Momentum is increasing on Restoring the Glass-Steagall Legisation!

Maine Editor Says "Sen. King Can Lead On Glass-Steagall Restoration"

January 5th, 2014 • 5:03 PM
Senator Angus King
Sen. Angus King
Senator Angus King (I-Maine) is urged to take the lead on restoring Glass-Steagal in an op-ed in [1], a consortium of the Portsmouth Herald and five other Maine and New Hampshire newspapers. Douglas Rooks, described as a former newspaper editor, writes that he was skeptical about King at first, but that he's turned out to be a pleasant surprise, and he's trying to maintain his independent credentials. Rooks says that King "has at least one opportunity to change things in a way that will cause consternation among both parties, which are heavily dependent on campaign contributions from the financial sector" — which is to push the fight to restore Glass-Steagall to center stage this year. Rooks notes that King has co-sponsored the bill to reinstate G-S with Elizabeth Warren and John McCain. He continues:
"Restoring this wall of separation isn't like most financial issues — incredibly complex — but at bottom, quite simple. Under other New Deal reforms still in place, the government guarantees deposits in the private banking system we all rely on. But banks weren't allowed, under Glass-Steagall, to dabble in high-profit but much riskier investment opportunities....
"Wall Street hates the prospect of the return of Glass-Steagall, and will do everything in its power to prevent it. But it needs to be done.
"Fortunately, for King and other supporters, the issue is clear enough to build a real groundswell of public support. Unlike arcane banking rules, practically everyone can understand this one. And people hate rigged games, of which current banking law is a prime example.
"If King can bring this fight to center stage this year, he will begin to justify the confidence voters showed when they sent him to Washington."

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JPMorgan's Madoff Settlement Could Prove Elizabeth Warren Right 

Lyndon LaRouche shares his views about how our country can reinvigorate its economy and more.
Sen. Elizabeth Warren.

By Linette Lopez 

Jan. 7, 2014, 10:23 AM

Another day, another $1.7 billion in fines for JP Morgan. This time, it's for failing to catch Ponzi schemer Bernie Madoff as it managed his ill gotten gains. Now the bank has to admit that it didn't have the systems in place to catch Madoff and implement them under a deferred criminal prosecution agreement.

You could call this a case of "too big to manage," one of anti-Wall Street crusader Senator Elizabeth Warren's (D-MA) favorite catchphrases.

Back in November, she used it to talk about reinstating Glass-Steagall, the regulation that once split commercial and investment banks.

Read the full article:




The Untold Story of the Wall Street Crash of 2007

By Pam Martens: January 6, 2014
The conventional wisdom is that the crash on Wall Street that continues to devastate the U.S. economy and job growth began in earnest in 2008. That’s likely because marquee Wall Street firms, in business for 75 to more than 100 years, did not blow up until 2008. Bear Stearns imploded in March of 2008 and was taken over by JPMorgan. On the same day, September 15, 2008, that Lehman Brothers filed bankruptcy, Merrill Lynch was taken over by Bank of America. Other major Wall Street firms were propped up with the largest taxpayer bailout in the history of U.S. financial markets.
A careful review of the report from the Financial Crisis Inquiry Commission (FCIC), Federal Reserve documents, Fed appointment calendars, and news archives indicate clearly that the financial system began “unraveling,” (as the FCIC phrased it) in 2007. More importantly, a number of events in 2007 had the clear, indisputable earmark of a financial panic but were glossed over by the Federal Reserve, which did not begin to cut interest rates until the third quarter of the year, and then only after serious market convulsions in the U.S. and Europe.
At its January, March, May, June and August meetings of the Federal Open Market Committee (FOMC), the Fed repeated the same words: “The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.”
The only possible explanation for the Fed’s resistance to cutting interest rates sooner is that it was in the dark about how Wall Street had tied a noose around its neck, anchored it to the U.S. housing market, then infused that risk into the overall economy through hybrid securities and derivatives sold here and around the globe.
The warning signs began as early as January 2007 when Mortgage Lenders Network said it was ceasing to fund mortgages or accept applications. In February, HSBC, one of the largest subprime lenders in the U.S. at the time, announced a $1.8 billion increase in its provision for potential losses. In March, New Century, which ran a close second to HSBC in subprime loans, said in an SEC filing that federal investigators were “conducting a criminal inquiry under the federal securities laws in connection with trading in the company’s securities, as well as accounting errors regarding the company’s allowance for repurchase losses.” In April, New Century filed bankruptcy.
Against this backdrop, Congress heard the following from Fed Chairman Ben Bernanke and U.S. Treasury Secretary Hank Paulson in March 2007. “The impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained,” Bernanke told the Joint Economic Committee of Congress. Paulson testified to a House Appropriations subcommittee: “From the standpoint of the overall economy, my bottom line is we’re watching it closely but it appears to be contained.”
Were they watching closely?
By June 2007, two of Bear Stearns’ multi-billion dollar hedge funds were in deep trouble. Bear told major Wall Street firms that it lacked the cash to meet the margin calls on the funds and asked for a reprieve. None came. On July 31, 2007, both funds filed for bankruptcy.
The Fed knew that major Wall Street firms had serious loan exposure to Bear Stearns. But this was the statement in the Fed’s FOMC meeting of June 27-28, 2007 as it voted to leave interest rates unchanged:
“…a number of participants pointed to rising mortgage delinquency rates and related difficulties in the subprime mortgage market as factors that could crimp the availability of mortgage credit and the demand for housing. Spillovers from the strains in the housing market to consumption spending had apparently been quite limited to date.”
From July 10 to 12, the delusional ratings agencies that had given structured products from subprime debt a AAA-rating, began to downgrade billions of dollars in mortgage-backed securities. The market understood that this was only the beginning and the credit markets tightened further.
According to the FCIC, on August 14, the Federal Reserve sent a confidential memo to the Fed’s Board of Governors concerning Countrywide, another major subprime lender. The memo said: “…The ability of the company to use [mortgage] securities as collateral in [repo transactions] is consequently uncertain in the current market environment. . . . As a result, it could face severe liquidity pressures. Those liquidity pressures conceivably could lead eventually to possible insolvency.”
By August 17, the insured depository bank owned by Countrywide was experiencing a full blown customer panic and bank run. The Los Angeles Times reported: “Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.”
The same day, August 17, the Federal Reserve finally cut its discount rate by 50 basis points, beginning a long path of rate cuts to try to restore stability to the markets. Europe had now joined the turmoil with the European Central Bank playing catch up by infusing tens of billions of dollars of liquidity into the system.
By early November, Citigroup was forced to announce its massive exposure to subprime assets, issuing a press release on November 4 that said it had experienced “declines since September 30, 2007 in the fair value of the approximately $55 billion in U.S. sub-prime related direct exposures in its Securities and Banking (S&B) business.” It added that it estimated that “the reduction in revenues attributable to these declines ranges from approximately $8 billion to $11 billion (representing a decline of approximately $5 billion to $7 billion in net income on an after-tax basis.)”
The Federal Reserve had presided over the inscrutable behemoth called Citigroup, allowing its creation through the repeal of the Glass-Steagall Act; then allowing it to grow into an unwieldy global conglomerate with 2,000 operating subsidiaries, a $2 trillion balance sheet and $1.2 trillion off its balance sheet.
On a November 5, 2007 conference call with analysts, Gary Crittenden, the CFO of Citigroup, was asked by an analyst why the firm didn’t hedge its risk. Crittenden responded:
“I mean I think it is a very fair question…we are the largest player in this [collateralized debt obligation; CDO] business and given that we are the largest player in the business, reducing the book by half and then putting on what at the time was three times more hedges than we had ever had at least in our recent history, seemed to be very aggressive actions given that we were a major manufacturer of this product…once this [decline in values] process started…the size was simply not there. The market is simply not there to do it in size in any way and it would have been uneconomic to do it.”
The “size” to hedge was not there because these derivatives were not trading on exchanges, thanks in no small part to pressure to deregulate derivatives by former Fed Chairman Alan Greenspan and members of the Clinton administration. In 2008, Citigroup would require a taxpayer bailout of $45 billion in equity, over $300 billion in asset guarantees, and low-cost loans from the Fed of over $2 trillion.
J. Kyle Bass, a managing partner at Hayman Advisors, had outlined the problem to the House subcommittee on Capital Markets in testimony on September 27, 2007: “I will tell you why and how regulators completely missed the epic size and depth of the problem in the credit markets today. An important concept to appreciate is that each securitization is essentially an off balance sheet bank…However, the securitization market has no Federal and State banking regulators to monitor its behavior. The only bodies that provide oversight or implicit regulation are the NRSROs [rating agencies] — bodies that are inherently biased towards their paymasters, the securitization [Wall Street] firms.  Without sufficient oversight, this highly levered, unregulated, off balance sheet securitization market and its problems will continue to have severe ramifications on global financial markets.”
Nothing that the Federal Reserve or Congress has done thus far has removed the risk that Wall Street could collapse the U.S. economy again.  Until the Glass-Steagall Act is restored, separating Wall Street speculators from insured banks holding the life savings of millions of Americans, 2007 and 2008 must be viewed as Wall Street’s warm-up act.

Detroit Sought SEC Investigation of UBS and Merrill Lynch Over Fraudulent Interest Rate Swaps

January 5th, 2014 • 8:31 AM
In testimony before U.S. Bankruptcy Judge Steven Rhodes on Friday, January 3, Detroit Emergency Manager Kevyn Orr testified that Detroit had asked the U.S. Securities and Exchange Commission (SEC) to investigate its deals with UBS AG and Merrill Lynch Capital Services, unit of Bank of America Corp. for interest rate swaps to hedge risk on $1.4 billion on pension debt Detroit sold in 2005 and 2006.
Orr did not say whether the SEC responded to his request, but it is apparent no action was taken by the SEC against the banks.
Orr also testified that the city thought there were "serious questions" about whether it owed the banks anything at all and that Detroit considered trying to invalidate the swaps.
But instead of fighting the criminals in order to promote the General Welfare, the city decided not to challenge the swaps in court but instead to settle with the banks, because litigating the case risked having to pay the full amount or losing casino tax revenue the city put up as collateral. The casino tax accounts for about 20% of the city budget.
Thus, while cutting the pensions of workers, the city instead decided to borrow money from a loan-shark, Barclays, to terminate the swaps. The exact amount of the termination agreement is yet to be decided. But it is believed that it will cost the City at least $165 million.
Bond insurers, the city's pension funds and other parties have objected to the swap-termination plan. On Friday, Rhodes rejected their motion to force the city to release documents disclosing its thinking about legal options it considered to end the swaps.
Thus, the city of Detroit, out of fear of losing revenue from casino gambling, borrowed more money to pay other gambling debts which it considered to be fraudulent. And not only did the SEC fail to prosecute the banks, but the judge has refused to disclose documents which would be the basis for challenging payments which the city itself did not think it had any obligation to pay.

New York FED Chief Dudley Displays His Brilliant Economic Insight

January 6th, 2014 • 9:25 AM

William Dudley, President of New York Federal Reserve Bank.
This one you can either cry about, or laugh uproariously. On Saturday, NY Fed President William Dudley showed his economic brilliance — which he probably gained during his 1986 to 2007 tenure at Goldman Sachs, where he held the position of chief economist for 10 years before Tim Geithner hired him at the Fed — by telling the annual gathering of the American Economic Association in Philadelphia on Jan. 4, that Fed economists confront a major "riddle." They don't know whether or not the unemployment rate will continue to fall as the economy improves, because possibly millions of frustrated workers will now begin to return the labor force — which could lead to a rise in unemployment! What Dudley is hinting at, without admitting it, is that the only reason the official unemployment rate has fallen recently, is that millions of actually unemployed Americans have simply been dropped from the labor force, as EIR and LaRouchePAC have extensively documented.
Dudley also admitted that "we don't understand fully how large-scale asset purchase programs [i.e., the Fed's QE] work to ease financial market conditions" — but he is certainly glad that they have helped bail out the utterly bankrupt trans- Atlantic financial system.
Regional FED Presidents Dispute the Relative Merits of Particular State Rooms on the Titanic
At the annual meeting of the American Economic Association in Philadelphia on Jan. 4, various regional Fed presidents took the occasion to grand-stand about the finer points of QE, tapering, and the relative merits of particular state rooms on the Titanic. With Janet Yellen's confirmation hearing as next Fed president scheduled for Jan. 6, a Federal Open Market Committee (FOMC) meeting slated for Jan. 28-29, and the end of Ben Bernanke's term at the Fed occurring on Jan. 31, Boston Fed President Eric Rosengren led the phalanx demanding that QE continue undiminished. He said he had been the lone dissenting vote against tapering QE purchases by $10 billion per month, at last month's FOMC meeting, because "we believe strongly that monetary policy makers have the opportunity to be patient in removing accommodation." Philadelphia Fed President Charles Plosser took the hawkish position against QE, saying "my preference would be to move a little quicker and end it [tapering] sooner rather than later," since there is a danger of new asset bubbles.
This article appears in the January 3, 2014 issue[1] of Executive Intelligence Review.

Without Glass-Steagall, 2014
Will Bring Mass Death to U.S.

by Nancy Spannaus
Dec. 30—Wall Street's stooges in Washington, D.C.—ranging from President Barack Obama to the leadership in Congress—have already set the process in motion: Unless there is a radical shift to cancelling Wall Street with the re-imposition of the Glass-Steagall law[3], there will be an accelerating rate of murder in the United States, to the point of mass death.
Just look at the record:
  • Health: Starting more than two years ago, Obama's signature "Hitler Health" plan began measures to reduce medical care and facilities, allegedly in order to save money to be able to provide "health care for all." These changes, including fines for "unnecessary" hospital visits, reductions in payments to providers, and classification of what used to be standard preventive care as "clinically ineffective," will be augmented in 2014, as fines increase and more standardized payments (caps) go into effect.
  • Food: Starting Nov. 1, food stamp benefits for more than 48 million low-income Americans were cut by 5% across the board, increasing their food insecurity, and sharply increasing their dependence upon food charities. With no reversal in sight, and no resolution on a new farm bill (within which the food stamp allocation is made), further cuts are anticipated in the immediate future.
  • Unemployment compensation cut-off: On Dec. 28, 2013, more than 1.3 million Americans who have been unemployed for more than six months lost their Federal extended unemployment benefits. With each passing day, more people will be kicked off benefits, increasing their misery and inability to make ends meet, until and unless Congress takes action to extend the benefits, which average a measly $300 a week.
These are by no means the only areas where austerity is going to hit, but the picture should be clear. Americans, starting with the old, sick, and poor, are being thrown on the scrap heap, and unless there is radical action to reverse the policies in Washington, they are going to die in increasingly large numbers.
The fate of Greece is coming to the United States.
Obama's Lies
If you listen to Obama and his sycophants in the Democratic Party, these new austerity measures are "crimes of the Republicans." They are lying.
Take the issue of extending unemployment insurance (EUC), a program which everyone knew was running out by the end of the year. The Obama Administration did begin to make noises about the necessity for its extension, in the immediate weeks before the much-applauded budget deal was made between Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wisc.) in mid-December. But, while some sections of the Democratic Party were insisting that the Administration (which was directing Murray) require the inclusion of the extension in any budget deal, the White House made it absolutely clear that it would not do so.
EIR has been informed by high-level Democratic Party sources that the Administration never had any intention of re-extending EUC. The Administration did nothing to insert it into the budget resolution, at the point when it had the leverage to pressure the Republicans to do so. Once the budget was passed, and the House adjourned, the chances of getting a separate bill passed during 2014 are slim to none.
Senate Majority Leader Harry Reid has scheduled a vote on a stand-alone bill to restore the EUC on Jan. 6, the day the Senate returns. But, outside of budget negotiations, there is probably no way to force it through the House of Representatives. Thus, the bill will only be a partisan effort against Republicans, after the benefits have expired.
How to see the often strident demands now coming from Obama and other Democrats that unemployment be extended? As EIR's sources stress, these are simply an election ploy, intended to counterbalance the fall in the President's popularity.
That's Not All
The White House and many Democrats have made a similar, but much weaker, propaganda push in favor of restoring the food stamp cuts. Once again, it's smoke and mirrors.
As EIR pointed out at the time, it was President Obama who called for the removal of "extra" money in the Supplementary Nutritional Assistance Program (SNAP), saying it should be traded away in budget negotiations with the Republicans on the FY13 or FY14 budgets. His justification was that he expected his program would so lower unemployment, that it wouldn't be needed any more.
And while it's true that statistical tricks, and massive drop-outs from the labor force, have lowered the official unemployment rate, not even stalwart Democrats believe that the unemployment crisis is over. With the labor participation rate of the working-age population at a near all-time low, and the current jobs clustered in the make-work service sector, only a lunatic or a liar could claim that a jobs recovery is in process.
What's To Be Done?
Speaking at his Dec. 27 webcast[4], Lyndon LaRouche issued the following marching orders:
"Don't preach fine formulas! Give us some action! We've got people who are dying and condemned to die, under the policies of this President and this Congress, now! We're talking about mass killing. We're also talking about the kind of folly that leads to a thermonuclear war, which can be an extinction war if it happens. Or something like that. What are we talking about? Talking about doing 'good things'? How can you do good things, if you're not stopping the bad things? How can you help people, if you won't let the doctors give them treatment? And that's our problem now.
"We have to reach a higher standard. We have to say, 'Look, this crap has to cease, now! Otherwise, we aren't going to be a nation any more!' And the danger is, the influence of the Anglo-Dutch problem in Europe, coming into Wall Street, and so forth, the Wall Street crowd.Extinguish Wall Street! Get rid of Wall Street! Just cancel it! We can create a new banking system immediately. We don't have to take these permanent deficits that they're using on us.
"But take the kind of measures, as citizens, in voting, and in organizing the vote, which will address these questions. We are in grave danger, from our own stupidities. Our own capitulations, to these kinds of things. Trying to be 'nice' to monsters. You get eaten that way."
How to accomplish what LaRouche called for? The first step is to enact the Glass-Steagall bills in Congress[5], of which there are two in each House. Wall Street is deathly afraid of Glass-Steagall for good reason: It starts the process of cancelling their fraudulent hold over the U.S. economy, and setting the stage for the establishment of a new credit system that will restart the physical economy.
Cancel everything that smells like Wall Street. Then we'll have the conditions where the mass murder can be stopped.

Generalizing the Principle of Government Credit

December 20th, 2013 • 11:58 AM

Non-Mechanical Economic Cycles:


by Michael Kirsch

This is Part II of a lecture given on July 29, 2013, available (video) here [1]. Part I (transcript)[2]. Part III (transcript)[3].

Each of Roosevelt's credit lending institutions, like the national bank, operated on the principle that they were to provide the possibility of a loan or the back up an active agreement between the public and private sector.[fn1] And a great example of that is the Commodity Credit Corporation. You see this characteristic in the October 16 1933 executive order by which it was created.
Whereas, the Congress of the United States has declared that an acute emergency exists by reason of widespread distress and unemployment, disorganization of industry, and the impairment of the agricultural assets supporting the national credit structure, all of which affects the national public interest and welfare, and
Whereas, in order to meet the said emergency and to provide the relief necessary to protect the general welfare of the people, the Congress of the United States has enacted the following acts…
It is this tone of voice, which you had not seen since the time of Lincoln, of a Government willing to come out and say, ‘we exist, we are a power, that is the purpose of the nation, the nation is not set up for Andrew Jackson's ‘simple machine’, laissez faire, and the idea that we are going to become tools of a private financial power.’
The Commodity Credit Corporation was an example of using the powers of Congress to create the necessary means to effect the objects. “To carry out the provisions of said acts it is expedient and necessary that a corporation be organized with such powers and functions as may be necessary to accomplish the purposes of said acts."[2] There were laws that were passed, these various acts just referenced, and every law has objects and purposes that it lays out. And then the government has the power to come up with whatever the means are that will be the best way to effect those objects, which is actually discretionary. And therefore corporations are formed as the means to effect the objects of the laws.
Today the idea of setting up a credit corporation by the government is something people do not have a clear sense of at all because they are thinking in a monetarist view. They are thinking ‘what has happened has happened, and its not our job to come in and control the process.’
The Commodity Credit Corporation on the other hand, was the idea of taking parties in the private sector and allowing the cycles of each part of them to be delayed to effect a transfer of wealth, to allow the output of the different parts of the productive system to actually mesh in their cycles. Rather than the policy that if they do not happen to mesh then they both go bankrupt, and the government says ‘that’s just the way things are.’
The object of the Commodity Credit Corporation was to contribute to the support of farm prices by enabling producers to hold on to their products which might otherwise have to be dumped with the resulting price declines. Roosevelt describes its purpose: “to help the farmers of the Nation by lending them money on their surplus crops so that they might continue to hold them instead of dumping them on already saturated markets.

Franklin Delano Roosevelt.
The role of credit came into play, in the form of this government credit institution, and made it possible for banks or other local lending institutions to loan farmers money, so that they would not be forced to sell them immediately at a really low price and flood the market. If the bank loaned them money and then suddenly needed it itself, there was a plan established which permitted the banks to carry the loans under a guarantee by the corporation to purchase the farmers notes on demand. So if the bank had discounted a bill of exchange for the farmer, but it needed the cash right away because of a demand upon it, then the Commodity Credit Corporation would purchase this bill of exchange that the bank was holding.
It was providing the context in which credit agreements could occur without the risk of total collapse, and, in reality, providing the context in which credit agreements could even occur. The cycle of the farmer could now be offset in order to ensure prosperity. And that was just one example, which a lot of these institutions reflected.
The direct comparison of this institution and the Bank of the United States is remarkable. Nicholas Biddle used the exact same language in 1811 when he was defending the first Bank of the United States during a debate in the Lancaster, PA House of Representatives. (Nicholas Biddle was the 3rd director of the 2nd Bank of the United states and the one who re-established Hamilton’s system with John Quincy Adams in 1823-1825.) Speaking in the State House as a legislator in 1811, Biddle stated,
To my mind no principle of national economy is clearer, than that the most natural way of protecting the poorer classes of a society is by a [national] bank: an institution… which enables the farmer to reserve his crops for a better market, instead of sacrificing them for his immediate wants; and by loans, at a moderate rate of interest, relieves every class of society from the pressure of usury.
Image of Nicholas Biddle's 1811 Speech on the Bank of the United States.
So you see exactly the same idea. You need a national credit institution which allows the economy to act on the timescale of the human mind. The human mind can know that this farmer is going to come to a season where he is going to have all of these goods, but that the rest of the economy is not ready for them at that time. Allowing these random cycles to determine what the prices are, and then to therefore collapse the living standard of your farmers and others, just because, is inhuman, and is against the idea of government, the representative of the people.
If the government decides it wants to make that process more coincident with mind, and guide the process, then it sets up a credit lending institution. It is then guiding these relations, not only of agriculture, but transportation, production, etc. It was that whole system which John Quincy Adams and Nicholas Biddle set up which created a giant surplus by guiding different cycles of the economy, as Biddle did with the whole farming sector of the West. Bills of exchange, letters of credit, would be discounted in the western branches of the Bank of the U.S in his time, and then find their way East, where the merchants would be importing and exporting goods, and the Bank allowed the farmers to get the best prices for their goods.
By extending credit to the farmers, then, if they had a bad year they did not have to sell off their farm because they went bankrupt. The nation was enabled to continue building the power of production: more farms, do not let the farms just collapse; more manufacturing because the credit of the bank; more internal improvements because of the lending for the canals.
Now what did this do? Biddle came in as Bank director in 1823 and reorganized the system. At this time, James Monroe had agreed with the quote I cited earlier from Hamilton regarding the powers of appropriation of money, to lay and collect taxes. What does it mean to lay? It means to put down, you can put forward a bounty or duty, but you can also collect taxes. Monroe came around to agree that the government could appropriate money for canals, that this was implied in the powers. Benjamin Franklin had wanted it to be an explicit provision at the Constitutional Convention to have the power to appropriate money for canals. Monroe came around in 1823-1824 and said, ‘ok, I will go with this’. He started the national survey act, and Army engineers started designing canals and railroads. In 1825 the Erie Canal was done, but all these other states were also launching projects in 1823 and 1824.
When Biddle came in as Bank Director as the patriot he was, he and his associate nation builders, such as his close associate Mathew Carey, launched the biggest industrialization and overall increase of production that we had ever seen as a nation. And years into the process, it created a huge national surplus from tax revenues.
Then Andrew Jackson comes in as President, acting as a complete tool of Aaron Burr, Van Buren, John Randolph, et. al., anti-nation state interests, which I have written about and will go through in a different presentation. But the key point of relevance here is that Jackson moved immediately to pay off the national debt, which he was only able to do by the work of Nicholas Biddle at the Bank, who made sure through the credit operations of the bank, and management of deposits and funds, that the nation could keep generating enough surplus productivity, to maintain growth, while at the same time meaninglessly sink all of this debt.
There was no reason to pay off the debt so soon. All it did was slow down the growth that we could have had. It was fine to pay off a lot of the debt, because you have to make good on it sometime, but the reason Jackson was made to do it by his controllers was to obtain the “justification” to then drop the protection against foreign laws given to manufacturers; to drop the development of canals and rails, which Jackson opposed early on in 1830; to argue that the sale of the public lands, which had given money to the treasury for internal improvements (roads, canals, and rails), was no longer necessary and they could now be given away for free to the states; to destroy the Bank, which was deemed no longer necessary to coordinate the economy to create a surplus, because we had now paid off the national debt.
Nicholas Biddle, Nation Builder and Director of National Bank.
Nicholas Biddle, at the head of the Bank, spent years dealing with generating a real physical surplus, by coordinating the cycles of debt and credits throughout the economy, and organizing all of the assets of the branches of the bank and all of the assets of the government in such a way as to maintain productivity and a physical surplus. Reading through Nicholas Biddle’s letters, and the history involved, one is presented with an absolute dedication and mastery of national economic cycles, managed day in and day out; the picture of a nation builder looking at the whole economy in his mind and regulating the bank to generate this hard earned surplus. And then these traitors, Jackson et. al., look at the surplus as something that just happens to be there, randomly occurring, and decide to throw it all into paying off the debt immediately.
Involved here, is the distinction between monetary debt, as treated by Jackson et. al., and credit debts, as Biddle used them, as Hamilton before him. The failure to understand the correct view of debt is something which Franklin Roosevelt addresses in his budget addresses, which I want to get into now.


[fn1] Roosevelt set up a whole group of credit institutions to promote the general welfare and to actively get the economy moving: the Commodity Credit Corporation, the Tennessee Valley Authority, Public Works Administration to provide work relief on large public projects, Agricultural Adjustment Act to restore agricultural income, Emergency Farm Mortgage Act to save farms from wholesale foreclosure, Emergency Railroad Transportation Act to help the railroad systems of the country and to restore oil and petroleum from disaster, Federal Surplus Relief Corporation to help farmers and unemployed by purchasing surplus foodstuffs, Civil Works Administration, non-public works projects relief work, building schools, etc. Roosevelt writes that all of these institutions were organized forms of self-help to allow the population to build their own way out of the crisis, with the hand of the government acting as a backing of the process, but not a direct guide.
[fn2] The Agricultural Adjustment Act, approved May 12, 1933; 2. The National Industrial Recovery Act, approved June 16, 1933; 3. The Federal Emergency Relief Act of 1933, approved May 12, 1933; 4. Reconstruction Finance Corporation Act, approved January 22, 1932; 5. The Federal Farm Loan Act, approved July 17, 1916; 6. The Farm Credit Act of 1933, approved June 16, 1933; 7. The Emergency Relief and Construction Act of 1932, approved July 21, 1932.
[1] Video of Part II (this part) of this lecture series:
[2] Part I (transcript):
[3] Part III (transcript):
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