Political and Economic Crises (Pt 16)

Trump is acquitted

The beginning of February finally saw the end of the impeachment saga with the acquittal of Trump in a partisan-line vote with one exception in the Republican-dominated U.S. Senate. That was Senator Mitt Romney, Republican of Utah, who voted to convict on the Article of abusing power. Romney’s vote reflects a growing friction between the conservative Utah-based Mormon religious sect of which Romney is a member and the pro-Trump “Christian right.”

The Christian right does not consider Mormons to be genuine Christians. Mormons indeed have a history of being persecuted in the U.S. They fear that despite their long-time alliance with the right wing of the Republican Party, Trump with his dependence on the Christian right is potentially dangerous to them. This is similar to the fears of even highly conservative parts of the U.S. Jewish community who fear the influence of anti-Semitism within the Trump “movement.”.

The fate of the impeachment trial was sealed when on Jan. 30 the Senate voted to refuse to allow witnesses to testify, making it impossible for the Democrats to advance their charges against Trump any further.

In mid-January, Nancy Pelosi finally sent two Articles of Impeachment, passed by the House of Representatives against President Trump in December, to the U.S. Senate. Essentially, the Democratic House charged that President Donald Trump held up military aid to the pro-imperialist Ukrainian government of President Volodymyr Zelensky to force Zelensky to open a corruption investigation of former-Vice President Joe Biden and his son Hunter. The Democrats charged that Trump intended to use this against Joe Biden if he were to become the Democratic presidential nominee.

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One Response to “Political and Economic Crises (Pt 16)”

  1. citizencokane Says:

    I have a question about the current world economic conditions. Recently the dollar has been depreciating versus gold. The dollar-“price” of gold currently stands at $1,645.00 as I type. This strikes me as quite similar to how the dollar-price of gold began to creep upwards steadily in the 1970s and in the early 2000s. If I understand your “commodity-money” approach to the Law of Value, one prediction of your approach should be that this dollar depreciation versus gold should eventually cause inflation…regardless of however much “slack” is in the world or U.S. labor market. Your model would also seem to predict that this dollar depreciation versus gold should also eventually trigger a “creditors’ strike” and rising interest rates…once again, regardless of how much “slack” is in the labor market. Am I correct so far?

    One question I have is, in what way does the causality run for the anticipated increase in interest rates? For example, would it be possible for there to be little to no initial acceleration in inflation, and yet still see a “creditors’ strike” and rising interest rates, due to creditors noticing the declining gold-value of their returns? Or is a degree of accelerating inflation needed in order to make creditors worry about their “real” inflation-adjusted returns? Does the chain of casuality run: gold price increase –> inflation –> interest rates increase, or gold price increase –> interest rates increase –> inflation (because industrial capitalists will layoff workers in the face of higher financing costs, cutting into their profit of enterprise, even if there are rising prices and slack in the labor market, thus decreasing production and driving prices up)?

    I know that you have stressed time and time again that creditors…and any other capitalists, for that matter…don’t care so much per se about the expansion in the physical use-values that they may purchase…except incidentally when it comes time for them to transform some limited slice of their profits into personal consumption expenditure. Instead, if they are to excel at being capitalists, they are forced to care about maximizing their exchange-value, which means that, even if at first there is little to no acceleration of inflation in “real” physical use-value terms (i.e. in terms of the basket of physical use-values that they can purchase with their dollars), a dollar-depreciation versus gold will, by itself, already be enough reason for creditors to demand increasingly higher interest rates in dollar-terms in order to compensate for the decline in interest (or even absolutely negative interest) that they will be receiving in gold terms.

    I am personally convinced of the logic of this line of thought, and yet whenever I try to explain it to educated individuals, they rightly point out that creditors do not seem to outwardly care about the “price” of gold…in that it is very difficult to find any talk in the media or among investors about the price of gold influencing interests rates.

    These educated individuals will then point out that the “price” of gold is going up, and yet interests are falling. The 10-year U.S. treasury yield is now 1.34%. The 30-year U.S. treasury yield is now 1.81%. Forget for the moment what this means in “real” terms. Just consider what it means in gold terms, with the dollar-“price” of gold going up by about 25% over the last year. These bondholders seem to be content to accept roughly -20% (that is, NEGATIVE 20%) return on their bonds in terms of gold. How long can this go on?

    If Arthur Burns had inherited this sort of situation in the 1970s, or Bernanke in 2007, then they would have had a much easier time bailing out markets without facing a “war on two fronts,” no? Is not the situation right now more similar to that inherited by Franklin Roosevelt by around 1938, where there was plenty of idle money capital in comparison to industrial capital, ultra-low interest rates, and where fiscal Keynesianism had plenty of room for expansion without sending interest rates soaring?

    Consider also that the higher dollar-price of gold, in conjunction with little to no acceleration in inflation, is making gold-mining more profitable. In effect, primary commodity prices are experiencing a gold-price deflation right now. This should set the stage for an acceleration in gold mining, and an acceleration of the growth of the market. The higher “price” of gold (especially in comparison to primary commodities) also means that there has already been an expansion of the market *in gold terms*—i.e. that there is now more gold purchasing power on the world market, even without the amount of physically mined gold accelerating yet. Together with the ultra-low interest rates (which implies that there’s actually lots of idle money capital in comparison to industrial capital), does this not imply that we are actually at the bottom of the Kondratiev Cycle right now, similar to 1938, for example, and that world capitalist economic conditions are set to improve broadly over the next 10 years or so? Is it incorrect to draw this conclusion? I’d love to hear you explain why our situation right now is closer to 1970 rather than, say, 1938. Thanks!

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