Is capitalism a belief system
Church in the belief system capitalism
The crisis hit the United States out of the blue. Rich people didn't know what to do with their money, which fueled speculation in the financial markets. A system of unregulated shadow banks competed with traditional banks. Gains in the price of securities led to increased lending and destabilized the banking system. When it was decided to drop a company in financial difficulties in order to avoid the risk of a crisis, the opposite happened: Panic broke out. After a short time, around 16,000 banks were bankrupt.
No, we are not in the most recent crisis here - but in the midst of the panic of 1907. It was not Lehman Brothers but the Knickerbocker Trust Company that was dropped. Not from the US Federal Reserve, but from the private bank JP Morgan. Knickerbocker was classified as not systemically relevant. At that time, it was not a political authority, but rather a group of banks headed by private banker John Pierpont Morgan, who decided whether stumbling companies should find refuge under a rescue package. Upton Sinclair captured the mania before the crisis and the panicked rescue attempts in his 1908 novel Wall Street, which was published in German in 1929.
100 years ago, seven years after the panic, the US central bank, the Federal Reserve System, or Fed for short, was founded on December 23, 1913. In the meantime, several monetary studies have been commissioned - the Fed was also a product of scientific capitalism. That it was taking so long suggests the resistance that existed despite the apparent need for a bank of banks, a lender of last resort.
In the good US tradition, the Democrats in particular resisted the centralization of political power. But the US banking association was also against it and did not only speak out when the Fed was founded: "For those who are not in favor of socialism, the solution is hardly acceptable."
However, the Fed system of 1913 was far from what we know today. The concessions to the federalists and bank capital were too great for that. Another, even more serious crisis had to come first. The devastating effects of the global economic crisis of 1929 and the shared responsibility of the Fed finally led to a general reform and further centralization in 1935 - the Fed became a real central bank.
After the Second World War, the USA not only became a world power, but the US dollar also became world money. Crude oil, the lubricant and fuel of the golden age of capitalism, was still traded in pounds sterling until the 1950s.
That was soon to change and the Fed was not just an important central bank, it was more or less the world central bank: the US dollar became world money and is still today. Assets are held in the US currency, peripheral states have to borrow in US dollars, and a large part of world trade is settled in US dollars. That is not in the interests of all states, because it gives the US greater leeway in terms of economic and foreign policy. You can go into debt almost without end. That is one reason why parts of the European Union founded the euro, and also one reason why China, for example, as the world's workbench, wants to increasingly trade in its own currency.
It was also the Fed that symbolically ushered in neoliberalism when then Fed chairman Paul Volcker turned the interest rate screw - while the key rate was 11 percent in 1979, it was over 21 percent in 1981. Inflation was high and the US dollar was under pressure as a result of the Vietnam War, the associated high debt levels and political weakness. With the so-called Volcker shock, the US dollar was strengthened and the increased exchange rate plunged the countries of the Tricont into bankruptcy - the debt crisis and the IMF dictates (»structural adjustment«) had begun.
With its anti-inflation policy, however, the Fed did not simply represent the interests of US money capital. In 1975, US banks still held 55 percent of the loans to Trikont countries. In the wake of the debt crisis, there was an explosive increase in bank failures, as loans granted could not be repaid. But the manufacturing industry was also hit hard by the more expensive bank loans, and they gave it a refresh - the market was "cleaned up", that is, companies went bankrupt, it was modernized and the financial market became increasingly important for corporate financing.
The interest rate shock also marked the beginning of financial market capitalism, the growing importance of Wall Street and the credit-financed growth of financial stocks. Instead of high interest rates, Alan Greenspan, Fed chairman from 1987 to 2001, pursued a low interest rate policy; he spurred the dot-com mania and also the loan-financed real estate boom in the USA.
The Fed policy was not the cause of the crisis. Nevertheless, it was repeatedly used as a projection screen for conspiracy theories and anti-Semitism - a look on the Internet shows that. Greenspan is portrayed with a hooked nose and the Fed is denied its public-political character - rather it is an instrument of a sworn banker clique.
The Fed's responsibility for global capitalism was also evident in the recent crisis. The US central bank acts in the interests of global capital, while the European Central Bank (ECB) found it difficult to enforce an overall European interest against German politics and the Bundesbank. Even more: the Fed's purchase of US government bonds, the loose monetary policy and the state economic stimulus programs were some of the reasons why the German economy came through the crisis well. While the internal European market collapsed, Germany exported more than ever to the USA.
While a fiscal union was being discussed during the crisis in the eurozone, the US had long since left it: After a bitter conflict between Alexander Hamilton and Thomas Jefferson and James Madison, it was already implemented in 1790 that the states' debts accumulated during the War of Independence should be removed from the Central government could be taken over. The background to that was a problem that was similar to that in the euro zone today: "If a country's creditworthiness is in the least questionable," says Hamilton, "inevitably a costly premium has to be paid for all loans that are granted to it." To counter fiscal and debt union, Germany pushed for a consolidation course. While the Fed is also committed to a high level of employment and buys government bonds unconditionally, the ECB is solely committed to monetary stability and has committed the countries whose bonds it buys to an austerity rate.
Even after 100 years, the Fed is an expression of US pragmatism, which is less subject to economic dogmas than to the US as a world power and the US dollar as the "real polity" (Marx) of the world economy. As this center of global capitalism, the Fed is tantamount to an institution of the capitalism belief system, in which disputes over direction exist but principles are not questioned. And when in times of crisis the authority is called upon to restore general trust.
"The system is like the church," former Fed executive Richard F. Syron once wrote. “There is a Pope, that is, the chairman, and a college of cardinals, that is, the governors and bank presidents. Then there is the curia, which is made up of the senior managers. The commercial banks correspond to the lay class. "One even has orders with different religious ideas like the Jesuits, Franciscans and Dominicans, only that they are called Pragmatists, Monetarists and Neo-Keynesians."
Ingo Stützle recently published »Austerity as a political project. From the monetary integration of Europe to the euro crisis ”published by Westfälisches Dampfboot, 399 pages, 36.90 euros
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