Workers Revolutionary Party

Carney Says Time Is Not Right For Interest Rate Rise!

THE TIME is not right for an interest rate rise, Bank of England governor Mark Carney said at the Mansion House.

In his speech, Carney said: ‘From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment (rate rises).

‘In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.’

As far as Brexit is concerned companies on both sides of the Channel may ‘soon need to activate contingency plans.’ He predicted disaster in that ‘Before long, we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption.’

Following Carney’s cynical barbs, the pound fell about 0.4% against the dollar to trade at $1.2682. At the same time as the custodian of the crisis-ridden UK economy lamented its fate, the US Federal Reserve Bank has been raising interest rates and taking steps to put an end to the Quantitative Easing policy through which the banks have been handed trillions of electronically created dollars to try to keep the world’s capitalist economy afloat, on an ocean of debt.

Bankers, who have got used to the notion that they are too big to be allowed to fail, have denounced the fact that the Federal Reserve is to begin selling off its $4.4 trillion bond portfolio well before interest rates have returned to ‘normal levels’ and before a safety buffer or firewall has been built to absorb the new shocks to the system that are expected to erupt and turn into an earthquake.

The Fed’s move has been denounced as a massive gamble and leap into the dark by the ‘too big to fail’ mob – the Fed is to begin shrinking its balance sheet as early as the end of September, beginning at $10bn a month and rising in steps each quarter until it reaches $50bn a month.

Taking away life support from the big banks at this rate will undermine what is left of the entire financial system and, in the opinion of many bankers, not only decide the fate of capitalism for the worst, but also prove to be the basis of the ending of ‘Western Liberal Democracy’.

In other words, the workers of the world will react to a new banking disaster and crash of the world economy with socialist revolutions. A former member of the Bank of England’s Monetary Policy Committee, Danny Blanchflower, has said of the Fed’s chair Janet Yellen’s policy: ‘This is a huge mistake. They have no idea how to unwind it.’

For good measure he added: ‘Commentators like to think that there is a deep underlying plan. But when we first went into QE we had no idea what the effects would be or how much to do. This was beyond anything in the text books. It was suck-and-see economics.’ So much for the masters of the universe!

The outcome of sucking and seeing is a banking system that cannot live without Quantitative Easing, and is 100% parasitic, and actually a huge barrier to the further development of the real productive forces. There is now indebtedness on a world scale of a like never seen before. The alleged financial gurus are now very badly rattled.

Patrick Peret Green from Ad Macro has made a call for investors to ‘batten down the hatches’. He added: ‘Our message is sell credit, sell duration, sell risk!’ – if buyers can be found! The only way out of the world crisis and crash that is being stoked by the Federal Reserve Bank is for the working class of the world to get organised to carry through the world socialist revolution, on the 100th anniversary of the Russian revolution which was the start of this world revolution.

For UK workers this means immediately breaking with the EU, and bringing in a workers government that will expropriate the bosses and bankers and bring in a planned socialist economy that will be the basis of a huge development of the productive forces and for socialism. The workers of the UK must then unite with the workers of Europe to replace the EU with the Socialist United States of Europe!

Exit mobile version