Posts Tagged ‘fascism’

Prospects for the Economy Under Trump

January 1, 2017

This article will come in two parts. This month, I examine policies of the Federal Reserve and Trump’s domestic policies. Next month, I will end this series with an examination of Trump’s global economic policies.

The Federal Reserve and Donald Trump

On December 14, 2016, the Federal Reserve Open Market Committee announced that it had finally decided to raise the federal funds rate—the rate that commercial banks, not the Fed itself, charge each other for overnight loans—by a quarter of one percent. Instead of targeting a rate of 0.25 to 0.50 percent like it did between December 2015 and December 2016, its new target is 0.50 to 0.75 percent.

Since Trump’s victory on November 8, long-term interest rates have risen sharply. This combined with the decision of the Fed to finally nudge up the fed funds rate indicates that the money market has tightened since Trump’s election. In the course of the industrial cycle, once the money market starts to tighten it is only a matter of time before recession arrives. The recession marks the end of one industrial cycle and the beginning of the next.

As it became increasingly likely that Trump could actually win the Republican nomination, the Fed put on hold its earlier plans to raise the fed funds rate multiple times in the course of 2016. The normal practice is for the Federal Reserve System to raise the fed funds rate repeatedly in the later stages of the industrial cycle. Indeed, this is central banking 101. These policies are designed to hold in check credit-fueled “over-trading” (overproduction), as well as stock market, land and primary-commodity speculation that can end in a crash with nasty consequences.

If the central bank resists raising interest rates too long by flooding the banking system with newly created currency, this leads sooner or later to a run on the currency, which is what happened in the 1970s. The result back then was stagflation and deep recessions with interest rates eventually rising into the double digits, which effectively wiped out the profit of enterprise—defined as the difference between the total profit and the rate of interest. At the end of the stagflation in the early 1980s came the explosion of credit, sometimes called “financialization,” the aftereffects of which are still with us today.

Under the present dollar-centered international monetary system, the repeated failure of the Federal Reserve System to push up interest rates would lead to the collapse of the U.S. dollar and the dollar system. The inevitable result would be a financial crash and thus the military and political crash of the U.S. world empire, which has held the capitalist world together since 1945.

In this cycle, however, the Federal Reserve waited more than eight years after the outbreak of the crisis in August 2007 before it began to push up the federal funds rate. The reason for the prolonged delay is that the current U.S. economic expansion, which began in 2009—representing the rising phase of the current industrial cycle—has been the slowest on record.

During this extraordinarily feeble expansion, the U.S. GDP has grown, with some fluctuations, at a rate of only about 2 percent a year. This performance contrasts sharply with the double-digit U.S. GDP rates of growth that occurred during the expansion of 1933-1937 and again after the severe but brief recession of 1937-1938 during the Great Depression. Far more than in the 1930s, the current era has been marked by “secular stagnation” in the U.S. as well as Europe and Japan.

Beginning with the panic that broke out with the failure of the giant Lehman Brothers investment bank in September 2008, the Federal Reserve engineered an explosion in the dollar-denominated monetary base designed to stave off a new super-crisis that could have been much worse than the one in 1929-1933. This effort succeeded in preventing the crisis from reaching the extremes the earlier super-crisis did in most countries—but not all. For example, the crisis/depression that began in the U.S. in 2007 has been far worse in Greece than the crisis of the 1930s was in that country. But even in countries where a full-scale repeat of the 1930s Depression was avoided, the post-crisis stagnation has been far more stubborn than anything seen in the 1930s.

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Donald Trump, the New Political Chief of Capitalist Society

December 4, 2016

Donald J. Trump, the 70-year-old New York billionaire, real-estate magnate, owner of casinos and golf courses, and former clownish reality star, is the new political chief of the United States and leader of the “free world” (as the U.S. world empire likes to call itself).

Trump was actually defeated by a margin of 2.3 million votes in the election by Hillary Clinton. However, he won an overwhelming victory in the electoral college. The electoral college is itself an undemocratic hangover from when the plantation economy dependent on the slave labor of kidnapped Africans and their descendants dominated the southern U.S. This would be as though the Labour Party in Britain won a small but definite majority in the House of Commons but the House of Lords and the Crown—both survivors of the time when a feudal economy dominated what is now Great Britain—combined to install a prime minister from the Tory Party.

Hail to the Chief!

The big capitalists know full well that, whether or not they like a particular “leader of the free world,” they have only one such leader at a time. Immediately after the proclamation of Trump as “president-elect,” outgoing President Barack Obama wished Trump success. He explained that, whatever differences there might be between the first African American to be elected to the presidency and his right-wing racist successor, “we”—the ruling capitalist class—are “playing on the same team.”

Obama is correct. Hillary Clinton after a lag of a few hours—reports said that she had not even considered the possibility that she would lose and had not prepared a concession speech—delivered a meek statement along the same lines.

Ironically, Trump had declared in the weeks leading up to the election that “the system is rigged” and he might not accept the results. This indicated that Trump himself did not actually expect to win. Whether Trump would have recognized a Clinton victory as legitimate and indicated his support of a President Hillary Clinton will never be known.

The selection of Senator Jeff Sessions of Alabama for U.S. attorney-general indicates that the Trump administration will be the most racist administration since at least the days of Woodrow Wilson. Ronald Reagan nominated Sessions for a federal judgeship, but his racism was too obvious and he was rejected by the Senate. Sessions called African American employees of the Justice Department “boy”—the term of address used by white slaveholders when addressing their African male slaves. Later, in the Jim Crow era, white bosses, officialdom and racist whites would address African American men as “boy.”

Sessions once joked that he had no arguments with the Ku Klux Klan until he found out that Klan members used marijuana. The point of this joke is that Sessions, though he disapproves of weed, has no disagreements with the Klan on the question of race. This joke is beyond offensive and in a decent society would disqualify him for any public office, let alone the position as chief law-enforcement officer. The Sessions nomination gives the lie to any claim that the president-elect is not a racist.

Trump appointed Steve Bannon as White House chief advisor and strategist. Bannon, the former chief executive officer of Breitbart “News,” a far-right website that has provided a platform for the neo-Nazi-ridden alt-right movement, has sent chills down the spines of all American who do not fit the white-nationalist definition of European Americans. As defined by neo-Nazis—or white nationalists, as they like to call themselves today—non-European Americans include the African American community; Latinos, especially but not only the Mexican community; Native Americans; the entire Muslim community and, yes, that other group not considered to be European American, the Jewish community.

Not so long ago, the complacent mainstream leaders of the U.S. Jewish community, who are all Zionists, claimed that anti-Semitism today came from the left. According to these misleaders, anti-Semitism showed itself in the form of the Boycott and Divestment and Black Lives Matter movements because the leaders of these movements expressed solidarity with the struggle of the Palestinian people against Israeli apartheid.

But then a funny thing happened. The old anti-Semitism of “the right”—that is, the real thing—is now raising its ugly head not only in far-off Poland, Hungary and Hitler’s homeland of Austria but right here in the U.S. Recently, the Anti-Defamation League denounced the attacks on Muslims. This is a welcome development though it would be nice if they extended their defense of Muslims to Arab Muslims who are native to Palestine. This illustrates the fact that the state of Israel and the entire Zionist movement are actually barriers in the struggle against fascism and the real anti-Semitism that inevitably accompanies it.

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U.S. Two-Party System After Defeat of the Slaveholders’ Rebellion

May 22, 2016

The attempt of the Republican and U.S. political establishments to deny Donald Trump the Republican presidential nomination collapsed on May 3, when Trump won a decisive victory over his two remaining rivals in the Indiana Republican primary. Trump routed Tea Party darling Senator Ted Cruz of Texas and Ohio Governor John Kasick, probably Wall Street’s favorite among the remaining candidates to succeed termed-out President Barack Obama next year. Kasick’s share of the vote ended up in single digits.

In the weeks leading up to the Indiana primary, Cruz and Kasick had announced a bloc to deny Trump a majority of the delegates needed for nomination on the first ballot at the Republican convention in July. If this bloc had succeeded on the second or, if necessary, later ballots, delegates pledged to Trump on the first ballot would have been free to vote for somebody “acceptable” to the large capitalists—somebody like John Kasick.

In the weeks leading up to the Indiana, New York and New England Republican primaries, the media had pictured the Trump campaign as at long last in deep trouble. Headlines like “Trump’s Worse Week” were splashed across the major newspapers and associated websites. The corporate press made much of the success Cruz had in picking up a few delegates here and there delivered to him on a silver plate by state Republican machines in service to Wall Street interests.

But these maneuvers came to nothing after Trump swept first the New York primary and then the New England primaries, with majorities as opposed to the mere pluralities he had won in primaries held earlier.

Earlier, there had been a lot more Republicans in the presidential race. They included Wall Street’s original favorite Jeb Bush, former governor of Florida and son of former President George H. W. Bush and brother of the hated George W. Bush. Unlike his brother, Jeb was considered to be an “intelligent conservative.”

But Jeb Bush got very few votes and was forced out of the race after the South Carolina primary. As more Republicans were forced to drop out, the race to defeat Trump came down to the extreme neoliberal Senator Ted Cruz and the “moderate”—but still very neoliberal—John Kasick.

Cruz would be more in the mold of Ronald Reagan, while Kasick would be more like George W. Bush. Certainly, the conventional wisdom went, the “anti-Trump” majority among Republican voters would rally around these two candidates whose support of traditional Republican neoliberal economic policies would make either one more acceptable than Trump to Wall Street.

Eventually, the conventional wisdom went, either Kasick or Cruz would emerge as the nominee to face off against pro-Wall Street Democrat Hillary Clinton in November. But just the opposite happened when Trump won first in New York and then the New England states with outright majorities, and then won in Indiana, also with an outright majority, where Cruz had been expected to do well. Cruz and Kasick were then forced to withdraw from the race leaving only Trump.

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Germany and the U.S. Empire (Pt. 5)

January 31, 2016

On January 30, 1933, German President Paul von Hindenburg appointed Adolf Hitler Reich chancellor, the most powerful office in the government. But there were only two other Nazis in the cabinet. In terms of cabinet members, traditional reactionaries such as Franz Von Papen (1879-1969)—the vice-chancellor—and the arch reactionary media baron and Nationalist Party leader Alfred Hugenburg (1865-1951) dominated the government.

Hugenburg was the Rupert Murdock of Germany. Leaving aside the Nazis, Alfred Hugenburg’s Nationalist Party was considered Germany’s most right wing, representing the large landowners. Hugenburg held the Ministry of Economics and Food, a ministry of considerable interest to Germany’s large landowners.

The Communist movement at first believed Hugenburg, not Hitler, was the dominant member of the new government. Not only were Nazis a small minority in the cabinet but the Prussian landowner and militarist Paul von Hindenburg (1847-1934) still occupied the presidency and had the power to appoint and dismiss the chancellor.

The view that Hitler was not the real power in the cabinet, however, ignored several crucial facts. One was that the two Nazi ministers besides Hitler gave the Nazis control over the bulk of Germany’s police forces. The Ministry of the Interior was awarded to Nazi Wilhelm Frick (1877-1946), a lawyer and policeman by profession. The other Nazi, Herman Goering (1893-1946), held the post of minister without portfolio and, more importantly, served as acting minister of the interior for the State of Prussia. This gave Goering effective control of Germany’s police force, including its political branch—the “red squad” in U.S. terminology. The Prussian red squad was soon given a new name—State Secret Police, or Gestapo for short.

Even more importantly, the Nazis were not just another bourgeois political party, only further to the right. They were a combat organization with a huge SA militia, whose membership numbered in the millions—compared to only 100,000 for the official German military, the maximum allowed under the Treaty of Versailles. Members were recruited mostly from Germany’s desperate middle-class youth, who had few prospects in Depression-bound Germany. The SA was organized to wage civil war against all wings of the workers’ movement—especially the Communists but also the Social Democratic Party, the trade unions, cooperatives, youth groups, and so on, in the streets of Germany.

Imagine if Donald Trump today commanded a private army of tens of millions of mostly middle-class youths, dwarfing in size both the regular army and all police forces of the U.S. Imagine further that this militia was fanatically loyal to Trump’s person. Further imagine that this private army was waging violent war in the streets against the trade unions, all African American organizations, Mexican-American organizations, immigrant rights groups, and Muslim and Arab organizations. This is what a full-fledged, Nazi-like mass fascist movement would look like in the early 21st-century U.S.

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Germany and the U.S. Empire (Pt. 3)

December 6, 2015

*Special Statement*

I don’t normally comment on current events unless they are connected to economic events or theories of capitalist economic crises. However, the terrorist acts in Paris that led to the deaths of at least 130 civilians and the injuring of scores of others forces an exception.

I deplore the deaths of civilians in Paris whose only crime was enjoying a night of partying, drinking and music, a “crime” I have been guilty of myself. This follows the terrorist attack in Beirut and the apparent bombing of a Russian airliner that crashed in Egypt causing the deaths of 224 passengers. All these acts seem to be the work of supporters of the Islamic State, also called ISIS, ISIL and Daesh.

The media has shown much more concern about the mostly white Western European victims in Paris than they have for the victims on the Russian plane, not to speak of the victims of Islamic State terror attacks in the Muslim countries such as the recent attack in Beirut. But bad as the carnage caused by the terrorist acts organized or encouraged by the Islamic state have been, it pales before the much greater number of civilians that are being killed not only in Syria but in many other countries being attacked by U.S. imperialism and its satellites such has France.

Even if we count the nearly 3,000 people killed in the Twin Towers attack on September 11, 2001—also innocent bystanders whose only “crime” was showing up at work at the World Trade Center in New York that day—the total number of civilians killed by individual or small-group terrorist actions such as those carried out by the Islamic State or al-Qaeda is still dwarfed by the number of dead resulting from the terrorist war against terror waged by the U.S. government, Israel and the Empire’s imperialist satellite states against the peoples of the Muslim world and beyond. Are the lives of white Parisians more valuable than of “brown” Syrians, Iraqis or Palestinians? I say no! Black and Brown lives matter just as much!

It is also worth noting that the “war on terror” launched by George W. Bush and continued under President Obama has been joined with great enthusiasm by the French government. Paris is hoping the U.S. will allow France to once again become the colonial master in all but name of Syria.

The war on terror is itself being waged with terrorist methods. That is, the government of the U.S. and its satellites are using methods of warfare that in the past were associated with individual and small-group terrorist acts. One famous example is the assassination of Crown Prince Archduke Franz Ferdinand and his wife Sophie by Serbian nationalist terrorists in June 1914.

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