Federal Reserve Building
In a Facebook exchange last month I wrote:
It absolutely was Obama who bailed out the banks. (And bragged about it to their fat cat CEOs with his ‘pitchforks’ remarks.) Leaving aside the utter but predictable injustice – this is capitalism – of making workers pay for the recklessness of those ‘masters of the universe’, this was dreadful in practical terms. There was no writedown on those missold mortgages, yet by far the most efficient way of pump priming the US economy was to give money to those who must spend it. Ordinary folk don’t have the option of hoarding it else buying a Picasso and a few vintage cars.They have to go out and put that money back into the real economy.
But we’re not talking history here – not even history of the most recent kind. Wake up world! Every time capital lurches into crisis, it is workers – and by the way that is almost certainly you insofar as your only means of putting food on the table is by selling your labour power – who pay the price.
This from Nick Beams, writing two days ago on the World Socialist Website:
Two actions by US financial authorities this week indicate that the United States will respond to a looming downturn in the global economy by providing, once again, unlimited amounts of cash to financial markets.
On Wednesday, the Federal Reserve began an operation, lasting at least six months, to purchase around $60 billion of Treasury bills a month in response to sharp spikes in interest rates in overnight markets. The following day, in a separate action, the New York Federal Reserve injected $104.15 billion into financial markets to boost liquidity.
Together with the Fed’s decisions to twice cut interest rates, with the prospect of another cut at the end of this month, these moves make clear that, in conditions characterised by the International Monetary Fund as a “synchronised” global slowdown, any efforts to “normalize” monetary policy are well and truly over.
The European Central Bank has reversed its plan to end financial asset purchases and lowered its base interest rate further into negative territory, while the Bank of Japan continues to be the virtual sole purchaser of government debt and a major buyer of corporate shares.
In other words, the policy of the world’s major central banks, acting on behalf of a global financial oligarchy, is quantitative easing ad infinitum.
After the crash of 2008, the Fed and other central banks handed out trillions of dollars to the banks and finance houses whose actions had precipitated the crisis. This money did not go into the real economy but passed straight into the coffers of the financial oligarchs.
Read the full piece (1332 words) here …