Dear Capital Account Viewers & Fans,

Creating and producing Capital Account for RT has been one of my greatest professional privileges. I can’t imagine another network that would have allowed me such incredible editorial freedom to create and produce such an independently minded, creative and honest program. I also had the opportunity to work with some tremendous people, and first on that list is unquestionably Lauren Lyster.

In light of how popular Lauren has become with our audience, and how much adoration they have showed her over the course of our show’s existence, I can say unequivocally that only a fraction of her talents, abilities and immense intelligence are readily evident on television. She is the star that made my dreams for this show, for its message and for its entertaining style possible, and for that, I am forever in her debt.

It would be impossible to start listing the names and qualities of all the people I have met on my RT journey the past 18 months. Doing so would challenge the dwindling attention spans of modern audiences. I will simply note that, as with any endeavor that attains the type of success we have had with Capital Account, the contributions of unsung heroes are limitless.

And here, I would like to take the time to thank the “most unsung” hero of them all…our audience. I have learned through my experience working in news that garnering an audience and attaining the respect and appreciation of a growing mass of people depends more on that group’s willingness to listen than it ever does on a production team’s own talents of communication or expression. If it were not for all of you truly special and committed people, who have had the patience and clarity to seek out our show and appreciate it for its message, its style, and hopefully its heart, then my time here would have been very short indeed. My gratitude to you for this can never be expressed in words, so I will not even attempt to try. I will simply say that it has been my privilege to produce a show that brought on the type of quality guests and generated the sort of insightful conversation that I know all of you have, and always will, thirst for.

It is on this last point that I hope we have made our greatest, unrealized contribution, and that future shows on this network and others will find a way to continue speaking TO you, not FOR you, and that you will entrust them with the invaluable attention and respect that you have so generously entrusted to us.

Thank you for the memories,

Demetri

Ever since taking on the job of producing Capital Account in the early fall of 2011, I have not found much time to contribute content to this blog. Although I hope to find the time to write again, I would like readers to know that, for the foreseeable future, the best way to find my work is to watch Capital Account. We continue to do great work there with a team that is growing, and Lauren is an incredible host.

If you don’t have access to cable or satellite, you can also watch the show at www.youtube.com/capitalaccount or at http://www.hulu.com/capital-account. You can also follow me on twitter at CoveringDelta.

On today’s Capital Account, we were lucky to have both economist Dean Baker, as well as deputy editor of Business Insider, Joe Weisenthal on our program to discuss a few things. The interview with Joe is what I would like to focus briefly on though [comes in at 16:50], because it was relevant to a post he published today titled “DEAR SAVERS AND RETIREES: Stop Whining About Those Lousy Rates You’re Getting From The Bank.”

In the post, Joe contested the notion that savers should be earning a return on their money. We thought it would be fun to have him on, because it was clear that his post was going to inflame the opinions of various people. Joe is of the opinion that negative real savings rates (although I do not believe the hedonically adjusted, geometrically weighted and substitution laden CPI, even this phony number is higher than the interest you would earn on a 3-month CD) are where they are not because of the Federal Reserve and central bank instituted financial repression (as PIMCO’s Bill Gross calls it), but because of the realities of a bad economy.

This couldn’t be further from the truth. Absent a Federal Reserve, we would be in a deflationary period. Prices would be falling, which means that your savings would be earning a real return irrespective of what the nominal interest rate on your CD is. You could be earning zero nominal interest at the bank, but when you took that money out 1 or 3 or 5 years later, you would be able to buy more stuff with it. In particular, you would be able to purchase assets at a much cheaper price. Although we have had asset price deflation since 2008, the extent to which prices are being propped up by the Federal Reserve and other government actions is simply unknowable due to the historically unprecedented balance sheet expansion of almost 4x in the past 3 years, along with a policy of zero-percent interest rates.

Credit driven booms always end as a result of credit contractions. The “boom” we had during the middle of the 2000′s was driven by a mortgage refinancing bubble. That bubble burst in 2007-2008, and it burst because people slowly, and then quickly, went from being buyers to being sellers, and from extending credit to contracting credit. The contraction of credit in an economy means that savings become more scarce a) because the saver begins to demand higher and higher interest payments as he/she reappraises risk upwards in the marketplace and b) because savings are destroyed through bankruptcies, default and liquidations of malinvestment as banks go under. Savings are what drive investment. If you don’t have savings, then you can’t have capital formation, which occurs when savings are put to work for the purposes of creating profitable enterprise and economic growth. When the supply of savings becomes more scarce, the price of those savings rises, which is reflected in the interest rate. The interest rate is actually the price of money. It is the cost of capital. It is the price that a borrower is willing to pay for someone else’s money. Therefore, it behaves exactly as one would expect any price to behave. It reacts every second of every minute of every hour of every day to the normal fluctuations in supply of and demand for money in the market place. The marketplace is the credit and capital markets. When they froze in late 2008, it was because the savers (i.e. those with money) were no longer willing to lend their money out at any price (i.e. interest rates shot up through the roof) irrespective of the intense demand for that money by firms like Lehman and Citigroup. Everyone wanted money, and no one was willing to lend it. In addition, everyone was selling, and no one was buying. A cascade of prices had a feed-back effect on credit, because credit is extended off the back of asset price inflation. Things are good during the boom, as money goes for cheap, but during the bust, credit can quickly evaporate into thin air.

It seems to be Joe’s contention, and that of others, that in a period where uncertainty abounds, and investors are more concerned with the “return of their money,” as opposed to the “return on their money,” interest rates should be low. This is because, in his view, people are willing to pay any price to keep their money safe. I agree with him, and this would explain why treasury yields have fallen during a period where LSAPs have been tapered off, but this is hardly the entire story. Interest bearing savings accounts have been negative, in real terms for most if not all of this crisis, even while the stock market was rebounding from its March 2009 lows. In fact, savers have been punished irrespective of what the market and investors have been doing with their money, and this is because the central banks are dictating what savers should and should not earn by virtue of their interest rate policies. The market is not determining the rate of interest for savers, as should be the case, but rather, it is the central banks that are doing it. And they have decided that savers should be punished for not taking the risk of investing or speculating with their money. They are trying to force savers, at gunpoint, to put their money into the stock market, or into their home, or anywhere – just not at the bank. This seems counterintuitive, since you would think that banks want your money, but the reality of our current money system is that so much credit has been extended by the banking system, that if banks were actually forced to compete for savings, there wouldn’t be many left standing by the end of the process. The healthiest banks would quickly suck up all the savings, and the rest would collapse. Therefore, banks want zero interest rates and special loan facilities. This is the only way to fund the banking system now. If banks actually had to fund their operations through savings, we wouldn’t have a banking system today, because it would collapse instantaneously.

When Joe says that savers should basically shut up and deal with a negative return on their hard-earned money, what he is really saying is that central banks have a right to decide how much of your own money you get to keep. This philosophy is what has created this depression (and I believe we are in one, not so technical, depression) to begin with, because each time we had a rescission, it was met with “accommodative” monetary policy. This is another way of saying that the Fed intervened in the interbank lending or fed funds market to push down the price of money (interest rate) when savers were demanding higher interest on their money. Why were they demanding higher interest rates? Because, money was becoming more scarce as debts were being liquidated and the investment landscape was being seen as riskier than before, therefore warranting higher returns for that extra risk. These are periods where it “pays to be in cash,” but the Fed, and other central banks, don’t like this. They no longer seem to think that it should ever pay to be in cash. The philosophy that was adopted by the Greenspan Fed in particular was one of keeping the pedal to the monetary metal all the way through the smokey, crash ridden turn, and pray to god that they don’t hit anything. Right now is one of those periods, where it should pay to be in cash, but the central banks are hell bent on preventing this. Their obsession with preventing price declines and credit contractions is why people like Mohamed El-Erian are coming out with words like “Paranormal” and “Bi-Modal Fat Tail Distribution” to describe the investment environment. The saver is no longer able to decide whether it is better for he or she to remain in cash or to jump out of cash and into assets, because the central banks are leaning against the wind and no one knows yet whether the wind or the crew will win out.

I may have digressed here a bit, so let me just get back to one other point that Joe made in his article, and that many other people make. In response to those who suggest that we raise rates, Joe says:

We’d be incentivizing people to save more at a time when the biggest problem is a lack of investment and hiring. And we’re not even convinced that rates would rise. Think about it: An interest rate hike would discourage people from taking risk, meaning they’d dump their stocks … and buy Treasuries, driving the curve even lower!

Sorry, but it simply isn’t true that the biggest problem is a lack of investment and hiring. That is a symptom of a private sector that doesn’t see sufficient opportunities on the horizon to warrant borrowing other people’s money (or even using their own capital) to make investments in the future. Business would rather sit on that cash, wait for the economy to contract and for more bankruptcies to occur, and then begin to deploy that capital. It’s this type of thinking that supports the logic behind ZRIP and deficit spending. If the only problem is investment and hiring, then just get the government to do it, right?

The Fed has been able to overcome periods like this in the past by pushing the rate of interest earned on savings lower and lower, until now, where it is at zero and will remain there for the indefinite future. The government, in turn, has engaged in deficit spending, trying desperately to offset the drop in aggregate demand seen in the private sector, so as to hopefully incentivize more investment and more hiring. It isn’t working this time though, and the smooth tongued wizards can’t seem to figure out why. The reasons is simple: the private sector is burned out. It doesn’t want to borrow anymore. And this obsession by mainline economists and other pundits with growth, and the need to expand economic growth at all costs, is part of the problem. You need sustainable growth (actually, you don’t need growth at all, as Chris Martenson has pointed out, but that is another story for another time), and the private sector is in a far better position to create sustainable growth, absent certain depleting resource constrains and environmental degradation, than the government. The private sector isn’t in the business of creating jobs. The jobs are a consequence; they are not the objective. When the objective is jobs and growth, irrespective of what kind of growth and what types of jobs, then you get massive capital misallocation, which shows up in the form of housing bubbles, or excessive car building, or whatever. The soviet union was expert at this. They actually managed to create products with NEGATIVE value. In other words, they dug up and put together goods whose component parts were worth more than the final product. This is UNSUSTAINABLE growth, otherwise known as WASTE, and it doesn’t matter how low you make rates, or how much you divert spending from the private sector to the public sector, you can’t get around the economic reality that you can’t get something for nothing. You can’t go around creating profit-losing enterprises and negative-value products and expect to not drive your economy into the ground. You also can’t function with the subconscious idea that resources are infinite, and that therefore, growth is infinite. You can only fuck up so many times before reality puts on the breaks, and that’s where we are today.

So, I guess my response to the argument that savers should be happy with a negative real return is that is should be left up to the saver, not the central bank, to make this determination. Of course, if the market were left to decide, real interest rates would sky-rocket, because the economy would contract, and the only service that a depositor would pay for would be the fees associated with storing his/her money. This is essentially what people have been doing with gold. This is why some very smart people have been in precious metals since well before the crash of 2008, and have been storing those metals in their own homes or at bullion vaults and gladly paying a fee for the service. The metals have been appreciating in value, despite the fact that they do not yield a return, but rather cost the owner for holding them. This is exactly what you would expect during a deflation, and I think this is where people like Joe miss the point. It is exactly because you demand a return of your money over a returnon your money, that people expect a positive return on their savings. It isn’t that we need a positive nominal yield, but rather that we expect to at least sustain if not grow our purchasing power during bad economic times. In this sense, gold and other precious metals have been a safe store of value for investors who do not trust the banking system (FDIC insurance included), but who also want to hedge against central bank monetary debasement. But I’m digressing again.

Hope that wasn’t a ramble.

I had a chance to interview former Federal Reserve Vice Chairman Alan Blinder, on Capital Account last week. I started off this interview with some questions about the Greenspan administration, which you don’t actually see in this episode. Rather, this interview starts with a video that I play for the former Vice Chairman of himself speaking at the Woodrow Wilson Institute on the origins of the 2008 financial crisis. I used the clip to inquire about interest rate fixing, and the role of the Fed in setting the price of money. I was surprised that Alan Blinder admitted that the Fed actually doesn’t know what the right interest rate should be, although he did not seem to think that the market could set the interest rate better than a board of economists.

This picture was created by our graphics department here at RTTV. It was supposed to be put on the plasma during our “loose change” segment at the end of our show today, where Lauren, Shannon and I banter back and forth about funny little stories. Shannon is a Packers fan, and I thought it would be funny if she unexpectedly saw the graphic come up during a completely unrelated topic. Unfortunately, Shannon saw the graphic before I was able to sneak it into our show’s rundown, making it no longer a surprise…and therefore, not really funny.

Still, I didn’t just want this image to be wasted, so I decided to post it here. It’s not economic, but hopefully there are some sports fans who read this blog, and who find the image humorous.

Yesterday, on Friday the 13th, we fittingly invited the CEO of PIMCO, Mohamed El-Erian onto our program. I say fittingly, because the guys at PIMCO have advanced their new “paranormal” thesis onto the media-sphere, and it has gotten quite a bit of attention. To be fair, there is nothing new about this hypothesis. Plenty of people in the investment community have viewed the world in this way for quite some time, but PIMCO does a good job of marketing themselves and their ideas in a way that gains them notoriety and traction. Still, it was exciting to have someone who the mainstream media adores on our program, because it further legitimizes, in my view, the quality of our work and the skills of our host, Lauren Lyster.

Before I leave you to watch the interview, I want to point out one important thing that El-Erian mentions, which is the foundation of the debt-based money system: the sovereign bond market. This is, in fact, what I and many other bloggers and investors have been concerned with since the government stepped into the breach in 2008, turning private liabilities into public debts. The bad bets made by hedge-fund stylized banks and insurance companies with kleptocrats for CEO’s, were transferred onto the public balance sheet, which has served as the foundation for the global economy’s debt-based money system since we went off the de-facto gold standard in 1971. It was plainly obvious back then that all we were doing was playing “hot potato depression,” buying a little extra time before the next crisis hit: the sovereign debt crisis. We are now there, and unfortunately, there is no where left to hide, because sovereign bonds have functioned as the risk-free asset upon which all other debts and credit are pyramided. This is what El-Erian meant when he responded to Lauren’s question about the monetary system being at the end of it’s rope with those three words: “risk free, triple-A, and government debt.” It’s absolutely unclear where we go from here, but the only thing certain is that we do not go back to the economic growth model that we had over the past 40 years.

I was forwarded an article by a seemingly “progressive” writer named Matthew Yglesias. I just want to point out how confused this guy is about economics. I’m really surprised at how many people publish opinion pieces on economic theory with zero understanding of the subject. It’s like a cult of authority worship that I find especially prominent amongst the “intelligentsia” crowd of guys/gals who went to the top schools and were always told they were really smart. There are a lot of them here in D.C. where I have relocated. I’m not sure why this is the case, though I have some off-beat theories about it that I won’t bother you with now.

Anyway, here is the portion of this guy Yglesias’ piece on economics that caught my eye. Emphasis is mine:

The way this works, according to the Austrians, is that artificially low interest rates spur “malinvestment” in unworkable enterprises that inevitably crash when the stimulus is withdrawn. This is an emotionally appealing idea, positing that the suffering of a bust is a kind of cosmic payback for the boom. But it doesn’t make much logical sense. For one thing, as George Mason University economist Bryan Caplan, who’s ideologically sympathetic to the Austrians, points out, it’s hard to understand why businesspeople would be so easily duped in this way. If Ron Paul and Ludwig von Mises know that cheap money can’t last forever, why don’t private investors? Why wouldn’t firms avoid making the supposedly dumb investments? Ironically, the Austrians have replicated an error from the crudest forms of postwar Keynesianism—the failure to consider the role of expectations feedback in macroeconomic policy.

Let me answer this question plainly. First, the author doesn’t understand that speculators often do believe that interest rates are too low and know that cheap money can’t last forever. In fact, the best evidence for this comes from the mouth of Citi Group’s former disgraced CEO, Chuck Prince, in an interview he gave with the Financial Times in July of 2007:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” he said in an interview with the FT in Japan.

In other words, as long as rates are low and money is cheap, we are going to continue to borrow and speculate. We are going to continue to play the game. This is coming from the mouth of the CEO, of what was then, the largest company in the world by assets. If this guy was willing to continue rolling over his positions with cheap, short-term financing in a game that he knew could end at any moment, why was he doing it? Well, because he made a shit load of money, that’s why. So this negates entirely Yglesias’ first point, that somehow astute businessmen won’t knowingly participate in a carry trade if they think that the spread they are betting on is being artificially propped up. This, Matthew Yglesias should have known on his own. This doesn’t require understanding how interest rates work in order to recognize, and it just shows that he didn’t follow the financial crisis closely enough to be opining on it.

Second, Yglesias doesn’t understand what interest rates are. Interest rates are the price of money, and like all prices, they are constantly moving. The market rate for money is set every second, of every minute, of every hour of every day. The Fed sets a nominal target for that rate that it announces to banks, and then uses open market operations in order to put its “money where it’s mouth is.” So, because the fed is manipulating the price of money all the time, no one actually knows what the price is, so no one can know if it is too high or too low. This is why Yglesias would still be wrong, even if risk-loving speculators like Chuck Prince didn’t exist. If you are a car manufacturer, and your consumers have been increasing demand for your cars for the past 5 years in a row, and you project increases for the next year, is it your fault for not knowing that we were in a low interest rate environment, and that therefore this boom in car sales was about to collapse? This is ridiculous.

Anyway, I was told that many people have already offered their two cents on this, but I just had to say something given how uninformed the author is. Unfortunately, this is the norm. You have a lot of sheep out there, parroting this or that about economic theory, which makes no sense. In this case, it was particularly easy to point out the low-level analysis, because Yglesias could have easily caught himself if he knew anything about the history of financial speculation.

If, for some reason, you need an explanation, then I suggest you read the article that I posted just ahead of this one.

And just in case you are missing some of the very “in your face” allegories, not only is this the golden cross of William Jennings Bryan mention, but the nails that are securing his arms firmly extended are made of…yes…silver. The same silver that the midwest farmers wished to introduce as part of a move towards bimetalism in the hopes of breaking the gold standard money trust of the Gilded age. The same silver that Dorothy used in her slippers to glide comfortable along that long forgotten yellow brick road…

And lastly, since Lloyd has told us that he is doing “God’s work,” I think it only fair that he should be prepared to suffer the ultimate sacrifice that Jesus, another servant of God, was willing to endure for the Father: the Crucifixion.

Anything less would be blasphemy Blankfein. We are all counting on you, including your disciples…

The "Cross of Gold" Speech, William J. Bryan (1896)

For those at all familiar with the populist movements of the late 1800′s and the calls for “free silver,” you may find this metaphor most interesting. Of course, I am referring most specifically to that famous “cross of gold” speech delivered by William Jennings Bryan at the 1896 Democratic National Convention in Chicago, in which the Nebraska congressman and future secretary of state declared:

“Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.” – William J. Bryan

Now, it is somewhat ironic that the populist position during the Gilded age when Bryan rose to prominence was one of easy money, while the arguably populist “Ron Paul Revolution,” erects as one of its major platforms, the return to a gold standard. Bryan was a progressive, while Paul is a libertarian. Byran was a defender of labor through credit, while Paul is a defender of labor through capital. If Ron Paul were on the floor of congress during William J Bryan’s time, I suspect the later would accuse the former of being an agent of the industrialist monopoly men. And he may have been correct, but why?

I certainly won’t claim any expertise on the political and social history of post-civil war American. My only encounter with it has been peripheral, having studied it inadvertently through the works of people like Milton Friedman and Howard Zinn in “Monetary History of the United States” and “People’s History of the United States” (ironically, two books whose almost identical titles are the only thing that the two works, as well as their authors, have in common), as well as through the biographies of people like William Jennings Bryan and JP Morgan. That said, it cannot be argued that the industrial revolution was, just what that often abused word implies, anything short of a revolution. It was a fundamental change in the organization of American life, and it took place in an extraordinarily short period of time – in less than a single man’s lifetime (literally, as John D. Rockefeller lived from 1839-1937).

Anytime you have that sort of rapid change, you are bound to see fractures and schisms, as that part of society which failed to catch up looks to “right the wrongs” as it were of the new state of social and economic affairs. During the time of Bryan, that wrong was the wealth disparity that opened like a giant chasm between the owners and employers of capital, and the laborers who needed that capital in order to work and survive. Clashes between capital and labor became quite common during the period, and resulted not just in firings, as was the case during the famous air traffic controller’s strike of the Reagan administration many years into the future, but actual fatalities. The famous “Pullman Strike” that followed the panic of 1893, was not resolved until the US Army was brought in at the behest of the railroad and under the direct orders of Grover Cleveland, a Democrat no less.

Illustration from Harper's Weekly Courtesy of Chicago Historical Society

And even the latest “battle” that was so heavily covered by mainstream outlets like Fox News and MSNBC, fought by the public workers in Wisconsin, was not a war against capital. These workers were waging a war against their own state government. In fact, labor disputes, with the exception of professional sports, don’t carry the weight they once did. When a company can just move jobs overseas, what pull do labor unions really have in America anymore? When a company as innovative and profitable as Apple (for a brief time the largest company by market capitalization in the entire world) manufactures its products outside of this country, I think it’s safe to say that labor, as it has traditionally been thought of in America, has lost the fight. It simply doesn’t have the ammunition to hold capital at bay anymore. The imagery of “labor vs. capital” that is pushed by people like Ed Schultz is a relic of the past. It is a fantasy. It doesn’t exist. Labor is dead in America, and it’s because they have been fighting the wrong fight – they are fixated on the wrong enemy.

Truth be told, the enemy of the American worker is no longer capital. The great industrialists are no longer, now having been replaced in full force by bankers – droves of them – who now populate Wall Street and the City of London like a swarm of termites, eating at the very core of the world’s capital infrastructure. This is not to say that bankers did not represent a hideous breed of insect during the Baronial age, they most certainly did. JP Morgan famously worked alongside the industrialists of the time to help erect and later maintain the sort of monopolies that are anathema to real capitalism. But bankers had gone from being lords of the manor, as they were prior to the industrial revolution, to having their position of power threatened by the very wealth that, through their syndications and stock offerings, they helped create. The industrialists and robber barons of the Gilded age had generated so much wealth that by the start of the 20th century, they were in a position to finance, through free cash-flow and large balances, the entirety of their own operations and investments:

“My own financial operations have been very simple. I started with the policy of buying and selling for Cash, keeping a large fund of cash always on hand, taking full advantage of all discounts, and collecting interest on bank balances. I regard a bank principally as a place in which it is safe and convenient to keep money…The place to finance a manufacturing business is the shop, and not the bank. I would say that a man in business needs to know nothing at all about finance, but he is better off knowing too little than too much, for if he becomes too expert he will get into the way of thinking that he can borrow money instead of earning it and then he will borrow more money to pay back what he has borrowed, and instead of being a business man, he will be a note juggler, trying to keep in the air a regular flock of bonds and notes…We are not against borrowing money and we are not against bankers. We are against trying to make borrowed money take the place of work. We are against the kind of banker who regards a business as a melon to be cut…The time for a business man to borrow money, if ever, is when he does not need it.”

- Henry Ford, My Life and Work (Chapter 11: Money and Goods)

Contrary to popular belief, bankers don’t actually want the borrower to pay back the loan. They want to find that perfect interest rate which will create a steady yet large return on capital in perpetuity, with the balance of the loan remaining psychologically manageable in the mind of the borrower, but by any objective calculation, incapable of being repaid. A company like Apple, with a levered free cash flow most recently of 20 billion dollars, and that had more cash on hand at one point than the US treasury (at $76 billion in the month of August) is JP Morgan’s worst nightmare.

But Apple is the exception (and who knows, maybe even Apple isn’t all that tough in today’s Bankocracy) in a world where the owners of capital bow before the issuers of credit as though they were modern day serfs – a slight exaggeration, though not an unwarranted one. And that’s the dirty little secret that shows like “Ed” on MSNBC and “Bill O’Reilly” on Fox News don’t want you to know. If you are part of the “99%”, it isn’t the “1%” you should be mad at, and likewise, if you are part of the “1%” it isn’t the “99%” that you should be afraid of. It isn’t the owners of capital that are your enemy if you are unemployed, and it isn’t the unemployed that are out to get you if you have capital. The unemployed by and large aren’t lazy, and the rich by and large aren’t greedy. It is those privileged few in society who need neither capital nor labor in order to live high on the hog that we should all pay close attention to. In a really perverse way, the enemy of both capital, as well as labor today is credit. Credit, backed by fiat, convention and the force of law. The enemy is a cartel of highly interconnected and criminal banking oligarchs who function in a vacuum of capital, but by the grace of modern central banking, have the godly power to emit bills of credit to whomever they choose, consolidating the country’s wealth in exponential fashion. If they have their way for much longer, there won’t be a penny of capital left in this economy for the capitalists, and at that point the emitters of credit will be free to “press down upon the bleeding brow of labor and capital this crown of thorns.”

The Cross of Currency Debasement (Source: McClatchy News Service)

If this seems confusing to you, it really ought not to be. After all, it isn’t just the poor or middle class that has been affected by the latest economic crisis. It is the upper and upper-middle classes as well, who had their life savings locked up in 401k’s and who had paid-in benefits that are either already being cut, or will undoubtedly be hacked into in the near future. These people, hard workers, were unable to save their money over the years because of punishingly low interest rates created by a cartel of bankers – insolvent, incompetent and paradoxically indebted issuers of credit – and therefore were forced into the stock market, advised on what to buy and how to “invest” (another word for speculate) by professional “money mangers” who don’t know their ass from a hole in the wall, and who base their advise to unsuspecting clients on the directives of executive memos from people higher up than they and who have anything but the client’s interests at heart. Of course, what Wall Street and the Money Trust could not extract from your 401K, they got from your mortgage refinancing plan, and on it went.

I could go on and on, but those who have read my writings in the past know all to well how I feel about Wall Street, and the role it has played in this latest economic crisis. The war is no longer a war between capital and labor. Capital already won that battle a long time ago, but while it was busy devouring what remained of the American worker, credit and its Wall Street standard bearer moved in quickly to push capital aside as it made room for itself in the hierarchy of American economic life. The new battle lines are now draw. The war is now one of Capital vs Credit, or as some have come to call it, a battle of Savers vs Speculators. And for the moment, it is the speculators who have had their way with the rest of us. Perhaps it is time that we realized this, and turned the great populist and progressive William Jennings Bryan on his head, worrying not about preventing the crucifixion of labor on a cross of gold, but rather beginning what will be a long and arduous battle of crucifying a generation of greedy, insolvent and infestious bankers upon that very same cross, for only if you take away the banker’s access to unlimited credit will capital ever be capable of regaining its rightful place in American capitalism today. Because capitalism without capital is like christianity without christ.