Monday, September 29, 2008


(Week 10 - Monday, Sept. 29)

On Friday evening the two "major-party" candidates for President, John McCain and Barack Obama, met for the first face-to-face debate of the Presidential campaign. Overall the session was divided into two main segments, their respective themes being the current financial crisis in the economy, and the Iraq and Afghan wars in the Middle East. In this installment, let us take a look at the first segment, the current financial crisis.

Moderator Jim Lehrer opened with the question - "Where do you stand on the financial recovery plan?" (the "financial recovery plan" being, presumably, the $700 billion dollar bailout of the financial industry proposed in an address to the nation by President Bush earlier in the week).

I found the responses of both candidates to be evasive and non-substantive. They lapsed into the vague platitudes, truisms and bromides that virtually always seem to attend economic issues. For Senator Obama's part, he talked about the need for "more oversight", measures "to make sure that we protect taxpayers", arrangements to "make sure that "none of that money is going to pad CEO bank accounts", and steps "to make sure that we're helping homeowners". Senator McCain's replied by asserting the need for more "transparency", "accountability", "oversight" and options that don't require the government taking over. These are all very fine sentiments, but, borrowing from a Presidential debate in 1984 between Walter Mondale and Gary Hart, "Where's the beef?" That is, where is the substantive thought in their respective responses?

I would ask the reader, if the words and phrases attributed to each candidate above were cut out and presented without identification as to who uttered them on this particular occasion, could you tell which belonged to whom? Or, rather, are they not in fact abstract vagaries professed endlessly in the common political-speak by which politicians attempt to garner credit for sincere intent, and create an aura of being on top of the problem, but convey no substantive thought on the matter at issue?

Both declined to be responsive in the first go-round to the clearly stated intent of the moderator's question, so he felt obliged to re-ask it. The answers were only slightly more responsive the second time around. Obama deferred in part by saying that "we haven't seen the language yet", and McCain related an inspiring in is own right, but irrelevant in this case, anecdote about General Eisenhower to reiterate his point about "accountability".

In yesterday's column I stated that, "...if returning the monetary franchise to the people where it rightfully belongs is not at the heart of a proposed solution, then it is no solution at all." There was no mention whatsoever about the need to return the monetary franchise to the American people, and so in my view there was no effective dialogue about a solution. In fact, neither candidate even mentioned the monetary system, let alone the private-bank-loan transaction by which the nation's money is created and issued, or the collapsing fractional reserve formula which is creating the perception of the supposed urgency to push through a "rescue plan" immediately before the banking system shuts down.

This is a far cry from when three-time Democratic Party nominee for the Presidency, William Jennings Bryan, declared in his famous "Cross of Gold" speech in 1896:

"If they ask us why we do not embody in our platform all the things that we believe in, we reply that when we have restored the money of the Constitution, all other necessary reforms will be possible, but until this is done there is no other reform that can be accomplished."

Can one imagine a "major party" Presidential candidate saying such a thing today? Perhaps more importantly, can one imagine a national audience understanding what he is talking about? This is a point to keep well in mind before we blame McCain or Obama for their failure to address the core issue at the heart of the financial crisis. A culture-wide amnesia has descended on the populace related to the monetary issue, and, of course, the "major candidates" we get are a natural reflection of that.

To be fair, both candidates made attempts at more substantive responses as they talked about the need to "balance the budget". What was missing, however, was any awareness that the current financial crisis is not in its nature a fiscal problem (i.e. related to balancing taxing and spending), but a monetization problem (i.e. related to how and by whom money is created and issued) [see Cols. #19 – 21]. Until they gain such a realization, their "debates" on this critical issue will continue to be almost completely unresponsive to the wrenching financial turmoil that citizens, the nation and the world are experiencing at present.

Richard Kotlarz

The complete set of columns from this series is posted at the following websites: