classical economics
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Republic is Usurped

By Wayne Jett © August 4, 2011
    Ben Franklin said the Constitutional Convention had given the nation “a republic, if you can keep it.” Alas, we have failed. Aristocrats (now called “oligarchs” because they have accumulated so much looted capital) dominate Congress with money poured into pockets of party leaders. They dominate the executive and judicial branches and elite media by much the same means. Republican democracy is a faint image of honest representation of popular interests. The dominant elite are focused upon using debt to bring about collapse of U. S. constitutional government.
Dominant Elitist Wins
    What evidence proves our failure to sustain the republic won and handed to us? The list is long, but recent examples will suffice:
(1)    Passage into law of the Troubled Asset Relief Program (TARP);
(2)    Passage into law of the Dodd-Frank financial reform law;
(3)    Passage into law of Obamacare; and
(4)    Passage into law of the debt increase deal.
Each of these actions advanced the agenda of the dominant elite – the oligarchs of Wall Street and the Eastern Establishment. Congressional leadership steam-rolled intense popular opposition, including rank-and-file members of Congress.
    Even Alan Greenspan, former chief perpetrator of the Federal Reserve’s deceptions, now asserts the “too big to fail” banks should have been permitted to fail. Where was he when TARP was defeated in the House, and his voice might have sustained the opposition? He was nowhere to be found because J. P. Morgan Chase, Goldman Sachs, Citigroup, J. P. Paulson (Greenspan’s current benefactor) and others wanted the $700 billion to be handed out by then-secretary of Treasury, Henry Paulson.
How Oligarchs Rule
    Burdened from colonial days by elitists installed by European colonial powers, the U. S. today is strangled by unprecedented power in hands of oligarchs. The events of 2008-2011 are only the most recent evidence. Financial “terrorists,” who almost certainly work for or in conjunction with the oligarchs, looted $13 trillion from U. S. investors in 2008 alone.
    How do the oligarchs abuse their power?  First, they assure their own invulnerability to punishment for their actions. In 2010 as in 1933-34, Congress failed to lay a glove on corrupt financiers who orchestrated the crimes of 2007-2009. No serious person would argue that the Dodd-Frank “reform” law reined in Wall Street’s manipulators in any serious way. Instead, the tentacles of J. P. Morgan Chase now squeeze Americans from coast to coast.
    Neither did the 1933 and 1934 laws achieve true reform, though Franklin Roosevelt and Joseph Kennedy were praised for bringing law, fairness and transparency to financial markets. The truth is much different. The Securities & Exchange Commission is a travesty of justice now, and always has been. From the outset, the agency betrayed investors and shielded financial predators by designing rules with ambiguities and loopholes and by abusing statutory “discretion” to investigate or prosecute market manipulation.
Borrowing by Beggars
   Additional federal borrowing to finance present comforts at the expense of future generations is morally and economically indefensible. The Keynesian hall of smoke and mirrors has no trick capable of turning the debt monster into a fairy princess.
    No solution to the federal debt problem can be achieved so long as the oligarchs and their Keynesian operatives hold power. They insist upon maximizing debt and minimizing economic growth, so “growing our way out of it” is impossible while they reign.
    Additional financing of comforts for the present at the expense of future generations digs the hole deeper and leaves control of policy with those who insisted debt creation and currency devaluation were paths to economic nirvana. The damage is done, their spiral stairway goes only downward for the productive class, so nothing is gained by going farther with the agenda of the dominant elite. They should be deposed now so they can plant no additional IEDs on the arduous road to economic recovery.
    Unless significant portions of federal debt are reviewed and revoked now, debt already incurred will harass younger Americans, driving them inevitably into poverty and national collapse. These are unconscionable conditions to impose on younger generations. Better to face consequences of irresponsible conduct – and confront oligarchs’ oppression – now rather than heaping those burdens onto cradles of innocents.
    No matter the outcome of the debt ceiling confrontation in Congress, the Wall Street predators were determined to take their first opportunity to drive share prices down hard. They were tired of the slow grind to the upside while the president and Federal Reserve gained accolades in some quarters for propping up the economy with “stimulus” dollars created by the Fed itself. Now the predators are ravenous for mammoth gains provided by short side tactics and derivative instruments during a crash of securities markets. Expect them to be at it for a while, since they have been so patient in delaying a return to the feast since 2009.
Fatal Attraction
    Also expect the Fed to create a lot more dollars, because Treasury plans to borrow $600 billion-plus during the next six months. This may well be under-stated, if additional "stimulus" comes to pass.  By mere happenstance, the dollar’s status as the world’s primary reserve currency is reported “slipping,” which is about as newsworthy as the U. S. credit rating being under “negative watch.” The titular head of Russia openly disrespects Fed chairman Bernanke, accusing the central bank of leeching value out of other countries globally by devaluing the dollar.
    But don’t worry about a double-dip recession. To repeat, the U. S. never came out of the recession which began in 2008. If it lasts another seven years or so, perhaps someone else will call it a “great” depression.
    U. S. GDP statistics are no more honest than its CPI or employment numbers, and GDP is influenced importantly by federal spending of Fed-created dollars. You might say QE2 (and the approaching QE3) is Bernanke’s own brand of naked short selling – he is permitted to generate dollars rather than fake shares and exchange them for something of value (Treasuries). No true recovery can be based upon numbers created using phony currency.
  Energy commodities are dropping in price, anticipating depressed demand. Food commodities are spiking higher, as are precious metals, anticipating inflation. Treasuries have risen with yields dropping sharply (the 10-yr bond yield dropped 22 basis points today to 2.4%, and the 30-yr yield dropped 23 bps to 3.67%), as capital sought shelter in a tin barn during a lightning storm. This may turn out worse than a hurricane in a Southern city with “vanilla” dikes. ~