Yep, Bill Clinton. Too me, the two most egregious actions against our economic prosperity was put in place by him. And what makes this so bad is that he was smart enough to know better, being vehemently more competent and astute as President in comparison to his replacement; for he should have known that Wall Street Bankers were merely a monopoly. Albeit they fly different flags – a pirate is still a pirate.
The first was the commodities Futures Modernization act, which II have written extensively about in past years. Although put in place in the late 1990s and the brain child of Senator Phil Graham of Texas, this is not what I am targeting, but rather Clinton’s abrogation of the Glass-Steagall Act.
Sure there were inordinate acts signed into law before and after the great depression including the Underwood Tariff Act, the Robinson-Patman Act and the Sherman Anti-trust. All were relatively ineffective, especially the last one. Glass-Steagall is (or was) the most instrumental and effective of all the banking or anti-trust laws implemented after the great depression. Politicians were always aware of the powers of the big banks, especially since the times of the Greenback. But as early as 1911, politicians were aware of the amassed power the Wall Street Banking Cartels had and is why Woodrow Wilson at the time called the “money monopoly.”
Prior to it becoming law, the Pujo Committee noted that the concentration of credit in the hand of a few on Wall Street was both a threat and danger to the nation. In particular since bankers were both capital users and capital supplying entities that made their loot using the loot of others (sounds familiar?) Practices that had been growing since the 1890s with the proliferation of investment banks and finance capitalism. By finance capitalism investment banks were both responsible for the selection and issuing of stocks and setting their prices. Meaning for the investment banker, a guaranteed return on invested capital was more important than national economic progress.
In essence, Glass-Steagall was a means to liberate credit systems from Wall Street control and end the perceived special privileged enjoyed by this sect via a rigged credit system. It was also an attempt to address the massive maldistribution of wealth and engaged reckless speculation of Wall Street investment houses. Moreover, the insider trading, pyramid schemes, speculation, unloading worthless securities and the fact that the general misuse of buying power had been responsible for the economic meltdown put a bright light on the obvious criminal practices of the banks such that laws had to put on the books to keep it from happening again. More importantly, it assisted in ending the incessant discrimination against small business in terms of access to credit, especially if they were outside of New York or Washington, D.C.
Glass-Steagall was signed into law in June of 1933. We have to give both Carter Glass and Henry Steagall of Alabama big props for this. Especially Steagall – who was responsible for instituting the FDIC into law to insure customer deposits? Strange is like today, Republicans who described insuring deposits as “socialism.” I would also have to give props to Duncan Fletcher and Sam Rayburn for their bill to regulate Wall Street and thee stock market. Here two, republicans and bankers argued that Wall Street could police itself.
Glass-Steagall prohibited commercial banks from collaborating with full-service firms or participating in investment banking activities. With one deft stroke of a pen, Clinton actions would proffer to show how Keynesian economic theory was wrong: that trying to obtain maximum employment was good and that liquidity, profit expectation and consumption are not enough to propel economic growth. Why, because equilibrium and underemployment are incompatible theoretical suppositions when conjoined. Clinton ended Glass-Steagall in essence letting the fox guard the hen house,
Yet we still act as if such is the Michael Jordan of economic jump starts, when we ignore the truth that no matter how much loot the government drop as stimulus, folks just gone buy stuff made in other nations, creating jobs over there, because we do not make anything that we or any other nation wants to buy – what we do make (movies and music) can be bootlegged (LMBAO).