Financial System Is A Larger Threat Than Terrorism
- 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.
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.
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.
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.
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.
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.
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.
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%.
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.
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
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.
Paul Craig Roberts was Assistant Secretary
of the Treasury for Economic Policy and associate
editor of the Wall Street Journal. He was columnist
for Business Week, Scripps Howard News Service, and
Creators Syndicate. He has had many university
appointments. His internet columns have attracted a
worldwide following. Roberts' latest books are
of Laissez Faire Capitalism and Economic Dissolution
of the West,
Neoconservative Threat to World Order.