The United States of Inequality
by Stephen Lendman
Shutting down government irresponsibly doesn’t work. Nor does money printing madness for the wrong reasons.
Former Reagan administration Office of Management and Budget Director David Stockman calls QE “high grade monetary heroin.” One day, it’ll “kill the patient,” he says.
Out-of-control debt isn’t resolved by more of it. Adding more leaves less for goods and services. Economies suffer. They’re looted for profit. Bankers want state enterprises sold at fire sale prices.
Doing so creates lucrative financing on credit opportunities. The top 1% benefits. Most others are force-fed austerity.
Economies are wrecked for profit. The road to dystopian hell isn’t paved with good intentions.
In late 2012, Bank of England official Andrew Haldane said:
“In terms of the loss of incomes and outputs, this is as bad as a world war.”
“The rise in government debt has prompted calls for austerity – on the part of those who did not receive the giveaway.”
“It would be astonishing if people weren’t asking big questions about where finance has gone wrong.”
Finance is a new form of warfare. It’s more destructive than standing armies. Banking giants run things. Money power has final say.
Economies are strip-mined for profit. Communities are laid waste. Ordinary people suffer most. They’re exploited. They’re impoverished.
They’re underpaid. They unemployed or underemployed. They’re increasingly without vital social protections. They’re headed toward being on their own sink or swim.
Throughout US history, America achieved fiscal balance or surpluses only six times: 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, 1920-30, and 1998-2001.
In contrast, six Depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. An ongoing Main Street one persists today.
When finance capitalism prospers at the expense of ordinary people, economies are hollowed out in the process.
America and much of Europe are headed toward becoming ruler – serf societies. It’s today’s reality. New World Order harshness is baked in the cake. It’s not a pretty picture.
It’s a searing indictment of current policies. It counters conventional wisdom. Casino capitalism replaced free enterprise.
Ordinary Americans suffer horrifically. They’re swindled. Their welfare and futures are stolen.
Washington conspires against them. It’s allied with business. It’s criminal class is bipartisan.
Obama serves wealth, power and privilege. Few benefit at the expense of most others. It’s official policy. Hardwired inequality defines today’s America.
Democrats and Republicans are in lockstep. They oppose social justice. They harm ordinary people most.
They’re heading America toward dystopian backwater status. They duplicitously claim otherwise.
Stockman titled a recent address
“Sundown in America: The Keynesian State-Wreck Ahead,” saying:
Since 1989, median household income remained static. For the past quarter century, inflation adjusted well-being declined.
Low income Americans suffered most. Poverty increased exponentially. Nearly 50 million require food stamps to eat. In 1989, it was 18 million.
Child poverty tripled over the same period. Not all financial “vectors” headed south. In 1989, the Dow Jones was 3,000. Today it’s five-fold higher. It’s around 15,000.
The Fortune 400 aggregate wealth increased from $300 billion to over $2 trillion.
Billionaires alone didn’t benefit. Five million households comprising the top 5% “enjoyed an average income of $320,000 last year,” said Stockman. It’s one-third higher than “the $240,000 inflation-adjusted” 1989 level.
“The same top tier” was worth about $10 trillion a generation ago. In January 2013, it was five-fold richer.
It’s $40 trillion gain alone “is nearly double the entire current net worth of the remaining 95 percent of American households.”
During Obama’s first term, America’s top 1% got 95% of “the entire gain in household income.”
Defense spending also rose sharply. With all categories included, it’s well over $1.5 trillion annually. Unknown amounts in black budgets add tens to hundreds of billions more.
Doing so is when America’s only enemies are ones it invents. Peace in our time is verboten. America never beat swords into plough shares.
Permanent war is official policy. It’s ongoing worldwide. America’s empire of bases wages it abroad. A police state apparatus does so at home.
Money power runs America. Banks profit hugely. In 1989, Wall Street’s top six banks “had combined balance sheet footings of $0.6 trillion,” said Stockman.
It represented “30 percent of the industry total.” Today their footings are 17-fold higher at $10 trillion. They “account for 65 percent of the industry total.”
Debt is the leading growth category. Money printing madness bears much responsibility. In 1989, America’s national debt was $3 trillion. It represented 35% of GDP.
Today’s national debt approaches $17 trillion. It’s 105% of GDP.
In 1989, total US household, business, financial and government debt was $13 trillion. It was 2.3x national income. Thereafter, it went “parabolic.”
Today it’s nearly $58 trillion. It’s 3.6x GDP. It “represents a leverage ratio far above the historic trend line of 1.6x national income,” said Stockman.
That level “held for most of the century prior to 1980.” America’s economy today “lug(s) a financial albatross.” It represents “two extra turns of debt or about $30 trillion.”
Throughout its pre-Greenspan years, the Fed grew its balance sheet modestly. It added a few billion dollars annually.
In 1987, it reached $250 billion. In August, Greenspan became Fed chairman. He remained so until January 31, 2006. He “discovered the printing press in the basement of the Eccles Building.”
Stockman summed up the last quarter century as follows:
“What has been growing is the wealth of the rich, the remit of the state, the girth of Wall Street, the debt burden of the people, the prosperity of the beltway, and the sway of the three great branches of government which are domiciled there – that is, the warfare state, the (corporate) welfare state and the central bank.”
“What is failing, by contrast, is the vast expanse of the Main Street economy where the great majority has experienced stagnant living standards, rising job insecurity, failure to accumulate any material savings, rapidly approaching old age and the certainty of a Hobbesian future where, inexorably, taxes will rise and social benefits will be cut.”
“And what is positively falling is the lower ranks of society whose prospects for jobs, income and a decent living standard have been steadily darkening.”
Stockman calls the current condition “Sundown in America.” It’s a dystopian new normal. Historic patterns no longer apply.
More crucially, he stresses, today’s “baleful realities are being dangerously obfuscated by the ideological nostrums of both (pseudo) Left and Right.”
America is failing itself. It’s a “floundering leviathan.” It can’t save the economy or society. It’s “fallen victim to its own inherent shortcomings,” mismanagement, and “inefficiencies.”
It’s “dysfunction(al) and incoheren(t).” It operates on “continued flows of maniacal monetary stimulus.”
Monied interests and lobby groups representing them run things. Private looting takes precedence over the public interest. Things go from bad to worse.
“Washington’s machinery of national governance is literally melting down.” It’s victimized by Fed greed and ineptitude. It’s compounded by congressional malfeasance.
Budget and debt ceiling battles are theater. What’s ongoing reflects the tip of the iceberg. Years of monetary heroin show how far off the rails the Fed strayed.
It did wonders for Wall Street, other corporate interests, rich investors, and high net worth households. It did virtually nothing for Main Street.
America’s 1% benefitted at the expense of most others. According to Stockman:
“(W)e now have the spectacle of the state’s central banking branch blindly adhering to a policy that has but one principal effect: namely, the massive and continuous transfer of income and wealth from the middle and lower ranks of American society to the 1 percent.”
It’s the greatest amount ever by far. It continues recklessly unabated. Tapering was expected in September.
Bernanke blinked. Grand theft America continues. A previous article said one day he may be remembered as the economy wrecker of last resort.
Money printing madness substitutes for stimulative growth policies. QE works when used constructively.
Money injected responsibly into the economy creates growth. It creates jobs. When people have money they spend it.
A virtuous cycle of prosperity is possible. America once was sustainably prosperous. Today it’s heading for a slow-motion train wreck.
Fed policy is “the next best thing to legalized bank robbery,” said Stockman. “And dubious economics is only the half of it.”
The flip side of nearly free money “is massive thievery from savers.” They’re getting virtually nothing on bank accounts and money market funds. Fed policy “decreed it.”
“For all intents and purposes, in fact, the Fed is conducting a massive fiscal transfer from the have nots to the haves without so much as a House vote or even a Senate filibuster.”
Congress and the White House wink, nod and approve. Grand theft America is official policy.
It’s been ongoing for years. Post-9/11, it accelerated. Under Bernanke, it’s been out-of-control.
Fed policy “is a stunning case of bureaucratic mission creep that has virtually no statutory mandate,” said Stockman.
It’s reckless. It’s out-of-control. It’s the bane of the nation. It wrecks communities and households. Bipartisan complicity permits it.
What’s ongoing reflects the sick face of crony capitalism. Crime families run America. Whatever they want they get. They make money by stealing it.
Ordinary people lose out entirely. America’s a kleptocracy. It’s headed toward banana republic status.
Fed policy facilitates what it’s mandated to prevent. Harder than ever hard times follow. Expect much worse ahead.
His new book is titled “Banker Occupation: Waging Financial War on Humanity.”
Listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network.
It airs Fridays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.