From 1813 to 1907, the U.S. dollar appreciated in value. What cost one dollar in 1813 cost only 48 cents in 1907. In 1913, the Federal Reserve was formed, ostensibly to provide financial stability and “fight inflation.” Since then, the value of a dollar has all but vanished, as what cost one dollar in 1913 cost $20.73 in 2007; the dollar has lost 95.2 percent of its value under management of the Fed.
But at least the central bankers are keeping the financial system stable, right? Hardly. Although the Drudge Report is again reporting that the Paulson plan is on go-ahead, this time with some added provisions that are supposed to make the deal more palatable to American politicians, if not American taxpayers, the reality is that whatever is being done almost surely will not avert the coming economic cataclysm for long. This injection of liquidity into the system may alleviate the symptoms temporarily, but since the core problem was caused by excess liquidity in the first place, it cannot possibly be the solution. Still, a crash tomorrow is arguably better than a crash today; it’s understandable if the politicians facing re-election in five weeks time would rather not face an electorate more in the mood for pitchforks than polls.
And yet, for all its mind-boggling scope, the Paulson plan appears to be little more than declaring “The system is broke. Long live the system.”
Regardless of whether it is necessary, and whether it is likely to work, I don’t think the politicians or the media understand how angry many Americans are about this proposed deal. I took a poll of the readers at my blog, about 80 percent of whom are Republicans who voted for George Bush in 2000 and 2004. Furious would be one word to describe them. Jacobin might be a better one. I gave them three options to the question “What is your preferred response to the Paulson plan?” and 1,051 people responded as follows:
1 percent – Give the bankers what they say they need to rescue the economy. (9 votes)
56 percent – Ignore the bankers, and let the crisis solve itself. (587 votes)
43 percent – Guillotine the greedy bastards. (455 votes)
Nor were my readers alone in this regard. John Hawkins of Right Wing News also polled his readers, who are more conventionally conservative than the libertarian-minded readers of Vox Popoli, and they voted against the Paulson Plan by a landslide, 85 percent to 15 percent.
Given these extraordinarily strong feelings, one would think John McCain and the Republican leadership would have to be insane to go against the wishes of their electoral base, and yet they appear inclined to do precisely that. No doubt they will bill this action as bold leadership, in much the same way they attempted to sell the welcome mat for Mexicans to conservatives earlier this year. One wonders, too, if the left-wing base of the Democratic Party is as enthusiastic as their political leadership in selling out their poor and minority constituencies in favor of enriching the very Wall Street fat cats they usually preach against with all the fire-and-brimstone of a Southern Baptist criticizing Satan.
It seems to me that once the slow-witted left realizes what its leaders have done, they will be more than a little inclined to return to their intellectual roots and bring back the tumbrils of yore. And, it must be said, there will surely be more than a few on the right who will feel moved to join them in addressing the burning issue of excess height in bankers.