While individuals, businesses and governments suffer from a credit crisis created on Wall Street, the banks responsible for the crisis are tapping into nearly-interest-free credit lines and using the money to speculate or to make commercial loans at much higher rates.

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15 Responses

  1. The financialization of economies around the world is now bearing its bitter fruit. In Greece, there is rioting in the streets. All the EU economies are trying to come to terms with debt, which means “austerity”, cut backs in public spending. The beneficiaries of these socialized economies, the people, are very likely to get angry like the Greeks.

    Here’s the question: where does this debt come from? Listen to the bankers and you hear the same old song: too much spending on “entitlements”. But there is no countervailing voice talking about the entitlements of the bankers and the rich.

    What might that entitlement be? The “right” to charge whatever rate of interest they see fit. The “right” of their money to gather interest, no matter the cost to society as a whole.

    Interest rate arbitrage is the basis of the financialized economy. Borrow it cheap, loan it out dear. Doesn’t matter if this money is invested in productive enterprise that makes the economy grow and raise all boats. Economies are not growing and no boats are being raised except those of the rich. Everyone else is being squeezed to raise the boats of the rich. Their entitlement to earn huge rates of interest on their money is never questioned.

    Economies all over the world are hitting the wall created by unrealistic expectations of “return on investment”, ie, unrealistic interest rates. Strangely, no one questions this. A few voices cry “usury” in the wilderness, but this is not understood. We should understand right now the criminal nature of usury. It is charging rates of interest that cannot be justified or sustained by concurrent growth in the economy, in GDP.

    Ellen’s state bank solution will make a difference chiefly because it offers the states the opportunity to cut interest rates and thus cut debt.

    If the rich of this world, the bond holders, the investor class, do not cut back on their sense of entitlement, there will be blood in the streets. Maybe not here in this nation of sheep, but certainly in Europe where the people have thrown over the old style laissez faire capitalism long ago. But not here. Strange, but true.

    The solution to the debt problem is to slash interest rates and prevent loan sharking. That is what the entitlement of the investor class has become in this financialized world: loan sharking..

  2. Is the quotation from the article urging to Shut Down the Federal Reserve accurate? Why is there so little education about the Federal Reserve in the media, schools and universities?
    Why is the Government Accountability Office not allowed a full audit of the Federal Reserve? The position that something is very wrong with the Federal Reserve is even supported by some courageous Congressmen. If their accusations are unfounded, then why aren’t the democratically elected Congressmen allowed to audit the Federal Reserve’s alleged private ownership and selfish activities? The US Constitution in Article I, Section 8, Paragraph 5, states that Congress has the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;”.
    Why is the Federal Reserve so secretive?
    “The band aids will not help the economic crisis. There is a systemic problem. The Federal Reserve and all the central banks in the world that are designed on its model are defrauding the people of the world.

    There is no rational reason why the U.S. Congress cannot print its own currency. The Congress was intimidated, bribed and blackmailed into creating and maintaining the Federal Reserve Bank. The Federal Reserve was awarded a contract to manage the currency in America. The cost of that contract to the U.S. has been $10 trillion in national debt.

    To try to cover for the Federal Reserve’s greedy fraud, many countries are being forced to pay into the Federal Reserve coffers to keep the world economy afloat. One of the ways they are being forced to pay is through devaluation of their currencies with respect to the U.S. dollar, which is a way of building up America at the expense of others in the world.

    All of the band-aid measures will fail. The problem is the Federal Reserve, which concept is founded upon debt-based currency and fraud. It must be closed down or it will continue to suck the resources of the U.S. with its currency management contract. The American government could do the Federal Reserve’s job for virtually nothing, and save the U.S. taxpayers between $200 and $900 billion each year in interest off a debt that will never be paid off.”
    “McFadden is also remembered for his criticism of the Federal Reserve, which he claimed was created and operated by European banking interests who conspired to economically control the United States. On June 10, 1932, McFadden made a 25-minute speech before the House of Representatives[2] , in which he accused the Federal Reserve of deliberately causing the Great Depression.”
    “Long was a staunch opponent of the Federal Reserve Bank. Together with a group of Congressmen and Senators, Long believed the Federal Reserve’s policies to be the true cause of the Great Depression. Long made speeches denouncing the large banking houses of Morgan and Rockefeller centered in New York which owned stock in the Federal Reserve System. He believed that they controlled the monetary system to their own benefit, instead of the general public’s benefit.”
    “Paul opposes the Federal Reserve Act of 1913 and the Federal Reserve’s control of the nations money supply and interest rates. He wants to allow the free market to regulate interest rates, and supports congresses constitutional role of controlling the money supply. Paul endorses H.R. 1207, the Federal Reserve Transparency Act, a bill introduced by Congressman Ron Paul mandating an audit of the Federal Reserve. Although Paul would abolish the Federal Reserve, he supports transparency and accountability of the semi-private institution. Additionally, Paul opposes inflation and supports “restoring the value of the dollar that has devalued by approximately 95% since the Federal Reserve’s inception in 1913″.”

  3. Ellen Brown needs to run for President of the U. S. with getting rid of the ” fed ” as her platform along with a dozen other items.

  4. Would these publicly owned banks that you argue for, would they be a “virtual” bank, existing only as an accounting clearing house, or a “brick and mortar” bank, with branches and outlets spread out everywhere? Thanks

  5. Most public libraries here in the DenCo area have “the Web of Debt”. It’s really an awesome book. I’ve a Question regarding the June 17 at 4:19pm — Q.= In the 7th line of the last paragraph (/wiki/rand. paul), the “semi-private” institution. is mentioned. Is the Fed Resv – in fact – “sem-private”, or is it entirely private? Thanks

    • Not sure what you mean about June 17, but the Federal Reserve branches are entirely private — not one share of stock is held by the public, and they pay guaranteed dividends to their bank shareholders. Where the issue gets confused is with the Federal Reserve Board, the head of which is appointed by the President; but they still aren’t on the government payroll. They pay their own. Where do they get the money? As one Fed branch head famously said, “We make money the old fashioned way — we print it!”

  6. Thank you Ellen. Just to be clear — the FedResvSystem (which includes FedResv branches, FedResvBoard, Whatever B. Bernanke is HeadOf, etc.) is all privately owned, for profit banks. Correct?? I’ve been told the FedResvSystem is a “hybrid” — i.e: partially gummint but mostly a ‘private bank’. If true, HOW CAN THAT BE? And, is the consortium of the biggest (JPM/Chase, Citibank, BofA, GoldmanSachs, NYBmellon, etc.) banks also, in some way, a very real part of the (non-governmental) FedResvSystem?

  7. The fundamental problem is simply that the government is printing more
    of our own currency without any added value in addition to borrowing from
    other nations (like China). That is why at the time of this writing there is a
    gold rush going on. Everyone wants to invest in the universal currency that
    has been and always will be the standard…before the inevitable global economic meltdown

    • False, as to “fundamental problem”. Gold is not money. Gold is wealth – a refined metal natural resource. If gold goes to 25K/oz and beyond, it will still NOT be money. It will always be wealth.

      The distinction between wealth and money is fundamental to understanding “money”.

      • “False, as to “fundamental problem”. Gold is not money. Gold is wealth – a refined metal natural resource. If gold goes to 25K/oz and beyond, it will still NOT be money. It will always be wealth.”

        I would agree that is not money today but for the entire history of mankind and across all cultures it is the first choice to be used as money. Anything can be used as money but I would argue gold is both. Today the federal gov’ts around the world have declared various paper bills as money and that is maintained by the use of force. Remove the coercion and gold would once again become money. The sooner that happens the better off mankind will be. Abandon all central banking schemes, federal or state. Banks should only be vaults to store your money (gold) and obtain their income from that service. They would also earn income on loans they make but htey should never be alowwed to lend more than what depositors have placed into their instutions. IOW, 100% reserves.

  8. I must conclude that the statement:; (quoting)”,……..the FedResvSys is a “hybrid” of – partially – the U S government and – mostly – private, for-profit banks”….. is NOT TRUE!. The Fed is NOT a hybrid. NOR is it accurate to be referenced as “the semi-private institution.” (as was stated by a blogger above — ‘which blog begins’,: “Paul opposes the Federal Reserve Act of 1913 and the…….). I accept that the Federal Reserve System is an entirely for-profit, nongovernment, nonhybrid, not even a semi-private institution, but rather an entirely private consortium of mega-banks that have a FedResBoard whose chairman is “picked” by the POTUS from a list of names supplied to him by those same private bankers. The MSM has said that this ‘System’ is opaque, not answerable to Congress or the Executive. And, Senator Dick Durbin said (this – 2010 – Spring) that, “they (the bankers) own this place.” He said this to a major net-work TV reporter while standing on the floor of the U S Senate. And they control the nation’s money supply, etc. 😦

  9. Thank you, Jere Hough, for that distinction between wealth & money. I would add that gold is also a commodity, but not necessarily “a medium of exchange”/ ‘money’.

  10. This is a key point that the banks profit from the system (though in the long term it causes problems they don’t want to have.)

    However the only reason the banks go along with the system is because they profit. The state needs the banks, as it lives and dies by people accepting their money. Without the banks to keep the state currency under control and accepted as money, the state would be powerless. While surely the state seeds the banks as an affront to its sovereignty, the state is not that sovereign. It can not repeal the laws or physics or economics.) Without a functioning banking system they’re relegated to dustbin of history like the USSR.

    (For a similar symbiosis see the state and drug dealers. The state can’t stamp out the market be it ever so black. The state is better off co-opting them and it usually does. Of course the best situation is to make it legal and repeal prohibition, but that wouldn’t benefit key parties.)

    This reminds me too of the stamp act – it infuriated the colonists lawyers and journalists, key group the English Parliament did not want against them.

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