Erin Burnett is in the first week of her big transition from CNBC to CNN with her new show Erin Burnett Out Front.    And what better place for the former Wall Street anchor to start than with the Occupy Wall Street protests?   Unfortunately, Burnett used the opportunity to spread more myths in the mainstream media and totally ignore the real point of the protests.

In a segment called “Seriously?!”  Burnett goes down to Wall Street and talks to Dan, an “unemployed software designer” about the purpose of the protests.  She says:

“So, do you know that taxpayers made money on the Wall Street bailout?  They did.  They made money on the Wall Street part of the bailout….Does that make you feel any differently?”

Dan kind of (not really) says yes and then they cut back to studio and Burnett says, “Seriously?  That’s all it would take to end the unrest?”  Then she verifies her claim and tells her unwitting viewers that the bank bailout “made” $10B for taxpayers.  She proclaims victory by saying they “solved” it.  And that’s it.  2 minutes and 34 seconds and she did it.  Case closed, right?  Not even close.

So what should Dan the “unemployed software designer” have said to Ms. Burnett?  He should have said this:

“Excuse me, but I believe you have a completely insufficient understanding of the way that our fiat monetary system works.  When the U.S. Treasury “makes” money it is actually reducing the outstanding net financial assets of the private sector.  There is no such thing as “making money on the Wall Street bailouts” because, as the issuer of our currency, the U.S. Federal Government is not a profit making entity and cannot be compared to a household, business or bank.   There is simply no such thing as the U.S. government having “more” money when it brings in tax revenues.  As the supplier of the U.S. dollar, the Federal Government must issue money before it is available to us.  And when they “make” money via increased taxes they are quite literally removing net financial assets from the private sector.

So no, none of us are “making money” on the bailout except for the people who caused their banks to collapse.  That is of course, unless the banks or Uncle Sam are paying you some form of special bank bailout dividend?  Did that happen?  No.  So none of us are “richer” directly because of the bank bailout.

More importantly though, what the banks did to us was break the moral code that is always attached to money.  Money is always debt and when an institution or individual fails to adhere to the moral code attached to our debts, they are directly infringing on their moral obligations that they are legally bound to.  And when a government bails out banks, individuals or businesses, they are saying that this infringement is okay and are in fact encouraging it.  This is why we don’t allow counterfeiting, fraud, scams, etc.  These are all forms of infringement on the moral code that inextricably links us all together via trade and commerce.  Without the soundness and strict adherence to this moral code, there is no such thing as a healthy functioning U.S. economy.  And the banks infringed on this moral code to the tune of trillions of dollars.  And we let them get away with it.  Now you’re justifying it with a false understanding of how a fiat monetary system works.  Shame on you.

So, no, there is nothing you can say or do that would make me feel better about the Wall Street bank bailouts.  SERIOUSLY!”

It’s that simple.  People feel slighted.  And rightfully so.  Now, in fairness, most people in this country are not aware of the underlying mechanics of our monetary system.  And most people have a poor understanding of what money really is.  But one thing is very clear from the Wall Street protests.  Main Street got the short end of the stick.  And we all know it.   Whether it’s the fact that none of us are actually “making money” on the bailouts or the idea that we have all been subjected to approval of an egregious violation of the moral code that links us all through our money.

Although it may not be obvious, the anger that resonates from these facts is what is fueling the movement.  It is the heart of the Occupy Wall Street protest.  Misleading media coverage like Ms. Burnett’s is just another glaring reason why the mainstream media is dying a quick death in this country.  They continually fail to represent our reality and connect with the American public.


Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  1. “Theory is all in the application….” like Cullen said.

    Abba Lerner: “Fundamentally the new theory, like almost every important discovery, is extremely simple. Indeed It is this simplicity which makes the public suspect It as too slick. Even learned professors who find It hard to abandoned ingrained habits of thought have complained that It is “merely logical” when they could find no flaw in It.”

    It is extremely difficult to explain extremely simple things to people who believe It is extremely complicated.
    I don’t think the Wall Street occupiers are any different in this sense.

  2. the General Assemble of Occupy Wall st. has released their demands to the media over a week ago. If your so clueless that you can’t find it then maybe your the one isn’t a very serious journalist. lol

  3. Cullen.

    I probably lean closer to Trixie, but at this time, I think courage and honesty in dealing with reality, which you continue to demonstrate, will prove more of a unifier than any a priori political biases.

    I would be glad to get your take on what has occurred in my home state of NC, as documented by Jane Meyer.

    I will only add a side note to her story: Art Pope bankrolled it from an inherited fortune based on ‘dime stores’ that for years had a near monopoly in small, poor and minority towns on the kinds of goods now available at higher quality and lower prices at Walmart. For years, Roses was notorious for poor service and management; when the Walmart opened in the neighboring county, the two stores in these counties, already in serious decline, folded. (I gladly drove the extra 15 minutes to Walmart, knowing they would have the oil filter for my Corolla in stock. Now, Fred’s offers a similar trade-off between convenience and price/quality, but well managed, and a locally owned franchise.)

    The story demonstrates that there is more truth to the Brandeis quote that ‘you can have democracy, or you can have concentration of wealth, but you can’t have both’ than just left-wing ideology or resentment. That increasing concentration since the 80′s does not primarily reflect the ‘productivity’ or ‘job creativity’ of the few who’ve gained but more than anything the ignorance of the public (kept there in some measure, by design, albeit perhaps largely ‘unconscious’).

    I support the efforts of MMT to dispel that ignorance. However, the ultimate responsibility lies not with those who have ‘gamed the system’, but with the larger public, that bought into a shallow, unsustainable, and largely illusory prosperity, and now need to find a version not based on exploitation (of either the human or natural world), with room for the basic concerns of fairness and community.

    • I don’t think I am attacking anyone; certainly not the ’1%’ or competent management, and not even those who perpetrate the myths providing cover for the activities of Scaifes, Kochs, Popes, and the like.

      My main concern is with those on either side of any divides of wealth, education or political allegiance who have failed to recognize that the functioning of the system requires the public interest to be constantly represented, in the form of an engaged and informed citizenry. Any needed political and economic balances will follow.

    • No system, which continually funnels a growing amount of money into the hands of a few, can be sustained. Once the exponential growth of that inequality turns perverse, as it now has, it will show that concentrated wealth destroys democracies. It’s not that government is spending too much money, it’s that it is going into the wrong hands.

      “The greatest shortcoming of the human race is our inability to understand the exponential function.” Albert Bartlett

  4. Cullen, could you elaborate what you mean by “moral code attached to our debts[money]“?

    • Now I’m really worried about the proposed bailout of the EU banks by the EU taxpayers. Would it be better to create a central EU issuer of EU currency and have that entity spend money into the economy, especially that of the debtor nations? This may dilute the Euro a bit, but that seems to be what they need. Would the Austrian econ geniuses agree with this? Is MMT a pipe dream since it’s not being used in the world?

  5. Erin Burnett is another IMBECILE with a time slot on tv. Listen to her comments Americans consumers that they should stop complaining about the toxic materials the Chinese use in the toys and the food they sell us because the prices at Walmart and rates on mortgages will increase.

    Honestly, it is difficult to see how we managed to walk upright with these knuckledragger types constantly showing up to mankinds grand ball.

    Erin Burnett should be one of the unemployed…it goes to show you no matter how many times you demonstrate your an imbecile if you screw a banker you have job security…come to think of it it’s just another demonstration of how the American taxpayer by saving the a banker is like pissing down our own leg.

  6. Great post! Really simple and beautiful in reminding everyone why, in fact, the mainstream media is losing. They’re not telling the truth.

  7. Goldman Sachs and Morgan Stanley, to name a few, should not exist and should have been killed off, but they were saved by the very politicians elected by the very voters now unhappy and disenfranchised. Everyone trusted the system while their stock accounts and house values were increasing? Changed their minds now that their pact with El Diablo has not worked out? I do worry that the man in the mirror is not getting enough blame.

  8. Dear Cullen,
    repeat after me: a banking crisis is a household crisis!
    produce for me a scenario in which all the major banks topple, but households make out fully with their deposits, and without other major collateral damage in day-to-day corporate borrowing and incidental household borrowing.

    if you can produce such a scenario, i’ll be very much interested in hearing it.

    TARP was obviously a lesser evil

    • Back all deposit and checking accounts at 100% using the Fed’s keystroke money to do it, so as to help Main Street. Wipe out the stockholders and pay the bondholders after liquidation at whatever price is justified on a mark to market basis after liquidation of assets. Nationalize management of the irresponsible banks prior to selling off the valuable pieces (e.g., the loan book) to banks that were well managed. Clear the housing market. Have the Fed buy enough assets with keystroke money so as to avoid too deep a fire sale discount. Reenact Glass Steagall and separate investment banking, utility banking and insurance once again. Force derivatives onto exchanges and value them (net and gross exposures) daily. Wring out the mystery of counterparty exposures once and for all so bank valuations are no longer a black box. Give unemployed bank employees their 99 weeks of UIC so that they can adjust to other work, just like industrial workers must do.

      In 18 months to two years, we will be through the worst and be growing again. Instead, we subsidize the offenders, allow zombie banks to roam the landscape and continue to paralyze the housing market for an indefinite period of time. We do this because our government is owned by the TBTFs. The Democrats have sold their souls to Wall Street and the flow of campaign money to them from Wall Street proves it. Once the party of the left has sold out, the only hope remaining is that the party of the right has enough old school Main Street Republicans left to block any more bailouts if the system crashes again.

      • Isn’t “Have the Fed buy enough assets with keystroke money so as to avoid too deep a fire sale discount” contradicting the let-the-market-clear-naturally-in-order-to-avoid-moral-hazard message? How do you define what’s “too deep” of a discount? At the end of the day if too big of a dicsount is set at 20% from the peak for example, then no bank would be bankrupt so there wouldn’t be any need for bailout at all. But you would have the same problem of resources being misallocated to unproductive sectors (FIRE).

        • If the market freezes such that the bid is a penny on the dollar (kind of like the flash crash), the Fed is the bid based on an honest model.

          The solution is right there, and it is not that complicated. We did it after the S&L crisis with the RTC. No one in power wants to go in this direction because they are all co-opted and corrupted by Wall Street money. The blood funnel has gone deep.

          • The bid on a house will not be a penny on the dollar, it will be let’s say 50 cents (i.e. 50% off the top), should the Fed step in to buy it? And what should it bid? 60 cents? 65? Who can determine what it’s really worth?
            Likewise, the bid on a subordinated or mezzanine tranche of a subprime CDO could be a penny on the dollar. Should the Fed step in and bid 20 cents? I would say that instead you should actually hit that bid because it’s really worth 0 (zero) cents on the dollar.
            So you see that before you have the Fed act as a market maker on any assets, you run the risk of distorting the market and causing moral hazard as inevitably some people will benefit from this intervention.

    • Haha, WTR, you are killing me tonight.

      But damn straight!

      BTW, that was a TOTAL rant. :)

      TRIXIE 2012!

      • Ok, but change the last name to ‘Warchester’ (sounds vaguely aristocratic); lose the ‘Different’ (too close to ‘alien’) and the *ed words (too threatening); keep all of the bite.

        • I’m sold, it has a certain ring to it. And this way I can start all comments with ‘Dahling’ and end with ‘MWAH’. Win/win.

      • (As in “L’Etat, c’est mwah”? I think she means ‘air kissing’.)

        No, no, no – think upper crust/macho. You are running for president, not trying to wrest the ‘Queen of the Air’ crown from Ms. Palin. Come to think of it, maybe you should change the first name to ‘Hilary’.

        • Hilary Warchester? That is so atrociously bad, even I can’t resist. Bless you.

  9. The way I see it, Main Street anger has taken on many faces in this crisis. The Tea Party started it, and now we have OWS. Of course, the media and politico types have already staked their claim on each side and in many cases co-opted the messages. The Tea Party and OWS messages should in reality be the same – the little guy is getting stomped, and we aren’t taking it anymore. Instead, we have mass media destroying the tea party, with supposedly mature journalists openly mocking them with unseemly monikers. Now, the OWS frenzy has been co-opted by left leaning progressive types (unions, politicians, the media). From what I can glean, some of the anger of the OWS folks should be directed at Democrats as well, considering their role in the bailouts of Wall Street! I don’t see that now – I see that at ground level, their message is disjointed and emotional…at least until the progressives move in to hone it for maximum political gain. Obama – to his discredit – shamefully plays off of this, because it takes the American eye off of his failed leadership, to the detriment of all.
    The reason common sense does not prevail anymore is because those with common sense don’t own the bullhorn to get their views aired. The ones who do get their views aired have no idea what they’re doing. What we have is unfocused – but very real – anger in America. It is important to identify the real culprits. Perhaps we can even combine an OWS/Tea Party protest in the future by kicking out the ones trying to co-opt the movements.

  10. i liked this article. the explanation of the monetary system is very succint in the comment to erin.

  11. AFAIK the Wall Street banks didn’t repay all the bailout money back to the FED/Treasury. So, IMO – Erin Burnett tried to put words in the mouth of this protester. And is twisting the words because she didn’t get the answer she hoped for.

  12. “monopoly supplier” – debaser is more like it. Also, there are plenty of other fiat currencies in the world.

  13. i thing someone had crush on erin. erin is simply a reporter not an analyst.

    although i agree, “the government made a profit on the bailouts” is a crock.

    and if the banking system is fixed, why are they still getting free money at 0% interest rates?

    the us government can easily “fix” the market short term. but we’ll see what happens longer term withb thevbanks and other outstanding bailouts.

    did it ever occur to these jokers what is needed it lower prices not interest rates.

  14. It makes me think of this Solyndra “scandal”… Essentially the Fed Government handed the private sector (and many Obama cronies) $500million dollars. They built a fancy factory, paid some employees for a time, bought other resources, materials and equipment and were never able to pay it back. That’s a half-billion dollar win for the private sector, no? If they had been able to stay in business, and paid off the debt, they would just have collected revenues from other sectors of the private sector and sent checks back to the government. The net for the private sector would have been 0 or less if you factor in interest.

  15. Make money or lose money, the FED is keeping short term rates below the inflation level as a subsidy to banks. Seniors should be out en masse protesting that their savings are being confiscated through “financial repression”. It’s a crime

    • yes, and the lower interest rates and increased money supply are resulting higher prices for consumers.

      meanwhile, its on to more market volatility, and bubbles, i.e. bonds, gold.

  16. When the government puts more money into the private economy without any corresponding growth of the economy, doesn’t that decrease the value of the dollar? So, wouldn’t pulling that money back out *increase* the value of the dollar?