A few years ago, lying was something that politicians and the media big seldom discussed openly. Now it’s practically in the news every day.
One of the big dumb lies involves the Fed’s plan to cut rates soon. Some are claiming that the move is political because it’s a Trump appointee, Jerome Powell, at the helm.
The Big Lie
A big lie is a gross distortion or misrepresentation of the truth primarily used as a political propaganda technique. It is not to be confused with the more familiar notion of a white lie, which involves telling a untruth in order to deceive people for your own gain. A big lie is capable of swaying large numbers of people to your side if repeated often enough, and that’s exactly what tyrants aim for.
One year after a violent mob stormed Congress trying to prevent it from certifying President Biden’s election win, America remains engulfed in the Big Lie: that the election was stolen. Despite overwhelming evidence to the contrary, Trump and his allies continue to spread this baseless falsehood, and a significant percentage of Republicans believe it.
It’s not hard to see why. The Big Lie is seductive, and it plays on the deep-seated human need to belong to a group. Whether it’s a tribe, a club, or a country, we all seek out membership in a community of shared values. But when we are manipulated by falsehoods that promise belonging to an exclusive group, it becomes easier and more tempting to ignore facts, even when they conflict with our own beliefs and emotions.
The problem is that when the big lies are successful, they threaten not just democracy but the lives and wellbeing of ordinary Americans. They are fueling divisiveness, racism, and fear, which are all threats to peace and prosperity, and they are undermining the trust that democracy requires. The Big Lie is supported by two other dangerous forces: big anger and big money.
Author Michael Snyder, who has spent years studying the ways tyrants skewer truth, points out that Hitler, in Mein Kampf, originally described the big lie as an idea designed to turn long-standing sentiment against Jews into hatred and justify mass murder. Snyder argues that we need to take lessons from history in understanding and fighting propaganda. And he notes that one of the keys to fighting the Big Lie is competing with it, not just with facts but with other models of community and belonging.
The Bailout Deception
The American economy is built on cheap debt, and the credit bubble burst in 2008 because banks were pumping out trillions of dollars to prop up speculative investments and puff up paper asset values. The bursting bubble showed up as soaring inflation. And instead of using that money to fund productive assets – private investment in industry, public investment in infrastructure, or even housing – politicians and the Federal Reserve doubled down on their pre-2008 strategy, stoking consumer spending and pumping up paper-asset prices with a flood of cheap dollars.
It’s no wonder the economy is still a mess, nearly 10 years later. Politicians of both parties, with Federal Reserve help, rebuilt the economy on the foundation of paper wealth rather than real wealth – and paper wealth is fickle. It can deflate in a heartbeat if more money chases the same amount of goods and services.
When Congress passed the Troubled Asset Relief Program, the architects of the bailout vowed that taxpayer money would only be handed out to viable banks. But as Neil Barofsky, the former TARP special inspector general, explains in his new book, that’s a lie. The TARP money was actually used to hand trillions of taxpayer dollars to a number of shaky institutions.
For example, a Goldman banker named Henry Paulson ran the TARP program and funneled trillions of Your Dollars to his old friends on Wall Street. Among them was John Thain, the asshole head of Merrill Lynch who scored himself and his fellow Goldmanites $87,000 area rugs while his bank was self-destructing; and Robert Steele, another Goldmanite, who got billions to rescue Wachovia.
Paulson and his team didn’t even bother to assess the health of TARP recipients before declaring them healthy, Barofsky says. They picked them for their size alone, without assessing whether they were “viable.” In fact, as early as February 18th of 2009, when Obama’s signature HAMP mortgage-modification program was announced, Barofsky knew the banks had been getting trillions in secret, near-free bailout money all along.
This secret, no-strings-attached Fed money accounted for more than half the total bailout funds that went to the biggest banks, and it wasn’t fully disclosed until Bloomberg Markets sued the Federal Reserve to force a one-time audit of its emergency lending to the country’s biggest firms in 2011. Until now, it hasn’t been clear how much more of this hidden bailout is still going to Wall Street every year.
The Bank Bailout Deception
Four long winters have passed since the federal government, in the hulking, shaven-skulled form of Treasury Secretary Hank Paulson, committed $700 billion in taxpayer money to save Wall Street from its own chicanery and greed. To hear the bankers and their friends in Washington tell it, that bailout saved the economy, prevented a Great Depression and even turned an accounting profit.
But what’s not so clear is that the “profit” the bailout showed up on the books was a technicality bordering on fraud. The actual costs to taxpayers were much greater, and will remain for years to come if the big banks do what they’re doing now.
The first thing the banks did was to use the bailout money to merge – Chase and Bear Stearns, Wells Fargo and Wachovia, JP Morgan Chase and Merrill Lynch – creating a super-sized banking oligopoly that now controls 70% of all bank assets. Then, in an attempt to evade regulation and keep the profits coming, they created a whole new set of financial tools – derivatives and credit default swaps – and used them like a giant casino, racking up huge losses that drained everyone else’s savings.
Finally, they parked trillions in near-free money at the Fed throughout the crisis. These massive cash infusions were supposed to help these same banks get back into the business of lending to small businesses, but they didn’t. Instead, they were used to finance a massive Ponzi scheme that fueled speculation and bubbles of all sorts.
What’s more, these big firms became more like house pets that grow fat and lazy on two guaranteed meals a day than wild animals that have to go out into the jungle and hunt for food to survive. As a result, they ended up using their unprecedented reach and power to manipulate whole economic sectors for years at a time – pumping them up and then draining them as the economy stalled – all while consuming a staggering amount of future tax dollars to pay off their bailouts.
It all adds up to a colossal failure that will have profound consequences for every American family. For starters, it’s causing higher gas prices, soaring consumer credit rates and the risk of widespread mass layoffs.
