Last night, the Presidential candidates had their last debate before the election. They talked of the baleful state of the economy and the stock market; but omitted from the discussion was what actually caused the credit freeze, and whether the banks should be nationalized as Treasury Secretary Hank Paulson is now proceeding to do. The omission was probably excusable, since the financial landscape has been changing so fast that it is hard to keep up. A year ago, the Dow Jones Industrial Average broke through 14,000 to make a new all-time high. Anyone predicting then that a year later the Dow would drop nearly by half and the Treasury would move to nationalize the banks would have been regarded with amused disbelief. But that is where we are today.

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13 Responses

  1. […] A year ago, the Dow Jones Industrial Average broke through 14000 to make a new all-time high. Anyone predicting then that a year later the Dow would drop nearly by half and the Treasury would move to nationalize the banks would have …[Continue Reading] […]

  2. I asked a question almost 20 years ago to myself which was, “where does money come from”? and have come to know the truth. Most people are still ignorant of the answer. They are too busy being consumers and tax payers to know that answer. I even have asked banker friends that question and thay have not known the true answer of how the system really works. It is thought evoking to get one who is being educated to look up the Federal Reserve Bank in the blue government pages of the phone directory when they are in disbeleif.

    Ron Paul has done some good in getting the word out but he as been marginalized as an old kook by the media which is not “main street.” That term “main street media” is Orwellian double speak. My thoughts and beliefs are not being represented there. Altough our beliefs are shapes those things that are experienced and programmed into our collective minds by the MSM, the lens used in viewing the word with really needs to be prisim that allows for color seperation of the shades of truth.

    Everything has been monitized from the shoes on your feet to the house over your head to the steak in you refrigerator. Even your time has been monitized. The first six months belongs to the governments we exist in the rest is ours to keep to survive. Hopefully there is surplus in your life that provides well for you.

    This financial crisis is about things that have been monitized that should not have been. High risk loans, high risk credit which were the basis for fractional reserve banking into derivatives, CDO’s SIVS UFO’s MBS on top of which sits credit default swaps and more swaps that have no insurable interests to the parties at interest. These are the assets that need to be bailed out. These aren’t assets, they are shit stuck in the bankers imagination. Let them unwind their stupidity.

    Congress needed to hurry up and pass that bail out bill or the sky will fall. The Federal reserve bank creates dollars from the ether, sends the credits over to treasury who issues bonds back to the bank, We get to pay the principal and interest via the IRS. Paulson who is Goldman’s boy delivers that 700 billion to the chosen banks, all no doubt shareholders of the FRB. Now it’s hurry up and wait. Too early to inject that capital. Inject, gives that Orwellian image of medicine that is going to cure the sick patient, what a crock. By waiting, more assets are devalued and can be scooped up by the bankster cronies on the cheap on my dime.

    Dodd and Frank checked their manhood at the door of the senate offiice building because if there was any brass there, they would have set off the metal detectors. Where is the call for banking reform you tools. We need to throw the bank under the bus, put the fire walls back up and create a new model for doing business.

    I guess that executive order 11110 will have to wait for another day. My grandfather always stated, “show me an honest politician and I’ll show you a dead one”. I never really knew what that ment as a young child but I’m sure that there are a few marters that serve as a constant reminder to our leaders to not step out of line.

    Go work your phoney committees you bunch of blowhards. And Dodd, you stink for taking that Countrywide loan deal, shame on you. Very cad like indeed. You guys really know how to belly up to the meatball tray at the reception don’t you. Weasels.

    I will begrudenly pay income tax to your bankster fraud because my life has been monitized in your system and if I don’t play the game, I’m cut off and my family’s survival means are seized by your armed thugs. The mark of the beast is removed from my being and I starve. How prophetic. Maybe it’s going to take the second coming to drag us out of this fallen world. Pharoh only took 1/7, we are really getting leaned on by these demons.

    Ellen you are right, the bank should be the utility of the people as Franklin had it in Pennsylvania in Colonial times. When banks need money, they go to treasury and borrrow dollars, giving treasury interest bearing bonds in return. That’s an asset of the people. We are all in bondage, treasury bondage that is, to the banksters. I am not your utility, get off my back.

    The president needs to take charge and nationalize the FRB. All they have to do is change the charter of the FRB act of 1913. Hey W., you could even show some leadership, instead of acting like the bank employee that you are, be the owner. Now there’s a legacy that you can pass down to your grandchildren and get into the history books. Your historial legacy is looking a little pale right now, how about a little going away present for the people. Your eight years of being a lame duck is ending soon. Demorat, Republican, it doesn’t matter, you are both different cheeks on the same ass.

  3. Ellen:

    How close is the Bank of North Dakota to the Land Bank of Pennsylvania? Will the people benefit from public fractional reserve banking versus private fractional reserve banking?

    I like Tom Brown’s reference to Biblical lessons. I share that world view. Look at the revolutionary vision of Torah, with remission of debts every seven years, and Jubilee return of all estates every fifty years. Look at the truly radical, yet basis ministry of Yehoshua ben Yosef (Jesus, son of Joseph), in his parables of rich and poor, his lesson on money and the images thereon, and the driving of the moneychangers from the Temple, where people traded G-d’s produce for a pittance committed to Temple sacrifices and Roman taxes in one transaction. The poor knew who were fleecing them — the Empire with the help of the high priests. Today, the plutocratic oligarchy and the Empire fleece the people, with the arms of the Empire and the illusions of the oligarchy’s deceptive mass media.

    Pennsylvania paper money and Lincoln’s Greenbacks were the people’s currency. By these means we can throw down the most wicked of idols, and the most vicious of idolatrous priests — private, fiat money and their moneychanging financiers, and put money in the service of the people (that this world may truly become a dwelling place where lions and lambs walk unafraid, and where all may worship G-d as they understand (or refrain from) G-d in peace.

    The explicit, shameless nature of the moneychangers’ giveaway makes the case clear. I see a lifting of illusions. There is no doubt what finance capitalism is, wants, and is willing to do to perpetuate itself. Accordingly, I see the moral road as the high and winning road in this debate.

    Peter of Minneapolis

  4. I am here this morning because late last night
    I clicked on my link to Global Research. I have
    been posting for some while about money in
    this USofA. Not being an expert, most of those
    posts have been learning experiences for me
    wherein I’ve provided links to articles by those
    who are. I support replacing the private money
    system this nation has been relying on with a
    nationalized money system. Perhaps we could
    name it The USofA Benjamin Franklin Bank.

    Thank you.

  5. Hi Ellen,
    Thank you! Now this is the type of thinking I was alluding to in my comments to your Post #79 “Monetary Proposal”

  6. If you really want to go to the bottom of it, please read.

    There is a far more efficient monetary system possible with constant economic growth at maximum potential and without debt, crisis, government intervention, unemployment and useless financial activity.

    It has been proven to work. It has been used by great civilizations (like ancient Egypt) and it created great civilizations (the powerbase of Europe was built in the Middle Ages using this system).

    The Solution in 12 Steps
    1. Interest on money should be banned. This is the only prohibition. Return on capital is a good thing, and should not be abolished.
    2. Raise a tax on money, for example, one percent per month. This is not a tax on wealth, so shares, real estate and money lent, are not taxed
    3. Do not print more money, so there will be no inflation.
    4. Because there is a tax on money, people will soon use the money to:
    – to invest;
    – to consume;
    – to lend without interest.
    5. Because on money lent, no interest may be charged:
    – money will not be lent to unreliable individuals, businesses and structures.
    – less money will lent and more money will be directly invested in equities and real estate.
    – money will only be lent to reliable people, people with collateral and well-financed companies can borrow without interest.
    6. Therefore there will never be an economic crisis, because money is spent directly and there are no bad loans.
    7. Because all money is directly used for investment or consumption, everyone is at work and the economy grows steadily at maximum speed.
    8. The financial sector is largely superfluous, and that is a good thing, because this sector produces nothing and destabilises the economy. People working in financial services will get another job quickly, because the economy grows steadily at maximum speed.
    9. Governments also need much less to interfere with the economy. The people who did this work, get another job quickly.
    10. As the economy grows constantly at maximum speed, and because no more money is printed, prices will fall. Therefore loans with zero percent interest will have a return that is probably higher than the interest rate you will get at the bank now. The money you lent will be worth more when the loan matures.
    11. If one country chooses to apply this system, it will attract capital from other countries since the return of loans with zero percent interest rate is higher than the yield on interest in other countries (bizarre but true!). Therefore, all other countries will need to do this, if one country has changed its money system in this way.
    12. Now everyone is free. There is no fear in the economy. There will always be work for employees and there will always be customers for viable businesses. Nobody is deeply in debt.

    If you do think this will not work, you are wrong. It has been tried and it worked very well.


    More information:

  7. Hi Ellen

    There’s a guy in Australian academia called Steve Keen from the University of Western Sydney who has written a book called “Debunking Economics”. There are also a lot of other articles on his website that attemp to “un-obfuscate” the “science” of economics: he talks about endogenous money and various theories about the creation of money are debunked.
    It’s great to see serious academics are now trying to educate the public – he has a website here .
    We don’t need a new Bretton Woods or more government intervention and regulation. We need a credit system that is a shared public utility based on the full faith of the shared State and the capacity of its people to be productive.

    Good luck with everything you are doing.

    Western Australia.

  8. Any economic system that doesn’t outlaw interest will eventually spiral into a bankrupt web of debt. The only difference between the government stealing your money and the Rothschilds is that the government is likely to steal it faster.

    Not that compound interest doesn’t accumulate very fast. It can destroy most individuals within their lifetimes, which may explain why the Great Depression was 79 years ago today.

    If we truly had a government of the people, by the people, and for the people we could trust them with handling all our banking needs at zero interest. Credit as the cornerstone of the public commons would be a boon to commerce. Fractional reserve banking is not a threat as long as the money lent is paid back over the life of the goods or services used as collateral.

    The problem starts when people with money or power or both want something for nothing. Lending money to make more money adds nothing to our GDP. Printing money without collateral only debases our money. Doing both, as is now done, only accelerates national bankruptcy.

    Look, all of this is academic as long as we allow sociopaths to run the system and demand money for nothing. There are an infinite number of better ways to run a society than the present model.

    People who have had control of the current monetary system for hundreds of years have instituted a legal system that makes it impossible to challenge their authority using the system they designed.

    The super-rich pay thugs who rarely consider the moral implications of bashing a few heads to protect their masters. Should such thoughts occur to them, they are promoted to lawyers or judges or politicians and paid so much “money” that they forget their nagging morality.

    How can 537 elected national representatives withstand the financial onslaught of 42,000 lobbyists?

    The machine has not only been bought and paid for, but carefully honed and oiled to grind any simpleton who believes in fairness or a free market into an exotic fragrance lathered as a lotion on the exhalted feet of the moneychangers.

    So, we peons can argue theoretical money systems all night, but in the morning we’ll still scribble checks to Chase.

    I’m beginning to think it’s time we move beyond the books and the arguments and the water-cooler theories of how, exactly, the so-called Illuminati are robbing us blind. I think it is time we toss exotic monetary theories and work out how, exactly, we are to toss off our yokes.

    There is a lot of disagreement as to how we’re being screwed and how, exactly, we are to be unscrewed. Nothing gets done. We’re still writing checks.

    We need national organization to unyoke. Pull our cash from the banks, the 401Ks, the IRAs. Stop paying mortgages and credit cards. Un-hitch ourselves from killer banksters first, then worry about how to create a better system.

    We need to withdraw our cooperation from both corporations and the government they own. We especially need to stop buying stuff we don’t need with money we don’t have.

    Until we yank the yoke, the “web of debt” is a joke.

  9. Hi Ellen,

    It looks like Paulson’s $700 Billion bailout is not being used to unfreeze the credit market as it was marketed to congress.

    The following article was in the NYT and can be accessed via this link:

    Here’s the article:

    October 25, 2008
    Talking Business
    So When Will Banks Give Loans?
    “Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?”

    It was Oct. 17, just four days after JPMorgan Chase’s chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked that question. It came toward the end of an employee-only conference call that had been largely devoted to meshing certain divisions of JPMorgan with its new acquisition, Washington Mutual.

    Which, of course, it also got thanks to the federal government. Christmas came early at JPMorgan Chase.

    The JPMorgan executive who was moderating the employee conference call didn’t hesitate to answer a question that was pretty politically sensitive given the events of the previous few weeks.

    Given the way, that is, that Treasury Secretary Henry M. Paulson Jr. had decided to use the first installment of the $700 billion bailout money to recapitalize banks instead of buying up their toxic securities, which he had then sold to Congress and the American people as the best and fastest way to get the banks to start making loans again, and help prevent this recession from getting much, much worse.

    In point of fact, the dirty little secret of the banking industry is that it has no intention of using the money to make new loans. But this executive was the first insider who’s been indiscreet enough to say it within earshot of a journalist.

    (He didn’t mean to, of course, but I obtained the call-in number and listened to a recording.)

    “Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

    Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy. On the contrary: at another point in the conference call, the same executive (who I’m not naming because he didn’t know I would be listening in) explained that “loan dollars are down significantly.” He added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” In other words JPMorgan has no intention of turning on the lending spigot.

    It is starting to appear as if one of Treasury’s key rationales for the recapitalization program — namely, that it will cause banks to start lending again — is a fig leaf, Treasury’s version of the weapons of mass destruction.

    In fact, Treasury wants banks to acquire each other and is using its power to inject capital to force a new and wrenching round of bank consolidation. As Mark Landler reported in The New York Times earlier this week, “the government wants not only to stabilize the industry, but also to reshape it.” Now they tell us.

    Indeed, Mr. Landler’s story noted that Treasury would even funnel some of the bailout money to help banks buy other banks. And, in an almost unnoticed move, it recently put in place a new tax break, worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”

    Friday delivered the first piece of evidence that this is, indeed, the plan. PNC announced that it was purchasing National City, an acquisition that will be greatly aided by the new tax break, which will allow it to immediately deduct any losses on National City’s books.

    As part of the deal, it is also tapping the bailout fund for $7.7 billion, giving the government preferred stock in return. At least some of that $7.7 billion would have gone to NatCity if the government had deemed it worth saving. In other words, the government is giving PNC money that might otherwise have gone to NatCity as a reward for taking over NatCity.

    I don’t know about you, but I’m starting to feel as if we’ve been sold a bill of goods.

    The markets had another brutal day Friday. The Asian markets got crushed. Germany and England were down more than 5 percent. In the hours before the United States markets opened, all the signals suggested it was going to be the worst day yet in the crisis. The Dow dropped more than 400 points at the opening, but thankfully it never got any worse.

    There are lots of reasons the markets remain unstable — fears of a global recession, companies offering poor profit projections for the rest of the year, and the continuing uncertainties brought on by the credit crisis. But another reason, I now believe, is that investors no longer trust Treasury. First it says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart.

    Now, he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions. Sneaking in the tax break isn’t exactly confidence-inspiring, either. (And let’s not even get into the less-than-credible, after-the-fact rationalizations for letting Lehman default, which stands as the single worst mistake the government has made in the crisis.)

    On Thursday, at a hearing of the Senate Banking Committee, the chairman, Christopher J. Dodd, a Connecticut Democrat, pushed Neel Kashkari, the young Treasury official who is Mr. Paulson’s point man on the bailout plan, on the subject of banks’ continuing reluctance to make loans. How, Senator Dodd asked, was Treasury going to ensure that banks used their new government capital to make loans — “besides rhetorically begging them?”

    “We share your view,” Mr. Kashkari replied. “We want our banks to be lending in our communities.”

    Senator Dodd: “Are you insisting upon it?”

    Mr. Kashkari: “We are insisting upon it in all our actions.”

    But they are doing no such thing. Unlike the British government, which is mandating lending requirements in return for capital injections, our government seems afraid to do anything except plead. And those pleas, in this environment, are falling on deaf ears.

    Yes, there are times when a troubled bank needs to be acquired by a stronger bank. Given that the federal government insures deposits, it has an abiding interest in seeing that such mergers take place as smoothly as possible. Nobody is saying those kinds of deals shouldn’t take place.

    But Citigroup, at this point, probably falls into the category of troubled bank, and nobody seems to be arguing that it should be taken over. It is in the “too big to fail” category, and the government will ensure that it gets back on its feet, no matter how much money it takes. One reason Mr. Paulson forced all of the nine biggest banks to take government money was to mask the fact that some of them are much weaker than others.

    We have long been a country that has treasured its diversity of banks; up until the 1980s, in fact, there were no national banks at all. If Treasury is using the bailout bill to turn the banking system into the oligopoly of giant national institutions, it is hard to see how that will help anybody. Except, of course, the giant banks that are declared the winners by Treasury.

    JPMorgan is going to be one of the winners — and deservedly so.

    Mr. Dimon managed the company so well during the housing bubble that it is saddled with very few of the problems that have crippled competitors like Citi. The government handed it Bear Stearns and Washington Mutual because it was strong enough to swallow both institutions without so much as a burp.

    Of all the banking executives in that room with Mr. Paulson a few weeks ago, none needed the government’s money less than Mr. Dimon. A company spokesman told me, “We accepted the money for the good of the entire financial system.” He added that JP Morgan would use the money “to do good for customers and shareholders. We are disciplined to try to make loans that people can repay.”

    Nobody is saying it should make loans that people can’t repay. What I am saying is that Mr. Dimon took the $25 billion on the condition that his institution would start making loans. There are plenty of small and medium-size businesses that are choking because they have no access to capital — and are perfectly capable of repaying the money. How about a loan program for them, Mr. Dimon?

    Late Thursday afternoon, I caught up with Senator Dodd, and asked him what he was going to do if the loan situation didn’t improve. “All I can tell you is that we are going to have the bankers up here, probably in another couple of weeks and we are going to have a very blunt conversation,” he replied.

    He continued: “If it turns out that they are hoarding, you’ll have a revolution on your hands. People will be so livid and furious that their tax money is going to line their pockets instead of doing the right thing. There will be hell to pay.”

    Let’s hope so.

  10. Adam Smith pointed out in the Wealth of Nations that the textile mills in Birmingham and Manchester ran for more than 100 years before any banks appeared. Banks are unnecessary and parasitic.

  11. There are so many things I don’t understand.
    The FED says they give their profits to the treasury department, after keeping 6% and paying dividends to their banks. is this so?

  12. They give a 6% return to their shareholder banks on the shareholders’ equity. They pay their costs from the interest on the bonds and refund anything that’s left over to the government.

  13. Amazing–I’ve read most of your articles and you’ve got it right, exactly. Congratulations for seeing and speaking the truth in a practical and sensible way.

    Now we have to ask ourselves: Why isn’t the mainstream media able to do this, and get the truth out to the mainstream American public?

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