Counterfeit currency
Is this Capitalism’s End of Days? By Norman Markowitz -------------------------------------------------------------------------------- click here for related stories: economy 10-08-08, 12:37 pm The economic crisis continues to escalate and it is a crisis of the capitalist system as the system has devolved in the US and globally in recent decades. It is not a crisis of “Wall Street” aka the stock market or “finance” aka the banks because the stock market and the banks are inter-related and with “deregulation” directly interconnected institutions of the capitalist system. For those of us not ready to pass through the golden gates and ascend to Free Market Heaven where there is no regulation or taxation, three questions arise? What is being done? What should be done? What can be done? First, what is being done is to pump money into the system. The goal is to buy up the “bad paper” that has functioned as a sort of counterfeit currency in a world where public policy has encouraged the worst of capitalist speculation on a scale greater (because the world economy is so much greater) than ever before. Does the US Treasury and the Federal Reserve have enough money literally to do this? In the “brave new world "of multi-trillion dollar and euro unregulated global hedge funds, a world where transnational firms are in many instances literally working off the books, I really don’t know. And, more importantly, I don’t think that those who are pumping in the money from the US Treasury and the Federal Reserve know either? Register to vote here What they are doing now is to use a version of Keynesian compensatory fiscal as the policy to “pump prime” the economy, as it was called in the 1930s, in order to ward off a major depression. But they are doing it in a chaotic, helter-skelter way, with no serious concessions to workers who face unemployment as credit contraction continues, the millions of homeowners who face foreclosure without any ban on foreclosures or any judicial discretion in debt restructuring. Nor is there any mention of the long battered public sector where state and local governments, relying on bond issues and regressive taxes to fund education, police, fire, and other basic services, may face collapse as the crisis expands to the bond market and local property taxes move toward confiscatory levels. What can be done? To answer this, let us exclude entirely the likely answers of Palin and McCain, that is, prayer and tax cuts for the corporations and the rich, respectively, along with their mock outrage against greedy Wall Streeters. Let us also exclude what the Federal Reserve Board itself seems to be excluding, that is, the monetary theory of the late Milton Friedman, on which it and the central banks of other major capitalist countries in significant ways have been operating for decades, that is intervening with interest rate increases and decreases to alternatively stimulate and dampen down capital flows in the economy and thus let the “free market” operate without state intervention in the form of jobs, housing, health care, transportation energy. However, bailouts of banks, brokerage houses, corporations, which don’t fit into the theories of Adam Smith in the 18th century, with greatly influenced the nineteenth, or the theories of Milton Friedman in the 20th, century, which promised a triumphant return to the 19th, seem to keep on happening when big capitalists get in big trouble. It is almost as if government serves dominant class interests instead of being a “neutral” force, a passive policeman, or a buddy to stakeholders. I am sure Milton Friedman would have opposed the Treasury department orchestrated bailout last week. And, although I do not commune with spirits, I think he certainly would be aghast at the Federal Reserve buying up all this bad paper. After all, he long contended that the US could have avoided both the great depression and the New Deal (a terrible deviation from “economic freedom”) with the correct monetary policy. He would probably say if he were still with us that his monetary theories should be given a chance to work, that in the long run all will be well if the “market” is kept as free as possible. And the theorist whom he spent much of his life trying to supplant (not Karl Marx, but John Maynard Keynes) would probably repeat the sarcastic answer he gave to his “free market critics” during the depression that is, “in the long run everyone is dead.” What should be done before Keynes' warning becomes prophecy? In the US and globally through the IMF and World Bank, there can be a repudiation of the policies that have emanated from Friedman’s monetary theories and a revival and updating of both regulation and compensatory fiscal policies aimed at maintaining effective purchasing power in national economies. This means providing economic and social protections for workers and farmers instead of forcing poor countries to eliminate existing subsidies to facilitate “market development.” This means also building over time the World Labor Organization and the Food and Agricultural Organization of the UN into instruments that will at the very least regulate both transnational corporations and agribusiness in the interest of workers and farmers in poor countries, raising the purchasing power of the people within those countries in order to make international trade a two way, not a one way street. In the US, particularly what should be done is the dismantling of what was once called “Reaganomics” the grotesque combination of Friedmanite Monetary Theory with a prominent US historian earlier called “Military Keynesianism.” To achieve this, what is needed is nothing more than a “new New Deal,” and one that will in all likelihood have to be more experimental, flexible, and radical then the first. That “new New Deal” should in the first hundred days of an Obama administration write new National Banking and Securities and Exchange Acts, repealing the deregulation of the last thirty years, and restructuring consumer debt for personal property (including home a mortgages). That “new” New Deal should repeal in its entirety the Taft-Hartley law and threaten those states who seek to continue anti-union shop policies under various subterfuges with a cut off of federal funding. That “new New Deal” should institute in its first year far reaching cuts in the military budget. A reduction of something like $50 billion should in the first year should be considered a minimum and those cuts should continue annually. These cuts should also be re-invested in federal public sector programs, federal aid to education, the establishment a national public health care system, the revival of public housing programs which went into eclipse in the Reagan era and public energy policies which fell by the wayside in after World War II. Finally, the first 100 days of a “new New Deal” in an Obama administration should do more than close tax loopholes, but repeal the entire “detaxation” policy of the Reagan-Bush era. Ideally, it would restore progressive income and corporation taxes, capital gains taxes, and in the process begin to collect hundreds of billions of dollars which will permit it, along with military budget cutbacks, increased revenues from increased real wages and incomes of working people, to both fund social revitalization, reduce the federal deficit and through its policies aid state and local governments to reduce their deficits. How much of this will be done depends on what happens in this coming election. If McCain wins, we can be reasonably certain that none of it will be done, because even with an expanded Democratic majority, he would veto virtually all of it. If Obama wins, the size of his victory and the continuation of the grassroots movements and activism that served was the mass base for his candidacy, along with his inclinations and the size of the crisis he confronts upon taking office will largely determine the policies of his first 100 days, whether it is just a half a loaf improvement from the Bush disaster or a comprehensive reversal of what Obama himself has called “an economic philosophy which has failed completely.” All of this can be done, within the context of the present capitalist system. Immediately, meaning right now, Congress can push through a repeal of Gramm-Leach and the Obama campaign can begin to outline its economic policy, leaving McCain and Palin continue their silly and petty personal attacks, which merely highlights the fact that they have no plan, no policy, and no idea of what to do exist get elected and continue the policies that have produced the present crisis. Hopefully, we will begin to see an outline of the Obama’s first 100 days as he addresses the expanding economic crisis in the last weeks before the election. This message has been scanned for malware by SurfControl plc. www.surfcontrol.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
