Now the latest hype about the global economic situation involves the debate about what has caused it rather than what is actually taking place. Working class people must exercise some critical thinking, because this ruse intends to keep them in the dark. Since black folks are linked into the global economy just like anybody else, we need to get our heads out of the soaps and churches and anywhere else that does not help us gain clarity and substance on this issue.
The economists are inventing red herrings like the “global savings glut”. This is nonsense. Who believes that money can be earned thru saving? In terms of working class folks, it makes little sense to save, since inflation eats up savings. The annual 3% inflation rate results in only a 1% yearly savings on your money, if banked. Outside of the industrialized countries, there is no return because inflation is much steeper. If you are a middle class person trying to save, your higher education is not paying off.
Not only that, but the Savings & Loans crisis of the Eighties and Nineties definitely scared the US public away from savings and stampeded them towards more sophisticated types of swindles, such as retirement plans based upon 401k and KEOGHs. Just because an activity is approved by Congress, and filled with volumes of small type that only a lawyer can understand, does not make it honest. No black worker has any business playing the stock market without knowing the dollar value of one point on the DJIA or having $250k to throw away in a money-manager fund. ‘Investment’ means only fools leverage all their assets on a gamble.
So if the economists were discussing stock-based retirement funds as a form of savings, consider that misinformation. The New York Review of Books and PEN World Voices presented a symposium on the world economic crisis at the Metropolitan Museum of Art on April 30. At that time, the idea was proposed that savings had driven down interests rates when, in fact, the Fed and the European Common Bank (ECB) themselves dictate interest rates. Not only that, North America and Europe in no way represent the globe.
It is important to repudiate any notion which dismisses the theory that the ruling class manipulated the financial system for their own benefit. The theory proposed by the symposium flies in the face of every scandal from Enron to Bernie Madoff. It contradicts the events which demanded welfare (bail outs?) for the banks.
Folks must not be duped by the highly esteemed panelists at that event, former senator Bill Bradley, Niall Ferguson, Paul Krugman, Nouriel Roubini, George Soros, and Robin Wells, and Jeff Madrick as moderator. Not one of them has an analysis which serves the interests of the millions of people who form the basis of the US domestic economy; not one of them even speaks the language of every day people.
When the banks pressed the Fed to raise interest rates, this became the primary trigger for the financial meltdown. While most folks think of the banks as finance institutions, the bank is a tool for making money. It is an instrument for concentrating money. Concentrated money becomes capital. Working class people lack capital. They sell their labor for a wage. Capitalists do not earn wages. They make money not thru labor or savings but by skimming value from what labor produces.
If ten laborers in a gold mine work together to extract one ton of gold daily which has a value of $900 per ounce, not one of them makes $900 per day, or even half of that. Even if their combined labor only extracts ten pounds of gold a day, who gets the money? The workers do not earn enuf to save. The value of the gold gets concentrated at the top of the chain, by people who trade paper with a value printed upon it, in exchange for the real value that has been extracted from the mine. This practice prevails thru out the bloodsucking capitalist system, where a few people live exorbitantly upon the backs of five billion working people worldwide.
This paper money has a value assigned to it. This value can be manipulated easier than anything else. After all, the paper has no real value! Today, one dollar may be as strong as yesterday’s ten dollar bill; tomorrow, that same one dollar note may be devalued so that it is only worth five cents. Entire societies remain at risk as a worker in this type of system.
So the monies the panelists claimed were tied up in savings actually were being poured into a volatile market, the stock market, another place ruled by paper tigers. Over the last thirty years, real wages failed to keep pace with inflation and the cost of living. Working people lacked the ability to save. However, amid the fears that Social Security would dry up before they could retire, they put a few hard earned extra dollars into stock-based retirement funds. Human relations managers and other company officials pulled their workers off assembly lines to sell them pyramid and ponzi schemes called a KEOGH or IRA or 401k Plan. These talks sounded something like the average MLM hustle, where the guy at the top of the chain makes all the money and the suckers who bought into it are left holding the bag. That is precisely what happened in instances such as MCI-Worldcom, Tyco, Enron, and others all the way thru the Madoff scandal. These were all multi-billion dollar scams.
Now, this symposium happened in April. Do not forget, several weeks earlier, pretty much the same crew had called for the goverrnment to nationalize the banks. Their analysis continues shifting, while the causes for this period of voodoo economics involve financial manipulation, pure and simple. Prior to the curveball idea about interest rates being dictated by savings, the pundits said that the financial crunch happened because people were living on debt, another shattered theory.
People were indeed living on debt, yet that is not the reason for the crisis. People were forced to live on debt because wages did not keep pace with rising costs. Remember the old adage: “When creditors enforce collections, that results in market corrections.” So for folks living in debt, their very existence has become manipulated by those who control wages and prices. Stay tuned to the media, because within the next few weeks they will cook up a new rationale for the problems they continue heaping on the backs of poor and working people.
