Creature From Jekyll Island by G. Edward

If America is to survive as a free nation, her citizens must become far more politically educated than they are at present. As a people, we must learn not to reach for every political carrot dangled in front of us. As desirable as it may be for everyone to afford a home, we must understand that government programs pretending to make that possible actually wreak havoc with our system and bring about just the opposite of what they promise.

After 60 years of subsidizing and regulating the housing industry, how many young people today can afford a home? Tinkering with the laws of supply and demand, plus the hidden tax called inflation to pay for the tinkering, has driven prices beyond the reach of many and has wiped out the down payments of others. Without such costs, common people would have much more money and

purchasing power than they do today, and homes would be well within their reach.

SUMMARY

Our present-day problems within the savings-and-loan industry can be traced back to the Great Depression of the 1930s.

Americans were becoming impressed by the theories of socialism and soon embraced the concept that it was proper for government to provide benefits for its citizens and to protect them against economic hardship.

Under the Hoover and Roosevelt administrations, new government agencies were established which purported to protect deposits in the S&Ls and to subsidize home mortgages for the middle 84 THE CREATURE FROM JEKYLL ISLAND

class. These measures distorted the laws of supply and demand and, from that point forward, the housing industry was moved out of the free market and into the political arena.

Once the pattern of government intervention had been established, there began a long, unbroken series of federal rules and regulations that were the source of windfall profits for managers, appraiser, brokers, developers, and builders. They also weakened the industry by encouraging unsound business practices and high-risk investments.

When these ventures failed, and when the value of real estate began to drop, many S&Ls became insolvent. The federal insurance fund was soon depleted, and the government was confronted with its own promise to bail out these companies but not having any money to do so.

The response of the regulators was to create accounting gimmicks whereby insolvent thrifts could be made to appear solvent and, thus, continue in business. This postponed the inevitable and made matters considerably worse. The failed S&Ls continued to lose billions of dollars each month and added greatly to the ultimate cost of bailout, all of which would eventually have to be paid by the common man out of taxes and inflation. The ultimate cost is estimated at over one trillion dollars.

Congress appears to be unable to act and is strangely silent.

This is understandable. Many representatives and senators are the beneficiaries of generous donations from the S&Ls. But perhaps the main reason is that Congress, itself, is the main culprit in this crime.

In either case, the politicians would like to talk about something else.

In the larger view, the S&L industry is a cartel within a cartel.

The fiasco could never have happened without the cartel called the Federal Reserve System standing by to create the vast amounts of bailout money pledged by Congress.

C h a p t e r Five

NEARER TO THE

HEART'S DESIRE

The 1944 meeting in Bretton Woods, New Hamp-

shire, at which the world's most prominent social-

ists established the International Monetary Fund

and the World Bank as mechanisms for eliminat-

ing gold from world finance; the hidden agenda

behind the IMF/World Bank revealed as the

building of world socialism; the role of the Federal

Reserve in bringing that about.

As we have seen, the game called Bailout has been played over and over again in the rescue of large corporations, domestic banks, and savings-and-loan institutions. The pretense has been that these measures were necessary to protect the public. The result, however, has been just the opposite. The public has been exploited as billions of dollars have been expropriated through taxes and inflation. The money has been used to make up losses that should have been paid by the failing banks and corporations as the penalty for mismanagement and fraud.