As the geniuses running the western financial bubble sometimes called an “economy” continue to double down on their obsession to pump a dead financial system with ever more trillions in stimulus spending, arguments are raging among brainwashed economists living in denial over the oncoming systemic collapse. The thought of engineers on the Titanic passionately arguing over whether they should accelerate or decelerate the speed of the boat whose hull has long been torn to shreds by an iceberg comes to mind.

On one side of the debate, figures like U.S. Treasury Secretary Janet Yellen and Fed Chair Jerome Powell champion an emerging new wave of high interests as “a plus for society’s point of view” in order to counteract the increasing rates of inflation sweeping across every sector of the economy. This camp asserts that this spike in interest rates should not be done immediately however, and only begin in 2023, and until then interest rates should be kept at near zero percent.

On the other side of the debate, economists among Germany’s largest bank scream that waiting until 2023 is deadly. Not a second should be lost before increasing interest rates now in order to stop a “time bomb” from destroying both the USA and the world. On June 7, Deutsche Bank Chief Economist David Folkerts-Landau wrote passionately that Washington’s decision to wait until 2023 before raising interest rates “could create a significant recession and set off a chain of financial distresses around the world” leading to “a time bomb” waiting to explode… unless interest rates were hiked up to 20% just as they had been done in 1980 by then Fed Chairman Paul Volcker which saw interest rates collapse from 12.5% in 1980 to 3.8% in 1982.

Both sides however, are either completely ignorant or outright liars trying to distract citizens and policy makers from the real systemic nature of the oncoming meltdown that can only be dealt with if certain fundamental facts of recent history are kept in mind.

Why is Inflation going to Skyrocket?

Since a pandemic induced nations to lockdown their economies, rescue packages and unlimited money printing to keep people from literally starving, and banks from collapsing has become a new normal. $24 trillion dollars in COVID related debts have been generated internationally, while U.S. Federal Reserve balance sheets have doubled over the same period to $8 trillion with increasing rates of liquidity injections flushed into the Too Big to Fail banks since September 2019. So far, consumer price inflation has risen by 4.2% in 12 months, but based on the obvious reality of $28 trillion of totally unpayable U.S. debt, sustaining a $1.2 quadrillion derivatives bubble time bomb alongside the breakdown of supply chains and a dysfunctional green infrastructure program pushed by Biden, the runaway threat of inflation and even hyperinflation is firmly (or should be) on everyone’s mind.

Now if Deutsche Bank’s Folkerts-Landau was talking about the insane money printing disassociated from any systemic restructuring of the over-bloated Too Big to Fail zombie banks or serious recovery program, then he should be applauded for raising the spectre of unbounded inflation. His nation did after all have a direct experience with this disastrous policy back in 1923 when hyperinflation tore the German economy to shreds and set the stage for the rise of Nazism shortly thereafter. (1)

Sadly, both Folkerts-Landau and Yellen are instead pushing policies that will not only accelerate hyperinflation a century after Weimar, but usher in a new central bankers’ dictatorship that had only been subverted in 1933 due to the fortuitous intervention of U.S. President Franklin Roosevelt.

So What Did Volcker Do?

Since economists are told repeatedly that Volcker’s interest rate hikes of 1979-1982 saved the U.S. economy, let’s look at what really happened and why Volcker described his philosophy as a “controlled disintegration”.

While inflation did indeed spread across the USA in the 1970s, it is worth asking: why did this actually happen and did Volcker’s reforms have anything to do with solving that problem? Or did both the problem and its nominal solution drive a singular agenda of controlled destruction of the USA now playing out four decades later?

For one, the shift away from industrial long term development with the 1971 floating of the U.S. dollar off of the gold reserve standard went a long way to turning a once-forward thinking productive, manufacturing-driven economy into a consumer cult, post-industrial waste. This “post industrial” age was characterized by outsourced industries relying ever more on increased rates of imports of things the USA once made for itself. A FIRE economy (of Finance, Insurance and Real Estate speculation) increasingly took over the once powerful manufacturing sector.

Agro-Industrial production was replaced by service sector jobs as the USA became ever more reliant on cheap imports made from China, Mexico and other poor nations who were expected to remain labor intensive sweat shops for eternity.

This detachment of the “valuation” of the dollar from all physical measurable standards went a long way to killing the buying power and raising inflation as monetary circulation increased ever more by speculation on oil, currencies or other goods that often had no connection with reality. Investment rates into cutting edge science both in the atomic realm of fusion and the macro realm of space exploration were cut off drastically (see graphs) as general vital infrastructure maintenance and improvement collapsed drastically across all OECD nations trapped in the “new post-industrial normal”.

Non-military related science R & D also saw a collapse during this period from 2.5% of GDP in 1971 to a mere 0.4% of GDP in 2020 (see graph).

Deregulation and market liberalization castrated the role of the sovereign nation state ever more from 1971 onward, as “laissez faire” policies dominated a once-protectionist landscape. Rather than continuing the successful practice of “parity pricing” which defined the real growth of western nations during the 25 post-WW2 years, the markets run by speculators looking only towards maximizing profit defined the prices of goods.

Last but not least, oil price increases of 400% during the 1973 OPEC crisis is admitted to have played a big role driving the 1973-79 inflation, but as researcher William Engdahl demonstrated in his 1992 Century of Oil, then Secretary of State Henry Kissinger had more of a role in manufacturing this crisis from scratch by keeping hundreds of tankers replete with petrol from being unloaded in the USA and facilitating the 400% increase with the assistance of several high level oil ministers in the Middle East beholden to Kissinger. In recent years, Saudi Arabia’s former OPEC minister at the time corroborated Engdahl’s research stating:

“I am 100 per cent sure that the Americans were behind the increase in the price of oil. The oil companies were in in real trouble at that time, they had borrowed a lot of money and they needed a high oil price to save them.”

Putting the Trilateral Commission into Perspective

This shift of the U.S. economy from its former role as an industrial producer economy to a consumer cult of speculation and monetarism was accompanied by a broader international shift then being orchestrated by a cabal of misanthropic technocrats managing an organization known as the Trilateral Commission founded in 1973 by Chase Manhattan President David Rockefeller III and a sociopathic grand strategist named Zbigniew Brzsinski.

The aim of the Trilateral Commission was to destroy the sovereign manufacturing base of both the USA and international developing sector alike.

For anyone who might consider this paranoid “conspiracy theorizing”, it is useful to be reminded that among the highest echelons of the U.S. executive branch under President Carter included members such as Brzezinski, Walter Mondale (Vice President), Harold Brown (Defense Secretary), Cyrus Vance (Secretary of State), Michael Blumenthal (Treasury Secretary), James Schlesinger (Energy Czar) and Paul Volcker himself as Fed Chair. Henry Kissinger was also a leading member of this group.

Among the many goals of the Trilateral Commission laid out Brzezinski in his 1970 Manifesto “Between Two Ages” was the need to drive the transition of society towards what Brzezinski referred to as the “technetronic era” saying:

“The technetronic era involves the gradual appearance of a more controlled society. Such a society would be dominated by an elite, unrestrained by traditional values. Soon it will be possible to assert almost continuous surveillance over every citizen and maintain up-to-date complete files containing even the most personal information about the citizen. These files will be subject to instantaneous retrieval by the authorities.”

During a 1975 Trilateral Commission study called Crisis in Democracy, overseen by Zbigniew, Clash of Civilizations ideologue Samuel Huntington wrote: “we have come to recognize that there are potential desirable limits to economic growth. There are also potentially desirable limits to the indefinite extension of democracy… a government which lack authority will have little ability to impose on its people the sacrifices that will be necessary”.

So what sort of sacrifices did these Trilateral Commission technocrats think necessary in a healthy society liberated from its foolish belief in scientific and technological progress that animated the policy outlook of such rifraf as Franklin Roosevelt, John F Kennedy, Charles De Gaulle or Bobby Kennedy?

This is where Volcker steps in.

The Meaning of ‘Controlled Disintegration’

In 1978, faced with unbounded inflation, Paul Volcker spoke at a conference at Warwick University London stating that “a controlled disintegration in the world economy is a legitimate object in the 1980s”.

Upon ascending to the chair of the Fed a year later, he wasted no time in applying this program. Not only did he render available credit impossible for many small and medium enterprises by raising interest rates to 20%, Volcker also ensured that third world nations then being sucked back into a neocolonial debt slavery under the IMF and World Bank economic hitmen, would be sucked into ever greater rates of unpayable debts as a new form of slavery. Between 1979-1982, third world debt skyrocketed from 40-70% across the board leading to a major debt crisis.

During this period U.S. agricultural output collapsed, metal cutting machine tools fell by 45%, automobile production fell by 44.3% and steel production fell by 49.4% as bankruptcies skyrocketed leaving only mega-corporations strong enough to pay the draconian rates while absorbing small bankrupted companies and farms like a modern day Borg consuming ever greater rates of cheap labor and cheap resources from poor nations.

To understand how these countries remained poor and exploitable, one need only visit the Malthusian State Department/CIA Report authored by Henry Kissinger in 1974 called NSSM-200 that called for a total depopulation program targeting 14 poor nations then desirous of industrial growth. Those targeted included India, Bangladesh, Pakistan, Indonesia, Thailand, the Philippines, Turkey, Nigeria, Egypt, Ethiopia, Mexico, Colombia, and Brazil. Kissinger’s logic was simple: If these nations develop, their populations will grow. If their populations grow they will use their resources. BUT since it is in the strategic interests of the USA to use those resources, these nations must be kept down.

Nationalist leaders among those target nations who had a different idea were targeted for assassination or regime change throughout the 1980s.

Back in the USA, Paul Volcker additionally took aim at commercial banks by forcing vast increases in reserve requirements making lending additionally difficult (although speculation in investment banks were facilitated with the Garn-St. Germaine Act of 1982). This act and accompanying financial de-regulation during this period of “Reaganomics” led the way to the new age of universal banking beginning with Thatcher’s Big Bang in 1986, the end of Canada’s Four Pillars that same year and finally the killing of Glass-Steagall in 1999. The dream of social Darwinists of an unregulated world of each against all where only the strongest and fittest and most sociopathic survive was now real. In the Soviet Union, this process of nation stripping and deregulation that took decades to wreck havoc on western economies was accelerated in the space of a decade of shock therapy. In China, where agents of Soros and the CIA like Zhao Ziyang (Prime Minister and CCP General Secretary from 1987-89) attempted to impose liberalizing reforms like a Chinese Gorbachev, the rape was luckily stopped before a Russian model could be imposed.

With Glass-Steagall out of the way, commercial and investment banks could unite to form “the ultimate, all-powerful, many-headed financial conglomerate” as outlined by Lord Jacob Rothschild in 1983 (2).

In 2001, as Zbigniew Brzezinski’s Islamicist monstrosity created to fight the Soviets in Afghanistan had been incubated throughout the 1990s, a new program of never-ending wars in the Middle East was launched. While the Middle East was turned inside out under a new age of war, the financial services sector avoided several near blowouts in 1997, 1998 and 2000 (with the collapse of the dot com/Y2K bubble). This was done by deregulating over-the-counter derivatives which turned a $70 trillion time bomb (in 2001) into a $650 trillion time bomb in 2008 when the housing market collapsed.

While opportunities then existed to impose Glass-Steagall and break up the banks as had been done earlier by FDR in 1933, hyperinflationary money printed was chosen instead resulting in another 12 years of insanity as the bubble continued to expand and the physical economic productive base continued to atrophy.

Today, we sit on not one bubble concentrated in housing prices, or oil, or currencies, but rather a multitude of bubbles in literally everything from commodities, bitcoin, housing, commercial real estate, bundled student debts, automotive loans, and the over-valued U.S. currency itself.

The COVID Pandemic did not “cause” the current systemic crisis as many fools have parroted for over a year, but has merely served as cover to obscure the real systemic causes of the long-awaited collapse and accelerate the controlled disintegration of the system as the world is prepared to transition into a “new technetronic age” which has come to be dubbed a “Great Reset” or “Fourth Industrial Revolution”.

We are told by the likes of Klaus Schwab, or World Economic Forum trustees Mark Carney, Christine Lagarde, and Chrystia Freeland that the age of free market capitalism which reined from 1971-2020 has come to an end, and that a new epoch of “green finance” under a decarbonizing world is upon us. Under this new world order of “stakeholder capitalism” citizens will learn to own nothing and be happy, while polluting companies who commit climate sins will be choked of all credit.

As former Bank of England head Mark Carney recently wrote of the new age of “net zero” in his new book Values Building a Better World for All, (which many of recognized as a precursor to his replacement for Canada’s Justin Trudeau as Prime Minister):

“It could be generations before the gains of the fourth industrial revolution are widely shared. In the interim, there could be a long period of technological unemployment sharply rising inequalities and intensifying social unrest”.

Klaus Schwab has publicly fantasized of this new age of human-machine merging of microchipped brains interfacing with the global net, and Tony Blair has giddily said that “vaccination is, in the end, going to be your route to liberty”.

So, while that story might sound a tad bleak, there remains only tiny obstacle to the successful implementation of this anti-human program.

This obstacle is located in the Greater Eurasian Partnership led by Russia and China and joined by 135 nations of the world that have signed onto the Belt and Road Initiative. These are nations who would rather have a multipolar future vectored around large scale industrial growth than be sacrificed on the alter of Gaia by a technocratic neo-Malthusian priesthood. This multipolar paradigm operates under a financial and geopolitical philosophy at total odds with the closed, entropic obsession of the forces associated with Kissinger, Blair, Carney or Schwab, and that is a very good thing not only for the Eurasian world, but for nationalist forces within the west as well.

The author can be reached at matthewehret.substack.com 

(1) In June 1922, 300 marks exchanged $1 US and in November 1923, it took 42 trillion marks to get $1 US! Images are still available of Germans pushing wheel barrows of cash down the street, just to buy a stick of butter and bread (1Kg of Bread sold for $428 billion marks in 1923). With the currency’s loss of value, industrial output fell by 50%, unemployment rose to over 30% and food intake collapsed by over half of pre-war levels.
(2) In his 1983 speech, Lord Jacob Rothschild stated: “two broad types of giant institutions, the worldwide financial service company and the international commercial bank with a global trading competence, may converge to form the ultimate, all-powerful, many-headed financial conglomerate.”

BlackRock Corporation is currently a co-owner or a shareholder, in 18,000 banks, companies, and financial service providers, primarily in the U.S. and Canada, in the European Union, and in Western-oriented nations. Such a numerous simultaneous presence of a single owner has never been seen before in the history of capitalism.

Yet BlackRock is only the tip of the current, newly formed capitalist iceberg. The next largest capital organizers of this new kind are Vanguard, State Street, Capital Group, Amundi, Wellington, Fidelity, T Rowe Price, Pimco, Norges. BlackRock is exemplary for these currently determining players of US-led Western capitalism. Smaller new capital players with related, also hardly regulated business models such as private equity investors (“locusts”), hedge funds, investment banks and venture capitalists are also part of the current phase of the newly formed capitalism at the latest since the banking crisis of 2007 – they here are only briefly referred to. (1)

BlackRock – Rise of the Leading Shadow Bank

BlackRock is the result of a long series of deregulations in the U.S., but also spills over into the entire Western economic, financial, fiscal and governmental system, in Europe mostly through subsidiaries in the City of London.

Headquarters in the largest U.S. financial haven, Delaware

BlackRock does have its operational headquarters in New York and branches in a few dozen states. But the company’s legal headquarter as a corporation is in the U.S. financial oasis of Delaware.

This tiny U.S. state built its position as a leading Western financial haven in the 20th century, initially for U.S. companies: Particularly low taxes on profits, low disclosure requirements, the establishment and management of letterbox companies as a business segment, and extremely “liberal” corporate law: liability and transparency are particularly limited, for example, compared to a classic stock corporation. Since the 1920s, the U.S. corporation DuPont (pharmaceuticals, armaments, auto supply) has been at the forefront of this development: It had and still has its legal domicile there and thus evaded public control and tax payments even during its worldwide expansion; it also cooperated, for example, with the German pharmaceutical cartel IG Farben during the Nazi era. These capitalist freedoms have also been used for decades by most multinational corporations and banks, not only located in the USA, but also from the EU, Asia (especially Hong Kong), Latin America, also for hundreds of subsidiaries each.

The EU has recognized the legality of this corporate law on its territory. The Federal Republic of Germany, which was founded after World War II at the instigation of the U.S., recognized already in the German-American Friendship Treaty of 1954 under its founding chancellor Konrad Adenauer that U.S. companies could operate in the Federal Republic under the laws of the financial haven of Delaware. (2)

Deregulation since U.S. President William Clinton

Freedoms under Delaware law have been continuously expanded and have become significant beyond the U.S. on a large scale globally since the beginning of the 21st century.

In the 1980s, Wall Street bankers began new financial products and practices, which were then legalized under the presidency of “Democrat” William Clinton. For example, at Bank First Boston during the 1980s, Laurence Fink, who later founded BlackRock, made it a business model to bundle and sell individual hypoptheque loans (for the purchase of condominiums and homes) to banks and turn them into tradable securities. Fink first practiced this in one of the equally deregulated new financial players, the private equity firm Blackstone. In 1988, he went independent from Blackstone with Blackrock (written much later as BlackRock): The small black stone became the great black rock. (3)

Blackrock & Co were not and are not subject to the old banking regulations, renewed after the 2008 financial crisis. U.S. President Obama even made BlackRock the advisor for the resolution of the financial crisis: as advisor to the U.S. Federal Reserve, Blackrock helped decide the fate of insolvent banks, insurance companies and corporations: Who would be rescued, who would not? In the process, BlackRock’s own business scale skyrocketed.

The EU followed suit, and BlackRock has also been an advisor to the ECB since the head of the European Central Bank, Mario Draghi (until 2020), came from Goldman Sachs. In 2020, BlackRock also got a consulting contract with the European Commission for ESG (Environment, Social, Governance). (4)

BlackRock: Largest “shadow bank”

BlackRock & Co are not considered banks under corporate law, despite many bank-like operations. The World Bank, the central banks and the G7 countries still officially regard BlackRock and Co as “shadow banks”. To this day, they remain unregulated “under observation” in the central bank of central banks, the Bank for International Settlements (BIS, headquartered in Basel/Switzerland), which is dominated by the Federal Reserve Bank. (5) Through their lobby, BlackRock & Co have achieved that Western governments keep postponing regulation. (6)

The basis of capital power: The Super-Rich and the U.S. location

BlackRock & Co obtain their capital base through the capital they raise from entrepreneurs, corporate foundations, banks, insurance companies, pension funds. An increasingly important group of capital providers is the number of super-rich, multi-millionaires and multi-billionaires, which is growing by leaps and bounds with deregulation: They are known as High Net Worth Individuals (HNWI) and Ultra High Net Worth Individuals (UHNWI).

BlackRock commands more than $8 trillion in 2021, earning itself in fees, commissions, and its own trades, but essentially acting as the legal representative and manager of the capital providers. To all of them, BlackRock also guarantees higher annual returns than previous asset managers, traditional banks, and corporations because of its greater freedoms.

BlackRock under the US administrations since William Clinton

Wall Street and the new capital organizers supported the Democratic Party by majority in the USA since the 1990s because they had become powerful through its deregulations. That’s why BlackRock CEO Fink was in the conversation to be Treasury Secretary under presidential candidate Hillary Clinton. He had brought Obama administration staffers to BlackRock.

But when anti-Wall Street Republican Donald Trump won the 2016 election, cutting taxes on corporations while promising them higher government subsidies, Fink declared: “Trump is good for America. ” (7)

U.S. President Joe Biden, in office since 2021, has appointed several high-ranking BlackRock executives to his administration. So Brian Deese: The head of BlackRock’s global sustainable investing division will be the president’s chief economist. Wally Adeyemo has served as U.S. President Obama’s chief advisor on international economic relations, then joined BlackRock as Fink’s chancery chief, and has been president of the Obama Foundation since 2014; now he is deputy Treasury secretary under Biden. Michael Pyle was in charge of International Financial Relations at the Treasury Department under Obama. Then he became head of global investment strategy at BlackRock, now he is chief economist for Vice President Kamala Harris.

Biden himself was a senator for the state of Delaware from 1973 to 2009. He helped build Delaware into the world’s most important corporate financial haven – and thus a tool for BlackRock & Co. So BlackRock is more than ever active part of „America First“.

The new power of the invisible capitalists

BlackRock & Co have also replaced the traditional big banks at latest since the financial crisis of 2008: the unregulated shadow banks are now the owners of even the regulated big banks, but also of, for example, all the big digital corporations such as Amazon, Google, Apple, Microsoft and Facebook. At the same time, BlackRock & Co have managed to remain virtually unknown to the general public.

BlackRock combines the following characteristics and practices:

*Ultraliberal corporate constitution under the laws of the financial haven of Delaware

*Status as an unregulated “shadow bank”

*the unique volume of capital employed, currently $8 trillion

*the unique insider and monopoly position as a simultaneous major shareholder in 18,000 corporations, banks, financial service providers

*the advisory function with important governments, with the US National Bank Federal Reserve, with the ECB and with the European Commission

*with ALADDIN, the largest collection and analysis system in the Western world for financial, economic and political data

*a system of paid influence agents in key countries such as the U.S., Germany, the U.K., France, Mexico, Switzerland

*Integration with “America First” political, media, legal, rating, consulting, intelligence and military systems. For example, BlackRock is a shareholder in the leading Western liberal media outlet, the New York Times.

It is this combination that creates power. From this it becomes clear that in capitalism it is not enough for the exercise of power to simply be rich or super-rich, multimillionaire or multibillionaire. Rather, it is the multiple presence in companies, banks, financial institutions, governments, leading media and the multiform systemic multiple networking that is decisive.

Simultaneous Multiple Ownership: Example Wirecard

It is often claimed in “critical” circles that BlackRock & Co. cannot have such a large influence because they only ever own 3 or 5 or at most 10 percent of the shares. This was also the argument of BlackRock’s former chief lobbyist in Germany, the CDU politician Friedrich Merz.

But BlackRock is intertwined with the next dozen similar capital organizers through cross-ownership and consults for decisions in the joint enterprises, such as before shareholder meetings: To coordinate voting, the Big Three in particular, BlackRock, Vanguard, and State Street, often hire the financial agencies Institutional Shareholder Services (ISS) and Glass Lewis.

And there is the multiple ownership around one company where BlackRock & Co are the determining shareholders. Let’s take the fraud company Wirecard, which is currently the subject of scandal in Germany. Members of the Bundestag and leading state and private media are fiercely denouncing Finance Minister Scholz, the financial regulator Bafin and the auditors Ernst&Young (EY) for failing to uncover the multi-billion dollar fraud perpetrated by this financial services provider over many years.

But no one asks: who are actually the owners of Wirecard? That’s right, BlackRock was a shareholder for the longest time with 5 percent, making it the third largest shareholder. But BlackRock is at the same time much more:

*BlackRock is shareholder in Wirecard’s other major shareholders, e.g. Goldman Sachs,

*BlackRock is shareholder in Wirecard’s largest lenders, Commerzbank, Société Générale, and Deutsche Bank,

*and Blackrock is shareholder in the rating agency Moody’s, which determined Wirecard’s creditworthiness and credit terms. (8)

This de facto multiple presence of BlackRock & Co is as important to the functioning of contemporary capitalism as their public obscurity.

Network of Influential Agents

BlackRock maintains paid agents of influence in all major states: These are leading people from governments, political parties, corporations, central and other banks. These individuals receive high-paying consulting contracts and seats on boards of companies in which BlackRock is a major shareholder.

Laurence Fink, BlackRock’s chief executive, acts (or acted) as an influence agent himself:

*Member of U.S. President Donald Trump’s Business Council

*Director in the Council on Foreign Relations (CFR)

*Presenter at the World Economic Forum

*Meets heads of state, government and corporations in person

*Lobby office in Washington, donor to both U.S. political parties

*Lobby office in Brussels.

Friedrich Merz, ex-faction leader of the CDU in the Bundestag: partner in the U.S. business law firm Mayer Brown, until 2020 chairman of the supervisory board of BlackRock Deutschland AG.

Michael Rüdiger, ex-head of Dekabank Deutsche Girozentrale, on the Supervisory Board of Deutsche Börse AG: successor to Merz at BlackRock Deutschland AG.

Hildegard Müller, President of the German Association of the Automotive Industry, on the Executive Board of the CDU Economic Council and the Central Committee of German Catholics: Member of the supervisory board of the largest housing company in Germany, Vonovia where BlackRock is a major shareholder.

Cherryl Mills, ex-chief of staff to Hillary Clinton at the State Department: member of the supervisory board of BlackRock.

George Osborne, ex-finance minister in the British Tory government, editor of The Evening Standard newspaper: BlackRock advisor with a 650,000-pound-a-year contract.

Philipp Hildebrand, ex-president of the Swiss National Bank: head of BlackRock’s European headquarters in London.

Jean-Francois Cirelli, ex-chief executive of France’s largest energy companies GDF/Suez/Engie: head of BlackRock France.

Marco Antonio Slim Domit, son of the richest Mexican, Carlos Slim: member of BlackRock’s supervisory board.

How does BlackRock generate the super profits?

Through its position of power, BlackRock generates higher profits than traditional companies, banks, and asset managers in Western capitalism. (9)

New Monopolies and Oligopolies

BlackRock & Co are the controlling shareholders in the most important companies in the same industries, i.e., simultaneously in the most important banks, the most important pharmaceutical, oil, agribusiness, automotive, logistics, airline, defense, and digital corporations, both throughout the capitalist West and in each of the most important individual states, such as in the United States, Germany, France, Great Britain, and Switzerland.

On the one hand, this means a new kind of monopoly formation, for example when BlackRock, Vanguard, State Street & Co are at the same time, in changing composition, the new major shareholders of the most important Wall Street banks, for example in Germany at the same time major shareholders of the two largest banks, i.e. Deutsche Bank and Commerzbank. Or like this: BlackRock & Co are, again in changing composition, at the same time determining shareholders in the 30 DAX corporations of Germany, in the 40 CAC corporations of France and in the 500 S&P corporations of the USA. This type of monopoly formation is not covered by any of the outdated antitrust laws of Western countries.

Mergers and acquisitions

Another form of monopoly or oligopoly formation is mergers and acquisitions. BlackRock & Co can do this all the more easily because they are at the same time co-owners in the most important companies in the same industry, both nationally and internationally.

For example, BlackRock & Co are the major shareholders of the two chemical companies Bayer in Germany and Monsanto in the USA. Bayer’s largest shareholders during the 2016 – 2020 Monsanto takeover were, in this order: BlackRock, Sun Life Financial, Capital World, Vanguard, Deutsche Bank. Monsanto’s largest shareholders were, in slightly different order: Capital World, Vanguard, BlackRock, State Street, Fidelity, Sun Life Financial. At the same time, BlackRock is also a shareholder of Deutsche Bank.

This is how the world’s largest agrochemical group came into being: it combines market leadership in seeds, pesticides, agricultural patents and global data on farmers, agricultural companies and agricultural markets. And, of course, BlackRock & Co are also major shareholders in other agricultural and chemical companies such as BASF, LG Chem (South Korea), Akzo Nobel (Netherlands), and Pfizer and DowDupont (USA).

Digitization

BlackRock & Co are the determining shareholders of the large digital corporations Google, Amazon, Apple, Microsoft, Facebook and many others as soon as they stabilize their success. This also applies to such corporations as those in the automotive and logistics sectors that are developing self-driving cars, trucks and delivery drones with artificial intelligence, including Tesla, for example. Of course, this also applies to defense corporations.

The management of the Corona pandemic by Western governments has further spurred the expansion of digital corporations by leaps and bounds, not least through government contracts for healthcare, public administration and government communications. BlackRock & Co are the first to benefit from this.

Robotized speculation

Digitization with the help of artificial intelligence is also taking hold in finance. BlackRock & Co do not wait anxiously like traditional shareholders for the dividend decided and paid out at the end of the year. They take that too, but the much more lucrative business is the speculation with the shares that runs throughout the year. Every movement in the value of the stock – up or down – is used for speculation.

The advantage that BlackRock is the biggest insider in the Western economy is increased by its subsidiary ALADDIN (Asset Liability and Debt Derivative Investment Network): This is the biggest collection and exploitation facility for financial, economic and political data. In the nano-second range, the values of all shares and other securities on all stock exchanges in the world are simultaneously recorded, compared with each other and evaluated, bought, sold in a largely robotized manner. Through additional purchases and sales, reinforced by loan shares, upward and downward movements of securities can be accelerated and used for speculation – faster and more profitably than by competitors and small speculators. If, for example, a stock constantly rises and falls due to scandals, as in the case of Wirecard, or in the case of a merger that drags on for years, as in the case of Bayer/Monsanto – then this is the ideal, profit-generating business area for BlackRock.

If national reporting laws are violated in the process – in Germany, for example, the Securities Trading Act – then financial regulators such as Bafin are not in a position, either technologically or in terms of personnel, to exercise the necessary control. (10)

Aiding and abetting global tax evasion

Part of the higher return for capital providers is BlackRock’s organized tax evasion for the benefit of its wealthy capital providers, the HNWIs and UHNWIs. For example, the 5 percent of shares in the lignite company RWE represented by BlackRock are distributed among 154 shell companies in a dozen financial havens between Delaware, the Cayman Islands and Luxembourg. The shell companies bear names such as BlackRock Holdco 6 LLC. In this way, the actual beneficial owners, the super-rich investors, are anonymized and made to disappear in front of financial and stock exchange supervisory authorities, tax offices, employees and the public: organized irresponsibility. (11)

In addition, this further impoverishes the affected states, the public infrastructure decays, private infrastructures, on the other hand, are expanded.

Low wages, union hatred, rents, privatized pensions

BlackRock, as a simultaneous shareholder of the five largest housing corporations in Germany – Vonovia, Deutsche Wohnen, LEG, Grand City Properties, TAG – promotes excessive increases in rents and utility costs.

BlackRock profits from low-wage labor in national and global supply chains – at Amazon and Apple as well as at Tesla, promotes precarious working conditions also in the housing management subsidiaries of the housing corporations controlled by BlackRock&Co.

BlackRock lobbies the EU and governments through its influence agents for privatized pensions – also tax-subsidized, of course – with the help of the financial product ETF (Exchanged Traded Funds), a kind of “people’s share” in which BlackRock leads the world market ahead of Vanguard. (12)

Environmental destruction, armament and new wars

BlackRock is a shareholder in the major coal, lignite, oil, pharmaceutical, agribusiness, and automobile corporations in the United States and the European Union. BlackRock’s high profit withdrawals thus also prevent the necessary innovations in transport, energy and the environment and endanger the survival of mankind. Newly launched environmental funds are only an addition of comparatively very small size, while disproportionately larger ownership stakes in fossil fuel corporations continue to be held.

BlackRock, Vanguard & Co are also the largest shareholders in the leading defense corporations – including those involved in nuclear bomb production – in the U.S. and EU: Boeing, Lockheed, Northrop, General Dynamics, Raytheon (U.S.), BAE (UK), Rheinmetall (Germany), Leonardo (Italy) and others. BlackRock & Co use rearmament, military interventions and wars by the US and EU states as a source of profit and increase the global threat of war.

Practices include circumventing export restrictions currently in the wars in Yemen and Libya, for example, by supplying warring parties such as Saudi Arabia. BlackRock has not withdrawn from any of the aforementioned groups.

Corona pandemic: accelerated build-up of private world power

BlackRock CEO Fink has been the acknowledged spokesman at the World Economic Forum (Davos) since several years for the “renewal” of capitalism, particularly in environmental and climate matters (Great Reset of Capitalism).

Fink notes correctly that the governments of the West are increasingly failing to meet the expectations of their populations. As an alternative, however, Fink & Co are concerned not with democratizing states, such as collecting taxes, fostering labor incomes in accordance with human rights, and expanding public infrastructure.

Rather, Fink said as a star speaker at the World Economic Forum: The alternative is to build a new private power structure, with multinational private companies and private foundations at its core. The “Corona” measures are intended to serve as an accelerant. “Neoliberalism has had its day,” writes World Economic Forum founder Klaus Schwab, but revolutions and uprisings are to be prevented. (13)

Current international law, the Universal Declaration of Human Rights including social and labor rights, the UN majority decision to ban nuclear weapons, the UN conventions, for example, on the rights of refugees, children and migrant workers, and on the sanctioned responsibility of companies in global supply and production chains (Binding Treaty) – Fink, Schwab & Co do not mention any of these in their new canon of values.

A greened new capitalism is supposed to whitewash all violations of international law, human rights and democracy: Greenwashing. Current governments and international institutions like the World Bank, the UN and the European Commission are supposed to assist in this. (14) BlackRock also advises the Federal Reserve Bank and the European Central Bank on their trillion dollar/euro Corona recovery programs.

BlackRock & Co want a renewed green capitalism. Many new funds are being launched for this purpose. However, they are comparatively small in scale. In essence, BlackRock & Co continue to be the controlling owners of fossil capitalism, i.e., the oil, mining, automobile, pharmaceutical, and defense corporations that maintain a global, deep-pocketed network of subcontractors and persistently violate human rights with impunity. Tax evasion, shrinking of national economies, prevention of necessary innovations for the environment and mass-serving infrastructure, impoverishment of states, and last but not least: dwindling political approval of the majority of the population for the complicit governments and previous governing parties: Fossil capitalism in more ways than one.

China wins system comparison, the West arms up

Poverty in the colonies, in the neocolonially exploited regions of Africa and Latin America, and increasingly also of their own populations, including the middle classes of the rich metropolises – the old Western capital democracies have long put up with this, most brutally and for the longest time in the leading Western state, the United States.

But with the People’s Republic of China, an alternative has emerged in just a few decades: Now the world’s largest economy, it has brought many millions of feudally, colonially and capitalistically impoverished people into sustainable upward development, in contrast to the capitalist West and the developing countries dependent on it, such as India and Brazil. In China, labor incomes of the majority and the middle class have been rising sustainably for at least three decades, the number of socially insured people has been increasing (labor, health, pensions), and the infrastructure for housing, new cities, ground-based mass transportation, free education has been expanded.

To this domestic development comes the alternative, namely inclusive globalization: on all continents, even for instance in a growing number of states of the European Union, the approval for the multiple investments of the New Silk Road is growing. This kind of globalization goes, and this is a very important difference, with respect for international law: without military accompaniment, without a global ring of military bases, without capital ships constantly patrolling off distant coasts, without covert or overt military intervention.

Last but not least, the fight against the Corona pandemic showed: China is winning the systems competition. In contrast, the economically, technologically and politically declining U.S.-led West – at least so far – sees armament against China and its most important cooperation partners, Russia and Iran, as the main way out. (15)

At the same time, BlackRock & Co continue their efforts to acquire stakes in China’s leading companies and to obtain licenses for financial operations in China. In doing so, they accept government regulations that they fight against in the West. The battle of the systems is multifaceted and by no means decided.

Notes

(1) On typology, practices and consequences, see Werner Rügemer: The Capitalists of the 21st Century. An Easy-to-Understand Outline on the Rise of the New Financial Players, 308 pages, tredition Hamburg 2019
(2) German-American Treaty of Friendship October 29, 1954; confirmed by judgement of the german Federal Court of Justice january 29, 2003 VIII 155/02
(3) On the history of the deregulations in the U.S. and the founding of BlackRock, see Rügemer: The Capitalists of the 21st Century p. 24 ff.
(4) New Order from Brussels: Will BlackRock soon determine EU climate policy? Deutsche Wirtschaftsnachrichten May 5, 2020
(5) Adam Lebor: The Tower of Basel. The Shadowy History of the Secret Bank that Runs the World. New York 2013, p. 252 ff.
(6) International Monetary Fund: What’s Shadow Banking? Many financial institutions that act like banks are not supervised like banks, in: Finance and Development June 2013, p. 42 f.
(7) BlackRock chief Larry Fink praises Trump tax cuts, bbc.com/news/av/business-42830383, January 26, 2018
(8) Werner Rügemer: Betrugsunternehmen Wirecard am Pranger – wo aber bleibt BlackRock? www.nachdenkseiten.de September 4, 2020 (Fraud Company Wirecard – but where is BlackRock?)
(9) For special references see the indictment, the testimonies of the witnesses and experts and the verdict at the Tribunal against BlackRock in Berlin on September 26-27, 2020; www.blackrocktribunal.de
(10) See Rügemer: The Capitalists of the 21st Century p. 16 ff.
(11) See Rügemer: The Capitalists of the 21st Century p. 28 f.
(12) George Osborne to earn 650.000 at BlackRock for 4 days a month, Financial Times March 8, 2017
(13) Klaus Schwab is founder and organizer of the World Economic Forum; Malleret founded the asset management company IJ for capital investment of UNHWI (starting from about 100 million per person)
(14) For the alternatives and counter-mouvements oriented to international law and human rights, see www.blackrocktribunal.de
(15) See the preface to the 3rd german edition of Werner Rügemer: Die Kapitalisten des 21. Jahrhunderts, Köln 2021

Some Federal Reserve officials are calling for tougher banking regulations in order to prevent the Fed’s low interest rate policy from leading investors to take “excessive” risks that will create asset bubbles. The Fed is understandably worried that these bubbles will burst leading to another market meltdown. However, the boom-and-bust cycle will not end because regulators stop investors from taking “excessive” risks. Almost every bubble and economic downturn America has experienced over the past 107 years was caused by the Federal Reserve’s manipulation of the money supply.

The Federal Reserve’s actions artificially lower interest rates, thus distorting the signals sent by the rates, which are the price of money. Artificially low interest rates cause investments to be made in projects that are not supported by the real underlying market conditions. This results in a boom, inevitably followed by a crash, then by a new round of money creation and government bailouts restarting the cycle.

Increased regulations will not just fail to head off the next crash, they will make the next recession worse. Federal regulators are not capable of determining what is “excessive” risk. Instead, that determination is best left to market participants. Regulators are subject to having the same Fed-induced distorted view of the marketplace as nearly everyone else. Thus, regulators may mistake a growing asset bubble as a thriving sector of the economy that will serve as a long-term source of growth. This is especially the case if, as with the housing bubble, government policies such as the Community Reinvestment Act encourage the malinvestments. Also, regulators may impede the growth of businesses that are actually responding to real economic conditions instead of Fed-created illusions.

Support among the people, if not among the financial and political elites, for auditing and even ending the Fed, as well as for cryptocurrencies and precious metals, suggests we may soon reach what Ludwig von Mises referred to as the “crack-up.” The crack-up occurs when enough people realize that continuous expanding of the money supply, and the accompanying decline in a currency’s purchasing power, is a feature of central banking. Therefore, they spend their money as soon as they get it, accelerating the rise of hyperinflation.

Concerns over the effects of the US government’s debt, the precarious American economic condition, and growing resentment of US foreign policy have led to a decline in the dollar’s international value. Eventually, these factors will lead to a rejection of the dollar’s world reserve currency status.

Rejection of the dollar’s reserve currency status abroad and the crack-up at home will cause an economic meltdown worse than the Great Depression. Among the problems this will lead to is increased violence as some Americans who believe they are entitled to live off the stolen property of others cut out the government middleman and start stealing from their fellow citizens.

The only way to avoid this fate is to spread the ideas of liberty among the people. A strong liberty movement that can pressure politicians to cut spending, audit and end the Fed, legalize competing currencies, and stop promoting divisive identity politics is the key to peacefully transitioning away from the Keynesian welfare-warfare state to a free society.

ronpaulinstitute.org

Federal Reserve Chairman Jerome Powell recently announced that the Fed is abandoning “inflation targeting” where the Fed aims to maintain a price inflation rate of up to two percent. Instead, the Fed will allow inflation to remain above two percent to balance out periods of lower inflation. Powell’s announcement is not a radical shift in policy. It is an acknowledgment that the Fed is unlikely to reverse course and stop increasing the money supply anytime soon.

Following the 2008 market meltdown, the Fed embarked on an unprecedented money-creation binge. The result was historically low interest rates and an explosion of debt. Today total household debt and business debt are each over 16 trillion dollars. Of course, the biggest debtor is the federal government.

The explosion of debt puts pressure on the Fed to keep increasing the money supply in order to maintain low interest rates. An increase in rates to anything close to what they would be in a free market could make it impossible for consumers, businesses, and (especially) the federal government to manage their debt. This would create a major economic crisis.

The Fed has also dramatically expanded its balance sheet since 2008 via multiple rounds of “quantitative easing.” According to Bloomberg, the Fed is now the world’s largest investor and holds about one-third of all bonds backed by US home mortgages.

Congress has expanded the Fed’s portfolio by giving the central bank authority to make trillions of dollars of payments to business as well as to state and local governments in order to help the economy recover from the unnecessary and destructive lockdowns.

Contrary to what most “mainstream” economists claim, a general increase in prices is an effect — not a cause — of inflation. Inflation occurs whenever the central bank creates money. Increasing the money supply lowers interest rates, which are the price of money, distorting the market and creating a bubble (or bubbles) that provides the illusion of prosperity. The illusion lasts until the inevitable crash. Since the distortions come from money creation, the system cannot be “fixed” by just requiring the Fed to adopt a “rules-based” monetary policy.

Once the lockdowns end, the Fed’s actions may lead to a short-term boom. However, the long-term effect will be even more debt, continued erosion of the average American’s standard of living, and the collapse of the fiat money system and the welfare-warfare state. The crisis will likely be brought on by a rejection of the dollar’s reserve currency status. This will be supported both by concerns about the stability of the US economy and resentment over America’s hyper-interventionist foreign policy.

The question is not if the current system will end. The question is how it will end.

If the end comes via a meltdown, the result will likely be chaos, violence, and increased support for authoritarian movements as desperate people trade their few remaining liberties in hopes of gaining security.

However, if pro-liberty Americans are able to force Congress to begin cutting spending — starting with the money wasted on militarism — and to move toward restoring a sound and sane monetary policy that includes ending the Federal Reserve, we can minimize an economic crisis and begin restoring limited constitutional government, a free-market economy, and respect for liberty.

ronpaulinstitute.org

China fears a financial ‘Iron Curtain’ is about to fall – a complete expulsion from the dollar sphere. In fact, soft capital control is already birthing, with Bloomberg reporting that the U.S. is now asking colleges and universities to divest from Chinese holdings in their endowments, “warning schools in a letter this last week, to get ahead of potentially more onerous measures [coming] on those holding the shares”.

Reportedly, the Chinese leadership annual August Beidaihe retreat, agreed (should the recommendations be subsequently endorsed at the Central Committee plenum in October) that China should prepare for war; build food and energy reserves; establish the Eurasian continental economic system, recover its overseas gold and broaden the global RMB settlement system (including its digital Yuan) – and prepare for the complete interruption of relations with the U.S.

Yet, whilst the media focus is all on this ‘tech’ and ‘sphere’ de-coupling, something profound – and quite separate – is already shaping the global monetary order (quite apart from likely Chinese exclusion). It is set, in the longer term, to be more revolutionary – and contentious – than even ‘de-coupling’. It is getting sparse attention.

However, as it becomes ever more evident that no ‘V’ shaped economic rebound will be arriving soon – as the U.S. ‘house’ catches fire again with Coronavirus over the autumn and winter, presaging a further economic closedown – the chances are that this bombshell will indeed ignite. First, a little background:

Earlier this month, Zero Hedge published a remarkable interview with two former Fed economists – Simon Potter (who was also the former head of the Fed’s Plunge Protection Team for many years) and Julia Coronado – both of whom have tremendous impact on thinking at the Fed.

They hinted at the Fed’s ‘last ditch’ stimulus and bailout strategy (i.e. should the U.S. economy be further stalled by Coronavirus): It is ‘to wire’ digital money directly into Americans’ smartphone financial apps, bypassing the banking system entirely. “The two propose creating a monetary tool that they call ‘recession insurance bonds’, which draw on some of the advances in digital payments and ‘wired’ instantly to Americans”:

“As Coronado explains the details, Congress would grant the Federal Reserve an additional tool for providing support — say, a percent of GDP [in a lump sum that would be divided equally and distributed] to households in a recession. Recession insurance bonds would be zero-coupon securities, a contingent asset of households that would basically lie in wait. The trigger could be reaching the zero lower bound on interest rates or, as economist Claudia Sahm has proposed, a 0.5 percentage point increase in the unemployment rate. The Fed would then activate the securities and deposit the funds digitally in households’ apps.

“As Potter then elucidates: “it took Congress too long to get money to people, and it’s too clunky. We need a separate infrastructure. The Fed could buy the bonds quickly without going to the private market. On March 15 they could have said interest rates are now at zero, we’re activating X amount of the bonds, and we’ll be tracking the unemployment rate—if it increases above this level, we’ll buy more. The bonds will be on the asset side of the Fed’s balance sheet; the digital dollars in people’s accounts will be on the liability side.””

Then, just days later, Federal Reserve Governor, Lael Brainard, hinted once again at the coming monetary revolution: “To enhance understanding of digital currencies, the Federal Reserve Bank of Boston is collaborating with researchers at MIT, in a multi-year effort to build and test a hypothetical digital currency oriented to central bank uses … It is important to understand how the existing provisions of the Federal Reserve Act with regard to currency issuance apply to a CBDC and whether a CBDC would have legal tender status, depending on the design”.

So what would prompt the Fed to pursue “this significant policy process”? Why – another leg down, resulting from an upsurge in Covid-19, of course. The last bailout was not just “clunky”, it sent stocks and bonds soaring skyward. And has severed asset prices from any connection to metrics of value, from fundamentals, and from analysis (and did do not much either for ordinary Americans). What we now have, therefore, is a market focussed only on narratives, and not on reality. This has implications, too.

The prospect of the Fed ‘printing’ digital dollars, wired to peoples’ cash-pay apps, as a new stimulus mechanism – replete with the overtones of a ‘Davos Reset’ formula for moving toward a digital, global Universal Basic Income model is obvious – as is the political temptation for politicos to pay for all sorts of political ‘projects’ in this way.

Yet this is only a half of the ‘Revolution’ – two other components are already ‘done’. Two tipping-points have been passed. Firstly, people can see (with Boomer entitlement spending about to soar into the Trillions), that the U.S. government cannot support the debt burden without having the central bank simply ‘print’ more money. Many on Wall Street will see this as the solution: Putting digital money directly onto apps must be inflationary, they believe. And inflation can melt away America’s debt-load through de-basing the currency.

Secondly, in April, the Fed already changed the Supplementary Leverage Ratios (SLR) to exempt U.S. Treasuries from capital-ratio requirements. In simple English, this means that commercial banks can buy any amount of U.S. government debt instruments, without putting aside capital on their balance sheet, to support such purchases. So that (as long as rates are even marginally positive) they can buy and enjoy a nominal income. In June, U.S. banks increased their U.S. Treasuries by 48%. Effectively, the Fed facilitates the credit creation; the banks use it to buy Treasuries; and the government then spends the money.

Magic. Like the Mad Hatter’s tea-party – out of thin air, things appear. Not once, but twice: as a similar trick was done by the Fed via multiplying the value of Treasury bails out – by providing credit on a 10:1 basis to the Treasury’s special purpose vehicle. (The Fed says this is not direct spending, which would be illegal).

So, let’s try putting all this into some sort of order:

Firstly, America has already started down the path towards a nationalised (centrally-managed) economy – rather like China’s. The Treasury and Blackrock Hedge Fund, (who manage the Congressional bails out distribution on behalf of the Treasury), now make the (economic) life-or-death decisions for U.S. businesses – from the very big, down to the very small.

This is a ‘great reset’. And like most temporary measures, it is likely here to stay. What’s not to like from the U.S. President’s point of view? He controls ‘money’ issuance now that the Treasury and Fed effectively are fused together, and can ‘steer’ the U.S. economy in a ‘national-interest’ direction during its tech war with China (and Europe). Free markets? They do not exist in America at this point.

Secondly, this financial war is already underway, and China will likely use its CIPS (financial clearing system) and its Central Bank initiated digital yuan (already in use) to circumvent SWIFT and the USD. Except this will mean others being paid in a non-fungible digital currency that can only be recirculated back to China for its goods. Or, maybe not? Like China’s Shanghai oil futures market, foreign sellers may be given the option to hold their sale proceeds either in Chinese debt instruments, or, to exit their Yuan via the physical gold market.

But, apart from U.S. and China, Russia, Italy, Iran and UK are, amongst others, planning their own CBDCs. Are we moving then – in an era of enhanced financial war – towards multiple, non or quasi, fungible digitalised of means of payment, as the new normal?

Third, the world again is demanding gold in exchange for U.S. dollars. And the Fed’s primary dealers – some of which operate as bullion banks — seem unable to comply. But with the advent of the Coronavirus, the U.S. financial system has been forced to lower real interest rates down into negative territory, causing gold to look more attractive than holding devaluing U.S. Treasuries.

Traditionally, the Fed controls the gold market to prevent gold from effectively competing with, or displacing, the U.S. dollar as the primordial monetary instrument. But someone, or some entity somewhere, is now battling the U.S. central bank for that control. In short, the Fed’s manipulation process presently is failing. And unless the Fed can suppress the price of gold, and regain control, we may see an escalating, downward spiral in the value of the dollar vis à vis gold.

Here – finally – we come to the crux. In outlining the monetary ‘revolution’ taking place in the U.S., there is much in it for the Wall Street ‘Davos’ contingent to like: the move from traditional money into digital; Central Banks issuing digital money (though the ‘Davos’ crowd would prefer that to be done by a global authority); the end of cash; and the system-control and transparency that digitisation would allow. Some of this – such as the political instrumentalisation of smartphone apps – have been given a push by the Coronavirus.

But the U.S. Establishment is deeply split: Yes, there is a powerful, Wall Street, globalist component who support Davos, but others in the Deep State, including some amongst the neo-cons, would rather die-in-a-ditch than see U.S. dollar hegemony lost – amidst the undoubted exigencies of the present economic recession. These tend to be Trump supporters.

So let us put the final pieces into place: U.S. asset markets are presently unhinged from all fundamentals, and ruled by a ‘don’t fight the narrative’, and existential fear of potentially ‘missing out’. In other words, the un-anchored stock market highs – on which Trump’s re-election hopes are pinned – are highly vulnerable. Sentiment can shift in the flash of an eyelid from an adrenalin-fuelled ‘fight’ mode, to ‘flight’. All that is needed is a changed narrative.

And what narrative might that be? Well, the ‘Sage’ of Omaha, Warren Buffet, this week dropped a very unexpected narrative: Not known as a ‘gold bug’, he was shown to have dumped stocks and bought gold, and gold-miners. So, who next for sparking the October market sell off, as the dollar continues to spiral downwards, and interest rates edge upwards?

Mr Soros may be smiling?

As economist Mark Thornton put it in a Q&A published at the Mises Wire, America now has this President and a generation in power that has no concept of monetary restraint, and as a result, has no heed for government policy restraint – either domestically or externally. While the Fed’s policy is unprecedented and even outlandish, other G7 central banks are going to even greater extremes. By colluding in a monetary race to the bottom – each state debasing their currencies jointly and collectively – these ‘Vichy’ Central Bankers both conceal the dollar de-basement, whilst piling fuel onto the illusion of ‘no consequences; no accountability and no limit’ to the dollar’s fire-power.

So the U.S. government feels empowered to sanction China over human rights in Xinjiang, over its visa policy in Tibet, over Huawei actions, over Hong Kong – and even thinks to travel-ban the entire CCP. China’s crime? It didn’t become ‘like U.S.’ (as we had anticipated). Non-compliant Russia, like Iran, is already sanctioned up to its eyes, and in the Middle East, U.S. officials have relished the prospect of starving and financially bludgeoning Lebanon, Syria, Iraq, Jordan and Iran into line. Gulf States too – even Israel in respect to China – are required to collude in financial siege-war of one sort or another – or face having their ‘security umbrella’ cancelled.

There are many in Washington who regard this as America ‘winning’ – and good election tactics, too. There is however, old wisdom about such pursuit of a dismembered world. It is the story of Osiris. The ‘world’ then, was Egypt. Osiris had inherited the fertile Nile Delta, and his younger brother, Seth, had received only a lesser, more arid portion.

Mean-spirited and destructive, Seth aspired to ‘grasp the world’. He murdered Osiris, and hid his body; but Osiris’ wife/sister, Isis, after endless search, finally found it. Osiris was outraged and angry at her: he again seized the body. He dismembered it into parts. And had the parts hid, and spread far around distant regions. Yet Isis did it again: She ‘came back’. She found Osiris’ ‘bits’, re-assembled him, and had Apollo blow life into him. They had a son: Horus.

There are many messages in this story, but a principal one was that Seth’s dismemberment of Osiris brought only violence, instability and calamity to Egypt. Horus fought for decades against Seth. But neither ultimately were able to prevail. The fighting brought only strife and ruin – and Egyptians came to detest Seth as the symbol of a destruction that tainted everything. Eventually the council of gods decided that Seth be expelled and exiled from Egypt, for all the tensions and turmoil he had caused.

Seth was understood by Egyptians to represent a capsized human; a one-sidedness of character that had failed to accomplish wholeness – was incomplete, and inadequate. Significantly, it was only by the intervention of the opposite pole, the female Isis, in alchemical marriage to Osiris, who brought back fecundity – in all its meanings – and harmony to Egypt.

If we look back to the ancient concept of the ‘two lands’ of Egypt – the fertile Black Lands of the Nile and the barren Red Lands of the surrounding desert – we get an inkling of how the waxing and waning of one polarity, yielding ultimately to the rise of its ‘opposite’ value, was understood in earlier times. Everything is in flux: polarities swap places, as in a formal dance, and potencies of the invisible world jostle and shove against the ebb and flow of human activity.

The ‘Two Lands’ of Egypt represents something more than some mere geographical distinction. In ancient Egypt, the physical landscape had a metaphysical resonance of which the ancient Egyptians were keenly aware: The Two Lands were comprehended as the two contending, yet mutually interpenetrating, realms of life and death.

The combined landscape of the Two Lands is one of ‘paradise’ and ‘hell’, at war with one another, yet united in precarious balance and reciprocity. ‘Horus’ thus symbolises the harmonious, creative unity of cultivation in the valley; and ‘Seth’ that of in-coherence, of chaos and death in the desert areas.

But even Seth, who in so many respects symbolises a destructive, voracious negativity, embodies too a certain duality. He was never perceived as intrinsically bad or evil, but as a necessary component of the Cosmos: aridity, desiccation and death. His ambivalence is experienced in the Egyptian desert: mercilessly hot, with nowhere to shelter from the sun; but in this landscape of rock and silence, where no bird flies and no animal, save the desert viper moves, there is too, a deep stillness which the Valley cannot give.

Seth may, in one sense, personify the force of life-sapping, decay and death, but his dramatic polarity lies precisely in his very necessity to renewal. Ancient Egyptians saw themselves held in this balance and interplay of polarities: life and death, abundance and scarcity, light and dark – the very landscape teaches the principle of oscillating polarities. Maintaining balance was a succession of destructions and renaissances; allowing Seth’s insidious, sapping barrenness to be overcome by Horus’s subsequent reviving inundations, was the central preoccupation of the Egyptian King. Seth and Horus were thus to be held in equilibrium.

We might understand this double movement – compounded in aspects that are always in polar tension, but yet a co-constituent to each other – as being somehow a reflection, an analogy, and a consequence of a deep inner life-rhythm: the systole and diastole of human creativity itself.

Later historians such as Plutarch (Greek writer, d. CE 120) observed that Seth is said to have wandered the region where he fathered sons – whom, fuelled by their resentment at Egypt’s treatment of them, chose to redeem the mortal enmity of Egypt, by precisely identifying themselves with a vengeful, ambitious – but now exclusive deity – Seth. In short, Plutarch is saying that the Sethian impulse and polarity was perpetuated (i.e. that it descended down through the human condition).

The U.S. may believe that dismembering and scattering the institutional limbs of its perceived nemeses – China, Russia and Iran – will Make America Great Again; but this ancient wisdom tells U.S. that it will fail, precisely because of its one-sidedness, and lack of the feminine faculty of empathy – and not because a weaponized reserve currency is no potent tool.

The region faces – like ancient Egypt – a period of travail, as neither the U.S., nor its nemeses, initially will prevail; but ultimately, America will be, like Seth, forced into exile to taste its own bile at the failure of its exceptionalist mission (and deity).

The upside here is that this crisis holds the promise to discredit the mainstream illusion that there exists, and there needs be, therefore, no limits – and no accountability – to using the Fed’s dollar printing press, and threats of exclusion from the dollar sphere, to impoverish lives in much of the rest of the world. And that this action is consequence free – that it portends no come-back.

It is grotesque that millions of workers are being laid off by corporations which are in turn receiving taxpayer funds. Many of these corporations have stashed trillions of dollars away in tax havens and have contributed zero to the public treasury. Yet they are being bailed out due to shutdowns in the economy over the Covid-19 crisis.

Why aren’t the banks and corporations being forced by governments to pay for their workers on sick leave or in lockdown? It’s because the governments are bought and paid-for servants of the top one per cent. Some political leaders are the embodiment of the one per cent, like Donald Trump and senior members of the U.S. Congress.

The biggest orgy of funny money is seen in the U.S. where the Trump administration and Congress have approved the printing of trillions of dollars to prop up corporations and banks. Meanwhile crumbs are being thrown at millions of workers and their families.

In just five weeks, unemployment has hit a staggering 26.4 million people in the U.S. – and that’s the official figure. The real level is doubtless much higher. It is reported that the job losses have wiped out all the employment gains made over the past decade since the last financial crisis in 2008. As with the present crisis, the U.S. government arranged trillion-dollar bailouts for banks and industries back in 2008-2009. It didn’t last long until the next binge.

In truth is this is a familiar pattern over the past century where the economy is continually salvaged from ruin by the government at the expense of ordinary workers, small businesses and taxpayers. The recurring rescue is proof that the system of private capital and supposed free markets is a myth.

The system typically privatizes profit for an elite while socializing the losses for the mass of people. It has always been a version of “socialism for the rich”.

In the distant past the salvaging of broken-down capitalism was at least conducted with a certain degree of democratization and social progress. In the New Deal era of Roosevelt in the 1930s at least government intervention went a long way to restoring workers and their rights, despite bitter opposition from capitalists. Over recent decades, however, the rescuing of capitalism has seen an ever-increasing emphasis on plying money and loans to corporations and investors while ordinary workers are neglected. This process of embezzlement reached new heights in the 2008 crash. Now under Trump the larceny has become legendary. It should be underscored though that the corruption has bipartisan endorsement from Republicans and Democrats. They are really one party beholden to big business.

As Eric Zuesse commented in an-depth analysis published in our journal this week, the Covid-19 “top-down bailout” in the U.S. will result in even more social inequality and ultimately more dysfunction in the American economy going forward. “The outcome will therefore be economic collapse, and perhaps even revolution,” notes Zuesse.

It is indisputable that capitalism is a failed system both in the U.S. and Europe. The Covid-19 pandemic and its disastrous social impact of sickness and deaths shows that such an economy cannot organize societies based on satisfying human needs. Instead, it functions to continually enrich the already wealthy while creating ever-greater numbers of impoverished and deprived. This chronic polarization of wealth has been pointed out by many critics of capitalism, including Karl Marx, and more contemporaneously by progressive economists like Richard Wolff and Thomas Picketty.

It is fair to describe corporate capitalism (or socialism for the rich) as a pathology which produces many other pathologies, including deprivation, crime, insecurity, ecological damage, militarism, imperialism and ultimately war. Ironically, a virus is exposing the pathological system. And it is, inevitably, forcing a cure to arise.

It’s time to abolish the parasitical system and implement something more civilized, effective, sustainable and democratic. That is the task of people organized to fight for their interests. The delusion of bailing out a failed and sick system must be shaken off once and for all.

The right-wing old Reagan imperialists and fundamentalists continue to endlessly proclaim that the crisis has mortally wounded China’s standing in the world; That is simply a lie.

The same voices continue to witlessly proclaim the superiority of American exceptionalism in the face of the mounting tsunami wave of evidence to the contrary. They will endlessly continue do so in the Kingdom of the Mad and the Asylums of the Delusional Insane.

The clear facts are these: First, China’s crackdown got its pandemic crisis under control – impressively fast.

The reaction to this great achievement, as that great Healer Doctor Sigmund Freud warned us – has been denial: For China;s centralized form of government “cannot” ever succeed according to both the conservative right and liberal fake left in the United States.

Therefore China’s figures are conveniently being denied. Its data has become in the words of the brilliant American (indeed he was a New Yorker) iconoclastic questioner of all Conventional Wisdom Charles Fort a century ago “damned.”

That is to say, facts that are “damned” because they contradict and disprove prevailing absurd paradigms of belief that falsely and fashionably masquerade as scientific truth.

Russia’s achievement must also be ignored. As I have noted before, it was the very success of the crazed Russia-hating liberals in the Democratic Party and all their “me-too!” Republican wimp allies in Congress in imposing such swingeing economic sanctions on Russia that protected and saved the Russian people.

Contrast the paucity of COVID-19 cases in Russia so far with the disasters sweeping Italy, Spain, France and Germany in the European Union as well as Britain: By cutting Russia out of the global free trade system at least since 2014, her Western liberal enemies have only insulated and protected the Russian people from the inexorable consequences of Universal Free Trade and Open Borders.

What I call the Audit of Pandemic is delivering a death blow to the already disintegrating European Union.The institutions of Brussels, Luxembourg and Strasbourg are dissolving before our eyes. Their Proud Tower, 75 years in the building is collapsing. “Thou art weighed in the balance and found wanting.”

Judgment is also coming on the antiquated political system of the United States. As I write (obviously the figures change everyday) the Coronavirus Resource Center at Johns Hopkins University lists 331,000 cases of the virus in the United States as opposed to only 81,000 in China.

What this m really means is that the venerable US federal system simply cannot handle the threat of pandemic in a modern mass society.

Liberals scapegoat President Donald Trump for this but his hands are tied. It is the policies of state governors and city mayors, especially on the ultra liberal East and West Coasts and in such teeming unregulated urban centers as Detroit, Chicago, Boston and New Orleans, that are directly responsible for this catastrophe. The biggest urban center – New York City – is the most hard hit of all.

Out of lemons, make lemonade: The Deep State and Mainstream Media are now trying to create yet another absurd and fraudulent liberal national leader out of this sordid mess. Where ludicrous toy-men “Beto” O’Rourke and “Pete” Buttigieg and the Feminist Knight Elizabeth Warren failed to strike any spark whatsoever, “America ‘s Governor” – the complacent and downright creepy Andrew Cuomo is being marketed – as a new heroic figure.

Yet no state and no major US city failed to prepare for the pandemic as egregiously as Cuomo did. At least, the cowardly and useless Mayor of New York City Bill De Blasio had a fig leaf of shame to keep a low profile through the pandemic, Cuomo is milking his own shameful criminal incompetence for all he can.

The Democratic National Committee would love to replace old Joe Biden now that he has served his purpose in blocking Bernie Sanders with the infinitely more pliable and preferable Cuomo, as Joaquin Flores has rightly pointed out on this platform.

My own observation is that all the 60 million mindless American liberals who revere every sentence in the New York Times, the Washington Post and on MSNBC and CNN as coming straight from the teats of their feminized “god” are swallowing all the latest fawning lies about Cuomo with their full, brainless glee. Dostoevsky’s Gadarene Swine have found yet another cliff to jump off.

However, in the real world, the crisis is exposing the bankruptcy of the US federal system.

It is not the federal government or the US armed services that have failed here: It is the individual US states, primarily on the East and West Coasts. They have blocked any centralized, coherent national response at every step.

The ludicrous Sanctuary Cities remained obsessed with bringing in millions of illegal immigrants. Yet those people, by their own adult choices defy and deny established laws of the country they are invading. And they have spread the disease like wildfire. Outbreaks of the virus and rapid spreads of it are worse by a vast margin all the metropolitan centers that proudly practice sanctuary policies.

Such illegals are the least likely to respect voluntary restrictions on travel. They are also most likely to abuse such freedoms regardless of the dangers they pose to all others.

In protecting these Illegals at all costs, the wealthy, comfortable liberals in the US suburbs and cities have violated the most fundamental basis of John Locke’s Social Contract: The obligation for society to defend its own members from outside predators.

The EU is now obviously collapsing before our eyes while the United States teeters on the Tipping Point of total disintegration. Russia and China will emerge from this crisis as world leaders in responsible social policies far more rapidly than anyone imagines.

We stand by hoping that it will work to reflate markets collapsing from a catastrophic mispricing of assets. At least some of us do. I don’t.

I hope it fails and it’s because those inflated prices fuel the very global political order that is anathema to human advancement.

President Trump is finally happy with his FOMC chair, Jerome Powell, after he opened the door to unlimited quantitative easing, nearly unlimited liquidity injections via the repo markets, and taking interest rates to the zero-bound.

It’s clear that the Keynesians at the Fed and the U.S. Treasury Dept. have no answers to the problems in front of them. They are simply doing what they always do when a crisis hits. Print money and hope someone still believes the new money is worth buying.

The sudden supply and demand side shock to the global economy thanks to the COVID-19 coronavirus is outside of their frame of reference.

To best understand what we’re dealing with here you have to understand how these people think. Modern economic theory, based on John Maynard Keynes’ General Theory of 1936, imagines the economy as a bathtub.

And that bathtub is constantly draining as credit is destroyed. Money flowing out of the economy has to be replaced with a constant stream of new money, in the form of new credit, or the bathtub drains. The velocity of new money has to keep up with old money or the system drains.

When the credit markets through the transmission of new money through central bank policy cannot keep the bathtub full, governments are supposed to step up with fiscal spending in the form of deficits to make up the difference.

This is then supposed to stimulate aggregate demand and, in turn, the credit markets to keep everything running. This is done to chase an ever-larger global gross product as measured by total spending.

I’m not here to argue as to why this is patent nonsense. I’m going to state that it is. And I state this without reservation. Because it places zero value on the cost of stealing time from the productive portion of the society to reinforce the unproductive.

That’s why all money printing is fundamentally immoral. It’s thievery, transferring wealth from the holders of money, savers, to the holders of the new money.

That deflation the Keynesians are so afraid of is the cure to the malinvestment of capital resources incurred because of the last time the government intervened to refill the bathtub.

This system is ultimately a Ponzi scheme piling credit on top of credit until there are no more greater fools to sell the new debt to.

That’s the system we have. And it is collapsing precisely because the world is situated at the point where there is little more productive capacity to monetize and pull that capital from the future to fund the new debt.

It won’t matter if we replace this system with pure helicopter money without debt as the Modern Monetary Theory proponents argue. We’re already doing a version of this by having the central banks buy debt they never intend to sell on the open market. So, the debt itself is without value. The money printed from those bonds is as much scrip as if the bond had never been issued.

But the time lost by people in pursuit of uneconomic ends by mispricing risk and servicing debt they are legally obligated to service is real.

So, ultimately, the difference at this point between what we’re seeing from the central banks now and MMT is a matter of accounting and definitions. But it doesn’t solve the basic problem that prices for things want to adjust downward.

And I remind you that Russian President Vladimir Putin understood all of this when he said no to OPEC+ and lower oil production. This pricked the so-called “Everything Bubble” and now the world is realizing just how important it is for capital markets to reflect the actual goods and services produced by the global economy not a financialized multiple of that value thereof.

It’s important to make this distinction now because as a hard money advocate and Austro-libertarian thinker it is my duty to counter the rising cries for someone to save us from the evil monster of deflation.

Those most vulnerable to this deflation of asset prices are the very people who own most of those assets and use them as cudgels to beat down those who oppose them — think Iran, Venezuela and, most openly, Russia.

The good news is that they can’t stop the deflation. Quantitative easing is, in the real world, deflationary because it signals to markets that the central banks are so scared of the future that it cannot be trusted to market forces. This feeds the fear and causes people to hoard money they feel is undervalued, thereby exacerbating the cycle.

And today those monies are the U.S. dollar, gold and, to a lesser extent, Bitcoin.

So, the Fed fired its bazooka. Congress fought for a couple of days in deciding how it would provide its support through government means (fiscal policy) and refill the bathtub.

The rest is now a question as to whether anyone still believes this makes any sense anymore.

The ECB has yet to truly act other than to intervene in the sovereign debt markets to keep rates from exploding to the upside. The Fed has the floor right now, the ECB is waiting in the wings. It will have to act soon as Italy’s economy goes into freefall and its insolvent banking system has to find a way to survive.

Because the reality is that what is really on trial here is the idea that any of these people in charge have, collectively, one single clue as to what to do to stave off a complete collapse in confidence.

I would like to think that they do, that they know in their heart of hearts that I am right and allowing asset prices to deflate is the cure and the inflation of prices has been the real disease we should be fighting alongside COVID-19.

And the main reason they will not allow that deflation is because it directly threatens their personal power base and the fundamentally unfair system they have profited from through the extraction of unearned wealth at the world’s expense.

I believe some of them understand this dynamic. The true vultures, like George Soros and Paul Singer, I’m sure do. But the vast majority of these people in charge in both Europe and the U.S. believe what they were taught about the economy in college and today execute plans based on what they have been miseducated in.

And that actually scares me far more than if they were doing this out of pure malice.

Incompetence honestly applied is far more dangerous than honest evil disingenuously applied. Because in the former environment the purely malicious can operate with few if any controls.

The world is changing before our eyes while we hide out in our homes hoping not to catch a virus that won’t do more than inconvenience most of us. But we are still at a crossroads. Putin set us on the path to choose deflation, he understood the problem as I am presenting it here.

Now will we take the opportunity handed to us and tighten our belts, demand debt liquidation, corporate bankruptcies and a complete reshuffling of the global capital order?

Or will we choose to be complicit in debasing our ourselves through access to the printing press, actively devaluing our time and labor by accepting digits added to our bank balances which no one sweated or worked to produce?

Bankruptcies or bailouts? That’s the question you should be asking yourself. You can’t bail out Main St. without bailing out Wall St. To bankrupt Wall. St. and all that it funds a lot of us will have to be bankrupted as well.

Are you willing to take that pain to stop the money machine that funds the death and destruction? If not then you aren’t serious about wanting it to end.

And that’s the real crossroads we have come to, the one where we realize there is no such thing as a free lunch and our inaction to this point makes us culpable for what has been done.

For the second time in a generation, the President and Congress are creating an economy under the guise of ‘saving the economy.’ Through bailouts for the executives of corporations and institutions whose coffers have been emptied for their own personal enrichment, a corporate kleptocracy is having its class power secured. And through token payments and pandemic profiteering for the masses, the American precariat is being deepened and broadened to solidify its place as desperate and expendable.

With Donald Trump’s threat to ‘get America working again’ by Easter (April12th), the same tactic that turned Italy’s pandemic from tragedy to catastrophe is being repeated on a much larger scale here. And for what? In an economy where the richest 1% takes all the gains while the poor and working class haven’t seen a raise in four decades, it is the rich who will reap the benefits while workers get sick and die. It is finance capitalism that is being bailed out when it should have suffocated under its own weight in 2009.

Graph: in times of crisis the powers that be call for solidarity through national unity. However, there is little solidarity shown in who owns the economy. The rich own the economy, represented here in shares of stock. Since the Fall of 2019 — long before the coronavirus arrived, the Federal Reserve has been once again bailing out Wall Street to the tune of several trillion dollars (graph below). There aren’t enough virus test kits, ventilators or protective equipment, but at least the rich don’t have to worry about not being rich anymore. Source: Edward Wolff / NBER.

Where are the bailouts for the people? $1,200 checks against $30,000 bills for being treated for coronavirus? Why isn’t providing healthcare for all of the people the primary objective of the bailouts? Mr. Trump says he will send workers back to work while Democrats leave them no alternative but to work or starve. Without providing them the means— assured by meager bailouts, Democrats are every bit as guilty as Donald Trump of sending working people to die in a pandemic to add a few more dollars to the bank accounts of the rich.

More to the point, where are the virus test kits, ventilators and protective equipment for health care workers and the rest of us? Nick Turse of The Intercept puts a lie to the claim that the need for these couldn’t have been foreseen. For decades epidemiologists and health care professionals have been shouting from the rooftops about the need to prepare for a pandemic caused by a respiratory virus. Successive neoliberal governments dismissed the warnings and here we are to suffer the consequences.

When Mr. Trump uttered ‘our country wasn’t built to be shut down,’ one could be forgiven for asking whose country he was talking about and why it can’t be shut down? The country that most of us inhabit has been in the process of being shut down for some four decades through outsourcing, privatization, austerity and cuts to the social safety net. The region I live in was completely shut down in 2008 and stayed closed until just recently. That’s how long it took the last round of bailouts to land here.

Implied in the statement is that we, the people, must comport ourselves with the dictates of ‘the economy’ rather than the other way around. For all of the talk of freedom and democracy, the economy is theorized to exist in a realm where human needs are secondary, a mere matter of opinion. The coronavirus pandemic can’t in any meaningful sense be said to have been chosen. Neither are the marginal existences many of us live. In this way, deference to the economic system is cover for power relations, not a natural order.

One of the truths spoken aloud in a moment of political panic is that the Federal government can create as much money as it cares to and spend it any way that it sees fit. Neel Kashkari, President of the Minneapolis Federal Reserve, reconfirmed this truth. This reframes poverty, student debt, inadequate healthcare, Social Security shortfalls and austerity as political choices, not facts of nature. It also means that the thousands of workers being sent to early deaths from coronavirus could just as easily be saved.

While it’s clear that Donald Trump is a menace, Democrats have yet to reconcile that he is using the same logic— that people must be sacrificed to save ‘the system,’ that motivated Barack Obama’s bailouts of Wall Street. Rich bankers were given unconditional bailouts while nine million mortgage borrowers had their houses taken from them to restore bank profits. The ‘sanctity of contracts’ was cited to give bonuses to bailed out bankers while ‘moral hazard’ was claimed to deny relief to homeowners who were unable to pay their mortgages.

As the Federal government, under the auspices of Donald Trump, Nancy Pelosi and Chuck Schumer, conjures five trillion dollars (Federal stimulus + Federal Reserve) ‘out of thin air’ to bail out financial speculators and the corporate looting class, where was this power when Joe Biden claimed that ‘we’ can’t afford a functioning healthcare system? Where was this power when Nancy Pelosi claimed that this same ‘we’ can’t afford a Green New Deal? The national Democrats’ decades-long austerity program has always been a cynical fraud.

Why this matters is that rank and file Democrats have by-and-large taken the claim that the Federal government must ‘live within its means’ at face value, even as they bore the brunt of austerity policies, as they are about to do again. If hedge funds, private equity and various and sundry financial speculators can be bailed out, then why couldn’t black homeowners have been bailed out in 2010? If corrupt and incompetent corporate executives can be bailed out, then why couldn’t working people whose jobs were outsourced through NAFTA have been bailed out? If Democrats had held the Obama administration to account for the Wall Street bailouts, they would have standing to criticize Donald Trump in the present. But they didn’t.

Graph: beginning last Fall (2019) the Federal Reserve restarted large-scale bond purchases to provide ‘liquidity,’ a.k.a. the capacity to transact, to financial markets. Dislocations in the repo (repurchase contract) market where large hedge funds speculate began appearing. Whether this was due to large banks preferring to put their funds elsewhere (forex) or hedge fund arbitrage strategies gone awry, the bond purchases represent a public subsidy of private profits. Source: St. Louis Federal Reserve.

Most readers probably don’t know this, but the Federal Reserve began re-bailing out Wall Street early last Fall, well before the coronavirus hit. Why this matters is that it indicates that nothing was fundamentally fixed through earlier bailouts. Hedge funds of the sort that pay their executives tens of millions of dollars created the market dislocations they claim to be able to exploit. In 2007 these strategies were derided as ‘picking up pennies in front of a steamroller’ for their tendency to earn regular profits until they give them all back plus some when they blow up.

The socially and economically rational solution to these types of blow-ups is to unwind the trades— the bailout, and then shut the hedge funds down and make their managers find honest work in other industries. However, what the Federal Reserve has been doing, following from the Obama administration’s decision to keep insolvent banks on life support in perpetuity, is to manage markets so that losing trades don’t result in loses.

So again, Democrats trying to portray Donald Trump’s lazily articulated homicidal tendencies as a break with the past need to explain why their guy (Obama) used the same class divisions to organize and distribute the 2009 bailouts. Mr. Trump and his fellow oligarchs are exactly who the Obama administration ‘saved’ with its bailouts. Now that Donald Trump is following Mr. Obama’s lead, although in more desperate and politically fraught times, the bi-partisan class war against the rest of us may finally be coming clear.

This gets to the nature and structure of the economy that is being ‘saved.’ The problem in a pandemic is that no one is producing the stuff that money could otherwise buy. Mr. Trump and Congress can wish large amounts of money into existence. But doing so only produces the money, not the stuff to buy. And without the stuff to buy, money is worthless. So it’s fair to say that workers create the wealth that Wall Street exists to redistribute upwards.

But consider this in the context of the current bailouts. Donald Trump, Congress and the Federal Reserve wish trillions of dollars into existence and they decide how it gets allocated. The already rich and connected— financial speculators, corporate executives and other oligarchs, get most of it. This gives them the power to buy the stuff that workers produce. Workers receive enough to not starve for a couple of weeks, and then it’s back to work to die in the pandemic. And here’s the punchline: it has always been like this. Poverty and want are political choices.

Moderate left economists appear to accept that corporations be kept as dominant institutions at the center of American political economy. They recommend giving bailout money to them to be managed, with restrictions, to keep workers ‘attached’ as employees. This, despite that the executives who will still control these companies made them fragile through issuing debt to benefit themselves. Indebtedness has been used as a weapon against labor since the 1980s to claim that corporations can’t afford to pay living wages.

The breadth of the bailouts in 2020 indicates the rising fragility of finance capitalism. The Federal Reserve is reportedly in the process of buying everything— stocks, corporate bonds, mortgage-backed securities, etc. to save the fortunes of the rich, the institutions of finance capitalism and the corporations that have been systematically looted for decades now. The bailouts started well before the coronavirus became known. And unlike in 2008, there is little pretense that these bailouts are about saving a functioning system.

Being made to work during a pandemic (Trump) or face starvation and homelessness (Democrats) leaves working people and the poor with a lot less to lose than they had even a few weeks ago. These circumstances recall the capitalism of the nineteenth century, fitting the pre-Great Depression ideology that currently informs economic logic. Work or die has been ‘disrupted’ to become work and die. The idea that Democrats are going to save anyone but themselves is several crises past delusional. Solidarity is these circumstances means class solidarity. Organize or die is the message being sent from above.

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