[CN Editor -- The local all volunteer radio station, WEFT 90.1 
FM, has a 1-hour show at 10 A.M. on Saturday mornings called 
"News From Neptune." The following is a partial transcript of 
their June 11, 1994 broadcast. Co-hosts are Paul "The Truth" 
Muth, and Carl Estabrook.]


MUTH: ...The other thing unique this week is that I heard a 
business correspondent mouth something that I have been talking 
about vis-a-vis Fed [Federal Reserve] policy for awhile. And that 
was, he frankly said that this isn't so much an anti-inflationary 
policy of keeping... well, when the Fed was backing off on the 
interest rate very slowly, uh, and now raising it again -- when 
it doesn't look like inflation is around... What was 
Rukeyser's(?) comment that I wanted? -- "Inflation neurotics".


MUTH: But what *I* thought was happening -- and then I heard from 
a person from NPR [National Public Radio]. I forget who it was, 
but it was on the nightly business report on Thursday. What 
really was going on was keeping the "spread" wide. The "spread" 
is historically high, uh, 3 percent, roughly, I think.

ESTABROOK: You should say what we mean by the "spread" here. 
That's the difference between the *real* interest rate -- the 
difference, basically, between what banks are lending money at 
and what they're paying for the money themselves.

    [CN Editor -- In other words, the Fed loans money to the 
    banks at 3 percent interest. If the banks then charge 
    customers, say, 4 percent to borrow this money, the 
    "spread" is the difference between the two rates of 3 
    and 4 percent: 1 percent. If the spread is high (e.g. 
    the bankers do not pass on the Fed's lower rates to 
    their customers), the banks make more profit on the 
    money they lend.]

MUTH: Right. Right. How much... Generally it's [i.e. the spread] 
been about 1.5 percent, historically. But it's up to 3 [percent] 
now. It may have backed off a little bit from that in the raising 
of the rates.

ESTABROOK: So you're suggesting that the policy that's been 
followed by the Fed and the federal government, together, has 
been sort of the "Banker's Recovery Act of 1994," Paul? Is that 

MUTH: Indeed. And they didn't have to pass it through Congress...

ESTABROOK: Funny about that.

MUTH: ...and they didn't have to be embarrassed by having these 
huge figures that we cited earlier with [Charles] Keating; how 
much money is being used to bail out the S&Ls. It's being done, 
uh, by the bankers, themselves.

ESTABROOK: So Clinton *did* get his stimulus package. The point 
was, it just wasn't for the rest of us. It was for the bankers. 
And they were stimulated.

MUTH: And it's quite clear that the profits for banks have been 
quite good. And the people knew... people who were on the inside, 
which doesn't... not, not evoking a *huge* conspiracy. But people 
who have the money and are playing the markets knew that bank 
stocks were gonna fare well with this kind of policy. And 
they've, uh, cleaned up again!

ESTABROOK: Well, I remember, it was about a year ago, that there 
was much talk about the unsoundness of the American banking 
system for a variety of reasons -- including a sort of "historic 
sclerosis" -- and you don't hear that talk much anymore. And the 
reason is, I think, exactly as you describe. That what we have 
here is (by a supposedly "populist" administration), we have a, 
uh, vast national conspiracy to restore the health of the banks.

I've said for awhile that when the evening news talks about "the 
economy" and how "the economy" is doing, reasonable people 
translate that word "economy" into the phrase "rich people's 
money." So we say, "The economy is getting better," -- "Rich 
people's money is getting better." "The economy is doing worse," 
-- "Rich people don't have quite so much money as they used to." 
That's really what's at stake and what we've seen from our 
supposedly "liberal" administration, is, an aggressive attempt to 
make sure that rich people's money is O.K. They've done fairly 
well on that score, huh?

MUTH: And so it's "Trickle Down, Plus," basically.

ESTABROOK: Only, as we found last time around, it doesn't trickle 
down very much, does it?

MUTH: Well that's... That goes without saying. That's just part 
of the camouflage.

ESTABROOK: Well, in fact, I'm not sure it *does* go without 
saying, my friend. Because there is such persiflage put forth by 
the, let's say the "economics profession" (to take a laughable 
example) about what's happening in the American economy, that 
it's sometimes difficult to break through the propaganda.

Take the issue of wages: We find supposedly competent economists 
tell you that, "Things are getting better for American wage 
earners." Well, in fact, that's false. Real wages in this country 
have been declining for 20 years. The figure that is often given 
is about 15% over the last 20 years. But Doug Headwood's(?) 
excellent newsletter put forth, last week, another way of 
thinking about this that I think is worthwhile. He says, if you 
look at it in terms of the amount of time it takes for someone 
earning the average hourly wage -- the *average* now -- to make 
the equivalent of a household's yearly expenses, *that* figure is 
up 43 percent over 20 years. That is, it takes you almost half 
again as long to work to earn the money you need to spend on your 
basic household expenses. If you want to buy a house, that figure 
is up 45 percent. For a new car, the average is 57 percent. To 
pay for a year at an elite college (and this shows, it seems to 
me, the greater diversion between rich and poor in this country), 
the figure is up 75 percent over the last 20 years.

Now what we have here is a sort of "dumb-bell" shape to the 
demographics. That is, the middle gets stretched away and we have 
a two-tiered society, a two-tiered economy. The rich are doing 
well. Those whose income has risen the equivalent of 75 percent 
find it no more trouble to send their kid to a good college now 
than they did 20 years ago. But for those on the other end of the 
extreme, what was technically possible 20 years ago is now 
outside of the realm of possibility. Owning a house, say. Sending 
a kid to an elite college. And this is the sort of change, this 
is the sort of decline in *real* wages that's even much more 
serious than the numbers -- even when they aren't "cooked".

MUTH: There's a lot of ways of obscuring this. For one, if you 
focus on the wage earners, then all the people that are living on 
their inherited wealth and those kind of dividends from stocks, 
etc. All that money is set aside. You're not looking at that. 
You're really looking at people that are working. And a lot of 
times when you see "income," you know, gross average income, 
reported, all those other figures are put in.

So it's quite, you know... And then you can also use the family 
earning. And that, uh, that factors in the fact that most people 
who are in families are in two-income earner families. So, uh...


MUTH: ...that doesn't acknowledge the decay of the quality of 
life that's come about because of that.

ESTABROOK: Absolutely. And that's a crucial point. Part of the 
problem is that that's been covered over by people saying, "Well, 
what we have here is just a more just relationship between men 
and women in the workplace." And insofar as that's true, that's 
obviously to be applauded. But in *fact* what's happened is that 
under cover of that, they've produced a situation you just 
described. And that's clearly a decline in the quality of life of 
most people in this country.

    [CN Editor -- Muth/Estabrook seem to be saying that (1) 
    to maintain their standard of living, American families 
    were forced to rely on both spouses being wage earners, 
    and (2) this grim necessity is disguised as being *only* 
    attributable to feminist advances. I wish to add my own 
    theory: The overseers gave the nod to feminism so as to 
    increase the labor pool and drive down the cost of 

The work of professional economists is often a matter of 
obscuring what people know from their own experience. And people 
aren't fools. People know what's happened to their working life 
over the last generation. An awful lot of time is spent by our 
public agencies, whether the Presidency or the Federal Reserve 
agency [sic, Fed is not a public agency] or academic economists, 
in trying to obfuscate these facts and trying to "manufacture 
consent" to a situation that's more and more difficult to consent