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Re: We must take to the streets, to demand the Change that was promised
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James
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Nov 02, 2009 07:10 PST
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Slogans for the Real Economy
Those who have written and initiated proposals below will have the support
of great crowds of people for their activism intended to "fix the economy".
We have been presented with many slogans.
One slogan I might suggest is "It's the real economy, stupid!"
That would be intended to focus attention on the need to rid ourselves of
our obsessions with smart finance and whizz kids who dream up programs for
making money out of nothing - and destroying the real economy and our
individual lives in the
process.
I am also in favour of "taking to the streets" - as a matter of principle
and to promote
good causes that can gain attention in no other way.
But I've seen people - most of them decent, principled people - taking to
the
streets over the last ten years or more, especially at multinational
meetings like the Group of Seven or Eight, the Forum of the Capitalist
Masterclass in Davos, the meetings of the IMF and so on.
All that they have achieved is an ever more mature and efficient force to
ensure that the meetings are closeted and that physically they are secure
from the "barmy armies" outside.
Ordinarily I would regard it as sacriligious to define these armies - or
most of them - in that way; but the record has been that they have not
succeeded in defining what they stand for and they have converted few if any
to their cause.
Governments, administrations, central bankers and other bankers - including
the cowboys - ignored them up to the time of the collapse of Bear Stearns
and
Lehmann Brothers.
The time since has been spent by the masterclass in getting to be able to
ignore them again - while they use the money of the underclass to set
themselves on their rogue feet again.
As for "change", that is what Obama was supposed to be all about.
I concede that he has been in office less than a year and he might yet turn
out
to be the agent of change we have all been dreaming of.
However, his record is not so far very good. So far, he seems like the same
old mob - though he might be wearing a coat of many colours with which to
deceive us.
He has appointed the same team of cowboys and, generally, lives on warm and
friendly terms with members of the same masterclass whose activities got us
into this mess in the first place or who "regulated" us so skilfully into
ignoring our risks until it was
much too late.
The big - "too-big-to-fail" - bankers and moneymen have regained much of
their self-confidence under Obama, they
are making handy, to some quite immense profits and, with a bit of luck and
continuing support from those
who should be chastising them, they might soon be back in the best
dress-circle seats again - if indeed they are not there already.
So we need to define change and we need to define it in practical terms. We
need to have desirable change defined not by the financial whizz kids and
the cowboy bankers but by the masses of us who rarely make a million dollars
but who make the economy and the society great - if they get to be given
half a chance.
How do we get to hear from these people?
One way is to give them a point to stand on and they will change the world.
In other words, one way is to get them to meet together. There, instead of
their shouting
slogans in a street from which they will be beaten with police sticks and
flushed into the gutters with riot hoses, they will work out and tell us
soberly what
they want.
Many years ago I proposed such a convention.
The proposals for a World Conference were included in my proposals for
"Victory Over Want."
They were made in 2001 but in the extract from the proposals copied below,
you will see how much of what is said is still absolutely relevant - or even
more relevant
today than is was eight years ago.
The full text of the VOW proposals was re-published in my book, "America's
Suicidal Statecraft: The Self-destruction of a Superpower" in 2006.
"America's Suicidal Statecraft" also suggested a World Economic Authority
and a World Development Authority in its suggestions for reconstruction of
national economies and the global economy to recover - genuinely recover -
from what we have come to call "The Great Financial Crisis."
An extract from pages 581 to 583 of my book appears below.
I agree wholeheartedly with many of those people who advocate "change" and
with some of their specific proposals. For example, I agree with Ellen
Brown's support for a major publicly-owned bank. She has even been kind
enough to quote me on the Commonwealth Bank of Australia, in her article
"Cut Wall Street Out." The quotes appear under the heading "The Commercial
Banking Model: The Commonwealth Bank of Australia."
However, what we need is much more than that. Articles, books, street
demonstrations and slogans are all very well in their way and up to a point;
but they won't get us what we want.
Certainly they won't get it quickly enough.
And the probability is that it will be far from painless.
We must be more direct - just as a publicly-owned bank can be more direct in
getting funds to the areas of the real economy where it is most urgently
needed.
We - may I say The People? - must show that we are well organised, we have
practical proposals and that we know how to govern.
That is right: we know how to govern and that is what we intend to do.
The way to do that is, in the first place, to convene a world conference and
show what we can do. From there, through the establisment of a responsible
"World Economic Authority", we will be able to ignore the inanities of the
Group of Twenty and other feckless international "authorities." We will tell
our governments what they must do. If they do not do it, we will turf them
out. We will become the masterclass or, better still, there will be no
masterclass. We will all act together in the cause of global humanity and
solidarity.
Perhaps we could make that our slogan: "We, the new Masterclass."
James Cumes
"America's Suicidal Statecraft: The Self-destruction of a Superpower" reads
as follows on pages 581 to 583:
Speculation and the Real Economy
13. These measures for stable growth and full employment should, among
other things, explicitly aim to reduce the scope and opportunities for
speculative investment and financial trading which have come, in recent
years, to dominate rather than constitute a marginal adjunct to the real
economy and to real, fixed-capital investment. Keynes warned that the
situation “…is serious when enterprise becomes the bubble on a whirlpool of
speculation.”
14. Speculation leading to a casino-like world economy can be reduced to
tolerable dimensions only if stability can be restored to the domestic
economy and to the flow of funds and trade within and across national
borders. Risks cannot be eliminated entirely and a need for some hedging of
positions will always exist; but, to the extent that predictability can be
derived from stability in the domestic and international economy,
opportunities for speculative pseudo-investment, largely in short-term
ownership of assets, will be reduced and longer-term, real investment in
assets for production will be enhanced. If we do this, the “bookie once
removed, taking bets on people making bets,” as the speculators have
sometimes been described, will have been once again despatched to the
margins – where they should be seen properly to reside.
Exchange Rates and International Currency Flows
15. If we are to reduce speculation and short-term destabilising money
flows in the global economy, stability in the foreign-currency markets must
be restored to something like the conditions in which they operated, for
example, during the IMF’s original period of management from 1945 to 1971.
16. The value of currencies might be linked, through the US dollar, to
gold, as in the original IMF, or more likely in present circumstances,
through a basket of currencies, including the Euro, the yen and the
renminbi, to gold or possibly to a basket of commodities.
17. Currency flows for current-account and longer-term capital movements
should be free; but short-term, speculative and hot-money flows would be
subject to restriction, prohibition or inhibitory taxes. The reformed IMF or
its successor should provide short-term support to regulate the value of
participating currencies, where required.
18. The use of exchange-rate variations to obtain trading benefits and
apply protectionist policies through the currency would be banned, except to
the extent that, after examination by the world currency authority – the IMF
or its successor – a variation of the exchange rate might be allowed so as
to correct what was, for example, a fundamental over- or under-valuation of
a currency and in order to achieve a more level economic playing field. (The
Articles of Agreement of the IMF originally allowed variation in the event
of a “fundamental disequilibrium.”) With a restoration of order in exchange
rates and their mode of variation, the WTO or its successor could more
effectively and fairly formulate and apply trade rules for the world economy
on a negotiated, most-favoured-nation basis. Without it, the WTO will
continue to be stifled and its outcomes distorted by instabilities in
national economies and financial flows that frustrate the objectives of
trade negotiations and agreements based on non-discriminatory trade
principles.
A World Economic Authority
19. A World Economic Authority should be established to guide and
determine the evolution of the economic situation in individual countries,
regions and the global economy as a whole, in the light of the objectives –
such as those of stable growth and full employment – written into its
articles of agreement. The WEA would not necessarily replace the gaggle of
such ineffectual organisations as the Group of Seven/Eight, the OECD and the
moribund Specialised Agencies of the United Nations, but it would have
overriding authority and responsibility for the global economy. Membership
of the WEA would be open to all members of the United Nations or its
successor. The WEA would give substantive effect to the commitments entered
into in Chapter IX, International Economic and Social Cooperation, of the
United Nations Charter.
20. The WEA would elect a Council of up to 20 members, representing
major, as well as regional and small economies; and appoint a
Director-General to provide the Council and Member Governments with expert
oversight of the global economy, its problems and ways to address those
problems. The Council would be elected so as to ensure that it would be
representative of a variety of developed and developing economies including,
for example, those dedicated less to an unqualified capitalist, free-market
economy. Like the Security Council, the WEA Council should be organised so
as “to be able to function continuously.”
A World Development Authority
21. A World Development Authority, based on the premise that it is a
common human interest to ease and ultimately abolish poverty and unnecessary
suffering, would be established and would work on the broad collaborative
principles of the Marshall Plan of the 1940s to raise levels of production
and living in the less developed countries and areas, to the advantage of
both the richer and the poorer countries and regions. While the WDA would
have independent status, it would report to the Council of the WEA, so as to
enable the development of the less developed areas to continue to be woven
into the fabric of the stable economic growth of the world community. The
WDA would elect a Council which would hold joint meetings, as appropriate,
with the WEA Council. The WDA would appoint a Director-General acceptable to
both developed and developing Member Governments. To an agreed extent, he
might act as administrative overlord for a new, global “Marshall Plan.”
Stability and Equality through Victory Over Want
In 1928, on the presidential campaign trail, Herbert Hoover said
that “We in America today are nearer to the final triumph over poverty than
ever before in the history of any land. The poorhouse is vanishing from
among us." In 1941, President Franklin Roosevelt defined his Four Freedoms,
among them “Freedom from Want”, to be realised throughout the world. Twenty
years later, President Kennedy believed that “man holds in his mortal hands
the power to abolish all forms of human poverty”. In his BBC Dimbleby
Lecture on 29 December 2001, former President Clinton told us that "the
burdens of the twenty-first century...are formidable. Global poverty - half
the people on earth are not part of the new economy...Half the people on
earth live on less than two dollars a day. A billion people, less than a
dollar a day. A billion people go to bed hungry every night and a billion
and a half people - one quarter of the people on earth - never get a glass
of clean water. One woman dies every minute in childbirth....We have to
reduce global poverty and increase the economic empowerment of poor people.
We know how to do this and it doesn't cost that much money."
All the optimistic claims, forecasts and hopes for an end to
poverty over the last eighty years have been premature. At about 37 million,
more people live in poverty, in the United States, than ever before. Around
the world, the figure is in billions and grows every day.
However large, the problem is not insoluble. We can abolish poverty
in ways that would, at the same time, help to restore stability to the world
economy and community and restore the United States to much of its former
greatness in vision and leadership. These arrangements would aim -
(1) To halt the slide of the world economy into recession or
depression and to re-launch it, through direct public investment, in ways
that are effective, sustainable and equitable for all the world’s people.
(2) To enhance the economic and, with it, the social and political
infrastructure of all countries and regions, at whatever stage of
development, so that both individuals and their societies can realise their
potential in economic, social, political, cultural and other terms.
Extract from A Democratic Initiative for Victory Over Want (VOW)
2001
The Slide Towards Economic Collapse
The world¹s three most powerful economies - the United States, Japan and
Germany - are already in recession. So are others or they teeter on the
brink. In the United States, savings and real investment, as distinct from
financial and stockmarket dealing and often highly speculative capital
movements, have been low, negative or in decline for some years. Indeed,
real investment has tended to be less than real depreciation, a trend likely
to intensify. Individuals and businesses stagger under record burdens of
debt. A high proportion of businesses are either profitless or their
profits, often inflated, are so small that they bear little relation to
their stockmarket values. The Japanese economy, stagnant or in recession for
more than a decade, still shows no convincing signs of recovery. Germany
continues to struggle under the twin burdens of reunification and the
artificial rigidities of European Union.
This has come at a time when inequalities have been increasing, within the
rich as well as among rich and poor countries. Recessionary trends will
intensify these inequalities or, at best, deepen the poverty of the already
poor. Social and political tensions and turmoil will reinforce and deepen
the tragic consequences of economic distress.
To preserve what is best in our democratic and essentially free-enterprise
system, we must act quickly and not solely through failed governments and
failed international institutions but through a people¹s grassroots
initiative.
This initiative outside normal governmental processes is all the more
essential because governments and international institutions have failed in
circumstances in which they should have confirmed a future for humanity more
promising than ever before. We are in the midst of three of the greatest
revolutions ever. The Information, Biotechnology and Quantum Revolutions
promise to extend human horizons, satisfy human aspirations and assuage
human discomforts in ways never possible before; but our political, social
and economic management threatens not only to deny us these unprecedented
benefits but also to create such tensions and conflict that the very
survival of the human and other species on our planet are increasingly put
at risk.
We must therefore act to make good the omissions and commissions of
governments and international institutions. We must act quickly. We must act
over a sufficient range of issues. We must act through as many and as varied
a group of participants as practicable.
The Restoration of Real Investment, Productivity and Production
Real private investment has failed, profits are low and falling, and
prospects for overall economic growth are, at best, dismal. This is so
despite large cuts in interest rates in much of the world, including the
United States and Europe, and near-zero rates in Japan for much of the last
decade. The United States has already cut taxes, though largely for the
rich. However, despite the measures so far taken by governments,
unemployment mounts, production declines and the trend towards widespread
economic collapse gathers pace.
The failure of private investment comes at a time when public investment has
already declined to low levels through privatisation, the philosophy of
small government and ideological addiction to lower taxes and balanced
budgets. Private investment can therefore hope for little reinforcement from
public investment. This creates a situation of the most acute danger for the
world economy.
Aggregate real investment must be increased quickly before the momentum of
decline becomes so great that it cannot be arrested even by powerful,
radical and widespread counter-measures.
Within that aggregate, private investment will increase, if at all in the
short term, only slowly and that sluggishness will itself be a major factor
restraining revival of the world economy.
Therefore, the only solution in the short term - a solution that also offers
great benefits in the longer term - is through public investment. That must
be direct investment, especially through provision of infrastructure and
direct supply of goods and services. It will meet an emergency while at the
same time installing a basis for a more productive and more fully employed
economy continuing without interruption, well into the future.
Fields for Public Investment
The need for public investment, in all countries, rich and poor, is massive
and covers a wide variety of fields.
These needs include:
1.. Measures to abolish physical poverty by raising minimum income levels
and improving support for those disadvantaged because of disability, chronic
illness and other causes. This can be pursued only through enhanced and
continuing real investment most of which must come initially from public
sources and be managed by public national or international institutions.
Valuable as the market and private enterprise are, they cannot do the job
alone. This is especially so in the circumstances of worldwide
recession/depression now confronting us.
2.. Construction of new primary, secondary and tertiary schools,
universities and training centres; repairing, renovating, upgrading and
modernising existing educational centres; and providing educational
equipment, for example, to ensure that all students achieve familiarity with
computing and other modern technology.
3.. Housing for the homeless and better housing for the poorly housed.
Even in such a rich country as the United States, millions are homeless or
live in sub-standard accommodation. The homeless and poorly housed include
children whose future value to themselves and their society is grossly and
unfairly diminished. In India and China, hundreds of millions lack any or
adequate housing. Throughout the world, housing may be the largest and most
pressing need for public investment. Resources should be mobilised worldwide
to raise housing standards, including levels of home hygiene (see clean
water and waste disposal below).
4.. Construction of more hospitals, modernising existing hospitals and, at
least as a goal, equipping all with state-of-the-art diagnostic, treatment
and surgical facilities. Investment, including funds to compensate private
individuals and companies for free or low- price supply of their
prescription drugs and other products, should aim to halt the resurgence of
such old plagues as tuberculosis and malaria as well as deal effectively
with such newer scourges as AIDS.
5.. As a long-term goal, the provision of free and equal medical services
and educational opportunities to all people throughout the world.
6.. The rehabilitation and reconstruction of depressed and dismal urban
areas so as to afford an environment in which talent and human energy may
flourish and the goals adopted for housing, health, education and welfare
may be met.
7.. Provision of clean fresh water and construction of hygienic sewerage
and trash-disposal systems. At least a billion people have no access to
clean water. Drought is a constant menace to many millions, flood a constant
menace to millions more. Desertification extends in Africa and elsewhere
every day. Few countries reclaim much land lost through shortage of water or
its misuse. As well as providing clean water and hygienic waste-disposal
systems to all, a goal should be to make the deserts bloom. Research to
enable cheap desalination and distribution through pipelines, canals and
other means should be undertaken by public enterprise in cooperation where
practicable with private enterprise and investment.
8.. The planting and replanting of forests for commercial use and
environmental protection. The goal should be to re-create world forests so
as to occupy an area at least as extensive as at the beginning of the 20th
century.
9.. Direct investment in roads, railways, airports, telephone and other
modern communications systems with the goal of bringing all countries and
regions up to a standard comparable with the developed regions, bearing in
mind not only commercial imperatives but also and especially the reasonable
aspirations of all humankind.
10.. Generation of power through renewable sources - including solar, wind
and tide - throughout the world. In his BBC Dimbleby Lecture on 29 December
2001, President Clinton reminded us that "there is a trillion dollar market
today in alternate energy sources and presently available energy
conservation technologies that will create jobs in Europe, America, in the
developing world and reduce greenhouse gas emissions. We're being hurt by
denial there."
These are intended only as examples of the enormous extent of the
worldwide need for public investment and the need to mobilise all our
resources in the attempt to meet a significant part of them. One observer
has calculated that the gap between the United States potential gross
domestic product - what it would be if the United States had been able to
maintain an unemployment rate of around 4 percent - and what is actually
being produced is enormous. By his calculations, the gap was already, in
November 2001, upwards of $350 billion a year! This is an enormous waste of
resources, a waste we can ill afford - and it is growing every day as we
sink more deeply into economic recession.
Indeed, these needs are so great and so urgent that there can be no
rational justification for leaving any resources idle so long as they remain
unsatisfied. National governments and international institutions must manage
their affairs and deploy their resources so as to meet the needs as quickly
and completely as practicable, without allowing economic, political or other
prejudices, irrationalities, dogmas or vested interests to stand in the way.
VOW¹s Overriding Purposes
With that as background, VOW has two overriding purposes:
1.. To halt the slide of the world economy into recession or depression
and to re-launch it, through direct public investment, in ways that are
effective, sustainable and equitable for all the world¹s people.
2.. To enhance the economic and, with it, the social and political
infrastructure of all countries and regions, at whatever stage of
development, so that both individuals and their societies can realise their
potential in economic, social, political, cultural and other terms.
Within these overriding purposes, VOW asserts the right of all societies
to invest their human and material resources in peaceful purposes which they
see as of fundamental importance to themselves and to vary the mix of public
and private enterprise and investment in ways that they freely and
democratically determine.
VOW is directed to serve all countries and regions around the world. It is
concerned with the developed countries and regions as well as with the less
and the least developed. Even in the richest areas of Europe, such as the
South of France, many people are poor and homeless. Appeals for donations of
food - "Marchons contre la faim" - are a regular feature of daily life.
In North America, millions, including children, are homeless and millions
more live in sub-standard accommodation. Many are educated to levels far
below their potential and some fifty million people - equal to almost the
total population of Britain, France or Italy - have no medical insurance at
all.
The need for action is urgent.
Governments and international institutions have been unable and/or
unwilling to take that urgent action.
We must therefore take action ourselves.
Injustice and Poverty
We have referred above to the three watershed revolutions occurring at
this time: the Information Revolution, the Biotechnology Revolution and the
Quantum Revolution. These revolutions which have already brought substantial
benefits and promise many more in the future, should be shared by everyone
on the planet. Benefits must not be allowed to be placed in jeopardy or
delayed by economic, social and political mismanagement.
Arrangements are therefore needed so that all the people from all regions
may exchange ideas and so that, for example, the gap arising from shortfalls
in private investment may be filled by moving substantial public investment
into areas where the need is great and where it can provide a major stimulus
for national economies and for the world economy as a whole.
As always, timing is vital. Therefore, it is crucial that public
investment, expanded nationally and internationally, be planned and
implemented as a matter of the greatest urgency.
In this way, not only will a severe and possibly catastrophic downturn in
the world economy be moderated, but the poverty and injustice that have
plagued and continue to plague the world will also be moderated and, in the
longer term we hope, eliminated, so that all, and not just select groups,
may enjoy the benefits of scientific and technological progress.
This is a huge task whose accomplishment should be in the hands of all
those people who can fairly expect to benefit from it, from whatever place
in their economy or society they may come.
Pledges for Victory against Want
All communities will derive benefit from recovery of the world economy.
But the further objective is to re-launch the world economy and that
contemplates setting in motion a major campaign whereby the rich may help
the poor and, in so doing, promote their own well-being as well as
benefitting those they help.
Accordingly, Victory over Want contemplates that the richer countries,
such as those in North America and Western Europe, will pledge themselves to
finance the eradication of want in their own countries and help eradicate
poverty, homelessness, disease and the rest in the poorer countries.
Those pledges may be made both by private individuals, companies and
associations and by governments and other public agencies. Pledges may be
expressed in financial terms but should not consist of simple financial
transfers but of real resources to be brought together to achieve rapid and
substantial expansion of public investment.
A process is contemplated along the lines of that used to implement the
Marshall Plan in Europe after World War Two. VOW has in mind that the
Marshall Plan, operating through the Organisation for European Economic
Cooperation, brought substantial benefits to the Americans who pledged
funds, as well as to the war-devastated countries who were the recipients of
American aid.
VOW contemplates therefore that a body will be set up similar to OEEC
which, however, will take account of the more diverse character of the world
economies, societies and political entities operating within it.
Contributors of resources will formulate practical programs for the
elimination of poverty, homelessness, disease and other specific ills, in
close working cooperation with a particular country or region. Each
contributor will then make its direct investment in that country¹s or
region¹s agreed program. The resources contributed in terms of goods and
services will be integrated with those of the recipient to boost
productivity and production for the market and, through the market, to
confer economic and social benefit on the community.
In his lecture of 29 December 2001, President Clinton told us that "we're
spending - America - about a billion dollars a month in Afghanistan; that's
as cheap as a war gets....For twelve billion dollars a year, we can pay
America's share of all those initiatives I just mentioned [in education,
health, economic development, the environment and elimination of poverty]
and have money left over. So I urge you to think about that."
A World Conference
To achieve VOW¹s purposes and to act quickly, a World Conference will be
convened as quickly as logistics permit. It will aim at comprehensive
representation of individuals, societies and groups as well as those
governments wishing to participate.
While VOW hopes that all governments will accept its invitation, the
Conference will proceed even though some governments, including some from
the larger and/or richer countries, may decline to be represented or to
offer support.
International organisations will also be invited to attend. These will
include the United Nations, the World Bank and Fund, WHO, UNESCO, the
International Refugee Organisation, the Commission for Human Rights and
others.
Non-governmental organisations will also be invited so as to enable a free
exchange of views and productive debate in a fully representative, secure
and egalitarian environment.
That environment will ensure in particular that those who have expressed
views divergent from mainstream policies will be able to participate on
equal terms in exchange of views and formulation of conclusions of the World
Conference.
Commissions will be set up, representative of all regions and peoples at
all stages of development, to prepare the agenda and discussion papers and
formulate recommendations on participation so as to produce a wide and
convincing expression of views and a democratic formulation of Conference
conclusions.
These preparatory bodies will include, for example -
a.. A Commission on Economic Growth and Employment
b.. A Commission on Wealth, Income and Inequality
c.. A Commission on Mobilising Financial Resources in the War against
Want
d.. A Commission on Financial and Other Pledges for the War against Want
e.. A Commission on Priority Destinations for Public Investment
f.. A Commission on Housing the Homeless
g.. A Commission on Free, Universal Education
h.. A Commission on Free, Universal Health Care
i.. A Commission on Water Resources
j.. A Commission on Rights of Economic Migrants and Asylum Seekers and
Regulation of Economic, Social and Political Migration
k.. A Commission on Logistics for the World Conference on VOW
l.. A Commission on Conference Participation and Issue of Invitations
A Convenor will be appointed for each Commission to draft an
issues-and-options paper and bring together a small group of up to six
members to complete and submit the paper to the full Commission of twenty
members. Preparatory groups and Commissions will balance membership among
regions, as well as among developing/developed, radical/mainstream and
non-government/government participants. Each Commission will submit its
conclusions and recommendations to the Plenary of the World Conference for
adoption. The preparatory groups will meet at sites selected by each
Convenor. Immediately before and during the World Conference, the
Commissions will meet at the site of the Conference.
Before consideration and adoption of Commission recommendations, the
Plenary of the World Conference will hear theme statements from
distinguished representatives from around the world. These statements, by
non-government as well as by some government representatives, will reflect a
wide spread of opinion on a variety of issues. The theme statements will be
included in the documentation to be distributed worldwide, in print and
electronic form, at the conclusion of the Conference.
Site of World Conference
The World Conference for Victory over Want will be held at a location that
does not evoke recollections of meetings and institutions, such as the Group
of Seven and the IMF, which have failed or fallen short in the past.
The World Conference will also avoid the institutional and intellectual
rigidities and may appraise critically the philosophical orientation of
international institutions. The participation of the latter will offer them
an opportunity to contribute to but not dominate or unduly influence the
proceedings or outcome of the Conference.
In other words, the Conference is designed to enable fresh minds to take a
fresh look at issues and make a fresh start in dealing with them. It must be
free of the ideological and narcissistic drag of traditional bureaucracies,
political parties and international institutions.
At the same time, the Conference must be held at a location that can
accommodate one of the world¹s most inclusive and significant gatherings. It
must be able to conduct its business efficiently and in security.
We already have in mind a location which meets these criteria. Its
identity will be conveyed as arrangements proceed.
The Conference will look towards the establishment of a permanent
organisation for Victory over Want. The headquarters of the organisation and
its constitution will be determined by the Conference.
----- Original Message -----
From: <peter.-@mailstar.net>
Cc: "Paul Craig Roberts" <paulcrai-@yahoo.com>
Sent: Monday, November 02, 2009 5:26 AM
Subject: We must take to the streets, to demand the Change that was
promised
After receiving Ellen Brown's latest article, I suggested to her that all
our efforts at fixing the economy have come to naught.
We must take to the streets, to demand the Change that was promised.
She agreed, and came up with some slogans for placards:
Main Street
not Wall Street
Workers not Bankers.
Here are some others for consideration:
We voted for Change
You voted for Wall Street
We Demand
the Change
you Promised
You promised Change
but Sold us Out
(1) Cut Wall Street Out! - Ellen Brown
(2) The Rich Have Stolen the Economy - Paul Craig Roberts
(3) Obama’s banker-friendly financial overhaul
(4) Happy Anniversary Wall Street - Steve Keen
(1) Cut Wall Street Out! - Ellen Brown
From: Ellen Brown <ellenh-@gmail.com> Date: 01.11.2009 01:11 PM
http://www.truthout.org/1031091
SATURDAY 31 OCTOBER 2009
Cut Wall Street Out! How States Can Finance Their Own Economic Recovery
Saturday 31 October 2009
Ellen Hodgson Brown
Pouring money into the private banking system has only fixed the economy
for
bankers and the wealthy; it has not done much to address either the
fundamental problem of unemployment or the debt trap so many Americans
find
themselves in.
President Obama's $787 billion stimulus plan has so far failed to halt the
growth of unemployment: 2.7 million jobs have been lost since the stimulus
plan began. California has lost 336,400 jobs. Arizona has lost 77,300.
Michigan has lost 137,300. A total of 49 states and the District of
Columbia
have all reported net job losses.
In this dark firmament, however, one bright star shines. The sole state to
actually gain jobs is an unlikely candidate for the distinction: North
Dakota. North Dakota is also one of only two states expected to meet their
budgets in 2010. (The other is Montana.) North Dakota is a sparsely
populated state of less than 700,000 people, largely located in cold and
isolated farming communities. Yet, since 2000, the state's GNP has grown
56
percent, personal income has grown 43 percent and wages have grown 34
percent. The state not only has no funding problems, but this year it has
a
budget surplus of $1.3 billion, the largest it has ever had.
Why is North Dakota doing so well, when other states are suffering the
ravages of a deepening credit crisis? Its secret may be that it has its
own
credit machine. North Dakota is the only state in the Union to own its own
bank. The Bank of North Dakota (BND) was established by the state
legislature in 1919, specifically to free farmers and small businessmen
from
the clutches of out-of-state bankers and railroad men. The bank's stated
mission is to deliver sound financial services that promote agriculture,
commerce and industry in North Dakota.
The Advantages of Owning Your Own Bank
So, how does owning a bank solve the state's funding problems? Isn't the
state still limited to the money it has? The answer is no. Chartered banks
are allowed to do something nobody else can do: They can create credit on
their books simply with accounting entries, using the magic of "fractional
reserve" lending. As the Federal Reserve Bank of Dallas explains on its
web
site:
"Banks actually create money when they lend it. Here's how it works:
Most of a bank's loans are made to its own customers and are deposited in
their checking accounts. Because the loan becomes a new deposit, just like
a
paycheck does, the bank ... holds a small percentage of that new amount in
reserve and again lends the remainder to someone else, repeating the
money-creation process many times."
How many times? President Obama puts this "multiplier effect" at eight to
ten. In a speech on April 14, he said:
"[A]lthough there are a lot of Americans who understandably think that
government money would be better spent going directly to families and
businesses instead of banks - 'where's our bailout?,' they ask - the truth
is that a dollar of capital in a bank can actually result in eight or ten
dollars of loans to families and businesses, a multiplier effect that can
ultimately lead to a faster pace of economic growth."
It can, but it hasn't recently, because private banks are limited by bank
capital requirements and by their for-profit business models. And that is
where a state-owned bank has enormous advantages: States own huge amounts
of
capital, and they can think farther ahead that their quarterly profit
statements, allowing them to take long-term risks. Their asset bases are
not
marred by oversized salaries and bonuses; they have no shareholders
expecting a sizable cut, and they have not marred their books with bad
derivatives bets, unmarketable collateralized debt obligations and
mark-to-market accounting problems.
The Bank of North Dakota (BND) is set up as a dba: "the State of North
Dakota doing business as the Bank of North Dakota." Technically, that
makes
the capital of the state the capital of the bank. Projecting the
possibilities of this arrangement to California, the State of California
owns about $200 billion in real estate, has $62 billion in various
investments and has $128 billion in projected 2009 revenues. Leveraged by
a
factor of eight, that capital base could support nearly $4 trillion in
loans.
To get a bank charter, specific investments would probably need to be
earmarked by the state as startup capital; but the startup capital
required
for a typical California bank is only about $20 million. This is small
potatoes for the world's eighth largest economy, and the money would not
actually be "spent." It would just become bank equity, transmuting from
one
form of investment into another - and a lucrative investment at that. In
the
case of the BND, the bank's return on equity is about 25 percent. It pays
a
hefty dividend to the state, which is expected to exceed $60 million this
year. In the last decade, the BND has turned back a third of a billion
dollars to the state's general fund, offsetting taxes. California could do
substantially better than that. California pays $5 billion annually just
in
interest on its debt. If it had its own bank, the bank could refinance its
debt and return that $5 billion to the state's coffers; and it would make
substantially more on money lent out.
Besides capital, a bank needs "reserves," which it gets from deposits. For
the BND, this too is no problem, since it has a captive deposit base. By
law, the state and all its agencies must deposit their funds in the bank,
which pays a competitive interest rate to the state treasurer. The bank
also
accepts deposits from other entities. These copious deposits can then be
plowed back into the state in the form of loans.
Public Banking on the Central Bank Model
The BND's populist organizers originally conceived of the bank as a credit
union-like institution that would free farmers from predatory lenders, but
conservative interests later took control and suppressed these commercial
lending functions. The BND is now chiefly a "bankers' bank." It acts like
a
central bank, with functions similar to those of a branch of the Federal
Reserve. It avoids rivalry with private banks by partnering with them.
Most
lending is originated by a local bank. The BND then comes in to
participate
in the loan, share risk and buy down the interest rate.
One of the BND's functions is to provide a secondary market for real
estate
loans, which it buys from local banks. Its residential loan portfolio is
now
$500 billion to $600 billion. This function has helped the state to avoid
the credit crisis that afflicted Wall Street when the secondary market for
loans collapsed in late 2007. Before that, investors routinely bought
securitized loans (CDOs) from the banks, making room on the banks' books
for
more loans. But these "shadow lenders" disappeared when they realized that
the derivatives called "credit default swaps" supposedly protecting their
CDOs were a highly unreliable form of insurance. In North Dakota, this
secondary real estate market is provided by the BND, which has invested
conservatively, avoiding the speculative derivatives debacle.
Other services the BND provides include guarantees for entrepreneurial
startups and student loans, the purchase of municipal bonds from public
institutions and a well-funded disaster loan program. When the city of
Fargo
was struck by a massive flood recently, the disaster fund helped the city
avoid the devastation suffered by New Orleans in similar circumstances;
and
when North Dakota failed to meet its state budget a few years ago, the BND
met the shortfall. The BND has an account with the Federal Reserve Bank,
but
its deposits are not insured by the FDIC. Rather, they are guaranteed by
the
State of North Dakota itself - a prudent move today, when the FDIC is
verging on bankruptcy.
The Commercial Banking Model: The Commonwealth Bank of Australia
The BND studiously avoids competition with private banks, but a
publicly-owned bank could profitably engage in commercial lending. A
successful model for that approach was the Commonwealth Bank of Australia,
which served both central bank and commercial bank functions. For nearly a
century, the publicly-owned Commonwealth Bank provided financing for
housing, small business, and other enterprise, affording effective public
competition that "kept the banks honest" and kept interest rates low.
Commonwealth Bank put the needs of borrowers ahead of profits, ensuring
that
sound investment flows were maintained to farming and other essential
areas;
yet, the bank was always profitable, from 1911 until nearly the end of the
century.
Indeed, it seems to have been too profitable, making it a takeover target.
It was simply "too good not to be privatized." The bank was sold in the
1990s for a good deal of money, but it's proponents consider it's loss as
a
social and economic institution to be incalculable.
A State Bank of Florida?
Could the sort of commercial model tested by Commonwealth Bank work today
in
the United States? Economist Farid Khavari thinks so. A Democratic
candidate
for governor of Florida, he proposes a Bank of the State of Florida (BSF)
that would make loans to Floridians at much lower interest rates than they
are getting now, using the magic of fractional reserve lending. He
explains:
"For $100 in deposits, a bank can create $900 in new money by making
loans. So, the BSF can pay 6 percent for CDs, and make mortgage loans at 2
percent. For $6 per year in interest paid out, the BSF can earn $18 by
lending $900 at 2 percent for mortgages."
The state would earn $15,000 per $100,000 of mortgage, at a cost of about
$1,700, while the homeowner would save $88,000 in interest and pay for the
home 15 years sooner. "Our bank will save people about seven years of
their
pay over the course of 30 years, just on interest costs," says Dr.
Khavari.
He also proposes 6 percent credit cards and 6 percent certificates of
deposit.
The state could earn billions yearly on these loans, while saving hefty
sums
for consumers. It could also refinance its own debts and those of its
municipal governments at very low interest rates. According to a German
study, interest composes 30 percent to 50 percent of everything we buy.
Slashing interest costs can make projects such as low-cost housing,
alternative energy development, and infrastructure construction not only
sustainable, but profitable for the state, while at the same time creating
much-needed jobs.
(2) The Rich Have Stolen the Economy - Paul Craig Roberts
From: IHR News <ne-@ihr.org> Date: 28.10.2009 03:04 PM
The Rich Have Stolen the Economy
Paul Craig Roberts
http://www.informationclearinghouse.info/article23739.htm
By Paul Craig Roberts
October 16, 2009 "Information Clearing House" -- Bloomberg reports that
Treasury Secretary Timothy Geithner’s closest aides earned millions of
dollars a year working for Goldman Sachs, Citigroup and other Wall Street
firms. Bloomberg reports that none of these aides faced Senate
confirmation.
Yet, they are overseeing the handout of hundreds of billions of dollars of
taxpayer funds to their former employers.
The gifts of billions of dollars of taxpayers’ money provided the banks
with
an abundance of low cost capital that has boosted the banks’ profits,
while
the taxpayers who provided the capital are increasingly unemployed and
homeless.
JPMorgan Chase announced that it has earned $3.6 billion in the third
quarter of this year.
Goldman Sachs has made so much money during this year of economic crisis
that enormous bonuses are in the works. London Evening Standard reports
that
Goldman Sachs’ “5,500 London staff can look forward to record average
payouts of around 500,000 pounds ($800,000) each. Senior executives will
get
bonuses of several million pounds each with the highest paid as much as 10
million pounds ($16 million).“
In the event the banksters can’t figure out how to enjoy the riches, the
Financial Times is offering a new magazine--”How To Spend It.” New York
City’s
retailers are praying for some of it, suffering a 15.3% vacancy rate on
Fifth Avenue. Statistician John Williams (shadowstats.com) reports that
retail sales adjusted for inflation have declined to the level of 10 years
ago: “Virtually 10 years worth of real retail sales growth has been
destroyed in the still unfolding depression.”
Meanwhile, New York City’s homeless shelters have reached the all time
high
of 39,000, 16,000 of whom are children.
New York City government is so overwhelmed that it is paying $90 per night
per apartment to rent unsold new apartments for the homeless. Desperate,
the
city government is offering one-way free airline tickets to the homeless
if
they will leave the city and charging rent to shelter residents who have
jobs. A single mother earning $800 per month is paying $336 in shelter
rent.
Long-term unemployment has become a serious problem across the country,
doubling the unemployment rate from the reported 10% to 20%. Now hundreds
of
thousands more Americans are beginning to run out of extended unemployment
benefits. High unemployment has made 2009 a banner year for military
recruitment.
A record number of Americans, more than one in nine, are on food stamps.
Mortgage delinquencies are rising as home prices fall. According to Jay
Brinkmann of the Mortgage Bankers Association, job losses have spread the
problem from subprime loans to prime fixed-rate loans. On a Wise,
Virginia,
fairgrounds, 2,000 people waited in lines for free dental and health care.
While the US speeds plans for the ultimate bunker buster bomb and
President
Obama prepares to send another 45,000 troops into Afghanistan, 44,789
Americans die every year from lack of medical treatment. National
Guardsmen
say they would rather face the Taliban than the US economy.
Little wonder. In the midst of the worst unemployment since the Great
Depression, US corporations continue to offshore jobs and to replace their
remaining US employees with lower paid foreigners on work visas.
The offshoring of jobs, the bailout of rich banksters, and war deficits
are
destroying the value of the US dollar. Since last spring the US dollar has
been rapidly losing value. The currency of the hegemonic superpower has
declined 14% against the Botswana pula, 22% against Brazil’s real, and 11%
against the Russian ruble. Once the dollar loses its reserve currency
status, the US will be unable to pay for its imports or to finance its
government budget deficits.
Offshoring has made Americans heavily dependent on imports, and the dollar’s
loss of purchasing power will further erode American incomes. As the
Federal
Reserve is forced to monetize Treasury debt issues, domestic inflation
will
break out. Except for the banksters and the offshoring CEOs, there is no
source of consumer demand to drive the US economy.
The political system is unresponsive to the American people. It is
monopolized by a few powerful interest groups that control campaign
contributions. Interest groups have exercised their power to monopolize
the
economy for the benefit of themselves, the American people be damned.
(3) Obama’s banker-friendly financial overhaul
31 October 2009
http://www.wsws.org/articles/2009/oct2009/pers-o31.shtml
In the wake of a financial meltdown that precipitated the deepest
recession
since the 1930s, the Obama administration and Democratic congressional
leaders are working to institute regulatory changes that avoid any serious
constraints on Wall Street banks and financial institutions.
The so-called legislative process itself is a mockery of democracy. An
army
of financial industry lobbyists is at work wining and dining key
legislators, whose elections were funded by millions in campaign
contributions from banks, insurance companies, hedge funds, etc. Wall
Street
lawyers are helping draft the details of regulatory bills in closed-door
meetings, while Obama and his top economic advisers—many of whom are
former
investment bankers and all of whom are longstanding proponents of bank
deregulation—confer with the CEOs of the most powerful firms.
The guiding premise of the enterprise is that the capitalist “free market”
must at all costs be safeguarded, along with the personal fortunes of the
financial oligarchy. Flowing from this, the informing notion behind the
proposed changes is to allow the banks to return to business as usual,
recouping their gambling losses at the expense of this and future
generations of working people, while setting in place mechanisms for the
government to more effectively manage the next financial debacle.
On Thursday, Treasury Secretary Timothy Geithner testified before the
Financial Services Committee of the House of Representatives in support of
a
bill jointly sponsored by the White House and committee Chairman Barney
Frank (Democrat of Massachusetts). The bill would give the Treasury and
the
Federal Reserve Board so-called “resolution authority” to order the
seizure
of a major financial firm whose failure would destabilize the financial
system.
The idea is to prevent the type of panic that accompanied the collapse of
Lehman Brothers in September of 2008. Geithner, Frank and the White House
are selling the bill as a boon to taxpayers. It is supposedly an
alternative
to the multibillion-dollar bailouts at taxpayer expense that followed last
year’s crash.
In fact, the proposal would give the executive branch and the Fed
unlimited
powers, without the need for congressional consent, to allocate taxpayer
money to prevent the failure of a major commercial or investment bank,
insurance firm (such as AIG) or other financial company by placing the
firm
in receivership. Supposedly, the seized firm’s shareholders and unsecured
creditors would take large losses, the firm’s top management would be
sacked, and the firm’s assets would be sold off to investors.
The cost of the rescue, according to the bill, would be repaid through
fees
levied on other banks with more than $10 billion in assets (around 120
banks). However, these fees would be assessed over an indefinite period,
while the taxpayers would pay the bill upfront.
One provision of the bill which has garnered little comment either by its
official proponents or the media would give the Federal Deposit Insurance
Corporation, with the consent of the treasury secretary and the Fed, the
power to “extend credit or guarantee obligations … to prevent financial
instability during times of severe economic distress.”
This amounts to a blank check to use public funds to bail out Wall Street.
What is actually being proposed is the replacement of the ad hoc bailouts
that characterized the past year with an institutionalized mechanism for
looting the public purse for the benefit of the financial aristocracy.
Little wonder that Jamie Dimon, the CEO of JPMorgan Chase, has broadly
endorsed the administration’s bank “reform.” He told a conference in New
York this week that “we need a resolution mechanism so that the system isn’t
destroyed.” Dimon knows full well that such a law will expand the profits
of
the big banks by making their borrowing costs cheaper, far outstripping
any
fees they might be required to pay in the event of a government seizure of
a
major firm.
There are those within the financial and political establishment who are
warning that the administration’s policies are enhancing the power of the
biggest banks and making an even greater financial disaster all but
inevitable. Asked by CNN on October 21 whether the administration’s
regulatory changes will avert another financial meltdown, Neil Barofsky,
the
special inspector general of the Treasury’s Troubled Asset Relief Program
(TAPR), said:
“I think actually what’s changed is in the other direction. These banks
that
were too big to fail are now bigger. Government has sponsored and
supported
several mergers that made them larger… The idea that the government is not
going to let these banks fail, which was implicit a year ago, is now
explicit.
“So, if anything, not only has there not been any meaningful regulatory
reform to make it less likely, in a lot of ways, the government has made
such problems more likely. Potentially, we could be in more danger now
than
we were a year ago.”
Paul Volcker, the former Fed chairman who heads Obama’s Economic Recovery
Advisory Board, is evidently alarmed. He has been publicly calling for the
reinstatement of the legal wall between commercial banking and investment
banking that was a cornerstone of the Depression-era bank reforms
instituted
by Franklin D. Roosevelt. Under the Glass-Steagall Act of 1933, commercial
banks—which take deposits from ordinary consumers—were banned from owning
and trading risky securities, the very practice that brought the biggest
banks to the brink of collapse in 2008.
This would mean breaking up such behemoths as JPMorgan Chase, Citigroup,
Bank of America and Wells Fargo. Volcker has no support within the Obama
administration. Wall Street is adamantly opposed to such a reform, as are
Obama’s top economic advisers. The director of the White House’s National
Economic Council, Lawrence Summers, pushed through the repeal of
Glass-Steagall in 1999 when he was treasury secretary in the Clinton
administration.
Daniel Tarullo, a Fed governor appointed by Obama, last week dismissed
Volcker’s proposal as “more of a provocative idea than a proposal.”
As for the claims that the public will not be forced to pay for the
government “resolution” of major financial firms facing collapse, their
worth can be judged by looking at the other major planks of the
administration’s financial regulatory plan.
Frank’s Financial Services Committee this month passed a bill on
derivatives—the unregulated $592 trillion market in complex and murky
financial contracts that led to the collapse of AIG—which exempts from
government oversight a huge portion of such deals, including so-called
“customized” credit default swaps and derivatives contracts of
non-financial
companies. It also places the management of “standard” derivatives in the
hands of privately owned clearinghouses closely aligned to the big Wall
Street banks.
The Consumer Financial Protection Agency bill passed by Frank’s committee,
nominally establishing a new agency to police consumer lending fraud and
abuse, exempts 98 percent of the nation’s banks as well as car dealerships
from oversight, and allows the federal government to override state
consumer
protection laws that are tougher than federal regulations.
All of these loopholes were inserted at the behest of bank lobbyists.
Then there are the sham bank pay restraints announced last week by Obama’s
“pay czar,” Kenneth Feinberg. Not only do these rules apply only to the 25
highest-paid executives and employees of seven companies still holding
TARP
money, including just two banks, they apply only for November and December
of this year. And the limits in cash salaries and bonuses imposed by
Feinberg are to be largely offset by stock issued to the affected
multimillionaires.
The Wall Street Journal published an analysis Wednesday showing that
Feinberg actually increased the base salaries of 89 of the 136 people
under
his remit, raising their average regular salaries to $438,000, an average
increase of 14 percent. At Citigroup, which is 34 percent owned by the US
government, Feinberg agreed to more than double salaries for 13 of the 21
employees, upping them by an average of $202,000.
Barry Grey
(4) Happy Anniversary Wall Street - Steve Keen
From: ERA <herm-@picknowl.com.au> Date: 30.10.2009 01:05 AM
Happy Anniversary Wall Street
by Steve Keen
Published on October 29th, 2009
http://www.debtdeflation.com/blogs/2009/10/29/happy-anniversary-wall-street/
If I was asked to nominate the wisest aphorism of all time, Mark Twain’s
“History doesn’t repeat, but it sure does rhyme” would definitely be one
of
my top two candidates.
On song, today Wall Street is replaying the 1930s, but to a slightly
different meter. With the 80th anniversary of the Great Crash of 1929
falling on October 29th of this year, Wall Street is celebrating in
characteristic style–with a euphoria-led bubble that now appears to be
crashing up against economic reality.
Of course, our time is not a mirror image of that momentous period 80
years
ago. It’s closer to a mirror image of the days roughly a year later, when
the first two bear market rallies that followed the crash finally petered
out, and the long slow grind of the Great Depression gradually took hold
on
the economy and the minds of America.
But in 1930, though on our reckoning the Depression had well and truly
begun, the mindset that prevailed was very similar to today’sthat the
worst
of the crisis is behind us, and economic recovery is underway.
This mindset is on show at the wonderful blog News from 1930, which in
honour of this week’s anniversary is publishing news summaries from the
Wall
Street Journal of 1929 as well as from 1930. Reading newspaper stories
from
1930 is remarkable enough on a day by day basis, as comments made about
the
recovery that was then in place (and the return of the bull market) could
easily have been lifted from today’sor last week’snewspapers. But to see
these juxtaposed with the actual coverage of the Crash of 1929 is all the
more startling.
The most obvious chord in the historical song is that very few people
realise when they are participants in an event of historic proportions.
Even
though the Dow had never fallen by anything like what it did in the five
days of the Great Crash, the belief that this would nonetheless turn out
to
be a rather ordinary event was the dominant perspective, as this excerpt
from the Wall Street Journal’s Editorial for Saturday October 26th 1929
indicates:
“The market will find itself, for Wall Street does its own liquidation and
always with a remarkable absence of anything like financial catastrophe. …
Suggestions that the wiping out of paper profits will reduce the country’s
real purchasing power seem rather far-fetched.”
It seems that only in retrospect was it realised that 1929 was a watershed
in world history: few living at the time actually understood that, and
none
of them had their prognostications published by the Wall Street Journal.
One year later, though the far-fetched had become somewhat harder to
dismiss, the general tenor of economic and business commentary was that
the
worst of the crisis was over, and that 1931 would be a bumper year for the
market and the wider economy. This observation in a radio address by
General
Motors executive and Democratic Party National Committee Chair J. Raskob
is
indicative of business attitudes in 1930:
In closing, let me say that no country in the world, not even our own, was
ever in as splendid position to go forward and enjoy a period of
prosperity
as our own country is today. Everything has been thoroughly deflated and
business is now turning upward. The momentum is necessarily slow at first,
but within three months … we will quickly leave depression behind.”. (WSJ
Tuesday October 1930)
The second chord is that the causes and effects of momentous events can be
misunderstood both at the time and in retrospect, which leads humanity to
repeat its mistakes all over again. Reading the commentary in the 1930, it
is clear that the government of the time was doing all it thought possible
to prevent the Crash turning into an economic crisis, and it appeared to
believe that it had been successful.
The statistics certainly imply that Hoover wasn’t sitting on his hands
doing
nothing as Wall Street burned, which is the modern mythology. Government
debt was equivalent to 30 percent of GDP when the crisis began; just 3
years
later it was 70 percent of GDP, and that was when the so-called “automatic
stabilisers” were a lot smaller than they are today (because the
government
sector was much smaller back then).
Yet the view that dominates conventional economic thinking today is that
the
Depression was caused by a disengaged government and bad monetary policy,
if
only the Fed hadn’t tightened in 1930, everything would have been fine. In
fact, if the Fed did tighten, and the evidence on that is mixed, it was
because they, like today’s Fed, believed they had already done enough to
avert catastrophe.
Bollocks to that: the problem in 1930 wasn’t the tightening of fiat money,
but the preceding failure to constrain the private debt bubble that
financed
Wall Street’s speculative excess of the 1920s. Yet armed with the
misguided
belief that there wouldn’t have been a Great Depression had the Fed not
tightened in 1930, the Fed of the 1980s-2007 ignored an even bigger bubble
in private debt than its predecessor ignored in the 1920s.
By the time Ben Bernanke made his fawning paean to Milton Friedman at his
90th birthday “Let me end my talk by abusing slightly my status as an
official representative of the Federal Reserve. I would like to say to
Milton and Anna: Regarding the Great Depression. You’re right, we did it.
We’re
very sorry. But thanks to you, we won’t do it again”, the Fed had already
caused a far bigger crisis by ignoring private debt and the asset bubble
it
financed.
I’ll finish with my other favourite aphorism: Max Planck’s observation
that
“science progresses one funeral at a time”. It will take a lot of funerals
before the economics profession abandons the follies that led it to
describe
the decade leading up to today’s crisis as “The Great Moderation”.
Peter Myers, 381 Goodwood Rd, Childers Qld 4660, Australia ph +61 7
41262296
[in Australia: 07 41262296]
http://mailstar.net/index.html
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