Let’s be honest – impeachment ain’t gonna happen. There are several explanations for this – choose one or more:
• The Democratic leaders in the House and Senate are gutless weenies who have no principles;
• The Democratic leaders in the House and Senate are pragmatic politicians who recognize that even if they could impeach in the House, and in the process expose on the record a history of malfeasance, misfeasance and high crimes and misdemeanors, there is no chance to convict by a two-thirds majority in the Senate.
• The Democratic leaders in the House and Senate are statespeople who want to break the cycle of tit-for-tat impeachment and restore a measure of civility and dignity to politics; besides, Bush and Cheney are out in 17 months anyway.
So whatever the reason, let’s assume that impeachment is off the table. How then do we get rid of these guys? The only answer is to get them to resign, like Nixon did. And how might we get them to do that? Direct action from the people.
So whatever the reason, let’s assume that impeachment is off the table. How then do we get rid of these guys? The only answer is to get them to resign, like Nixon did. And how might we get them to do that? Direct action from the people.
Here’s a little economics lesson. As consumers and workers, we hold the economy hostage. The Federal government functions on borrowed money – the national deficit and the Iraqi war as well as most other government activities are financed through the issuance of short term and long term government bonds, which are really IOU’s. In addition to the directly issued bonds of the USG, there are bonds issued by federal government agencies, used to finance their activities. FannieMae is one example. There are lots of folks that lend money to the government by buying those bonds, in return for an interest rate of return that is considered to be almost riskless, because the bonds are backed by the full faith and credit of the United States of America, which has never defaulted.
So one option is to cash in your government bonds and not buy any more until B-C resign. But there is more that can be done.
Banks use government bonds. When you deposit funds in a checking or money market account, banks lend those funds for consumer purchases, mortgages, etc. But they are required by the Federal Reserve to keep a certain portion as a reserve requirement so that they have the liquid funds to pay back depositors that want to withdraw funds, either by writing a check or getting cash out of the ATM. A lot of that reserve requirement is covered by bank holdings of government bonds, which are considered safe and liquid.
So if a lot of folks go to the bank and withdraw their money, once they have run through their cash on hand, banks have to start liquidating their holdings of government bonds. If they all have to do this at once, there is no ready buyer. The Fed usually steps in and serves as buyer of last resort, or eases the ability of banks to borrow from one another, like it did recently when it looked like a run was beginning on some banks as a result of the sub-prime disaster. Banks can get into real danger of defaulting on their obligations. Another avenue of direct action is all those money market funds. Many of them have large holdings of government bonds. Withdraw your money and they have to sell their bonds. This kind of run on banks has happened in the past as a result of a loss of confidence. But doing it in a coordinated and purposeful way can signal a loss of confidence in the government that would be restored by B- C resignation.
Have I explained the multiplier effect? Simple example – if the banks have to keep 20% reserves, when you deposit $100, they lend out $80. That $80 is deposited by the borrower into a bank, which then keeps 20% reserve and lends out $64. Continue the math and you discover that a deposit of $100 generates bank deposits of $500 (the reciprocal of the reserve requirement). But it also works in reverse, with withdrawals. When that happens, the banks have to start calling in their loans. The newspapers call that a "liquidity crunch."
When there have been runs on banks in the past, it has generated real economic hardship for those whose funds remained and became frozen as banks went "bank"- rupt. So I don’t advocate that you go and withdraw all your money and close your accounts. But what about 25%? And not in cashier’s checks but in real cash. And we hold those dollars hostage until B-C resign.
You may ask, "If everyone is selling, who will be buying?" The Fed will be a buyer, but so will foreign investors – central banks, funds, and governments. Let’s take China. It already holds $1.33 trillion US dollars, much in US government bonds. Large sales of those bonds will drive down their price, so the Chinese would take a capital loss. Same for the Japanese and Europeans. And did I mention the Saudis? To maintain the value of their assets, they would have to buy big. But a concentrated divestment of US government bonds by Americans would create giant waves in international financial markets and the money guys around the world would put pressure on B- C to resign.
More could be done – two-thirds of American GDP is generated by consumer spending. A one-day zero –spend would send a powerful signal and coupled with the rest, probably force B-C to resign. We vote every day with our dollars, and if our elected representatives can’t or won’t do the job, it is up to we, the people.
How about targeting the day that the Petraeus – White House report on Iraq is released?