Steering America for the Money Party

The key appointment of the next U.S. Secretary of the Treasury is the former junior of Robert Rubin and Larry Summers at Treasury, Tim Geithner. He originally came from Kissinger and Associates before moving on from Treasury to the Fed Bank Reserve of New York.

Here Geithner’s main qualifying distinction – not mentioned in press releases – has been as chair of a central committee of the BIS (Bank of International Settlements), a body of chief-executive international bankers which has been the unseen point-man of neoliberalism over the last 25 years. The BIS first cut its teeth on collecting debt reparations from Germany which provoked the rage of the broken country and seeded the Nazi Party – for which the BIS later stored stolen gold. In between, Geithner served the IMF as director of Policy Development and Review in its turn towards decline.

In short, Geithner is an international money-man and banker. This is not what America and the world needs, but it is a clear symbol of what the incoming presidential administration is doing behind all the hoopla of "Change We Need" and "The People’s President". The social security Obama has promised is not for the people. It is for the big banks. More specifically, it is for international private money sequences that bleed U.S. and global productive economies and public coffers dry.

Obama has quietly agreed with the really big shock treatment – $700 billion dollars and climbing of public wealth transferred to the big banks when the government is already in debt-deficit crisis – with another further 25 billion plus 300-billion credit handed out to Citigroup, a Rockefeller bank, and then on November 25, the whole doubled to $1.5 trillion. The mind boggles at the feeding frenzy of the deregulated and failed banks gobbling up all the government money (and future citizen taxes) now handed over with Obama’s support and no clear accountability or condition

Obama and Bush agree that we must "do whatever is required to save our financial institutions". Yet compare their supine surrender to the demanded limitless bailout to Thomas Jefferson’s more practical wisdom: "Banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the Government at defiance. The issuing power [of money credit] should be taken from the banks and restored to the people to whom it properly belongs".

The "monied aristocracy" and its servants, however are now bowed to as an unaccountable and non-productive force bending the nation to its will, with government handing over as much public money as they demand "to keep credit flowing". The democratically accountable alternative is that government reclaims it constitutional powers over money creation and credit to leave the banks in the dustbin of history where the free market has taken their parasitic leveraging of society’s medium of exchange. Yet even when the big banks have shown they are incapable of running the shop, the Obama and Bush presidencies silently fill their tills with money when they have bankrupted themselves by exploiting a deregulated free-market in money-pyramid schemes. Conditions of public ownership of the banks as purchased by the government has not surfaced to the minds of America‘s leaders. They are bipartisan in handing over the keys of the U.S. Treasury to the world’s most rapacious private money-sequencers – up to a $100 billion in fees alone to bail themselves out with public money, with none yet to anyone else.

Why not just hand all government taxing powers over to Wall Street straight out? The better part of a trillion dollars has already gone with no conditions, while auto makers were told they must have exact plans of what they plan to do with less than one twenty-fifth of that before they get any, although hundreds of thousands of workers are on the verge of unemployment without it. Note that the promised over-$700 billion hasn’t saved one homeowner from bank closures on their homes, and credit for the real economy is as stiffed by the banks as before.

The money-men run the show. The people and the real economy go down the hole.

Obama says he is bringing "fresh thinking" to the economic direction of the nation and the world with Larry Summers as chief of economic policy formation. Everyone behind him is thinking that Obama is just doing what he needs to get his program of productive economics, employment, non-oil energy, and environmentally friendly manufacture up and running. It is worthwhile reviewing the record of Summers, Obama’s chief of economic thinking.

The "Fresh Thinking" of Larry Summers

Recall that before becoming Clinton’s Secretary of the Treasury at the turn of third millennium where he mentored Geithner, Larry Summers had distinguished himself as an outspoken ideologue of the money theism which done the damage along with criminal foreign wars. It has stripped America of its manufacturing base and jobs and looted the environment and its resources in a global pollution economy. In a leaked Memorandum as Chief Economist of the World Bank, Summers came to public attention when he gave a harbinger of what we might expect now when he is the man behind the man at Treasury. Summers wrote that the World Bank "should be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]" for three reasons (his emphases):
       1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. – – – I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.
       2) I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. – – [We should prefer] world welfare enhancing trade in air pollution and waste.
       3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. – – – While production is mobile the consumption of pretty air is a non-tradable.
Summers concludes the memorandum with a neo-liberal call for more deregulation and less moral and social concerns. "The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.)", he sternly warns "is that it could be turned around and used more or less effectively against every Bank proposal for liberalization."

After the memo became public, Brazil‘s then-Secretary of the Environment Jose Lutzenburger wrote back to Summers: "Your reasoning is perfectly logical but totally insane…"  Mr. Lutzenburger was fired, but Larry went on to become the U.S. Treasury Secretary, and now his recruit succeeds him.

No Roots in Adam Smith or the New Deal

Adam Smith’s vision of the production of "the wealth of nations" by the free market did not envisage despoiling nations by exporting toxic wastes to Africa to save the polluters from cleaning up their act.

When the God of  "the Invisible Hand" was briefly annunciated by Smith, he was clear that his idea of trade was not in financial derivatives or rights to pollute, but in "tangible goods useful to mankind". For bankers and money sequencers, however, the real economy does not compute. They erase the productive economy and Smith’s proviso of "tangible goods" from the mind. As Geithner has shown, the biggest points are scored not for doing anything economic with public money, but by demanding bail-outs for Wall Street before anyone else and letting sinking homeowners, the escalating unemployed and the real economy go to hell.

This was not how the New Deal worked. It ploughed all the money into public works and productive employment – with one program the Works Progress Administration (WPA) becoming the largest and most good-productive employer in the nation.  It also started old-age and unemployment insurance, and loans to local authorities for slum clearance.

Most all of this needs to be done or improved today, and much deeper at the same time – principally, conversion away from fossil fuels and basic re-tooling of manufacture towards ecologically coherent industry. The eco-energy rescue of the economy is a marriage made in heaven, but is likely the furthest from the minds of the bankers and the new Treasury Secretary appointed by Obama.

Presidential Brand Change for More of the Same

Do you begin to wonder whether this has been just a PR campaign for a presidential brand change to keep the same empire of money, waste and war? Observe that the financial group remains completely in charge even as they have levered America‘s economy and their own looting money-sequences into an abyss.

The longterm results of such thinking have proven to be catastrophic. The cancer era of the global market has increasingly stripped the earth of its species and resources, impoverished the middle class and the poor, siphoned off all the surplus wealth for reinvestment to decoupled money multiplication, and broken the wheels of the productive economy.

Yet all the proofs of failure have been discounted as "externalities" – that is, until global collapse on every level of economy and life organization can no longer be fast-talked away. Or can it? America‘s President-elect is approaching the desk where the buck stops, but the buck is being passed on to the very people who brought us the end of the New Deal and deregulated the financial sector to build the credit collapse of today.

The Deep Fault-Line of the Ruling Economic Rationality

The Obama administration won on the platform of "Change We Need", but now positions his financial and economic policy for more of the same thinking. Summers the teacher has left quite a legacy to his trainee at the Treasury. For Summers, market money-sequencing is the sole source of salvation – this is the deep reason he got in trouble at Harvard for saying women are not good at its mathematics decoupled from the real world. In a lecture at the University of Toronto a few years ago, when he was still Harvard’s President, Summers proclaimed "the essential truth" that all "basic value" – including, specifically, "literacy" – is "linked to market growth".

We may formalize the sacred first premises of neo-liberalism as follows: More Money-Value Exchanges = More Market Growth = More Basic Values for All. No substantiation of ultimate goodness is deemed necessary for the theism of money sequencing. Yet the contra-indicative evidence on the ground is overwhelming. The ecological goods and resources on which every life depends are the most basic values possible, but they have been despoiled at every level with ever more money-rated growth. Growth of money exchanges – which is all that "market growth" means in fact – turns basic values into waste across the world.

If we consider the most basic of values – fresh air to breathe and hear through, stable climate and hydrological cycles, and life spaces to live securely within – growth of the money-sequence economy has, in fact, operated as a global carcinogenic invasion, with "financialization"leading the way. Perpetually turning leveraged money into more money for private money possessors with no life good produced is in principle the logic of cumulative collapse of life support systems and credit itself. Yet, it is hard to believe, the private money sequences and their bank hosts are fed endless billions of public wealth to keep their privately leveraged monopoly of credit going in defiance of the public interest, all backed by future tax money.

Obama’s First Crisis: Forgetting the Past

How could an Obama administration declaring "change we need" give back the US Treasury and America‘s public wealth to the money-men who have managed the collapse?

Consider, in contrast, Joseph Stiglitz, the former World Bank Chief Economist and Chairman of the President’s Economic Advisory Committee, who has learned and written a lot about the money-mind diseconomy pushed by the IMF, and won the Nobel Prize in Economics as a result. Yet he is a non-person to the Obama team and the corporate media.

In a word, Obama has handed the ball of the crashing economy to more neo-liberals whose ilk have brought the crash in the first place. The greatest moments in America’s history which might have instructed him have been forgotten – the 1776 Revolution itself which Benjamin Franklin said was most of all to wrest back control over money issue from the private Bank of England; Abraham Lincoln’s issue of "greenbacks" to go over the head of the New York bankers’ demand of 17% compound interest to fund the war for the Union; and most relevant of all, fellow Democrat, FDR, and his historic New Deal which put the people back to work in rebuilding the real economy that was needed. Never before, not even the Depression, has such an economic turn been demanded to resolve the coinciding energy, environmental, employment and money-value crises at once. But the captain at the wheel is keeping the group who have set the ship towards the reefs in charge.

Selling the Goods

As always in the collapsed system, the truth is what sells. As with other commodities, a magical force metamorphizes believers into a higher existence with nothing in fact changed. The proof of goodness is that people buy the message. But if the people buy the money-cancer rescue, a bail-out banker to lead Treasury, and Summers’ voodoo economics at the same time, America continues into the abyss. A New York banker may spike up stock prices because a banker is in charge, and so tempt back the money-bags who have gone on strike for ever more public money after they have bled the base dry. But this will do no good for the real economy and society going down. There is nothing there but neoliberal ideology and big-money servants with no economic ground.

We are used to the pervasive images and parables of magical cleansers and cosmetics, new vehicles of transfiguring power, aphrodisiac doorways to paradise, redeeming graces for the rejected, and pretend people who care for us. Are they just being re-run again at the macro level of global confidence ad?

We have all been hoping for much better from Obama. But only devotees of the fallen fundamentalism have been lined up to run the U.S. economy.

John McMurtry PhD, FRSC
University Professor Emeritus
University of Guelph, Canada

Relevant books:

Value Wars: The Global Market versus the Life Economy (London:2002)
The Cancer Stage of Capitalism (London and Tokyo: 1999, 2002)
Unequal Freedoms: The Global Market As An Ethical System (Toronto and Bloomfield Ct: 1998, 2000)

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