[Sosfbay-discuss] [Fwd: The Bailout and What's Next]

[Gerry Gras]

-------- Original Message --------
Subject: The Bailout and What's Next
Date: Tue, 30 Sep 2008 16:33:24 -0400 (EDT)
From: Dennis Kucinich <reply at kucinichforcongress.com>
Reply-To: reply at kucinichforcongress.com
To: gerrygras at earthlink.net



[ ]

[Dennis Kucinich - www.Kucinich.us]

The Bailout and What's Next

Dear Friend,

Yesterday marked a day that will go down in history, when Congressional
Democrats and Republicans alike took on full responsibility to protect
the interests of taxpaying Americans, and defeated the deceptive bail
out bill, defying the dictates of the Administration, the House Majority
Leadership, the House Minority Leadership and the special interests on
Wall Street.

Obviously Congress must consider quickly another course. There are
immediate issues which demand attention and responsible action by the
Congress so that the taxpayers, their assets, and their futures are
protected.

We MUST do something to protect millions of Americans whose homes, bank
deposits, investments, and pensions are at risk in a financial system
that has become seriously corrupted. We are told that we must stabilize
markets in order for the people to be protected. I think we need to
protect peoples' homes, bank deposits, investments, and pensions, to
order to stabilize the market.

We cannot delay taking action. But the action must benefit all
Americans, not just a privileged few. Otherwise, more plans will fail,
and the financial security of everyone will be at risk.

The $700 billion bailout would have added to our existing unbearable
load of national debt, trade deficits, and the cost of paying for the
war. It would have been a disaster for the American public and the
government for decades and maybe even centuries to come.

To be sure, there are many different reasons why people voted against
the bailout. The legislation did not regard in any meaningful way the
plight of millions of Americans who are about to lose their homes.  It
did nothing to strengthen existing regulatory structures or impose new
ones at the Securities and Exchange Commission and the Federal Reserve
in order to protect investors. There were no direct protections for bank
depositors. There was nothing to stop further speculation, which is what
brought us into this mess in the first place.

This was a bailout for some firms (and investors) on Wall Street, with
the idea that in doing so there would be certain, unspecified, general
benefits to the economy.

This is a perfect time to open a broader discussion about our financial
system, especially our monetary system. Such a discussion is like
searching for a needle in a haystack, and then, upon finding it,
discussing its qualities at great length. Let me briefly describe the
haystack instead.

Here is a very quick explanation of the $700 billion bailout within the
context of the mechanics of our monetary and banking system:

The taxpayers loan money to the banks. But the taxpayers do not have the
money. So we have to borrow it from the banks to give it back to the
banks. But the banks do not have the money to loan to the government. So
they create it into existence (through a mechanism called fractional
reserve) and then loan it to us, at interest, so we can then give it
back to them.

Confused?

This is the system. This is the standard mechanism used to expand the
money supply on a daily basis not a special one designed only for the
"$700 billion" transaction. People will explain this to you in many
different ways, but this is what it comes down to.

The banks needed Congress' approval. Of course in this topsy turvy
world, it is the banks which set the terms of the money they are
borrowing from the taxpayers. And what do we get for this transaction?
Long term debt enslavement of our country. We get to pay back to the
banks trillions of dollars ($700 billion with compounded interest) and
the banks give us their bad debt which they cull from everywhere in the
world.

Who could turn down a deal like this? I did.

The globalization of the debt puts the United States in the position
that in order to repay the money that we borrow from the banks (for the
banks) we could be forced to accept International Monetary Fund dictates
which involve cutting health, social security benefits and all other
social spending in addition to reducing wages and exploiting our natural
resources. This inevitably leads to a loss of economic, social and
political freedom.

Under the failed $700 billion bailout plan, Wall Street's profits are
Wall Street's profits and Wall Street's losses are the taxpayers'
losses. Profits are capitalized. Losses are socialized.

We are at a teachable moment on matters of money and finance. In the
coming days and weeks, I will share with you thoughts about what can be
done to take us not just in a new direction, but in a new direction
which is just.

Thank you,


Dennis
www.Kucinich.us <http://www.Kucinich.us>
216-252-9000   877-933-6647

PS Watch the 47 minute 'Money as Debt' animated documentary in
http://video.google.com/videoplay?docid=-9050474362583451279. This is a
useful, though by no means definitive, introduction to the topic of debt
and the monetary system. Let me know what you think.

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