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What every American needs to know about the Federal Reserve System

31 March 2012

Summary: The Federal Reserve has become one of the most powerful government agencies, operating almost free of checks and balances.  Worse, it represents one of the most outrageous examples of regulatory capture, private interests taking control of agencies intended to supervise them.  Today we have Michael Hudson to explain to use the significance of these events.

From The Independent Word

An interview with Michael Hudson published on the Russian website Terra America.  Posted here with his generous permission.  His bio appears at the end.  Red emphasis added.

Question: What is the place of the Federal Reserve System in the American financial and economic structure?

Prior to the Federal Reserve’s founding in 1913, U.S. monetary policy was conducted by the Treasury. Like the Fed, it had district sub-treasuries that performed nearly all the financial functions that the Fed later took over: providing credit to move the crops in autumn, managing government debt, and so forth.

But after the severe 1907 financial crisis, a National Monetary Commission was reformed. Under the then-Republican administration, it recognized a need for more active government intervention to prevent future financial crises. It also recognized the desirability of moving away from the Anglo-Dutch-American system of “merchant banking” based on short-term lending against collateral in place, or for shipping of goods already produced. The National Monetary Commission’s longest volumes were on the great German industrial banks, and Republican policy aimed at bringing banking into the industrial era, to provide long-term funding after the model of German and other Central European banks.

However, the leading bankers sought to use the crisis as an opportunity to grab power for Wall Street, away from the Treasury. In this sense, the Fed was founded in large part to take monetary control away from Washington’s elected officials and appointees, and privatize the supply of money and credit.

So its place in the U.S. financial and economic structure is to allocate credit, primarily to serve Wall Street financial interests. That explains the insistence on the financial class here and abroad in insisting on an “independent” central bank. It means that instead of serving the public interest, it serves the interests of the banking class. The hoped-for transformation of commercial banking into long-term industrial banking was not achieved.

Q: Can we imagine the global economic system without Federal Reserve today? If yes/no, why?

As David Kinley’s book for the National Monetary Commission pointed out a century ago, nearly all the financial functions performed by the Fed already were performed by the national Treasury. In more recent times, Milton Friedman and his University of Chicago colleagues suggested that the entire Fed could be reduced to a single desk inside the Treasury. The “Chicago Plan” of the 1930s urged Treasury control, as does Congressman Dennis Kucinich’s current bank reform.

There is no inherent need for a monetary agency to exist outside of the national government, except to serve the interests of the financial class as distinct from those of government, industry and labor. And the banking sector’s business plan is to load down real estate, labor, industry and the government with as much interest-bearing debt as possible.

Q: Some people in the US (especially supporters of the congressman Ron Paul) believe that the Federal Reserve is the reason of serious problems within the American financial system. Do you agree with this claim?

The Fed is a reason for serious problems, but not the only reason. Unfortunately, Ron Paul’s proposal opposes paper credit itself, whether issued by the Fed or the Treasury. He wants to return to the gold standard and clash government spending – in effect, to create an economy without government. So what he actually advocates is not only the end of the Fed, but the end of a functioning credit and tax system. The idea is otherworldly and has no possible chance of being enacted, because it would cause a vast debt default as a result of plunging prices, incomes and employment.

Q:  Contrary to most of European central banks the Federal Reserve is quite autonomous and has some private aspects. Doesn’t it give too much power to this financial structure? Or maybe this power is part of the checks and balances within the American political system? If yes, what is its precise role and place?

The Federal Reserve is private in name only. Its heads are appointed by Washington, but Wall Street has veto power over it (as it has over the appointment of major Treasury and other regulatory agency officials). So the problem is not that the Fed is technically owned by its stockholders, but that Wall Street has gained overpowering control over government itself.

The financial sector has sought to dismantle checks and balances, making it protect Wall Street even as financial interests diverge from the promoting of economic growth and rising living standards.

Q: What is the priority for the Fed leadership: solving national American problems or serving the interests of the global system?

The Fed is officially supposed to perform two functions: First, to promote “price stability.” This means in practice, fight against wage inflation and preserve sufficient unemployment so that wages will not increase. The “prices” that are supposed to stabilize are the price of labor (wages) and commodity prices.

Meanwhile, the Fed seeks to inflate asset prices, above all real estate prices. Under Alan Greenspan, the aim of the Bubble Economy was to inflate housing prices by enough so that homeowners could borrow the interest to pay the bankers each year, and even enough to spend on consumer goods that their stagnant wage levels were not sufficient to buy. The result was to vastly increase the volume of debt – and debt service became a rising element of prices throughout the economy. Debt-leveraged housing prices ended up absorbing about 40 percent of typical family budgets, and a rising share of corporate income as well, leaving less for spending on current production of consumer goods and capital goods.

The second function the Fed was supposed to perform was to promote full employment. Mr. Greenspan made it clear that he believes that this is incompatible with the ideal of price stability. He pointed out before Congress that the virtue of loading down homeowners, college students and others with debt was that they were afraid to go on strike or even complain about working conditions or seek higher wages, for fear of being fired and missing a mortgage payment or credit-card payment. Going on strike or losing as job would threaten them with loss of a home, and an immediate increase in the credit-card interest rates and penalties that they had to pay. So the Fed became the leading administrator in Wall Street’s war against labor.

Under Mr. Greenspan’s tenure and that of his successor, Ben Bernanke, the Fed has overseen the greatest shift of wealth n American history since the Robber Barons.

Finally, the Fed has taken over the functions of government by threatening to close down the economy if the government does not bail out the banks at taxpayer expense, and protect the wealthy 1% against losing money.

Q: How different were the three last Fed chairmen? Who was the most successful?

Paul Volker came from the Chase Manhattan Bank. In the late 1970s he coped with the U.S. balance-of-payments deficit (stemming mainly from overseas military spending) and consequent the inflationary pressures by raising interest rates to 20%, thereby plunging stock market and real estate prices.

His successor, Alan Greenspan, was a Wall Street lobbyist and a follower of Ayn Rand. Diametrically opposite from Paul Volcker, he pressed to deregulate the economy and sponsored the financial bubble to pump enough credit (debt) into the economy to enable debtors to pay the banks the interest that was mounting up. As a bank lobbyist in control of the banking system, he “freed” the bank from government control – and promoted the greatest debt bubble in U.S. history.

Ben Bernanke was an academic, not a banker but sufficiently brainwashed in neoliberal, pro-Wall Street ideology to be trusted by the banks to flood the economy with credit in an attempt to re-inflate the bubble economy so as to pull real estate prices out of negative equity – thereby saving the banks from their bad loans. Instead of writing down debts, the Fed made sure that no bank would lose, or even be prosecuted for the financial fraud that has risen to epic proportions over the past decade. My UMKC colleague Prof. Bill Black calls this phenomenon “criminogenic.” So in effect, Mr. Bernanke is as much a bank lobbyist as Mr. Greenspan.

In this sense, both Mr. Greenspan and Mr. Bernanke were successful in steering U.S. financial policy to benefit Wall Street by loading down the economy with debt, and then using public credit to bail out the banks and pass the losses onto taxpayers. But this “success” is leaving the U.S. economy debt-ridden and uncompetitive internationally, because its industrial producers face such heavy debt charges that they are priced out of world markets for most products except for military arms, agriculture and high-technology monopoly goods and patented motion pictures and entertainment.

Q: The existence of the Federal Reserve: does it match with the ideas of the classical liberalism? How liberal is this institution?

The Federal Reserve is antithetical to the classical liberal aim of using financial and tax policy to minimize the economy’s cost of production. From the Physiocrats and Adam Smith through Ricardo, John Stuart Mill and the Reform Era, the aim was to minimize land rent (by either taxing it away or nationalizing the land), monopoly rent (by price regulation or by keeping natural monopolies in the public domain) and interest or other financial charges that were payments for special privilege.

Acting on behalf of the banks, the Fed has sponsored the un-taxing of real estate and monopolies, as these have become the major bank customers. And by deregulating Wall Street, the Fed has underwritten the overgrowth of unproductive credit – credit extended not to finance industrial capital formation, but simply to speculate and to transfer ownership of assets already in existence.

The guiding philosophy of the Fed is to inflate prices of assets in order to expand the market for real estate loans (which account for some 80 percent of bank loans in the United States), corporate takeover loans and speculative “casino capitalist” loans for foreign-currency and interest-rate arbitrage.

About the author (from his “about page“)

Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971).

ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East.

Michael acts as an economic advisor to governments worldwide including Iceland, Latvia and China on finance and tax law. He gives presentations on various topics at conferences and meetings and can be booked here. Listen to some of his many radio interviews to hear his hyperspeed analysis of the geo-political machinations of global economics.

Go to his website to see his writings.  See his Curriculum Vitae here.

Books (both in revised editions):

  • Super Imperialism: The Economic Strategy of American Empire was the first book to describe the global free ride for America after it went off the gold standard in 1971, putting the world onto a paper U.S. Treasury-bill standard. Obliging foreign central banks to keep their monetary reserves in Treasury bonds forced them to finance U.S. military spending abroad, which was responsible for the U.S. balance-of-payments deficit at that time. See exorbitant privilege for more discussion of reserve currency status, and super-imperialism for history and use of the term.
  • Global Fracture: The New International Economic order — a sequel to Super Imperialism, forecast the division of the world into regional trade and currency blocs.

For More Information about our banks

  1. Locked into the bailout state, 4 March 2009
  2. Now is the time for America to get angry, 24 March 2009
  3. America on its way from superpower to banana republic, 28 March 2009
  4. Bush’s bailout plan is now Obama’s. His quiet eloquence guides the sheep into the pen, 30 March 2009
  5. The best way to rob us is to own a bank, 10 April 2009
  6. “The Greatest Swindle Ever Sold”, by Andy Kroll in The Nation, 28 May 2009
  7. Please read this. For the sake of yourself, your children, and their children, 2 June 2009 — Taibbi’s first article about Goldman.
  8. About Goldman Sachs, the exemplar of our financial system, 21 July 2009
  9. More about “Government Sachs” (they own America; we just live here), 31 July 2009
  10. It’s official. TARP is just theft., 1 May 2010
  11. Matt Taibbi helps us see ourselves, and the leaders we elect to run America, 29 May 2010
  12. FDR explains one dimension of our problem: bankers own the government, 23 November 2011
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26 Comments leave one →
  1. Marvin permalink
    31 March 2012 7:01 am

    Your summary says “The Federal Reserve has become one of the most powerful government agencies” and your expert says “The Federal Reserve is private in name only.”.

    In fact, the Federal Reserve banks are owned by the banks in their district. The FRBNY is owned in toto by Goldman Sachs, JPMorgan and other banks in the district of NY. Ditto for Federal Reserve district banks in Texas, Chicago, San Francisco etc.

    In my view, the situation is not so much a matter of regulatory capture, where Wall Street exerts an overpowering influence, its a matter of OWNERSHIP. Until this is recognized, we are to debt serfdom.

    Like

    • 31 March 2012 3:52 pm

      You do not understand the Federal Reserve system. The system was created by legislation, wields government powers, with any profits returned to the Treasury (over a statutory dividend of 6% on member banks’ capital investment).

      You appear to confuse the Federal Reserve District Banks with the Board of Governors (a misleading name for the parent agency). They have very different powers and roles.

      The Board of Governors is a government agency. The Governors are appointed by the President and confirmed by the Senate. Only one member of the Board of Governors may be a district bank governor. The salaries of the agency’s senior staff are set by Congress. This is the fundamental fact about it. For example, the Federal Reserve website explains why they are subject to the FOIA (bold emphasis added):

      The Freedom of Information Act (FOIA), 5 U.S.C. § 552, generally provides that any person has a right of access to federal agency records.

      The District Banks are formally owned by its member banks, but with many aspects of ownership held by the Board of Governors. The Governors appoint 3 of the 9 members of each District Board of Directors — including the Chairman and Deputy Chairman.

      Like

  2. Pluto permalink
    31 March 2012 12:48 pm

    While I don’t disagree with the author’s major tenants, I urge the reader to find additional sources of information. I have never met a person who is, at the same time, extremely knowledgeable about a topic and completely unbiased about it. I also note that the more biased a person is about a topic the more they tend to try to spread their viewpoint and this guy is spreading his viewpoint a lot.

    His points about the conflict of interest are valid but I look at recent history and at other countries and can find no example of a country that a) participated heavily in the 2005-8 bubble and b) has performed better than ours.

    While the Federal Reserve may not have served the country particularly well since the bubble burst, putting the enormous Fed power back in the hands of the politicians strikes me as an even worse solution than our current situation. Ben Bernanke’s efforts to keep the economy strong are considerably less destructive, at least in the short run, than the severe austerity plan that several European countries are currently enduring.

    As for whether or not the founding fathers would have approved of the Federal Reserve, I can only offer two major thoughts:
    1) The founding fathers were extremely cautious about the benefits of direct democracy and made the Supreme Court a “for life” office to counteract the vagaries of public opinion. If they had understood the impact of monetary policy as well as they understood the impact of judicial policy they might have come up with something similar.
    2) Alexander Hamilton was a key player in getting the Constitution in place and was a major proponent of using banks to weld the country together. I’ve never been able to decide whether that was a good idea because his feud with Jefferson so altered the way that the idea was presented that I’ve never been able to separate the idea from the poisonous atmosphere in which it was presented.

    Like

    • 31 March 2012 2:55 pm

      I don’t believe you understand the author’s point.

      “a) participated heavily in the 2005-8 bubble and b) has performed better than ours”

      (1) The bubble was in the US and EU. The current political regime consists of bank-dominated governments in most OECD nations. That’s true in the EU as much as the US; EU policy has been about bailing out the banks more than helping the PIIGS.

      (2) It’s not that the solution adopted in Europe and USA has not worked. It’s that the cost was vast, prevented fundamental bank reform, created extreme mora hazard (setting up the next crisis), and benefited the banks more than the people.

      (3) There were other models. The US S&L crisis, Sweden following the 1991-92 bubble (see Wikipedia), even Russia (see this post). All in some form nationalized the insolvent banks, fixed them, and re-privatized them. So the citizens bore not just the costs but reaped some of the benefits of the recovery.

      China has a different model, in which the banks are State-controlled and partially state-owned.

      Like

  3. roger erickson permalink
    31 March 2012 3:37 pm

    Not bad. Avoids specific policy corrections that could occur within a day, but provides much needed perspective. For specific policy options, begin with these. Then expand. There are SO MANY options not being explored!

    http://moslereconomics.com/proposals/

    Like

  4. roger erickson permalink
    31 March 2012 3:39 pm

    see also: “The end of private banking: Why the federal government should own all banks

    Maybe not all Federally owned, maybe some state/county/city versions too, as well as private investment banks.

    The same argument would apply to things as simple & fundamental as the postal service, Social Security, Medicare, PSTN, internet, public health …. yet you can see where private lobbying is driving all those issues.

    To get around that trend? Distributed citizens should more directly own all policy decision-making – including the tempo & timing. (let campaigns be publicly funded – with no offices bought?)

    Like

  5. roger erickson permalink
    31 March 2012 3:44 pm

    In the end, all similar issues return to balance between personal and group initiative. Our progress follows optimization of [private + public] initiative, never either in isolation. There are tolerance limits for that balance, with capitalism and fascism at the two extremes. Striking a productive balance is what organized systems do. It’s what Ben Franklin advised, back at the original Constitutional Assembly. A successful balance can always be found by interacting widely enough & soon enough to achieve collaborative, open-source initiative.

    http://www.cositech.net/

    Like

  6. 31 March 2012 4:55 pm

    Federal Reserve, yet another violation of our rights. The gov’t constantly violates our rights.

    • They violate the 1st Amendment by caging protesters and banning books like “America Deceived II”.
    • They violate the 4th and 5th Amendment by allowing TSA to grope you.
    • They violate the entire Constitution by starting undeclared wars.

    Impeach Obama, support Ron Paul.
    Last link of “America Deceived II” before it is completely banned.

    Like

    • 31 March 2012 5:35 pm

      It’s always interesting to see how Americans build fantasies around their candidates. It gets them elected, from President Jimmy Carter to President Obama. Now the cycle repeats itself again with Ron Paul and the other clowns in the 2012 Republican freak show.

      For a few details see

      Like

    • 31 March 2012 5:43 pm

      About Hank Warren’s comment: “Last link of “America Deceived II” before it is completely banned.”

      Fortunately right-wing extremists are easily identified, as they live in a world constructured around myths and lies.

      That there are so many of them is a symptom of America’s sick soul.

      Like

    • 31 March 2012 7:11 pm

      The ‘unconventional monetary policy’ that’s happened since 2008 needs political supervision. Ultimately it is all free money for the politically well-connected large banks and financial companies with various fig-leaves to hide the fact. The fed buys stuff for less more than it’s worth, it lends money to those who are politically well-connected. If unconventional monetary policy is needed, and maybe it is, I’m not going to argue that the idea is completely bad, what has to be put in place is some mechanism to stop the massive favoritism in the current system. These policies need to benefit everyone equally, not just the super-rich elite bankers, who are the ones who raked in vast profits by causing the crisis in the first place.

      Like

    • Ma3 permalink
      31 March 2012 8:25 pm

      Fabius Maximus, surely you jest:

      “Fortunately right-wing extremists are easily identified, as they live in a world constructured (sic) around myths and lies. That there are so many of them is a symptom of America’s sick soul.”

      The same is said on the right about easily-identifiable left-wing extremists (like you) living in their own world constructed around myths and lies, and therein lies the “symptom of America’s sick soul” – both sides are extreme. You too, are one of the symptoms of America’s sick soul.

      Like

    • 31 March 2012 9:32 pm

      I think the difference between us is…

      (a) I cite a specific example of delusional thinking: your comment about that book being banned in the US. Despite all the heavy breathing on the Internet about this, it has not happened. Nor is there any evidence that it might happen. Hence my comment.

      (b) You’re reflexive reply — if you are labled right-wing, then I must be left-wing — is more defective thinking, a schoolyard taunt without supporting logic or evidence. For details see Politics of the FM site: radical leftist reformer or right-wing iconoclast?.

      Like

  7. 31 March 2012 9:42 pm

    Fed Is COUNTERFEITING, Pure And Simple (Apollonian, 31 Mar 12)

    Excuse me, but why can’t u just spare us the speechifying and say the TRUTH: The Fed is simply a COUNTERFEITING scam, pure and simple–that’s it–and this is NOT a metaphor or an exaggeration — EVEN CHILDREN can understand COUNTERFEITING. So, the Fed is a CRIMINAL ENTERPRISE AND CONSPIRACY, pure and simple, enough said.

    And think of it: if u have a MONOPOLY on this COUNTERFEITING, the sky is the limit (nearly) for the “money” u could manufacture, becoming insanely rich, owning all the large corporations and most of the smaller ones too, all the politicians (w. very few exceptions), the judges, the public “education,” and the establishment “Christian” churches–ALL of them.

    And controlling the mass corp. “news”-media would cap it all, except for that pesky INTERNET–which they’re working on, never doubt. So now these power-mad psychopaths are presently poisoning the earth in numerous ways and murdering the people by “slow-kill” methods, like forced vaccines, which give people cancer and other horrible maladies. And don’t forget the depleted uranium which kills EVERYONE in the vicinity — even the “home” troops who use it against the “terrorists.”

    And it gets down to the basic Christian theme of TRUTH vs. LIES, the Fed being the active agent which creates and enforces the lies and the (on-going) mass-murder of the stupid people who allow this regime of lies and Fed COUNTERFEITING.

    CONCLUSION: So we just need people to start valuing truth as something which genuinely protects their sanity as well as their lives — the REAL meaning of Christianity (knowing truth makes u FREE — Gosp. JOHN 8:32). Honest elections and death to the Fed.

    Like

    • 31 March 2012 10:49 pm

      apollonian,

      The Constitution authorized the government to “To coin Money” (Article I, section 8). Congress has delegated this to government agencies, the Treasury and Governors of the Federal Reserve.

      Please spare us this crazy talk. I’m modertaing your further comments.

      Like

  8. 31 March 2012 11:21 pm

    “If congress has the right under the Constitution to issue paper money, it was given them to use themselves, not to be delegated to individuals or corporations.”
    – Andrew Jackson

    “The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”
    – Abraham Lincoln

    “Issue of currency should be lodged with the government and be protected from domination by Wall Street. We are opposed to…provisions [which] would place our currency and credit system in private hands.”
    – Theodore Roosevelt

    Since when is the Federal Reserve a ‘government agency’? More like the government is a Federal Reserve agency.

    When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
    – Napoleon Bonaparte

    “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
    – Thomas Jefferson

    End the Fed!

    Like

    • 1 April 2012 12:31 am

      Prodigal Son’s comment nicely illustrates how many conservatives have become guided by lies. Led by the nose by lies. And so they have become a danger to the Republic. Let’s look at the quotes given by The Prodigal Son.

      (1) The Andrew Jackson quote is fake. What Jackson actually said, referring to the Second Bank of the US (a private bank, not a government agency):

      It is maintained by some that the bank is a means of executing the constitutional power “to coin money and regulate the value thereof.” Congress have established a mint to coin money and passed laws to regulate the value thereof. The money so coined, with its value so regulated, and such foreign coins as Congress may adopt are the only currency known to the Constitution. But if they have other power to regulate the currency, it was conferred to be exercised by themselves, and not to be transferred to a corporation. If the bank be established for that purpose, with a charter unalterable without its consent, Congress have parted with their power for a term of years, during which the Constitution is a dead letter. It is neither necessary nor proper to transfer its legislative power to such a bank, and therefore unconstitutional.

      (2) The Lincoln quote is not found in Lincoln’s works. This earliest source of this quote found is 1941. It shows special ignorance to believe this quote, as Lincoln paid for the Civil War to a large extent by issuing “greenbacks” (fiat currency).

      (3) The Napoleon quote not found in Napoleon’s works. The earliest source of this quote found is 1933.

      (4) The Teddy Roosevelt and Jefferson quotes are irrelevant to the Fed Board of Governors, which is a Federal agency and under close supervision by Congress (of course, that provides no guarantee of good policy). Jefferson was referring to the First Bank of the United States, which was explicitly a private bank.

      Like

  9. Thomas Moore permalink
    31 March 2012 11:46 pm

    Ma3 asserted: “The same is said on the right about easily-identifiable left-wing extremists (like you) living in their own world constructed around myths and lies, and therein lies the ‘symptom of America’s sick soul’ – both sides are extreme.

    Please provide us with examples of left-wing politicians who have advocated

    • a) shutting down the IRS;
    • b) letting private citizens mint their own currency;
    • c) abolishing almost all federal regulatory agencies like the FDA;
    • d) who espouses a wide variety of beliefs systematically contradicted by the existing scientific consensus, such as creationism and the claim that AIDS was deliberately created by the federal government;
    • e) who has for more than 30 years purveyed paranoid racist conspiracy stories. (See “The 10 most shocking ideas in the Ron Paul newsletters.”)

    People who claim that right-wing cranks like Ron Paul have any equivalent on the left of the political spectrum either are not familiar with the full range of crazy counterfactuals asserted by Ron Paul and people like him (including Michelle Bachmann, Rick Santorum, Grover Norquist, Rush Limbaugh, etc.,), or they are simply lying.

    The people today derided as “extreme left-wing members of the lunatic fringe,” like Glenn Greenwald, claim that the president of the united states is obliged to obey the law. There is no equivalency between such a claim and the assertion, for example, that the Federal Emergency Management Agency plans a martial law takeover of America which will cast all Americans into abject slavery, which Ron Paul made in his newsletter in 1987.

    In fact, attempts to establish such a false equivalency represent a symptom of America’s descent into self-delusion and what FM has aptly called a “dreamland.” If you don’t believe FM’s analysis, consider that Nobel prize winners like Paul Krugman have also derided this currently fashionable and totally delusional false equivalency of “both sides do it” by using the analogy.

    “If a presidential candidate were to declare that the earth is flat, you would be sure to see a news analysis under the headline ”Shape of the Planet: Both Sides Have a Point.” After all, the earth isn’t perfectly spherical.”
    — Source: “Views Stil Differ On Shape of Planet,” Paul Krugman, New York Times, 8 January 2011.

    Like

    • 1 April 2012 12:58 am

      I agree with Thomas Moore’s comment, except for one small detail.

      “People who claim that right-wing cranks like Ron Paul have any equivalent on the left of the political spectrum ”

      They have equivalents on the left. All groups have their crazy fringe. But magnitudes matter, and I believe their equivalent crazies on the left are fewer than on the right (does anyone have research about this?). It’s the number of right-wing extremists that make their delusional beliefs a threat to the Republic.

      Like

  10. Thomas Moore permalink
    1 April 2012 1:59 am

    Here’s some research based on roll-call votes in the House of Representatives that appears to show

    …the mean winning coordinate in the 111th Senate (a session in which the number of Senate Democrats fluctuated between 57 and a supermajority of 60) was the furthest to the left since the 75th Senate during the Great Depression and the New Deal. Further, the mean winning coordinate in the (present) 112th House is the most conservative since the late nineteenth and early twentieth centuries, following the realigning election of 1896, after which Republicans controlled the House for 32 of the next 38 years.

    Source: “Congressional policy shifts, 1879-2011,” VoteView blog.

    I don’t have any experience in evaluating the VoteView blog, but the historical statistics they use appear credible at first glance, and I don’t see any obvious statistical errors in their analysis.

    Like

    • 1 April 2012 2:42 am

      Thank you for posting this.

      How do they determine left and right? What very left bills did the Senate pass? The big one, Obamacare, was modeled after plans from conservative think-tanks (esp Heritage) and implemented by GOP Governor Romney in Mass.

      Like

  11. Alberto permalink
    1 April 2012 7:08 pm

    Privately owned Fed?

    What would replace the Fed? A politicized US Treasury run by politicos?

    United States Postal Service.

    I rest my case.

    Like

    • 1 April 2012 8:42 pm

      Alberto,

      I don’t understand your comment. Who is proposing a privately owned Fed? In 1833 President Jackson killed that idea in the US.

      As for a “politicized US treasury”, why would the Treasury be any more politicized than the Fed is today? The Fed’s structure merely ensures the political influence of banks, and legitimizes their actions.

      Like

  12. 3 April 2012 9:14 am

    I caught this link reading the WIR. I understand what the author is saying but we need to get off this progressive/socialist, backed up by communist 1% agenda. Do we really have 1% running the works? I agree it’s probably the major ‘wallstreet’ bankers (my local banker NOT included), it’s not the thousands of wallstreet traders, their grinding out a living too, no I think we need to calibrate what this 1% is and it’s not the earning bracket that should be thrown in this equation as most common folks have been lead to believe by the dividers; so I’d like to look at who benefits from the current situation.

    For starters we have the president, staff & minion, then congress and their staff, family, staffs family, minions… Same for the senate, then you have countless agency’s, staffs, their families, so basically the entire federal government, friends, neighbors, tagalongs… Then we get to the corporate side of the federal racket, the governments opium, I mean money supply for a campaign here, campaign there, and all the 30,000,000 million dollar suits, their sycophants and so on… Government re-education, the finest prison system on the planet turning out more perfect criminals upon the people at a specified rate to keep the public pinned down and out of the Feds hair. I could go on and on but I don’t believe this simple 1% garbage for one second and its use lacks cridibility, either ones not considering the other possibilities or is a progressive with their marching orders to divide those that can’t see the forest for the trees.

    Like

  13. sffg permalink
    7 October 2012 10:55 pm

    Large pdf of ebook: “Confessions of an Economic Hitman“, John Perkins (2004), posted at The Venus Project
    .
    .
    FM note — from Wikipedia:

    Confessions of an Economic Hit Man … provides Perkins’ account of his career with consulting firm Chas. T. Main in Boston. Before employment with the firm, he interviewed for a job with the National Security Agency (NSA). Perkins claims that this interview effectively constituted an independent screening which led to his subsequent hiring by Einar Greve, a member of the firm (and alleged NSA liaison) to become a self-described “economic hit man”.

    See the Controversy and Criticism section for more information.

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