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Thursday, April 23, 2009

The Fall of the American Empire

The Fall of the American Empire
by Doug Page / April 23rd, 2009
The Connection between Torture, Wall Street Bank Profits and Our Descent into PovertyWe 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 Hae 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.
Doug Page is a retired lawyer for unions, a former Democratic politician, and a life long observer of government, unions and business.

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