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Tom Greco: How Bad Will the Economy Get?
Posted By dpacheco On July 16, 2009 @ 10:37 am In Politics & Social Justice | No Comments
The Fed, already accountable to no one, is being given more regulatory and oversight power over financial institutions by the Obama administration in an attempt to save the economy. Author Thomas Greco  (The End of Money and the Future of Civilization ) fears this could lead to an even greater concentration of wealth at the top and even more disparity between the world’s wealthiest and the world’s poorest. One of his proposed solutions: to create and nurture an alternative, sustainable economy. Can this plan gain any traction?
From Alternet :
Historically, every financial and economic crisis has been used to further centralize power and concentrate wealth. This one is no different, and in fact the moves being promoted by the Obama administration and the central banks of the Western powers will take the whole world to the pinnacle of financial despotism — unless enough people wake up and claim their own “money power.”
In recent months, the Fed has expanded its “assets” from about $800 billion to more than $2,000 billion. Those so-called assets are securities it bought from financial institutions and loans made to central banks in other countries. But the Fed refuses to name the specific recipients of those funds, while admitting that by doing so they are manipulating the value of the US dollar on foreign exchange markets. (Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn.) 
Where does the Fed get the money to buy those “assets” or to make those loans? Quite simply, it creates the money. Unlike you or me or any other economic entity, the Fed has the power to create Federal Reserve dollars by effectively writing a check against no funds. This is the function known as “Open Market Operations .”
What is the economy experiencing now, and what is in prospect for the future? Despite unprecedented inflation of the money supply, we are now (mid-July, 2009) in a period of depression. How can we have simultaneous inflation of the currency and still have economic depression?
It is a matter of where the money is going. While the public sector (federal government) is being lavishly funded to maintain a global empire, and the banks are being bailed out to try to keep a dysfunctional and destructive financial system from collapsing, the private productive sector is being starved for credit. As a result, businesses are bankrupting, people are losing their jobs and their incomes, and lower levels of government are being squeezed because their tax revenues are shrinking.
There is also the matter of the real estate bubble that was created by the financial institutions as they loaded up the private sector with a debt burden that was way beyond its ability to bear. Now that burden is being shifted to the public sector as the government assumes those “toxic” loans. Unfortunately, it is not the poor suckers who were lured into the debt trap that are being relieved, but the predatory lenders who laid the traps. So mortgages are being foreclosed at an unprecedented scale, people are losing their equity as housing values plunge, and more Americans are being made homeless.
These are the factors that have so far kept the effects of monetary inflation from becoming extreme. Ultimately, however, such abusive issuance of political money shows up as rising prices.
When will the price effects of hyper-inflation begin to kick in? How will the government respond to it? What will be the social and political fallout? What can ordinary people do to protect themselves from monetary and legislative abuses? These are the questions that beg for answers.
Article printed from Chelsea Green: http://www.chelseagreen.com/content
URL to article: http://www.chelseagreen.com/content/how-bad-will-the-economy-get-really-really-bad-tom-greco/
URLs in this post:
 Thomas Greco: http://www.chelseagreen.com/authors/thomas_greco_jr
 The End of Money and the Future of Civilization: http://www.chelseagreen.com/bookstore/item/the_end_of_money_and_the_future_of_civilization:paperback
 Alternet: http://www.alternet.org/workplace/141281/how_bad_will_the_economy_get_really%2C_really_bad/
 Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn.): http://www.youtube.com/watch?v=Mj0JAfq4esk
 Open Market Operations: http://en.wikipedia.org/wiki/Central_bank#Open_market_operations
 The Separation of Money and State: http://www.chelseagreen.com/content/the-separation-of-money-and-state-2/
 LISTEN: It’s the Slow Economy, Stupid: An Interview with Tom Greco: http://www.chelseagreen.com/content/conscious-talk-radio-greco/
 DIY Cash: Communities Beat Recession, Benefit from Local Currency: http://www.chelseagreen.com/content/diy-cash-communities-beat-recession-benefit-from-local-currency/