The Oligarch’s Stooge

In tonight’s California debate, McCain again displayed his utter lack of even a rudimentary understanding of economics. His shortcoming is somewhat muted since it is shared with two of the other combatants, all of the moderators and most of the assembled audience.

Hey Moe!

About 31 minutes into the debate, Volcanic Johnny is sure that there is someone to blame criminally for the credit crisis that is currently wreaking havoc in our financial markets. The problem (he says) is that we aren’t regulated enough (I know…. this from the Reagan conservative). He’s just sure that a new oversight agency and more forms to sign when you get a loan is what can prevent future crises. While it is typical of his reactionary outlook and illustrative of the crisis-oriented narrative justifying his candidacy, if he is really interested in understanding the problems, he should look at the Fed policy on interest rate targets during his Senate tenure that made money cheap and caused these problems.

lead crook
Bernanke talks over the head of the legislators who are looking out for us….

When money is cheap, the banks and financial institutions have access to inflated amounts of capital. That translates into a surplus of available capital for loan, and drives the interest rate down. The reduced rates fuel the borrowing activities of businesses and households. Loans are ‘securitized’ and sold off in large bundles, and ratings agencies stamp the stuff ‘AAA’. This allows the proceeds to be returned to the lending institutions, and loaned out again. And securitized again…….

The ‘virtuous circle’ is repeated endlessly. To a person who makes a living in the financial markets, wealth flows in. Every mortgage has a fee for the broker. The securitizing agency gets it’s cut, and the banks make their loan fees. Real estate agents benefit greatly; Stock and commodities brokers have huge windfalls of fees as the surplus money chases the finite assets.

The multiplication of wealth is frenetic, fueled by the cheap credit made available by the central bank, and benefiting the corporate interests, particularly in banking and financial sectors. The lower classes – those who ‘work hard, not smart’ (or lack access to the large pools of cash needed to work smart) – get left behind, as the relative wealth of the financial class balloons to embarrassing proportions.


This is the supreme evil of central banks. It is the engine of corporatism. It allows the financial class to amass an insurmountable control over the nation’s wealth, which facilitates the control of all other substantial assets. It allows the manipulation of our mass media (including the bloggers supported by partisans to spout the party line), functional control of the productive capacity of the nation and the ability to buy every political office of any consequence.

Our minds are pacified through the media as they control the parameters of acceptable debate, and we are goaded into fighting over trivia. And while the great unwashed toil away in fear of the financial calamity they worry is around the corner, the central bank powers the corporatist oligarchs through good times and bad.

John McCain asks if there is anyone criminally to blame. Sure there is, but they are long since dead. Representative Carter Glass, a Democrat from Virginia and Senator Robert Latham Owen, a Democrat from Oklahoma were the lead sponsors on the bill that saw 341 Representatives and Senators vote to hand over this incredible power to the so-called ‘money interests’.
[Federal Reserve Act of 1913]

The folks who pushed low interest, easy money loans at the local broker’s office? They are just doing what the Federal Reserve wanted them to do, implicit in it’s loose monetary policies. The banks who underwrote it; the brokerages that securitized it; the ratings agency that gave it the big thumbs up? Same answer. The problem is the Fed, but the responsible parties are those elected representatives of the people who allow this travesty to continue.

Now I think it’s time for some straight talk.

Senator McCain. The closest thing I can find to criminal culpability is the corrupt political class who performs the bidding of the oligarchs; who feed their wealth from manipulation of monetary policies, and not from their own labors or ingenuity. I can’t blame the oligarchs alone – who wouldn’t take all of the material wealth that they can legally lay hand to? The criminal culpability, if such an animal exists in this situation, lies at the feet of our legislators who have abdicated their responsibility to control our monetary policy by farming the proverbial chicken coop out to the fox – and who haven’t even kept up with the responsibility of keeping an eye on the fox! The problem – my friend – is you, along with your peers who feign to represent the interest of us chickens. Quite frankly, us chickens is tired of you.

How’s that for straight talk, my friend?

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