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Swindling Posterity

by MIKE WHITNEY

 

“Banking establishments are more dangerous than standing armies; and the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”

Thomas Jefferson

“The threat of democracy can be overcome if economic sovereignty can be eliminated.”

Noam Chomsky

There are two principle factors that keep an economy humming along; interest rates and the amount of money that is circulating through the economy. Interest rates are presently at historic lows (40 year low) and the Bush tax cuts have added nearly $530 billion a year ($625 billion by Mr. Greenspan’s calculations) to the amount of money that is moving through the economy by way of transactions, investment etc.

Still, the economy is “dead in the water.”

What’s going on?

For one thing, according to the CBO (Congressional Budget Office) 45% of the Bush tax cuts have gone directly to the wealthiest 2% of the people in the country. This has a negligible affect on the economy, since the spending habits of this class of people are not influenced additional revenue. Their wealth simply allows them to buy what they please regardless of tax cuts.

In other words the money from the cuts is not getting into the hands of the people who might spend it quickly, and thereby, improve the economy.

America’s businesses are also experiencing the effects of overcapacity. Through various efficiencies and technology they are able to produce more than the American people need to buy. This undermines industry’s inclination to invest in greater expansion or development.

A troublesome adjunct to this current malaise is that Americans are more overextended and burdened with personal debt than at anytime in the history of this country. Business debt is also at unprecedented levels. This creates the worrisome scenario that bankruptcies are likely to increase unless the phlegmatic economy shows signs of life.

Unfortunately, the Federal Reserve and Bush Administration have invoked their two most powerful weapons for “stimulating” the economy (Tax cuts and low interest rates) but the patient is still ambling towards “life support.”

The tax cuts have failed because they are designed to fail.

They are simply a “rewards system” for Mr. Bush’s core constituency. They are a further illustration that “supply side” economics doesn’t work. Giving boatloads of money back to people who people who don’t quickly spend it does not stimulate the economy. It would be of considerable benefit to the American people to have the “Voodoo” contingent of the Bush economic team purged once and for all from the White House Staff.

Never the less, Mr. Greenspan’s role in this current fiasco is intriguing. His policies have worked in concert with those of the Bush Administration; “the Iron Fist and the Velvet Glove”.

The Fed Chairman has said that he would like to see the tax cuts remain intact despite their dreadful performance and despite America’s skyrocketing debt. He is not troubled at all by the burden he is passing on to the next generation. Moreover, he seems to understand his job description as increasing that “morass of debt.”

In this way, Greenspan has “tipped his hand” and lined up on the side of America’s aristocracy. He has stated that he would rather see a savaging of the many social programs that American’s have come to depend on, rather than reverse the tax cuts and stem the flow of money that is being navigated into the pockets of the “upper class.”

There should be no doubt as to whose interests are served by Mr. Greenspan’s actions.

Eventually, Greenspan will be required to raise interest rates and send the American economy spiraling towards the canvas. (which will probably happen at the first mention of “national health care”) Already, the dollar has taken a brisk thrashing by the Euro (25% in the last eight moths) But, Greenspan knows that raising rates now would spell disaster for the Bush reelection campaign, so the “hammer-lock” on rates continues at the ultimate expense of the average American.

Besides, without the low interest rates Bush would never have achieved his “shaky” mandate for invading Iraq. Fiscal policy is every bit as critical to facilitating aggression as Abrams Tanks or F-16s. Certainly, Greenspan knows that his choices have been critical to supporting the murderous “preemptive” theories of the administration.

We can analyze Greenspan’s decisions and get a fair reckoning of his political pedigree.

His choices will inevitably lead to a dismantling of social programs, a redistribution of wealth to the upper class and the handing over control of the country to America’s creditors.

This is Greenspan’s real mission. It is a program designed to bankrupt the country so that democracy cannot successfully function. It is a scheme that has been applied throughout the Third World and is now appearing in America, courtesy of Alan Greenspan.

The “shackle” of debt is being applied by America’s bespectacled warden; Maestro!

A quote from Noam Chomsky epitomizes the Fed Chairman’s underlying motives.

“The threat of democracy can be overcome if economic sovereignty can be eliminated.”

Thanks, Alan.

MIKE WHITNEY can be reached at: fergiewhitney@msn.com

 

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MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

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