Courtesy of Pam Martens
John Williams, President of the Federal Reserve Bank of New York
Consumers represent two-thirds of GDP in the United States. And yet, when consumers run into trouble, they don’t get a handout from the Federal Reserve – they are forced to file bankruptcy. There are no Fed handouts to small business owners, farmers, or main street merchants either.
So why is it exactly that the trading houses on Wall Street, with a serial history of crimes and with the most overpaid and under-punished executives on the planet, are able to perpetually have secret communications with the New York Fed and magically turn on the flow of trillions of dollars of ridiculously cheap loans to bail out their hubris and corruption.
The obscene money spigot from the New York Fed to Wall Street’s trading houses didn’t start with the epic financial crisis of 2008, as most Americans believe. It started following the dot.com bust, which was fueled by fraudulent research from Wall Street’s trading houses. The money from the Fed to Wall Street simply flowed under the cover of the 9/11 crisis.
The emotional toll of 9/11 has caused a memory lapse among most Americans to the reality that the stock market and Wall Street were in freefall before 9/11 occurred. The Nasdaq stock market had closed at 1695 on the day before September 11, 2001 – a stunning 66 percent drop from its peak in March of 2000. The dot.com bust had led to one of the largest destructions of U.S. wealth in stock market history. The New York Times’ Ron Chernow wrote about the dire conditions on Wall Street six months before 9/11, penning this: “Let us be clear about the magnitude of the Nasdaq collapse. The tumble has been so steep and so bloody — close to $4 trillion in market value erased in one year — that it amounts to nearly four times the carnage recorded in the October 1987 crash.”
The Federal Reserve not only bailed out Wall Street after 9/11 but it carefully coordinated its public remarks about that bailout. At a teleconference call on the morning of September 17, Fed Chairman Alan Greenspan effectively warned the Fed governors to keep a lid on how much they shared with the public. According to the transcript of the call, Greenspan stated:
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