by Richard C. Cook
Now to the Wall Street bailouts, the
plan for the government to purchase preferred shares in banks, and the
takeovers of Fannie Mae, Freddie Mac, and AIG, may be added the intention
announced last night that the government will throw another $20 billion at
Citibank, the nation’s largest financial institution.
The announcement came after Citibank’s
stock fell 60 percent last week to $3.77 a share. Of course it won’t help
the 50,000 people Citibank is laying off, but, what the hey, no plan is
perfect.
Meanwhile, almost nothing has been done
to help the consumers within the producing economy who have lost trillions
of dollars in the stock market crash, seen the value of their homes fall
in many cases below what they owe on their mortgages, and lost jobs or
health benefits through the escalating recession. Fannie Mae, which over
the weekend sponsored a Walk for the Homeless in Washington, D.C., an
event that drew thousands of participants, had announced the previous day
that it was placing a moratorium on further home foreclosures until after
the Christmas and New Year’s holidays. Wow, thanks.
But what then? Everyone agrees that the
recession will be long and deep, not only in the U.S. but in nations that
export to us. The Federal Reserve can only go so far in cutting interest
rates, because at a certain point nations such as China which have floated
the Federal deficit will no longer lend.
Besides, what good are low interest
rates if borrowers can’t even afford to repay the principle, which is the
situation so many of us find ourselves in today? Japan found that out in
the 1990s, leading to a recession that lasted a decade.
So what are ordinary people to do who
have families to feed, rent or mortgages to pay that are still inflated
from the collapsed housing bubble, unmet medical or insurance expenses, or
may be trying to get their kids through college? Should we go deeper into
debt when U.S. households, businesses, and government already owe in the
neighborhood of $60 trillion (excluding federal unfunded debt
liabilities), almost five times the GDP? Banks have cut back on lending
anyway.
Then there are the jobs programs. The
Senators who bowed down to Secretary of the Treasury Henry Paulson when he
came to extort $700 billion for Wall Street scolded the Big Three
automakers who came seeking help in salvaging an industry that still
employees millions. But maybe by cutting worker wages and benefits the
carmakers will be able to limp along a while longer.
Or maybe we should wait to see if
president-elect Barack Obama gets his economic stimulus plan through
Congress after he is inaugurated. Granted the plan may result in some new
jobs a few years down the road once the additional federal borrowing to
pay for it works its way through the economy. But will America still be
alive by then?
Ladies and gentlemen, the financial
system has destroyed America. And really and honestly, the folks in
Washington, both those arriving and those departing, don’t know what to
do.
I have argued in recent articles that
the government should implement what I have modestly called the “Cook
Plan,” whereby a dividend similar to the Alaska Permanent Fund would be
paid to every U.S. citizen at the rate of $1,000 per month in vouchers for
food, housing, and other necessities of life.
This dividend would be paid out of the
U.S. Treasury, where I used to work, from an emergency self-financed
account without recourse to taxes or government debt. The dividend would
constitute each citizen’s fair share of the producing potential of the
economy, as advocated by Social Credit reformers in the British
Commonwealth nations for decades. The vouchers could then be deposited in
a new network of community savings banks that would revitalize local
economies through lending at zero-percent interest, charging only
administrative fees and a small amount of lending insurance for access to
capital.
Such a system would provide recompense
for the vast amounts of money stolen from citizens’ pockets due to a
lifetime of borrowing from financial institutions which are now looting
our children’s and grandchildren’s heritage to pay for generations of
abuse. This abuse has taken place under a debt-based monetary system by
which banks create money out of thin air, then charge the rest of us
interest to utilize it for survival. This system has operated for almost a
century under the auspices of a Federal Reserve System accountable to no
one.
The “Cook Plan” would bring real reform
to a system that has collapsed. The plan would begin to correct the
primary cause of the recession, which is the steep decline of consumer
purchasing power.
Of course I am not so deluded as to
believe Congress or the incoming Obama administration would implement it.
Why would the politicians turn against a financial system which paid their
way into office? As indicated by the announcement that Obama will appoint
Timothy Geithner, president of the Federal Reserve Bank of New York , as
his treasury secretary, it’s the banking system that will continue to
oversee the government, not the other way around. Even so, I would be
happy to explain the "Cook Plan" to Mr. Geithner - for free.
But the citizens must do something. How
can we just sit and wait while the financial monopolists smother the
economy to death in order to protect their wealth and privileges? The
least they could do is declare a moratorium on debt payment until the
economy is functioning again or cancel the most egregious types of
debt-abuse, such as credit card or student debt.
But they are not likely to do this
either. So citizens’ can be forgiven if they simply stop paying. Many home
purchasers are already doing this—turning in the keys to their homes and
driving away. Who can blame them?
But the worst of the debt may be credit
card debt, where the controls on interest rates and penalty charges were
lifted long ago and the government stopped providing a tax deduction for
interest paid. In many cases, interest on credit cards is 28 percent or
more, which means that even by making the minimum required payment,
consumers see their balances grow each month. That the politicians could
continue to allow such evil to exist is astounding but proves who their
masters are.
So until real relief is forthcoming,
citizens who are in distress should simply destroy their credit cards and
stop paying the monthly bills. People are already doing this. Arrearages
and defaults are climbing, and credit card debt is starting to be viewed
as the next bubble to burst. But so what? If people have to use a credit
card, that means they can’t really afford to buy whatever it is they think
they want. If they can afford it, they should use a debit card instead.
Then tell the credit card company you
cannot pay. Ask them to write off some or all of the debt, and if they
want to take you to court, go on your own and defend yourself. You don’t
need a lawyer, and you don’t need anyone’s permission. You also don’t need
to go through the horrendous “reformed” bankruptcy system the credit card
companies got Congress to pass in 2005. Failure to pay credit card debt is
not, thank God, a crime in this country, and there are no debtors’
prisons—yet.
Besides, if people do not pay credit
card debt, that money remains in circulation. So default is actually a
form of patriotism in today’s trying circumstances. And the credit card
companies really don’t lose anything, since the money didn’t exist before
they lent it to people who are now broke.
Where I used to live in the country in
rural Virginia, the story was going around about a farmer who fell down in
the pen where he was feeding his pigs, and the pigs ate him. That is what
has been happening in this country. The financial industry which is now
swilling at the public trough has been eating alive a nation that was once
“the land of the free and the home of the brave.”
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Republished by permission of the
author. Richard C. Cook. First published
here
