Our Gigantic Delusion
Can We Overcome It In Time?
We live in a culture wide, all embracing fantasy world. It has become our total “reality.” It is our Conventional Wisdom. Paul Ehrlich called this intellectual fog “wonderland.” In 1973 Jonah Raskin called it “mythology.” In 1978, Columbia Professor Edward Said wrote his famous bookOrientalism in which he surveyed Western academic literature and novels about our attitudes toward Asia, Arabs, Palestinians, East Indians, and Moslems. He found that even novelists assumed that Westerners were more moral, advanced, and enlightened than Asians and that it was our duty to bring our civilization to them. Orientalism boiled down to racism: Our Caucasian race, our Western way of life, our civilization, our economy is good and clean, and theirs is backward, antiquated, dirty, ignorant. and bad. John Bellamy Foster, Professor of Sociology and Richard York, Associate professor of Sociology, at the University of Oregon, and Brett Clark, Assistant Professor of Sociology at North Carolina State University, in aMonthly Review article, “Capitalism in Wonderland,” show that all of our mainstream economists, policy makers, media owners, editors, journalists, and politicians conform to the dictates of this falsified view of reality. President Obama, Lawrence Summers and all his other advisors, and most members of Congress are captives of this false view of reality.
Even when presented with facts that challenge this gigantic delusion, being frightened, hypnotized, addicted, and brainwashed, we reject them. The irony is that the delusion is so grandiose, that one like me who challenges it, runs the risk of seeming to be a grandiose crazy individual.
Our reigning economic falsehood is that our market economy whose principal goal is short term private profit, is the best that humans can create, is the best for everybody, and is in every respect unchallengeable. Moreover, THERE IS NO ALTERNATIVE. Thus, we cannot have and cannot even consider
- Serious measures to deal with the needs of our damaged planet home.
- Socialism in any form.
- Extensive public hiring and public works.
- Caring for ourselves and for each other using the powers of our government.
- Directly giving people who want to work, employment to meet our vast unmet needs.
- Mondragon type cooperative businesses.
- The immorality of a system based on selfish, short term, private greed and absence of caring.
- Medicare for everybody or a VA-type public Hospital and doctor available for everybody.
- Any health care system that does not provide some private persons with a generous private profit making opportunity from our accidents and illnesses .
- Solutions to the ever increasing disparity between the rich and the poor.
Our President and his economic advisors are imprisoned by this reigning market falsehood. It embodies the further falsehoods that our market economy is basically stable, contains no systemic defects, contains no laws of motion or dynamics or anti-social tendencies, and that its minor aberrations can be managed by unlimited expenditures of our tax dollars or by borrowing. The fact that systemic defects caused our “capitalism to hit the fan”1 in 1980 are simply ignored. Thus our President and our government by exhaustive efforts to restore bank lending, seek to create a new credit bubble to replace the housing bubble that crashed. Their stated rationale is that the banks will lend, businesses and individuals will borrow, and that ultimately new jobs will be created. They seek also to maintain and restore the many forms of collateralized debt obligations free of any new regulation. They ignore the basic truth that our economy can be re-started only by directly creating jobs providing enough earned income so that citizen employees can afford to purchase the products of their labor. Moreover, our governmental leaders urge that we must restore “growth” of our existing economy, with its inevitable growth of our emissions of carbon into the atmosphere, of pollution, and our depletion of the planet’s finite resources of oil, soil, and fresh water. As a consequence:
* We are ignoring a basic rule of arithmetic that even “reasonable” growth of 3% per year leads to doubling within an unexpectedly short time. (To get the doubling time simply divide the number 70 by the percentage rate of growth. Thus 70 divided by 3 gives us a doubling time of 35 years. A 4% growth rate would have a doubling time of 17.5 years. A 6% growth rate would give a doubling time of about 12 years. Such doubling continues over and over again so long as the growth rate continues.) Do we really want to double our carbon emissions and consequent global warming? Do we really want to double the consumption of oil, soil and fresh water? Do we really want to double the population of the planet? Is not any talk of growth idiotic? We need a sustainable, stable economy with zero growth.
* We are frightened and uneasy. We are acting irrationally in street marches and in public hearings. We do have to fear fear itself. We have no FDR who promises to meet our needs. We have a presiding eloquent Black Herbert Hoover and not a Black FDR. There are no plans on the shelf for any plausible solutions, and no leaders or academicians promoting them.
* We, of the political left, right and center, with good reason, are worried about how we and our children will pay for all of this vast expenditure of public tax dollars. We worry whether there will be the disastrous inflation experienced by Argentina a few years ago, deflation even worse than the Great Depression of our grandfathers, or, for us, both at the same time.
Then there are the many falsehoods that accompany the extension of this reigning falsehood, our “good” market economy abroad to foreign countries, an extension that we used to call Imperialism:
* Does anybody really believe that our own sons and daughters in the military, and Afghanistan and Pakistan civilian men women and children are being killed or wounded every day as a part of our effort to help them or to bring them Democracy?
* Does anybody really believe that the Honduran military Generals trained in our School for the Americas, financed by loans and grants from our government, using a plane that we financed, landing on the way out at a US military base in Nicaragua, acted without U.S. consent in deposing democratically elected President Manuel Zelaya?
* Does anybody really believe that we are getting out of Iraq when we replace every soldier withdrawn with a hired Blackwater mercenary soldier, and when we are building 4 large permanent military bases in Iraq, and the most lavish US Embassy building in Asia?
* Do we really need 800 military installations in 45 foreign countries staffed with 240,000 military personnel?
Then there is the deepest secret of all, so well hidden in our gigantic delusion, that almost nobody is aware of it. It is the secret Ponzi-like scheme of our private bankers that produces an almost unimaginable annual private profit for them at our expense. This secret private money creating scheme involves the following characteristics:
1. Congress in 1913 delegated the power to create our money supply to the private bankers that constitute the Federal Reserve system. Congress does not use its power to coin our money. Private bankers create 95% of our money supply simply out of thin air. The privately owned “Federal” Reserve Bank simply writes a check out of thin air and issues the money to a private bank. The private bank then loans this money to a private or governmental borrower who promises to repay with interest. The promise to repay becomes an “asset” of the lending bank that it then uses to make many other loans under what is called “fractional reserve banking.” It is thus a fact that 95% or more of our money is based on debt. All existing money thus equals the total of all public and private debt.
2. Our government instead of using its Constitutional power to issue money directly to meet governmental needs (as Lincoln did to finance the Northern side of the Civil War) borrows money to meet its needs from private bankers and pays private bankers interest on what it borrows. Repayment is promised from our tax dollars.
3. Over time, the annual profits for the owners of private banks have compounded enormously. We cannot know how much because the private bankers secured a federal law making it unlawful to audit the activities of the Federal Reserve Banks. One can estimate the annual profit by simply multiplying a probable average interest rate times the total money supply since all money is debt. Is it reasonable to assume that the rate of return is at least 3 %? The total money supply was recently estimated to be $50 Trillion. 3% x $50 Trillion gives private bankers an annual gross profit of $1.5 Trillion per year. This profit compounded over the decades produces an unimaginable stash of total wealth for the owners of the private banks.
4. The private banks use this immense secret stash of wealth to control our government and to override our votes on every issue that is important to banks. Thus it is accurate to say that we have a government of, by and for private bankers. It is also accurate to say that every aspect of the reigning gigantic delusion about our capitalism, including the Imperialism of defending and promoting capitalism abroad, partially set forth above, serves the interests and the profits of private bankers.
5. These private bankers, having the authority to create money out of thin air have created too much money in the recent past and caused inflation, and are now creating too little money and thus are causing our current depression.
In the 1990s, Professor Jared Diamond wrote his book Collapse where he studied four civilizations that had perished in the past and two that survived. The two that survived, managed to overcome their prevailing falsehoods, their Conventional Wisdoms. The four fallen civilizations could not and did not. The question for all of us is: Do we have what it takes to overcome our gigantic delusion? Or will our democratic civilization fall into a new dark age where the only law is the Law of the Jungle?
- See University of Massachusetts Professor Rick Wolff’s You Tube video, “Capitalism Hits the Fan.” [↩]