Economic crisis update

The Federal Reserve Bank has reduced its key interest rate to 0 t0 0.25 percent. This is a momentous occasion that revolutionaries live for.

We have Obama leading all the possible forces of counterrevolution, and we have an interest rate that says capitalism is out of gas.

The capitalists could raise the interest to 10%, and force borrowers to be doing the kind of business that would make it worthwhile to pay that interest rate. However, the capitalists are afraid of a domino effect with businesses going out of business and not starting in the first place.

Even at 0% to 0.25% the capitalists are afraid the dominoes are going to continue to fall. Hence, they have turned to Keynesian fiscal policy or stimulus plans as well.

The federal bankers are hoping to see some effect from their interest rate policy this summer. If they are lucky the effect of the stimulus plan will take hold shortly thereafter.

Scylla and Charibdis–the rock is the problem that dominoes will continue to fall and the economy spiral downward. The hard place is that even if the interest rate and stimulus plan take hold, there is no guarantee that there will not be stagflation.

Currently, the rulers believe that the economy could be doing much more business without inflation. However, if at some point we have 0.25 interest rates with inflation of a few percentage points, we can expect a massive flight of capital from the united $tates. At that point, the search will be for countries perhaps overlooked in a banking sense but still holding a positive profit rate. Already this search is on.

It will not really be up to whether someone advocates a policy of decoupling from the Western economy. Local profit rates are what they are. Overlooked business talents throughout the world should be getting a crack eventually. Inside U.$. borders, the rulers are pinning hopes on the petty-bourgeoisie insensitive to the financial world, the less sophisticated members of the bourgeoisie. The hope is that they will somehow pick up the slack as the dominoes fall and more opportunities supposedly open up. The press has already started the narrative on Madoffs at the top frittering away life while Joe the Plumber below saves the day. We find it unlikely especially in a short-run situation. In the long run, the argument is simply that the imperialist class takes in new blood from the labor aristocracy. There is no reason for the international proletariat to wait for that to occur.

Overall, the investor class sense of where to invest is a question of racism. Some of the oppressed nation bourgeoisie itself believes a street sweeper in Calcutta is 20 times less efficient than one in Baltimore. And from there it only continues up into the ranks of the petty-bourgeoisie and managerial classes of the oppressed nations. Yet we are confident that opportunities to invest without creating inflation are more commonplace in the oppressed nations than the united $tates.

Politically, there is no possibility of hastening from within the united $tates. It will be up to external forces to deliver quick blows. If the U.S. crisis went on for decades on a scale and intensity worse than what we saw in Japan, political forces–accidents–might end up with fascism. So there is always a risk from dilly-dallying too much. However, we should note that Bush did hand over power and those talking about his “fascism” have been discredited, unless they count Obama as in Bush’s fascist party.

Capitalism has more surprises for itself later this year even if everyone starts napping in neutral.

Politically, there was no point for waiting for Germans to rise up in World War II. Today, there is no U.$. proletariat swooping down on the banks; even though, the political opportunity exists. That’s not to say there are no risks to investing in the united $tates. The risk just occurs by different means than factory takeovers.

What we have instead is talk of sovereign wealth funds and bailouts. Much of U.$. wealth is not transferable abroad in the event of bankruptcy. Transfer of housing assets is meaningless to foreigners and housing is the plurality of the wealth.

So a foreign investor faces difficulty in extracting minimum assurances from the U.$. economy. When the stock market crashes and the government starts injecting money into assets, we are in a position where dilution of foreign ownership can occur. The excuse will be that no inflation occurs in the process and asset prices rise.

One can leave aside questions whether outsiders want to time their commodity purchases to take advantage of trends in the dollar. Marx held that surplus-value does not arise from capitalist exchange–overall. That is not to say that oppressor nation segments of capital cannot cheat oppressed nation segments of capital through exchange–only that overall no net surplus-value arises in the process of all exchange summed up.

It is not a matter of decoupling policy or even the oppressed nation bourgeoisie cutting its teeth in exchange with the oppressor nation bourgeoisie. A falling dollar and inflation has the potential of undercutting the argument of a lack of inflation and rising asset prices. This problem is now structural, which means that no combination of policies of banks can stop it without creating more problems for the global capitalist system.


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