Posted 6 months ago on April 7, 2014, 3:14 p.m. EST by LeoYo
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The Oligarchy Doesn't Care About Democracy, Just Rigged Markets
Monday, 07 April 2014 10:40
By Mark Karlin, Truthout | Author Interview
In All the Presidents' Bankers: The Hidden Alliances That Drive American Power, Wall Street journalist (and former Goldman Sachs executive) Nomi Prins writes a painstakingly researched history of the financial industry's collusion with the White House to create a self-serving United States financial policy. Get the book directly from Truthout by clicking here.
Through thorough research and incisive writing, Nomi Prins has revealed how tightly Wall Street and White House policy have been aligned for more than a century. This is a difficult relationship to nail down, but Prins - as one reviewer noted - "followed the money." As a result, All the Presidents' Bankers is a must-read blockbuster of a book that names names and nails down the reality that US domestic and foreign policy is largely driven by the interests of economic hegemony and consolidated wealth.
Prins, a former executive on Wall Street and now an author and journalist, knew where to find the evidence - and it is startling to read the details.
In an extensive interview with Truthout, Prins discusses "the hidden alliances that drive Amercan power."
Mark Karlin: Could your book have been called Wall Street Financiers Are America's Co-Presidents?
Nomi Prins: Yes, that's a great way to describe the symbiotic relationship between the men that run the White House and those that run Wall Street. But equally, the title could have been American Presidents are Wall Street's Co-Bankers. When I set out to research this book, I specifically did not want to write another book about how bankers rule the world. Many people, myself included, have written books along that "dog wags the tail" theme. But I wanted to explore the relationships between the men that reside at the two poles of power over America, those who are elected to the White House and those that govern over its finances, and about how long, and to what extent, they operate on the same page.
What I found, is that that for the past century, mutually reinforcing relationships amongst the most powerful men in the past century were drivers of American domestic, national and foreign policy than just the government was, no matter who the president, or what the party in the Oval. I found that every president had connections of various degrees of closeness with the most influential bankers during his term. I knew these associations existed throughout the decades, but I was surprised to discover just how prevalent they were.
In addition, beyond the prevalent collaborations through the years, many of the key players, or 'operators,' as John Galbraith referred to them in his book about the 1929 crash, are related in some way. As I examined this genealogy of power in America, I found an elite "family tree," with branches of blood, intermarriage and protégé-mentorship connections that has shaped America on behalf or from the perspective of its members, and not necessarily the population as a whole.
Reading your new book, I get the feeling that the privileged few in the private sector who control most of America's money, de facto, don't really give a whit about democracy. What they are focused on is free markets for the plutocracy like a laser. Is that your perspective?
The notion of free markets, mechanisms where buyers and sellers can meet to exchange securities or various kinds of goods, in which each participant has access to the same information, is a fallacy. Transparency in trading across global financial markets is a fallacy. Not only are markets rigged by, and for, the biggest players, so is the entire political-financial system.
The connection between democracy and free markets is interesting though. Democracy is predicated on the idea that every vote counts equally, and in the utopian perspective, the government adopts policies that benefit or adhere to the majority of those votes. In fact, it's the minority of elite families and private individuals that exercise the most control over America's policies and actions.
The myth of a free market is that every trader or participant is equal, when in fact the biggest players with access to the most information and technology are the ones that have a disproportionate advantage over the smaller players. What we have is a plutocracy of government and markets. The privileged few don't care, or need to care, about democracy any more than they would ever want to have truly "free" markets, though what they do want are markets liberated from as many regulations as possible. In practice, that leads to huge inherent risk.
All the President's Bankers begins in early 1900s. You detail the attempts to rein in Wall Street, which the financial industry inevitably reverse. Change only appears to occur temporarily after a huge economic setback. But in 2008, Wall Street nearly destroyed the economy and got a taxpayer bailout. Is the hidden alliance that drives American power, as you call it, becoming even more solidified?
The alliance between leaders in Washington and on Wall Street has undergone a series of character changes over the past century. In the early 1900s, when President Teddy Roosevelt - widely perceived as a "trustbuster" - was breaking up the monopolies in certain industries, he didn't 'bust' the banking industry because he was facing a great financial panic in 1907 and decided he needed J.P. Morgan's help to thwart it. In the 1910s, Taft and Wilson aligned with the bankers in establishing the Federal Reserve, and then Wilson and the bankers aligned in war-financing efforts during WWI. In the 1920s, Hoover, Coolidge and Harding and the bankers aligned to endorse a spirit of political isolationism at home, laissez-faire banking policy, and financial internationalism as US bankers pushed into Europe again to take advantage of their ailing former competitors' post-war weakness, with transactions that ultimately combusted during the 1929 crash and Great Depression. In the 1930s to the 1970s though, something changed. Between the Great Depression, World War II, the Cold War and into the early 1970s, bankers were more content to be careful, to support general American expansion abroad and national interest at home, and their practices were more subdued and less speculative.
By the 1970s, things changed again; bankers found that Middle-East oil was a good source of financial independence from the US government's domestic initiatives. With Chase and Citibank leading the charge, US bankers recycled "petrodollars" into Latin American loans, got into trouble and needed the Reagan-Bush government to bail them out. It did, and from that moment on and through the major 1994 and 1999 deregulation under the Clinton administration, they increased their risk-taking and divergent path from the public interest, and though associations between bankers and presidents continued, and general national and financial policy goals were the same, bankers became more globally predatorial and had less interest in helping to sustain the general good at home. The recent 2008 crisis and time since then is the culmination of that attitude, coupled with the enabling and support by presidents of both parties, of their practices and power concentration, without requiring anything from them in return to benefit the population.