Nothing like this has been seen in economic history. According to Bank of America analysis, reported by the Financial Time this weekend, central banks injected $ 32 trillion into financial markets since the start of the pandemic.
This means that since the start of the Fed’s interventions in response to the March 2020 market collapse, central banks have been buying financial assets at the rate of $ 800 million per hour for 20 months.
The result was a massive speculative boom that resulted in an increase in market capitalization of $ 60 trillion.
The magnitude of this increase can be seen in relation to the gross domestic product (GDP) figures which measures the growth of the real economy. The annual economic output of the United States is approximately $ 22 trillion, while the global GDP is approximately $ 84 trillion. In other words, the growth in market capitalization, which is most pronounced in the United States, is equivalent to more than two and a half times annual American production. This is roughly three-quarters of that of the entire world economy.
These comparisons serve to highlight the nature of the stock market escalation and its divorce from the underlying real economy.
Stocks, bonds and other financial assets do not embody real value. Vast profits can be made when traded, but those profits do not mean that real value has been increased. In contrast, in the real economy, a firm profits from the extraction of surplus value from the labor power of the workers it employs.
Stocks and other financial assets are what Marx called fictitious capital, that is, they are titles of property and, in the final analysis, are a claim on the surplus value extracted by real capital. in the economy.
The situation is, of course, more complicated than the one described here, but, whatever its complexities, it is its essential dynamics.
While fictitious capital may exist for a considerable period in a kind of paradise where money generates ever greater amounts of money, often through all kinds of obscure operations, it can never completely separate itself from its earthly foundations. .
This paradise can be maintained by making ever larger amounts of almost free money available by central banks through lowering interest rates to near zero and purchasing financial assets. Ultimately, however, it depends on the continued extraction of surplus value from the living labor of the working class on which it feeds like a gargantuan vampire.
And if this flow is threatened with interruption – by a production halt or by the development of strikes for wages – it finds its expression in the markets as financial confidence is shaken.
All financial transactions are heavily indebted and therefore sensitive to even small fluctuations in interest rates. So even a minor disturbance can have significant consequences.
The latest data on the rise of financial markets, the result of speculation fueled by debt financed by the Fed and other central banks, draws attention to the underlying engine of the refusal of capitalist governments in the United States and in the United States. the world, regardless of their political stripe, to implement meaningful public health security measures.
They insisted, despite all evidence to the contrary, that a “vaccine only” policy is sufficient. Regardless of the level of death and disease, people must “learn to live” with the virus.
As China’s data and the analysis of conscientious scientists show, strong protective measures, if implemented globally, could wipe out COVID-19 and all its variants from the human population. .
When measures implemented in China are cited as concrete evidence that the pandemic can be stopped, the answer is often not to trust its numbers.
One can be sure that if this were the case, however, it would have been immediately grasped by the capitalist media which so heavily promoted the lie that COVID-19 emanated from the Wuhan virology laboratory. But no such report analyzing and challenging the Chinese data has been published in any of the world’s media.
Why then have meaningful public health protection measures – so often referred to as “restrictions” on human “freedom”, and not what they really are, protections – have not been applied?
The necessary measures, including stopping non-essential production and economic activity, with compensation for those affected, mass vaccinations worldwide, rigorous contact tracing combined with quarantine, as well as ‘other public safety measures are well known. But they are not implemented because that would interrupt the flow of surplus value necessary to maintain the mountain of fictitious capital.
The claim is put forward that it is necessary to “learn to live” with COVID, that is, with disease and death, because “the economy” could not support the necessary measures.
To accept this assertion, however, is to fall into the trap of an essential hoax widely promoted by bourgeois economists. It is the misidentification of the economy – the productive activity of billions of workers around the world that is the source of all real wealth – with the financial system. The financial system does not provide an atom of real wealth. It is an institutionalized mechanism for siphoning wealth out of the hands of the financial oligarchy and pandemic billionaires.
In the 21st century, the vast productive forces created by the labor of billions of workers around the world, combined with enormous technological advancements, mean that the economic resources exist for the large-scale implementation of public safety measures during the time. necessary to eliminate the pandemic. .
The resources available to society, if they were mobilized in a rational and planned manner in the interest of the population, rather than according to the imperatives of profit, would be more than capable of coping with the pandemic.
However, the stock markets and the global financial system, inflated to an extent never seen before, cannot tolerate the slightest interruption in the flow of life force – the surplus value extracted from the working class, on which it feeds.
This fact of economic life was demonstrated at the start of the pandemic. As the coronavirus struck, walkouts and workers’ strikes in the United States, Italy and elsewhere sent a wave of terror through the financial system.
Wall Street suffered a dizzying fall and, more importantly, the $ 22 trillion U.S. Treasury bond market – the basis of the global financial system – froze, so that at one point it didn’t stop. There were more buyers for the US government debt.
In the face of a crisis that had the potential to go well beyond the collapse of 2008, the Fed intervened, doubling its holdings of financial assets, virtually overnight, to over $ 8 trillion. He established himself as the guarantor of all areas of the financial system, spending at one point $ 1 million per second.
The intervention stabilized the markets, but none of the underlying causes of the crisis were resolved, as many official reports on the events of March 2020 clearly show. Very specific conclusions have been drawn, however. The collapse of the market led to the adoption of the mantra “the cure cannot be worse than the disease” meaning that no matter the extent of death, nothing should be done that has an impact on the financial system.
The emergence of the even more virulent Omicron variant brought a new stage of the crisis. The claim that a ‘vaccine only’ policy is sufficient has been refuted by events. The pervasive fear in financial markets is the eruption of a movement within the working class fighting for action to end the wave of death.
The issues facing the global working class are emerging more and more clearly. For many decades, the ruling classes and their ideologues have maintained that the capitalist market, private property and the parasitic financial system that arose from it, is the only possible socio-economic order. The Marxist analysis of the inevitable collapse of capitalism was mythology.
However, the lesson to be learned from the events of the past 20 months is that the current order’s complete inability and unwillingness to deal with the pandemic is the form in which the collapse of capitalism is taking shape.
The incompatibility of the capitalist socio-economic order with the progress of society and with life itself is established not only in the theoretical form, but in living events themselves.
At the heart of the development of understanding in the working class of political tasks, of the struggle for a socialist agenda, which now confront it directly as the WSWS, is the global workers’ survey of the COVID-19 pandemic conducted by the WSWS. The ongoing collapse of capitalism assumes so. the form of an ongoing monstrous crime against humanity.