This is the 1970s Depression all over again – this time on a global scale. Governments are going to fall.
This puts the wind to the sails. It is the type of action I would expect, demand, in fact, from the humanity in Europe. If this can be coordinated correctly it will bring government to this point: ordering the goon squad to keep whacking her citizens with tear-gas and sticks until they go back indoors, or, seeing the gathering grim determination of active citizens collectively finding their Archimedean Point, the goons themselves will beg to stand down. They may even join their fellow citizens. After all, these are not Indonesian goons we are talking of here, these are European goons. And, they are Unionized. They have an undeniable stake in this. Perhaps they themselves will glimpse a New Horizon.
What a moment. We hold our breath as “The Whole World is Watching,” and, though through sheer exhaustion of spirit we may have come to believe otherwise, we now know beyond question that we continue to live in interesting times.
“The whole world is watching.
The whole world is watching.
The whole world is watching.
The whole world is watching.” Chicago Transit Authority, 1969
Europe’s unions caught between members and markets
European trade unions are facing up to a difficult choice: acquiesce to austerity measures and infuriate members, or fight them with strikes and risk a market backlash that could make the economic situation worse.
At one extreme is Ireland, where unions have avoided widespread industrial action over existing cuts — some of the earliest and sharpest in Western Europe — in part because the resulting market reaction would hurt workers more.
Trade union congress leader Jack O’Connor told Reuters last week that he feared foreign investors would interpret serious strikes as a sign Ireland might not be able to push through cuts and meet debt obligations, leaving it unable to borrow.
“Even if you win (the strike campaign), you could end up losing,” he said — but he said the decision was costing him sleepless nights and would not rule out further strikes if the government pushed through new cuts.
At the other extreme is Greece — where the European Union and International Monetary Fund (IMF) are demanding harsh spending cuts — where unions say they will strike in June and push for Europe-wide action against austerity measures.
“We’ll be pushing until the end to prevent the worst,” GSEE union head Yannis Panagopoulos, promising maximum resistance to a bill that raises the retirement age and curtails early pensions.
Panagopoulos says he is already talking to other European unions and hopes they can work together to hold back a wave of austerity measures as governments pull back on stimulus spending and start to address deficits.
If we compare the chart from the Great Depression of the 1930s to the chart from the Great Stagflation of the 1970s, a number of questions immediately come to mind, not the least of which is why does the dollar measure of GDP and the gold measure of one and the same GDP diverge?
If your answer to this question is, “Because the dollar was debased from gold and replaced with a symbol (or token) of money – with a mere piece of paper, even dancing electrons – in 1933”, you have overlooked precisely the thing you should be explaining; namely, why gold money had to be replaced by paper money in the first place, and, therefore, why GDP came to be expressed by these two contradictory measures.
Paper money has always coexisted with gold or some other metal based money. Paper tokens served as the representative of metal money in transactions whenever the transportation and use of metal money was inconvenient to the exchange of goods. It was, however, only a substitute for metal money and served only limited functions as a substitute for gold where the metal money was not actually needed in its own metal bodily form – for instance, only gold could settle accounts between nations, and only gold can be used to store value (hoarding).
Even in transactions where money need not be present in its metal form, however, the paper which served as its substitute had value based on the fact that it represented this metal, and only to the extent it represented this metal. So, for instance, Confederate money, during our own Civil War, became worthless because it was printed in large quantities beyond what could be redeemed for the face value of the paper in gold.
If we only focus on what happened to the Confederate paper money, however, we miss an important point: what was happening from the standpoint of the citizens of Confederate society. As holders of Confederate paper money, they saw prices continually rising for everything; while as holders of gold, prices were stable, perhaps even falling. Much like what we see in the two charts above, reality looked very different depending on whether you held paper or gold.
When money was debased from gold in 1933, these two contradictory views of reality each became conferred on a different portion of society. The United States was now divided between the holders of gold, on the one hand, and those who used the debased paper currency, on the other.
Wherever money is required for daily transactions – for instance, to be paid out as wages, or to purchase normal daily goods – it is the debased paper currency that is in use. In this sector of the economy the paper money plays only the symbolic or token functions of money to make routine transactions possible.
The paper money itself is worthless, and only serves as a symbol of a social relation, implied by money: namely, the utter dependence of its owner on the transaction performed. In the case of wages, it symbolizes the utter enslavement of the worker by forces over which she has no control and which rule over her absolutely. Her acceptance of the money for her labor power announces the depths of depravity to which she has sunk – her absolute reduction to the category of a sub-human, inferior even to the status of household pet – a draft animal, with the right to vote.
We flatter her.
Better to describe her as a mere container for what is really important, and, unfortunately, necessarily attached to her – her labor power. Since this container requires so much food, water and shelter in order that its precious contents – her humanity – be present for work each week to be consumed, we might substitute for this container, a Chinese container, or an Indian, Brazilian, or Mexican container – each of which require that much less care and feeding.
The inflation of the prices of goods as against their value when measured in ounces of gold, as seen in the charts above, is, therefore, the relentless intensification of the enslavement of the worker, the ruthless application of financial violence of the most extreme sort by the most inhumane and predatory gang of sociopaths ever to dominate society in the entirety of human history.
The absolute debasement of the worker is the necessary condition for the debasement of money.
Even if it is pissing in an ocean, we take it:
Below is another breakout from the chart we showed you previously. This time, however, we direct your attention to the Great Stagflation period of 1969 to 1980.
The Great Stagflation, according to the Wiki, refers to the period of the 1970s, when the economy was simultaneously rocked by ridiculously high inflation and ridiculously high unemployment. The authors of the entry write:
It is a difficult economic condition for a country, as both inflation and economic stagnation occur simultaneously and no macroeconomic policy can address both of these problems at the same time.
Stagflation was never supposed to happen, according to the then dominant postwar macroeconomic theory, because, in the words of the Wiki, “inflation and recession were regarded as mutually exclusive.”
When inflation got out of control, the government simply instigated a recession to purge working families of their jobs – thus reducing wages with a sudden explosion of unemployment. Once inflation was “wrung” from the economy, prices could be allowed to creep upward again in order to further reduce wages.
As you can see from the chart, however, something went terribly wrong with this alleged theory.
Starting around 1970, the economy, as measured in ounces of gold, began contracting with a viciousness not even seen during the 1930s. By 1974, it had lost 2/3rds of its value, as measured in gold, and, after a bounce, went on to lose 80 percent of its value by the same measure. At the same time, the dollar measure of the economy tripled over the same period.
To put it another way: in 1970, $100 of GDP could buy 2.6 ounces of gold; but, by 1980, that same $100 dollars of GDP could purchase a mere 0.17 ounce of the metal. Relative to the value of gold, $100 worth of wages lost almost 94 percent of its value.
It was a repeat of the collapse of real wages seen during the Great Depression, but on a scale not even imagined by the working families of that generation.
It was all about reducing wages. And, an ever lengthening family work week, as millions of women joined the labor force beside their husbands to make up for lost real wages income by throwing their bodies onto the labor market – all to the inspirational tune of the theme song from Wall Street’s propaganda series, the Mary Tyler Moore Show.
Who can take a nothing day, and suddenly make it all seem worthwhile?
Well it’s you girl, and you should know it
With each glance and every little movement you show it
Love is all around, no need to waste it
You can have a town, why don’t you take it
You’re gonna make it after all
How will you make it on your own?
This world is awfully big, girl this time you’re all alone
But it’s time you started living
It’s time you let someone else do some giving
Love is all around, no need to waste it
You can have a town, why don’t you take it
You’re gonna make it after all-
Below is a breakout from the chart we showed you previously, which focuses on U.S. Gross Domestic Product from 1929 to 1940 – the Great Depression period.
The Great Depression, we have always been told, was ultimately overcome by Franklin Delano Roosevelt’s Keynesian-style government economic policy. The narrative goes some thing like this: Lord John Maynard Keynes rewrote the book on Economics; and, as governments like FDR’s New Deal adopted his prescription, a marvelous economic recovery began to take hold.
As you can see from the chart, however, this is not a completely accurate portrayal of the events. By 1940 the economy of the United State did indeed seem to recover to its 1929 level, but only when measured in dollar terms. When measured in ounces of gold, it was still 40 percent off of its 1929 peak.
You can actually see where the two measures of economic activity begin to diverge in 1933 – the first year of FDR’s administration. This divergence occurred because Washington, to create a false prosperity, debased the dollar from the gold standard that year and began flooding the economy with fiat money, i.e., paper money printed on a press and required by law to be accepted in the place of real (gold based) money.
This debasement resulted in an outbreak of massive inflation in the middle of an ongoing depression! Absolutely unprecedented!!! For the first time in history, prices rose despite the near complete collapse of economic activity. This inflation created the false perception that economic recovery was underway, but its real effect was to sharply reduce the real value of the wages of working families and fatten corporate profits.
This was the goal explicitly suggested by Keynes, who argued that you could either drastically cut wages and get in a pissing contest with the unions – as Greece, Spain and many U.S. states are doing today – or, you could simply inflate the value of those wages away by printing a ton of paper money and injecting it into the economy. Faced with this inflation, the natural choice for working people would be to work harder and longer in a vain attempt to keep up with rising prices.
… it is fortunate that the workers … resist reductions of money-wages … whereas they do not resist reductions of real wages … Every trade union will put up some resistance to a cut in money-wages, however small. But since no trade union would dream of striking on every occasion of a rise in the cost of living, they do not raise the obstacle to any increase in aggregate employment which is attributed to them by the classical school.
Despite this ugly reality of government-corporate collusion, people who would otherwise be opposed to such fascistic predatory behavior nevertheless embrace the New Deal as an example of what the Messiah should be doing in our present crisis.
Stupidity has no bounds.
From the Dylan Ratigan Show:
“We are told that this is an unpredictable cascade of unforeseeable errors – that this is unprecedented, that no one could have foreseen this. It’s kind of like the bankers on Wall Street: No one could have foreseen the risk they engineered themselves, and so no one is responsible.“
–Representative George Miller
From a friend: