THE head of the Bank for International Settlements (BIS) issued the gravest warning yet to the governments and central banks of the capitalist world that they must curb their ‘relentless’ rise in public debt.
Agustin Carstens, General Manager of the BIS, was speaking yesterday at a conference in Tokyo hosted by the Bank of Japan.
The BIS is an international financial institution, owned by global central banks with the primary goal of serving as the ‘central bank for central banks’ with a remit to ensure financial stability throughout global capitalism by fostering ‘cooperation’.
Any financial stability in the capitalist world has been shattered, most recently by US president Donald Trump’s continuing tariff war on the rest of the world.
Alongside his ‘beautiful’ tariffs – which are turned on and off, increased and then cut back with postings on his social media account – Trump is now set on a final push to sign off the ‘largest tax cuts in American history’ following his bill’s narrow approval at the weekend by the US House of Representatives.
These tax cuts to the rich and multi billion corporations are estimated to add $5.2 trillion to the US national debt, which already stands at over $36.2 trillion.
With interest rates on national debts being forced up by the international bond marketeers, who finance government spending by buying up government bonds (called treasuries in the US), the interest charged is becoming astronomical.
National debt crisis is now strangling the economies of the US and the rest of the capitalist world, and this is causing a massive panic in the BIS and amongst bourgeois economists and central bankers.
Carstens told the conference yesterday: ‘Markets are already waking up to the fact that some paths are not sustainable’ meaning that financial markets could suddenly ‘destabilise’ in the face of massive national debts running out of control and governments forced to default on public debt.
Carstens issued a warning to governments that ‘the days of ultra-low rates are over. Fiscal authorities have a narrow window to put their house in order before the public’s trust in their commitments starts to fray.’
In a roundabout way, Carstens is warning that the working class in the US, UK, EU and across the capitalist world are very rapidly reaching the conclusion that capitalism is a bankrupt system, drowning in debt and is demanding that workers and their families pay the bill to rescue the profits of the bankers and bosses.
Trump intends to pay for ‘big, beautiful bill’ tax handout to the filthy rich by slashing the vital medical care and food stamps that ten of millions of Americans rely on just to stay alive.
Trump fears a ‘Liz Truss’ moment when the bond markets turn on the US and refuse to buy up its national debt for fear that it will default on this debt.
It is vital that Trump proves to the financial markets he is prepared to use the full force of the capitalist state to crush any resistance from workers to being driven back to conditions of the 1930s Depression era in order to finance his massive tax bonanza.
Across Europe and the UK, the dominant capitalist financiers are demanding exactly the same, that governments bring down public spending by inflicting turbo charged austerity on the working class.
Capitalism today is in its death agony, crushed by debt that it will try to force the workers of the world to pay by being driven into the gutter of poverty.
The working class has the power to resolve the crisis through taking power, overthrowing capitalism and advancing to a socialist society.
The debt crisis makes the victory of the world socialist revolution a historical necessity.
The urgent requirement today is the building up of the WRP and Young Socialist in the UK, and sections of the International Committee of the Fourth International in every country to provide the leadership needed to organise putting an end to crisis-ridden capitalism, and replacing bankrupt capitalism with a socialist planned economy.
