Download Dissecting the Economic 1%

Dissecting the Economic 1%
Jason Makansi
1% is only part of the story…
• To fully appreciate the master-slave (figurative)
relationship between the 99% and the 1%, you have to
understand the component parts of the 1%
• The critical distinction is that the U.S. financial system
is a global financial system. The cream of the financial
elite sets monetary policy, the parameters for how the
U.S. economy will function.
• Although large corporations can influence the financial
system, they are also victims of monetary policy.
• Monetary policy is distinct from fiscal policy but both
drive the general economy
Class warfare is beside the point…
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It isn’t about who has money and who doesn’t
It’s not about banks and non-banks
It’s not about large corporations and small business
It’s about who has power and who doesn’t
It’s about who sets the rules of the game and who
don’t
• It’s about the elite club which sets the rules and
operates outside of the political parties.
• It’s about a financial system specifically constructed to
vacuum money upwards from the general economy
and the government
Financial Engineering
• Banks, lenders, hedge and equity funds,
insurance companies, government entities, etc,
serve a useful function in the economy. They
aggregate money and lend it to others so
businesses can grow more quickly.
• Financial engineers inside banks, insurance
companies, hedge and private equity funds, and
some government agencies are agents of
speculation and complicated investment vehicles
Financial engineering is
corrupt and immoral
• Principally, financial engineers make their
egregious profits in three ways:
– By increasing volatility in the marketplace
– By confusing the buyers and sellers in the deals they
are “facilitating”
– By working with government officials, often
undetected, to change legislation and standards so
that they can (1) achieve a protected position with
little or no competition, such as setting accounting
standards, (2) increase volatility, and/or (3) confuse
buyers and sellers.
Component parts of the 1%...
• The Federal Reserve –sets monetary policy (a handful
of elite)
• Those who influence and implement monetary policy
(0.001%) and regulate the financial system
• Those who set and implement fiscal policy (0.01%)
• Those who work (and those who fund them) the halls
of government to obtain tax relief, incentives,
subsidies, government contracts, and other pieces of
government largesse (0.1%)
• Those with enough money or earning power to be
mostly unaffected by all of the above (1.0%)
Monetary policy – the
0.0001% (~300 elites total?)
• The Federal Reserve sets interest rates and makes
sure they are aligned with our stated policy of
maintaining the dollar as the world’s reserve
currency. It isn’t just about Americans.
• The Federal Reserve has only one point of
oversight in our government – the Secretary of
the Treasury who reports to the President
• The Federal Reserve does not need Congressional
approval to do anything but is required to report
to Congress and appear at their request.
Monetary policy (2) – the 0.001%
(3000 individuals)
• The system of elites around monetary policy
– The President, the Secretary of the Treasury, and the President’s Council of
Economic Advisors
– Global banking entities, e.g., the International Monetary Fund, the World
Bank, the European Central Bank, etc.
– The Federal Reserve Board and the regional Federal Reserve bank directors
– Heads of regulatory agencies – Securities and Exchange Commission, Federal
Deposit Insurance Corp, Financial Accounting Standards Board, Commodities
Futures Trading Commission, Office of the Comptroller of the Currency,
– Elite academics who specialize in, and analyze, monetary policy and are
confidants of the Fed. They mostly originate from the most elite of
universities, especially Harvard
– Influencing bodies in Washington, especially the Council on Foreign Relations,
Institute for International Economics, and several others
– Executives of the very largest Wall Street banks which buy and sell financial
instruments issued by the Fed.
Post-2008 financial crisis, the banking system is no longer a “free market.” They are too big
to fail. They are the government!
Fiscal Policy –the 0.01%
(30,000 individuals?)
• Fiscal policy has to do with the government’s budget (and the deficit) –
spending (appropriations for each branch of the government) and revenue
(taxation)– and is as affected by monetary policy as the rest of us.
– Pertinent Congressional committees, e.g., House Ways & Means Committee,
Senate Appropriations, Senate Banking, Housing, and Urban Affairs, Budget,
Foreign Affairs, House Committee on Financial Services, and others
– President’s Council of Economic Advisors and others in the Administrative
Branch
– Commensurate state government elected officials and legislative and
administrative committees
– Lobbying organizations which advocate on behalf of their clients for funding
programs
– Policy organizations (federal and state) which seek to influence government
budgetary outcomes, e.g., US Chamber of Commerce
– Academic, partisan, non-partisan, bi-partisan organizations and people who
seek to influence the budgeting process
– Executives of the largest U.S. corporations (or foreign entities with a large
American footprint or presence)
Fiscal policy – the 0.1% (300,000
individuals?)
• There are those who set fiscal policy and then those who
carry out fiscal policy – i.e., spend the government’s money
(our money!) – or are the beneficiaries of fiscal policy
• Included here are all those firms, corporations, interest
groups, etc, which seek direct tax relief, subsidies,
incentives, and appropriations that enhance their abilities
to make money or stay funded
– Government agencies which are appropriated money and
disburse it to contractors (directors, managers, etc; not
everyone, in other words)
– Lobbying, policy, and interest groups
– Management of Fortune 500 companies
– Academic institutions (who do the “research”)
– Non-profit and NGO organizations
The rest of the 1% (3-million
Americans)...
• Doctors and other professionals
• Financial services professionals
• Lawyers, many of which facilitate the functions listed on
previous slides
• Media executives, entertainers, sports stars, and artists
• Elite university chancellors and professors
• Small and mid-size business executives
• Tech and other entrepreneurs
• Anyone else who makes over $300K annually
These people are included for their ability to contribute to
campaigns, propagate information, buy access to government
networks, or because they are courted by the elite to intermediate
messaging to, and regional and local influence of, the 99%.