Symphony of Debt
& Destruction
“We’re not in a stable
equilibrium,” Greenspan said. “I hope we can all find a way out because this is
too great a country to be undermined, by how should I say it, crazies.”
By J.M. Hamilton (9-17-2016)
Perhaps Mr. Greenspan should observe the old saw, “Those who
live in glass houses…”
After all, what’s crazy?
Living under the delusion that the Federal Reserve, under one’s watch,
played a small role in the worst economic calamity, so far, in the twenty-first
century? Yes, the Maestro had just left the
conductor’s stand, while the music played, the Fed fiddled, and Wall Street
burned the country’s 2008 economy to the ground.
But heh, the elite tell us we are not supposed to talk about
such things. Shame on Mr. Trump for
bringing up the “Federal Reserve” topic.
Apostasy? Sacrilege against the
high priests of finance, many of whom Senator Warren says should be jailed.
Doesn’t Mr. Trump know that the elite never talk about the
fourth branch of government, and the most powerful branch of government, at
that?
Personally – for me, The Donald waffles too much. Add in xenophobia, bigotry among his
following, intolerance, and Mr. Trump is a non-starter in my book. And yet, he continues to rise in the
polls. Warts aside, Mr. Trump has
several estimable qualities, among them:
his derision and scorn for corporate/multinational welfare, I mean free
trade agreements; his oft stated belief that our “military allies” should stop
sponging off a bankrupt United States, and carry their own martial/security
freight; Mr. Trump’s ready acknowledgment that our economic & political
system is deeply corrupt & rigged; and of course, taking on, or at least
touching upon, the taboo topics of the national debt and the Federal Reserve,
and the politicization of same.
Please… haven’t we all read enough from the mainstream news
media that Ms. Yellen & Co. are some how above the political fray. Yes, consistent with elementary school civics,
the women & men wearing black robes are not politicians, and there’s an
Easter Bunny and a Tooth Fairy, too. Ditto a non-political Fed.
The reality is – since Congress campaigns 24/7/365 and has
abdicated all responsibility for economic, fiscal, foreign, and tax policy – the
Federal Reserve is the only game in town.
The Fed’s chairperson and board of governors are hand picked by the
POTUS, and sent to the Senate for review and approval.
Political? Perish the
thought.
With the power the Fed possesses & wields, perhaps the Fed
Chair and her board should be up for national election every four years, and
the Chair could then nominate the POTUS for Senate confirmation.
But I digress because the Fed is the composer of
much of what troubles the U.S. economy today.
Indeed, central banks have had similar deleterious impact across the
globe. The Fed and central banks underwrite the credit card
economy/ the debt driven economy. The
Fed’s liquidity has fueled consolidation and M&A in industry after
industry…. that, and financial engineering on a colossal scale. Industry consolidation, M&A, and
financial engineering are often driven by a need for corporate management to do
something, anything, in the face stagnating top line growth.
The Street, stock analysts, and activist investors demand
that management take action, so the dance begins to the beat of a fugue symphony: low demand and stagnant growth fueled by globalization & free
trade leads to consolidation and M&A, which leads to job cuts and lower
aggregate demand, which leads to more consolidation and financial engineering,
etc., etc., etc. (repeat ad nauseam).
The symphony grows louder and the fugue builds with an ocean of
private and public debt across the globe.
How smart is it to do a stock buyback or a merger at a market
top (?)… presumably, not very. History
shows that the serial acquiring companies usually perform poorly in an economic
downturn, buried under debt and debt service payments (much of which is often at adjustable rates). In a downturn, short sellers begin
to circle, and the feeding frenzy begins.
Who fuels cheap liquidity for consolidation and M&A, the resulting stagnation, and a stock market on roids? You guessed it, our friends at the Fed… that
non-partisan body. The same folks, who
tell us w/ a straight face that they have a dual mandate of maximum employment
and keeping inflation in check…. When in reality, the Fed's true mandate is to
keep Wall Street financial institutions in the black and the stock market juiced for a happy plutocracy. There’s a
reason why an inordinate number of Fed governors, and twelve regional Fed
bank heads, come from Wall Street and are white males. The Fed, by printing money and suppressing
interest rates, pursues its policy of trickle down monetary policy.
Trickle down tax policy is a proven failure. In the long run, the debt burden caused by
trickle down monetary policy has proven to be a failure, and dovetails – not
so nicely – with stagnating wages and rising wage and wealth inequality. (There's all sorts of bogus nostrums floating around today, about the need for greater productivity, when the nation's true problems are the debt & monopoly driven economy.)
Given that private and public sectors are both often underwater, in nation after nation, central banks will continue to keep interest rates at all time lows, in order to mitigate debt service loads.
Meanwhile, Congress is off the hook. The women and men who make up both houses, as
long as interests rates are suppressed, don’t have to worry about the national
debt, and interest expense on same, crowding out defense, foreign adventures,
and entitlement spending (i.e. Medicare, Social Security and Medicaid, etc.) Nor does Congress feel the need to break up job/opportunity killing cartels & monopolies, which dodge taxes at every turn.
Which means America can continue to abuse what
remains of its largely spent Superpower status on the global stage, with endless war, endless nation
building, seemingly “sky is the limit” MIC spending, and free military aid –
often to countries least in need.
That’s right. At a
time when 20 to 25% of U.S. children live in poverty, and many teens are selling their bodies just to get a bite to eat, Uncle Same has $38 billion to give to
Israel, four to five trillion to waste in the Middle East & Afghanistan,
and at least a trillion to spend on a nuclear upgrade.
Who’s to say what the final price tag will be w/ trillions used
as a rounding number by DOD accountants.
It’s almost as if America is at war with itself, or the elites are at war with Americans. Arguably, if one
wanted to learn of a way to destroy an empire, one would follow the course we
are presently on. Mr. Blitzer's hand wringing aside, it is morally repugnant to be at war with the world, or be the number one Merchant of Death on the planet, in order to save a couple hundred thousand engineering jobs.
War is the mother of all waste and fraud, as well as, standing armies. As noted by POTUS Madison – both, war &
standing armies - are producers of debt, and debt is a key instrument in bringing
the many under the subjugation of the few (read Wall Street banks, the beneficiary & conduit of Federal Reserve policy). Mr. Madison went onto note: "No nation could preserve its freedom in the midst of continual warfare." For further clarification, see the police & surveillance state, and our catastrophic national debt.
A world at war brought to you by that above the fray, apolitical, non-partisan body… The Federal Reserve, and the Wall Street
banks it supports, with bailouts and free money.
Let us all join hands and give the Fed a standing
ovation. Encore! Encore!
Hopefully, the concert will not end under Ms. Yellen’s watch, like it did shortly after the Maestro's.
Who else could keep our wilting empire from foundering; who
else would enable multinationals to dodge paying hundreds of billions in back
taxes, at the expense of honest tax paying citizens?
Fed & global central bank polices, and their smoking hot printing presses… that’s who.
Copyright JM Hamilton Publishing 2016
