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"Audit: Fed gave $16 trillion in emergency loans"

Ben Bernanke

via Audit: Fed gave $16 trillion in emergency loans | The Raw Story.

All this amounts to is that the Federal Reserve, as pre-planned, bought the toxic garbage of the Wall Street so-called investment banks and others and are causing the American taxpayers to work it off over decades. That's all there is to it.

None of it was necessary in the slightest. All of those institutions could have been, and should have been, taken over by the federal government to clean them out and dismantle them in an orderly fashion costing the American taxpayers nothing at all rather then tens of trillions in additional taxes.

The reason the right thing didn't happen is because the crooks pulled an inside job. Some of them have mixed feelings about it and have paid some lip-service to doing better going forward, but that's not nearly good enough.

I like government, even love government — good government. I hate bad government, and we have very, very bad government right now.

Everything that should have been done still needs doing. There is no going forward without fixing what's wrong, and there's no fixing what's wrong by ignoring it the way Barack Obama has advocated.

There were some bad regulations back in the 1970's, but simply undoing all the regulations that were undone was a scam on the people by bought-off politicians doing the bidding of economic royalists who have been busy turning America and the globe into a giant fiefdom.

Go back to the end of 2008, and nationalize all the bankrupt banksters. Clean economic house. Set things right. Completely undo all the austerity measures that are very, very stupid.

There are more things we could do. Nationalize the Fed. Issue interest- and tax-free United States Notes. Use those to completely pay off the National Debt. Put everyone who needs work, and wants work, to work via federal works programs.

There are plenty of other things that could be done, and none of them need result in any booms and busts or inflation or deflation. The money supply could be, and should be, pegged exactly to real productivity, real growth. We have the computer networking and number-crunching power to do it in real-time.

Let's stop being slow and stupid and lazy, shall we? The solutions are easy. All they take is making the decisions.

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  • Tom Usher

    About Tom Usher

    Employment: 2008 - present, website developer and writer. 2015 - present, insurance broker. Education: Arizona State University, Bachelor of Science in Political Science. City University of Seattle, graduate studies in Public Administration. Volunteerism: 2007 - present, president of the Real Liberal Christian Church and Christian Commons Project.
    This entry was posted in Libertarian Capitalism, United States Notes. Bookmark the permalink.
    • Anonymous

       The whole thing sounds like a case of mega racketeering to me. The fed and private banks create the problem then threaten the economies of the world if they do not get piles of cash. Even worse, though, is the fact that they essentially control the financial edifice through revolving door politics. Sadly most people are currently too wrapped up in one side issue or another to care or even rationally think about the root problem which is a major part of their everyday lives, namely the monetary system that is everyone's yoke.
       I believe Government should take back control of money and use it as the commons it truly is, it does after all belong to the nation and not some financial wizards and their cronies. A fee should be attached that is equivalent to all Government expenditures, with the amount of money created equaling G.D.P or actual productivity, and then afterwards the Government should reverse auction that money to private banks, with the banks that would lend it at the lowest rate above the expenditure fee winning the auction, using newly chartered banks if necessary. This would get rid of the IRS and all other forms of taxation, make it impossible to cheat on taxes, stop the government from paying interest to crooks, and create an environment where useful products were much more likely to be created than the one we have now. It would also move money from the financial casino that currently exists into Government spending, drastically reducing everyone's tax rate. Everyone would win except the financial industry which appears to be nothing but a massive swindling and racketeering scam, it is about time the entire obsolete industry was massively shrunk in size and power anyway.

      • You lost me at the following:

        A fee should be attached that is equivalent to all Government expenditures, with the amount of money created equaling G.D.P or actual productivity, and then afterwards the Government should reverse auction that money to private banks, with the banks that would lend it at the lowest rate above the expenditure fee winning the auction, using newly chartered banks if necessary.

        We don't need banks lending us money when we can create all the money we want for whatever we want. The US government under the US Constitution can create all the money it wants without borrowing a dime. In fact, dimes themselves are minted tax-and-interest free right now. All we need to do is amend the Constitution to include paper and cyber currency. Then, the government would spend money right into the population on whatever the population wants via the democratic system, which needs an overhaul as well (but that's another article).

        Do you see how United States Notes (USN) could be used in this manner? USN could be, and should be, used to completely pay off the National Debt with the possible exception that the fraudsters should not be reimbursed for losing their bonds, etc., that they fraudulently brought into existence.

        In your system/idea, the difference between the fee and amount paid in auction and then the interest rate on amounts lent out all amount to inflationary pressure without resulting in any productivity. You don't need or want that unless you're in banking or aren't comprehending why it would all be wasteful layers ripe for lazy profiteers.

        Interest is a scam. Lending at interest is a scam. The current system built upon interest is a scam. We never needed it. Banksters are milking the people. The people can put a stop to it. They don't need to pay interest to anyone for anything. The whole interest-based system needs to go. It's a trap. It's a trap used by the Plutocrats to takeover the world for their private gain at the direct, negative expense of everyone else.

        • Anonymous

           It is a different type of idea but I am saying the treasury takes back control of money and instead of income or consumption taxes they add taxes to treasury money through a fee. The government fee would be equivalent to expenditures for making roads, social security liabilities, medicare and whatever is included as a tax expenditure. Since that money would be used to create goods and services, no inflation would result.

           The reverse auction idea is twofold. One, after considering the government would get their taxes or the Government money fee first and this would be the primary fee on money, they would give it to the banks who lent it at the lowest rate. This would be the reverse of a normal bid, where the bank willing to pay the highest bid wins, in contrast the bank that would distribute money efficiently to those with good ideas at the lowest cost would win the bid.  Those 2 opposing bidding systems are night and day, the former drives prices up, while the latter drives them down. Making sure the ability to get a bank charter was not too hard would ensure healthy competition and keep the costs low while making the money lending service efficient.  The main motivation for this idea is to stop government from becoming a scapegoat when a politician uses the system inappropriately. When government does something it causes much more controversy and calls to change the system than when a private company does the same thing. In the latter case the private company may lose their charter but the former can cause the entire Government controlled banking system to be scrapped. 2nd) This is an attempt to create checks and balances between the private sector and government, something that has been sorely needed since the rise of corporations.

           The reverse auctioning of an amount of treasury money, equivalent to GDP, with a Government fee for expenditures attached, a replacement for taxes, would have many positive side effects. Government expenditures would be attached to productivity limiting the governments ability to borrow and spend on never ending wars. Money having taxes attached to it would also lessen the chance of it being hoarded since holding onto it would not put it to work paying of the tax/expenditure surcharge.

           Also as I wrote above it "would get rid of the IRS and all other forms of taxation, make it impossible to cheat on taxes, stop the government from paying interest to crooks (instead Government would earn it), and create an environment where useful products were much more likely to be created than the one we have now. It would also move money from the financial casino that currently exists into Government spending, drastically reducing everyone's tax rate."

        • We don't need "taxes to treasury money through a fee." We don't need taxes, period.

          Also, perhaps you are using different notions of inflation than I am. What you wrote is creating the money that's needed but then doubling it at least only to auction off half of the total for more than 50%. That's inflationary in my book. Sure, it can be counteracted by other means, but what's the point of that when the whole idea is still mired in unneeded and undesirable usury? Regardless though, there's no need for any of it, as I've already pointed out.

          Why continue promoting here something that is inferior? Doing that makes no sense. Don't you change when you come across a better idea? I do.

          When the government creates the money, it doesn't need taxes. Don't you see that?

          Look, taxes and loans at interest are not needed. I'm not interested in ideas promoting either or both when the idea is already out there that doesn't require them. Why are you re-promoting your idea here after hearing that it is not the best idea?

          You need to convert to the movement for tax- and interest-free United States Notes, which others and I have been promoting for years now.

          The main motivation for this idea is to stop government from becoming a scapegoat when a politician uses the system inappropriately.

          Well, to stop people from doing wrong, it is the system within hearts that must be changed.

          The democratic process needs an overhaul, as I said. Right now, it's designed to benefit the Plutocracy. The people are duped in that regard.

          In your comment, you are still talking about the government borrowing. There is no borrowing with a full USN system. There is no borrowing that needs to be prevented.

          The issue of hoarding money is also moot. The government, our government, the people's government, can both create and move money all we want.

          You need to increase your abstract reasoning.

    • Anonymous

      "Also, perhaps you are using different notions of inflation than I am. What you wrote is creating the money that's needed but then doubling it at least only to auction off half of the total for more than 50%. That's inflationary in my book."

       Based on this statement  I do not think I have explained myself very well, sorry.  It is easier to use an example. If GDP were $1000 and tax expenditures were $100 the Treasury would create $1100 and Government would spend the $100 for roads or any Government expenditure it was required for. The $1000 would be reversed auctioned to a bank who would lend it out. The reverse auction bank bid would cover employees, expenses and a profit, a profit one would expect in a competitive industry not the monopoly that currently exists. This is just an incentive to create efficient specialization in the money lending industry. My view is that this industry would cost about %1 of GDP making the total about $1110. The bank would get the %1, for example, up front to pay for banking expenses. The total economy which borrowed $1000 would then earn the $100 or %10 from Government employees; medicare workers, those on social security, construction workers who build infrastructure, etc.., and the $10 or %1 would be earned from bank employees, bank CEO's etc, which would all be used to repay the loans. In that case everyone is producing something and all money would be backed by goods and services with all money eventually being retired, therefore, no inflation would result. An extra "float" could be spent by the Government in order to counteract savings that were not available to the economy and which would leave some borrowers unable to repay loans, but this would likely only be a one time expense as savings would stabilize and remain approximately the same. Even if that was not the case it would not be hard to figure out how much extra money was needed in the economy to enable all individuals the possibility, at least, to repay their loans.

       I really did not explain what I meant very well. I think this type of system would balance Government with the private sector, making it harder for the Government to create/borrow money for wars, a silent tax and inflation source, while stopping the private sector financial industry from creating money to put in their own pockets, another more insidious tax and source of inflation. I believe this would get rid of the IRS and drastically streamline the tax system making it much more efficient and therefore less costly to all citizens while at the same time putting the cost of money, call it the commons tax, to work for all instead of just the wealthiest 1 or 2 percent. This is an idea which is essentially inspired by North Dakota banking system with the main difference being the money would not originate from the Fed/Governments  convoluted bond system and instead be issued directly by the Treasury, with the overt statement that money, which is under the Government's purview, is a part of the commons and meant to serve the general welfare of the citizens not some modern day aristocracy.

      • Well, I appreciate your patience and effort to reexplain your idea. Nevertheless, for the reasons I've already stated, I see zero point in going about things in the manner you suggest.

        Why in the world do you want bankers in the middle deciding who gets funded? The people, through a reformed democracy, can decide what they want to "fund." It doesn't need to be private even for an instant. Why should bankers make any money by lending out any money for which they were the highest and so-called most-qualified bidders? Where did they get the money to make the bids? Are we just going to give it to them or let them keep the money they've been stealing via fraud? I do not believe for a moment that bankers are better able to decide what needs to be done in our economy -- quite the contrary.

        We do not need banks, usury, or finance capitalism. They are a drain, a drag, parasitic!

        I'm not for punishing or starving or making homeless the banksters, but I'll be damned if I'm going to say they deserve better than the common people.

        • Anonymous

           I agree %100 with what you say. My view is that in many ways the current systems in place are predisposed to putting the greedy and arrogant into places of power. The monetary system, usury, gray area immorality and corruption, according to the law, contribute to perpetuating this state of affairs. I believe that the environment and systems in place today are one of the main drivers of all of this. I have put a lot of thought into what I explained and think it creates the necessary checks and balances to mitigate problems with the environment, in both the government and private sectors, in a way that would encourage more honest and humble people to step up to the plate. Of course human nature plays a role and any system is corruptible but I think some are  more likely to encourage negative traits and corruption than others. There is no usury, which I absolutely abhor, in the system I explained, only fair trade based on competition. The work that is decided to belong under the Governments control, infrastructure etc, or that is accomplished by a bank at the lowest cost and in the most efficient manner as a subcontract to the Government, in other words the people, is done as a trade, using a competitive framework, for the work done by borrowers, their employees and society at large. This is trade which is really unrelated to interest and would be better described as operating expenses, it is not really interest since it is not compounded and it is a flat rate which arises due to the costs at the core, either from government expenditures or from a lending facility. The banks would not exist under central control and therefore, those that tried to rip people off would find themselves out of business very quickly, unlike now where they are the ones profiting the most on others misery. The current Government/Corporatist enforced banking monopoly creates suffering and scarcity the world over and I think checks and balances between the private sector and the Government is extremely important, in order to limit both, ones that puts banks in service to the people instead of having the Government act in service of the banks. I also worry about the potential for unending wars when the Government and pandering politicians have too much power and can fund wars in ways where the inflation and monetary costs are not obvious, not to mention human costs. That would be much harder if expenditures were tied to the monetary system in a direct and obvious way. Anyway it is just another idea and the more ideas there are out there the better the system implemented in the future will be. The marketplace of ideas has always been one of the biggest drivers of prosperity and that is likely the case here too.

           Anyway thanks for showing me how to explain this a little more concisely, it is so easy to get caught up in my own thoughts and not realize I am glossing over extremely important concepts due to my own familiarity with this idea. I find it hard to explain this matter in a quick and easy way.

        • I am not a promoter of, or even a supporter of, the concept of checks and balances. I've studied/read both Montesquieu (it's been many decades) and Christ, and I find Christian political ideology and economics (which are actually one and the same) vastly superior. I want to see that finally put into action. It's never been done before.

          I'm no secular humanist, even though some people who call themselves Christians are so bad that they give secular humanism a good name. I might be accused of being a Christian humanist in some ways, but that would be to misunderstand the nature of the relationship between God and humanity. We can improve and should, even must, but God allows and even encourages and facilitates if we're willing. I've experience this firsthand in unmistakable ways, even indescribable ways.

          As for usury, if lenders lend at interest, it's usury even if it is only enough to cover the banks overhead.

          On your auction idea, what's to prevent the development of a banking monopoly? Are you going to limit what a bank may bid on? Who's going to certify the banks as qualified to bid? How would this serve to eliminate the private-sector elitism from which the nation currently suffers?

          The system I've suggested as a starting position faces none of these issues.

        • Anonymous

           Me and you are likely in total agreement in spirit but maybe not in form. I am sure our understanding of the best outcome possible converges but that our views on how to best get there are mildly divergent, in my view anyway. Nothing wrong with that. I hope a massive leap forward away from greed and towards a generosity of spirit does occur because, in my view, both the best off and the worst off would become better off, in both the spiritual and material sense. Anything that causes a step in that direction, one that creates an environment to encourage the generosity of spirit instead of exacerbating selfish greed, is supported by me. If the system Lincoln used were implemented today, I would definitely support it, I am just a little reticent about the idea, though, based on its historical use of funding war, I find that aspect worrisome.

           As far as interest goes, it would not be needed in what I explained. The bank that bid the lowest price to find businesses who could efficiently put people to work and use material resources in order to create the products and services used by society and individuals would win, it could easily be based on a flat rate, operating costs plus a reasonable profit, in the exact same way and with the same expectations as any industry working within a competitive framework. Any individual who had the ability to link Government treasury notes to a business owner with an idea, by reviewing the business plan, products and services produced and there value in the economy in relationship to the resources needed to produce them, would qualify, as long as they had shown themselves, through prior graduated dealings, to be honest and trustworthy. Specific metrics could be used by Government in order to avoid nepotism and/or corruption when choosing lender subcontractors and for monitoring the lenders themselves. If fraud was discovered, in either case, then legal action, criminal and/or civil, would be initiated. As I said before this would take Government out of the hot-seat and make it hard to undermine the system due to either public anger or for concerted selfish ambitions or even both being leveraged together. Also the infrastructure essentially already exists and could grow, in the competitive sense, from there in such a way that the entire financial industry would not become an enemy of the idea, though, at first, many likely would. It is a way of turning the current system, that destroys prosperity, into a system that would destroy its own essence and at the same be put in service to all, where it belongs, through a "commons tax" used for Government expenditures and due to increased efficiency.
           
           Reverse auctions give the contract to the individual or company that will provide the service to the public at the lowest cost and therefore it drives costs down on average. It is the opposite of the typical auction where the highest bidder wins, a system which, relative to reverse auctions, generally drives the costs of services up in an attempt to recoup capital outlays.

           In my view technological advancements are going to force an economic paradigm change much greater than the one which occurred when feudalism turned into mercantilism and eventually capitalism within the next century. There will likely come a point in time where it is widely realized that productive machinery, that needs very few operators, and potential productive  capacity is being unused, while at the same time people have no work and are going hungry, living in poverty. This collective cognitive dissonance will force a change in worldviews analogous to the change in worldviews which occurred when feudalism changed into mercantilism and then capitalism or when hunter gatherers entered into the agricultural revolution, long ago. Any changes that occur before then will be a stepping stone on this path and so I am personally open to many options. I just believe that as much effort as possible should be put into finding the optimal "stepping stone". As far as the future economic paradigm change goes, I have no idea what that will look like when done, or even if it will be positive, but I am pretty sure it will occur in the next century. I believe it is being foreshadowed now, but how long the status-quo can cling on by its fingernails is anyone's  guess. Due to that any step in the direction of increased prosperity for the average person is supported by me.