Ending Free Money
How can we make our lives better?
First, let’s look at how we got here. Our economy is in trouble and your life is probably not better off than it was 10 years ago. It is probably not getting any better soon.
So why is this? Did you stop working hard? Probably not. Did our country stop innovating? No - just look at the innovation here in California: Apple, Google, Facebook, Twitter...
So what happened? What caused your life to be worse? In short, what has happened is very simple: a very bad idea has infected Washington and politicians. This bad idea has caused enormous damage to our economy and it even caused the total collapse of our economic system in September 2008.
In Sept 2008, for the first time in our country’s history, the entire system ceased to work. Think about this. The Nazi’s couldn’t stop our economic system, the Soviet Union couldn’t stop it, and even Al Qaeda couldn’t stop it. So what did stop it?
The cause is simple. It was a very bad idea:
Politicians have been giving away free money it is has broken our system. And remember this is your money they are giving away.
Let me explain (i) what happened, (ii) why it is still happening today, and (iii) why it is making your life worse. No matter what politicians say, until we end the era of free money, your life is not going to get any better.
So how did we get here?
Let’s look at why your life can get better in America. Why can your standard of living improve? This is an amazing fact. Your life can get better. And the reason why is actually very simple.
For over 200 years our country had a rising standard of living with good jobs, increasing prosperity. The real result was that as you worked hard, your life did actually get better.
The reason for this 200 years of prosperity and the reason why the years from 1940 to 1980 were the best the world has ever seen is well known.
In the United States, we established a set of market rules that were the envy of the world. Banks and companies had to follow a very efficient set of rules that made the U.S. the envy of the world. We were the best the world had ever seen in creating jobs, wealth, and peace.
Markets work best with an efficient set of rules. With rules, companies can compete, jobs get created and people - including you - make more money.
As a result, there is little reason to go to war.
But in 1980 that all started to change.
A bad idea had taken root in the minds of politicians and it spread like a virus.
The Era of Free Money
The bad idea was that market’s should have no rules at all. In other words, banks, Wall Street, and companies, should be able to create free money without any rules or oversight.
And free money - a market without rules - is an incredibly bad idea, as history has shown us again, and again, and again - in 1908, 1929, 1988 and again in 2008.
We don’t have to guess if free money is a bad idea, we have historical examples that show just how bad it really is.
Let’s look at the two most recent examples.
In the late 1980s, in the first part of the era of Free Money, it was a disaster. S&Ls no longer had to play by the rules, and it cost you - the American taxpayer - a half trillion dollars of your money. The bankers and Wall Street made tons of money during the so called real estate “boom” of the 1980s by charging fees.
But they took very little real capital risk, thus they got “free money”.
This free money was financed by you. After all, money doesn’t grow on trees. Free money is always paid for by you because once a market collapses - as it did in September 2008 - and as it always does without market rules - the only way to save the economy and your job from catastrophic and irreversible collapse, is to have you, the American taxpayer, save the system.
Heads Wall Street wins, tails you lose.
Free money - markets without rules - is a rigged system. Wall Street walks away with billions and you pay the bill.
So let’s look at the second part of the era of Free Money, starting in 1999.
There was a little known bill that went into effect about 11 year ago that, yes, once again, got rid of all the market rules. This time the impact was even worse.
So what happened?
Politicians passed a bill that eliminated 50 years of market rules, so that Wall Street could get tons of free money. So how did Wall Street get free money?
By selling contracts to insure your house.
That’s right, you didn’t even know it, but Wall Street was insuring your house.
But this wasn’t normal insurance. Normal insurance is what you have on your home. So if you have a $350k home, and a fire destroys your home, you get $350k and a new home. And the company that you buy insurance from has to invest your premiums wisely (after all it is your money) and follow a set of rules.
This make sense and it worked extremely well.
That is until the virus of free money - a market without rules - took hold in the minds of politicians. So how, without any rules, could Wall Street get free money that eventually you wold have to pay for. How does this work?
Well, its simple really.
It is a simple bad idea.
Without any rules, any Wall Street firm could sell insurance on your house. But not just $350k worth of insurance. They could sell $3.5 million or even $35 million of insurance on your $350k house. When there is no fire, the Wall Street firm collects money - likely from other Wall Street firms managing your money from your bank or your pension plan, your retirement - in the form of premiums.
It is almost pure profit, i.e. free money, because the Wall Street firm isn't required (remember with free money there are no rules) to have any capital at all!
So now let’s say there is a fire. Instead of paying $350k, the Wall Street firm has to pay out, potentially $35 million, to the other Wall Street firms (but not to you). But the Wall Street firm that sold insurance on your house doesn’t have any money because it has taken out all the profits in fees.
Remember: with free money there are no rules.
Heads Wall Street wins, tails you lose.
When the fire happened - the financial crisis - in September 2008, this free money system infected every company and every financial transaction in the entire United States. And because there were no rules - no one, no financial institution, no person, no government agency had any idea how big the risk to the system actually was. Our economy is $14 trillion, and some estimates put the risk at $600 trillion because Wall Street was selling free money insurance worth more - lots more - than the value of your house.
When the free money house of cards collapsed in September 2008, there was no one to save the financial system but you, the American taxpayer. So Wall Street walked away with free money and you paid the bill.
Heads Wall Street wins, tails you lose.
Let’s look at a real example: AIG. AIG created a free money machine. They made billions of profits until September 2008. And the head of AIG financial products, the center of their free money machine, Joe Capistrano personally made $245 million. Think about this for a minute.
For you, the average American to make that much money, you would have to work over 4,000 years!
And what did Joe do?
Did he find a cure for cancer? Invent a new technology? Launch a new company?
Nope - he used “free money” that cost you - the American taxpayer, $80 billion (remember, "free money" is your money). And he didn’t have to pay back one cent of his $245 million. Why?
Because free money - a market with no rules - was made legal by politicians.
We need to elect representatives to Congress who will never let this happen again.
If you want a better life where you work hard, your standard of living goes up and you make more money, this era of Free Money and markets with no rules has to come to an end.
My plan to end the era of free money is simple. And it will make your life better and our country stronger.
You work hard for your money, and the plan will make sure your government works hard for you - and just you, not Wall Street.
Before I get to the details of my plan, let’s talk about politicians and why they unleashed the era of free money and why it is still holding back our economy today.
Because if we don’t understand the root cause, we can’t fix the problem.
The Corruption Cycle
The cause is very simple. I call it the corruption cycle. And I will show you how it works and how we can fix it.
So how does our political system work today? What is its lifeblood?
Speech? Debate? New ideas? Nope.
The lifeblood of our system today is money.
To run for office, as we all know, takes a ton of money. And to have power in Washington takes a ton of money.
And what does Wall Street want? Money, of course.
But not just money - everyone wants money.
Wall Street wants free money. They don't want any market rules, so they can get their free money and be saved Washington, paid for by We the People.
And the more free money they get, the more they will fund politicians.
This is why free money starts the corruption cycle, where politicians work for Wall Street and not you.
And big companies also want free money, i.e. they don’t want to pay their fair share to fund our country’s operations, like infrastructure, roads, the military, etc. They want free money. So they fund the corruption cycle as well.
Why do politicians do this?
First, because they need to fund their campaigns with money of course, but second because when they get out of office, what do they do?
Yep, they go work for a Wall Street firm that gets free money from Washington.
Here are just two examples:
Phil Graham, the architect of the most recent Free Money legislation, left office and made millions in free money from UBS, a huge Wall Street bank.
Robert Rubin, another architect of the recent free money era, went to Citibank, and made millions in free money.
And believe it or not, this was all legal - made legal by the corruption cycle and Washington politicians, and the bad idea of free money -- a market with no rules.
So why do Wall street firms and big companies want free money?
Because it is a lot harder to work hard, compete and innovate. Getting free money, as we will see, is much easier - but it is what is making your life worse, because ultimately you have to fund the free money that politicians are giving to Wall Street.
A few decades ago, Wall Street and big companies realized that they could get free money by funding politicians. They could give a lot of money to campaigns, to political groups and to politicians.
So they started piling money into campaigns.
And worse, they started spreading the very bad and very wrong idea that money is free speech, so that like their market with no rules, there should be no rules on giving money to politicians to get free money.
And the supreme court, infected as well by this bad idea, recently agreed.
Even after the idea of free money and markets without rules brought down our entire financial system, even after it cost you hundreds of billions of dollars, even after it destroyed millions of jobs and ruined peoples lives.
Even now, when the free money era is still killing jobs and making your life worse, the supreme court allowed Wall Street to spend as much as it wants in secret to get more free money from politicians.
The speaker of the United States House of Representative was even caught handing out cash - literally piles of cash - to other members of congress on the floor of your house.
The house that is supposed to represent your interests, the House of Representatives. He was handing out cash from companies that want free money.
Ending free money is the only way to make your life better.
My plan will stop politicians from giving away your money for free to Wall Street and it will end the corruption cycle.
So how do we do it?
There is a solution to the free money and corruption cycle problem. And it is very simple. It will take just three things: first, we need to stop free money and end the corruption cycle with a simple constitutional amendment.
Second, we need what I call Markets 2.0 - a set of rules that govern the market, and makes sure Wall Street gets no free money.
And third, we need to invest in America through what I call the American Funds. This is how we can accelerate our growth, compete with other countries, create millions of new jobs, increase your standard of living and ultimately make your life better.
Let’s look at each of the solutions. They are why you should support my plan - because they will make your life better.
First, the No Free Money constitutional amendment.
So why do we need to amend the constitution?
When the Supreme Court of the United States makes a mistake - as it does on occasion - the only recourse we have is to turn the the supreme power in our country - not the Supreme Court, not Congress, not the President.
The supreme power in our country is you, the People of the United States of America.
The Supreme court has made some awful mistakes in its history - for example, the Dred Scott case legalized slavery, led to the Civil War, and was finally overturned by Abraham Lincoln’s Emancipation Proclamation.
And the Supreme Court made another awful mistake in 2010 when it once and for all legalized the era of Free Money.
So, the only place we can turn for a solution is to you, the People of the United States of America.
A simple constitutional amendment will end the era of Free Money by ending the corruption cycle and making sure that no politician ever again hands out cash to representatives on the floor of your House of Representatives.
I will end the era of Free Money by proposing an Amendment to the Constitution of the United States:
“All elections in the United States will be financed by and only by we the people of the United States.”
Once this Amendment is law, no politician will ever be able to get funded from a Wall Street firm looking for your money.
And not even the Supreme Court will be able to stop us from ending the era of free money and terminating the cycle of corruption that is making your life worse today. We will take money out of politics once and for all.
This is the only way to ensure that politicians are representing you and not the Wall Street firms that want free money.
Second, I will introduce new market rules that will will accelerate our country’s growth, create new jobs, and force Wall Street and companies to invest in growth instead of investing in politicians to get free money.
So what are these rules?
We will re-establish what is known as the Glass-Steegal Act. These were a set of rules that governed the financial markets for 50 years and created the system that made your life better. Why? because when Wall Street and companies had to follow these rules, they couldn’t get free money and they had to invest in real jobs, real innovation, and real products and services that grew the economy and created jobs.
We will enhance these rules in order to make sure Wall Street can never again walk away with piles of free money - your money - while increasing the risk to our financial system. We will limit the debt financial firms can use, so they can never again put our country’s prosperity - and your money - at risk again.
We will introduced legislation to start the American Funds.
What are these funds? These are funds to invest in our country, make you more money and make your lives better. So who will own these funds and who will benefit from them?
You will, the taxpayers, We the People of the United States.
So how will these fund work? And what is an American Fund?
It is like the China fund. China's funds have about $1 trillion in assets - investments in stock and bonds, many in American companies.
They literally own American companies. These investments benefit not you, but the people of China.
So how much have American politicians invested to benefit you? $0.
So right now, we are $1 trillion behind China. And it is even worse. Not only is the total value of American Funds $0 right now, but you actually owe the Chinese about $600 billion.
As a result of the era of free money, politicians have financed our debt with your money, i.e. the national debt.
Our debt is a tax on you payable to the Chinese.
Put simply, you owe the Chinese $600 billion because politicians gave away free money to Wall Street.
If you think this is making your life better, you are wrong. It is the reason your life if worse. Because the corruption cycle funds free money and makes your life worse.
This plan will end the corruption cycle and end the era of free money.
Ending free money and investing in the American Funds will make your life better.