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Greenspan was economics advisor to Reagan when he came up with his plan to loot the US Treasury. He got Reagan to raise Social Security (FICA) taxes to put lots of cash in the Social Security fund. Then Reagan pushed through tax cuts for the rich to "spur" the economy. The economy was in a recession because Greenspan's predecessor had pushed Fed interest rates through the roof "to prevent inflation".
As soon as the Social Security fund ballooned, Reagan cut taxes at Greenspan's urging. Since the government now had less income to work with, Greenspan suggested that the government get operating revenue by "borrowing" it from the Social Security fund and replacing that money with government IOU's. In that way, they covered up the now increasing deficit by taking the "debt" off of the books.
Later on they talked about the short fall in the SS fund by looking only at the cash on hand and ignoring the IOU's that they put there themselves. Their proposed solution was not to pay back the IOU's, but rather to cut benefits for retirees.
The second part of his plan involved getting himself appointed to be the head of the Federal Reserve. In that capacity he reduced the interest rates to ridiculously low levels. This had several effects designed to steal middle class assets, and increase profits for the corporations.
The low interest rates reduced interest paid to savings accounts, money markets, CD's, IRA's, etc. These instruments are what many middle class people use to hold their savings. The banks were still charging double digit interest on charge cards that many people use to pay for what they buy. So the banks were raking in huge profits by charging "high" and paying "low", often to the same people. (While legal, it still amounted to theft, because it wasn't "market" forces that were controlling the economy, but Greenspan's conniving.)
Low interest rates provided another assist to the corporations. Since people were losing interest on their savings, they were encouraged to buy stock which would grow and make the middle class investor wealthy. Many people took their savings and bought stock with it. (This is exactly what the middle class did in the years just prior to the Great Depression.)
All this money being thrown into the stock market had the desired effect of boosting stock prices. (By the law of supply and demand, throw a lot of money (high demand) into any market having a limited supply and you get price increases (inflation)). The price increases were not due to increased profits, but merely to the increase in the money supply within the stock market. However, the suckers did not understand this. It is a house of cards. At some point the number of buyers drops because potential buyers have exhausted their assets and have no more to invest. The insiders see this coming before anyone else and sell their stock, play their stock options, take their profits and bail out before the market collapses. Meanwhile, the corporate executives and stockbrokers walk away with a huge pile of middle class assets, willingly handed over in the middle class attempt to get rich quick.
Low interest rates also enabled the housing "boom". The banks, insurance firms, and investment companies had so much money thrown at them that they had much more lying around than they could legitimately invest in secure assets. Hence, the big gamble on sub-prime mortgages. It was inevitable that the housing bubble created by the Fed's artificially low interest rates would collapse. Meanwhile, the realtors, builders, and bank executives made a bundle, and safely took their profits out before the big collapse. Then they can run to the government to bail them out to "prevent a recession".
The only major candidate speaking to this fraud and theft is John Edwards. Kucinich recognizes it, but he has been marginalized by the corporate media. Edwards' message is catching on. Clinton and Obama have gotten themselves so in hock to corporate interests that they will do little to help the middle class.
As a litigator, Edwards was successful in fighting the corporations. Coming from working class and middle class backgrounds, he can talk to people in ways that resonate with their own situation. I strongly support John Edwards to be our candidate. He represents the Democrats' best chance to win the Presidency in 2008.
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