The Bailout and What's Next
Dear Friend,
Yesterday marked a day that will go down in history,
when Congressional Democrats and Republicans alike took
on full responsibility to protect the interests of
taxpaying Americans, and defeated the deceptive bail out
bill, defying the dictates of the Administration, the
House Majority Leadership, the House Minority Leadership
and the special interests on Wall Street.
Obviously Congress must consider quickly another
course. There are immediate issues which demand attention
and responsible action by the Congress so that the
taxpayers, their assets, and their futures are
protected.
We MUST do something to protect millions of Americans
whose homes, bank deposits, investments, and pensions are
at risk in a financial system that has become seriously
corrupted. We are told that we must stabilize markets in
order for the people to be protected. I think we need to
protect peoples' homes, bank deposits, investments, and
pensions, to order to stabilize the market.
We cannot delay taking action. But the action must
benefit all Americans, not just a privileged few.
Otherwise, more plans will fail, and the financial
security of everyone will be at risk.
The $700 billion bailout would have added to our
existing unbearable load of national debt, trade
deficits, and the cost of paying for the war. It would
have been a disaster for the American public and the
government for decades and maybe even centuries to
come.
To be sure, there are many different reasons why
people voted against the bailout. The legislation did not
regard in any meaningful way the plight of millions of
Americans who are about to lose their homes. It did
nothing to strengthen existing regulatory structures or
impose new ones at the Securities and Exchange Commission
and the Federal Reserve in order to protect investors.
There were no direct protections for bank depositors.
There was nothing to stop further speculation, which is
what brought us into this mess in the first place.
This was a bailout for some firms (and investors) on
Wall Street, with the idea that in doing so there would
be certain, unspecified, general benefits to the
economy.
This is a perfect time to open a broader discussion
about our financial system, especially our monetary
system. Such a discussion is like searching for a needle
in a haystack, and then, upon finding it, discussing its
qualities at great length. Let me briefly describe the
haystack instead.
Here is a very quick explanation of the $700 billion
bailout within the context of the mechanics of our
monetary and banking system:
The taxpayers loan money to the banks. But the
taxpayers do not have the money. So we have to borrow it
from the banks to give it back to the banks. But the
banks do not have the money to loan to the government. So
they create it into existence (through a mechanism called
fractional reserve) and then loan it to us, at interest,
so we can then give it back to them.
Confused?
This is the system. This is the standard mechanism
used to expand the money supply on a daily basis not a
special one designed only for the "$700 billion"
transaction. People will explain this to you in many
different ways, but this is what it comes down to.
The banks needed Congress' approval. Of course in this
topsy turvy world, it is the banks which set the terms of
the money they are borrowing from the taxpayers. And what
do we get for this transaction? Long term debt
enslavement of our country. We get to pay back to the
banks trillions of dollars ($700 billion with compounded
interest) and the banks give us their bad debt which they
cull from everywhere in the world.
Who could turn down a deal like this? I did.
The globalization of the debt puts the United States
in the position that in order to repay the money that we
borrow from the banks (for the banks) we could be forced
to accept International Monetary Fund dictates which
involve cutting health, social security benefits and all
other social spending in addition to reducing wages and
exploiting our natural resources. This inevitably leads
to a loss of economic, social and political freedom.
Under the failed $700 billion bailout plan, Wall
Street's profits are Wall Street's profits and Wall
Street's losses are the taxpayers' losses. Profits are
capitalized. Losses are socialized.
We are at a teachable moment on matters of money and
finance. In the coming days and weeks, I will share with
you thoughts about what can be done to take us not just
in a new direction, but in a new direction which is
just.
Thank you,
Dennis
www.Kucinich.us
216-252-9000 877-933-6647
