THE US, the most powerful economy in the world, has already crashed into a recession that will shatter the capitalist world.
This is the inescapable conclusion of two leading bourgeois economists as ‘bad news’ piles up at the door of the US economy with prices of everyday goods rising sharply and the US inflation rate stuck at a 30-year high.
The study by David Blanchflower (professor of economics at Dartmouth university and a former member of the Bank of England interest rate setting committee) and Alex Bryson of University College London, bases its dire predictions on the decline in consumer confidence in the US, which they maintain is a far better indicator of crisis than all the official statistics around GDP increases.
These findings show a dramatic slump in the expectations of US workers, a slump that directly reflects their everyday experience of the economic crisis tearing through the US.
Blanchflower, one of the few economists to predict the economic crash in 2008, said that these findings were an ‘early warning’ system for trouble ahead as workers struggle with inflation that is spiralling out of control.
He pointed out that indexes showing a massive slump in consumer confidence had occurred in the year before the 2008 world banking crash.
According to Blanchflower, workers’ confidence in the US economy had ‘basically collapsed’, adding that: ‘The US sneezes and the UK really does catch a cold.’
In fact, as the 2008 crash proved, if the US sneezes the entire capitalist world system collapses.
Blanchflower may be better than most bourgeois economists at predicting a crisis but he has no answers.
He puts the recessionary crisis in the US as being a product of the Covid pandemic and the rupture in the supply chain along with the reluctance of US workers to risk their lives returning to jobs at a time when the Covid Delta variation is running riot.
He says it is just a temporary hiccup in getting capitalism ‘back to normal’.
What is ignored is that at the root of inflation is the massive amount of valueless ‘money’ artificially produced by the central banks that has created a huge financial bubble.
To keep the banking system from going bust in 2008, capitalist central banks embarked on a Quantitative Easing programme, pumping trillions of this worthless money into the economy.
It has created huge national debts as governments covered their finances, propping up bankrupt capitalism with valueless currency.
The US national debt stands at $28.1 trillion while the UK debt is £2.3 trillion.
The central banks are caught now in an insoluble contradiction: Carry on printing money to keep capitalism staggering on and inevitably inflating the debt bubble to the point where every currency loses its value and inflation turns into hyperinflation, or try and deflate the economy by reining in QE and increasing interest rates.
As it has been pointed out though, an increase in interest rates on these massive government debts would lead to state bankruptcy.
In the US, even with near-zero rates, government repayment of the national debt is the fourth largest budget item.
If interest rates were raised to levels of 6%, let alone the rate of 20% that the US hit in the 1970s, then the US government would be bankrupted overnight.
This is the crisis that faces the entire capitalist world and is at its sharpest in the US.
Blanchflower’s study reveals that US workers, like workers in the UK and throughout Europe, are increasingly aware that capitalism is in acute crisis and, unlike the trade union leaders, have absolutely no faith in its ability to provide any future for the working class.
The working class is not prepared to pay the cost of the capitalist crisis.
In the US along with the UK and Europe, workers are on the move to defend their jobs and wages from the imminent world crash of capitalism.
This is the time to build sections of the International Committee of the Fourth International in the US and throughout Europe to provide the revolutionary leadership necessary to put an end to this bankrupt capitalist system with the victory of the world socialist revolution.
