I just corresponded with Dennis O’Neil, a friend in NYC, and it put me up to an idea. In nutshell, the left has been caught flat-footed by this financial crisis, the exceptions being handful of financial historians and lefty economists like Henry CK Liu, Michael Hudson, Peter Gowan, and Loren Goldner… to name a few.
For a while no, to the chagrin of those who espouse the politics of manipulaiton, I have been saying that “Money for people, not for war,” and other such agitational drivel is a violation of Amilcar Cabral’s dictum, “Tell no lies, mask no difficulties, claim no easy victories.”
Money, and the evolutionary nature of money, is at the very center of what is happening, yet many many leftists are neither preoccupying themselves with, nor teaching others about, any theory of money that demystifies it for our current epoch.
Warning to the Consumer Culturists of Easy Answers: It requires study.
I’m doing a long, serial piece at Insurgent American where part 4 talks about money… a subject that has been off limits in the public discussion for way too long, and now it is about to bite everyone directly in the ass, do not pass go, do not collect $200 (no pun intended).
But the whole story cannot be told strictly in the canonical leftist (marxist )idiom. As Loren Goldner shows, value-theory gives the basic plot, but the political economy of the left — having been stuck repeatedly in time, and thereby circumscribing its own reach — does not have a language adequate to explain this.
Fictional value, the Treasury-bill standard, dollar hegemony, and the Dollar-Wall Street Regime are terms and concpets that provide the specificity to build on basic assumptions about value, with a tremendous preponderance of evidence from the actually-existing capitalist system.
I propose that we use the just-published piece (below) by Henry C. K. Liu as a pedagogical device. It is chock full of the very financial language that describes our epoch, and that is largley unknown to most of us (thereby concealing the actual operation of the system). This can be a kind of community-based self-pedagogy that takes one series about a real thing that is happening, and demystifies it.
Whether folks want to do that is something I can’t predict. Here goes.
Central bank impotence and market liquidity
By Henry C K Liu
After months of adamant official denial of any potential threat of the subprime mortgage meltdown spreading to the global financial system, the US Federal Reserve (Fed) last Friday, a mere 10 days after declaring market fundamentals as strong and inflation as its main concern, took radical steps to try to halt financial market contagion worldwide that had become undeniable.
The Wall Street Journal (WSJ) reports that the emergency measures – lowering the discount rate FULL ARTICLE
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What does it mean to say “market fundamentals are strong”?
Actually, the market here is the “equity market.” How did this — as opposed to household economic security — become “fundamental”? This is a peek into which class the Fed works for.
What is the history of the Federal Reserve Board’s (Fed) preoccupation with inflation?
Class again. Inflation is bad for investors and lenders, who want the purchasing power of collected interest, etc, maximized. “Controlling inflation” is seen as the key to a “healthy economy” (one with a happy equity market). How to control inflation? Well, the cause of inflation — according to this theory — is higher wages for workers. Higher wages are a result of to many jobs and not enough workers competing for them, which givew workers more power relative to the employers (who have to compete for workers by offering money and time off and respect on the job… stuff like that). How to control inflation… that was the question. Create unemployment. No joke. This is the explicit policy of the Fed, and it is done by raising interest rates as a disincentive to job creation. The signal to stop is measured as an umemployment rate. That it is mean-spirited and hypocritical (calling other economies “command economies,” for example) is not the only problem. The other problem is that it is not always true… like now.”
citations and links welcome