Those were the words of President Franklin Roosevelt in his first inaugural address on March 4, 1933 -- his famous "the only thing we have to fear is fear itself" speech aimed at rallying a downtrodden America to rise up and overcome the Great Depression.
Here's how our 32nd president described the "conditions facing our country" 75 years ago:
"Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone."
Sound familiar?
"More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return," Roosevelt continued. "Only a foolish optimist can deny the dark realities of the moment."
Or maybe a certain presidential candidate.
But back to our straight-talking president as he confronted a nation in the throes of economic calamity.
He said, "Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men."
The practices to which Mr. Roosevelt referred included what economist John Kenneth Galbraith, economic historian of the Great Depression, called "large-scale corporate thimble rigging" that "took a variety of forms, of which by far the most common was the organization of corporations to hold stock in yet other corporations, which in turn held stock in yet other corporations."
Does that sound familiar, too?
Carter Glass, a newspaperman turned politician, authored the Federal Reserve Act of 1913, predicted the consequences of banks lending money for stock market speculation, and after the stock market crash in 1929 and the widespread bank failures that followed, wrote a banking reform bill in 1931 to provide the Federal Reserve Board with more control over speculative credit practices by banks. His bill, the Glass-Steagall Act of 1933, regulated the "practices of the unscrupulous money changers" that drove the nation into the Great Depression.
It worked pretty well for 66 years, until the unscrupulous money changers had their way with Congress and then President Bill Clinton in 1999. They repealed Glass-Steagall with the passage of the Gramm-Leach-Bliley Act.
Former Senator Phil Gramm, Republican of Texas -- Sen. John McCain's economic adviser in his campaign and, reportedly, a likely cabinet appointee in a McCain administration -- sponsored the "deregulatory" legislation. He said at its passage:
"In the 1930s, at the trough of the Depression, when Glass-Steagall became law, it was believed that government was the answer. It was believed that stability and growth came from government overriding the functioning of free markets. We are here today to repeal Glass-Steagall because we have learned that government is not the answer. We have learned that freedom and competition are the answers."
Until the greed of "unscrupulous money changers" in the unregulated free market runs the free market into the ground. Then government becomes the answer again -- to the tune of probably a trillion dollars in the economic calamity of the 21st century.
Sen. McCain, by the way, voted for Gramm-Leach-Bliley, in a vote that closely followed partisan lines in the Republican-dominated 106th Congress. Sen. Joe Biden voted against the House bill in May 1999, but then voted for conference bill that reconciled the House and Senate versions in November 1999 -- a vote which Mr. McCain, then seeking the 2000 Republican presidential nomination, missed because he was campaigning in New Hampshire.
Sen. Barack Obama, at the time a member of the Illinois state senate, and Gov. Sarah Palin, then mayor of Wasilla, Alaska, didn't get to vote on it.
It pays to note that the Leach in "Gramm-Leach-Bliley" is former Republican congressman Jim Leach of Iowa, who crossed party lines to endorse Mr. Obama and delivered a speech at the Democratic National Convention this year. Mr. Leach would reportedly have some role in an Obama administration.
When President Bill Clinton signed the Gramm-Leach-Bliley Act, known as the financial services modernization act, into law on Nov. 12, 1999, he said it made "the most important legislative changes to the structure of the U.S. financial system since the 1930s." Did he know just how "important" those changes would be?
"Financial services firms will be authorized to conduct a wide range of financial activities, allowing them freedom to innovate in the new economy," Mr. Clinton said.
Freedom to innovate granted to Mr. Roosevelt's "unscrupulous money changers" got us pretty much right back to where we were when FDR took office. But for the intervention of Mr. Glass' Fed, you and I might soon be standing on a bread line.
In 1999, while Bill Clinton and the 106th Congress were entertaining us with the juicy details of the president's Oval Office trysts with intern Monica Lewinsky, they were actually busy undoing the underpinnings of the security of the nation's financial system. The phone sex and stogies were merely a side show. In the background, unbeknownst to most of us, there was true bipartisan cooperation to serve the interests of the titans of finance who, left to their own devices, would get us into a fix very similar to the conditions about which FDR spoke in March 1933.
That's the bipartisan cooperation comic genius Jon Stewart of The Daily Show last week called a "clusterf#@k to the poor house." He's right. He was right, too, about this: "Those who do not study the past get an exciting opportunity to repeat it."
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5 comments:
Very good Mrs. Civiletti, for once I like where your going, although, you need to further investigate the federal reserve. That is where the problem originates, for profit banks in control of our money and enabled to TAX us without representation by causing inflation through uncontrolled printing of money.Then they collect interest on it, what a scam.
Excellent column, Denise!
Along with John Stefan's column, and the article on local banks, it's gratifying to see our local editors and bank managers seem to understand our situation far better than the politicians in Washington.
Common sense there seems to have flown out the window. The public is left with confusing information and few real choices.
It's frustrating to see how local bankers and newspaper editors seem to be able to analyze the situation far better than the "experts" who want to take our money and administer some unfathomable program which might or might not work.
Gawd help us all!
Hi Denise...you are right on as usual. I once read ( who knows where)? The past is important, you can't have any kind of future if you don't understand your past.
Well, obviously, these words have gone unheeded..The big heads in Washington, have their own agenda that does not include us the tax-paying citizens...
There is a financial crisis in Europe that has further distressed our markets the Dow dropped under 10,000 this morning. I fear ( and I'm a positive gal) this may get a lot worse before it gets better.
Citizens of America- Fasten your seatbelts...we have been taken for a ride, and a scary one at that, by this Administration.
Denise, I think you have this completely backwards. The Federal Reserve is the perpetrator of depressions, not the cure! Let me explain.
First of all, there is no unhampered free market in the United States, nor did such a condition prevail at the time of the Great Depression.
In a free market, prices are set by the interplay of supply and demand. Low interest rates signal a larger pool of real savings from which to borrow and a future-oriented time preference among the public.
In the United States, the price of money — that is, the interest rate — is fixed by the government-created central bank, the Federal Reserve. The Fed is always under political pressure to keep interest rates artificially low. It does this by pumping newly created money into the economy, i.e. inflation.
This causes prices to rise, or, seen another way, the value of the dollar to decline. Taxation by stealth, in other words. But another, lesser known, result of the Fed's credit expansion is the boom and bust cycle.
The Fed-induced cheapness of credit misleads entrepreneurs into undertaking projects for which there is no real demand — because the public was not actually saving at the level the interest rate suggested. When the Fed finally begins to tighten its credit stance (usually to ease concerns about inflation), the artificially-maintained economic boom comes to an end, sometimes precipitously.
The root cause of the Great Depression, of the current financial crisis and every boom and bust cycle in modern history, is government (i.e. political) control of money and banking. Specifically, the manipulation of interest rates by central banks. See the work of Ludwig von Mises, F.A. Hayek and the Austrian School of Economics for a fuller exposition.
The real problem is not the economic downturn, which is merely the inevitable victory of truth over illusion. The real problem is occurring during the bubble phase of the business cycle, when the economy is being juiced and everyone thinks the good times will last forever.
Trying to prevent an economic downturn with bailouts, price-fixing and the like makes about as much sense as trying to "save" a drug addict from the symptoms of withdrawal by giving him more drugs. Yet this is exactly what FDR did during the Great Depression, which is why it lasted for over a decade. And this is the course Republicans and Democrats alike want to repeat today.
Ever hear of the Panic of 1918? No? That's because the government did nothing, and it passed quickly.
Also worth noting: In a free market, there would be no GSEs like Freddie and Fannie to guarantee loans at taxpayer expense (again, thanks alot, FDR!) and no Community Reinvestment Act forcing banks to make high-risk loans in the name of egalitarianism. These are just a few of the contributing factors to the present, government-created crisis.
A truly free market is the solution, not the problem.
— You-Know-Who :)
Denise,
How did repeal of Glass Steagall contribute to the problem?
If Glass Steagall was still in effect, it would not have prohibited Lehman Brothers and Bear Stearns from going hog wild on mortgage backed sub-prime securities
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