FacebookTwitterGoogle+RedditEmail

The Financial System is a Larger Threat Than Terrorism

by

shutterstock_93231562 (1)
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.

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.

More articles by:

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format. His latest book is The Neoconservative Threat to World Order.

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

July 20, 2017
Sebastian Friedrich – Gabriel Kuhn
A New Class Politics
Patrick Cockburn
The Massacre of Mosul: More Than 40,000 Civilians Feared Dead
Paul Street
The Abandonment: Reflections on James Foreman’s “Locking Up Our Own”
Kim Codella
A Practical Education
Frank Scott
America’s Trump, Not Trump’s America
Louis Proyect
Clancy Sigal Goes Away
Don Monkerud
The Real Treason in DC: Turning Our Lives Over to Corporat
Brian Dew – Dean Baker
Are Amazon’s Shareholders Suckers?
Ralph Nader
Detecting What Unravels Our Society – Bottom-up and Top-down
Barbara Nimri Aziz
Covering Islam, Post-Jack Shaheen
Binoy Kampmark
Uhlmann’s Trump Problem
Patrick Walker
In Defense of Caitlin Johnstone
Barry Lando
Those Secret Putin-Trump Talks
Sean Marquis
Thank You, Donald Trump
July 19, 2017
Adam Ziemkowski and Rebekah Liebermann
How Seattle Voted to Tax the Rich
Patrick Cockburn
Why ISIS Fighters are Being Thrown Off Buildings in Mosul
John W. Whitehead
Zombies R Us: the Walking Dead of the American Police State
Mateo Pimentel
Net Neutrality’s Missing Persons
Adil E. Shamoo - Bonnie Bricker
Yemen Policy is Creating More Terrorists
L. Ali Khan
U.S. Misreads Pakistan’s Antifragility
David Macaray
Fear and Trembling in the Workplace
Brian Trautman, Gerry Condon and Samantha Ferguson
Veterans Call on U.S. to Sign Nuclear Ban Treaty
Binoy Kampmark
Militarising Civilian Life: Australia, Policing and Terrorism
Ricardo Vaz
Venezuelan Opposition “Consultation”: Playing Alone and Losing
Jesse Jackson
Trump’s Cold-Hearted Agenda is Immoral
Raul Castro
We will Continue to Advance Along the Path Freely Chosen by Our People
July 18, 2017
James Bovard
Obama’s AWOL Anti-War Protesters
Gary Leupp
CNN: “Russia is an Adversary, Ukraine is Not.”
Ryan Shah
Beware the Radical Center
John Carroll Md
Cold Hands Don’t Need Narcotics
Derrick Jensen
Endangered Species Don’t Need an Ark – They Need a Living Planet!
Kenneth Surin
Brief Impressions of the Canadian Conjucture
Arturo Lopez-Levy
Trump’s Cuba Restrictions: a Detour, Not the Future
Russell Mokhiber
State Street Bentley University Business Ethics and Corporate Crime
Laura Finley
Being Too Much
Robert J. Gould
What is Our Experience of our Flawed Democracy?
Taju Tijani
The Burden of Indivisible Nigeria
Guillaume Pitron
China Now Leads in Renewables
Ted Rall
How I Learned Courts are Off-Limits to the 99 Percent
Binoy Kampmark
Militarising Civilian Life: Australia, Policing and Terrorism
July 17, 2017
Gregory Wilpert
Time for the “International Left” to Take a Stand on Venezuela
Gary Leupp
Trump’s Embrace of the Saudi Crown Prince, and a Qatar Nightmare Scenario
Thomas Hon Wing Polin
Liu Xiaobo: the West’s Model Chinese
Terry Simons
Why I Did Not Go to Vietnam
Jim Green
Nuclear Power’s Annus Horribilus
FacebookTwitterGoogle+RedditEmail