Depression and the Federal Reserve

The Corona virus has now spread around the world, which is to say that it is now at pandemic levels. If it was confined to a single country, it would be referred to as an epidemic. I mention this for the benefit of those who are not clear concerning the subject. This pandemic is being blamed for the crisis in capitalism, the collapse of the global economy, which is now being referred to as a depression. Such is not the case. This depression is the natural result of capitalism, precisely as predicted by Marx.

It has been reported that the country of Italy has been very hard hit by the virus, with possibly 6,500 deaths so far. The whole country is in a state of ”lockdown”, with good reason. The medical personnel are doing their best, at great risk to themselves, with the equipment which is available. It is reported that the medical professionals are exhausted and desperate. It is very likely that a similar situation will soon be faced by the citizens of America, as the United States is expected to become the latest epicentre of the pandemic.

Within the country, New York City is considered to be the ”centre of the epidemic”. The number of people who are now known to have the virus has ”sky rocketed”, if for no other reason than that more people are now being tested for the virus. In many cases, people who have the virus show no symptoms. These same people spread the virus, through no fault of their own. Such people are known as carriers. It only makes sense to isolate people, to exercise ”social distancing”, as a means of containing the virus.

As I write this, perhaps one third of the American people are being told to stay at home, unless they absolutely have to leave their houses for essential service jobs. Even then, they are being advised to stay a safe distance from each other, six feet or two meters.

The Surgeon General, Dr. Jerome Adams, says ”this week, it is going to get bad”. As he is the top medical professional in the country, all would be well advised to listen carefully to that which he says. That includes President Trump, who has his own ideas. It should come as no surprise to anyone to learn that Trump is ”at odds with the medical profession”. He clearly thinks that he knows more about the medical situation than the medical professionals. But then it is not reasonable to expect anything better from someone who is so supremely ignorant.

This in no way changes the fact that the medical professionals are treating patients who are infected with the Corona virus, at great personal risk to themselves. The only thing they are asking for in return is the proper ”personal protective equipment, or PPE”. By that they mean masks, gowns and surgical gloves. In addition, the patients who are desperately sick, short of breath, need ventilators. There is a severe shortage of ventilators, just as there is a shortage of hospital beds.

These are the facts, just as it is also a fact that Trump is fond of giving speeches, even at press conferences. That is a man who loves the sound of his own voice! At these conferences, and in front of his medical advisers, no less, he states things which directly contradict the opinion of those same medical professionals. As one of them stated it, ”I can’t jump in front of the microphone and push him down.” No doubt the temptation is do so is very strong. At least the thought is most pleasant.

The frustration of the medical professionals does not end there. As president, Trump did exercise his authority to activate the Defence Production Act, which gives him the authority to force businesses to produce medical equipment. Ordinarily, this Act is used as a means of forcing industry to produce war material. Now it is being used to force the same industry to produce medical supplies. Or more accurately, it could be used for that purpose, but it is not. Now that Trump has activated that Act, he refuses to enforce it. Industry can produce such medical items or not, as they see fit. For the moment, they see fit to not produce such items. Perhaps the profit margin is not sufficient to justify the expense of retooling the factories. This is the way the capitalists think. As Trump is a capitalist, this he understands.

As I write this, it has just been reported that the stock market is down from its all time high by 37 percent, or just over a third. For some strange reason, the reporters are of the opinion that those of us who watch the news are half Philadelphia lawyers and half rocket scientists. I mention this for the sake of the odd viewer who is neither, is not familiar with percentages, and is not even a mathematician. They also mention that the market is on track for having its worst month since 1931, at the height of the Great Depression. That is not a coincidence.

This is not to say that our fearless leader, Donald Trump, is indifferent to the suffering of American citizens. Indeed not. He has given it a great deal of thought and come to the conclusion that ”the cure cannot be worse than the sickness”. He has therefore decided that the country must be re-opened for business, that all shutdowns must end, that the six foot exclusion rule must be tossed, and the pandemic will be over within the next few weeks. President Trump is truly a man of action! In fact, he wants the country ”opened up and just raring to go by Easter”. In fact, he announced this on the very day the daily death toll from the Corona virus reached a record high.

If nothing else, this provides all of us with a very clear cut setting for the class war. And it is a war, with the ”lower classes”, which is to say the working class, the proletariat, in partnership with the family farmers, as well as the middle class, the petty bourgeois, against the monopoly capitalist class, the bourgeoisie. The capitalists have made their position quite clear. Their spokesman, Donald Trump, no less, is more concerned with the economy than with the fact that countless people are getting sick and dying!

Think of it. The medical professionals are of the opinion that the pandemic is about to ”become much worse”, that the ”worst is yet to come”, that we have a ”desperate shortage of medical equipment”, everything from ”personal protective equipment to ventilators”, and the only thing the capitalists are concerned about is their profit! It has been reported that two million people applied for unemployment benefits in one week, and it is anticipated that another seven million will soon join the ranks of the unemployed, and yet the press is focused on the stock market!

As the news outlets are owned and operated by the capitalists, this is understandable, and we should not blame the journalists for reporting on that which concerns the capitalists. They are merely doing their job, and many of them sneak in news tidbits as best they can. This in no way changes the fact that the capitalists are deeply concerned with the stock market, as that is a reflection of their profits. As the stock markets are plunging, the capitalists are responding by ”propping up the markets”. In fact, the Federal Reserve Board, otherwise known as the Fed, has pumped countless billions of dollars, even trillions, into the market, as well as reducing the interest rates to effectively zero. This they refer to as ”economic stimulus”, and the markets have responded by continuing to drop. In fact, some economists expect the market to lose another third of its value, reducing the country to depression levels, not seen since the Great Depression.

As all measures to stop the decline of the stock market have had almost no effect, the capitalists have decided to pump more money into the market. As anyone with a lick of sense could tell them, it has not worked before and is not about to work now. But then capitalists are convinced that money solves all problems. Any evidence to the contrary is quietly ignored.

This bring us to the ”Fed”, the Federal Reserve Board. Countless people have heard of this outfit, and it clearly has great power, so it stands to reason to look into this secretive organization. The people on this Board control the ”Federal Reserve System”, the ”central banking system of the United States of America”. It was reportedly ”created by Congress to provide the nation with a safer, more flexible and more stable monetary and financial system”. As the economy of the country is now in free fall, it is safe to say that it has fallen short of this noble objective.

The key component of the Fed is the Federal Reserve Bank, the ”nations central bank, an agency of the federal government and reports to and is directly accountable to the Congress…the Fed has control of the money supply through its power to create credit, with interest rates and reserve requirements.” It does not take an economist to realize that the Fed has incredible power.

Yet there is more to it than that. The Congress has decided that the Fed has four functions. The first is to manage the inflation rate at preferably 2 percent, and to keep prices stable. The effect of inflation is to gradually lower the standard of living of the working class, as wage increases rarely keep up with inflation. This means that in the past, such as immediately after the Second World War, it was customary for a family to have one parent working, usually the father, while the mother stayed home and raised the children. That is now a thing of the past, the ”good old days”, which they were not, but working people did enjoy a higher standard of living. As a result of inflation, our standard of living has dropped considerably, so it is safe to say that the Fed has achieved its goal of reducing the standard of living of the working class. It is also safe to say that the Fed has failed miserably in its goal of keeping prices stable.

The second goal of the Fed is to ”supervise and regulate many of the nations banks to protect consumers”. This begs the question, what do they mean by ”consumer”? If they are referring to the fellow capitalists, then the Fed is performing a magnificent job. If they are referring to the common people, then that is a different story completely. But of course the only concern of the capitalists is with other capitalists.

The third role of the Fed is to ”maintain the stability of the financial markets and constrain potential crises”. Any way you look at this, the Fed has also failed miserably, in this objective. The ”financial markets”, by which we can only assume they mean the stock market, is in free fall, the unemployment rate is expected to hit 20 percent, countless small businesses are expected to close, and the country is entering a depression, one which is expected to be even more intense than the Great Depression. So much for ”constraining potential crises!”

The fourth role of the Fed is to ”provide banking services to other banks, the US government and foreign banks”. The income of this bank is ”derived primarily from interest earned on US government securities that the Federal Reserve has acquired through open market operations.”

The economists are concerned now, as the Fed has placed all their money -and then some- into the stock market, in an attempt to prop it up. The results are clear for all to see. The most kind and considerate of the economists refer to the stock market as ”volatile”, in that it may ”rise one day and fall two days”. It has been compared to a roller coaster, with the trend downwards.

As a result of this, the economists are warning that the ”entire global financial system is at a tremendous level of risk. Governments could conceivably be facing bankruptcy.”

It is not too often that economists blurt out something completely honest, but this is one such rare event. As that is the case, perhaps we can pause and cherish the moment.

Now that the pause is over, let us face the fact that even the bourgeois economists are facing the fact that the Federal Reserve Bank is on the verge of bankruptcy! If that happens -when that happens?- various governments around the world, including the United States of America, are anticipated to go broke!

The capitalists have not yet exhausted their bag of tricks. The leaders of both parties, of both houses of Congress, the Senate and House of Representatives, are currently in negotiations, trying to ”hammer out a deal” of possibly more than two trillion dollars, in an attempt to ”stimulate the economy”. One of those leaders has reported ”broad bipartisan support” and that ”conceptually we are there”. By way of translation, this is ”bourgeois speak” for the fact that they are ”at each others throats”, no where near agreement. The press is reporting that behind closed doors, they are not even civil with each other.

The more passionate supporters of the bourgeoisie are determined to give hundreds of billions of taxpayer money to the biggest, richest, most powerful corporations, those who are ”Too Big To Fail”. This includes the major airlines, auto manufacturers, hotel chains, restaurant chains, ocean cruise chains, computer manufacturers and casinos. Small companies, which are described as those who employ less than 500 people, as well as individuals, are ”Too Small To Succeed”. As far as the capitalists are concerned, the rest of us can go the way of the dodo bird.

This stands in sharp contrast to other voices, those who are possibly even more passionate supporters of the bourgeoisie! They are determined that this ”economic stimulus package” should go to the ”little guy”, which is to say the small business owner and the working people, especially those who are losing their jobs. They would like to see a check sent to all Americans, as well as ”Unemployment Insurance on Steroids”, so that those who are out of work will receive their full income, at least for a short time.

No doubt the reason for this benevolent attitude, coming from those who are the most avid supporters of the bourgeoisie, has nothing to do with concern for the ”common people”, the ”little guy”. They are just well aware that the working class is in motion, demanding change, becoming aware of themselves as a class, politically active. These people have ”their ear to the ground”, are well aware that a revolt is brewing, a full scale revolution could break out any day now, and ”drastic steps” must be taken to forestall that revolution. Their idea of drastic steps is to send a little money to the working people, to ”throw a few coppers to the Natives”, to effectively ”buy people off”. As a few paltry dollars will stop the revolution!

I have news for all of you, those of you who are belly crawling boot lickers of the bourgeoisie. We are not our grandparents. We are not about to put up with all the crap our grandparents put up with. This is not 1929 and this depression is not about to drag on for ten years and end with a war. We are well aware that there are over six hundred billionaires in the country, and they are all living ”high off the hog”. We also know that those people are monopoly capitalists, imperialists, members of the class of people whom are technically referred to as the bourgeoisie. They are the members of the ruling class, responsible for this depression, this crisis in capitalism. This depression is proof that capitalism does not work. To suggest that this depression came about as a result of the Corona virus is nonsense. This depression came about as a result of capitalism, pure and simple, just as predicted by Marx.

The current situation is exceptionally sharp and clear. The last of the middle class, the petty bourgeois, the small business owner, is now facing bankruptcy, being forced into the ranks of the working class, the proletariat. Now in America, there is effectively no middle class! It is a war of the monopoly capitalist, the billionaires, the bourgeoisie, against the working class, the proletariat. There is no longer any vacillating petty bourgeois to ”muddy the waters”, to confuse the issue with their petty bourgeois mentality. They no longer exist.

It is a fundamental tenet of Marxism that the proletariat is destined to overthrow the bourgeoisie, smash the existing state apparatus and establish the Dictatorship Of the Proletariat. Before long, the working class will rise up in revolt, but spontaneously, as it is not yet aware of itself as a class, complete with its own class interests. Still less is it aware of its destiny to crush the bourgeoisie under the Dictatorship Of the Proletariat. It is absolutely essential that the proletariat be made aware of this, and it is the duty of every conscious person, every scientific socialist, by which I of course mean Marxist, to carry this awareness to the proletariat. The best way to do this -if not the only way- is through the leadership which can only be provided by a party. I am of course suggesting the name Communist Party, Dictatorship Of the Proletariat, or CP,DOP, as a means of distinguishing ourselves from the parties which claim to be Marxist, but are not.

I am also suggesting that all Americans be encouraged to join the two mainstream political parties, Democrat and Republican, as card carrying members, party bosses. As such, they will get to decide the individuals to run for any and all political offices, will be able to flood Washington and state capitals with Leftist people, can work to abolish the Electoral College, increase the minimum wage, abolish all student loans, increase the pensions, defend our democratic rights, and in the process, will receive most valuable training for the Dictatorship Of the Proletariat. They will learn first hand that the bourgeoisie are in charge, and fully intend to remain in charge.

In summary, I am suggesting an extremely exclusive Communist Party, an organization of dedicated Marxists, those who are committed to revolution and the subsequent Dictatorship Of the Proletariat. The members of this Party can focus on raising the level of awareness of the working class, especially the most advanced workers, to that of the level of Marxists. These people will know they are making progress when the term Dictatorship Of the Proletariat is commonly discussed among working people.

I am also suggesting a very broad based coalition of Leftist people, which would include anyone and everyone who is the slightest bit interested in defending our democratic rights. They should be encouraged to join the two mainstream political parties. This of course includes seniors, students, workers, unemployed and homeless. In fact, everyone who is dissatisfied with the current political situation, in which a handful of people live in extreme wealth, while the vast majority live in extreme poverty. The more advanced will run for political office, or at least make the attempt. In this manner, they will receive valuable training in leadership, which will serve them well after the revolution, when such workers will be placed in key positions, within the newly created Dictatorship Of the Proletariat.

No doubt this latest crisis in capitalism, this depression, will help to motivate conscious people, Marxists, to form a proper Communist Party. Equally without doubt, it will also inspire people to take action, to join the two mainstream political parties. It is to be hoped that it will also motivate certain people, by whom I am of course referring to the leaders of the Womens’ March, as well as the Students Protest Movement, to once again become active. I have complete confidence in you. You have done it before and you can do it again. The difference this time is to not focus on narrow issues, but to focus on capitalism and the class of capitalists, the bourgeoisie. They can and must be destroyed.

With that in mind, I will close this article with my usual suggestions for slogans. I mention these slogans as they are so important. It is the best way to raise the level of awareness of the working class. It gives people a place to start.

Scientific Socialism!

Dictatorship Of the Proletariat!

Workers of the World, Unite!