Source – thesaker.is
– “…QE has thus screwed up the natural world, and when the QE-bubble pops there is going to be a geopolitical reordering. The collusion Prins’ title alludes to – prop up US banks at all costs – is a reminder that the QE era has been precisely to avoid a geopolitical reckoning for US financial crimes and thievery”
Bankocracies: the real Western governance model – By Ramin Mazaheri
The Great Recession has exposed “capitalism with Western characteristics” for what it truly is: banker cultural worship, but also banker political governance.
The reality that this is the real Western governance model has been thrown into sharpest relief in Europe: I hypothesise it’s because its government (the EU) is so much newer than in the US or almost everywhere else.
It is also because it has been so blatant: even Eurozone countries which didn’t need a 21st century banker bailout had to ruin their own economies to pay for them.
We all know about bailouts – what’s less publicised is: Central bankers in the G7 nations and the Eurozone have all been given the power to set fiscal policy, to decide social policy priorities and to render domestic elections irrelevant. Western nations are no longer democracies – and they were all, every one, merely the types of democracies which pointedly refused to evolve after 1917 – but “bankocracies”.
Japan is the king of QE – both in creating it and in quantity, and they also pioneered QQE (Quantitative and Qualitative Easing). Germany has been the driving force behind printing massive amounts of money – while hypocritically criticising it publicly. The world is left in a situation similar to 1940: these (economically fascist) nations are poised to (foreclose) invade much of the globe. Again!
How is it that they lost WWII but could start WWIII just to prevent a debt jubilee, which would hurt them most of all?
Answer: America was a fascist, segregated country in 1940, and both Germany and Japan teamed up with the US. Richard Werner’s pioneering, cross-cultural The Princes of the Yen details Japan’s excessive US-aping, whereas the rabid anti-socialists of West German-dominated Germany toadies to Washington shamelessly.
When ___ Bubble(s) 2 explode, money will rush back to these three countries, the dust will clear, and then their (repo men) armies will follow.
“Nobody should believe that another half century of peace in Europe is a given – it’s not,” said Angela Merkel in 2011. Her aim was to use EU-nationalism (not an oxymoron) to shut people up from complaining about banker bailouts and failed far-right economic policies.
But who should Europeans be worried about… the Portuguese? The Irish? The Czechs? No, they should worry about Germany – Merkel was merely displaying the “strike first in a crisis” sense of fear which has pervaded German culture in the past century. Americans have this sentiment in abundance as well.
The question is: is it more likely that a nation goes to war to definitively break free from this neoliberal pan-European project, or more likely that Germany and France invade to stop someone from trying not to pay the debts they incurred after joining the Eurozone (to bail out French and German bankers)?
Surely, it is the latter: the idea that some racist, neo-Nazi far-right group comes to power – in a county which also has an intimidating army – is far less likely than belligerence from Berlin and Paris.
Brexit has been made as protracted and as painful as possible – which Paris openly warned would happen – and that was just to leave the EU. Berlin and Paris are not about to treat anyone leaving the Euro with kindness.
German smugness (as if everybody secretly wants their shamefully bloodstained modern culture, LOL) and hypocrisy continues to be incredibly galling: for a decade they have railed against the ECB even though ECB never does anything against Germany’s interests. There is a reason they put it in Frankfurt – for German control!
Germany (their 1%, of course) has profited like no other European nation from QE. It is not at all correct to say that within the EU it is a question of “North versus South” or even “Western Europe versus the former Soviet/Eastern Europe” – the only proper analysis is 1%-ers versus 99%-ers (a class analysis), and there simply are more 1%ers in Germany than in Bulgaria, Portugal, Ireland, etc.
Dictators commit crimes and get away with it: In bankocracies bankers have the same exorbitant privilege
This 10-part series (this is Part 10) uses as its jumping-off point the 2018 book Collusion: How Central Bankers Rigged the World by Nomi Prins, a former Wall Street executive who saw the light and is now informing on the crimes of Western imperialism-capitalism.
Prins gives a thorough and chronological account of central banker doings in key areas – Mexico, China, Brazil, Japan and Europe – ever since US banker crimes set off the Great Recession in 2007. The essence of her thesis is that the US orchestrated collusion among the central bankers of many of the G20 economies and the Eurozone in order to primarily save busted US banks, and then also to maintain the 1%-enriching policies of QE, ZIRP and no-strings attached bailouts.
I have often written about the complete lack of democracy and accountability of the Eurogroup, which governs the Eurozone, but we must remember – this is not unusual in Western bankocracies.
Prins relates how in July 2016 the IMF’s Independent Evaluation Office did an internal investigation, “… admitting its top staff made many misjudgments in dealing with the entire European debt crisis, especially Greece’s economic situation. The staff’s ‘cultural of complacency’ and a tendency toward ‘superficial and mechanistic’ analysis brought up questions about who was ultimately in charge of the IMF. The report also admitted that internal investigators were unable to obtain key records or delve further into the activities of secretive ‘ad hoc task forces’.
It was a largely ignored bombshell. Christine Lagarde was not accused of obstruction. The reported cited the approach to the Eurozone as characterized by ‘group think’ and intellectual capture. There were no alternative plans on how to deal with a systemic crisis in the Eurozone or a multinational currency union.”
In the Eurogroup this is called “normal and legal”.
That the IMF is operating in such a fashion is not at all surprising – this is how major Western monetary institutions work: in secret, in collusion, with secret groups pulling the major strings, with no accountability, with terrible results for the 99%, with no accountability, in collusion with the corporate MSM, and with total complacency that their Western viewpoint on economics is 100% correct (despite all the failure) and that it should be exported.
That’s a very tough, but accurate, sentence. Anyone living in a non-Western nation should take notice and be on guard against adopting a Western economic model – it only looks good on movie screens, not in the light of reality.
The fact that the media failed to relay this bombshell – such a key mea culpa from an international institution whose Western importance and reach is rivalled only by the European Central Bank, Fed and Eurogroup – indicates just what a failed press system the West has. The failure is purely due to excessive amounts of capitalism in the Western system, which translates into, “Free speech must be bought.” Without a publicly-dominated media, with journalists who fear no legal retribution and have guaranteed jobs, it should be crystal clear that the private media will never investigate private banks. I am always surprised whenever I hear the term “Fourth Estate” – maybe during the 18th century “Capitalism with Western characteristics” corporate/bank interests didn’t dominate the Western system, but it is not the 18th century anymore.
The internal report also shows what the ECB has to look forward from Lagarde, who was – as I have written – selected to head the ECB mainly because she has already proven herself to be an empty cypher who can be easily manipulated.
The West either doesn’t know they have a bankocracy, or it can’t envision anything but a bankocracy
I credit Prins for discussing bringing this report, but she relates none of these obvious conclusions and merely moves on to the next chronological event. Her book is indeed excellent and indispensable, but I reiterate my overall criticism:
Her book is essentially conventional journalism – it is a recounting of historical decisions of central banker doings in key areas during the Great Recession. The only radical, non-Western change Prins really suggests is to move away from the dollar. Crucially, the world “class” is used less than a handful of times. What I have done is to take Prins’ useful chronological, globally-oriented journalism on modern economic history and analyse it from a perspective very different from her own: a pro-socialist and anti-imperialist one.
Prins’ inability to propose anything new is because the former Wall Streeter clearly supports capitalism essentially to the hilt. She may not like the crimes of capitalism, but she differs from socialists in that she cannot see that behind every fortune there is a crime; behind every profit is the sweat of a worker; that there IS an alternative, and one which other countries are implementing and advancing daily, and one which is far, far more democratic and egalitarian.
Other people have taken off the blinders.
My God – do you realise just how bad the Eurozone has been since it began? From 1999-2018 the average annual growth rate has been just 1.4%. Now wonder unemployment is so high in Latin countries, and horrible part-time work so prevalent in non-Latin Europe: job replacement doesn’t start until economic growth reaches 1.5%.
My God Part II – do you realise that there hasn’t been more than a decent whiff of revolution in the West despite 13 years of widespread popular (but not public) acceptance of the bankocratic nature of the Western system? The Yellow Vests are both personal friends and huge inspirations, but they are not even close to widespread acceptance in France, much less political power.
If I was a betting man I would bet that there won’t be this type of honesty – which necessarily requires an open rejection of the Western model – until the next bust in capitalism. Fortunately, such busts are inescapable, per Marx.
Both the critical Prins and the IMF cannot help but be inexorably impelled towards that bust – they have “no alternative plans”.
The beauty of Prins’ book is the way it documents how collusion to maintain QE – primarily to benefit imperial Rome (the US) – has always been the plan: In 2008 the US started QE, then in 2013 they handed the baton off to Japan and Abenomics. The US ended QE by 2015, but the ECB immediately started QE, fulfilling Draghis’ 2012 whatever it takes” code to investors. 2019 saw QE Infinity and back-to-bailouts in the US repo market. It’s been an endless shell-game relay.
For every QE there must be an unwind, no? Uhhh, apparently ‘no’ is their actual answer
Governments could buy unwanted financial assets and essentially burn them – allowing securities to mature and roll off the balance sheet without replacement. This was the Fed’s plan recently. However, such a plan is rather offset by the essential fact of capitalism which Prins gets, but does not really understand:
Capitalism IS collusion, always. The Fed is not going to betray the 1%, ever.
There is no “unwind”, no “taper” – they keep buying bad assets! And Prins lists why:
“There is nothing easy about letting go of the quantitative money addiction. Selling the trillions of dollars in securities banks have hoarded could very well cripple the system – again. Just as garage sale junk values are crushed when there are no buyers for the junk, associated ‘fire sales’ could see multiple asset prices come crashing down.”
I truly detest apocalyptic thinking. The next time you see a rainbow, remember: this is a symbol of the covenant God gave to Noah, and every other living thing, that He would never again destroy the world, via a flood or nuclear war or whatever. So just chill out a bit, doomsdayers. However, this is indeed the “everything Bubble”. Prins continues:
“Existing on a diet of artificial money and demand is anything but normal for an economic or financial system, even if it boosts (rich peoples’) markets to historic highs. If you take the air out of a tire, it collapses; if you take too much QE out of the system too quickly, the system collapses. If the flow, or even the possibility, of conjured money was to stop, markets relying on it would tank.”
And these markets have become unthinkably gigantic due to the infusion of massive QE money, of course.
There has been talk about “tapering” and an asset “unwind”, but it’s simply impossible (and against neoliberal ideology). For example, the US Fed made some efforts – they went from a peak of $4.5 trillion in assets in 2018 down to $3.7 trillion last year. What happened? There was trouble in the repo market, and – rather than allow any 1%ers to get their homes foreclosed on – the Fed resumed QE and are back up to $4.15 trillion. The takeaway should be that capitalism is collusion: with every flutter and dip of the markets where the 1% parks their money the US Fed will save them because they have a bankocracy.
But as Prins relates, this collusion is a G7/G20-wide affair now, post-2007 – this is what the Wests truly means when they talk about “globalisation”. It is not just the US – they are simply the imperial leaders, and if a nation follows the US they must switch to bankocracy as well.
In the Eurozone – the largest macroeconomy in the world, and also the weak link in the global economy – Mario Draghi came in with “whatever it takes” and he left last fall with “for as long as it takes”: QE restarted, at 20 billion euros per month, with no end date. It’s QE Infinity.
No unwind, no tapering – what about no more ZIRP (Zero Interest Rate Policies)?
If that is your question, you are behind the times: the battle now is over NIRP (Negative Interest Rate Policies), where banks literally suction off the savings of the average person’s bank account. This is a very real solution (not to endemic Western economic stagnation but) to the stable source of liquidity worries of the Western 1%. However, if the average person is perhaps too busy to study up a bit on QE they can certainly easily understand the impact of a negative rate on their savings account – last month Sweden ended their NIRP, becoming the first country to do so. Things change, but I think broad NIRP is a bridge too far, even in a bankocracy – they may as well just openly demand Roman tribute? Some still have room to manoeuvre: last week France announced that the interest on their saving (Livret A) accounts will fall from 0.75% to just 0.5% – its lowest level ever. A Livret A is what I have so… thanks again for that, French government. Former Fed chair Ben “helicopter money” Bernake keeps pushing NIRP, though, and we can’t put anything past American bankers.
Surely we have learned that much.
There is not much left to be said – this was a 10-part series. The failure is not QE per se, but the fact that QE did not go into the “real” economy and as many pockets as possible, but into areas (markets) which only the rich benefit from. QE is indeed central planning of the economy (a primary pillar of socialism) and denying that only shows either your close-mindedness or your inability to comprehend that the Western system in the 21st century has become a “bankocracy”.
I don’t think this is what the US Founding Fathers envisioned, but I also don’t care at all about that – I am not an “American Salafist”.
Maybe Marx didn’t see it happening exactly like this but – again – who cares. I imagine I have this view because I am a daily hack reporter – our point of view is to emphasise what is going on today, seriously.
Postscript: So when is the Japanese debt jubilee arriving?
The US and Europe isn’t engaging in “domestic neo-imperialism”, you say?
But what’s a more valued natural resource than “money”? Money is natural as hell – that’s why they call it “money”. Why make the thing or grow the stuff to get the money when you can just cut out the annoying, grubby worker class and print the money directly to yourself? That’s been the biggest economic development of the 21st century.
Money, QE reminds, can definitely be created, farmed. However, its supply is not infinite, giving money even more the status of a “natural resource”.
QE has thus screwed up the natural world, and when the QE-bubble pops there is going to be a geopolitical reordering. The collusion Prins’ title alludes to – prop up US banks at all costs – is a reminder that the QE era has been precisely to avoid a geopolitical reckoning for US financial crimes and thievery.
As Prins wrote and I expanded upon: since 2007 the West has inadvertently done everything it could to go back to a multipolar world, i.e. facilitate the rise of China. China may historically be rather culturally isolationist (within the hugely diverse “continent” which China truly is), but it desires to cooperate under a “Heavenly Mandate” rather than rule like a German “Ubermensch”. Who will they cooperate with, then, to best transition away from the recent evils of Western bankocracy, as they eventually will must?
In studying the modern global economy one cannot help but be struck by the incredible success of Japan amid two centuries Western domination. Personally, I consider Japan “Western” because their 1% is so intertwined with the West. But regardless of labels the world truly keeps following Japan’s lead:
The nation which seems to have extracted the most benefit from the QE era is Japan, the originator of QE back in 2001. They were also the first to create QQE. They were the first to introduce NIRP. They are like the anti-Saudis: they have amassed huge influence in the West because of brains, not natural resource luck and powerful bodyguards.
Given the fact that only God is infinite, therefore QE has to end eventually, what about the only other option available: What of the debt jubilee?
Jesus son of Mary was the last person who seemed to seriously talk about it, other than the indispensable economist Michael Hudson, but let’s discuss it: a debt jubilee for individuals, sure, but not for the Western system, of course!
If a debt jubilee does not coincide with a radical political-cultural shift away from Bankocracy and “Capitalism with Western characteristics”, then what is the point? The same issues and exploitation will simply reappear.
Anyway, it’s not really feasible – it would require inter-ethnic & international cooperation, something which is only pushed in socialism and not capitalism. Among Western nations seemingly only Japan could actually pull off a debt jubilee. They are such an economic-intellectual powerhouse who cares if their debt is 500% of GDP – the debt is nearly all owned by Japanese.
This makes them like the decidedly anti-Western Iran or Cuba – both those nations could have debt jubilees if those governments decided to do so because the mass majority of their entire economies (the non-black market parts, anyway) are controlled by the government. No debtor army can be sent into any of these countries; no debtor lawyer army can be sent to take over those nation’s cabinets, either.
Furthermore, Japan is not like Germany – they are not tied to some supranational system which despises them. Nor is Japan geographically and culturally tied to the devious, non-patriotic, Western bankocratic systems. Instead, Japan is historically close to China, the period of Japanese invasion and fascism notwithstanding.
I always try to remind myself that history moves very, very slowly no matter what the 24/7 news cycle (which I am a part of) insists. In 2017 I wrote a 7-part series – based around the fake-leftist analysis of fellow European-dweller Yanis Varoufakis – on this very same QE economy.
However, not much has or could change in the intervening 2.5 years.
Back then I brought up “ancient” history: The future was supposed to be Japanese back in the 1980s, remember? It was delayed via the neoliberal Plaza Accord of 1985, in which Japan’s 1% handed their country’s hard-won surpluses to the US in a Petrodollar-like scheme. As I wrote in 2017: “From a capitalist, 1% point of view it made perfect sense and worked perfectly well, which is why Japan’s 1% adopted it. But from a nationalist or 99% point of view it was economic suicide.”
Japan has been an incredibly successful anomaly amid two centuries of White dominance, but they clearly have faults in their system – it is not expressly patriotic, nor is it also simultaneously propelled by egalitarian principles of international solidarity, but instead geared instead towards the international 1%. When the QE era they created and intellectually guided finally ends, Japan is going to have some radical changes to make – they will have the money and power to do that.
Therefore: I’d say the day the world order truly changes is not when Chinese boots land on Main Street (impossible, as China has never been imperialist), but when Tokyo tells Washington: we’re with our Beijing cousins now.
The global arrangement post-Great Depression 2 thus hinges on this: Socialism in Japan makes a comeback.
Heck, they never left – since the 1960s the Japanese Communist Party has consistently won 10% of their vote. That’s a far better record then French and Italian communists.
Who did you think Japanese imperialist/fascists were repressing at home prior to the US occupation? And do you think Emperor MacArthur was allowing Japanese socialists a fair shot, LOL?
When Bubble 2 breaks it’s not Islamic Socialism which will be unchained first, but East Asian Socialism (they are far less dominated, after all – it’s the oil curse).
So Japan breaks with the US and allies with China, and the US gulps as they finally have to honor its debt to their top two debtors – China and Japan. Yes, there are many US warships which will oppose that, but at least partially and in some way they will have to repay… such as their troops leaving East Asia.
Thus, Korea will become unified. Think they will go the German route and erase all traces of socialism? I doubt it. Socialist Vietnam, the country with the highest economic growth rate in recent decades, are right there to help if some 5th columnists try.
Thus we should not predict a a “Chinese century” – what an individualistic, Western conception of history? – but an “East Asian Socialist” one. Americans may talk about a “US unipolar world”, but others, like in Iran, always talked about a broader “Western” dominance.
People will say that’s impossible, but such people are anti-leftists and latent supporters of Western bankocracy.
Iranians will soon be talking about a “Eastern” dominance, but that’s ok: “Neither East nor West but the Islamic Republic” has been working fine as a mantra for 41 years. Giving a cold shoulder to the West necessarily implies facing east, anyway.
There must be a reckoning for the Western 1%’s 1980-2007 era of neo-imperially gutting their own societies, and then also for the 2007-2020+ era of QE theft.
The reckoning will be the reduction of West Eurasian influence, and the subsequent rise of East Eurasia.
Post-Postscript – can Westerners trust people over 50?
(It’s incredible for their youth class of today, but when Westerners said in the 1960s, “Don’t trust anyone over 30,” people who were 30 actually owned their own home and car!)
I doubt many young people are reading this. It’s useful to know your audience, so may I briefly add:
People under 35, a group which I only recently exited, have been the hardest hit by the QE era, in terms of reduced salaries/personal wealth, our total exclusion from the property market, and a job market which legally conspires against us. In talking with older people I often find them to be totally unsympathetic: they incorrectly believe that the conditions are as “easy” today as they were 40 years ago. Combine that with the natural but undesirable narcissism of being old – one is closer to the end than the beginning, and many just stop caring about what comes after they leave this Earth – and there is a real generation gap brewing in the West. However, unlike in the 1960s this generation gap is not cultural but economic – many older people are seeing it, falsely, as cultural. They are blaming a totally powerless group – the youth class – for conditions they had no hand in making. Last year I wrote extensively about the urban-rural gap, via a comparison of the Chinese Cultural Revolution and France’s Yellow Vests, but this culture gap will become nearly as yawning if the West’s elderly and middle-aged do not put themselves in the shoes of young people. You could start by reducing our rents, eh?
Young Westerners have no reason to support bankocracy, as many elderly do. This is a political gap which must be fomented! It would help if you passed around this series, LOL.
For those who read the whole series: Thanks for going along with me! Hope some of it was useful.
Here is the list of articles which were published in this 10-part series, and I hope you will find them useful in your leftist struggle!
Part 1 – Western central bankers: they’re God, they trust – a 10-part series on the QE economy
Part 2 – How QE has radically changed the nature of the West’s financial system
Part 3 – QE paid for a foreign buying spree: developing countries hurt the most
Part 4 – Iran vs Mexico: ‘economic inflows’ versus ‘economic independence’
Part 5 – Understanding the West’s obsession with inflation
Part 6 – The new ‘beggar thy neighbor’: wars to devalue labor, not currencies
Part 7 – Blaming China for the Great Recession… to avoid emulating China’s (socialist-inspired) success
Part 8 – 1941, 1981, 2017 or today – Europe’s mess is still Germany’s fault
Part 9 – Don’t forget the real root of Brexit: fear of Eurozone economic contagion
Part 10 – Bankocracies: the real Western governance model
Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the upcoming ‘Socialism’s Ignored Success: Iranian Islamic Socialism.’)