/2020chronicle

We’ve known how to fix our economy since 1933.

As part of Franklin D. Roosevelt’s first inaugural address in 1933 he said

“Finally, in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people‚Äôs money, and there must be provision for an adequate but sound currency.”

These actions fixed a much worse economy than we are experiencing now. Our failure to pursuit these sound and responsible advisement’s will result in a worsening recession, greater job losses, a continuous fall in the value of the dollar and a decrease in the living standards for all American’s. Following his inauguration Roosevelt closed all US banks for four days to evaluate their strength and permanently closed those found to be insolvent. Compare this to the weak evaluations recently performed on the mega banks of today that produced mere warnings for some seriously distressed institutions.

Today’s politicians don’t have the stomach necessary to stand up to the bank and corporate lobby’s. The do not have the will to impose “strict supervisions” on an out of control investment banking sector who have resumed their sport of extreme speculative risk taking with other people’s money.

Until regulators are prepared to do their unpopular job on Wall Street no one should begin to feel safe about the future of their savings, investments or the value of the dollar. Contrary to the argument that a lower dollar is better for US exports, the reality is the US manufacturing sector has declined to a point where a weak dollar does very little to offset any trade imbalances with China, Japan and Korea.

Today Mervyn King, The Governor of the Bank of England, paraphrased another 1930’s leader, Winston Churchill, who said

“Never in the field of financial endeavor has so much money been owed to so many by so few.”

He was talking about the banks who took huge risks because they knew they would be bailed out with public funds because they considered themselves “too big to fail”. There has been little change in behavior and little reform. A very few are getting enormously rich by risking investor dollars while taking on little risk of their own. Will it take another full depression and 25%+ unemployment for us to impose the sound solutions of the past?

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