after the November 2020 vote, such a timely investigation of the US financial sector would well serve the public interest.
The authors present a number of signs demonstrating that “the Fed knew, or should have known…. that there was a big banking crisis brewing in August of last year. ” The signs of the financial crisis in the making included negative yields on government bonds around the world as well as big drops in the Dow Jones average. The plunge in the price of stocks was led by US banks, but especially Citigroup and JP Morgan Chase.
Another significant indicator that something was deeply wrong in financial markets was a telling inversion in the value of Treasury notes with the two-year rate yielding more than the ten-year rate.
Yet another sign of serious trouble ahead involved repeated contractions in the size of the German economy. Moreover, in September of 2019 news broke that officials of JP Morgan Chase faced criminal charges for RICO-style racketeering. This scandal added to the evidence of converging problems plaguing core economic institutions as more disruptive mayhem gathered on the horizons.
Accordingly, there is ample cause to ask if there are major underlying reasons for the financial crash of 2020 other than the misnamed pandemic and the lockdowns done in its name of “flattening” its spikes of infection. At the same time, there is ample cause to recognize that the lockdowns have been a very significant factor in the depth of the economic debacle that is making 2020 a year like no other.
Some go further. They argue that the financial crash of 2020 was not only anticipated but planned and pushed forward with clear understanding of its instrumental role in the Great Reset sought by self-appointed protagonists of creative destruction. The advocates of this interpretation place significant weight on the importance of the lockdowns as an effective means of obliterating in a single act a host of old economic relationships. For instance Peter Koenig examines the “farce and diabolical agenda of a universal lockdown.”
Koenig writes, “The pandemic was needed as a pretext to halt and collapse the world economy and the underlying social fabric.”
Inflating the Numbers and Traumatizing the Public to Energize the Epidemic of Fear
There have been many pandemics in global history whose effects on human health have been much more pervasive and devastating than the current one said to be generated by a new coronavirus. In spite, however, of its comparatively mild flu-like effects on human health, at least at this point in the summer of 2020, there has never been a contagion whose spread has generated so much global publicity and hype. As in the aftermath of 9/11, this hype extends to audacious levels of media-generated panic. As with the psyop of 9/11, the media-induced panic has been expertly finessed by practitioners skilled in leveraging the currency of fear to realize a host of radical political objectives.
According to Robert E. Wright in an essay published by the American Institute for Economic Research, “closing down the U.S. economy in response to COVID-19 was probably the worst public policy in at least one-hundred years.” As Wright sees it, the decision to lock down the economy was made in ignorant disregard of the deep and devastating impact that such an action would spur. “Economic lockdowns were the fantasies of government officials so out of touch with economic and physical reality that they thought the costs would be fairly low.”
The consequences, Wright predicts, will extend across many domains including the violence done to the rule of law. The lockdowns, he writes, “turned the Constitution into a frail and worthless fabric.” Writing in late April, Wright touched on the comparisons to be made between the economic lockdowns and slavery. He write, “Slaves definitely had it worse than Americans under lockdown do, but already Americans are beginning to protest their confinement and to subtly subvert authorities, just as chattel slaves did.”
The people held captive in confined lockdown settings have had the time and often the inclination to imbibe much of the 24/7 media coverage of the misnamed pandemic. Taken together, all this media sensationalism has come to constitute one of the most concerted psychological operations ever.
The implications have been enormous for the mental health of multitudes of people. This massive alteration of attitudes and behaviours is the outcome of media experiments performed on human subjects without their informed consent. The media’s success in bringing about herd subservience to propagandistic messaging represents a huge incentive for more of the same to come. It turns out that the subject matter of public health offers virtually limitless potential for power-seeking interests and agents to meddle with the privacies, civil liberties and human rights of those they seek to manipulate, control and exploit.
The social, economic and health impacts of the dislocations flowing from the lockdowns are proving to be especially devastating on the poorest, the most deprived and the most vulnerable members of society. This impact will continue to be marked in many ways, including in increased rates of suicide, domestic violence, mental illness, addictions, homelessness, and incarceration far larger than those caused directly by COVID-19. As rates of deprivation through poverty escalate, so too will crime rates soar.
The over-the-top alarmism of the big media cabals has been well financed by the advertising revenue of the pharmaceutical industry. With some few exceptions, major media outlets pushed the public to accept the lockdowns as well as the attending losses in jobs and business activity. In seeking to push the agenda of their sponsors, the big media cartels have been especially unmindful of their journalistic responsibilities. Their tendency has been to avoid or censor forums where even expert practitioners of public health can publicly question and discuss government dictates about vital issues of public policy.
Whether in Germany or the United States or many other countries, front line workers in this health care crisis have nevertheless gathered together with the goal of trying to correct the one-sided prejudices of of discriminatory media coverage. One of the major themes in the presentations by medical practitioners is to confront the chorus of media misrepresentations on the remedial effects of hydroxychloroquine and zinc.
On July 27 a group of doctors gathered on the grounds of the US Supreme Court to try to address the biases of the media and the blind spots of government.
Another aspect in the collateral damage engendered by COVID-19 alarmism is marked in the fatalities arising from the wholesale postponement of many necessary interventions including surgery. How many have died or will die because of the hold put on medical interventions to remedy cancer, heart conditions and many other potentially lethal ailments?
Did the unprecedented lockdowns come about as part of a preconceived plan to inflate the severity of an anticipated financial meltdown? What is to be made of the suspicious intervention of administrators to produce severely padded numbers of reported deaths in almost every jurisdiction? This kind of manipulation of statistics raised the possibility that we are witnessing a purposeful and systemic inflation of the severity of this health care crisis.
Questions about the number of cases arise because of the means of testing for the presence of a supposedly new coronavirus. The PCR system that is presently being widely used does not test for the virus but tests for the existence of antibodies produced in response to many health challenges including the common cold. This problem creates a good deal of uncertainty of what a positive test really means.
The problems with calculating case numbers extend to widespread reports that have described people who were not tested for COVID-19 but who nevertheless received notices from officials counting them as COVID-19 positive. Broadcaster Armstrong Williams addressed the phenomenon on his network of MSM media outlets in late July.
From the mass of responses he received, Williams estimated that those not tested but counted as a positive probably extends probably to hundreds of thousands of individuals. What would drive the effort to exaggerate the size of the afflicted population?
This same pattern of inflation of case numbers was reinforced by the Tricare branch of the US Defense Department’s Military Health System. This branch sent out notices to 600,000 individuals who had not been tested. The notices nevertheless informed the recipients that they had tested positive for COVID 19.
Is the inflation of COVID-19 death rates and cases numbers an expression of the zeal to justify the massive lockdowns? Were the lockdowns in China conceived as part of a scheme to help create the conditions for the public’s acceptance of a plan to remake the world’s political economy? What is to be made of the fact that those most identified with the World Economic Forum (WEF) have led the way in putting a positive spin on the reset arising from the very health crisis the WEF helped introduce and publicize in Oct. of 2019?
As Usual, the Poor Get Poorer
The original Chinese lockdowns in the winter of 2020 caused the breakdowns of import-export supply chains extending across the planet. Lockdowns in the movement of raw materials, parts, finished products, expertise, money and more shut down domestic businesses in China as well as transnational commerce in many countries outside China. The supply chain disruptions were especially severe for businesses that have dispensed with the practice of keeping on hand large inventories of parts and raw material, depending instead on just-in-time deliveries.
As the supply chains broke down domestically and internationally, many enterprises lacked the revenue to pay their expenses. Bankruptcies began to proliferate at rates that will probably continue to be astronomical for some time. All kinds of loans and liabilities were not paid out in full or at all. Many homes are being re-mortgaged or cast into real estate markets as happened during the prelude and course of the bailouts of 2007-2010.
The brunt of the financial onslaught hit small businesses especially hard. Collectively small businesses have been a big creator of jobs. They have picked up some of the slack from the rush of big businesses to downsize their number of full-time employees. Moreover, small businesses and start-ups are often the site of exceptionally agile innovations across broad spectrums of economic activity. The hard financial slam on the small business sector, therefore, is packing a heavy punch on the economic conditions of everyone.
The devastating impact of the economic meltdown on workers and small businesses in Europe and North America extends in especially lethal ways to the massive population of poor people living all over the world. Many of these poor people reside in countries where much of the paid work is irregular and informal.
At the end of April the International Labor Organization (ILO), an entity created along with the League of Nations at the end of the First World War, estimated that there would be 1.6 billion victims of the meltdown in the worldwide “informal economy.” In the first month of the crisis these workers based largely in Africa and Latin America lost 60% of their subsistence level incomes.
This pandemic has laid bare in the cruellest way, the extraordinary precariousness and injustices of our world of work. It is the decimation of livelihoods in the informal economy – where six out of ten workers make a living – which has ignited the warnings from our colleagues in the World Food Programme, of the coming pandemic of hunger. It is the gaping holes in the social protection systems of even the richest countries, which have left millions in situations of deprivation. It is the failure to guarantee workplace safety that condemns nearly 3 million to die each year because of the work they do. And it is the unchecked dynamic of growing inequality which means that if, in medical terms, the virus does not discriminate between its victims in its social and economic impact, it discriminates brutally against the poorest and the powerless.
Guy Ryder remembered the optimistic rhetoric in officialdom’s responses to the economic crash of 2007-2009. He compares the expectations currently being aroused by the vaccination fixation with the many optimistic sentiments previously suggesting the imminence of remedies for grotesque levels of global inequality. Ryder reflected,
We’ve heard it before. The mantra which provided the mood music of the crash of 2008-2009 was that once the vaccine to the virus of financial excess had been developed and applied, the global economy would be safer, fairer, more sustainable. But that didn’t happen. The old normal was restored with a vengeance and those on the lower echelons of labour markets found themselves even further behind.
The internationalization of increased unemployment and poverty brought about in the name of combating the corona crisis is having the effect of further widening the polarization between rich and poor on a global scale. Ryder’s metaphor about the false promises concerning a “vaccine” to correct “financial excess” can well be seen as a precautionary comment on the flowery rhetoric currently adorning the calls for a global reset.
Wall Street and 9/11
The world economic crisis of 2020 is creating the context for large-scale repeats of some key aspects of the bailout of 2007-2010. The bailout of 2007-2008 drew, in turn, from many practices developed in the period when the explosive events of 9/11 triggered a worldwide reset of global geopolitics.
While the events of 2008 and 2020 both drew attention to the geopolitical importance of Wall Street, the terrible pummelling of New York’s financial district was the event that ushered in a new era of history, an era that has delivered us to the current financial meltdown/lockdown.
It lies well beyond the scope of this essay to go into detail about the dynamics of what really transpired on 9/11. Nevertheless, some explicit reckoning with this topic is crucial to understanding some of the essential themes addressed in this essay.
Indeed, it would be difficult to overstate the relevance of 9/11 to the background and nature of the current debacle. The execution and spinning of 9/11 were instrumental in creating the repertoire of political trickery presently being adapted in the manufacturing and exploiting of the COVID-19 hysteria. A consistent attribute of the journey from 9/11 to COVID-19 has been the amplification of executive authority through the medium of emergency measures enactments, policies and dictates.
Wall Street is a major site where much of this political trickery was concocted in planning exercises extending to many other sites of power and intrigue. In the case of 9/11, a number of prominent Wall Street firms were involved before, during and after the events of September 11. As is extremely well documented, these events have been misrepresented in ways that helped to further harness the military might of the United States to the expansionistic designs of Israel in the Middle East.
The response of the Federal Reserve to the events of 9/11 helped set in motion a basic approach to disaster management that continues to this day. Almost immediately following the pulverization of Manhattan’s most gigantic and iconographic landmarks, Federal Reserve officials made it their highest priority to inject liquidity into financial markets. Many different kinds of scenario can be advanced behind the cover of infusing liquidity into markets.
For three days in a row the Federal Reserve Bank of New York turned on its money spigots to inject transfusions of $100 billion dollars of newly generated funds into the Wall Street home of the financial system. The declared aim was to keep the flow of capital between financial institutions well lubricated. The Federal Reserve’s infusions of new money into Wall Street took many forms. New habits and appetites were thereby cultivated in ways that continue to influence the behaviour of Wall Street organizations in the financial debacle of 2020.
The revelations concerning the events of 9/11 contained a number of financial surprises. Questions immediately arose, for instance, about whether the destruction of the three World Trade Center skyscrapers had obliterated software and hardware vital to the continuing operations of computerized banking systems. Whatever problems arose along these lines, it turned out that there was sufficient digital information backed up in other locations to keep banking operations viable.
But while much digital data survived the destruction of core installations in the US financial sector, some strategic information was indeed obliterated. For instance, strategic records entailed in federal investigations into many business scandals were lost. Some of the incinerated data touched on, for instance, the machinations of the energy giant, Enron, along with its Wall Street partners, JP Morgan Chase and Citigroup.
The writings of E. P Heidner are prominent in the literature posing theories about the elimination of incriminating documentation as a result of the controlled demolitions of 9/11. What information was eliminated and what was retained in the wake of the devastation? Heidner has published a very ambitious account placing the events of 9/11 at the forefront of a deep and elaborate relationship linking George H. W. Bush to Canada’s Barrick Gold and the emergence of gold derivatives.
The surprises involving 9/11 and Wall Street included evidence concerning trading on the New York Stock Exchange. A few individuals enriched themselves significantly by purchasing a disproportionately high number of put options on shares about to fall precipitously as a result of the anticipated events of 9/11. Investigators, however, chose to ignore this evidence because it did not conform to the prevailing interpretation of who did what to whom on 9/11.
Another suspicious group of transactions conducted right before 9/11 involved some very large purchases of five-year US Treasury notes. These instruments are well known hedges when one has knowledge that a world crisis is imminent. One of these purchases was a $5 billion transaction. The US Treasury Department would have been informed about the identity of the purchaser. Nevertheless the FBI and the Securities Exchange Commission collaborated to point public attention away from these suspect transactions. (p. 199)
On the very day of 9/11 local police arrested Israeli suspects employed in the New York area as Urban Movers. The local investigators were soon pressured to ignore the evidence, however, and go along with the agenda of the White House and the media chorus during the autumn of 2001.
In the hours following the pulverization of the Twin Towers the dominant mantra was raised “Osama bin Laden and al-Qeada did it.” That mantra led in the weeks, months and years that followed to US-led invasions of several Muslim-majority countries. Some have described these military campaigns as wars for Israel.
Soon New York area jails were being filled up with random Muslims picked up for nothing more than visa violations and such. The unrelenting demonization of Muslims collectively can now be seen in retrospect as a dramatic psychological operation meant to poison minds as the pounding of the war drums grew in intensity. In the process a traumatized public were introduced to concepts like “jihad.” At no time has there ever been a credible police investigation into the question of who is responsible for the 9/11 crimes.
Defense Secretary Donald Rumsfeld chose September 10, the day before 9/11, to break the news at a press conference that $2.3 trillion had gone missing from the Pentagon’s budget. Not surprisingly the story of the missing money got buried the next day as reports of the debacle in Manhattan and Washington DC dominated MSM news coverage.
As reported by Forbes Magazine, the size of the amount said to have gone missing in Donald Rumsfeld’s 2001 report of Defense Department spending had mushroomed by 2015 to around $21 trillion. It was Mark Skidmore, an Economics Professor at the University of Michigan, who became the main sleuth responsible for identifying the gargantuan amount of federal funds that the US government can’t account for.
As the agency that created the missing tens of trillions that apparently has disappeared without a trace, wouldn’t the US Federal Reserve be in a position to render some assistance in tracking down the lost funds? Or is the Federal Reserve somehow a participant or a complicit party in the disappearance of the tens of trillions without a paper trail?
The inability or unwillingness of officialdom to explain what happened to the lost $21 trillion, an amount comparable to the size of the entire US national debt prior to the lockdowns, might be viewed in the light of the black budgets of the US Department of Defense (DOD). Black budgets are off-the-books funds devoted to secret research and to secret initiatives in applied research.
In explaining this phenomenon, former Canadian Defense Minister, Paul Hellyer, has observed, “thousands of billions of dollars have been spent on projects about which Congress and the Commander In Chief have deliberately been kept in the dark.” Eric Zuesse goes further. As he explains it, the entire Defense Department operates pretty much on the basis of an unusual system well outside the standard rules of accounting applied in other federal agencies.
When news broke about the missing $21 trillion, federal authorities responded by promising that special audits would be conducted to explain the irregularities. The results of those audits, if they took place at all, were never published. The fact that the Defense of Department has developed in a kind of audit free zone has made it a natural magnet for people and interests engaged in all kinds of criminal activities.
Eric Zuesse calls attention to the 1,000 military bases around the world that form a natural network conducive to the cultivation of many forms of criminal trafficking. Zuesse includes in his reflections commentary on the secret installations in some American embassies but especially in the giant US Embassy in Baghdad Iraq.
The US complex in Baghdad’s Green Zone is the biggest Embassy in the world. Its monumental form on a 104 acre site expresses the expansionary dynamics of US military intervention in the Middle East and Eurasia following 9/11.
The phenomenon of missing tens of trillions calls attention to larger patterns of kleptocratic activity that forms a major subject addressed here. The shifts into new forms of organized crime in the name of “national security” began to come to light in the late 1980s. An important source of disclosures was the series of revelations that accompanied the coming apart of the Saudi-backed Bank of Credit and Commerce International, the BCCI.
The nature of this financial institution, where CIA operatives were prominent among its clients, provides a good window into the political economy of drug dealing, money laundering, weapons smuggling, regime change and many much more criminal acts that took place along the road to 9/11.
The BCCI was a key site of financial transactions that contributed to the end of the Cold War and the inception of many new kinds of conflict. These activities often involved the well-financed activities of mercenaries, proxy armies, and a heavy reliance on private contractors of many sorts.
The Enron scandal was seen to embody some of the same lapses facilitated by fraudulent accounting integral to the BCCI scandal. Given the bubble of secrecy surrounding the Federal Reserve, there are thick barriers blocking deep investigation into whether or not the US Central Bank was involved in the relationship of the US national security establishment and the BCCI.
The kind of dark transactions that the BCCI was designed to facilitate must have been channelled after its demise into other banking institutions probably with Wall Street connections. Since 9/11, however, many emergency measures have been imposed that add extra layers of secrecy protecting the perpetrators of many criminal acts from public exposure and criminal prosecutions.
The events of 9/11 have sometimes been described as the basis of a global coup. To this day there is no genuine consensus about what really transpired to create the illusion of justification for repeated US military invasions of Muslim-majority countries in the Middle East and Eurasia.
The 9/11 debacle and the emergency measures that followed presented Wall Street with an array of new opportunities for profit that came with the elaborate refurbishing and retooling of the military-industrial complex.
The response to 9/11 was expanded and generalized upon to create the basis of a war directed not at a particular enemy, but rather at an ill-defined conception identified as “terrorism.” This alteration was part of a complex of changes adding trillions to the flow of money energizing the axis of interaction linking the Pentagon and Wall Street and the abundance of new companies created to advance the geopolitical objectives emerging from the 9/11 coup.
According to Pam Martens and Russ Martens, the excesses of deregulation helped induce an anything-goes-ethos on Wall Street and at its Federal Reserve regulator in the wake of 9/11. As the authors tell it, the response to 9/11 helped set important precedents for the maintaining flows of credit and capital in financial markets.
Often the destination of the funds generated in the name of pumping liquidity into markets was not identified and reported in transactions classified as financial emergency measures. While the priority was on keeping financial pumps primed, there was much less concern for transparency and accountability among those in positions of power at the Federal Reserve.
The financial sector’s capture of the government instruments meant to regulate the behaviour of Wall Street institutions was much like the deregulation of the US pharmaceutical industry. Both episodes highlight a message that has become especially insistent as the twenty-first century unfolds.
The nature of the response to 9/11 emphasized the mercenary ascent of corporate dominance as the primary force directing governments. Throughout this transformation the message to citizens became increasingly clear. Buyer Beware. We cannot depend on governments to represent our will and interests. We cannot even count on our governments to protect citizens from corporatist attacks especially on human health and whatever financial security we have been able to build up.
Bailouts, Derivatives, and the Federal Reserve Bank of New York
The elimination of the Glass-Steagall Act in 1999 was essential to the process of dramatically cutting back the government’s role as a protector of the public interest on the financial services sector. The Glass-Steagall Act was an essential measure in US President Franklin D. Roosevelt’s New Deal. Some view the New Deal as a strategy for saving capitalism by moderating ts most sharp-edged features. Instituted in 1933 in response to the onset of the Great Depression, the Glass-Steagall Act separated the operations of deposit-accepting banks from the more speculative activity of investment brokers.
The termination of the regulatory framework put in place by the Glass Steagall Act opened much new space for all kinds of experiments in the manipulation of money in financial markets. The changes began with the merger of different sorts of financial institutions including some in the insurance field. Those overseeing the reconstituted entities headquartered on Wall Street took advantage of their widened latitudes of operation. They developed all sorts of ways of elaborating their financial services and presenting them in new packages.
The word, “derivative” is often associated with many applications of the new possibilities in the reconstituted financial services sector. The word, derivative, can be applied to many kinds of transactions involving speculative bets of various sorts. As the word suggests, a derivative is derived from a fixed asset such as currency, bonds, stocks, and commodities. Alterations in the values of fixed assets affect the value of derivatives that often take the form of contracts between two or more parties.
One of the most famous derivatives in the era of the financial crash of 2007-2010 was described as mortgaged-backed securities. On the surface these bundles of debt-burdened properties might seem easy to understand. But that would be a delusion. The value of these products was affected, for instance, by unpredictable shifts in interest rates, liar loans extended to homebuyers who lacked the capacity to make regular mortgage payments, and significant shifts in the value of real estate.
Mortgage-backed securities were just one type of a huge array of derivatives invented on the run in the heady atmosphere of secret and unregulated transactions between counterparties. Derivatives could involve contracts formalizing bets between rivals gambling on the outcome of competitive efforts to shape the future. An array of derivative bets was built around transactions often placed behind the veil of esoteric nomenclature like “collateralized debt obligations” or “credit default swaps.”
The variables in derivative bets might include competing national security agendas involving, for instance, pipeline constructions, regime change, weapons development and sales, false flag terror events, or money laundering. Since derivative bets involve confidential transactions with secret outcomes, they can be derived from all sorts of criteria. Derivative bets can, for instance, involve all manner of computerized calculations that in some cases are constructed much like war game scenarios.
The complexity of derivatives became greater when the American Insurance Group, AIG, began selling insurance programs to protect all sides in derivative bets from suffering too drastically from the consequences of being on the losing side of transactions.
The derivative frenzy, sometimes involving bets being made by parties unable to cover potential losses, overwhelmed the scale of the day-to-day economy. The “real economy” embodies exchanges of goods, services, wages and such that supply the basic necessities for human survival with some margin for recreation, travel, cultural engagement and such.
The Swiss-based Bank of International Settlements calculated in 2008 that the size of the all forms of derivative products had a monetary value of $1.14 quadrillion. A quadrillion is a thousand trillions. By comparison, the estimated value of all the real estate in the world was $75 trillion in 2008.
As the enticements of derivative betting preoccupied the leading directors of Wall Street institutions, their more traditional way of relating to one another began to falter. It was in this atmosphere that the Repo Market became problematic in December of 2007 just as it showed similar signs of breakdown in September of 2019.
In both instances the level of distrust between those in charge of financial institutions began to falter because they all had good reason to believe that their fellow bankers were overextended. All had reason to believe their counterparts were mired by too much speculative activity enabled by all sorts of novel experiments including various forms of derivative dealing.
In December of 2007 as in the autumn of 2019, the Federal Reserve Bank of New York was forced to enter the picture to keep the financial pumps on Wall Street primed. The New York Fed kept the liquidity cycles flowing by invoking its power to create new money with the interest charged to tax payers.
As the financial crisis unfolded in 2008 and 2009 the Federal Reserve, but especially the privately-owned New York Federal Reserve bank, stepped forward to bail out many financial institutions that had become insolvent or near insolvent. In the process precedents and patterns were established that are being re-enacted with some modifications in 2020.
One of the innovations that took place in 2008 was the decision by the Federal Reserve Bank of New York to hire a large Wall Street financial institution, BlackRock, to administer the bailouts. These transfers of money went through three specially created companies now being replicated as Special Purpose Vehicles in the course of the payouts of 2020.
In 2008-09 BlackRock administered the three companies named after the address of the New York Federal Reserve Bank on Maiden Lane. BlackRock emerged from an older Wall Street firm called Blackstone. Its former chair, Peter C. Peterson, was a former Chair of the Federal Reserve Bank of New York.
The original Maiden Lane company paid Bear Stearns Corp $30 billion. This amount from the New York Fed covered the debt of Bear Stearns, a condition negotiated to clear the way for the purchase of the old Wall Street institution by JP Morgan Chase. Maiden Lane II was a vehicle for payouts to companies that had purchased “mortgage-backed securities” before these derivative products turned soar.
Maiden Lane III was to pay off “multi-sector collateralized debt obligations.” Among these bailouts were payoffs to the counterparties of the insurance giant, AIG. As noted, AIG had developed an insurance product to be sold to those engaged in derivative bets. When the bottom fell out of markets, AIG lacked the means to pay off the large number of insurance claims made against it. The Federal Reserve Bank of New York stepped in to bail out the counterparties of AIG, many of them deemed to be “too big to fail.”
Among the counterparties of AIG was Goldman Sachs. It received of $13 billion from the Federal Reserve. Other bailouts to AIG’s counterparties were $12 billion to Deutsche Bank, $6.8 billion to Merrill Lynch, $5 billion to Switzerland’s UBS, $7.9 billion to Barclays, and $5.2 billion to Bank of America. Some of these banks received additional funds from other parts of the overall bailout transaction. Many dozens of other counterparties to AIG also received payouts in 2008-2009. Among them were the Bank of Montreal and Bank of Scotland.
The entire amount of the bailouts was subsequently calculated to be a whopping $29 trillion with a “t.” The lion’s share of these funds went to prop up US financial institutions and the many foreign banks with which they conducted business.
Much of this money went to the firms that were shareholders in the Federal Reserve Bank of New York or partners of the big Wall Street firms. Citigroup, the recipient of the largest amount, received about $2.5 trillion in the federal bailouts. Merrill Lynch received $2 trillion,
The Federal Reserve Bank was established by Congressional statute in 1913. The Federal Reserve headquarters is situated in Washington DC. The Central Bank was composed of twelve constituent regional banks. Each one of these regional banks is owned by private banks.
The private ownership of the banks that are the proprietors of the Federal Reserve system has been highly contentious from its inception. The creation of the Federal Reserve continues to be perceived by many of its critics as an unjustifiable giveaway whereby the US government ceded to private interests its vital capacity to issue its own currency and to direct monetary policy like the setting of interest rates.
Pam Martens and Russ Martens at Wall Street on Parade explain the controversial Federal Reserve structure as follows
While the Federal Reserve Board of Governors in Washington, D.C. is deemed an “independent federal agency,” with its Chair and Governors appointed by the President and confirmed by the Senate, the 12 regional Fed banks are private corporations owned by the member banks in their region. The settled law under John L. Lewis v. the United States confirms: “Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region.”
In the case of the New York Fed, which is located in the Wall Street area of Manhattan, its largest shareowners are behemoth multinational banks, including JPMorgan Chase, Citigroup, Goldman Sachs and Morgan Stanley.
There was no genuine effort after the financial debacle of 2007-2010 to correct the main structural problems and weaknesses of the Wall Street-based US financial sector. The Dodd-Frank Bill signed into law by US President Barack Obama in 2010 did make some cosmetic changes. But the main features of the regulatory capture that has taken place with the elimination of the Glass-Steagall Act remained with only minor alterations. In particular the framework was held in place for speculative excess in derivative bets.
In the summer edition of The Atlantic, Frank Partnoy outlined a gloomy assessment of the continuity leading from the events of 2007-2010 to the current situation. This current situation draws a strange contrast between the lockdown-shattered quality of the economy and the propped-up value of the stock market whose future value will in all probability prove unsustainable. Partnoy writes,
It is a distasteful fact that the present situation is so dire in part because the banks fell right back into bad behavior after the last crash—taking too many risks, hiding debt in complex instruments and off-balance-sheet entities, and generally exploiting loopholes in laws intended to rein in their greed. Sparing them for a second time this century will be that much harder.
Wall Street Criminality on Display
The frauds and felonies of the Wall Street banks have continued after the future earnings of US taxpayers returned them to solvency after 2010. The record of infamy is comparable to that of the pharmaceutical industry.
The criminal behaviour in both sectors is very relevant to the overlapping crises that are underway in both the public health and financial sectors. In 2012 the crime spree in the financial sector began with astounding revelations about the role of many major banks in the LIBOR, the London Interbank Offered Rate. The LIBOR rates create the basis of interest rates involved in the borrowing and lending of money in the international arena.
When the scandal broke there were 35 different LIBOR rates involving various types of currency and various time frames for loans between banks. The rates were calculated every day based on information forwarded from 16 different banks to a panel on London. The reporting banks included Citigroup, JP Morgan Chase, Bank of America, UBS, and Deutsche Bank. The influence of the LIBOR rate extended beyond banks to affect the price of credit in many types of transactions.
The emergence of information that the banks were working together to rig the interest rate created the basis for a huge economic scandal. Fines extending from hundreds of millions into more than a billion dollars were placed on each of the offending banks. But in this instance and many others to follow, criminality was attached to the financial entities but not to top officials responsible for the decisions that put their corporations on the wrong side of the law.
One of the factors in the banking frauds comprising the LIBOR scandal was the temptation to improve the chance for financial gains in derivative bets. The biggest failure of the federal response to the financial meltdown of 2007-210 was that little was done to curb the excesses of transactions in the realm of derivatives.
Derivatives involved a form of gambling that exists in a kind of twilight zone. This twilight zone fills a space somewhere between the realm of the real economy and the realm of notional value. Notional values find expression in unrealized speculation about what might or might not come to fruition; what might or might not happen; who might win and who might lose in derivative speculations.
The addiction of Wall Street firms to derivative betting remains unchecked to this day. The bankers’ continuing fixation with unregulated gambling, often with other people’s money, is deeply menacing for the future of the global economy…. indeed for the future of everyone on earth. According to the Office of the Controller of Currency, in 2019 JP Morgan Chase had $59 trillion in derivative bets. In July of 2020 it emerged that Citigroup held $62 trillion in derivative contracts, about $30 trillion more than it held before it was bailed out in 2008. In 2019 Goldman Sachs held $47 trillion and Bank of America held $20.4 trillion in derivate bets.
A big part of the scandal embodied in these figures is embedded in the reality that all of these banks carry their most risky derivative bets in units of their corporate networks that are protected by the Federal Deposit Insurance Corporation. This peril played a significant part in deepening the crisis engendered by financial meltdown that began in 2007.
One of the most redeeming features of the Dodd-Frank Act as originally drafted was a provision preventing financial institutions from keeping their derivative portfolios in banks whose deposits and depositors were backed up by federal insurance.
Citigroup led the push in Congress in 2014 to allow Wall Street institutions to revert back to a more deregulated and danger-prone economic environment. The notoriously inept decisions and actions of Citigroup had played a significant role in the lead up to the financial debacle of 2007 to 2010. Since 2016 Citigroup has become once again the biggest risk taker by loading itself up with more derivative speculations than any other financial institution in the world.
By returning derivative speculations to the protections of federal financial backstops, taxpayers are once again forced to assume responsibility for the most outlandish risks of Wall Street’s high rollers. It is taxpayers who are the backers of the federal government when it comes to their commitment to compensate banks for losses, even when these losses come about from derivative bets.
How much more Wall Street risk and public debt can be loaded onto taxpayers and even onto generations of taxpayers yet unborn? How is national debt to be understood when it plunders working people to guarantee and augment the wealth of the most privileged branches of society? Why should those most responsible for creating the most excessive risks to the financial wellbeing of our societies be protected from bearing the consequences of the very risks they themselves created?
Along with Citigroup, JP Morgan Chase stands out among a group of financial sector reprobates most deeply involved in sketchy activities that extend deep into the realm of criminality. In a simmering scandal six of JP Morgan Chase’s traders have been accused of breaking laws in conducting the bank’s futures trading in the value of precious metals. They have been accused of violating the RICO statute, a law meant for people suspected of being part of organized crime.
In the charges pressed by the Justice Department on JP Morgan Chase’s traders it is alleged that they “conducted the affairs of the [minerals] desk through a pattern of racketeering activity, specifically, wire fraud affecting a financial institution and bank fraud.”
In 2012 JP Morgan Chase faced a $1 billion fine for its role in the “London Wale” series of derivative bets described as follows by the Chair of the US Senate’s Permanent Subcommittee on Investigation. Senator Carl Levin explained, “Our findings open a window into the hidden world of high stakes derivatives trading by big banks. It exposes a derivatives trading culture at JPMorgan that piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight, and misinformed the public.”
Traders at Goldman Sachs appear to have been part of the Wall Street crime spree. The tentacles of corruption in the Goldman Sachs case apparently extend deep into the US Justice Department. The case involves allegations of embezzlement, money laundering and missing billions. These manifestations of malfeasance all spin out of a scandal-prone Malaysian sovereign wealth fund administered by Goldman Sachs.
A big part of the scandal reported in Wall Street on Parade in July of 2020 involves the fact that the Justice Department’s prosecutors seem to be dragging their feet in this possible criminal felony case against Goldman Sachs. The prosecutors, including the US Attorney-General, William Barr, worked previously for the law firm, Kirkland and Ellis. Kirkland and Ellis was retained to defend Goldman Sachs in this matter.
Pam Martens and Russ Martens express dismay at the failure of US officialdom to hold Wall Street institutions accountable for the crime spree of some of its biggest firms. They write, “Congress and the executive branch of the government seem determined to protect Wall Street criminals, which simply assures their proliferation.”
Even racketeering charges against officials at JP Morgan Chase, where Jamie Dimon presides as CEO, failed to receive any attention from the professional deceivers that these days dominate MSM. The star reporters of Wall Street on Parade write, “Crime and fraud are so de rigueur at the bank led by Dimon that not one major newspaper ran the headline [of the racketeering charge] on the front page or anywhere else in the paper.
While federal charges that JP Morgan Chase’s Wall Street operation engaged in criminal racketeering was not of interest to the press, Jamie Dimon’s surprise visit in early June to a Chase branch in Mt. Kisco New York aroused considerable media attention. Dimon was photographed with staff wearing a mask and taking the knee. By participating in this ritual Dimon signaled that his Wall Street operation is in league with the sometimes violent cancel culture pushed into prominence by the Democratic Party in partnership with Black Lives Matter and Antifa.
*(JPMorgan CEO Jamie Dimon takes a knee with employees in front of a bank vault. Credit: JPMorgan)
In an article on 21 July marking ten years since the Dodd-Frank Act of 2010, the Martens duo conclude, “So here we are today, watching the Fed conduct another secret multi-trillion dollar bailout of Wall Street while the voices of Congress and mainstream media are nowhere to be heard.”
In March it was announced that representatives of the US Treasury Department, the Federal Reserve Board and the BlackRock financial management were joining forces to make adjustments in the US economy. The aim was to address the financial dislocations resulting from the decision to lock down businesses, citizens, schools, entertainment, and social mingling outside the home, all in response to the health care hysteria promoted by governments and their media extensions.
The format of this process suggested some relaxation in the strict distinctions historically drawn between the US Treasury and the Federal Reserve. What would be the role of the third member of the group? In reflecting on this topic Joyce Nelson observed, “the new bailout bill not only further erases the line between the Federal Reserve and the U.S. Treasury, it places BlackRock effectively in an overseer position for both.”
Some saw as symbolically instructive the delegation to BlackRock of a larger role than that assigned it during the first bailout of 2007-2008. It would be hard to overestimate the significance of this prominent Wall Street firm’s return to a strategic role near the very heart of this major exercise of federal power. This invitation to take part in such crucial negotiations at such a consequential juncture in history caused some to characterize BlackRock as a “fourth branch of government.”
As Victoria Guida commented in Politico, “This is a transformational moment for the Fed, and BlackRock’s now going to be in an even stronger position to serve the Fed in the future.”
BlackRock officials had been instrumental in helping to manoeuvre their company into such a strategic role by responding proactively to the understanding in some elite circles that another financial debacle was imminent. Only months before the financial meltdown actually occurred a group of former central bankers all commissioned by BlackRock delivered a recovery plan in August of 2019.
Presented at a G 7 summit of central bankers in Jackson Hole Wyoming, the plan for the government responses to the looming financial collapse was entitled Dealing with the Next Downturn. Its authors are Stanley Fischer, former Governor of the Central Bank of Israel, Philipp Hildebrande, former Chairman of the Governing Board of the Swiss National Bank, Jean Boivin, former Deputy Governor of the Bank of Canada, and Elga Bartsch, Economist at Morgan Stanley.
The BlackRock Team at Jackson Hole put forward the case that a more aggressive and coordinated combination of monetary and fiscal policy must be brought to the job of stimulating a financial recovery. Monetary policy includes the setting of interest rates. Where monetary policy has historically been the domain of the central banks, fiscal policy, involving issues of taxation as well as the content and size of government budgets, lies within the jurisdiction of elected legislatures.
The nub of the proposal to unite fiscal and monetary policy put the US Treasury and the US Federal Reserve on the same political platform. As the author of this merger of monetary and fiscal policy, BlackRock became third member of the triumvirate charged to address the broad array of economic maladies that arrived in the wake of the lockdowns.
In the spring of 2020 BlackRock has been hired by the Bank of Canada and by Sweden’s Central Bank, the Riksbank, to deliver on the approaches to crisis management its representatives had laid out at Jackson Hole. BlackRock’s most high-profile and strategic engagement, however, began with its involvement in the negotiation of the $2 trillion CARES stimulus package that passed through the US Congress in March of 2020.
The CARES Act included $367 billion for loans and grants to small business, $130 billion for health care systems, $150 billion for state and local government, $500 billion for loans to corporate America, and $25 billion for airlines (in addition to loans).
The heart of the plan involved a payout of $1,200 per adult and $500 per child for households making up to $75,000. This payment to citizens approaches the concept of disseminating “helicopter money” as referred to in BlackRock’s initial outline for dealing with the “downturn.” Helicopter money distributed by the federal government to its citizens was also related to the concept of “going direct” in strategies for stimulating the economy.
BlackRock seems to be moving into the space recently held by Goldman Sachs as Wall Street’s best embodiment of ostentatious success including in the preparation of its corporate leaders for high-ranking positions in the federal government. Laurence Fink, BlackRock’s founder and CEO, might well have replicated this career path to become Treasury Secretary if Hillary Clinton had succeeded in becoming US President in 2016.
BlackRock’s leadership went to great lengths to avoid being tagged with the title in the United States of a “systematically important financial institution” (sifi). To be subject to this “sifi” label entails added federal scrutiny and regulation as well as heightened requirements to keep high amounts of capital on hand. BlackRock’s status as a private company not subject to sifi regulations makes the financial management firm more attractive to its federal partners in the federal payout operation presently underway.
One of the reasons for including a private company in the trio of partners involved in the payouts is to sneak around limitations on the legal powers of the Federal Reserve. As explained by Ellen Brown in her essay, Meet BlackRock: The New Great Vampire Squid, the Federal Reserve can only purchase “safe federally-guaranteed assets.” As a private company, BlackRock apparently faces no such restrictions. It can purchase more risky assets not backstopped by federal insurance.
The regional banks of the Federal Reserve Board are owned by private companies whose directors seem to have been part of the decision to include BlackRock in the implementation of the CARES process. There can be no doubt that the format of the CARES negotiations pulled the supposedly independent Federal Reserve more deeply into the political orbit of the US Treasury branch. The presence of a major Wall Street firm in the process, however, apparently gave the advocates of the Fed’s supposed independence from politics a sense that they retained some leverage in the process.
The inclusion of private companies in the conduct of government business has become in recent decades a very common expression of neoliberalism. One of the reasons for this embrace of public-private partnerships in the conduct of government business is to take advantage of the legal nature of private companies. The apportionment to private companies of significant roles in deciding and implementing public policies helps put veils of secrecy over the true nature of government decisions and actions.
Private companies can more easily assert claims to “proprietary information” than can public institutions when they act on behalf of citizens. This feature of privatization in the performance of public responsibilities by elected government runs counter to the imperatives of democratic transparency. It puts obstacles in the way of genuine accountability because the public is more likely to be kept in the dark about key aspects of what is being decided and done on their behalf.
Suck Up Economics and State Monopoly Capitalism
BlackRock owns, controls, or manages about $30 trillion in total in securities. It directly controls or owns somewhat less than a third of this amount. The remainder of the assets BlackRock manages are to service clients responsible for taking care of pension funds, philanthropies, foundations, endowments, family offices, superannuation funds and such.
A big part of BlackRock’s business model involves attracting customers by allowing them access to great masses of timely information of significant utility to those responsible for making investment decisions. This technological wizardry happens on a very advanced computational platform known as Aladdin.
Aladdin remains a work-in-progress, one that is widely recognized as the most sophisticated medium of its kind for assessing all manner of financial risks and potentials for profit. Its future as an investment platform is to become more and more integrated into the complex mix of hardware and software animating Artificial Intelligence.
BlackRock’s job is to dispense funds ushered into existence through the money-creating powers of the Federal Reserve. These transactions are to take place through eleven so-called “special purpose vehicles” similar to the Maiden Lane companies that BlackRock administered during the prior bailouts.
The funds it distributes in this round starting in 2020 are meant, at least at this early stage of the crisis, as payments for various sorts of assets. These assets might include an array of corporate bonds spanning a range from so-called investment grade to garbage grade junk bonds. The losses incurred in this exchange, involving supposed assets that might turn out to be worthless, or loans that might not be paid back, are to be charged to the US Treasury. Ultimately the liability lies on US taxpayers who are the holders of the national debt.
Bonds of varying levels of worth lie beneath another asset eligible for transformation into cash. This instrument of value is referred to as Exchange Traded Funds, ETFs. ETFs happen to be a specialty of BlackRock ever since the company launched a range of commercial ETFs into Stock Market circulation through its iShares division. BlackRock’s role on both sides of buying and selling ETFs comes up repeatedly as one of the many conflicts of interest of which the Wall Street firm stands accused.
Given that BlackRock is involved in one way or another in the proprietorship of pretty much every major company in the world, there is plenty to back up the allegation that Black Rock is an interested party in most of the transactions in which it engages as part of its partnership with the US Fed and Treasury Branch.
Pam Matens and Russ Martens have been very critical of the role of the Federal Reserve and BlackRock in the current economic crisis. They have anticipated that, if the current drift of events continues, American taxpayers will once again be gobsmacked with a huge growth in the national debt. This development would amount to another major transfer of wealth away from working people to the beneficiaries of Wall Street firms and the same commercial institutions that received the lion’s share of funds during the last bailout.
The co-authors picture BlackRock is part of a scheme to use “Special Purpose Vehicles” like “Enron used to hide the true state of its finances and blow itself up.” They entitle their article published on 31 March, 2020 as “The Dark Secrets in the Fed’s Wall Street Bailout Are Getting a Devious Makeover in Today’s Bailout.”
The authors observe. “What makes the New York Fed’s bailout of Wall Street so much more dangerous this time around is that it has decided to use a different structure for its loans to Wall Street – one that will force losses on taxpayers and, it hopes, will provide an ironclad secrecy curtain around how much it spends and where the money goes.”
I find this account of an effort by the Federal Reserve to create an “ironclad secrecy curtain” shocking under these circumstances. It suggests an intention to exceed the deceptiveness of the last bailout. This warning renews longstanding suspicions that the failures of transparency and accountability have not subsided since the beginning of the era when deregulation and the 9/11 deceptions converged in the domestic and international operations of Wall Street.
The structural problems already identified in the process initiated to implement the CARES Act could have enormous consequences if the current economic crisis continues to deteriorate. This deterioration is not likely to stop anytime soon given the depth of the crash and its probable domino effects. It was reported in late July that during the second quarter of 2020 the US Gross Domestic Product collapsed at an annualized rate of 33%, the deepest decline in output ever recorded since the US government began measuring GDP in 1947.
The CARES Act helped set in motion a program with the potential to repeat elements of the earlier bailout. The amount of $454 billion was to be set aside to assist the banking sector. The Fed can leverage this amount by ten times according to the principles of fractional reserve banking.
The news of this development caused Mike Whitney to imagine “the Fed turning itself into a hedge fund in order to buy the sludge that has accumulated on the balance sheets of corporations and financial institutions for the last decade,” Whitney pictured an onslaught of “scheming sharpies who will figure out how to game the system and turn the whole fiasco into another Wall Street looting operation.”
Meanwhile the Martens Team at Wall Street on Parade called attention to the $9 trillion already injected by the New York Fed to flood liquidity into the still-troubled Repo Markets that began to falter in September of 2019. Add to this revelation the news that the Fed “has not announced one scintilla of information on what specific Wall Street firms have received this money or how much they individually received.”
There is no doubt that the nature of economic relations will be substantially altered in the process of dealing with the financial meltdown induced by the lockdowns and by the overreliance on high debt rates combined with artificially low interest rates prior to 2020. The altered political economy that is beginning to emerge following the lockdowns is sometimes described as state monopoly capitalism.
In deciding what companies get bailed out and what companies don’t, the financial authorities that are intervening in this crisis are pretty much deciding what enterprises get the advantage of federal financial backstops and what enterprises will not enjoy government sanction. Increasingly, therefore, it is the state that determines winners and losers in the organizing of financial relations. This development further undermines any notion that some idealized vision of competition and market forces will determine winners and losers in the economy of the future.
As Peter Ewarts has observed, it seems that BlackRock is being delegated by federal authorities to exercise “discretionary powers to pick winners and losers,” a choice that is “where the real bonanza and clout lies.” Will the winners be chosen from the companies run by executives that used the money gained from the prior bailouts to engage in stock buy backs? This process of buying back stock tends to be reflected in CEO bonuses and higher share prices. Alternatively this way of allocating funds tends to short change workers as well as innovation and efficiency in industrial production?
Will companies be rewarded whose executives have moved production facilities overseas or issued billions in junk bonds? Will companies be rewarded whose directors have participated in the effort to censor the Internet, bring about lockdowns or foment mask hysteria? Why is it that the coddled elites serving the financial imperatives of most wealthy branches of society are being put in the best position to decide who gets a life preserver from the state and who must sink and drown?
Might this bias be a factor in the current process that led Forbes Magazine to conclude in a headline that “Billionaries Are Getting Richer During the Covid-19 Pandemic While Most Americans Suffer.”
There can be no doubt that the financial transactions beginning with the CARES Act represent a crucial initial stage in what the promoters of the World Economic Forum have been labeling as the Great Reset. Laurence Fink and the BlackRock firm are significant participants in the World Economic Forum. The WEF helped introduce the pandemic in Event 201 in October of 2019 even as it is now trying to put a positive face on the fiasco.
Why should the people most harshly affected by the lockdowns tolerate that the very Wall Street interests dispossessing them, are tasked once again to lead and exploit the reset of the financial system? As presently structured by the likes of BlackRock and its beneficiaries, this process is once again transferring new wealth to the most wealthy branches of society. Simultaneously it is burdening the rest of the population with yet another massive increase in both personal and national indebtedness.
There is no more discussion of “trickle down” economics, a frequent metaphor invoked in the Reagan-Thatcher era. Instead we are in the midst of an increasingly intense phase of suck up economics. The rich are being further enriched and further empowered through the dispossession of the poor and the middle classes. This procedure, initiated when locked down citizens were sidelined from the political process, has the potential to result in the largest upward transfer of wealth so far in history.
BlackRock Versus the Debt-Lite Legacy of the Bank of Canada
At the end of March Laurence Fink, CEO and founder of BlackRock, announced in a letter to his company’s shareholder, “We are honored to have been selected to assist the Federal Reserve Bank of New York and the Bank of Canada on programs designed to facilitate capital to businesses and support the economy.”
This announcement might leave the impression that the Bank of Canada and the Federal Reserve Bank of New York are similar institutions. This impression is unfounded. The two banks have very different structures and histories. A spotlight on these differences helps illuminate the nature of a number of core financial issues.
These financial issues should command avid attention during this time of reckoning with a serious economic crisis that may well be still in its early stages. Such issues inevitably draw attention to the current manifestations of very old questions about the character of money and its relationship to the concepts of usury and debt. Questions about debt, debt enslavement as well as the possibility of debt renunciation or debt forgiveness are becoming especially pressing.
These controversial queries arise in an era when a tiny minority is aggressively asserting sweeping claims to ownership of vast concentrations of the world’s available assets. The other side of this picture reveals that the largest mass of humanity is sinking into a swamp of rising debt on a scale that is concurrently unsustainable and unconscionable. How did this level of inequity reach such audacious extremes? Are there any remedies in sight?
There is nothing to suggest structural remediation in the current approach to the economic crisis. In fact so far there is every indication that the current approach of bringing about an enormous expansion in the availability of debt-laden money will only compound the further dispossession of the already dispossessed in order to expand the wealth of the already wealthy.
As already noted, the Federal Reserve Bank of New York is one of twelve regional banks that together constitute the US Federal Reserve. Every regional Federal Reserve Bank is owned by a group of private banks. Each of the private banks at the base of a Federal Reserve regional bank marks its proprietorship through the ownership of shares. These shares cannot be freely traded in stock markets. The ownership of these shares expresses the private ownership of the US banking system.
The Fed’s New York regional bank has a special role in money creation given its location at the heart of the US financial sector on and around Wall Street. In this crisis, the Federal Reserve Bank of New York is creating new money in the name of holding back onslaughts of destitution and penury in a traumatized society. Ever since 1913 every new dollar brought into existence by the Federal Reserve, which is the central bank of the United States, creates added debt that collects compound interest as long as it is left unpaid.
The Bank of Canada was created to counter the delegation of money-creating authority to privately-owned banks. The Bank of Canada was founded during the Great Depression, a time when the failure of many existing institutions created the conditions to try out alternative entities in the attempt to improve economic relationships.
One of the driving forces in the creation of Canada’s new banking system was Gerald Gratten McGeer. McGreer was an elected official in British Columbia dedicated to changing the system so that the people of Canada could generate their own currency through the sovereign authority of Canada’s Parliament. McGeer helped to push the national government of Prime Minister R.B. Bennett in this direction. The wheels were set in motion in 1933 through the work on the Royal Commission on Banking and Currency.
McGeer drew much of his inspiration from former US President, Abraham Lincoln. Lincoln led the US federal government throughout the US Civil War. To finance the Armed Forces of the Union, Lincoln used the authority of the federal government to create “Greenbacks” as a means of paying the troops. By employing the sovereign authority of the US government to create its own currency, Lincoln avoided the intrigues that often accompanied the process of borrowing money from foreign lenders.
McGreer had obtained what he viewed as credible evidence that Lincoln had been assassinated because of his antagonism to the designs of private bankers seeking to widen their base of power in the United States. The Canadian politician had taken to heart a comment attributed often to Lincoln: “The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity.”
The Bank of Canada was created in 1934 and nationalized as a Crown Corporation in 1938. To this day it retains its founding charter that affirms,
WHEREAS it is desirable to establish a central bank in Canada to regulate credit and currency in the best interests of the economic life of the nation, to control and protect the external value of the national monetary unit and to mitigate by its influence fluctuations in the general level of production, trade, prices and employment, so far as may be possible within the scope of monetary action, and generally to promote the economic and financial welfare of Canada.
The Bank of Canada formed an essential basis of a very creative period of Canadian growth, development, and diversification throughout the middle decades of the twentieth century. The Bank of Canada created the capital that financed the Canadian war effort from 1939 until 1945. After the war the Bank of Canada lent money at very low rates of interest to the municipal, provincial and national governments. The monies were used for infrastructure projects and for investments to increase the wellbeing and creative potential of Canada’s most important resource, its people.
This type of low interest or no interest financing formed the economic basis for projects like the creation of a national pension plan, national health care insurance, the Trans-Canada Highway, the St. Lawrence Seaway, the Avro-Arrow initiative as well as a formidable system of colleges and universities.
One could say that the Bank of Canada provided an indigenous money supply that was spent into the operations of a fast growing economy greased with lots of federal liquidity. The new money derived its value from the efforts of Canadian workers. Together they brought about significant increases in the country’s net worth through practical improvements that bettered the lives of all citizens.
Consider the contrast between this type of national development and the kind of larceny facilitated by the Federal Reserve’s infusions of the money it creates into Wall Street’s operations in the twenty-first century. In, for instance, the financial bailouts of 2007 to 2010 the largest part of the newly-created money ended up in the coffers of the wealthy whereas the new debt created ended up as part of a US national debt.
The burden of carrying this debt falls inter-generationally on average working people who form the lion’s share of taxpayers. They have long been saddled with an “inextinguishable debt” that unrelentingly grows, hardly ever shrinks, and remains basically unpayable forever. The very concept of “compound interest” conveys the image of an overall debt spread out over many venues. This debt must grow in perpetuity. There is a constant need for additional debtors while existing debtors must face constantly growing personal debt.
There is reason to suspect that the financial debacle of 2020 will re-enact some the worst excesses of the 2008 bailout. Might the payouts this time around to derivative-addicted Wall Street firms like Citigroup, Goldman Sachs and JP Morgan Chase exceed the scale of the prior bailout? Would there be any way of even knowing whether the current round of payouts outdoes the former round of bailouts? The current process of federal disbursements is not transparent. In fact the process has been described as one designed to “provide an ironclad secrecy curtain around how much [the Fed} spends and where the money goes.”
Why is the Canadian government turning to the very firm that emerged as Wall Street’s main fixer and winner in the 2008 bailouts? Why is Justin Trudeau looking to BlackRock to respond to the Canadian aspects of the 2020 economic crash?
Justin Trudeau seems unwilling or unable to provide a coherent answer to this question and others requiring thoughtful replies rather than barrages of platitudes. Why is Justin Trudeau instituting what Joyce Nelson has characterized as a “new feudalism” in Canada’s economic policies?
Any decent effort of response on Trudeau’s part would have to make some reference to the background of the current debacle. There would have to be some acknowledgment that between 1934 and 1974 the Canada government did not build up any significant national debt. Then, between 1974 and 2020, the national debt of Canada skyrocketed from $22 billion to $700 billion.
Why was such a good and sustainable use of the Bank of Canada put aside, one that contributed magnificently to the health and wellbeing of the Canadian people as well as the Canadian federation? Who lost out? Who gained besides the international bankers?
The incomprehensible abandonment of a winning formula for Canadian development by Prime Minister Pierre Trudeau puts a special onus on his son, Canada’s current PM, to explain the incredibly costly mistake of his father. Why won’t Justin Trudeau fix the mistake of his father and restore the Bank of Canada to its former role in Canadian nation building?
There has never been a full and satisfactory explanation of what really happened in 1974 to persuade Pierre Trudeau to throw aside the means of developing infrastructure with resources generated internally within Canada. Trudeau Senior’s decision to stop building up Canada through the operation of the Canadian people’s own national bank was not debated in Parliament. The option was never part of an election platform let alone the subject of a national referendum.
Apparently the Swiss-based Bank of International Settlements, which is often referred to as the central bank for central bankers, had some role in Pierre Trudeau’s decision to cease using the Bank of Canada’s powers to generate near-debt-free Canadian currency.
Government as a Means of Escaping Debt Entrapment
That powers of debt-lite money creation invested by Parliament in the Bank of Canada have never been formally withdrawn. The Bank of Canada could still revert back to the direct creation of Canadian currency to be spent into an economy of national recovery; to be spent in investments in infrastructure as well as in cultivating and applying the creative skills of the Canadian people.
Between 2011 and 2017 a court case was brought against the government of Canada with the aim of restoring the Bank of Canada to its former role. As Rocco Galati, the lawyer for the Committee on Monetary and Economic Reform (COMER) explained “Not only has the government abandoned its constitutional duty to govern, but it has transferred it to international private banks which corresponds to an abandonment of its sovereignty.”
After some significant rulings and contentious appeals, the COMER case came to an end without delivering results that its plaintiffs sought. But the court case helped to put a spotlight on the potential of the Bank of Canada. If properly utilized, this institution could provide a model corrective to the subordination of governance to the international Lords of Debt Explotation and their minions.
This process of politicizing the role of the Bank of Canada should extend to a process of calling out Justin Trudeau’s current approach to selling off key components of Canada’s infrastructure.
This topic came up in private discussions between Larry Fink and Justin Trudeau at the World Economic Forum in Davos in January of 2016. Fink apparently got Trudeau interested in attracting private investors to the project of improving or building Canadian infrastructure projects like roads, high-speed trains, airports and such. This kind of approach to developing infrastructure projects runs counter to the role once played by the Bank of Canada in incorporating self-sufficiency into the process of national building.
The dangers and opportunities in this time of manufactured crises are indeed unprecedented. Instead of rejecting the Davos crowd’s preoccupation with a giant reset, why not embrace the concept? Why not treat this moment as an opening to reset the global economy in a way that would restore the Bank of Canada to some of its former functions. Why not highlight this return to the sovereign embrace of benevolent nation building as an example for the rest of the world?
Why not reconstitute the worldwide structures of the international system of economic relations to restore elected governments to the functions that have been pre-empted by unaccountable institutions like the US Federal Reserve or the Bank for International Settlements? Why not renew the model of banking as an exercise and expression of national sovereignty and the self-determination of peoples in a dynamic global arena of rules-based economic interaction?
Why not withdraw the power from private bankers to create national currencies? Why not follow the advice of the deceased Abraham Lincoln by restoring “the greatest of all creative possibilities available to governments,” namely their power to issue money and set interest rates. The restoration of economic power to governments and the people and peoples they represent would involve the infusion of life into conceptions of globalization very different than those used to justify the industrialization of China and the deindustrialization of North America.
By delegating to international organizations much of their capacity to influence the economic conditions affecting their own people, national legislatures have lost much of their capacity to provide responsible government. Governments thus weakened are not realistically in a position to derive their authority from the consent of the governed. When representative bodies cannot effectively express the right of their constituents to collective self-determination in economic realm, what legitimacy is left to the institution of representative government?
This strange moment puts humanity face to face with much that is novel and unprecedented and much that is old and integral to the history of human interaction. The economic dimensions of this crisis constitute its most devastating and far-reaching attribute. The supposed remedy being rushed into operation is to flood large quantities of debt-laden loans into existence and for governments to distribute the borrowed funds to individuals, businesses, and organizations as they see fit.
Once again, vast quantities of debt-laden money are being created without the informed consent of those on whose shoulders the vastly increased loads of debt are falling. Once again governments are rewarding political friends and punishing political enemies by means of the way the new funds are being apportioned.
Decisions are pushed forward that emanate not from citizen constituents but from cabals of supranational connivers actively engaged in wrecking what little remains of responsible government. As governments lose legitimacy by engaging in collusion with corrupt cronies and international crime syndicates they must depend more and more on police state thuggery to enforce some semblance of order.
This process is going forward in spite of the fact that alternative means exist to create as much new money as is required without having to pay large amounts of compound interest to private bankers. Every sovereign government has the capacity to generate new money by following the model of the Bank of Canada between 1938 and 1974.
There is an especially urgent need at this time for some serious reckoning with the economic dimensions of the crisis before us. This reckoning will inevitably meet the resistance of extremely powerful interests who are deriving great benefits from the existing system. The process of privatizing the creation of money has enriched and empowered a clique whose institutionalized, deep-rooted and continuing kleptocracy was exposed in part by the bailout of 2008.
Why should we take for granted in 2020 that the best way to deal with the economic debacle put before us is to create new money by agreeing to go much deeper into a quagmire of debt entrapment. This debt trap, whose cumulative amount will soon be more that $300 trillion globally, creates gross liabilities in a trajectory of disadvantage that severely limits the life chances even of many generations still unborn.
The other side of debt is embodied in assets. Who gets the assets and who gets the liabilities that coalesce to form indebtedness? What is to be made of the role of birth or inheritance or race or natural ability or social connections in apportioning assets or imposing the enslavements of accumulated debt?
John Perkins addressed some of these issues in his Confessions of an Economic Hit Man and in a subsequent follow-up volume. Perkins chronicled how an inter-related complex of US institutions aligned themselves with his own greedy and unscrupulous interventions. The goal of their coordinated aggressions was aimed at imposing the enslavements of massive debt with compound interest. Their version of loan sharking is one of many manifestations expressing a very old and common phenomenon. It often happens that powerful interests parasitically exploit the weak to further enrich themselves.
This partnership between John Perkins and the kleptocratic agencies directed by the US government has long been drawing wealth from struggling countries by pushing them more deeply into national indebtedness. Once the governments of target countries succumbed to greater dependence on debt-based financing, the conditions were ripe to force officials into adopting policies of austerity that harmed local citizens in order to augment the assets of international investors.
Significantly the World Bank demonstrated how this coercion works in the context of the current economic crisis. The World Bank attempted to impose conditions on a loan of $940 million to Belarus because the WB wanted Belarus to conform to the lockdowns that are a primary cause of the current manufactured crisis.
As revealed by the Belarus’s President, Alexander Lukashenko, the World Bank wanted his country to adopt the full set of COVID-19 measures that had been implemented by the Italian government. Lukashenko said no to the loan. He refused to accept the conditions and carried on the established policies of Belarus, a country that has “not implemented strict coronavirus containment measures.”
Lukashenko is far from alone in his contempt for the manipulative tactics of the apparatus promoting the manufactured crisis. For instance Tanzanian President, John Magufuli, tested the accuracy of the testing procedures being forced on his country by the World Health Organization. President and Medical Doctor Mugufi included in the samples submitted to the testing agency some tissue of a goat and a papaya. Both the goat and the papaya tested positive for COVID-19, an outcome he publicized before ordering the WHO group to leave his country.
The Political Economy of Usury From the Middle Ages to the Era of Social Credit and Ezra Pound
We cannot assess the division of humanity between a massive group of debtors and a much smaller group of creditors without touching on the issue of usury. The subject of usury, the lending of money with the addition of interest payments, has been an extremely contentious issue throughout much of human history.
There were prohibitions against usury in ancient Greece, ancient India and the Roman Empire. Throughout much of the last thousand years usury has been regarded as a sin outlawed in the Bible, the Torah and the Koran. At different times in history the Roman Catholic Church has been an especially zealous opponent of some forms of usury.
Considering the nature of our current predicaments including obscene levels of economic inequality, usury might yet again arouse contentions. Some of the core ethical issues raised by the resort to usury remain unresolved. How is it ethical, for instance, to subject disinherited children in poor countries to the indignities of deepened poverty so that rich folks in rich parts of the world can reap larger dividends?
Beginning in the Middle Ages, forms of usury began to show up first in the Italian city states and in the towns of the Franco-Flemish realm. The act of loaning money with interest gradually spread throughout Europe. In some predominately-Muslim jurisdictions, the concept conveyed in the Arabic term, “riba,” approximated the idea of usury or interest. Over time various versions of riba have affected Muslim banking practices.
Often there were prohibitions preventing Jews from demanding interest on loans made to other Jews. There were many Talmudic teachings, however, permitting interest to be collected from gentiles when they borrowed money from Jews. Many accounts of Jewish efforts to break down prohibitions on usury highlight obstacles preventing Jews from pursuing other lines of work. The case is made that the pull of some Jews into banking came about in part because of their exclusion from other occupations.
Whatever the case, the obstacles to usury continued to be lessened including through the changes to Biblical interpretation that came with the Protestant Reformation. Even in the twentieth century, however, usury continued to arouse criticism and distrust. Ezra Pound was one of those who became very outspoken when it came to problems with usury.
The modernist poet and scholar, Ezra Pound, was one of the most influential literary figures of the twentieth century. The importance of his work was expressed not only in his own literary efforts but also in his contributions to other authors in his circle of friends and colleagues.
Pound’s outspoken criticism of usury formed part of the discourse that was integral to the political movements seeking economic reform. The creation and successful nationalization of the Bank of Canada was one of the outgrowths of the concerted quest to give substance to economic institutions that would more effectively serve human needs.
The creation of the Bank of Canada drew on the ideas of Abraham Lincoln and also on those of many other theorists including Major C.H. Douglas. While Major Douglas and John Maynard Keynes each denounced one another’s work, both sought to stimulate economic activity by expanding the supply and distribution of money. Major Douglas’ vision of Social Credit, one that Pound enthusiastically embraced, sought to bring about greater harmony and equilibrium between the forces of production and consumption.
A biographer of Pound has explained that this formidable literary figure believed “there was the prospect of building a Social Credit society where money served the consumer and served the producer.” As Pound pictured it, “the middle men” seeking usurious, interest bearing profit” to be collected “without work or prior motivation, could be cut out.” During the Depression the hope of prosperity through the application of Social Credit principles was seized upon by many. One of them was an evangelical preacher in the Canadian province of Alberta.
Largely as a result of the popularity he gained by incorporating Major Douglas’ analysis of Social Credit into his Sunday afternoon Christian radio broadcast, “Bible Bill” Aberhart became the Premier of Alberta. His Social Credit Party gained 56 of 63 seats in the Alberta Legislature. The Social Credit Party continued in power until 1971.
The Social Credit preoccupation with bringing about changes in the relationship of citizens to financial institutions helped add to the discourse from which the Bank of Canada emerged as a dynamic instrument of nation building.
The enthusiasm was well placed of those who threw their lot in with the movement to create and enlivened the Bank of Canada. The generations that put their trust in this federal financial institution had the satisfaction of knowing that their taxes were not devoured to pay big amounts of interest to private bankers in the style that presently prevails almost everywhere.
Like his good friend and colleague, Ernest Hemingway, Pound was a devotee of clear, terse and succinct prose.
This characteristic of his writing comes through strongly in his harsh condemnations of usury. “Usury is the cancer of the world,” Pound wrote. He explained, “Until you know who has lent to whom, you know nothing of politics, you know nothing whatever of history, you know nothing of international wrangles.”
Ezra Pound was born in Idaho but was attracted to Italy throughout long periods of his life. In Italy he lionized its fascist leader, Benito Mussolini. He embraced the Axis side in World War II developing close relations with the British fascist leader, Oswald Mosley. Pound threw himself into the contest producing a torrent of radio broadcasts seeking to win over English-speaking converts to the Axis side. These broadcasts are today widely described as war propaganda.
Pound was indicted in the United States in 1943 and arrested at the war’s end by the US Armed Forces in Italy. After being jailed in Pisa, Pound was charged with treason. Then Pound was diagnosed as being mentally unfit to face charges.
The finding that he was mentally ill caused Pound to be locked up as a patient in St. Elizabeth’s Hospital in the Washington DC area for the next 13 years. In spite of his severe prejudices against Jewish bankers and his active embrace of fascism during the war years, Pound continued to carry on very lively interactions with his formidable circle of poets, essayists and novelists.
Pound’s circle included James Joyce, Ernest Hemingway, and T.S. Eliot. All these writers wrote works that won a Nobel Prize for Literature. These and many other authors benefited from Pound’s encouragement and mentorship. In 1948 Eustace Mullins joined Pound’s circle. Mullins was introduced to the famous poet and scholar through Pound’s wife, Dorothy Shakespeare,
When he first met Pound, Mullins was an art school student and a veteran of the US Air Force. He had already published some short pieces in the British journal, Social Creditor. Mullins remembered Pound’s place of forced residence as “a hideous, urine-soaked madhouse in Washington D.C.” As their visits became increasingly regular, Pound encouraged Mullins to conduct research into the history and activities of the Federal Reserve.
When Pound proposed the idea Mullins was unaware of the existence of the Federal Reserve. Nevertheless, Mullins threw himself into the project that he supported by combining his research with work as a book stacker at the Library of Congress. At the Library he befriended George Stimpson who was well known among Washington journalists and government officials for his wealth of knowledge and his ability to locate relevant research materials.
Stimpson happily worked with Mullins. He helped the aspiring author by guiding him into the primary and secondary literature illuminating many facets of the Federal Reserve’s history
Eustace Mullins Explores the Secrets of the Federal Reserve
An initial edition of the volume appeared in 1952 as Mullins on the Federal Reserve. Another edition with added information was published in 1954. The text has been republished many times, sometimes in different editions under the title Secrets of the Federal Reserve. The text is organized around both thematic and chronological facets.
Mullins lays out the history of the Federal Reserve with considerable attention to the institution’s roots and origins. The author emphasizes several strands of continuity showing the links of the Federal Reserve to the banking establishments of Europe but especially those of Great Britain and Germany.
Mullins characterizes the Federal Reserve as the most powerful institution in the United States whose influence grew so that “it gradually superseded the popular elected government of the United States.” The power of the Fed and its core facet, the Federal Reserve Bank of New York, is said to have become so formidable because the agency operates in secrecy without any genuine form of accountability to any public institution. The NY Fed combines the power of secrecy with the enormous power to create new currency and to set interest rates becoming in the process “the most gigantic trust on earth.”
Mullins makes the case that the financial district known as the City of London exercised enormous influence over the activities of the Federal Reserve and many of the large Wall Street banks. Mullins wrote, “London is the world’s financial centre, because it commands enormous sums of capital created at its command by the Federal Reserve Board of the United States.”
Mullins is conscientious in presenting many citations to back up his observations and interpretations. He cites, for instance the New York Times on January of 1920 where it states, “The Federal Reserve is a fount of credit not capital.” The manipulation of credit, however, can greatly affect the industrial economy by affecting the ability of manufacturers and farmers to produce.
Mullins emphasizes throughout the text how events are often engineered to strengthen the hand of the Lords of Credit in the matrix of society’s operations. In referring, for instance, to a secret banker’s plan to crash the stock market in 1929, Mullins expressed a view that could as easily describe the growing suspicion in 2020. Could it be that the lockdowns of businesses and workers were purposely engineered to strengthen the hands of the Lords of Credit whose main platform is the Federal Reserve Bank of New York?
Mullins explains that sometimes “bankers paralyse the industrial energies of the country” in order to highlight and strengthen “their tremendous powers” over the financial and business organization of the American economy. Mullins’ observation that “panic is an instrument of [financial] power” is another statement with obvious relevance to the current crisis.
As have many authors since, Mullins emphasizes the importance of a top-secret meeting on Jekyll Island in the state of Georgia in 1910. At this meeting Paul Warburg essentially took the intellectual lead in creating a plan for a Central Bank in the United States. Such an institution was long contemplated and promoted but it had been stopped repeatedly, most famously be Andrew Jackson. Jackson’s political career culminated in his winning the US presidency between 1829 and 1837.
Warburg left his family banking business in Hamburg Germany in 1902. He joined the Wall Street Office of Kuhn Loeb, a Wall Street House that helped finance the Bolshevik Revolution in Russia. Mullins devotes much effort to describing the complex of alliances and rivalries that characterized banking before and after the founding of the Fed.
Weaving throughout these networks of financial activity were the banking operations of the Rothschild family. Mullins leaves no doubt that the operations of the Rothschild family of bankers were extensive, elaborate and very influential.
In the nineteenth century the Rothschild banking establishment gradually wove its operations into those of large segments of Europe’s royal and aristocratic establishments. Mullins emphasizes the genesis of the close business relationship between the Rothschild banking clan and a London-based US company, George Peabody and Company.
Peabody’s bank was passed on to a father and son team, Junius Spencer Morgan and John Pierpont Morgan. In the days of the Fed’s founding and even today, the name of J.P. Morgan is synonymous with New York banking. Mullins explains how the Rothschild bankers kept a fairly low profile in New York by conducting much of their American business largely through the financial organizations associated with the name and reputation of J.P. Morgan.
Mullins outlines the role of the Federal Reserve in the funding of two world wars. Many of the topics covered in Secrets of the Federal Reserve were later pursued in much more detail in the prolific writings of Antony C. Sutton.
Most of Sutton’s volumes describe the role of Wall Street in helping to bring about many of world history’s major turning points during the twentieth century. These turning points include Wall Street’s funding of the rise of the National Socialist government in Germany in the 1930s and the role of Wall Street in financing the Bolshevik Revolution and the business activities of the Soviet Union.
The capacity of the New York Bank of the Federal Reserve to create vast quantities of credit to finance wars, often with the same bankers funding competing sides in conflicts, provided the key to the creation of huge fortunes. The funding of both sides in war can be seen as an early form of hedging one’s bets. This kind of high impact intervention through banking sometimes created huge leverage for a very small number of people to steer history towards preconceived destinations.
As Mullins explains it, the Federal Reserve was founded in extreme secrecy and often employs deceptive tactics to misrepresent its true nature. As Mullins sees it, for instance, the creation of the twelve regional banks was a ploy to gain political acceptance for the Central Bank’s core entity, the Federal Reserve Bank of New York. Mullins explains, “the other eleven banks were so many expensive mausoleums erected to salve local pride and quell the Jacksonian fears of the hinterland.”
The ability of Wall Street bankers to invoke the credit creating powers of the New York Fed forms a key aspect of the frequent military adventurism of the US government. This military adventurism continued full force even after the United States became the world’s largest debtor nation after 1990. How large has been the role of the US Fed in building up the US national debt together with the tens of trillions missing from the books of the US Defense Department?
The Israel Lobby and the Federal Reserve
Much of the military adventurism of the United States especially after 9/11 was directed into invasions of Muslim-majority countries that threaten a particular view of Israel as a dominant power in its region and in the world. Why would it be that the Federal Reserve is any less involved in creating the available credit for the waging of wars in the twenty-first century than it was in creating the wars of the twentieth century?
In his authorship of The Secrets of the Federal Reserve, Mullins seems largely oblivious to the role in world history of Zionism and the genesis of Israel. His main attention lay elsewhere. As I read his text, he accurately conveyed how the large Jewish influence in the banking institution of Europe, including the influence of the Rothschild consortium, was extended into Wall Street including the Federal Reserve.
While Mullins does not shy aware from dealing with the Jewish component of the story he set out to tell, I don’t think he belabours this subject or becomes aggressively polemical about it. Certainly the same cannot be said of some of his critics whose condemnations of Mullins can sometimes be extremely polemical.
Mullins might have made more of the identity politics prevailing throughout the twentieth century. The sensibilities of the dominant Christian constituency in the United States probably influenced the decisions of many customers shopping for banking services. Quite likely some of them would have been more comfortable dealing with firms identified with names like J.P. Morgan, Rockefeller and Mellon rather than Warburg, Greenspan or Fink. Times, however, have changed.
Some of the more severe prejudices seem to have subsided around the time that Sandy Weill combined his Travellers Insurance Company with Citicorp to create Citigroup. This merger helped create the political momentum leading to the elimination of the Glass-Steagall Act in 1999. With Glass-Steagall’s elimination, Citigroup tried to become a giant department store of varied financial services. In its inner sanctums, however, Citigroup developed a preoccupation with derivatives that continues yet.
In the twenty-first century it happened that some of the cosmetic overlays were removed that had previously been imposed to disguise the large representation of Jews in Wall Street banking, including in the Federal Reserve Bank of New York. For good or bad, usury has become a core features of how the contemporary world is organized. Some reckoning with the ethnic inheritances attending usury are therefore inescapable, especially when dealing with the some of the most dramatic displays of usury on steroids in Wall Street institutions.
Where I see the need to draw a line in the sand is not on the question of the ethnicity of Wall Street personnel. Rather this line in the sand involves the question of how power is used or abused at the domineering heights of our financial institutions. Generally speaking it is not a justifiable use of the Federal Reserve to produce credit that enables the waging of wars that are offensive rather than defensive in character.
The waging of war has long been one of the big bonanzas producing major windfalls for international bankers. In the twenty-first century so many of the wars involve the flexing of military might by the United States to advance the expansionary designs of the Israeli state. The US Federal Reserve has been part of the process of creating what some would consider wars for Israel in Iraq, Syria, Yemen and Iran.
Why are the money-generating powers of the secretive Federal Reserve being invoked to help fund wars for Israel and also to help shape public opinion to accept the US role in these wars of aggression. Especially sensitive is the further indebting of the American people to subsidize the production of propaganda aimed at persuading them to back wars for Israel. This propaganda is deemed necessary to deflate opposition to Israel’s actions including the ruthless dehumanizing treatment of Palestinian Arabs.
We have seen that the Federal Reserve Bank of New York was deeply engaged in 2008 in transferring tens of trillions into the coffers of its own member institutions and counterparties. What uses were made of this bailout produced through a dubious process of legalized financial larceny?
One way or another the Israel Lobby must be a prime beneficiary of the machinations of Wall Street and its money spigot, the Federal Reserve Bank of New York. This pattern of priority can easily be related to US federal funding of the Israel project as a higher priority in federal budgeting than even the basic needs of the domestic population of the United States. Black Lives Do Matter but why is it that the lives of Israel First Partisans seem to matter more than any other group?
This Israel Lobby has the power to prevent any critic of Israeli policies from gaining the nomination of a major US party to run for US president. The result is that, in election after election, Americans are offered a very limited choice between competitors who are equally supportive of Israel.
The Israel Lobby can intervene to prevent the leadership of opposition parties from adopting policies that emphasize equity in Israel-Palestinian relations. Through its campaign contributions, the Israel Lobby dominates the process of choosing and electing representatives in Congress. How much does it cost to buy the political obedience of most federal politicians? How much does it cost to replicate this feat in the state legislatures and even municipal governments?
Through the ownership and/or control of major media outlets, the Israel Lobby exerts major influence in determining the main outlines of much public discourse when it comes to US-Israeli relations and many related subjects. How could one calculate the amount of money it took to achieve this feat? How much of this money is directed into payments for compliance, in other words, bribery? In the post-Epstein era what is the role of bribery’s criminal cousin, namely backmail?
The Israel Lobby is deeply engaged with other lobbies in transforming the Internet from an open forum of public interaction and debate into a centrally controlled propaganda instrument. Prominent among the Internet’s most aggressive censors and thought police are Google, You Tube, Facebook, Twitter and the Anti-Defamation League of B’nai B’rith.
Through all kinds of interventions the Israel Lobby asserts significant forms of control over a broad array of institutions and operations including those of the judiciary, the universities, book publishing, magazine publishing, municipal governments, trade unions and cultural groups. The biggest and most influential cultural group of all is the Hollywood film industry. Not surprisingly there is little in its cinematic output that provides critical perspectives on Zionism and its emanations.
The injection of huge amounts of money are essential to the exercise of so much concerted influence over such a broad sweep of political, intellectual and cultural organizations. Where do the large quantities of money supporting the activities the Israel project come from? Why is it that so many of agencies of the Israel Lobby have the status of charitable organizations with the capacity to extend tax write-offs to donors? What is the relationship of the Israel Lobby to Wall Street and the Federal Reserve Bank of New York?
Even the act of asking such questions will be seen by some as heretical. There is, however, nothing wrong with looking into issues that have so much impact on the quality of our political discourse… so much impact on our capacity to live together with the civility and security we have been losing so quickly with the imposition of the economically crippling lockdowns.
It is no less legitimate to ask questions about the ethnic identity of those who benefit most from the US economy than it is to ask questions about what groups suffer the most from the deprivations of poverty. Wouldn’t it make sense to try to moderate the disparities beginning with processes of research and discussion?
In a book of the same name, former ADL Executive Director, Abe Foxman, has opened the discussion of Jews and Money. Foxman effectively counters the view that all Jews are rich. Foxman, of course, is correct in this assertion. All Jews are not rich. Some are outright poor. A fairly large number of Jews, however, are somewhat rich and a small minority of Jews are disproportionately invested with wealth and power. Jews are especially well represented in the billionaires club both within the United States and internationally.
Some of the wealthiest Jews are part of the Wall Street establishment including the Federal Reserve Bank of New York. Perhaps the time has come to begin retiring this, “the most gigantic trust on earth.” Perhaps it is time to retire some of the debt created over more than a century of putting private bankers in charge of dictating interest rates as well as creating debt-laden dollars. Perhaps the time has come to lessen the debt burden that is narrowing the life chances of so many people who have been funding the wars for Israel mounted in the wake of the 9/11 deception.
The severity of the crisis before us compel all thoughtful people of conscience to look beyond the redeployment of old institutions and old remedies for old problems that are different from the challenges facing us now. One of the most obvious ways to avert further calamity is to move away altogether from the empowerment of private bankers to massively expand national debts with compound interest charged to tax payers.
The alternative to this approach is to change the present means of creating new money. The creation of many banking systems similar to that of the Bank of Canada should be considered in the quest for the main ingredients of a global reset. The Bank of Canada brought about an almost-debt-free run of prodigious nation building before Pierre Trudeau bent the policies of his government to meet the impositions of the Bank of International Settlements.