Raising the U.S. debt ceiling will tighten the vise on Americans and shovel more devalued dollars to Wall Street speculators, a new report says.
“The Wall Street policy means an acceleration of crippling hyperinflation and devastating austerity for the nation's most vulnerable citizens,” said economist Lyndon LaRouche.
Several Washington sources have confirmed a delegation of Wall Street bankers and insurance companies spelled out the terms to President Obama at a private White House meeting on Oct. 2.
The delegation was organized by the Financial Services Forum, a coalition of the nation's 19 biggest banks and insurance companies, and included Jamie Dimon, CEO of J.P. Morgan Chase; Lloyd Blankfein, CEO of Goldman Sachs; Brian Moynihan, CEO of Bank of America; Michael Corbat, CEO of Citibank; and Anshu Jain, CEO of Deutsche Bank.
Their message: Keep the cash flowing, at any cost.
Congress has long set an upper limit on the amount of money that the United States can borrow by selling Treasury bonds, the New York Times reported. That cap has been raised many times because the government regularly spends more than it brings in, forcing it to borrow more and more money to pay the bills. Most recently, in August 2011, Congress voted to raise the limit to $16.7 trillion.
"The government actually hit that threshold in May. But since then, the Treasury Department has used 'extraordinary measures' to continue borrowing money while staying under the limit. Among other things, Treasury has not made new investments with money from the retirement funds it oversees for the Postal Service," the Times said.
International Monetary Fund Managing Director Christine Lagarde echoed the bankers' message in an interview with the Financial Times on Oct. 4, in which she demanded that the Federal Reserve maintain the $85 billion a month "quantitative easing" bailout of the top Wall Street and Europe banks indefinitely.
Treasury Secretary Jack Lew, speaking for Obama, warned that any U.S. default will trigger a financial crisis far worse than the September 2008 meltdown.
Lew has said that on Oct. 17 his department will run out of tricks to stay under the debt ceiling, making it impossible to borrow any more money.
While new tax revenue will continue coming in, if the government cannot borrow, then it will not be able to pay all of the bills due that day, officials said. Lew estimated that on Oct. 17 the government would have $30 billion on hand, indicating that its daily expenditures can be as high as $60 billion.
LaRouche said it's a ginned-up controversy.
“The reality is that the ongoing government shutdown and threatened default on U.S. sovereign debt on Oct. 17 is nothing more than an orchestrated swindle, aimed at conditioning the American people for the murderous policies that have already been accepted by Obama and by leading congressional Republicans,” he said in a statement over the weekend.
Economic experts, ranging from former Federal Deposit Insurance Corp. Chairwoman Sheila Bair to ex-Reagan budget chief David Stockman, say that unless U.S. commercial bank assets are walled off from speculative Wall Street investment houses, another 2008-style financial collapse is inevitable.
Congress is considering three bills that would reinstate the 1933 Glass-Stegall banking law that would rebuild the protective wall.
“The total separation of commercial banking from all the gambling activities is the only remedy. President Obama is nothing but a tool of these Wall Street interests, as evidenced by his slavish commitment to maintain the bailout/bail-in program and stop Glass-Steagall," said LaRouche, who added this chilling prediction:
"In a matter of days or weeks, Obama and his Congressional Republican cohorts, on orders from Wall Street, are going to unleash absolute hell on the American public through even deeper killer austerity cuts than the sequestration of the past months.
“The government shutdown is the biggest dog and pony show ever, intended to prepare the population to accept more hyperinflation, more bailouts and bail-ins, and worsening conditions so that Wall Street can survive a bit longer while honest, hard-working Americans die in ever greater numbers.”
Sen. Elizabeth Warren, D-Mass, one of the Glass-Steagall sponsors, agrees that the measure is crucial to the country's economic sustainability.
Co-sponsors of her bill include Sens. Maria Cantwell, D-Wash.; John McCain, R-Ariz.; and Angus King, I-Maine. Reps. Marcy Kaptur, D-Ohio., and Walter Jones, R-N.C., are carrying similar legislation in the House. Several state legislatures has already passed resolutions demanding that Congress restore Glass-Steagall.
Said LaRouche: "It is time for Congress to break from Wall Street and the bankers' stooge in the White House, and do the only thing that can set the United States back on a course of genuine prosperity: Pass Glass-Steagall by a veto-proof majority this week."
In a statement, LaRouchePAC said:
"We are now at the point where Bush-League Republican idiots are on a collision course with Obama, forcing our nation into a government shutdown. The only thing we should shut down is Wall Street, and Glass-Steagall is our weapon to do that.
"Once the too-big-to-fail banks are no longer kept alive by taxpayers bailouts and depositor bail-ins, they go under. Good riddance! We are then left with a viable but undercapitalized commercial banking system and with an immediate opportunity to revive federal government credit.”