“At the demise of empire, City of London financial interests created a web of secrecy jurisdictions that captured wealth from across the globe and hid it in a web of offshore islands. Today, up to half of global offshore wealth is hidden in British jurisdictions and Britain and its dependencies are the largest global players in the world of international finance.”
Pouring money into the private banking system has only fixed the economy for bankers and the wealthy; it has not done much to address either the fundamental problem of unemployment or the debt trap so many Americans find themselves in.
President Obama’s $787 billion stimulus plan has so far failed to halt the growth of unemployment: 2.7 million jobs have been lost since the stimulus plan began. California has lost 336,400 jobs. Arizona has lost 77,300. Michigan has lost 137,300. A total of 49 states and the District of Columbia have all reported net job losses.
“I understand that these cuts are very painful and they affect real lives. This is the harsh reality and the reality that we face. Sacramento is not Washington – we cannot print our own money. We can only spend what we have.”
– Governor Arnold Schwarzenegger quoted in Time, May 22, 2009
Christmas comes early, Governor. You CAN print your own money. Fiscally solvent North Dakota is doing it . . . and so can California. Now!!!
In a May 22 article in Time titled “Billions in the Red: Fiscal Reckoning in CA,” Juliet Williams reports that since California voters have now vetoed higher taxes and further state government borrowing, Gov. Arnold Schwarzenegger has indicated that he intends to close the budget gap almost entirely through drastic spending cuts. The cutbacks could include laying off thousands of state workers and teachers, ending the state’s main welfare program for the poor, eliminating health coverage for about 1.5 million poor children, halting cash grants for about 77,000 college students, slashing money for state parks, and releasing thousands of prisoners before their sentences are finished. Schwarzenegger bemoaned the fact that the state could not print its own money but said it could only spend what it had.
Sent to DS from Richard C. Cook with permission from the author to post.
by Mike Whitney
February 10, 2009
Richard Cook’s new book, We Hold These Truths: The Hope of Monetary Reform, cuts through the nonsense and reveals the root cause of today’s economic crisis; a privatized credit system gone haywire. This is first-class analysis from a prescient reformer whose message is just now catching fire. While the pundits are still hung up on subprime mortgages and toxic assets, Cook has peeled the cover off our deeply-flawed monetary system and exposed the rot within. This is where the change needs to begin.
We Hold These Truths is a timely book that challenges conventional thinking about credit and the role of banks. As the author points out, “In a system where the banks have a monopoly on the issuance of credit, they inevitably become the most powerful entity in the economy and therefore the most powerful politically as well.” Cook’s observations are particularly relevant today, now that many of the same people who pushed for deregulation during the Clinton and Bush administrations have been appointed as key members of Obama’s economics team. It’s clear that Wall Street has further tightened its grip on Washington even while it continues to wreak havoc on the financial system. It’s no wonder Thomas Jefferson concluded that, “Banking establishments are more dangerous than standing armies.”
Cook’s strong suit is taking complex economic ideas and breaking them down for his readers. He devotes a fair amount of time to explaining the fundamental mismatch between what the country produces and its net earnings. This gap between GDP and purchasing power can only be filled through the issuance of credit. The problem is, that as borrowing increases, the ballooning debt becomes more unmanageable and the system begins to teeter. Wall Street’s reckless expansion of credit simulated prosperity for nearly a decade, but when the bubble burst, the financial system collapsed, creating the present downturn.
Cook believes that a National Dividend–which would come in the form of a check from the government to every man, woman and child in America–could make up for the loss in purchasing power and maintain economic stability. This is not “pie-in-the-sky” liberalism, but a reasonable proposal designed to stimulate business activity and avoid disruptive recessions. He also advocates public control of credit: community-run investment banks which operate as public utilities and provide low interest loans to consumers and businesses. These ideas were implemented during the Great Depression via the Reconstruction Finance Corporation (RFC) and the Home Owners Loan Corporation (HOLC) They were successful programs that helped build America’s middle class while seizing control of the mortgage industry from Wall Street speculators.
Cook also supports a basic income guarantee for every American regardless of whether they work or not. This is a defining issue that should be debated in terms of the value we place on human dignity. Everyone deserves a minimal standard of living. The last time Congress considered such an initiative was Nixon’s Family Assistance Act of 1970. The “reverse income tax” was voted down by a coalition of southern Democrats who opposed it mainly on racial grounds. Senator George McGovern who supported the bill said that “it would have provided a basic underpinning of income for all Americans.” Income guarantees are stimulative and help maintain demand. They are good for the economy and demonstrate the nation’s commitment to provide for those who are most in need.
We Hold These Truths is a book for people who want to understand the current crisis without getting bogged down in hand-wringing and negativity. It’s a blueprint for removing the gangrenous parts of the financial system and for establishing a dividend-based system that better serves the public interest. Richard Cook has presented the ideas that are likely to shape the national debate on monetary reform for years to come. They are certainly worth our consideration. It’s a great read.
This article describes an idea for a bank reform, with which the enterprises are protected against the antics in the banking world and which enables better economic policy, also in hard times.
There are many analyses about the causes of the bank crisis. Many explain it like a consequence of greed, insuffiscient regulations and failing control by central banks.
Governments were completely surprised when the banks started to fall and they were suddenly confronted with the consequences. Ministers of Finance got carte blanche to get the banks back on track with billions of euros of support. All this because they are so important to the economy. Continue reading
Washington, Jan 21, 2009
“In God We Trust, Not in Banks We Trust”
Congressman Kucinich (D-OH) this morning made the following statement calling for assurances from Treasury and the new administration that the second tranche of the Troubled Asset Relief Program (TARP) funds will be used to address the home foreclosure crisis:
“Let us discuss our system of checks and balances. Congress writes hundreds of billions of checks to the banks, and the banks, it turns out, don’t know their own balances.
“Banks are not lending the money that Congress gave them because most banks don’t know their own balance sheets. We throw countless dollars into a bottomless pit, and we’re wondering why new lending is not happening?
“Our nation’s motto is in God we trust, not in banks we trust. We must verify what banks are doing with the money we gave them. We must get concrete assurances that the rest of the bailout funds be used to address the center of the financial crisis in America: foreclosure. Foreclosures are devastating the American family. There was a 41% increase in foreclosures in the past year.
“We must get concrete assurances from the new administration that the final bailout funds will be used to address the foreclosure crisis and help keep millions of Americans in their homes. We must help Americans save their homes.”
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Note: Josh added this to Obama’s website, please vote it up there.
by Josh Sidman
January 14, 2009
Most people had probably never heard this phrase a year ago. It refers to the monetary phenomenon whereby the financial authorities find themselves powerless to stimulate the economy via the normal expedient of cutting interest rates. Ordinarily, interest-rate policy is a viable tool for speeding up or slowing down the business cycle. If the economy is sluggish, interest rates are lowered, and economic activity picks up. If the economy is too active and inflation looms, interest rates are increased, and the economy slows down. Continue reading