EXAMINER.COM
How an economics teacher presents Occupy’s economic argument, victory
January 30, 2012
This is part 3 of a 4-part series:
Important history that makes crimes in the present easy to see and understand:
I’m going to discuss trillions of dollars in a moment. As an economics teacher, I understand numbers this large are extremely difficult to imagine. If you are among the majority with this difficulty, I recommend that you follow the expert testimony that paints the picture, and know that success in this area of public education transformation that unleashes trillions of our dollars for human creative capacity in unimaginable power is sufficient to end the current economic crisis.
This is the longest section of my call for Revolution. If you tire in reading, please consider that at trillions of dollars of annual public benefits, you literally have nothing more valuable to do than understand the following facts that document the theft of our money.
Please take your time with this. You can read it in sections. This minor investment of your reading to understand trillions to empower 100% of humanity includes contributions to Occupy’s success from many of our brightest economic minds.
Here we go:
Harvard’s Linda Bilmes co-authored a paper with Nobel Prize winner Joseph Stiglitz estimating the long-term costs of current US wars at now $4 to $6 trillion ($40-$60,000 per US household of $50,000/year income), with total debt increase since 2001 of over $10 trillion. Remember, as demonstrated by the evidence disclosed by our own government, all the reasons Americans were told to go to war were known to be lies as they were told and applicable law proves these wars Orwellian unlawful.
Just down the Charles River from Harvard, MIT’s Simon Johnson (and former Chief Economist of the International Monetary Fund) describes our economy being lead by gambling oligarchs who have captured government as in banana republics (his words), and might plunge the US into an economy worse than the Great Depression. From his article under the telling title, The Quiet Coup:
“Elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.”
He concludes fraud is the heart of Wall Street. Under the poignant title, Goldman Sachs: Too Big to Obey the Law: “The behavior and de facto immunity of the biggest banks is out of control.” He cites the financial crisis was engineered by the largest banks to consolidate power: in 1995 the leading six banks had assets of 17% of US GDP; today they have 63%.
His immediate best-selling book, 13 Bankers: The Wall Street takeover and the next financial meltdown, was discussed with President Johnson’s Press Secretary and journalist with over 30 Emmy Awards, Bill Moyers, to explain the oligarchy, the loss of trillions of American taxpayer dollars to oligarchs’ manipulation as a matter of definitive fact, the oligarch’s looting of America is protected by their purchased political muscle, and without transformation “the next financial meltdown” is certain:
BILL MOYERS: Let me get to the blunt conclusion you reach in your book. You say that two years after the devastating financial crisis of '08 our country is still at the mercy of an oligarchy that is bigger, more profitable, and more resistant to regulation than ever. Correct?SIMON JOHNSON: Absolutely correct, Bill. The big banks became stronger as a result of the bailout. That may seem extraordinary, but it's really true. They're turning that increased economic clout into more political power. And they're using that political power to go out and take the same sort of risks that got us into disaster in September 2008.BILL MOYERS: And your definition of oligarchy is?SIMON JOHNSON: Oligarchy is just- it's a very simple, straightforward idea from Aristotle. It's political power based on economic power. And it's the rise of the banks in economic terms, which we document at length, that it'd turn into political power. And they then feed that back into more deregulation, more opportunities to go out and take reckless risks and-- and capture huge amounts of money….The American democracy was not given to us on a platter. It is not ours for all time, irrespective of our efforts. Either people organize and they find political leadership to take this on, or we are going to be in big trouble, okay?... That's absolutely the heart of the problem. I would also say and tell you, and emphasize, these people will not come out and debate with us. The heads of these companies or their representatives, they will not come out. They're afraid. They don't have the substance. They don't have the arguments. We have the evidence. They have the lobbyists. And that's all they have.BILL MOYERS: They've got the power, the muscle, the money.SIMON JOHNSON: They have money.BILL MOYERS: You just have the arguments. You just have the facts. On your side.SIMON JOHNSON: Absolutely. That's exactly what it comes down to.
Most people don’t read professional economists’ writing. I do, and can tell you that leaders such as Simon Johnson are using unprecedented strong language to provide the facts. Again, in his choice of words: the US economy is under attack by a colluding and unlawful oligarchy. Without Revolution that forces political leadership to transform the US economy to serve the public rather than the oligarchy, as Johnson says above:
“The American democracy was not given to us on a platter. It is not ours for all time, irrespective of our efforts. Either people organize and they find political leadership to take this on, or we are going to be in big trouble, okay?”
Harvard’s Elizabeth Warren explains the economy in language just as fierce. She professionally observes that the US economy is run by “reckless gamblers” who exploit a system they know in advance will “privatizes gains and socializes losses.” She documents the increasing destruction of the US middle class as US financial “leaders” write their own laws “behind closed doors,” and choose regulators who will protect them and not the public in order to “fleece consumers.” As you may know, Ms. Warren is the Leo Gottlieb Professor at Harvard Law School and Chair of the Congressional Oversight Panel for the so-called “bailout” program.
Ms. Warren admonishes: the US economy is in the “last chapter” with “all the chips on the table.” She says either the US public will demand their political and economic leaders end the fleecing because they “took the cops off the beat,” or the US middle class will devolve to live from paycheck to paycheck as Wall Street’s debt peons, “and the game really will be over.”
The good news is that solutions to the crisis are simple.
But let’s first continue with crucial facts and testimony. Take a deep breath. This is the civic economics education leaders like you must be responsible for or else you’re damned for condoning US War Criminals and ongoing plunder of trillions of our families’ and children’s money.
Chris Hedges, Middle East Bureau Chief for the New York Times, best-selling author, and Pulitzer Prize recipient in 2002, writes that American taxpayers are on the road to permanent serfdom under a police state from oligarchs’ “rapacious looting” and their purchase of a politically-protected luxurious lifestyle. He calls our economic system “criminal” and “totalitarian capitalism” lording over the exploited slave-labor class the American public has become (Resist or Become Serfs and video, “Chris Hedges on poverty and the permanent lower class”). Mr. Hedges also writes and lectures that current US wars are criminal Wars of Aggression (here, among dozens of his works). From Wall Street will be back for more:
“These corporations don't make anything. They don't produce anything. They gamble and bet and speculate. And when they lose vast sums they raid the U.S. Treasury so they can go back and do it again. Never mind that $50 trillion in global wealth was erased between September 2007 and March 2009, including $7 trillion in the U.S. stock market and $6 trillion in the housing market. Never mind that the total amount of retirement and household wealth trashed was $7.5 trillion or that we saw $2 trillion in 401(k)s and individual retirement accounts evaporate. Never mind the $1.9 trillion in traditional defined-benefit plans and the $2.6 trillion in nonpension assets that went up in smoke. Never mind the job losses, the foreclosures and the 35 percent jump in personal and small-business bankruptcies. There are bundles of new money, taken again from us, to make deals and hand out outrageous bonuses. And when these trillions run out they will come back for more until our currency becomes junk.”
Mr. Hedges poignant assessment matches the acknowledged government data. According to the US Senate Permanent Subcommittee on Investigations report, these financial oligarchs’ “trading” in non-wealth producing market derivatives increases the price of gasoline for all Americans somewhere from 33 to 60%. Market analysis in other commodities’ “trading” brings the total cost to American consumers of padded prices over $1 trillion every year. This is an incredible increase of prices to US households of ~$10,000 for every $50,000 of annual income!
“It's one of the most frustrating things. We essentially have had modern-day bank robbers -- except that they wore gray suits and not masks -- and there's been no accountability for it ...Every day we see energy speculators, war profiteers, managed health-care providers, media propagandists, and/or financiers given some unfair advantage over the average consumers and taxpayers, and the cumulative effect of the American people watching selfishness prevail over the public interest has been an undermining of the public's trust in government.There's no question the system is rigged against the little guy. The bigger interests have a lot more information. They jerry-rig the system so that they always win.” – Senator Byron Dorgan
This admission is crucial data. However, considering Elizabeth Warren and Simon Johnson’s expert testimony of a captured government who collude rather than end this parasitic cost to Americans, the Senate report should force government compliance under existing law to stop cartels, not merely report on how many trillions they’re costing the American public under the Senate’s “oversight.”
Nobel Prize-winning economist, former Chief Economist at the World Bank, Chair of the Council of Economic Advisors, and Columbia economics professor, Joseph Stiglitz, agrees the US economy continues under oligarchic domination:
“What the Obama administration is doing is…ersatz capitalism, the privatizing of gains and the socializing of losses. It is a “partnership” in which one partner robs the other. And such partnerships — with the private sector in control — have perverse incentives, worse even than the ones that got us into the mess.”
The economic fraud isn’t just protected by government non-regulation; the government is one of the principle embezzlers. The Pentagon admitted they “lost” $2.3 trillion dollars and then didn’t follow-up with investigation. The American public heard about this news only once that anyone has been able to document from corporate media. Let $2.3 trillion sink-in:
- $23,000 for every US household, or
- embezzling $1,000,000 from a military project 2,300,000 times, or
- embezzling a million dollars a day for 6,300 years, or
- embezzling over 600 million dollars a day, every day, for ten years.
The solvable problems center around economic policy that creates protected parasites that collect unregulated and illegal gambling profits on the way up (the FBI reported 80% of the subprime mortgage fraud came from lenders), subsidized losses through “bailouts” on the way down, and then celebrate with unprecedented bonuses to themselves while publicly claiming to be doing “God’s work.” Future bailouts get guaranteed in advance without questions by government, while the symbolic program to help struggling homeowners is hyped in corporate media but not implemented.
The most egregious documentation of government fraud is in the data of collective government Comprehensive Annual Financial Reports (CAFRs) that reveal trillions of our dollars invested while lying in omission that they have no money for budgets. This takes some time to understand; the 2011 data is here, 2009's explained and documented here. For an example to understand what this means, the University of California system (UC) had a budget deficit that resulted in thousands of students denied enrollment, thousands of staff laid-off, a 32% tuition raise, and a 10% employee pay-cut with furloughs to reduce education days. The deficit could have been fully-funded with less than one-fifth of one percent of California's documented investments. And no, the amount required for retiree benefits is only one-half of one percent of the total; that's the specious and usual "official" lie. The above link will walk you through those trillions, if this is of interest. My latest work to help people understand these trillions of the 99%'s dollars fraudulently hidden is here.
The cartels taking billions of our dollars are in many industries. Dr. Marcia Angell, former Editor in Chief of the New England Journal of Medicine and currently a Senior Lecturer at Harvard Medical Schooldocuments:
“The combined profits for the ten drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion).”
Importantly, “profit” is distinct from “research” in understanding these figures. This is prima facieevidence of unlawful collusion among a cartel, yet government doesn’t investigate. Dr. Angell concludes that US government will never provide universal health care because both political parties’ “leadership” obeys health insurance companies’ lobbyists rather than legislate for the public good. The lack of health care kills about 45,000 Americans every year according to the recent study championed by Harvard’s Medical School. Cost-benefit analyses have historically ranged between $100 to $300 billion annual cost increase to the US by keeping health care companies between doctors and patients, with the latest showing over $500 billion annual savings. That is, Americans would collectively save $100 to $300 billion every year with universal health care, no insurance companies, and no administrative red tape. A system designed to serve the 99% is likely to also decrease deaths from improper medical care, a leading cause of US deaths, and retract medical studies proven falsefor the profit of "health care" cartels.
Is academic economics the proper place to work for solutions rather than a Revolution? Let’s look.
In light of the evidence so far of oligarchic control in the US economy, it’s troubling that professional economics journals’editorial boards have half the members receiving money from the Federal Reserve. The Federal Reserve is the pinnacle bank of the current banking system; with a majority of shares owned by the same banks that Simon Johnson reports have consolidated their assets to 63% of US GDP. This circumstantial evidence suggests that professional consideration of ideas contrary to existing monetary policy may be censored. We’ll examine omission of competing ideas you’ll conclude should be under political and public consideration shortly.
Jeffrey Sachs, best-selling author and one of the world’s best-known economists, agrees that competing ideas are missing in government and corporate media of our most important economic areas. He sharply writes:
“Cynics believe that the Geithner-Summers Plan is exactly what it seems: a naked grab of taxpayer money for Wall Street interests. Geithner and Summers argue that it's the least bad approach to a messy situation, in which we need to restore banking functions but don't have any perfect ways to do that. If they are serious about their justification, let them come forward to confront their critics and to explain to the American people why the other proposals are not being pursued.Let them explain the hidden and not-so-hidden risks to the American taxpayer of the plan that they have put forward. Let them explain why they are so intent on saving the banks' bondholders, even the long-term unsecured creditors who clearly knew they were taking market risks in buying Citibank bonds. Let them work with their critics to fashion a less risky and less costly plan. So far Geithner and Summers tell us that their plan is the only option, but without a word of further explanation as to why.”
Leading academic economists testify that something is indeed missing from their understanding of crucial national economic understanding. Several professors from Harvard’s Economics Department admitted to the Boston Globe that they both didn’t see the economic collapse coming and don’t have solutions. They acknowledged limitations in their current theories and thinking:
"Everyone that I know in economics, and particularly in the worlds of academic finance and academic macroeconomics, is going back to the drawing board," said David Laibson, a Harvard economist. "There are very, very, very few economists who can be proud.""You can't just say, 'I have a model for tremors that works great - I just can't explain earthquakes,"' said Kenneth Rogoff, an economist at Harvard who has studied financial crises."We have a very restrictive set of language and tools, and we tend to work on the problems that are easily addressed with those tools," said Jeremy Stein, a financial economist at Harvard. "Sometimes that means we focus on silly questions and ignore greater ones."
Let’s examine some evidence of how Revolution for these trillion dollar issues can breakthrough what Harvard’s Professor Stein calls “silly questions” to demand professional cost-benefit analyses of alternative models of economic management clearly discussed by many of America’s brightest historical minds.
The Great Depression in the US (1929-1941) motivated professional economists to comprehensively and creatively address its causes. Upon consideration of previous US economic depressions in 1837, 1873, and 1893, prominent economists led by Henry Simons at the University of Chicago proposed monetary reform as the nation’s most effective and practical policy response, known as the Chicago Plan (and here). This proposal was endorsed by Simons’ colleague, Paul Douglas, Frank Graham and Charles Whittlesley of Princeton, Irving Fisher of Yale, Earl Hamilton of Duke, Willford King of NYU, and sent to a thousand academic economists for their input. Three hundred twenty responded to the mailed proposal and survey (an impressively high number for a cold-call proposal and survey) from 157 universities, with 73% in full agreement with the proposal, 12.5% in approval with various considerations in its implementation, and only 14% in disagreement.
Nobel laureate Milton Friedman would become the proposal’s best-known champion. Congressman Dennis Kucinich has current legislation proposed.
This proposal was the shift from banking industry creation of “money as debt” through loans (technically “credit” and not money because it exists only and always as increasing and unpayable debt in the macro economy), to the government creating debt-free money for the direct payment of public goods and services. This policy has several extraordinary benefits (details in the links):
- The national debt is paid rather than always increased.
- It’s the only policy that accomplishes the goal of full employment as the government becomes the employer of last resort.
- This policy ends the economic crisis almost instantly; and once the program is established will guarantee no further unemployment crises.
- If the GDP value of government employment exceeds its costs (consider infrastructure that returns far more than costs), the US would have the double benefit of decreasing prices as well as full employment.
- For an example of interest, considering the US Department of Education reports that between 100,000 to 300,000 US public education positions are in danger of termination for the 2010-2011 school year, this policy creates money directly to rehire unemployed teachers and fill all school needs. Our current economic model will suffer the layoffs and decrease in education quality.
- State-of-the-art infrastructure.
- Elimination of almost all social costs of poverty.
- If banking were nationalized rather than being “bailed out” in the present, interest rates could be non-profit (think 1 or 2% mortgages that would reduce the cost of homeownership by 50% and eliminate need for any state taxes).
- Creating debt-free money could be combined with public-created credit. This could take the form of state-owned banks.
Despite 86% of academic economists in favor of this proposal, its 1934 policy proposal in Congress was defeated. Paul Douglas, leading economist and Senator from Illinois from 1949 to 1967 wrote:
“This proposal will of course be opposed by the bankers from whom it takes the lucrative privilege of creating purchasing power. It would however insure the safety of deposits, give large revenues to the government, provide complete social control over monetary matters and prevent abnormal fluctuations in the capital market. At the same time it would permit the allocation of productive resources…to remain primarily in private hands. All in all it seems the most promising program for the reform of our monetary and credit system…”
For current discussion of this idea, here's a 2-minute video explanation by Congressman Dennis Kucinich, and a 2012 Claremont Colleges conference.
So: why isn’t this proposal considered by Harvard’s economists, Congress, and leading Americans known to you today?
Consider the possible answer of oligarchic control of American “leadership” for generations as we consider the next piece of revealing evidence: Thomas Edison and Henry Ford understood the mechanics of money, and went on a media tour together to explain this transformative education.
Thomas Edison’s 1921 media tour with Henry Ford included traveling to the site of a hydroelectric dam to explain to the public through the media the economic breakthrough to build the dam apart from the parasitic and captured finance we still have today that Simon Johnson and Elizabeth Warren so strongly describe. Edison explained fully to the New York Times reporter how public works can and should be funded by government directly creating and paying for the project. This is less than half the cost of the continuing method of government borrowing money. Edison concluded the interview by explaining that ideas for the public good that challenged corporate oligarchs have always been defeated by the oligarch’s purchased propaganda campaigns:
“Certainly there is a complete set of misleading slogans kept on hand for just such outbreaks of common sense among the people. The people are so ignorant of what they think are the intricacies of the money system that they are easily impressed by big words. There would be new shrieks of ‘fiat money,’ and ‘paper money’ and ‘green-backism,’ and all the rest of it – the same old cries with which the people have been shouted down from the beginning.But maybe we have passed beyond the time when the thoughtful 2 per cent – you know, I gather from my questionnaire that only 2 per cent of the people think,” and Mr. Edison smiled broadly. “Maybe they can’t shout down American thinkers any longer. The only dynamite that works in this country is the dynamite of a sound idea. I think we are getting a sound idea on the money question. The people have an instinct which tells them that something is wrong, and that the wrong somehow centers in money. They have an instinct, also, which tells them when a proposal is made in their interests or against them.”
In conclusion of this section of literal trillion dollar importance, there is a human face to our current economic condition calling for Revolution.
We live in a present political/economic “leadership” environment that allows a million children to die from preventable poverty every month. These million human beings die every month, year after year, despite the investment to save their lives is less than 1% of our income (the annual investment is ~$100 billion a year for about a ten-year project to end poverty forever). In addition, every nation that has ended poverty has also reduced their population growth rates to sustainable levels. This human cost is remarkably under-reported compared with the death toll of 3,000 innocent lives on the one day of 9/11 (allegedly the reason for US wars – to stop such innocent loss of future lives).
The conclusion of colleagues and I who worked with two UN Summits to end poverty is in agreement with best-selling author John Perkins (Economic Hitman) that the criminal 1%'s priority is economic parasitism (two-minute video to explain here). Of course, this is only possible with complicit criminal 1% corporate media to lie: read this for how the NY Times covered the 1990 World Summit for Children to save a million children's lives every month from preventable poverty, then ask and answer for yourself what the connection is between 1% economic policy and 1% corporate media in how they choose to communicate to the 99%.
Preventable poverty kills 30,000 every day, ten times the deaths on 9/11, for a total of over 100 million innocent human beings killed since 9/11. And please remember the 45,000 dead Americans every year and our combined annual loss of $100 billion to $300 billion because US political “leadership” chooses cartel profits over physician-managed health care.
According to Jeffrey Sachs, when polled, the American public think we give 25% of our government budget to help the poorest of the poor, are willing to give 10%, and would be outraged to understand the actual figure we give is less than one-sixth of one percent of our income. American media and political leadership allow this disinformation to continue at the cost of 30,000 lives every day while Congress passed HR 4173 to guarantee future so-called bailouts for banks at $4 trillion dollars without hearings.
In review, this section has presented data and expert testimony that the US “modern” economy is still a Robber Baron-era oligarchy. Logically, only one of the following two conclusions seems to be possible:
1. Either people like Jeffrey Sachs, Thomas Edison, 86% of academic economists in the 1930s, and others of our brightest historical American minds beginning with Benjamin Franklin and Thomas Jefferson were too stupid to understand that corporate bankers creating a national debt supply rather than a money supply is best for Americans, and best without consideration or ethical refutation of their competing and wrong ideas. Things like the banking bailout should be done without Congressional hearings and passed immediately when banking insiders say so because they’re experts. And just because what you’re reading proved government and corporate media Orwellian war lies, those two groups wouldn’t collude with corporate bank and finance cartels to parasitize millions, billions and trillions of dollars because they respect law and honesty with money. Oh, and Ron Paul, Dennis Kucinich, Paul Grayson and all the third parties are extremists with impractical ideas of monetary reform that don’t deserve explanation. Even though Pew Research reports 92% of Americans oppose our current economic management, we don’t need civic education on alternative models. Or…
2. The US “modern” economy really is an oligarchy that suppresses competing ideas and parasitically costs Americans trillions of dollars every year. Without Revolution, this parasitic cost will continue with current trends indicating the costs will increase.
“When our Federal Government, that has the exclusive power to create money, creates that money and then goes into the open market and borrows it and pays interest for the use of its own money, it occurs to me that that is going too far. I have never yet had anyone who could, through the use of logic and reason, justify the Federal Government borrowing the use of its own money... The Constitution of the United States does not give the banks the power to create money. The Constitution says that Congress shall have the power to create money, but now, under our system, we will sell bonds to commercial banks and obtain credit from those banks. I believe the time will come when people will demand that this be changed. I believe the time will come in this country when they will actually blame you and me and everyone else connected with this Congress for sitting idly by and permitting such an idiotic system to continue. I make that statement after years of study.”
- Wright Patman, Representative in the U.S. Congress from 1929 to his death on March 7, 1976, and Chair of the House Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913. This quote is from excerpts of September 29, 1941, as reported in the Congressional Record of the House of Representatives (pages 7582-7583).
Revolution unleashes trillions of our dollars. Revolution exposes and ends what history will frame as the end of “Robber Baron” corporate/political cartels. Revolution enters America into a golden age unimaginable in the present.
And fortunately, the structural solutions are obvious, simple, and have been understood and advocated by leading American minds for literally centuries. Even if the economic solutions proposed beginning with Benjamin Franklin are too complex for you to invest your time to understand, the case for Revolution should be obvious by the suppression of these competing ideas that either are worthy of consideration or should have been professionally refuted (“refutation” is distinct from denial or propaganda as Thomas Edison explained).
If you want more economic data that piles-on additional proof of an oligarchy collusion between corporate cartels and owned regulators looting our economy, I recommend the brilliant comprehensive explanation and documentation of David DeGraw in his no-holds-barred paper, "Time for law-abiding American citizens to stop paying taxes, start a new government?"
And if you're ready to take the rational next step to embrace the possibility of economics that fully utilizes technology, watch Zeitgeist Addendum and/or Zeitgeist: Moving Forward. This planetary breakthrough potential is explained at The Venus Project.
“Every day, I saw more evidence about the evils humankind will inflict on their fellow humans to gain or maintain power… What is more, those who choose not to empathize may enable real monsters. For without ever committing an act of outright evil ourselves, we collude with it through our own apathy… If you choose to use your status and influence to raise your voice on behalf of those who have no voice; if you choose to identify not only with the powerful, but with the powerless; if you retain the ability to imagine yourself into the lives of those who do not have your advantages, then it will not only be your proud families who celebrate your existence, but thousands and millions of people whose reality you have helped transform for the better. We do not need magic to change the world, we carry all the power we need inside ourselves already: we have the power to imagine better.” – J. K. Rowling, Harvard Commencement, June 5, 2008
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