A second repost, this and the piece that follows it may be important.
We posted this piece
a month ago and today's events make it seem more prescient than the day we first linked.
Although we don't agree with all of the interpretations, especially
those in the introduction, the observations are pretty sharp and give us
a guide to what we should watch out for.
A couple notes on
nomenclature: 1) the fact the U.S. Federal Reserve Bank will soon begin
'tapering' does not mean that their purchases of treasuries and agency
debt have stopped. It is only decreasing. QE lives!
2) On the
fiscal side of things, every dollar spent in excess of tax revenue is
stimulus. It doesn't have to be called stimulus, you can call it, as we did in 2012 when referring to 2010's Recovery Summer: "Sweet, Sweet Biden Love." Remember that? President Obama put Joe in charge. Call it Democracy's Flaw, or whatever you want, every dollar of deficit spending is still stimulus. And it is working less and less well.
Just making sure we are all on the same page with the words because, as noted in the seminal work "De Do Do Do, De Da Da Da":
Poets, priests and politicians
Have words to thank for their positions
Words that scream for your submission
And no one's jamming their transmission
'Cos when their eloquence escapes you
Their logic ties you up and rapes you
De do do do, de da da da....
From The Philosophical Salon, October 18:
Sheep spend their entire lives being afraid of the wolf, but end up eaten by the shepherd.
(Popular proverb)
By now it should be clear that COVID-19 is, essentially, a symptom of
financial capital running amok. More broadly, it is a symptom of a
world that is no longer able to reproduce itself by profiting from human
labour, thus relying on a compensatory logic of perpetual monetary doping.
While the structural shrinking of the work-based economy inflates the
financial sector, the latter’s volatility can only be contained through
global emergencies, mass propaganda, and tyranny by biosecurity. How can
we break out of this vicious cycle?
Since the third industrial revolution (microelectronics in the
1980s), automated capitalism has been engaged in abolishing wage labour
as its own substance. We have now passed the point of no return. Due to
escalating technological advance, capital is increasingly impotent
vis-a-vis its mission of squeezing surplus-value out of labour-power.
With the unleashing of artificial intelligence this truly becomes
mission impossible – game over.
This means that the foundations of our world no longer reside in the
socially necessary labour contained in commodities such as cars,
telephones, or toothpaste. Rather, they reside in highly flammable
debt-leveraged speculations on financial assets like stocks, bonds,
futures, and especially derivatives, whose value is securitised
indefinitely. Only the religious belief that the mass of these assets
produces value prevents us from seeing the yawning abyss beneath our
feet. And when our faith dwindles, divine providence intervenes by
sending us into collective hypnosis through apocalyptic tales of
contagion and attendant narratives of salvation....
....Pandexit In the Land of Unicorns
How close are we to Pandexit? The following excerpt from a recent Bloomberg
piece has the most likely answer: “For anyone hoping to see light at
the end of the Covid-19 tunnel over the next three to six months,
scientists have some bad news: brace for more of what we’ve already been
through.” To unpack this statement, let us surmise that our future is
characterised by the following events: 1. Central banks will continue to
create inordinate amounts of money, mostly destined to inflate
financial markets; 2. The contagion narrative (or similar) will continue
to hypnotise entire populations, at least until Digital Health
Passports are fully rolled out; 3. Liberal democracies will be
dismantled, and eventually replaced by regimes based on a digitised
panopticon, a Metaverse of control technologies legitimised by deafening
emergency noise.
Too dark? Not if we consider how the health crisis rollercoaster
(lockdowns followed by partial openings alternating with new closures
caused by mini-waves) looks increasingly like a global role-play, where
actors pass the buck to make sure the emergency ghost continues to
circulate, albeit in a weakened capacity. The reason for this depressive
scenario is simple: without Virus justifying monetary stimulus, the
debt-leveraged financial sector would collapse overnight. At the same
time, however, rising inflation coupled with supply-chain bottlenecks
(especially microchips) threatens a devastating recession.
This catch-22 appears impossible to overcome, which is why the elites
cannot let go of the emergency narrative. From their perspective, the
only way out would seem to imply the controlled demolition of
the real economy and its liberal infrastructure, while financial assets
continue to be artificially inflated. The latter comprises cynical
tricks of financial greenwashing such as investment in ESG securities,
an environmentally disguised loophole to legitimise further debt
expansion. With all due respect to the Greta Thunbergs in our midst,
this has nothing to do with saving the planet.
Rather, we are witnessing the accelerating dissolution of liberal
capitalism, which is now obsolete. The outlook is objectively
depressing. Global financial and geopolitical interests will be secured
by mass data harvesting, blockchain ledgers, and slavery by digital app
peddled as empowering innovation. At the heart of our predicament lies
the ruthless evolutionary logic of a socioeconomic system that, to
survive, is ready to sacrifice its democratic framework and embrace a
monetary regime supported by corporate-owned science & technology,
media propaganda, and disaster narratives accompanied by nauseating
pseudo-humanitarian philanthro-capitalism.
By appealing to our personal sense of guilt for ‘destroying the
planet’, the coming climate lockdowns are the ideal continuation of
Covid restrictions. If Virus was the scary appetiser, a generous portion
of carbon-footprint-mixed-with-energy-scarcity ideology is already
being served as main meal. One by one we are being persuaded that our
negative impact on the planet deserves to be punished. First terrified
and regimented by Virus and now shamed for harming Mother Earth, we have
already internalised the environmental command: our natural right to
live must be earned through compliance with ecological diktats imposed
by the International Monetary Fund or the World Bank, and ratified by
technocratic governments with their police. This is capitalist realism
at its most cynical.
The introduction of Digital Health Passports (only a year ago
ridiculed as conspiracy theory!) represents a critical juncture. The
tagging of the masses is crucial if the elites are to gain our trust in
an increasingly centralised power structure sold as an opportunity for
emancipation. After crossing the digital-ID Rubicon, the crackdown is
likely to continue smoothly and gradually, as in Noam Chomsky’s famous
anecdote: if we throw a frog into a pot of boiling water, it will
immediately come out with a prodigious leap; if, on the other hand, we
immerse it in lukewarm water and slowly raise the temperature, the frog
will not notice anything, even enjoying it; until, weakened and unable
to react, it will end up boiled to death.
The above prediction, however, needs to be contextualised within a
conflictual and deeply uncertain scenario. Firstly, there is now
evidence (however heavily censored) of genuine popular resistance to the
pandemic psy-op and the Great Reset more widely. Secondly, the elites
appear deadlocked and therefore confused as to how to proceed, as
demonstrated by several countries opting to de-escalate the health
emergency. It is worth reiterating that the conundrum is, fundamentally,
of economic nature: how to manage extreme financial volatility while
holding on to capitals and privileges. The global financial system is a
huge Ponzi scheme. If those who run it were to lose control of liquidity
creation, the ensuing explosion would nuke the entire socio-economic
fabric below. Simultaneously, a recession would deprive politicians of
any credibility. This is why the elites’ only viable plan would seem to
lie in synchronizing the controlled demolition of the economy (collapse
of global supply-chain resulting in an ‘everything shortage’), with the rolling out of a global digital infrastructure for technocratic takeover. Timing is of the essence.
Emergency addiction
With regard to a potential recession, financial analyst Mauro Bottarelli
summarised the communicating-vessels logic of the pand-economy as
follows: “a state of semi-permanent health emergency is preferable to a
vertical market crash that would turn the memory of 2008 into a walk in
the park.” As I tried to reconstruct in a recent article, the ‘pandemic’ was a lifeboat launched to a drowning economy. Strictly speaking, it is a monetary event
aimed at prolonging the lifespan of our finance-driven and terminally
ill mode of production. With the help of Virus, capitalism attempts to
reproduce itself by simulating conditions that are no longer available.
Here is a summary of Covid’s economic rationale. The September 2019
bailout of the financial sector – which, after eleven blissful years of
Quantitative Easing, was again on the verge of a nervous breakdown –
involved an unprecedented expansion of monetary stimulus: the
creation of trillions of dollars with the magic wand of the Federal
Reserve. The injection of this inordinate amount of money into Wall
Street was only possible by turning the engine of Main Street off.
From the point of view of the short-sighted capitalist mole, there was
no alternative. Computer money created as digital bytes cannot be
allowed to cascade onto economic cycles on the ground, as this would
cause an inflationary tsunami à la Weimar 1920s (which ushered in the
Third Reich), only much more catastrophic for a stagnant and globally interconnected economy.
Inevitably, the (cautious) reopening of credit-based transactions in
the real economy has caused inflation to rise, hence further
impoverishment on the ground. The purchasing power of salaries has been
dented, along with revenues and savings. It is worth recalling that
commercial banks are positioned at the interface between the magical
world of Central Banks digital money, and the emergency-swept wasteland
inhabited by most mortals. Thus, any wild expansion of Central Bank
reserves (money created out of thin air) triggers price inflation as
soon as commercial banks leak cash (i.e. debt) into society.
The purpose of the ‘pandemic’ was to accelerate the pre-existing
macrotrend of monetary expansion, while postponing inflationary damage.
Following the Federal Reserve, the world’s central bankers have created
oceans of liquidity, thus devaluing their currencies to the detriment of
populations. While this continues, the transnational turbo-capital of
the elites keeps expanding in the financial orbit, absorbing those small
and medium size businesses it has depressed and destroyed. In other
words, there is no such thing as a free lunch (for us). The Central
Bank’s money-printer works only for the 0.0001% – with the help of
Virus, or a global threat of equal traction.
At present, it looks as if central bankers are indulging in the noble
art of procrastination. The Fed’s board will convene again in early
November 2021, with taper (reduction of monetary stimulus) announced to
start in December. However, with the Covid bubble deflating, how will
the elites deal with zero interest rates and direct deficit financing?
In more explicit terms: what new ‘contingent event’ or ‘divine
intervention’ will get them out of trouble? Will it be aliens? A
cyber-terrorist attack on the banking system? A tsunami in the Atlantic?
War games in Southeast Asia? A new War on Terror? The shopping list is
long.
In the meantime, ordinary people are caught in a suffocating double
bind. If credit needs to be made available to businesses, Central Banks
must keep a lid on inflation, which they can do only… by draining
credit! Runaway inflation can be avoided only by containing the
disruptive effects of excessive money creation; that is, by bringing work-based societies to their knees.
Most of us end up squashed between price inflation of essential goods,
and deflationary liquidity drainage via loss of income and erosion of
savings. And in a stagnant economy with inflation off the chart, each
suppressed business transaction is channeled into financial assets.
A tool preventing liquidity from reaching the real economy is the
Federal Reserve’s Overnight Reverse Repo facility (RRP). While
continuing to flood financial markets with freshly printed money, thanks
to reverse repos the Fed mops up any excess of that very cash it pumps
into Wall Street. Effectively, a zero-sum game of give and take: at
night, financial operators deposit their excess liquidity with the
Federal Reserve, which delivers as collateral the same Treasuries and
Mortgage-Backed Securities it drains from the market during the day as
part of its QE purchases. In August 2021, the Fed’s usage of RRP topped $1 trillion, which led the Federal Open Market Committee (FOMC) to double the RRP limit to $160 billion, starting from 23 September 2021.
Here, then, is the elephant in the room: how will the Fed’s taper
square with reverse repos of this astronomical magnitude? Is the
much-anticipated reduction of monetary stimulus even possible
with a global financial bubble fuelled by zero-interest-rate leveraging
and structural borrowing? But, at the same time, how can central bankers
continue to expand their balance sheet, when the double whammy of
stagnation and rising inflation (stagflation) is just around the corner?....
....MUCH MORE
A topic near and dear to our jaded hearts.
This is a real
problem, whether you call it "Marginal Productivity of Debt" or "Debt
Saturation" or "Bang-for-the-Buck", we are running faster and faster
just to stay in place. This is not a new phenomena, the piddly 6.5% GDP
growth we just saw, despite the trillions and trillions in new debt is
just the latest example.....
Previously from The Philosophical Salon:
Money, Money, Money: "A Self-Fulfilling Prophecy: Systemic Collapse and Pandemic Simulation"
