Archive for the ‘Golden prices’ Category

Political and Economic Crises (Pt 12)

October 13, 2019

Political crisis engulfs the U.S. and Britain

On Sept. 24, 2019, Democratic Speaker of the U.S. House Nancy Pelosi announced the opening of an impeachment inquiry directed against Donald Trump. This is not yet an actual impeachment of the U.S. president, still less his removal from office. But it is considered a major step toward impeachment, which had appeared to be a dead letter after the Mueller report failed to produce any evidence that the 2016 Trump campaign had collaborated illegally with the Russian government.

A CIA whistle-blower reported that he or she had heard from other government officials that President Trump had withheld military aid to Ukraine to pressure the Ukrainian government to investigate Hunter and Joseph Biden. Joseph Biden is considered a front-runner in the race to be the Democratic presidential nominee for the 2020 election. Since the 2014 Euromaidan coup spearheaded by fascist and openly pro-Nazi elements, Ukraine has been reduced to the status of a virtual U.S. colony. The Democrats consider this colonization of Ukraine a great achievement of the Obama-Biden administration.

In the wake of the Euromaidan coup, the younger Biden was appointed to the Board of Directors of Burisma, Ukraine’s leading producer of natural gas, in an obvious move to please Ukraine’s new masters. If Trump demanded in a meeting he held with Ukrainian President Volodymyr Zelensky that Zelensky investigate the Bidens or else the U.S. would withhold military aid, Trump would violate U.S. laws that prohibit seeking the aid of a foreign government in a U.S. election. The Democrats failed to prove that Trump received such aid from the Russian government in the 2016 election. Now they believe they are on the verge of proving it concerning Ukraine’s government.

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Political and Economic Crises (Pt 11)

September 15, 2019

Trump versus the Fed

On Sept. 3, the U.S. Institute of Supply Management reported that its widely watched index, based on a survey of industrial purchasing managers, had dropped to 49.1 percent. Any number below 50 indicates a declining trend in U.S. industrial production. The index has not been so low since September 2009, when the U.S. industrial economy was near the trough of the Great Recession.

The ISM reports: “Falling orders among foreign clients dragged on overall new business growth and producer confidence. The degree of optimism about the year ahead hit a fresh seven-year series low amid growing business uncertainty. As such, employment was broadly unchanged and spare capacity was used to clear backlogs of work.”

This is just the latest in a series of reports indicating that the U.S. and world capitalist economies are on the brink of recession. The Trump White House and the electoral wing of the Republican Party fear that Trump will face the reelection in November 2020 amidst full-scale recession conditions, dramatically reducing Trump’s chances of winning a second term.

Trump has responded by stepping up his public attacks on Jerome Powell, the conservative Republican banker Trump himself nominated to head the Federal Reserve System. In the wake of the annual August meeting of bankers at Jackson Hole, Wyoming, Trump declared Jerome Powell to be worse for the U.S. economy than even Chinese President Xi Jinping.

Trump is pursuing two aims here. First, he hopes that the Federal Reserve and its Open Market Committee will lower its target for federal funds and flood the banking system with newly created U.S. dollar reserves that will at least postpone the arrival of a full recession and mass cyclical unemployment until after November 2020. If this happens, Trump will be able to run as a “prosperity president.” Experience shows that U.S. presidents have a tough time winning second terms when they have to run for reelection near the low point of the industrial cycle.

Secondly, if a recession does arrive by election day, Trump wants to be able to point to a scapegoat — in this case, the Federal Reserve Board and the “international financial elites” out to destroy his nationalist “Make American Great Again” policies.

Jerome Powell, for his part, has promised that he will act “as appropriate” to keep the expansion going. The key words here are “as appropriate.” Powell is indicating to the markets that he will not jeopardize the dollar and the dollar system in an attempt to “keep the expansion going” like Trump is demanding. Somewhat reassured, investors caused the dollar price of gold to fall after Powell’s remarks, while interest rates on government bonds have rebounded.

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Political and Economic Crises (Pt 6)

April 21, 2019

Storm over the Federal Reserve System

U.S. President Donald Trump has indicated that he will nominate right-wing economic commentator Stephen Moore and businessman Herman Cain to fill two vacancies on the
Federal Reserve System’s Board of Governors – called the Federal Reserve Board for short. If confirmed, both Moore and Cain would serve for 14 years. While Trump’s other nominees to the “Fed” have been conventional conservative Republicans, Moore and especially Cain have been strongly attacked in the media and by economists and some Republicans for being completely unqualified.

Of the two, Cain has drawn the most opposition from within the Republican Party. As of this writing, his confirmation by the U.S. Senate looks unlikely. Republican Senators Mitt Romney (who ran against Obama for president in 2012), Lisa Murkowski, Cory Gardner, and Kevin Cramer have all indicated that they are leaning against voting to confirm Cain. If all them vote no, Cain’s nomination will fail unless he can win over some Democratic senators.

Cain – one of the few African-Americans Trump has nominated for high office – throughout his business career has expressed opposition to even elementary labor rights. In 2016, he briefly ran for president as a Republican on a platform of reforming the federal tax system in an extremely regressive way going beyond Trump’s own tax cut for the rich. Cain was then forced to withdraw from the presidential campaign when several women came forward alleging that he had sexually assaulted them. For Donald Trump, this was not a disqualification but it might be for some U.S. senators who have to face re-election.

Cain has not indicated that he supports inflationary monetary policies. On the contrary, he has said that he would like to see a return to the gold standard. For taking this stand, he has been ridiculed by liberals and progressives as well as mainstream economists. However, Cain does have actual central bank experience having served as head of the Federal Reserve Bank of Kansas City, one of 12 regional banks that make up the Federal Reserve System.

Capitalist opponents of Cain’s nomination – Cain has been a strong supporter of Trump – fear that Cain would do Donald Trump’s bidding on the Fed’s Open Market Committee (1). With the 2020 presidential election approaching, it is widely suspected that Cain would push for an “easy” monetary policy and cuts to the Fed’s target for the federal funds rate in a bid to stave off the looming recession until after the November 2020 election. Not only would such a policy put the dollar-centered international monetary system in danger in the short run, it would also erode the Federal Reserve System’s independence over the long run.

Trump’s other prospective nominee, Stephen Moore, has drawn much criticism from mainstream media and professional economists but so far less from Senate Republicans. Like most of Trump’s nominees for high positions, Moore is white. He is not even a professional economist. Although majoring in economics in college, he does not hold a PhD. Unlike Cain, Moore has never directed either a business enterprise – Cain in addition to serving as head the Federal Reserve Bank of Kansas City was also head of the Godfather Pizza Chain. However, like Cain, Moore has been accused of mistreating women. This raises the question whether Cain’s race could be a factor in the apparent lack of opposition to Moore on the part of Senate Republicans.

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Political and Economic Crises (Pt 4)

February 24, 2019

Trump and ‘Party of Order’ unite to declare war on Bolivarian Venezuela

On Jan. 23, after conferring with U.S. Vice President Mike Pence, Venezuelan right-wing politician Juan Guaidó declared himself “interim president” of Venezuela. The United States promptly recognized Guaidó as the “interim president.” Trump refused to rule out a military attack against Venezuela if the government of President Nicolas Maduro and the Venezuelan people resist the U.S. government’s appointment.

In a series of moves that included breaking diplomatic relations with the legitimate government, appointing a puppet government in its place, seizing state assets and handing them over to the puppet government, demanding that Venezuela’s military support the puppet, and threatening direct military action if the Venezuelan military refuses, “commander-in-chief” Donald Trump’s order amounts to a declaration of war against the government and people of oil-rich Venezuela.

As part of the war drive, Trump imposed a full-scale economic blockade against Venezuela. The assets of the state oil company held abroad, including its U.S branch Citgo, has been seized and handed over to the puppet Guaidó “government.” Venezuelan bank accounts have been frozen, including $1.2 billion in gold bullion held in the Bank of England.

Venezuela is one of a bloc of three large oil-producing countries, the other two being Iran and Russia, that is not under the control of the Empire. If Trump succeeds in his war against Venezuela, the pressure on Iran and Russia will increase. For the moment, the war against Venezuela is being fought with economic methods, but this could change at any moment.

Even if the war remains economic, this doesn’t change the fact that it is a war of aggression and, as such, a crime against humanity. By Feb. 6, the European countries of Austria, Belgium, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Iceland, Latvia, Lithuania, Luxembourg, Macedonia, Netherlands, Poland, Portugal, Spain, Sweden, and the UK had recognized the U.S.-appointed “interim president.”

Latin American countries that resist the Empire continue to recognize the legal government of Venezuela. These include socialist Cuba – no surprise there – Bolivia Uruguay, Nicaragua, and the new nationalist government of Mexico, which came to power in January after many years of right-wing rule. On the other hand, Latin American countries ruled by right-wing governments belonging to the so-called Lima group announced that they recognize the Trump-appointed Guaidó as Venezuela’s “interim president.” Among the Latin American governments recognizing Guaidó is the new far-right government of President Jair Bolsonaro in Brazil.

Beyond Latin America, Israel also announced its support for the coup government. In contrast, Syria continues to recognize the Maduro government. Russia, China and Iran also continue to recognize Maduro as the sole legitimate president of Venezuela.

There is a general pattern here. Governments that are integrated into the U.S. empire quickly recognized the coup government and joined the U.S. declaration of war against Venezuela. All other governments recognize Maduro as head of the only legitimate government of Venezuela.

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Political and Economic Crises (Pt 3)

January 21, 2019

On Dec. 20, 2018, it was announced that U.S. “Defense” Secretary James “Maddog” Mattis was resigning. Mattis resigned in protest over President Trump’s decision to withdraw 2,000 U.S. troops fighting in northeast Syria and cut in half the number of U.S. troops fighting in Afghanistan.

It was originally announced that Mattis would stay on until Feb. 28, which would allow time for President Trump to nominate a successor and for the successor to confirmed by the Republican Senate. Within days, however, it was revealed that “Maddog” would at the president’s insistence leave by Jan. 1. Mattis was replaced “on a temporary basis” by Patrick Shanahan, a former Boeing executive. Shanahan’s official title will be “acting” secretary of defense. Unlike Mattis, Shanahan is a civilian who comes from the industrial capitalist side of the military-industrial complex.

Since he assumed office on Jan. 20, 2017, Trump had been surrounded by a ring of generals, the most prominent of which was Mattis. General Mattis was known to be an enthusiastic supporter of the war in Afghanistan as well as all the other colonial wars the U.S. has been fighting around the world, including the war in northeastern Syria. Even more important, he is a strong supporter of NATO, which acts as the military wing of the U.S. world empire.

Trump, in contrast to Mattis and other generals who have surrounded Trump until recently, has expressed skepticism about continuing the wars in Afghanistan and Syria. According to the U.S. government, U.S. troops are in Syria to fight the remnants of ISIS and protect “our allies” the Kurds against NATO member Turkey.

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Political and Economic Crises (Pt 2)

December 23, 2018

As boom slows, political instability rises in the imperialist countries

As 2018 winds down, political instability is sweeping the Western imperialist countries – both the United States and Western Europe. In the United States, as part of a plea bargain with federal prosecutors, Michael Cohen, Trump’s former lawyer and “fixer,” pleaded guilty to violating with “Individual 1” U.S. campaign finance laws. Cohen faces three years in prison.

It is no secret that “Individual 1” is one Donald J. Trump, the current president of the United States. According to Cohen’s plea, Trump directed Cohen to break U.S. campaign finance laws in order to pay “hush money” to porn star Stormy Daniels and “Playboy playmate” Karen McDougall. Trump paid the hush money because he didn’t want the headlines of his extramarital affairs to dominate the news in the weeks leading up to the U.S. presidential election.

Since these payments violated federal election law, it is clear that Trump committed felonies. These felonies, it should be pointed out, are not connected with the so-called Mueller probe into whether Trump, other members of the Trump family, or other associates violated U.S. laws as part of their alleged collusion with Russia in the 2016 elections. That is a separate matter. So far, Mueller and his prosecutors have not presented concrete evidence of law-breaking on the part of Trump in this matter, though there continues to be much speculation about this possibility in the media.

Theoretically, Trump can now be impeached because he committed felonies, which meets the U.S. constitutional standard for impeachment for “high crimes and misdemeanors.” Some Democrats have suggested that in light of these facts impeachment proceedings against Trump in the House of Representatives should now commence. However, there is also a general feeling that crimes centered on sexual affairs are not sufficient grounds to remove a president from office. After all, who in Washington has not had an affair or two or more? While the Democrats will have a majority in the U.S. House of Representatives beginning in January, they would need a large number of Republican votes in the Senate to reach the two-thirds’ majority necessary to remove Trump from office.

The Republicans are reluctant to remove Trump on impeachment charges. If they do vote to remove him, they will likely lose Trump’s white racist “base,” which continues to adore him. The “Trump base” will be furious if their adored leader is removed over what is essentially a sex scandal. Can Trump – and this is a concern for those ruling-class circles of the “Party of Order” who do not like Trump – be removed from office without splitting the Republican Party in such a way that its continued existence as one of the two “major parties” in the two-party system would be in question?

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Political and Economic Crises

November 25, 2018

I had originally planned to deal with the current state of the industrial cycle in this post. I assumed I would make a few passing comments on the U.S. mid-term elections and then go into the economic analysis. However, it became clear that the political crisis gripping the U.S. has reached a new stage. At the same time, the industrial cycle that began with the Great Recession of 2007-09 has now entered its terminal stage.

I have therefore decided to begin with the political crisis this month and, events allowing, examine the terminal stage of the current industrial cycle next month. One way or another, the interaction between the political crisis represented by Trump’s rise to power and the developing cyclical economic crisis will dominate national and global politics between now and the 2020 U.S. presidential election.

This blog has centered on capitalist economic crises, especially the periodic crises of overproduction. The industrial cycle with its periodic crises of overproduction and the political crises and wars that can turn into revolutions – or counterrevolutions – are closely intertwined in ways that are not always obvious.

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Modern Money (Pt 5)

October 28, 2018

In recent weeks, U.S. politics were dramatically shaken by the Republican drive to get Trump’s Supreme Court nominee Judge Brett Kavanaugh confirmed by the U.S. Senate despite charges that he violently sexually assaulted women in high school and later while a student at Yale University. Though Kavanaugh was an extremely right-wing federal judge, his nomination was expected to go smoothly, with virtually unanimous support from the Republicans and some Democrats. That changed when a respected California professor of clinical psychology, Dr. Christine Blasey Ford, revealed that a drunken Kavanaugh had tried to rape her at a high school party. According to Dr. Ford, when she attempted to cry for help, Kavanaugh put his hand on her mouth causing her to fear that he might accidentally kill her.

Normally, a nominee for high office, let alone the Supreme Court, facing charges for crimes far less serious than attempted rape would be expected to withdraw his candidacy for the sake of “the nation and his family.” But not this time. Demonstrators, mostly women, descended on Washington demanding that the Senate reject the Kavanaugh nomination. After riveting testimony by Dr. Ford and a temper tantrum rebuttal by an outraged Kavanaugh, the Senate by a 50 to 48 vote confirmed Kavanaugh as one of nine Supreme Court justices. Every Republican with the exception of Senator Lisa Murkowski of Alaska, who voted “present,” voted for Kavanaugh’s confirmation. Every Democrat, with the exception of West Virginia Senator Joe Manchin, who voted to confirm Kavanaugh, voted against the nomination.

The Republicans hope the backlash against the women protesters, horrified that an accused rapist like Kavanaugh could ever be seated on the high court, will electrify their racist misogynistic base and limit the expected Democratic gains in the November 2018 mid-term elections. The conventional wisdom is that while the Democrats will win a somewhat larger majority than previously expected in the House they will face defeat in their bid to retake the Senate. If the Democrats against current expectations do win a majority in the Senate, they will have the power over the next two years to reject future Trump nominations to the Supreme Court.

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Modern Money

July 1, 2018

By the time of the U.S. presidential election in November 2020, historical experience and the condition of global money markets suggest that the current global economic boom will probably have run its course. While the latest government economic figures show the current boom continuing in the United States and Europe, serious crises have already hit the currencies of Argentina and Turkey.

The dollar after a period of weakness has begun rising against the euro and other currencies and against gold. This sudden dollar strength is not only the result of rising U.S. interest rates. Trump’s threat to impose high tariffs on a whole range of commodities starting on July 6 has set off a flight into the dollar due to its role as the international means of payment. We have seen many such flights into the dollar over the years whenever a crisis threatens, whether political, military or economic.

If no compromise is reached by July 6 and Trump’s tariffs – and the retaliatory tariffs of competing nations – go into effect, it is possible that some commodity sales will fall through, which could trigger an international credit crisis. If severe enough, such a crisis would quickly throw the global capitalist economy into recession. This is all the more likely given the very late stage in the current industrial cycle, which has made the global credit system increasingly fragile even in the absence of a trade war. Whatever happens in the short run, Trump’s economic nationalist “America First” policies are undermining the entire world order that has prevailed since 1945. But that is the subject for another post.

Because capitalist economic crises tend to manifest themselves first in the spheres of currency and then credit, many reformers have sought cures for crises through reforms to the currency and credit systems. This creates the illusion in the minds of middle-class reformers, who stand between the two main class camps of modern society, the capitalist class and the working class, that the contradictions of capitalist society can be overcome through reforming the credit/monetary system. The U.S., in particular, has produced numerous monetary reform movements.

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The Current U.S. Economic Boom in Historical Perspective (Pt 2)

May 6, 2018

Trump’s attempts to reverse the decline of U.S. capitalism

In April 2018, the U.S. political world was shaken by the news that Paul Ryan, the Ayn Rand/Austrian school-inspired Republican speaker of the U.S. House of Representatives, would not be running for re-election in this year’s mid-term race. Ryan claimed he was retiring at the age of 48 from politics “to spend more time with my family.”

It is widely believed, however, that Ryan is retiring from Congress because he fears a humiliating defeat at the hands of his Democratic Party opponent, the construction worker, trade unionist, and “Berniecrat” Randy Bryce. Over the last year, many of Ryan’s constituents were no doubt shocked to learn that their handsome, genial congressperson wanted to take away their health insurance.

It seems likely that Ryan, who is believed to harbor presidential ambitions, plans to lie low, make lots of money in the private sector, and count on the public forgetting (with the assistance of the mass media) about his attempt to throw tens of millions of people off their health insurance. At a later day, Ryan will be poised to reenter electoral politics and ride a new Republican wave, perhaps all the way to the White House.

But how could there be another Republican wave in the aftermath of the ever-growing debacle of the Trump presidency and the self-exposure of the Republican Party on the health insurance issue? To assume that a Republican comeback is impossible, would be to ignore the lessons of the last great “progressive” victory in U.S. politics—the election in November 2008 that brought into the White House the first African-American president, combined with solid Democratic majorities in both houses of Congress. However, at the end of Obama’s triumph lurked the racist Donald Trump, backed by Republican majorities in both the Senate and the House.

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