Transcript: Thom Hartmann: The Big Picture: Thanks to trickle down - we're headed to another collapse, 26 April '11

Transcript: Thom Hartmann: The Big Picture: Thanks to trickle down - we're headed to another collapse, 26 April '11

There’s at least one Senator on Capitol Hill looking out for the working class and not the banksters - and that’s Bernie Sanders. Thanks to his efforts - we the taxpayers - are privy to exactly what the Federal Reserve has been up to since the financial meltdown of 2008.

And the latest release of numbers from the Fed to Senator Sanders’ office - reveals that over the past few years the largest banks in America have pulled off one of the biggest scams in the history of our nation.

Since 2008 - the Fed has been creating money out of thin air and then dishing that cash out as low interest loans - we’re talking REALLY low-interest loans - like 1% or less - to some of the biggest banks in the nation like JP Morgan Chase - Bank of America - and Citigroup.

The idea was that the banks would use that money to loan out to small businesses to hire people again. Basically - to jump start our economy - or so we were told. But the truth is - as revealed by Senator Sanders - those loans were merely vehicles to transfer billions - maybe hundreds of billions - of dollars from you and me the taxpayer directly into the pockets of the banksters.

Here’s how it worked:

The Fed would give a bank like Citigroup a couple billion dollars at let’s say a 1% interest rate. Then - what Citigroup would do is lend that money THEY JUST GOT - back to the government at a much higher interest rate. It’s like if I ask you to loan me 100 bucks at a 1% interest rate - then next year - I’ll have to repay you $101. But - if as soon as you lent me that 100 bucks I turned around and lent it right back to you for a 5% interest rate - then while I’m paying you $101 dollars next year - you’re paying me $105 - I just profited 4 bucks.

Of course - 4 bucks is small potatoes - but when we’re talking about loans in the millions and billions of dollars - the interest can add up really quickly - and it did.

In 2008 - JP Morgan Chase took out a loan from the Fed of $1.2 billion at an interest rate of 2.1% - then JP Morgan Chase used that money to loan the government $2.2 billion at a 4.6% interest rate. They profited $30 million off the deal and all they had to do was sit on their hands and wait for the government - you and me - to pay them their interest.

In 2009 - Citigroup took out a loan from the Fed of $12.1 billion at a interest rate of half a percent! - and then loaned that same money to the government at an interest rate of 3.9%. They profited more than $411 million off the deal - again - doing absolutely nothing except waiting for the government to use our tax dollars to pay them their interest.

Also in 2009 - Bank of America took out loans from the Fed totaling $2.9 billion at a rate of a measly .25% - just a quarter of a percent! - and then turned around and loaned $23.5 billion to the government at a rate of 3.2%. They profited more than a whopping $744 million off this crooked deal with taxpayers - that's three quarters of a billion dollars - absolutely free.

We’re talking billions and billions in new profits the banksters made - and what do we the taxpayer have to show for it?

Nothing!

The banksters didn't loan a penny of that almost-free Fed money out to a small business. They didn't loan a penny of it to homeowners to refi their mortgages. They didn't create a single job or save a single home. Not a damn thing except the truth about what happened - and even that - Senator Sanders had to fight and claw for in the Senate.

Back in 2008 - when the shredded money was hitting the fan in our financial markets - and George W. Bush was parading Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke out to warn us all that our economy was going to implode unless drastic actions were taken - there were plenty of things Bush could have done to stave off doom

He could have nationalized the banks - saved the taxpayers trillions - and put in place reforms to prevent this all from happening again. This is what Iceland did - and it worked. It's what Sweden did in the 90s and it worked. It's what Ronald Reagan did with the S&Ls when they exploded after he'd deregulated them - and it worked - It even showed a profit for the taxpayer - and Reagan sent over 1000 banksters to prison.

Instead of bailing out the banks - Bush could have let them fail and instead bailed out all the homeowners who were screwed into exploding mortgages - just like FDR did in the 1930s, moving them all over to long-term low-interest government-financed mortgages - a bottom-up solution - that, again, actually made a profit for the federal government.

But Bush didn’t do any of that - instead he went the trickle down route - give the rich banksters trillions and wait for that money to trickle down on the rest of us.

It doesn’t work - It hasn’t worked anywhere it’s ever been tried at anytime in history.

So here we are today - after trillions were given to the banksters - the rich are richer - in fact, richer than they’ve ever been - the stock market gamblers are surging - and yet…the economy still sucks for working people. Nothing has trickled down - and as S&P said last week - there is greater risk in our financial markets today than there was before 2008. Thanks to trickle down - we’re headed to another collapse.

Until there’s a fundamental realignment within the Democratic Party - until they change their Party’s vision and blow away trickle-down economics for good - then things will get continuously worse.

The Progressive Caucus has banished trickle down from their budget - and the President gave a mild dismissal of Reaganomics a few weeks ago - but the entire Democratic Party needs to unite in their opposition to a "for the rich by the rich" economy.

The Republicans are hopelessly lost - having thrown their weight firmly behind Wall Street - but there’s no reason why the Democrats should be in the banksters pockets as well.

Because the only thing trickle-down economics produces is a nation of peons.

That's The Big Picture.

Comments

marshman's picture
marshman 2 years 38 weeks ago
#1

"Because the only thing trickle-down economics produces is a nation of peons."

Then why don't we call it what it is: tinkle-down economics.

Welcome to the New Corporate Feudalism

Feudalism is back, with a vengeance.

Right now, the Wisconsin legislature is considering a bill that would make Wisconsin the nation’s 25th right-to-work-for-less state. All signs point to this bill becoming law. The state senate passed it by a margin of 17 to 15 last week, and Republican Governor Scott Walker, who supports right-to-work-for-less laws, said he will sign it if it reaches his desk.

From Screwed:
"Once again, Thom Hartmann hits the bull’s eye with a much needed exposé of the so-called ‘free market.’ Anyone concerned about the future of our nation needs to read Screwed now."
Michael Toms, Founding President, New Dimensions World Broadcasting Network and author of A Time For Choices: Deep Dialogues for Deep Democracy
From The Thom Hartmann Reader:
"Thom Hartmann is a creative thinker and committed small-d democrat. He has dealt with a wide range of topics throughout his life, and this book provides an excellent cross section. The Thom Hartmann Reader will make people both angry and motivated to act."
Dean Baker, economist and author of Plunder and Blunder, False Profits, and Taking Economics Seriously
From The Thom Hartmann Reader:
"In an age rife with media-inspired confusion and political cowardice, we yearn for a decent, caring, deeply human soul whose grasp of the problems confronting us provides a light by which we can make our way through the quagmire of lies, distortions, pandering, and hollow self-puffery that strips the American Dream of its promise. How lucky we are, then, to have access to the wit, wisdom, and willingness of Thom Hartmann, who shares with us here that very light, grown out of his own life experience."
Mike Farrell, actor, political activist, and author of Just Call Me Mike and Of Mule and Man