America, How Can We Screw Thee? 4 Trillion Ways
If you still harbor a shred of doubt that your government and its institutions really care about Main Street America, this should put those doubts to rest once and for all. And make you mad as hell in the process.
In the Wall Street Journal, former Federal Reserve bond buyer Andrew Huszar wrote a piece I’m sure he hopes will clear his conscience, even though, despite his own initial apprehension, in 2009 he became part of the biggest ongoing swindle of the American taxpayer in the history of the country.
Forget ballooning welfare and food stamp fraud. Put aside your concerns about Obamacare and its rate hikes and fees for a moment. Those of you still paying income taxes, lay down your resentment for the time being.
Because according to insider Huszar, your federal government – at the behest and direction of your Congress and your president – has stolen $4 trillion from you and your children, and in the process has once again created a looming economic crisis that will devastate Mr. and Mrs. America, while enriching the fattest of the fat cats on Wall Street.
At this point I must say that I’m a free-marketeer through and through. But like many of you, I’m sick and tired of taking it up the shaft by elitist members of America’s newest criminal class: Crony capitalists.
Here’s how they did it this time.
In case you’re not aware, the Federal Reserve has been purchasing a record number of bonds – $85 billion a month – through a process called “quantitative easing.” When the program began following the passage of the Troubled Asset Relief Program in 2008, its goal was to stem the financial hemorrhaging of the nation’s largest banks, while creating cheap lending conditions for average Americans so We the People could reestablish purchasing power and shore up the badly damaged economy.
What quantitative easing has turned into, according to Huszar, is the financial crime of the century:
I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.
Five years ago this month, on Black Friday, the Fed launched an unprecedented shopping spree. By that point in the financial crisis, Congress had already passed legislation, the Troubled Asset Relief Program, to halt the U.S. banking system’s free fall. Beyond Wall Street, though, the economic pain was still soaring. In the last three months of 2008 alone, almost two million Americans would lose their jobs.
The Fed said it wanted to help—through a new program of massive bond purchases. There were secondary goals, but Chairman Ben Bernanke made clear that the Fed’s central motivation was to “affect credit conditions for households and businesses”: to drive down the cost of credit so that more Americans hurting from the tanking economy could use it to weather the downturn. For this reason, he originally called the initiative “credit easing.”
Four trillion dollars later, however, this is what happened:
Where are we today? The Fed keeps buying roughly $85 billion in bonds a month, chronically delaying so much as a minor QE taper. Over five years, its bond purchases have come to more than $4 trillion. Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history.
And the impact? Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn’t really working.
Unless you’re Wall Street. Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.
As for the rest of America, good luck. Because QE was relentlessly pumping money into the financial markets during the past five years, it killed the urgency for Washington to confront a real crisis: that of a structurally unsound U.S. economy. Yes, those financial markets have rallied spectacularly, breathing much-needed life back into 401(k)s, but for how long? Experts like Larry Fink at the BlackRock investment firm are suggesting that conditions are again “bubble-like.” Meanwhile, the country remains overly dependent on Wall Street to drive economic growth.
So in the end, TARP, the QE and the other measures taken by the government (think “Dodd-Frank” financial reform) and the Fed to ensure that “too big to fail” didn’t happen again – has not occurred.
All that has occurred is the preservation and enlargement of the same criminal banking cabal that has existed for a century, all at taxpayers’ expense. In other words, it is the same shit that former Congressman Ron Paul – you know, “that crazy guy from Texas” – warned about for years.
Perhaps now you know why scumbag posers like Barack Obama, Harry Reid, John McCain, Lindsey Graham, Nancy Pelosi and the rest of the Big Government Establishment fight so hard against guys like Ted Cruz, Mike Lee and Louie Gohmert. The same Establishment turds who just extracted $4 trillion from yours and your kids’ future are not about to voluntarily relinquish their control over your destiny.
I have no doubt that, were the founding fathers somehow reincarnated today, they would be leading a second American revolution.