Second verse, same as the first
Have you heard this story?
Once upon a time, U.S. banks stopped making loans; credit dried up; the
stock market plunged; Americans lost their jobs, got poor, cold, hungry, and
frightened; and the U.S. Government gave the bankers a pile of dough just to
make it all stop. If you're thinking of
the 2008 banking crisis, you are a hundred years off. I was describing the "Bank Panic of
1907." The U.S. had suffered through
similar panics in 1837, 1857, 1873, and 1893, and by 1907, Americans were just
fed-up. Something had to change and that
change was the Federal Reserve.
Unfortunately, after the "Fed" came on-line in 1914, nothing improved. We had the depression of 1920, the crash of
1929, the Great Depression, the savings and loan crisis of the 1980's, and now the
2008 bank crisis and Great Recession.
Wealthy bankers have always loved depressions. In the 1830's, Nicholas Biddle, President of
the Second Bank of the United States, single-handedly contracted our nation's
money supply and caused a five-year depression.
Later, after Andrew Jackson shut-down the central bank, national bankers
had to circulate incriminating letters in order to coordinate the timing of money
contractions and depressions. With the
advent of the Federal Reserve, monetary contractions were much easier to
manipulate, but since there was only one place to point the finger of blame,
the bankers had to concoct elaborate dog-and-pony shows in order to convince
Americans that what they are doing was different. The ironically-titled book, "This time it's
different" by Carmen Reinhart and Kenneth Rogoff, documents the remarkable
similarities of 800 years of bank-caused panics and depressions, worldwide.
Two years ago, in the Daily Republic article, "Why we have
recessions," I wrote: "When bankers raise interest rates, refuse to loan or
otherwise contract the available money supply, our national economy goes into a
nosedive. Businesses close their doors, workers become unemployed and homes,
farms and factories go into foreclosure.
The poor and middle classes always lose in these recessions, but the
wealthy can buy those foreclosed homes, farms and factories at a tremendous
discount, then re-inflate the economy, and sell at a profit, pocketing
lifetimes of labor. While it sounds
illegal, it's merely immoral. Instead of
the usual, petty "victimless crimes,' America now has 100 million "crimeless
victims.' We've been robbed of our jobs,
homes, savings and futures with no prosecution -- none -- only bailout money
flowing in vast torrents, again, from taxpaying workers to wealthy bankers."
As promised last week, this
column is about two of Senators Elizabeth Warren and Bernie Sanders' questions for the
next Federal Reserve Chairman: "If
you were to be confirmed as chairman of the Fed, would you work to break up
"too-big-to-fail" financial institutions so that they could no longer pose a
catastrophic risk to the economy?" and "Do you believe that the deregulation of
Wall Street, including the repeal of the Glass-Steagall Act and exempting
derivatives from regulation, significantly contributed to the worst financial
crisis since the Great Depression?"
The
obvious answers are "yes" and "yes," but even if we amended our banking system,
regulated derivatives, and charged a 0.01% fee every time they were traded, history
would repeat. The core problem remains:
Private citizens own the Federal Reserve and issue and regulate our nation's
money. Monetary contractions are man-made pathogens and immunizing against
one type, merely stimulates the creation of another strain. The look may be slightly different, but the results
are exactly the same. What happened here
in Fairfield happened to every "Fairfield" in America, over and over and over again.
Generations come and go, but the song
remains the same.
