The Largest Welfare Check Ever Written -- The Rise of the Wall Street Ruling Class

[Octafish]

For those wondering who's paying the band:

The Largest Welfare Check Ever Written

The Rise of the Wall Street Ruling Class

By THOMAS VOLSCHO
CounterPunch
Weekend Edition
December 10 - 12, 2010

EXCERPT...

In 1981 Reagan signed the “Kemp-Roth” tax bill about a week after he had taken the radical step of firing 11,000 striking federal air traffic controllers. This was accomplished within the context of the highest interest rates and subsequent unemployment rates of the postwar era (in 1981-1982). This strategy, as explained by Naomi Klein in her book The Shock Doctrine, requires that radical policy shifts must occur when the public is disoriented and confused. High interest rates, business failures, foreclosures, plant closures, downsizing, and rising unemployment can have this effect. The interest-rate shocks enabled elites to pursue radical anti-union policies and radically reduce taxes on the rich. At the same time, neoconservatives argued that “missile gaps” and “acoustic submarines” (the inability to detect them being given as evidence for their existence) developed by the Soviet Union were posing a major threat to the United States. This justified unprecedented defense spending increases. One of the failed moments of the Reagan revolution, of course, was the decision not to pursue “Social Security reform” while only having limited success at cutting other social programs. This left a problem. Tax cuts for the rich reduced the tax revenue of the Federal government while a defense-spending spree threatened to create the largest federal deficit in history.

In a widely ignored 2000 book, Wall Street Capitalism: A Theory of the Bondholding Class, economist E. Ray Canterbery explains what happened. The tax cuts drastically increased the incomes of the rich and they used their newfound money from the tax cuts to buy the Treasury bonds, notes, and bills that the Treasury Department had to issue in order to finance Reagan's deficits. The combination of monetarism (high interest rates), supply-side tax cuts, and the phantom Soviet threat created the bondholding class. In essence, a Wall Street Welfare institution known as the bond market came to dominate politics in the United States. Instead of using taxes to fund the federal government (and increasingly state and municipal governments), taxes on the rich were cut and they were handed an “investment opportunity” so that working and middle-class taxpayers now pay a “bondholder's tax” to firms like Goldman Sachs and JP Morgan Chase (as well as Japan and China). The domination had become quite apparent in early 1993 when President-elect Bill Clinton remarked "You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?" Clinton ditched his 1992 campaign promises to the whims of the Wall Street Ruling Class and the Federal Reserve Bank.

Treasury securities come in maturities of 1 month, 3 months, 3 years, 7 years, 10 years, and 30 years. But rarely does the bondholding class hold their securities to maturity. Instead, they are circulated through high-volume secondary markets. In October of 2010, for instance, the average daily trading volume of Treasury bonds was $558 billion. Treasury, State, and Municipal bonds are highly concentrated among the rich. In the 2007 Survey of Consumer Finances, the Top 5 percent (ranked by net worth) held about 93.6 per cent of all bonds (this does not include the savings bonds that the working and middle classes are familiar with). Likewise, the Top 5 percent owned 82.4 per cent of all stocks. The bondholding class oscillates between bonds and stocks as market conditions dictate. The Wall Street Ruling Class manipulates the supply of bonds, bills, and notes of differing maturities through its “Treasury Borrowing Advisory Committee” to maximize the economic gains of the bondholding class. The current Chairman and Vice Chairman are from JP Morgan Chase and Goldman Sachs, respectively.

By implementing what Canterbery calls a “bondholding class strategy,” the Federal Reserve Bank managed interest rates so as to optimize returns for the bond and stock market. Studies indicate that bond prices and the stock market generally react negatively to what is good news for most Americans: strong employment growth, a decline in jobless claims, an increase in wages, or an uptick of inflation sends bond and stock prices falling. When news reports of slower housing starts, slower than expected employment growth, an increase in unemployment or jobless claims are released, the bond and stock markets rally. This is a major difference in the class interests between the vast majority of Americans whose primary income is from wages and salaries and the minority of rich asset holders. When the economy grows too fast, the ideology of the bondholding class dictates that the Federal Reserve Bank should raise interest rates (which increases the unemployment rate and reduces wages). Keep wage and commodity inflation in check by all means necessary while allowing for stock market and home mortgage inflation.

CONTINUED...

http://www.counterpunch.org/volscho12102010.html

So, it's not an optical illusion conspiracy theory that our tee vee screens are missing: the Middle Class really is getting hosed into penury.

[Mimosa]

1. What they don't want us to know? n/t

[Octafish]

10. That is how the rich get richer.

This is how they got away with the loot.

[David Zephyr]

2. K&R for another Octafish punching OP.

Thanks for the article! :)

[Octafish]

11. I love CounterPunch.

I don't always believe everything I read,
but when I do, it's often in CounterPunch.



Stay reading, my Friends.

[WHEN CRABS ROAR]

3. We are at the crossroads right now, what are we, you going

to do about it? Push back! Yes, I am trying to stir us up.

[Octafish]

13. Your name alone is enough to change the multiverse, WHEN CRABS ROAR.

Enlighten the turds. Most people change when they hear the truth about America's satanic ruling elite.



Your screen name uttered times infinity.

[Newest Reality]

4. Thanks for tossing some rocks in the blender and pushing

the button to a higher speed.

Can people get enough information to start to realize their actual position and expand their flexibility to act in their own best-interest? That's only selfish when you can't expand your idea of selfishness to include others who are facing the same devastation.

The pivoting point is there if you can see, feel and hear it. Jump in.

[Octafish]

15. That's a great sound: ''WHIR-ZHEE EEEE EEEEE EEEEEE GRAK GRAK! GRAA! Awesome!

The guy on the right is a major player in one of the world's largest economic pie, the petroleum pie.

The guy on the left is a major player in one of the world's other largest economic pie, the narcotrafficking pie.

They both are major players in the world's largest economic pie, Wall Street warmongering.

The guy on the left is a major player in one of the world's largest economic pie, the petroleum pie.

The guy on the right is a major player in another one the world's other largest economic pie, the narcotrafficking pie.

They both are major players in the world's biggest largest economic pie, Wall Street warmongering.

The guy on the left is a major player in (more than all global government revenues combined) the world's largest economic pie, the petroleum pie.

The guy on the right is a major player in the world's other largest economic pie, the narcotrafficking pie.

The guy on the left is a major player in the world's largest economic pie, the petroleum pie.

The guy on the right is a major player in the world's other largest economic pie, the narcotrafficking pie.

They both are major players in the world's biggest largest economic pie, Wall Street warmongering.

The guy on the left is a major player in the world's largest economic pie, the petroleum pie.

The guy on the right is a major player in the world's other largest economic pie, the narcotrafficking pie.

They both are major players in the world's biggest largest economic pie, Wall Street warmongering.

The guy on the left is a major player in the world's largest economic pie, the petroleum pie.

The guy on the right is a major player in the world's other largest economic pie, the narcotrafficking pie.

The guy on the left is a major player in the world's largest economic pie, the petroleum pie.

The guy on the right is a major player in the world's other largest economic pie, the narcotrafficking pie.

And the poor get poorer, imprisoned, enslaved and collaterally damaged.

[leveymg]

5. Manipulation of the Repo (T-Bills) market destroyed Lehman Bros, locked up the markets in Q3 '08

Trading in Public Debt issues is both the instrument of great wealth and the implement of destruction of financial competitors.

The Repo Market is a venue for a vast but silent bonds war that few know about except those who profit immensely from it.

The author is onto something.

[blindpig]

6. Same as it ever was.

The differences are of style and intensity.

[bobbolink]

7. That would make a great billboard! Instead of spending thousands to send roses, why can't DUers

get behind a billboard campaign of facts like this?

[bobthedrummer]

8. It's the transfer of wealth to superwealth. K&R. n/t

[jotsy]

9. I had hoped to find this posted here when I read it earlier today at CP..

I'm glad it's you to get the rec.

The central banking system in private hands is a fail proof recipe to bankrupt a public, whether on the short or long haul.

Have you caught these?

<http://www.youtube.com/watch?v=PTUY16CkS-k>

First song is such a good vent for my angst over the age of ill gotten gain. We're supposed to heartier.
<http://www.youtube.com/watch?v=oTypV_LPiYI&feature=fvw>

edited cuz I pushed the post instead of preview button.

[upi402]

12. 'markets generally react negatively to what is good news for most Americans'

Exactly, but Wall Streeters and banksters operate without the risk of personal penalty.

"The domination had become quite apparent in early 1993 when President-elect Bill Clinton remarked "You mean to tell me that the success of the economic program and my re-election hinges on the Federal Reserve and a bunch of fucking bond traders?" Clinton ditched his 1992 campaign promises to the whims of the Wall Street Ruling Class and the Federal Reserve Bank."

And impunity for the culpable is not limited to the financiers. I was a delegate AGAINST that "right-to-work" bastard during his nomination bid. I was called every name in the book for my efforts. That's the way it is.
Now, here on DU, posters who point out the elephant in the living room get the same.

All hail the uniparty.

[leftstreet]

14. K&R

[chill_wind]

16. It's a big club and you and I ain't in it, K & R. n/t

[Norrin Radd]

17. kr

[bobthedrummer]

18. cue up the O Jays "For the Love of Money", not that Pink Floyd $ song-kick

[Poboy]

19. Too late to rec, but kick.

[bobbolink]

20. I still say that would make a great billboard.