They are simply “misguided”

Everyone knows that politicians are liars and thieves.

Therefore it annoys me when average people pretend that politicians are simply “misguided.”

Politicians serve the rich and serve themselves. If we falsely think that politicians mean well, then we will remain confused and bewildered. We will think that politicians have no economic policy, when in fact their policy is to widen the gap between the rich and the rest.

I mention this because I just saw an annoying article about Iran, in which the author thinks that President Hassan Rouhani means well, but is misguided.

Rouhani doesn’t mean well. He is a rich oligarch who is dedicated to neoliberalism, i.e. mass privatization, mass financialization, gratuitous austerity, and everything else that widens the gap between the rich and the rest in Iran. Rouhani even affirms the lie about the Jewish holocaust. He has accomplished what Iran’s “green revolution” of 2009 failed to do, namely bring neoliberalism to the Islamic Republic. Why else do you imagine that the West has warmed up to Rouhani? He wants to break away from Russia, and stop supporting Syria, but he is opposed by the Republican Guard.

I have said this since Rouhani took office in August 2013, but everyone calls me an idiot.

Let me explain something. The corporate media outlets portray Iran as a crazed Islamic extremist nation. In reality, rich oligarchs in Iran have been increasing their wealth and power ever since the 1979 Revolution. For them, Islam is a weapon to keep the peasants down.

In August 1989, Akbar Hashemi Rafsanjani became Iran’s president. Rafsanjani was a rich oligarch who was dedicated to neoliberalism, which is why the Western Empire praised him as a “reformer.” Rafsanjani served two terms (eight years) and was replaced in August 1997 by Mohammad Khatami, another rich oligarch. The oligarchs were opposed by the Republican Guard, which is anti-imperialist and anti-neo-liberal. Also the Republican Guard does not worship Israeli atrocities.

By 2005, the greed of the oligarchs caused the gap between rich and poor in Iran to become so huge that average Iranians finally voted out the oligarchs, and voted in Mahmoud Ahmadinejad as president. Ahmadinejad was anti-imperialist and anti-neo-liberal. He befriended Russia. He befriended Hugo Chavez of Venezuela. He questioned the Jewish holocaust™ lie. He supported Hezbollah in Lebanon when Israel bombarded and invaded Lebanon in 2006. He started programs to give food and fuel subsidies to the poor. Health care and education were free.

All these things and more made Ahmadinejad “evil” in the eyes of the Western Empire, plus the rich oligarchs in Iran. The Western Empire decided to punish average Iranians for having voted Ahmadinejad into office. On 31 July 2006 the UN Security Council adopted Resolution 1696, the first of endless rounds of sanctions imposed on average Iranians. The pretext was Iran’s nuclear energy program. Russia and China stupidly agreed to these sanctions, hoping that obedience to them would make the Western Empire ease up on Russia and China. (It did not.) Russia and China remained stupid until the Empire destroyed Libya in 2011, at which point Russia and China finally grew a brain and a spine.

In response to the blockading of Iran, President Ahmadinejad launched a national campaign of self-sufficiency. Iran produced its own food, its own cars, weapons, household appliances, and so on. Ahmadinejad also formed partnerships with then-leftist governments in South America.

Because he would not bow to the Western Empire, or to Israel, the Empire retaliated by having the UN Security Council pass more and more resolutions to punish average Iranians for supporting Ahmadinejad (e.g. Resolutions 1696, 1737, 1747, 1803, 1835, 1929, 1984, 2049, 2105, 2159, and 2231).

When Ahmadinejad stood for re-election in 2009, the Western Empire, plus the rich oligarchs in Iran (along with Iran’s entire upper class), tried to mount a “green revolution.” They tried to get rid of Ahmadinejad by claiming that the election results were fraudulent. Rich Iranians were desperate to reclaim supremacy, and the Western Empire was desperate to help them do so. However their revolution failed, and Ahmadinejad served a second four-year term.

The now-enraged Western Empire tripled its sanctions against Iran, calling Iran the world’s foremost state sponsor of global terrorism. The Empire’s pretext was Iran’s nuclear power program, but the attack on Iran has never been about nuclear power. It has always been about neoliberalism.

By 2013 the Empire’s blockade and sanctions began to wear down the lower classes in Iran. Average Iranians (especially the naïve younger ones) started listening to the greedy oligarchs who claimed that they could get the sanctions removed, and bring joy to all. Hassan Rouhani ran for the presidency using very progressive-sounding rhetoric (just like Obama), promising hope and change and prosperity (just like Obama) while being a total liar (just like Obama).

In August 2013 Rouhani became Iran’s president, and immediately embarked on a vicious campaign of neoliberalism, cutting food and fuel subsidies to the poor, imposing gratuitous austerity on the masses, and demanding mass privatization of education, health care, and banks. He deregulated the financial sector, and oversaw the financialization of Iran’s economy, in which Iran’s Wall Street became a deadly parasite on Main Street.

The only impediment to Rouhani’s neoliberal assault is the Republican Guard, which has always been a thorn in the paw of the Western Empire, Israel, and the Iranian upper class.

Now let me return to this article that annoys me because its author thinks that Rouhani means well, but is “misguided.”

My comments are in blue.


How parasitic finance capital has turned Iran’s economy into a case of casino capitalism

Critics (which critics?) have often blamed President Rouhani of Iran for blindly following the worst aspects of the neoclassical-neoliberal model of capitalism. He’s not blindly following it. Rouhani is widening the gap between the rich and the rest. Why else do you imagine that the USA has warmed up to him?

An example is the unregulated and out-of-control financialization of Iran’s economy. Rouhani and his cronies have given the banking/financial sector a free rein to engage in all kinds of parasitic, speculative activities. So much for the “Islamic Republic.” This has robbed the manufacturing sector of the productively-investible finance capital, thereby leading to a severe economic stagnation and high rates of unemployment. Sound familiar? Hillary will accelerate financialization in the USA.

It is now common knowledge that the 2008 financial crisis in the U.S., which spread to other parts of the capitalist world, was precipitated largely by a disproportionately high degree of financialization, that is, by an unsustainable financial bubble on top of a much narrower base of real values. Rodger Mitchell does not understand this. No matter how many times I have carefully explained it to him, Mitchell cannot grasp that the real economy (which is based on the production and consumption of goods and services) is separate from the financial economy (which is based on fraud and speculation). Mitchell thinks that the gulf between Wall Street and Main Street is not important.

It is equally well-known that systematic deregulation of the financial sector in the U.S., especially of the dismantlement of the Glass-Steagall Act (in 1998), which had fairly well regulated the financial sector in the aftermath of the Great Depression, was a major contributing factor to the creation of the financial bubble that burst in 2008.

President Rouhani and his economic team seem to be altogether oblivious to the bitter experiences of the financialization disaster in the U.S. and other core capitalist countries around the world. WRONG! Rouhani is not oblivious! Rouhani is a rich oligarch who is focused on widening the gap between the rich and the rest. He does not mean well. He is not “misguided.” He does not care about Iran. He only cares about getting more wealth and power for himself and his cronies.

Rouhani’s blatant inattention to the devastating consequences of a bloated financial sector at the expense of a cash-strapped real sector, combined with his trade policy which has effectively replaced domestic products with foreign products through a policy of unhindered importation of foreign goods and services, has greatly contributed to Iran’s economic stagnation. It’s all part of the neoliberal program.

While the real / manufacturing sector of Iran’s economy is in dire need of investment funds, its financial sector enjoys an abundance of liquidity that, according to Iran’s Central Bank, amounts to nearly 900,000 billion tumans, or almost $260 billion dollars ($1 = 3500 toomans). That is approximately equal to 65% of Iran’s 2015 GDP of barely $400 billion. Unfortunately, the major bulk of this plethora of liquidity is used for speculation purposes, instead of lending to manufacturers for productive investment.  For the rich, this is glorious, just like in the West. Everything and everyone in the lower classes exists to serve the financial casino.

By the way, toman is an informal word for ten Iranian rials. Thus, “900,000 billion tumans” (as the author writes, misspelled) equals 900 trillion rials.

The fact that the financial sector prefers the more lucrative speculation to real production is not surprising—it is simply in the nature of a profit-driven economic system. What is surprising is a total lack of an economic policy that would channel the nation’s financial resource away from speculation to production. Why is it surprising? Rouhani and his cronies are widening the gap between the rich and the rest. That’s what oligarchs do.  They want to personally owns everything in Iran so they can reduce the lower classes to slavery. Calling it “surprising” is like saying it will be “surprising” when Hillary privatizes Social Security.

The abundance of domestic liquidity belies President Rouhani’s frequent pleading with foreign investors on the grounds that Iran’s economy is suffering from illiquidity, and that foreign direct investment could serve as a panacea to Iran’s ailing economy. When Rouhani calls for foreign investment, he is calling for more money for the speculative casinos in Iran.

The persistent economic stagnation in Iran is largely due to a dire lack of an effective macroeconomic policy. WRONG. Rouhani’s economic policy is quite effective. It favors the rich, and it favors the financial economy at the expense of the real economy. Lack of economic policy is, in turn, mostly due to President Rouhani’s and his economic advisors’ blind faith in an economic model that is unfeasible in the real world; a model that, while simple and even elegant, is dangerously misleading. WRONG. Neoliberalism is not “unfeasible.” It works beautifully for the rich. Nor does Rouhani have a “blind faith” in neoliberalism. He has no need for “faith” when he can see it working with his own eyes. It is misleading because it maintains that if the government abstains from making macroeconomic policies and leaves all economic matters to microeconomic activities of private individuals and businesses, the invisible hand of the market mechanism would in a magical fashion lead to efficiency, development and prosperity.

Neoliberals claim that markets work best when there is no government regulation. This is like saying that society works best when there are no police forces, and no penalties for crime.

Neoliberals actually love regulation, as long as it is only imposed on the lower classes. The rich get decriminalized, while the lower classes get brutal police states. More socialism for the rich. Less for everyone else.

According to this doctrine lie, called supply-side or neoliberal economics, solutions to economic stagnation, poverty and under-development lie in unhindered market mechanism and unreserved integration into world capitalist system. Recessions, joblessness and economic hardship in many less-developed countries are not so much caused by the nature of global capitalism as they are because of government intervention and / or exclusion from world capitalist markets. So say the neoliberal liars.

Unimpeded importation of foreign products into Iran’s open-door market, unregulated and out-of-control financialization of its markets, and devastating stagnation of its economy are mainly due this misguided economic doctrine.

There it is again. Rouhani and all the other financial thieves are simply “misguided.” (Who is doing the “misguiding”?)

Misquided 02Misguided. Why do people use that ridiculous word? Do they think it will make them seem more sophisticated? Why not just call thieves “thieves”?

Misquided 03It is now widely acknowledged that the disproportionate growth of the financial sector has been a major contributing factor to the ongoing financial turbulence and economic stagnation in many core capitalist countries. In Iran the parasitic growth of the financial sector is among the highest in the world. The per capita number of banks, shadow banks, and other financial institutions (called moasesaat-e atebaari) is certainly the highest in the world. Parasitic activities of the financial players include speculation in foreign exchange or foreign currency market, in gold and other precious metals market, in all kinds of imports (both legal and illegal), in real estate, and the like. This is the cause of Iran’s high inflation rate. When Ahmadinejad clamped down on all this, the Western Empire called him “evil.”bomber 1

Profits are so high from speculative activities in the financial sector that a number of major manufacturing corporations such as Iran Khodrow bomber 2(Iran’s largest auto manufacturer) have established their own banks that divert funds from their manufacturing operations to the financial sector. General Motors did the same thing in the USA. GM started making more money through its financial arm (GMaC0 than from selling cars. When Obama bailed out General Motors in 2009, he actually bailed out GMAC. Anything to support the speculative financial casinos.

Likewise, many civil, military, and governmental organizations (such as municipalities), as well as pension funds and charity foundations (such as Bonyad-e Mostazafan) have also created their own banks in pursuit of a share in the lucrative financial sector. Everybody is so busy playing in the financial casino that they are increasingly ignoring the basic necessities of life (like producing food). This is how empires and nations collapse.

The perils of the commercial banks’ and other financial institutions’ speculative activities are dangerously magnified by their ability to create money! Following the Anglo-Saxon model of fractional reserve banking (explained below), which is today practiced in most capitalist countries, the power prevalence of money creation in Iran rests not so much with the government as it does with commercial banks. When commercial banks make loans or extend credit to their clients they, in effect, create money, which is called debt/credit money, or bank money, as opposed to sovereign or real money created by the government. Although in essence bank money is not real money, in practice it functions just as real money.

Bank money is real money. The author is trying to say that neoliberalism always entails gratuitous austerity, in which the central government creates less money, so that the masses are forced to seek loans from banks. Why have free college, for example, when you can reduce millions of students to debt slaves?

By the way, fractional reserve banking is a myth. Banks create money when banks make loans. The author admits this. Farther below, he falls into the error of believing that banks create all money.  

The ability of the commercial banking system to create money explains why the all-important power of controlling or manipulating money supply, of financing and, therefore, of influencing or controlling national economies in most capitalist countries has increasingly come to rest with commercial banks, often mediated by central banks and treasury departments that are frequently headed by the proxies of the financial oligarchy. Bankers bribe politicians to give more and more power to bankers. Welcome to the wonderful world of post-industrial capitalism.

In theory, the ability of the banking system to create credit or debt money is determined or limited by two factors: (a) the savings/deposits by households and businesses, WRONG and (b) the central bank policy that determines reserve requirements and the money supply—the so-called fractional reserve banking. Fractional reserve banking means that, for the sake of financial safety and stability, commercial banks ought to always keep a legally-determined fraction of their deposits (for example, 20%) on hand, either in their own coffers or in their accounts with the central bank. This fraction of bank deposits is called required reserves, or capital requirement/base. Only the rest (80% in our example), which is called excess reserves, can be loaned out.

NO. Reserve requirements (which are set by the central bank) do indeed limit the creation of loan money by banks. However reserves are not deposits. When a customer deposits money in a bank, the customer’s money remains spendable. The customer can take the money out. Reserves are money too, but reserves are not spendable. Reserves are a stabilizing back-up for the regular (spendable) money system. In the USA, the $20 trillion deposited at the Federal Reserve (the so-called “national debt”) are reserves. That reserve money cannot be spent until it is converted back to regular money. Where do banks get reserves? Not from customer deposits. Banks borrow reserves from other banks, and from the central bank. Banks must pay interest on the reserves they borrow.

What has made the ability of the commercial banking system to create debt money especially dangerous in recent years is that, as the financial sector has systematically freed itself from traditional rules and regulations, most of the debt money they now create is increasingly geared towards speculation, not production. It’s called financialization. This explains the exponential growth of parasitic finance in most capitalist countries. As noted, parasitic growth of the financial sector in Iran represents an extreme case of this ominous development—a developments that has made Iran’s economy akin to a nationwide casino.

It is the same in most nations. If a country tries to resist this nightmarish global trend, the Empire calls its government “evil” and a “state sponsor of terrorism.”

Also, let us not forget the role of gratuitous austerity in causing financialization. When politicians claim that there is “no money” for social programs, it means, “If you need food, shelter, or medical care, get a loan for it.”

What is to be done?

It follows from this brief discussion that the inordinate financialization of Iran’s economy is largely due to two major factors: (1) the ability and/or freedom of commercial banks and other financial institutions to create money, along with the government’s refusal to create enough money and (2) their freedom to engage in non-banking activities, including speculation in commodities market, especially in precious metals, in foreign currency market, in real estate market, in imports market, and the like.

Policy implications of this diagnosis are unmistakable: to cleanse Iran’s economy of the poisonous effects of parasitic finance requires (1) ending the commercial banks’ and other financial institutions’ ability to engage in non-banking activities, and (2) ending their ability to create money.

We can let banks create money (i.e. issue loans) as long as we don’t let politicians screw us with austerity. Also, for every privately owned bank, there should be a publicly owned bank available, so that people have freedom to choose.

The article then has several paragraphs that are in error, and which do not enhance the discussion. Basically the author lapses into falsely believing that all money is created by banks, and that things would be better if central governments could create money, which of course they already do (although the euro-zone is an exception).

By creating the money they need interest-free, instead of borrowing it from commercial banks and other private financial entities interest-borne, governments can strengthen their budgets and save taxpayers huge sums of money.

This author is a disciple of Ellen Brown and her delusions. Monetarily sovereign governments do not borrow their own money in their own currency from anyone. They create their money out of thin air by spending. And they spend by crediting bank accounts.

Moreover, if central governments want to “save taxpayers money,” they can do so by lowering taxes.

For example, evidence shows that the U.S. federal government paid in 2011 a sum of $454 billion in interest on its debt—the third highest budget item after the military and Social Security outlays. The Federal Reserve did that, and it created the money out of thin air for interest payments. The “national debt” places no constraint on the U.S. government’s ability to create money out of thin air. This figure amounted to nearly one-third of the total personal income taxes ($1, 100 billion) collected that year. Nope. Tax revenues do not pay for the federal government, whether we speak of the USA or Iran.

This means that if the federal government created the money it needed, instead of borrowing it at interest, personal income taxes could have been cut by a third. WRONG. The U.S. federal government does not borrow its spending money. Nor does it depend on federal tax revenues. Alternatively, the savings could be invested in social infrastructure, both human and physical, thereby drastically augmenting the productive capacity of the nation, creating millions of jobs and elevating the standard of living for all. The U.S. government does not need to worry about “savings.”


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5 Responses to They are simply “misguided”

  1. Beaner That Looks Like A Cracker says:

    Do you have any sources that confirm Ahmadinejad gave free education and healthcare to the Iranian people?


    • Actually I misspoke. He protected them from creeping privatization. Iran has a private medical system (mainly used by affluent urban dwellers) and also a state system that is mainly used by the poor, and by rural folk, and by people in small towns. The Iranian Constitution, written after the 1979 Revolution, guarantees free college and medical care, but it does not prohibit private ownership of colleges and hospitals. Therefore, over time, more and more government funding is subtly shifted from the public to the private sphere, causing the private operations to become huge, and their owners to become rich. This is a global phenomenon. With creeping privatization, everything is increasingly owned by the rich. The rest of us are their slaves. Government leaders that resist this trend are condemned by the Western Empire as “dictators.”


      • Beaner That Looks Like A Cracker says:

        Honestly, its all doomed. People will always hold on to their herd instinct, governments will always be corruptible, and the greedy will only look out for themselves. What can be done? I think the most realistic answer is-nothing. Abso-fucking-lutely nothing.


  2. As these different influences came together, a distinctly Cuban taste and design developed, which is reminiscent of nation peasant models of cooking by oral custom and eye, fairly than relying on specific measurements and the creation of dishes that tend in the direction of the uncomplicated and hearty, and that can be left on their private to simmer. Fussy, large sauces are unusual and deep-frying is simply not a favored cooking technique. The island nation, by natural means, employs a wonderful offer of seafood in its cuisine, which encourages the use of basic cooking tactics and spicing that is meant to increase, not smother, natural flavors.


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