IN A SPEECH in London last Tuesday, the chair of the US Federal Reserve Bank, Janet Yellen, announced to a disbelieving world that the world’s banks are ‘very much stronger’, going even further and grandly proclaiming that there would be no more financial crisis in ‘our lifetime’.
Even bourgeois economic commentators are clearly getting fed up with regurgitating the steady flow of mindless optimism pumped out by central bankers. An article in Thursday’s Daily Telegraph expressed the incredulity of these writers at Yellen’s mindless optimism in a capitalist banking system that is on the point of an almighty crash.
This article nails Yellen from the start, stating: ‘The US Federal Reserve has progressed from complacency to delusion. Janet Yellen’s fond belief that there will never again be a financial crisis in “our lifetime” takes the biscuit.’
It then proceeds to demolish Yellen’s delusional ramblings with a few cold facts from the Washington-based Institute of Finance which has released figures that show that global debt has reached a staggering £168 trillion, which represents 327% of the world’s GDP (the total amount of wealth produced).
This is a massive increase on the global debt in 2007, just before the entire western world’s banking system was pushed over the precipice into complete collapse, which then stood at 276%. Yellen is clearly an extreme example of the delusional world inhabited by central bankers but the Bank of England boss, Mark Carney, is not immune from the tendency to try and pretend nothing is seriously wrong while completely contradicting himself in practice.
This week he gave a speech extolling the strength and resilience of the British banks and then warned about them being ‘complacent’ in the face of impending doom and demanding that they raise £11.4 billion immediately to prevent them from going bust.
Claudio Bario chief economist at the Bank for International Settlements (BIS) – the central bank of central bankers – was even blunter, warning that ‘new and emerging vulnerabilities’ were piling up in the banking system and that central bankers were ‘too quick to forget’ the lessons of the 2008 crash and were now repeating them on an even bigger scale.
Bario cited: ‘unusually low productivity growth, unusually high debt and unusually narrow room for policy manoeuvre’ as the huge danger looming over the world banking system. Yellen, of course, is following in the less than glorious footsteps of other financial geniuses in slipping into a delusional world where capitalism is a stable system that can avoid catastrophic crisis.
Who can forget the boasting of former Labour chancellor Gordon Brown that he had abolished capitalism’s tendency to ‘boom and bust’ – a boast he repeated ad nauseam right up to the moment the banks came crashing down around his ears.
The reality is that in order to prevent every bank in the west going bust after the collapse of the giant US Lehman Brothers bank in 2008, Brown and the Fed embarked on the untried policy of pumping trillions of dollars of worthless electronically produced money into the financial system through quantitative easing programmes.
Along with this was the policy adopted by the central banks of near-zero interest rates. All this free or cheap money went directly into the pockets of the bankers and speculators and has been used for ten years to fuel the world debt bubble in stocks and shares, a bubble that everyone (except Yellen) acknowledges will burst soon with explosive consequences, bringing down banks and entire countries in the process.
The end product was the massive permanent austerity drive against workers to make them pay for the bailing-out of the banks. Cutting this free money off, as the Fed is trying to do by raising interest rates and ending quantitative easing, will equally precipitate a banking crash.
With no way out, the only solution for the capitalist class and the bankers will be to dump this crash on the backs of workers through even more vicious austerity cuts. For the working class, the only solution will be to put an end to capitalism forever through the victory of the world socialist revolution.
Yellen may deny it but the world crisis of capitalism has placed the socialist revolution and the expropriation of the capitalists on the immediate agenda for workers throughout the world.
Now is the time to build up the sections of the International Committee of the Fourth International to lead this world socialist revolution to its victory.
