Saturday, April 9, 2011

Debt, debt, and more debt

In the fall of 2008, I was finishing up my Bachelor's degree in International Studies at the University of Nebraska-Omaha, and one of the courses I was enrolled in was titled International Political Economy.  We were studying how the political systems of various countries, private corporations, international organizations and financial institutions interacted with the economies of sovereign nation states.  Essentially, we were analyzing how the private sector and public sector interacted at both a nation-state and international level.  My professor was one of those Milton Friedman, free market types, but we did study other economic and political philosophies in order to understand and analyze the international political economy.  I'd like to say it was a pretty good course, but looking back, my professor left out some important facts that would have shed some light on the true nature of the world we live in.

For instance, my professor could have had us read Eustace Mullins' book, The Secrets of the Federal Reserve, which documents and details the real history of the Federal Reserve System, a private central bank that operates independently of the U.S. federal government (although the President does appoint the Board of Governors, the bank is still operated privately).

Only later did I come to learn that although U.S. citizens pay taxes to the federal government, the money that the federal government spends comes through borrowing from the Federal Reserve, which loans the U.S. government (and other governments, banks, and private corporations) money to fund it's activities (often criminal in nature) at interest, making those who actually own the shares of the Federal Reserve the big winners and controllers of this country.  If this characterization of the Federal Reserve System is incorrect, I'd really appreciate some feedback in the comment section of this post.  

Looking back on it, it was a truly amazing concept not to discuss.  However, given the nature of the academy, which largely serves to propagandize and endow the political, economic and social establishment with legitimacy, it's not surprising to me now days.

It was in the fall of 2008 when many of the major banks on Wall St. began to collapse, causing the larger economy to sputter and contract, due to fraud, criminality, and unbelievably avaricious policies enacted by these major banks and financial institutions, almost all of whom were intimately involved with the inner dealings of the Federal Reserve.  Many, if not most, of these unsound and disastrous policies were facilitated by official government policy and regulations.  In my class, we were learning about how the U.S. was the shining example of free market capitalism, in which private corporations allocate capital in the most efficient, productive manner, free (largely) from government regulation and control.  It was during this period that I began to really understand how things worked in this country, and largely throughout the world, and realized how utterly fraudulent this political-economic philosophy was.  It was nice to talk about, I suppose, in a rather pie-in-the-sky way, but things certainly weren't panning out the way they were supposed to.  

According to free market capitalism, if a private business or corporation engages in practices that lead to their downfall, the free market is supposed to punish that particular business or corporation, and they are to go out of business, right?  Well, we found out in a major way during this period that things certainly do not play out that way in the real world.  We watched as the criminal banks on Wall St. literally looted the American treasury for trillions of dollars.  The very people and organizations that caused the financial crisis were now socializing their loses by putting the American taxpayer on the hook for them, and privatizing the profits.  What sense did that make?  And why wouldn't my professor address these glaring holes in the very economic philosophies we were learning about?  

Only then did I realize that we didn't have a free market economy or political system at all, and that private economic, political, and military interests controlled the government, and used it as their tool to facilitate their criminal behavior.  Concepts like the Deep State, crony capitalism, and fascism made a lot more sense in accurately describing the nature of the U.S. political economy.  Watching this disaster unfold, I soon realized that this was not just an American phenomenon, and that these concepts applied to the international arena as well.  

A recent report in the New York Times highlights quite well how all of this works.  In an article titled, "In Portugal Crisis, Worries on Europe's 'Debt Trap'," we read (bold and underline mine):
So far the markets have taken Europe's third successive sovereign financial crisis in stride.  But many economists are a good deal more alarmed, most notably because the bailout formula European leaders keep applying to their most indebted member nations shows no signs of working.
Greece, Ireland and now almost certainly Portugal have access to hundreds of billions of dollars in emergency European aid to help them avoid defaulting on their debt.  But the aid is really just more loans, and the interest rates the countries are paying, if a little lower than what the private market would charge, are still crushingly high.  Their pile of debt gets bigger with every passing day. 
With the financial crisis in the U.S., we saw private corporations receive bailout money, with little or no interest charged, as a result of their fraudulent, criminal practices.  Over in Europe, the governments of sovereign nation states, unable to finance their debt and pay their bills, receive more loans, piling up even more debt, to the international banking cartel and private economic interests.  Does anyone else see a problem here?  Then we read:
Moreover, the price of these loans has been a commitment to slash government spending far more drastically than domestic leaders would have the desire or the political power to accomplish on their own.  And for countries that depend a good deal on government spending to generate growth, rapid decreases in spending have meant sustained economic stagnation or outright recession, making every dollar of debt that much harder to pay back.   
Talk about a receipt for economic slavery, huh?  But that is exactly what the private international banking cartel wants.  Debt, debt and more debt.  No penalties, fines, or criminal prosecutions of the very people who caused the financial mess we're witnessing today, but bailouts and bonuses.  And the taxpayers get less services, benefits and social welfare, all of which are generally meager, poorly operated and open to exploitation in the first place, in order to satisfy the money junkies at the top.


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