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FRANCESCO CAPPELLO
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The more general conflict between workers and owners of the company has now been added to the traditional conflictbetween debtors and creditors. Not only families and businesses but entire peoples and their state organizations belong to the category of debtors. In the background the conflict between micro and macro: micro-enterprises and multinationals, small banks and large business banks, nation states and supranational powers.
The architecture of the financial system and the international payment system generate huge debt and credit bubbles, public and private, that do not meet and that finance manages in the form of securitisations, derivatives (1) and more. Accumulated debts from speculative finance amount to according to estimates, using BIS data, to a sum equal to 54 times the world GDP! This is fictitious money, fictitious wealth, translated into titles, invented by the financial system, whose value cannot be determined with certainty and which are continuously subject to sudden and unpredictable risks of devaluation. however, the aristocratic-financial caste (which makes use of the instrument of the large investment funds that control the large investment banks, multinationals, rating agencies, large information agencies, the same policy) who owns and manages this wealth of paper uses the most diverse speculative maneuvers for this purpose. The basic claim consists in thinking that it is possible to make money with money, in the various changes of hands from one investor to another, skipping the real economy, held on the sidelines, if not completely disjoint, from the financial one. Rather than granting loans to households and businesses, it is more profitable to market securities. However, the fictitious wealth accumulated by finance has a purchasing power that it exercises over real wealth. Unfortunately, many production and service companies that have allowed themselves to be convinced are not immune from the risks of financialization, or have been forced to, to hold large chunks of their capital in the form of financial securities, whose instability generates, moreover, significant fluctuations in the prices of raw materials underlying their transformative activities.
The fictitious money market threatens peace
The verbto pay contains the rootpace, well, none is possible todayreceipt because the pacification resulting from the payment of debts is increasingly difficult. Unquenchable debts, destined not to be paid, they are used as an instrument of domination by the financial aristocracy over peoples and their organizations. Get into debt, in the current context dominated by private debt money, it amounts to putting yourself at a permanent disadvantage vis-à-vis your creditors. Whoever is able to grant loans exercises power over the debtor. If the credits are not included, even for the lender, the system turns out to be unsustainable in the long run.A conflictual tension is established between debtors and creditors that prevents collaboration between peoples, risking rather to degenerate even into war between countries.
To stabilize the financial system, with respect to the always incipient crises, the role, unpublished until 2007, of the large central banks that accepting to withdraw from the market all the critical issues that it continually generates (toxic titles of various kinds) and replacing them with fresh money, created from nothing (operations oflightening quantitative easing Qe), it makes continuity possible, preventing the collapse of the financial castle thus obviating its most obvious pathologies. However, the Qe acts on the symptoms. It cannot cure the speculative finance disease which is structural being inscribed in the payment system as decided at Bretton Woods. (BW) where the US preference for liquidity prevailed which imposed the dollar, a national currency, as an international reserve currency to be used for international commodity exchanges. From ’71, Moreover, the dollar, freeing itself from the previous bond of convertibility into gold, becomesfiat.
“The US preference for liquidity reflects not so much concern, more or less reprehensible or more or less justifiable, of the American administration for the revenues of the dominant financial lobbies, how much, more profoundly an unconditional prior assent to power. An assent that, expressed in these terms, he is neither guilty nor innocent, but it is literally on this side of good and evil. The assent to the power that governs the decisions of Bretton Woods is such as to reflect the need, unavoidable for any power politics, not to separate trade finance fromfinancing of the war place that, while in the days of Bretton Woods a hot war begins to end, a new cold war is looming on the horizon, yes, but financially demanding against the other candidate to uphold the imperative of power, that is, the Soviet "superpower". A war that, perhaps even more than that which is ending, implies the need for unconditionally available liquidity, and can be created at will. And yet, this unconditional option in favor of potentially unlimited liquidity does not appear for what it is, Ma, rather, as a completely reasonable way of organizing economic and political relations within the West, in view of freedom and growth. "
GivesThe purpose of finance at M. Amato and L. Fantacci
The USA, by virtue of the fact that until 1949 they had been the only possessors of the atomic threat, obtained above all thanks to the contribution of the Italian physics school (then the most advanced in the world), they imposed the dollar as an international means of payment (1944 – Bretton Woods). In doing so they had at their disposala virtually unlimited source of liquidity in the service of their imperial hegemony. Printing dollars as needed (which would inevitably have devalued the currency of any other country that adopted the same way) they were able to build the most powerful army in the world. They played the hegemonic role of financiers of international aid and foreign investment etc.. (they were able to afford to "give" by appearing generous without them lacking anything) in an attempt to mask the obscene violence of 75 years of their "peace" in which according to the various estimates of historians they caused from 20 A 30 millions of victims to multiply by 10 if you want to include the wounded in the account.
Today this "equilibrium" of unipolar domination is no longer accepted by the large and small emerging powers that would aspire to a different order and organization of the world monetary system. Hence the risk of nuclear war that threatens the world again.
The operations of massive injection of liquidity into the system, aimed at easing the financial tensions generated by the mass of debts and credits that no longer meet, have so far been possible because the enormous inflation they have aroused has remained confined to the financial system (2). The real economy, artificially kept out of such monetary expansion processes, it has not yet undergone inflationary processes. This made it possible for the financial bubble to grow (2) at levels never seen before even compared to the great crises of the past and the recent crisis of 2007 (see graph: Dow Jones historian).
The 2019 it has been an extraordinary year for the financial markets.A record year. All major asset classes saw an overall rise of 23 trillion on stock exchanges and bonds. The value of the global stock exchanges has grown by 17 trillion dollars (from 67 thousand to 84 thousand billion dollars), that of bonds increased by 6 thousand billion!
However, it is a house of cards whose dangerous fragility the world could become tragically aware of on the occasion of an open conflict such as that in the nascent state between the US and Iran. (3). The blockade of the Strait of Hormuz which sees the transit of more than a fifth of the crude oil handled globally, could, indeed, lead to a sudden increase in the price of oil and a consequent and inevitable surge in inflation. Cost inflation in the real economy would make further monetary input by central banks impractical. The huge financial bubble that is no longer sustained would risk imploding ruinously. This time, indeed, the intervention of the large central banks, in the presence of interest rates already close to zero and often below zero it would prove to be a blunt weapon. The crisis would tragically spread everywhere with the dynamics of a financial tsunami saving very few countries. The possible collapse of the real economy together with large amounts of money in circulation would cause irrepressible demand inflation.
In the functioning of the global market, is exactlythe money market the great defendant to finally impeach and put under control. Since the 1980s, the liberalization of capital trade on a global scale without any regulation and control (since 1985 in Europe at the proposal of J. Delors) operated the main flaw in the dam that prevented the world from again becoming prey to the liberal creed and the colonial-style mercantilist practice. Having focused everything on exports makes the economy fragile today, because, for example, of the very rapid spread of tariffs that have caused exports to collapse. The EU, altogether, it is in surplus compared to the rest of the world.It is mercantilism that characterizes the economic policy of the eurozone countries. Its main tool being ordoliberalism.
On the real economy side, the economically strongest countries compete to be in surplus with respect to the world by making an effort to export more than they import. These are mercantilist policies that are only possible thanks to internal devaluations, than keeping wages and salaries low, destroying the welfare state, limiting public investment as much as possible, they manage to maximize exports and win competition, producing goods capable of establishing themselves on foreign markets. The globalization, that moves companies to where work can be bought cheaply and environmental regulations are non-existent or very lax and taxation is very low or zero, does the rest by rewarding the worst producers.
If you think, Furthermore, to the pathological accumulations of assets and liabilities of the European trade balances: the balances that the surplus countries have accumulated, registered by the European payment system, Target 2, amount to approximately one trillion euros, of which 800 Germans! The surpluses have allowed the holding countries to finance the deficits of the countries of the periphery of the eurozone, thus masking a completely unbalanced trade balance in favor of the profitable countries and against the countries of the periphery. The consequent criminal movements of capital, from surplus to deficit countries, they allowed the former to finance imports from countries like Greece to which he was asked, suddenly (following the crisis of 2007/8), to compensate the debt incurred, while it was denied any further financing of the deficit. Greece received the additional funding only by allowing it to sell off its public assets, assets and factors of production, etc.. , reducing the welfare state to zero. In the past, the large trade surpluses created by the strongest countries in the eurozone, in a system of national currencies regulated by flexible exchange rates, would have been impossible to accomplish. Today the risk must finally be recognized, inherent in the movement of capital accumulated in the large European surpluses, towards the poor countries of the eurozone, in an interested attempt to cover debt with new debt, without making it payable and taking actionintroducing the necessary corrective measures.
The mercantilist choice, it is equivalent to the implementation of continuous and aggressive competitive devaluations (we remember that, for obvious reasons, a devaluation is competitive if carried out by a surplus country and not by a deficit one!) to the detriment of the rest of the world.
The choice of favoring exports at all costs is greedy, short-sighted and warmonger; it reveals in an ever more evident way all its fragile danger. If the countries that normally absorb exports are hit by an economic crisis, this will immediately affect the exporting country.
The peace economy as proposed by J. M. Keynes
In Keynes's proposal theInternational Clearing Union (ICU) it would have been a functioning bank such asclearing house between debt positions (imports) and credit positions (exports). An international bank with the task of recording debts and credits generated by exchange relationships (import-export) between countries.
A clearing house, In a nutshell, allows countries that adopt it to exchange goods and services by paying for imports from adhering countries with their own exports. It's about exchanges (barter) multilateral in compensation. I can compensate the debt to the country from which I bought it by selling (exporting) towardsany othercountry joining the circuit. Thebancor it would have been the international currency used, reduced to simpleunit of account or unit of measurement of the value of the goods and services exchanged. In order to participate in international trade, each country would first have to "buy" bancor according to the exchange rate appropriately decided by the ICU. The common currency, reduced to its essence as a universally recognized unit of measurement of the value of goods and services exchanged between countries, it is created when needed and practically disappears after carrying out its task as a facilitator of transactions. A currency therefore not usable to accumulate wealth as it is suitably deprived of the function ofstore of value.
The possibility of adjusting theexchange between national currencies and bancor, the latter functioning as a common currency, it would have made it possible to adjust the exchange rate with the individual national currencies as needed: revaluing the currency of the country that exceeded in surplus and devaluing that of the country in excessive deficit in such a way as to facilitate the imports of the former and at the same time discourage further exports and vice versa with the latter, for the purpose of achieving equilibrium (of peace and mutual development) tra export ed import.
Such an international payment system pays offno capital movements are necessary. Do without the financial markets! Portfolio capital movements (not direct investments) they are discouraged; the fact that the German balance of payments surplus allows Germany to buy bonds from Italian banks is due to the fact that Greece, Spain or Portugal need loans because they are in deficit ... To the extent that the possibility of generating surplus and deficit were structurally reduced, the need for these loans mediated by the financial market would proportionally decrease. The ideal condition being that for whichI don't need to borrow money from you and you, in any case, you would have no money to lend me. It would be reduced like this, structurally, the need for a money market to exist! If we are all at zero I do not need to have money on loan and you do not have it to finance me but we have equally financed each other by giving each other credit within that commercial credit circuit, made possible by the Clearing Union, where trust would be organized in a structural way, so as to encourage and"Oblige" to collaborative relationships between countries, verifying their mutual benefits at every step, that is, system.
If we are all at zero I do not need to have money on loan and you do not have it to finance me but we have equally financed each other by giving each other credit (believing in each other). If all converge towards equilibrium (situation of substantial parity between imports and exports ) there are no deficits to finance and there are no surpluses able to finance them because the money I spent buying and I bought because I sold.The coin, as a unit of account (scriptural), once it has fulfilled its role of mediating trade, it disappears (it cannot be accumulated). That is why it is no longer usable as a store of value.
Trust between countries would be organized in a structural way in order to facilitate and encourage the growth of virtuous relationships between economic actors.. Ultimately, an international payment system capable of drastically reducing the need for a capital market and optimizing that of traded goods and services, in a logic ofcomparative advantages.
TheInternational Clearing Union, proposed by Keynes to BW would structurally prevent the formation of trade surpluses and deficits (if I have a surplus I condemn you to the deficit, if I have a deficit I condemn you to the surplus) and would discourage existing ones, applying to the first negative rates, in order to induce their holders to mobilize them, donating solos, that is, by circulating them in the form of social and environmental investments. It is not a question of "helping" deficit countries to "support" their debts with transfers from the rich to the poor, but of implementingan organization in which each member is structurally "forced" to actively collaborate with the mutual benefit of all. Countries in surplus would be induced to spend by buying more abroad (thus allowing deficit countries to make up for their liabilities) but also and at the same time internally, raising wages and salaries, returning to making public investments that can no longer be postponed, making, In other words, to finally incentivize domestic demand, ending the tragic season imposed on the whole world by liberalism and mercantilism.
The very dangerous resulting capital market, ultimately, from excesses of unsustainable surpluses and deficits, it would thus be completely downsized.
In the European context, from 1950 to 58, A structured trading model was active as proposed by Keynes to BW in '44, which has seen a clearinghouse active, the European Payments Union - UEP, directed by Guido Carli. It has definitely helped Europe rise from the rubble of war. Some authors (Massimo Amato and others) propose today a virtuosotransformation of the TARGET payment system 2, aiming at a re-edition, as far as possible, of an institution similar to the UEP.
It is necessary and more urgent than ever to re-propose the Keynesian project with renewed strength and awareness to get out of the evolutionary impasse into which humanity is entering. A common currency, the Bancor, in virtuous interaction with national currencies, together they would allow to regulate, optimally, world trade by abandoning speculative finance based on liquidity, harbinger of war.
Needdo it quickly and well because you die said a dear friend to whom I owe a lot. The largest economies in the world, namely those of SU, China and the EU are in full trade war with each other at a time when the supremacy of the dollar and its underlying world order are also dangerously questioned. Europe has increased its dependence on the international situation, he has, Furthermore, negatively affected the global recovery and is blowing on geopolitical tensions. The crisis it is going through, it is not by chance that it is a crisis of mutual trust among its members. Not only do we no longer trust each other but we often get offended and insult each other systematically, to the point of evoking again those nationalistic demons that they wanted to dispel. A recovery of the national margin for action is necessary, to be clearly distinguished from the nationalistic discourse.
The conditions for which the economic-commercial conflict can degenerate into military are all there. The division of the world into areas to be controlled for access to natural resources and for reasons of geopolitical strategy;the unsustainability of speculative finance, its outrageous growth;the tension to enrich oneself behind others, accumulating surpluses at the expense of others' deficits, as it is in the logic of the mercantilist choice. In all these aspects of the dominant economy we can now identify the profoundly criminogenic and warmongering trait that characterizes it that leads inexorably from commercial wars to wars fought with armies. Everything seems, Unfortunately, move in this tragic direction: the Chinese began to arm themselves at an increasing rate (they already spend a quarter of the US military budget today);the aggressive extension of NATO towards the East;the breaking of the INF treaty;
the adoption of military doctrines such asFirst Strike Atomico to replace the more reassuring (so to speak…) balance of terror of the times of the first cold war;the declassification of weakened nuclear weapons (mini nukes), from strategic to tactics, that is, usable in conventional war theaters (see the documentNuclear Operations).Preparation for war is proceeding swiftly, as reported in the documentProviding for the Common Defence, from which it is clear as for the Americans, while aware that this time it will not be a walk in the park and that the American people will have to be ready to suffer enormous losses of goods and human lives, even on its own national territory, war is to be considered necessary since it is no longer a question of deciding whether, but only when ...
A new international conference is very urgent, a new Bretton Woods before it's too late.
It is no coincidence that our constituents, with behind the great economic crises caused by those same liberal / mercantilist economic systems, which today have regained the upper hand, and which then led to totalitarianisms and the great global wars were fully aware of it; and our Constitution declared to write it in such a way that it would never happen again. From the minutes of the Constituent Assembly:
«If we let free reign to the law of free competition and to free initiative animated only by the aim of personal profit, we still get to super capitalism and thus to those consequences among which the terrible war that was the ruin of so many peoples stands out " Gustavo Ghidini, 1947
“The liberal conception in economic matters is effectively unsustainable, as there is a need for control according to the most complete ordering of the world economy, also and above all to achieve the greatest possible well-being. When we say control of the economy, however, it is not intended that the State should be the manager of all economic activities, but we refer to the state in the complexity of its powers and therefore largely to the state which does not exclude individual initiatives, but coordinates them, disciplines and guides them " Aldo Moro, 1947
(1) Securitization of credit rights (debts) previously prohibited by the civil code.They do, that is, to count debts as marketable securities (credit rights) authorized in Italy by law 130 of 1999 as a means of payment or howmoney enabled to balance accounts in normal financial transactions. In practice, the transformation of real assets into a charter. Likewise the law 481 of 2001 has cleared the derivatives which, born as forms of insurance on agricultural crops, they have become realbets around the price trend of goods, regardless of the possession of the same; Practicallybets on the value of other financial instruments; derivatives were alsoequivalent by law to "money" enabled to balance the accounts of public bodies as well as those of banks. law 448 of 2001
(2) A financial bubble is an artificial increase in value, disconnected from the fundamentals, of securities such as, actions, bonds or derivatives subject to excessive valuations caused by easy optimism and complacency among investors who carry out trading operations on the financial markets. The mass of monetary stimulus perpetrated by major central banks was used to purchase additional securities, making them raise their prices by giving investors a continuous stock market, a "fantastic" ten-year rise.
(3) bubbles tend to burst just before a recession
- bursting of the bubble of the new economy (spring of 2000)
- the bubble of subprime mortgages and derivative securities (2007)
Stock markets usually anticipate recessions from 6 A 9 months before they occur.