Did Roosevelt’s New Deal End the Great Depression?

The Skeptics Guide to American History

Episode 18 What Did Roosvelt’s New Deal Really Do?

Film Review

In this lecture, Stoler argues that contrary to popular perception, Franklin Roosevelt was a wealthy, aristocratic conservative in the traditional European sense (see Who Were the First Populists ). Stoler claims he is falsely credited with ending the Great Depression (according to Stoler, World War II ended it). Stoler blames this failure on FDR’s unwillingess to incur debt (as recommended by British economist John Maynard Keynes) to stimulate the US economy. I disagree. In my view, FDR’s failure stemmed from his unwillingness to instruct the US Treasury to create money to spend into the economy (instead of borrowing it), as occurred in Canada and New Zealand.*

When Roosevelt was inaugurated on March 4, 1933, the US was experiencing the worst economic crisis in its history, with an unemployment rate of 25%. An estimated 40-60% of the US population earned below the marginal subsistence income of $2,000 a year. The day after his inauguration, Roosevelt shut all the banks, Wall Street and the Chicago Board of Trade – to prevent investors from collapsing them by withdrawing all their money.

He then called a special session of Congress to pass a banking bill (written by the banks), to cut World War I veterans benefits, to reduce federal salaries and to enact a new tax on beer and wine.

During their first six weeks in session, Congress passed seven major New Deal bills to create jobs and help pump money into the US economy and to better regulate Wall Street to better protect it against future financial crashes. These include the Agricultural Adjustment Act, the National Industrial Recovery Act (suspended US anti-trust laws to encourage price fixing and cartels and allowed for federal regulation of wages and prices), the Home Owners Loan Act, the Civilian Conservation Corps (creating 300,000 jobs for young men 17-28) and bills creating the Securities and Exchange Commission (to better regulate Wall Street), the Federal Deposit Insurance Corporation (which protects depositors’ saving if their bank fails) and the Tennessee Valley Authority (TVA).**

As a result of these measures, the US economy began to recover in 1934.

However in 1935, the recovery stalled as unemployment crept upward towards 1929 levels. In 1935-36, Roosevelt responded with the Second New Deal, which included legislation creating the Works Progress Administration (employing 8 million Americans – 1/3 of the jobless), Social Security and unemployment insurance, the National Labor Relations Board (guaranteeing US workers the right to collective bargaining), a rural electrical electrification program, as well as higher taxes on the weathy and greater regulator control over banks and utilities.

This new swathe of laws generated major claims from business that Roosevelt was a communist and socialist.*** Disturbed by these attacks, Roosevelt began to cut federal spending following his 1936 reelection. Around the same time, the Federal Reserve reduced the amount of money in circulation. These cutbacks totally wiped out the economic gains the US had made between 1933 and 1936, leading to a 33% drop in industrial production, a 35% drop in wages, a 13% drop in national income and an increase in unemployment to 18%.

The New Deal essentially ended in 1938 after 1) the Supreme Court declared it unconstitutional and 2) Roosevelt lost the support of Congress. The Depression would only end in 1941, as military production ramped up following US entry into World War II.

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*Contrary to popular belief, most new money isn’t created by the US Treasury or the Federal Reserve (except in the case of Quantitative Easing, in which the Federal Reserve creates new money to buy back Treasury bonds from private banks). Most new money is created by private banks out of thin air when they make loans.

**The Tennessee Valley Authority is a federally owned corporation created by congressional charter on May 18, 1933, to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development to the Tennessee Valley (a region disproportionately affected by the Depression).

***Stoler makes no mention of assassination attempt against Roosevelt exposed by retired general Smedley Butler. See https://constantinereport.com/smedley-butler-and-the-fascist-plot-to-overthrow-fdr/

****By increasing the reserves required for private banks to create new money.

The film can be view free at Kanopy

https://pukeariki.kanopy.com/video/what-did-roosevelts-new-deal-really-do

Hidden History: A Close Examination of Woodrow Wilson’s Legacy

The Skeptics Guide to American History

Episode 15 Woodrow Wilson and Rating Presidents

Mark Stoler PhD (2012)

Film Review

I confess Woodrow Wilson is one of my least favorite presidents. In addition to breaking his campaign promise to keep the US out of World War I, he is responsible for creating  the Federal Reserve and the US income tax and invading the Soviet Union without a congressional declaration of war. In addition to breaking a second campaign promise to break up the big US trusts (“corporate monopolies”), he also opposed women’s suffrage and enacted policies that increased racial segregation. And while he claimed to be anti-imperialist, he launched more military interventions in Latin America than any other president in history.

Finally in addition to outlawing dissent through the Espionage and Sedition Act (the law under which Julian Assange has been indicted), he was responsible for the illegal Palmer raids involving the arrest, deportation and imprisonment of both immigrants and US citizens campaigning for greater social justice.

According to Stoler, Democratic President Woodrow Wilson only received 42% of the popular vote in 1912 when he was first elected. Because the popular vote was split three ways, owing to Teddy Roosevelt’s nomination by the Bull Moose Party, Wilson won the electoral college vote.

Wilson won his second term outright by promising to keep the US out of World War I. Stoler blames the 1917 US declaration of war on Wilson’s secretary of state William Jennings Bryan. Historian Alison Weir tells a much different story, blaming US involvement in the war on on secret dealings US Zionists and the British government which was suffering major casualties.*

After siding with Wilson’s critics on most of the above issues (he views the creation of the Federal Reserve and income tax** as positive achievements) Stoler goes on to enumerate Wilson’s “positive” accomplishments. These include the Federal Farm Loan Act and the Warehouse Act (to help struggling farmers), the Highway Act (to construct rural roads), the Owen-Keating Act (preventing Interstate shipment of items made with children labor), the Adamson Act (establishing the eight-hour day, but only for railroad workers) and the Kern-McGillicuddy Act (establishing a workers compensation scheme for federal workers).

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*According to Weir, the secretive but powerful Zionist lobby Parushim (run by Wilson’s close friend Supreme Court chief justice Louis Brandeis), promised US entry into the war in return for Britain’s 1917 Balfour Declaration. The latter assured British support for a Jewish state in Palestine. (At the end of the war, control of Palestine would pass from the Ottoman Empire to Britain). See https://ifamericansknew.org/us_ints/history.html and https://stuartbramhall.wordpress.com/2021/07/16/the-hidden-history-of-the-balfour-declaration-and-the-state-of-israel/

**While I would agree that wealthy Americans should contribute more to running the government, a tax on labor, like the income tax, tends to tax the middle class more than the wealthy. In my view, a land value tax is far fairer.  See https://stuartbramhall.wordpress.com/2013/12/24/progress-and-poverty-a-suppressed-economics-classic/

Solving the Covid Economic Crisis: Taking a Page Out of History

Brother Can You Spare a Billion?

Directed by Eric Strange (2000)

Film Review

This biographical documentary, narrated by Walter Cronkite, concerns the head of Roosevelt’s Reconstruction Finance Corporation (RFC), Houston banker Jesse H Jones. The RFC was a national bank owned and operated by the US government (in contrast to the Federal Reserve, which is privately owned). Under the leadership of Jones, the RFC became the “bank of last resort,” lending money to struggling farmers, small businesses and homeowners when private banks refused to give them loans. HR 6422, a bill introduced by Illinois Representative Danny K Davis in March 2020, seeks to address the COVID economic crisis with a National Infrastructure Bank along the lines of the RFC.  (See HR 6422)

Jones, the son of a Tennessee tobacco farmer, left school after eighth grade to help his father. At 19, he moved to Houston to help run his uncle’s lumber yard. When his uncle died four years later, he became the executor of his uncle’s million dollar estate. He used this capital to leverage millions in bank loans to build a chain of lumber yards and over the years, a chain of Houston hotels and skyscrapers. He also ran a Houston bank and was part owner of the city’s major newspaper.

The major cause of the Great Depression that started in 1929 was a contraction in the global money supply, owing to private banks’ extreme reluctance to issue new loans. Then, as now, the vast majority of money (everything but notes and coins) was created by private banks when they issued loans.*

In desperation, President Herbert Hoover created the RFC in 1932, which initially only issued loans to banks (to encourage them to increase their lending) and railroads (1/3 of railroads were already bankrupt and 2/3 on the verge). For ideological reasons, Hoover vetoed a bill Congress passed to allow the RFC to also issue loans to farmers and businesses.

Jones, who first joined the RFC board under Hoover, became its chair following Roosevelt’s inauguration in 1933. The former Houston banker persuaded Roosevelt to expand lending to businesses and farmers, in addition to banks, railroads, mortgage associations, numerous federal infrastructure projects (eg extending power lines to rural American and building aqueduct supplying water to California and to assist struggling states with relief efforts. Putting more money into circulation generated rapid recovery in numerous sectors of the economy.

Rather than fund the RFC via taxation or increasing government debt, the RFC was capitalized via bonds issued to the general public by the US Treasury. It was then given the same power as private banks to create the vast majority of money it lent out.

With the US entry into World War II, the RFC would finance the massive build-up necessary in armaments manufacture. It would be abolished in 1957.

For more information about the bill that would create a National Infrastructure Bank to fulfill the same role as the RFC, contact the Coalition for a $4 Trillion Infrastructure bank at NIB Coalition

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*FDR wasn’t the first president to create a national bank. He was following the example of Alexander Hamilton, John Qunicy Adams and Abraham Lincoln.

**See In Memorium: Monetary Reform Hero Stephen Zarlinga

Meet Noam Chomsky: Academic Gatekeeper

Meet Noam Chomsky: Academic Gatekeeper

James Corbett (2012)

Film Review

This documentary explores prominent dissident Noam Chomsky’s peculiarly pro-corporate neoliberal positions on the Federal Reserve, the JFK assassination and 9-11.

Using archival footage of Chomsky presentations, Corbett begins by outlining issues in which he (and most of the activist community) share Chomsky’s political views.

• Obama was for worse (ie anti-democratic) than Bush.
• Drone strikes are terror weapons.
• Bush merely tortured people, Obama assassinated them without trial.
• The military Industrial Complex only survives thanks to corporate welfare.
• The ruling elite exerts control over the US population mainly via propaganda and indoctrination.

Corbett continues by examining other areas of activist concern that Chomsky totally refuses to address – specifically the Federal Reserve and the role of private banks in money creation, the JFK assassination and government insider involvement in 9-11.

Corbett, like many of us, finds the arguments Chomsky advances on these issues totally irrational and contradictory.

For example, it’s totally mystifying to hear an “anarcho-syndicalist” like Chomsky sing the praises of private central banks and their control of money creation.

In contrast, his dismissal of any “conspiracy” in the JFK assassination seems to be based on a deliberate lie. He claims to have never “looked at” any of the evidence. A prominent JFK researcher disputes, based on a four-hour face-to-face meeting during which he shared a selection of assassination research with Chomsky.

Chomsky’s dismissal of insider involvement in 9-11 is just plain bizarre. His disingenuous claim that the 9-11 Trust movement is made up of non-activists who have spent an hour studying physics, architecture and engineering on the Internet is a slap in the face to the over 2,500 professional architects and engineers who make up Architects and Engineers for 9-11 Truth. As his claim that the 9-11 Truth movement diverts attention from “more serious activism.”

In 2018, Chomsky further solidified is neoliberal credentials with his call for US military involvement in Syria: Chomsky Among Progressives Calling for US Intervention in Syria

Caveat: Several readers have cautioned me that Corbett himself (a prominent climate denier) may also be controlled opposition. In this case, I think his analysis of Chomsky’s neoliberal contradictions are spot on.

 

The Lost Science of Money – Wars Are Won By Bankers, Not Armies

The Lost Science of Money: The Mythology of Money – The Story of Power

by Stephen Zarlinga

American Monetary Institute (2002)

Book Review

This book, by co-author of Congressman Dennis Kucinich’s HR 2990 to abolish the Federal Reserve (see HR2990: Historic Bill to Abolish the Federal Reserve), is one of the most amazing books I’ve ever read. At 775 pages, the lowest price I could find for a used copy was $225 from Alibris. Fortunately it’s also available in PDF format at The Lost Science of Money

It’s clear from Zarlenga’s extensive documentation and footnotes that the research for this book took decades. He essentially rewrites western history dating back to the ancient Sumerians. His goal is to expose and correct all the distortions and myths introduced into official history historians in the pay of merchants and bankers. Both are fiercely committed to perpetuating our current global monetary system in which private central banks create and control the money supply.

Among many others, two of the myths Zarlenga explodes are that the Roman Empire collapsed due to barbarian invasion (he demonstrates very convincingly that Rome collapsed due to a debasement of their currency) and the often repeated claim that excessive government printing of money was responsible for the deadly inflation in the early years of the Third Reich – as Zarlenga points out, it was actually the privately owned central Reichsbank that issued the money and created the inflation.

The Concept of “True Money,”

Zarlenga begins by establishing a clear difference between “true money,” which he defines as money with a fixed value set by law and “commodity money,” in which private merchants and banks issue and control the value of money. In the rare historical periods where governments have issued and controlled money by law, the result has been long periods of political stability and flourishing industry and culture.

The Romans enjoyed the longest continuous period (200 years) of monetary stability. Roman leaders maintained control of their money by prohibiting silver and gold coinage for domestic use – issuing fixed value copper and bronze coinage instead. In this way they prevented foreign merchants from capturing control of their money supply and manipulating the value of their currency.

He Who Controls the Money Controls the World

Zarlenga carefully traces how after the fall of the Roman Empire, control of western money shifted from Constantinople (after the 4^th Crusade which sacked Constantinople – see link), to Venice, to Portuguese traders in Antwerp (after they opened the trade route around the southern tip of Africa), to Amsterdam (following the civil war splitting the Netherlands into Holland and Belgium), to London (after the Dutch prince William of Orange seized the English throne). In each case, control of the money supply was far more important than military strength in consolidating political control.

Zarlinga also clarifies, though careful research, the historical role played by the Knights Templar and Jewish merchants and money lenders in the development of global monetary centers.

The Dutch Usurper Who Chartered the Bank of England

One of the sections that interested me most concerned the founding of the Bank off England – which set the global standard for all private central banks – in 1694. Previously I hadn’t realized that the Bank of England was started by a Dutch king (William of Orange), who usurped the English throne from James II. Nor that his purpose for chartering the Bank of England was to advance the interest of the Dutch merchants and bankers who initially controlled it.

“True Money” in the Americas

I also enjoyed the detailed section outlining the history of government issued money in the US. Again Zarlenga presents extensive and convincing evidence that it was the ability of colonial governors to issue their own money that enabled commerce and industry in the 13 original colonies, as well as enabling them to organize a successful war of independence against England.

Zarlenga also describes in detail the battle Jefferson, Andrew Jackson and their allies fought against the creation of a privately controlled central bank, as well as the immense popularity of the Greenback Congress issued during the Civil War – and the immense national uprising (the populist movement) launched at the end of the 19^th century to save them.

The Federal Reserve Engineers the Great Depression

Obviously the book wouldn’t be complete without a chapter on the criminal conspiracy that lead to the formation of the Federal Reserve in 1913, the Federal Reserve’s role in engineering the Great Depression 26 years later, and Roosevelt’s prolonged battle with Wall Street to implement the New Deal recovery.

HR 2990: Historic Bill to Abolish the Federal Reserve

In 2011, to address the failed US recovery, former Congressman Dennis Kucinich (D-Ohio) and Congressman John Conyers (D-Michigan) introduced HR2990, the National Emergency Employment Defense Act. The bill proposed to abolish the Federal Reserve system and end the ability of private banks to create money out of thin air.* If the bill had passed, it could have instantly ended all federal deficits and debt, while simultaneously providing trillions of dollars for vital infrastructure and restoring funding to states and local authorities for education, hospitals, clinics, housing, police, libraries and other programs cut after the 2008 economic crash.

The late Stephen Zarlenga, founder of the American Monetary Institute and co-author of the bill, always found it ironic that in 2008-2099 the US Treasury “printed” between $3-15 trillion of new money (aka quantitative easing) – as HR2990 proposes. However instead of spending this government-created money into the economy as HR2990 specifies, they handed it over to private banks. They in turn used it to pay obscene CEO salaries and to inflate their stock prices by buying back shares.

Among other provisions, of HR2990 would

• Dismantle the Federal Reserve and transfer its powers to a new Monetary Authority operating under US Treasury oversight.
• Replace all Federal Reserve notes with United States Money.
• Instruct the Secretary of the Treasury to create United States Money to address any and all deficits resulting from a discrepancy between tax receipts and funds appropriated for government services.
• Subject to criminal and civil penalties any person [ie banks] who creates or originates United States Money by lending against deposits through “fractional reserve banking.”
• Prohibit borrowing by the Secretary or by any federal agency or department, independent establishment of the executive branch, or any other instrumentality of the United States (other than a national bank, federal savings association, or federal credit union) from any source other than the Secretary.
• Require the Secretary to begin to pay off all outstanding US debt payment in full in United States Money.
• Prescribe requirements for the entry of United States Money into circulation.
• Require the Monetary Authority to instruct the Secretary to disperse monetary grants to states for public infrastructure, education, health care and rehabilitation, pensions, and paying for unfunded federal mandates.
• Direct the Secretary to make recommendations to Congress for payment of a tax-free Citizens Dividend to all U.S. citizens residing in the United States in order to provide liquidity to the banking system at the commencement of this Act, before governmental infrastructure expenditures have had a chance to work into circulation.
• Prescribe requirements for federal funding of education programs, coverage of any deficits in Social Security Trust Fund account, a universal health care plan, resolution of aspects of the mortgage crisis, and a program of interest-free lending of United States Money to state and local governmental entities.

As Kucinich points out in the preamble to his bill, Article 1 Section 8 of the US Constitution places the power to create money in Congress. In 1913, Congress made the foolhardy decision to delegate this bower to the Federal Reserve system and private banks. Predictably the latter operate the US monetary system (and money creation) in such a way as to their profits – and not for the benefit of the American people. The result has been increasing economic instability, skyrocketing income inequality and growing power of private banks, such as Goldman Sachs and JP Morgan – to the extent they virtually control our so-called democratic system of government.

More information on the American Monetary Institute at their website: http://www.monetary.org/

Link to HR2990: HR2990

In the video below, Kucinich** speaks about HR2990 on the floor of Congress in 2013.

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*Contrary to popular belief, the government doesn’t create the dollars in circulation in the US. The vast majority is created by private banks out of thin air when they initiate loans. See How Banks Invent Money Out of Thin Air

**Like Bernie Sanders, Kucinich was more of an anti-coproratist than a Democrat. He opposed military intervention in Iraq, Libya, Syria and the Patriot Act. As a presidential candidate in 2004 and 2008 he called for single payer health care, free education (including pre-school and university), instant run-off voting, a moratorium on GMO crops, withdrawal from the WTO and NAFTA, ending the death penalty and the War on Drugs and lowering the voting age to 16. He collaborated with libertarian Republican Ron Paul on a number of bills and currently serves on the Ron Paul Institute advisory board. He lost his seat in 2013 after the Ohio state legislature re-districted his Congressional District out of existence.

How the US Uses War to Protect the Dollar

The Gods of Money

William Engdahl (2015)

The first video is a 2015 presentation by William Engdahl about his 2010 book The Gods of Money. It focuses on the use of US economic and military warfare to maintain the supremacy of the US dollar as the global reserve currency.

As his point of departure, he begins with the 1944 Bretton Woods agreement, in which the Allied powers agreed to use the gold-backed US dollar as the world’s reserve currency. In 1971 when Nixon was forced to end the gold standard,* the gold-backed US dollar was replaced by the “petrodollar.” According to Engdahl, it was so named because of a secret agreement the US made with Saudi Arabia – in return for a guarantee that OPEC would only trade oil in US dollars, the US guaranteed the Saudis unlimited military hardware.

In this way, oil importing nations (most of the world) were forced to retain substantial US dollar reserves. This was the only way they could provide their economies with a continuous supply of oil.

The petrodollar remained supreme until the mid-1980s, when the collapse of the US Savings and Loan industry (a pre-cursor of the 2007 banking collapse) raised concerns in Europe that the US was failing as a super power. Fearing the US economy was collapsing, they created the euro and the Eurozone, to prevent the Soviet Union or China from filling the power vacuum.

The financial warfare unit of the US treasury responded by feeding hedge fund manager and currency speculator George Soros secret information that enabled him to lead an attack on the British pound. This, in turn, destabilized the British economy to the point the UK no longer qualified to join the euro.

In 1997 the US Treasury and Soros made a a similar attack on economies of Southeast Asia (Thailand, South Korea, Indonesia, Hong Kong, Laos, Malaysia, Philippines) that attempted to use currencies other than the dollar as their reserve currencies.

In 2010, after the US government had run three years of $1 trillion deficits, China, Russia and Japan announced their intention of selling US Treasury bonds (which the US government sells to finance its debt) to increase their euro reserves. Concerned this placed the US dollar on the brink of catastrophic collapse, the US Treasury and Soros attacked the Euro directly by collapsing the Greek economy. The mechanism Soros used was to direct his hedge funds to dump the sovereign treasury bonds that financed Greek debt.** When the European Central Bank announced its commitment to a Greek bail-out, the US Treasury and Soros followed up with an attack on Irish, Spanish and Portuguese sovereign bonds.

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*A US economic crisis led to massive foreign demand for US dollar redemption that threatened to deplete US gold reserves.

** The immediate effect of bondholders dumping Greek bonds raised interest rates on Greek debt to a level that threatened to bankrupt their government.

 

 

The second clip is a Guns and Butter radio interview with Engdahl. It focuses on a second area the Gods of Money covers, namely the long US battle to abolish their private central bank (aka the Federal Reserve) and end the ability of private banks to create money out of thin air (see How Banks Create Money Out of Thin Air).

After a brief explanation of fractional reserve banking, whereby 97% of our money is created by private banks, Engdahl traces the history of the First Bank of the United States, created by Alexander Hamilton in 1791. The latter was the first US central bank, 80% owned by private (mostly Rothschild-controlled) banks in the City of London and 20% owned by the US government. President James Madison’s refusal to renew the bank’s charter in 1811 would result in Britain and the US going to war in 1812.

When the war ended in 1815, the American war debt was so substantial, the US had no choice but to charter the Second Bank of the United States, which once again was 80% controlled by London banks.

In 1832, Andrew Jackson refused to renew the bank’s charter, and the US had no central bank between 1832 and 1913. In 1913 when President Woodrow Wilson secretly colluded with the global banking establishment to create the Federal Reserve.

Both Lincoln and Kennedy challenged the exclusive role private banks play in creating the US money supply – Lincoln by issuing greenbacks (rather than borrowing money from private banks) to pay for the civil war and Kennedy by issuing silver certificates directly redeemable by the US Treasury. In both cases, Engdahl feels their defiance of the international banking establishment played a role in the decision to assassinate them.

Trump: Expanding the Parameters of Permissible Debate

Lies Wars and Empire

By Michael Parenti (2007)

In this presentation, Michael Parenti focuses on the science of media manipulation and mass indoctrination. He makes his most important point at the end: mass indoctrination never works perfectly. Spontaneous skepticism tends to be a natural outcome of a steady diet of media propaganda. I suspect this healthy skepticism is a major reason why Trump’s attacks on the corporate media have been so popular – and why counterattacks by US intelligence and the mainstream media have been so savage.

Trump is the highest profile politician to ever publicly challenge the official version of 9-11, the job-killing effects of free trade treaties such as TPP and NAFTA, the threats to democratic process posed by investing power in a private central bank (the Federal Reserve) and the long term safety of America’s multiple vaccination regime in children.

Parenti begins with an explanation why, in most cases, peoples’ beliefs are totally impervious to facts. He reminds us that our perceptions are shaped by a number of factors beyond our control, particularly income, status, background assumptions and disinformation.

He maintains that what passes for objectivity in the mainstream media is really conformity of bias – nearly always in favor of corporate capitalism and the status quo. Owing to this emphasis on conformity, expressing a dissenting viewpoint viewed as a radical activity, mainly because it helps expose and expands the boundaries of permissible debate. Because the corporate media only allows an extremely narrow range of debate, you will never see a open discussion of evidence implicating the government in 9-11 or  the JFK, Robert Kennedy or Martin Luther King assassinations.

This lecture examines numerous world events deliberately censored or distorted by the corporate media:

• The war crimes trial of Slobodan Milosevic (who died under suspicious circumstances in prison in 2006).
• The stolen 2004 election (in which election fraud in Ohio, New Mexico, Florida and Arizona wrongly awarded the electoral vote to Bush).*
• The repeated claim that the Soviet Union invaded Afghanistan in 1979 – the Afghan government requested assistance from the Soviets to restore order in the face of a major CIA destablization campaign.
• Saddam Hussein’s 40-year role as a CIA asset in the coup overthrowing Iraqi prime minister Abd al-Karim Qasim and declaring war on Iran.

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*See Stolen Elections

Fed Chairman Yellen Breaks 50 Year Taboo on “Helicopter Money”

At a June 15 press conference, Federal Reserve Chairwoman Janet Yellen made the surprise announcement that the Fed “might legitimately consider” using “helicopter money” in an “all-out” effort to rescue the U.S. economy from a severe downturn.

“Helicopter money,” a term coined in 1969 by late economist Milton Friedman, is money government creates by spending it into the economy.

As economist Richard Murphy describes in The Joy of Tax, government has always played a role in creating money whenever private banks generate insufficient money (by issuing loans from money they create out of thin air) to maintain the smooth running of the economy. Following the 2008 recession, the Obama administration pursued a policy called “quantitative easing,” in which the US Treasury created $500 billion (out of thin air). Unlike “helicopter” money, quantitative easing provided these funds directly to private banks, hoping they would use them to generate more loans. This, in turn, was meant to stimulate business investment and job creation.

Although it probably prevented the US economy from collapsing, Obama’s quantitative easing did little to promote business investment and job creation. This was because the banks used most of these funds for purposes other than making new loans – ie buying back their stock (to increase stock prices) and paying obscene CEO bonuses.

In contrast, “helicopter money”, a policy that has been virtually taboo for fifty years, calls for a central bank to print money and spend it into the economy for social services, infrastructure development, or even a citizen’s dividend. The idea is to put the money directly into people’s hands – rather than using banks as an intermediary – as they are more likely to stimulate the economy by spending it.

As Murphy details in The Joy of Tax, libertarian corporatists obsessed with balanced budgets, government debt and austerity are largely responsible for the taboo against public money (aka sovereign money) that the government creates and spends into the economy. Their position is that only private banks should be allowed to create money – in most cases due to immense financial benefits (from interest payments) they derive from this type of money creation.

Ironically former Federal Reserve Chairman Ben Bernanke also raised the possibility of the US using “helicopter money” as a tool to stimulate a flagging economy in an April blog post.

And in a similar move , 18 Members of the European Parliament have written to European Central Bank (ECB) president Mario Draghi requesting that the ECB should revisit its opposition to using “helicopter money” to boost the EU’s deteriorating economy.

The Hidden History of Big Oil

How Big Oil Conquered the World

Corbett Report (2016)

Film Review

This is an extremely gripping documentary about the hidden history of John D Rockefeller and the global oil cartel. Much of this history, including Rockefeller’s early background, the role of the “oilagarchy” in instigating World War I, Prohibition and their total domination of education, medicine, agriculture and finance has been systematically erased from US history books.

I found the beginning of the film, in which James Corbett talks about JD’s father William Avery Rockefeller, most revealing. Rockefeller senior was a notorious snake oil salesman (and cunning sociopath) who changed his name to Dr Bill Livingston to escape the clutches of the law for fraud, bigamy, rape and various other crimes.

The film traces Rockefeller junior’s entry into the oil drilling business in the 1850s with the formation of the Pennsylvania Rock Oil Company. From the very beginning of his career, JD demonstrated the same knack for treachery, deceit and fraud as his father – in dealings with both business partners and competitors.*

The invention of the internal combustion engine in the 1870s put Rockefeller in direct competition with the electric vehicle industry. Even the first electric cars (built in 1884) had a number of advantages over gas-powered cars. In 1900, they made up 28% of the US market. Thanks to the discovery of plentiful oil in Texas, Rockefeller easily flooded the market with cheap gasoline and put electric car makers out of business.

After World War I, he faced similar competition from ethanol-fueled cars (Henry Ford designed the Model T to run on either gasoline or alcohol produced from agricultural waste). Here Rockefeller and his corporate allies demolished their competition by conspiring to instigate a national anti-alcohol movement. The latter resulted in the enactment of Prohibition in 1919 and a total ban on alcohol. In a similar vein, after World War II the “oilagarchy” conspired with General Motors to acquire and shut down electrified public transport systems in at least a dozen cities.

Rockefeller’s transformation of medicine (by funding and acquiring control of medical schools) into a field dominated by synthetic petroleum-based pharmaceuticals is fairly well known. There is less public awareness that he played a similar role in shaping public education (especially the teaching of history) and the replacement of organic-based farming with industrial agriculture reliant on petrochemicals. Rockefeller played a similar role in secret meetings that resulted in the creation of the Federal Reserve, as did Rockefeller’s Chase Manhattan Bank in the creation of the World Bank and IMF.

Corbett also traces the creation of parallel oil monopolies in Europe by the Rothchilds, the Nobel family and the British and Dutch royal families. Germany posed a major threat to this global oil cartel with a treaty they signed with the Ottoman Empire to acquire a controlling interest in Iraqi oil development. The threatened competition with established European oil interests set wheels in motion for a British-led war against Germany (ie World War I).

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* JD’s favorite motto: “Competition is a sin.”