It’s time to talk about women’s economics with attitude. It’s time to laugh at what is often absurd and call out what is dangerous. By focusing on voices not typically part of mainstream man-to-man economic discourse, Women Unscrewing Screwnomics will bring you news of hopeful and practical changes and celebrate an economy waged as life—not as war.
The CARES Act promises $2.2 trillion in crisis relief, mostly for corporations. But the Fed is also making $4 trillion newly available through a host of new programs.
If you’re like most people in the U.S., you’re wondering—um, who’s the Fed again? What changes exactly? And do I have the bandwidth to care right now?
You’re not alone if you’re confused or overwhelmed. Even Janet Yellen, who is the only woman ever to have chaired The Fed for a brief four years, appeared on CNBC last week to share her worst COVID-19 fears—and also, alas, a “learned ignorance.”
That’s a term coined by Erasmus to describe educated book-learning’s blind spots. Thorstein Veblen called it “trained incapacity,” for the way elite educations can smooth over any threatening questions about causes of bad results. Any ignorance you have is also learned, but more likely due to the Fed’s growing obfuscation and deception.
Since its establishment in 1913, the Fed has created our dollars. Called Federal, it is actually a network of privately-owned banks, dominated by Wall Street’s biggest banks. Like the Bank of England and other central banks, The Federal Reserve System has no vaults of gold or your savings in a locked safe to back its loans; the Fed System literally creates money out of thin air and debt.
At its simplest, you could say its Reserve is actually our U.S. Treasury bonds, or American debt, which the Fed’s primary dealers—those biggest banks again—auction off to the highest bidders world-wide.
To her credit, Janet Yellen at least worried out loud about Main Street people that Alan Greenspan, her predecessor who chaired the Fed for 19 years, never noticed even in the midst of the 2008 crash.
She cited matters that Jerome “Jay” Powell, her Trump-appointed successor, ignores with his latest Fed “innovations” that serve Wall Street. Yellen told CNBC that regular people like you and me will also affect economic recovery post-COVID-19, saying:
“…if households have run down their savings and had to dip into retirement savings, or are behind on their bills, and have higher debt and lower wealth, their spending patterns are not likely to go back to what they were….” She predicted coming bankruptcies.
But here’s the learned ignorance that astonishes, called out by financial investigative reporter Pam Martens: Beginning on September 17, 2019, four months before any U.S. coronavirus cases, the Fed started pumping billions of dollars to Wall Street’s biggest trading houses, owned by New York’s biggest banks and hedge funds, all busy eliminating 68,000 jobs.
By now, this Fed backup begins to look like a new kind of bailout that author Ellen Brown likened to a trillion-dollars-a-day credit machine.
So, it was surprising to hear Yellen repeat what Pam calls, “the official delusional mantra.”
“We have a strong, well capitalized banking system,” Yellen declared on CNBC: “We’re seeing the benefits of that.” But as Pam pointed out: What benefits?
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Even those Americans without money in the market can see the difference between the Feds’ trillions and a lousy $1200 check they’ll possibly get. We all see the Dow reports on the market’s scary ups and downs. Finance pages report plummeting bank share prices and something called the repo market, a freakily growing number of short-term mostly private overnight loans that feel panicked.
Basically, the Fed’s so-called innovations do the same old same old, providing cheap loans for Wall Street’s biggest players while somersaulting linguistic gymnastics.
On March 23, more than ten Special Program Vehicles (SPVs) were launched, each with its own tortured name and acronym. One of them, the Primary Market Corporate Credit Facility (PMCCF), allows the New York Fed to buy BBB-rated investment bonds before they turn into corporate junk-bonds on the books of the biggest banks, which would downgrade the banks themselves.
They’ve also resuscitated an SPV from 2008’s bailout, the Primary Dealer Credit Facility (PDCF), loaning to Wall Street’s trading houses at one-quarter of one percent interest, while accepting as collateral those trader’s stocks and toxic waste known as Collateralized Debt Obligations (CDOs) and Collateralized Loan Obligations (CLOs).
I won’t blame you if your eyes cross at all this verbiage. That’s why it’s complicated—in hopes you’ll give up. But when CNBC asked Janet Yellen if the Fed should be buying stocks, her answer’s “trained incapacity” was shocking.
The Fed is not legally allowed to buy stocks, she said, restricted to buying government debt and agency debt with government backing—when clearly the PDCF allows exactly that, and not for the first time.
As Nomi Prins made clear in It Takes a Pillage, its CDOs were a big part of the 2008 crisis.
We wouldn’t discover how big until U.S. Sen. Bernie Sanders demanded an audit of the Fed, their first audit in nearly a hundred years. That’s how we found out that the Fed, in secret, had loaned another sixteen trillion dollars to EconoMan, the mostly white rich guys on Wall Street whose toxic assets had just caused the 2008 crash. The Fed hasn’t had an audit since.
If you want clearer more sensible explanations of the Fed’s hall of mirrors, check out Yves Smith at Naked Capitalism, Pam Marten and her husband Russ at Wall Street on Parade, and also Ellen Brown’s three books, Web of Debt, The Public Banking Solution, and Banking on the People, all available at The Public Banking Institute, a real source of some good news for a change.
A financial system funded by the public for the public good, could create money as a utility for all of us on Main Street, instead of what we have now—a profit center for the richest few on Wall Street.
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