‘TRUMP rout is taking on historic dimensions’ was how American financial paper, the Wall Street Journal (WSJ), described the news yesterday that the Dow Jones Industrial Average Index had plunged on Monday and is headed for the ‘Worst April Since 1932’.
The Dow is a stock market index of 30 prominent US companies listed on American stock exchanges – these companies are mainly in the manufacturing industries – and doesn’t contain stocks in the more financially volatile companies like the high-tech industries that rely overwhelmingly on debt and financial risk.
Therefore, the Dow is considered to be a more stable index, less prone to the crashes that hit the Nasdaq Stock market which is focused on the high-tech companies whose shares price crashed spectacularly in April.
The crash has enveloped the entire US stock market, leading the WSJ to ring the alarm bells and start publicly to draw comparisons with the 1930s Great Depression that plunged the US working class into years of mass poverty and which destroyed the economies of the UK and Europe.
At the heart of the crisis are the massive contradictions in capitalism, contradictions that are being most clearly revealed in the contradictory policies being pursued by US president Donald Trump.
Trump was elected on the promise of bringing down prices for American workers and bringing jobs back to the US by waging tariff war on the rest of the world.
He also vowed to ensure the supremacy of the US dollar as the world global currency – even threatening war against any group of countries that attempted to supplant the dollar as the dominant world currency.
This was essential, as the US relies exclusively on the strength of the dollar to ensure that international financiers invest money into keeping the US going.
The US has a national debt of over $36 trillion and pays out $1 trillion a year in interest alone – all this debt is funded by other countries and international funds pouring money into a ‘safe’ investment.
All this has been upended by the Trump administration.
His tariffs on other countries can only drive up prices at home for workers and for companies, while his latest attempt to bring down US inflation has caused a massive backlash in the financial markets.
Trump is now threatening to sack the head of the Federal Reserve Bank, Jerome Powell, over the Fed’s refusal to cut interest rates which Trump believes will bring down prices.
Powell and the Fed on the other hand are scared that any cut in interest rates will only massively increase the inflation rate.
What is at stake in this stand-off is the independence of the Fed from the political machinations of the president. The Fed is held by the global financial system to be the one stabilising force in the US economy, and the thought of Trump taking complete control over it is driving the conviction that America is no longer a safe-haven for their billions.
Instead, the global investors and countries who financially support the entire US economy are turning to gold as the only safe alternative to store their cash.
While the US dollar is dropping in price on the currency markets the price of gold is reaching record highs by the day – currently over $3,500 an ounce and rising.
The fast developing crash in the US will spread like wildfire throughout the world with banks, corporations and industries collapsing and the working class expected to pay through unemployment and the destruction of every gain made by workers in the past.
The powerful working class will never accept being driven back to the conditions and poverty of the ‘hungry thirties’. The most urgent task today is to build a new revolutionary leadership in the unions and working class prepared organise general strikes bring down their capitalist governments, and going forward to workers’ governments and socialism.
Putting capitalism out of its death agony through the victory of the world socialist revolution is the only way to resolve this historic crisis.
Build up the WRP and Young Socialists in Britain and build sections of the International Committee of the Fourth International in every country to lead the World Socialist Revolution to dump capitalism in the dustbin of history where it belongs.
