The Federal Reserve: A Common Enemy

I originally wrote this piece for RevoluTimes on December 3, 2011

The recent discovery that prior to the TARP bailouts of 2008 (which authorized $700 billion in purchased assets), the Federal Reserve secretly doled out $7.7 trillion to foreign banks has caught the attention of pundits across the political spectrum. And it should. The TARP program originally authorized what was thought to be an unprecedented but allegedly necessary purchase of “troubled assets” by the Department of the Treasury in an attempt to save the participating institutions from further losses by improving the liquidity of these assets. Most of the American people haven’t been convinced such measures were truly necessary. In response to the bailouts emerged the Tea Party; a band of conservatives, libertarians, disenchanted liberals and independents who believe the size of government has grown too large and its influence (particularly in the economy), should be greatly limited. Not satisfied with these sentiments and desperate for a reenergized base, many left-liberals have joined ranks with the growing Occupy Wall Street demonstrations (OWS), that feels the power and influence of corporations has corrupted the government and sold the people to elite bankers. While it’s true there are stark differences between the dominant philosophies of these two movements, to a degree they’re saying the same thing in different languages. The latest reports from Bloomberg News suggest the Federal Reserve may be the missing link between the two populist movements.

Reported Bloomberg:

“A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.”

The report continues to note that not only did the Federal Reserve secretly print this money, but they gave the loans at below market interest rates. How low exactly? 0.01%! As the always hilarious Jon Stewart opined,

“0.01%? I got news for ya, that’s not below market-that’s free!”

The report went on to note that the free loans were then loaned back out by the receiving banks. It’s estimated the banks receiving the secret bailout gained a profit of $13 billion.

According The New American’s Thomas Eddlam,

“The Bloomberg report noted that top Wall Street banks benefited most from the deal. ‘The big six — JPMorgan, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs Group Inc., and Morgan Stanley — took 63 percent of the Fed’s emergency-loan money as measured by peak daily borrowing,” the San Francisco Chronicle observed November 29 of the Bloomberg data.’”

Added Eddlam,

“The evidence also reveals that Federal Reserve intervention in the market helped the ‘too big to fail’ banks get bigger still. ‘Records shows that during the past five years, total assets at the largest six banks increased by almost 40% and executive compensation rose by 20% — more than $146 billion in compensation last year alone,’ USA Today reported November 28.’”

The lack of transparency and unaccountability of the Federal Reserve has created some rather strange bedfellows. Lifelong critic of the Fed and 2012 Republican presidential candidate, Congressman Ron Paul has joined with Democratic Congressman Dennis Kucinich numerous times in pushing for an audit of the Federal Reserve. Paul is well-known for his advocacy of a market-based currency and allowing for competition of currency. Kucinich has not gone that far but he has created a new bill, (the NEED Act) to drastically limit the power of the Fed.
In his latest “Kucinich Report”, he outlines the necessity of bringing accountability to the Federal Reserve saying,

“Ten million homes are in jeopardy. Fourteen million people out of work. Fifty million without health care. Endless wars. The Fed creates money out of nothing, gives it to banks, banks keep it on deposit, gain interest, pay high bonuses — fat city — while the rest of America falls apart. The Fed creates money out of nothing for the banks. Meanwhile, the rest of us have to be stuck in a debt-based economic system? I don’t think so…now do you understand ‘Occupy Wall Street’?”

There’s no denying genuine progressives such as Congressman Kucinich and much of OWS aren’t going to find complete agreement with libertarians like Congressman Paul and many among the Tea Party; however, such pressing issues can bring together coalitions of individuals across the spectrum to work towards common goals without sacrificing principle. Whether you view the “1%” as those with most of the money or as those with most of the guns, if we abandon the fictional narrative contrived of vitriol and platitudes by the establishment we may find that we have more in common with each other than we do with politicians or talking heads.

The Tea Party's Identity Crisis

I originally published this article at RevoluTimes on December 1, 2011

The political circus being played by the GOP must leave one wondering if the Tea Party has all but abandoned its goals of fiscal restraint and smaller government. Rick Perry, Herman Cain and now Newt Gingrich have all been declared the frontrunner at some point throughout the presidential race despite their support for Big Government programs and government spending. Mitt Romney continues to poll well throughout the country but many conservative activists have refused to warm up to the former Massachusetts governor due to his many inconsistencies on the campaign trail.

This strong trend of searching for the Anti-Romney (similar sentiments were held during his presidential bid in 2008 as well) is rather puzzling considering the embrace given to the aforementioned candidates by much of the Republican Party and Tea Party supporters. The Tea Party and conservative activists across the country pride themselves on being defenders of capitalism, lower taxes and cuts to federal spending; but their propensity to latch onto whomever the Republican Party and conservative media is promoting at the moment makes this claim questionable at best.

The schizophrenia of right wing voters began with Rick Perry. As I’ve documented elsewhere, the Texas governor has a laundry list of tax hikes, corporate welfare and even a government mandate for young girls to purchase and be submitted to an HPV vaccine. As if this wasn’t enough to eradicate any rumors of Perry’s fiscal conservatism, Perry staunchly supported the springboard for the Tea Party movement: TARP. Indeed, not only did Perry support the bailout, he co-authored a letter with then president of the Democratic Governors Association, Joe Manchin saying,

“…There is a time for partisanship and there is a time for getting things done…and now is not the time to assign blame. It is time for D.C. to step up and be responsible and do what’s in the best interest of American taxpayers and our economy…It’s time for leadership. Congress needs to act now.”

Perry’s well-known history of pandering to special interests and unimpressive debate performances led many within the Tea Party to look towards Atlanta businessman Herman Cain. Cain’s candidacy had been an afterthought for several weeks due to his lack of name recognition; but his apparent outsider demeanor made him far more attractive as voters looked for an anti-establishment candidate. Yet again the so-called conservative media and grassroots organizers touted the latest frontrunner as a stalwart defender of free markets and fiscal responsibility. Little did most Republicans know, (and most still don’t know), Cain oncecondemned a national sales tax only to propose his own, vehemently opposes the notion of ending the Fed and restoring sound money and the coup de grâce of course was Cain’s op-ed in strong support of TARP saying,

“…Wake up people! Owning a part of the major banks in America is not a bad thing. We could make a profit while solving a problem. But the mainstream media and thefree market purists want you to believe that this is the end of capitalism as we know it. It is not for several reasons that they have conveniently not explained…” (emphasis added)

It seems Mr. Cain believed the stealing of your wealth was just a wise investment the State was obliged to make for you. But despite his tarnished record and brand of political whimsy, the former CEO of Godfather’s Pizza held strong until allegations regarding his personal life were made public recently.

At this point the conservative masses were more than happy to offer the musical chair to former House Speaker Newt Gingrich. It’s not surprising to see the Georgia native rising in the polls as he’s very well known for his debate skills. It is baffling however that anyone with a straight face could claim Newt Gingrich believes in the free market or fiscal responsibility in any form. Not only did Gingrich support TARP, he staunchly supported the creation of the unconstitutional Department of Education, (and continues to push for its expansion) NAFTA and GATT, various federal subsidies, flip-flopped on Climate Change, received nearly $2 million from Freddie Mac and has repeatedly expressed his support for a federal mandate to purchase health insurance in some manner. And just to illustrate how little concern he has for actually cutting spending, Gingrich referred to the rather modest cuts presented earlier this year by Congressman Paul Ryan as “right wing social engineering”, only to once again change his mind later.

If the Tea Party and its supporters truly wish to be an agent of change and usher in a new age of free markets, sound money and fiscal restraint, they have a very strange way of showing it. As of right now, their choices in a presidential candidate will only result in them becoming a silenced wing of the Republican Party with little influence, and even less credibility. I’d suggest they return to their roots.

Newt Gingrich (D)

I originally wrote this piece for RevoluTimes on November 19, 2011

The growing sentiment across the country of “anyone but Obama” has placed the GOP, (driven by the enthusiasm of the Tea Party) front and center in American politics. The staggering number of Americans out of work and the unconscionable national debt has spawned a nationwide movement of voters searching for a candidate who will finally cut federal spending and shrink the size of government. Newt Gingrich is not that candidate.

Being a Georgia native, I’ve seen firsthand the masterful work of Gingrich the performer. It is unfortunately very rare to come across conservatives in Georgia who are aware of the former Speaker’s record. I’m sorry to say the two politicians Georgia is most noted for in modern times are Jimmy Carter and Newt Gingrich; contrary to popular opinion, the latter is no more conservative than the former. Despite his often touted, “Republican Revolution,” (which didn’t do much of anything at all) and harsh criticisms of Democrats’ endless spending, a look beyond the grandstanding and empty talking points reveals a charlatan, a professional blowhard who’s ability to rhetorically condemn big government policies is only overshadowed by his propensity to portray those same policies as conservative when they’re offered by Republicans.

One of the trademarks of George W. Bush’s big government conservatism, (and one of the scourges of the Tea Party) was the $400 billion Medicare Part D. Any self-respecting conservative has always wished to reduce the federal budget and the welfare state, not expand it. Gingrich on the other hand, strongly supported this increase in entitlement spending–and still does. Reports National Review:

“Gingrich supported Medicare Part D in 2003 — and the ensuing years haven’t made him any less supportive of the legislation. Asked in March if he regretted supporting the plan, Gingrich responded not with an apology, but with a ringing defense: ‘I feel strongly that the No. 1 purpose of health care is health, and Medicare was designed in the 1960s when pharmaceutical drugs were not a significant part of how you took care of people. And for us to have a government-run health plan that said we’re not going to help you with insulin but we’ll be glad to pay for kidney dialysis is an utterly anti-human provision. And so all I was in favor of was modernizing the system to recognize modern medicine.’”

While Newt’s words may indeed be comforting to seniors, they should be appalling to anyone who believes in constitutional government and particularly disturbing to those wishing to see a dramatic decrease in government spending and a restoration of the free market. Notice Gingrich does not seemed troubled at all by the notion of a “government-run health plan”; in fact he believes the government doesn’t go far enough. His statements regarding an opposition to government funded prescription drug benefits as being “anti-human” is predicated on the notion that without the State organizing and funding such care, it wouldn’t be available at all. How is this mentality and approach to government any different than that of liberal Democrats? For all of Newt’s lip-service to the free market, when the chips are on the table he folds every time.

Newt’s career is filled with endorsements of excessive and unconstitutional government spending and State interference in the marketplace. From ethanol subsidies, to No Child Left Behind and even a government bailout of the Mexican peso, one has to wonder how he’s managed to maintain his conservative cover for so long and why the Tea Party seems to favor him.

Perhaps it’s because the two policies most responsible for starting the Tea Party movement occurred while Newt was out of the limelight. His not being in Congress when TARP and ObamaCare were passed seems to have certainly helped to hide the fact that Gingrich supported TARP and has stated for years that he supports an individual mandate to purchase health insurance.
When asked in 2008 by George Stephanopoulos would he have voted for TARP, Gingrich replied:

“Sure, look, something has to be done. …I suspect were I still in Congress, in the end, George [Will] is right, and I would end up probably voting reluctantly yes…”

Newt’s right, something did need to be done, but not by the government. The market should have been allowed to liquidate the malinvestment, rather than such “troubled assets” being propped up at the expense of taxpayers. Newt’s tendency to presume so many social and economic ills can and must be remedied by government, rather than acknowledging government as the cause of much of our problems is further indicative of his insincerity when defending capitalism and the extent to which he’ll betray the economic freedoms and property rights of his supporters if given the opportunity.

One would think with such economic turmoil and anti-Obama sentiment pervading the country, supporting a government mandated purchase of health insurance would be a non-starter for anyone seeking public office. But the shape shifting Gingrich defies the odds as he has not only candidly admitted his support for an individual mandate over the years, but has also successfully condemned president Obama’s administration for imposing the same thing, simultaneously.
In an interview last May with NBC’s David Gregory on Meet the Press, Gregory played a video of Gingrich from a 1993 interview discussing health care in which Gingrich said,

“I am for people, individuals–exactly like automobile insurance–individuals having health insurance and being required to have health insurance. And I am prepared to vote for a voucher system which will give individuals, on a sliding scale, a government subsidy so we insure that everyone as individuals have health insurance.” (emphasis mine)

When asked by Gregory does he indeed advocate for an individual mandate, Gingrich replied,

“…I believe all of us–and this is going to be a big debate–I believe all of
us have a responsibility to help pay for health care…”

Continued Gingrich,

 “…And, and I think that there are ways
to do it that make most libertarians relatively happy. I’ve said consistently
we ought to have some requirement that you either have health insurance or you
post a bond…”

Not only does the former college professor have an obvious misunderstanding of libertarianism, but yet again Gingrich demonstrates his lack of conservative credentials. This notion of fixing big government rather than ending it has been seen throughout his career and persists in his current bid for the White House. His website remarks upon the need to “modernize the FDA”, (whatever that means) turn the Environmental Protection Agency into an “Environmental Solutions Agency that works collaboratively with local government and industry to achieve better results”, return to “Reagan era monetary policy”, (despite that Reagan appointed the destructive Alan Greenspan as Fed Chairman) and of course “Repeal and Replace” ObamaCare. Gingrich is the modern Republican Party personified. At no point is the prospect of actually reducing the size and scope of government and drastically cutting spending ever on the table. From the perspective of Gingrich and his fellow Rockefeller Republicans, excessive spending, crippling regulations and debasement of the currency aren’t to be condemned and certainly not to be reversed; but adjusted, revised and altered to the interests of the GOP.

The fundamental question that needs to be asked to Gingrich and each of the presidential candidates is this: Where are the actual CUTS in federal spending and where are you seriously shrinking the size of government? For far too long conservatives have confused pandering for principle, entertainment for integrity, and valued style over substance. If we are to truly turn the tide and rid our lives of government and restore prosperity, we can no longer afford to tolerate imposters, because political chameleons like Gingrich will always change their colors to mask what’s beneath the surface.