Finally, years too late, Bernanke will follow Geithner out, and Yellen has a shot at chairing the all-important and deeply complicit Fed. When Bernanke leaves, two of the main foxes who guarded the U.S. financial chicken coop so many of whose chickens have been so shamefully gobbled up since 2007, will finally be gone. Will anything change?
The Federal Reserve bears key responsibility for the on-going economic disaster known as the Recession of 2008, and since Fed official Yellen is now in the running to replace Bernanke, one of the chief foxes in the U.S. financial chicken coop, her recent speeches bear studying. The following example of her views provides considerable cause for concern.
“Both for the United States and for Europe … fiscal austerity does raise unemployment, weaken the economy and … in addition undermines the goals for which it is designed to achieve,” Yellen said.
Yellen argued that the primary cause of high unemployment is a shortage of demand due to the ebb and flow of the business cycle, not structural factors. That suggests monetary policy can be helpful to offset the labor market’s troubles.
I would argue that structural factors are exactly the problem: the economy is carefully structured by the Fed to promote a stock market balloon that facilitates the rich getting richer. Backed up by tax laws that further favor the rich and a broad Federal refusal to hold financial magnates personally responsible for the corrupt behavior that “just happens” in the corporations they control, the result is a steady transfer of national wealth from the population into the hands of a few millionaires. The fact that Detroit car companies were bailed out while the people of Detroit are being forced to suffer under government-imposed austerity is the prime current case in point illustrating the fundamental structural problem of the U.S. financial system.
The “business cycle” is a complete red herring. There is no business cycle in contemporary America. The business cycle is a normal ebb and flow of supply and demand as governed by the invisible hand. Monetary interventionism by the Fed has completely supplanted the business cycle, replacing it with a contrived boom and bust cycle (S&L, dot-com, 2008 Recession) that are unrelated to national economic performance and instead are designed as wealth transfer mechanisms to impoverish the 99%. While the original Fed intent may have been well-meaning, this policy of monetary intervention is today designed primarily to enrich the rich by creating an elitist, anti-middle class legal and financial environment that punishes hard work while rewarding “gambling with other people’s money.” The details on how that particular scam works were laid out by Louis Brandeis a century ago and remain highly relevant today.
Can Yellen rise to the occasion and reverse the elitist U.S. financial policy that effectively amounts to class war against the 99%? This much I can say in her defense: if she had spoken the truth in public about what the U.S. political-financial elite is doing, that elite would have banded together and driven her from office and banned her from Washington. In other words, they would have treated her exactly as they treated Elizabeth Warren, who is now a very opinionated U.S. Senator with her teeth clamped on the ankle of the elite.