Reich: Economic Recovery Is a Government 'Sham' … Former Secretary of Labor Robert Reich (left) says the "recovery" is a sham. "Part of the perceived growth in GDP is due to rising government expenditures," he says. "But this is smoke and mirrors … The stimulus is reaching its peak and will be smaller in months to come," Reich recently wrote in The Huffington Post. "And a bigger federal debt eventually has to be repaid." And even though the U.S. economy grew at a 5.9 percent annual rate in the fourth quarter of 2009, those GDP figures are badly distorted by structural changes in the economy. For example, part of the increase is due to rising healthcare costs. When WellPoint ratchets up premiums that enlarges the GDP. But you can't consider this evidence of a recovery. Big global companies, Wall Street, and high-income Americans who hold their savings in financial instruments are clearly doing better, Reich notes. As to the rest of us – small businesses along Main Streets, and middle and lower-income Americans – "forget it," he says. – MoneyNews
Dominant Social Theme: Problems abound, and we are misled?
Free-Market Analysis: The Huffington Post is not exactly mainstream media, but it's getting there – and this article (as summarized by MoneyNews, above) is a succinct description of what may actually be happening in America today. We like it, also, because it says just what we here at the Bell have been trying to explain almost since the financial crisis began – that sometimes you can't recharge a dying economy by printing money – not when there's been a really severe blow-off.
Thus, we wanted to comment on Reich's economic explanations, but also to use them as a springboard to make a larger point about what the elite is really trying to accomplish and why, in our opinion, it may not work, not entirely anyway. Let's set the stage, first of all, by elaborating a little on what Reich wrote.
Reich points out, quite rightly, that while America seems to be rising out of a deep but manageable recession, the reality may be otherwise. He believes what the American government and Federal Reserve have done is to print money and use that money to create public industrial make-work programs that give the perception the economy is growing when it is not. If people are put to work building a bridge to nowhere, the revenue shows up in the gross national product, perhaps, but the net result is useless and unsustainable.
Reich also notes that Wall Street is doing better, and, as we have pointed out before, this too is comprehensible based on the amount of money that the US government has given or loaned to banks and other large corporate entities. This money, some of it, has found its way into the stock market. The theory is that once the stock market goes, people will feel richer and the economy will be kick started. But in practice, this time round, it's not working.
This is no mere recession but a Great Unraveling. The economy in America (and, really, in the West) cannot grow until distortions are fully unwound and the market itself can perceive what is apt to survive and thrive and what is withering and slowly dying. This time, such perceptions may take years to realize, especially since America and the West generally continues to retard the inevitable culling.
Now because the Bell covers dominant social themes from a free-market thinking perspective, we want to point out that there is more to all this than a failed Keynesian approach to economics. Fiat-money central banking is a centralizing force that is set up to fail in our opinion. That is, mercantilist, private-public central banking as it is practiced today is a centralizing procedure whereby a power elite reaps the benefit of money production while most people suffer loss of income, jobs and the middle class is gradually squeezed into poverty by endless waves of recessions. We could go on about the distortive effect of this kind of central banking – and we have in the past. The point is that those who put the system in place are not stupid. It is likely supposed to behave this way – and it has for at least a century.
If the power elite does indeed want to bankrupt nation states, we have to ask ourselves … why? The answer (from our point of view) is that the power elite is an inter-generational force of select families, individuals and interest groups (private and corporate) that have as their goal a more globalized industrial and regulatory environment with ever more centralized governance and financial systems. This explains why Western economies are such a mess and why President Barack Obama in America, for instance, continues to press for nationalized health care even though the evidence is overwhelming that such a system would only, eventually, exacerbate America's health care dilemma.
Not only is the Obama administration gearing up to nationalize health care, it may also have in mind, via legislation, to open up America's borders in the south and attempt to give illegal immigrants various benefits that have hitherto been restricted to US citizens. Health care, no doubt, will be an attractive lure to millions of Mexicans, and thus will exacerbate the situation if passed. The stakes are so high that the Democrats in Washington are literally willing to blow up their own party to pass a nationalized health care bill and – next up, reportedly – to create an open-borders situation.
It can be argued (and the Bell does) that there is an Anglo-American elite standing behind both the Democratic and Republican parties that is orchestrating all this. It seems, in fact, to be a carefully crafted plan to merge America with Mexico and Canada – just the way Europe has been merged into a single (struggling) enterprise. The Bush administration laid the groundwork for some of this (though extant plans go back to Reagan) and indeed attempted to make additional Mexican-American industrial intercourse a functional reality before the effort was turned back by outraged Americans. (You can read more about such things in a free book available on this site.)
Now, using various parliamentary maneuvers – some of which are already on display as regards health care – the Obama administration will doubtless try to accomplish what the previous administration could not. It will continue socializing American society with the brute force of the federal government and it will do its best to tear down the border between America and Mexico. The war on drugs – which basically boosts the price of drugs and creates criminal classes out of whole cloth – has so destabilized Mexican society that many Mexicans may welcome a de facto merger with the US. The Canadians, thus far, would not, but that may change in the future. And that's why the Anglo-American elite might be said to be partying in Washington DC! Plans proceed toward regional centralization of the Americas.
In fact, while the various bailouts and other actions taken by Washington may seem to be aimed at "rescuing" Americans from an unfortunate financial crisis, they are actually doing exactly the opposite. We note, recently, that Fed chairman Ben Bernanke suggested that major banks operate without any financial reserve at all so as to more efficiently inject money into the long-suffering American economy. This is just another destabilizing financial measure so far as we are concerned. The elite acts to "alleviate" the problems faced by the average American, but in reality the actions taken are destabilizing and end up making things worse. Here's a report on what Bernanke has suggested:
Now Bernanke Wants To Eliminate Reserve Requirements Completely … Up until now, the United States has operated under a "fractional reserve" banking system. Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest. But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says "impose costs and distortions on the banking system".
At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all? That simply does not make any sense. But it is right there in black and white on the Federal Reserve's own website….
The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system. If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system? Not that we are operating with sound money now, but is the solution to have no restrictions at all? … What in the world is Bernanke thinking? But of course he is Time Magazine's "Person Of The Year", so shouldn't we all just shut up and trust his expertise? Hardly. The truth is that Bernanke is making a mess of the U.S. financial system. ( – The Economic Collapse.)
Here's the actual Fed language on its website:
… Given the very high level of reserve balances currently in the banking system, the Federal Reserve has ample time to consider the best long-run framework for policy implementation. The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.
The American system of republican governance has been relentlessly dismantled since the Civil War. But now the attacks have grown in power and scope and it would seem the actual integrity of the nation itself might be in question. As we recall, The Fabian Society (in a quote we can no longer find on the Internet) suggested in the early 2000s that the 21st century would be one of extreme "change" that people might find uncomfortable. In such an environment, the Fabian Society suggested that those who would adapt most effectively were those who would accept the changes quickly and without fuss.
We are not sure that many will enjoy changes that include the partial dismantling of the United States. However, surprisingly (given what we have just written above) the Bell is optimistic about where the world is headed. The power elite behind the relentless global consolidations did very well in the 20th century. But the 21st century has proven more difficult. The plans and strategies that proved fairly easy to implement in the 20th century began to melt down in the 21st century as the broad beam of the Internet has shown hotly upon them.
One can only come to two conclusions about what is going on (assuming one accepts the presence of a power elite that wishes to continue a trend of global consolidation). Either the Anglo-American power elite doesn't care about whether millions and even billions of people understand what it has on its collective mind. Or it DOES care but cannot do anything about it.
The Bell believes the latter. Again, (for those apt to tolerate such suggestions), it is fairly clear the power elite operated in the 20th century under a determined veil of secrecy. (We would operate under such a veil as well if we were the power elite and had in mind to do what it is doing.) But that veil of secrecy exists no more. Did the power elite plan to rip this veil away? No, no, no!
The power elite must be seen as a troubled entity these days. The power elite, events seem to show us, has had no more idea of how to handle the expansive communication explosion called the Internet than Bill Gates did in the 1990s. The power elite has moved ahead with its "creative destruction" but unlike as was the case in the 20th century, people can actually see the process in action – and in real time. (And they may not wish to be destroyed and recreated, which is bound to be uncomfortable, not to say inconvenient.) As a result, we seen a trend for various governments to try to regulate and censor the Internet. Yet it is late in the game, and we predict these efforts will be hard to implement and even harder to sustain.
In fact, the power elite's planned consolidations are under attack around the world. Europe is beginning to simmer, and even boil in such places as Greece. In America, the Tea Party movement is growing in size and scope and will not ultimately be contained by the Republican party. In South America a series of leftist oriented governments are far less apt to do the West's bidding than such governments once were. Japan and especially China are still perhaps in the West's orbits but are apt to go their own way not because of the political class but because the citizens may eventually demand it. The Internet, a modern-day Gutenberg press, has penetrated these countries as well, and the literacy rate is high.
This article has been entitled "Party Time for Anglo-American Elites?" But we put the question mark at the end of the title for a reason. We think in both America and Britain, the elite celebration is bittersweet. Yes, there are plenty of actions underway to consolidate Western governance and to continually remove barriers between nation states. But the plans of the elite have been illuminated by the internet (for anyone who chooses to look, in our opinion) and for a group that relies on secrecy and purported global coincidences such exposure cannot be considered good news.
We don't know exactly what the power elite has in mind to do next (in detail, anyway), but whatever it is, the Internet's alternative press will predict it and cover it – up to and including wars of control and diversion. And increasingly people, in the 21st century, likely will make up their own minds as to how to respond. That is an opportunity that was lacking in the 20th century and it may eventually make a significant difference. We would argue it is doing so.