Why Is America's Monetary System Broken?

The Monetary System is Broken

Excerpt from "Occupying America: We Shall Overcome"

by Rev. Paul J. Bern

Another area where the movers and shakers on Wall Street have gotten completely out of control has been salaries, and especially the outrageous bonuses, being paid to Wall St. executives. This problem has been ongoing for a long time, and it continues to get worse. The scenario usually works out something like this: A global financial catastrophe occurs a la 2008. An outraged public shakes pitchforks at the corporate culprits. Lawmakers respond by proposing some new bullshit laws that appear to require corporations to more fully disclose what they’re doing. Corporate America, sensing encroachment on their hunting territory, goes ballistic. Sound familiar? We’ve seen this story play out before. In fact, we’ve seen this story play out after almost every grand corporate catastrophe over the last 80 years.

For example, back in 1933, with the nation still reeling from the 1929 stock market crash, President Franklin Roosevelt pushed for legislation that required firms to register securities trades and provide basic financial information. That act eventually passed despite fanatical Wall Street opposition. A more modern example? In 1984, a Union Carbide chemical leak killed thousands in India’s Bhopal. U.S. lawmakers had to battle relentless industry opposition before they could pass a right-to-know law on toxic emissions.

Runaway executive pay, almost all analysts now believe, played a key driving role in the run-up to the Great Recession. Executive pay excesses, as President Obama has put it, “have contributed to a reckless culture.” By attempting to avoid the issue, it seems clear that corporations simply want to avoid embarrassment and public outrage, not to mention the attention of congressional investigators, the Office of Management and Budget and the US Attorney General's office, among others. If we are going to be successful in reversing this trend for the purpose of redirecting America's cash flow from the top 1% back in favor of the rest of us, the remaining 99% of Americans will have to forcibly take back what has been shamelessly stolen from us. Political and economic power is never surrendered voluntarily, so forcibly retaking it is the 99%'s only option as of now. Is this too much to ask of ourselves? I think not. In fact, I made up my mind a long time ago that this is the very purpose for which I have been born.

Outrageous pay packages, research indicates, encourage outrageous executive behaviors that range from high-risk investing gambles to outsourcing jobs and cooking the corporate books. The wider the pay gap between the guy in the corner suite and that guy’s workers, the lower the workforce morale, the higher the turnover. In other words, the more cash we let corporations stuff in executive pockets at employee expense, the less competitive our corporations become. Is this any way to run the richest country in the world? Whose lame-brain idea was this to begin with?

Is it any wonder that the US economy has been run into the ground when we find such egregious examples of inexcusable mismanagement, criminal malfeasance and offensive buffoonery? It is abundantly clear to me that the system has been abused so badly that it is no longer functional. Allow me to present a couple of examples taken straight from the Web on what happens when abusive people who also happen to be exceptionally greedy take control of our country's entire governmental system. Vast sums of money are being quietly diverted from the wallets, pensions, banking and investment accounts of the American public just by changing the tax laws to favor the ultra-rich.

Tax cuts for the wealthiest five percent of Americans cost the U.S. Treasury $11.6 million every hour, according to the National Priorities Project. America’s top earners will get an average tax cut of $66,384 in 2011, while the bottom 20 percent will get an average cut of $107. These enormous tax cuts are weighing on the national debt. The non-partisan Center for Budget and Priorities found that the Bush tax cuts costs about the same as the shortfall from Social Security in the ten years after they were signed into law. If the U.S. reverted to Clinton-era marginal tax rates, the U.S. Treasury would net an additional $72 billion annually, according to Citizens for Tax Justice. In addition, increasing taxes on the wealthy could also help to narrow the widening wealth gap. The net worth of the bottom 60 percent of U.S. Households – about 100 million households – is lower than that of Forbes 400 richest Americans. Tax cuts for the wealthy provided Americans making more than $1 million with a $128,832 benefit, while Americans earning from $40,000 to $50,000 got an $860 benefit on average.

Besides the broken tax system, as if this set of problems were not enough, we have a broken monetary system. The US Federal Reserve was created on December 21^st, 1913 and given a 99 year lease to print America's money. This lease was given to an organized group of nameless, faceless investors who formed a private holding company that is the de facto sole proprietorship of the Federal Reserve. (The Federal Reserve Bank is not a public entity, and never was). That 99-year lease expires on December 21^st, 2012. What happens after that is anyone's guess, but you can be sure there will be some kind of power grab made by either US government or corporate entities, or more likely a combination of the two. What many people don't realize is that the US Constitution gives the right to mint money to the Department of the Treasury to begin with, and that the Federal Reserve Bank in its current form is completely unconstitutional and has been from the start. To make matters worse, in all the time the Federal Reserve has been in existence it has never – ever – been audited until just recently. Nobody in Washington, not even the president, knows the true state of the Federal Reserve as I write this, although I have no doubt that many in DC will claim that they do. For that reason, senator Bernie Sanders, an independent US senator from Vermont with (thankfully) no party affiliation, sponsored a bill calling for an audit of the Federal Reserve system that was made public in the summer of 2011. He published a blog post regarding this first-ever Fed audit that was widely cross-posted on the Web, and I offer a short excerpt of what the senator wrote.

“The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the President. One thing already is abundantly clear. The Federal Reserve must be reformed to serve the needs of working families, not just C.E.O.'s on Wall Street....”

The so-called “national debt” is nothing more than the indebtedness of the US Government to the Federal Reserve for the money it prints for our government. For example, when current Federal Reserve chairman Ben Bernanke initiated what he called “QE2” (for quantitative easing), what actually occurred was the need for Washington to borrow more money. This necessity was met by having the Fed print what we now know was $16 trillion dollars in order to flood American markets with liquidity. Unfortunately for the American people, there was a price tag to be paid in the form of interest on the money that the Fed printed. And so it turns out that the United States has to borrow to print its own money, an arrangement whose legality is highly questionable and whose very existence is contrary to the best interests of the United States.

I'm not a politician and have no plans to become one, but if I were President I could solve America's national debt problem in one afternoon. On the first day I am in office, I would send certain platoons of US soldiers to seize control of the Federal Reserve Banks in Washington and all other locations throughout the country, along with local police SWAT teams to arrest all the directors and managers along with anyone else who opposes us. They will all be charged with treason for ruining the financial health and general welfare of the US, or with being accessories to the same, and they will be prosecuted. The Federal Reserve will be immediately nationalized, with the authority to manage and oversee returned to the Department of the Treasury where it belongs, pursuant to Article 1, section 8 of the US Constitution, which says this: “Congress shall have the power... to coin money, regulate the value thereof, and of foreign coin, and to fix the standards of weights and measures”.... Bye bye national debt! In fact, maybe the Federal Reserve banks across the US should be “occupied” until they are returned to the rightful owners, the American people. Now THAT would be something to see!