NOT EVERY bourgeois economic commentator has swallowed the upbeat line peddled by central bankers that capitalism has weathered the storm of its economic crisis and that the future is rosy.
This is the line pushed by Andrew Bailey, boss of the Bank of England, who after pushing up interest rates to 4% (the highest since the world banking crash in 2008) confidently predicted that the growing economic recession in the UK would be much shorter and less severe than previously thought.
Bailey did warn that although there are still ‘big risks out there’ everything looked good and would only get even better if all those who are ‘economically inactive’ through illness or early retirement could be forced back to work to cover the 1.1 million job vacancies.
He also emphasised that holding down the pay of public sector workers was essential to stop inflation from becoming ‘embedded’ in the economy.
All sorts of figures were produced by the Bank, and also by the US Fed central bank, as justification for their newfound optimism that the capitalist world was not crashing into recession and gripped by an inflationary spiral that was out of control.
The Bank and the Fed leant heavily on employment figures that appeared to show a growth, or at least not the collapse, that economists usually predict will accompany a recession.
Meanwhile, the world’s stock markets were booming, clearly proof that capitalism was thriving.
Yesterday, an article in the Daily Telegraph by one of the more astute economic commentators, Ambrose Evans-Pritchard, dealt a severe blow to this unfounded optimism and complacency by central bankers.
In his article, headed: ‘Central Banks are fighting the wrong war – the West’s money supply is already crashing’, Evans-Pritchard undermines the claim that apparent strength in the job market means all is well, pointing out that the ‘employment count kept rising’ in the run-up to the 2008 crash and that these indicators lag behind the fast-developing economic crisis.
He also points out that with employment shortages ‘Firms are holding onto workers for dear life’ but that this means ‘it could lead to sudden lay-offs on a big scale if the recession does happen, accelerating a destructive feedback loop.’
The unspoken fear is that this ‘destructive feedback loop’ of a global recession, leading inevitably to mass unemployment on a scale not seen since the 1930s, will drive a revolutionary surge by a working class determined not to be driven into abject poverty by a bankrupt capitalist system.
A world recession is not just coming but is here today despite all the wishful thinking of central banks and bourgeois governments.
This is giving some economists nightmares and they are floundering around trying to blame the Central Banks for ignoring all the signs of impending disaster and acting too late and going too far in applying the brakes to the unbridled pumping of trillions of valueless pounds, dollars and euros into the world financial system to prevent the collapse of the global banks in 2008.
All the trillions of worthless ‘money’ (fictitious capital) pumped out by the central banks to prop up the banks along with near-zero interest rates since 2008 have driven a stock market bubble and led to conditions where entire industries and corporations exist entirely through debt.
With the central banks forced to cut off the supply of free money out of the belated realisation it is leading inevitably to super-inflation, this bubble is set to explode bringing down all the corporations and industries that have survived entirely on debt.
In turn, the banks, who rely on interest repayments from loans, will crash, as all the free money dries up and loans turn into a mountain of debt.
With no economic way out of this historic crisis, capitalism has no alternative but to make the working class pay, making workers and their families accept mass unemployment and abject poverty as the price for the survival of the bosses and bankers.
The powerful world working class will never accept this as its fate but will see that capitalism is bankrupt and the only way forward is for the working class to put it out of its misery through the victory of the socialist revolution.
