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Sunday, Nov 8, 2009
which is, as Michael Lewis ("Liar's Poker") wryly observed:
"The firm made money, and the broker made money. Two outa three ain't bad".
"That last point to underline is that the hands-off-Wall Street, deregulatory impulses unleashed by Ronald Reagan and expanded by all his White House successors have directly contributed to the precarious state of today's average American."
While they may have contributed, they aren't the root cause. These are predictable symptoms of a broader disease.
The root cause of these problems, far surpassing "weakened oversight" and "deregulatory impulses", is the Federal Reserve system, its monetary policies and the distortions created by our fractional reserve banking system.
If you or I were asked to lend to an individual who wished to buy a house 40 miles from Los Angles, who would not tell us his income, or disclose his history of employment, and who provided an appraisal for the property so overstated as to be absurd, what would we do? We would rather keep the money safe in our wallets than lend for a meager 5 - 8 % return on our investment, especially considering the skyrocketing costs of everything around us. The risk would not be worth it, nor would the value of any dollars returned to us net out to create an increase in our purchasing power: real returns. These rates are far too low for the risk we would take and too low to compensate us for the increase in prices we see everyday.
It wasn't the lack of regulation over greed of savers like you or I that created this problem. It was our monetary system: the Federal Reserve system created the dollars for this borrowing to happen in the first place.
They did so by setting rates so low that it drove up the demand to borrow money. It allowed the purchaser to bid ever higher for property, with price levels increasing each time the Fed lowered rates. This is the root cause of the problem, and the proper treatment for this disease is to eradicate this unconstitutional institution called the Federal Reserve. It is an unaccountable entity within government given the power to create money out of thin air.
This money is not only used for subprime lending. The Federal Reserve allows government to fund our wars without asking the taxpayers to pay the cost of war, it allows election of politicians on false entitlement promises, and it grants the government the power to borrow and spend in amounts so large as to bankrupt our children and continually devalue the purchasing power of our savings through inflation. If the government had to tax us for its expenditures each year the public would never have allowed a $1 trillion dollar war to continue. We simply can't afford it.
Until we accept the diagnosis we will always be suffering from and attempting to treat symptoms brought on by this Federal Reserve system. Responsible adults should work to eradicate this problem before it becomes a hereditary disease enslaving generation after generation of our children to both their government and to foreign lenders.
This article made me absolutely sick. And some of the comments posted have been seemingly flippant- trying to point out the benefits that a Depression would eventually bring. Could you imagine the carnage in the meantime? My husband and I live off of his $30,000 a year salary and my medical student loans. We would be absolutely ravaged by a Depression, and to hear people even speculate about potentially teaching rich republicans a lesson in the process makes me want to vomit. My husband certainly would be out of his restaurant industry job if a depression descends and we would then lose our house and not be able to have children for any foreseeable future. We have got to keep McCain out of the White House because it is disgusting the way he would so thoughtlessly sacrifice the happiness of many for the comfort of a few of his cronies. I feel like we are moving back in time to a feudal system with right wing extremists leading the way. Clinton or Obama- who cares? Just get us out of this nightmare!
I was a science major, not math or economics, so I had to quickly google the definition of GDP to fully grasp the meaning of this article. The result of my ten minute self-education is that since government spending contributes to the gdp, the billions of dollars being spent in iraq could be artificially inflating its value, rendering the number a useless exaggeration of the truth. We may not be in a recession yet, but were dangerously close.
Actual production of SOMETHING (besides guns and corn products), instead of gluttonous consumption and expensive modern manifest destiny wars, will stabilize our economy and regain the respect of the rest of the world
For the love of god, people! (Pardon, it's just a figure of speech). We as a nation once went through a Great Depression. Those of us who were born within 20 years of it got an earful for our entire upbringing, but in the case of my parents they were both poor before Black Thursday (and the following Black Monday and Tuesday) ever happened,so they lost nothing because "When you got nothin' you got nothin' to lose."
Andrew Leonard has been careful to speculate clearly -- that is to let us know he is speculating, sounding a timely word of warning, and not, repeat not shouting "Fire!" in a crowded theater. He points out many serious problems with which we have lived for the past quarter century and which, if allowed to go on indefinitely, could trigger a depression; maybe not a Great one, but while we have endured any number of recessions since World War II, we've also gone through boom times and not all of them were attributable to Reaganomics and sheer, naked greed, which is what seems to drive the engine right now.
Panic is not only unbecoming of Americans (and the Great Depression is as close as we can come to the Battle of Britain, so we need to get over ourselves),it also is absolutely useless as a strategy. The prior letter writers here have all helped illustrate exactly why there is an "Invisible Hand" which rocks our economic cradle: the life of a high-financier is one based on hunches and emotion, not much different than claiming poker as a career skill. Of course the Domino Theory comes into play, just as when someone actually does shout "Fire!" in a crowded theater. We enlightened westerners are still a herd, a throng of lemmings. The letters illustrate that. It hasn't happened yet, we know what's up, and besides, individuals, even those considered to be living below the poverty line, are "richer" than most working class people were during and even before the arrival of the Great Depression. Couple that with the entitlement mentality of today's American and I can see the Nation's Capitol being stormed by cranky yuppies deprived of their daily caffeine taking the place apart.
So why not get the jump on the riot and simply start thinking and vote intelligently? We already know the current crop of Republicans,by and large are not our friends (and I am a Republican and an economic conservative who damns the Reagan and subsequent neocon approach to a "free" market and the culture of greed which has brought us to this pretty pass). We know we have to make a radical change in our approach to damn near everything to survive not only economically but physically on the planet, and it starts with cleaning house politically, as well as making major adjustments socially.
Aside from dong some serious study of the available Democratic Presidential candidates (and for taste-and-compare purposes, the Republican as well, so we can recognize precisely why we don't want him for the job); then start learning new ways to manage the herd. Start reading the works of Wendell Berry, Erich Fromm, James Howard Kunstler and, most especially, Greg Easterbrook (start with his "The Progress Paradox"). Throw in some Camus or Burroughs to keep your perspective on how bad things could get in a world run by idiots, then top it off with maybe Krishnamurti. Stop babbling and read and think.
Think. There's a neglected idea. We're rich. The least of us is wealthy. Sure, it's obscene that one per cent of us hold 20 per cent of the wealth, and we probably should eat the one-per centers if things get tight.
But it hasn't come to that yet and there is absolutely no reason to assume it will. Fear, dread, panic, yes, they are infinitely more fun -- but a calm assessment of how we might do things if we were smart, now there's a nice way to kill a weekend or two.
Besides, there's always a meteor with our name on it Out There somewhere.
Much of the initial coverage about Fort Hood turned out to be wrong. Is there anything wrong with that?
The accountability imposed by another country for the CIA's kidnapping and torture reveals much about our own.
Fox News' morning show plays to type, talking about whether Muslims in the Army should face "special debriefings"
The survivor and author is upset about comparisons some on the right are making to genocide
Once seen as a lunatic fringe, reactionary anti-women groups are courting respectability
Salon headlines in your mailbox
