But what is so smart and energetic about us? We too are being badly hurt by neocon policies, and yet we can not organize or mobilize ourselves to stop them. We are trapped by our own addiction to material comforts, and by our firm dedication to our liberal principles of supporting women’s choice on abortion, the right of gay’s to a same sex marriage, and of the removal of guns from our midst. Like the people of Kansas, we have not been willing to forgo or to compromise our cherished principles in order to join with, organize, and mobilize together with the millions of Americans who are also being badly hurt. All of us, Republican and Democrat, left and right, women, men, gays, straight, born-again religious, and agnostic, hunters and pacifists, are being driven into poverty and the dark ages by the 5000 or so extremely wealthy persons with their banks and insurance companies who maintain neocon policies, and control our government and our lives.

The most graphic current example is our own health care: We cannot have the security of decent health care because we will not give up our principled stand on abortion, and neither will the people of Kansas. (Meanwhile, we are manipulated by the media of the rich to prevent us from “following the money” to see who benefits, and from full recognition of the fact that we will be forced to give 27% of our health dollar to CEO salaries and bonuses, and fined by the IRS if we do not)

Health care is but the tip of the ice berg. These ruthless, cruel neocon forces, determined to extract every last penny of profit from us, have the tools to use against us here at home, that they use against people in the Middle East: Torture, Guantanamo type “detention centers,” remote controlled drones, a West Point plan to use the Army for domestic “riot control,” and authoritarian police worse than those of Copenhagen who recently arbitrarily arrested 2000 climate control advocates.

So far, we have allowed these few ruthless cruel neocon persons to use their mainstream media to divert our attention from what they are doing to us, while they provide us only with unimportant news of fires, rapes and murders, and lies about the “terrorists” abroad who “have weapons of mass destruction.”

We, millions and millions of us, have an interest in the common good, in preserving civilized life, a sustainable planet home, self government, a stable monetary system, and a humane economy. We have a common interest in preserving civilization itself, and in our common protection from the cruel arbitrary Law of the Jungle.

With all of this at stake, let’s reconsider our strategy and our own mind-sets.

First off, an observation: There are some issues that democracy cannot handle when proponents and opponents are equally divided. Every person who has ever served as a city councilman knows that one must avoid considering dog leash ordinances like the plague. Keep that issue off the agenda! It is a divisive and emotion laden issue. One half of the voters will storm city hall in support, and the other half will storm city hall in opposition. One’s city will not be able to consider fire and police problems, planning, zoning, and other issues of concern to all. With this in mind let’s consider the national hot button issues.

Compared to the millions and millions now hurt by neocon policies, how many women need an abortion? A few thousand per year? Are there no other options, such as the “morning after pill?” Women for thousands of years have had wisdom to control conception by their own means. If civilization falls and we are ruled by the law of the jungle, where will women then get their abortions? Is it wise to allow ourselves to be driven into poverty and the dark ages because we cannot make common ground with those who oppose abortion?

Compared to the millions and millions now hurt by neocon policies, how many gay persons need a marriage ceremony? A few thousand? If civilization falls, where will gays then get the sanction of a civil society for a same sex marriage? Considering what is at stake, are there not other options such as a simple private partnership contract that could suffice?

Do we really want gun control? Or should we too want an AK 47, or the most powerful gun we can manage, and a bazooka type rocket? If we are all armed to the teeth, the authoritarian police and the Army captains implementing the West Point plan for controlling our domestic resistance will think twice before they rush in to arrest us. If remote CIA controlled drones are threatening to bomb our houses because we are not going along with the program, we would very much like to have a bazooka.

As Frank’s book and the movie depict, there were and are populists in Kansas who resent the power, wealth, corruption; and arrogance of Wall Street bankers and insurance companies, perhaps as much or more than we do. Our only hope for avoiding the precipitous fall of our civilization is to make common cause with the people of Kansas, motivate, mobilize and fight our common neocon enemies together.

So it is with the abortion issue, same sex marriage, and gun control. We must keep them off the agenda! These are divisive issues of less importance than the gigantic common survival problems that we all face.

The very rich use their media to stoke these emotion-laden, divisive issues, to keep us fighting and divided, and to keep us from realizing that they are ruthlessly victimizing us for their own profit. They also dominate and control our elected Republicans and Democratic officials and use their media to create and exaggerate differences in social programs and philosophy, to examine endlessly the “strategy” of candidates, in order to divert our attention from the reality of their domination and oppression of us.

To deal with our overwhelming common problems of our fragile terminally ill capitalism, global warming, peak oil, wars abroad, torture, and our economic victimization, we must put aside those issues affecting relatively few persons, so that we can deal with the common good.

We can:

• Talk to “the people in Kansas” with humility and the realization that we are as victimized as they are. Join with them. Organize and Mobilize together with them.
• Stop work, have sick outs, sit down strikes, work stoppages for a day or for a week, or for whatever it takes.
• Stop buying, stage strategic boycotts of companies and buyer’s strikes of products.
• We can march with pots and pans and ridicule our elected officials who give us “excuses” for their betrayal of us. We can run against them ourselves.

We face as much or more oppressive authoritarian power as our Founding Fathers who signed the Declaration of Independence. They then pledged and gave their lives, their fortunes, and their sacred honor to implement its principles. We can do no less. We must. The Enlightenment itself is at stake. Our material well-being, our security, our freedom, and our self-governing democracy are at stake.

Ironically, most wealthy capitalists will themselves be destroyed in this looming Jungle.

Capitalists need government almost as badly as we do, but they will not admit it. As Adam Smith taught long ago, capitalism and capitalists can survive only with a rule of law controlling private property rights and business promises, a government to enforce those laws, and a certain level of morality. He cannot be concerned with the common good lest some competitor captures his profit. Capitalist ideology thus prohibits capitalists from protecting their own common good. As we see from the daily news, no capitalist will speak out in support of regulation of Wall Street. Capitalists say that they will discipline themselves, but they have not, can not and do not.

We ordinary citizens and voters cling to an illusory idealistic assumption that we retain the right to govern ourselves, and that if we only work hard enough in the political process, we can change things through the ballot box. We cling to this false deadly assumption despite the vast accumulation of evidence that our political process is totally dominated and controlled by approximately 5000 very wealthy individuals acting through their ownership of their corporations and their mainstream advertising agencies, TV, radio, newspapers, and magazines. Thus in these desperate times, our government has given Trillions of our tax dollars to the big banks of the wealthy without any conditions, while our government has given little or nothing to create jobs for us. This money controlled government can afford to give Trillions to the wealthy, but this government cannot afford to provide VA hospitals and medical care for everybody. We citizens and voters are kept quiet and non-rebellious because of our own brainwashed state, fueled by our addiction to consumer goods, electronic gadgets, computers and TV.

Part of the trance and delusion is maintained by liberals. My definition of a “liberal” is one who vaguely wants a civilizing government and to make things right, but only if it does not deprive him of his standard of living. Thus a liberal will protest wealth inequality, the corruption of our elected leaders by money, imperialism, wars abroad, torture, rendition, and civilian collateral damage, but a liberal will not rebel, stop work, strike, picket, vigil or boycott. A liberal knows at some level that his material well being depends ultimately on these very evils that he protests against, specifically including torture. A liberal, like a conservative capitalist, cannot face the fact that he himself is in a dangerous suicidal trance. So he does not challenge the trance either.

Even under the best of circumstances, we have limited time and interest in governing ourselves. Our civic impulse is in very short supply. We see this in the low voter turnout and in the superficial slogans that lead many voters make up their minds. We see it also in political parties, local governments, charities, clubs and unions where aggressive individuals rise to power, and the ordinary person does not bother to attend meetings or to vote.

The blunt truth is that we are now ruthlessly governed by these few wealthy individuals who have accumulated their vast fortunes. One might almost say that we are “ungoverned,” but of course we are taxed to benefit these rulers, and to pay for their losses on their risky financial investments. The government is operated and controlled by and for these few wealthy individuals. For all practical purposes, it is if we are ruled by a selfish greedy king who rules us and taxes us for his own pleasure and his own benefit. This “king” has his royalist earls, dukes, nobles and toadies in the form of Presidents, Senators, elected officials, journalists, college professors and economists who fawn around him. These toadies tell the “king” what he wants to hear (however insane and stupid) hoping for his favor and crumbs from his table. President Obama himself is such a toady to the “king.” Obama’s economic advisors, former Harvard President Larry Summers and University of California Professor Christina Romer are perfect examples of such fawning advisors to the “king.” They study and report only what the “king” wants to hear.

The truth is that our capitalism and our self governing democracy are beyond repair or reform. Both are terminal, and dysfunctional. Our material well being is rapidly falling, and it will fall much further. Our trance prevents us from dealing with the death throes of capitalism, with the few wealthy individuals who control democracy with their wealth, with diminishing reserves of oil and gas, and with deadly global warming. This is not to say that we will find it easy to make changes even if we become aware of our trance. We will have to attend meetings and vote. We will have to accept a lower standard of living because of the depletion of oil and live like Cubans. Other civilizations in the past have fallen into dark ages because those in power did not recognize the falsity of their political-economic-cultural ideas, and did not take corrective action in time. Millions of us are destined to starve and those who do survive will be serfs allowed to grow a little food on the estates of the very rich. This is inevitable, unless we awaken and face the truth very soon.

Even when presented with facts that challenge this gigantic delusion, being frightened, hypnotized, addicted, and brainwashed, we reject them. The irony is that the delusion is so grandiose, that one like me who challenges it, runs the risk of seeming to be a grandiose crazy individual.

Our reigning economic falsehood is that our market economy whose principal goal is short term private profit, is the best that humans can create, is the best for everybody, and is in every respect unchallengeable. Moreover, THERE IS NO ALTERNATIVE. Thus, we cannot have and cannot even consider

• Serious measures to deal with the needs of our damaged planet home.
• Socialism in any form.
• Extensive public hiring and public works.
• Caring for ourselves and for each other using the powers of our government.
• Directly giving people who want to work, employment to meet our vast unmet needs.
• Mondragon type cooperative businesses.
• The immorality of a system based on selfish, short term, private greed and absence of caring.
• Medicare for everybody or a VA-type public Hospital and doctor available for everybody.
• Any health care system that does not provide some private persons with a generous private profit making opportunity from our accidents and illnesses .
• Solutions to the ever increasing disparity between the rich and the poor.

Our President and his economic advisors are imprisoned by this reigning market falsehood. It embodies the further falsehoods that our market economy is basically stable, contains no systemic defects, contains no laws of motion or dynamics or anti-social tendencies, and that its minor aberrations can be managed by unlimited expenditures of our tax dollars or by borrowing. The fact that systemic defects caused our “capitalism to hit the fan”¹ in 1980 are simply ignored. Thus our President and our government by exhaustive efforts to restore bank lending, seek to create a new credit bubble to replace the housing bubble that crashed. Their stated rationale is that the banks will lend, businesses and individuals will borrow, and that ultimately new jobs will be created. They seek also to maintain and restore the many forms of collateralized debt obligations free of any new regulation. They ignore the basic truth that our economy can be re-started only by directly creating jobs providing enough earned income so that citizen employees can afford to purchase the products of their labor. Moreover, our governmental leaders urge that we must restore “growth” of our existing economy, with its inevitable growth of our emissions of carbon into the atmosphere, of pollution, and our depletion of the planet’s finite resources of oil, soil, and fresh water. As a consequence:

* We are ignoring a basic rule of arithmetic that even “reasonable” growth of 3% per year leads to doubling within an unexpectedly short time. (To get the doubling time simply divide the number 70 by the percentage rate of growth. Thus 70 divided by 3 gives us a doubling time of 35 years. A 4% growth rate would have a doubling time of 17.5 years. A 6% growth rate would give a doubling time of about 12 years. Such doubling continues over and over again so long as the growth rate continues.) Do we really want to double our carbon emissions and consequent global warming? Do we really want to double the consumption of oil, soil and fresh water? Do we really want to double the population of the planet? Is not any talk of growth idiotic? We need a sustainable, stable economy with zero growth.

* We are frightened and uneasy. We are acting irrationally in street marches and in public hearings. We do have to fear fear itself. We have no FDR who promises to meet our needs. We have a presiding eloquent Black Herbert Hoover and not a Black FDR. There are no plans on the shelf for any plausible solutions, and no leaders or academicians promoting them.

* We, of the political left, right and center, with good reason, are worried about how we and our children will pay for all of this vast expenditure of public tax dollars. We worry whether there will be the disastrous inflation experienced by Argentina a few years ago, deflation even worse than the Great Depression of our grandfathers, or, for us, both at the same time.

Then there are the many falsehoods that accompany the extension of this reigning falsehood, our “good” market economy abroad to foreign countries, an extension that we used to call Imperialism:

* Does anybody really believe that our own sons and daughters in the military, and Afghanistan and Pakistan civilian men women and children are being killed or wounded every day as a part of our effort to help them or to bring them Democracy?

* Does anybody really believe that the Honduran military Generals trained in our School for the Americas, financed by loans and grants from our government, using a plane that we financed, landing on the way out at a US military base in Nicaragua, acted without U.S. consent in deposing democratically elected President Manuel Zelaya?

* Does anybody really believe that we are getting out of Iraq when we replace every soldier withdrawn with a hired Blackwater mercenary soldier, and when we are building 4 large permanent military bases in Iraq, and the most lavish US Embassy building in Asia?

* Do we really need 800 military installations in 45 foreign countries staffed with 240,000 military personnel?

Then there is the deepest secret of all, so well hidden in our gigantic delusion, that almost nobody is aware of it. It is the secret Ponzi-like scheme of our private bankers that produces an almost unimaginable annual private profit for them at our expense. This secret private money creating scheme involves the following characteristics:

   1. Congress in 1913 delegated the power to create our money supply to the private bankers that constitute the Federal Reserve system. Congress does not use its power to coin our money. Private bankers create 95% of our money supply simply out of thin air. The privately owned “Federal” Reserve Bank simply writes a check out of thin air and issues the money to a private bank. The private bank then loans this money to a private or governmental borrower who promises to repay with interest. The promise to repay becomes an “asset” of the lending bank that it then uses to make many other loans under what is called “fractional reserve banking.” It is thus a fact that 95% or more of our money is based on debt. All existing money thus equals the total of all public and private debt.

   2. Our government instead of using its Constitutional power to issue money directly to meet governmental needs (as Lincoln did to finance the Northern side of the Civil War) borrows money to meet its needs from private bankers and pays private bankers interest on what it borrows. Repayment is promised from our tax dollars.

   3. Over time, the annual profits for the owners of private banks have compounded enormously. We cannot know how much because the private bankers secured a federal law making it unlawful to audit the activities of the Federal Reserve Banks. One can estimate the annual profit by simply multiplying a probable average interest rate times the total money supply since all money is debt. Is it reasonable to assume that the rate of return is at least 3 %? The total money supply was recently estimated to be $50 Trillion. 3% x $50 Trillion gives private bankers an annual gross profit of $1.5 Trillion per year. This profit compounded over the decades produces an unimaginable stash of total wealth for the owners of the private banks.

   4. The private banks use this immense secret stash of wealth to control our government and to override our votes on every issue that is important to banks. Thus it is accurate to say that we have a government of, by and for private bankers. It is also accurate to say that every aspect of the reigning gigantic delusion about our capitalism, including the Imperialism of defending and promoting capitalism abroad, partially set forth above, serves the interests and the profits of private bankers.

   5. These private bankers, having the authority to create money out of thin air have created too much money in the recent past and caused inflation, and are now creating too little money and thus are causing our current depression.

In the 1990s, Professor Jared Diamond wrote his book Collapse where he studied four civilizations that had perished in the past and two that survived. The two that survived, managed to overcome their prevailing falsehoods, their Conventional Wisdoms. The four fallen civilizations could not and did not. The question for all of us is: Do we have what it takes to overcome our gigantic delusion? Or will our democratic civilization fall into a new dark age where the only law is the Law of the Jungle?

1. See University of Massachusetts Professor Rick Wolff’s You Tube video, “Capitalism Hits the Fan.”

Our founding fathers were inspired in giving us the Declaration of Independence and our Constitution. Brilliant as they were, they could not have known and did not provide for control of emerging and rapidly growing economic dynamics of private banking and of capitalism. These two human institutions can be thought of as gigantic private tornado funnels that extract our wealth created by our work, for the benefit of the super rich. These two institutions are also parasitic in that in impoverishing their human hosts, they are also destroying themselves. These beneficiaries of the wealth and power generated by these two uncontrolled political- economic forces have now captured control of our governments, our military and intelligence forces, our media, our mainstream religions, our academic institutions, and what we study, what think and what we dream.

Besides these two institutions, we civilized humans are confronted, with the coinciding problems of over-population, Global Warming and the end of the age of oil. We humans in the United States and the Western World must make very profound changes in our values, life styles, and institutions, if we are to maintain sustainable civilized life. Our challenge is: Have we humans have evolved enough to make these profound changes? Can we do this when we face the relentless opposition of the main stream media and we have no comparable way of communicating the truth among the millions of us?

THE FIRST WEALTH EXTRACTING “FUNNEL TORNADO:” CREATION OF MONEY AND CREDIT BY PRIVATE BANKS

Even during the times of our Founding Fathers, there was public controversy about whether money should be issued solely by the government, solely by private banks, or by a mixture of the two. Prior to our Revolution, the State of Pennsylvania had been especially successful in creating public money. This was well known to the Founding Fathers who had just won the Revolutionary War financed by publicly created money issued by the various Colonies. At that time, the private European banks had found it to be immensely profitable for private banks to be in control of the money supply. It is said that branches of the banks of the Rothschild family financed both sides of the Napoleon’s Wars. Alexander Hamilton vigorously proposed private money creation. Benjamin Franklin and others wanted our new government to be the sole creator of money, public money. The resulting language of our Constitution was a compromise. The US Congress was given the power to create money, but it did not necessarily have to be the sole source of money-creation, and the Constitution left the private banks free to create money. The private banks seized the opportunity. Today, for practical purposes, all money is created by private banks

The actual workings of private banking and money creation are well documented,¹ but are totally unknown by voters and even many elected officials. The facts and the dynamics of private banking are startling:

• The Federal Reserve System is not a public institution. It is privately owned by the private banks. The Accounting and Auditing Act of 1950 section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include “deliberations, decisions and actions on monetary policy matters.”²
• Our money is created by private banks out of nothing. NOTHING!!!
• All money is debt!!! All money is created by private banks making loans to the government and to individuals and corporations. The private banks simply write a check for the requested loan, with no actual cash deposits to back up the loan. Banks do not ordinarily make loans from actual savings on deposit.
• Each loan becomes an account receivable by the bank which is then used as a “reserve” to issue even more loans.
• In the past, a ratio of 10 to 1 was common so that a bank with a loan, and thus an account receivable “reserve,” of say, $10,000, could issue 9 more loans for total loans of $100,000. This is called “fractional reserve” banking. All this money is created out of nothing by the private banks. In recent years, the 10 to 1 traditional reserve requirement has been largely ignored, and loans were issued at will sometimes with very little “reserves.”
• All money being debt, and that money plus interest being owed to the private banks, the resulting annual private profit for them is huge. Total private and public debt is now said to be over $50 Trillion, ($50 Thousand Billion), all owed to private banks. Taking into account the 18-21% interest charged on credit cards, and the much lower interest on Government Bonds, the average rate of interest must be well over 3% per year. But even 3% x $50 Trillion results in annual profit to private banks and their owners of $1.5 Trillion per year. The private banks are owned by the wealthiest 1% of Americans and foreigners. This is one of the principal causes of the immense and ever increasing disparity of wealth between the rich and the non-rich.
• We thus have a gigantic, fraudulent, secret, private banking system that is killing our civilized democracy and impoverishing us.

Money is power, power with which the tiny numbers of people constituting the super rich finance candidates for public office, finance their re-elections, finance their opponents if they fail to do the donor’s bidding, power finance lobbyists, think tanks, academic studies, and universities. George Washington’s Blog on July 2 gave us the result:

“Leading economist Dean Baker wrote today ‘Banks Own the US Government.’

The number two ranking Democrat in the Senate, Senator Dick Durbin (D-IL), said: “Frankly, banks own the place.”

Collin Peterson, Chairman of the Agriculture Committee, said: “The banks run the place … I will tell you what the problem is — they give three times more money than the next biggest group. It’s huge the amount of money they put into politics.”

This anti –democratic private power and wealth could be curtailed if we caused the United States Congress to exercise its power to cause the United States to be the sole creator of our money. We then would not need to tax ourselves to pay off public and private loans. This public money could simply be issued to rebuild our infrastructure, provide universal medical care, and to provide free education through college. Public money could be loaned at controlled interest rates for private businesses.³

THE OTHER WEALTH EXTRACTING “FUNNEL TORNADO:” CAPITALISM

The dynamics of capitalism, based solely on private greed, are more familiar than the workings of private banking, but still largely suppressed by the main stream media.

The core dynamic is this:

A person with money hires a person without money at the lowest possible wage, to produce as much profit as possible, for the man who already has money.

In 1789, this core dynamic seemed harmless. Persons without money could always go “out West,” or become self-employed. Our Founding Fathers did not and could not have anticipated how this private wealth creating institution standing parallel with a government “of, by and for the people” would capture control of the government.

However, this core dynamic repeated by thousands of employers hiring millions of employees, over the past 230 years has caused what we have today: The employers and those who finance the employers have gotten very rich and powerful. We employees have had a stagnant standard of living since 1970. An immensely powerful private business system now controls the government with its wealth in the same way that the private banks do. We now experience the resulting disparity of poverty and wealth. We experience our own voting impotence. Even though 70% or more of us voters want Single Payer Health Coverage, so great is the power of privately owned insurance companies and HMOs, that this coverage is not even on the legislative table for consideration. The super rich will allow no government solution to any of our problems unless it provides a profit making opportunity for them. Hence the relentless pressure to “privatize” every human enterprise from health care to freeways to municipal water works, and to cut the taxes of the rich.

So, our only hope is to seek sources of information and inspiration outside of these dominant mainstream institutions, from our own experience and observation, from our prophets and sages over the ages, and from our own sense of right and wrong. The current economic crisis provides a fertile opportunity, if only we had the wisdom courage to press our advantage. The Banks are bankrupt. We can use no more loans or “credit.” We are maxed out on debt. Capitalism is in its terminal phase. Capitalism has extracted all that it possibly can from us. We are working harder and longer and for stagnant wages. Capitalism has extracted so much from us, that we can no longer afford to buy the goods and services that our labor provides. In extracting wealth from us, these two institutions, private banking and capitalism, are reducing us to feudal poverty and are killing themselves.

As activist John Stoltenberg says:

… American capitalism is confronted with the greatest economic/financial crisis in its over 230 year history. Meanwhile, the capitalist class, its corporate management and its political elite, i.e. the capitalist oligarchy which has the real economic and political power, do not have any real solutions for the economic/financial problems confronting American capitalism. Therefore, the capitalist oligarchy has created our de facto fascist state whose sole function is to preserve the economic and political power of the capitalist oligarchy in the face of its failure to solve the problems associated with their very mature, dysfunctional and failing capitalist economic system.

Concurrently, people outside of the ruling capitalist oligarchy, people without much real economic or political power, people who do the grunt work to keep American capitalism functioning, who do the dirty work of fighting its wars, the expendable people who are unemployed, live on food stamps, have no health insurance, try to make capitalism work no matter how dysfunctional it is, no matter how badly it is failing as an economic system. It is these people who still believe the American republic with its democratic political process, our civil rights, the rule of law, and the separation of church and state still exists, and try to make our political system function as it was intended to function.

Since we have no public “bull-horn” comparable to the mainstream media with which to communicate among ourselves and to organize, we still can do the following:

• We can recognize our own denial that all of this is happening, our false belief that “everything will turn out all right,” and our wish to die if we cannot keep our material goods. Guided by cutting edge people like Carolyn Baker, Ph.D., a Jungian psychologist, educator, and author of Sacred Demise: Walking the Spiritual Path of Industrial Civilization’s Collapse, we can adjust to our current reality and create the sustainable survival of our human civilized community. We can be comforted and enlightened by the book, The Transition Handbook by Rob Hopkins, Founder of the Transition Movement.
• We can openly and honestly accept our impotence at the ballot box, and that we no longer have effective voting power. We can be aware of the immense private forces that control President Obama’s actual acts, as contrasted with what he says in his moving speeches.
• We can stop getting our information from the main stream media. We can “cut the cord.” We can and we must rely on non-mainstream internet sources like World Socialist Web Site, MRzine, George Washington’s Blog, Counterpunch, and Dissident Voice. We must become aware that even sources like Move On.org, NLPF, Huffington’s Post, NPR, PBS, and The Nation are beholden to and influenced by private banks and the private business institutions. We must judge their proposals, “insights” and “information” accordingly, and we must become aware of what they simply leave out of their coverage.
• We can use the internet to communicate and organize, perhaps using something like Face book.
• We can have one day or many day “buyers’ strikes” where we simply buy nothing, to demonstrate our power and our outrage, to mobilize ourselves, and to challenge the power of the super rich.
• We can have one day “work stoppages” or “sick days” where we simply do not work.
• We must be ever on guard that our use of the internet will be foreclosed or monitored by the powers that be.

1. See, for example, former Congressman Wright Patman’s report to the Congress and to the American people entitled “Money”; See also Paul Grignon’s eye opening 47 minute video, Money as Debt.
2. “ (b) Under regulations of the Comptroller General, the Comptroller General shall audit an agency, but may carry out an onsite examination of an open insured bank or bank holding company only if the appropriate agency has consented in writing. Audits of the Federal Reserve Board and Federal reserve banks may not include–

   (1) transactions for or with a foreign central bank, government of a foreign country, or nonprivate international financing organization;

   (2) deliberations, decisions, or actions on monetary policy matters, including discount window operations, reserves of member banks, securities credit, interest on deposits, and open market operations;

   (3) transactions made under the direction of the Federal Open Market Committee; or

   (4) a part of a discussion or communication among or between members of the Board of Governors and officers and employees of the Federal Reserve System related to clauses (1)-(3) of this subsection.” [emphasis added]

3. See the draft of the proposed American Monetary Act drafted by Steven Zarlenga and others.

We who are watching President Obama carefully observe that he has betrayed us. For unknown, hopefully innocent and unknowing reasons, he has chosen an economic policy based on a massive falsehood, and advisors who have enabled Wall Street Banks to earn rich profits in the short run based on that falsehood. Obama has committed $12.8 Trillion to bailing out crooked Wall Street Banks, fraudulent by the public admissions of their own CEOs, and attempting to make them whole, a ratio of 14 for Wall Street Bank crooks to 1 for our Main Street economy. Obama continues the idiotic policy through massive bailouts of Wall Street crooks by trying to restart the unregulated real estate bubble, specifically including unregulated derivatives, credit default swaps, and hedge funds.

Instead of hope and change from the policies of the Bush Administration that some of us expected, every single policy regarding the maintenance of an aggressive economic empire abroad has been retained or expanded. We are all concerned about the depression that now confronts us, our loss of jobs and our loss of our homes in foreclosure, and the loss of our old age security. We had somehow assumed that Obama would deal with that directly and effectively by taking steps to restore purchasing power. An obvious first thing we expected was that he would enlarge and lengthen unemployment benefits. This has not happened. President Obama has not clearly explained how his present bail out priorities will help us. He has announced no alternate strategy if the present strategy does not work. Our disillusion was capped off by an article in the Wall Street Journal on April 18, 2009 reporting that Obama was considering secret retention of the right of the CIA to torture. We get no explanation of this from the mainstream media, nothing from the Democratic Party and nothing from the Republican Party. Even Marxists seem unconcerned about Wall Street Banks. It is left to us citizens and voters to try to find answers to these perplexing questions from non-mainstream sources and from economists and analysts who are not beholden to Wall Street’s status quo. We thus have a massive job of self-education and education of friends and neighbors. As Professor Michael Hudson suggests, we might copy a small European nation where labor unions called a one day general strike for the purposes of educating citizens. In the United States, we may need a one week general strike, probably more than one.

Since so large a proportion of public money is devoted to crooked Wall Street Banks, and to the maintenance of the aggressive spread of American investment opportunities in foreign lands, it seems appropriate to examine the dynamics of the Wall Street Banking system.

Three Preliminary Definitions

By “Wall Street Banks,” we mean about 10 dominant leading international banks of the United States, Europe and Japan, the main ones being based in the United States, and the major firms that they lend money to in defense industries, manufacturing and industrial businesses, agri-business and transportation. The term includes the Federal Reserve System, the WTO and the IMF. We do not mean the local independent banks that serve us in our local communities.

By “capitalism” we mean the political-economic system in which the Wall Street Banks and the firms they finance including their control over the governments where they operate. Capitalists are thus those within the operating complex of Wall Street Banks who have access to the means of producing goods and services, and access to the Wall Street Bank loans to do so. We citizens and voters whether employed or self-employed are not “capitalists.” because we have control of and access to nothing but our own labor or brain power which we sell or rent to employers or clients, patients and customers. The car dealers, professionals and independent businesses in our local communities are not capitalists in the sense here used. We non-Wall Street citizens and voters have very different moral values, ethics and interests than Wall Street Banks.

By “the massive falsehood,” we mean the culture wide dominating falsehood promoted by Wall Street Banks and its politicians and advisors and, so far, accepted by President Obama. It is this lie:

“The economy can flourish indefinitely by increasing the supply of goods and services and loaning people money with which to buy them. It is never necessary to increase the wages and purchasing power of employees. Wages and salaries can be cut, jobs eliminated, and production transferred to low wage countries without harming our stable economy.”

Current events now graphically demonstrate the falseness of this proposition as does simple logic. Imagine an economic system where all of the work is done by unpaid slaves. The slaves could buy nothing, having no earned income. So who is left to buy? Banks might loan slaves money with which to buy, but how would slaves repay the loans? That is now our plight. Wall Street Banks hate unions and hate high wages and salaries for employees. Wall Street Banks hate giving citizens more money and security. Our jobs were transferred overseas where workers earn too few pennies to buy much of anything. Too many of us are unemployed or employed only part time at a wage where we can not even buy enough food, much less support our huge, but very fragile economy.

The Private Fortune Building Machine: How the Fed and Private Banks Create Money Out of Thin Air and Then Profit by Lending it To Us

The Wall Street Banking System is private. It exists to make a profit for its investors and owners. Congress in the 1913 Federal Reserve Act granted a franchise to private banks to create money and to regulate interest rates. This franchise today is exclusive for all practical purposes since most money is “check book” money and not coins and dollar bills.

The Federal Reserve Board is not a public institution. Although the President selects the 12 board members for staggered terms, by law, they must be selected from a pool of private bankers. The Federal Reserve Bank and its 12 member branches are also private banks, owned by the member private banks. We have no accurate way of knowing the profits of this system because, by law, it may not be subjected to public audit.

The Federal Reserve Board creates money out of thin air, simply by writing a check, with no back up reserves or deposits and then allows a member bank to “create” 10 times more of that initial check book money. Our government backs this magic money as “legal tender” for the payment of all debts and taxes. For example, if a member bank has applications for loans, say $1000, the Fed simply writes a check for this money out of nothing and lends it to the member bank. Then a second bit of magic money making occurs: Each such loan by a member bank becomes an “asset” or a reserve so that the member bank can loan 90% of the first “asset” to a second borrower, and 90% of the second borrower to a third borrower and so on, to a maximum of $10,000 based on the initial $1000. This is called fractional reserve banking.” It is a fabulous way to create a permanent and growing “critical mass” fortune due to the compounding of money loaned at interest over time. It is the hidden secret of private banking that has existed at least since Rothschild in the early 1800s. The banks charge us interest on money they create out of thin air. The private fortunes that this system generates over the decades are beyond belief. These private banking fortunes must have multiplied many times.

The total private banking fortunes of Bank investors and heirs of investors must now be as large as the entire planet’s GNP. We have no way of knowing how much. This then is the operational underpinning of the private banking system. If we had known in time, we all should have started banks. Foreign banks and individuals, probably including Rothschild heirs, own stock in our private Wall Street Banks, but again we have no way of knowing how much. Because it generates so much money, it generates dominant power over our government. In fact it was this already existing private bank lobby money and power that “persuaded” congress to delegate its power to coin money and regulate the value thereof to private banks in 1913. Keep this secret, magic, profit generating system in mind as we examine how the private banks have used this power since 1913. Think also of the statement attributed to the legendary European banker Amschel Mayer Rothschild who allegedly said in 1838: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

How the Wall Street Banks Have Compounded Their Political Power and Profits, From 1913 to Date

Wall Street Banks have persistently striven to place themselves at the center of every human transaction so as to make money, and to expand their profit making opportunities and their power.

In 1944 the Wall Street Banks met at a ski resort in Bretton Woods, New Hampshire.Voters and citizens in the US were fighting WWII in the armed services, riveting airplanes, welding tanks and ships, and buying Victory Stamps arranged as corsages for their dates. Millions of ordinary citizens were putting out this massive effort to secure the Four Freedoms, Freedom from Fear, Freedom from Want, Freedom of Speech, and Freedom of Religion. The Wall Street Banks had a very different objective. They were meeting in Bretton Woods to plan how to maximize their profit and power following WWII. England, France, Germany and Japan were physically and financially devastated by WWII. The United States escaped WWII relatively unharmed. Wall Street Banks seized the opportunity to dominate. Wall Street Bankers hatched a plan to make the dollar backed by gold the dominant currency for the planet and to breach national barriers so as to foster dominant lending and investment opportunities throughout the world for Wall Street Banks. The dollar dominance created by Bretton Woods was backed by the US guarantee that it was “legal tender,” and the promise to pay in gold if demanded, the “gold standard.”

By 1971, The US debt and inflation due to the Viet Nam War caused Europeans to demand payment of debts in gold. This was exhausting our gold supply so President Nixon unilaterally abandoned the gold standard and adopted a “floating dollar standard” relative to other currencies. The US dollar dominance was strong enough by that time that the dollar remained the dominant currency of the planet, aided by a Treaty with Saudi Arabia that all oil it sold would be paid for with dollars.

After a time a domestic crisis occurred in the operation of this Wall Street Bank capitalism. There would be overproduction: more goods produced than earned wages could purchase, and still yield a profit. Wages stagnated. Wall Street Banks found insufficient profitable places to loan money. The Wall Street Banks quickly adapted using the IMF and the WTO which the private banks controlled. They exported their Wall Street Bank crisis to poor countries. They made large loans to foreign governments often to their Dictators, to “help them develop.” Wall Street Banks were not being charitable or benevolent. They imposed harsh conditions on these loans:

1. The borrowing country had to open its borders so that Wall Street Banks could invest in that country.

2. The country had to privatize many of its public works such as water works, abandon “socialism,” and adopt a market economy so that Wall Street Banks could purchase or invest in that country without restriction.

3. The country had to cut its social welfare programs (which had the intended effect of compelling workers to accept lower wages, or starve.)

4. Taxes had to be raised on the workers so that the IMF loans could be repaid.
This was the Wall Street Bank salvation formula that was imposed on the Soviet Union, Mexico, Brazil, Argentina, Chile, and Indonesia, among others.

By 1980, poor nations became unable to pay and Wall Street Banks were desperate to find still other ways to make profit. Wall Street Banks adopted the policy of “Financialization.” This meant that instead of trying to loan money for the production of goods and services that human beings needed, and could pay for, Wall Street Banks would buy and sell each other’s companies, invest in hedge funds or bets that a company or commodity would go up or down. The profits for Wall Street Banks were immense, much more than Wall Street Banks had ever made before. Wall Street Banks used its new money to persuade Congress to abolish the Glass-Steagall Act and to pass a law prohibiting regulation of these “securities.”

This new absence of regulation enabled Wall Street Banks to become crooks, to engage in fraud. Wall Street Banks made “liar loans,” risky loans that Wall Street Banks knew from decades of banking experience, the borrowers were unlikely to repay. Wall Street Banks begged local mortgage brokers to sell such liar loans to unqualified buyers of houses, urging them to falsify their income. These liar loans were made sometimes to unlearned first time home buyers and sometimes to speculative individuals who thought they saw a way to make money without working from the appreciation in house values.

Wall Street Banks then bundled these loans, and issued layer upon layer of bonds “secured” by these “liar loans.” Wall Street Banks then pressured the rating agencies like Moody’s to give these very risky bonds an AAA rating. Wall Street Banks then sold these bonds to state pension funds, wealthy foreign individuals, to foreign governments, and even to a tiny town in Northern Norway, all of whom justifiably relied on the AAA rating. The profits for Wall Street Banks created many new billionaires and millionaires. These Financial Assets grew to about 425% of U.S. Gross National Product. The total fortunes now accumulated by the families invested in Wall Street Banks are probably enough to control the entire developed world.

It is these crooked fraudulent Wall Street Banks, stock holders and CEOs that Obama is now bailing out with a commitment of $12.8 Trillion of public money. Further than that, President Obama has retained as his main advisors the same persons and the same crooked fraudulent practices that created our current depression and difficulties.

The Wars Against Terror, Aided Where Necessary by Torture and Assassination, are Critically Necessary to the Maintenance of the Power of the Wall Street Banks

Any person or group within a foreign country who actively opposes imperialistic Wall Street Bank looting or dollar domination is labeled a radical, a communist, a socialist, or more recently a terrorist. Terrorists are often loyal to their cause and to each other and will not talk when captured, so Wall Street Banks find it necessary to torture them so as to identify and capture other terrorists. This will not seem so strange or unusual to those who know that US employers, to protect their profits, have historically resorted to hired thugs, beatings, and murder of those employees who engaged in a work stoppage and union organizing. Employers did not see this as immoral or uncivilized. Such striking employees were “terrorists,” outlaws, hooligans, and radicals, so far as employers were concerned. Wall Street Banks apparently see those who oppose their policies abroad in the same way. According to Professor Michael Hudson, Wall Street Banks say in effect: If you oppose our dollar domination, we will kill you.” William Blum in his 1995 book, Killing Hope, gave us the details of 55 foreign countries in which our military or CIA had been involved in killing operations after WWII up to 1995! (The “hope” that Wall Street Banks killed was the hope of the citizens of these countries for a better life.) Since 1995, we have the additional examples of Yugoslavia-Bosnia, Afghanistan, Iraq, and now Pakistan.

Criminals Have Captured Our Government

We can make sense out of what is happening only by seeing Wall Street Banks for what they are: Criminals with far more power and capacity for evil than the mob or the mafia. These criminal Wall Street Banks, unlike the mafia, have control of our national government, with its larger military capacity than all of the other nations put together. These criminals have at their disposal, 800 military bases in 70 countries, the Army, Navy, Air Force and Marines, the CIA, most academic persons, the main stream press, and the support of the major religious faiths.
They have the tools of modern advertising and PR to create diversionary fears, to create “false flag disasters,” and to manipulate our thoughts and our votes.

Wall Street Banks are now exercising their power over our government to restart the crooked bubble without regulation. Michael Hirsch in an April 10, 2009 Newsweek article entitled “Wall Street Digs In” writes:

At issue is whether trading in credit default swaps and other derivatives – and the giant, too-big-to-fail firms that traded them — will be allowed to dominate the financial landscape again once the crisis passes. As things look now, that is likely to happen. And the firms may soon be recapitalized and have a lot more sway in Washington — all of it courtesy of their supporters in the Obama administration. With its Public-Private Investment Program set to bid up and buy toxic assets, the administration is handing these companies another giant federal subsidy. But this time the money will come through the back door, bypassing Congress, mainly via FDIC loans. No one is quite sure how the program will work yet, but it’s very likely going to make a lot of the same Wall Street houses much richer at taxpayer expense. Meanwhile, the big banks that still need help will almost certainly get another large infusion once the stress tests are completed by the end of the month.

The financial industry isn’t leaving anything to chance, however. One sign of a newly assertive Wall Street emerged recently when a bevy of bailed-out firms, including Citigroup, JPMorgan and Goldman Sachs, formed a new lobby calling itself the Coalition for Business Finance Reform. Its goal: to stand against heavy regulation of “over-the-counter” derivatives, in other words customized contracts that are traded off an exchange. Companies like these kinds of contracts, which are agreed to privately between firms, because they allow them to tailor a hedge perfectly against a firm-specific risk for a certain time period. But in order to preserve its right to negotiate these cheaper private contracts, Wall Street is apparently willing to argue for the same lack of public transparency and to permit the systemic risk that led to the crash.

Even Though the Congressional Oversight Committee Cannot Find Out What is Going On, What Can We Citizens Deduce Concerning Our Own Well-Being?

Elizabeth Warren, the head of the Congressional Oversight Committee, tells us that she cannot get answers from Wall Street Banks about their strategy or what they have done with the bail out money they have already received. However it is clear from the evidence that Wall Street Banks are attempting to subject us ordinary citizens to the policies that they imposed on the poor nations of the world. We ordinary US citizens are destined to become like the citizens of “underdeveloped” nations. Wall Street Banks are trying to “kill our hope.”

* We have to accept “free trade” meaning the exporting of our jobs to foreign nations where labor is cheaper, unregulated capitalism, and police wiretap power over our thoughts and records.

* We have to endure privatization of our public works such as water works, freeways and prisons, abandon “socialism,” and avoid joining unions

* We have to accept cuts in our social welfare programs (which have the intended effect of compelling us to accept lower wages, or starve.)

* We have to pay higher taxes to repay the bail out debts, while the wealthy get tax cuts.

Wall Street Banks well know of the culture wide lie that they have propagated. They know that the jig is up, that our wages and salaries have been so depleted, and our borrowing so maxed out, that the system is about to fall. Lending us more money, will no longer work.

Professor Michael Hudson says that the crooked Wall Street Banks know that the debts now being incurred by us taxpaying citizens can never be repaid. They know that this will cause China and Saudi Arabia to stop buying our Bonds, Bonds that finance our wars and bases that encircle and threaten those countries like China, Japan, and Saudi Arabia who now buy our bonds. Wall Street Banks know that their own acts and policies will inevitably bring our political economy crashing down. As bankers, they well know that creating a lot of “check book” money (fiat currency) will cause massive inflation so that each of our dollars will buy less and less.

So the only conclusion that can be drawn is that the human owners of the Wall Street Banks are grabbing all of the Trillions of dollars that they possibly can, while they can. They will quickly convert their dollars to a stable foreign currency if there is one, to land, oil, gold, diamonds, plutonium, and commodities, and live in residential castles behind guarded gates.

They will buy or obtain by foreclosure all available food producing land. Those of us that survive will be reduced to feudal serfs allowed to work a parcel of land for the economic nobles who own it, and to retain a small share of food, wool and cotton for ourselves. We will become share-croppers at best, and dead at worst.

So How Does Obama Fit Into All of This?

Is Obama the hypnotized, drugged, programmed puppet of Wall Street Banks?

Is Obama afflicted with the psychological disorder of two or more personalities, one magnificently promising us hope and change, and the other delivering starvation, serfdom, and death?

Is he simply innocently ignorant of the real dynamics of our political economy and respectful of his Harvard academic advisor like Lawrence Summers, University of California advisor Christina Romer and Wall Street Banker, Secretary Geithner who themselves have built their careers on the lie?

Does he have the ambition of the top law school graduates of rising to the top of the “legal pecking order” by serving the legal “needs” of the very largest private institutions?

Is he a very bright man who does know of the lie, but also knows the political limits, within which he can operate, and, somewhat like Lincoln, is waiting for Wall Street Banks to fall even further, become even more weak and bankrupt, before he can act on our behalf? If so there are neither plans on the shelf, nor knowledgeable persons to implement it.

We have no way of knowing what motivates Obama. How do you see him? What is your strategy given the circumstances? I am “beating pots and pans” as loudly as I can, and writing articles like this in my effort to arouse others to participate in massive protest marches whose objective is to make the politicians meet our needs. I invite you to do the same. As a fall back position, I am buying a small parcel of land with my remaining retirement dollars where I can grow food and keep a goat.

We have carefully watched the new President’s first 100 days and we are appalled. We find that Obama has continued Bush policies affecting the abuses of Wall Street banks, and allowing Wall Street wrongdoers to manage our economy and the “recovery.”

Forget the impeachment of Bush and Cheney, the prosecution of Eliot Spitzer for his sexual indiscretion, and Bernard Madoff’s little Ponzi-scheme. What about prosecuting those bankers who profited from the most massive fraudulent swindle in human history?

Reputable commentators such as Michael Whitney, John Paul Roberts, Professor Michael Hudson, and now Professor William K. Black have spelled out the details. The CNBC TV Documentary House of Cards explained in detail with surprisingly candid on camera, guilt free admissions by the wrong-doers how this swindle worked from the borrowers and mortgage salesmen in Los Angeles to the top CEOs of Wall Street and to the Fed. These sources of our information have been relatively diplomatic in tone. It is time to name names and cite the fraudulent acts of those responsible, and the specific violations of law.

As we evaluate all of this, keep in mind what William K. Black said on Bill Moyer’s April 3 program about making risky loans where the ability of the borrower to repay a loan is not vetted: “We know that will produce enormous fraud under economic theory, criminology theory, and two thousand years of life experience.” Both Democrats and Republicans, hand in hand with Wall Street Bankers, by repealing the Glass-Steagall Act, and by enacting The Commodity Futures Modernization Act of 2000 specifically to preclude regulation, caused the current extraordinary depression and crisis by ignoring and acting contrary to this accumulated human wisdom. Think of this when you evaluate whether their acts were knowing and intentional and whether they are guilty or innocent.

THE INTENTIONAL FRAUD OF THE WALL STREET BANKERS, RATING COMPANIES, AND THEIR CONGRESSIONAL ENABLERS

The legal elements or requirements of the crime or wrong of fraud known to every first year law student are:

   1. An intentional misrepresentation of facts or a false promise
   2. Knowledge of falsity
   3. Intent to deceive
   4. Justifiable and actual reliance on the truth of what was represented or promised
   5. Resulting Damage

President Obama is a brilliant lawyer, top of his class at Harvard Law, and a ten year professor of Constitutional Law. His roots are in Chicago politics. President Obama clearly knows the elements of fraud.

We know the factual details of the wrongdoing from CNBC’s video House of Cards where those involved in the fraud at each level made surprisingly candid admissions of what they had done. At each level, the CEOs involved felt no guilt or responsibility. They would not have changed their conduct in retrospect Each said he had to do what he did to stay in business and to compete with others who were doing the same thing. This was the “justification” at every level from LA mortgage salesperson, to the bankers, the creators of layers of derivatives and credit default swaps to the raters who gave the derivatives that they knew or should have known were not worth their stated values: AAA ratings. All of this was happening in the context of congressionally granted exemptions from regulation, and NY Fed President Timothy Geithner’s failure to supervise and to regulate.

The Wall Street bankers deliberately made and palmed off to others loans that they knew were really bad. They made them because they were so profitable. Among themselves, they called them “liar’s loans” because they did not care if borrowers were unqualified and they encouraged them to lie about their incomes. They created the layers of derivatives based on these pools of liar loans, knowing that they were extremely risky. They pressured the rating companies to give them AAA ratings, and the rating companies complied “because the competition was doing it” when they knew or should have known that the “securities” were really not of AAA quality.

Foreign investors, domestic pension fund managers, and foreign governments and banks justifiably relied on the Wall Street banker’s sales pitch and the AAA ratings. The AAA rating satisfies the obligation of “due diligence” in checking the risk of an investment. These innocent but sophisticated investors had a right to assume that NY Fed President Timothy Geithner was doing his duty of supervising and regulating.

All of these investors were damaged when the house of cards collapsed. The investors have been damaged. We the citizens and voters and generations of our offspring have suffered almost incalculable damage…damage totaling many trillions of dollars that will plague us for generations.

This is the massive Wall Street fraud that President Obama inherited, and is now covering up, and possibly attempting to restart.

PRESIDENT OBAMA IS NOT FAITHFULLY EXECUTING THE LAW REGARDING UNDERCAPITALIZED BANKS

President Obama now has the sworn Presidential duty to “take care that the laws be faithfully executed.” Thus he must “faithfully” prosecute financial wrongdoing, avoid conflicts of interest, and specifically, take certain prompt action against wrongdoing Wall Street banks as mandated by the Prompt Corrective Action Law that was enacted just following the savings and loan crisis of the 1980s. This law is found in Title 12 United States Code beginning at Section 1831.¹ There is no exception in the law for “banks that are too big to fail,” and no exception for criminal enterprises even if they are large.

Instead of bailing out wrongdoing banks with Trillions of dollars of our money, President Obama is required by federal law to appoint a receiver for the bank within 90 days after it becomes critically undercapitalized. He must prosecute those bankers who were paid salaries or bonuses while their banks were undercapitalized. There is no question that they are undercapitalized because they require Trillions just to make them function, without complying with legal standards. If “they are too large to fail,” they have seized way too much private “mafia-like” power over all of us. President Obama can and must follow the law.

OBAMA’S CHOSEN FINANCIAL AND ECONOMIC ADVISORS KNOWINGLY DEREGULATED SO AS TO ENABLE THE FRAUD, AND THEN PARTICIPATED IN THE FRAUD AND PROFITED FROM IT

Obama’ Chief Economic Advisor, Larry Summers one of Clinton’s Secretaries of the Treasury, and Robert Rubin along with Republican Senator Phil Gramm lead the lobbying effort to repeal the Glass Steagall Act thereby enabling Wall Street Banks to invest in derivatives, hedge funds, and credit default swaps, and permitting Wall Street insurance companies to engage in banking.

Then the same three men, Summers, Rubin, and Gramm together with Alan Greenspan lead the effort to persuade Congress to pass a law in 2000 without debate in either the House or the Senate prohibiting the regulation of these newly enabled Wall Street financial giants. It is known as The Commodity Futures Modernization Act of 2000, and is found in Title 7 USC Section 2. The exemptions from regulation are found in Sections 2 (g) and 2(h).² President Clinton signed the new law on December 21, 2000.

Obama’s Chief Economic Advisor Larry Summers and his Secretary of Treasury Timothy Geithner both pushed for the enactment of this law which enabled the ensuing fraud involving mortgages and the layers of derivatives that were known to be risky and worthless.

Secretary of Treasury Timothy Geithner, President of the New York division of the Fed where all of the major Wall Street banks are located had the following duties according to its own mission statement:

It is responsible for

   formulating and executing monetary policy,
   supervising and regulating depository institutions,
   providing an elastic currency,
   assisting the federal government’s financing operations, and
   serving as the banker for the U.S. government.

In addition to paying his own taxes, Timothy Geithner had a public responsibility and duty to all of us. Timothy Geithner, the man chiefly responsible for avoiding what has happened, instead facilitated the fraud. He did not supervise and he did not regulate.

PRESIDENT OBAMA IS KNOWINGLY AND INTENTIONALLY REWARDING CRIMINALS AND IS COVERING UP WALL STREET BANK CRIMES AND FRAUD

It is a felony for any person including the President of the United States to cover up a crime. 18 USC Section 4 states:

Whoever, having knowledge of the actual commission of a felony cognizable by a court of the United States, conceals and does not as soon as possible make known the same to some judge or other person in civil or military authority under the United States, shall be fined under this title or imprisoned not more than three years, or both.

Such a cover up is also criminal fraud as defined in 47USC 1001.³

Such a cover up when done by a President, Vice President or a Secretary of Treasury is also a “high crime and misdemeanor” warranting impeachment under Article II, Section 4 of our Constitution:

“The president, vice president and all other civil officers of the United States shall be removed from office on impeachment for, and conviction of…high crimes and misdemeanors.”

President Obama has also taken the Presidential Oath that he will faithfully execute this cover up avoidance law as well, and not to violate it himself.

80% of the American people, according to a recent poll believe that Wall Street is crooked and is responsible for our current Depression.

Obama, in a recent speech to Wall Street CEOs telling them to “cool it” about justifying their contract rights to bonuses, said

“My administration is the only thing between you and the pitchforks.”

So what is he saying to the 80% of us potentially holding pitchforks who voted for him?

In effect, he is saying in his vague, charming, persuasive and hypnotic way: “I know of no crimes. I want to look to the future I will not prosecute the bankers. I will hire them as advisors. We have nothing to learn from their mistakes. We together will try to restore lending, and restart the economy as it was.”

What are President Obama’s own lawyers, Dawn Johnson Chief of the Office of Legal Counsel and Attorney General Eric Holder advising him? Are they, like John Yoo and Michael Mukasey who advised Bush that he could torture, advising Obama that he has the power to ignore the law created exactly for the purpose of dealing with failing banks because of an economic emergency? What is brilliant lawyer Obama advising himself? Where is there indication of Obama’s own integrity and inner moral compass?

WHAT ARE THE CONSEQUENCES FOR US IF OBAMA’S MUTI-TRILLION BAIL OUT OF WALL STREET “SUCCEEDS?”

The most immediate, pressing danger is that it will not work at all. Obama may not discover this until it is too late to try another solution. The reason is Obama seeks mainly to restore the lending ability of the Wall Street banks. That will work only if we are willing to fund our purchases by more borrowing. We are not. We will not borrow. We are too frightened. The great danger is of a total breakdown of civilized democratic society.

Even if it “works,” Obama’s plan will never succeed for us. The reasons are:

• Obama and his advisors see capitalism as a stable system that only got a little off track due to unfortunate lack of regulation. It is in fact in deep trouble even aside from the banking problem due to an overproduction of goods and services that can be produced at a profit. This is the underlying “systemic defect.” Failing to recognize this defect, Obama does nothing to solve it.
• Obama aims mainly toward providing more credit, restoring the Wall Street banks’ ability to lend money.
• Obama fails to deal adequately with restoring the purchasing power of consumers from our earned labor.
• The inevitable result for us will be a vast inflation of our dollars, so that each dollar buys less and less. We will be like frogs placed in slowly heating water. We will notice nothing at first. The “water” will heat slowly until it kills us. It may ultimately “succeed” for the wealthiest 1% in that they will own all of the land, gold, platinum, silver, and commodities and live in guarded gated castles. Those of us who survive will do so as feudal serfs who are permitted to share-crop their land. The result for Obama is that he will lose his bid for re-election in 2012 due to the massive despair and disillusionment of voters.

WHAT COULD OBAMA DO THAT WOULD WORK?

Although his window of opportunity is very short, if Obama changed course promptly before he has put us many trillions further in debt, there are sound, historically tested things he could do. They are bold. They involve a profound change in his analysis of our problem. He could:

• Cause our government to be the sole creator of our money supply, our silver coins, our dollar bills, and our “check book” money. Lincoln did this in 1860 to finance the Civil War. The state of Pennsylvania did this successfully for 50 years prior to 1789.
• Instead of borrowing from private banks and other governments, our government could create and issue money to meet government, business and individual needs, including rebuilding our infrastructure, education through college, and universal health coverage, and to pay our government’s obligations on existing bonds as they fell due.
• Prohibit “fractionalized reserve banking,” the practice of private bankers lending from 10 to 90 times the asset-reserves they hold. Allow banks only to loan on a 1 to 1 basis, from the dollars they have on deposit.
• Impose a top limit on interest that could be charged say 8%.
• Allow the Wall Street banks to go into bankruptcy, but retain enough of the needed staff employees to implement the new way of supplying money where needed.
• Repeal the Federal Reserve Act and install the needed functions of the Fed as a division of the Treasury Department.
• Enable local banks and businesses to continue to function as they now do.

1. 12 USC Section 1831 o. Prompt corrective action

   (d) Provisions applicable to all institutions
   (2) Management fees restricted
   An insured depository institution SHALL pay no management fee to any person having control of that institution if, after making the payment, the institution would be undercapitalized.

   (3) Conservatorship, receivership, or other action required
   (A) In general
   The appropriate Federal banking agency SHALL, not later than 90 days after an insured depository institution becomes critically undercapitalized—
   (i) appoint a receiver (or, with the concurrence of the Corporation, a conservator) for the institution (Emphasis Added)

2. 7USC 2(g) provides the “Exon” exception for swaps:

   (g) Excluded swap transactions
   No provision of this chapter…shall apply to or govern any agreement, contract, or transaction in a commodity other than an agricultural commodity if the agreement, contract, or transaction is—
   (1) entered into only between persons that are eligible contract participants at the time they enter into the agreement, contract, or transaction;
   (2) subject to individual negotiation by the parties; and
   (3) not executed or traded on a trading facility.

   7USC 2 (h) (3) provides the exemption from regulation for derivatives so long as they are traded on an electronic trading facility (as they all were and are!)

   (3)…, nothing in this chapter shall apply to an agreement, contract, or transaction in an exempt commodity which is—
   (A) entered into on a principal-to-principal basis solely between persons that are eligible commercial entities at the time the persons enter into the agreement, contract, or transaction; and
   (B) executed or traded on an electronic trading facility.

3. 47 USC Sec 1001 states in part: “(a) …whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully -

   (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact… shall be fined under this title or imprisoned not more than 5 years, or both.

Do you want “change” from the status quo, as I do? Do you want regulation of Wall Street? Reform of the private banking system? The Employee Free Choice Act? Election reform? Single Payer Health Coverage? The public financing of election campaigns? Making contributions of large sums of campaign money a felony? Prosecution of torturers all the way to the top? Save the environment? If we want any one of these proposals, we must mobilize with many other voters to defeat the Senate Filibuster.

The Filibuster is a Senate practice, embodied in the Senate’s “Robert’s Rules of Procedure,” as Senate Rule XXI that effectively thwarts our self governing democracy of, by and for the people. It enables a very small number of Senators to defend the status quo, to prevent change, and to prevent enactment of bills or appointment of judges and officials that are demanded by a majority of us voters, a majority of the Members of the House of Representatives, a majority of the Senators, and by a popular President elected by a majority of voters. Filibustering originally meant unlimited talking or debate to delay or preclude a vote on the merits. Under modern usage, no Senator speaks endlessly. A single Senator privately and secretly informs his Party leader that he objects to the proposal. The Party leader honors his wish, and requires all members of the Party to vote against ending debate. Then no vote on the merits can be had until a supermajority of 60 Senators vote to permit a vote. From 1919 to 1970, the filibuster was actually used about 2 times per Congressional Session. During the Civil Rights Era after 1970 it was used much more often. Since the election of Bill Clinton in 1992, the filibuster has been used by the Republicans as a partisan weapon to thwart the majority. During Bill Clinton’s first two years, there were 20 attempts to close off “debate,” and the necessary 60 Senators could be mustered only 4 times. The pledge of the disciplined Republican Senators to stop President Clinton’s Stimulus Package was adhered to and the President’s Stimulus Proposal was defeated on 4 separate occasions as the Democrats tried to raise the necessary 60 votes. This does not even count the many Presidential proposals that were not even considered or brought up for a vote because of the threat of the filibuster.

The filibuster thus stands as a permanent and formidable weapon by Republicans, by Blue Dog Democrats, by powerful moneyed interests, by HMOs, by Wall Street, by war industries, and by ideologues to defend the status quo and to prevent both reform and “change.” It is now being used against Obama’s proposals, and it can and will be used against our demands. The mere existence of the filibuster and the threat of its use inhibit consideration of effective measures that really solve problems. In 1993 when someone pressed Hillary to consider Single Payer, she said: “Get real.” What she meant was that both the money of the insurance lobby and the filibuster made consideration of Single Payer impossible. It still is for the same reasons.

Our founding fathers were wealthy property and slave owners. They were very afraid of government by a “mob,” of rule by a temporary majority of voters. The Whiskey Rebellion had recently occurred. They created a Senate where Senators are elected for 6 year terms for the very purpose of slowing and impeding popular will. They created a law making process that even without the filibuster, contained 3 difficult hurdles: In order to pass a new law, a majority of voters must elect a majority of Members of the House, and elect a majority of Senators. Voters must in addition elect a President who will not exercise his veto over our majority will. These are obviously very difficult hurdles. We the sovereign people have to organize and maintain a disciplined sustained effort for at least 6 years in order to implement our will under the constitutional pattern.

The Founding Fathers clearly intended to require only the votes of a simple majority of Senators as in order to make a law:

   1. The Founding Fathers expressly provided regarding both the House and the Senate that “a majority of each shall constitute a quorum to do business.” In the case of the Senate, that means that 51 Senators can show up to enact a law. It may mean that a simple majority of that 51 Senators or an affirmative vote of 26 Senators shall be sufficient. At most it means that only the unanimous vote of the full quorum or 51 Senators is required. In the case of a 50-50 tie 50 votes plus the vote of the Vice President is sufficient. It does not mean that the affirmative vote of 60 Senators is required.

   2. The constitution provides for 6 other special instances where a 2/3 vote is required.

   a. To override a Presidential veto
   b. To ratify a treaty
   c. To expel a member
   d. To impeach
   e. To propose amendments to the Constitution
   f. To adjourn the Congress over the objection of the President

   3. Thomas Jefferson presided over the first Senate and wrote the first procedural rules for both the House and the Senate.¹) These rules provided that debate could be ended so that a vote could be had on a Bill by a non-debatable motion for the previous question which could be passed by vote of a simple majority of the quorum. The House has continued with this procedure to this day. The Senate operated with this procedure from 1789 to 1806, when this constitutional rule was abolished.² The bloodless coup started then.

   4. Consider the effect on our law making power if the House of Representatives also adopted the filibuster. This would obviously be unconstitutional if the House did it because few if any laws could be enacted. The House and Senate are governed by the same provisions in the Constitution. So it is unconstitutional for the Senate as well.

   5. The Supreme Court in U.S. vs. Ballin³ in 1892 impatiently confirmed what the common understanding had been for hundreds of years:

“…the act of a majority of a quorum is the act of the body. This has been the rule for all time…”

So, the Senate filibuster is unconstitutional.

Although the Senate has a constitutional right to make its own rules of procedure, those procedures must implement, not obstruct the will of the voters. The great Chief Justice John Marshall ruled early on in 1819 in McCulloch vs. Maryland,⁴ (a case upholding a congressionally created US National Bank) that our constitution provided for a government of the people, by the people, and for the people. President Lincoln embedded this concept in our minds by his Gettysburg Address. “We the People of the United States” are the sovereign 4th branch of government. We are the bosses. The Senators, the President and all elected officials are our agents. The constitution compels them to implement our will, not theirs. The filibuster empowers 41 Senators permanently to veto the constitutionally manifested majority voting power of 69 million voters. The filibuster is in fact a right wing bloodless coup by Senators, as effective as a bloody machine gun coup by a military dictator.

The filibuster has its roots in slavery. As a majority of voters began to object to slavery, Slave Owners in the South needed every parliamentary trick they could devise to protect their right to own and to profit from slavery. They got extra Members of the House of Representatives because each of the millions of the non-voting slaves was counted as 3/5 of a person for purposes of apportioning representatives in the House. Thus Southerners had the votes to capture leadership roles in the Congress. In the Senate, the Southern slave owners needed a device to prevent votes against their interests. The filibuster was perfect for this. A Southern Senator had only to keep talking to prevent action on the merits that would free the slaves. Even after the Civil War and the abolition of slavery, Southerners used the filibuster to prevent Congressional action to implement Black voting rights, to prevent enactment of a law against lynching and to prevent laws abolishing the poll tax.

Although Senate Rule XXII and the filibuster are unconstitutional, the Supreme Court, composed of Justices who are now inclined to oppose the concept that voters are sovereign, denies “standing” to a sovereign citizen, any group of sovereign citizens, to a Member of Congress, and to a Senator to challenge the filibuster in court. Nobody has standing. One might think that a sovereign citizen would be able to exercise his First Amendment right to “petition the government for a redress of grievances” by bringing a suit in court, but the Court has ruled that “right” means only the right to file the claim with the clerk and not the right to be actually heard or to get actual redress. The court has changed since 1819 when it affirmed the concept of the sovereignty of the people. Contrast the current rulings denying sovereignty with the court’s rulings giving a corporation the legal rights of an actual person, and giving that corporation the First Amendment Right of free speech to use its wealth to broadcast widely to overwhelm individual speakers. The Senate’s use of the filibuster has created a Supreme Court that supports the bloodless coup.

All of this leaves us with the only remedy available, and it is not easy. A simple majority of a quorum of Senators, plus the cooperative vote and ruling of Vice President Biden, can change the rule any time the Senators wish. This Senate precedent and procedure was established in 1975 by then Senator Mondale. Supposing the Democratic Senators really wished to enact banking reform or Single Payer: Somebody moves to cut off debate and bring the matter to a vote on the merits. The Vice President puts the matter to a vote. Somebody, probably a Republican or a Blue Dog Democrat or Senator Lieberman raises a point of order: “Point of Order Mr. Vice President. Senate Rule XXII requires 60 votes to close debate.” The VP rules that Senate Rule is unconstitutional and that the constitution compels a vote by a simple majority. Somebody then will challenge the ruling of the chair. This vote is not debatable and the ruling of the chair can be sustained by simple majority vote. . This is the basis of the threat by Republicans when they were recently in the majority to use the “nuclear option.”

The secret is that the Senators do not wish to change the rule. Not a single Democratic Senator and not a single Republican Senator wishes to change the rule.

In 1973, full of sovereign citizen outrage when the filibuster was being used against President Clinton’s Stimulus Package, I filed suit in the D.C. Federal Court⁵ against all 100 Senators raising the challenge that the supermajority requirement of Senate Rule XXII was unconstitutional. I claimed that I had a constitutional right to a fractional share of majority voting power, and to have that right implemented by a simple majority of my elected Senators and Representatives. I naively hoped and expected that President Clinton and some Democratic Senators like Senator Wellstone and Senator Leahy would seize the opportunity and join the suit on my side. I notified President Clinton of the opportunity. He never replied. He never joined the suit. Every single one of the 100 Senators authorized and directed the Senate Legal Counsel to oppose my suit because I lacked “standing.” So I had neither verbal support nor legal support from any Democratic elected official.

There are several reasons why the Senators unanimously support this unconstitutional rule:

   o It gives each Senator a way to conceal his votes for the wealthy Wall Street Banks and to continue to receive campaign contributions, while he claims to represent the “little guy.” For example, both President Clinton and President Obama and the Democratic Senators can say the filibuster make it impossible for the overwhelming voting majority of us to get the Single Payer Health coverage we voters need and want. Meanwhile the Senators can continue to take campaign funding from HMOs and other interests who profit from the status quo.
   o It gives each Senator vast power to stall and possibly to defeat a majority proposal that is opposed by some moneyed interest that finances the Senators re-election campaign.
   o It preserves the alleged collegial and cooperative relationship among Senators so that they can “scratch each other’s back” and trade votes on different Bills important to each Senator.
   o It preserves the hallowed “tradition of the Senate” as a wiser, calmer legislative body, “the most powerful legislative body in the world,” as Senator Robert Byrd proudly claims.⁶
   o It has now existed for 203 years.

These are not ordinary times. This is a time of extraordinary emergency. We voters are facing “a depression greater than the Great Depression, loss of jobs, homelessness, illness, and hunger, along with Global Warming, and the end of cheap Oil.

We face a covert class war by the Wall Street Banks who desperately seek to preserve their sources of vast wealth by making us taxpayers and our taxpaying offspring pay their bills.

We have a cancerous private banking system that is siphoning off our wealth for the benefit of the wealthiest 1%.

We desperately need to assert our sovereignty as majority voters, and to regain majority control of our law making process.

The only way we can possibly do this is to mobilize and lead millions of our fellow and sister voters and beat our pots and pans in front of every office of the Senators, Congress persons, and the White House demonstrating that we are aware of the Senators’ dirty little secret and demanding that they abolish the filibuster. The angry and outraged voters are ready to act. It is important that demonstration leaders, spokespersons to the media, sign makers, and those who speak directly to the elected official, be prepared to make a focused demand that the Senators abolish the filibuster.

1. Page 395, Jefferson’s Parliamentary Writings, edited by Wilbur Samuel Howell, Princeton University Press (1988
2. From 1806 to 1917, one filibustering Senator could and did thwart majority action. There was no way for the Senate to get to a vote on the merits. Under the looming emergency of WWI in 1917 a “reform” was adopted by the Senators so as to permit 2/3 of the Senators to cut off debate. In 1975 under the pressure of the civil rights movement, the Senators agreed to a further “reform” so as to enact the 3/5 rule that exists today.
3. U.S. v Ballin 144 U.S. 1
4. McCulloch v. Maryland 4 Wheat 316
5. Page v. Dole et al United States District Court for the District of Columbia, No. 93-1546; Page v. Richard Shelby et al Unites States District Court for the District of Columbia, No. 97-0068
6. 1 Robert C. Byrd, The Senate 1789-1989

Forty five years ago in 1964, Wright Patman had answers and solutions for our banking problems which he left for us in his Congressional Reports, in transcripts of Congressional Hearings, and in his speeches in the Congressional Record.

Wright Patman was an extremely well qualified expert on our side. He was a lawyer, a former District Attorney, a former Representative in the Texas Legislature, and a long time Congressman. Wright Patman served as a Congressman from the North East corner of Texas for 47 years beginning in 1929 and ending in 1976. He was Chairman of the United States House Committee on Banking and Currency until 1975. He was an avid New Dealer. He served in Congress on the banking committee at the time of the 1929 Stock Market Crash, the Great Depression, the New Deal recovery efforts, financing World War II, and the post war boom period. Unlike current Representatives and Senators, he was not taken in by private Wall Street Banks for one second and he fought to expose Wall Street Banking evils and power.

Patman from his long experience with our banks provides evidence that Thomas Jefferson’s 1802 view of private banks was accurate:

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.

Luckily for us, Patman summarized his long experience with Wall Street Banking in his 50 page report, A Primer on Banking published by the U.S. Government Printing Office in 1964. It was his gift for us, his warnings, and his suggested reforms that are very relevant today even though our banking problem has gotten many times worse.

WHO CREATES MONEY IN THE UNITED STATES?

Patman approvingly quoted Lincoln who said:

Money is the creature of law, and the creation of the original issue of money should be maintained as the exclusive monopoly of the National Government. The privilege of creating and issuing money is not only the supreme prerogative of Government, it is the Government’s greatest opportunity.

Our Constitution provides that Congress shall have the power “To coin money and regulate the value thereof.”

Unfortunately, under heavy lobbying by private bankers, Congress delegated the power to create money to a private group of bankers with the 1913 Federal Reserve Act and its 1934-35 Amendments. About this, Patman said:

In the US today, we have in effect two governments. We have the duly constituted government, then we have an independent, uncontrolled and uncoordinated government in the Federal Reserve, operating the money powers which are reserved to congress by the Constitution.

We still have two such governments today in 2009. We have

   1. Our “We the People” Constitutional government of by and for the people. Our governmental powers are exercised for us by our elected representatives.

   2. A government by a private oligarchy of 12 bankers which creates our money, regulates the amount in circulation, regulates the interest rate at which money shall be loaned to us, to businesses and to our government, whose sole legal obligation is to make as much profit for bankers as possible.

What is wrong with this?

It gives this tiny private bankers’ oligarchy dominant control over our government, our economy, our level of well being. The oligarchy can refuse to finance reforms and programs enacted by our constitutional government. The oligarchy can and does lobby congress extensively; it finances the re-election of those who favor it, and finances opponents of those who vote against its wishes.

Patman quotes a once famous British Chancellor of the Exchequer who said of private banks:

“They control the credit of the nation, direct the policy of the governments, and hold in their hands the destiny of the people.”

This mirrors the statement attributed to the legendary European banker Amschel Mayer Rothschild who allegedly said in 1838: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

This oligarchy in effect plans our economy, not to benefit us or our general welfare, but to earn the maximum private profit for them. Thus, for example, we can get health coverage for everyone only if it we pay 31 cents of every health care dollar for interest on loans, HMO profits and CEO salaries and bonuses. We cannot have Single Payer health coverage financed by the government by progressive income taxes.

It is undemocratic. These 12 bankers are responsible to no one. They are appointed every 12 years by the then sitting President on staggered terms. The law compels that the appointees be selected from a pool of bankers, and thus no appointees representing labor, the consumer, the voter or academic experts can be selected. The Accounting and Auditing Act of 1950 section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include “deliberations, decisions and actions on monetary policy matters.”1 According to the law, in other words, the Fed simply cannot be audited by Congress. We apparently can not find out the actual profits of the Fed.

The oligarchy by increasing the amount of money in circulation can cause inflation. By decreasing the amount it can cause a recession and leave millions jobless. It can cause “bubbles,” and it can also cause depressions, whichever will earn the maximum profit for them.

Patman summarizes it this way:

What may appear, then, to be a simple decision to rein in the money supply and raise interest rates is, in fact, a simultaneous decision about the whole range of economic life—the prices people pay, the incomes they earn, the level of prosperity and the dynamic thrust of the economy is permitted to develop. The fallout extends even further. As interest rates rise, a transfer of income also takes place—to the large holders of liquid assets and the large financial institutions. It is no accident that rising interest rates are accompanied by a boom in the market for the stocks of banks and life insurance companies. The major owners of these institutions—certainly concentrated among a tiny minority of families in the United States—receive gratuitous additions to their personal wealth as the value of their stock increases. This only reflects the fact that there has been a shift of income away from interest payers—all of us in our role as consumers—toward the substantial interest receivers—only a relative handful.

WHAT IS MONEY?

Patman has a very clear and accurate concept of money. Money is not real wealth; it is only a claim to wealth. While barter can be useful, it is far more convenient to have a medium of exchange that people agree has value. This need not be gold and it need not be any substance of real value. It can be shells, beads, notched sticks or printed paper greenbacks. The selected medium of exchange must be backed by the law and the courts in that it must be legally acceptable in full payment of debts and taxes. It adds to its stature to have it backed by a government guarantee and to have a tax system in place so that the government can make good on its guarantee if necessary. There are many advantages if the government is the sole creator of money. Letting private bankers create money creates a lot of problems, particularly if banks are not regulated.

HOW IS MONEY CREATED?

A government, whether a royal monarchy or a democracy, can simply print and issue greenbacks, or give recipients a government check. The government would incur no debt to anybody if this method were used, and if interest was to be charged, the government would get the interest. Our Constitution authorizes this method for us.

Under the exclusive franchise to manufacture money that we have delegated to the 12 bankers, these private bankers can simply “write a check” with absolutely nothing to back it up. They can create money out of thin air, loan it to us, to businesses, and to our government, and make a private profit from the interest charged. This private money manufacturing process is backed by our law that makes this money legal tender, and it is guaranteed by our government and hence by us taxpayers. It is magic money making scheme that makes private bankers wealthy beyond imagination. It is far better than all the casinos on the planet for making money. Patman did not use this description, but it is in fact a massive fraud on the public in that banks are loaning money that they do not have.

Bankers and their controlled mainstream media do not like to reveal their lucrative secret. As Patman says:

…some of those who do understand the workings of our monetary system seem to feel they are in possession of secrets which cannot be safely revealed to the public…..For this reason, it has been traditional for bankers and other private managers of money to cloak the working of the money system with a mantle of secrecy…..These officials seem very partial to the turns of phrase that imply that the supply of money—and interest rates—are subject to powerful economic laws over which men have no control.

Patman lays out the workings of this private money making franchise in a way that we all can understand.

It all began with the gold smiths of the late middle ages who held gold for wealthy persons who did not wish burden or the risk of carrying it around. The gold smiths issued receipts for the gold. People found it convenient to use these receipts as a medium of exchange rather than withdrawing gold, paying it to the creditor, with the creditor then depositing the gold with the gold smith. The gold smiths made loans based on their deposits. Then, since depositors rarely came at one time to withdraw the gold, they began to make loans of up to 10 times the amount of the actual gold on deposit. Nobody was any the wiser and the gold smiths got very rich. The gold smiths were creating money, ten times the amount of money they had on deposit. Banks now do the same thing. It is called “fractionalized reserve banking.” They loan a lot more than they have on deposit. What they have on “deposit” and call an “asset” for the purposes of the ratio will surprise you.

In 1964, there were at least 2 components of our money supply in circulation:

20 % was Coins and dollar bills minted and created by the U.S. Mint

80% was “Check book money” being money created by private commercial banks and by the private Fed simply by writing a check

“In 2005, the check book money, now generated by computer entries and not actual checks, was calculated to be 97.6% of our money supply. (Money as Debt, Helen Hodgson Brown, 2008, Third Millenium Press, Baton Rouge, page 26)”

Supposing a local bank had loan applications, but had no money. Where would it get it to loan? The local bank would borrow money from the Fed. Patman used $1,000 as a ridiculously low example simply for purposes of explanation. So the local bank borrows $1000 from the Fed. Where does the Fed get the money? It simply writes a check for it, although the Fed has no reserve deposit. “It creates money purely and simply by writing a check.”

In addition to the magic power to write a check out of thin air, there is a magic multiplier:

Each loan that a bank makes is considered a new addition to its “reserve” for the purpose of calculating the fractional reserve ratio. Thus it can loan 90% of the first $1000 loan or $900 to a second borrower, and 90% of that or $810 to a third borrower and continuing until it has loans outstanding of 10 times the $1000 created out of thin air or $10,000 drawing interest to profit the bank and its shareholders.

When we consider the Trillions of Dollars of debt now owed to private bankers, it becomes clear that Wall Street and its banks are collecting huge sums in interest. This magic process creates unimaginable hidden wealth for banks and their shareholders.

There is always a danger that frightened cash depositors will gang up on a bank and demand the withdrawal of their cash deposits. The Fed stands ready as the “banker’s bank” to make loans to the besieged bank to meet the threat. So long as the threat is local and confined, the whole magic system continues to function and to earn profit for the bankers.

WHAT CAN WE LEARN FROM PATMAN THAT WOULD HELP TODAY?

Since Patman wrote his Primer in 1964, the powers and activities of banks have compounded the wealth generated for the bankers and their shareholders. This is due to de-regulation, relaxed regulation, and the repeal of the Glass Steagall Act so as to permit banks to venture outside mere money lending. Banks could now invest in new ventures, invest in the stock and futures markets, in hedge funds, in various collateralized debt obligations, all with the sole legal imperative that they make profit for their shareholders. They still had no legal obligation to serve the public interest. While it lasted, this bubble made bank shareholders very wealthy. This tiny group of wealthy individuals uses its wealth to enhance its political power over elected officials. As we see from recent Bail Out events, this power over our government has become dominant. The powers of our government have been captured and used solely to benefit this tiny group, the top 1% of the wealthiest people in our nation.

Despite this vast mushrooming, Patman’s analysis of the underlying banking dynamics remains accurate and his remedies even more effective. Patman would recommend:

   1. That the Federal Reserve Act be repealed and the legitimate functions of the Fed be made a division of the Treasury Department.
   2. That the U.S. Government be the sole “coiner” of money and that it simply issue Greenbacks as needed to make the economy flourish, and to pay for public projects.
   3. That fractionalized reserve banking be abolished. Local banks would be permitted to loan only on a 1 to 1 ratio of what they had on deposit and then only for a low rate of interest.
   4. That local Banks be regulated again.

These reforms would halt the cancerous existing practice where all money rests on somebody’s debt. This would stop the endless U.S. policy of borrowing ever more money from the private banks and from foreign nations. We and our grandchildren would not have to pay off a crushing national debt. Our dollar would not be inflated.

We could finance our recovery from this depression. We could avoid going into an even deeper depression. Our local banks and businesses would function as they now do, but in a stable sustainable way. If the money supply of the U.S. was stabilized, it could lead to the U.S. dollar again becoming the world’s currency standard, the planet’s stable reserve currency. Lincoln’s “greatest opportunity” for our government would be realized.

President Reagan’s Assistant Secretary of the Treasury, Republican Paul Craig Roberts seems to agree with Democrat Wright Patman. In Counterpunch on 3-26-09 in an article entitled, “Is the Bail Out Breeding a Bigger Crisis,” Roberts wrote:

Could this huge debt issue be avoided if the government took over the banks and netted out the losses between the constituent parts? A staid socialized financial sector run by civil servants is preferable to the gambling casino of greed-driven, innovative, unregulated capitalism operated by banksters who have caused crisis throughout the world.

Perhaps the Federal Reserve should be socialized as well. The notion of an independent, privately-owned Federal Reserve system was never more than a ruse to get a national bank into place. Once the central bank is part of the state-owned banking system, the government can create money without having to accumulate a public debt that saddles taxpayers and future budgets with hundreds of billions of dollars in annual interest payments.

There is one startling difference between what Wall Street banks wanted in Patman’s day and what they want now. Wall Street banks used to be overly concerned about inflation of their dollars. Our market economy was then fairly stable and the wealthy wanted the purchasing power of their dollars preserved. They restricted the creation of money and raised interest rates, a “tight money” policy. Now, strangely enough, Wall Street is going all out to inflate dollars beyond measure. This must mean that Wall Street has secretly given up on our market economy, and now seeks to siphon off as many dollars as it can as quickly as it can. The wealthy can then invest their dollars in land, gold, silver, platinum, oil reserves, and in gated castles for themselves. They can thus reduce those of us who survive to the level of feudal serfdom where we eke out an existence by working their land.

Wall Street’s plan to rescue itself is a covert class war by the top 1% against the rest of us. Wall Street seeks to solve the problem of the huge public debt to China by inflating the dollar so that each of our dollars buys less and less. This will put us into poverty. China is well aware of this Wall Street strategy which involves cheating China also. China would be repaid with inflated dollars that will buy less and less. Strangely enough, we have a common interest with China in stopping this sly anti-social Wall Street scheme.

Obamamania is rampant among Obama voters. By this I mean a continuing almost-religious faith that President Obama will give us what we need despite all of the accumulating factual evidence to the contrary. I know of no “mania” that has ever served mankind well, and there is a special danger inherent in Obamamania. To get at this phenomenon, I choose to explore some back ground.

When people say: “I just can’t believe that President Obama would betray us,” I shudder. There are several critical current factual exposures of the falsity of Conventional Wisdom about which many people respond, “I just can’t believe that …” With that statement and the mind-set behind it, we are defending the status quo. This mind-set constitutes the powerful controlling special interests’ defense against the exposure of the real factual weaknesses and lies of the status quo. Obamamania serves the same purpose. Among the most important of these uningested factual exposures of Conventional Wisdom are these:

• Our private banking system at the Wall Street level has substantial systemic defects that public regulation can not control.
• Israel practices apartheid and secretly undermines all efforts for peaceful settlement with Palestine.
• The $180 Million Dollars that Wall Street contributed to elected officials in the last election cycle in fact controls their votes and policy solutions. We are in fact governed by a ruling class oligarchy.
• President Obama is continuing or enlarging every single act and policy that Wall Street demands, just as ex-President Bush did. The latest example is Obama’s position in court that detainees have no rights under law.
• 9/11 was intentionally caused or enabled by persons high in our government, specifically including former Vice President Cheney.

I have long believed that speaking writing and publishing the truth among citizen-voters could ultimately overcome Wall Street, the Wall Street Banks, the military industrial complex, and even the fact that our elected officials are bought and paid for by very wealthy and powerful financial interests. I have always believed that truth speaking citizens could overcome the contention of Karl Marx that the ideas and ideology of the ruling class inevitably become the ideas and the ideology of citizens everywhere. I had not realized how addictive and how hypnotic the ideas, the ideology, and the brainwashing of the Wall Street Banks, the military industrial complex and the main stream media are. These powerful special interests in fact constitute our ruling class. The exposure of these implanted defensive ideas that many have ingested may help.l I hope that the exposure and communication of this truth will thaw our immobilization and enable us to act politically together.

There have been several recent factual expose’s that expose the falsehood of ruling class mind-sets. For example:

• Two recent Bill Moyers programs exposing Wall Street’s control of the government and the power of big money on our elected officials.
• The surprising 2 hour documentary by CNBC “House of Cards” that exposed the acts and the greedy motives of every actor including the Fed and the Wall Street banks that resulted in our current “depression that threatens to turn out to be worse than the Great Depression.”
• The recent book by Jimmy Carter, Palestine: Peace not Apartheid, the serious academic study by Professors John Mearschiemer and Stephen Walt, The Israel Lobby and U.S. Foreign Policy, and the many articles by Professor Norman G. Finkelstein exposing that the acts of Israel are often in conflict with the best interests of the United States, and in conflict with Israel’s PR about its stated acts and objectives.

About each of these exposes, many people, including mainstream politicians, academics, economists, advisors and citizens say: “I simply cannot believe that…” For example, many state: “I cannot believe that Israel does evil things,” and claim that Carter, Walt, Mearscheimer, and Finkelstein are anti-Semitic, or self-hating Jews and simply ignore the facts. Some will say, “I cannot believe that our government is that bad or that corrupt” and dismiss the facts with one or more of the status quo defenses that I outline below.

From his actions, appointments, and policy proposals as President, it appears that Obama himself is a victim of this addictive brainwashing.

Our brainwashed state appears to be founded in large part on the fact that we all, rich and poor, Phi Beta Kappa bright, and not so bright, employed and unemployed, male and female, NGO employees and government employees, union members and non-union members, are dependent for our survival on the existing status quo. It is very difficult if not near impossible for us to believe that the source of our survival is somehow corrupt, non-functional or untruthful. We are something like 6 year old children who are terrified at the thought of the death of our mothers. Moreover, we are fairly well off now. We do not want to jeopardize what we already have. The trouble with this is that we may wait too long until things really get bad, and then it will be too late to save civilized democracy. In fear many will turn then to a strong man, perhaps a General who promises to “save” us, as the Germans did in 1933. So let’s wise up now.

In our addicted brainwashed state, when we are called to act, the following are our varying reactions and responses when presented with the true facts, all based on our inner fear that is usually not known or acknowledged.

* Refusal to listen or read. I will not waste my time with that crap.
* Claimed lack of time. I am too busy earning a living to keep what I have. I am doing ok right now.
* Claimed lack of intelligence. I do not have enough brains or facts to act. Those in control know far more than I do.
* Denial. Things are not really what the facts show. Our situation is not nearly as dire as you say.
* Moral Relativism. What you say is “dire” is just a matter of opinion and there are a lot of contrary opinions.
* Groundless Optimism. Things will work out alright. They always have in the past.
* Self Destruction. If it really is that bad, I will kill myself.
* Alcohol. Have a drink, fella. Relax and it will all go away and you will feel better like I do.
* God will save us. All we have to do is pray.
* Conspiracy Nut. You are a just a proponent of some crazy conspiracy theory.
* Retreat into Inner Life. Meditation, serious prayer, being in the “now,” “our survival depends only on our own inner growth,” I am saving us all by doing my inner work.
* Science will save us. I have confidence in our human ability through science to survive.
* Claim of impotence. There is nothing that I can do that will really help.
* Communism. What you propose is communistic or socialistic
* More Big Government. We need to get the government off our backs so that we can enjoy our freedom and take care of ourselves.
* Ad Hominem attack. You are a crazy grandiose zealot. What gives you the right to proclaim the truth? I too keep up with the current news. I know just as much about the truth of what s going on as you do. You are a control freak. Your proposed actions are unloving. All change must be based on love.
* That is class war. We have no classes in America. We all have the same common interests. We are all Americans, like Obama says.
* There is no alternative. For example, many will say Israel has no alternative. About the private Wall Street banks, defective that they may be, most people say they are better than any possible alternative
* Obamamania. President Obama will save us. This is probably the most dangerous of the ruling class myths of all because it immobilizes the civic impulse in thousands and thousands of bright knowledgeable citizen-voters from acting to support Obama. Obama himself does not want this mania and wants us to help him now, between elections, as he begs in his many web sites. The civic impulse is limited in most people. The most we can expect is that they will vote. We are in bad trouble indeed unless some Obama voters can be mobilized to take other political action besides voting. Obamamania is a form of what theologian Walter Wink calls the “Myth of Redemptive Violence” cast in the form of a very bright orator, constitutional lawyer, and democratic politician. (Some argue that Wall Street selected and financed Obama for the very purpose of immobilizing us, our civic impulses, and our normal tendencies to act on our outrage.) This Myth of Redemptive Violence is pervasive in our society. We ingest it from early childhood on. In the case of Obamamania, built on his seductive vague promise of hope and change, his strength and his “violence,” are that he will use his oratory, his constitutional law brilliance and his political brilliance to save us by himself without effort on our part. This is my short summary of how Wink describes this Myth:

Our childhood TV shows, our comic books, many of our movies and our foreign policy are all founded on the false myth of redemptive violence. It promises to redeem, to restore order, law, peace and democracy, but it never does. This myth appears in The Lone Ranger, Batman, Superman, Cowboy Westerns, James Bond movies, TV games, modern adult movies and popular TV shows, and in our foreign policy and CIA. No cooperation, community effort on our part or democracy is required to remove the evil. The Myth is the essence of totalitarianism. The myth is the simplest, laziest, most exciting, uncomplicated, and irrational depiction of evil trouble the world has ever known. The good guys always win. We are devoted to this Myth because it seems so real. It survives in our religious institutions. This myth, and not Christianity, is the real religion of America. No preacher in church once a week can match its power, its excitement, its addiction and its fascination. It is the foundation of holy wars and “just” wars. The distinctive feature of this Myth is the victory of order over chaos by means of “violence” of some kind by one person, albeit a “super” person. “One super man’s might (“or hope and promise of change”} makes right.” There is an underlying theology that the brilliant strong man has the powers of God. The strong man is thus a king with the power of God. Obamamania means that President Obama has become a God for many Obama voters.

All of us, radical, conservative, libertarian, Phi Beta Kappa brilliant or of meager intelligence, in elective office, or citizen, will be damaged and our democratic civilization will fall unless we can act together to meet the threat, and act together to mobilize and act on our outrage. Given the “gung ho” tendency toward “happy talk” as far as our economy is concerned on the part of the ruling class who say the economy can be restarted by relatively conventional means by the same persons and ideas that created the crisis, we must deal with the possibility that things could get much worse than anybody has so far dared to say. Before we can mobilize ourselves and others to act, we must ourselves transcend the addictive brainwashing, the hypnotic trance, and the mythical falsehoods that support and defend the status quo. We all must surpass our differences to deal with our common paramount peril whatever its dimensions may turn out to be.

Here is how it can all play out:

Some of us clear ourselves of our trance, face the facts, and inform those around of us of our new mind-set and our recognition that civic action on our part is urgently required.

We join existing organizations like Democracy for America, Progressive Democrats, Code Pink, and MoveOn.org. I have found that my local chapter of Democracy for America is tentatively supportive of Obama, but wary, and free of Obamamania. I believe Code Pink is also.

We help these groups to mobilize million person marches, focusing their action on two strategic objectives, both locally and at the national level:

* We focus on elimination of the Senate filibuster. We will never get any of our objectives so long as an unconstitutional supermajority of 60 Senators is required to pass legislation or good appointments. So long as it is in place, we would have to elect 2 good Senators in all 50 states to get what we need. Given Blue Dog Democrats and other problems, this is impossible. A simple majority of a quorum of Senators can change the rule if they want to. We must organize, hound the Senators, the Vice President, and the President in DC and in their local offices until they do so. We must bang our pots and pans with a focus.

* We focus on securing public democratic control of our money, to be accomplished by causing the Secretary of Treasury to be the sole creator of money, the incorporation of the Fed into the Secretary of Treasury, and the prohibition of fractional reserve banking, largely as proposed in the American Monetary Act. This is the strategic time to do so. The banks are bankrupt and on the ropes. By doing this, we cut off their source of Ponzi-like money, and hence their immense political power. Then and only then will we be able to push for things like Single Payer Health Coverage. Since Wall Street private bank money is the “mother’s milk of politics,” we will cut off the source.

These focused actions, when accomplished, will not adversely affect us at all. Local banks and local businesses will still function as usual. These actions will insure economic and political stability and sustainability. They are the least radical changes that can deal effectively with the radically profound economic and political problem now confronting us.

The new book, The Web of Debt, by Ellen Hodgson Brown, Stephen J. Zerlanga’s proposed American Monetary Act, and Paul Grignon’s 47 minute video Money and Debt present a persuasive case for the United States to exercise its sovereignty by creating its own currency, and for the nationalization of the Federal Reserve System. The fact that Wall Street banks are “too big to fail,” is a compelling reason, among many others, why they should be nationalized. These authors present interesting solutions for our current anxiety. They propose a way to abolish our Ponzi-like private banking system and to curb banker fraud.

Here are some shocking little-known facts from the sources here reviewed:

• The Federal Reserve Bank is a private institution owned and controlled by private banks. It is a private bank that enriches its private owners.
• The US Mint does not create our money. It creates about 3% of it in the form of dollar bills and coins. The rest is generated through computerized bookkeeping entries by the private banks.
• Banks do not make loans only from money they have on deposit… Through what is called “fractional reserve banking,” They loan well over ten times the amount they have on deposit. This is how our money is created. It is created out of thin air.
• All debt of the US, all corporate debt, and all individual debt are owed to private banks.
• All money is debt.
• Over 20% of our taxes are used just to pay the interest on our government debt
• Banks are no longer limited to loaning money to make their profit. The 1999 abolition of the Glass-Steagall Act allows them to gamble in the stock market, the commodity exchanges, the foreign currency exchanges, collateralized debt obligations, and to buy and sell other banks and businesses.

AN ILLUSTRATION OF THE WAY THE PRIVATE BANKING SYSTEM MAKES HUGE PROFITS OUT OF THIN AIR

Let’s use $10,000 as an example to understand the process.

The Federal Reserve Bank buys $10,000 of US debts called Treasury Bills from the US. Where does the Fed get the money? The Fed creates it out of thin air. This is the first bit of magic. This is authorized by the Federal Reserve Act of 1913, and is a questionable delegation by Congress of its own power to “coin money and regulate the value thereof. It is the ultimate in privatization. It is an authorization for the Fed and the banks to counterfeit actual hard money. Other federal laws make this counterfeit money legal tender for the payment of all debts and taxes.

The Fed then loans this $10,000 to a bank and requires the bank to pay the current federal funds rate as interest. This $10,000 becomes a “liability” of the bank, but the bank immediately loans this money to a borrower, but in double entry bookkeeping, this $10,000 loan becomes an “asset” of the bank from which the bank can make further loans. Here is where the second bit of magic occurs called “fractional reserve banking.” The reserve is not gold or any other hard asset. The “reserve” is debt.

The bank is permitted by the Fed to loan 90% (or more) of that $10,000 loan to make a second loan of $9,000 which also becomes an “asset” of the bank from which the bank can make a third loan of 90% or $8100 and continuing to a maximum of 10 times the first $10,000 or $100,000.

The bank “earns” interest on this magic $100,000 created out of thin air which is the source of the bank’s immense Ponzi-like profit. A bank can earn more profit by borrowing more from the Fed and loaning it. This explains why the banks are so eager to give us credit cards.

By federal law, this money created out of thin air is “legal tender” and must be accepted in the payment of debts and taxes. The backup security is not gold, but “the full faith and credit” of the United States.

All of this is made clear and understandable by the video “Money and Debt.”

WHAT IS WRONG WITH THIS PRIVATE PONZI-LIKE SYSTEM OF CREATING OUR MONEY?

• The power to create money is immense private power that exists parallel to our governmental power. This private power generates tremendous private wealth that is then used to control, dominate, and thwart our government and our right to govern ourselves.
• The power to create money gives the private banking system the power to control our money supply. By curtailing the money supply, the banks can cause a deflation. By increasing the money supply the banks can cause inflation. As we now see, they can also cause a depression.
• This private power is used solely to make a profit for the owners of the private banks. There is no public control. There is no enforceable obligation of the banks to serve the public interest or to meet public needs. We have allowed our entire existence to be dominated and controlled by those few individuals who control the banks that create our money.
• It makes short term profit making the dominant influence on all of us and negates 2200 years of the moral wisdom of our civilization: “When gold argues the cause, eloquence is impotent;” “One cannot love both God and Mammon;” “Money is the mother’s milk of politics;” “Follow the money.”
• More than 20% of our taxes is used to pay the interest owed to private bankers on the U.S. debt.

OUR GOVERNMENT SHOULD CREATE OUR MONEY

Professor Michael Hudson on January 30 in Counterpunch gave us a hint of what we could do:

“Bank credit is created freely. Governments could do the same. Indeed, this is what the U.S. Treasury did during America’s Civil War, when it issued greenback credit.”

There are many successful historical and current instances where sovereign governments have created their own currency.

King Henry I in England in 1100 A.D. created England’s money by simply dictating that England’s currency was to be solely wooden sticks called “tallies” with varying notches to indicate the denomination. The sticks were then split in half and one half was held by the King to prevent counterfeiting. The other half was used by his subjects to buy and sell goods. The King required all taxes to be paid with these sticks. This tally system financed the British Empire successfully for 700 years.

Prior to our Revolutionary War, Pennsylvania issued money for 50 years because England limited the supply of its money in the colonies. The King’s edict prohibiting the colonies from issuing their own money was a cause of that War.

The American colonies financed the Revolutionary War by issuing paper money.

During the Civil War the Northern Banks would loan President Lincoln money to finance the Civil War only at interest rates of 24-36%, so Lincoln caused the Congress to authorize the Secretary of the Treasury to issue Greenbacks, paper dollars that were U.S .legal tender. These Greenbacks successfully financed the Civil War and remained in circulation for decades thereafter.

Stephen J. Zerlenga has drafted a proposed American Monetary Act.

This proposed Act is very useful concrete example of how the U.S. would create its own money, how it would work, and the surprising array of public benefits that could be obtained.

The proposed Act begins with a finding:

(1) The Federal Reserve Act of 1913 effectively ceded the sovereign power to create Money delegated to Congress by the Constitution to the private financial industry.

(2) This cession of Constitutional power has resulted in a multitude of monetary and financial afflictions, including an uncontrollable national debt, excessive taxation of citizens, inflation of the currency, drastic increases in the cost of public infrastructure investments, excessive un- and under-employment, and erosion of the ability of Congress to exercise its Constitutional responsibilities to provide for the common defense and general welfare.

The Secretary of the Treasury, following targets established by a 9 member Monetary Authority appointed by the President with the advice and consent of the Senate, shall directly issue all money, called United States Money, the nominal unit being the U.S. Dollar. This money shall be legal tender, backed by the full faith and credit of the United States.

The Act stops the creation of money by private banks. Fractionalized Reserve Banking is prohibited and banks can loan only the United States Money they actually have on deposit.

The Federal Reserve System (but not the local banks) is nationalized as a Bureau within the U.S. Treasury.

The United States would no longer borrow money. The Secretary of the Treasury shall issue United States Money as needed in lieu of public borrowing.

All existing money shall be exchanged for United States Money.

U.S. Money can be loaned to local banks which can continue to loan United States Money but with maximum charges not to exceed 8%. Banks can loan only U.S. Money.

The U.S. shall pay off the principal and interest of the national debt as they came due with directly issued United States Money.

The U.S. would use directly issued United States Money to rebuild the nation’s infrastructure.

The United States could loan United States Money interest free to states and local governments.

It is contemplated that in the future United States Money would be issued to finance Universal Health Care and an Education Funding Program that would at least put the United States on par with other developed nations.

CONCLUSION

President Obama and his economic advisors can be encouraged by the fact that famous and influential economist Milton Friedman supports the idea of abolishing the Fed. For at least 300 years, the private banks have used their wealth and power to persuade governments to allow them exclusive control over money. They have relentlessly and vigorously battled every single effort of governments to create currency. The author Ellen Brown does not expressly claim that banks have resorted to actual assassination, but she does note the strange sudden deaths of many of the reformers such as President James Garfield who urged public creation of currency. The political power of Wall Street banks is currently illustrated by their ability promptly to get billions of dollars of bailout money with no serious debate. The banks due to their own greed and ineptitude are now near bankruptcy and collapse. They are more vulnerable now to nationalization than they ever have been. They have brought all of us to the brink of economic disaster. This is a strategic political time for the U.S. to create our money. The awesome political power of private banks driven by the quest for huge profits would be curbed. Public control of the money supply would unleash the government to meet our legitimate human needs as it has done in the past in our own history. If the private banks can create money out of thin air, there is no reason why the government could not do it. We would all escape our excessive debt and tax burdens due to the interest owed to private banks. If interest must be charged, let it go into the public treasury.

THE COMPOUNDING DISPARITY OF WEALTH AND POWER

1% of the very rich own as much wealth and power as all the rest of us and the imbalance is compounding as we read. We are nearing the place where the top 1% has ALL the wealth and power, and we have NONE. The system has stalled, destroyed itself. Obama is vainly trying to restart this dead economic engine.

THE THREE SYSTEMIC DEFECTS THAT HAVE STALLED OUR POLITICAL ECONOMY AND SIPHON OUR WEALTH AWAY

• Henry Ford’s Truth: The system does not give ordinary citizens and employees enough purchasing power to keep the system going. Too much goes to the very rich. It is not a question of insufficient credit. We do not need to borrow more. We need a much larger share of our earned production pie, if not all of it.

If Republicans do not like the current stimulus package because it will not work (they are right) then Obama should propose only one thing: Nixon’s negative income tax where the people at or below the poverty level would be given money directly. Only this emergency measure will create the necessary purchasing power and prevent starvation on a temporary basis until the three defects can be dealt with. If that is unpalatable, we need temporary emergency relief, expansion of the amount and duration of Unemployment Compensation and long term projects to improve the infrastructure.

• Our system of private banking that allows very wealthy private individuals to control and hugely profit from the creation of money and control how it shall be spent must be nationalized.

This is the basic reason Obama cannot act effectively. The private banks will not let him. He has been selected and financed by the banks. They will defeat him one way or the other if he opposes them. Do you really believe Obama can persuade the very rich and their private banks to change their ways because “we are all Americans” and because they have a common interest with the poor to save our civilization? This would involve abolishing the system of private banking, and seriously regulating and controlling capitalism. However, that is exactly what we must do. A sovereign nation can and must issue its own public money, regulate its value, make it legal tender in satisfaction of debts. It is idiotic for us to allow private bankers to create our money, and then lend it to us and to the government at a great profit for them. “Money is the mother’s milk of politics.” Any profit from banking should go into the public treasury. Although vigorously ridiculed by the spokesmen for the very rich, the concept of a nation issuing and controlling its money was successfully used by the State of Pennsylvania for 50 years prior to our Revolutionary War and championed by Benjamin Franklin. The Continental Congress financed our Revolutionary War against England with money issued by the Congress. Lincoln issued Greenbacks to finance the Civil War. It is now used by China. This concept is subject to a powerful taboo, and is thus unfamiliar to us. For a brilliant explanation of how private banking works and how public banking can work much better, see the 47 minute entertaining video Money as Debt by Paul Gignon.¹

• The Unconstitutional Filibuster Rule of the U.S. Senate that thwarts majority will to deal with these problems…

Under Senate Rule XXII, a minority of 41 Republican and Blue Dog Democratic Senators can stop anything that a majority of us want and need, even though we have elected a House, a Senate, and a President to meet our needs. This rule is unanimously maintained and defended by all the Senators as a part of its “tradition.” Our constitution provides that both the House and the Senate shall act by majority of a quorum. This Rule in requiring a supermajority of Senators to pass a law is thus unconstitutional. The Rule can be abolished by a simple majority of Senators if they had the will to do so under a parliamentary procedure known as the “nuclear option.” The Senators choose not to abolish it because it gives the Senators much more power to block legislation opposed by powerful special interests, and thus to obtain money for re-election. They fear the abolition of the Rule would be “nuclear” for their re-election financing. The filibuster can and will be used to thwart what must be done if we are to avoid total collapse. The spotlight must be focused on the Senators to use a simple majority of a quorum to abolish the supermajority requirement of Senate Rule XXII.

1. See also Ellen Hodgson Brown, The Web of Debt (The Third Millennium Press: Baton Rouge, LA, 2008).

President Obama, we, being some of your sovereign voters who gave you campaign money and who elected you want you to know that we have come to a startling realization: Our national market economy, our capitalism has “blown its engine.” No new inputs of oil or fuel or cash will jump start this blown engine. We must meet the immediate need of getting survival cash in our hands, then analyze why the engine failed, and then fix the defect. There are many among us who because of habit, obliviousness or temporary advantage have not yet accepted the fact that our national capitalism has permanently stalled beyond anybody’s capacity to restore it. We all soon will.

Have you noticed the spin on the real cause of the depression we now face? The main stream media incessantly label it as a “credit crisis,” and a “liquidity crisis” of Wall Street. Ben Bernanke and Henry Paulson were the first users of these words when the investment banks stopped lending because of their vast liability exposure in collateralized debt obligations. The use of these words as obfuscating spin continues inaccurately and inappropriately now that we are in a full blown depression. Their analysis is faulty. They either have not examined the dynamics of capitalism or they find it advantageous not to deal with the dynamics in public. Our diminishing or non-existent paychecks are the cause of Wall Street’s crisis and of our own crisis. Millions of us cannot afford to buy what multinational capitalism produces and attempts to sell at a profit. Naturally, high unemployment does not help. Stephen Lendman reported,

“Economist John Williams corrects it (official statistics) by including what BLS leaves out, and through November reports unemployment at 16.5% or more than double the manipulated government data.”

There is suddenly an “overproduction” of houses that can be sold at a profit although millions are homeless. We do not need more credit in order to buy. We need much more adequate salaries and wages and we need full employment. In capitalism’s gigantic siphoning of money from the production process in the form of CEO salaries and perks, dividends, and interest, capitalism has created a small wealthy group of about 33,000 of us who have as much income and wealth as the bottom 300,000,000 of us. It has left the rest of us with insufficient wages and salaries to buy the houses and cars that capitalism produces. There is a limit to the number of houses the members of the top 33,000 very wealthy want, so their purchases do not keep capitalism going. Five or more mansions spread around the planet for each of them is enough. The Wall Street spin, if honestly presented seeks to preserve the profit making opportunities, salaries, perks, dividends, interest, and power of the top 1%, and for the wealthiest investment banks of Wall Street. We emphasize: This strategy will not work even for Wall Street capitalists because it does nothing directly to restore our employee purchasing power upon which capitalism is so desperately dependent.

Our tax money is thus contributing to the continuation of the very dynamic that caused the crisis and blew up the economic engine we call capitalism. The bailout is not made on condition that employees be paid more so that they can buy what is produced. There is no condition imposed that the profit CEO salaries, perks, dividends, or interest of those who receive this public bailout be curtailed or eliminated. It is analogous to pouring more and more oil into a blown engine of an Indy race car. Pouring more and more oil will not start this blown engine and put it back in the race.

It is significant that the Wall Street spin studiously avoids suggesting an immediate direct solution to our real crisis: the quick transfer of public money to those who will quickly spend it, such as generously enhanced unemployment pay and a negative income tax. It is sad that even the UAW is part of the spin and is marching to Washington offering benefit concessions while forgetting Henry Ford’s dceision that he had to pay his employees more generously so that they could buy the Model Ts that their labor produced on the assembly line. With UAW concessions and support of the “credit crisis,” Ford employees will not be buying many Fords.

These observations are neither left nor right. They are simply observations of Wall Street acts and Wall Street’s stated purposes as communicated to us by the Wall Street owned media.

What underlying truth is this obfuscating spin hiding? In the case of the bailout of Wall Street investment banks and insurance companies, it may be a case of the top 1% getting all of our money they can “while the getting is good,” and hiding it away in their personal accounts overseas before we wise up. The Wall Street spin may conceal the largest theft of public funds we humans have ever experienced.

The rationalizations and justifications for national capitalism have been totally discredited. National capitalism is neither meeting human needs nor its own needs. It is not efficiently managed. It is not innovating. Any economic system whose normal dynamics can take us into the dark ages must be abolished. It is the height of stupidity to support an economic system that creates a few persons with the power to destroy our well-being.

Is capitalism providing society with good efficient management in its search for profit? Robert Rubin, Secretary Paulson and other top bankers of Wall Street were not very efficient in getting us into the subprime and collateralized debt obligation mess, and in their failure to deal with the core defect of inadequate purchasing power that has been with us since 1980. The management of capitalism’s best and brightest in the auto industry has brought the auto industry to bankruptcy.

Is American capitalism providing society with innovation in its relentless search for profit? Certainly not in the auto industry or in the housing industry. What about new products like hydrogen fuel cells? So far as I have been able to find, the main source of innovation is the University of California at Irvine where a public employee, Professor Scott Samuelsen is a world wide leader of hydrogen cell research and applications. Unfortunately for us, Wall Street capitalism has innovated and ineptly managed a large number of ways to make a short term profit without producing anything we need. This management has brought capitalism to its knees and begging for public bailout. Innovation and good management? What about Bear Stearns and Citibank? What about AIG? Lehman Brothers? The coal industry is spending millions in false advertising and PR to sell “clean coal” when no such thing now exists and is not predicted to exist for at least 2 decades. We are experiencing unthinking greed by our brightest national capitalists and not good management and innovation.

The point of all this is not to pick on human beings, misled and oblivious as they may be. Ben Bernanke is a brilliant human being with an IQ far above most of us mortals. He is moral and civilized. Capitalism did not self destruct for the want of human intelligence. The point here is to analyze and recognize the inevitably self destructive dynamic of capitalism itself. Former capitalists and present defenders and revivers of capitalism, Ben Bernanke, liberals like Paul Krugman and Robert Reich, and most importantly our elected Senators must face the facts. Capitalism has now destroyed itself at least at the national and global levels. National capitalists have successfully demanded that we turn over the management of our economy to them. “Privatize” and “let the market handle it” they said. They asked for freedom to invest abroad. We met their demands, loosened regulation, and provided billions and billions of public money to stimulate capitalism. We gave them unfettered freedom to invest and take their production facilities anywhere on the planet Despite this capitalism and capitalists have totally failed us. There is no point in trying to revive this blown economic engine at the national level.

We, through our democratic government, led by our new President Obama must take over the overall management of our national economy and our currency away from the market, away from Wall Street and away from the Federal Reserve Bank. We must use our public money much more directly and efficiently to solve real problems. For example, to meet the tragedy of those whose pensions are now vastly diminished in value, we must use public money to meet legitimate expectations. We must tax the wealth of those who “made out” during the bubbles and bailouts to fund what needs to be done

Our local capitalism in our local communities should not be much affected. A Federal Loan Bank can supply local auto dealers, hardware stores, and grocery stores with routine business loans for innovation. This Federal Bank could supply us with affordable housing loans. We are apparently not ready as citizens and voters to manage our local economies. Local capitalism should continue in our local communities. The civic impulse in us Americans seems to be in relatively short supply. We can barely manifest enough civic energy to vote periodically. Most union members do not attend union meetings. We so far do not have enough civic energy or interest to manage our local businesses through employee ownership and management. If bursts of civic energy should emerge to challenge capitalism on the local level, employees and voters can form Mondragon co-operatives so that they can be owner-managers of local business.

We challenge any and all remaining defenders of capitalism to show precisely how this analysis is wrong. If President Obama’s official advisors, or any one thinks that it is, put forth what you believe to be a more accurate analysis of the inner dynamics of capitalism.

President Obama does not now acknowledge how very sick and fragile our capitalism was in August 2007. We were overburdened with credit debt. The economy was kept going by tempting us into more debt by issuing multiple credit cards, and by selling us overpriced subdivision houses with mortgages that we could not afford. As we shall show below, the subprime mess was a natural mutation of the dynamics of our capitalism.

However, most of us continue to give Obama the benefit of the doubt. We have no other choice. We hope and we pray that he, like Lincoln, is making every possible effort to harmonize profoundly conflicting ideologies and levels of wealth, and that he will ultimately do what is right and possible for mankind and fulfill our yearning for hope and healing change. We hope that he will do this without another Civil War, and without the loss of our liberty.

All we can do right now is to raise questions: Will Obama’s present plan to give Wall Street $7.3 Trillion without effective conditions really stimulate the whole economy? Will Obama’s efforts, priorities, and huge bailouts rescue Wall Street and the top 1% so that capitalism will be jump started for them and for all of us?

President Obama’s selection of University of California Professor Christina Romer as his head economics advisor gives us a hint of what he plans. She, so far as we can tell from her writings, has never studied nor even acknowledged the existence of capitalism’s inner dynamics. She seems to assume that capitalism, if left to itself, will work smoothly and permanently with full employment. The insight that we now have as to her interests and beliefs comes from her entry on “Business Cycles” in the Library of Economics and Liberty.

As to the causes of business cycles, recessions and depressions, she writes:

…there is no reason why business cycles have to occur at all. The prevailing view among economists is that there is a level of economic activity, often referred to as full employment, at which the economy could stay forever…. If nothing disturbs the economy, the full employment level of output, which naturally tends to grow as the population increases, and newer technologies are discovered, can be maintained forever.

She seems to believe that our capitalism can be controlled simply by tweaking the money supply and the interest rates. If these cycles cause pain among us, she writes: “The advent of unemployment insurance and other social welfare programs means that recessions no longer wreak the havoc on individuals’ standard of living that they once did.”

In her view of our capitalism: “Everything is grand in Kansas City. Everything is good as it can be.”

Although she is said to be a specialist in the causes of the Great Depression, her academic work and writings seem to reflect her interest in simply uncritically and non-judgmentally observing capitalism, and measuring its external movements and tendencies. She assumes capitalism is at least potentially a stable, socially useful system for all of us. She seems to assume that only minor tweaking is needed to keep it going. She does not show interest in the inner workings of capitalism, its tendency toward monopoly, overproduction, and imperialism, in its creation of a tremendous disparity between the rich and the poor and the resulting political power, and its longstanding need for ever increasing public expenditure to avoid economic depression.

She thus assumes a capitalism that has never existed anywhere, at any time. No manipulations of money supply and interest rates have ever made capitalism work with full employment. Born in 1958 and coming of age in 1978, she has never personally experienced or witnessed the pain of the Great Depression. She has apparently not been much influenced by John Steinbeck’s book, Grapes of Wrath whose main character Tom Joad says regarding our capitalism: “There is food to eat and people to eat it, but them two cannot get together. There is work to do and people to do it, but them two cannot get together either.” Professor Romer thus deprives herself of much relevant data, insights, and actual experience of the real workings of capitalism during strikes, on the picket line, in the legislative halls, among the victims of industrial pollution, with the sick whose only source of care is the hospital emergency room, and among the homeless, unemployed and underemployed. She apparently has not read Barbara Ehrenreich’s book, Nickel and Dimed about a woman’s unsuccessful effort to survive in our real economy. She also deprives herself of those who have studied the real inner workings and dynamics of capitalism, or she finds it professionally advantageous to ignore them. (No capitalist business or corporation has ever provided grants to professors or graduate students to study the defects of capitalism.)

The point of all of this is that neither Professor Romer nor President Obama can devise remedies and solutions for the great crisis of our capitalism unless they know the real causes of the crisis.

Feeding more hay to a sick elephant will only make it sicker if the elephant has cancer in its digestive tract. The evidence shows that our capitalism has “cancer of its metabolism.” The evidence shows that ever since 1980, capitalists could not make a profit producing things that people really need. The fact that capitalist employers draw out tremendous salaries and dividends from the production our labor creates and the fact that investment banks draw out more in interest, leaves us employee-consumers with insufficient wages and salaries to buy the goods our labor has produced. So the employers have “overproduction.” We still have needs, but there is no profit for capitalists in meeting our needs. They fire us and move on to some other activity where they can make a profit, first overseas in economic imperialism by hiring employees to produce there, at even lower wages.

When even imperialism produced more goods that could be sold, capitalists turned in 1980 to what has been named Financialization. Desperate for new sources of profit, capitalists began to buy and sell each other’s companies using the easy credit from investment banks to do so rather than their own accumulated profits or issuing stock. (Interest is tax deductible, while dividends are not.) They also began to invest in subprime mortgages, and then in the many levels of collateralized debt obligations based on these new mortgages. These three or more levels of collateralized debt obligations provided quick Ponzi scheme type profit for Robert Rubin and his investment banks, but produced absolutely nothing that human beings needed. This is how capitalism actually has worked during recent history. This illustrates the inner dynamics of capitalism. As we see, capitalism was very sick even in 1980 in that there was insufficient profit making opportunities in producing what people needed. Every year from 1933 to date, capitalism has needed tremendous contributions of public money to stay out of depression. Capitalism has never been robust on its own without public money. It has always been fragile. Our capitalism’s mutation from one level to the next is set forth in detail in my previous article, “Why is Our Capitalism Failing Us?” published in Dissident Voice.

There simply is no credit crisis. There is a demand crisis, a crisis among us voter consumers consisting of our inability to buy what we need. We need more credit like we need a hole in the head. We are already maxed out on credit. The real problem is that people do not earn enough from their labor to buy what capitalism produces. There is an “overproduction” of things that can be sold at a profit, but there simply is not an overproduction of things we really need. So it is a pure criminal theft of our money to give $7.3 Billion to investment banks, their CEOs and shareholders in the hope that they will again make credit available. This scandalous gift of public funds is aimed at a problem that does not exist and will do absolutely nothing to solve the problem that does exist. A policy that is aimed at providing profit making opportunities for investment banks on Wall Street will not even produce profit for them. It does absolutely nothing to increase our purchasing power or our earnings or our well being. If we were eagerly ready to pay for more cars and houses, you may be sure that Wall Street banks would find a way to finance them. We are not. We cannot. We have no earned money with which to buy. THAT is the problem. The current strategy involves spending $7.3 Trillion in an outright gift to bankrupt ineptly managed investment banks and insurance companies to relieve them of the liability of now worthless collateralized debt obligations. It is then hoped that they will again extend credit. This is not working, it could work for us if at all only by trickle down, and it cannot work even for Wall Street. Even if the banks are forced to lend money to businesses and credit card holders, there is no way to force anybody or any company to borrow. There is no way this trickle down will create adequate purchasing power among those with needs. It does nothing to solve the inner sickness of capitalism. There is absolutely no reason why we the public should bear the cost of Robert Rubin’s stupidity and take over the massive liabilities of the investment banks in these worthless collateralized debt obligations. In order to qualify to invest in those, one had to be a sophisticated wealthy investor. Let Robert Rubin and other investors like him bear the loss of their stupid investments. It is idiotic to let Robert Rubin and his protégés now influence the policy of bailing them out when they are responsible for the problem.

With an accurate and realistic analysis of the dynamics of capitalism, one can then fashion pragmatic reforms or substitutes as circumstances demand, a Plan B.

We have plenty of humans willing and anxious to work. We have immense human needs, many of them unmet. We have thousands of businesses ready and willing to meet those needs, although some needs like medical care cannot and should not yield a profit. What is missing is a source of earned purchasing power. Instead, to get things going why not set up a Federal Loan Bank and provide the necessary credit at low interest rates directly to local healthy banks so that they can function normally? These local banks can then meet the routine needs of business for flooring loans, seasonal loans, and other normal long and short term loans. Spend the $7.3 Trillion on extending and increasing Unemployment benefits, in retraining, building new sources of energy, and rebuilding our bridges and levees. Let’s spend it for Universal Health Care. If necessary let our government be the employer and the lender of last resort. Let Robert Rubin’s investment banks go bankrupt. Once things are going, we can then consider further steps to solve capitalism’s inner sickness. For those human needs that capitalists cannot meet adequately and still make a profit like universal health care, our government can become the employer of last resort. For example, our government can hire doctors, nurses and physician’s assistants. It can place a physician’s assistant in a drop in clinic in the corner of drug stores to provide immediate health care. We can then relieve our employers of the expense of providing health care and Worker’s Compensation Insured medical care for job injuries.

Since our government is not choosing direct solution, it is apparent that this is a class issue. Wall Street, Robert Rubin and the top 1% naturally prefer that the $7.3 Trillion be given to them to compensate them for their stupid investments. We do not need to yield to these outrageous demands. Our President and our government are so far demonstrating that they are subject to the control of Wall Street. Our alternative is to let the investment banks go bankrupt and not us. They created their own problem. There is no sense in letting them take us down with them.

It is also obvious that President Obama, at least for the present, is adopting as his very own, and trying to refuel, the already existing class war of Wall Street and the very rich against the rest of us to convert every minute of our existence into a profit making opportunity. This is obvious from his priority of helping Wall Street first and asking absolutely nothing substantive in return. It is obvious from his support of the Wall Street policy of helping investment banks and insurance companies, but not Ford Chrysler or GM. The Wall Street policy is to let the auto companies go through bankruptcy to escape their union contracts and health insurance commitments. Wall Street will then help these companies after bankruptcy. The current policy will not work. A Great Depression will soon be upon us. We hope that brilliant, pragmatic, compassionate President Obama and his economic advisor Professor Christina Romer will then stop listening to Robert Rubin’s “solutions.” We hope that they will then use our public money to solve the inner sickness of capitalism, and to meet our needs. We will then be truly united Americans with common needs, dreams, and more equal political power.

Think about this. If we have an economic system, capitalism, where almost all humans are employees, who, if not employees, will purchase capitalism’s products? Hunters and gatherers? Self employed farmers? What group in society has cash to purchase what capitalism produces? Are there enough money lenders and capitalist employers with enough profit and earned interest to purchase all of the production? Experience now clearly demonstrates that there are not. These sources have far more money than they have needs so their wealth simply is held in multiple dwellings, jet airplanes and other luxuries, investments, loans, and cash. This is not a left-right problem, nor a conservative- liberal ideological problem. It is simply a fact. It is an inevitable, unavoidable result of the core dynamic of capitalism. That core dynamic is:

A person with money hires a person with little or no money for the lowest possible wage to earn as much profit as possible for the person who already has money.

It is this profit generating dynamic over decades of time and repeated by hundreds of employers that has created the immense disparity of wealth and power between the top 1% of our nation and the 95% of us at the bottom. This top 1% has as much wealth and income as the bottom 95% of us. The purchasing power of the bottom 95% of us would be vastly enhanced if the wealth of the top 1% was spread more equitably among us all. The fatal defect of capitalism would be bridged. We employees could then purchase all of the products that our labor produced. The fact of the almost unimaginable wealth of the top 1% is little known and is largely suppressed by the capitalist media. The capitalist media ridicules as “class warfare” any thoughts we may have about the injustice and pain we experience because of this disparity of wealth.

So we have many millions of persons on the planet who have legitimate needs, and these same persons are willing and anxious to work. Why cannot our work meet our needs? There are insufficient jobs because employers cannot hire all of us and still make a profit. Capitalism gives us only one way to meet our needs. We must go to work for somebody who can make a profit on our labor. This fundamental flaw of capitalism perceived by Henry Ford is now causing our capitalism to implode, to destroy itself. Henry Ford was unique among the planet’s employers in perceiving this flaw and acting to correct it within his own company.

So why do not all employers follow Ford’s example? One reason is that the competition by those employers who continued to pay the lowest possible wage would quickly drive the generous employer out of business. Another reason is the simple greed by capitalists to get as much profit as they can as quickly as they can. Employers as a group would have to act together cooperatively and all of them would have to pay enough wages so that employees could buy capitalism’s products. However even if all employers cooperated and paid high wages, capitalism would implode sooner or later because of the large sums drawn out by private employers in the form of profits, CEO compensation, and dividends, and the large sums drawn out by private money lenders for interest on the money loaned for the production process. It is interesting to note that the very successful Mondragon Co-ops of Basque Spain have sustained themselves and expanded over the last 40 years in part because the workers are the owners and they limit the pay of the top managers ordinarily to no more than 3 times the pay of the production workers. The Mondragon Co-ops also have their own Co-op bank to supply their credit.

Capitalism can thus produce far more than can be sold at a profit. Capitalists curtail production to avoid loss of profit. If there is no profit to be made, there can be no capitalism. There remain millions of people with legitimate needs who are anxious to work, but there is no work, because there is no profit to be made. For example, the world wide auto industry has the capacity to produce far more cars than can be sold at a profit. This defect of capitalism existed long before the current mortgage bubble and crisis. Auto plants around the world were operating at less than full capacity because there was not a demand by buyers for all of the cars that could be produced. We have some human needs, for example health care that simply cannot be adequately met by capitalists and still make a profit. If there is no profit to be made, capitalists will simply not provide health care.

This fundamental defect of capitalism that has caused it to implode is a truth that is totally suppressed in our capitalist culture. We do not learn of this truth in Econ 1 or even in Econ 101. We do not learn of this truth from our capitalist media.

Given this truth, and the culture wide failure to diagnose the problem we must look at the false solution that capitalists select for us.

Secretary Paulson, Fed Chairman Bernanke and our elected Democratic leaders identify the problem as a “credit crisis,” or a “liquidity crisis,” and they propose that we employees tax ourselves so as to pay billions of dollars to the bankrupt Wall Street investment banks in the hope that they will again extend credit to employers and liberal credit cards to consumers. They seek to supply the credit to enable capitalists to seek profit making opportunities. (The fact that the Wall Street investment banks have not chosen to use the gifts of our tax money for this purpose so far, while criminal, is irrelevant to the larger problem.) That larger but totally ignored problem is Henry Ford’s 1920s problem. That problem is that there is insufficient sustainable demand for all capitalists can produce at a profit. Human wants are insatiable, and if we humans had the money to buy, credit would flow like a quickly melting glacier. The proposed solution does nothing to provide jobs and wages, and nothing therefore to create demand for capitalism’s products. If we were not so scared, we consumer employees could borrow more money for a short time and thus be able to buy products, but this could not go on very long. Most of us are already maxed out on credit. Sooner or later we have to pay the borrowed money back.

Wall Street and our Democratic elected officials are vainly trying to rejuvenate a dead system. Lending or giving the dead system more money simply does not solve the fatal defect. The fatal defect is neither diagnosed nor dealt with. The truth is hidden behind a culture wide taboo so that it cannot be discussed in the main stream.

The solutions so far advanced seek only to create profit making opportunities for capitalists. These solutions ignore capitalism’s fatal defect. They do absolutely nothing to correct the fatal defect. Capitalism cannot solve the dilemma identified by John Steinbeck in his 1939 book, Grapes of Wrath: “there is work to do, and people to do it, but them two cannot get together, and there is food to eat and people to eat it, but them two cannot get together either.” Even Franklin Roosevelt failed to diagnose this fatal flaw of capitalism in his New Deal when he sought to save capitalism with its profit making opportunities while providing temporary “band-aid” type remedies for those who had no work.

We human being can work together to meet our needs, on a small scale by simply bartering. We can meet our sustainable needs on a larger community scale with Mondragon Co-ops, and on a nation wide scale by causing our government to act solely in our interest to be our lending bank at little or no interest, to supply co-ops, small businesses, partnerships, and self employment, and as our employer of last resort. We can no longer afford profit making employers and money lenders who siphon off the increase in value that our work creates. Because of this fatal defect, our capitalism can be thought of as a huge tornado which having sucked us dry, then dies itself. Or it can be thought of as a cancer that kills those of us who are its workers and consumers, and having killed its host, and then dies itself.

Most of us realize at long last that unregulated capitalism is in fact a total disaster for the human race. We have given capitalism all possible monetary support and freedom to display its worth. President Carter deregulated the airlines. President Reagan broke the union movement. The two Bush Presidents and Clinton gave capitalism full military support for its imperialistic expansion abroad. President Clinton, advised by Robert Rubin, gave Wall Street everything it wanted: The safety net was abolished, so as to drive more desperate people into the work force who would take whatever wage was offered. Capitalists were given full legal and military protection to invest abroad. President Bush installed capitalists who should be regulated to do the regulating, and abolished or weakened regulations that in any way inhibited capitalist investment. For more than 50 years, we have primed the capitalist pump with “military Keynesianism.” We have tried capitalist ideas and ideologies of “trickle down economics,” and “neo-liberalism.” Despite all of this, capitalism has failed us.

The truth is that capitalism has destroyed itself and imposed extreme risk and danger of planet wide economic depression and actual starvation on all of us. The truth is that further “economic growth” and “growing the economy” following the failed capitalistic way will destroy the planet.

So far President-elect Obama and the Democratic leadership seem to be doing a bit of quacking of their own as capitalism implodes. President-elect Obama wants the government to bail out the big three auto makers in Detroit, and seems to want to get things going again the way they were before August 2007. Do we really want to finance Detroit to build more locomotive sized SUVs and Humvees? Do we really want to stimulate the construction industry to build more over-priced housing subdivisions that require 50 to 60% of a buyer’s income to finance on long term loans? Do we really want to restore the real estate bubble? The Silicon Valley bubble? Do we really want to give public money to Wall Street’s investment banks to encourage them again to loan money? Loan money to do what? Use the money to do what? Do we want to give Wall Street public money with no conditions, no oversight, and no real controls whatever? President-elect Obama and the Democratic leadership have done exactly that. The fact is that capitalism was obviously in deep trouble prior to August 2007.

There are no constructive creative ideas for dealing with the current crisis coming from the left either. For example the editors of the respected socialist journal, Monthly Review, write in a November editorial: “It is not our job to fix their (capitalistic) system.” So, Monthly Review editors, whose job is it? Who will come up with the ideas that will get us from where we are to where we need to be for a sustainable civilized existence?

We still have the necessary building blocks to maintain a sustainable civilization:

In President Obama we have a towering intellect with inner security, calm pragmatic judgment and a compassionate heart as the new leader of the free world.

This President has the enthusiastic support of voters in the US and people everywhere on the planet.

Although the implosion of capitalism has eliminated many of our jobs and will eliminate many more, we are all anxious and willing to work.

We all have human needs for health care, housing, clothing, a stable food supply, energy, safe bridges and levees, truthful sources of information, and leisure time.

We care about each other. We are willing to work cooperatively together, and to care for each other, to meet our needs.

We are willing to petition, march, rally, and organize between elections to support true leaders and to make sure that our needs are met.

Given that capitalism has imploded, what ideas can we rally around? What can we demand of President Obama?

We can demand a permanent public planning agency something like the War Production Board of World War II staffed with pragmatic, non-ideological, public spirited, bright persons who are willing to direct lending and production to those sustainable human needs that we share. If Detroit should not make SUVs, what should it make?

We can demand that our government provide us with security that we will all have nutritious food no matter what. Many citizens do not now have that peace of mind and some are buying guns to protect themselves from hungry mobs. Although we hope and pray that farmers will continue to grow food at a profit, and truckers will distribute the food at a profit, there may be a total collapse of the profit system, as some economists predict. Hence, we demand that our government have an alternate plan to hire farmers to grow food and to hire truckers to deliver it if necessary. We must terminate our unthinking worship of capitalism. We must not make the mistake of Franklin Roosevelt who ordered the killing of pigs when thousands were hungry in order to restore profit making for farmers.

We can demand that the government stop relating to us as if we were only consumers, and meet our deep need to be producers and creators with a decent share of the income from our production.

We can demand that our government become our bank, our lending agency of last resort, to finance small businesses and cooperatives that produce products and services that meet our needs. We can demand that the Federal Reserve Bank, controlled by private bankers, be abolished.

We can demand that our government become our employer of last resort. If, for example there are no doctors willing to meet our health needs at a price we can afford, let our government subsidize medical schools and hire doctors and physician’s assistants to serve us.

We can demand that our government make available to us radio and TV frequencies so that we can discuss our needs and solutions with each other and with our elected representatives, and so that our President has a means free of the dead hand of capitalist ownership to report to us about how he is implementing our demands and our needs. We can reinstate the “fairness doctrine” and implement the true purposes of the Federal Communications Act to foster public enlightenment, and to provide the complete and accurate information that we need to govern ourselves.

We can and should tax the extreme wealth and income at the very top of our society. It is the only source of funding available to do what needs to be done. It is not only because “it is unjust for some people to have more than they need when others are needy,” but because the wealthy have hugely profited at our expense because of recent policies. We should studiously avoid bailing out the wealthy and their failed institutions and ideas. David Chandler, a California Quaker and businessman has calculated the wealth now held by the top 1%: It is as much wealth as all that we at the bottom 95% own. Most of us do not know about the immense total wealth held by the wealthiest 1%. It is a well kept secret. It is at least $13 Trillion, and that estimate is conservative and does not count secreted wealth. This $13 Trillion is held by 30 thousand people. These 30 thousand hold as much wealth as 300 million of us. If we stack up $100 bills, $1,000 stack would be a stack between ¼ inch and ½ inch high. A million dollar stack would be 39 inches high. A billion dollar stack would be 3280 feet high or 6/10 of a mile. A trillion Dollar stack would be 621 miles high. $13 Trillion would be a stack over 8,000 miles high. See: http://lcurve.org/

Free of the propaganda coming from the top 1%, we can evaluate the power and numbers of “terrorists,” and make a determination as to whether there are less expensive and more effective ways such as effective police work and negotiation, to deal with them rather than a permanent planet-wide war.

We must halt all public financial support of capitalism and capitalists. Let capitalists stand or fall on the true principles of capitalism without public subsidy, and without “socialism for the rich” or “military Keynesianism.” We need not let capitalism take us humans and civilization down with it.

• Willingness to reconsider and change core values
• Long term planning

Our mainstream nation abides by a culture wide taboo against mentioning or analyzing the social adequacy of capitalism and its offspring of imperialism and empire. The taboo stifles discussion of a positive role for public planning. We are therefore unable seriously to reconsider and change our core values or long term public planning. We choose three current examples for the purpose of illustrating this taboo and demonstrating the danger that the taboo presents to all of us.

Retired West Point Colonel Alexander J. Bacevich, now a professor at Boston University has a new book, The Limits of Power: the End of American Exceptionalism,² that is an insightful analysis of the current sad state of our American democracy. A conservative, Bacevich says that we American citizens with our wish for endless consumer goods purchased on credit are the root cause of an imperial presidency and American empire that aggressively pursues the War on Terror and imperialism abroad with the uncritical support and funding of a one party congress. He says that Congress’ function is to provide the funding for this imperialism while at the same time insuring the re-election of incumbent Members. ³ Our government he says is broken and dysfunctional, and is using ineffective inappropriate military power against criminal terrorists that can only be controlled by effective police work.

Princeton professor of political science emeritus Sheldon Wolin has a very persuasive new book, Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism⁴ in which he shows how the United States is becoming, if it is not already, a totalitarian state posing as a democracy. He says that corporate and state power are now one, and that we voting citizens are politically uninterested, infantilized, obedient, distracted, and divided, effectively controlled by our corporate masters, as they pursue imperialism. He says that both the media and academia are “self-pacifying” and thus are not critical of their corporate masters or our trend toward totalitarianism.

Former Vice President Al Gore has his alarming book, An Inconvenient Truth ⁵, where he documents the current state of global warming and the danger that we are fast approaching the point of no return.

A citizen who wishes to be informed should read each of these books. They show that our planet is in peril and that our ballot box democracy is very nearly dead. Taken together, these authors give us desperately needed observations about our current environmental danger and the peril to our democracy. Each writes as if we citizens had sovereign governmental power and that we could control our politics and our environment if only we had the wisdom and the will to do so. Bacevich says the root problem is our own weakness, financial irresponsibility, and uncontrolled desire for consumer goods. Wolin says simply that we will have to get smarter. Wolin very accurately describes the current corporate rule and corporate control of our votes and thoughts without dealing with the dynamics of capitalism. Gore argues that we can control global warming within our market economy and still maintain material “progress.” Each writer fails to ask how we got into this condition. Each ignores root economic causes. Each falls into the trap of analyzing politics and political science separate from economics, when our plight compels that they be considered together as political economy. The analyses of these writers are typical American social science under the iron grip of the powerful taboo against public planning and criticism of our market economy. Because of this taboo these authors could not survive professionally in mainstream America if they were to talk about the root economic causes of our imperialism and our American Empire. Because of this taboo, Professor Wolin had to give a rather passive strange name to his book, “Inverted” Totalitarianism when the context suggests that he really means “Money-Controlled” Totalitarianism, or Capitalistic Totalitarianism.

Vice President Al Gore, Professor Bacevich, and Professor Wolin give us only half-truths when they fail to “follow the money,” namely to deal with the increasing wealth, power, and devastation that is generated from things as they are. Wolin’s journalists and fellow professors “self-pacify” for an important reason: They want to keep their jobs and their paychecks. Bacevich does not ask why Americans are addicted to consumer goods and credit. It of course has largely to do with incessant advertising, outsourcing of jobs, and inadequate pay. Gore does not talk about the powerful economic interests that must pursue short term profits and cannot survive by limiting carbon emissions. Each fails to ask: What caused us to get to our present plight? Who gets money and power from things as they are? Who has the money and power to prevent any reform by us voters? Who is thwarting and trumping our voting power to end the Iraq War right now? What is the effect, if any, of the vast disparity of wealth and power in the United States?

The fact is that we can understand and deal effectively with our problems only by analyzing both politics and economics, by “following the money.” As California Assembly Speaker Jesse Unruh proclaimed years ago, “Money is the mother’s milk of politics.” For several centuries, lawyers have ferreted out the truth during cross examination of a witness by showing that he/she was “paid off,” that he/she received payment for his/her testimony. We voters, citizens, journalists, and professors must “cross examine” our market economy, our capitalism to see who is “paid off” and who thereby derives overwhelming political power. We must not allow ourselves to be deterred by hysterical charges that we are “communistic” or “socialistic.” It is not evil for members of our human community to think, plan and work together cooperatively. It is anti-intellectual simple mindedness blindly to leave our problems to the “market” for a “solution,” especially when the capitalist market is the root cause of our problems. If we are to maintain a civilized democracy and a sustainable planet, we simply cannot avoid analyzing the dynamics of capitalism. Vast institutions of wealth and political power have created and now profit from the status quo. We cannot control or curtail this anti-social power unless we know what creates it. To understand what is going on, why corporate totalitarianism is creeping over us, why we are losing our jobs and our houses and why global warming seems out of control, we must understand how our market economy works and how it interacts with our government.

Capitalism, the accurate name for our market economy must constantly move and grow, with a dynamic something like a tornado or a fast growing cancer. There never has been and there never can be a sustainable stable capitalism, since capitalism thrives on competition testing who can be the greediest and most socially irresponsible. We have never voted to choose capitalism. It is a human creation, but it grew like a fast growing cancer side by side with our self-governing political process without any input or control from the vast majority of us.

At the root of capitalism there is:

PRIVATE HIRING: A private person with money hires a person without money for the lowest possible wage in order make as much profit as possible for the person who already has money. The core axiom repeated over the decades by thousands of private employers, created a small very rich and politically powerful elite group of employers⁶ while it produced millions and millions of employees who remain relatively poor with no wealth or power. The employers’ imperative to get employees at the lowest possible wage lead to the closing of productive jobs in the US and the outsourcing of those jobs and production to Mexico, then to China, and then to India. We did not vote or choose to stop being producers. We do not choose or vote to become a nation of consumers… We did not vote or choose to create global warming. The dynamics of capitalism make the choice for us, and for our employers. The profits of the capitalist employers give them means to make campaign contributions to our elected officials and to lobby them so as effectively to control them. The meager wages of employees gave us at most the right to vote which capitalist money and power then trumps. Democrats are especially guilty of lying to us when they repeatedly promise to protect the “the little guy” and give him health care and then invariably vote as the drug and insurance companies demand.

This private hiring twists into:

MONOPOLY: Competition among capitalist-employers inevitably leads to the elimination of small employers, to price fixing, and to a monopoly of a few large firms, with capacity to produce more than they can sell at a profit. Henry Ford recognized this characteristic in the 1920s when he unilaterally raised the wages of his employees so that they could buy his Fords. Almost all other employers pay us employees such low wages that we cannot afford to buy what we have produced. We would lose our jobs and economic depression would result if nothing was done Capitalism thus needs public money to provide the necessary purchasing power to consume the products of capitalism. We never voted that our economy based on private hiring and competition should change into monopoly.

Monopoly then swirls to:

AN ALLIANCE BETWEEN GOVERNMENT AND CAPITALIST EMPLOYERS: Capitalism badly needs our tax money to keep going. Our Government becomes a critical component of capitalism and to an ever increasing degree, capitalism and capitalist employers control the government. We employees have less and less voting power to get what we need from our government because of the increasing power of employers’ money over our elected officials. Capitalist employers get more and more of what they want such as tax relief for the wealthy and cutting social spending for us so as to make more and more of us desperate to work for ever lower wages. We never voted for this alliance.

This moves into:

IMPERIALISM: When profit making opportunities dwindle at home, capitalists, using the Government, the CIA and the Military go abroad to seek new profit opportunities, new resources, additional customers, and employees willing to work for lower wages. Capitalism at home tends to move inevitably toward capitalism abroad: an American Empire, Imperialism and sometimes War. We have never voted to send or protect capitalism in other countries.

At the same time capitalism destroys our planet home by

USING UP OIL AND RESOURCES, POLLUTION, AND GLOBAL WARMING: In its relentless search for profit, capitalist employers devour oil, minerals, timber, soil, and water, and dangerously pollute the earth and atmosphere. Good places to live, and to fish and to hunt are ruined. Al Gore fails to recognize that the dynamics of capitalism compel capitalist employers to seek profit as their sole motive lest they perish in the competition with other employers. We have never voted to plunder the planet.

Voracious capitalism moves yet again to:

FINANCIALIZATION: The capitalist elite, finding too few profit making opportunities making things that humans need began increasing investment in speculation by buying, selling, and spinning off existing companies to produce the short term profit upon which the survival of capitalism depends. Capitalism, in this phase thus produces nothing new: no jobs, no food, no medical care, and no highways. It produces nothing except more profit and more political power for capitalists. We never voted for this innovation of capitalism.

Capitalists use this money and political power to create:

CORPORATE STATE CAPITALISM: Capitalism mutates so as to merge corporate power with state power so that we now have corporate state capitalism whose powers are exercised solely to create socialism for the global elite at the expense and starvation of the rest of us. As we now see from the bailouts, the elite causes the government to print massive amounts of paper money to rescue the businesses of the elite. It does nothing for us except to impose the burden of taxation and inflation on us employees. We suffer the loss of our jobs, houses and things we need cost more and more, due to uncontrolled inflation. We live in a constant state fear. We are approaching what Wolin calls “totalitarianism posing as democracy.” We certainly have never voted for this.

During all of this, in order to control our thoughts, Capitalists have been creating:

THE PROPAGANDA ARM OF THE CORPORATE CAPITALIST STATE: The power elite control the main sources of information that we citizens and voters need wisely to govern ourselves. They will tell us nothing about the features of capitalism that destroy both our planet and our democracy. The capitalist elite own and control all the major print and electronic media, public relations and advertising agencies. The mainstream media is owned by those who profit from things as they are, and provide uncritical support of war, imperialism, and all activities that contribute to keeping things as they are. This includes the NYT, Washington Post, PBS and NPR as well as TV and radio. The media have the power to inflame, to manipulate, to fail to cover, to deny and to ridicule. The capitalist elite thus impose the ideas, ideology and taboos that benefit the elite upon us. Through research grants and endowments, corporate capitalism controls universities and college professors and what they research and teach. It controls reporters and journalists. It controls even what we citizens think about. We thus get no information analyzing capitalism and its effects on us. We never voted that the media should have this power. The market economy at this stage makes us employees powerless, frustrated, restless, angry, and unhappy. Lacking the truth about the causes of our plight, some of us employees turn toward racism, bigotry, jingoism, evil enemies and other false solutions. There is a risk that we employees would act negatively toward the capitalist elite.

To preserve its power and privilege the Capitalist Elite moves toward:

CONTROL OF ELECTIONS, DECLARATION OF MARTIAL LAW, and FASCISM WITH A FRIENDLY FEMININE FACE: The power elite entertain and divert us with a non-serious circus-like election process. The government and the capitalist elite can then ignore the plunder of our planet home, ignore our lack of jobs, ignore our hunger, ignore our illnesses, and ignore our needy old ages. We employees are in effect placed into wage slavery if we have any jobs at all. If we riot, we are placed in detention camps. If we starve nobody in control cares. If we march and protest at political conventions, we are arrested as terrorists.

THE UPSHOT OF ANALYZING POLITICS AND MONEY POWER TOGETHER

We are not yet in the final state of capitalism’s mutation, but as Bacevich and Wolin show us, we are very close. We have never voted for any of these changes in our market economy. No political movement exists to stop this final mutation. Our belief that we are governing ourselves is totally illusory. Our democracy is nearly lost. Nobody is taking any meaningful effective steps to deal with global warming. The dynamics of capitalism are ongoing. The great danger is that it will mutate into fascism. The point of following the money, and of evaluating politics and economics together is to make certain that we understand and permanently eradicate the causes of our imminent fall.

As Professor Rick Wolff wrote:

“The egalitarian… society envisioned by social democracy cannot be secured so long as it leaves in place a group of people with incentives and means to prevent that.”⁷

The “means” that Wolff is talking about is simply the profits, the money that we allow capitalists to accumulate under capitalism. The tremendous disparity between the wealth of the elite and the relative poverty of the rest of us has political consequences that we now observe. We must find a way to curb that wealth and power. Shocking as it may seem, we may have to prohibit private hiring by large employers altogether. Our democracy and our civilization cannot survive otherwise. The money of the power elite nullifies our voting power. The dynamics of capitalism are devastating our fragile planet of finite resources. Our planet simply cannot support vast accumulations of wealth and power by the few unless millions of us are to be left to starve. We must learn from; the mistake of President Franklin D. Roosevelt who brought us “band-aid” solutions for the pain of the Great Depression, but left in place an economic system founded on short term greed, and small elite with the wealth power and incentive to repeal all of his reforms. Our civilization, like the civilizations of Rome, Norse Greenland, Mayan Central America, and Easter Island will fall unless we comprehend the causes of our difficulties and expose the unrecognized dynamics of capitalism. Once we do this, we will be free to re-examine our core values like material “progress” and we can begin to plan for realistic sustainable civilized alternatives.

1. Jared Diamond, Collapse: How Societies Choose to Fail or to Survive, Viking Adult, 2004.
2. Alexander J. Bacevich, The Limits to Power: The End of American Exceptionalism. Metropolitan Books, 2008; Also discussed in interview with Bill Moyers on August 15, 2008.
3. The vital role of Congress in supplying the funding for the American Empire is so important that Manuel Garcia Jr. calls it MICC, the Military Industrial Congressional Complex. See Manuel Garcia Jr., “Oiling the War Machine,” Counterpunch, July 11, 2008.
4. Sheldon Wolin, Democracy Incorporated: Managed Democracy and the Specter of Inverted Totalitarianism, 2008, Princeton University Press, Princeton, N.J; See also Paul Street, “Totalitarianism: It can Happen Here,” Dissident Voice, August 23, 2008.
5. Al Gore, An Inconvenient Truth, Rodale Books, 2006.
6. The word “employers” should be understood to include those who invest money in the firms of employers. We consider the emphasis by some on “corporations” as the source of our trouble to be misleading in that capitalism would function much the same if corporations were abolished and all the hiring was done by individual employers or large partnerships of employers.
7. Rick Wolff, “Today’s Haunting Specter (or What Needs Doing),” MRzine, June 6, 2007.

The basic question of political economy has always been: How shall we human beings organize our productive and creative abilities so as to work together to meet our needs?

The current critically important questions are: Is our present day economy meeting our human needs? Are there alternatives? To answer these questions, and even to understand what our economy is, we must analyze its dynamics, the way it really works.

It is critical at the outset that we state our own values. We seek, insofar as is possible, to meet the reasonable needs of all humans. No person should have more than he needs when others are needy. We seek caring, sharing and cooperation. We seek a sustainable civilized free existence for all humans on this planet. Only this sort of a Political Economy will be sustainable, consistent with our values, and consistent with the wisest values of our spiritual traditions. We are radical in the first dictionary definition of that term: “one who seeks roots or root causes.”

In considering the following analysis, please try to suspend conventional wisdom, and your present beliefs and opinions. Like most of us, you may have never known of an analysis like this one or you may have learned to regard it negatively. Therefore, please evaluate the following on the basis of your own personal experience, your personal judgment, and what you personally observe that seems to be happening.

As Doug Page understands them, the following are some of the main dynamics of capitalism:

1. The core dynamic of capitalism is this: A private person with money hires a person without money for the lowest possible wage, in order make as much profit as possible for the person who already has money.

   a. It is the private hiring of human beings that fuels the economic engine. Slavery would also work for this purpose temporarily just as well were it not for the problem of where would slaves get the money to buy products from the slave master-employer?

   b. Notice the internal contradiction: As Henry Ford observed in the 1920s, employers do not pay employees enough to buy all the products employees create.

   c. Capitalism inevitably produces more than employees and others can afford to buy, thus leading to repeated cycles of overproduction, layoffs, unemployment and recession or depression.

   d. The core dynamic, employed by thousands of private employers over time, creates a very rich and politically powerful but relatively small elite group while it produces millions and millions of people who remain poor and never get wealth or power. The elite get richer and richer and the rest of us get relatively poorer and poorer. This accounts for the tremendous disparity of wealth in the United States. The elite use this power and wealth to control the government through bribes, campaign contributions and lobbyists.

   e. This small elite group comes to control the government, despite the fact that formality of voting remains intact. The voters no longer have effective governmental power. The government unsurprisingly uses its power and its taxing power only to help the elite.

   f. Notice that the employee creates something, but he keeps no part of it. He is alienated from the product and the pleasure and pride of creating it, unlike so-called primitive self-employed crafts people.

   g. Notice that this core dynamic rests on the first employer getting his initial capital to begin hiring by shrewd bargaining, capture, force, luck, or theft. The core dynamic thereafter creates capital of the employer by extracting as much production from the employee for as little wage as possible. Thus it is true that all of the employer’s capital was one way or the other produced by the human labor of employees. Diamonds deep in the ground have no value until the labor of human beings brings them to the surface. This raises the issue of justice: Were the employees fairly paid? It also raises other questions: Do we really need private employers? Can we get along without them? (The Mondragon Co-ops of Basque Spain function perfectly adequately without private employers. When the hotel owner and employer recently went broke running a hotel in Buenos Aires, Argentina, the former employees took over the hotel and are operating it very successfully.)

2. Capitalism must constantly expand profit making opportunities for capitalists or the economy will cycle into a downturn.

The greed for more profit is insatiable, so capitalists constantly seek more profits through more production. There is never enough profit for them. Capitalists cannot relax with the level of income or wealth that they have at any given moment. With population growth, more capitalists are born each day. Soon there is more production than poorly paid employees can buy. Hence the downturn.

3. Competition among capitalist-employers inevitably leads to the elimination of small capitalists and to the monopoly of a few large firms, with capacity to produce more than they can sell at a profit.

Despite the ideology of competition, individual employers hate competition. It increases the risk that they will lose. It is safer and more profitable to cut a deal with other employers. That is why we have state and federal laws against monopoly, although they are weak and rarely enforced. Employers can reduce their risk and their competition for employees and for sales and increase their mutual profit by cooperating. Is this not self-evident? Look at the example of the auto industry. There were once hundreds of car manufacturers. Three remain in the U.S. and seven world wide. Look at the media industry. There are now five huge conglomerates that own and control the print media, radio, TV and PR agencies. With a monopoly, capitalists can limit production, and maintain the same prices even if demand falls off. Monopoly augments the power and wealth of the tiny elite.

4. The normal path of mature monopolistic capitalism thus leads inevitably to stagnation. Due to excess productive capacity, there are insufficient opportunities to make a profit by investing in production of goods and services to meet human needs. Vast unemployment and economic depression would result if nothing was done.

There are people other than employees who buy capitalist goods such as self employed farmers and crafts persons. However, they do not earn much either because their income is reduced by competition from the capitalists. Thus, capitalism is unstable. It powerfully tends toward overproduction as competing employers try to get a share of the profit, but then more is produced than employed and self employed people can afford to buy. They may need the product, food for example, but they cannot afford to buy it. So plants shut down, employees lose jobs, farmers also cannot sell their products and a depression results.

Human beings were shocked and startled by the Great Depression of 1929, particularly so, capitalist employers. Capitalists learned, even if we did not, that capitalism simply would not function without public money. U.S. capitalist employers remained without profit making opportunities for 14 years until World War II, despite the public expenditures of the New Deal. The vast public expenditures of WWII, primed the pump of capitalism. Billions and Billions of dollars of public money have sustained capitalism and avoided stagnation from 1940 to date. We now have:

   * $49 trillion in interest-bearing debts, according to the U.S. Federal Reserve Board …
   * $50 trillion in federal contingency debts, according to the Government Accountability Office (GAO), and …
   * $164 trillion in derivatives, according to the U.S. Comptroller of the Currency (OCC).

That’s a grand total of $263 trillion in debts and obligations, twenty times more than the total size of the entire U.S. economy.

Despite this massive public expenditure, our capitalism remains always on the brink of stagnation.

What do we mean by “stagnation?” It means absence of profit making opportunities, too much productive capacity, and much unemployment.

The huge unmet consumer needs that had built up during the depression and WWII, provided profit making opportunities until around 1970. Capitalist employers were determined that no future depression would again lay them low. All capitalists thus enthusiastically supported the vast public expenditures for defense during the Cold War from 1946 to 1990, the Korean War, and the War in Viet Nam. We are now spending $1 Trillion per year on the Iraq War

Despite all of this, capitalism remains fragile, prone to stagnation, and desperately dependent upon contribution of public tax money or borrowed money to keep it going. If there had not been this public taxpayer support of capitalism, there would have been another depression or to some solution like the Germans adopted in 1933.

5. The National Government is now a critical component of capitalism and to an ever increasing degree, capitalism and capitalists control the government. Capitalism and the government are “one.” We now have corporate state capitalism.

   a. Even in Adam Smith’s day, the state and society were essential to the functioning of pure capitalism. The state provided laws and courts to protect private property, private ownership of resources, and provided the sole legal imperative for corporations to make money in the short run for shareholders. The state always did more than this. Through its sheriffs and army, it enforced its laws by force, if necessary. Law enforcement has always intervened in employee strikes on the side of employers. Society provided the ethical and practical incentive for capitalist employers to pay their employees at least enough to survive and continue working for the employers. (But with the global outsourcing of jobs, this social constraint has been abandoned. See below.)

   b. The National Government, being effectively under the full control of capitalist employers and bankers, now provides “whatever public money it takes” to keep capitalism going for the elite and to avoid the loss of profit making opportunities. Thus the government provides massive public money for “defense,” “Cold Wars, War in Korea, War in Viet Nam, War against ‘communism,” and now for the perpetual “War against Terror.” Spending for human social services would prime the pump also, but the capitalist elite always vigorously opposes this because it would increase wage costs by making employees less desperate to work.

6. Since capitalists must make a profit, when profit making opportunities dwindle at home, capitalists, using the National Government and the Military go abroad to seek new profit opportunities, new resources, additional customers, and employees willing to work for lower wages. Capitalism at home tends inevitably toward capitalism abroad: Imperialism.

   a. Capitalists do not go abroad to help foreign residents, to bring freedom, or to impose democracy. They go to make a short term profit.

   b. Imperialism does not require colonialism with an occupying force. Imperialism is now more often a purely economic activity, perhaps aided by bribes of local officials, loans with unfavorable conditions for foreign peoples, and CIA toppling of unfriendly foreign governments.

   c. Capitalists now pay employees at the cheapest wage rate they possibly can with total disregard of whether or not the employee will survive. Survival of human employees is somebody else’s problem under modern mature capitalism.

   d. The voting public is caused to support each major foreign war by a “false flag” events such as Pearl Harbor or 9/11.

7. Despite the massive aid to capitalism from Imperialism, state spending and monopoly, capitalists, beginning in 1970, found insufficient profit making opportunities in investing to produce things human beings need. The capitalist elite began increasing investment in speculation in the financial sector to produce the short term profit upon which the survival of capitalism depends. This serves no human need except the speculators’ profit. We now have the phenomenon of Financialization.

Beginning in 1970, the capitalist elite had no shortage of capital. Wealthy individuals and corporations had huge reserves of cash. There was simply no profitable place to invest it to meet human needs. Public expenditures for wars and defense, including the War against Terror were simply not enough. In this era of Financialization, corporations seldom invest their own accumulations of cash. There is much more profit to be made by “leveraging” that is, using borrowed money with as little of the corporations’ own cash as possible.

Wall Street created numerous novel investment vehicles where a short term profit could be made: Hedge Funds, and Collateralized Debt Obligations, Collateralized Mortgage Obligations, with each level serving as “security” for yet another level of Collateralized Debt Obligations.

Whereas finance used to support investment for production, Financialization took on a life of its own, unrelated to the real economy and production for human needs. The Fed and the big bankers created a “monstrous bubble of cheap credit.” “The monstrous explosion of debt, consumer, corporate and government (equal to well over 300% of the GDP by the housing bubble’s peak, both lifted the economy and led to growing instability.”

This investment in the financial sector and speculation has become the dominant and necessary feature of current capitalist investment, if a serious depression is to be avoided. While this investment may make a profit for the wealthy investors, it does absolutely nothing for human beings or the real economy. It is so necessary to keep capitalism going that Federal Reserve Chairman Bernacke absolutely refuses to regulate this financial speculation. If he did, stagnation would be the result. Bernacke gave the big banks almost $30 Billion “to avoid a total breakdown of the world economy.” Did the Big Banks use this public money to invest in new production to serve public need? Absolutely not! They used public money and barely secured loans to invest in foreign currencies so that they could augment their reserve capital to meet the difficulties from the worthlessness of the collateralized debt instruments!

It is now apparent for all to see that despite all of the foregoing Capitalism is still extremely fragile and vulnerable to stagnation. More importantly, Capitalism is failing to meet our most critical human needs.

8. Capitalism as it existed in the days of Adam Smith no longer exists in the Twenty First Century. Capitalism has mutated so as to cause the merger of corporate power with state power so that we now have corporate state capitalism whose powers are exercised solely to benefit of the global elite at the expense and starvation of the rest of us.

The elite causes the government to print massive amounts of paper money to rescue the institutions of the elite, and to stave off a massive economic collapse. This paper money is funded by the Chinese and the Arabs buying U.S. Bonds which we citizens and taxpayers will ultimately have to pay off.

It is conceivable that the US could default on its bonds. The US could simply not pay them, and start over with a new currency based on the Gold Standard. This would mean an immense depression in the US, the end of capitalism, and a new economy based on public hiring, public utilities, co-ops, partnerships and self employment.

Unfortunately, the existing power elite are not likely to sit passively by and to allow this to happen. It is far more probable that they will choose a military dictator favorable to their interests and to impose martial law. The power elite are hurt far less than the rest of us by massive depreciation of the value of the dollar.

As John McChesney says:

“One thing is certain. Large capitalist interests are relatively well positioned to protect their investments in the downswing through all sorts of hedging arrangements (Doug adds: Investment in foreign currencies, and repossession and ownership of houses and other assets) and can…call on the government to bail them out. They also have a myriad of ways of transferring the costs to those lower down on the economic hierarchy. Losses will therefore fall disproportionately on small investors, workers, and consumers, and on third world economies.”

It seems abundantly clear that the wealthy powerful elite served so well by Federal Reserve Chairman Bernacke is far more concerned with maintaining the stability of its banking institutions than with inflation. The elite have ways of profiting from inflation such as investing in stable foreign currencies.

9. The Propaganda Arm of the corporate capitalist state. The capitalist elite owns and controls all the major print and electronic media, public relations and advertising agencies. The capitalist elite thus imposes the ideas and ideology that benefit it, including the taboo against analyzing capitalism, its social inadequacy and its dynamics, upon all of us.

We must learn the truth of the points above by ignoring the massive taboo imposed by the elite, and by becoming aware of the degree which each of us has been brainwashed by the elite. The short term capitalistic best interests of the small ruling elite determine the ideas and ideology of the elite. The ideologies and ideas of the ruling elite are projected or imposed by this dominant elite on all members of that society in order to make the elite’s interests appear to be the interests of all. This is of course augmented by the ruling elite’s control of all of the mass media, by the dependence of us employees on the employers whose jobs are our only means of survival, and by monetary support of the elite to non governmental organizations and the academic community.

The ideology of a capitalist society is enormously important since it confuses us employees and voters, causes us to abandon our own economic and political best interests and creates a false consciousness such as the addiction to consumer goods. It is a part of the false American civil religion.

The elite through their ownership and control of the media are well aware of and make full use the manipulative power of Nationalism, of Patriotism, and of the “dogs of war.”

We set forth three current examples:

   · The NYT acted as a branch of the government in publishing know lies that led us to support the war in Iraq.

   · The NYT and the media publicized the views of retired military officers as objective efforts, knowing the fact was that they were acting as spokesmen for the military and Bush Administration.

   · A huge majority of American voters want Universal Health Coverage, but neither Obama, nor Hillary Clinton, nor John McCain can promise to try to implement that wish of the voters.

Application of the analysis of these dynamics to current conditions:

Both capitalism and a government of, by, and for the people no longer exist. We now have corporate state capitalism with its military, intelligence agencies, and media, all controlled by the elite.

There are now three economies in the US each dominated and controlled by the elite:

   · The economy of the very rich, for the support of which the Elite uses their control of media, academia, government, Federal Reserve Bank, and our taxes.

   · The Stock Markets that we should think of as simply a gambling casino, with hidden government financial support and manipulation to aid the rich in the fleecing of little stock holders. (Do you know of the “Plunge Protection Team,” who controls it, whose money it uses, and under what circumstances? None of us do and we invest in the stock market at our peril.)

   · The Real economy where the rest of us live in immense insecurity, with many unmet needs and we struggle to survive.

We have lost our ballot box control of the government. We have no means to control the ecological destruction of capitalism. Al Gore may be living in a fool’s paradise in his efforts to control Global Warming unless he deals with the dynamics of capitalism. We have no direct means of curbing, controlling or regulating corporate state capitalism. We can no longer study “economics” as a subject distinct from “political science” if we are to have any hope of enlightenment.

Because we do not have a visible dictator, because we still have substantial freedom to speak, write, communicate, and organize, and because the forms of ballot box democracy still remain in place (although not the substance), it is not yet accurate to call our global corporate state “fascism,” such as existed in Italy under Benito Mussolini.

The capitalism of Adam Smith, relatively free of government support, is no more. Monopoly Capitalism and the government are now one. However, even corporate state capitalism is fragile as we have seen. The government cannot keep borrowing forever to support this fragile institution. We citizens and taxpayers cannot pay ever higher taxes simply to keep capitalism from depression. Moreover, present day Corporate State Capitalism is parasitically dependent on us as consumers and as employees for its existence. This capitalism is like a cancer that in killing its human hosts, it kills itself. Its laws of motion take it inevitably in the direction of fascism, dictatorship and martial law. It destructive energy in sucking away the profit from our labor, and in its total lack of concern for our wellbeing, makes us think of a tornado.

It is now probable that the ruling elite with its vast economic, military, media, and governmental powers, can avoid another Great Depression for them. There may be another great depression for the rest of us, although the mainstream elite media, using falsified statistics, may never acknowledge or publicize that fact. Runaway inflation where our wage dollars buy less and less would itself be a Great Depression for us. If a Great Depression really threatens the elite, it is probable that the elite would turn to a popular general like General Petraeus as military dictator and impose martial law. The elite would engage our “support” of this dictator by “false flag” operations, and by a media PR campaign, ,manipulating our own fear, and playing on our national honor, nationalism, consumerism, racism, religious differences, patriotism, “evil enemies at home and abroad,” and “the dogs of war.” In this, the elite will be successful unless we learn to be intellectually and emotionally immune to these false manipulations.

This being the case, what shall we do? What can we do?

It is clear that we cannot successfully or morally use force against the armed juggernaut of the elite, and against those among us who are successfully brainwashed by the elite.

   · We can learn and communicate the dynamics of corporate state capitalism and its false PR manipulative strategies.

   · Since even this mutated form of capitalism is parasitically dependent upon our work, and our consumption, we can stop working for large private employers. We can slow down our pace of work.

   · We can stop our consumption of the products of the elite. We can boycott the products of the elite

   · Insofar as is possible, we can grow our own food and meet our own needs as our ancestors did

   · We can support a democratic government as our employer to meet those needs we cannot meet ourselves.

Our sustainable survival, our freedom, our democracy, and our civilization are dependent upon our overcoming the taboo imposed by the elite, and learning capitalism’s dynamics.

Is this analysis plausible? What part of it, if any, is illogical, or contrary to your own experience and observation? Is it worth considering? What is your alternative? How do you analyze the workings of capitalism?