THE US Senate finally agreed on a $1.2 trillion infrastructure bill. This huge sum was in fact just half of what Biden wanted – he had requested $2.3 trillion for his ‘coronavirus stimulus’ package.
The deal, worth an eyewatering £860bn, accompanies an eight-year plan to fund roads, bridges, the power grid, public transport and the internet.
Earlier in June, the German Deutsche Bank issued a report warning that capitalism is ‘sitting on a time bomb’ adding that the US Federal Reserve policy of printing worthless paper money was leading to hyperinflation.
The report rebuked Biden for his ignorance stating that, ‘The most basic laws of economics, the ones that have stood the test of time over a millennium, have not been suspended. An explosive growth in debt financed largely by central banks is likely to lead to higher inflation.’
The Federal Reserve Bank is in fact injecting a staggering $6 trillion into the US economy by printing money and buying up government bonds to fund Biden’s ‘coronavirus stimulus’ package.
The US inflation rate is now forecast to rise to a 13-year high of 4.7%, the fastest rise since 2008 – the year of the last worldwide banking crash. The US has led the way in pumping out trillions of dollars to keep American capitalism from collapse, a collapse that has been accelerated by the coronavirus pandemic.
The US federal government has already authorised an unprecedented $3.5 trillion in spending to shore up the economy. This does not include the further $1.2 trillion coronavirus stimulus package.
All this massive accumulation of debt and printing of worthless paper money by central banks cannot continue indefinitely. It means massive inflation, and the collapse of currencies, banks and industries, on a scale not seen since Weimar Germany.
Financing of government spending by printing money is precisely what led to the hyperinflation that destroyed the German economy and made its currency worthless in the 1920s during the Weimar Republic (1918 to 1933). It also created the conditions for the rise of Hitler.
Today’s massive debt has been kept going by the central banks holding interest rates at near zero and in some cases minus zero. This actually means that industries, governments, banks and companies are paid to take out debt!
Meanwhile, when the tax returns of America’s richest people were investigated, it showed that they are paying little or no tax whatsoever and have been doing so for years. The richest 25 Americans paid just a small fraction in federal income taxes during this period while their wealth increased by $401 billion.
In 2007, Amazon’s Jeff Bezos, now the world’s richest man, didn’t pay a penny in federal income tax. In 2018 Tesla’s Elon Musk, the second richest person in the world, also paid zero tax.
It is the US working class that will be forced pay for this extraordinary hyperinflation and the US national debt that has now gone up to $28.5 trillion. A revolutionary situation is developing in the USA by leaps and bounds. The US is headed for many millions of unemployed, an army of homeless people and a massive crash.
Meanwhile in the UK, during the lockdown, the Tories have driven the national debt sky-high up to £2.4 trillion. This postponed the fight with the working class using the furlough scheme.
Now showdown time is nearing – this is what was evident in the recent Chesham and Amersham by-election, with its declaration by the middle class that they would not pay for the crisis.
Already, the Office for National Statistics (ONS) has reported that the UK inflation rate more than doubled in April this year as energy costs soared and the prices of goods in retail shops increased. The crisis is driving the imperialist powers to war moves, as this week’s Royal Navy adventure into the Black Sea illustrated.
A settlement of accounts is near. The ruling class is set to impose the brunt of its crisis onto the working class, at the same time as it beats its war drums against Russia and China.
There is only one way forward for the working people of the UK, the US and the EU. That is to organise socialist revolutions to smash capitalism and imperialism to bring in a worldwide socialist planned economy, and the World Socialist Republic.
