Hip… hip… hooray!
Let’s hear it for Independence Day. We licked the British at Yorktown, Virginia, with the help of the French fleet. Ever since, America has been the land of the free.
Free people. Free minds. Free markets.
But what’s this? Vicky Pelaez for Global Research:
There are approximately 2 million inmates in state, federal and private prisons throughout the country. According to California Prison Focus, “no other society in human history has imprisoned so many of its own citizens.” The figures show that the United States has locked up more people than any other country: a half million more than China, which has a population five times greater than the U.S. Statistics reveal that the United States holds 25% of the world’s prison population, but only 5% of the world’s people. From less than 300,000 inmates in 1972, the jail population grew to 2 million by the year 2000. In 1990 it was one million. Ten years ago there were only five private prisons in the country, with a population of 2,000 inmates; now, there are 100, with 62,000 inmates. It is expected that by the coming decade, the number will hit 360,000, according to reports.
What has happened over the last 10 years? Why are there so many prisoners?
“The private contracting of prisoners for work fosters incentives to lock people up. Prisons depend on this income. Corporate stockholders who make money off prisoners’ work lobby for longer sentences, in order to expand their workforce. The system feeds itself,” says a study by the Progressive Labor Party, which accuses the prison industry of being “an imitation of Nazi Germany with respect to forced slave labor and concentration camps.”
The prison industry complex is one of the fastest-growing industries in the United States and its investors are on Wall Street. “This multimillion-dollar industry has its own trade exhibitions, conventions, websites, and mail-order/Internet catalogs. It also has direct advertising campaigns, architecture companies, construction companies, investment houses on Wall Street, plumbing supply companies, food supply companies, armed security, and padded cells in a large variety of colors.”
We’re not going to let a little thing like forced labour spoil our Freedom Fest holiday.
Anyway, it is only poor people who get caught up in the prisons’ slave market. So, we have nothing to worry about. We can hire a shyster lawyer when we need one.
Besides, we like the Land of the Free. Which is to say, we appreciate hypocrisy. After all, it is the “homage that vice pays to virtue”. Without it, virtue wouldn’t get any strokes at all.
Free minds and free markets are virtues too. Nobody cares about them either. Not in America. We have the schools to shackle minds. And we have the feds to lock up, beat up, and tie up the markets.
In this regard, we were particularly amused this week by Ms Janet Yellen, America’s number one market jailer. The most important number in a free market is the price of capital, the cost of borrowing someone else’s savings: the interest rate.
On it, almost all other numbers. That number must be ‘discovered’ in free trading. Otherwise, if it is chained up and whipped, like a tortured prisoner, it is likely to tell you want you want to hear, not the truth.
This week, she gave us such a gaudy example of jailhouse humour that the gods must have fallen on the floor, holding their stomachs and hoping not to bust a gut laughing.
“At this point, it should be clear that I think efforts to build resilience in the financial system are critical to minimising the chance of financial instability and the potential damage from it. This focus on resilience differs from much of the public discussion, which often concerns whether some particular asset class is experiencing a ‘bubble’ and whether policymakers should attempt to pop the bubble. Because a resilient financial system can withstand unexpected developments, identification of bubbles is less critical.”
Resilience? By pushing down interest rates and promising as much extra credit as the speculators need, she has turned the wild, robust markets of a free economy into the fragile crystal of a parlour ornament.
And the system now depends on something so freakish that it can’t go on much longer – unlimited credit at zero cost. Without this heavy-handed intervention, the whole kit and caboodle shatters into a thousand shards.
But wait. She is ready for it.
Nonetheless, some macro-prudential tools can be adjusted in a manner that may further enhance resilience as risks emerge.
This from the woman who missed the biggest threat in many decades. Economist Robert Hall says the years since ’07 were “a macroeconomic disaster… of a magnitude unprecedented since the Great Depression”.
And now, so macro-reckless is her combination of number torturing and policy improvisation that even her own banking cartel headquarters – the Bank of International Settlements (BIS) – had to say something:
“Overall it is hard to avoid the sense of a puzzling disconnect between the market’s buoyancy and underlying economic developments globally… Financial markets are euphoric… and yet macro and geopolitical outlook is still highly uncertain.”
“Policy…”, BIS continued, “has little room for manoeuvre”.
The BIS says there are $710trn in derivatives now outstanding. Combined public debt in the G7 economies has grown 40% since the crisis began. Corporate debt has never been higher and never grown so fast.
And now, consumer prices may be going up. All of this is the product of control planning and an unfree market. Instead of allowing the interest rate to frankly express itself, Ms Yellen has put tape over its mouth.
What place will history will give Ms Yellen? We don’t know. But all up and down the yield curve, interest rates cringe, whimper and wet their pants when they hear her coming.