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Is Capitalism the Problem, or Is It Something Else?

By: Rita Jacobs | Published: 1/2/2021

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Is Capitalism the Problem, or Is It Something Else?

There are some basic underlying reasons for the present state of the union. Many critics of government policy blame the problems on capitalism – pointing out that the underlying system causes profits to be the driving force of all business. The actual needs, safety, and security of the citizens are not given adequate consideration in business decisions. Capitalism is part of the problem, but one of the underpinnings of capitalism is the system that automatically causes wealth to accumulate in the hands of a few, and allows the few to decide what to do with that wealth. Wall Street has partnered with corporations to fund the election campaigns, controlling their outcome.  It is well-known that the candidate who spends the most money during their campaign wins 90 percent of the time. Politicians know that if they do not support the legislation requested by Wall Street or corporations, they will lose funding for future campaigns. Military funding continues to rise each year in order to feed the demands of the weapons corporations for profits from government contracts. One can easily come to the conclusion that the government exists now for the purpose of increasing the profits of the banks and corporations.

What we are witnessing in government policies today is the gradual build-up of power by banks and corporations during the last century caused by their increasing wealth. Most of the expenditures to relieve the effects of the 2020 pandemic went to banks and corporations through loans - with the Fed as the lender of last resort. Only a small portion of relief was provided to the people in the country who have suffered loss of income, jobs and housing. Congress no longer makes excuses for its decisions to provide funding for the rich, while neglecting the poor. It is not the poor people of the country who fund their re-election.

What is the system that causes wealth to accumulate in the hands of the few? We need to look no further than the Federal Reserve Act of 1913, which gave private commercial banks the privilege of creating nearly all the new money that is spent into the economy. They have the legal right to do so every time they make a loan. Congress, through the passage of this Act abandoned its responsibility enumerated in Article I of the Constitution to create money. At the time this Act was passed, the various private banks that were issuing their own bank notes had already created a network of private connections with corporations by having bank officials serve on corporate boards. The banks also had the ability to decide where to make loans. Banks have little difficulty gaining control of corporations when the corporations are dependent on the banks for necessary loans for the expansion of their business interests, and the banks own an increasing percentage of shares in the corporations. This interconnection between banks and corporations has grown stronger and stronger over time until now Wall Street banks and financial institutions own controlling shares in nearly all of the largest corporations. Of course the banks are always working with the corporations toward the common goal of profits without regard to the needs of the rest of society. We all know that with vast wealth comes great power.

What is not understood by the general public and most economists, is that the system needs to be changed in order to implement many of the new programs that are needed right now to correct the problems facing the people. Banks and corporations are not going to do this unless it is profitable. The Constitution is meant to provide for the general welfare of all the people, not for the general welfare of a powerful wealthy class. Our money system is debt-based, meaning that every time a dollar is created, a corresponding debt is created. Over the course of time, debt has built up to an unsustainable level. And under the system, no extra money is created to pay the interest. Payment of interest alone on the debts is reaching an unsustainable level.

The government could reverse these problems by simply creating its own money and spending it directly into the economy through guaranteed basic income to citizens or by funding of programs necessary for infrastructure and new solutions to combat the climate crisis that looms large in the near future. President Lincoln used Greenbacks – government created money – to fund the civil war. This was the last time that Congress exercised its authority under the Constitution to create money. With the banks and corporations owning our representatives in government, the necessary changes are not going to happen unless people rise up and demand an end to this special privilege and subsidy granted to private banks. There should be no reason why Congress needs to ask the question, "How are we going to pay for that"? Congress has the ability to pay for whatever is needed.

Just a few statistics:Dollar amounts are in trillions

US government debt  $27.6

Personal debt              20.9

Student loan debt          1.7

Credit card debt             1.0

State debts                    1.2

Local government debts  2.1

US corporate debt         10.5


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