Between 1660, when Charles the Second ruled England and 1819 during the middle of George the Fourth's rule, nearly two hundred laws were enacted mostly to protect property. Until 1803, attempted murder was only a misdemeanor (from The Fatal Shore by Robert Hughes). Stealing a chicken or a loaf of bread was punishable by death until such thieves were used to colonize and populate Australia. The laws enshrining property became the thinking norm in the British colonies of America and were exploited to steal land from the community ownership of native Indians in Canada and the thirteen US colonies.
The Spaniards and the Portuguese did the same to the native Indians in Central and South America and the Caribbean. John Jay, a wealthy merchant who served as the President of the Continental Congress, author of the Federalist Papers, minister to Spain and France and the first Chief Justice of the US Supreme Court, unequivocally stated that those who own the country should rule it. Madison, the author of the US Constitution, secretary of state and later president had a similar emphasis and restricted the vote to property owners.
Thus from its birth, America has put property on a pedestal above human dignity and welfare. Slavery, Indian genocide and disenfranchisement of women and the poor provide the damning testimony. In this, the Federalists of Adams and Hamilton were united with the Republicans of Jefferson. Jefferson wanted the concentration of wealth to be more rural and land based, while Hamilton wanted it more urban and based on commerce and banking. Hamilton prevailed and the First Bank of the United States was chartered under president George Washington. Its present day successor, the Federal Reserve is the third such entity with gaps in the lineage due to the opposition of Andrew Jackson and others. Nicholas Biddle, a banker served as president of the First Bank of the United States and in the last century Andrew Mellon, a private banker served as the Treasury Secretary under three presidents. The fox guarding the chicken coop has been the US national policy from its birth to the present. The appointment of papa Kennedy as the SEC chairman by FDR is of a similar nature.
The assigned duties of the Federal Reserve are to keep inflation in check and to sustain the national economy. It does this by changing the money supply and setting the short term interest rates. There are two of the latter, the federal funds rate (currently 5.25%) affecting the consumer rates (us small fries) and the discount rate (which it just lowered to 5.75% from 6.25%) affecting the banks (the big fat cats). Inflation in very small doses helps growth and to an extent alleviates poverty, but it has a tendency to accelerate and become self-sustaining, as in the Weimar republic of Germany in post WW1, when a pack of cigarettes cost over a billion German marks. Other examples are Brazil and Argentina in Latin America and Indonesia in Asia.
America post WW2 was in the catbird seat. Its GDP was nearly half of the entire world and it had the bulk of the world's gold. To prevent the spread of Soviet communism to war devastated Europe and recurrence of the depression, it instituted the Marshall Plan. It was not real aid but a bonanza for US companies, as the bulk of the aid was to be used in the purchase of American goods. A substantial portion of the rest was to bribe and support political parties opposed to the communists in countries like Italy, Greece etc., as revealed in the recently disclosed CIA archives.
Lyndon Johnson's profligate guns and butter policies for the Great Society and the Vietnam War led to closure of the gold window to the irritating DeGaulle of France and the first devaluation of the dollar. Inflation was galloping and Nixon asked Arthur Burns to indulge in skullduggery to lower the rate. He came up with the concept of the core rate of inflation which excluded food and energy, whose prices had risen substantially due to Soviet grain purchases to remedy a poor harvest and the Arab oil embargo which raised the price of crude oil. This bogus statistic is still used for indexing the increase of Federal Social Security payments. The public cannot live without food and energy, so they should not be excluded from the cost of living increases.
Nixon's policies were notoriously underhanded and crooked as in Watergate, enemies list etc. He was also a closet racist. The US census form before Nixon's time had only three race categories, black, white and other (for native Indians). Asians and brown Latin Americans checked the category white. Nixon started the category Asian and Pacific islanders to separate out all Asians (Chinese, Japanese, Koreans, Pacific islanders, Arabs, Indians, Pakistanis, Vietnamese etc.) and Hispanics to separate Central and Latin Americans, to get a clear count of his idea of pure whites.
The politicization of the Federal Reserve worsened with the appointment of the bubble boy political hack Greenspan. He brought the policy of unbridled merciless capitalism for the poor and compassionate socialism for the rich to its acme. He refused to raise the margin rates during the rampant speculation of the nineties despite his calling it irrational exuberance. He does not even have a PhD in economics and has no academic credentials. He ran a small economic consulting firm and was a rabid devotee of Ayn Rand, revealing his paucity of analytical thinking. As a prior political hack and hatchet man, he had chaired the commission that raised the Social Security taxes on the poor (OASDI tax percentage was raised hitting the poor more, while the limit on the income to be taxed was raised less and more slowly, sparing the rich). He did not mandate separation of the collected taxes for their specific purpose and the irresponsible Congress raided the social security surplus with presidential collusion and spent it on pork, leaving worthless IOUs in the lockbox.
Greenspan was a one trick pony (really an ass) whose only repertoire was to blow bubbles by rapidly inflating the money supply and while regulating, sleep on the job to enrich his Wall Street cronies. He did this in 1987 after the crash and the market went to new highs. He did nothing to stop the irrational exuberance. When there was a savings and loan debacle due to the idiotic policies of Reagan, he did not say a word against the foolishness. When the major banks were on the verge of failing in 1991, he lowered the interest rates to make them whole. He did the same in the Mexican debt crisis by giving loans to Mexico to bail out the big banks and Wall Street. During the Long Term Capital hedge fund and Russian default debacles, once again he opened the money spigot. This led to the dotcom bubble which burst in 2000. Then after 9-11, he lowered the funds rate to one percent and robbed the savings of the common people with negative rates (savings interest rates lower than inflation rates). The people stopped saving and took on cheaper debt to make the savings rate negative. This led to the housing bubble. His policy of inflating the money supply and injecting massive liquidity to rescue his cronies of the big banks and Wall Street came to be known as the Greenspan put. A put is an option you buy to protect you on the downside.
Greenspan actively encouraged adjustable rate mortgages, interest rate only mortgages with negative amortization with zero down payments for sub-prime (risky) borrowers. These mortgages were bundled and securitized and sold to persons, pension funds, hedge funds and financial institutions in America and abroad after being mislabeled as AAA (highly rated and safe) due to collusion of US rating agencies who conveniently winked at their quality due to unforgivable lack of due diligence and oversight. As the rates were reset higher and house prices declined, the home owners found that the mortgage debt they owed was higher than the market price of the home. They were further squeezed by falling incomes due to layoffs and meagerly rising paychecks while their monthly mortgage payments were rising. They stopped making payments and went into foreclosure.
The lenders and insurers were stuck with foreclosed homes and no interest payments. The prices of mortgage securities plummeted and the market for them evaporated. The banks and financial institutions were stuck with loans on their books they could not sell to any investors and liquidity evaporated. This spread to the prime and business markets. To counter the crunch and aid failing financial institutions, the central banks opened the money spigots. This time Bernanke cut the discount rate, which is only for banks, while leaving the federal funds rate unchanged with little or no concern for the people. Once again, a modified Greenspan put was what Bernanke called for. It is again compassionate socialism policy favoring banks, hedge funds, insurance companies and Wall Street firms, while leaving the poor people to the ravages of merciless capitalism. The real reckless sinners who made these loans and gave them inappropriate sound ratings and those who bundled and sold them at obscene profits will be rescued, while individuals, public pension funds, home owners and individual taxpayers will bear the burden.
America is on the verge of entering a debt trap with nine trillion dollars of debt and over three trillion of it owed to foreigners. At a five percent interest rate, it needs 150 billion dollars a year to service the foreign debt and 450 billion dollars to service the entire debt. It is adding to its debt burden a trillion dollars a year due to war spending, budget, trade and current account deficits. If the interests rates rise to seven percent (the real rate -3% above the true inflation rate of 4%), the debt service burden would be 630 billion a year and rise 70 billion dollars each year. True defense spending is 800 billion and Social Security, Medicare and Medicaid about 1.3 billion dollars. The total budget intake is just over two trillion dollars, so it would all be consumed in wars, military, retirement payments and retiree healthcare, leaving no money for education, infrastructure, aid or running the government. David Walker, the comptroller general of the United States is screaming from TV, radio and states of the nation about this while the legislature and executive fiddle.
Debtor nations have limited escape routes from the burden. They can default as Russia and Argentina did or they can try to wipe out the debts by militarily conquering their creditors as Hitler and Saddam did. America in the past has used a smarter strategy. For building its infrastructure it made private railroad companies and fiber optic cable companies raise money by debt or stock and then extinguish the debt by bankruptcy. It is doing the same thing by selling mortgage securities to foreign commercial and China's central bank. Treasury Secretary Paulson tried that trick on his recent China visit. The other tricks he tried are forced revaluation of the Chinese and Japanese currencies which would reduce the local value of their over two trillion dollar reserves by 10 to 30%. The wildly gyrating markets are to tempt foreigners to speculate with their money to redress the current account deficit and if they lose it in American markets it would decrease the debt. Oil rich nations have arms sales thrust on them and their illegitimate thieving leaders go along to get US military support for their rule and to siphon off huge illegal commissions from those deals. Finally, its war to conquer Iraq's oil reserves and threats to take over Iran's oil are the last alternatives for America's otherwise yarborough hand.
The US faced with rising casualties and expenses in the wars has tried to recruit soldiers from other nations with the promise of an immigrant visa. This has not solved the manpower problem. The debt problem arose from transfer of jobs and factories to nations with cheaper labor, lax environmental and other regulations. It has enriched the multinational corporations who finance both the Democrats and Republicans. The unconditional support of Israel's oppressive and inhumane policies garners the support of the Israeli lobby, but the cost of all the above is lack of growth of well paying US jobs, widening wealth disparities in the nation and deindustrialization and neglect of infrastructure as in the Minnesota bridge collapse and Katrina decimation of New Orleans.
The business community in India endorses the nuclear pact and the Washington consensus of neoliberal policies which will widen wealth disparities and increase insurgencies, because it will make them richer. They own the newspapers and TV channels and will saturate the ignorant public with repeated lies and spins. It looks like the opposition parties including the leftist ones will standby and not rock the boat just to acquire political gain, while the nation and its future are sold down the river.
The US requires surrogate sheriffs around the world to maintain its hegemony. It does this by selling arms to these proxies or twisting their arms. Such dogs range from Bush's lapdog Blair, the rightist parties in Germany, Canada, Mexico and recently France. They have garnered Bush's kennel a German dachshund, Canadian husky, Mexican Chihuahua and a French poodle. Other strange breeds are from the rightist parties of Eastern Europe and the dictators of the Middle East.
Every Indian may not know it but Bush has a cat he has named India. The problem is that cats don't lick. So now he wants to transform the cat into a dog who will please his mind. Can any astute reader suggest a name for Bush's new mind pleasing dog and the kennel in which that dog and his cronies and opponents bark, but do nothing else?