How To Restore Trust So As to Revive the Economy

In addition to the technical factors which have brought on the financial crisis - the huge speculative bubble and leverage, derivatives, fractional reserve banking, spending beyond our means, etc. - there is another major factor.

As market psychologists Richard L. Peterson M.D. and Frank Murtha, Ph.D. wrote in October:

"This crisis is now fundamentally about psychology.

Trust is the oil in the engine of capitalism, without it, the engine seizes up.

Confidence is like the gasoline, without it the machine won't move.

Trust is gone: there is no longer trust between counterparties in the financial system. Furthermore, confidence is at a low. Investors have lost their confidence in the ability of shares to provide decent returns (since they haven't).

This is now a PSYCHOLOGICAL problem."

Understandably, the Fed's refusal to disclose who it gave $2 trillion in loans to, and Paulson's failure to disclose what Treasury is doing (even to the official Congressional TARP oversight committee) are adding to investor and taxpayer distrust. Obviously, they need to start disclosing what they're doing.

And the big financial institutions don't trust each other, because they know that all of the other companies might have hidden their problems or gamed their books. See this, this and this.

Bigger Context

But these facts cannot be taken in a vacuum.

Remember, every time Paulson, Bernanke or Bush open their mouths, the stock market dives (see this and this).


Well, what if - on your way to the bank - you happen to see your normal banker mug an old lady and steal her purse? Would you then proceed to the bank as if nothing had happened, and give your money to that banker?

Probably not.

Similarly, Americans' trust in our leaders and our systems have collapsed. Whether or not Americans think much about it, we all know that Bush lied us into war in Iraq with false claims about WMDs. We know that the Bush administration has implemented a widespread torture policy, and lied about it. We know that our government has been spying on us for years, but lied about it. We know that our intelligence and military should have stopped the 9/11 attacks, that the official story about 9/11 is very shaky, and that something must have been very wrong to allow them to succeed.

So How Do We Restore Trust?

Even though it is contrary to conventional wisdom, I would argue that we need war crimes trials against those who authorized America's torture program to restore our trust in our government and its leaders. We need real investigations and full disclosures about the WMD propaganda, spying and 9/11.

Everyone knows about these things anyway, but the lies and cover-ups have eaten away at our trust in a profound way.

As counterintuitive as this may sound, the festering distrust which is killing our economy will not ease until the truth about these abuses by our government are aired.

Rather than dragging the markets down with pessimism, airing the truth will restore our trust in our government, our leaders and our systems, and allow us to start to rebuild our economy and our financial system.

"We were wrong" are the three magic words which can start to end the cancer of distrust and begin to revive our economy.

If you are an economist, psychologist, sociologist or historian with expertise in market psychology, I would appreciate your input.

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“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit.We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

- Woodrow Wilson 1919

"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

- Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)

"The government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the government and the buying power of consumers. By adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity."

- Abraham Lincoln

“For more than a century ideological extremists ... attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as "internationalists" and of conspiring with others around the world to build a more integrated global political and economic structure - one world, if you will. If that's the charge, I stand guilty, and I am proud of it."

- David Rockefeller, “Memoirs” page 405

Transforming America

Good Article.

The Trust Crisis started a long time ago.

Event before that "magic bullet" one November Dallas Day in 1963.

911 Truth will Restore that Trust.

Proper Conclusion of 911 Truth will dismantle the wastes of the Military Industrial Complex and Permanently Revive the Economy.

Its going to be up to us.

Believe it or not, 911 Truth HAS Economic Value, amongst other things.

The CONSTITUTION is NOT going to "collapse" into pulverized dust no matter how much thermate/explosives or planes they throw at it


In solidarity with the Iraqi journalist who threw his shoes at Bush yesterday out of disgust, we are introducing OPERATION: GIVE 'EM THE BOOT! Let Bush know you are thinking of him this holiday season by sending him an old pair of shoes for Christmas! Make sure when packing up your old shoes for Dubya that the soles are facing upward when the box is opened! This shows your total lack of respect for a lying, murderous and treasonous war criminal.

Mailing Address:

The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Got an extra pair of shoes to get rid of? Send them to Cheney!

"A nation of sheep will beget a government of wolves" – Edward R. Murrow

Boot Indeed...

What if "W" et al were the recipients of countless shoes wherever they go? Heels need shoes- even at free-fall speed. I see a growing trend here.

What are we sheep?

"to restore our trust in our government and its leaders."

Trusting one's "leaders" is about the worst possible thing we could do at this point in time.

"A strong people needs no leader"
- Zapata

"Trust is the oil in the engine of capitalism"

Wrong. Blood is the oil in the engine of capitalism.

It's really quite incredible that people continue to accept the "bad apple" theory of politics. You'd think after hundreds of years of oppression that it might begin to sink in that there is something wrong with the institutions themselves.


If our "leaders" held war crimes tribunals, 9/11 tribunals, criminal trials for illegal spying, etc., wouldn't that be evidence that they were going to do things differently?


Well, I suppose, but the same rotten systems would still be in place after cleaning out the latest round of vermin. Sooner or later I think people will have to come to terms with the fact that "our institutions" are a major part of the problem, not something we should be "restoring faith" in. To rekindle blind faith in inherently anti-democratic systems would be to squander the opportunity of actually changing those systems (structurally, not just re-arranging personnel) at a time when people are actually amenable to doing so.

After all, what is a "healthy economy" anyway? Traditionally the term is used to describe growth (as opposed to recession) -- which may or may not be healthy to the mass of the people in a given environment (to say nothing of the environment itself). In fact the two are often inversely related. Natural disasters produce growth in the economy. Car crashes produce growth in the economy. Humanity can do better than endless toxic growth from which only a handful truly benefit and endless layoffs and unemployment. But to realize this potential we will have to start questioning the fundamental assumptions on which capitalist economics are based.

States (as they are presently constructed) are violent institutions and "trusting" them is NEVER a good idea.


is correct.

The Madoff scandal 16 December 2008 WSWS

The Madoff scandal
16 December 2008

The repercussions from the collapse of Bernard L. Madoff Investment Securities LLC, whose founder and owner was arrested last Thursday after admitting that his $17 billion investment advisory business was "a giant Ponzi scheme," continue to widen. According to a criminal complaint filed by the FBI and a civil action brought by the Securities and Exchange Commission (SEC), the elderly Madoff estimated that the losses from his fraud exceeded $50 billion. The tally of losses already reported by banks, hedge funds and wealthy investors climbed over the weekend to nearly $20 billion.

Banks and hedge funds around the world—in the US, Britain, Italy, Spain, France, Switzerland and Japan—are reporting hundreds of millions and even billions in losses. University endowments, charities and other institutions that entrusted their money to Madoff or to hedge funds that invested in Madoff's company are reeling from the news that their investments are worthless.