Category Archives: Economy

Trickle-down economics doesn’t work but build-up does—is Biden listening?

How should the huge financial costs of the pandemic be paid for, as well as the other deferred needs of society after this annus horribilis? Continue reading

Tackling the infrastructure and unemployment crises: The “American System” solution

A self-funding national infrastructure bank modeled on the “American System” of Alexander Hamilton, Abraham Lincoln, and Franklin D. Roosevelt would help solve not one but two of the country’s biggest problems.

Millions of Americans have joined the ranks of the unemployed, and government relief checks and savings are running out; meanwhile, the country still needs trillions of dollars in infrastructure. Putting the unemployed to work on those infrastructure projects seems an obvious solution, especially given that the $600 or $700 stimulus checks Congress is planning on issuing will do little to address the growing crisis. Various plans for solving the infrastructure crisis involving public-private partnerships have been proposed, but they’ll invariably result in private investors reaping the profits while the public bears the costs and liabilities. We have relied for too long on private, often global, capital, while the Chinese run circles around us building infrastructure with credit simply created on the books of their government-owned banks. Continue reading

Biden says he’ll take on inequality. Good! You need to hold him to it

“It’s time we address the structural inequalities in our economy that the pandemic has laid bare,” President-elect Joe Biden said last week, as he introduced his economic team. Continue reading

Why the Fed needs public banks

The Fed’s policy tools—interest rate manipulation, quantitative easing, and “Special Purpose Vehicles”—have all failed to revive local economies suffering from government-mandated shutdowns. The Fed must rely on private banks to inject credit into Main Street, and private banks are currently unable or unwilling to do it. The tools the Fed actually needs are public banks, which could and would do the job.

On November 20, US Treasury Secretary Steven Mnuchin informed Federal Reserve Chairman Jerome Powell that he would not extend five of the Special Purpose Vehicles (SPVs) set up last spring to bail out bondholders, and that he wanted the $455 billion in taxpayer money back that the Treasury had sent to the Fed to capitalize these SPVs. The next day, Powell replied that he thought it was too soon—the SPVs still served a purpose—but he agreed to return the funds. Both had good grounds for their moves, but as Wolf Richter wrote on WolfStreet.com, “You’d think something earth-shattering happened based on the media hullabaloo that ensued.” Continue reading

The stock market is not the economy

Whatever happens to the economy—jobs, wages, the hardships so many are facing—the stock market seems to be in a world of its own. Why? Continue reading

Another 1.3 million Americans file for UI benefits

The US economy faces unprecedented economic collapse conditions. Continue reading

Over one million unemployment insurance claims for 27 straight weeks, unprecedented US economic collapse

Nothing remotely like what’s gone on since January ever happened before in the US. Continue reading

FinCen Files shine spotlight on suspicious bank transfers

The reporters behind the Panama Papers and the Paradise Papers have more to share. We should pay attention.

On September 20, the International Consortium of Investigative Journalists (ICIJ) –the reporters who brought us the “Panama Papers” and the “Paradise Papers”—released the “FinCEN Files,” in collaboration with Buzzfeed News. Continue reading

Anti-laundering bill targeting shell companies stalled in Senate as big banks caught cooking books

The Anti-Money Laundering Act would expose the owners of shell companies now sits alone on a shelf in the US Senate while the Federal Reserve shrugs its shoulders in the face of blatant manipulation by the too-big-to-fail banks.

Money laundering and cooking the books are usually treated as separate things when discussing white collar crime, even though the latter is often the mechanism through which the former is carried out. In the world of corporate banking, hedge funds and the host of satellite market services that underpin the financialized economies of the U.S. and U.K., tax haven jurisdictions allow money flowing in from all sorts of highly profitable illicit activities, shell companies and brass plate trusts to become an asset on the books of massive institutions like JPMorgan Chase, Deutsche Bank, and HSBC; all of which have been embroiled in massive money laundering scandals. Continue reading

On its 85th anniversary, ‘no damn politician’ should be allowed to scrap Social Security

On this anniversary, we must renew our commitment to preserving and expanding Social Security in the face of these relentless efforts to undermine it.

When President Franklin Roosevelt signed Social Security into law 85 years ago today [August 14, 1935], he expressed hope that the program would offer Americans a “measure of protection” from the “hazards and vicissitudes of life.” True to FDR’s vision, Social Security has protected workers from some of the costliest hazards and vicissitudes of life—including loss of income from retirement, disability, and the death of a family breadwinner. This year, though, Americans have faced “hazards and vicissitudes” unseen for one hundred years—a deadly global pandemic and the resulting economic fallout. Now, as Social Security continues to provide basic financial security to 68 million Americans during this tumultuous time, the program itself needs protection. Not only are Social Security’s resources strained by the pandemic; the program’s opponents seek to undermine and eventually dismantle it amid a national crisis. Continue reading

Trump’s dangerous lies about the COVID economy

“The recovery has been very strong,” Donald Trump said last week. Then the Commerce Department reported the U.S. economy contracted between April and June at the fastest pace in nearly three-quarters of a century, which is as long as economists have been keeping track. The drop wiped out five years of economic growth. Continue reading

Can Trump legally suspend payroll taxes by executive order?

Trump pushed the dubious scheme earlier. Continue reading

Retirees vow to ‘fight this attempt to gut Social Security’ as Trump announces executive order to suspend payroll tax

‘President Trump just betrayed seniors, ordering cuts in Social Security funding because Congress wouldn't go along with his payroll tax cut scheme.’

An advocacy group representing more than four million American retirees warned Thursday that President Donald Trump took a dangerous step toward “single-handedly” dismantling Social Security by announcing he plans to sign an executive order suspending collection of the payroll tax as early as Friday afternoon. Continue reading

Fed guarantees unproductive debt and perilous speculation

Now it is time for various House Committees to publicly question Chairman Powell about the costs of the Fed's callous indifference to the real economy and struggling Americans.

The Federal Reserve Board—our unaccountable Central Bank—needs more citizen and congressional supervision. Fees from financial institutions fund its operations, not congressional appropriations. It is as secret as it wants to be and that’s plenty. (See Secrets of the Temple: How the Federal Reserve Runs the Country by William Greider). Plus, the Fed can print money at will. In the past several years, it has “produced” trillions of dollars that juiced the stock market’s speculation. Continue reading

GOP coronavirus relief package to include Romney bill that would ‘fast-track Social Security and Medicare Cuts’

‘They will use every opportunity and every crisis—including the mass death and economic carnage from COVID—as cover for their sick desire to destroy our Social Security system.’

Shortly after publicly ditching one attack on Social Security—the payroll tax cut—Senate Majority Leader Mitch McConnell confirmed Thursday that the Republican coronavirus relief package will include legislation sponsored by Sen. Mitt Romney that one advocacy group described as an “equally menacing” threat to the New Deal program. Continue reading

Beware the 21st century robber barons

This great shift in bargaining power from workers to corporate shareholders has created an increasingly angry working class vulnerable to demagogues peddling authoritarianism, racism, and xenophobia.

Why do big corporations continue to win while workers get shafted? It all comes down to power: who has it, and who doesn’t. Continue reading

Still more reasons to defund our CEOs

Their relentless rush to hit the pay jackpot is fueling the calamities that confront us.

America’s dirtiest three-letter word may now be “CEO,” and our ongoing economic meltdown is only making that tag even dirtier. Chief executives the nation over have spent this past spring scheming to keep their pockets stuffed while their workers suffer wage cuts, layoffs, and even death by COVID-19. Continue reading

Trump rushed to reopen America, now COVID is closing in on him

Donald Trump said last Thursday’s jobs report, which showed an uptick in June, proves the economy is “roaring back”. Continue reading

Meet BlackRock, the new great vampire squid

To most people, if they are familiar with it at all, BlackRock is an asset manager that helps pension funds and retirees manage their savings through “passive” investments that track the stock market. But working behind the scenes, it is much more than that. BlackRock has been called “the most powerful institution in the financial system,” “the most powerful company in the world” and the “secret power.” It is the world’s largest asset manager and “shadow bank,” larger than the world’s largest bank (which is in China), with over $7 trillion in assets under direct management and another $20 trillion managed through its Aladdin risk-monitoring software. BlackRock has also been called “the fourth branch of government” and “almost a shadow government”, but no part of it actually belongs to the government. Despite its size and global power, BlackRock is not even regulated as a “Systemically Important Financial Institution” under the Dodd-Frank Act, thanks to pressure from its CEO, Larry Fink, who has long had “cozy” relationships with government officials. Continue reading

Working class heroes get death as their reward

We are a nation that loves its heroes, even if most fade unknown to their deaths, protecting capital in a laissez faire system. When we flip a light switch, we take it for granted that the room will be illuminated, without understanding that people die for that to take place. Continue reading

GOP ‘plot to gut Social Security behind closed doors’ gains steam in Senate Covid-19 talks

‘With seniors most at risk from Covid-19, we need to be increasing Social Security's modest benefits, not creating secret commissions to cut them.’

A proposal by Sen. Mitt Romney to establish congressional committees with the specific goal of crafting legislative “solutions” for America’s federal trust fund programs has reportedly resurfaced in GOP talks over the next Covid-19 stimulus package, sparking alarm among progressive advocates who warn the Utah Republican’s bill is nothing but a stealth attack on Social Security and Medicare. Continue reading

Another bank bailout under cover of a virus

Insolvent Wall Street banks have been quietly bailed out again. Banks made risk-free by the government should be public utilities.

When the Dodd Frank Act was passed in 2010, President Obama triumphantly declared, “No more bailouts!” But what the act actually said was that the next time the banks failed, they would be subject to “bail ins”—the funds of their creditors, including their large depositors, would be tapped to cover their bad loans. Continue reading

Could the current serious economic recession evolve into a full-fledged global economic depression?

So far, it can be said that central banks and governments in most advanced economies have acted correctly to prevent the economic lockdown of large segments of the economy from turning into a total economic disaster. They have, at least, saved the day. Continue reading

Trump regime hardliners want Social Security and Medicare eliminated

Social Security and Medicare are insurance programs, not welfare—funded by equal worker-employer payroll tax deductions. Continue reading

The Trump administration’s “monstrous idea”: Direct payments in exchange for cuts to Social Security benefits

‘Donald Trump and his administration will stop at nothing to cut Social Security.’

Suddenly concerned about the growing national debt now that corporations have secured access to trillions of dollars in COVID-19 bailout funds with little oversight, Trump administration officials are reportedly considering several proposals purportedly aimed at reducing government spending—including a pair of plans that would provide Americans with cash payments in exchange for delays or cuts to their Social Security benefits. Continue reading

Crushing the states, saving the banks: The fed’s generous new rules

Congress seems to be at war with the states. Only $150 billion of its nearly $3 trillion coronavirus relief package—a mere 5%—has been allocated to the 50 states; and they are not allowed to use it where they need it most, to plug the holes in their budgets caused by the mandatory shutdown. On April 22, Senate Majority Leader Mitch McConnell said he was opposed to additional federal aid to the states, and that his preference was to allow states to go bankrupt. Continue reading

A universal basic income is essential and will work

A central bank-financed UBI can fill the debt gap, providing a vital safety net while preventing cyclical recessions.

According to an April 6 article on CNBC.com, Spain is slated to become the first country in Europe to introduce a universal basic income (UBI) on a long-term basis. Spain’s minister for economic affairs has announced plans to roll out a UBI “as soon as possible,” with the goal of providing a nationwide basic wage that supports citizens “forever.” Guy Standing, a research professor at the University of London, told CNBC that there was no prospect of a global economic revival without a universal basic income. “It’s almost a no-brainer,” he said. “We are going to have some sort of basic income system sooner or later ….” Continue reading

COVID-19 and the war on cash: What is behind the push for a cashless society?

Cash may well become a casualty of the COVID-19 pandemic. Continue reading

Was the Fed just nationalized?

Did Congress just nationalize the Fed? No. But the door has been cracked open for that possibility.

Mainstream politicians have long insisted that Medicare for All, a universal basic income, student debt relief and a slew of other much-needed public programs are off the table because the federal government cannot afford them. But that was before Wall Street and the stock market were driven onto life-support by a virus. Congress has now suddenly discovered the magic money tree. It took only a few days for Congress to unanimously pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which will be doling out $2.2 trillion in crisis relief, most of it going to Corporate America with few strings attached. Beyond that, the Federal Reserve is making over $4 trillion available to banks, hedge funds and other financial entities of all stripes; it has dropped the fed funds rate (the rate at which banks borrow from each other) effectively to zero; and it has made $1.5 trillion available to the repo market. Continue reading

How to prepare for the Trump recession

The global coronavirus pandemic has put our economy in free-fall. Continue reading

Debt forgiveness and nationalization are the answers to the economic crisis

The US airline companies have bankrupted themselves by buying back their stock in an enrichment scheme for CEOs and board members. With the impact of the virus on their revenues, Congress is handing them a $50 billion bailout. Instead of being bailed out they should be nationalized. Continue reading

‘This is a trap’: Progressives sound alarm as GOP attempts sneak attack on Social Security in coronavirus stimulus plan

‘Senate Republicans are using the coronavirus crisis as a cynical cover to attack our Social Security system.’

Tucked inside Senate Republicans’ gargantuan coronavirus stimulus package is a provision that progressives are warning could significantly damage Social Security’s funding in the short-term and empower right-wing lawmakers to make even deeper cuts to the vital program in the future. Continue reading