THE UNIVERSAL ECONOMY UNIT VIII: STRATEGIES OF THE RICH CLASS WAGING WAR ON AMERICA
“The issue of debt cannot be segregated from the overall organization of society. Now, just imagine if instead of banks and their bondholders holding student loans and profiting from it, if the government had made these loans, the government could easily forgive them, because it would be forgiving money owed to itself. But when you privatize not only education, but also student loans, that is what has led to the student loan crisis. It was completely unnecessary. But Joe Biden, as senator for the credit card companies centered in Delaware, pushed it through, saying, “We’ve got to make education a profit center for the banks. Our purpose is not to educate the population, it’s to create a situation where in order to get a job, in order to get a union card, they have to go into a lifetime of debt to the banks that cannot be wiped out by bankruptcy.” That’s the Democratic Party policy. And it’s what’s tearing the country apart. And it’s unnecessary, it’s Thatcherism.” – Michael Hudson, distinguished Research Professor of Economics at the University of Missouri, Kansas City.
Think about the above statement. Our young people are being forced into a lifetime of debt servitude because the banking and financial industry – the predatory, parasitic rich – want to use them endlessly as interest bearing mechanisms. And not only is it totally unnecessary, it is the joint “accomplishment” of both the Establishment “Democratic” and the Republican parties – the United Parties of the Financiers.
Because the United States is a sovereign nation with a sovereign fiat money, it could simply create the money needed, interest and debt free, to pay for student’s college tuition. In fact, it did so for many years under the G.I. Bill. All returning military veterans could attend college, tuition free, and the return on investment for America was enormous. But the private banking industry – the parasitic rich – saw young people as a gullible target to be bled. The United parties of the Financiers were told to act and America’s youth were turned into hosts – victims for exploitation. Students were forced to borrow bank created credit rather than be given sovereign government created money.
Yet student loans are only one example of how the financial industry has turned America into its host. To understand this, we must take a moment to review earlier units in this series regarding the use of sovereign fiat money by a sovereign nation like the United States. The following are axiomatic:
- The U.S. Government, through the U.S. Treasury and the U.S. Federal Reserve Bank (the Fed) is the creator, the originator, of all of the nation’s money. The private banking industry creates credit and debt.
- The “deficit” never needs to be repaid. In fact, it must not be repaid or the private sector economy will eventually go into recession or depression for lack of money.
- The U.S. Government can never run out of money. In fact, in 2008 the United Parties of the Financiers (at that point all 3 branches of government were controlled by “Democrats”) authorized the Fed to create over 16 trillion interest free, debt free dollars to bail out corrupt Wall Street banks. They approved nothing to help the millions of struggling families who were the victims of the parasitic banking fraud.
- The U.S. Government never has to default on its “debt.” It can create all the money it needs to pay for all services required by society. In fact, government “debt” doesn’t actually exist. It is a misleading use of terminology. Government “debt” is private sector operational funds and savings.
- The U.S. Government never has to borrow money. It is the constitutionally authorized creator of the nation’s money. Within the constraints of productive capability (inflation/deflation) the government can supply itself with all the money it needs.
- The U.S. Government never needs to collect taxes to pay for its own operation. It created the money people and corporations use to pay their taxes in the first place. Taxes enforce the legitimacy of the dollar and, before the Financiers united the Democratic and Republican parties against working Americans, were used to reduce extreme inequality through progressive taxation.
Let us now return to the financial war destroying the lives of working Americans. People envision parasites as draining their host’s lifeblood and energy. But the smartest parasites also take over the brain of the host. They make the brain of the host think the parasite is a normal part of the body to be protected. This is what the rich – the parasitic Wall Street banks, the parasitic insurance industry, and the parasitic financial industry – have done to working Americans. Since the time of Ronald Reagan, expertly crafted, emotion grabbing, poll tested, endlessly repeated, sound bite lies have been used to manipulate the brains (and extort the labors) of the people of America.
We all know the lies: Government is the problem, government spending is out of control, the government is broke, government must be run like a private business, the government can’t create jobs, only private business can create jobs, public employees are lazy, the rich are the “job creators,” public school teachers are overpaid, our “failing public schools,” regulations kill jobs, taxes kill jobs, the deficit is out of control (as they pass more tax cuts for the rich), we are indebting our grandchildren, China will own us, and on and on.
The most insidious of all these lies is “the government is broke” (a physical impossibility in a sovereign nation with a sovereign fiat monetary system) and “government spending is out of control.” It is through these falsehoods that the private banking industry is able to prevent the U.S. Treasury and Federal reserve from creating interest free, debt free, money to serve the peoples needs and forcing them to borrow interest and debt accruing credit from Wall Street banks and financiers. This is what has caused the student debt crisis, it is what is behind the so-called “public-private partnerships for infrastructure, and it is absolutely parasitic. In the words of Michael Hudson:
What you are seeing is a financial grab of infrastructure that is taking place by the ability of commercial bankers to prevent the central bank [the public U.S. Federal Reserve Bank] from creating credit.
And this is [results in] vast new bank loans. Most of the infrastructure that is being purchased—the water and sewer systems, real estate—is all being bought with borrowed money from the banks. So, that, first of all, the commercial bank political strategy is to block the central bank from creating money. And then saying the governments need to borrow from the commercial banks and need to pay interest to the commercial banks, instead of issuing interest-free debt [money]. And then, to pay the commercial interest, they have to sell off the infrastructure. And the result is that bankers today are able to seize the property that in the past it took a military invasion to seize.
With the able (and well financed) assistance of every presidential administration since Ronald Reagan, and members of congress from both political parties, the Financial Industry is now the de facto Government of the United States of America. We are watching the life-long indebtedness of our youth, we are watching the privatization of our roads, our public schools, our water utilities, our seaports and airports, our prisons, our national parks and public lands, our public pensions and our public buildings. We are watching the final stages of the privatization or outright destruction of social security, Medicare and Medicaid. All are to be profit centers for the rich. The words of Warren Buffet bear repeating: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
The Trump Administration is simply the culmination of 40 years of this war on the people and democracy of America. Final victory for the rich is not inevitable but it is urgent that “we the people” come together for the common good.
UE Unit VIX will discuss: Fighting Back Against the Rich Class War Being Waged on America