457. Supply Economics, Neocons, US disintegration and Ukraïne.

Paul Craig Roberts- interview.  ( Listen here)

The last 23 minutes of the interview are written out below. 

  

Geïnterviewd door Ellen Brown (EB), 10 maart 2015.

http://thesaker.is/very-interesting-interview-of-paul-craig-roberts-with-ellen-brown

Ellen Brown schreef een van de beste boeken over de financiele wereld. Het boek kwam uit enkele maanden voor de 2008 crisis begon. Maar U kunt het boek goed gebruiken om die crisis te begrijpen.  EB was in januari 2009 in de Balie in Amsterdam.

Paul Craig Roberts was ooit staatssecretaris voor financiën  onder Ronald Reagan.  Zij brachten de economie die enorm in crisis zat, weer aan het draaien.  Hieronder legt hij in enkele zinnen uit hoe dat ging.

Ook vertelt hij beknopt over de opkomst van de Neoconservatieven. Hoe ze verdwenen onder papa Bush en de macht grepen onder Clinton. En hoe ze de oorlogen  van de afgelopen jaren al 10 jaar tevoren hadden gepland en hoe ze die mogelijk maakten.

Verder schildert hij de gevolgen van de ineenstorting van de Soviet Unie en hoe die in feite ook de economische ondergang dan de Amerikaanse middenstand veroorzaakte en mogelijk van het hele land.

Ik heb de engelse tekst vrij getrouw uitgeschreven, en soms een korte toelichting in het Nederlands gegeven.

NB: De eerste 36 minuten van het interview zijn volgens mij minder indrukwekkend, dus heb ik slechts de laatste 23 minuten uitgeschreven.  

 (??) Deze tekst begrijp ik niet.

36 min

There is no economic policy for the country. There is only "covering the bank’s bad bets". Either through the tax payers or the Central Bank.

This is a new development. Came out of the 2008 crisis.

It actually came out of the deregulation. It goes back to Bill Clinton.

EB: Yeh, where did all this money come from. That quadrillion of money.  Who had that happening? What was the reasoning?

PCR: Don’t you remember: Brooksley Born, who was head of the Commodity and Futures Trading Commission ( CFTC) . Her federal madate was to regulate ‘over the counter derivatives.’

When she tried to do what she was supposed to do ( reguleren, toezicht houden) , the chairman of the FED, Alan Greenspan, and Larry Summers and Rubin and Geithner stopped her.  (PCR noemt de functies,maar ik herinner me de joodse namen.)  

They said: If this woman regulates the derivatives it will ruin the economy . Markets are self-regulating. Don’t you remember this? This was a big thing, and she had to resign. And so the derivatives had no regulation.   

38 min.

They did other things as well. They took ‘position limits’ off of speculators.

In my day a speculation could not dominate a commodity market. Or any market. Well, today they can dominate any market.

So all these things are post-Reagan.  We did not have any such ideas.

EB: Was there a rule so that speculation could not dominate the markets?

PCR: Of course,there were position limits on speculating. You know, Mark Candy  (~) explained this brilliantly in Rolling Stone.

Traditionally the purpose of speculation is: to smoothe inbalances between supply and demand, over time.  Not to dominate the market. If I remember well, the speculations could never be more than 15% of the market. It was limited to that.

Today they can dominate the market.  Goldman Sachs can raise hundreds of billions of dollars and  go in and dominate any market.

To get back to the supply side policy, the Keynesian policy used monetary policy to stimulate consumer demand. ( Ze brachten meer geld in de economie zodat mensen meer kochten en de economie weer begon te rollen) ( Supply side policy: de barrières voor producenten verlagen, zodat er meer geproduceerd wordt,en de producten goedkoper worden, en meer werknemers worden aangenomen. Door: de belasting tarieven niet te verhogen bij hogere winsten. Of door minder regels die producenten hinderen. )

Maar die Keynesiaanse geld-schepping werd ineffectief doordat er heel hoge belastingtarieven waren.

40 min.

But the very high taxrates on income and on labor discouraged the increase in labor supply  (er kwamen niet meer banen) and in investment (het extra geld werd niet gestoken in bedrijven, want leverde bijna niks op bij de progressieve tax tarieven)

to meet the rising consumer demand that was caused by monetary policy. And so the prices would go up. In other words: when you get more CD ( Consumer Demand) in the economy, one or two things have to happen: either the prices go up or the output ( productie) goes up or some combination of both.

And what was happening was because of the high tax rates on … for example the depreciation allowance ( toegestaan afschrijvingspercentage op investeringen(?). Als dat laag is, dan blijft het belastbaar inkomen hoog. Snel afschrijven is prettig als je veel verdient.) on bussinesses were so low and drawn out ( over vele jaren) that it was impossible for any bussiness to recover its capital investment, through depreciation.  And this affected the  rates of return. People would say ‘well, the risk in this ( investment) .[is te hoog]. lets just get the price go up ( dan daalt de vraag tot het niveauvan het aanbod).

( Als de vraag naar jouw product groot is, kun je meer verdienen door te groeien, maar ook door de verkoopsprijs te verhogen.)

Why go through all these troubles with labor. ( Extra mensen aan nemen, als je wil groeien,  geeft ook al gedoe.)

 People would not show up on Monday. Doctors would not show up for work on Friday. They went to the golf course. Because marginal tax rates are tax rates on addition to income.

( progressieve belasting tarieven: elke hogere schijf van inkomen wordt hoger belast)

So as the income mounts, the tax rate mounts. And at some point people say: Well, you know,
the leisure is worth more to me than the additional ‘after-tax-income’. It is so little.

It also effects the saving/consumption ratio. People say: if I get all my savings to invest in some bussiness, the after-tax-return is so little , I rather spend the money now, and enjoy the consumption.

We changed that. (De Reagan economics mensen.  Thatcher nam dat over. Toen kwamen vele landen uit de recessie. Natuurlijk ging het ook gepaard met maatregelen die minder prettig waren voor het volk. Maar de mijnwerkers in Engeland en de stokers op de electrische treinen in Engeland die ontslagen werden waren niet allemaal slachtoffer van onmenselijke nieuwe wetten…)

So that the supply had more incentives to respond to growing demand.

EB: And how is demand then driven up by .. ?

PCR: Monetary expansion.

42 min.

EB:  Printing money ?

PCR: Not anything like printing money like they do now. There is a different purpose now. It was ( then) called ‘deficit spending’( Teveel uitgeven). ( Je besteed als overheid meer dan je ontvangt, en het tekort aan geld laat je drukken door de banken, door aan die banken obligaties te verkopen).

The govermnement would run a deficit. Then the Central Bankl would expand the money supply to accomodate the deficit. So that is the way the monetary expansion would work.

As Milton Friedman explained: you will always need a growing money supply. But what you do not need is a money supply growing faster than the real economy. And that is how the Keynesians ended up, for the reasons I gave you. So we had to correct that. And we did. And once corrected, Reagan now said “I have got economic power to put pressure on the Soviets to come to the bargaining table because their economy hasn’t got a solution and they are in dire straits ( problemen) and we are out of our dire straits, so Reagan started all this bluff:  We gonna have Star Wars. We gonne build up the military”. It was mainly talk.  But what the Neocons wanted was : action. They wanted it really to happen.  They wanted not to ènd the Cold War, but they wanted to win it. Wanted a Soviet defeat at the hands of the US. So they got a …. Reagan fired them all. Many of them were prosecuted. Even the secretary of State Casper Weinberger was about to be indighted. And it was papa Bush who pardoned them.  And I can understand why he would do it because .. well they went to far … but they were really fighting the Soviets, and how can we punish them for fighting the Soviets ?

So that was the first appearance of the Neoconservatives. And it was not very succesfull. But they made a lot of new contacts and they got anti-communists on their side who were feeling sorry for them for getting fired and prosecuted.

44 min.

 I dont think they had any influence to speak of in the G H W Bush administration. They were traditional republicans, who are now gone! But the Neocons reemerged under Clinton. They are responsable for the American attack on Yugoslavia, the American attack on Serbia, the beginning of this type of illegal war-crime being committed by Washington in the name of spreading democracy. And then of course with son Bush it went berserk (gek). And so 911 was what let them go forward with all their position papers. If you read their position papers (nota’s waarin hun standpunten en plannen staan genoteerd) you will see they already had a scheme for invading all of the middle Eastern countries. And they said: “What we need, in order to go forward with this, is a new Pearl Harbor.Well, 911 provided the Pearl Harbor. And it also provided the ground for the beginning of a domestic police state, because the argument was given that ‘Oh we cannot keep the Americans safe unless we curtail your rights. We have to take away Habeas Corpus ( basis rechten), and have infdefinite detention (without evidence presented to a court), we have to take away due proces ( ?) ,we have to spy without warrants, and then Obama added: ‘I can kill you on suspicion alone, without due process.’ Kill American citizins.

46 min.

So, this put in place a domestic police state, known as ‘Department of Homeland Security’. While we are talking right now they are recording this. Emails are recorded, our creditcard purchases are recorded. Our movements, our social connections. All of this is stored in a huge complex in Utah. And they are doing this to people all over the World. Their closest allies like Merkel.

All of this is inconstitutional. Every kind of invasion of privacy is inconstitutional.

Like in the Bill of Rights. Its all strictly inconstitutional, strictly illegal. And nothing has been done about it. Nothing.

EB: So what can we do? Is there any way out of this mess?

PCR: I don’t think so. I dont think there is any way of that…
( NB: Roberts zegt hier dat hij weinig hoop heeft dat we nog vrij komen uit de slavernij - die nu nog aan het begin is, en die zeker ernstiger vormen zal aannemen...) 

( Discontinuïty in the tape)

EB: What I am writing about all the time is: when we set up our own banks and moved our money out of Wall Street and in to our own banks, then the Wall Street bankers would not be too big to fail. We could let them fail.

PCR: We can let them fail anyhow.  That is just a made up  thing. For the power.  If they fail there would not be any consequences. It would just be reorganised.

EB: But I think for example in Greece. I read somewhere that the Greeks did not have any choice but to capitulate because the ECB had threatened to cut off their liquidity. And that is the way all banks are : they are all insolvent by nature because they lend out money that is supposed to be there for their depositors, and then they rely on their … ( ??)

48 min.

PCR: Look, I think the work that you are doing ( EB promoot het oprichten van private Banks door het volk of door locale overheden)  is extremely important, but as I understand it , what it basically does (die State bank vanNorth Dakota bijvoorbeeld)  is:  it prevents State budgets and State pensionfunds and State projects from being ripped off by the likes of Goldman Sachs, and ( G S will..) impose tremendous expenses on State and local governements that are then used to force them out of their pension-obligations.

So part of it is the attack on the governement-bullying Unions. (??)

And this is vital. I think every state should have a bank like North Dakota.

It works fine and it keeps them out of the clutches of banksters like Goldman Sachs. And all the kinds of problems that many cities and states have gone through.

These problems are due to  having been influenced by these big banks who are out to make a killing   at the expense  even of State governments. So that part of your work is absolutely essential and I support it wholeheartedly.

EB: I just wonder Europeans could do the same thing, it seems like they could set up their own bank that could get good rates from the ECB

PCR: I think there is a much simpeler solution, that is : just exit the Euro, go back to your own money. People are brainwashed. Propaganda is the same thing: over and over for years and years. So they think ‘Oh we cannot do that.’ But you can do it. You used to do it !! Before you got roped into the Euro you had your own CB and your own money. You can do it again. And if the Russians are giving the Greeks the opportunity and they don’t take it, then they deserve whateveer happens to them as far as I am concerned.

50 min.

But  did you get all of the story that you asked me? You wanted to know what happened from Reagan to  now. And I told you the fundamental difference between Reagan and now or between Reagan and 1991 is that the Soviet Union was still there. And the Soviet Union was a check on American power, and under Reagan ity was a potential conflict that could become nuclear and end life. And I think so he wanted to end the conflict in order to avoid a nuclear Armageddon.

Now, what caught everybody off gueard and surprised them was the Soviet collapse in 1991. It was basically provoked internally when the hard communist Right arrested the president, Gorbachov. And the country came to a defense of Gorbachov. Because he was trying ot reform the system, and he was .. very much with Reagan. The result was that the whole system collapsed and the drunkard Yeltsin showed up and he deliberately delivered Russia to the Americans, and essentially Russia was a vassal state of the US.  OK, now, when the Soviet collapse occurred,
two things happened:

1 The Neocons said: Oh, look: all the constraints on the US are removed. We are now the Unipower. The worlds sole superpower. We are chosen by history.. you may remember the book that Fukuyama wrote: ‘The end of history’

What Fukuyama means is that the conflict between socio-economic political systems is over. That history has decided. American democratic capitalism won. And therefore the Neoconservatives said: “We are the exceptional, the indispensable country”

52 min.

2 “And history has given us the responsability to impose us on the rest of the World. And this means we are the hegemonic power.”

And then Wolfowitz in 1992 wrote the Wolfowitz doctrine that said:

‘ the US will not permit the rise of any other country that can controle sufficient resources to be a check on American power.’( De VS zal nooit toestaan dat een ander land sterk genoeg wordt zodat het in staat zal zijn om Amerika dwars te zitten.)

Now, this is the official foreign policy of the US.

So, during the decade of American wars in the Middle East, where nothing went right and 6 week wars became 8 year wars, and in Afghanistan 14 year wars, and continuing.. during this time Vladimir Putin appeared on the Russian scene. And put Russia back together. Created economic and miltary competence ( confidence?) and.. suddenly, the Neoconservatives who had been distracted with their adventures in the ME and Africa and worrying about China, said : Oh my godness, look, Russia just blocked our planned invasion of Syria.. look they have blocked our plan of bombing in Iran .. they have come back and now they have sufficient resources to be a constraint (een beperking ) on our power. We cannot tollerate this. We must get rid of them. What can we do? We will have a coup in the Ukraine.  That will cause them so much trouble, and not only that.. we can use the coup because we controle the explanations : english is the World language, not Russian.  The Media cooperate with us, sowe can do whatever we want, demonise Russia for it and use the demonisation to break off the econoic and political  relationships between Europe and Russia.  We can isolate and marginalise Russia and force sanctions on the Europeans  that will break up their economic and political relations .. ( 2 times) .. keep you ....(?)

54 min.

And give Russia so many problems  and we will go on from there.

So that is the big transformation. That is the big difference. ( Beteen the Reagan times and now)  Reagan had no Hegemonous ideology.

And the other major consequence of the collapse of the Soviet Union was: it caused socialst India and communist China to believe the Neoconservatives that democratic American capitalism was the only  way to go, and so they opened up their massive under-utilised labor forces to western capital.  Previously they had not. So now Wall Street could go to American manufacturers and say: “We want higher profits. Move your operations to China. Your labor cost will collapse and your profits will go up dramatically. And we will be happy.  But if you don’t do this, we gonna finance a take-over and take you over. And we will do it.

So, the American manufacturers were forced off-shore.  Well, this destroyed the ladders of upward mobility. .collapse the middle class. The well paying manufacturing jobs lost, benefits lost, and then the next step, with the rise of the high speed internet was that the professional skilled jobs such as software engineering and information technology  that provided many jobs for American university graduates .. these were off-shored too, because they could be done anywhere with high speed internet.

And so now we see a contracting, shrinking middle class, already some elements in it going into near destitution  ( wanhoop).

56 min.

We see an amazing increase in the disparity in income and wealth.. The US has a worse income -and -wealth distribution than some  gangster states.

So these are the consequences of the Soviet collapse. 

It unleashed this dangerous ideology, the Neoconservative ideology of Hegemony over the World which is gonna give us all kinds of wars and conflicts, and it unleashed the off-shoring of middle class jobs which are collapsing the American economy because if you move middle class jobs off shore, what will those people do? Well, according to .. they just take part time lowly paid jobs at Wallmart that will no support individuals. They keep torn (?) households.

So the entire economy has been sacrificed to the profits of the manufacturing cooperations and to the cooperations that supply professional skills (zoals programmeerders) or tradeable professional skills such as engineering.

So that is the story you asked.

EB: A really good explanation. A bit gloomy. But, I don’t know, I tend to be an optimist, I don’t know why but it does seem to me that we can work it out, and maybe what we have to do is wait for the whole thing to collapse or grab it just as it seems to be going over the edge .. although it seems to be pretty close right now.  ( De banken over nemen op het moment dat ze bijna failliet gaan, is wat EB bedoelt, denk ik.)

But anyway, thank you so much for that wonderful explanation of where we are, where we have come from, how we have gotten here. And what is going on over there in Europe.

PCR: Well, it’s a pleasure to speak with you, and I thank you for the opportunity.

EB: “I have been speaking with Paul Craigh Roberts, former assistant secretary of the treasury under president Reagan, and the author of 12 books, the latest of which is : How America was lost, from 911 to the police warfare styate. 

You can find all about him on his website: www.paulcraigroberts.org