Yes…Yes (5)
An Appeal to All Christians.
The rich will always be with us…. That phrase fits our society better than the more familiar one from Matthew 26 when Jesus reminded us that the ‘poor’ would be our constant companions, perhaps referring to Jesus himself who also was among the poor, lived on welfare, depended on others, mostly well-off women, for room and board.
The Bible often tells us that it’s the rich who exploit us, who never have enough, who always want more. Capitalism is so unchristian because it solely exists for the benefit of the wealthy. The government helps them, based on the mistaken notion that “a rising tide lifts all boats”. That’s why those in the top income bracket are bailed out, and receive the bulk of the trillions of tax-payers dollars, which will eventually be bounced back to the backs of the poor, especially the current crop of young people, already loaded with study debt, credit card debt, environmental debt, and now the bail-out debt.
Somehow the current economic crisis can be traced back to the many of us who always hoped to wade in money. To be really well-off is the true American dream. We do anything to get our hands at money. That’s why the current money meltdown is such a tragedy, because this dream has now become a nightmare. The American dream, in which everybody can reach the top, has been exposed as a pipedream, an impossibility. The pursuit of money for its own sake has proved to be a fallacy, the wrong thing to do, because it excluded the pursuit of what really counts: to seek the Kingdom of God. You may wonder what religion has to do with money. Well, the pursuit of money is a religious quest, an object of worship that now is showing its true nature: a branch of hell.
First an assessment of what the future looks like. I have in front of me a bank note from Zimbabwe. The face value of that money unit is 100 billion dollars, issued by the Reserve Bank of Zimbabwe. The signature on that piece of paper is from Dr.G. Gono, Governor. It features a pair of giraffes and underneath the description of the SPECIAL AGRO-CHEQUE is a picture of a row of some 17 large grain silos, suggesting that a lot of food is stored there. I paid $1.00 for that One Hundred Billion Dollars bill, probably not even enough to buy one loaf of bread in Harare, Zimbabwe’s capital.
Dr Marc Faber, an economist born in Switzerland, believes that this is also what is in store for us: hyper inflation. Our relentless pursuit of money and the Western governments relentless efforts to revive a moribund economy has already resulted in burdening every one of the 80 million plus American families with a debt that stood on June 1 2009 at $546,668, an increase of $55,000 in 2008 alone. Only hyper inflation will make these awesome figures disappear.
Mr. Posner agrees. He is a federal circuit judge and a senior lecturer at the University of Chicago Law School, and in his just-published “A Failure of Capitalism: The Crisis of ’08 and the Descent into Depression” (Harvard University Press), he writes: “A commitment of such magnitude (referring to the $12 trillion bail-out) — stacked on top of enormous budget deficits enlarged by sharply falling federal-tax revenues — could lead to high inflation, greatly increased interest costs on a greatly increased national debt, much heavier taxes, the restructuring of major industries, and the redrawing of the line that separates business from government.”
He also states that the key to understanding a capitalist economy is that, even though it is immensely dynamic and productive, it’s also inherently unstable. At its heart is a system that depends on large-scale borrowing and lending, needed to bridge the gap between input costs and expected revenues and allowing consumers to buy their toys. When the banking system breaks down and credit stops, economic activity plummets, which has happened recently.
Of course, bankers are not the only ones to blame. A large portion of this disaster can be traced to the influential economists who assured us that there could never be another depression. They argued that in the face of a recession the Federal Reserve had only to reduce interest rates and flood the banks with money and all would be well.
As the situation now stands, it is very likely that foreign investors will suddenly pull their money out of the United States, making the dollar worthless and presenting us with a replay of the Deutsche Mark in 1923, when ordinary Germans paid for loaves of bread with wheelbarrows of money. Either way, the structural contradictions in the world system are profound, and they are not going to go away any time soon.
Unlike in the 1930s, when the Western world nations spent themselves out of depression, first through massive state investment in public works, coupled with a new social compact with labor (as in the United States, with the New Deal), and, more effectively through a massive arms buildup and military expansionism, aided by the onset of World War II, this time no such cruel remedies are available, unless we start a nuclear war, bringing about the Final Solution: nobody left to live.
As matters stand today, the state sector already accounts for a large portion of the national economies of the United States, Japan, and Europe. In the 1920s, the U.S. national debt (relative to GDP) was flat and even declined, while GDP per capita grew at an extraordinary rate, ushering in higher wages, improvements in agricultural productivity, and vast improvements in quality of life for millions of Americans, including electricity in the home, increasing availability of rail travel, and the introduction of automobiles into everyday life. During the latest economic expansion, by contrast, debts public and private soared at every level of society. The national deficit grew, banks and corporations assumed mind-boggling amounts of risk (often in the form of obscure financial instruments like derivatives), and ordinary working people piled up trillions of dollars of debt in the form of home and car loans and credit card debt. At the same time, wages and quality of life fell. It is therefore difficult to see how the United States and other nations will be able to spend their way out of the present crisis, when, even before the collapse of Lehman Brothers last year, the population was already tapped out, and government expenditures hovered near record highs. In other words: spending more borrowed money is not possible: debts are too high already. More debt will cause more inflation.
Then there is something new under the sun: pollution: capitalism has savaged the earth, leaving billions of people without a decent livelihood, and the ecosystem in tatters. But the social and ecological costs of “doing business” are about to grow exponentially greater. Even without a world-wide financial crisis, we can anticipate more, and more devastating, natural disasters, which in turn will mean disruptions in agricultural production, flooding of cities and entire countries, mass starvation, increasing migration pressures, and so on. All of this will in turn exact an increasing toll on the legitimacy of the liberal nation state. Now with the state, both in Washington and Ottawa, and in Europe as well, becoming more and more the lender and owner ( GM, banks) of last resort, and agreeing to protect us from harm, we, in exchange, consent to be obedient subjects. Another, now much more likely scenario, is that even the “last resort= government ownership” will proves inadequate, resulting in total chaos.
What will come then? America had a taste of dictatorship under Bush and Cheney. Will Barack Obama be able to navigate the ship of state in the face of a full-blown economic hurricane, without it capsizing? Given the people he chose – all Wall Street veterans – to steer his economy through the current fiscal turmoil, his chances look dismal.
I read the New York Times every day. This spring, its columnist, the liberal economist and writer Paul Krugman criticized the administration for continuing to “believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic.” Citing “the failure of a whole model of banking,” Krugman faulted the administration in particular for trying to preserve a model of “securitization”-i.e., the process by which banks have essentially made risk a commodity by carving up loans and debts and selling them as obscure instruments on the market. “I don’t think the Obama administration can bring securitization back to life,” Krugman wrote, “and I don’t believe it should try.”
What Krugman and others fear is that the administration’s temporizing maneuvers may only end up creating the conditions for an even bigger economic collapse later on.
Just as the Reagan Administration’s monetary policies sowed the seeds for the storm we are reaping today, the Obama administration’s failure to grapple with the structural contradictions of capitalism may be sowing the seeds for an even more cataclysmic day of reckoning in the future.