The Economic Slavery of the 99%

The growth of the “Occupy Wall Street” movement (#OWS or #OccupyWallStreet) and a few arguments with right-wing zealots on Twitter has forced me to revisit a topic many in the past would have qualified as “Conspiracy Theory”.

A few years back, Independent documentary filmmaker Peter Joseph – http://en.wikipedia.org/wiki/Peter_Joseph  - produced the full-length film “Zeitgeist”

http://conspiracyrealitytv.com/zeitgeist2-the-movie-addendum-money-creation-central-banks-and-economic-slavery/

…in which he presented the basis and foundation of economic and money supply theories for the masses.  And while he also wrapped into the film several conspiracies theories *which may or may not be true* and with which *I may or may not agree* (no further comments) – the parts about money supply, debt and interest are powerfully presented and a real eye-opener.

The debate over the soundness of this monetary system has been forcefully presented by many over the years, including by Republican Presidential Candidate Ron Paul of Texas, yet alternative views broadly dismissed as “extremists”, especially as M. Paul and his followers have advocated the complete destruction of the Federal Reserve and a return to the Bretton-Woods Gold Standard pre-1971.

The Gold Standard was FAR from being a perfect system, especially as it didn’t allow for a dynamic allocation of capital to the best and most innovative areas of the economy – And it didn’t prevent countless bank runs – Don’t take my words for it, read the history:

http://en.wikipedia.org/wiki/Gold_standard

However as we increasingly witness the fundamental flaws of the capitalist system post-2008 crisis, it is entirely legitimate that we examine what went wrong.

I am not an advocate for the destruction of the Fed.  I happen to believe that the fractional reserve system can actually be a positive force for capital allocation and broader economic growth (good for the best ideas and innovation); as I always say, a *little* greed does wonders.  And thus abolishing the Fed altogether would not be wise in my opinion; there is no need to throw the baby out with the bathwater.

The far-right argues wrongly that all “Fiat” money (that’s the floating, regular paper money not tagged to gold or silver you and I use every day) has no intrinsic value, that it is doomed to fail one day and with it all your savings.  Well, it’s true in theory – Let’s see why.

Paper money does have a “certain” value.  Its value is what people “think” it’s worth.  And the determination of what this “worth” is, is based upon the evaluation of all the things that makes up a particular economy, a particular country.  Because paper money “floats” in value against other currencies, people get to choose which currency is worth more and which one is worth less (by buying and selling it on the open market – something conservatives like), when compared to other currencies.  That’s the reason the US dollars, despite all the Fed printing of the last few years still retains a “strong” value against other floating currencies.  Take the Euro for instance; right now, people think that Europeans using the Euro will be less competitive in the coming years, that they will have steeper economic problems than the US – and thus the value of the Euro erodes against the dollar.

Now in theory, a country and all its workforce, competitiveness, inventiveness, innovation, public and private spending, etc – all of that – could be wiped out by a horrible event say, a meteorite smashing New York City or a devastating earthquake submerging the whole of California under the Pacific.

And yes, for some time after such a catastrophe, the currency would lose a lot of its value – until such time whereas the country started to do better again.  Take Japan.  The Yen lost a big chuck right after the earthquake and following tsunami, only to return to its previous value a few weeks later, when investors were reassured that nothing in the long term would fundamentally alter the foundations of the Japanese economy.

And so, to say that Fiat money has no value simply isn’t true.  It’s based on faith, the faith the market (here’s that word again) has in a particular economy.  And judging by the strength of the US dollar, despite all the right-wing crying foul about the Fed printing money, the world still have faith in the USA.

http://thebasispoint.com/2011/06/23/quantitative-easing-rate-recap-timeline/

Floating currencies become a BIG problems when *some* governments do not allow theirs to “float” against other currencies and nothing is done about it.  That is the main problem with China and the reason why so many of our industries are not competitive against China.  The Chinese government tags the value of its Yuan rather than let it float, and the US government is right to scream at the Chinese for it.  One of the biggest contributors to all of us buying Chinese rather than American goods at Wal-Mart is that we continue to trade freely with China even as it continues to deny its currency to float.

I cannot talk for our government, but I think the reason behind this is that they hope to “build up” a middle-class in China for a while longer (with our purchasing power) until the Chinese themselves can become strong consumers – and in theory, when that finally happens, the world will be able to enjoy a billion more customers purchasing goods from all over the world, the largest ever market.  That’s when the Yuan should start to float freely, or so the theory goes…

Now, returning to the US dollar – For a very long time, the USA enjoyed a very stable dollar and no bank runs, thanks to the Glass-Steagall Act.  It was foolishly repealed by Clinton and right on cue, 10 years later, we experienced the largest financial crisis in history, the same kind Glass-Steagall was put in place to protect against after 1929.  It needs to be re-instated. Now.

http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

One more thing – Unregulated, the Fractional Reserve System does only benefit the very rich and the corporations in the long run, to the detriment of everyone else (1% VS 99%).  The 1% control the mass-media and advertizing and (of course) will do everything in their power to maintain their dominance over the 99%.  They have lost their ways, and their greed has grown unchecked, extreme and unhealthy.  And because they also control elections and politicians (by funding their elections – now unlimited thanks to the Supreme Court decision “Citizen United”), they have rigged the system to their sole advantage.

*UPDATE* – Who are the 1%? - http://motherjones.com/mojo/2011/10/one-percent-income-inequality-OWS

THIS is why the “Occupy Wall Street” movement (and its sister, the “#GetMoneyOut of government” movement) will continue to grow, and will do so until all basic inequalities are removed from the current unfair system.

Indeed, there are solutions, and those need NOT be communism, anti-capitalist or extreme-left policies.  It’s called “Social Democracy”.  And in such systems (Canada for instance) the PEOPLE come first and the 99% live productive and relatively prosperous lives, while the 1% innovators still receive excellent rewards for their ingenious efforts.

Indeed, in a FAIR and HUMANE society, we MUST tax the highest earners and rich corporations MORE as the ONLY way to end economic slavery for the 99%.  That IS the point of “Progressive Taxation”, “Inheritance Tax” on the wealthy and “Wealth Redistribution” through programs designed to ensure upward mobility for all and a real shot at the American Dream (healthcare for all, affordable higher-education and daycare, efficient public transportation, clean environmental policies, support for the needy and the disabled, etc.)

Without those programs, the rich would always be the only winners of the capitalist system.

*** And the very first step (right after the re-instatement of Glass-Steagall) is to finally place the Fed under the control of the US Treasury Department, the way it is in other industrialized countries.  The era of the US Central Bank run by the bankers and for the bankers MUST stop, and the fundamental fallacy of the “debt” contained in each dollar must return to those issuing the notes: The American People. ***

We MUST also support strong Unions for all workers: as the value of the currency will decline due to inflation (“built-in feature” of the fractional reserve system) workers MUST be able fight for their rights, and wages MUST be adjusted upward on a regular basis in order to counteract the effects of such inflation and maintain their purchasing power.

As Americans, we are ONE family, ONE group and ONE people, regardless of race, creed, sexual orientation or faith.  We must ALL rise and fall together; to defend and enrich only one’s close circle in a “Me-Myself-And-I” way amounts to class-racism and economic bigotry.

And that would be fundamentally Un-American.

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One thought on “The Economic Slavery of the 99%

  1. Pingback: 99 % Movement

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