The Pentagong Show

The Pentagong Show
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Thursday, December 27, 2012

Zombie Institutions Reinstitute Poverty

"Read my quips: "Bushonomics is the continuous consolidation of money and power into higher, tighter and righter hands."
George Bush Sr, November 1992

A curious sentence in the beginning of Van Wyck Brooks', "The Flowering of New England" states that, "Classes are provisional in a republic", and he's not referring, as currently seems to be the case, to school classes, but instead, to the classless society which, here in America, or at least The United States thereof , we've struggled so mightily, and managed so adroitly, to create. LOL

But I can't help but note that, with the FED's ZIRP, it's apparent, with even a smattering of knowledge about economics, that, given the completely debased, erroneous, and proven failure, of EMH (Efficient Market Hypothesis, or sometimes EMT, for Efficient Market Theory), none of its adherents have recanted any of their rhetoric in its regards, nor believe it is in any way flawed, retreating instead to the familiar shibboleth that there wasn't enough Free Market to disprove their theory, simply too much governmental interference to allow the true flowering of the economy that would  have occurred had the Crony Capitalism Conspiracy, euphemistically referred to as laissez-faire, simply been allowed to continue unhampered.

But, as Mike Norman writes in his blog, "Fed actions have removed an enormous amount of interest income from the economy. In fact, it has removed over $100 billion more in interest income than the total net gain in private wages and salaries since it began undertaking these extraordinary measures". Now, this may nonetheless, be a desirable outcome, given the fact that work is such an important part of people's lives and self-image, and also, from a fiduciary perspective, that it actually increases revenues to not only the Social security fund, via the payroll tax, but also to the coffers of the general fund, given the fact that labor is taxed at approximately twice the rate that interest income is. But, in terms of what it forces those with savings to do with their hard-earned cash, it also gives us a  valued insight into the motivations of the FOMC (Fascist Oligarchic Medieval Cabal).

For proponents of EMH, and its true beleivers are ensconced on the board of the FOMC, when they institute a ZIRP, it is because they wish to force those who have cash in savings, to move it into riskier investments, since not only are they getting da nada in interest, the purchasing power is simultaneously being debased via the FED's stated goal of igniting inflation, which will further diminish the value of those savings. And since EMH  claims that prices on traded assets (e.g., stocks, bonds, or property) already reflect all past publicly available information, the MBS the FED holds, as well as the $1.2 trillion (at the rate of $85bln/mo) they have announced their intention of purchasing, are not worth that, else the private market would be lining up to do what they do best: line their own pockets.

And since EMH claims that not only do prices reflect all publicly available information but also that prices change to reflect new public information, what the purchase of impaired collateral is telling the markets is that without the purchase of said assets, there is no market for them, the more the FED purchases, the more impaired it becomes, despite the stated assertion that they will in time rise to their true value. For EMH makes quite clear that if no one in the private economy will purchase them at any price, they have no value.

ZIRP has the effect that the same message is broadcast loud and clear for the very lifeblood of a capitalist economy as well: Money. If nothing is charged for the loan of an asset, it is because the manufacturer is convinced of its worthlessness. My artistic endeavors are a perfect example. In spite of putting labor and materiel into them that by my estimate, are worth thousands of smackeroos, let's say, if no one finds them appealing, they are worth, no matter what my protestations to the contrary might be, only what the market will pay. Now, if I give that same art away for free, it may be very appreciated, and even coveted by those to whom I've not given it. But that increases its value not a whit. It merely reenforces its monetary worthlessness. Similarly, since the FED, by the pronouncement of its own chairman that it has a printing press, it follows that the FED is the manufacturer of money, and, since interest is what they charge for their product, and they charge ZIP via ZIRP, they thereby announce that they are convinced that their product, cash, has no value. Sure, we'll take it for free, but once you charge for it, well ... not so much.

The value it did have was deliberately debauched and destroyed by the Bush regime, as per the stated objective so blithely announced by its avatar, Grover Norquisling, to make the Federal government small enough  so it could then, like an infant, be drowned in its bathwater. With a floating exchange rate, the dollar's value was dependent on three things: the productivity of the economy vis-a-vis its competitors (which includes the power to tax the wealth the economy generates), the military ascendancy the United States of America held over the rest of the globe, and the value of its real property, which fluctuates based on the former two.

One by one the administration of GW Bush destroyed these bulwarks of the American economy, finishing the job his father had started during the Reagan, and then his own short-lived, administration. In those years they strived mightily to transfer America's manufacturing base overseas, creating the Rust Belt, destroying the Savings and Loans Industry, and then, hand-in-hand with that, moving military bases from its Homeland, where they served as anchors to local economies, overseas, where the economic benefits flowing from the US taxpayers' support of said bases, were transferred to the citizens and economies of its enemies.

They then, in connivance with Norquist, who had already drafted his "Pledge not to Raise taxes" which they planned to have every Republican sign, passed their tax-cuts for the rich, even as they funneled a greater proportion of the productive wealth of the economy into their pockets, knowing that the taxing power of the federal government would thereby be concomitantly reduced, and only then launched their War on Iraq (though we all knew it had been planned long before Bush was even elected, per the PNAC).

Then, finally, playing the trump card of an overaching military preparedness completely out of balance with any threat from any single or combined force on the planet, they used that military in a bungling, farcical charade, demonstrating how that trump card, once played, projected far less power than the fear of its being played did.

That this was a planned campaign, which I, among other writers, was writing about and warning about before any attack occurred on the WTC, has been completely ignored, the historical facts no longer containing any meaning, proving that the complete derision with which the Bush regime held its own constituents, never mind its opposition, was completely justified. To this day, the fact that the planned destruction of their own government was the platform on which the Republicans put Bush into the White House, is still never mentioned. As I said at the time, it can't be called a conspiracy when its announced beforehand and done in the full light of day. It can, however, be called criminal, traitorous, treasonable and, most importantly, prosecutable.

But now, our Democratic President insists that the treason of his predecessors should be ignored.  President Obama, when pressed to investigate Bush and Cheney for war crimes, has repeatedly declared: "I prefer to look forward rather than backwards". And what, exactly is it he looks forward to? Well:

Continued destruction of the middle class,
Escalation of wars in all parts of the globe,
Continued exposure of our savings to pillaging by the very banks we pour government funding into,
Debasement of Social Security
Declining longevity as the forces in the US that conspired to destroy The Soviet Union now openly take aim at destroying anything that smacks of socialism here. (And the result is just as predictable: millions will die, saving Medicare billions, or more likely, trillions.)
Hopelessness for growing numbers of our young.
The prison industry will remain the largest growth  opportunity.

And those are just the known knowns. The unknown knowns and the unknown unknowns aren't even known.

But when they are, it won't be pretty.

Happy New Year!

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