Latest News [latest first]Central Banks Have Gone Rogue, Putting Us All at Risk ICH By Ellen Brown, September 14, 2018
Excluding institutions such as Blackrock and Vanguard, which are composed of multiple investors, the largest single players in global equity markets are now thought to be central banks themselves. An estimated 30 to 40 central banks are invested in the stock market, either directly or through their investment vehicles (sovereign wealth funds). According to David Haggith at Zero Hedge:
Central banks buying stocks are effectively nationalizing U.S. corporations just to maintain the illusion that their “recovery” plan is working. … At first, their novel entry into the stock market was only intended to rescue imperiled corporations, such as General Motors during the first plunge into the Great Recession, but recently their efforts have shifted to propping up the entire stock market via major purchases of the most healthy companies on the market.
The U.S. Federal Reserve, which bailed out General Motors in a rescue operation in 2009, was prohibited from lending to individual companies under the Dodd-Frank Act of 2010, and it is legally barred from owning equities. It parks its reserves instead in bonds and other government-backed securities. But other countries have different rules, and central banks are now buying individual stocks as investments, with a preference for big tech companies like Amazon, Apple, Facebook and Microsoft. Those are the stocks that dominate the market, and central banks are aggressively driving up their value. Markets, including the U.S. stock market, are thus literally being rigged by foreign central banks.
The result, as noted in a January 2017 article at Zero Hedge [ https://www.zerohedge.com/news/2017-01-23/80-central-banks-plan-buy-more-stocks ], is that central bankers, “who create fiat money out of thin air and for whom ‘acquisition cost’ is a meaningless term, are increasingly nationalizing the equity capital markets.” Or at least they would be nationalizing equities, if they were actually “national” central banks. But the Swiss National Bank, the biggest single player in this game, is 48 percent privately owned, and most central banks have declared their independence from their governments. They march to the drums not of government but of private industry.
Marking the 10th anniversary of the 2008 collapse, former Fed chairman Ben Bernanke and former Treasury secretaries Timothy Geithner and Henry Paulson wrote in a Sept. 7 New York Times op-ed that the Fed’s tools needed to be broadened to allow it to fight the next anticipated economic crisis, including allowing it to prop up the stock market by buying individual stocks. To investors, propping up the stock market may seem like a good thing, but what happens when the central banks decide to sell? The Fed’s massive $4-trillion economic support is now being taken away, and other central banks are expected to follow. Their U.S. and global holdings are so large that their withdrawal from the market could trigger another global recession. That means when and how the economy will collapse is now in the hands of central bankers.
Thanks to Obama Bailouts and Trump Tax Cuts, Five Largest US Banks Have Raked in $583 Billion Since 2008 Crash ICH By Jake Johnson September 12, 2018
"With no jail time for executives and half a trillion in post-crisis profits, the big banks have made out like bandits during the post-crash period."
The 2008 financial meltdown inflicted devastating financial and psychological damage upon millions of ordinary Americans, but a new report released by Public Citizen on Tuesday shows the Wall Street banks that caused the crash with their reckless speculation and outright fraud have done phenomenally well in the ten years since the crisis.
Thanks to the Obama administration's decision to rescue collapsing Wall Street banks with taxpayer cash and the Trump administration's massive tax cuts and deregulatory push, America's five largest banks—JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs—have raked in more than $583 billion in combined profits over the past decade, Public Citizen found in its analysis marking the ten-year anniversary of the crisis.
"With no jail time for executives and half a trillion in post-crisis profits," said Robert Weissman, president of Public Citizen, "the big banks have made out like bandits during the post-crash period. Like bandits."
Using data from the Federal Reserve, Public Citizen also calculated that America's the banks now hold a combined $9.7 trillion in assets.
"In the aftermath of the Great Recession, American families continue to struggle. A new report by the Urban Institute finds that nearly 40 percent of Americans had trouble paying for basic needs such as food, housing or utilities in 2017," Public Citizen notes in its report. "The banks, on the other hand—with more than half a trillion dollars in profits over the past decade—are doing just fine."
If recent earnings reports are any indicator, big banks are on track to continue shattering profit records thanks to President Donald Trump's $1.5 trillion in tax cuts. Big banks are also expected to see a boost from a recently passed bipartisan deregulatory bill that analysts argue significantly heightens the risk of another crash.
"Wall Street's grip on Washington is painfully evident in the corporate tax giveaways and deregulatory favors that Congress routinely bestows to this bonus-besotted industry," Bartlett Naylor, financial policy advocate for Public Citizen's Congress Watch division, said in a statement.
According to a Washington Post analysis published on Saturday, many of the lawmakers and congressional aides who helped craft the Democratic Congress' regulatory response to the 2008 crisis have gone on to work for Wall Street in the hopes of benefiting from big banks' booming profits.
"Ten years after the financial crisis brought the U.S. economy to its knees, about 30 percent of the lawmakers and 40 percent of the senior staff who crafted Congress' response have gone to work for or on behalf of the financial industry," noted the Post's Jeff Stein.
Meanwhile, Main Street Americans who lost their homes, jobs, and savings as a result of the greed-driven crash are still struggling to get by on stagnant or declining wages, even as unemployment falls and the economy continues to grow at a steady clip.
This article was originally published by "Common Dreams"
Switzerland - A Once-in-a-Lifetime Chance to Spreading Positive Banking News to the World By Peter Koenig May 14, 2018
It’s called “Vollgeld Initiative” – in German, meaning more or less “Referendum for Sovereign Money”. What is “Sovereign Money”? – Its money produced only by the Central Bank, by the “Sovereign”, the government, represented by its central bank. Money created in accordance with the needs of the economy, as contrasted to the profit and greed motives of the banking oligarchy – wat it is today; money creation at will, by private banking.
The people of Switzerland are called to vote on 10 June 2018 whether they want to stop the unlimited, unrestrained money-making by the Swiss private banking system, and to return to the “olden days”, when money was made and controlled only by the Central Bank; and this not just in Switzerland, but in most countries around the globe. Switzerland is one of the few sovereign countries within the OECD, and possibly worldwide, that has the Right of Referendum written into her Constitution. With 100,000 valid signatures anybody can raise a referendum to amend or abolish a law, or to create a new one. – This is a huge privilege to Right a Wrong.
Most Swiss and probably most westerners in general don’t even know that the loan or mortgage they get from their bank is no longer backed by the bank’s capital and deposits. How could they? Instead of being told the truth, they are being lied to, even by their own party and politicians. And that in the case of Switzerland, by nobody less than the CEO of the UBS, the largest Swiss bank. Just watch this short video (in German and Italian – 2 min) https://www.youtube.com/watch?v=5m5ifQV4aIg .
UBS Ermotti weiss nicht wie Geld entsteht! en Deutsch y Italiano
Lying is a felony, hence Mr. Sergio Ermotti, CEO of UBS, should be prosecuted. Unlikely to happen, though. What Mr. Ermotti in essence says in this interview is that loans are backed by deposits. This is directly contradicted by the Swiss National Bank and the German Bundesbank (Central Bank). They say that “today about 90% of all the money is accounting money, created by loans the banks make to enterprises and private citizens. Pretending that banks use deposits to make loans, is not true.” The latter part was specifically expressed by the German Bundesbank. – So, how come Mr. Ermotti, CEO of UBS, wouldn’t know that?
Switzerland, fully embedded in the globalized western banking system, absorbed by it, has a chance to tell the world that the only way to control and get on top of the cycle of financial and economic crises is to reign-in the bottom-less money production – the debt-interest-profit driven banking system, a Ponzi scheme that cannot survive (financing debt with more debt); the abhorrent uncontrollable debt-profit cycle that has brought misery to humanity – just look at Greece.
With money production controlled by the respective central banks, for example, in France and in Germany, the senseless indebting of Greece by German and French banks would not have been possible, in which case the troika’s (ECB, European Commission and IMF) so-called bail-outs, or ‘rescue packages’, would not have been possible either. Hence no doubling of Greece’s debt – and Greece would be well on her way to recovery.
The point is that these too-big-to-fail banks have become also too big to control, and of course they do not want to be controlled. They have the (political) power to shed off any control. They want to continue creating debt, lending money not for economic development, but for profit of their shareholders. Banking for development has stopped a long time ago. The only banking for development is public banking, and that is almost non-existent – so far – in the west; except for North Dakota and soon New Jersey – and a number of other US States are considering public banking as a means of bringing back the true sense of banking – i.e. for economic development. But with the current FED-Wall Street bulldozer’s onslaught on the world, they are fighting against windmills – but even windmills are fallible.
By and large, in the west it’s corporate banking for profit. And thanks to the public’s ignorance and disinterest, deregulation took place behind our backs.
Did you know for example, that to become a member of the World Trade Organization (WTO), a nation has to deregulate its banks – to put them on a platter at disposal of the globalized banking sharks? – Probably you didn’t. Such decisions are never publicized.
Again, the Swiss with a Yes vote on 10 June could change this for themselves and send a signal to the rest of the world – suggesting to take back their financial, economic and monetary sovereignty – cutting the link to globalized usury banking that enslaves the poor in favor of the rich. Literally.
Will Switzerland seize this unique opportunity to broadcast this powerful message to the (western) world? Saying in the clearest voice possible – enough is enough, we are going back to regulating our banking system, through ‘new-old’ legislation and through the only institution that really has the Constitutional power to create money – the Swiss National Bank?
The Swiss, an enormous influence in international banking – good or bad – could become a trail blazer for a new economic model, to demonstrate how ell well an economy can run without following the global trend of unlimited money supply – which serves only the banks by indebting the nations and the people. They could put a halt to the seemingly out-of-control economic rollercoaster that brings only misery to people, unemployment, broken homes and businesses, decimated social safety nets, pensions health plans — they, the Swiss could put an end to it and become an economically and financially independent nation with a healthy economy for the wellbeing of the people – not of the banks.
The Swiss people are the most indebted of the G20, with 127.5% of private debt as compared to GDP in September 2017. The trend is on the rise. The United States, where deregulation started in the 1990s under President Clinton before it became ‘globalized’, was number seven with 78.5% in September 2017. – According to an OECD 2015 report, mortgages account for 120% of GDP, by far the largest proportion of all OECD countries. – Do the Swiss know that? – Some probably do, but the majority most likely does not. Ever-so-often the Swiss National Bank (Central Bank) issues a routine warning about private and particular mortgage debt – as it is an ever-raising risk for highly indebted families. An economic crisis, loss of a job – and a family fails to meet mortgage payments – bingo, foreclosure. The same as in 2008, 2009 and going on.
Well, do you know that in Switzerland first mortgages do not have to be amortized? In fact, banks encourage you not to repay your mortgage, but just keep paying interest. Many mortgages are passed on with the related real estate from generation to generation. So, you never really own your house. The bank does. And the bank earns the money on your house, as well as calls the final shots on what is to happen with your real property, in case it is being sold.
“Free money” – as it could also be called, is money made indiscriminately without backing. It has many negative effects – the risk factor, as mentioned before – and the bubble effect on the housing market which in turn increases the risk for houseowners, because sooner or later bubbles burst. The only winners are the banks.
Why can the banks just make mortgage loans without requesting amortization? – Because they are afloat with money. Because, of course, they just make money with loans – the 90% which are not central bank made money. And the more loans they have outstanding, the more interest they earn. They earn money for doing absolutely nothing. For a mouse-click. Interest accumulates on its own. And debt is today’s foremost tool to enslave people, nations, entire continents.
This is what the Swiss could change by accepting this referendum, by Voting YES to Vollgeld. It would refrain banks from creating money and return the responsibility to the central bank, where it is to be located according to the Swiss Constitution. It would force banks to be more prudent in issuing mortgages and personal debt – it would provide for a more stable economy and for a financially less vulnerable personal life. It would gradually take some air out of the real estate bubble – a healthy feature for any society.
Again, are the Swiss going to vote for what is best for them? – Probably not. – But why not? – Because they are subjected to an enormous anti “Sovereign Money” campaign by the banking and finance sector, by the ‘built-in’ lobby. Yes, built-in, because in Switzerland Parliamentarians have the right to represent as many corporations, banking and otherwise, in their Boards of Directors, as they please. Yes – this is another special feature of Switzerland, also unique among OECD countries. – How many Swiss are aware of this?
Is it therefore a surprise that the Swiss are being utterly brainwashed to vote against their own interest? – As they have done so often in the past – and frequently to the utter surprise of neighboring countries.
In addition – and this is where another feature of the Swiss Un-Democracy enters: The Swiss Federal Council, the Swiss Executive, takes for itself the privilege and right – I have no clue from where, it is nowhere written in the Constitution – to issue sort of an edict before every national vote or referendum – “advising” the people how they should vote. With a public that oozes of comfort, where consistently less than 50% go to the polls, largely because of disinterest, such a proclamation has a huge impact.
In this case, the Swiss Government, its Executive, has already and already for a while repeatedly “advised” its populace to vote ‘no’ to the Vollgeld Initiative. And surprisingly every major party goes along with it, including the socialists and other left-leaning parties. Either they are brainwashed to the core by propaganda repeated at nauseam, indoctrinating the people how bad accepting the “Vollgeld Initiative” would be. How bad can be owning your “Sovereign Money”? – Can you imagine? – How much lie must go into such fake marketing?
Or could it be that the Swiss are no longer ruled by Bern, nor has the Swiss Central Bank much to say about Swiss monetary policy, but they may be ruled by an international and globalized banking cartel that puts so much pressure on the Swiss government, that it could almost be interpreted as blackmail? – Why otherwise, would intelligent people advise and vote against their own and proper interests?
I Know Which Country The US Will Invade Next By Lee Camp [stand-up comedian, writer, actor, and activist. Dubbed by Salon as the “John Oliver of Russia Today”, Camp is the host of RT America’s first comedy news show Redacted Tonight, which tackles the news agenda with a healthy dose of humor and satire. Lee’s writing credits are vast] May 03, 2018
By the end of this column, it will be clear which country the United States will invade and topple next. Or failing that, it will be clear which country our military-intelligence-industrial complex will be aching to invade next.
we all seem to assume that America—the entity, the corporation—has some sort of larger reasoning behind the actions it takes, the actions put forward by the ruling elite. And almost all of us know that the reasons we’re given by the press secretaries and caricature-shaped heads on the nightly news are the ripest, most fetid grade of bullshit.
We now know that the invasion of Iraq had nothing to do with weapons of mass destruction. We now know that the crushing of Libya had nothing to do with “stopping a bad man.” If one does even a cursory check of what dictators around the world are up to recently, you’ll find that the US doesn’t care in the slightest whether they are bad or good, whether they’re using their free time to kill thousands of innocent people or to harmonize their rock garden. In fact, the US gives military aid to 70 percent of the world’s dictators.
So if it’s not for the stated reasons, why does the US. overrun, topple and sometimes occupy the countries it does? Obviously, there are oil resources or rare minerals to be had. But there’s something else that links almost all of our recent wars.
As The Guardian reported near the beginning of the Iraq War, “In October 2000, Iraq insisted on dumping the US dollar—the currency of the enemy—for the more multilateral euro.”
But there’s more. Soon after Libya began moving toward an African gold-based currency—and lining up all its African neighbors to join it—we invaded it as well, with the help of NATO. Author Ellen Brown pointed this out at the time of the invasion:
[Moammar Gadhafi] initiated a movement to refuse the dollar and the euro, and called on Arab and African nations to use a new currency instead, the gold dinar.
This week, The Intercept reported that the ousting of Gadhafi, which was in many ways led by President Nicolas Sarkozy of France, actually had to do with Sarkozy secretly receiving millions from Gadhafi, and it seemed that his corruption was about to be revealed. But, the article also noted, “[Sarkozy’s] real military zeal and desire for regime change came only after [Hillary] Clinton and the Arab League broadcasted their desire to see [Gadhafi] go.” And the fact that Gadhafi was planning to upend the petrodollar in Africa certainly provides the motivation necessary. (It doesn’t take much to get the US excited about a new bombing campaign. I’m pretty sure we invaded Madagascar once in the 1970s because they smoked our good weed.)
Right now you may be thinking, “But, Lee, your theory is ridiculous. If these invasions were about the banking, then the rebels in Libya—getting help from NATO and the United States—would have set up a new banking system after bringing down Gadhafi.”
Actually, they didn’t wait that long. In the middle of the brutal war, THE LIBYAN REBELS FORMED THEIR OWN CENTRAL BANK.
Brown said, “Several writers have noted the odd fact that the Libyan rebels took time out from their rebellion in March to create their own central bank—this before they even had a government.”
Wow, that sure does sound like it’s all about the banking.
Many of you know about Gen. Wesley Clark’s famous quote about seven countries in five years. Clark is a four-star general, the former head of NATO Supreme Allied Command, and he ran for president in 2008 (clearly he’s an underachiever). But it’s quite possible that 100 years from now, the one thing he’ll be remembered for is the fact that he told us that the Pentagon said to him in 2002: “We’re going to take down seven countries in five years. We’re going to start with Iraq, then Syria, Lebanon, then Libya, Somalia, Sudan. We’re going to come back and get Iran in five years.”
Brown goes even further in her analysis of Clark’s bombshell:
What do these seven countries have in common? … [N]one of them is listed among the 56 member banks of the Bank for International Settlements (BIS). That evidently puts them outside the long regulatory arm of the central bankers’ central bank in Switzerland. The most renegade of the lot could be Libya and Iraq, the two that have actually been attacked.
What I’m trying to say is: It’s all about the banking.
So right now you’re thinking, “But, Lee, then why is the US so eager to turn Syria into a failed state if Syria never dropped the dollar? Your whole stupid theory falls apart right there.”
First, I don’t appreciate your tone. Second, in February 2006, Syria dropped the dollar as its primary hard currency.
I think I’m noticing a trend. In fact, on Jan. 4, it was reported that Pakistan was ditching the dollar in its trade with China, and that same day, the US placed it on the watch list for religious freedom violations. The same day? Are we really supposed to believe that it just so happened that Pakistan stopped using the dollar with China on the same day it started punching Christians in the nose for no good reason? No, clearly Pakistan had violated our religion of cold hard cash.
This leaves only one question: Who will be next on the list of US illegal invasions cloaked in bullshit justifications? Well, last week, Iran finally did it: It switched from the dollar to the euro. And sure enough, this week, the US military-industrial complex, the corporate media and Israel all got together to claim that Iran is lying about its nuclear weapons development. What are the odds that this news would break within days of Iran dropping the dollar? What. Are. The. Odds?
The one nice thing about our corporate state’s manufacturing of consent is how predictable it is. We will now see the mainstream media running an increasing number of reports pushing the idea that Iran is a sponsor of terrorism and is trying to develop nuclear weapons (which are WMDs, but for some strange reason, our media are shying away from saying, “They have WMDs”). Here’s a 2017 PBS article claiming that Iran is the top state sponsor of terrorism. One must assume this list of terror sponsors does not include the country that made the arms that significantly enhanced Islamic State’s military capabilities. (It’s the US)
Or the country that drops hundreds of bombs per day on the Middle East. (It’s the US) But those bombs don’t cause any terror. Those are the happy bombs, clearly. Apparently, we just drop 1995 Richard Simmons down on unsuspecting people.
Point is, as we watch our pathetic corporate media continue their manufacturing of consent for war with Iran, don’t fall for it. These wars are all about the banking. And millions of innocent people are killed in them. Millions more have their lives destroyed.
You and I are just pawns in this game, and the last thing the ruling elite want are pawns who question the official narrative.
How Banks Undermined Federal Foreclosure Assistance article has been torn from Internet
Thom Hartmann: How the GOP Used a Two Santa Clauses Tactic to Con America for Nearly 40 Years This scam has been killing wages and enriching billionaires for decades.
The Republican Party has been running a long con on America since Reagan’s inauguration, and somehow our nation’s media has missed it – even though it was announced in The Wall Street Journal in the 1970s and the GOP has clung tenaciously to it ever since.
In fact, Republican strategist Jude Wanniski’s 1974 “Two Santa Clauses Theory” has been the main reason why the GOP has succeeded in producing our last two Republican presidents, Bush and Trump (despite losing the popular vote both times). It’s also why Reagan’s economy seemed to be “good.”
Here’s how it works, laid it out in simple summary:
First, when Republicans control the federal government, and particularly the White House, spend money like a drunken sailor and run up the US debt as far and as fast as possible. This produces three results – it stimulates the economy thus making people think that the GOP can produce a good economy, it raises the debt dramatically, and it makes people think that Republicans are the “tax-cut Santa Claus.”
Second, when a Democrat is in the White House, scream about the national debt as loudly and frantically as possible, freaking out about how “our children will have to pay for it!” and “we have to cut spending to solve the crisis!” This will force the Democrats in power to cut their own social safety net programs, thus shooting their welfare-of-the-American-people Santa Claus.
Think back to Ronald Reagan, who more than tripled the US debt from a mere $800 billion to $2.6 trillion in his 8 years. That spending produced a massive stimulus to the economy, and the biggest non-wartime increase in the debt in history. Nary a peep from Republicans about that 218% increase in our debt; they were just fine with it.
And then along came Bill Clinton. The screams and squeals from the GOP about the “unsustainable debt” of nearly $3 trillion were loud, constant, and echoed incessantly by media from CBS to NPR. Newt Gingrich rode the wave of “unsustainable debt” hysteria into power, as the GOP took control of the House for the first time lasting more than a term since 1930, even though the increase in our national debt under Clinton was only about 37%.
The GOP “debt freakout” was so widely and effectively amplified by the media that Clinton himself bought into it and began to cut spending, taking the axe to numerous welfare programs (“It’s the end of welfare as we know it” he famously said, and “The era of big government is over”). Clinton also did something no Republican has 'e in our lifetimes: he supported several balanced budgets and handed a budget surplus to George W. Bush.
When George W. Bush was given the White House by the Supreme Court (Gore won the popular vote by over a half-million votes) he reverted to Reagan’s strategy and again nearly doubled the national debt, adding a trillion in borrowed money to pay for his tax cut for GOP-funding billionaires, and tossing in two unfunded wars for good measure, which also added at least (long term) another $5 to $7 trillion.
There was not a peep about the debt from any high-profile in-the-know Republicans then; in fact, Dick Cheney famously said, essentially ratifying Wanniski’s strategy, “Reagan proved deficits ''t matter. We won the midterms [because of those tax cuts]. This is our due.” Bush and Cheney raised the debt by 86% to over $10 trillion (although the war debt wasn’t put on the books until Obama entered office).
Then comes Democratic President Barack Obama, and suddenly the GOP is hysterical about the debt again. So much so that they convinced a sitting Democratic president to propose a cut to Social Security (the “chained CPI”). Obama nearly shot the Democrats biggest Santa Claus program. And, Republican squeals notwithstanding, Obama only raised the debt by 34%.
Now we’re back to a Republican president, and once again deficits be damned. Between their tax cut and the nearly-trillion dollar spending increase passed on February 8th, in the first year-and-a-month of Trump’s administration they’ve spent more stimulating the economy (and driving up debt by more than $2 trillion, when you include interest) than the entire Obama presidency.
Consider the amazing story of where this strategy came from, and how the GOP has successfully kept their strategy from getting into the news; even generally well-informed writers for media like the Times and the Post – and producers, pundits and reporters for TV news – '’t know the history of what’s been happening right in front of us all for 37 years.
Wanniski was tired of the GOP failing to win elections. And, he reasoned, it was happening because the Democrats had been viewed since the New Deal as the Santa Claus party (taking care of people’s needs and the General Welfare), while the GOP, opposing everything from Social Security to Medicare to unemployment insurance, was widely seen as the party of Scrooge.
The Democrats, he noted, got to play Santa Claus when they passed out Social Security and Unemployment checks – both programs of the New Deal – as well as when their "big government" projects like roads, bridges, and highways were built, giving a healthy union paycheck to construction workers and making our country shine.
Democrats kept raising taxes on businesses and rich people to pay for things, which didn't seem to have much effect at all on working people (wages were steadily going up, in fact), and that added to the perception that the Democrats were a party of Robin Hoods, taking from the rich to fund programs for the poor and the working class.
Americans loved the Democrats back then. And every time Republicans railed against these programs, they lost elections.
Wanniski decided that the GOP had to become a Santa Claus party, too. But because the Republicans hated the idea of helping working people, they had to figure out a way to convince people that they, too, could have the Santa spirit. But what?
“Tax cuts!” said Wanniski.
To make this work, the Republicans would first have to turn the classical world of economics – which had operated on a simple demand-driven equation for seven thousand years – on its head. (Everybody understood that demand – aka “wages” – drove economies because working people spent most of their money in the marketplace, producing demand for factory output and services.)
In 1974 Wanniski invented a new phrase – "supply side economics" – and suggested that the reason economies grew wasn't because people had money and wanted to buy things with it but, instead, because things were available for sale, thus tantalizing people to part with their money.
The more things there were, he said, the faster the economy would grow. And the more money we gave rich people and their corporations (via tax cuts) the more stuff they’d generously produce for us to think about buying.
At a glance, this move by the Republicans seems irrational, cynical and counterproductive. It certainly defies classic understandings of economics. But if you consider Jude Wanniski’s playbook, it makes complete sense.
To help, Arthur Laffer took that equation a step further with his famous napkin scribble. Not only was supply-side a rational concept, Laffer suggested, but as taxes went down, revenue to the government would go up! Neither concept made any sense – and time has proven both to be colossal idiocies – but together they offered the Republican Party a way out of the wilderness.
Ronald Reagan was the first national Republican politician to fully embrace the Two Santa Clauses strategy. He said straight out that if he could cut taxes on rich people and businesses, those tax cuts would cause them to take their surplus money and build factories, and that the more stuff there was supplying the economy the faster it would grow.
There was no way, Wanniski said, that the Democrats could ever win again. They'd be forced into the role of Santa-killers by raising taxes, or anti-Santas by cutting spending. Either one would lose them elections.
When Reagan rolled out Supply Side Economics in the early 80s, dramatically cutting taxes while exploding spending, there was a moment when it seemed to Wanniski and Laffer that all was lost. The budget deficit exploded and the country fell into a deep recession – the worst since the Great Depression – and Republicans nationwide held their collective breath.
But David Stockman came up with a great new theory about what was going on – they were "starving the beast" of government by running up such huge deficits that Democrats would never, ever in the future be able to talk again about national health care or improving Social Security.
And this so pleased Alan Greenspan, the Fed Chairman, that he opened the spigots of the Fed, dropping interest rates and buying government bonds, producing a nice, healthy goose to the economy.
Greenspan further counseled Reagan to dramatically increase taxes on people earning under $37,800 a year by doubling the Social Security (FICA/payroll) tax, and then let the government borrow those newfound hundreds of billions of dollars off-the-books to make the deficit look better than it was.
Reagan, Greenspan, Winniski, and Laffer took the federal budget deficit from under a trillion dollars in 1980 to almost three trillion by 1988, and back then a dollar could buy far more than it buys today. They and George HW Bush ran up more debt in eight years than every president in history, from George Washington to Jimmy Carter, combined.
Surely this would both starve the beast and force the Democrats to make the politically suicidal move of becoming deficit hawks. And that's just how it turned out.
Bill Clinton, who had run on an FDR-like platform of a "New Covenant" with the American people that would strengthen the institutions of the New Deal, strengthen labor, and institute a national health care system, found himself in a box.
A few weeks before his inauguration, Alan Greenspan and Robert Rubin sat him down and told him the facts of life: he was going to have to raise taxes and cut the size of government. Clinton took their advice to heart, raised taxes, balanced the budget, and cut numerous programs, declaring an "end to welfare as we know it" and, in his second inaugural address, an "end to the era of big government."
Clinton was the anti-Santa Claus, and the result was an explosion of Republican wins across the country as Republican politicians campaigned on a platform of supply-side tax cuts and pork-rich spending increases. State after state turned red, and the Republican Party rose to take over, ultimately, every single lever of power in the federal government, from the Supreme Court to the White House.
Looking at the wreckage of the Democratic Party all around Clinton by 1999, Winniski wrote a gloating memo that said, in part: "We of course should be indebted to Art Laffer for all time for his Curve... But as the primary political theoretician of the supply-side camp, I began arguing for the 'Two Santa Claus Theory' in 1974. If the Democrats are going to play Santa Claus by promoting more spending, the Republicans can never beat them by promoting less spending. They have to promise tax cuts..."
In reality, his tax cuts did what they have always 'e over the past 100 years – they initiated a bubble economy that would let the very rich skim the cream off the top just before the ceiling crashed in on working people. Just like today.
The Republicans got what they wanted from Wanniski's work. They held power for thirty years, made themselves trillions of dollars, and cut organized labor's representation in the workplace from around 25 percent when Reagan came into office to around 6 of the non-governmental workforce today.
Over time, and without raising the cap, Social Security will face an easily-solved crisis, and the GOP’s plan is for force Democrats to become the anti-Santa, yet again. If the GOP-controlled Congress continues to refuse to require rich people to pay into Social Security (any income over $128,000 is SS-tax-free), either benefits will be cut or the retirement age will have to be raised to over 70.
The GOP plan is to use this unnecessary, manufactured crisis as an opening to “reform” Social Security - translated: cut and privatize. Thus, forcing Democrats to become the Social Security anti-Santa a different way.
When this happens, Democrats must remember Jude Wanniski, and accept neither the cut to disability payments nor the entree to Social Security “reform.” They must demand the “cap” be raised, as Bernie Sanders proposed and the Democratic Party adopted in its 2016 platform.
And, hopefully, some of our media will begin to call the GOP out on the Two Santa Clauses program. It’s about time that Americans realized the details of the scam that’s been killing wages and enriching billionaires for nearly four decades.
1/17/17 Rachel Maddow asked for suggestions for what you call a group, crowd, collection of Goldman Sachs bankers, like a herd of cattle or a murder of crows:
A corruption of bankers
Waking up in Hillary's World 10/29/2016
Before he resigned with his nine-figure golden parachute, Wells Fargo CEO and Chairman John Stumpf addressed Congress over disclosures that 5,300 of his employees had created two million fake accounts, scamming $2.4 million from existing customers. The bank was fined $185 million for that (out of a total $10 billion in fines for a range of other crimes committed before and during the financial crisis).
8. Welfare for Wall Street ($83 billion/year)The biggest banks have grown even bigger than they were just before the 2008 financial meltdown. And due to their size, these banks are perceived as “too big to fail,” as their demise would spell doom for the US financial sector as a whole. So as these big banks grow bigger, the Federal Reserve allows them to borrow at lower interest rates than other big banks — essentially subsidizing the continued growth of the big banks. In 2013, Bloomberg estimated the ten biggest TBTF banks suck up $83 billion per year in corporate welfare.
If we were to force the big banks to borrow at the same interest rates as every other bank at a rate of $83 billion per year, that would be enough to double the current federal budgets for highway spending ($48.6 billion), Head Start ($10.1 billion), the Environmental Protection Agency ($7.89 billion), nutrition assistance for women, infants, and children ($6.2 billion), the National Parks Service ($3 billion), and the Federal Deposit Insurance Corporation ($2.39 billion), with $5 billion left over.
Wells Fargo fined $185M for 'widespread illegal practices':
Wells Fargo will pay $185 million to settle allegations of "widespread illegal practices" in which employees secretly opened accounts to meet sales targets and receive bonuses, federal regulators announced Thursday
Reinventing Banking: From Russia to Iceland to Ecuador By Ellen Brown. December 11, 2015
Global developments in finance and geopolitics are prompting a rethinking of the structure of banking and of the nature of money itself. Among other interesting news items:
Developments in Russia
A significant debate is underway in Russia since imposition of western financial sanctions on Russian banks and corporations in 2014. It’s about a proposal presented by the Moscow Patriarchate of the Orthodox Church. The proposal, which resembles Islamic interest-free banking models in many respects, was first unveiled in December 2014 at the depth of the Ruble crisis and oil price free-fall. This August the idea received a huge boost from the endorsement of the Russian Chamber of Commerce and Industry. It could change history for the better depending on what is 'e and where it further leads.
Much as with Islamic banking models that ban usury, the Orthodox Financial System would not allow interest charges on loans. Participants of the system share risks, profits and losses. Speculative behavior is prohibited . . . . There would be a new low-risk bank or credit organization that controls all transactions, and investment funds or companies that source investors and mediate project financing. . . . Priority would be ensuring financing of the real sector of the economy . . . .
Iceland’s Radical Money Plan
Iceland, too, is looking at a radical transformation of its money system, after suffering the crushing boom/bust cycle of the private banking model that bankrupted its largest banks in 2008. According to a March 2015 article in the UK Telegraph:
Iceland’s government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled “A better monetary system for Iceland”.
Public Banking Initiatives in Iceland, Ireland and the UK
A major concern with stripping private banks of the power to create money as deposits when they make loans is that it will seriously reduce the availability of credit in an already sluggish economy. One solution is to make the banks, or some of them, public institutions. They would still be creating money when they made loans, but it would be as agents of the government; and the profits would be available for public use, on the model of the US Bank of North Dakota and the German Sparkassen (public savings banks).
In Ireland, three political parties – Sinn Fein, the Green Party and Renua Ireland (a new party) — are now supporting initiatives for a network of local publicly-owned banks on the Sparkassen model. In the UK, the New Economy Foundation (NEF) is proposing that the failed Royal Bank of Scotland be transformed into a network of public interest banks on that model. And in Iceland, public banking is part of the platform of a new political party called the Dawn Party.
Ecuador’s Dinero Electronico: A National Digital Currency
Ever since 2000, when Ecuador agreed to use the US dollar as its official legal tender, it has had to ship boatloads of paper dollars into the country just to conduct trade. In order to “seek efficiency in payment systems [and] to promote and contribute to the economic stability of the country,” the government of President Rafael Correa has therefore established the world’s first national digitally-issued currency.
Unlike Bitcoin and similar private crypto-currencies (which have been outlawed in the country), Ecuador’s dinero electronico is operated and backed by the government. The Ecuadorian digital currency is less like Bitcoin than like M-Pesa, a private mobile phone-based money transfer service started by Vodafone, which has generated a “mobile money” revolution in Kenya.
Western central banks issue digital currency for the use of commercial banks in their reserve accounts, but it is not available to the public. In Ecuador, any qualifying person can have an account at the central bank; and opening one is as easy as walking into a participating financial institution and exchanging paper money for electronic money stored on their smartphones.
Ecuador’s banks and other financial institutions were ordered in May 2015 to adopt the digital payment system within the next year, making them “macro-agents” of the Electric Currency System.
Electronic money will stimulate the economy; it will be possible to attract more Ecuadorian citizens, especially those who do not have checking or savings accounts and credit cards alone. The electronic currency will be backed by the assets of the Central Bank of Ecuador.
That means there is no fear of the bank going bankrupt or of bank runs or bail-ins. Nor can the digital currency be devalued by speculative short selling. The government has declared that these are digital US dollars trading at 1 to 1 – take it or leave it – and the people are taking it. According to an October 2015 article titled “Ecuador’s Digital Currency Is Winning Hearts!”, the currency is actually taking the country by storm; and other countries in Latin America and Africa are not far behind.
Banking Moves into the 21st Century
The catastrophic failures of the Western banking system mandate a new vision. These transformations, current and proposed, are constructive steps toward streamlining the banking system, eliminating the risks that have devastated individuals and governments, democratizing money, and promoting sustainable and prosperous economies.
German public bank The German banking system is structured in three different pillars, totally separated from each other. They typically differ in their legal form and the ownership. Private banks, represented by banks like Deutsche Bank or Commerzbank as listed companies, and Hauck & Aufhäuser or Bankhaus Lampe as less known private companies, are part of the first tier. The second tier is composed of co-operative banks like the numerous Volksbanken and Raiffeisenbanken. They are based on a member-structure where each member, independently from its capital share, has one vote. The third tier consists of public banks, that are a legally defined arm of the banking industry in Germany and separate into two main groups.
The German Savings Banks Finance Group (Sparkassen-Finanzgruppe) is the most numerous sub-sector with 431 savings banks using the Sparkasse brand, 8 Landesbanken including the DekaBank using separate brands and 10 real estate financing banks using the LBS brand. The Deutscher Sparkassen- und Giroverband (German Savings Banks Association, DSGV) represents the interests of the Sparkassen-Finanzgruppe on a national and international level concerning law and the financial services industry. It also coordinates, promotes and harmonises the interests of Sparkassen.
Based on OECD studies, the German public banking system had a share of 40% of total banking assets in Germany. This shows the important and significant role of this group of banks in Germany.
Sparkassen Savings banks in German-speaking countries are called Sparkasse (pl: Sparkassen). They work as commercial banks in a decentralized structure. Each savings bank is independent, locally managed and concentrates its business activities on customers in the region it is situated in. In general, savings banks are not profit oriented. Shareholders of the savings banks are usually single cities or numerous cities in an administrative district. Some 6 savings banks (Bordesholmer Sparkasse AG, Spar- und Leihkasse zu Bredstedt AG, Sparkasse Bremen AG, Hamburger Sparkasse AG, Sparkasse zu Lübeck AG, Sparkasse Mittelholstein AG) are independent from municipalities; their association is the Verband der Deutschen Freien Öffentlichen Sparkassen.
Sparkasse Bank in Germany en Deutsch; a small savings bank in the district of Hannover.
Finally, One Banker Gets Sizable Jail Term. But Will Others Follow? Sentence in LIBOR manipulation case is 'one of the harshest penalties meted out against a banker since the financial crisis'
"A message needs to be sent to the world of banking," said UK Judge Jeremy Cooke on Monday as he handed down a 14-year sentence to former Citibank and UBS trader Tom Hayes, convicted in a Lon' court on eight counts of conspiring to manipulate a global benchmark interest rate known as LIBOR.
But Hayes claimed he was taking part in an "industry-wide" practice, the Guardian reports. "He described the broking market he worked in as the wild west, a place with no rules and where relationships relied on lavish entertainment. He said it was this high-pressure environment which took its toll on him, prompting him to threaten brokers and pick fights with colleagues to move interest rates to aid his trading."
The UK jury's unanimous verdict, followed about an hour later by Cooke's 14-year prison sentence, is said to be "one of the harshest penalties meted out against a banker since the financial crisis." The Wall Street Journal has a run-down of how Hayes' sentence stacks up against others who have been convicted of white-collar crimes.
"The United States spends over $87 billion conducting a war in Iraq while the United Nations estimates that for less than half that amount we could provide clean water, adequate diets, sanitations services and basic education to every person on the planet. And we wonder why terrorists attack us." - John Perkins, Confessions of an Economic Hit Man
Email from Bernie Sanders:It's time to break up the banks.
The greed, recklessness, and illegal behavior on Wall Street drove this country into the worst recession since the Great Depression. Their casino-style gambling has helped divert 99 percent of all new income to the top one percent. And it has contributed to the most unequal level of wealth and income distribution of any major country on earth.
In the midst of all of this grotesque inequality sits a handful of financial institutions that are still so large, the failure of any one would cause catastrophic risk to millions of Americans and send the world economy into crisis.
If it's too big to fail, it's too big to exist. That's the bottom line.
I introduced legislation in Congress that would break up banks that are too big to fail. Can you sign on as a citizen co-sponsor of my bill to show your support?
'Biggest Banking Leak in History' Details Nefarious Tactics of Global Tax-Dodgers Whether revelations result in crackdown on shadow banking system and tax avoidance by the wealthy and by multinational companies remains to be seen
Quotes"...maybe you've wondered why the banking laws of our great democracy are written in such a way that they allow bankers to rob you and me -- such daylight robberies as their endless and always-rising fees, so-called privacy provisions that let them sell our personal financial information, etc. etc. It will all become clear to you if you go to the swank Rainbow Room in Manhattan on the night of August 30th, the opening day of the Republican National Convention.
"There you'll see Rep. Michael Oxley, chairman of the Financial Services Committee that supposedly oversees the banking industry. He'll be the guest of honor at a party paid for by J.P. Morgan Chase, Credit Suisse First Boston, and the other big banks that profit enormously from Chairman Oxley's willingness to legalize their robbery -- banks that currently have bills before him to allow even more robbery. The banks are paying up to $100,000 each in tribute to the guy who writes the banking laws" (Jim Hightower. The hightower Lowdown, June 2004: 5).
Kane then lands this bombshell: “The warranted rate of return on the stock of deeply undercapitalized firms like Citi and B of A [Bank of America] would have been sky high and their stock would have been declared worthless long ago if market participants were not convinced that authorities are afraid to force them to resolve their weaknesses.”
Kane goes on to say that it is “shameful” for government officials to suggest that bank bailouts were good deals for taxpayers. Kane writes: “On balance, the bailouts transferred wealth and economic opportunity from ordinary taxpayers to much higher-income stakeholders in TBTF firms" (Dr. Edward J. Kane, economist. From http://www.dailykos.com/story/2014/08/01/1318253/-Senate-Bombshell-Testimony-Citi-BofA-Stock-Worthless-In-2009-Without-Implied-Gov-t-Guarantees?detail=email#).
"The USA permitted "wildcat banking," which was little different in principle from counterfeiting operations... As late as 1929, the US banking system was made up of thousands upon thousands of small, amateurishly managed, largely unsupervised banks.... even during the prosperity of the Coolidge presidency (1923-9), 600 banks a year failed" (Ha-Joon Chang. Kicking Away the Ladder: Developement Strategy in Historical Perspective. Lon': Anthem Press, 2002. Page 94).
The Peril of Whistleblowing on Wall St. by Nicole Collins Bronzan. ProPublica, June 9, 2014. "...reveals big banks who muster their considerable power in the cause of self-protection—making the risk of finding and reporting wrongdoing so high... The 2010 Dodd-Frank financial reform law was supposed to help prevent another financial meltdown partly by encouraging whisteblowers to come forward, but even that has shown mixed results, Cohan says."
Barney Frank's Biggest Bombshell: His Shocking Anecdote About the Financial Crisis Barack Obama refused to extract foreclosure relief from the nation’s largest banks, as a condition for their receipt of hundreds of billions of dollars in bailout money... The Bush administration, still in charge during TARP’s passage in October 2008, used none of the first tranche on mortgage relief, nor did Treasury Secretary Henry Paulson use any leverage over firms receiving the money to persuade them to lower mortgage balances and prevent foreclosures.
'Rotten Core of Banking' Exposed: Global Outrage Follows HSBC Revelations New details about how HSBC bank helped tax evaders and money-launderers—from political figures to celebrities to arms dealers—conceal billions of dollars in assets have sparked international condemnation, from elected officials as well as public interest groups around the world.
"These bankers are too big to fail and too big to jail, so they just keep engaging in illegal activity," Henry declared. "There’s a widespread pattern of using fines to penalize the top 20 global big banks—$247 billion since 1998, for 655 separate major infractions of all kinds. But they just pass along the costs and continue with business as usual, with client secrecy preserved. It’s like a criminal syndicate."
In the U.S., Sen. Sherrod Brown (D-Ohio) called on the federal government to explain "its actions—or lack thereof—upon learning of these allegations in 2010." The Guardian established that the leaked data was shared with U.S. regulators five years ago.
LinksThe Web of Debt blog Ellen Brown's site
BankstersConjuring Up the Next Depression ICH By Chris Hedges, September 12, 2018
During the financial crisis of 2008, the world’s central banks, including the Federal Reserve, injected trillions of dollars of fabricated money into the global financial system. This fabricated money has created a worldwide debt of $325 trillion, more than three times global GDP.
The fabricated money was hoarded by banks and corporations, loaned by banks at predatory interest rates, used to service interest on unpayable debt or spent buying back stock, providing millions in compensation for elites. The fabricated money was not invested in the real economy.
Products were not manufactured and sold. Workers were not reinstated into the middle class with sustainable incomes, benefits and pensions. Infrastructure projects were not undertaken. The fabricated money reinflated massive financial bubbles built on debt and papered over a fatally diseased financial system destined for collapse.
What will trigger the next crash? The $13.2 trillion in unsustainable U.S. household debt? The $1.5 trillion in unsustainable student debt? The billions Wall Street has invested in a fracking industry that has spent $280 billion more than it generated from its operations? Who knows.
What is certain is that a global financial crash, one that will dwarf the meltdown of 2008, is inevitable.
And this time, with interest rates near zero, the elites have no escape plan. The financial structure will disintegrate. The global economy will go into a death spiral. The rage of a betrayed and impoverished population will, I fear, further empower right-wing demagogues who promise vengeance on the global elites, moral renewal, a nativist revival heralding a return to a mythical golden age when immigrants, women and people of color knew their place, and a Christianized fascism.
The 2008 financial crisis, as the economist Nomi Prins points out, “converted central banks into a new class of power brokers.” They looted national treasuries and amassed trillions in wealth to become politically and economically omnipotent. In her book “Collusion: How Central Bankers Rigged the World,” she writes that central bankers and the world’s largest financial institutions fraudulently manipulate global markets and use fabricated, or as she writes, “fake money,” to inflate asset bubbles for short-term profit as they drive us toward “a dangerous financial precipice.”
“Before the crisis, they were just asleep at the wheel, in particular, the Federal Reserve of the United States, which is supposed to be the main regulator of the major banks in the United States,” Prins said when we met in New York. “It did a horrible job of doing that, which is why we had the financial crisis.
"[The fed] became a deregulator instead of a regulator. In the wake of the financial crisis, the solution to fixing the crisis and saving the economy from a great depression or recession, whatever the terminology that was used at any given time, was to fabricate trillions and trillions of dollars out of an electronic ether.”
The Federal Reserve handed over an estimated $29 trillion of this fabricated money to American banks, according to researchers at the University of Missouri. TWENTY-NINE TRILLION DOLLARS!
TWENTY-NINE TRILLION DOLLARS! We could have provided free college tuition to every student or universal health care, repaired our crumbling infrastructure, transitioned to clean energy, forgiven student debt, raised wages, bailed out underwater homeowners, formed public banks to invest at low interest rates in our communities, provided a guaranteed minimum income for everyone and organized a massive jobs program for the unemployed and underemployed. Sixteen million children would not go to bed hungry. The mentally ill and the homeless—an estimated 553,742 Americans are homeless every night—would not be left on the streets or locked away in our prisons. The economy would revive.
Instead, $29 trillion in fabricated money was handed to financial gangsters who are about to make most of it evaporate and plunge us into a depression that will rival that of the global crash of 1929.
Kevin Zeese and Margaret Flowers write on the website Popular Resistance, “One-sixth of this could provide a $12,000 annual basic income, which would cost $3.8 trillion annually, doubling Social Security payments to $22,000 annually, which would cost $662 billion, a $10,000 bonus for all U.S. public school teachers, which would cost $11 billion, free college for all high school graduates, which would cost $318 billion, and universal preschool, which would cost $38 billion. National improved Medicare for all would actually save the nation trillions of dollars over a decade.”
An emergency clause in the Federal Reserve Act of 1913 allows the Fed to provide liquidity to a distressed banking system. But the Federal Reserve did not stop with the creation of a few hundred billion dollars. It flooded the financial markets with absurd levels of fabricated money. This had the effect of making the economy appear as if it had revived. And for the oligarchs, who had access to this fabricated money while we did not, it did.
The Fed cut interest rates to near zero. Some central banks in Europe instituted negative interest rates, meaning they would pay borrowers to take loans. The Fed, in a clever bit of accounting, even permitted distressed banks to use these no-interest loans to buy U.S. Treasury bonds. The banks gave the bonds back to the Fed and received a quarter of a percent of interest from the Fed. In short, the banks were loaned money at virtually no interest by the Fed and then were paid interest by the Fed on the money they borrowed. The Fed also bought up worthless mortgage assets and other toxic assets from the banks. Since Fed authorities could fabricate as much money as they wanted, it did not matter how they spent it.
“It’s like going to someone’s old garage sale and saying, ‘I want that bicycle with no wheels. I’ll pay you 100 grand for it. Why? Because it’s not my money,’ ” Prins said.
“These people have rigged the system,” she said of the bankers. “There is money fabricated at the top. It is used to pump up financial assets, including stock. It has to come from somewhere. Because money is cheap there’s more borrowing at the corporate level. There’s more money borrowed at the government level.”
“Where do you go to repay it?” she asked. “You go into the nation. You go into the economy. You extract money from the foundational economy, from social programs. You impose austerity.”
Given the staggering amount of fabricated money that has to be repaid, the banks need to build greater and greater pools of debt. This is why when you are late in paying your credit card the interest rate jumps to 28 percent. This is why if you declare bankruptcy you are still responsible for paying off your student loan, even as 1 million people a year default on student loans, with 40 percent of all borrowers expected to default on student loans by 2023.
This is why wages are stagnant or have declined while costs, from health care and pharmaceutical products to bank fees and basic utilities, are skyrocketing. The enforced debt peonage grows to feed the beast until, as with the subprime mortgage crisis, the predatory system fails because of massive defaults.
There will come a day, for example, as with all financial bubbles, when the wildly optimistic projected profits of industries such as fracking will no longer be an effective excuse to keep pumping money into failing businesses burdened by debt they cannot repay.
“The 60 biggest exploration and production firms are not generating enough cash from their operations to cover their operating and capital expenses,” Bethany McLean writes of the fracking industry in an article titled “The Next Financial Crisis Lurks Underground” that appeared in The New York Times. “In aggregate, from mid-2012 to mid-2017, they had negative free cash flow of $9 billion per quarter.”
The global financial system is a ticking time bomb. The question is not if it will explode but when it will explode. And once it does, the inability of the global speculators to use fabricated money with zero interest to paper over the debacle will trigger massive unemployment, high prices for imports and basic services, and a devaluation in which the dollar will become nearly worthless as it is abandoned as the world’s reserve currency.
This manufactured financial tsunami will transform the United States, already a failed democracy, into an authoritarian police state. Life will become very cheap, especially for the vulnerable—undocumented workers, Muslims, poor people of color, girls and women, anti-capitalist and anti-imperialist critics branded as agents of foreign powers—who will be demonized and persecuted for the collapse. The elites, in a desperate bid to cling to their unchecked power and obscene wealth, will disembowel what is left of the United States.
Global EliteExposing the Giants: The Global Power Elite ICH By Robert J Burrowes August 31, 2018
Developing the tradition charted by C. Wright Mills in his 1956 classic The Power Elite, in his latest book, Professor Peter Phillips starts by reviewing the transition from the nation state power elites described by authors such as Mills to a transnational power elite centralized on the control of global capital.
Thus, in his just-released study Giants: The Global Power Elite, Phillips, a professor of political sociology at Sonoma State University in the USA, identifies the world’s top seventeen asset management firms, such as BlackRock and J.P Morgan Chase, each with more than one trillion dollars of investment capital under management, as the ‘Giants’ of world capitalism. The seventeen firms collectively manage more than $US41.1 trillion in a self-invested network of interlocking capital that spans the globe.
This $41 trillion represents the wealth invested for profit by thousands of millionaires, billionaires and corporations. The seventeen Giants operate in nearly every country in the world and are ‘the central institutions of the financial capital that powers the global economic system’. They invest in anything considered profitable, ranging from ‘agricultural lands on which indigenous farmers are replaced by power elite investors’ to public assets (such as energy and water utilities) to war.
In addition, Phillips identifies the most important networks of the Global Power Elite and the individuals therein. He names 389 individuals (a small number of whom are women and a token number of whom are from countries other than the United States and the wealthier countries of Western Europe) at the core of the policy planning nongovernmental networks that manage, facilitate and defend the continued concentration of global capital. The Global Power Elite perform two key uniting functions, he argues: they provide ideological justifications for their shared interests (promulgated through their corporate media), and define the parameters of action for transnational governmental organizations and capitalist nation-states.
More precisely, Phillips identifies the 199 directors of the seventeen global financial Giants and offers short biographies and public information on their individual net wealth. These individuals are closely interconnected through numerous networks of association including the World Economic Forum, the International Monetary Conference, university affiliations, various policy councils, social clubs, and cultural enterprises. For a taste of one of these clubs, see this account of The Links in New York. As Phillips observes: ‘It is certainly safe to conclude they all know each other personally or know of each other in the shared context of their positions of power.’
The Giants, Phillips documents, invest in each other but also in many hundreds of investment management firms, many of which are near-Giants. This results in tens of trillions of dollars coordinated in a single vast network of global capital controlled by a very small number of people. ‘Their constant objective is to find enough safe investment opportunities for a return on capital that allows for continued growth. Inadequate capital-placement opportunities lead to dangerous speculative investments, buying up of public assets, and permanent war spending.’
Because the directors of these seventeen asset management firms represent the central core of international capital, ‘Individuals can retire or pass away, and other similar people will move into their place, making the overall structure a self-perpetuating network of global capital control. As such, these 199 people share a common goal of maximum return on investments for themselves and their clients, and they may seek to achieve returns by any means necessary – legal or not…. the institutional and structural arrangements within the money management systems of global capital relentlessly seek ways to achieve maximum return on investment, and … the conditions for manipulations – legal or not – are always present.’
Like some researchers before him, Phillips identifies the importance of those transnational institutions that serve a unifying function. The World Bank, International Monetary Fund, G20, G7, World Trade Organization (WTO), World Economic Forum(WEF), Trilateral Commission, Bilderberg Group, Bank for International Settlements, Group of 30 (G30), the Council on Foreign Relationsand the International Monetary Conference serve as institutional mechanisms for consensus building within the transnational capitalist class, and power elite policy formulation and implementation. ‘These international institutions serve the interests of the global financial Giants by supporting policies and regulations that seek to protect the free, unrestricted flow of capital and debt collection worldwide.’
But within this network of transnational institutions, Phillips identifies two very important global elite policy-planning organizations: the Group of Thirty (which has 32 members) [https://group30.org/] and the extended executive committee of the Trilateral Commission (which has 55 members) [http://trilateral.org/]. These nonprofit corporations, which each have a research and support staff, formulate elite policy and issue instructions for their implementation by the transnational governmental institutions like the G7, G20, IMF, WTO, and World Bank. Elite policies are also implemented following instruction of the relevant agent, including governments, in the context. These agents then do as they are instructed.Thus, these 85 members (because two overlap) of the Group of Thirty and the Trilateral Commission comprise a central group of facilitators of global capitalism, ensuring that ‘global capital remains safe, secure, and growing’.
So, while many of the major international institutions are controlled by nation-state representatives and central bankers (with proportional power exercised by dominant financial supporters such as the United States and European Union countries), Phillips is more concerned with the transnational policy groups that are nongovernmental because these organizations ‘help to unite TCC power elites as a class’ and the individuals involved in these organizations facilitate world capitalism. ‘They serve as policy elites who seek the continued growth of capital in the world.’
Developing this list of 199 directors of the largest money management firms in the world, Phillips argues, is an important step toward understanding how capitalism works globally today. These global power elite directors make the decisions regarding the investment of trillions of dollars. Supposedly in competition, the concentrated wealth they share requires them to cooperate for their greater good by identifying investment opportunities and shared risk agreements, and working collectively for political arrangements that create advantages for their profit-generating system as a whole.
Their fundamental priority is to secure an average return on investment of 3 to 10 percent, or even more. The nature of any investment is less important than what it yields: continuous returns that support growth in the overall market. Hence, capital investment in tobacco products, weapons of war, toxic chemicals, pollution, and other socially destructive goods and services are judged purely by their profitability. Concern for the social and environmental costs of the investment are non-existent. In other words, inflicting death and destruction are fine because they are profitable.
So what is the global elite’s purpose? In a few sentences Phillips characterizes it thus: The elite is largely united in support of the US/NATO military empire that prosecutes a repressive war against resisting groups – typically labeled ‘terrorists’ – around the world. The real purpose of ‘the war on terror’ is defense of transnational globalization, the unimpeded flow of financial capital around the world, dollar hegemony and access to oil; it has nothing to do with repressing terrorism which it generates, perpetuates and finances to provide cover for its real agenda. This is why the United States has a long history of CIA and military interventions around the world ostensibly in defense of ‘national interests’.
An interesting point that emerges for me from reading Phillips thoughtful analysis is that there is a clear distinction between those individuals and families who have wealth and those individuals who have (sometimes significantly) less wealth (which, nevertheless, is still considerable) but, through their positions and connections, wield a great deal of power. As Phillips explains this distinction, ‘the sociology of elites is more important than particular elite individuals and their families’. Just 199 individuals decide how more than $40 trillion will be invested. And this is his central point. Let me briefly elaborate.
There are some really wealthy families in the world, notably including the families Rothschild (France and the United Kingdom), Rockefeller (USA), Goldman-Sachs (USA), Warburgs (Germany), Lehmann (USA), Lazards (France), Kuhn Loebs (USA), Israel Moses Seifs (Italy), Al-Saud (Saudi Arabia), Walton (USA), Koch (USA), Mars (USA), Cargill-MacMillan (USA) and Cox (USA). However, not all of these families overtly seek power to shape the world as they wish.
Similarly, the world’s extremely wealthy individuals such as Jeff Bezos (USA), Bill Gates (USA), Warren Buffett (USA), Bernard Arnault (France), Carlos Slim Helu (Mexico) and Francoise Bettencourt Meyers (France) are not necessarily connected in such a way that they exercise enormous power. In fact, they may have little interest in power as such, despite their obvious interest in wealth.
In essence, some individuals and families are content to simply take advantage of how capitalism and its ancilliary governmental and transnational instruments function while others are more politically engaged in seeking to manipulate major institutions to achieve outcomes that not only maximize their own profit and hence wealth but also shape the world itself.
So if you look at the list of 199 individuals that Phillips identifies at the centre of global capital, it does not include names such as Bezos, Gates, Buffett, Koch, Walton or even Rothschild, Rockefeller or Windsor (the Queen of England) despite their well-known and extraordinary wealth. As an aside, many of these names are also missing from the lists compiled by groups such as Forbes and Bloomberg, but their absence from these lists is for a very different reason given the penchant for many really wealthy individuals and families to avoid certain types of publicity and their power to ensure that they do.
In contrast to the names just listed, in Phillips’ analysis names like Laurence (Larry) Fink (Chairman and CEO of BlackRock), James (Jamie) Dimon (Chairman and CEO of JPMorgan Chase) and John McFarlane (Chairman of Barclays Bank), while not as wealthy as those listed immediately above, wield far more power because of their positions and connections within the global elite network of 199 individuals.
Predictably then, Phillips observes, these three individuals have similar lifestyles and ideological orientations. They believe capitalism is beneficial for the world and while inequality and poverty are important issues, they believe that capital growth will eventually solve these problems. They are relatively non-expressive about environmental issues, but recognize that investment opportunities may change in response to climate ‘modifications’. As millionaires they own multiple homes. They attended elite universities and rose quickly in international finance to reach their current status as giants of the global power elite. ‘The institutions they manage have been shown to engage in illegal collusions with others, but the regulatory fines by governments are essentially seen as just part of doing business.’
In short, as I would characterize this description: They are devoid of a legal or moral framework to guide their actions, whether in relation to business, fellow human beings, war or the environment and climate. They are obviously typical of the elite.
Any apparent concern for people, such as that expressed by Fink and Dimon in response to the racist violence in Charlottesville, USA in August 2017, is simply designed to promote ‘stability’ or more precisely, a stable (that is, profitable) investment and consumer climate.
The lack of concern for people and issues that might concern many of us is also evident from a consideration of the agenda at elite gatherings. Consider the International Monetary Conference. Founded in 1956, it is a private yearly meeting of the top few hundred bankers in the world. The American Bankers Association (ABA) serves as the secretariat for the conference. But, as Phillips notes: ‘Nothing on the agenda seems to address the socioeconomic consequences of investments to determine the impacts on people and the environment.’ A casual perusal of the agenda at any elite gathering reveals that this comment applies equally to any elite forum. See, for example, the agenda of the recent WEF meeting in Davos. Any talk of ‘concern’ is misleading rhetoric.
Hence, in the words of Phillips: The 199 directors of the global Giants are ‘a very select set of people. They all know each other personally or know of each other. At least 69 have attended the annual World Economic Forum, where they often serve on panels or give public presentations. They mostly attended the same elite universities, and interact in upperclass social setting[s] in the major cities of the world. They all are wealthy and have significant stock holdings in one or more of the financial Giants. They are all deeply invested in the importance of maintaining capital growth in the world. Some are sensitive to environmental and social justice issues, but they seem to be unable to link these issues to global capital concentration.’
Of course, the global elite cannot manage the world system alone: the elite requires agents to perform many of the functions necessary to control national societies and the individuals within them. ‘The interests of the Global Power Elite and the TCC are fully recognized by major institutions in society. Governments, intelligence services, policymakers, universities, police forces, military, and corporate media all work in support of their vital interests.’
In other words, to elaborate Phillips’ point and extend it a little, through their economic power, theGiants control all of the instruments through which their policies are implemented. Whether it be governments, national military forces, ‘military contractors’ or mercenaries (with at least $200 billion spent on private security globally, the industry currently employs some fifteen million people worldwide) used both in ‘foreign’ wars but also likely deployed in future for domestic control, key ‘intelligence’ agencies, legal systems and police forces, major nongovernment organizations, or the academic, educational, ‘public relations propaganda’, corporate media, medical, psychiatric and pharmaceutical industries, all instruments are fully responsive to elite control and are designed to misinform, deceive, disempower, intimidate, repress, imprison (in a jail or psychiatric ward), exploit and/or kill (depending on the constituency) the rest of us, as is readily evident.
Defending Elite Power
Phillips observes that the power elite continually worries about rebellion by the ‘unruly exploited masses’ against their structure of concentrated wealth. This is why the US military empire has long played the role of defender of global capitalism. As a result, the United States has more than 800 military bases (with some scholars suggesting 1,000) in 70 countries and territories. In comparison, the United Kingdom, France, and Russia have about 30 foreign bases. In addition, US military forces are now deployed in 70 percent of the world’s nations with US Special Operations Command (SOCOM) having troops in 147 countries, an increase of 80 percent since 2010. These forces conduct counterterrorism strikes regularly, including drone assassinations and kill/capture raids.
‘The US military empire stands on hundreds of years of colonial exploitation and continues to support repressive, exploitative governments that cooperate with global capital’s imperial agenda. Governments that accept external capital investment, whereby a small segment of a country’s elite benefits, do so knowing that capital inevitably requires a return on investment that entails using up resources and people for economic gain. The whole system continues wealth concentration for elites and expanded wretched inequality for the masses….
‘Understanding permanent war as an economic relief valve for surplus capital is a vital part of comprehending capitalism in the world today. War provides investment opportunity for the Giants and TCC elites and a guaranteed return on capital. War also serves a repressive function of keeping the suffering masses of humanity afraid and compliant.’
As Phillips elaborates: This is why defense of global capital is the prime reason that NATO countries now account for 85 percent of the world’s military spending; the United States spends more on the military than the rest of the world combined.
In essence, ‘the Global Power Elite uses NATO and the US military empire for its worldwide security. This is part of an expanding strategy of US military domination around the world, whereby the US/ NATO military empire, advised by the power elite’s Atlantic Council, operates in service to the Transnational Corporate Class for the protection of international capital everywhere in the world’.
This entails ‘further pauperization of the bottom half of the world’s population and an unrelenting downward spiral of wages for 80 percent of the world. The world is facing economic crisis, and the neoliberal solution is to spend less on human needs and more on security.
It is a world of financial institutions run amok, where the answer to economic collapse is to print more money through quantitative easing, flooding the population with trillions of new inflation-producing dollars. It is a world of permanent war, whereby spending for destruction requires further spending to rebuild, a cycle that profits the Giants and global networks of economic power. It is a world of drone killings, extrajudicial assassinations, death, and destruction, at home and abroad.’
Where is this all heading?
So what are the implications of this state of affairs? Phillips responds unequivocally: ‘This concentration of protected wealth leads to a crisis of humanity, whereby poverty, war, starvation, mass alienation, media propaganda, and environmental devastation are reaching a species-level threat. We realize that humankind is in danger of possible extinction’.
He goes on to state that the Global Power Elite is probably the only entity ‘capable of correcting this condition without major civil unrest, war, and chaos’ and elaborates an important aim of his book: to raise awareness of the importance of systemic change and the redistribution of wealth among both the book’s general readers but also the elite, ‘in the hope that they can begin the process of saving humanity.’ The book’s postscript is a ‘A Letter to the Global Power Elite’, co-signed by Phillips and 90 others, beseeching the elite to act accordingly.
‘It is no longer acceptable for you to believe that you can manage capitalism to grow its way out of the gross inequalities we all now face. The environment cannot accept more pollution and waste, and civil unrest is everywhere inevitable at some point. Humanity needs you to step up and insure that trickle-down becomes a river of resources that reaches every child, every family, and all human beings. We urge you to use your power and make the needed changes for humanity’s survival.’
But he also emphasizes that nonviolent social movements, using the Universal Declaration of Human Rights as a moral code, can accelerate the process of redistributing wealth by pressuring the elite into action.
As I read Phillips’ insightful and candid account of elite behavior in this regard, I am reminded, yet again, that the global power elite is extraordinarily violent and utterly insane: content to kill people in vast numbers (whether through starvation or military violence) and destroy the biosphere for profit, with zero sense of humanity’s now limited future.
For this reason I do not share his faith in moral appeals to the elite, as articulated in the letter in his postscript. It is fine to make the appeal but history offers no evidence to suggest that there will be any significant response. The death and destruction inflicted by elites is highly profitable, centuries-old and ongoing.
I would also encourage independent action, in one or more of several ways, by those individuals and communities powerful enough to do so.
If we cannot persuade the global power elite to respond sensibly to that predicament, or nonviolently compel it to do so, humanity’s time on Earth is indeed limited.
Colby Glass, MLIS, Ph.D.c., Professor Emeritus