This is long but very good. A must read...
From Liberal to Libertarian: Bush, Obama and the Final Bubble
Introduction: Ideas and Change
America’s once vibrant Republic has morphed into an imperial oligarchy. The regime has weaved a new dogma preached faithfully by pundits and politicians of both parties. As that dogma crumbles in the face an impending economic collapse, the vast majority of citizens will be left in an ideological vacuum.
Palin or Obama, Fox or CNN, The Drudge Report or The Huffington Post; they simply affirm to their followers and viewers different shades of the same worldview. From within this paradigm it’s impossible to grasp the enormous manipulation and dysfunction that besets the nation. In the past there was sufficient diversity of ideas within the mainstream to offer adequate solutions for the challenges of the time. This is no longer the case.
A Liberal Democrat
Born in the late 1960s, Cold War mythology was very real. The Soviets were bad, the West was good yet the echoes of Vietnam left a crack in the armor of the ‘noble’ United States. Nonetheless, FDR saved the nation and American GI’s saved the world. Government was good, if not perfect. It protected us from Nazis, Communists as well as from the greed and ruthlessness of bankers, oil men, and dirty tricks. The Left was for civil rights, workers rights and sympathized with the plight of the poor.
I watched Capra’s It’s a Wonderful Life and was sure George Bailey was a Democrat and Harry Potter was a Republican. Toss in a strong dose of Irish Catholicism and you get the picture.
Kennedy was good, Nixon was bad. But many thought otherwise, and saw the Democrats as the architects of big political machines and powerful unions bent on taxing, controlling and stealing from hard working people. For them, the Republican Party represented fiscal responsibility, religious values and the war on Communism.
The Reagan years were for the fiscally conservative, anti-communist Republicans a renaissance. A bizarre, sentimental journey through the present. Strangely enough, Mr. Reagan began to spend like no other peace time president in history while at the same time cutting taxes. Needless to say, the country grew and prospered and the biggest bull market in history began as the credit bubble began in earnest. Buy and hold was the mantra. Wall Street went wild, and the men from New York with slicked back hair became the ‘rock stars’ of the 80s. This fit perfectly into my world view; evil bankers and Republicans together stampeding over the ‘great civilization’ founded by FDR and his crown prince Kennedy. Little did I know that hourly wages had been falling in the US since the early 1970s and I had the honor of being part of the first generation in American history that would earn less than their fathers.
A bump on the road with the market crash in 1987 and the S&L crisis which I little understood. Almost in the blink of an eye, the Berlin Wall came down, the Cold War was over, and GWH was invading Kuwait and definitively reestablishing American hegemony in the world. Japan, after threatening to overtake the US economically, began its long fade into deflation.
Bill Clinton made his entrance, seemingly too young and impetuous to become a good President and surrounded by very bright and dogmatic folks from the Left. The waves of change that had begun before he arrived carried his administration forward into what for my generation will surely be its apex. Technology, innovation, money, growth and an angry, dogmatic right apparently jealous of his good fortune and attacking him in an unprecedented way. All of this simply confirmed my world view. Newt Gingrich and the evil Republicans against Bill and the good Democrats.
But something irked me. The Clintonites imposed their own brand of ‘politically correct’ dogma. I tried to brush it aside, but the bad taste lingered. The supposedly fiscally irresponsible Democrats even balanced the budget, Time’s cover with Rubin, Greenspan and Summers as our saviors. Low inflation and unemployment, steady growth, and a stock market that seemed to never stop. Silicon Valley replaced Wall Street as the Mecca for brains and innovation. Technology would save us all and the wise Mr. Greenspan had us fiscally under control. All was well, we won.
9/11 and Iraq
I was working for an Internet company when Election Day arrived in November of 2000. I was giving a presentation on how to use email as a tool for advertising. The media buyers were skeptical, SPAM was still something you ate. I was in Madrid at the time and actually hadn’t used my Broward County, Florida vote but I told everyone I would have voted for Gore and he was sure to win. The 2000 election only reinforced my belief in the evils of the Republican Party. Nothing good could come of it and it certainly didn’t. But up till this point I firmly believed in a two party system and was sure that our media had enough diversity to cover all angles and versions of what was happening.
Living abroad during the buildup to the War in Iraq, the true intentions of Washington were crystal clear. The administration was using the patriotic fervor of 9/11 to bulldoze the country into a war that had nothing to do with terrorists or 9/11. There was another agenda, but whose agenda? I began to hear about Neo-Cons and their strategies to re-shape the Middle East and I was sure the Democratic Party would put up the fight of its life to do what was right. They didn’t. The majority of the Clinton era stalwarts supported the War in Iraq as did both the conservative and liberal media. What had happened? What was the agenda?
Then came 2004, payback. John Kerry had a gun full of bullets and Bush a broken stick. The American people would awaken, cheered on by a duped media looking for redemption, and they would oust Bush as an usurper and war monger. But it didn’t happen. Neither the electorate nor the media was willing to really call him out. If there was ever a moment when one party should have overwhelmingly defeated the other it was in 2004. The War in Iraq was based on lies and mistruths, thousands were dead, billions spent yet no one was willing or able to point the finger at the culprits: AIPAC, the Neo-Cons and their apologists in the media. The Kerry campaign was the first campaign I ever worked for, and the experience was not only disheartening, it was eye opening.
2008 and the Meaning of Money
I must admit that even with an undergraduate degree in History, a Master’s Degree in Management, and experience working for the marketing department of a bank, I had no idea how money was created, what fractional banking was, or really what the Fed was. If you had asked me in 2006 how ‘new’ money was created I probably would have guessed that the Treasury added on a certain amount to Federal spending to increase M3. If you had asked me about the Fed, I would have guessed it was part of the Treasury, and in a true/false scenario, if asked if the Fed was mentioned in the Constitution, I probably would have said yes.
I don’t claim to be an expert on American history but I would consider myself fairly well informed and well read so I suspect I was not alone in 2006 in my ignorance. I do remember a rather esoteric friend of mine telling me a bizarre story about a funny sounding island and Congress off on Christmas holiday and the creation of the Fed. I chalked it up to conspiracy theories.
By 2006 I had recently arrived in Silicon Valley and was doing okay for myself in a online marketing job. Making a good salary, it was still impossible for me to buy the most humble of converted rental one-bedroom apartments in the area. It reminded me of my mission to Argentina to try and salvage the operations of the Internet company I worked for at that time. Thousands spent on office furniture, PR firms, big salaries but NO revenue. I knew what a bubble was firsthand, and Silicon Valley real estate had bubble written all over it. The second time in my life I came into contact with what can only be called funny money. Who in their right mind would give millions to companies with no income or people without jobs to buy overpriced houses? I had worked in a bank and had had the risk speech drilled into me. I knew bankers, and bankers weren’t stupid and never, never lost sight of risk. I was simply confused. These prices had to come down at some point or new buyers would simply not be able to afford a home. I had seen the same thing in Spain. It was very obvious but I assumed I was missing some part of the puzzle; those with access to the data had to know better than I.
By 2008 I was in New York working for an agency. The first cracks were appearing in the hull, but I, as most, had no idea how far things would collapse. Once they did, it was the first truly cataclysmic event for my generation. While 9/11, with all it horrors, did not shake the very core of the Republic; we were attacked, we would recover, the financial crisis of 2008 brought the country to its knees. The extent of the illusory wealth and almost holographic reality that Wall Street and the Fed, with plenty of cheerleaders in the media, created was extraordinary. How could so much wealth be created out of nothing, and disappear into thin air in the blink of an eye?
Goldman Sachs, Summers, Greenspan, Bernanke, Rubin and the whole host of unsavory characters once glorified as the creators of 1990s boom were finally being revealed for what they were. The elections of 2008 would certainly bring about a massive ‘house cleaning’, heads would roll. The bankers and the war mongers would finally be given what they deserve. Who better than Barack Obama to give it to them? I had been right the whole time, it was all the Republicans fault.
The Last Nail: Obama
I didn’t have a television, and hadn’t had one for a long time. The first time I saw Obama give a personal interview I was very underwhelmed. The topic was education and he seemed incredibly bland and vague for someone who had been a community organizer, whatever that really meant. But I brushed it off. He was being intentionally vague to keep the Right at bay. His rhetoric completely seduced me, and his impressive resume assured me he was much more on the ball than he appeared.
I was beginning to figure out what TARP was, and it was sickening. Anyone in America gets in over their heads with that type of arrogance always had and should get crushed, humiliated, sent out to pasture. But the bankers got a free pass after collapsing the world economy. Once in office, Obama would clean house.
He had to tell AIPAC what they wanted to hear, but as soon as he took the oath, he would set them straight and send them back to Tel Aviv in a leaky boat; it was all about getting him in. (See The End of the Republic? for more on this topic) Once in office he would make the changes he so vaguely insinuated, but could not mention. He was a Democrat, big money and foreign lobbies bent on war were the enemy; he was good and he would conquer evil. Then he was elected.
Robert Rubin, Larry Summers, Tim Geitner, Rahm Emanuel, Hillary Clinton, Ben Bernanke
I learned about the Fed. I watched Bernanke buy $1 trillion of assets from the cartel that he served. The Fed Board of Governors was the most powerful organ in this country and could literally create trillions of dollars out of nothing. What right did he have to exchange $1 trillion of US currency for garbage assets from banks? Why were banks allowed to ‘create’ money? With a flick of a finger on a mouse, they could whip up in milliseconds what would take hundreds of men and women a lifetime to earn. In the name of leverage they were ‘creating money’. Why could Bernanke spend trillions as he liked, yet the President had to fight tooth and nail to pass a stimulus bill of significantly less money? Learning how money is made, what the Fed is and who runs it, and how the board is appointed made my skin crawl. (See The Myth of Abstract Money for more on this topic) From Obama or McCain never a word. Greenspan was still considered the closest thing to a living George Washington.
Learning what money was, who created it, and who the Fed was finally pushed me beyond the pale. The little spat with Israel concocted on Joe Biden’s trip to Jerusalem had all the ear marks of a straw man. Then the Rachel Corrie, one dead American and not a peep from the President. All we heard was Iran, Iran and more Iran. (See Banging the Drums of War: Iran and the Neo-Cons for more on this topic) It seemed that Wall Street and Tel Aviv were even more imbedded in the White House than under GW. In the first quarter of 2010 the five largest banks in the US had record trading profits, and not one losing day. TARP and Quantitative Easing were nothing less than a $2 Trillion bankrolling of the banks that had destroyed the world economy but were saved nonetheless. Then they miraculously returned the TARP money with new money Bernanke had given to them through Quantitative Easing just in the nick of time to cash in their bonuses. The country was reeling from unemployment and foreclosures, our armies were fighting two wars, but Wall Street was back bidding up houses on the Hamptons.
The same war mongers who had ‘invented’ the War in Iraq were doing it again with Iran. With a few exceptions (Matt Taibi, Alexander Cockburn for example) the media was giving them an incredible free ride. The right wing pundits talked about socialism, and birth certificates, the left about the Tea Party and Palin, but few if any would mention the 800lb gorillas of the Fed, fake money and the Israeli lobby....
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