Greenspan Admits To Fraud In U.S. Banking System

At the Jekyll Island Federal Reserve Conference - A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve - this past weekend, marking 100 years from the 1910 Jekyll Island meeting that resulted in legislation for the creation of a U.S. central bank, Greenspan admitted the truth:

"There are two fundamental reforms that we need: adequate capital, and two, to get far higher levels of enforcement of fraud statutes. Existing ones...I'm not even talking about new ones. Things were being done that were certainly illegal and clearly criminal in certain cases.  Fraud is a fact..fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it won't work, and indeed, we saw that it didn't."

 

The November 1910 Jekyll Island meeting that gave birth to the Federal Reserve was shrouded in secrecy. According to author Edward Griffin, Forbes founder Bertie Charles Forbes said the event was so secret that the full names of the attendees were not mentioned once. Attendees of this "most secret expedition in the history of American finance" reportedly included the powerful Senator Nelson Aldrich and several leading bankers of the time.

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Institutionalized Criminality and Right Winged Free Market Ideology

Is free-market economics, free, when the price of money is manipulated? Does free-market economics include allowing banks and corporations to grow so big that they cannot fail?

Over the years, the Federal Reserve, consisting of a few wealthy bankers, meet in secret to set the price of money (interest rates), and control and direct the money supply with absolutely no oversight. Doesn't this fly in the face of the free market?

Then, to top it off, in the last year alone, the Federal Reserve has taken on even new powers. The "invisible" hand seems to be quite visible.

So, having established that "free market" economics the right proclaim is the answer to all of life's problems isn't as free as they say it is, where does institutionalized criminality fit into the picture?

Just take a look at what's happening to the corporate "criminals", in large part, responsible for this crisis. Is anyone facing prosecution? No, because they have not broken any laws. Why? Those laws have been systematically removed over the last 35 years. Or to put it another way, the greedy, "profit at the expense of the people" actions that have damaged our society far more than the all of street crime combined, were legalized, in the sense that none of the actions are against the law. Hence crime incorporated itself into our well-established system. At the same time, the laws and penalties for crimes committed by those of us not so well off have increasingly become much more stringent.

This process of embedding corporate governance that would eventually lead to and provide fertile ground for corporate "crime" to flourish as part of our financial system began when Ronald Reagan started to apply the 1960s' grassroots tactics to destroy FDR's new deal when elected Governor of California and then, President of the U.S. in 1980. Reagan foresaw that his interpretation of what a "free market" economy is (Reaganomics) could not exist in a framework of law and order that required rules, regulation, and enforcement. He had to change things.

Reagan's true power to implement his vision came not from an iron fist, rather from his ability to camouflage his motives and agenda with a benign and grandfatherly persona. How could such an affable, likable man create mean-spirited policies that subsidized the wealthy on the backs of the poor? Just try imagining Mr. Rogers as a serial killer. It's just not possible, or is it?

Anyway, Mr. Reagan went to work galvanizing Americans, by using simplistic and deceitful rhetoric, charm, and subliminal messages. He encouraged we the people to worship at the alter of the almighty cash register, and to become the best consumers we could be. Revering wealth and the wealthy - picture Robert Schuller's $19.5 million Crystal Cathedral - while at the same time, hardening our hearts to those less fortunate, lead to the gradual elimination of social safety nets, and chipped away at the "New Deal", which steadily increased the gap between the richest and the poorest Americans.

But why make Ronald Reagan the primary villain? After all, he's such a hero to so many. Well, without Ronald Reagan's vision and leadership, deregulating the economy and disenfranchising the poor may not have spiraled out of control to accommodate his form of "socialism" for the wealthy thinly disguised as "laissez-faire" capitalism.

So, as we witness the collapse of right winged free market ideology, it becomes apparent that its success depended on institutionalizing crime, or as some may prefer, the institutionalization of cheating and greed. However when you consider the immense damage that has resulted, not only in the United States, but all around the world, the only word that comes close to describing what went on for the last three decades is crime, pure and simple. And since this form of crime cannot be prosecuted, it appears it was most definitely institutionalized so that former President Reagan's beatific vision could materialize for those who deserved it, the filthy rich.

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Barney Frank Was Ambushed!

Years ago, when I used to watch Bill O'Reilly, I distinctly remember him refer to Barney Frank as perhaps the smartest man he's ever interviewed. O'Reilly said he didn't agree with Barney Frank on anything; however, looked forward to the challenge of interviewing him.

Fast forward to the latest interview. Bill O'Reilly becomes extremely angry right away, refusing to let Barney Frank talk. Why? Because O'Reilly knew if he gave Barney Frank an inch, he would take a mile. He knew that Frank wouldn't let him blame the entire financial meltdown on him and the Democratic party.

Prior to Bill O'Reilly's temper tantrum, O'Reilly lied, and said Barney Frank became Chairman of the House Financial Services Committee (HFSC) in 2006 (9/30 episode). Barney Frank started the position in January of 2007, at the same time, the Democrats won over the House and the Senate. He also quoted Frank from 2003, and tried to apply it to his current position, further blaming him for the crisis.

This goes beyond Bill O'Reilly, although I'm sure O'Reilly enjoyed every moment. Fox News, the mouthpiece for the Republicans, has pegged Barney Frank as the "whipping boy" and the scapegoat for the financial crisis that they caused. Why Barney Frank? Well, aside from being Chairman (HFSC), the position he's held for less than two years, he is gay and we know how the Conservatives love to throw gay people to the lions to either promote their agenda or cover their ass.

Bill O'Reilly was foaming at the mouth and would have loved to call Barney Frank a faggot. However, O'Reilly knew that would be stepping over the line and might ruin this excellent opportunity to blame the Democrats. So, he did the next best thing and attacked Barney Frank's manhood, by calling Frank a coward and telling him that he's not a man, that he didn't "stand up" like a man, knowing that people who were watching, either knew, or would find out, that Barney Frank is gay. All of a sudden through the power of suggestion, O'Reilly's accusations make perfect "sense" to the average ignorant person.

The Neocons understand how important it is to keep the general public in the dark. That's the only way to maintain control and spread their bullying, scapegoating propaganda, essential to maintaining their control. They take advantage of our ignorance and manipulate us through our underlying biases, realizing that repetition of the lie will transform that lie into the "truth". My father, who watches Fox News, told me they replay this interview over and over.

“See, in my line of work you got to keep repeating things over and over and over again for the truth to sink in, to kind of catapult the propaganda." -- George W. Bush.

“Propaganda proceeds by psychological manipulations, character modifications, by creation of stereotypes useful when the time comes - The two great routes that this sub-propaganda takes are the conditioned reflex and the myth” -- Jacques Ellul

Most people don't know all that much about Barney Frank. Most people don't know all that much about the financial crisis. It's easy to find a scapegoat when the public has no idea what's going on.

The Conservatives know Barney Frank is smart and they know he is not a coward. That's why they went for the jugular. Anyone who has watched Barney Frank knows he has no problem standing up for himself and for what he believes, thus the reason they used Bill O'Reilly, the biggest bully on T.V., to do their dirty work.

Is Barney Frank innocent of wrongdoing? Probably not. However, Barney Frank, who has championed the people's rights throughout most of his career, is not even close to being the cause of this mess.

Unfortunately, most people do not know the collapse of the banking industry did not start yesterday. It started thirty-years ago, when Ronald Reagan declared his extreme "free market" ideology and began the process of deregulating as much as he could, making sure his agenda would be carried out for years to come. It continued with Greenspan's wholehearted belief in an unregulated market; his belief in his hero, Ayn Rand and her philosophy of the morality of individual greed; his insistence on keeping interest rates artificially low, and inflating the housing and stock market bubbles...

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Affluenza: Unsatiable Desire for an Abundance of Possessions

Affluenza, according to author of the book, Affluenza: The All Consuming Epidemic and filmmaker, John De Graaf, is a term describing "a painful, contagious, socially transmitted condition of overload, debt, anxiety, and waste resulting from the dogged pursuit of more”.

My guess is this insidious disease, "affluenza" began right around the time President Reagan took office in 1980, and Laissez-faire capitalism dominated most of our thinking. By the end of Reagan's two terms, after he had established "nibor dooh" (steal from the poor to give to the rich) economics, that's what I call it anyway, affluenza began to spread faster than sexually transmitted diseases in the porn industry.

Trickle down or "nibor dooh" economics achieved its true goal, evolving the meaning of the word, "affluent" to encompass the ordinary and the "working class" to include the poor, immensely increasing the divide between the "haves" and the "have-nots". The "noble" reason or rationalization is that income disparities and/or inequality vs. economic growth are supposed to encourage those at the lower end of the earning spectrum, and motivate them to catch up, however, they left out the part about the harder the "low earners" try, the further behind they will get creating a class of people Katherine Neuman calls the "Near Poor" in her book, The Missing Class.

In 1979, the top 1% of the US population earned, on average, 33.1 times as much as the lowest 20%. In 2000, the top 1% earned 88.5 times more than the lowest 20%. By now the discrepancy is much greater proving that President Reagan, Alan Greenspan and George W. Bush did nothing more than transpose the Robin Hood story.

Prior to this time, we were slowly emerging from a time when the importance of sacrifice was paramount. Forfeiture of material goods for the sake of something considered to have greater value placed the emphasis on higher ideals such as God, Country, and "humanity" (New Deal). Of course, this era (1930-1945) of sacrifice followed the pain of a market meltdown - the stock market crash of 1929, prior to which times were much like today.

Man is designed to satisfy his needs and desires with the least possible effort. In addition, the more he owns the more he wants. Lawmakers, who have not transcended their greedy natures, are normally the first in line when society prospers, and will try to create law for their own profit at the expense of others...Enron, Bear Stearns, Haliburton, Iraq War, tax cuts for the rich etc.

Bear Stearns is the latest casualty in what appears to be a growing trend of corporate scandals and failures tied to what appears to be poor fiscal management and lack of regulation, but in reality, is a carefully constructed legal system to benefit those at the top . In other words, as Frederic Bastiat says,

"It is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds."

When legislators create laws that contradict morality, society will either try to stop the "lawful" crime or as our society has chosen, choose to share in it, - affluenza, - thus making "lawful" crime universal. The victims of these greedy lawmakers - instead of fighting the unjust legislation or lack thereof - will try to fall in and end up following the "evil-doers," out of ignorance or in hopes of gain, even if it means suffering the consequences.

As terrifying as it seems, a financial melt down may be the only cure for "Affluenza" as it will force us to reduce consumption and waste, give us a chance "dry out", and figure out what's really important to us. Who knows? People might start choosing work that reflects their values, what they're good at doing and what they love to do instead of going for the job that can fill up their 28,000 square foot mansion with junk, closets the size of bedrooms to store the junk, hummers and garages large enough to store the hummers, entertainment centers that put movie theaters to shame and so on...

Unfortunately, human nature being what it is, usually requires some sort of comeuppance before true justice has a chance.

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The Hypocricy of Laissez-Faire and the "Utopia of Greed"

Robert Kuttner , author of "The Squandering of America: How Our Politics Undermines Our Prosperity", is convinced we are heading for a recession.

"The recent subprime mortgage collapse, and the hedgefunds that have contributed to the somewhat volatile stock market we see today have one thing in common. They have exploited loopholes in what remains of federal regulation."

Many Americans probably assume subprime lenders are put in business by some sleazy establishment, when the truth is, it's the bluest chip names on Wall Street including Citigroup, who can take credit for empowering this group. It's not the individual corruption that is the root cause of the numerous scandals, and the subprime fiasco we see today. Individual corruption is only the result of too much temptation created by the gradual process of deregulating the American economy that started in the 1960s and really took off once Alan Greenspan's "cheap money" policy and Ronald Reagan's "trickle- down" economics combined to create a "utopia of greed" giving birth to the mirror-image of the 1920s, the 1990s.

"‘Atlas Shrugged’ is a celebration of life and happiness. Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should.” -- Alan Greenspan in 1957 responding to a critic of Atlas Shrugged

Even in an ideal world, where everyone starts out on equal footing, Alan Greenspan's thinking is a little harsh, but considering the inequality and injustice that exist, he is either blind as a bat or ruthless as a rat. Alan Greenspan's strong belief in Laissez-Faire...that the government should not intervene to maintain a desired wealth distribution and that it should not protect people from poverty is steeped in hypocrisy considering he made sure the wealthiest citizens were insulated from the harsh mechanisms of the unfettered market.

"What she (Ayn Rand) did…was to make me think why capitalism is not only efficient and practical, but also moral," -- Alan Greenspan in 1974

Ayn Rand basically gave him the permission to blind himself to the ruthless effect "Laissez-Faire" could have on the *"parasites" he speaks of especially when he does not apply it to those who started life at the finish line...but has no problem reserving this sometimes brutal economic doctrine of opposing governmental regulation in commerce for the many people who cannot even begin to find the starting line.

The bottom line is deregulating our economy entirely, requires the regulation of unbridled greed, which requires reducing temptation in the market place which can only be accomplished through edict. Greed is here to stay because it is hardwired into human beings therefore cannot be eliminated, only regulated.

* In all fairness, Alan Greenspan was only 25-years old when he wrote that piece and should be given the benefit of the doubt. I know I have changed my views considerably since I was 25 and hopefully he has too. However, I do think that type of thinking influenced the decisions he made or neglected to make during the time he was Chairman.

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