LAST week the Republican presidential candidate and multi-billionaire property speculator, Donald Trump, unveiled his plan for saving US capitalism from economic catastrophe.
During a lengthy interview on CNBC Trump blurted out what no other presidential candidate has ever admitted, that America is effectively bankrupt and not capable of paying her debts in full.
Trump simply claimed that the US national debt, standing at more than £13 trillion, didn’t need to be repaid and certainly not in full. Instead Trump proposed that US capitalism tells its investor/creditors to get lost. This, Trump informed the public, was how he made his fortune, boasting that he is ‘the king of debt’.
His proposal for the US to simply renege on its debt would inevitably crash the entire world economy with countries holding massive amounts of debt in US dollars going under at a stroke, while the banks and financial institutions bankrupted overnight.
A few days later Trump ‘clarified’ what he had said claiming that instead of refusing to pay its creditors the US government could solve the debt crisis at a stroke by simply printing more money to pay it off.
This plan from a man widely assumed to be an out of control right-wing demagogue has actually been greeted as a serious way out of capitalism’s debt crisis. Economic commentators have been quick to defend Trump’s proposals pointing out that so desperate is the situation that what was previously thought to be dangerous to capitalism’s very existence is now being seriously contemplated by central banks in Europe and Japan.
Here the idea of ‘helicopter money’ is being considered with the Japanese central bank set to discuss it at their next meeting. Helicopter money involves simply printing money and dropping it into the economy – in much the same way that emergency supplies are dropped to famine disaster zones.
In the past bourgeois economists have recoiled from printing valueless bits of paper to try and stave off a crisis, with good cause.
The lesson of history is that printing money to pay off debt inevitably leads to hyperinflation.
In Germany in the 1920s the government resorted to printing vast quantities of paper money to pay off its massive war debts, the currency was completely devalued and the price of goods in German shops rocketed to unimaginable heights. A loaf of bread in 1922 cost 163 marks; by 1923 this had gone up to 200,000 million marks!
More recently in Zimbabwe the Mugabe government resorted to printing money in the late 1990s to finance its wars in the Democratic Republic of Congo leading to hyperinflation, and an inflation rate of 231,150,888.87% in 2008. Zimbabwe and Venezuela (which has recorded an increase in the inflation rate of 500% this year) are largely written off as economic ‘basket cases’, countries with weak economies unable to meet their debts and forced to print their way out of debt and then plunging into complete economic collapse with prices of essential goods spiralling out of control and the populations facing starvation.
It now turns out that America, Europe and Japan – the most powerful capitalist economies in the world – are also basket cases. Having tried and failed to prevent themselves from being overwhelmed by debt by all the usual, and some unusual, financial tricks of zero interest rates and quantitative easing, the capitalist class is now set to embark on the road to hyperinflation disaster by flooding the world with worthless bits of paper masquerading as real money.
Trump is emerging as the authentic voice of a section of the US capitalist class that recognises that the game is up and that American capitalism must fight it out with its capitalist rivals and bankrupt them if that’s what it takes to survive.
At the same time, unleashing hyperinflation on the working class throughout the world will inevitably place the world socialist revolution on the immediate agenda of workers and young people who will refuse to see their lives shattered by a bankrupt capitalist system. World capitalism is in a desperate situation; it must be put out of its misery by the victory of the world socialist revolution.