In the no-mind of American strategic political thinking the problem with policies that push millions of people out of paying jobs and into poverty is one of ‘messaging.’ In more pragmatic terms the problem is (1) that millions of people have been pushed out of paying jobs and into poverty and (2) the people to whom this has been done tend to exact revenge at the polls. And to save the suspense, those doing the ‘messaging’ are on the other receiving end of said policies.
As if to salve the psyches of these unsettled no-messengers, Chairperson of the Federal Reserve and liberal Democrat Janet Yellen recently restated that the Washington Consensus is alive and well. While she didn’t use the term precisely, she did manage to re-implicate Ds (Democrats) and Rs (Republicans) as co-conspirators in austerity economics. The ‘innovation’ at work was to maintain a posture of technocratic calm amidst such impassioned looting.
In an event that went largely unremarked upon in favor of baby-Trump’s poorly considered emails re: political dirt on the politically dirty (why not discuss Hillary Clinton’s actual policies if you want political dirt?), Ms. Yellen reiterated the misdirection that austerity is much needed medicine in search of a malady. Politically speaking, national Democrats need more austerity even less than their (nominal) constituents do.
Readers may recall Barack Obama’s chide that the nation must ‘live within its means’ much as the Joads gathering pennies to feed the children on their cross-country ‘vacation’ of yore did. Of course, had Ms. Yellen been along with the Joads she could have conjured a few trillion dollars for gas money much as the Federal Reserve and Treasury Department did around 2008 or so to save connected plutocrats from the consequences of their predations.
Graph: money conjured by the Federal Reserve in 2008 to (allegedly) feed the Joads joined that of the ECB (European Central Bank), the BoJ (Bank of Japan) and the BoC (Bank of China) to more precisely feed the seven-ton tape-worm (global plutocracy) that attached itself to the back of the Joads truck and wouldn’t let go. Citing the Federal budget deficit in 2017 as a problem is akin to arguing that the well-being of the tape-worm is being threatened by the profligate lifestyles of the starving Joads. Source: St. Louis Federal Reserve.
The flow of money from Wall Street and the Federal government illuminates the priorities of empire. Given its imperial position, the U.S. can (metaphorically) print its way to funding the projects that connected plutocrats favor. For instance, where did the funding for baby Bush’s slaughter in Iraq and Barack Obama’s bailouts of Wall Street come from? Balanced national budgets are an imperial enforcement mechanism turned inward.
The value of liberal Democrat Yellen, as with Bill Clinton and Barack Obama, is that she puts a technocratic face on brutal, poorly considered and increasingly dysfunctional public policies. When he was running for office Donald Trump briefly indicated he knew where money comes from and said he would use the Federal purse to put people back to work through ‘infrastructure spending.’ And while ‘infrastructure spending’ is code for DC bullshit, his explanation of money was a brief respite from the calculated untruths of liberal Ds.
In recent history ‘emergency’ Federal Reserve policies combined with Barack Obama’s bailouts for Wall Street and austerity for the rest of us constituted the largest wealth grab by connected plutocrats in modern history. And here’s the punchline— because of the U.S.’s (and the ECB’s) privileged position vis-à-vis money creation, there was no need for the austerity. Had Democrats (1) cared and (2) not been equally culpable for the Iraq war they could have pointed out that money is always found (created) for the priorities of empire.
At this point the American political class has descended so far down the rabbit hole that all it knows is its own bullshit. IMF / Washington Consensus policies designed to assure that foreign peoples comply with imperial looting through austerity and / or capital strikes, etc. are running up against pre-looted resources like Obamacare that leave less and less to be looted. The powers-that-be are close to bleeding the proverbial rock. And technocratic tool Janet Yellen is chiming in with instructions to bleed away.
Graph: banks create most of the money in modern capitalist economies and therefore it is banks (broadly considered) that allocate it. Credit booms and busts are a pre-New Deal relic that was revived by Rs and Ds, but mostly Ds, through financial deregulation. The current predicament is that credit-fueled booms (“getting Wall Street to lend again”) are the only path to economic ‘recovery’ that the political class remembers. Source: St. Louis Federal Reserve.
Whether or not Ms. Yellen is being tactical with her comments to prevent ‘irresponsible’ tax cuts by Rs is irrelevant because the whole frame is bullshit. With U.S. dollar denominated debt the Ds and Rs could give tax cuts and increase social spending with a few practical constraints (not stoking inflation and / or exchange rate dislocations). The political problem with exposing the social nature of Federal spending is that doing so lays blame for the last half-century of needless social misery squarely on the political class and the plutocrats they serve.
Optimists have begun argue that the West is approaching levels of social tension that will force material changes that benefit the unwashed masses, e.g. Medicare for all. However, capitalism has corrupted most of what were nominally public institutions. Furthermore, the paradox of nominally public institutions created within a system of ‘benevolent’ self-interest requires resolution of the paradox. What are public institutions once the concept of a public interest has been conceptually (and materially) abandoned?
The institutions of the West like the Federal Reserve were created to serve particular class interests. For those uncomfortable with the Marxian terminology, ‘capitalist republic,’ which is descriptively accurate as to the intended theoretical structure, will get you to much the same place. Political economy premised in self-interest combined with the capacity to loot (a/k/a concentrated social power) will result in looting. If the feeding frenzy underway in Washington seems akin to looting, welcome to a capitalist republic.
For those interested in theory, the link between MMT (Modern Monetary Theory) and Marxism would come through taking monetary theory out of the anti-history of mainstream economics and placing it in a (lived) context of class conflict (or ‘capitalist republicanism’ if you prefer). The ontological alternative is to stay with the mainstream (Cartesian) economic conceit that MMT will be as relevant on Mars ten million years from now (timeless and universal) as it is right here, right now.
Otherwise, why are Janet Yellen, Alan Greenspan, Barack Obama and Hillary Clinton all spouting the same misleading bullshit about fiscal constraints if the Federal Reserve has no political agenda? Plutocracy uber alles.