The
Financial System Is A Larger Threat Than Terrorism
By
Paul Craig Roberts
March
08, 2016 "Information
Clearing House"
- In the 21st century Americans have been distracted by the
hyper-expensive “war on terror.” Trillions of dollars have been
added to the taxpayers’ burden and many billions of dollars in
profits to the military/security complex in order to combat
insignificant foreign “threats,” such as the Taliban, that remain
undefeated after 15 years. All this time the financial system,
working hand-in-hand with policymakers, has done more damage to
Americans than terrorists could possibly inflict.
The
purpose of the Federal Reserve and US Treasury’s policy of zero
interest rates is to support the prices of the over-leveraged and
fraudalent financial instruments that unregulated financial systems
always create. If inflation was properly measured, these zero rates
would be negative rates, which means not only that retirees have no
income from their retirement savings but also that saving is a losing
proposition. Instead of earning interest on your savings, you pay
interest that shrinks the real value of your saving.
Central
banks, neoliberal economists, and the presstitute financial media
advocate negative interest rates in order to force people to spend
instead of save. The notion is that the economy’s poor economic
performance is not due to the failure of economic policy but to
people hoarding their money. The Federal Reserve and its coterie of
economists and presstitutes maintain the fiction of too much savings
despite the publication of the Federal Reserve’s own report that
52% of Americans cannot raise $400 without selling personal
possessions or borrowing the
money.http://www.federalreserve.gov/econresdata/2013-report-economic-well-being-us-households-201407.pdf
Negative
interest rates, which have been introduced in some countries such as
Switzerland and threatened in other countries, have caused people to
avoid the tax on bank deposits by withdrawing their savings from
banks in large denomination bills. In Switzerland, for example,
demand for the 1,000 franc bill (about $1,000) has increased sharply.
These large denomination bills now account for 60% of the Swiss
currency in circulation.
The
response of depositors to negative interest rates has resulted in
neoliberal economists, such as Larry Summers, calling for the
elimination of large denomination bank notes in order to make it
difficult for people to keep their cash balances outside of banks.
Other
neoliberal economists, such as Kenneth Rogoff want to eliminate cash
altogether and have only electronic money. Electronic money cannot be
removed from bank deposits except by spending it. With electronic
money as the only money, financial institutions can use negative
interest rates in order to steal the savings of their depositors.
People
would attempt to resort to gold, silver, and forms of private money,
but other methods of payment and saving would be banned, and
government would conduct sting operations in order to suppress
evasions of electronic money with stiff penalties.
What
this picture shows is that government, economists, and presstitutes
are allied against citizens achieving any financial independence from
personal saving. Policymakers have a crackpot economic policy and
those with control over your life value their scheme more than they
value your welfare.
This
is the fate of people in the so-called democracies. Any remaining
control that they have over their lives is being taken away.
Governments serve a few powerful interest groups whose agendas result
in the destruction of the host economies. The offshoring of middle
class jobs transfers income and wealth from the middle class to the
executives and owners of the corporation, but it also kills the
domestic consumer market for the offshored goods and services. As
Michael Hudson writes, it kills the host. The financialization of the
economy also kills the host and the owners of corporations as well.
When corporate executives borrow from banks in order to boost share
prices and their performance bonuses by buying back the publicly held
stock of the corporations, future profits are converted into interest
payments to banks. The future income streams of the corporations are
financialized. If the future income streams fail, the companies can
be foreclosed, like homeowners, and the banks become the owners of
the corporations.
Between
the offshoring of jobs and the conversion of more and more income
streams into payments to banks, less and less is available to be
spent on goods and services. Thus, the economy fails to grow and
falls into long-term decline. Today many Americans can only pay the
minimum payment on their credit card balance. The result is massive
growth in a balance that can never be paid off. It is these people
who are the least able to service debt who are hit with draconian
charges. The way the credit card companies have it now, if you make
one late payment or your payment is returned by your bank, you are
hit for the next six months with a Penalty Annual Percentage Rate of
29.49%.
In
Europe entire countries are being foreclosed. Greece and Portugal
have been forced into liquidation of national assets and the social
security systems. So many women have been forced into poverty and
prostitution that the hourly price of a prostitute has been driven
down to $4.12.
Throughout
the Western world the financial system has become an exploiter of the
people and a deadweight loss on economies. There are only two
possible solutions. One is to break the large banks up into smaller
and local entities such as existed prior to the concentration that
deregulation fostered. The other is to nationalize them and operate
them solely in the interest of the general welfare of the population.
The
banks are too powerful currently for either solution to occur. But
the greed, fraud, and self-serving behavior of Western financial
systems, aided and abeted by governments, could be leading to such a
breakdown of economic life that the idea of a private financial
system will become as abhorent in the future as Nazism is today.
Dr.
Paul Craig Roberts was
Assistant Secretary of the Treasury for Economic Policy and associate
editor of the Wall Street Journal. He was columnist for Business
Week, Scripps Howard News Service, and Creators Syndicate. He has had
many university appointments. His internet columns have attracted a
worldwide following. Roberts' latest books are The
Failure of Laissez Faire Capitalism and Economic Dissolution of the
West, How
America Was Lost, andThe
Neoconservative Threat to World Order.
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