What Happened to the American Dream?
by Jim Quinn
“The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.”
—Historian and writer James Truslow Adams in his 1931 book “Epic of America.”
Mr. Adams penned these words in the midst of the Great Depression. Then as now, the reason the American Dream is slipping away is due to the actions of politicians running our government and bureaucrats running the Federal Reserve. Those with ability who have earned a better life through their hard work and intelligence should be attaining a higher position in the social order. Instead, our government is rewarding those Americans who have taken unwarranted risks, made brainless decisions, and willingly chose the course of excessive debt to climb the social ladder.
As the politicians scurry to “save” capitalism through the use of communist measures, more Americans are becoming disheartened.
George Bush, Henry Paulson and Ben Bernanke have decided to seize money from the vast majority of Americans who lived within their means, utilized debt sparingly, and worked hard to get ahead — giving it to the most appalling failures in our society. They have shoveled billions to banks that operated their businesses like gambling parlors. They have shoveled hundreds of millions to people who bought houses with no money down, interest-only mortgages and fraudulent loan applications. They are now rewarding automakers who made the wrong vehicles, pay 30,000 workers per year to not work, and have only been able to “sell” cars by giving them away with 0% financing to anyone who could sign on the dotted line.
The jig is up. According to the Wall Street Journal, $530 billion of debt will come due in the next three years, with $160 billion due in 2009. Of course, in the America of today, bad business decisions of yesterday are cast aside with the “Too Big to Fail” excuse and “our government” will take money from the innocent taxpayers and give it to the rich negligent developers. The crux of the problem is that Americans, with a strong sense of morality are no longer steering the American ship. Thomas Jefferson declared that Americans had the right to “life, liberty and the pursuit of happiness” in the Declaration of Independence. The government’s obligation is to protect the life and liberty of its people. Representative Ron Paul bluntly speaks the truth about our government:
“The obligations of our elected representatives are to protect our liberty, not coddle the world, precipitating no-win wars, while bringing bankruptcy and economic turmoil to our people.”
Supreme Court Associate Justice Stephen Johnson Field further clarified pursuit of happiness in an 1884 opinion:
“Among these inalienable rights, as proclaimed in that great document, is the right of men to pursue their happiness, by which is meant the right to pursue any lawful business or vocation, in any manner not inconsistent with the equal rights of others, which may increase their prosperity or develop their faculties, so as to give to them their highest enjoyment.”
Our current system of incentives is inconsistent with the equal rights of others. The pursuit of happiness by Americans is where the American Dream has gone off the track. The pursuit of excessive wealth, power, influence, luxury automobiles, McMansions and electronic devices has substituted for happiness in the world we live in today.
Federal Reserve Fraud
Thomas Jefferson said of central banks:
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. … The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. The modern theory of the perpetuation of debt has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating.”
We did not heed Mr. Jefferson’s prudent advice. The result has been persistent inflation that has destroyed the purchasing power of the US dollar. It takes $1.00 to buy what cost 5 cents in 1914, a 95% loss of purchasing power since the creation of the Federal Reserve. Most of this loss in purchasing power has occurred since 1971. “Tricky Dick” Nixon took the country off the gold standard in 1971 and uncorked the bottle letting out the inflation genie. The unchecked issuance of debt by our government, facilitated by Federal Reserve policies since 1971, has brought our great country to the brink of financial disaster. The organization that caused the problem and has utterly failed in stem-ming the damage, is now taking actions completely outside of its mandate, while telling the public they have the answers. They have duped the American public for 85 years through the insidious use of inflation, and now they are trying to dupe the world into keeping their Ponzi scheme going for a while longer.
The Federal Reserve was created in 1913 with the dual purpose of maximizing employment and preserving stable prices. New York Senator Elihu Root, in voting against the creation of a Federal Reserve, saw a vision of our bleak future:
“Little by little, business is enlarged with easy money. With the exhaustless reservoir of the Government of the United States furnishing easy money, the sales increase, the businesses enlarge, more new enterprises are started, the spirit of optimism pervades the community. Bankers are not free from it. They are human. The members of the Federal Reserve board will not be free of it. They are human. Everyone is making money. Everyone is growing rich. It goes up and up, the margin between costs and sales continually growing smaller as a result of the operation of inevitable laws, until finally someone whose judgment was bad, someone whose capacity for business was small, breaks; and as he falls he hits the next brick in the row, and then another, and then another, and down comes the whole structure.”
The concept of forming this central bank was to stop bank panics from happening. So far, they are 0 for 2. They were in charge in 1929 during the greatest bank panic in history. Their actions in the 1930s exacerbated and prolonged the Depression. Alan Green-span and the Fed are the chief cause of the current disaster. The absurdly low interest rates of the early 2000s and the complete lack of oversight of bank lending practices caused the greatest debt bubble in history. During September and October, the country experienced an electronic bank run. Americans rightfully lost trust in all financial institutions and began withdrawing their money. The Federal Reserve has done the only thing it knows how to do. Print money. It has doubled its balance sheet to $2.3 trillion.
The Federal Reserve is supposed to be protecting the people of the United States. Transparency is essential for financial systems and democracies to function. Instead, Ben Bernanke is withholding which banks have borrowed from the Federal Reserve and what collateral was put up for the loans. They have lent out over $2 trillion of your money with no accountability to the American taxpayer. Bloomberg News has sued the Federal Reserve to obtain this information under the Freedom of Information Act. They are covering up their actions because they know that the collateral they have accepted is worthless. These are criminal actions with the intent to deceive the American public. The government and Federal Reserve work for “We the People,” not vice versa.
Last week, the Federal Reserve decreased its discount rate to 0.25%, the lowest in history. They also announced they would use any means necessary to re-inflate our bubble economy. Deflation is not a bad thing for most Americans. Cheaper gas, food, cars and flat screen TVs are nice, and for people and countries without debt, deflation is just fine. Unfortunately, that does not describe American consumers or the US government.
Deflation in a country that has $10.6 trillion in debt will annihilate the debtor. Therefore, Mr. Bernanke has chosen to try and inflate us out of this mess. As an expert on the Great Depression, Bernanke believes that fiscal and monetary expansion will save the country, but there is one significant difference: When the crisis hit the US in 1929, the total US debt as a percentage of GDP was about 200% and we were a net exporter nation. We enter this crisis with total US debt exceeding 350% of GDP and we have a trade deficit of $700 billion.
Foreigners have been buyers of 70% of our newly issued debt in the last few years. Does Ben Bernanke really believe that foreigners will be willing to accept 2% interest for 10 years on bonds while we are printing trillions of new dollars? The all-out assault on deflation will work. It will work so well that it will lead to a crash in the US dollar as foreigners begin to shun the debased currency. A hyper-inflationary bust ala Argentina and the Weimer Republic is in our future. There is one thing for sure. Whatever happens will take the Fed by surprise. They didn’t see the credit crisis coming and will not see the inflation tsunami before it washes over us.
The last 85 years of allowing our currency to be manipulated by a private bank has been a series of crisis, failure, and mismanagement. Ron Paul clearly articulates why the Federal Reserve has helped destroy the American Dream:
“Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. It is time for Congress to put the interests of the American people ahead of the special interests and their own appetite for big government.”
We are about to experience the largest government outlay in the history of our glorious Republic. President-elect Obama and his team of economic masterminds are preparing to borrow and spend the country back to prosperity. The Obama plan to spend $1 trillion to stimulate our economy has the 17,000 lobbyists in Washington, DC swarming like voracious locusts over a field of crops. These lobbyists will utilize the $3 billion per year they spend (bribe) to “influence” policymakers like there is no tomorrow.
The dice are loaded and the fight is fixed. Those who played by the rules, lived within their means, went to work every day, didn’t flip condos, or use home equity to lease a Mercedes, will pay for those who lied, cheated, and cut corners. This is how the American Dream has turned into the American Nightmare.
James Quinn is a senior director of strategic planning for a major university. James has held positions as a certified public accountant and a certified cash manager. Quinn’s views are not sponsored or endorsed by his employer.
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