Coming Clean: Beyond the Fiscal Cliff – Economic Health: 11th of 22 Challenges

**Note: We are republishing each of the 22 challenges from Catherine’s fiscal cliff article – one a week. Helps to digest them bit by bit!**

By Catherine Austin Fitts

The vast majority of the people lobbying the federal government are focused on what is in the specific interest of those who are paying their way, as opposed to what makes the pie bigger for everyone. Unfortunately, those lobbyists and the interests they serve have become our elected officials’ real “constituency”. Consequently, we find few in government or elsewhere whose primary focus and concern is the overall economic health of the domestic economy or the welfare of those they have been entrusted to represent.

The Housing Bill that nationalized Fannie Mae and Freddie Mac in 2008 was a perfect example of the political allocation of federal resources with complete indifference to the economic health of the country.

The Peter G. Peterson Foundation is now marketing a new documentary called “I.O.U.S.A.” I have only seen the trailer. Based on my reading the website and watching the trailer, I’d say that it is slick, Orwellian hogwash.

If the national debt was almost ten trillion dollars before the housing bill and, if my estimate is right, approximately ten trillion dollars has been stolen since 1997, then do we have a debt problem or do we have an aristocracy problem?

One of the beauties of “I.O.U.S.A.” is that all the luminaries interviewed as experts on this “debt problem” were in a position to stop or warn us that the $10 trillion dollars was leaving. They did not.

The implication is that the American people are slobs who are irresponsible and wrecked the place while the leaders who ran the country were helpless to do a thing about it.

Let’s set the record straight:

  • If energy technology had not been suppressed for the past 100 years, our energy costs would be a pittance compared to what they are now, and our savings would be much higher.
  • If countless medical discoveries had not been suppressed, we would not be looking at such ridiculous costs for health insurance, Medicare and Medicaid.
  • If government had produced proper financial statements as required by law and had also produced such disclosure contiguous to Congressional districts, the housing bubble and a lot of other bubbles could never have happened.
  • If the currency and monetary systems had been run in the manner envisioned by the founding fathers rather than by private bankers, we would not have any debt.
  • If the American media and government had communicated honestly about our problems for the past few decades, we would not be in this pickle.
  • If wasteful defense spending and disappearing money had not defined the Pentagon for quite some time, things would look very different.

I once had a wonderful employee when I was the Assistant Secretary of Housing. He told me that the way to clean up a big mortgage mess was to view the problem as the solution. He said, “In the destruction of the old, let there be the creation of the new.”

America does not have a debt problem. We have a political problem. We have created a system where secret governments can steal and have Congress, the U.S. Treasury, and the Federal Reserve replace whatever they stole. The theory is that the end of the world will come unless we bail them out. That is not true, for all the reasons you learned in kindergarten about letting bullies have their way.

The implication of the trailer for “I.O.U.S.A.” is that we must turn to these great financial leaders to lead us out of our mess. But if they were truly leading, how did we get in this mess in the first place? How did billions of fraudulent securities get sold around the world? Why were several generations of Americans fraudulently induced to take on student debt and mortgage debt they could not afford?

Catherine Austin Fitts, “The Housing and Economic Recovery Act of 2008: An Analysis