Jail The Bankers And Take Back Control Over Money

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When the 2008 financial crisis hit, Iceland had a very different response than the United States. Iceland let the big banks fail, nationalized them and prosecuted the bankers, sending 26 of the bank executives to jail for fraud and market manipulation.

In the US, no high level bankers were prosecuted and the big banks were bailed out through the Treasury Bailout and the Federal Reserve’s Quantitative Easing which bought bad debt burdening the big banks along with low interest rates. The weak response in the US has resulted in fraud and corruption by big finance continuing and we are facing an unstable market which many people predict will crash again within the year.

Bill Black of the newly formed Bank Whistleblowers United is interviewed about the plan they have put forward to instill the rule of law on Wall Street and end fraud with the hope of mitigating the effects of the next financial crisis. The plan they put forward could be taken by a president within 60 days without congressional action. It would instill the rule of law on Wall Street and end fraud with the hope of mitigating the effects of the next financial crisis.

We also spoke with Randall Wray, an expert in financial instability and macroeconomics, about alternatives to the current financial system that would bring greater stability. His focus is on Modern Money Theory which believes government spending on essentials like infrastructure, transition to clean energy, tuition-free college education and repaying the debts of students, among other things can be funded out of money created by the government. It believes in shrinking the role of the Federal Reserve to only setting interest rates in consultation with the President and Secretary of the Treasury while the Treasury Department has the power to create money. The government would be the creator of money, not the banks.

If the economic proposals described in this episode of Clearing the FOG were put into effect, Wall Street would be tamed and the people would regain control of the economy.  They would be major steps toward creating an economy that will serve the people and not the wealthiest and the financiers.

Jail the Bankers and Take Control of Our Money with Bill Black and Randall Wray by Clearingthefog on Mixcloud

  • jemcgloin

    When the government prints new money as the economy grows, so that the supply of money equals the demand for cash needed to do transactions, that money belongs to the people. 50 years ago it may have been necessary to distribute new money through the banks, but in the internet age it is not.
    Now it makes more sense to distribute new money directly to the people. The Fed or Treasury could decide how much it wants to expand the money supply by, divide it equally between all citizens, then distribute it through the IRS or spatial security.
    Instead of using the indirect route of interest rates, letting global banks mark up the price of the money, and lending it on their time schedule (we’ve basically been waiting 7 years for them to start lending again), most of the money would go right into the economy, because the average American has bills to pay right now.
    This would mean more direct control over the business cycle, more stimulus than cash sitting in banks, and an end to big banks profiting off of the People’s money.

  • Dave Constable

    I have never had a credit card. Only recently did I cave and get one of those little plastic cards that lets me use an ATM(I hope I didn’t put any bank execs out of job by doing so).
    I figure a government should control the money supply. But we have turned the plastic and electronic money over to private financials. Here in Canada all my fellow Canadians have cards that are part of American, that is, foreign, financials.
    Suppose we had a government run credit card system; maybe not to ban private companies in the fee and interest collection business, but as a corrective to those privateers.

  • Aquifer

    Black – thumbs up …

    Wray – hmmm, was introduced to MMT on another site a few years ago and have some serious questions, concerns …

    1) if taxes are not needed for revenue – then how does one justify them? I am not arguing that they are, but unless you are prepared to eliminate them entirely, you had better come up with reasons that the public accepts and best to prepare that ground before “informing” folks that they are not needed – that’s all folks will hear, and if you want taxes for any of the good reasons – reduce income inequality, discourage risky behavior, or bad practices, (e.g. smoking, carbon burning) you’ll have a much more difficult time re-instituting them – better methinks to leave a legitimate tax structure where we all, as they say, have some “skin in the game” and put that money toward good purposes, supplementing it by a few more “keystrokes”

    2) if we can “print” all the money we want – shucks, we can fund not only education and healthcare but war, war and more war – one large arm of the argument that we need to cut military spending is that we cannot “afford” both guns AND butter (of course the moral arguments against war are the legitimate ones), but, with just a few more keystrokes, shucks, we could afford both … Again, i think we need to have some sort of structure with limits on it – and the arguments should be around what do we do within those limits – i.e. choices need to be made – We have in fact, been behaving under the MMT scenario, Bernanke admitted it – while all the time behaving as if we were constrained – the argument for austerity is precisely that – but should the counter argument be that there need essentially be no financial considerations as to what we spend our money on, we can have it all with no “skin in the game”, or should they be around what that “skin” is used for. Don’t forget, what has kept stuff like SS and Med considered as a “third rail”, by both parties is perhaps not so much how well they work – but on “it’s mine, i am entitled to it, i paid for it!”

    3) at zero interest rates – what happens to savers? why put money into a savings account at any bank, be it private, public or postal when it gets no interest? The only folks who benefit at this point from 0 interest are those big financial institutions who borrow at that rate, then either use the money to speculate, or lend at a higher rate – i.e. fill their pockets – of course.

  • kevinzeese

    Lots of good questions. If we accepted that Modern Money Theory was right, and I think it is, then it would require a lot of re-education and rethinking about how we use money. We have been in the current system of limited money and debt that it would require a major transformation of consciousness about money.

    Taxes would not be needed to fund the government if MMT is taken to its fullest meaning. But taxes are a way to control the money supply, i.e. taking money out of the economy to help manage inflation; and they are a way to limit the wealth divide. Right now, I think they are a tool of government control over people.

    Of course, war is an evil for many more reasons that its cost and the debt it creates. This would be part of the change in consciousness, a real understanding why war is obsolete and counterproductive and rarely, if ever, the right response to conflicts between nations. Can we have that discussion? Will people be able to understand it with all the pro-war propaganda around us? Not right now, but humans can evolve.

    Whether to save or not; whether saving would be even needed if we had a decent guaranteed income for life would be one of those things that would require a rethinking of our relationship to money.

    It gets pretty interesting when money becomes something different than what it is today.

  • Aquifer

    I made several edits to my post before i saw your reply – that’s the trouble with trying to carry on a conversation in this format, I, for one, often need to see my scribblings in “post form” before I figure out they need to be “tweaked” or added to 🙂 – so i don’t know if you saw all the “tweaks” … for example, the “skin in the game” concept, or the comparison to nukes … or most probably, my last paragraph (sometimes things get accidentally “prematurely posted” before i am finished 🙂

    In any case – i think my last paragraph rather sums up my position …

    I agree, folks need to be educated on a lot of things, but you know as well as i that, though one can never totally prevent things from being taken out of context – the message that would be spread, at this point, especially by those who continually rail against taxes, is “see, (even those whacko pinkos say) we needn’t be taxed, taxes are just a form of the gov’t control!” So before we take MMT (like nukes) out of the box, we better understand if it is Pandora’s – I think it is not just the public that may need to be “educated” by us, but us also “educated” by the public ..

    One of the reasons i support Dr.s Stein and Flowers is that i think their professional experience with patients has taught them, as it did me – that when you want to introduce a new therapy, and want to ensure they will go along, it is best to not only explain it but integrate it into the patient’s “world view”, if you will, in a context they can relate to, and to do that you have to know what that context is …

  • Aquifer

    “The Fed or Treasury could decide how much it wants to expand the money supply ”

    Hmm, how much it wants to expand it, or how much we want to see it expanded ..

    And how do we get that “money directly into the economy”, just write to the Fed and ask for a check or a few “keystrokes”? A GAI would help, though, doncha think?

  • Jon

    On of the first things that should disappear is the legality of these obnoxious “exotic derivatives,” like “credit default swaps,” etc. that produce nothing of real value. Void existing ones and make them illegal in the future would be a good place to start. Also void all patents on life forms. Nature has THAT claim!

  • jemcgloin

    Clinton legalized them in the 1990’s. There nominal worth dwarfs that of the world economy. Now that the dropping price of oil is threatening oil company debt, they could bring down the economy again. The billionaires don’t mind though. They will get out first and buy out all the panicked little guys at rock bottom.

  • jemcgloin

    The money supply i supposed to expand with the number of transactions that take place. My plan is to divide the the new money by the number of U.S. citizens and place it directly in their bank accounts. Then they spend it as they see fit. Would there be pressure to expand it too much. Yes. But the Fed will be better able to resist the will of the People than it is to resist the demands of its client banksters.

  • Aquifer

    And how often do we do that?

    Seems to me a GAI is a better bet ..

  • jemcgloin

    As often as we now change interest rates to influence the money supply indirectly.

  • jemcgloin

    Obviously just randomly printing money is a bad idea. In general growth in the money supply needs to be calibrated to growth in the economy. During serious downturns, when people take too much cash or of the economy, out of fear, a temporary influx of cash can bump up the equilibrium to a higher level as Keynes showed.
    Right now we are trusting global banks not to print to much cash for themselves. I think it would be easier to trust them not to print too much money for the People.

  • jemcgloin

    I think right now we lean to heavily on borrowing and not enough on taxes. A sovereign people can choose between borrowing from the billionaires and taxing the crap out of them and clawing back their offshore accounts. I vote for choice number two.

  • jemcgloin

    I’m all for a Guaranteed Annual Income. As robots and artificial intelligence increase productivity exponentially, that will be the only way to make sure humans get a share of the resources.
    I see this as separate from my idea about the money supply. That would be a relatively small amount of money most years. I just want to keep it out of the hands of the bankers and give it to its rightful owners, the People.

  • Aquifer

    And what if those times don’t sync with inflationary effects or folks loss of jobs or med expenses? I think there needs to be a steady dependable income ..

  • Aquifer

    Oh, OK – so the GAI would be the mainstay?

  • Aquifer

    Well we did a lot of “random printing” of money to bail out the banks and that was a bad idea – so I agree, my point being that before we advance the idea that we, in fact, can do this, we need to develop a consensus among folks as to what the rules are – that there must be some rules …

  • jemcgloin

    My vision is that people work something like a 20 hour week for a livable income that provides their basic needs, including a college education. In their spare time they can exercise their creativity, inventiveness, entrepreneurism, and ability to govern together. Once people have their needs met they are motivated by doing work that has meaning for them, that they control. GAI should be a world wide phenomena.
    Taking back the money supply from the the global banks is not enough to finance this. The point is more to take a major source of their power and turn it into a small amount of extra spending money for the average American.

  • jemcgloin

    I would require a short (20 hour?) week for everyone for a GAI. But then there would be plenty of time left to create new businesses, or art, or new ways to govern, inventions, etc.
    We can all support each others quest to reach our highest potential. Yes, this requires an evolution in human behavior, but the only alternative is a de-evolution into corporate empire with no pretense of democracy.
    I believe that we will win.

  • jemcgloin

    yes

  • jemcgloin

    And hopefully we can move away from a constantly growing population and economy that is too stressful on the environment, so the money supply would not grow either. Also a GAI would greatly stabilize the economy since incomes would not fluctuate so much.
    My point with the $2.5 trillion that the Fed created and gave to the global banks was that it would have been much more effective as a temporary stimulus had t gone to the people, not that it would be a major source of income.

  • jemcgloin

    Maybe it isn’t obvious. The problem with printing money faster than the economy grows is that it undermines confidence in the value of the currency. Fiat money relies on a general belief among its users that it will be worth something tomorrow. If you undermine that belief, people start to hoard basic essentials and the economy goes haywire.
    You need taxes to pay for services. Now it is true that when the government has big debts, it can pay them by printing money, but a better solution is to tax the billionaires, because they have taken too much money out of the system, which they can and do use to manipulate markets and the government.

  • jemcgloin

    I think if people are going to evolve away from war, it will be now.
    Young people growing up on the internet encounter other people’s ideas before their identities. They understand that gender, race, ethnicity, etc. are not indicators of integrity or intelligence. People are changing. The question is will they change fast enough to reverse the global corporate coup, before the global billionaires drop all pretext of government and democracy, and revert to ruling with an iron fist.

  • Aquifer

    Gotcha ..

  • Aquifer

    Agree ..

  • Aquifer

    Sounds good … 🙂

  • jemcgloin

    Yes it didn’t create run way inflation, because, a) most people are completely unaware of it and b) because the the banks have not spent it. I’m guessing that if the economy were to really come back, all of that money (about 14% of the GDP) might flow back into the economy at exactly the wrong time and create an inflationary bubble.

  • jemcgloin

    Well there would have to be a huge national argument about such a move, but right now, if anything people worry to much about inflation, and not enough about deflation.

  • Aquifer

    If the economy were to come back – methinks that a good part of the problem was that a lot of that money that went to the big banks was not spent to finance industry but to speculate in derivatives, currency markets etc – wherever they could get the biggest returns and when companies borrowed at low rates they spent it on mergers and acquisitions and stock buybacks – instead of on hiring folks at decent wages ..

  • Aquifer

    True … although, myself, living on a fixed income, I find things keep getting more expensive all the time …