BOTH the capitalist class of the world and the Stalinist bureaucracy, which has been expending trillions of dollars buying US debt, are now issuing shrill warnings to the US ruling class that it must not default on October 17.
This is while within the USA itself, its different ruling class factions in the Republican and Democratic parties are digging in and preparing to slug it out to the end – that is to put an end to the massive inflationary tidal wave that has taken place since the US’s gold backing for the dollar, at a fixed rate of $35 an ounce, was brought to an end by President Nixon, on August 15, 1971.
This terminated the Bretton Woods agreement made in 1944 to make the dollar exchangeable for gold at that fixed rate, that made the post-war recovery possible.
Nixon’s historic action ushered in a period of gigantic inflation, which drove forward a world crisis that punctuated its development with a series of crashes; namely, the Black Monday October 18, 1987 shares crash, the collapse of the Russian banks on August 17th, 1998, and the bursting of the dot com bubble on August 10th 2000, before it brought down the world banking system on 17 August 2008, via the sub prime mortgage crisis.
The answer to each eruption of the crisis of capitalism has been a further inflation, culminating with capitalist state interventions in 2008 to guarantee the banks by pumping paper money into them, taking temporary state control, before adding electronically created Quantitative Easing ‘money’ to the explosive mix.
Now the USA, the centre of world capitalism and the world crisis has a debt ceiling of over $16.7tn, and also has a section of its ruling class convinced that a default, and a massive financial armageddon for world capitalism is the answer to the crisis, since after the ‘creative destruction’ there will be a new beginning, with the US in the lead.
This has an appeal to the US ruling class. It involves the greatest world debtor, with its paper dollar the world’s reserve currency, making the rest of the world pay for its crisis.
All over the capitalist world the alarms bells are ringing and ringing loudly at this prospect.
There is panic at the Apec meeting in Bali where the rulers of the world are gathered minus Obama. He cannot leave the USA because of the crisis!
The Philippines’ President Aquino said: ‘The world economy obviously is not in a position to withstand too much shock at this time when we are just recovering as a global economy.’
Chilean President Sebastian Pinera said the US had to confront its fiscal problems ‘in a better way than they are doing it now with shutting down the government’.
China is ‘naturally concerned about developments in the US fiscal cliff’, vice-finance minister Zhu Guangyao said. He urged that ‘the US earnestly take steps to resolve’ the issue, adding that ‘The executive branch of the US government has to take decisive and credible steps to avoid a default on its Treasury bonds’.
‘We hope the United States fully understands the lessons of history,’ Zhu added ominously. Both China and Japan – which hold a combined $2.4 trillion in US debt – have called for a quick resolution to the crisis and expressed worries over the economic consequences of a default.
They are threatened with being left with mountains of worthless paper as the US ruling class dumps its crisis onto the world.
In fact, what is being spelt out in the clearest fashion is that world capitalism has reached the end of the road and if allowed to continue, can only destroy itself and the productive forces that humankind has developed in a series of unparalleled catastrophes.
The only way forward for humanity is to carry out the the world socialist revolution, putting an end to capitalism and imperialism on a world scale.
For this to be done sections of the Fourth International must be built in every country.