QE4 will not bring capitalism out of collapse
By Daniel Campos 05/26/2020
We are witnessing a historical, civilizing moment, one of the most important in the history of humanity. We are privileged witnesses to these events. We are not referring to the first global pandemic of the Coronavirus, or the disastrous measures of capitalist governments. We mean that we are witnessing the collapse of capitalism
They will say that we exaggerate. That is not true. That capitalism always comes out ahead. What will come out of this. Which is the only possible system. That due to the absence of a revolutionary leadership, it can continue. What blah, blah, blah and blah. We already know what the professional tongues and liars who for years have refused to recognize that there is a crisis in capitalism will say. The reality data is categorical, and forceful: All the multinationals, corporations and companies that dominate the world economy are bankrupt. All capitalist countries are bankrupt. And all the banks in the world are bankrupt. It never happened that all global capitalism in unison was bankrupt. It is a unique show in history. It is the collapse 2020.
If these companies continue to operate despite widespread bankruptcy, the cut in the payment chain and the cessation of the circulation of global money, it is because of the largest rescue operation in the history of capitalism called QE4. In this article we explain what QE4 is. We will explain how capitalism came to collapse 2020. And we explain why QE4 will not be able to get capitalism out of collapse 2020.
Welcome to QE4: The biggest crisis in the history of capitalism
Let's see what QE4 is. The first thing is to understand that this crisis is bigger than the Wall Street crack of '29 last century. Bigger than the crisis of the '70s. Bigger than all the episodes like the Savings and Loan crisis ", the " Black Monday " in the 80's, the effects " tequila "," rice "," vodka "," caipirinha "," tigers, "tango" or the Enron crises, and LTCM in the 90's. It is superior to the " subprime" crisisin the 2000s. And larger than the acute crisis peak of the years 2008-2009. It is the largest crisis in history and the scientific example of this is the magnitude of the salvages injected by the Central Banks of the countries imperialists to stop it. This group of salvage is the so-called QE4 that we can see in the following table:
You can see the magnitude of the bailout in the last 50 years. You can see the Savings and Loan between 1980 and 1990 and the "effects" or LTCM, in the 90's. The Savages beginning in 2008 (QE1, QE2 and QE3) were so far the largest in history. The QE4 of 2020 is equal to all the previous saves together. Source: From Utsche Bank, and IMF
QE4 is an international bailout operation to put money in the pockets of the 1% aristocracy, which dominates the world economy. This operation already exceeds 10 trillion dollars, and grows minute by minute, because money is being injected at an average of 14 billion dollars per day, more than 3 billion dollars per hour. Amid the development of the US coronavirus pandemic, Donald Trump and the US Parliament approved in March 2020 the largest rescue package in the history of the United States of 2.2 billion dollars, called the law. "CARES", as well as Christine Lagarde president of the European Central Bank (ECB) also announced 1 billion in bailouts in Europe. But QE4 was not born in March 2020, but much earlier.
QE4 was born on February 5, 2018 when the largest Wall Street collapse since 2000 occurred. To stop that collapse the People's Bank of China (PCB) carried out a rescue of 84.3 billion dollars, which meant the largest injection in a single day in the history of the PCB. On the other hand, the United States Federal Reserve, the "Fed" as it is known in the financial world, suspended "Operation Twist".
But in the course of 2018 China fell into recession. On December 25, 2018, in the middle of Christmas, the world's stock markets suffered their worst collapse in 100 years, and the worst in the last 10 years. Capitalism ended 2018 in the midst of a tremor. By 2019, the entire world economy with China in the lead embarked on recession. On September 17, 2019, the New York bank replacement market exploded, called the "Repo" market in financial media, which is a circuit that manages the circulation of money among Global Conglomerates. This interbank rate is the heart of world capitalism, because it allows "Replenish"missing money to the banks and companies that dominate capitalism globally. In this way capitalism was approaching collapse, because just like the process of blood circulation in the human body, if the circulation of money stops, capitalism collapses.
To close the "Repo" crisis, the Fed injected $ 203 billion in a week, and as of October 11, it began to inject $ 2 billion a day, or $ 60 billion a month. At the same time that the "Repo" market exploded , a virus appeared in Wuhan, China, preparing the conditions for the outbreak of COVID-19. In December the epidemic developed in Wuhan, which in January 2020 became global pandemic. Capitalist governments established confinements on the grounds that they have no resources to deal with the pandemic, while injecting an average of $ 3 billion an hour into the 1% aristocracy.
The crisis is of historical, civilizing, epochal magnitude. Both the outbreak of the Repo market and the appearance of COVID-19 express the exhaustion of the capitalist mode of production. In this sense, it is not just another crisis, it is not at all like previous economic crises. All the previous crises expressed the way to the collapse of the capitalist mode of production. But the current crisis expresses that the capitalist mode of production reached the end of the road. We are experiencing collapse 2020.
So although the crisis has elements from all previous crises, it is completely different. Looking for analogies in history, it is comparable to the crisis of the fourteenth century, which expressed the end of the feudal mode of production. The 14th century crisis presented a violent process of destruction of productive forces that included the 100 Years War and the Black Death. Millions died worldwide. Six centuries later, the widespread bankruptcy, the development of pandemics, the unprecedented expansion of hunger, poverty and horrible living conditions, as well as the destruction of nature express the end of the capitalist mode of production.
The capitalist mode of production has accumulated enormous masses of capital as a result of the dominance of the Global Conglomerates over the world economy. As we explain in The End of the Multinationals (1) the current accumulation regime that capitalism is going through that we call "globalization" is typical of the imperialist and decadent stage of capitalism characterized by the control of monopolies and multinationals. The enormous masses accumulated in "globalization" caused the most important social inequalities in history, and the appearance of the aristocracy of 1% of the world's wealthy.
But those same accumulated masses of capital pushed capitalism and globalization to exhaustion and crisis. The exhaustion process began 20 years ago with the bursting of the "dot.com" bubble . Imperialism attempted to overcome this crisis with a global offensive against the world masses between 2001-2006, based on the NATO invasions of Iraq, Afghanistan and an attack on the democratic freedoms of the US people. When that offensive was defeated in 2006 by the revolution of the Iraqi masses and the world, the sharp economic peak of crisis erupted, which bankrupted all global conglomerates between 2007/2008 with the bursting of the " sub bubble - prime . "
The rise of QE: The scam that "accelerated" the crisis
When the sharp peak erupted in 2007 and 2008, all the multinationals that dominate the world capitalist economy went bankrupt. To get them out of bankruptcy, salvages were implemented. The Central Banks printed money in a massive way to put it in the pockets of the 1% aristocracy. Over 10 years the super wealthy owners of JP Morgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Wells Fargo, Citigroup, BNP Paribas, Deutsche Bank, etc. they received around 30 billion dollars (2) It is a figure that for any normal human being can hardly be understood. Officials analysts, economists and advocates of capitalism argued that they should carry out the bailouts because those companies were "too big to fall."(en inglés, "Too big to fail")
All that economic operation was a fraud. The mass of banknotes that was printed is fictitious capital without gold backing. It was awarded to the wealthy with an interest rate of 0%, when any citizen who applies for a loan to buy a bicycle must pay interest. But billions of dollars were loaned to the 1% aristocracy on an interest-free loan. Scammers and criminals from Wall Street, the City of London and the world's stock markets made huge profits on commissions.
The salvages began in July 2007, initially disorganized and random. But since in order to carry out all this illegal fraud, all the laws of capitalism itself had to be violated, a battery of decrees, resolutions, and a whole complex system of economic operations were instituted to make up balance sheets and hide transfers. The maneuvers were legalized in the G-20, and money was enabled from the Central Banks of all the imperialist countries: the US, Japan, England, Germany, France, Canada, and Italy, as well as in China, which is not a country. imperialist, but a capitalist sub-metropolis. Thus, in 2008, in a coordinated and global way, the QE (in English "Quantitative Easing") (3) began with 3 objectives:
1) That the Global Conglomerates do not go bankrupt
2) Avoid the collapse of capitalism by resuming the circulation of money
3) That the world economy does not go into recession
The QEs managed to meet the 3 objectives with great difficulty. But what Karl Marx got tired of explaining happened: The bourgeois economists and officials do not understand how the system they command themselves works. When they believed that they saved capitalism, the QE not only did not save it, but sank it even further. This is so because the salvage operations rapidly aggravated and sharpened all the contradictions of capitalism, and prepared the conditions for the collapse of 2020. Let's see step by step, how the capitalist officials organized this disaster.
The road to QE4 "whatever it takes"
The first stretch of salvage was called QE1, and began in September 2008, until 3/31/10. When the world economy showed signs of recession again, the second round of salvages began on 3/11/10 called QE2 until 6/30/11. But it failed to ward off the danger of crisis leading to a third round of salvages called QE3, which began on 9/13/12 until 10/29/14, when it stopped in the US. In Europe the QE was developed during 2015.
As the QE had avoided bankruptcy, revived circulation and avoided the recession, by 2015 all the economic authorities, analysts and officials of capitalism assured that the crisis had been overcome. Janet Yellen, the Fed chairwoman, went so far as to say that there would be no more crises "for many years, and perhaps never again." A whole chorus of charlatans argued that we were facing the "longest economic growth since the postwar period", that the "worst was over," and that the time had come to "normalize" the economy.
However, the reality was the opposite. What produced 10 years of trillion-dollar injection was a real disaster that pushed capitalism into greater and more serious dangers. If what caused the outbreak was a crisis in US mortgages, now that mortgage crisis had multiplied by 12 and spread to 11 countries.
On the other hand, one of the reasons for the crisis was the size of the companies that dominate the world economy. It is these companies that over-accumulate capital and push capitalism into crisis. But after years of injections of monstrous capital masses, the "Too Big to Fall" are now bigger and more dangerous. Having injected these huge financial parasites with salvages, he exploited the development of old speculative maneuvers such as share buybacks and all kinds of fraudulent activities. Criminal financial activities, which according to capitalist analysts themselves are "weapons of mass destruction", multiplied .
Risky speculative plays develop so-called speculative "bubbles" . The accumulation in a few hands of 1% of aristocrats caused a bubble to mount on a global scale that bourgeois analysts call the "Bubble of Everything". The financier Jared Dillian explains it this way: "... In 2000, we had the dot-com bubble. In 2007 we had the real estate bubble ... In 2017, we have the bubble of everything ..." (Capital Stock Market 6/29/17 ). And in China a gigantic bubble was formed which is called "the mother of all bubbles".
But the leaders of capitalism faithful to their belief that "the worst of the crisis is over" began in November 2017 an economic operation called Quantitative Adjustment (QT). In a reverse QE process, instead of printing money to circulate the QT, it is withdrawing money from circulation. The Fed assured that the transition from QE to QT was going to be so gradual that it would not cause any problems. Philadelphia Fed President Patrick Harker announced that the process was going to be as boring as staying to watch the paint dry. Along with the QT, the Fed carried out five increases in the interest rate.
Contrary to everything raised by officials, with the QT capitalism exploded. As the Fed restricted the flow of money, and raised interest rates, it became a vacuum cleaner that absorbed all the dollars that circulated around the world. By attracting dollars from around the world, it caused the currency crisis in developing countries because dollars began to flee from the economies of poor countries. Turkey and Argentina collapsed. The currencies of Indonesia, India, and Egypt began to tremble, and conditions in hundreds of countries worsened. Developing country bonds sank. On February 5, 2018, there was the largest collapse since 2000 of Wall Street, and the VIX index that measures the uncertainty of the world economy shot up."end of crisis" collapsed
When in July 2012 they consulted the then president of the European Central Bank (ECB), Mario Draghi how far he would go in his move to print money to support the Global Conglomerates, the former Goldman Sachs official said : "The ECB will do everything necessary". Mario Draghi's words were prophetic. The authorities of world capitalism to stop the debacle caused by the QT, were forced to carry out "Whatever it takes" and desperately inject billions. This is how QE4 was born
The QE4 is assured of its failure
But it would be a mistake to believe that the collapse 2020 is the fault of the QT. The crisis exploded because QE1, QE2 and QE3 had made a mess. The QT was a kind of financial coronavirus that revealed the magnitude of the disaster. In just 3 months, the goals that QE1, QE2, and QE3 had costly accomplished in 10 years were erased in one fell swoop. The claims of the heads of capitalism that the crisis "is already over" were buried by reality.
But if QE1, QE2 and QE3 made a mess, what effects will QE4 have? With the QE4, the equivalent of half the salvages that were implemented in the previous 10 years were injected in two years. At an even faster and faster speed. In the midst of a pandemic and a colossal level of destruction of the productive forces. That is, if QE1, QE2 and QE3 made a mess, and led capitalism to collapse, QE4 is going to cause an even bigger mess, and its failure is already assured.
Whether circulation was revived with QE1, QE2, and QE3 now depends on the QE4 respirator to continue day by day. If the bankruptcy of the Global Conglomerates was avoided with the QE1, QE2 and QE3, with the exception of Lehman Brothers and Bearn Sterns, now all the Conglomerates depend on the day-to-day life of the QE4 artificial respirator to avoid bankruptcy. And if before the beginning of QE4 the perspective of the world economy was the recession, now it is the depression. This is the grim expression of the collapse of the capitalist mode of production.
The tendency to depression is expressed in the development of one of the most shocking phenomena of the current crisis of capitalism: the existence of zero or negative interest rates. It is a process that acquires historical edges and has no antecedents in the history of capitalism. Currently $ 14 trillion of global debt is underperforming, that is, it has interest rates of zero or less than zero. The interest rate is what circulates money, as the heart makes blood flow to the human body. Under normal conditions, capital circulates seeking profit and is directed at the most attractive interest rates.
But if the interest rate is 0, or less than 0, money does not flow, rather it runs away. The heart stops beating, the blood stops circulating. When the doctor takes your pulse, if they don't feel a pulse within a certain period of minutes, they declare you dead. The big companies that dominate the world capitalist economy, full of junk bonds with negative returns will delight lovers of living dead movies and zombies.
Fans of those movies no longer have to spend money on streaming channels, now it will only be enough for them to read the performance of the bonds of the US, China, Switzerland, etc. There they will see real zombies. Companies like JP Morgan Chase are living dead, more real and more monstrous than the ones in the movies. You will see neat executives in suits and briefcases riding expensive jets run by huge companies. That contradict the laws of capitalism because they scare money away. But they live off QE4 because they are simply dead.
The possibilities of exit to the crisis of the capitalist system
We must remove all conspiracy theory to understand the crisis. There is no global conspiracy by a group of leaders who purposely bankrupt capitalism, or invent a virus in a laboratory to kill millions of people. The creators of these crazy theories seek to hide the reality of the decadence that capitalism lives. The crisis is not "created" by anyone because no group of individuals has the capacity to create such a crisis. The crisis expresses a set of scientific and objective elements that show that capitalism no longer has a reason to exist.
These claims will anger vulgar bourgeois economists and Marxists. They will now make the "call to overcome the crisis". They will tell you that "it is time to put your shoulder on it" and that "we can all together". We already anticipate that all these humanitarian calls are false, and a trap: What the governments and heads of capitalism hide is that to overcome the crisis of capitalism, a rate of exploitation on a global scale qualitatively superior to everything that exists today is necessary. .
To graph it with an image we can explain it like this: To solve this crisis imperialism should impose a rate of exploitation and living and working conditions that it has imposed in China, for the whole world. It should liquidate bourgeois democracy, install a dictatorship, sweep away the rights to unionize, to protest, to meet, to petition, to impose strenuous days, black work, semi-slavery, generalized insecurity, lack of all labor rights, and repression. brutal to any kind of union or social organization. And it should be imposed globally, on all five continents. Only in this way, imperialism could have any chance to start solving the crisis, from the capitalist point of view.
And that would be the beginning, but not the final solution. Only with these measures would it not be enough to solve the crisis of capitalism, and in fact in China they have not solved it. Capitalism can only recover the necessary exploitation rate and get out of this crisis through a violent burning of capital, as was the Second World War. Global Conglomerates represent an over-accumulation of capital on such a colossal scale that the burning of capital necessary to solve the crisis reaches historic proportions, dozens of ports in China and the world should be closed, lay off hundreds of millions of workers, eliminate regions and entire districts of the world economy. The failure of the QT, implied the failure of the attempt to "burn capital", by a peaceful route.
What is coming is the world revolution against capitalism
Bourgeois economists and vulgar Marxists will make big announcements. They will say that a "better" capitalism is possible . That the strongest capitalism will emerge from the pandemic. That employment, stimulus plans can be carried out, a return to Keynesianism, to the postwar "boom" . That they will bring this or that law to parliament. That you can turn back the clock of history. You will hear all kinds of quackery, and lies spread 24 hours a day by the media and social networks by the church, the military, capitalist economists, officials, etc.
But capitalism is today a mortally ill old man. He cannot be a healthy and robust young man again. Science and nature do not work that way, so we Marxists have a different diagnosis. And therefore, a different forecast; What is coming is not a "better capitalism", what is coming is the revolution against capitalism.
We are living a world revolutionary situation, headed by the most exploited and oppressed sectors of society, women, immigrants, the oppressed races, youth, the most backward and original nations and peoples, but also the workers and peoples of the more advanced capitalist nations like France. Revolutions multiply from Sudan, Algeria, Honduras, France, to Hong Kong. And from Chile, Ecuador, Puerto Rico, Bolivia to Iran and Iraq, Syria and Lebanon, to Catalonia. The capitalist pandemic has put "pause"to this process. But it is beginning to resume with force even amid the draconian measures of the capitalist governments, the poor of the world raise their voices. The coming revolutionary wave will be even more powerful and profound than all the previous ones.
The time has come to put an end to capitalism. It is time to impose Global Socialism. Hand in hand with the revolutionary process that is shaking the world, the material and objective conditions are more than ripe to impose socialism. What it is about is to build a world Socialist International to carry out this task. This is the invitation that we make with this article, to unite to concretize in the coming period the task that Carlos Marx and Federico Engels left us along with his legacy
(1) To read the End of the Multinationals click on the following link https://revolucion56.webnode.es/fdm-1/
(2) It is impossible to know exactly how much money is involved in the salvages. The calculation of 30 trillion dollars is approximate and based on data from the Central Banks of the G7 countries. Does not include money issued by non-G7 countries. In addition, the make-up of balance sheets, the "opaque" accounting and the concealment of operations, causes that there are data that are not known, for example, the amount of money as salvages that have been injected by developing countries. The final figure is likely to be much higher than estimated in this text.
(3) The QE in Spanish means flexibilization or quantitative expansion, and it is called "flexibilization" because the rules are relaxed, expanded or relaxed to be able to issue huge masses of capital, and inject huge masses of money without gold backing. the Central Banks, the US Fed, the BOJ of Japan, the ECB of Europe, the BoE of England, the BoC of Canada, working together with the BdPC of China.
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