THE IMF (International Monetary Fund) this week sounded the alarm bells for the world capitalist crisis when it announced the real scale of the huge global debt mountain and begged governments around the world to start cutting debt immediately.
In its latest ‘Fiscal Monitor’, the IMF has estimated that the total global debt, both public and private, now stands at $164 trillion which in turn represents 225% of GDP. This level of global debt is now far higher than before the banking and financial crash of 2008.
The report stresses that all the years of low or zero interest rates and the policy pursued by central banks of electronically producing trillions of dollars of worthless money and handing it to the banks under Quantitative Easing has resulted in this record amount of debt as banks gorged on all this ‘free’ money and used it to binge on the stock markets.
The IMF is scared that increases in interest rates, even the modest ones being enacted by the US Federal Reserve and the Bank of England, will inevitably make interest repayments on this debt increase to the point where companies and indeed anyone with a debt, including entire countries, are unable to finance them.
What they are foreseeing is the complete collapse of the world financial system under this debt mountain with mass bankruptcies hitting everyone, as banks and nation states crumble under the weight of unrepayable debt.
Whereas in the past the IMF has singled out developing countries as most at risk from this burgeoning debt crisis, this recent report points out that the levels of public debt are set to rise most sharply in the US for which they blame Trump’s massive tax cuts to the rich, which gifted them even more billions of dollars to speculate with.
Significantly, they point to the differences in debt between various countries. China, which is often portrayed as the main culprit for increased global debt, they point out has used the state debt to finance infrastructure projects to build the country. In the advanced capitalist countries like Europe and the US, the debt has been used to fuel the massive speculation and inflation of the stock market bubble.
But in a pointer to how the IMF expects countries to cut back on debt, they place the blame for it on the working class, saying that in: ‘advanced economies, especially Europe, deficits have swelled in order to finance expensive welfare systems.’
In other words, the only way for capitalism to survive its historic debt crisis is to smash the welfare state throughout Europe and the rest of the world. It is a declaration that capitalism can no longer afford any of the concessions on pay, pensions, or benefits or any gain like the NHS that workers fought for and won in the past.
This exposes as reactionary nonsense the claim by reformists like Corbyn that austerity is some ideologically driven policy of the Tories – all the massive austerity attacks on workers in Britain and across Europe and the US are not a Tory ‘choice’ that can be reversed by well-meaning reformists; they are an absolute necessity for capitalism to survive the crisis.
Its revolutionary implications are not lost on the IMF which warns that:
‘Diminished prospects for household income growth in advanced economies, coupled with trends of higher polarisation in jobs and incomes, have fuelled a widespread political backlash hostile to traditional political modalities.’
The IMF knows that austerity attacks already have caused the working class to rise up against the traditional ruling parties and it is refusing to accept the destruction of their lives to keep the banks and the capitalist system from bankruptcy.
This has revolutionised millions of workers and young people across the world who are rapidly reaching the conclusion that the only way this massive debt crisis can be resolved is for the working class to seize the power and put an end to this bankrupt capitalist system once and for all with the victory of the socialist revolution. The urgent task today is to build revolutionary sections of the Fourth International in every country to give the revolutionary leadership required for this victory.