Central Banks to increase global debt timebomb with QE


CENTRAL banks in America, Europe and Japan are on the verge of printing and handing out to their banks hundreds of billions of pounds of worthless paper money in yet another desperate effort to ‘kick-start’ capitalism through Quantitative Easing.

The US Federal Reserve, the European Central bank and the Bank of Japan are aiming at printing off £500 billion this year increasing to nearly £1 trillion by the end of 2021. This ‘free’ money follows all the trillions of pounds already flooding the world after the financial crash of 2008.

Unleashing trillions of paper money was supposed to have stimulated the world capitalist economy by encouraging investment in industry.

In fact, it has done nothing of the kind. Instead, all this ‘free’ money along with the near-zero interest rates imposed by the central bankers went straight into a worldwide orgy of debt-fuelled speculation on the stock markets.

While industries like car and steel across Britain, Europe and the US have entered the new year facing the crisis of falling demand, and country after country skirts perilously around outright recession in manufacturing, the world stock markets recorded record highs.

Instead of investing in productive industry – which is crashing and producing little or no profit for their shareholders and bosses – all this ‘free’ money was used to massively inflate the share prices of companies that were nothing more than ‘zombies’ existing entirely on debt.

The immediate prospect of these companies and corporations collapsing under the weight of their debt has been scaring the living daylights out organisations like the International Monetary Fund (IMF), and the Bank for International Settlements (BIS) whose role is to act as a watchdog over the capitalist financial system.

Last year the IMF warned that 40% of corporate debt in eight leading countries – America, China, Japan, Germany, Britain, France, Italy and Spain – was so huge that the slide into recession would mean they would go bankrupt immediately, unable to pay off the interest on their loans.

This will mean tens of thousands of businesses going bust overnight throwing millions of workers onto the streets. In fact, global corporate defaults have already emerged in 2019 and 77 of the corporations (66% of the total) going bust were based in the US.

At the end of 2019 the US federal government’s outstanding public debt stood at over $23 trillion for the first time in history.

If you include in this figure state and local debt, corporate debt, home mortgages, credit cards, student loans and other debt the total US national debt is around 330% of America’s Gross Domestic Product (GDP) – the total wealth produced by the US.

This surge in the US government debt pushed up global debt by $7.5 trillion in the first six months of 2019 – it now stands at over $70 trillion.

Opening the floodgates of Quantitative Easing and releasing another trillion pounds of paper money into the hands of the bankers and speculators will only accelerate the economic crash that will devastate the lives of millions of workers and their families across the world. It is this massive crisis of capitalism that is driving US imperialism to war with Iran over the control of oil.

The immediate effect of Trump’s murderous attack and open declaration of war was to drive up the price of oil and cause the stock markets to crash under the prospect of an all-out war in the Middle East.

Every attempt by capitalism to escape from its historic crisis through piling on debt and going to war over oil only accelerates the impending international economic crash.

Across the world workers and young people are rising up against brutal austerity cuts inflicted to bail out capitalism, and against imperialist wars. The only future for workers and the people of the world is in putting this bankrupt capitalist system out of its misery through socialist revolution.

The immediate issue in 2020 is the building of the revolutionary sections of the Fourth International in every country to lead the struggle for power, going forward to the victory of the world socialist revolution.