"If at the start this cancerous growth in the nation was not particularly noticeable, it was only because there were still enough forces at work that operated for the good, so that it was kept under control. As it grew larger, however, and finally in an ultimate spurt of growth attained ruling power, the tumor broke open, as it were, and infected the whole body." The White Rose, Munich 1942
Showing posts with label Federal Reserve. Show all posts
Showing posts with label Federal Reserve. Show all posts
It looks likely that Jerome 'Well you can call me Jay' Powell is going to be moving on from his post as Fed Chairman.
No tears need be shed, as he will likely find warm welcomes, open arms, and lucrative speaking opportunities at the Wall Street Banks and hedge funds from whence he came.
But what else could we expect, for creatures of the moneyed interests and their Banks.
“Your strength is just an accident arising from the weakness of others.”
Joseph Conrad, Heart of Darkness
These fellows are comedic gold, and for that he will be missed at Le Café.
"Events have satisfied my mind, and I think the minds of the American people, that the mischiefs and dangers which flow from a national [central] bank far over-balance all its advantages. The bold effort the present bank has made to control the Government, the distresses it has wantonly produced, the violence of which it has been the occasion in one of our cities famed for its observance of law and order, are but premonitions of the fate which awaits the American people should they be deluded into a perpetuation of this institution or the establishment of another like it."
"Another cause of today’s instability is that we now have a society in America, Europe and much of the world which is totally dominated by the two elements of sovereignty that are not included in the state structure: control of credit and banking, and the corporation.
These are free of political controls and social responsibility and have largely monopolized power in Western Civilization and in American society. They are ruthlessly going forward to eliminate land, labor, entrepreneurial-managerial skills, and everything else the economists once told us were the chief elements of production.
The only element of production they are concerned with is the one they can control: capital."
Professor Carroll Quigley, Oscar Iden Lecture Series 3, 1976
Money is power. And those who control the money, if they have the will for it, can use it as a means to incredible power, to create debt, and to control it, thereby controlling the debtors, both as individuals, as communities, as regions, and whole nations.
This is the story of global trade deals, the Dollar, and the foul marriage between politics, money, and central banking. The more discretion and secrecy that is granted to those who create money and debt, the more vulnerable is the freedom of the people.
This is the story of Cyprus, of Greece, and of the Ukraine.
And there will be more.
This will to power is as old as Babylon, and as evil as hell.
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.
Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank, sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
Professor Carroll Quigley, Tragedy and Hope, 1966
"He promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind. He scoffs at times gone by; he scoffs at every institution which reveres them.
He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods.
Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."
“The FOMC is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates. The Committee seeks to explain its monetary policy decisions to the public as clearly as possible.
Such clarity facilitates well-informed decision making by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society."
THE REALITY
I do not think that this blog entry really isn't being a naysayer, just negatively commenting on those facing a difficult task.
Or even really unfair.
After all, the Fed has been blowing up the US economy, and taking the world to the brink of economic and political disaster, about every eight years since 2000. And less regularly going back 1987 at least.
And they have been getting plenty of help from the government and the media.
They all put the banking system and the financial elite first, and the devil take the hindmost.
When the powerful are single-mindedly determined to have their way, even if it is horribly wrong, it is difficult and often dangerous to be right, or to even admit to knowing the difference.
Their policy errors will be a new chapter in the backward predicting textbooks of the dismal science. And I would probably enjoy this if I were reading about it in the more distant future.
What were they thinking?
And they appear to be about right on schedule for their next Doofenshmirtz Moment.
"We are determined to make every American citizen the subject of his country's interest and concern; and we will never regard any faithful law-abiding group within our borders as superfluous.
The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little."
"They will act in accord with the proverbs, 'that a dog will return to his own vomit; and the sow that was washed will go back to her wallow in the mud.'"
2 Peter 2:21-22
No. The Fed will not learn.
The Fed will keep repeating their policy errors because they are well paid not to learn. And the economic bobble heads will keep agreeing with them and rationalizing their failures. This is the judicious thing to do if you wish to succeed in a disgraced profession, trafficking in expedient fantasies that may last as long as everyone that matters agrees with them.
The Fed wishes for the ECB and the other central banks to do dumb things like they and some of their friends are doing so that they all do the same dumb things together. There is safety in numbers apparently. Hey, we all did dumb things out of good intentions. Who could have known? No one saw the bubble coming. No one could have known that what we were doing was making things worse.
It worked for Greenspan. And it's working for the Banks.
The Fed is a creature of the Banks. Its members are all members of the same 'Club.' They are from the ranks of the financial demimonde, and their livelihoods and privileges are supplied by the financial-political complex.
Insiders never speak ill of insiders. And whistleblowers and reformers are left at the curb. Or tossed under a bus.
As a regulator the Fed is one of the worst possible choices, just a quarter step removed from pure 'self-regulation' by the Banks. The Fed acts as their proxies and manservants.
The recent tapes of NY Fed meetings with Goldman are no surprise, except perhaps to those who live in an illusion of morally superior technocrats, ruling wisely with perfect virtue, cloaked in their models and jargon. And of course, you have no need to know, and could not understand it if you did.
I'm sorry, but this is just not how things are in the real world. The US and UK are caught in an awful credibility trap, and are destined to suffer stagnation and growing inequality until reform comes. And as we have seen in the case of Japan, that can be a very long time.
Speaking of things that make you go what the heck?, on CNBC this morning the assertion was that 'the goldmarket is not driven by supply and demand. It only responds to fear and greed.' That is, it's only fundamental basis is emotion.
And you know what? In the West, in London and New York, that's true.
The gold and silver markets have the depth and substance of a game of Liar's poker. They are rigged, like most of the other markets with global consequences have been. The precious metals market hasn't been cleaned up yet because the pinheads who are running the scam have no real track record or experience in trading physical commodity markets.
They think they can keep leasing out what isn't theirs and leveraging up ad infinitum, without ever incurring any real world consequences. And the Banks are perfectly willing to take their cuts because they are covered with plausible deniability, just following orders.
But this divergence from reality is not the case everywhere. Certainly not in the Asian and Mideastern markets where some accountability still exists, and delivery tends to imply taking possession.
And in that convergence of these two markets, the physical and the paper, there is both risk and opportunity. When the reckoning comes it is likely to be quite impressive.
There will be a Non-Farm Payrolls report on Friday.
The Comex Delivery Report for Friday is late, as if it is about anything that is actually delivered anywhere but on paper. There was the usual moving around the plate in the silver bullion warehouses. Gold was a snoratorium.
There is speculation now by the economists about when wage inflation will return. They are looking at 2015 for it.
I would point to the Japanese experience of 3.6% unemployment, at least on paper, and a massive underemployment running about 40%, with general wage stagnation and a large portion of the population struggling along on near subsistence wages.
Tell me again what is going to change to allow Labour to demand higher wages from a system totally dominated by two political parties both paid to represent the moneyed interests, driven by an insatiable greed for more?
Change will come, but not from within.
Something will have to happen to bring people back to their senses, and put some humility and a sense of obligation and proportion back into the masters of the universe. I won't go so far as to suggest a sense of shame. Perhaps just respect, if not for the law, then for justice.
Here is a chart comparing the Balance Sheet Assets of the Fed and the European Central Bank.
It is important to recall that the Fed has been providing extensive funding to non-US, largely European, multinational Banks through their US subsidiaries.
This also does not compare the sovereign debt of the two regions, but rather just one measure of their Central Banks policy responses. It does not indicate how those assets are being used, by whom, and to what effect.
Nevertheless there seems to be a clear divergence between the two policy responses.
"The truth is, although both incidents do reveal something about the way the powerful and famous get away with more stuff than the rest of us, there’s no real comparison. The Segarra Tapes actually reveal little or nothing that was not already known, assuming you have a shred of understanding how the Federal Reserve banks actually work. Nor is William Dudley, the president of the Federal Reserve Bank of New York, about to get pilloried in public like NFL Commissioner Roger Goodell.
Sorry, folks, but this is simply the way the New York Fed was designed to behave. The system of 12 Federal Reserve banks, established about 100 years ago by an act of Congress following secret meetings presided over by J.P. Morgan himself at an island off the coast of Georgia, has always existed for the benefit of the commercial and investment banks that created the system, that own the banks and that control their boards of directors.
To think that these banks exist for any other reason than to serve their Wall Street masters is complete folly. It has never been so and it will never be so – as long as the current system remains intact – despite what Segarra captured her bosses talking about on tape, without their knowledge."
This is not so much anything new, but a concrete reminder of the breadth of systemic banking risks inherent in the Anglo-American banking structure in which depositor money is intermingled with the Bank's speculative interests.
The repeal of Glass-Steagall stripped the average person of important and time-tested safeguards against loss. Things are different now.
Any deposits you have at a bank in excess of 'insurance guarantees' are at risk in case of another financial crisis.
This exposure may include wealth you think that you own, but do not know exactly where and how it is being held. This may include 401k's and IRA's, pension plans, health insurance deposits, life insurance and annuities, and so forth.
MF Global was very instructive on how even cash deposits and physical assets backed by a certificate of ownership may be fair game for the banking system in the event of a crisis.
Nothing is perfect and foolproof, but there are degrees of safety.
And you may wish to consider that the next time something like Occupy Wall Street starts up and demands reform, don't stand by on the sidelines and join in with the orchestrated jeering from the one percent's water bearers.
Simplify, streamline, organize.
Demand serious, meaningful, and genuine reform and transparency in the banking and political system.
"The goal is to produce resolution strategies that could be implemented for the failure of one or more of the largest financial institutions with extensive activities in our respective jurisdictions. These resolution strategies should maintain systemically important operations and contain threats to financial stability.
They should also assign losses to shareholders and unsecured creditors in the group, thereby avoiding the need for a bailout by taxpayers. These strategies should be sufficiently robust to manage the challenges of cross-border implementation and to the operational challenges of execution...
But insofar as a bail-in provides for continuity in operations and preserves value, losses to a deposit guarantee scheme in a bail-in should be much lower than in liquidation. Insured depositors themselves would remain unaffected.
Uninsured deposits would be treated in line with other similarly ranked liabilities in the resolution process, with the expectation that they might be written down."
Please notice that the CPI really 'gets some legs' when Nixon closed the gold window and released the modern monetary theory from its next to last restraint, the bond vigilantes being the last thin blue line.
And below that a quote on the modern monetary system, in which I detect the root of Paul Krugman's confusion about money.
To his credit, Krugman does recognize the liquidity trap, which sets him head and shoulders apart from the Austerians. He just does not understand the markets and how they work in practice rather than theory, and the absolutely compelling need for reform. But that puts him in with most regulators, central bankers, and the herd of academic economists.
Shifting Mandates: The Federal Reserve’s First Centennial
Carmen M. Reinhart and Kenneth S. Rogoff
For presentation at the American Economic Association Meetings, San Diego,
January 5, 2013
Session: Reflections on the 100th Anniversary of the Federal Reserve
"The current world monetary system assigns no special role to gold; indeed, the Federal Reserve is not obliged to tie the dollar to anything. It can print as much or as little money as it deems appropriate[History suggests that while they technically can print as much as they wish, there is an effective upper bound along with a law of diminishing returns in there somewhere. Weimar and John Law, amongst others, tended to show that. - Jesse]
There are powerful advantages to such an unconstrained system. Above all, the Fed is free to respond to actual or threatened recessions by pumping in money. To take only one example, that flexibility is the reason the stock market crash of 1987—which started out every bit as frightening as that of 1929—did not cause a slump in the real economy.
While a freely floating national money has advantages, however, it also has risks. For one thing, it can create uncertainties for international traders and investors. Over the past five years, the dollar has been worth as much as 120 yen and as little as 80.
The costs of this volatility are hard to measure (partly because sophisticated financial markets allow businesses to hedge much of that risk) [O brave New World, that has such derivative sophisticates in it. - Jesse] but they must be significant. Furthermore, a system that leaves monetary managers free to do good also leaves them free to be irresponsible—and, in some countries, they have been quick to take the opportunity." [Yes, THOSE countries may experience a financial collapse because of a monetary credit bubble, no doubt because of a lack of economic sophisticates. - Jesse]
Paul Krugman, The Goldbug Variations, 22 November 1996
Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted.
Statement Regarding Transactions in Agency Mortgage-Backed Securities and Treasury Securities
September 13, 2012
On September 13, 2012, the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York to begin purchasing additional agency mortgage-backed securities (MBS) at a pace of $40 billion per month. The FOMC also directed the Desk to continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities as announced in June and to maintain its existing policy of reinvesting principal payments from the Federal Reserve’s holdings of agency debt and agency MBS in agency MBS.
The FOMC noted that these actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
Purchases of Agency MBS
The purchases of additional agency MBS will begin tomorrow, and are expected to total approximately $23 billion over the remainder of September. Going forward, details associated with the additional amount of MBS to be purchased each month will be announced on or around the last business day of the prior month.
Consistent with current practice, the planned amount of purchases associated with reinvestments of principal payments on holdings of agency securities that are anticipated to take place over each monthly period will be announced on or around the eighth business day of the prior month. The next monthly reinvestment purchase amount was also published today, and can be found here: http://www.newyorkfed.org/markets/ambs/ambs_schedule.html.
The Desk anticipates that the agency MBS purchases associated with both the additional asset purchases and the principal reinvestments will likely be concentrated in newly-issued agency MBS in the To-Be-Announced (TBA) market, although the Desk may purchase other agency MBS if market conditions warrant.
Consistent with current practices, all purchases of agency MBS will be conducted with the Federal Reserve’s primary dealers through a competitive bidding process and results will be published on the Federal Reserve Bank of New York’s website. The Desk will also continue to publish transaction prices for individual operations on a monthly basis.
"Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country.
When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin!
Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I have determined to rout you out, and by the Eternal, (bringing his fist down on the table) I will rout you out."
"...It is to be regretted that the rich and powerful too often bend the acts of government to their selfish purposes. Distinctions in society will always exist under every just government. Equality of talents, of education, or of wealth can not be produced by human institutions. In the full enjoyment of the gifts of Heaven and the fruits of superior industry, economy, and virtue, every man is equally entitled to protection by law; but when the laws undertake to add to these natural and just advantages artificial distinctions, to grant titles, gratuities, and exclusive privileges, to make the rich richer and the potent more powerful, the humble members of society-the farmers, mechanics, and laborers-who have neither the time nor the means of securing like favors to themselves, have a right to complain of the injustice of their Government. There are no necessary evils in government. Its evils exist only in its abuses. If it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing. In the act before me there seems to be a wide and unnecessary departure from these just principles.
Nor is our Government to be maintained or our Union preserved by invasions of the rights and powers of the several States. In thus attempting to make our General Government strong we make it weak. Its true strength consists in leaving individuals and States as much as possible to themselves-in making itself felt, not in its power, but in its beneficence; not in its control, but in its protection; not in binding the States more closely to the center, but leaving each to move unobstructed in its proper orbit.
Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union.
It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy.
I have now done my duty to my country. If sustained by my fellow citizens, I shall be grateful and happy; if not, I shall find in the motives which impel me ample grounds for contentment and peace. In the difficulties which surround us and the dangers which threaten our institutions there is cause for neither dismay nor alarm. For relief and deliverance let us firmly rely on that kind Providence which I am sure watches with peculiar care over the destinies of our Republic, and on the intelligence and wisdom of our countrymen. Through His abundant goodness and their patriotic devotion our liberty and Union will be preserved."
In looking for analogues to the record of Barack Obama as President, many look to Hoover. But I think Woodrow Wilson offers some interesting comparisons.
Here is an exerpt from the collection of Wilson's campaign speeches from the election of 1912 in his book, The New Freedom. Compare this alternative he offers to Theodore Roosevelt's Progressive Party with his actual performance once in office.
"Since I entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.
They know that America is not a place of which it can be said, as it used to be, that a man may choose his own calling and pursue it just as far as his abilities enable him to pursue it; because to-day, if he enters certain fields, there are organizations which will use means against him that will prevent his building up a business which they do not want to have built up; organizations that will see to it that the ground is cut from under him and the markets shut against him. For if he begins to sell to certain retail dealers, to any retail dealers, the monopoly will refuse to sell to those dealers, and those dealers, afraid, will not buy the new man's wares.
And this is the country which has lifted to the admiration of the world its ideals of absolutely free opportunity, where no man is supposed to be under any limitation except the limitations of his character and of his mind; where there is supposed to be no distinction of class, no distinction of blood, no distinction of social status, but where men win or lose on their merits...
A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom...
Shall we try to get the grip of monopoly away from our lives, or shall we not? Shall we withhold our hand and say monopoly is inevitable, that all that we can do is to regulate it? Shall we say that all that we can do is to put government in competition with monopoly and try its strength against it? Shall we admit that the creature of our own hands is stronger
than we are?
We have been dreading all along the time when the combined power of high finance would be greater than the power of the government. Have we come to a time when the President of the United States or any man who wishes to be the President must doff his cap in the presence of this high finance, and say, "You are our inevitable master, but we will see how we can make the best of it?"
We are at the parting of the ways. We have, not one or two or three, but many, established and formidable monopolies in the United States. We have, not one or two, but many, fields of endeavor into which it is difficult, if not impossible, for the independent man to enter. We have restricted credit, we have restricted opportunity, we have controlled development, and we have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world--no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.
If the government is to tell big business men how to run their business, then don't you see that big business men have to get closer to the government even than they are now? Don't you see that they must capture the government, in order not to be restrained too much by it? Must capture the government? They have already captured it.
Are you going to invite those inside to stay inside? They don't have to get there. They are there. Are you going to own your own premises, or are you not? That is your choice. Are you going to say: "You didn't get into the house the right way, but you are in there, God bless you; we will stand out here in the cold and you can hand us out something once in a while?"
At the least, under the plan I am opposing, there will be an avowed partnership between the government and the trusts. I take it that the firm will be ostensibly controlled by the senior member. For I take it that the government of the United States is at least the senior member, though the younger member has all along been running the business. But when all the momentum, when all the energy, when a great deal of the genius, as so often happens in partnerships the world over, is with the junior partner, I don't think that the superintendence of the senior partner is going to amount to very much.
And I don't believe that benevolence can be read into the hearts of the trusts by the superintendence and suggestions of the federal government; because the government has never within my recollection had its suggestions accepted by the trusts. On the contrary, the suggestions of the trusts have been accepted by the government.
There is no hope to be seen for the people of the United States until the partnership is dissolved. And the business of the party now entrusted with power is going to be to dissolve it.
Those who supported the third party supported, I believe, a program perfectly agreeable to the monopolies. How those who have been fighting monopoly through all their career can reconcile the continuation of the battle under the banner of the very men they have been fighting, I cannot imagine. I challenge the program in its fundamentals as not a progressive program at all. Why did Mr. Gary suggest this very method when he was at the head of the Steel Trust? Why is this very method commended here, there, and everywhere by the men who are interested in the maintenance of the present economic system of the United States? Why do the men who do not wish to be disturbed urge the adoption of this program? The rest of the program is very handsome; there is beating in it a great pulse of sympathy for the human race. But I do not want the sympathy of the trusts for the human race. I do not want their condescending assistance.
And I warn every progressive Republican that by lending his assistance to this program he is playing false to the very cause in which he had enlisted. That cause was a battle against monopoly, against control, against the concentration of power in our economic development, against all those things that interfere with absolutely free enterprise. I believe that some day these gentlemen will wake up and realize that they have misplaced their trust, not in an individual, it may be, but in a program which is fatal to the things we hold dearest.
If there is any meaning in the things I have been urging, it is this: that the incubus that lies upon this country is the present monopolistic organization of our industrial life. That is the thing which certain Republicans became "insurgents" in order to throw off. And yet some of them allowed themselves to be so misled as to go into the camp of the third party in order to remove what the third party proposed to legalize. My point is that this is a method conceived from the point of view of the very men who are to be controlled, and that this is just the wrong point of view from which to conceive it...
One of the wonderful things about America, to my mind, is this: that for more than a generation it has allowed itself to be governed by persons who were not invited to govern it. A singular thing about the people of the United States is their almost infinite patience, their willingness to stand quietly by and see things done which they have voted against and do not want done, and yet never lay the hand of disorder upon any arrangement of government.
There is hardly a part of the United States where men are not aware that secret private purposes and interests have been running the government. They have been running it through the agency of those interesting persons whom we call political "bosses." A boss is not so much a politician as the business agent in politics of the special interests. The boss is not a partisan; he is quite above politics! He has an understanding with the boss of the other party, so that, whether it is heads or tails, we lose. The two receive contributions from the same sources, and they spend those contributions for the same purposes...
The critical moment in the choosing of officials is that of their nomination more often than that of their election. When two party organizations, nominally opposing each other but actually working in perfect understanding and co-operation, see to it that both tickets have the same kind of men on them, it is Tweedledum or Tweedledee, so far as the people are concerned; the political managers have us coming and going. We may delude ourselves with the pleasing belief that we are electing our own officials, but of course the fact is we are merely making an indifferent and ineffectual choice between two sets of men named by interests which are not ours."
How did Wilson treat some his supporters drawn to his message of reform?
"In 1912, 'an unprecedented number' of African Americans left the Republican Party to cast their vote for Democrat Wilson. They were encouraged by his promises of support for their issues.Wilson did not interfere with the well-established system of Jim Crow and backed the demands of Southern Democrats that their states be left alone to deal with issues of race and black voting without interference from Washington.
While president of Princeton University, Wilson discouraged blacks from even applying for admission, preferring to keep the peace among white students than have black students admitted.
Black leaders who supported Wilson in 1912 were angered when segregationist white Southerners took control of Congress and many executive departments. Wilson ignored complaints that his cabinet officials had established official segregation in most federal government offices, in some departments for the first time since 1863. New facilities were designed to keep the races working there separated. Eric Foner says, "His administration imposed full racial segregation in Washington and hounded from office considerable numbers of black federal employees."
With the supporting winds of economic stability and a Democratic majority in the Congress, Wilson proceeded to act on his vision of reforms, in particular breaking up the 'trusts.'
"With Progressive ("Bull Moose") Party candidate Theodore Roosevelt and Republican nominee William Howard Taft dividing the Republican Party vote, Wilson was elected President as a Democrat in 1912.
In his first term as President, Wilson persuaded a Democratic Congress to pass major progressive reforms including the Federal Reserve Act, Federal Trade Commission Act, the Clayton Antitrust Act, the Federal Farm Loan Act and an income tax. Wilson brought many white Southerners into his administration, and supported the introduction of segregation into many federal agencies."
One of the people whom I greatly admire, Louis D. Brandeis, "the people's lawyer," was a Wilson supporter and was appointed by him to the Supreme Court.
"Brandeis's positions on regulating large corporations and monopolies carried over into the presidential campaign of 1912. Democratic candidate Woodrow Wilson made it "the central issue," and, according to Wilson historian Arthur Link, "part of a larger debate over the future of the economic system and the role of the national government in American life." Whereas the Progressive Party candidate, Theodore Roosevelt felt that trusts were inevitable and should be regulated, Wilson and his party aimed to "destroy the trusts" by ending special privileges, such as protective tariffs and unfair business practices that made them possible.
On that basis, Brandeis, though "nominally a Republican," supported Wilson and urged his friends and associates to join him. The two men met for the first time at a private conference in New Jersey that August and spent three hours discussing economic issues. Mason notes that Brandeis came away from the meeting a "confirmed admirer of Wilson, whom he described in letters to his friends as possessed of a remarkable mind and likely to make 'an ideal president.'" Wilson thereafter began using the term "regulated competition," the concept that Brandeis had developed, and made it the essence of his program. In September, Wilson asked Brandeis to "set forth explicitly the actual measures by which competition can be effectively regulated."
After his victory in the November election, Wilson wrote to Brandeis, "You were yourself a great part of the victory." Wilson considered nominating Brandeis first for Attorney General and later for Secretary of Commerce, but backed down after a loud outcry from corporate executives that he had once opposed in court battles. He concluded that Brandeis was too controversial a figure to appoint to his cabinet.
Nevertheless, during Wilson's first year as president, Brandeis "played a key role in shaping the Federal Reserve Act," according to banking historian Albert Link. He adds that "Brandeis's arguments were decisive in breaking the deadlock on the banking issue." Wilson endorsed the banking proposals of Brandeis and Secretary of State William Jennings Bryan, who, Piott points out, felt that "the banking system needed to be democratized and its currency issued and controlled by the government," and convinced Congress to enact the Federal Reserve Act in December 1913."
On December 23, 1913, the new President Woodrow Wilson signed The Federal Reserve Act into law.
Wilson secured passage of the Federal Reserve Act in late 1913. Wilson had tried to find a middle ground between conservative Republicans led by Senator Nelson W. Aldrich and the powerful left wing of the Democratic party led by William Jennings Bryan, who opposed all banking schemes and strenuously denounced private banks and Wall Street. The latter group wanted a government-owned central bank that could print paper money as Congress required. The compromise, based on the Aldrich Plan but sponsored by Democratic Congressmen Carter Glass and Robert Owen, allowed the private banks to control the 12 regional Federal Reserve banks, but appeased the agrarians by placing controlling interest in the System in a central board appointed by the president with Senate approval. Moreover, Wilson convinced Bryan's supporters that because Federal Reserve notes were obligations of the government, the plan met their demands for an elastic currency.
Having 12 regional banks was meant to weaken the influence of the powerful New York banks, a key demand of Bryan's allies in the South and West. This decentralization was a key factor in winning the support of Congressman Glass.[69] The final plan passed in December 1913. Some bankers felt it gave too much control to Washington, and some reformers felt it allowed bankers to maintain too much power. Several Congressmen claimed that New York bankers feigned their disapproval.
Wilson named Paul Warburg and other prominent bankers to direct the new system. While power was supposed to be decentralized, the New York branch dominated the Fed as the "first among equals".
And despite unattributed and unverifiable quotes to the contrary, I do not think Wilson ever publicly expressed any regrets over his signing of the Federal Reserve Act. And yet it seems remarkably at odds with the principles which he had put forward in his campaign speeches. It is not hard to suppose that the policies of Wilson found their footing in the Roaring 20's and the emergence of the financial speculative sector as a dominant force in the country, and the debacle that followed thereafter.
Wilson is generally ranked well amongst the US presidents. He was an intelligent man and as far as I know the only President to hold a PhD. Say what you will, Obama is a highly intelligent and well-educated man.
I obviously cannot say how Barack Obama will be rated, as a second term is still very open to question. I do not mean to imply that Obama will be well regarded by history. His popularity ratings are shockingly low, in direct opposition to Wilson's first term. What intrigues me are their stylistic similarities, the penchant for compromise, and the embrace of means over ends in politics, despite professed commitments to great reform.
And at the end of the day, both men gave the Wall Street monied interests what they wanted, despite protestations and stated principles to the contrary. One can easily make the case that this was not their intention.
Perhaps this illustrates the notion that few understand the true nature of money, and the power of those who can control it. And an abiding notion I am obtaining in my older years that there are relatively few black and white situations in this variegated life, but many shades of gray.
And therefore it is easy to compromise and act from expediency so much that a person can lose their way, unless led with an occasional eye to enduring first principles, and a kindly light.
The Federal Reserve had used Washington Post business reporter John Berry to release trial balloons ahead of its actions to gauge market sentiment and to soften any reactions to changes in their policy outlooks.
Since John is no longer on the scene, have they switched to the Financial Times? This reporters speaks as though someone has already disclosed the intentions of the upcoming FOMC meeting.
This does sound like the sort of trial balloon we would expect to pre-release a change in the Fed outlook so that it does not suprise the bond markets.
Given the oversized percentage that the financial sector is taking from the real economy, like an unproductive tax on commercial business, it is unlikely that any measures will rejuvenate the US without creating another bubble.
"From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent." Simon Johnson
It is unlikely the Fed will announce any new programs on Tuesday. That will come intra-meeting, probably after another bad round of economic news, or on some event that makes it clear that the economic "recovery" is floundering.
Financial Times Fed set to downgrade outlook for US By James Politi in Washington August 8 2010
The Federal Reserve is set to downgrade its assessment of US economic prospects when it meets on Tuesday to discuss ways to reboot the flagging recovery.
Faced with weak economic data and rising fears of a double-dip recession, the Federal Open Market Committee is likely to ensure its policy is not constraining growth and to use its statement to signal greater concern about the economy. It is, however, unlikely to agree big new steps to boost growth.
Smaller measures to help the economy could initially take the form of a decision to reinvest proceeds from maturing mortgage-backed securities held by the US central bank, thereby preventing the Fed’s balance sheet from shrinking naturally.
Investors will also examine closely any changes to the pledge made by the FOMC in June to “employ its policy tools as necessary to promote economic recovery and price stability”, which could be hardened if policymakers choose to signal the potential for more aggressive move to boost the economy in the future.
But even if that happens, most economists believe that it would take several more months of poor data for the Fed to actually begin a new round of asset purchases on the scale of those carried out during the recession....
Organizations, whether it be a club or a profession or a department, too often over time develop a sort of intellectual inertia, a bureaucratic mindset that tends to perpetuate and validate a certain view of the world amongst its members, particularly if they share other elements in background and world view.
This works to its advantage when they are right, and when the scope of the tasks which they must address are limited to largely operational concerns, without significant risk in the classic sense of the term.
But when the situation becomes different, the environment changes, this organizational mindset not only stifles innovation and adaptation, it can literally reach out and strangle it, well beyond its members, using the entrenched power of its tenure. We see this tendency clearly in organizations that have enjoyed long periods of organizational growth under the leadership of strong personalities, such as the FBI under Hoover, and the Federal Reserve under Greenspan.
We can see this same tendency on a micro level in our daily life on chatboards, in clubs, in our company departments, in civic organizations. It is a tribalistic instinct, that urges the adoption of a consensus view, often influenced and promoted by articulate and single minded individuals, which then musters and focuses the energy and vitality of the group in the execution of its mission.
When it is right, it brings success. But when it goes wrong, when it feeds on itself, becomes defensive and inwardly focused, when perpetuation of the group view overtakes all other considerations, when tribal loyalty and sameness is valued over results, it leads to a cult like behaviour, inbred thinking, that may be inimical to the best intentions of the group, and the sort of behavioural anomalies which we have seen in the tragedies of Watergate, the latter stage Hoover FBI, and even Jonestown.
Economics is in the grips of such a period in its development. One of the primary causes of this problem has been the rise of a few well funded think tanks, universities, and of course the Federal Reserve, that have become powerful influencers, and guardians, dogmatisers of the status quo. The petty sniping among the schools notwithstanding, the current debate of stimulus versus austerity serves to show how anemic, how self referential, how predictable the discussion has become.
The US politicians and economists are doing the same things over and over, expecting a different outcome. For the past twenty years the world has been lurching forward in a series of increasingly destructive asset bubbles, supported by the corruption of thought, and the transfer of wealth from the many to the few, as a direct result of fiscal and monetary policy fomented by relatively small number of powerful people, the monied interests. At some point this will change, and the grip of the status quo will be broken. How much energy will be released, and in what directions, only time can tell.
Janet Yellen: "...has had thirty six opportunities to vote on monetary policy at the FOMC, and she has voted 'aye,' yes, thirty six times. Thirty six for thirty six. Has the Fed been right thirty six consecutive times? No. A well credentialed, consensus hugging economist straight out of the Fed HR department. She is ideal from the point of view of the Fed bureaucracy. She will make not one ripple."
Peter Diamond and Sarah Bloom Raskin: "Diamond is a formidable academic, and Raskin is a formidable regulator, but neither is a formidable thinker about the nature of money, or about the history of money, or about how the Fed might paradoxically make things worse by doing what it does, trying to make things better, which I think is the great question. These are people who I think are unlikely to propose novel solutions to our fundamental monetary dilemma which is that the US dollar is a faith based currency of no intrinsic value that is manipulated by the Fed, and the consequences of the manipulation are often quite distinct, different from what was intended. That's the problem."
"In questions of power, then, let no more be heard of confidence in a man, but bind him down from mischief by the chains of the Constitution."
Let us pray for those whose hearts are hardened against His grace and loving kindness by greed, fear, and pride, and the seductive illusion and crushing isolation of evil.
We pray that we all may experience the three great gifts of our Lord's suffering and triumph: repentance, forgiveness, and thankfulness. And in so doing, may we obtain abundant life, and with it the peace that surpasses all understanding.
It is available for your use at no cost, but with attribution and a link to the original posting.
I make every attempt to respect the rights of others. If you feel that something here has infringed your work please let me know and I will correct it immediately. It is not always easy to determine the status of material posted to the Internet with regard to fair use and public domain.
