Oh, the smugness that doth flow from those who fancy themselves to be cold realists, allegedly harboring nary a scintilla of fantasy about the way the world doth “really work”—a way which these smug folk unfailingly describe with a single, hallowed (by them) word: “capitalism.” And the evil, fantasy-addled, childish, hand-holding, paternalistic, murderous, incentive-sapping, good-for-nothing opposite of the sacred capitalism for the smug folk? Again, a single word: “socialism.”
The main point
All I really want to do herein is to show how “socialism” is already a very accepted economic reality in the so-called “capitalist” systems of the western world. Not so much in the sense that it benefits the ordinary worker, although there is that aspect: social security, fire departments, national post offices, public schools, and the like.
Let’s not mince words: banks ARE socialism.
How’s that, you say? Confusion about banks being socialist is completely understandable, given that banks are always portrayed as being the pinnacle and linchpin of capitalism. Well, what is one of the most mainstream pejoratives regarding “socialism?” If you said “free stuff,” you…really know your mainstream pejoratives!
Here’s an example from Fox News: “O’Reilly: Bernie and Hillary Are Promising Americans ‘Free Stuff‘”:
“O’Reilly pointed out that Sanders’ plan calls for free Medicare for all Americans, an increase in Social Security payments, guaranteed paid family and medical leave, tuition-free schools at all levels and much more.
‘The freebies and programs Sen. Sanders supports would cost the American taxpayer $18 trillion over a decade,’ O’Reilly said. ‘Obviously, that’s not fiscally possible unless the federal government begins seizing assets, which is certainly in line with the socialist philosophy.’”
The idea is that “free stuff”—whether money or goods—is objectively bad and of course, unaffordable when that “free stuff” goes to you or me, i.e., regular people. It’s objectively bad because it “kills our incentive” to work (i.e., be wage slaves) and it’s unaffordable because the tax money couldn’t be raised to pay for it. That’s the mainstream story, anyway. These are the reasons “socialism” supposedly “will never work.”
Those arguments are nowhere to be found, however, when discussing the free stuff—mainly money—that is given to the banks. We see O’Reilly above complaining that the supposedly horrible “socialist” programs of Bernie Sanders will cost us long-suffering taxpayers “$18 trillion over a decade.” That’s a drop in the bucket compared to the at least nearly $13 trillion that was spent on the bank bailout—i.e., free money to the banks—in only one year, as mentioned in this PBS article about the true cost of the 2008 bailout:
According to a team at Bloomberg News, at one point last year  the U.S. had lent, spent or guaranteed as much as $12.8 trillion to rescue the economy.
That number sounds a little low, though, doesn’t it? Yeah, I thought so too, and it turns out ol’ “Feel The Bern” himself helped instigate an audit of the Fed which revealed the bailout number to be somewhat higher, more like $16 trillion, as pointed out in this story from Forbes (as opposed to say, “Socialism Today”): “The Fed’s $16 Trillion Bailouts Under-Reported.” Here’s some of what the article had to say:
“The audit of the Fed’s emergency lending programs was scarcely reported by mainstream media – albeit the results are undoubtedly newsworthy. It is the first audit of the Fed in United States history since its beginnings in 1913. The findings verify that over $16 trillion was allocated to corporations and banks internationally, purportedly for “financial assistance” during and after the 2008 fiscal crisis.
Sen. Bernie Sanders (I-VT) amended the Wall Street Reform law to audit the Fed, pushing the GAO to step in and take a look around. Upon hearing the announcement that the first-ever audit would take place in July, the media was bowled over and nearly every broadcast network and newspaper covered the story. However, the audit’s findings were almost completely overlooked, even with a number as high as $16 trillion staring all of us in the face.”
If that isn’t “socialist”/”free stuff” enough for you, don’t forget good ol’ quantitative easing, or QE as it’s more commonly referred to. That Federal Reserve handout to the banks started in 2008 (continued through most of 2014), for a total of almost $4.5 trillion, or almost $1 trillion a year given to banks. Free stuff for banks. Here’s a little blurb on that fiasco:
“It’s the end of an era. The Federal Reserve has called time on its $4.5tn quantitative easing programme on Wednesday after more than five years. It was a radical departure for monetary policy, designed to steer the world’s largest economy through the depths of the financial crisis. As the US backdrop steadily improved in the aftermath of the Fed’s cash injection, the central bank gradually slowed its bond-buying programme from $85bn a month to $15bn a month. Here are six key charts tracking the period since QE began in late 2008…”
So with just the bailout and QE, we can see that banks were given free stuff—i.e., money—to the tune of over $20 trillion (with a “T”) in just 5 years. Pretty good deal for the few thousand people (give or take) that really run/profit from commercial banking. But O’Reilly is worried about something that could improve the lives of hundreds of millions of people that would cost less than that in twice the number of years?
And we certainly can’t leave out the ultimate freebie that the banks are given: the power to create money out of nothing, about which we have written frequently here at LRM. Just type “thin air” into the search box for this blog above.
And THAT’S how the world really works
So, socialism: good or bad? Well, I think we can see that socialism is a great thing if you are the beneficiary of it, as we can clearly see that banks are. Has all the free money rid the banks of their incentive? No, it clearly hasn’t. Has it been “affordable?” Well, since the money was created out of thin air, pretty much. That doesn’t mean that taxpayers aren’t put on the hook for it, but the Fed could print up $20 trillion tomorrow and give it to the banks. And then do it again every day for the rest of eternity. Because that’s how money really works. It’s an illusion—that’s the nice way to say it. What it really is is fake. Pure and simple. And that part about the Fed printing up as much as they want? That’s not a joke. Alan Greenspan said it:
We also know it ain’t no joke because it clearly happened in real life. I’ll give you that they didn’t print up $20 trillion in one day. No, they just printed up $9.1 billion a day, every day for 6 years (I figured up 2008-2014, $20 trillion/2,190 days=$9,132,420,091 per day). Printed it up “out of thin air”–that is, the money did not exist before it was just willed into being, ex nihilo. And then gave that to the banks. THAT is “how the world really works.” And it’s socialism/”free stuff”—for the banks.
But now the “serious” and “sober” pundits want to complain that doing the same for me and you—i.e., bailing us out instead of the banks–is gonna be a big problem and they vilify socialism, the very teat from which their banking paymasters have been suckling since 1913. So which is more “socialist”—Bernie or bailouts? Bailouts by far, as Bernie’s plan will only cost $18 trillion in money out of thin air over a decade—by the numbers of some of the main naysayers, while the bailout cost $2 trillion more than that in only 5 years. It’s time for the capitalism cheerleaders to admit to themselves that socialism is and has always been the real economic model on which this country has run. It’s just been socialism for the rich and for the corporations, who supposedly “deserved” it or “earned” it. Time for that socialism to go where it really belongs–to the people.
Go figure—Bernie Sanders is less socialist than banks. I hear a campaign slogan in there somewhere…