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“Dr. Jack Rasmus discusses the current global oil price deflation that began in earnest last June and is now accelerating, driving global oil from a prior 2014 high of $115/barrel to a recent low of $59. Jack explains how the net effect on the global economy will likely prove to b significantly negative overall, and that the price decline could fall as low as $40/barrel in coming months. The impact on Emerging Market Economies, already seriously slowing or in recession, will also prove significant—causing their currencies to collapse even further and in turn generating capital flight, declining credit availability, slowing investment, rising inflation, and inability of emerging market businesses and governments to finance previous incurred debt. Oil price deflation will almost certainly push Europe and Japan into general deflation and further recession, and toward more QE money injections that will further generate asset price bubbles. Rasmus predicts China’s current economic slowdown will continue in turn as Europe, Japan and Emerging markets slow their purchases of China exports. The contrary popular USA notion that lower oil prices mean lower gasoline prices and therefore more spending by USA consumers and businesses is challenged. In conclusion, Jack discusses how oil deflation globally could set off another round of financial instability worldwide, and how it will likely mean the ‘shale gas/oil fracking’ boom in the USA will now stall and could potentially set off a ‘junk bond market’ crisis in the USA similar to the subprime market real estate bust of 2007-09. Will the global oil glut and deflation lead to another ‘Asian Meltdown’, this time even more geographically dispersed; and, in the USA, will it lead to another ‘oil patch’ crash that occurred in the US southwest in the 1980s—this time affecting North Dakota-Wyoming, Alaska, and Pennsylvania as well as Texas and the southwest? (Read Dr. Rasmus recent posting on his website, http://www.kyklosproductions.com, ‘The Economic Consequences of Global Oil Deflation’, for further analyses).”

by Dr. Jack Rasmus, copyright 2014

A new wild card has just been introduced into an already increasingly unstable global economy: a growing world glut of oil and consequent oil price deflation.

Since June 2014, the price of high grade (ICE Brent) crude oil has fallen more than 40%, declining from around $115 a barrel, in January 2014, to just $67 a barrel at the end of November. That’s the lowest since the bottom of the 2009 recession. The price decline has not only been deeper than expected in a normal cyclical correction, but also appears more than just a temporary event. Some predict global oil prices will fall below $60 a barrel in 2015, and could potentially fall as low as the $40 a barrel collapse that occurred during the 2008-09 recession.

What effect a deep and sustained oil price deflation will have on the global economy—which is already drifting toward stagnation and, simultaneously, rising financial instability—is hardly being discussed at all in the western business press. Instead, oil deflation is reported as a positive economic development, both for the advanced economies (AEs) and for emerging market economies (EMEs), as well as the global economy in general.

Economists, the business press, and governments in the advanced economies are all giving a ‘positive spin’ to falling oil prices, claiming it will mean lower costs to both businesses and consumers in the AEs. Lower oil prices mean lower gasoline prices and thus more for consumer households to spend elsewhere. Lower oil costs will stimulate business investment and spending, it is argued, and thus also boost economic growth. But this simplistic view may prove incorrect, not only for the AEs but for emerging market economies in particular and for the global economy in general. The combined negative effects of deep and sustained oil price deflation may well outweigh their positive effects.

There are at least three major potential impacts on global economic instability that will likely follow in the wake of global oil price deflation, some of which have already begun to appear:
First, a more rapid appreciation of the US dollar, and the corresponding relative decline in the currencies of a number of emerging market economies (EMEs)—in particular those dependent on commodity exports and especially those for whom oil exports make up a significant percent of total exports. There is a long, historical and documented relationship between falling oil prices and a rising US dollar. So global oil deflation means a rising US dollar.

A second destabilizing impact from falling oil prices will be to contribute toward general deflation in Europe and Japan. Economies there have already entered recession. Despite trillions of dollars of liquidity injections by their central banks in recent months, price levels have still fallen to zero or less. Oil deflation will add significantly to a general deflationary drift in both Europe and Japan. That in turn will likely lead to even more liquidity injections by their central banks, in the form of more quantitative easing (QE), further feeding stock market and bond asset bubbles.

Third, decline in financial assets tied to oil could increase the tendency toward global financial instability. Oil deflation may lead to widespread bankruptcies and defaults for various non-financial companies, which will in turn precipitate financial instability events in banks tied to those companies. The collapse of financial assets associated with oil could also have a further ‘chain effect’ on other forms of financial assets, thus spreading the financial instability to other credit markets.

The positive impacts of falling oil prices on economies, including the USA, are generally over-rated. Oil price declines may not have as much positive impact on consumer spending and business investment that many in the AEs now assume. The total net effect on the global economy will therefore likely prove more negative than positive.

1. Oil Deflation’s Potential Impact on EMEs

The continued collapse of world oil prices since June has already been having a devastating effect on emerging market economies, especially those dependent on commodity exports—like Brazil, Chile, Argentina and South Africa, and even Australia and a number of economies in southeast Asia. Oil deflation has had an even more severe impact on those EMEs highly dependent on oil exports as a large percentage of their commodities mix—like Venezuela, Russia, Nigeria.

The initial transmission mechanism by which global oil deflation negatively impacts EMEs is falling currency exchange rates. Oil price deflation is generally associated with a corresponding rise in value of the US dollar relative to other currencies. A rising dollar in turn means falling currency values for other countries.

Since the collapse of global oil prices began in earnest last June, the Russian Ruble has fallen approximately 38%. The Venezuelan currency, the Bolivar, by around 45%. Nigeria’s currency, the Naira, has declined 12% just since mid-October. Even the currency of developed oil exporting countries, like Norway’s Krone, has fallen 17%. After having remained stable for several years, the US dollar clearly began to rise last June, as global oil prices commenced their freefall that same month. So falling oil prices drive the dollar up and in turn depress EME currencies, and especially depress the currency of oil exporting economies. And the more dependent the economy is on oil exports, the greater the EME currency decline.

In other words, it’s not sanctions on Russia by the west that are responsible for the lion’s share of the ruble’s recent decline. Nor is it Venezuelan domestic economic policies that are contributing most to the decline in the value of the Venezuelan Bolivar. It is the collapse of global oil prices that is the main culprit.

All commodities, not just oil, take a major hit when sustained oil deflation sets in. A sharp and sustained decline in oil is generally associated with declining sales and prices of other commodities. The entire global commodities sector may be impacted negatively. That has already begun to happen with commodities like copper, gold, and other industrial metals, that have begun to fall as well in the wake of the current oil price decline. The Bloomberg Index of 22 basic commodities, for example, has recently fallen to its lowest level since 2009.

Even non-oil, but commodity heavy, exporting EMEs have experienced significant currency declines relative to the US dollar since global oil prices began to fall more rapidly last June. In recent months Brazil’s Real has fallen 15.5% and Australia’s dollar by 12%–and in both cases despite their central banks’ interventions in currency markets to prevent even further currency declines.

Declining EME currency values sets in motion a number of critical economic developments that cause EME economic growth to slow sharply, and even precipitate recessions.

For example, sharp declines in currency values lead to capital flight from the EME. Both domestic and foreign investors dump those currencies, buy dollars, and send capital out of the country to buy US assets—typically US bonds and stocks and other assets that may be attractive as well, like real estate. The EME capital flight is then reflected in EME stock market declines and a rise in EME government bond interest rates. Former flows of foreign direct investment into the EME also slow. Money capital in general dries up. Credit becomes scarce. Falling currency values also lead to higher cost of imported goods for consumers and consequent decline in consumer real incomes and spending. Business exports also decline. All the above translate into slowing real economic growth in the EME, and even recession. And all because of rising dollar—the global trading and reserve currency—and the decline in the EME’s currency exchange rate that sets the process in motion.

This very process has already been going on, in a muted form, for the past year for EMEs. Talk by the US central bank, the Federal Reserve, of its plans to raise interest rates in 2015 has provoked a number of the trends above already. Note that just the talk of rising rates has resulted in an ‘on again/off again’ destabilization of a number of EMEs during the past year. Some EMEs have been able to partially and temporarily offset the effects of possible rising US dollar—that is, for now. However, should the US Federal Reserve actually raise rates, the effects on EME currency depreciation, capital flight, and so on will certainly grow worse.

But even before that ‘worse’ may occur, the rapid drop of oil prices since last June is having the very same effect right now, in the present, that the US Federal Reserve’s policy shift may also have in the near future: that is, it is causing the US dollar to rise and EME currencies to fall, thus setting in motion the aforementioned destabilizing effects on their economies. It is just that the oil deflation-rising US dollar effect is impacting the oil and commodity export dependent EMEs first and most severely at the moment. A more general negative impact may soon follow, and most certainly will sometime in 2015.

2. Oil Deflation’s Potential Impact on the Eurozone and Japan

In the cases of the Eurozone and Japan economies the main risk from global oil price deflation is that falling oil prices will further push already near zero general inflation rates into deflationary levels. Already the Eurozone’s general inflation is a mere 0.2% and Japan’s less than 0.8%. The central banks of both have a public inflation target of at least 2%, but are moving in the opposite direction from that goal, despite trillions of dollar equivalents of Euros and Yen injected into their economies by their central banks in recent years. Their general price levels have continued to fall.

Should oil deflation push their economies over the cliff into general deflation, it will no doubt be an excuse to inject even more trillions of dollars into their economies, in the false ideological notion that, in today’s economy, more money raises the general price level. History has shown this view to be nonsense, of course. Massive central bank liquidity injections result in financial asset inflation, but not in general inflation for goods and services in the real economy. In fact, liquidity injections lead to financial asset bubbles. But oil price deflation will be the excuse, nonetheless, for still more ‘QE’ money injections in both Japan and Eurozone in 2015. Should further liquidity injections occur, that will contribute even more to financial asset bubbles and instability.

The argument by Euro policy makers—as by their USA cousins—is that lower oil costs will free up income for households to spend on other consumption, as well as add income to businesses which they will subsequently invest. But both premises may prove incorrect.

Deflation produces a negative consumer and business psychological effect, a ‘deflationary expectations’ psychology. Falling prices, i.e. general price deflation, may lead consumers to expect prices to fall still further, and thus cause them to freeze up immediate spending. The same goes for business investment activity.

Uncertain about how far prices for their products my fall by the time they bring them to market at some future date, business uncertainty may instead lead them to forego additional investment even though they have additional income with which to invest as a result of oil cost declines. In other words, deflation is perverse. Deflation in general prices, made possible by oil deflation, may actually result in less consumer spending and less business investment—not serve as a stimulus to both.

3. Oil Deflation & Global Financial Instability

Oil is not only a physical commodity bought, sold and traded on global markets; it has also become an important financial asset since the USA and the world began liberalized trading of oil commodity futures (i.e. a financial security) in the late 1990s on a global scale.

Just as declines in oil spills over to declines of other physical commodities (e.g. copper, iron ore, gold, etc.), oil financial securities (i.e. oil commodity futures) price deflation can also ‘spill over’ to other financial assets, causing their decline as well, in a ‘chain like’ effect.

That chain like effect is not dissimilar to what happened with the housing crash in 2006-08. At that time the deep contraction in the global housing sector ( a physical asset) not only ‘spilled over’ to other sectors of the real economy, but to mortgage bonds (i.e. financial assets representing housing and commercial construction), and derivatives based upon those bonds, also crashed. The effect was to ‘spill over’ to other forms of financial assets that set off a chain reaction of financial asset deflation.

The same ‘financial asset chain effect’ could arise if oil prices continued to decline below $60 a barrel. That would represent a nearly 50% deflation in oil prices that could potentially set in motion a more generalized global financial instability event, possibly associated with a collapse of the corporate junk bond market in the USA that has fueled much of USA shale production.

Is the USA Economy an Exception?

(For the remainder of this article, go to Dr. Rasmus’ website,


published teleSUR English Edition, Nov. 27, 2014

For a print published version of this topic on the Republic Congress’ new aganda (updating the podcast on the Alternative Visions radio show available below on this blog)…

go to Jack Rasmus’s website, http://www.kyklosproductions.com/articles.html. The website is also accessible from the sidebar on this blog.


‘The USA Republican Congress’ New Agenda’

‘In the wake of the recent midterm elections, Dr. Rasmus describes how the new Republican controlled Congress has begun to develop new policies on behalf of Corporate America, many of which represent a resurrection of past policies of the Bush administration—i.e. old wine in new bottles. Rasmus briefly describes the major pro-corporate policies introduced and passed by Congress during the Obama administration, 2009-2014. He then identifies the new pro-Corporate agenda for the next two years, 2015-2016: more corporate tax cuts, accelerated push for free trade for pacific rim countries and europe, immigration reform defined as more policing and fences, rollbacks of environmental protection initiatives (XL pipeline, industrial plant emissions, public lands fracking, EPA funding, international CO2 limits), Affordable Care Act revisions (more business exemptions, cost shifting to consumers, limits on Medicaid), limits on financial regulation under the Dodd-Frank Act, more aggressive foreign policy action (green light for conflicts and funding of proxies in Syria, US troops to Iraq again, Ukraine (US advisers, special ops, money), NATO push into east Europe (Ukraine, Moldova, Georgia), more freedom of action for NSA spying on US citizens and limits on free speech and assembly. Rasmus predicts the Democrats and Obama will agree with a number of the legislative policies that will soon be proposed by the new Republican majority in Congress.’

The following ALTERNATIVE VISIONS radio show is available for listening and download at:


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Dr. Jack Rasmus describes Japan’s latest 2014 recession as yet another example of growing global Capitalist economic contradictions. With its stock markets booming, exports rising, unemployment at a 16 year low, interest rates at zero and massive money injections by its central bank—how is it that Japan’s economy has plunged again the last six months into a severe recession once again? Is it that it has introduced QE monetary policies too ‘late’, as one wing of mainstream economists argue (i.e. ‘retro classicalists’)? Or is it because it has not introduced fiscal stimulus government spending, as another wing of economists argue (i.e. ‘hybrid keynesians’)? Jack challenges both explanations. Real wages and real household income continues to decline, and consumption falter in turn, Jack argues, because job growth has been largely ‘contingent’(part time/temp), because Japan QE/monetary policy has depressed its currency by 35% and raise the cost of consumer imports that reduces real wages still further, and because Japan fiscal policy raised consumer taxes and reduced household income still further in turn. Jack argues Japan is yet another ‘model’ and example of how capitalist monetary policies driving the world economy today bail out wealthy investors, bankers, and multinational companies first and quickly, but result in a failure to boost real investment, jobs and average consumer incomes as well in the process. With little household demand for real goods and services, businesses cut labor costs (wages) instead to boost profit margins and then hoard their cash, or invest it offshore, or divert it to financial asset speculation globally. Capitalist monetary policies bail out the rich, but simultaneously cause the rest of the global economy to gradually grind to a halt—Japan being but the latest, and most extreme, example of the growing contradictions of global capital today.

On April 30, 2014 the International Monetary Fund (IMF) provided Ukraine a two year, $17.1 billion standby loan, justified at the time as necessary to stem the country’s accelerating economic decline. In exchange, Ukraine turned over the macro-management, restructuring, and the future of its economy to the IMF.

Today, six months later, it is reasonable to ask how Ukraine’s economy has fared in the interim? How has the IMF plan performed thus far? And what are the prospects for Ukraine’s economy in the months immediately ahead under continuing IMF management?

For the six quarters (18 months) prior to April 30, 2014 Ukraine’s economy declined 1%-3% every quarter except one. In the first three months of 2014 its GDP fell another -1.1%. But since the IMF deal was signed in April, the decline has accelerated: In the April-June 2014 period Ukraine’s GDP fell a more rapid -4.6%. GDP figures are not yet available for the most recent, July-September 2014 period, but it appears very likely the economy is now deteriorating even faster.

For example, according to World Bank data, while industrial production fell -5.8% in the first half of 2014, in July and August its decline accelerated to -12.1% and -20.1%, respectively. Other key indicators of the economy reveal a deterioration from January through August, especially business investment (-25.6%), construction (-15.6%), trade (-13.8%), exports (-14.4%) and imports (-21.2%). Those figures do not yet include the two most recent, and no doubt even worse, performing months of September-October.

During the same January-August period, inflation also rose by 20%, Ukraine’s currency plummeted by 36% (the most globally of any economy), and Ukraine central bank’s foreign currency reserves—needed to stem its currency collapse, to finance desperately needed exports & imports, and to provide essential credit to its increasingly fragile private banking system—began evaporating. Foreign reserves fell $4 billion in October alone, to a nine year low of barely $12 billion. With currency, reserves, and credit all collapsing, capital flight continues to intensify, recently prompting Ukraine’s government in desperation to impose a $200/day limit on withdrawals.

Last April the IMF assured its initial $17.1 program would result in only a -5% fall in Ukraine’s GDP this year, with a return to 2% positive growth in 2015.

However, an IMF preliminary review in mid-July of the program’s progress concluded that while “all performance criteria and benchmarks were being met” nonetheless, along a number of fronts the economy was deteriorating rapidly. The IMF therefore raised its GDP decline estimate to -6.5%.

In August, as the economy continued to further deteriorate, the IMF revised its April estimate again, predicting a -7.3% decline in 2014 and this time a -4.6% in 2015 instead of 2% growth.

An indication of just how fast the economy has been deteriorating, just last month, in early October, the World Bank raised that number to an -8.0% GDP drop for 2014. The Bank noted an even worse scenario was likely, if gas prices continued to rise in 2014(which they will with the onset of weather and the recent Ukraine-Russia gas deal) and if military conflict continues in the eastern regions (which has been intensifying anew). The only growth sector of the Ukraine economy is government military spending, as it battles separatists in its eastern Donetsk-Luhansk regions.

Many economists considered the IMF’s initial April estimates for Ukraine absurdly optimistic, this writer included, who predicted last March that Ukraine’s GDP would collapse at least -10% to -15% in the coming twelve months; furthermore, Ukraine would need a $50 billion bail-out in the next two years, not the IMF’s $17 billion. That 8% GDP drop so far amounts to $14 billion reduction in Ukraine’s 2013 GDP of $177 billion.
To date, the IMF has only distributed to Ukraine $4.5 billion of the $17 billion. But that $4.5 billion disbursement has had little positive impact on Ukraine’s real economy and provides essentially no ‘offset’ to the $14 billion real decline to date.

A significant percentage of that $4.5 billion has already been paid by the IMF to itself and to western bankers for debt previously incurred. In fact, according to Bloomberg business, Ukraine has more than $15 billion in payments coming due between now and the end of 2015. One could logically argue that the IMF’s initial $17.1 billion will be used to pay back $15 billion.

Another part of the IMF’s paltry $4.5 billion disbursement to date is directed to Ukraine’s central bank, in order to try to stabilize Ukraine’s currency, the hryvnia, that has been in freefall for months. And yet another $2.7 billion disbursement, scheduled for later in 2014, will likely be used by Ukraine’s state owned gas company, Naftogaz, to pay Russia for natural gas through next winter, and for payments owed for past gas deliveries, both as part of an agreement recently reached with Russia’s Gazprom.

Concerning the impact of IMF policies involving natural gas, gas prices have already risen 50% for many consumers, devastating incomes and depressing consumption. But the other foot will fall after January 1, when subsidies to households, now covering up to 7/8ths of the cost for gas, will start being discontinued.

So most of the $17.1 billion original IMF deal has had, and will have, little positive impact on Ukraine’s real economy. The lion’s share of the $17.1 billion goes to service past debts to creditors outside the country. And what remains in funding, i.e. what doesn’t go to creditors, goes mostly to Ukraine’s central bank—i.e. to try to stabilize its currency, to finance external trade (exports-imports), and to replenish evaporating foreign exchange reserves. Meanwhile, gas policies, as well as government spending cuts, tax hikes on consumers, and other ‘fiscal’ measures in the IMF plan directly impact both household consumption and government spending.

The IMF’s $17.1 billion April loan is classic IMF strategy, designed to take over an economy and manage it in the interests of western banking and multinational corporate interests. IMF lending is foremost about ensuring interest and principal payments are made on schedule. The first priority is to provide loans to ensure repayments. Bankers get paid first, along with the IMF. Second priority is to provide the country’s central bank funds necessary to stabilize its currency. A stable currency is needed to encourage western foreign direct investment into the country, i.e. to buy up and take over its domestic industry. Third priority is to enable indigenous businesses and consumers to purchase exports to the country from the west.

Thereafter the IMF plan is to fundamentally restructure the economy so that social spending programs are cut massively and wage pressures are reduced on business as layoffs take place as part of restructuring to make business more ‘efficient’. Social program cuts and layoffs tame the working classes to accept lower wages and to work harder, increasing productivity, if they want to keep their jobs. Finally, the classic IMF intervention program aims to reduce the size of the government and the public sector, so that it doesn’t compete with private businesses for credit or directly in markets. Reducing government spending and deficits also creates more budget room for business and investor tax reduction. That model is precisely what occurred in Greece, Portugal and elsewhere in recent years. And it’s being implemented today in Ukraine.

Contrary to IMF assurances last April, nearly everywhere since April the Ukraine economy is declining at double digits rates—industrial production, investment, consumption, trade, currency values, foreign exchange, and now GDP itself. So the Ukraine economy is currently spinning out of control—not stabilizing as the IMF April 2014 plan and deal originally assured—heading toward the 10%-15% GDP collapse and the need for $50 billion in bailout.

The IMF itself has recently recognized the seriousness of the situation, indicating it may have to add another $19 billion in bailout. But that doesn’t mean it will provide it. Western Europe is descending into a third recession in five years and is in no mood to give more. And the USA is preoccupied with ISIL, Iran, and domestic politics.

Ukraine’s President Poroshenko recently toured European capitals and Washington with his ‘hat in hand’. He reportedly “gave the speech of his life and got $53 million. That funds the cost of the war in the East for 9 days”, to quote the USA newspaper, The Washington Post.

The IMF’s cover for the failure of its program in the Ukraine is to blame the accelerating decline on the continuing military conflict in the East and on the natural gas crisis, escalating prices, and growing Naftogaz debt. While military conflict has contributed, the scope and magnitude of the Ukraine economic collapse now underway is attributable to various economic forces well beyond the military conflict—not least of which is the IMF program itself.

The fact that the IMF continues to revise its economic estimates downward, almost monthly, and that it is raising the possibility of the need to provide as much as $19 billion more in bailout, is ample testimony of the failure of the program.

Meanwhile, Ukraine’s real economy and its citizens suffer severely as a result, with all indications that the economic crisis there will get worse, perhaps much worse, before it ever begins to get better.

Dr. Jack Rasmus

Dr. Rasmus is the author of ‘Epic Recession: Prelude to Global Depression’, 2010, and ‘Obama’s Economy’, 2012, both published by Pluto Press; and the forthcoming ‘Transitions to Global Depression’, by Clarity Press, 2015. His website is http://www.kyklosproductions.com and blog, jackrasmus.com.

Dr. jack Rasmus on the Republican Congress’s Emerging Corporate Agenda, listen to ALTERNATIVE VISIONS radio show of November 22, 2014 at:


or at:



In the wake of the recent midterm elections, Dr. Rasmus describes how the new Republican controlled Congress is about to develop new policies on behalf of Corporate America, many of which represent a resurrection of past policies of the Bush administration—i.e. old wine in new bottles. Rasmus identifies and explains the likely emerging new policy initiatives in the weeks and months immediately ahead: more corporate tax cuts, accelerated push for free trade for pacific rim countries and europe, immigration reform defined as more policing and fences, rollbacks of environmental protection initiatives (XL pipeline, industrial plant emissions, public lands fracking, EPA funding, international CO2 limits), Affordable Care Act revisions (more business exemptions, cost shifting to consumers, limits on Medicaid), limits on financial regulation under the Dodd-Frank Act, more aggressive foreign policy action (green light for conflicts and funding of proxies in Syria, US troops to Iraq again, Ukraine (US advisers, special ops, money), NATO push into east Europe (Ukraine, Moldova, Georgia), more freedom of action for NSA spying on US citizens and limits on free speech and assembly. Jack explains how the new emerging policy offensive fits in the four decade long current pro-corporate offensive in America by US government and institutions. Jack provides an historical context for it all and how resistance represents the latest effort in a centuries long struggle by American people to expand and defend their democratic, civil and economic rights since the American revolution period of 1776-1787.

Listen to Dr. Jack Rasmus on this archived podcast of the ALTERNATIVE VISIONS RADIO show, on the topic ‘Why Austerity Continues’, Nov. 15, 2014 at:


or at:



Jack Rasmus takes a look at why Austerity policies were introduced in 2008-09 and why they continue still today, evolving into new forms, despite their proven negative impact on economic recovery. Jack challenges liberal economists like Paul Krugman who lament the continuation of such policies, explaining Liberals don’t understand the purpose and function of austerity policies, which are integral to capitalist recovery strategies since 2008. Austerity is the complement to a primary focus in advanced capitalist economies on monetary policy as the preferred strategy for economic recovery—i.e. central banks’ bailouts of private banks and investors via QE, zero rates, auctions and forward guidelines. While monetary policy is primary, austerity is a necessary complement, Jack explains, to bank bailouts which produce slow, intermittent, and 5-10 year or more economic recovery trajectories. Jack looks at how Austerity has functioned so far in Europe, USA, Japan and now Ukraine, why it has continued and why it will continue, morphing in to new forms. Austerity policy is a class policy and integral to capitalists’ view of how recovery should be engineered, Jack explains. That’s why Krugman and others don’t understand why it continues. (Next week’s show is ‘Back to the Future’, a detailed look at the new Republican Congress’s 10 priorities for the next two years, that are just a rehash and resurrection of George W. Bush policies in new form going forward).


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