Obama, the Fed, and the Phony Economic Recovery

By: Cliff Kincaid
Accuracy in Media


In a clever display of Marxist political maneuvering, President Obama and his “progressive” supporters are now attacking the substandard economic “recovery” that they have helped create. Zubi Diamond, author of the Wizards of Wall Street, says their ultimate goal is to increase federal control of the economy and “complete the fundamental transformation of America.”

The public understands something doesn’t add up. A Washington Post-ABC poll finds that 64 percent of the public thinks federal government policies currently favor wealthy Americans, while a new CNN/ORC poll shows that nearly 70 percent say the economy is generally in poor shape, and only 32 percent rated it as good.

This is after Obama has been president for five years, trying various tax-and-spending measures supposedly to spur economic growth.

The CNN poll finds that, “Thirty-six percent said they were cutting back spending on food or medicine, up from 31 percent in late 2008, the year the housing market collapsed.” Behind some apparently good economic numbers are “the long-term unemployed, the under-employed and those who have dropped out of—or never even entered—the workforce,” CNN reports.

This is a recovery?

Businessman Zubi Diamond calls it a “phony recovery,” based on the stock market rise driven by the Federal Reserve, that clearly has failed to help most Americans.

Diamond and other critics call Federal Reserve Chairman Ben Bernanke the “day trader Fed chairman” and “Magic Ben,” for his ability to print money and propel stocks to record levels. He is leaving office on January 31, to be replaced by Janet Yellen, who promises to continue the controversial policies that have given unprecedented monetary power and influence to America’s central bank.

Obama calls inequality “the defining challenge of our time,” even quoting the pope to that effect. But his policies, as carried out by Fed Chairman Ben Bernanke, have clearly exacerbated the inequality he now complains about. Such a claim enables Obama to avoid responsibility for his own policies and to campaign on a platform of reducing the inequality he has increased.

Talking about “inequality” seems to be the only way that Obama’s “progressive” allies in the media, such as New York Times columnist Paul Krugman, can change the subject from the lack of economic progress and opportunity—problems exacerbated by the disruptions to peoples’ lives caused by the socialized medicine scheme known as Obamacare.

What liberals like Krugman want the public to ignore is the fact that the politicians yakking the most about inequality—such as Obama, New York City Mayor Bill de Blasio, and Democratic Massachusetts Senator Elizabeth Warren—are backed by George Soros, the billionaire socialist hedge-fund operator who says capitalism is the major global threat. Soros almost single-handedly financially underwrites the “progressive” movement today.

The political reality facing the Democrats, as they ponder congressional elections this year, helps explain why a recent Post-ABC poll focuses on the so-called “wealth gap,” and whether ploys such as raising the minimum wage can turn things around for them. Another proposal is extending unemployment benefits.

The poll is worded in such a way as to be a prescription for more federal interference—some would call it socialism—in the economy. The Democrats, backed by Soros, believe this is how they can win.

But none of these proposals would increase the real economic growth that can help the millions of unemployed Americans get back into the economy and acquire good-paying jobs. Yellen’s confirmation as the next Fed chairman only helps the money manipulators on Wall Street, and does not filter down to Main Street, Diamond insists.

Putting the matter in personal terms, he asks, “Has Ben Bernanke’s artificially inflating assets and balance sheet in the economy reached your household and personal bank accounts yet?” He asks, “How come some communities and municipalities are filing for bankruptcy protection, and how come your personal bank account is not flooded with liquidity from the Fed?”

In this sense, he argues, the Obama “recovery” is worse than the so-called “trickle-down” pro-growth policies of President Reagan, which even the pope mocked in his recent papal “exhortation.” In the Obama economy, he says there is no trickle down, unless you have major investments in the stock market or have large accounts managed by the hedge-fund operators such as George Soros.

Diamond tells Accuracy in Media, “Do not get confused or be deceived by the rising stock market. It is not based on any fundamental recovery in the macro economy. It is artificially inflated. There is no fundamental economic recovery.” He says the “recovery” has basically consisted of the Federal Reserve assisting the stock market “with freshly minted U.S. dollars electronically transferred to a select group of primary broker dealers to replace the liquidity and buying power of the investors who fled the market due to fear and lack of investor confidence” in the wake of the 2008 crash. Diamond says hedge fund operators such as billionaire George Soros were behind the collapse in 2008, and Obama’s rise to power.

He explains, “Ben Bernanke’s rationale for doing this is to artificially inflate assets and balance sheets in the economy to create a wealth effect that will spur spending and economic growth.” In this Fed-induced stock market rally, he says, “the fact that the stock price of a particular company is rising does not necessarily mean the company is profitable or that the economy is doing well.”

Diamond, with 15 years of financial market experience, cautions people not to be confused by media misreporting: “When a talking head analyst points to the rising stock price of the electronics retailer Best Buy as proof the company is doing great business, and proof of healthy consumer spending, nothing can be further from the truth. Best Buy is losing money and closing down a lot of stores.”

“Since the Federal Reserve began their asset (stock) purchase program coupled with stock price manipulations, good earnings for the publicly traded companies do not really matter,” he says. “The price to earnings ratio valuation does not really matter, either. A fundamental or technical analysis of stocks or the market indexes does not really matter. The only thing that really matters is the activities of the world’s central banks led by Federal Reserve Chairman Bernanke.”

This is being done, Diamond maintains, because certain actors on Wall Street, like the hedge fund operators in the Managed Funds Association, want to see Obama turn the U.S. economy into a top-down command-and-control socialist-style system that eventually includes nationalization of the big banks.

“If the Federal Reserve continues the QE [quantitative easing] stock buying program in 2014, they will be holding up the economy artificially to lull you to complacency while the enemy of freedom remains in power to complete his fundamental transformation of America,” he says. “Things are not what they seem.”

Cliff Kincaid is the Director of the AIM Center for Investigative Journalism and can be contacted at cliff.kincaid@aim.org. View the complete archives from Cliff Kincaid.


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