This past weekend the IMF & G20 failed to agree on currency policy and broke up leaving continued uncertainty on the management of currency markets worldwide. China, which holds nearly $2.5 trillion in its currency reserves, is resisting ongoing pressure to revalue its own currency, which would ease pressure on the already troubled US Dollar.
Demands placed on China …
The IMF, G20 and US Government want China to revalue its currency so as to improve the position for themselves in world trading markets – they hope this will help their economic recovery. Last month the US added 95,000 more people to its unemployed; it is failing to resolve the crisis on its own. US manufacturing and domestic markets having slumped significantly, they need to expand their worldwide trade – thus the pressure on China.
China has rejected the call to revalue so now there is a continuing problem.
Pressure is being applied, but the truth is that if China released its reserve of US Dollars onto the world market it could break the US economy overnight, the US dollar would be left almost valueless. China has previously suggested that it would do this if needed, if there was a face-off. Such an event would be a severe crisis indeed and would impact millions of people worldwide that have nothing to do with events in either China or the USA. It would also impact heavily on other states that hold US Dollars in reserves, the value of which might be wiped out. This situation threatens the leading position of the US dollar as a ‘reserve currency’; this would weaken the US economy further.
IMF managing director Dominique Strauss-Kahn was asked why there was no resolution, he said: ‘There is only one obstacle, and that is an agreement of the members.’ So, these big power blocks can’t even agree amongst themselves, this reveals a lack of control over the economic systems that they themselves advocate and impose on the rest of us.
Adding to the money supply won’t fix the problem …
Japan, meanwhile, is encouraging further stimulus in the worlds’ economies, i.e. printing more currency to ‘kick-start’ growth – this has been the policy so far in both the USA and in Europe – it is often referred to as “quantitative easing”. The whole strategy is a bit like pyramid selling, if you can keep it growing it works, if you don’t it fails – economies and currencies enter a deflationary spiral and crash. The problem is you can’t keep printing money; currency loses its value if you do. However, only so much pressure can be exerted between competing imperial powers (Europe, Russia, China, Japan and the USA) before someone says ‘no’ – then there is an impasse, and a political as well as an economic crisis – this is a real danger today.
‘Confidence’ without substance is a “confidence trick” …
We are supposed to have ‘confidence’ in this system, in these bond and currency markets, and we want them to have ‘confidence’ in us. ‘Confidence’, apparently, is the decisive factor – not production in an economy or plans to satisfy the many needs of people in their day to day lives. Continued ‘confidence’, so that monopoly dominated world trade and the system of finance capital continues to generate profits for the tiny minority – that is what is important to the IMF, the ECB and their likes.
What does it all mean? simply stated:
- The worlds’ leading finance capitalists can’t agree between themselves on how to resolve the crisis and they never will.
- The system of finance capital, although controlled by giant monopolies on a worldwide basis, is still driven by competitive motivations, each seeking advantage over the other – this leads to conflict.
- None of their currency manipulations or agreements or deals will result in producing one single article of use to any human being – but they destroy productive facilities everywhere as markets stagnate and cash is hovered up by these same monopolies.
- Paying for this expensive system of currency markets is imposed on those who actually do the productive work, the generators of all real wealth, the working people. When these markets make profits the monopolists keep their winnings, when they lose we are made to pick up the tab.
- The needs and interests of ordinary people do not feature in these talks with the IMF or the G20 countries – their only interest is to preserve the system which pays them – to keep the chicken that lays the golden egg – at any cost.
This is what is happening at the top of the world system of finance capital. Ireland is only a dot in the ocean when these manoeuvrings are going on. However, our lives are directly affected, our own government has allowed our future to be mortgaged in service of this system for the next few decades – no matter how much we pump into it more will be required.
Still, we reassure the bankers that their interests are safe
This weekend also our Head of Central Bank, Dr Patrick Honohan was in the USA, he told a meeting of bankers at the International Institute of Finance in Washington, “There is no credible way of correcting the public finances that doesn’t require a higher tax ratio” (to GDP) in Ireland, however he said that this wouldn’t mean higher corporate tax – he means that ordinary people will pay. He was doing his real job when he said this, assuring international bankers that Ireland will keep paying, that they can be sure of ongoing returns on their ‘investments’ in Ireland, assured of ongoing profits at our expense.
Let’s call a spade a spade!
Does anyone honestly believe that the day will come when the big banking monopolies will come back to the Irish people, or anyone else, and say … ‘Hey people, ye bailed us out before, thanks a million! Now here is your reward … we will provide for all of your futures and ensure proper health services, education and a peaceful and prosperous life’? I think not!
It is time for change
It is beyond time that we grasped this nettle of worship of foreign dependence and finance capital – we really don’t need them. In fact, more than ever, we don’t need them, we can’t afford them … is it time to withdraw from this uncivilised and anti-people speculative economic system?
We need to build our own economy, to serve our needs – on a sustainable basis, using our own resources to the full, employing all of our people and revitalising the entire life of our country without the burden of worry, uncertainty, debt or fear.
What do you think?
Some have told us that we are not in the “real world”, but what can be more real than facing up to the truth? If our analysis of what is wrong in our current economic systems isn’t correct then how can we possibly hope to resolve matters?
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