US Financial System Without an Anchor
by John Lawrence
What kind of financial system is it that's predicated on giving cheap money to the big Wall Street banks, but that's essentially what we have now. The Federal Reserve sees its function as keeping Wall Street afloat. This is how it "saved" the collapse of the entire world financial system predicated on the dollar in 2008 during that crisis caused by credit default swaps, interest rate swaps and other financial instruments of mass destruction as Warren Buffett has called them. The Fed bought up all of Wall street's bad debts by means of a policy called quantitative easing. Basically this was a bail out of Wall Street by taking its excessive debt onto the Fed's balance sheet. As far as taking the debts of the American people onto its balance sheet ... not so much.
Jeremy Corbyn, the UK Labour leader, has called for "quantitative easing for the people." If this policy is good enough for Wall Street, it should be good enough for the average citizen mired in mortgage, student loan and credit card debt. But the Fed, which is privately owned, is not beholden to the people. It is beholden to Wall Street.
The point is that the dollar is not rooted in anything solid like gold. The US went off the gold standard in 1971 when Nixon was President. So the Fed can essentially print money with no restrictions and no restraints. The only possible restraint is inflation which the Fed says is not happening ... or is it? The stock market is inflating. Real estate is inflating. It's still the same old bubble economy. The way the Fed measures inflation is not realistic in today's economy, but according to them there is no inflation.
So the Fed will print money for Wall Street, but not for the people with the result that a few hedge fund managers and bankers are getting extremely wealthy while the US government keeps going further and further into debt, and the average working person's job is being replaced by a robot. Pretty soon the only jobs left will be low paying service jobs, and the transformation of the US economy will be complete. A wealthy class at the top and the hoi polloi at the bottom.