Study finds Public Input to Public Policy “Insignificant”

A shattering new study by two political science professors has found that ordinary Americans have virtually no impact whatsoever on the making of national policy in our country. The analysts found that rich individuals and business-controlled interest groups largely shape policy outcomes in the United States.

This study should be a loud wake-up call to the vast majority of Americans who are bypassed by their government. To reclaim the promise of American democracy, ordinary citizens must act positively to change the relationship between the people and our government


The new study, with the jaw-clenching title of “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens,” is forthcoming in the fall 2014 edition of Perspectives on Politics. Its authors, Martin Gilens of Princeton University and Benjamin Page of Northwestern University, examined survey data on 1,779 national policy issues for which they could gauge the preferences of average citizens, economic elites, mass-based interest groups and business-dominated interest groups. They used statistical methods to determine the influence of each of these four groups on policy outcomes, including both policies that are adopted and rejected.

The analysts found that when controlling for the power of economic elites and organized interest groups, the influence of ordinary Americans registers at a “non-significant, near-zero level.” The analysts further discovered that rich individuals and business-dominated interest groups dominate the policymaking process. The mass-based interest groups had minimal influence compared to the business-based interest groups.

The study also debunks the notion that the policy preferences of business and the rich reflect the views of common citizens. They found to the contrary that such preferences often sharply diverge and when they do, the economic elites and business interests almost always win and the ordinary Americans lose….

Why?  Aside from differences in focused money flows, it’s because of the relative consistency and longevity of business networking into congress vs that of constantly shifting and short lived public input.   If corporations insist in calling themselves “people”, they should also become mortal.  They should not outlive their founders or perhaps their founders’ children.

Why Did the Fed Pump and Dump US Real Estate Markets?

My colleague, Bill Black, has been entertaining himself by reading through the transcripts of the Fed’s meetings to find discussions of mortgage fraud. As you probably know, Congressman Henry Gonzalez forced the Fed to release these transcripts after he caught Chairman Greenspan in a white lie. Well, maybe it was not so white—just an outright lie trying to claim that transcripts of Fed meetings did not exist. We now know they did. Greenspan then agreed to release them, with a five year lag. So, joy of joys, you can now read the transcripts from FOMC meetings for 2006, right at the end of the biggest real estate boom in human history. And Bill Black is just the sort of guy who would find this fun.

I did the same thing for the period surrounding 1993-94 (back when Greenspan was caught in making those untruthful statements to Congress—never a good idea since Congress can throw the liar in prison). It is actually more fun than you might think. Go read the transcripts from the secret conference phone call when the Maestro informed his fellow FOMC members not only that he had misled Congress, but also that every word they had ever uttered at his FOMC meetings had been taped, as in Watergate secret taping. The gasps are still audible after all these years. But forget all that, let us turn to mortgage fraud in the 2000s.

Many of those involved in promoting the fraud have claimed that “no one could have seen it coming”—meaning the collapse. This is, of course, implausible. The FBI had warned of “an epidemic of fraud” back in 2004—long before the worst abuses became normal bank practice. And from the Fed’s transcripts, there is no doubt at all that the Fed “saw it coming”. Let’s look at a particular report from December 12, 2006. Don’t take my word for it. Read this:

There is no doubt at all that the Fed knew fraud was rampant and rising. There is no doubt at all that the Fed knew underwriting standards had collapsed. The Fed knew delinquencies had risen and would continue to rise. And they knew banks were reducing loan loss reserves—in order to book fake profits and to pay bonuses to top management.

And what did the Fed do about all this? The Fed sent representatives all around the country to argue that fundamentals were sound, that real estate markets had bottomed, and that the future looked bright ahead.

Did the Fed at any time ever tighten up mortgage lending standards? No. Did it ever publicly warn of a real estate bubble? No—only privately. Did it ever worry in public that we were set for the biggest real estate crash the US had ever seen? Of course not. That would have been counter-agenda.

At the time we could not get the transcripts—since they are released with a five year lag. So all we got was cheerleading for fraud by Fed officials.

Why? Because the Fed had become the government’s main tool for pumping bubbles. There was nothing else up the sleeve; it was all there was so far as a government strategy for growth. It was the tried and true method developed under President Clinton. And it worked. Until it didn’t. And won’t any more.

Unfortunately, neither President Obama nor the likely Republican candidate, ex-governor Romney have anything up their sleeves, either.

And the US economy will not recover until housing recovers. And housing will not recover until the Banksters are shut down. Because they’ve got all the dogs in the hunt—they cannot recognize the real estate losses because their exposure is too big.

It’s the biggest Catch 22 the world has ever seen. The big banks must be resolved—shut down—to relieve the pressure on homeowners, but that cannot happen because the big banks are too big to be shut down.

Dodd-Frank changed none of that. Indeed, it strives to keep the frauds running.

I think the author has politics and finance reversed.  The “fed” was not an instrument of government policy.  The government and the “fed” are both instruments of the  robber barons, and the robber barons wanted to blow the real estate bubble,  contaminate the bond market with the resulting fraudulent mortgage instruments, and then pop it to maximum effect.   It’s not hard to figure out the profit motive in “speculating” on a market that you essentially control, but in any case there’s no question it was deliberate and well orchestrated across multiple governmental, banking, corporate and legislative domains.    Here’s a smoking gun to that effect:

When you control the money supply and interest rates, blowing and popping bubbles becomes a very important instrument of theft and social control.  This is what you get with a privately controlled central bank.