Saturday, July 30, 2011

A Sample Letter to Congress

By: Dr. J. P. Hubert

I respectfully demand that you reject any budget deal that cuts Social Security, Medicare or Medicaid, and request that you raise the federal debt limit now without conditions.

Entitlements are legislatively guaranteed human rights which flow from the Natural Moral Law. You are well aware that Americans contribute to their Social Security and Medicare benefits through their payroll withholding taxes. It is factually incorrect and sophistic in the most reprehensible way to suggest that Entitlements represent unearned give-aways or welfare.

Moreover, it is the height of hubris to demand cuts in Entitlements (Social Security, Medicare and Medicaid) while insisting that taxes not be raised. What kind of disordered thinking is that? It is completely illogical unless legislators truely desire to harm the weakest among us in order to benefit the strongest. It represents a despicable kind of social Darwinism that should be totally rejected in fair and just society.

A balanced approach to budget deficit reduction would include cuts in military/security/intelligence spending and increases in taxes on corporations and wealthy individuals without cuts in Social Security, Medicare and Medicaid--currently preferred by a clear majority of Americans. I count on you to do the fair, just and honorable thing.

Friday, July 29, 2011

Disastrous Outcomes From An Orchestrated Crisis

By Paul Craig Roberts
July 28, 2011

With the world concerned about US financial credibility and the poor outlook for the US economy, now is not the time for the Republicans to grandstand on the public debt. The debt ceiling needed to be quietly raised. Instead, the Republicans started a fire and then threw gasoline on it, creating an inferno that could burn up the US social safety net or the US Treasury's credit rating and the US dollar's role as reserve currency or what remains of the separation of powers.

Consequently, world financial markets, currency markets, commodity markets, central banks, and mutual fund money market and bond funds are on pins and needles.

This level of irresponsibility is seldom seen even from American politicians.

Republicans have created a totally unnecessary crisis and turned it into compelling political theater. Will the US default? Will entitlements be slashed? Will Obama seize the power of the purse from Congress in order to save the dollar and the US credit rating? None of these questions needed to arise.

While the world media fixates on the orchestrated debt ceiling crisis, the US government continues to bomb civilians in Afghanistan, Libya, Iraq, Pakistan, Yemen, and Somalia and continues with preparations to do the same thing to Syria and Iran.

The violations of other countries' sovereignties, the naked aggressions that constitute war crimes, the murder of noncombatants, and the horrible moral and economic expense inflicted by the maximization of the military/security complex's profits are somehow not a crisis. These are just routine, normal, everyday necessary events. Nothing to notice or to become upset about.

The off-shoring of US jobs, GDP, tax base, and consumer demand that has eroded away the US economy and the government's tax base, thus elevating the deficit, is somehow not a crisis. These are just the imperatives of globalism and the routine maximization of shareholders' profits and management's performance bonuses.

The US has become such a ridiculous collection of fools that no real crisis can be recognized. Instead, the country is mesmerized by a fake crisis.

The fake orchestrated crisis can easily turn into a real one. If income support programs are slashed, so will be consumer demand, and the US economy will decline further, widening the budget deficit and national debt.

If the Republicans force the country into default, the dollar will suffer. At the least, import prices will rise and the trade deficit with them. At the worse, the dollar will lose its reserve currency role, and the US will no longer be able to pay its oil bill in its own currency. With its balance of payments deep in the red, it has no foreign currency with which to purchase oil.

If Obama has to seize the power of the purse in order to prevent a new financial crisis from landing on top of the ongoing financial crisis, democracy will take another big hit.

Americans need desperately to ask themselves why they put into political office such utterly irresponsible and incompetent people capable of creating such a totally unnecessary crisis loaded with such disastrous potential outcomes. It would appear that the American population is too insouciant to use the vote with any care.

Little wonder that the president is becoming a Caesar.

Tax Cuts for the Middle Class and Poor STIMULATE The Economy, But Tax Cuts for the Wealthy HURT The Economy

by Washington's Blog
July 28, 2011

Extreme conservatives push for tax cuts ... but just for the wealthy.

Extreme liberals are against all tax cuts, believing that we need higher taxes to pay for government programs ... and that taxes somehow won't create any drag on the economy.

Both extremes are wrong.

In fact, tax cuts for the middle class and poor stimulate the economy, but tax cuts for the wealthy hurt the economy.

This is actually a very simple concept, although some politicians and economists unintentionally or intentionally muddy the waters.

As Ed Harrison notes today:

Bruce Bartlett, a Republican political appointee and domestic policy advisor to Ronald Reagan, points out that:

Taxes were cut in 2001, 2002, 2003, 2004 and 2006.

It would have been one thing if the Bush tax cuts had at least bought the country a higher rate of economic growth, even temporarily. They did not. Real G.D.P. growth peaked at just 3.6 percent in 2004 before fading rapidly. Even before the crisis hit, real G.D.P. was growing less than 2 percent a year...

According to a recent C.B.O. report, they (Bush tax cuts) reduced revenue by at least $2.9 trillion below what it otherwise would have been between 2001 and 2011. Slower-than-expected growth reduced revenue by another $3.5 trillion  (6.4 trillion).

Spending was $5.6 trillion higher than the C.B.O. anticipated for a total fiscal turnaround of $12 trillion. That is how a $6 trillion projected surplus turned into a cumulative deficit of $6 trillion.

Bartlett offers this killer chart as a summary of the numbers:

If you recall, it was George W. Bush’s father, GHW Bush, who, when campaigning against Reagan, called supply side economics’ claims that tax cuts pay for themselves Voodoo Economics. And Bush was proved right when deficits spiralled out of control and both Reagan and Bush were forced to raise taxes.
The Bush tax cuts accrued disproportionately to the wealthy. The Tax Policy Center shows that 65 percent of the dollar value of the Bush tax cuts accrued to the top quintile, while 20 percent went to the top 0.1 percent of income earners.

If you want to talk about redistribution, there it is.

The New York Times reported in 2007:

Families earning more than $1 million a year saw their federal tax rates drop more sharply than any group in the country as a result of President Bush’s tax cuts, according to a new Congressional study.

The study, by the nonpartisan Congressional Budget Office, also shows that tax rates for middle-income earners edged up in 2004, the most recent year for which data was available, while rates for people at the very top continued to decline.

Based on an exhaustive analysis of tax records and census data, the study reinforced the sense that while Mr. Bush’s tax cuts reduced rates for people at every income level, they offered the biggest benefits by far to people at the very top — especially the top 1 percent of income earners.

The Economic Policy Institute reported in June:

The Bush-era tax changes conferred disproportionate benefits to those at the top of the earnings distribution, exacerbating a trend of widening income inequality at a time of already poor wage growth.
The top 1% of earners (making over $620,442) received 38% of the tax cuts. The lower 60% of filers (making less than $67,715) received less than 20% of the total benefit of Bush’s tax policies.

The Bush-era tax cuts were designed to reduce taxes for the wealthy, and the benefits of faster growth were then supposed to trickle down to the middle class. But the economic impact of cutting capital gains rates and lowering the top marginal tax rates never materialized for working families. Inflation-adjusted median weekly earnings fell by 2.3% during the 2002-07 economic expansion, which holds the distinction for being the worst economic expansion since World War II.

This isn't complicated. Rampant inequality largely caused the Great Depression and the current economic crisis. Cutting taxes on the middle and lower classes reduces inequality and stimulates the consumer economy. But cutting taxes for the wealthy reduces aggregate consumer demand.

As economics professor Robert Reich notes:

First, the rich spend a smaller proportion of their wealth than the less-affluent, and so when more and more wealth becomes concentrated in the hands of the wealth, there is less overall spending and less overall manufacturing to meet consumer needs.

Second, in both the Roaring 20s and 2000-2007 period, the middle class incurred a lot of debt to pay for the things they wanted, as their real wages were stagnating and they were getting a smaller and smaller piece of the pie. In other words, they had less and less wealth, and so they borrowed more and more to make up the difference. As Reich notes:

Between 1913 and 1928, the ratio of private credit to the total national economy nearly doubled. Total mortgage debt was almost three times higher in 1929 than in 1920. Eventually, in 1929, as in 2008, there were “no more poker chips to be loaned on credit,” in [former Fed chairman Mariner] Eccles' words. And “when their credit ran out, the game stopped.”

And third, since the wealthy accumulated more, they wanted to invest more, so a lot of money poured into speculative investments, leading to huge bubbles, which eventually burst. Reich points out:

In the 1920s, richer Americans created stock and real estate bubbles that foreshadowed those of the late 1990s and 2000s. The Dow Jones Stock Index ballooned from 63.9 in mid-1921 to a peak of 381.2 eight years later, before it plunged. There was also frantic speculation in land. The Florida real estate boom lured thousands of investors into the Everglades, from where many never returned, at least financially.

Tax cuts for the little guy gives them more "poker chips" to play with, boosting consumer spending and stimulating the economy.

As Reich noted last year:

Small businesses are responsible for almost all job growth in a typical recovery. So if small businesses are hurting, we're not going to see much job growth any time soon.

On the other hand (despite oft-repeated mythology), tax cuts for the wealthiest tend to help the big businesses ... which don't create many jobs.

In fact, economics professor Steve Keen ran an economic computer model in 2009, and the model demonstrated that:

Giving the stimulus to the debtors is a more potent way of reducing the impact of a credit crunch [than giving money to the big banks and other creditors].

And as discussed above, Reich notes that tax cuts for the wealthy just lead to speculative bubbles ... which hurt, rather than help the economy.

Indeed, Keen has demonstrated that "a sustainable level of bank profits appears to be about 1% of GDP" ... higher bank profits lead to a ponzi economy and a depression. And too much concentration of wealth increases financial speculation, and therefore makes the financial sector (and the big banks) grow too big and too profitable.

No wonder Ronald Reagan's budget director David Stockman called the Bush tax cuts the "worst fiscal mistake in history", and said that extending them will not boost the economy.

Wednesday, July 27, 2011

GOP Debt Ceiling Plan to Be 'Last One Standing' - to Obama's Delight

Last updated: 07/27/2011 02:28:59

By Lori Price

July 26, 2011

House Speaker John Boehner's plan will likely be the 'last one standing' -- one that President Obama must accept or face 'default' aka the pseudo-crisis created by and for the GOP -- and that is exactly the scenario he wants. Seeking political cover, Obama said he would veto earlier austere Boehner (R-OH) plans. That was never his actual intention, as he could have exposed the hypocrisy of the debt-ceiling self-generated crisis and invoked the 14th Amendment to the US Constitution. The stage is set for Obama to implement the Tea Party-pwned GOP plan and appear to be the 'adult in the room.'

Obama failed to assert the fact that Republicans voted to increase the debt ceiling *seven times* under unelected George W. Bush. At the time, they referred to their vote on the Sunday talk show circuit as 'routine house-keeping.' Dick Cheney also said 'deficits don't matter,' as he and the GOP were exploding them for the sole benefit of US corpora-terrorists. In addition to unfunded wars-for-oil, the unfunded (Homeland) security state, and the unfunded 'Leave No Every Child Behind' (so that we can privatize education), Bush and the GOP ushered in tsunami-sized deficits by over-funding the pharma-terrorists at every opportunity.

Remember Project Bioshield? 'As part of Project Bioshield, the Department of Health and Human Services has been allocated $5.6 billion to build up the Strategic National Stockpile with drugs, vaccines and therapies to prepare for the threat of terrorist attacks.' (See: Nuke attack drug contracts up for grabs --Feds to tap drug makers for stockpiles against radiation poisoning. By Aarron Smith 23 Sep 2005.) Another wasted $5.6 billion in giveaways to the pharma-terrorists after the anthrax attacks and avian flu scares created by Fort Detrick, etc.

Under Bush/Cheney, the pharma-terrorists were going to get their extra taxpayer billions by starving the US government of the right to bargain for Medicare drugs and lower costs. In fact, the GOP-run congress 'threatened its own' and kept the vote open against House rules for nearly three additional hours to ram through Bush's big pharma giveaway aka the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

In Republican Deficit Hypocrisy - Remember the Medicare drug benefit?, Bruce Bartlett described what happened when Republicans were determined to pass the 'budget-busting drug bill' in an editorial for Forbes, published 20 Nov 2009:

The vote was kept open for almost three hours while the House Republican leadership brought massive pressure to bear on the handful of principled Republicans who had the nerve to put country ahead of party. The leadership even froze the C-SPAN cameras so that no one outside the House chamber could see what was going on.

Among those congressmen strenuously pressed to change their vote was Nick Smith, R-Mich., who later charged that several members of Congress attempted to virtually bribe him, by promising to ensure that his son got his seat when he retired if he voted for the drug bill...

Eventually, the arm-twisting got three Republicans to switch their votes from nay to yea... Three Democrats also switched from nay to yea and two Republicans switched from yea to nay, for a final vote of 220 to 215. In the end, only 25 Republicans voted against the budget-busting drug bill. (All but 16 Democrats voted no.)

As an aside, can anyone *imagine* what would have happened if the Democratic House leadership froze C-SPAN cameras and kept voting open an extra three hours? The trial-by-Tea Party, conviction, execution, and viral YouTube replay of same would have been all wrapped up in about five hours. But I digress.

Recalling the classic line uttered by Mark Zuckerberg in The Social Network: 'If you guys were the inventors of Facebook, you'd have invented Facebook.' If Barack Obama wanted the public option, there would have been a public option. Obama would have invoked the 'moral imperative of health care for all' by mustering his soaring rhetorical skills and worked tireless for same. Obama chose federalized RomneyCare instead of the public option, even though candidate Obama campaigned for single-payer health care. Obama extended the Bush tax cuts, even though candidate Obama campaigned to allow them to sunset in 2010. Again, he allowed the GOP to control the narrative and in the final hours, pretended to cave when extending the Bush tax cuts was never problematic to him. If Obama wanted the Bush tax cuts to sunset, the would have been allowed to sunset.

The Democratic plan is to pass the Republican plan. They are just using different covers on the same playbook. Yes, some Democrats have fought for the people and continue to fight. But they are continually pushed to the right and/or are overtaken by the Democratic majority. Barack Obama was 'allowed' to win in 2008 so that he could turn over the rest of the U.S. Treasury to the Wall Street class and to pardon the Bush cabal for its war crimes. (War crimes, by the way, that continue in the Obama Administration.) Obama has taken the US into more covert and overt wars than did Bush and will have destroyed the middle class, an act even George W. Bush could not complete. Truly, mission accomplished!

Is America Caught In The Closed Mind Trap?

By: Paul Craig Roberts July 27, 2011 at 00:04:48

A reader responded to my recent column about how the US president was becoming a Caesar with a question: "Wouldn't a Caesar be preferable to a democracy in which the people are too ignorant, disinterested, and stupid to engage in self-government?"

Before I became a widely read columnist with many reader responses, I would have disagreed with the reader's characterization of the American people. Today, I cannot answer the reader's question with a "no" as confidently as I would like.

I receive appreciative words from many readers who are well aware of what is going on. I also hear from many who are so partisan and have such strong emotional responses that they are unable to follow an argument. I don't know what percentage these groups comprise in the population, but there seem to be a number of Americans, both on the left and the right, who are prepared to censor and even to kill in order to defend their illusions and delusions.

I remain a suspect bogyman for some on the left, because of my association with the Kemp-Roth bill and Reaganomics. As I, and others, have explained so many times, Supply-Side economics reversed the monetary/fiscal policy mix in order to cure stagflation. But some leftists persist in their insistence that it was all a trick to cut taxes for the rich -- the rich being those with more money than they. A stressed-out $100,000 a year guy with a family in a high-cost city is thrown into the rich class with the hedge fund manager who paid himself one billion dollars.

To give the leftists their due, at least they know that I was a member of the Reagan administration. However, the right-wing zealots think that I am a pinko-liberal-commie.

Recently I wrote an article pointing out that the Republicans had picked a bad time, when the world was already concerned about US financial credibility, to make an issue over the routine increase of the debt ceiling, thus creating an impasse that threatens default. The Republicans see in the debt ceiling issue an opportunity to cut social spending as the price of allowing an increase in the national debt.

One can't blame the Republicans for trying to do something about the growth of the public debt. However, there is a risk in the Republican's intransigency, and that risk is that, thanks to presidential directives put on the books by President Bush, President Obama has the authority to declare the prospect of default a national emergency. Obama can simply set aside the debt ceiling limit and seize the power of the purse from Congress. The transformation of the president into Caesar would take another large step forward.

I wrote that I regarded this risk to be greater than the risk of additional public debt.

Several Republicans never reached the point of the article. I had taken for granted that everyone knew, especially Republicans, of the Republicans' concern with entitlements and unfunded liabilities. I assumed that Republicans were aware of their party's long history of reacting against the debts that are being piled upon our grandchildren, that they knew of the Grace Commission during the Reagan years, that they knew of Republican Pete Peterson's many dramatic warnings and proposals, that they knew of David Walker's accounting of the unfunded liabilities and the Republican Party's determination to do something about the heavily-hyped cost of Social Security and Medicare.

I assumed that Republicans knew that during the Reagan years David Stockman and Alan Greenspan had accelerated the payroll tax increases that President Carter had put in place to ensure the long-term viability of Social Security and had spent the money for current operating expenses, leaving unfunded IOUs in the Social Security "trust fund." I Assumed that Republicans knew that Republican Chairman of the Council of Economic Advisors, Michael Boskin, and his Boskin Commission had reconfigured the Consumer Price Index in order to understate inflation and, thereby, reduce the cost-of-living-adjustments in Social Security checks.

I assumed that Republicans somewhere along the way had read at least one paper by a Republican policy analyst or think-tank member about the Social Security "Ponzi scheme" and the unaffordability of Medicare.

But, no, the Republican partisans who denounced me as an anti-Republican liberal propagandist for saying what is widely reported in the media -- that the Republicans want large cuts in Social Security, Medicare, and Medicaid as the price of their agreement to an increase in the debt limit -- know nothing whatsoever of their party's position on social spending. Apparently, they don't even watch Fox News.

These same partisans apparently have not noticed that the $1.2 trillion military/security expenditures are "off the table" when it comes to controlling spending. The Republicans and also the Democrats regard war as more important than old age pensions and medical care for the poor and the elderly. My Republican critics have also failed to notice that House Republican Majority Leader Eric Cantor has made certain that tax increases on mega-high incomes are also "off the table." According to mega-billionaire Warren Buffet, in America today we have the situation in which Buffet's secretary pays a larger share of her income in taxes than does Buffet.

When I wrote that the Republicans' fixation with slashing the social safety net -- a throw-away line that is in every news report on the debt ceiling imbroglio -- could turn out to be a threat to the separation of powers, several Republican partisans took extraordinary offense. Only a no-good liberal propagandist would claim that Republicans wanted to slash the safety net. My statement of an obvious fact reflected in the Republicans' own proposals was all that it took for my critics to conclude that a notorious Reaganite was a Republican-hating liberal.

It is annoying that people who have no idea what they are talking about are so ready to pop off. But it is discouraging to a writer that people are so emotional that they cannot follow an argument. Discouraged, in part by block-headed readers and from censorship of my writings by various Internet sites, I quit my column a while back and signed off.

I was beset by thousands of emails pleading and demanding that I continue to write. I relented, and the emails from thoughtful readers keep me going.

It is rewarding to hear from intelligent and open-minded people. But as the weeks and months go by, I find it ever more tiresome to tolerate closed minds spewing hate and ignorance. I have become convinced that there are enough frustrated and ignorant people out there to constitute a movement for a Fuhrer.

Washington, which has produced a long list of disastrous policy decisions since the collapse of the Soviet Empire two decades ago, will no doubt continue making incredible mistakes about everything, and we will end up with a Caesar or a Fuhrer.

Monday, July 25, 2011

The Federal Reserve Made $16 Trillion In Secret Loans To Their Bankster Friends

The American Dream
July 25, 2011

A one-time limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act has uncovered some eye-popping corruption at the Fed and the mainstream media is barely even covering it. It turns out that the Federal Reserve made $16.1 trillion in secret loans to their bankster friends during the financial crisis. You can read a copy of the GAO investigation for yourself right here. These loans only went to the “too big to fail” banks and to foreign financial institutions. Not a penny of these loans went to small banks or to ordinary Americans. Not only did the banksters get trillions in nearly interest-free loans, but the Fed actually paid them over 600 million dollars to help run the emergency lending program. The GAO investigation revealed some absolutely stunning conflicts of interest, and yet the mainstream media does not even seem interested. Solid evidence of the looting of America has been put right in front of us, and yet hardly anyone wants to talk about it.

Many Americans have a hard time grasping just how large 16.1 trillion dollars is. It is an amount of money that is almost inconceivable. It is more than the GDP of the United States for an entire year. It is more than the U.S. government has spent over the last four years combined.

The Federal Reserve was just creating gigantic piles of cash out of thin air and throwing them around with wild abandon.

One of the only members of Congress that has wanted to talk about the GAO audit has been U.S. Senator Bernie Sanders. The following is a statement about this audit that was taken from his official website….

“As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world”

So precisely who got this money?

Well, a recent article on Raw Story named some of the big Wall Street banks that got some of this money….

Out of all borrowers, Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.

But it just wasn’t U.S. banksters that were showered with nearly interest-free loans. It turns out that approximately $3.08 trillion went to foreign financial institutions all over Europe and Asia.

So who in the world gave the Federal Reserve permission to bail out financial institutions all over the world?

Nobody did.

But under our current system the Federal Reserve doesn’t have to get permission. They literally get to do whatever they want.

On his website, Senator Sanders expressed his outrage over these foreign loans….

“No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president”

So should we expect Congress to approve legislation that would reduce the power of the Fed?

Of course not.

We all know that is not going to happen.

The Federal Reserve is run like a dictatorship. They get to do what they want and nobody can stop them.

Not only did the Fed dish out over $16 trillion in secret loans to their friends, but they also paid their bankster friends over 600 million dollars to help them do it.
According to the GAO, the Federal Reserve paid $659.4 million to the very financial institutions which caused the financial crisis to help the Fed manage all of these emergency loans.

Can anyone say “conflict of interest”?

Not only were the banksters raking in trillions in secret loans, they were also paid to help run the lending process.


So why isn’t the mainstream media talking about this?

That is a very good question.

But wait, there is more.

It turns out that many Fed officials had very large investments in the financial institutions that were receiving these secret loans.

So what was done about all of the conflict of interest issues that arose?

According to Senator Sanders, “the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.”

Oh, everyone was given waivers.

Apparently corruption is okay if we just get everyone to sign a bunch of forms.

The following is one example of a conflict of interest that occurred during this lending program that Senator Sanders noted on his website….

For example, the CEO of JP Morgan Chase served on the New York Fed’s board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed. Moreover, JP Morgan Chase served as one of the clearing banks for the Fed’s emergency lending programs.

This is a classic case of the foxes watching the hen house.

It was the banksters that caused the financial crisis. They were the only ones that the Federal Reserve helped. In fact, the Federal Reserve ended up having the banksters basically run the entire emergency lending program as Senator Sanders noted on his site….

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates.

If you were not outraged by that, then you need to read it again.

What the banksters have been getting away with is absolutely mind blowing.

So will changes be made to make sure that something like this never happens again in the future?

Well, the GAO has recommended that significant changes should be made.

But as mentioned above, the only one that gets to tell the Federal Reserve what to do is the Federal Reserve.

According to the Washington Post, the Federal Reserve is promising to “strongly consider” the recommendations of the GAO….

The Fed’s general counsel, Scott Alvarez, said in a letter responding to the GAO’s audit that officials will “strongly consider” the recommendations.

Most Americans do not realize that the Federal Reserve is not actually part of the federal government. It is a privately-owned central bank that is not accountable to anyone.

But most Americans still believe that the Fed is a government agency.

The truth is that the Federal Reserve is about as “federal” as Federal Express is.

In another article about the Federal Reserve, I noted that the Federal Reserve has even admitted that it is not an agency of the federal government in court….

In defending itself against a Bloomberg request for information under the Freedom of Information Act, the Federal Reserve objected by declaring that it was “not an agency” of the U.S. government and therefore it was not subject to the Freedom of Information Act.

Basically, an unaccountable private monopoly creates our money, sets our interest rates, regulates our banking system and makes secret loans to whoever they want.

The Federal Reserve has more power over our economy than any other institution and nobody can overrule any decisions that they make.

Does that sound very “American” to you?

Since the Federal Reserve was created in 1913, it has been systematically destroying the wealth of America through constant and never ending inflation.

The U.S. dollar loses more value every single year.

According to the U.S. Bureau of Labor Statistics, what you could buy for $1.00 in 1965 will cost you $7.17 today.

Sadly, the devaluation of our money is actually accelerating. That is one reason why we are seeing precious metals soar right now.

Not only that, but the Federal Reserve was also designed to be a perpetual government debt creation machine.

Do you know how money is created in this country?

Normally, more money is only created when more debt is created.

What this sets up is a never end spiral where the amount of money and the amount of debt are continually increasing.

Most Americans believe that we could solve the government debt problem if we could just control spending.

But that is not the case.

The Federal Reserve system was designed to get the U.S. government into constantly increasing amounts of debt and this is exactly what has happened….

The U.S. government will never fix the national debt problem as long as it participates in the Federal Reserve system. 

Founding fathers such as Thomas Jefferson tried to warn us about the danger of central banking.

Jefferson strongly believed that when the federal government borrows money in one generation that must be paid back by future generations it is equivalent to theft….

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

Not only that, Thomas Jefferson actually said that if he could add just one more amendment to the U.S. Constitution it would be a complete ban on all government debt….
I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Of course we did not listen to Thomas Jefferson, did we?

Now we have gotten ourselves into one fine mess.

If the federal government shut down the Federal Reserve system, started issuing debt-free money and established a new system based on sound financial principles we might have a chance of turning this thing around.

But if we continue on the path that we are currently on, we are going to experience a financial disaster of unprecedented magnitude. We have piled up the biggest mountain of debt in the history of the world, and a day of reckoning is approaching.

Our founding fathers tried to warn us about this, but we thought that we were so much smarter than them.

Now we get to suffer the consequences of our foolishness.

The Real Crime: Concentration of Power  

By Ralph Gomory

July 21, 2011 "Huffington Post" --- We are missing the lesson of the current British outrage over Murdoch just as we missed the lesson of the financial crisis in America.

Was the real crime in England that employees of the News of the World illegally hacked the cell phone of a missing girl? Was the real financial crime in America illegal acts such as Ponzi schemes or insider trading? The answer is no in both cases.

The real crime in England was legal, not illegal; it was that one man had the power to influence large parts of the British parliament and was credited with a major influence in electing whichever government he favored. No one in government dared to cross him until an emotion-provoking illegal act unleashed a public outcry. That outcry has, at least temporarily, liberated the members of Parliament from their fear of being smeared by Murdoch's newspapers if they dared to be hostile to his interests or beliefs.

Was the real crime in America illegal acts? No. Despite the press devoted to Madoff, the real crime, here as in England, was legal. Selling subprime mortgages to people who could never pay them back was legal. Rating agencies certifying to the high quality of the resulting worthless securities was legal. The whole web of interacting CDO's was legal. It was the legal, though strongly unethical, actions of a powerful Wall Street dedicated to self-enrichment at any price that brought down the U.S. economy. And, though we are still far from recovering from that disaster, the power of money has prevented any fundamental reform of the financial sector.

In both countries, the real crime is the concentration of power that allows these things to happen.
How Power is Used

Power can be exerted through both the stick and the carrot. In England, members of Parliament feared being smeared in the powerful Murdoch newspapers, and they also knew that if they accommodated his views or interests, they could profit from his support.

In the United States, members of Congress understand that Wall Street money and corporate money can either be used to defeat them or to support their campaigns. They also know that if they are sufficiently influential in the right direction, lobbying jobs that are far more financially rewarding than their present occupation await them when they retire from Congress

Money can extend its power to other parts of government, too. In England, part of the police force became a Murdoch ally in ferreting out more news about important stories. In America, regulatory bodies, established to protect the public interest, become blind to risky behavior and kind to the industry. And these examples are some entries in a long list of possibilities.

The Tyranny of Government

It has been common throughout history for the concentration of power to be in governments, often but not always monarchies or dictatorships, and for the leaders of such governments to act to enrich themselves and their friends. In the years preceding the American Revolution, the British government's restrictions on colonial manufacturing, the Navigation Acts, the tax on stamps, and the tax on tea, brought revenue to the British Crown and profits to British merchants and manufacturers at the expense of the colonies, but also produced a revolution. This tyranny by governments is the type of oppression which the Tea Party is constantly reminding us of, but today's tyranny is of a different type.

The Tyranny of Wealth

The problem today is not the tyranny of government, but rather the concentration of money, and hence power, in Wall Street and in the largest corporations. And it is clear that enough money can buy political power.

Both Wall Street and the major corporations have added to their strong direct effect on the economy a decisive effect on the actions of governmental bodies. It is their influence on the federal government that caused the regulatory bodies to stand back from regulation and encouraged the excesses of the financial sector in the years leading up to the crash. It was the federal government, led by Wall Street alumni, that rescued the financial institutions so that they are now posting record profits despite having impoverished the nation. It was the overwhelming lobbying power of the financial sector that prevented the passage of meaningful financial reform. The banks that were too big to fail are, with the concurrence of both political parties, now bigger than ever. And the actions of the U.S. Supreme Court, permitting the unrestricted use of corporate and Wall Street money for campaigns, are adding to this effect.

The declared goal of most major U.S. corporations today is to make their stock as valuable as possible. As more than two-thirds of all stock is held by the wealthiest five percent in the country, this corporate goal amounts in practice to simply making the wealthy wealthier and increasing the extreme concentration of wealth and power that already exists in America today. And if making the stock as valuable as possible means sending jobs and technology abroad, while holding down wages at home, so be it.

Yet it is to this same corporate leadership that the government turns for policy advice on how to create jobs and revive the economy.


Today we have a concentration of wealth unmatched since the days immediately preceding the Great Depression in 1929. This wealth and power, concentrated in Wall Street and in the major corporations, is being used for the enrichment of the already wealthy. Unfortunately, that enrichment is one that does not raise all boats. As statistics clearly show, the big boats are rising rapidly and the small boats are not doing well.

After the Great Depression, the U.S. government acted to lessen the power of concentrated wealth. It separated commercial from investment banking, insured bank deposits, enacted social security, and facilitated unions as a counter-force to corporations. It even became to some extent the employer of last resort.

But the power of wealth today over both political parties is now such that new government actions are mainly words that cover real inaction, and even that limited action is often described as the actions of a too large and too powerful government.

Today, the threat of tyranny comes not from the government, but from the concentration of wealth and power outside government, and from the influence on government of that great concentration of wealth and power.

Sunday, July 24, 2011

Gang of Six takes from poor, gives to rich: There Will be Major Cuts in Social Security

July 22, 2011 ------- If there was ever a time in the modern history of America that the American people should become engaged in what's going on here in Washington, now is that time. Decisions are being made that will impact not only our generation but the lives of our children and our grandchildren for decades to come, and I fear very much that the decisions being contemplated are not good decisions, are not fair decisions.

There is increased understanding that defaulting for the first time in our history on our debts would be a disaster for the American economy and for the world's economy. We should not do that.

There also is increased discussion about long-term deficit reduction and how we address the crisis which we face today of a record-breaking deficit of $1.4 trillion and a $14 trillion-plus national debt.

One of the long-term deficit reduction plans came from the so-called Gang of Six. We do not know all of the details of that proposal. In fact, we never will know because a lot of the decisions are booted to committees to work out the details.

It is fair to say, however, that Senators Coburn, Senator Crapo and Chambliss deserve congratulations. Clearly, they have won this debate in a very significant way. My guess is that they will probably get 80 percent or 90 percent of what they wanted. In this town, that is quite an achievement, but they have stood firm in their desire to represent the wealthy and the powerful and multinational corporations. They have threatened. They have been smart. They have been determined. And at the end of the day, they will get almost all of what they want. That is their victory, and I congratulate them.

Unfortunately, their victory will be a disaster for working families in this country, for the elderly, for the sick, for the children and for low-income people.

Based on the limited information that we have, I think it is important to highlight some of what is in this so-called Gang of Six proposal that the corporate media, among others, are enthralled about.

Some may remember that for a number of years, leading Democrats said that we will do everything that we can to protect Social Security, that Social Security has been an extraordinary success in our country, that for 75 years, with such volatility in the economy, Social Security has paid out every nickel owed to every eligible American. I heard Democrats say that Social Security has nothing to do with the deficit. That is right because Social Security is funded by the payroll tax, not by the U.S. Treasury. Social Security has a $2.6 trillion surplus today. It can pay out every benefit owed to every eligible American for the next 25 years. It is an enormously popular program. Poll after poll from the American people says doesn't cut Social Security. Two and a half years ago when Barack Obama, then a senator from Illinois, ran for president of the United States, he made it very clear if you voted for him there would be no cuts in Social Security.

What Senators Coburn, Crapo and Chambliss have managed to do in the Gang of Six is reach an agreement where there will be major cuts in Social Security. Don't let anybody kid you about this being some minor thing. It is not. What we are talking about is that Social Security cuts would go into effect virtually immediately. Ten years from now, the typical 75-year-old person will see their Social Security benefits cut by $560 a year. The average 85-year-old will see a cut of $1,000 a year. Now, for some people here in Washington, maybe the big lobbyists who make hundreds of thousands a year, $560 a year or $1,000 a year may not seem like a lot of money, but if you are a senior trying to get by on $14,000, $15,000, $18,000 a year and you're 85 years old, the end of your life, you're totally vulnerable, you're sick -- a $1,000 per year cut in what you otherwise would have received is a major, major blow.

So I congratulate Senator Coburn, Senator Crapo, Senator Chambliss for doing what president Obama said would not happen under his watch, what the Democrats have said would not happen under their watch.

But it's not just Social Security. We have 50 million Americans today who have no health insurance at all. Under the Gang of Six proposals, there will be cuts in Medicare over a 10-year period of almost $300 billion. There will be massive cuts in Medicaid and other health care programs. There will be caps on spending, which mean that there will be major cuts in education. If you are a working-class family, hoping that you're going to be able to send your kid to college and thinking that you will be eligible for a Pell grant, think twice about that. Pell grants may not be there. If you're a senior who relies on a nutrition program, that nutrition program may not be there. If you think it's a good idea that we enforce clean air and clean water provisions so that our kids can be healthy, those provisions may not be there because there will be major cuts in environmental protection.

Some people think that's not so good, but at least our Republican friends are saying we need revenue and we're going to get $1 trillion in revenue. But wait a minute,. If you read the proposal, there are very, very clear provisions making sure that we are going to make massive cuts in programs for working families, for the elderly, for the children. Those cuts are written in black and white. What about the revenue? Well, it's kind of vague. The projection is that we would rise over a 10-year period $100 billion in revenue. Where is that going to come? Is it necessarily going to come from the wealthiest people in this economy? Is it going to come from large corporations who are enjoying huge tax breaks? That is not clear at all. I want middle-class families to understand that when we talk about increased revenues, do you know where that comes from? It may come from cutbacks in the home mortgage interest deduction program, which is so very important to millions and millions of families. It may mean that if you have a health care program today, that health care program may be taxed. That's a way to raise revenue. It may be that there will be increased taxes on your retirement programs, your I.R.A.'s, your 401(k)'s. But we don't have the details for that. All we have is some kind of vague promise that we're going to raise $1 trillion over the next 10 years, no enforcement mechanism and no clarity as to where that revenue will come from.

That is why it is so terribly important that the American people become engaged in this debate which will have a huge impact on them, on their parents and on their children. The American people must fight for a fair deal. At a time when the wealthiest people in this country are doing phenomenally well and their effective tax rate is the lowest on record, at a time when the top 400 individuals in this country own more wealth than 150 million Americans, at a time when corporate profits are soaring and in many instances corporations, these same corporations pay nothing in taxes, at a time when we have tripled military spending since 1997, there are fair ways to move toward deficit reduction which do not slash programs that working families and children and the elderly desperately depend upon.

This senator is going to fight back. I was not elected to the United States Senate to make devastating cuts in Social Security, in Medicare, in Medicaid, in children's programs while lowering tax rates for the wealthiest people in this country.

Bernie Sanders, an Independent, is Vermont's junior senator


Gang of Six takes from poor, gives to rich

By: The Institute for Southern Studies

Under the Senate's so-called "Gang of Six"* debt plan unveiled this week, percent of deficit reduction that comes through spending cuts to social programs including health care, education and environmental protection: 100%

Amount by which the plan cuts Medicare, the health care program for seniors, over a decade: at least $298 billion

Amount by which it would cut military benefit programs, such as health plans for soldiers and veterans: $80 billion

Portion of the immediate deficit reduction savings outlined in the proposal that would come from reducing Social Security benefits: 1/5

Under the plan, amount less per year the average Social Security recipient would receive at age 75: $560

At age 85: $1,000

Current top marginal income tax rate for the wealthiest Americans and most profitable corporations: 35%

Lowest rate to which that would be reduced by the Gang of Six proposal: 23%

Estimated amount in profits being held offshore by U.S. companies, which under the plan would see an end to taxation of most of their overseas profits: $1 trillion

Amount by which the Gang of Six plan claims to reduce deficits over the next decade: almost $4 trillion

Amount by which the plan would actually reduce revenue by 2021, compared to the Congressional Budget Office's current law baseline: $1.5 trillion

Number of weeks left to reach a deal before the U.S. could begin to default on its debt obligations: less than 2

The Fix Is In: Washington's Planned Social Contract Destruction

By Stephen Lendman
July 23, 2011 at 03:22:40

The criminal class in Washington is bipartisan, united against working household interests. In fact, lawmakers yield on virtually everything big money wants, notably when banks and other corporate favorites are affected.

Last December, Obama capitulated to Republicans, rigging a deal for up to $1 trillion dollars in handouts, mostly to corporate giants and America's wealthy with working households almost entirely left out.

They still are, enduring a protracted Main Street depression, stiff-armed by Obama-led bipartisan crooks. In fact, he's more crime boss than president - stealing from the many for the few. More on his dirty scheme below.

As a result, America and other "(e)conomies are being turned into rentier ('tollbooths') to pay debts that ('real' ones) can't sustain," according to Michael Hudson. "It's a losing game," but goes on, criminally defrauding millions of people to assure creditors are paid, sucking massive amounts of wealth to their coffers, unreported by major media scoundrels, suppressing what people most need to know.

In fact, new audit figures show that Bernanke's Fed gave Wall Street and European banksters at least $16.1 trillion (called emergency loans) from December 1, 2007 - July 21, 2010, besides unknown amounts earlier and in the past year.

Moreover, it's well known that trillions of dollars are stolen, handed to corporate interests and never returned, as well as gotten in other illegal ways. As a result, taxpayers get stuck with the bill, the nation with unsustainable mounting debt, heading it eventually for ruin.

About $13 trillion in Fed bailouts went to US financial institutions, the rest to their counterparts in Britain, Germany, France, Switzerland, and Belgium, according to a Government Accountability Office (GAO) analysis.

In addition, asset swaps (good ones for toxic corporate junk) were arranged with banks in Britain, Switzerland, Canada, South Korea, Norway, Mexico, and Singapore.

Moreover, the Wall Street controlled Fed mostly outsourced its lending operations to the same institutions responsible for engineering the financial crisis, letting them profit hugely at the public's expense.

Though unsustainable, the dirty game goes on, a take the money and run scam, leaving hollowed out economies and impoverished millions on their own sink or swim.

In dirty back room deals, Obama's out in front arranging it, doing what no Republican leader would dare. No wonder Hudson accused him of governing to the right of George Bush, Sarah Palin and Michele Bachmann - America's right-wing lunatic fringe.

Notably, only Republican Nixon could go to China when America had no diplomatic relations. Only Democrat Obama dares end America's decades-long social contract, especially Social Security, Medicare, Medicaid, and publicly funded pensions.

Hudson agrees, saying "(o)nly a Democrat posing as a left-winger could really pull off what (he's) proposing," pretending it's to sustain programs otherwise heading for insolvency.

In fact, pay-as-you-go payroll tax deductions sustain Social Security and Medicare, and will keep doing it if properly administered, needing only occasional modest adjustments.

Most workers, in part, fund public pensions, and Medicaid provides mandated safety net care for poor beneficiaries, jointly funded by the states and Washington, managed at the state level. MORE...