Press "Enter" to skip to content

Cynthia McKinney calls for nationalizing the Federal Reserve, eliminating derivatives trading

Pusblished at

Last week, I posted ten points (that were by no means exhaustive) for Congressional action immediately in the wake of the financial crisis now gripping our country. At that time, the Democratic leadership of Congress was prepared to adjourn the current legislative Session to campaign, without taking any action at all to put policies in place that protect U.S. taxpayers and the global community that has accepted U.S. financial leadership. Those ten points, to be taken in conjunction with the Power to the People Committee’s platform available on the campaign website at (, are as follows:

1. Enactment of a foreclosure moratorium now before the next phase of ARM interest rate increases take effect;
2. elimination of all ARM mortgages and their renegotiation into 30- or 40-year loans;
3. establishment of new mortgage lending practices to end predatory and discriminatory practices;
4. establishment of criteria and construction goals for affordable housing;
5. redefinition of credit and regulation of the credit industry so that discriminatory practices are completely eliminated;
6. full funding for initiatives that eliminate racial and ethnic disparities in home ownership;
7. recognition of shelter as a right according to the United Nations Declaration of Human Rights to which the U.S. is a signatory so that no one sleeps on U.S. streets;
8. full funding of a fund designed to cushion the job loss and provide for retraining of those at the bottom of the income scale as the economy transitions;
9. close all tax loopholes and repeal of the Bush tax cuts for the top 1% of income earners; and
10. fairly tax corporations, denying federal subsidies to those who relocate jobs overseas repeal NAFTA.

In addition to these ten points, I now add four more:

11. Appointment of former Comptroller General David Walker to fully audit all recipients of taxpayer cash infusions, including JP Morgan, Bear Stearns, Fannie Mae, Freddie Mac, and AIG, and to monitor their trading activities into the future;
12. elimination of all derivatives trading;
13. nationalization of the Federal Reserve and the establishment of a federally-owned, public banking system that makes credit available for small businesses, homeowners, manufacturing operations, renewable energy and infrastructure investments; and
14. criminal prosecution of any activities that violated the law, including conflicts of interest that led to the current crisis.

Ellen Brown, author of “The Web of Debt” writes at, “Such a public bank today could solve not only the housing crisis but a number of other pressing problems, including the infrastructure crisis and the energy crisis. Once bankrupt businesses have been restored to solvency, the usual practice is to return them to private hands; but a better plan for Fannie and Freddie might be to simply keep them as public institutions.”

Too many times politicians have told us to support the “free market.” The unfolding news informs us in a most costly manner that free markets don’t work. This is a financial system of their making. It’s now past time for the people to have an economic system of their own. A reading of the full text on the Congressional “Agreement on Principles” for the proposed $700 billion bailout reveals the sham that this so-called agreement truly is. Today our country faces an economic 9/11. The problem that is unfolding is truly systemic and no stop-gap measures that maintain the current bankrupt structure will be sufficient to resolve this crisis of the U.S. economic engine.

Today is my son’s birthday. What a gift to the young people of this country if we were to present to them a clean break from the policies that produced this economic disaster, the “financial tsunami” that former Comptroller General David Walker warned us of so many months ago and instead offered them a U.S. economic superstructure that truly was their own.

Power to the People!

About Post Author



  1. BrianHoltz BrianHoltz September 28, 2008

    pseudonym n. a fictitious name used by an author to conceal his or her identity

    In what universe does “G.E.” not conceal your identity as Jason Seagraves?

    Did you think *I* was being sarcastic? I was being precisely as sarcastic as you were.

  2. G.E. G.E. September 27, 2008

    haha.. Brian: Did you think I was being sarcastic? I wasn’t.

    “Behind a pseudonym” — it’s a HANDLE not a pseudonym. Jesus. If I changed my handle to Jason Seagraves there would be more confusion than it’s worth.

    “Heroic capitalist” was the highest compliment I could pay!

  3. BrianHoltz BrianHoltz September 27, 2008

    I agree with Jason Seagraves — the heroic anarchist who heroically calls me a “heroic capitalist” from behind a pseudonym — that education should be completely privatized. I also happen to agree with the anarchist David Friedman that vouchers would move us strongly in that direction. See e.g.

    I would have one primary condition for ending vouchers and leaving education completely privatized. There would need to be a functioning legal mechanism to correct the market failure in which poor minors needing tuition are unable to make binding commitments to repay tuition loans out of the increased future earnings that we education advocates say would result from the tuition. A possible alternative to this condition would be the correction of unjust site monopolization through something like a citizens’ dividend funded by the return of geo-rent from site monopolists such as through a site value tax.

  4. Thomas L. Knapp Thomas L. Knapp September 27, 2008


    You write:

    “I’ve already defined socialism as the state ownership of the means of production and distribution.”

    Then you’ve already mis-defined it.

    Socialism is worker ownership of the means of production.

    Some variants of socialist theory posit the necessity of a “workers state” as proxy for the exercise of said ownership. Others posit the impossibility of a state acting effectively as such a proxy.

    The existence/role of the state is an optional and variable, not required and fixed, characteristic of socialism.

  5. darolew darolew September 27, 2008

    It’s funny, capitalists often argue that anything but laissez-faire markets are socialism, while socialists argue that anything short of their ideal system is capitalism. The vast middle-ground is claimed by neither group, rarely celebrated as being any ideology in particular.

    I think interventionism is a good name for the middle-ground. For the sake of clarity, it’s dumb for capitalists to call interventionism “socialism” and it’s dumb for socialists to call it “capitalism”.

    The dividing line where interventionism becomes capitalism and where it becomes socialism is blurry. For the latter case, Mises suggested the lack of a stock market, which is as good as a divider as any.

    (Theories like mutualism and anarcho-socialism can be safely ignored, as without a de facto government to enforce socialism it would be impossible to maintain. Those ideologies either devolve into statism or become capitalism.)

    Thus, I think it’s safe to say there is a definite spectrum, running from socialism through interventionism to capitalism.

  6. G.E. G.E. September 27, 2008

    Tom is in a really bad mood.

    I’ve already defined socialism as the state ownership of the means of production and distribution. You can make up your own definition if you’d like, but you can’t compel the rest of the world to accept it. What is your problem with that, by the way?

  7. Thomas L. Knapp Thomas L. Knapp September 27, 2008


    When and if you manage to even noddingly acquaint yourself with what socialism means, I’ll be glad to discuss with you whether or not it’s “that bad.”

  8. G.E. G.E. September 26, 2008

    We pay tens of thousands of dollars of property taxes that mostly go to our school district, and that pays for “free” admission at our choice of exactly two government elementary schools

    This is why I don’t understand why you favor vouchers.

    From what I understand, Brian Holtz is a heroic capitalist who used his talents to accumulate wealth for the material betterment of himself and his family. Now he has a gun put to his head and is made to cough up vast sums of property taxes in order to fund the socialist propaganda mills known as public schools. The vouchers he would receive would clearly be for less than the amount that is stolen from him.

    Brian, why can’t you come out in favor of complete privatization? I’m sure that you’d be willing to donate money to good “public” (i.e. free to the public) schools. I think many people of even greater wealth would be more willing.

  9. G.E. G.E. September 26, 2008

    Knapp spends way too much time trying to make the case that he’s a man of the left, or that socialism isn’t that bad.

    No. Socialism is evil. And the greater extent to which something is socialized, the greater extent that it’s evil.

    As for “nuttery”: It’s a fact that no nation (with perhaps the exception of North Korea) is entirely socialized — meaning that the state owns the means of production and distribution. And no “state” is completely free (which would be a non-state). So the continuum is obviously true, even if it doesn’t fit with Knapp’s “socialists are cool” fantasy.

  10. Catholic Trotskyist Catholic Trotskyist September 26, 2008

    The Catholic Trotskyist Party of America endorses McKinney’s proposals, and will help her lobby President Obama and the Congress to adopt this proposal next year.

  11. BrianHoltz BrianHoltz September 26, 2008

    Cynthia McKinney, freedom fighter.

    Mises is quoted as defining socialism as “a completely integrated system which regulates all prices, wages, and interest rates, and which thus places full control of production and consumption in the hands of the authorities”. So I guess as long as my daughter is allowed to run her unregulated lemonade stand, we’re not yet at socialism.

    Sorry, Ludwig, wrong answer. Firms, industries, and economies can each be socialized to various degrees. Mises apparently applied the term “interventionism” to situations which fell short of his definition of socialism.

    We pay tens of thousands of dollars of property taxes that mostly go to our school district, and that pays for “free” admission at our choice of exactly two government elementary schools (because of a transition phase as the nearer school starts up). That’s not intervention, that’s socialized elementary education.

  12. Thomas L. Knapp Thomas L. Knapp September 26, 2008


    That’s possible. The definition I quoted was from the preface to Mises’s Socialism.

  13. Fred Church Ortiz Fred Church Ortiz September 26, 2008

    It seems Mises might be using the term “capitalism” distinctly from “free market”, I’ve seen that before but don’t remember where…

  14. Fred Church Ortiz Fred Church Ortiz September 26, 2008

    The Mises quote GE mentions was on LRC yesterday, and kinda apocryphal:

    I can’t recall where the story comes from, but Ludwig von Mises was reportedly asked once how to distinguish between a capitalist and a socialist economy in light of the fact that there is so much interventionism in “capitalist” economies. His answer was that the defining characteristic of capitalism was private capital markets.

  15. Thomas L. Knapp Thomas L. Knapp September 26, 2008


    I just quoted Mises’s definition of “socialism,” which seems reasonable. I guess I’ll have to re-read the whole book to see if he really falls into the statist nuttery you attribute to him (i.e. there being a continuum with socialism at one end and the free market on the other).

  16. G.E. G.E. September 26, 2008

    Knapp – Every nation is somewhere on the continuum between socialism and the free market. Mises said that a country could rightfully be considered “socialist” if it didn’t have a stock market. Her anti-deriviatives position is very close to that.

    Brian – Even though what McKinney proposes is even worse than the Fed, at least she’s challenging the Fed, which is a sacred cow.

  17. Thomas L. Knapp Thomas L. Knapp September 26, 2008

    Per Mises, socialism is “a policy which aims at constructing a society in which the means of production are socialized.”

    Even assuming that the finance system as it applies to housing is part of the means of production (as opposed to an artifice for manipulating the means of production), the federal government is not the proletariat, nor is it some approximation/representative thereof (i.e. a “workers state”).

    Leftist managerialism isn’t “socialism” any more than rightist managerialism is “capitalism.”

  18. BrianHoltz BrianHoltz September 26, 2008

    Wow, nationalizing the banking industry. Ron Paul must be so proud of how he got McKinney to agree to “evaluate” the Federal Reserve. I guess she liked what she saw.

  19. Fred Church Ortiz Fred Church Ortiz September 26, 2008

    More adventures in the failed left-right dichotomy.

  20. Trent Hill Trent Hill September 26, 2008

    Why on EARTH would that be a conservative position? Nationalizing anything is anti-conservative.

  21. G.E. G.E. September 26, 2008

    I think she might have crossed the Misesian line to real socialism, here.

    BTW: It is very interesting how the radical (racist) right and the socialist left line up on monetary policy. That book, Web of Debt (full of lies and distortions, btw), is heavily advertised in the Nazi-sympathizing American Free Press. The AFP has also published editorials for “nationalizing” the Fed.

Comments are closed.