by Peter D. Moss, 2004 Candidate, U.S. Senate
Snake oil is defined as a substances sold without regard to its medical worth or properties. For example, an oil to put hair on bald men as well as remove hair from women's chests is snake oil. When interest rates are lowered both to reduce inflation a couple of years ago and now to boost the economy, that's Alan Greenspan patent snake oil. There is no truth in either claim, so what is Greenspan's secret intent? It is the same as everything else the Bushist regime does: make the top 2% rich richer by income redistribution from the 98% unrich to the top 2% rich. The rich, you see, keep their wealth in productive assets, not debt instruments like bonds, savings accounts or certificates of deposit. They keep them in real property and plant and equipment or equities representing plant and equipment, and are thus relatively unaffected by low interest rates. Banks make a killing by borrowing cheap but lending near undiminished rates, thus spreading their spread. And last but not least, the new capital is used for tax cuts for the rich and globaloney, loans to foreign lands so they will become "democracies."
About a year ago, a New York weekly published an article titled "Interest rates lowered for banks -- How the Fed helps big banks take trillions from workers, farmers." The article stated that Alan Greenspan's depressed interest rates, lowest in 40 years, are solely for enriching banks whose lending rates have not declined much and whose profits have soared. All this at the expense of the unrich, of course: workers, farmers, retirees. I believe the article is accurate. Asked to comment on the accuracy of the article, Greenspan had a subordinate avoid the question, saying The Federal Reserve Act requires the Fed "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." Goodie two shoes, and not reassuring. The criminal code also prohibits bribery yet nothing happens in Washington without bribes. We are long on law and short on enforcement.
In the good old days, Willy Sutton was a bank robber because, he said, that's where the money is. Today we have robber banks, courtesy Alan Greenspan, chair of the Federal Reserve. Mr. Greenspan has engaged in an orgy of welfare for the banks, brokers and corporations, cutting interest rates 13 times in the past two years. He has brought the federal funds rate, which governs all other interest rates here and abroad, to a 40-year low of 1.25%. A state tax free 3-month Treasury bill bought on February 15, 2000, paid 6.088% on May 11, 2000. Subsequent re-investments every 3 months paid 6.164%, 6.288% [the peak], 4.976%, 3.700%, 3.468%, and finally 1.996% on February 7, 2002. After that it was better to buy a bank CD and pay state tax on the interest.
The AARP, too meek to do its members any good, admitted in an April 2002 article that retirees are struggling with Greenspan's low interest rates, but AARP did not demand that the Fed raise rates.
Banks do not stash excess cash in mattresses. After paying their lobbyists and executives shamefully excessive compensation, and buying up other banks, they still do not pay out any more dividends than is necessary to stay competitive with the Fed's miserly, miserable Treasury Direct yields. What happens to the trillions that the robber banks skim? I suspect they are lent to the World Bank and U.S. International Monetary Fund.
Based on the Multinational Monitor, their loans to Second World and Third World countries are (1) politically motivated and (2) promote globalization for U.S. multinational corporations. More often than not, these loans cause (3) economic and (4) environmental problems in the recipient countries when they are not (5) simply stolen by corrupt regimes. Each of these five factors makes the World Bank and IMF loans objectionable. But worst of all, these federal agencies use our money skimmed by U.S. banks thanks to the Fed's miserly, miserably low interest rates. The original justification of checking inflation has disappeared long ago. Now the Fed uses the sluggish economy and the low Down-Jones as an excuse for its continued intolerably low interest rate policy. Since both a booming, inflationary economy, and its opposite, a sluggish economy, are cited by the Fed to justify very low interest rates, the Fed is not credible. These excuses are intended solely to cover for the robber banks.
The imperialist tendencies of the Bushist regime should not be financed on the backs of America's unrich. That's my opinion and belief. At the very least, the full truth should be presented to the American electorate, to be followed by a referendum. If a majority agree with me, I believe the rediscount rate should also be set by referendum, not by the Fed Board bankers behind closed doors, using untruthful justifications like controlling inflation or re-invigorating the economy.