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THE UNFULFILLED PROMISE
Posted by Time for change in General Discussion (1/22-2007 thru 12/14/2010)
Fri Mar 28th 2008, 10:18 PM
To believe that we as a nation have to protect the wealthy from their failures in order to enjoy a stable economy just seems to me like the epitome of foolishness. How much extreme income inequality, joblessness and poverty does our nation have to ex
As I write the title to this post I imagine some corporate “journalist” reading it and a tape starting to play in his or her mind, saying “Uh oh, conspiracy theorist alert!”

The term “conspiracy theorist” is what the gatekeepers of the status quo use to connect in people’s minds those who are skeptical of so-called “conventional wisdom” with “left wing lunatics”. Here is the formula that everyone must be made to understand:

Skepticism of conventional wisdom = conspiracy theorist = left wing lunatic.

I wouldn’t ordinarily consider the term “conspiracy theorist” to be offensive, if it wasn’t uttered with such contempt and used to imply that I am a lunatic. By the plain English meaning of the phrase, all it refers to is someone who thinks seriously about conspiracies. Anyone who doesn’t recognize that the history of the world is filled with conspiracies of major importance hasn’t read much history. Any American who doesn’t recognize that U.S. history is filled with conspiracies of major importance simply isn’t paying much attention.

Consider just our overthrow of the governments of sovereign nations, for example. Beginning in 1893, we overthrew, helped to overthrow, or went to war against the legitimate governments of dozens of sovereign nations, including Hawaii (1893), Cuba (1898), Puerto Rico (1898), the Philippines (1899-1902), Nicaragua (1909), Honduras (1912), Iran (1953), Guatemala (1954), Indonesia (1965), Vietnam (1961-73), Chile (1973), Panama (1989), and Iraq (2003-???). And William Blum writes in “A Concise History of US Global Interventions, 1945 to the Present”, about United States intervention in 11 different Latin American countries during the Cold War.

I note the above as an introduction to this discussion of the Federal Reserve because I want to explain why I am skeptical of “conventional wisdom”. Each of the above noted events were either secret at the time they were carried out, or they were justified with lies. Though they are now so well documented by historians that they cannot be refuted, anyone who would have tried to discuss them at the time they were carried out would have been castigated for lack of patriotism and branded a “conspiracy theorist”.

My point then is that people who are skeptical of “conventional wisdom” are generally not lunatics – they are usually simply independent minded people who have been around long enough and who have paid enough attention to know that “conventional wisdom” should not be automatically accepted as reality.


What is the purpose of the Federal Reserve?

I’m not an economist, I don’t know much about economics, and I’ve generally found reading on the subject to be dry, boring and very difficult to understand. Nevertheless I recently started reading “The Creature from Jekyll Island – A Second Look at the Federal Reserve”, by Edward Griffin, because it was highly recommended to me by a fellow DUer, Larry Ogg.

Griffin describes the Federal Reserve as a cartel of private banks – meaning a group of banks joined together in order to maximize profits by reducing competition through the creation of a monopoly. In the case of the Federal Reserve, that particular cartel was legalized in 1913 with the enactment of the Federal Reserve Act of 1913. Of course the U.S. public wouldn’t consciously enable the creation of a legalized cartel. So the real purpose of the Federal Reserve System had to be disguised with a purported purpose. Griffin explains the concept like this:

To cover the fact that a central bank is merely a cartel which has been legalized, its proponents had to lay down a thick smoke screen of technical jargon focusing always on how it would supposedly benefit commerce, the public, and the nation; how it would lower interest rates, provide funding for needed industrial projects, and prevent panics in the economy. There was not the slightest glimmer that, underneath it all, was a master plan which was designed from top to bottom to serve private interests at the expense of the public.


The origins of the Federal Reserve System

Griffin describes the idea for the Federal Reserve System as originating in a highly secret meeting of seven of the wealthiest men in the world, taking place at Jekyll Island, off the coast of Georgia in 1910. The seven men included one of our nation’s most powerful U.S. Senators, Nelson Aldrich, and six bankers. He uses several sources to document the highly secret nature of the meeting, including an article written by one of its participants, Frank Vanderlip, 22 years after the passage of the Federal Reserve Act:

I do not feel it is any exaggeration to speak of our secret expedition to Jekyll Island as the occasion of the actual conception of what eventually became the Federal Reserve System… We were told to leave our last names behind us… We were instructed to come one at a time… where Senator Aldrich’s private rail car would be in readiness…

It was the names of all printed together that would have made our mysterious journey significant in Washington, in Wall Street, even in London. Discovery, we knew, simply must not happen, or else all our time and effort would be wasted. If it were to be exposed publicly that our particular group had got together and written a banking bill, that bill would have no chance whatever of passage in Congress.


A brief summary of how the System works

Griffin goes into great detail as to how the system works, and I’ll skip the great majority of that. This is how he summarizes the plan that emerged from the Jekyll Island meeting:

What emerged was a cartel agreement with five objectives: 1) stop the growing competition from the nation’s newer banks; 2) obtain a franchise to create money out of nothing for the purpose of lending; 3) get control of the reserves of all banks so that the more reckless ones would not be exposed to currency drains and bank runs; 4) get the taxpayer to pick up the cartel’s inevitable losses; 5) and convince Congress that the purpose was to protect the public.

Griffin explains objective # 4 in a chapter titled “The Name of the Game is Bailout”:

A primary objective of that cartel was to involve the federal government as an agent for shifting the inevitable losses from the owners of those banks to the taxpayers. That of course is one of the more controversial assertions made in this book. Yet, there is little room for any other interpretation when one confronts the massive evidence of history since the System was created.

He provides numerous examples of how this has worked. One of the most striking examples was the failure of Continental Illinois, our nation’s 7th largest bank, when it failed in 1982. Griffin describes how its irresponsible policies led to huge profits even as the stage was being set for a massive failure. He describes the details of the failure, and then:

This was the golden moment… Without government intervention, Continental would have collapsed, its stockholders would have been wiped out, depositors would have been badly damaged, and the financial world would have learned that banks not only have to talk about prudent management, they actually have to adopt it. Future banking practices would have been severely altered, and the long-term economic benefit to the nation would have been enormous. But with government intervention, the discipline of a free market is suspended, and the cost of failure or fraud is passed to the taxpayers… Banks can operate recklessly and fraudulently with the knowledge that their political partners in government will come to their rescue when they get in trouble…

The final bailout package was a whopper. Basically, the government took over Continental Illinois and assumed all of its losses ($4.5 billion).

Doesn’t this sound eerily familiar to the recent Federal Reserve actions with regard to Bear Sterns?

Even as the Bush administration insists it won't risk public funds in a bailout, American taxpayers may already be liable for billions of dollars stemming from Federal Reserve and Treasury efforts to quell a financial crisis.

History suggests the Fed may not recover some of the almost $30 billion investment in illiquid mortgage securities it received from Bear Stearns Cos., said Joe Mason, a Drexel University professor who has written on banking crises….


The record of the Federal Reserve System

If the Federal Reserve System really does serve the purpose of stabilizing our economy then one should be able to point to evidence of that. At least that’s what a “conspiracy theorist”… I mean a skeptic would say.

Griffin summarizes the record of the Federal Reserve System in stabilizing our economy:

Since its inception, it has presided over the crashes of 1921 and 1929; the Great Depression of ’29 to ‘39; recessions in ’53, ’57, ’69, ’75, and ’81; a stock market “Black Monday” in ’87 (Is it just a coincidence that all those depressions and recessions began during Republican presidencies?); and a 1000% inflation….

The consequences of wealth confiscation by the Federal-Reserve mechanism are now upon us. In the current decade (the book was copyrighted in 1994), corporate debt is soaring; personal debt is greater than ever; both business and personal bankruptcies are at an all-time high; banks and savings and loan associations are failing in larger numbers than ever before; interest on the national debt is consuming half of our tax dollars…

Griffin concludes from this:

That is the scorecard 80 years after Federal Reserve was created supposedly to stabilize our economy! There can be no argument that the System has failed in its stated objectives… There has been more than ample opportunity to work out mere procedural flaws. It is not unreasonable to conclude, therefore, that the System has failed, not because it needs a new set of rules or more intelligent directors, but because it is incapable of achieving its stated objectives…. That leads to the question: why is the System incapable of achieving its stated objectives? The painful answer is: those were never its true objectives… It becomes obvious that the System is merely a cartel with a government façade… When there is a conflict between the public interest and the private needs of the cartel – a conflict that arises almost daily – the public will be sacrificed. That is the nature of the beast. It is foolish to expect a cartel to act in any other way….

This view is not encouraged by Establishment institutions and publishers. It has become their apparent mission to convince the American people that the system in not intrinsically flawed.

William Greider, in “Secrets of the Temple”, reaches a similar conclusion:

At the time, the conventional wisdom… was that a government institution would finally harness the “money trust,” disarm its powers, and establish broad democratic control over money and credit… The results were nearly the opposite. The money reforms enacted in 1913, in fact, helped to preserve the status quo… Once the Fed was in operation, the steady diffusion of financial power halted. Wall Street maintained its dominant position – and even enhanced it.


My assessment

As I said above, I’m not an economist, so I am certainly less qualified to evaluate Griffin’s arguments than a lot of other people.

What about the record of Federal Reserve System failures that Griffin speaks of? Well, I presume that those who defend the Federal Reserve System would say that our economic history would have been worse without the System, and that it was worse before the System was initiated in 1913. I have no way of evaluating that. So I can’t prove to myself that Griffin is right. But as for those who would claim that we would be worse off without the Federal Reserve Act, I would expect them to be able to offer some proof of that, or at least some strong evidence in favor of that statement. In the absence of such evidence why should we have a system that requires our federal government to bail out wealthy banks when they get into trouble?

When large wealthy banks are on the verge of failure, they generally lobby the federal government to bail them out by claiming that if they fail our economy will suffer grave damage, there will be millions of unemployed, etc. etc. etc. Does it seem reasonable that banks would make such claims if they weren’t true? …. Ok, forget I said that.

The main reason I’m inclined to believe that Griffin’s account is right on the money for the most part, other than the fact that his book is extremely well written and meticulously documented with relatively easy to understand examples, is this: The idea that our government giving billions of dollars to super wealthy corporations because of their failures somehow serves to stabilize our economy is…. well…. It sounds so similar to Reagan’s theory of “trickle down economics” or John McCain’s economic stimulus plan of cutting the corporate tax rate from 35% to 25%, claiming that such a tax cut is “essential to U.S. competitiveness”, “will expand the U.S. economy, creating jobs and opportunities for prosperity”, and “lead to higher wages”. To believe that kind of stuff is almost in the same category as believing the Republican assertion that taxing inheritances even beyond $2 million is necessary to prevent ordinary families from going bankrupt.

To believe that we as a nation have to protect the wealthy from their failures in order to enjoy a stable economy just seems to me like the epitome of foolishness. How much extreme income inequality, joblessness and poverty does our nation have to experience before we wake up and realize what’s going on?
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The Unfulfilled Promise
The Unfulfilled Promise of the American Dream: The Widening Gap between the Reality of the United States and its Highest Ideals




Time for change


Notwithstanding the lofty sentiments and purpose of the U.S. Declaration of Independence, the reality of the United States of America did not then – and never has – lived up to its ideal. Our nation remains today a long way from fulfilling the promise implied by those ideals. Yet, our Declaration was a great start, and it has long shone as a beacon of hope for people all over the world.

Throughout our history, while many have striven to close the gap between our highest ideals and the reality of our nation, others have focused on the accumulation of private wealth and power, at the expense of everyone else. In recent decades the latter have gained much ground, leading to increasing imperialism abroad and deteriorating democracy at home, characterized by routine (and legal) bribery of our public officials, the fusion of government and private corporate interests (corporatocracy), a corrupt election system largely in the hands of private corporations, a corporate controlled communications media, and the widespread acceptance of Executive Branch secrecy, routinely justified with little if any questioning, by the magic words “national security”. All of this is rapidly turning our country from the democracy proclaimed at our founding into a plutocracy (government by the wealthy and for the wealthy). The result is the most obscene wealth gap our country has ever known, the highest imprisonment rate in the world, rampant militarism, routine flaunting of international law, the least efficient health care system in the developed world, a pending environmental catastrophe that threatens to destroy the life sustaining forces of our planet, and myriad other problems that threaten to destroy our nation and tyrannize our people.

My new book, The Unfulfilled Promise of the American Dream – The Widening Gap between the Reality of the United States and its Highest Ideals, explores the roots and consequences of the demise of our democracy, and why most Americans have been unable to understand this process or even become aware of it. A good understanding of why and how we have deviated so greatly from the ideals of our nation is the first and necessary step towards getting back on the right track and revitalizing our society.

The book is currently being sold in electronic PDF format and can be purchased at http://www.unfulfilledpromise.com/Buy-the-... for $3.99. It will also soon be available in Amazon Kindle format. DU members who cannot afford to buy the book but would like to read it can pm me with your e-mail address, and I will send you a free PDF copy.

I’ve previously posted on DU a slightly earlier version of the introduction to the book, which is also posted at my site. Here is the Table of Contents, followed by a brief description of the three parts of the book:


TABLE OF CONTENTS

Introduction
Acknowledgements
Prologue – What is Wrong with the United States of America?

Part I – Root Causes of the Impending Demise of American Democracy
Chapter 1 – Legalized Bribery
Chapter 2 – Human Psychological Factors
Chapter 3 – Corporatocracy
Chapter 4 – Corporate Control of Media
Chapter 5 – Corrupt Election System
Chapter 6 – Government Secrecy
Chapter 7 – American Exceptionalism

Part II – A Sampling of Imperialist Actions
Chapter 8 – Slavery and its Legacy
Chapter 9 – Early U.S. Imperialism
Chapter 10 – U.S. Imperialism in Cold War
Chapter 11 – Iraq War and Occupation
Chapter 12 – Afghanistan War

Part III – Consequences
Chapter 13 – Election of George W. Bush
Chapter 14 – War and Imperialism
Chapter 15 – Class Warfare
Chapter 16 – Predator Financial Class
Chapter 17 – Shock Therapy
Chapter 18 – Contempt for Int. Law
Chapter 19 – The “War on Drugs”
Chapter 20 – Climate Change
Chapter 21 – “War on Terror”
Chapter 22 – Health Care
Chapter 23 – Unaccountable government
Chapter 24 – Response to 9/11 Attacks
Epilogue


PART I – Root Causes of the Impending Demise of American Democracy

It is somewhat difficult to separate the causes of our problems from their consequences, since they combine to form a long chain of cause leading to consequence, leading to more consequences, etcetera. Nevertheless, it seems worth while to identify the root causes of our problems, those that occur early in the chain and lead to so many of the tragic consequences we see today. The only chance we have of reversing the demise of our democracy is through addressing and attacking its root causes.

At the top of the list is the systematic bribery of public officials by the powerful corporations (Chapter 1) whom our government is charged with regulating in the public interest. Instead of calling it bribery, we call it “campaign contributions”, but what we call it isn’t as important as what it is. It is hard to fathom how democracy can survive when such a practice is legal and condoned.

Working in tandem with our system of legalized bribery is the nature of the people who inhabit our country. That is not to say that Americans are inherently substantially different than any other people. Human beings are imperfect, and that is probably a major reason why in a world where civilization began more than five millennia ago, the oldest written national framework of government in the world today – the Constitution of the United States of America – is only a little more than two and a quarter centuries old. Chapter 2 explores the roles of basic human needs, authoritarianism, psychological defense mechanisms used to prevent us from perceiving reality as it is rather than as we’d like it to be, and corrupted ideologies in causing us to passively accept the accumulation of power in the hands of ambitious and ruthless individuals who care about little else than expanding their own wealth and power.

When bribery of public officials is tolerated as an inevitable aspect of public life, government inevitably grows close to the wealthy interests that shower it with money in return for legislative and other favors. A malevolent symbiosis grows between the state and corporate power, resulting in rule by an oligarchy that is highly detrimental to the lives of ordinary people (Chapter 3). Using their accumulated wealth and power to manipulate our legislative process, the oligarchy grabs for more and more control of the communications media (Chapter 4) that are used to control the information available to and shape the attitudes of our nation’s people, in pursuit of their own narrow interests.

Since the 1980s an orchestrated campaign has been underway to demonize “big government”, thereby paving the way for private corporate control over more and more functions that were previously deemed intrinsic functions of government. Among those functions is the running of public elections (Chapter 5) – the function that symbolizes democracy perhaps more than any other single function. Consequently, the purging of selected registered voters from our computerized voter rolls has become a routine recurring event throughout much of our country, and without a doubt determined the results of the 2000 – and probably 2004 as well – presidential election. Just as bad, more and more of the counting of votes in our public elections have been turned over to private corporations, which count our votes using electronic machines using secret software to produce vote counts that cannot be verified by anyone.

Bribery, the fusion of government and private interest, fake and biased news, and corrupt elections are not things that government and its corporate allies want us to know about. Consequently, they construct walls of secrecy (Chapter 6) to keep us from obtaining information that sheds light on their activities. The perfect phrase for facilitating this is “national security”. When our government tells us that the “national security” requires that certain things be kept secret from us, the understanding is that to question such a pronouncement is unpatriotic, and to actually attempt to obtain the “secret” information may be treasonous.

But indefinitely maintaining secrets from the American people can be very difficult, because at least some people want to know what their government is up to. So in addition to the formal mechanisms of secrecy, informal mechanisms are constructed (Chapter 7) to keep vital information away from us. One of the primary methods for doing this is to make certain sensitive subjects taboo – that is, to create the widespread belief that discussion of these topics is so outside the bounds of acceptable human discourse that anyone who discusses them should be shunned by society, or worse. The most common issue that falls into this category is any discussion that sheds light on the disparity between American ideals and the reality of life in our country today.


PART II – A Sampling of Imperialist Actions in U.S. History

Notwithstanding the fact that our founding document says that “all men are created equal” and speaks of the inalienable rights of humankind, the United States has throughout its history partaken of massive exploitation of other peoples.

It is estimated that at the time of our birth, 18% of our population was black slaves. In our expansion westwards during the late 18th and 19th centuries, we decimated the original inhabitants of our continent, and often treated them with great cruelty. In 1846 we manufactured an excuse for war with our neighbor Mexico, in which we continued to expand our country westwards and southwards. In 1893 we began our overseas imperialism with the conquest of Hawaii. Our overseas expansion was greatly accelerated in 1898 with our participation in the Spanish-American War, which led to our conquest of Cuba, Puerto Rico, and the Philippines. With our arrival at world superpower status at the end of World War II, we began the Cold War, which led to and served as a rationalization for covert and/or direct military actions against myriad foreign nations over the next 46 years. With the September 11, 2001 attacks on our country, we declared a perpetual “War on Terror”, which served and continues to serve as an excuse to invade and occupy Iraq and Afghanistan, nations that posed no threat to us. We do not know when or if this perpetual war will ever end. We don’t know how many additional imperial conquests it will lead to.

Most Americans don’t think much about all this. Many of these actions are done in secrecy, and the American people don’t find out about them until many years later – or we never find out about them at all. Those that we do know about are spun into the most favorable light, to make them seem benign or even noble.

But these actions come at great costs: in the lives of our soldiers; in the ruined lives of the peoples of the victim countries; in trillions of dollars cost to our people and their future generations; in our international reputation; in anti-American hatred leading to terrorism; and, to our democracy itself. For how can a nation claim to believe in the inalienable rights of humankind specified in its founding document, while making a mockery of that belief in the way it treats other peoples? For that reason alone it is worth while to take a brief look at our long history of imperialist actions.


PART III – Consequences

In the Prologue I give a brief account of what I see as some of the worst and tragic consequences of the root causes that I discuss in Part I – to enable the reader to see where this book is heading. When elections of our public officials are for sale to the highest bidder… when our public officials are so addicted to the “campaign contributions” of their wealthiest constituents that they develop a symbiotic relationship with them… when our communications media are owned and controlled by an oligarchy of wealthy elites… when our citizenry lack the ability to differentiate propaganda from reality… when we allow machines provided by private corporations to count our votes using secret electronic software… then we should expect that the consequences will not be pretty or comfortable for the vast majority of our citizens.

In Part III, I explore those consequences in much greater detail, in the hope that the reader will agree with me that these are very serious problems, and that they must be successfully addressed if our country is ever to fulfill the promise of its ideals, or even make progress in that direction. When enough Americans recognize our problems as problems, stripped of the gloss and spin put on them by our oligarchy, they will rise up and do something about them. Until then there will be no progress, and we are very likely to head in the direction of all the former empires of our planet, ending in chaos, widespread catastrophe, suffering, and ignominy.

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