Skip to content

Corporate Welfare Bums and Redistribution of Debt: The October “surprise” of 2008.


Via Best Syndication:  Video of Re. Paul Kanjorski, Collapse of Global Financial System Averted In September – $550 Billion Run On Money Market Accounts

On September 18th 2008, while most Americans went about their daily activities, there was a run on money market accounts that could have collapsed the world economic system. Unbeknownst to the American people, the Federal Reserve and Treasury scrambled to stop the hemorrhaging. They immediately closed down the money accounts and announced they would guarantee bank deposits up to $250,000.

Never mind politics for a moment.

Major banks and investment houses were in trouble…

On Thursday Sept 15, 2008 at roughly 11 AM The Federal Reserve noticed a tremendous draw down of money market accounts in the USA to the tune of $550 Billion dollars in a matter of an hour or two. Money was being removed electronically. The treasury tried to help with $150 Billion. But could not stem the tide. It was an electronic run on the banks.

The treasury intervened but had they not closed down the accounts they estimated that by 2 PM that afternoon. Within 3 hours. $5.5 Trillion would have been with drawed and collapsed and within 24 hours the world economy.

CSPAN: Rep. Paul Kanjorski, 11-Penn.

The Federal Reserve, via Ben Bernanke – an NGO – urged the federal Treasury, via Henry Paulson, to push President Bush and Congress to rapidly shovel public money into private accounts to prevent the sudden, unexplained loss of over a half-trillion dollars from collapsing “the world economy.” This, after Paulson had already transferred $150 billions of public money into private accounts. Legally.(?)

The Trouble…
Regulation here in the US (and UK) was used to “nudge” banks to lend to uncreditworthy buyers via the Community Reinvestment Act (and local British legislation).  Bad loans – “toxic assets” or in rational parlance – liabilities – were bundled with good assets and sold into the markets globally as reliable low-risk investments. As Americans began to default on these loans in ever increasing numbers, the true nature of the liabilities were destroying the balance sheets of the institutions holding them and “the full faith and credit” of the American banking system, including the government policies and regulations that forced the situation.

CRAp loans are still being made.  The Fed still exists and still operates outside of Congressional control.  The Treasury is printing billions of paper dollars and depositing trillions of electronic dollars into circulation.

The reason…
It is obvious on its face that one can not “redistribute wealth” from “the haves” to the “have nots” via force. The use of force serves only to redistribute debt. To repeat: Via force, one can only redistribute debt from the unproductive to the productive. Like the term “toxic asset”, the term “redistribute wealth” is disingenuous. When we speak of taxing and spending on “entitlements” we are redistributing debt from the unproductive to the productive. In the banking debacle still in action, the debts of individuals who took-out bad loans are being off-loaded onto productive tax-payers…

…all to buy votes. Really nice votes.

. . .

It really boils down to basic principles of Nature:

Wealth is only transferred via consent of willing parties in the free exchange of products and services,

Freedom is the individual use of choice, and,

Only Debt is transferred when force is the primary motivation,

Government is nothing more than the societal use of force.

One Comment leave one →
  1. 2010/12/08 04:17

    Ran, wanted to send an email about this story but find I do not have your address. I wrote twice about this story in Feb. 2009. You might be interested in the second, where the bottom line seemed to be that Kanjorski “suckered” C-SPAN. I’ll leave the link here, and hope you don’t mind me doing so.

    I’ve been holiday baking with my darling Mother today – all day. She can no longer stand to do that much in the kitchen so I do it for her vicariously 🙂 Anyway, my mind is a bit tired tonight. My bulb needs to be a tad brighter to see how these two stories jive – if they do.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s