It is not an accurate characterization to say that the United States is a capitalist country. Just the same, it is not a socialist country either. There are elements of both and certain elements are more prevalent in certain sectors.
If anything, the U.S. has more of a fascist economy, especially when it comes to such things as banking and healthcare. In using the term fascist, it means that the means of production are not owned by the government, but are heavily controlled or regulated. It might also be accurate to say that we have something of a crony capitalist system, where there are alliances between big business and government.
This is easily understood by looking at the banking and financial system. For anyone who pays some attention, there should be little doubt about these alliances.
The New York Times recently ran a piece detailing how one employee of Goldman Sachs advises the same type of banks as those he regulated when he worked for the New York Fed for seven years.
Goldman Sachs and the Federal Reserve banks provide stepping stones for each other. It is common for employees to move from one to the other.
While Goldman Sachs is supposedly a private company, there is little question that it is tightly tied to the Federal Reserve and the government.
And while the Federal Reserve system is sometimes called private, there is no question that its current existence is dependent upon the state. The Fed is granted monopoly powers over the money we use and its chairman is nominated by the president and approved by the Senate.
Former Treasury Secretaries Robert Rubin and Henry (Hank) Paulson both worked at Goldman Sachs. The current president of the New York Fed, William Dudley, worked for Goldman Sachs.
If that isn’t enough, Mario Draghi, president of the European Central Bank, worked at Goldman. And Mark Carney, also a previous Goldman employee, was head of the Bank of Canada before taking over as head of the Bank of England.
It is almost as if Goldman Sachs is some kind of a screening committee to get in to high financial politics.
A Not-So-Secret Alliance
The New York Times article details how this former Goldman employee is receiving confidential information from former colleagues at Goldman.
This comes on the heels of a lawsuit from a former New York Fed employee, Carmen Segarra, who claims she was fired after taping conversations that suggest her supervisors were soft on Goldman Sachs , particularly when it came to regulating one deal.
Of course, both the New York Fed and Goldman Sachs officials are releasing statements that they won’t tolerate these things and that they will review their policies…blah, blah, blah.
While it is positive that the New York Times is reporting on this, it will probably only make a marginal difference. I hate to sound like a skeptic here, but why would anybody new really care about this because of these stories? As I stated earlier, anyone who is paying a little bit of attention can realize quickly that the Fed and Goldman Sachs are in bed with each other.
The New York Fed just happens to be the most significant of the 12 regional Federal Reserve Banks. Its president always holds a vote on the Federal Open Market Committee (FOMC). And again, its current president used to be the chief economist at Goldman.
It is nice to see both organizations put on the defensive a little, but I doubt anything will change based on these new revelations. There simply is not enough interest from the voting public. If voters do not hold their so-called representatives to task, then you sure shouldn’t expect Congress to do anything to rock the system, particularly in terms of the Federal Reserve.
Perhaps these latest stories provide a little proof of an alliance, but there really wasn’t any secret to begin with. And even if there were no conspiracy here, it is obvious that there will be wrongdoing when there are so many former Goldman employees working at the Fed and vice versa.
If you are getting out of college and looking to work for the Fed one day to centrally plan a giant economy, then perhaps you should consider applying for an internship at Goldman Sachs. You have to go through the screening committee first.