Money: Banking on the Economy of the Absurd

Money and banking seem far too mysterious to far too many people.  Read all about it and you may feel that much of your time was wasted, simply because at root it seems not all that complicated.  Oh, the world of money and banking has been made quite complicated, but that’s because of who is running things and why they make decisions over all of our financial lives the way that they do.  With the endless elaboration of the complex institutions from which emanate the decisions that matter for the rest of us, the so-called “financial industry” has emerged as a much larger share of the economy than ever before.  But what does that mean?  Are we all wealthier?  Hardly.  As the “main street” economy has faltered while big corporations and banks grow ever larger profits, why has the financial industry—which claims to be so vital  to the nation’s economy—grown so large?

Along with the ideologically excused deregulation of banking and finance—driven, actually, by the growing influence of the big banks and their corporate companions over the laws that govern economic activity—have come a steady onslaught of banking practices that have made a very few people and corporations very, very rich and resulted in the rest of us falling further and further behind.  By expanding their control over the creation and lending of money, these institutions have expanded far beyond their usefulness to the nation. To big to fail?  Yes, if propped up by government bailouts.  But more important, too big to tolerate!

Have you ever wondered why over many generations people pay mortgages on their homes, yet very few of the succeeding generations ever live in a home without it being mortgaged?  Where is the accumulation of wealth?  Well, while complex interactions of a number of factors are at play, and individual cases vary, the “bottom line” is that we live in a debt-based economy, and it is debt based on purpose.  No, it wasn’t your idea and it wasn’t my idea.  It was the idea of the private bankers who took over the public function of banking way back when.  In a debt based economy, new money has to be created to pay the interest on old debt.  That requires endless economic expansion financed by new debt.  It is a never-ending cycle until one of two things happens:  1) a crash brought on by the excessive speculation in new debt—gambling—by the Banksters; or 2) the whole system expands beyond the carrying capacity of the ecological system on which we all depend.  The Great Depression of the 1930s has been matched by the real unemployment of the “Great Recession” of 2008-present as the absurd economy roars past sustainability.

Banking is an inherently public function.  In fact, money is a public institution.  Whether private banks control it has varied in time and place.  When you are playing Monopoly (the board game) the players are equivalent to the public but each acts as an individual, not as a member of that very small public—which helps to instill in the players an individualistic sense of what money is.  But the “play money” used in the game is “real money” for the purposes of that game.  One player is designated the banker, but only manages the allocation of money during play.  The players agree as to the initial distribution of money (usually equal) and to the rules of the game.

Eventually, through luck and skill, one of the players gathers so much money and property that the game is over—s/he won!  Oh, but then there’s no game anymore, unless the players want to start another game, in which case they have to redistribute the money so each player will have money with which to play.  In fact, once the game is over, there is no money, only amusing little pieces of colored paper in a box with the board and various symbols of property, etc.  But why does someone always win Monopoly?  The widely ignored fact of economic reality also ends every game of Monopoly.  Once a player has accumulated significant economic power, that player’s ability to gain economic power increases.  So it is in the real economy, with the added bonus of increased political power, which means that to keep the game going, something’s got to give.  The result has to be either collapse or some form of redistribution, that’s what history demonstrates.

So, you can see the difference between a game and social reality, or, technically, economic reality.  In the real world, the game can never be over, even when one element—the Banksters in our case—accumulates enough wealth to render the other players powerless to make a successful move.  In the real world, this holds right up to the point where some starve to death for lack of resources.  In the game, with all the money accumulated by a small number of lucky and/or skilled players, everyone else is out of the game.  In real life that is deadly and is bound to result in some kind of chaos, collapse, or major restructuring of the economy.  Look around, both in the world today and in history.  Money hasn’t been in play all that long.  It emerged slowly and in various odd forms when and where some surplus of valued goods was accumulated.  When, at various times when wealth became so concentrated in the hands of the elite, a monarch or emperor recognized that wealth had to be radically redistributed in order to keep the economy going.

The earliest examples of money and debt were in societies where sedentary agricultural practices replaced nomadic hunting and gathering.  Much of this is chronicled in David Graeber’s fascinating book, Debt: the First 5,000 Years.  Graebner is an anthropologist whose analysis of money and debt as cultural phenomena clearly breaks out of the illusions about money and debt upon which our deeply absurd, and equally unjust, economy is based.

Unless we face some very fundamental and widespread social illusions, we will be unable to grasp how debt drives our absurd economy and how deeply destabilized the system has become.  Sometimes these illusions have two sides, neither of which reflects economic or cultural reality.  For example, we have the “gold bugs” and the advocates of “fiat money.”  Gold bugs confuse symbols with reality and fiat money fanciers confuse wealth with abstractions of value.  Both obsess over the form of money, failing to see that the very essence of its existence is consensual rather than essential.

There is nothing in the essence of gold that makes it money and there is nothing in the essence of paper that prevents it from being money.  All manner of items at one time/place or another have been money because the conditions allowed and the people agreed to define them as money, from sticks to shells to stamped pieces of copper or other metal to beads to paper.  In no case did just any stick, shell or piece of paper do.  It had to have certain qualities or it couldn’t become money.

In one fascinating example, a stick with certain inscriptions would be split in two and the creditor and debtor each took a piece.  No other stick could represent that relationship of value-exchange because no two sticks will split in exactly the same way.  That made the stick parts a unique symbol of the value exchanged.  With gold, the size, ie., weight, of a nugget or shaped coin stands for its exchange value.  In every case of an object that becomes money, its value is designated in such a way that it cannot be altered.  So it is with paper.  With paper money, methods are devised to make it nearly impossible to duplicate without detection, but of course some counterfeiters have been very skillful, which results in a technology race between the legitimate and illegitimate printers of money.

Today, of course, most money takes the form of an electronic entry in computerized accounting systems controlled by banks and other financial institutions.  And that brings on an entirely new level of complexity and exploitability of what at base was a very simple relationship. But, as always, who controls the creation of money is still at the root of the way the money system works.

Because the nation so stupidly gave away the rights to control a fundamental public utility—money—to a cartel of private banks, the Federal Reserve, the creation of money (except for coins, which, trivially, are minted by the U.S. Treasury) is controlled not by public policy but by private banking interests.  “The Fed” is owned by its member big-private-banks yet is politically defined as a quasi-public institution even though it is entirely controlled by the cartel of private banks, except to the extent that the political system can influence its actions, which is almost nil.  Power flows from the banks to the government, not the other way around.

Well, you saw how well that worked out when the federal government essentially gave away the commonwealth by “covering” the bad bets of the world’s biggest gamblers—the Banksters, as I prefer to call them—because their agents, from Treasury Secretaries “Hank” Paulson and Timothy Geithner, Larry Summers, and the rest of the Wall Street gang were very much in control of the political response to the crisis.  These same Banksters had helped steer the congress to do away with the protections against gambling with depositors’ money that resulted from the Great Depression of the ‘30s.  The recent ‘Great Recession’ was the result of the same kinds of financial manipulations as precipitated the great crash, but now with lightning speed of computerized trading and lax limits on holding reserve capital to cover losses, as well as a whole new breed of “financial instruments” which are “derivatives” of complex combinations of debt.  The whole Dodd-Frank “reforms” were a smokescreen to cover continued abuse by the financial elite.

The whole system is, as they say, rigged.  And because it is entirely dependent on generating more debt in order to sustain profit, ultimately all that debt cannot be paid, since it is really a pyramid scheme basing illusory wealth on ever-expanding debt that cannot be sustained.  No, it is not about “the national debt” and “deficit spending” by the federal government, though they are part of the system.  And the “debt ceiling” is pure political theater.  It is about the centralized private control of the public means by which money is allocated to the actual people who participate in the economy as a way of sustaining their lives—through debt—with that private control being exercised in the sole interests of the so-called “masters of the universe,” the Wall Street Banksters and financial deal makers who have no idea what a real economy looks like.  It’s all about the art of the deal which generates paper profit [or, I should say, electronic profit] out of money generated with no other purpose, but which bounds the people to a system of debt over which they have no participation except as victims.

Therein lies the absurdity of the economy for you and me.  Money, the function of which had been to provide a medium for and a repository of actual exchange value—that is, the exchange of real objects and services of value to people in a real economy—has been perverted into a devise for generating false wealth—paper or electronic profit—which is treated as real wealth by the Banksters who control the Economy of the Absurd.

Why Obama Failed: Or did He?

A liberal lament among many Democrats these days is that President Obama has failed to implement—or has been prevented from implementing—the liberal agenda for America that he so eloquently outlined and continues to reference in his speeches. Of course, they continue to call for greater support for the president and his programs. The Republican politicians certainly play out their role as the usual suspects by kowtowing so mindlessly to their small but vocal Tea-Party primary-election base. That gives liberals plenty to crow about in excusing Obama’s failure to achieve the changes they could believe in. As if that weren’t enough, the Republicans in congress have flown so close to overt racism in demonstrating at every turn that they do not recognize him as a Legitimate President that their right-wings are beginning to melt.

Republicans have exercised their strategy of “no” from the very start when Mitch McConnell first blatantly proclaimed it. The Republicans thereby supply liberal democrats plenty of evidence of the gross obstructionism that allows liberals to cut the president some slack and continue supporting him in the midst of their disappointment with his refusal to entertain proposals for a single payer health insurance system, his escalated continuation of the neo-con military crusades, his assassination programs for citizens and foreigners alike, his pursuit of financial policies dictated by the banking and corporate elites that paid for his election—while he feigned support for underwater mortgagees, his relentless and unprecedented prosecution/persecution of whistleblowers who object to both blatant and secret violations of the constitution by his administration and agencies, and, well, of course, the list goes on. The so-called liberals who go along to get along with Obama’s administration would never tolerate such gross violation of liberal ideals if the president were a Republican. Rachael Maddow and Ed Schulz just keep looking for ways to support Obama—their cognitive dissonance scores must be astronomical.

For any reasonable assessment of presidential success or failure, we must look to the president’s actual behavior and the goals that such behavior implies. No, I didn’t say his speech, I said his behavior. As a card-carrying hopeful realist—itself a sometimes dissonant perspective—I had early on found the content and tone of Obama’s speeches a source of potential hope for a more progressive future for America if he were to be elected. Besides, I was committed to the idea that the election of a Black President would be a symbolic leap forward for American society. As it turned out, the leap forward came in the form of an uncomfortable exposure of the re-coded racism that permeates the ideology of a “color-blind America.” While consistently denied, re-coded racism is as widespread in the country itself as are the institutionalized racist practices that constitute the “New Jim Crow” era so effectively exposed by Michelle Alexander.

Unfortunately, it is even much worse than that. Charming though Obama is—bolstered by the charm and intelligence of Michelle and their daughters—the man is nevertheless a politician in the worst sense of the term. His actions belie his rhetoric, but they conform very closely to the financial-political-economic interests from which his big money flows.

Like so many, I had been charmed by Obama’s apparently passionate concern for the American people and their growing plight. But having looked at some early data on where the candidates’ contributions were coming from in the primary contests leading up to his first presidential campaign, my hope was tempered by a more realistic assessment of the candidate in terms of who he owed how much—political contributions are, after all, a form of debt, a loan secured by future favors. The financial and corporate elites were bankrolling him big time. The big boys were on a shopping binge and Barrack was their target. A Black President would make such a nice liberally enshrined instrument for achieving their political-economic plans for tightening their control over the American political economy.

The now well known Wall Street financing of the Obama presidential campaign had turned my early hope into a less hopeful skepticism about his likely performance. While I so strongly felt that America needed a Black President, largely for reasons of political culture, I now began to feel that from the governance perspective he would probably follow the standard political practice of the Democratic Party of pitching liberal rhetoric—and oh so well—while operating in the interests of the institutional forces I have come to think of as the “disinfotainment” (a term borrowed from Paul Krasner who published the infamous The Realist in the late sixties and seventies) media-framed ‘petro-mil-corp-bankster’ complex. “Deep Throat” remains an astute analyst of political behavior at the highest levels. “Follow the money” indeed! Follow it right from the pockets of ordinary Americans—and from the Fed’s vast purchases of bad debt—labeled “financial assets”—from the Bankster-gamblers, thereby flooding the Big Banks with “real” money by neutralizing the bad debt on their books—and right onto the balance sheets of the of the perpetrators of the greatest heist in history. This shell game, of course, runs up the “national debt” to the detriment of all Americans, but to the obscene profit of the perpetrators. But what was Obama’s role in all this?

The first principle of the Obama latent political-economic policy is to protect the rich and powerful who allowed him to be President, both from any risk that results from their sociopathic behavior and from any consequences for their crimes. At the same time, the people are tossed relatively small crumbs of social justice—the Lilly Ledbetter bill, Justice Department’s current efforts against voter suppression (which is the interests of the Democratic Party, of course), a not so strong effort seeking a real minimum wage, etc. When Larry Summers and his crowd were appointed to key economic positions I was shocked by the audacity, though I saw its consistency with the political money flow; now I am merely outraged by the reality of the Great Liberal Hoax that is Barrack Obama, coupled with a deep sadness that he turned out that way.
But at this stage in American history, we should expect some version of the same story accompanying the plundering of the American Commonwealth. With Mitt Romney there would have been less pretence (okay, he does lie a lot) but at least equal plunder; after all, Romney has achieved master huckster status among the plunder-capitalist class. He plundered real companies; the Wall Street operators plunder the nation’s economy as a whole. Obama is a mere political operator for more or less the same crowd—no serious effort has been made by his administration to reign in either variant of the plundering class. Of course not! The Obama administration is riddled with agents of the plundering class, with the full knowledge and consent of the Black President himself.

And where are the liberals in all this? Denial and projection explain a lot of it, if accompanied by a recognition that the Democratic Party has been bought off by the same forces that drive the Republicans’ politics. They just deny culpability while projecting their failures of conscience and practice onto their Republican colleagues. Chris Hedges was right after all, the “liberal class” really is dead—it just doesn’t know it yet because it still confuses rhetoric with action. Once the entire economy has been hijacked—we’re very close now—it won’t matter because as Bernie Sanders said recently, the government doesn’t regulate Wall Street, Wall Street regulates the government. We are well past the mid-point in the transition from pseudo-democracy—still pretending to be democratic, ‘cause we have elections, while government is latently, but near blatantly, controlled by the petro-mil-corp-bankster complex—to a fully formal corporate security/surveillance state without pretense.

The only remaining option for those who would like to live in a compassionate democratically governed society—rather than a ruthless corporate-run surveillance state—is to simply do it ourselves. Not easy, of course, but potentially realistic. Occupy Wall Street was a symbolic move in that direction—and continues in various scaled down ways in many places. If anything, OWS demonstrated the power of numbers focused on democratic change. The many small community actions for local mutual aid and local economic self-sufficiency, the new interest in publicly owned banks such as the long successful North Dakota state bank—are moves in the right direction. Public banking can support local self-reliance. Anyone who still keeps their accounts with Wells Fargo, chase-Manhattan, et al, is complicit, regardless of how small. Transfer your money to a local credit union or locally owned bank; support the growing public banking movement. Many other community actions are emerging. There are no guarantees, but at this point community action seems the only realistic hope for change. I would also support a third political party movement, but the chances seem so slim and time is so short.

Given the coming consequences of accelerating climate disruption—even the necessary massive de-fossilization of the economy cannot stop much of the impacts already in the climate pipeline and that have already begun to happen—local community actions will be absolutely necessary for survival, let alone to build humane democratic institutions. With climate rhetoric with minimalist action, President Obama’s success in aiding the institutional enemies of the American people’s future will provide a rather strange legacy for the first democratically elected Black President in American history.