"The stated objective of the bank bailout
programs is to alleviate the banks' burden of bad debts and
non-performing loans. In actuality what is happening is that these
massive amounts of money are being used by a handful of institutions to
consolidate their position in
global banking.
The exposure of the banks, largely the result of derivative trade, is
estimated in the tens of trillions of dollars, to the extent that the
amounts and guarantees granted by the Treasury and
the Fed will not
resolve the crisis. Nor are they intended to resolve the crisis.
The
mainstream media suggests that the banks are being nationalized as a
result of
TARP.
In fact, it is exactly the opposite:
the State is being
taken over by the banks, the State is being privatized. The
establishment of a Worldwide unipolar financial system is part of the
broader project of the Wall Street financial elites to establish the
contours of a world government.
In a bitter irony, the recipients of the bailout under TARP and Obama's
proposed $750 billion aid to financial institutions are the creditors of
the federal government. The Wall Street banks are the brokers and
underwriters of the US public debt, although they hold only a portion of
the debt, they transact and trade in US dollar denominated public debt
instruments Worldwide.
They act as creditors of the US State. They evaluate the
creditworthiness of the US government, they rank the public debt through
Moody's and Standard and Poor. They control the US Treasury, the Federal
Reserve Board and the US Congress. They oversee and dictate fiscal and
monetary policy, ensuring that the State acts in their interest.
Since the Reagan era, Wall Street dominates most areas of economic and
social policy. It sets the budgetary agenda, ensuring the curtailment of
social expenditures.
Wall Street preaches balanced budgets but the
practice has been lobbying for the elimination of corporate taxes, the
granting of handouts to corporations, tax write-offs in mergers and
acquisitions etc, all of which lead to a spiraling public debt.
The Federal Reserve System - Circular and Contradictory Relationship
The
Federal Reserve system is a
privately owned central bank. While the
Federal Reserve Board is a government body, the process of money
creation is controlled by the 12 Federal Reserve Banks, which are
privately owned.
The shareholders of the Federal Reserve banks (with the New York Federal
Reserve Bank playing a dominant role) are among America's most powerful
financial institutions.
While the Federal Reserve can create money "out of thin air", the
multibillion outlays of the Treasury (including the Bush and Obama bank
bailouts) will require the emission of public debt in the form of
Treasury Bills and government bonds. Part of these T-Bills will of
course also be held by the Fed.
US financial institutions oversee the US public debt. They are involved
in the sale of treasury bills and government bonds on financial markets
in the US and around the World. But they also hold part of the public
debt. In this regard, they are the creditors of the US government. Part
of this increased public debt required to rescue the banks will be
financed or brokered by the same financial institutions which are the
object of the bank rescue plan.
We are dealing with a pernicious circular relationship. When the banks
pressured the Treasury to assist them in the form of a major bank rescue
operation, it was understood from the outset that the banks would in
turn assist the Treasury in financing the handouts of which they are the
recipients.
To finance the bank bailout, the Treasury needs to run a massive budget
deficit, which in turn requires a staggering increase of the US public
debt.
Public opinion has been misled. The US government is in a sense
financing its own indebtedness: the money granted to the banks is in
part financed by borrowing from the banks.
The banks lend money to the government and with the money they lend to
the government, the Treasury finances the bailout.
In turn, the banks
impose conditionalities on the management of the US public debt.
-
They
dictate how the money should be spent
-
They impose "fiscal
responsibility"
-
They dictate massive cuts in social expenditures which
result in the collapse and/or privatization of public services
-
They impose the privatization of
urban infrastructure, roads, sewer and water systems, public
recreational areas, everything is up for privatization
The recipient banks are the beneficiaries as well as the
creditors.
As
creditors, they will oblige the government,
a) to slash expenditures
b) to run up the public debt through
the issuing of treasury bills and government bonds
This public debt crisis is all the more serious because the US federal
government does not control monetary policy.
All public debt operations
go through the Federal reserve, which is in charge of monetary policy,
acting on behalf of private financial interests. The government as such
has no authority over money creation.
This means that public debt
operations essentially serve the interests of the banks."
