Frederick Douglass

"Power concedes nothing without a demand. It never did, and it never will. Find out just what people will submit to, and you have found out the exact amount of injustice and wrong which will be imposed upon them..." Frederick Douglass

Saturday, October 16, 2010


[ Editor's note: This article was originally written for the ATU587 newspaper, News Review, which did not publish it. ]

by Dave Fryett

Let's begin with a quiz, who said this ( answer to follow ):

"Ask yourself why [governments]...pour money and effort into propaganda for their own helpless, chained, gagged slaves, who have no means of protest or defense. The answer is that even the humblest peasant or the lowest savage would rise in blind rebellion, were he to realize that he is being immolated, not to some incomprehensible noble purpose, but to plain, naked human evil."

Have you noticed all the attention our cost-of-living allowance has been getting lately? Why? If patching up budget shortfalls is the goal, then why is it that national, state, and our own county and Metro officials, are so insistent that we must surrender our COLA, the only defense against inflation we have? There are a host of alternate solutions to budget crises, but these are never mentioned by our adversaries in media or government. And when we broach these possibilities they are peremptorily dismissed, often angrily, as insufficient. It seems they have drawn a line in the sand.

So why the obstinacy? To answer this question it is necessary to understand a little about inflation and banking.

Inflation is measured ( or mismeasured, depending on whom you talk to ) by the Consumer Price Index. Although prices can move capriciously, and for a number of reasons, price inflation follows inexorably, if unpredictably, upon currency inflation. Currency inflation is a direct and inevitable result of banking practices. No bank in the U.S. could function as a bank and not inflate the currency. It's not possible.

In the U.S., currency inflation is shaped by the interest rates set by Federal Reserve Bank. It is not part of our government, but rather is a private bank owned by the international banking cartel. The Fed is part of a chain of national banks whose parent is the Bank of International Settlements ( BIS ), headquartered in Switzerland. In the nations in which they operate, they determine what interest rates will be, and hence the rate of currency inflation. The cheaper credit is, the more people borrow and the faster the supply of money grows.

The Fed has a trillion dollar monopoly on the issuance of our currency, it alone has the power to set rates. It is also the institution which, under the leadership of Alan Greenspan, permitted the creation and distribution of securitized debt like Collateralized Debt Obligations ( CDOs ), Mortgage-backed Securities ( MBSs ), and Naked Credit Default Swaps through the banking and insurance systems. As you know, it was the worthlessness of these financial instruments which caused the economic depression and led eventually to our impasse with Metro over our COLA.

Here's how banks create inflation: Firstly, one needs to understand that it is a myth that banks lend their depositors' money. In fact, banks create money out of thin air and then lend it into the economy. This does two things: It creates currency inflation, and a shortage of money, also an advantage for the banks.

When you take out a loan from a bank at a Fed-determined rate of interest, or use your credit card, no actual transfer of funds occurs between creditor and borrower. The bank just makes a data-entry change in its books and writes a check against it. If you borrow $1,000 at five percent interest, your bank increases clerically the sum in its account by $1,000 and gives it, abracadabra, to you. So the money you receive didn't exist before you borrowed it. The total amount of dollars in existence has now been increased by a thousand. That's currency inflation. Banks need this constant growth in the money supply in order to sustain themselves. [1]

There's a catch: An ever-increasing supply of anything, including money, diminishes its value. A dollar used to buy twenty loaves of bread when my father was a kid. Because of this inflationary banking system imposed upon us by the cartel, a dollar now won't even get you a single loaf nowadays. Currency inflation begets price inflation, and, as long as our banking system remains in the cartel's hands, it's a question of how much, not whether, prices will rise. As they do, the value, the real value, of our paychecks will decline proportionally.

There's another catch: Money is created as debt when banks lend, but only for the principal. You borrowed $1,000, you now owe the bank $1,050 ( not accounting for compounding ) which you cannot abracadabra but must win from the real economy. The net result is that there is always less money going into the system than the borrower must remove in order to pay off the loan. Hence the economy is shorted. It may not be you who borrowed the initial $1,000 who gets ruined, but somebody inevitably will as the money supply is always inadequate for everyone to pay off their loans. Bankruptcies inevitably follow and the banks are then able to "repossess" or buy other estates for pennies on the dollar. In other words, our economy is a giant Ponzi scheme. It's like a game of musical chairs in which the chairs are removed two by two and replaced one by one. In this latest induced calamity, J. P. Morgan Chase, owned by the Rothschild banking dynasty and leading member of the cartel, bought investment banking giant Bear Stearns, awash in MBSs and CDOs, for less than it cost the New York Yankees to sign Alex Rodriguez.

This is just one example among many. This is why Harry Truman said that "Our banking system is nothing less than legalized larceny." And why Al Capone once correctly observed: "Wall Street is the crookedest street in America. What a @#$&ing racket they got!"

These are the very billionaires whom your government bailed out by borrowing abracadabra money from the Fed. ( That's right. Our government borrowed from the cartel through the Fed to give that money back to the cartel's other banking houses. ) They are also the origin of the effort to bust unions and get workers to give up their COLA. This expropriation of our money ( through our government's debt ) by the cartel is the largest single transfer of wealth in history, dwarfing in sum and value the total amount of revenue gleaned from the sale of Saudi oil from its discovery until now. It is the greatest financial crime of all time.

As long as these people are at the helm of our economy, prices are going to go up, you can bet on it. If we surrender our COLA, the actual buying power of our wages will plummet vis-a-vis the rate of inflation. If we can keep our COLA, the opposite happens.

Say you buy a house, the bank waves its magic wand. goes sim sallah bim, ipso presto, abracadabra and voila, they conjure up the money and give you a mortgage. Say this payment constitutes a third of your income---the payment is $1,000/mo and you net $3,000. Well the bankers will keep inflating the currency and prices will go up accordingly over the years. As it does, because of your COLA, your income will rise proportionally. As this occurs, your payment will constitute an ever-dwindling percentage of your income. Your payment remains the same but your income keeps rising, slowly but steadily. In this scenario, inflation is actually helping you as it affords you a higher standard of living, some protection against injury or disaster etc.[2] The ever-growing difference between your fixed payments and your income may be the difference in being able to send a kid to college, or buying a boat, taking care of a sick relative, a comfortable retirement, whatever.

Now say you buy a house and don't have a COLA. The buying power of your income keeps declining, slowly, perhaps imperceptibly, but steadily. Your $1,000 payment represents an ever-burgeoning share of your real buying power, your real income. Instead of having more financial freedom over the years, the opposite occurs. It's harder and harder to make your payment. You may beat the banker's odds and emerge with your property still in your possession but at what cost? What hardships will you and your children have to bear in order to keep your house?

As you know, the assertion that Metro cannot afford to pay our COLA is a grotesque lie. Currently and recently, they have purchased a number of hybrid buses; rolled out Rapid Ride, light rail and the streetcar, which are expanding; diverted lots of revenue to Sound Transit, thus making it unavailable to Metro; performed expensive remodels of our service bases. Yet they insist that it is not they who need to sacrifice, but us drivers. Why should we suffer for their errors. Please do not vote for any contract which doesn't have a COLA provision. Write or call the union leadership and let them know how you feel about it. The consequences of losing it will not only be felt by you, but by your children and possibly your grandchildren as well.

This is one occasion when acting in self-interest is acting on behalf of every working person on the planet. The COLA is our mooring to a decent life, it's our protection from the billionaire criminals who are currently repossessing 50,000 American homes per month from hard-working people just like you and me. It's our protection from CDOs and MBSs and a still-unregulated, untaxed derivatives market. Say no to Wall Street! We are not like them, we are not trying take more than the economy can provide, we are just trying to hold on to what little we have. Every time we have a recession like this one, union membership worldwide declines, wages shrink, and the savings of blue-collar workers filter back up the food chain to the bankers. The rich get richer, and the gains for which so much innocent, working-class blood has been spilled are lost. This cycle begins with the ceding of our COLA.

We must draw a our own line in the sand. Don't let it happen again! Say no to Wall Street. Don't vote for any contract without a COLA. And don't settle for diet COLA, make sure there is no low ceiling, we deserve real sugar, not aspartame. They will probably offer a contract back-loaded with goodies if we give up the COLA. Don't fall for that! It is a mistake for which we will pay for the rest of our lives.

Whose quote is it? Marx, Lenin, Chomsky? No, Ayn Rand, diva of the militant Right; heroine to the likes of Donald Rumsfeld and Ann Coulter; mentor and friend to Alan Greenspan, architect of our current fiscal dilemma. Rand understood. So does Greenspan. Now so do you.

[1] If you are interested in just how this works, write to me at and I'll tell you.

[2] I do not mean to say that inflation is a good thing. It isn't, but if it is going to occur it is better to ride the wave than to be crushed against the sea bottom by it.