The local TV news did a story on progress about the new Cowboy's stadium in Arlington, which is to be ready in time for next season. The Cowboys will vacate their current government-subsidized quarters and move into swankier digs, also at taxpayer's expense. The stadium is, of course, a place where moderately rich men go to make their living, and where a very wealthy man gets wealthier. Being wealthy requires a subsidy from the citizens of Arlington, Texas, and the greater the wealth, the higher the subsidy. This is not the first time the said citizens have done this. George Bush's one accomplishment as a businessman—aside from looting some energy companies which then went bankrupt—was to persuade the City of Arlington that the Rangers were apt welfare cases. And anybody who has seen them play might agree that he was right. But the subsidy greatly increased the value of George's small share of the Rangers into a sizable fortune, proving once again that anybody can make it in America, provided he was born into the right family and has the right connections.
Jerry Jones's subsidy, if memory serves me correctly, comes to something like half-a-billion. And since the stadium is publicly supported, it was necessary to raise the prices substantially to keep most of the public out. You know, the wrong class of people might track in mud on the new carpet. Now, I think the City of Arlington is very foolish in all these subsidies. Located between Dallas and Fort Worth, the would get development no matter what, and some of that development might produce more revenue, at less cost, then the revenue produced by the eight days a year the Cowboys will actually play a regular-season game in their new shelter.
But whether it was a good idea of not, it was at least an idea that the citizens of Arlington got to vote on. They pay a higher sales tax to support Jerry Jones because a majority of them, or at least a majority of those who showed up to vote, agreed to do so. It might be democracy gone a muck, but at least it is democracy.
Yesterday, $85 billion was given to AIG. In the past year, between bailouts and “injecting liquidity” into the banks, the Fed has spent nearly a trillion of the public's money. But unlike the citizens of Arlington, the public did not get to vote on this. The public treasury is raided, the public accounts driven further into the red. But no act of congress authorized this. The theft of public funds was performed mostly by the Federal Reserve Bank. Who are these gentlemen at the Federal Reserve Bank, and where do they get such power? And where do they get such money? A bridge to nowhere is beginning to look like a bargain, and if money is needed for schools or roads, the Congress bewails the growth of government. But money for wars and money for the rich always seems to be available, and debating the subject is regarded as unpatriotic.
If there was any doubt that America is a socialist country, the events of the last few days should have dispelled those doubts. But it is a peculiar form of socialism, a socialism that is available only to the rich. True, a few bones are tossed in the direction of the general populace, “free-ways” and social security, systems that are crumbling and in danger of bankruptcy. But the main beneficiaries are the wealthy. Like Jerry Jones, they can't seem to make it without some help from the Federal Reserve Welfare Office. The people, by and large, are still capitalists. Not that many of them have much in the way of capital, but they still believe, and believe it so deeply that a candidate who does not present himself as a convinced capitalist is considered to be a convinced communist, unfit for office. This, apparently, is what John McCain means when he says the “fundamentals” are sound: it means that the people believe in an economic fundamentalism that their leaders have long ago abandoned. The public knows of no other choices, because the parties give them no real choice. And what choices are presented to them, by furtive “third party” candidates, are usually “all or nothing” type choices, such as radical libertarians who want to abolish government entirely. Of course, such “all or nothing” choices always work to the advantage of the “all”; nobody chooses nothing; there just aren't that many nihilists. So a discussion of what a proper government should properly do is ruled out before the discussion starts.
But back to the fed. Surely, this is an anomaly in a democratic society. They wield great power, and great money—our money—but nobody elected them and nobody knows quite what they do. We are not even sure if they are part of the government. Some say they are, some say they are a private bank. Who is right? Both sides. The Fed is a key part of that peculiar American brand of socialism. Technically, they are no part of the government. The employees of the bank are not employees of the government and their names do not appear on the Federal Register. The Fed is owned by the member banks, that is the 12 regional Federal Reserve Banks that each federally-chartered bank is required to join. The largest is the Federal Reserve Bank of New York, which owns 53% of the Federal Reserve System, and which in turn is largely owned by Citibank and JP Morgan/Chase. This makes the whole banking system overly sensitive to the needs of two New York super-banks.
But on the other hand, seven of the 13 members of the governing board are chosen by the President of the United States for fixed terms of office; the other members are the chairman of the regional Fed banks; the chairman of the New York bank is a permanent member, and the other slots are filled on a rotating basis by the other Fed Bank chairmen. The Fed has broad powers to regulate the banks, and any profits, over any above the interest payments they make to member banks, go to the Treasury. They are charged with controlling the money supply by varying capital requirements, setting the discount rate, and various other monetary tricks. They have enormous powers in our country, but they are under the direct control of no democratic institution. Oh, the Congress can threaten to change their powers, but in truth, the honorable members of that body are just like you and me: they have little understanding of money matters and are easily intimidated by the “experts” at the Fed. Alan Greenspan learned that he could talk in gobbledygook and the Congress would take his words as if they were spoken by the Delphic Oracle or a financial wizard.
So what is the Fed? It is that peculiar genius of American Capitalism/Socialism: the combination of private privilege and the public purse. Here it is quite literally the public purse, since the Fed controls the purse strings. Profits are privatized; losses as socialized. The “Ownership Society” that Bush talked about at the beginning of his first term has come to pass. Only it means we own the failures after they have drained the assets.
Henry Ford once said that if the people understood how money was created, there would be a revolution before morning. He was wrong. If you tell people how money is created, they will stare at you blankly in disbelief, and dismiss you as a crank. Surely, the banks cannot just create money. But they do. When you sign that mortgage for your home, that note for your car, the mastercard receipt for a night on the town, the money to pay it off does not exist until you sign the mortgage, the note, the receipt. The banks call money into being by loaning it out. People find that impossible to believe. And they should, since it is unbelievable. But it is true. The Fed is supposed to inject some prudence and rationality into the process, but we see what kind of rationality has ruled for the past eight years. The mild expansion in the economy was strictly a monetary phenomenon; it had nothing to do with the expansion of manufacturing, mining, or farming. It was simply a matter of pumping out money for houses and such, and thereby giving the appearance of prosperity, but postponing the day of reckoning.
That day is upon us, and now the sad reality beneath the appearances is revealed. Todo has pulled back the curtain and the wizard is revealed as a sad little man. But you and I now own Freddie and Fannie and AIG. How does it feel to be a big time capitalist? Don't get too used to it, however. Once they start making a profit, there will be a push to privatize them again. The good people of Arlington got to vote on owning stadiums, you had no voice in owning AIG, and will likely have no voice when they sell it.