Jack Rasmus

The Gayle McLaughlin Campaign for Lt. Governor of California—Progressive Local Politics In Action – 09.08.17

To Listen to the podcast of the show go to:

http://prn.fm/alternative-visions-gayle-mclaughlin-campaign-lt-governor-california-progressive-local-politics-action-09-08-17/

Or go to: http://www.alternativevisions.podbean.com

SHOW ANNOUNCEMENT

Jack Rasmus interviews Gayle McLaughlin, founding organizer of the successful grass roots independent political action movement in Richmond, California, former mayor of Richmond and current city council member. McLaughlin explains how the Richmond Political Alliance, RPA, has been able to take over city government despite intense opposition from oil giant, Chevron Corp., that previously ran the city. How the RPA’s strategy and tactics enabled real political action, outside the two wings of the corporate party of America (aka Democrats and Republicans), to become successful. Gayle describes the progressive improvements the RPA has achieved, how it started, its organizational innovations and direct community ties and how electoral action and direct action tactics were melded successfully. McLaughlin and the RPA are now undertaking efforts to extend progressive politics to the state level with her candidacy for Lt. Governor of California. For more information about her Lt. Governor campaign, go to her website http://www.GayleforCalifornia.org . For how the RPA became a successful grass roots movement, its strategy, organization structure and tactics, see http://www.RichmondProgressiveAlliance.net. And for local San Francisco bay area residents, check out her campaign’s next meeting at 747 Lobos St., Richmond, Calif., this Sunday, September 10 at 2-5pm.

(For a full history of the RPA from origin to present, Dr. Rasmus also recommends reading RPA member, Steve Early’s book, Refinery Town: Big Oil, Big Money, and the Remaking of An American City, Beacon Press, 2017. )

To listen to my assessment of the status and condition of the US working class this labor day, September 4, 2017, go to my Alternative Visions radio show on the progressive radio network…

GO TO

http://prn.fm/?s=Alternative+Visions

OR GO TO:

http://alternativevisions.podbean.com

SHOW ANNOUNCEMENT:

Dr. Rasmus takes stock of the condition of the US working class today. Discussed are the true condition of jobs and employment and how official government statistics underestimate contingent jobs, discouraged and missing labor force jobs, how labor force participation fails to account for millions, how government surveys of jobs underestimates, and how ‘hidden unemployment’ means jobless today is still 15-20 million. Working class wage stagnation the past decade, 2007 to 2017, is estimated with effects of contingent labor, gig labor, free trade, capital substitution, de-unionization, and privatization of healthcare and pension benefits; how workers real wages are less than reported due to housing-medical-education cost inflation, shifting tax burdens, and rising debt interest payments. The show concludes with discussion of new employer offensives against unions, focusing on open shop (right to work) Koch brothers offensives and new initiatives to outlaw agency shop and dues check off provisions in union contracts. Acknowledging the dismal scenario, Rasmus concludes that instead of stepping up defense of unions and workers’ interests, the Democratic party continues to retreat further into the morass of identity politics.

My just published book, ‘Central Bankers at the End of Their Rope?: Monetary Policy and the Coming Depression’, Clarity Press, July 2017, is now available for immediate purchase on Amazon.com, as well as from this blog. (see book icon)

The following article, ‘Central Banks As Engines of Income Inequality and Financial Crisis’, summarizing some of the book’s themes, appeared in Z Magazine, September 1, 2017:

“This September 2017 marks the ninth year since the last major financial crisis erupted in 2008. In that crisis, investment banks Bear Stearns and Lehman Brothers collapsed. So did Fannie Mae and Freddie Mac, the quasi-government mortgage agencies that were then bailed out at the last minute by a $300 billion U.S. Treasury money injection. Washington Mutual and Indymac banks, the brokerage Merrill Lynch, and scores of other banks and shadow banks went under, were forced-merged by the government, or were consolidated or restructured. The finance arms of General Motors and General Electric were also bailed out, as were the auto companies themselves, to the tune of more than $100 billion. Then there was the insurance giant, AIG, that speculated in derivatives and ultimately required more than $200 billion in bailout funds. The “too big too fail” mega banks—Citigroup and Bank of America—were technically bankrupt in 2008 but were bailed out at a cost of more than $300 billion. And all that was only in the U.S. Banks in Europe and elsewhere also imploded or recorded huge losses. The U.S. central bank, the Federal Reserve, helped bail them out as well by providing more than a trillion U.S. dollars in loans and swaps to Europe’s banking system.

Although the crisis at the time was deeply influenced by the crash of residential housing in the U.S., few U.S. homeowners were bailed out. A mere $25 billion was provided to rescue homeowners, and most of that went to bank mortgage servicing companies who were supposed to refinance their mortgages but didn’t. More than $10 trillion, conservatively was provided to financial institutions, banks and shadow banks, and big corporations, and foreign banks by U.S. policy makers in the government and at the U.S. central bank, the Federal Reserve.
The Federal Reserve Bank as Bailout Manager

A common misunderstanding is that the banking system bailouts were managed by Congress passing what was called the Trouble Asset Relief Program, TARP. Introduced in October 2008, TARP provided the U.S. Treasury a $750 billion blank check with which to bail out the banks. But less than half of the $750 billion was actually spent. By early 2009 the remainder was returned to the U.S. Treasury. So Congress didn’t actually bail out the big banks. The bailout was engineered by the U.S. central bank, the Federal Reserve, in coordination with the main European central banks—the Bank of England, European Central Bank, and the Bank of Japan.

The central banks bailed out the big banks. That has always been the primary function of central banks. That’s why they were created in the first place. It’s called the lender of last resort function. Whenever there’s a general banking crisis, which occurs periodically in all capitalist economies, the central bank simply prints the money (electronically today) and injects it free of charge into the failing private banks, to fill up and restore the private banks’ massive losses that occur in the case of banking crashes. Having a central bank, with operations little understood by the general public, is a convenient way for capitalism to rescue its banks without having to have capitalist politicians—i.e. in Congress and the Executive—do so more directly and more publicly.

From Bailouts to Perpetual Bank Subsidization

But central banks since 2008 have evolved toward a new primary function, no longer just bailing out the banks when they get in trouble, but providing a permanent regime of subsidization of the banks even when they’re not in trouble. The latter function has become a permanent feature of capitalist global banking.

With the Fed in the lead, in 2008-09 the central banks of the advanced capitalist economies simply created money—i.e. dollars, pounds, euros and yen—and allowed banks and investors to borrow it virtually free. But free money, in the form of near zero interest, was still not the full picture. The Fed and other central banks as well as other institutional and even private investors, said: “We will also buy up your bad assets that virtually collapsed in price as a result of the 2008-09 crash.” This direct buying of bad mortgage and government bonds—and in Europe and Japan also buying of corporate bonds and even company stocks—was called “quantitative easing,” or QE for short. And what did the central banks pay for the assets they bought from banks and investors, many of which were worth as low as 15 cents on the dollar? No one knows, because the Fed to this day has kept secret how much they overpaid for the bad assets. But the QE and the near zero interest rates have continued for nine years in the U.S. and the UK; and, in 2015 QE was accelerated even faster in Europe; and since 2014 faster still in Japan. And even in China after 2015, when its stock market bubble burst, its central bank began providing trillions to prop up financial markets.

In the course of the past nine years, the private capitalist banking system globally has become addicted to the free money provided by central banks.

Private banks cannot earn profits on their own any longer, it appears. They are increasingly dependent on the virtually free money from their central bankers. This is a fundamental change in the global capitalist economic system in the past decade—a change which is having historic implications for growing income inequality worldwide in the advanced economies as well as for another inevitable global financial crisis that will almost certainly erupt within the next decade.

The $25 Trillion Banking System Bailout

In the U.S., the Fed’s QE officially purchased $4.5 trillion in bad assets between 2009 and 2014. But it was actually more, perhaps as much as $7 trillion, because, as some of the Fed-purchased bonds matured and were paid off, the Fed reinvested the money once again to maintain the $4.5 trillion. The 2008-09 crash was global, so the Fed was not the only central bank player doing this. The European Central Bank, as of 2017, has bailed out European banks to the tune of $4.9 trillion so far. The Bank of England, another $.7 trillion. And the Bank of Japan, as of mid-2017, more than $5 trillion. The People’s Bank of China, PBOC, did not institute formal QE programs, but after 2011 it too started injecting trillions of dollar in equivalent yuan, to prevent its private sector from defaulting on bank loans, to bail out its local governments that over invested in real estate, and to stop the collapse of its stock markets in 2015-16. PBOC bailouts to date amount to around $6 trillion. And the totals today continue to rise for all, as the UK, Europe, Japan, and China continue their central bank engineered bailout binge, with Europe and Japan actually accelerating their QE programs.

Contrary to many critiques of rising debt levels since 2009, it is not the level of debt itself that is the problem and the harbinger of the next financial crash. It is the inability to pay for the debt, the principal and interest on it, when the next recession occurs. As long as economies are growing, businesses and households and even government can finance the debt, i.e. continue to pay the principal and interest some way. But when recessions occur, which they always do under capitalism, that ability to keep paying the debt collapses. Business revenues and profits fall, employment rises and wages decline, and government tax collections slow. So the income with which to pay the principal and interest collapses. Unable to make payments on principal and or interest, defaults on past-incurred debt occur. Prices for financial assets—stocks, bonds, etc.—then collapse even faster and further. Businesses and banks go bankrupt, and the crisis deepens, accelerating on itself in a vicious downward spiral as the financial system collapses and drags the non-financial economy down with it—and as the latter in turn exacerbates the financial crisis even further.

In other words, the private corporate debt at the heart of the last crisis in 2007-08 has not been removed from the global economy. It has only been shifted—from the business sector to the central banks. And this central bank debt has nothing to do with national governments’ total debt. That’s a completely additional amount of government debt. So too is consumer household debt additional, which, in the U.S, is more than $1 trillion each for student loans, auto loans, credit cards, and multi-trillions more for mortgage loans. Moreover, in recent months defaults on student, auto and credit card debt have begun to rise again, already the highest in the last four years in the U.S.

It’s also not quite correct to say that the $25 trillion central banks’ injection of money into the banking system since 2008 has successfully bailed out the private banks globally. Despite the total, there are still more than $10-$15 trillion in what are called non-performing bank loans worldwide. Most is concentrated in Europe and Asia—both of which are likely the locus of the next global financial crisis. And that next crisis is coming.

In the interim, the central banks’ free money and bank subsidization machine is generating a fundamental dual problem within the global economy. It is feeding the trend toward income inequality and it is helping fuel financial asset bubbles worldwide that will eventually converge and then burst, precipitating the next global financial crash.

The Fed as Engine of Income Inequality

In the U.S., the central bank’s $4.5 trillion (really $7 trillion) balance sheet—and the 9 years of free money at 0.1% to 0.25% rates provided to banks by the Fed— have been at the heart of a massive income shift to U.S. investors, businesses, and the wealthiest 1% households.

Where did all this money go? The lie fed to the public by politicians, businesses, and the media was that this massive free money injection was necessary to get the economy going again. The trillions would jump-start real investment that would create jobs, incomes consumption, and consequently, economic growth or GDP. But that’s not where it went, and the U.S. economy experienced the weakest nine-year post-recession recovery on record. Little of the money injection financed real investment—i.e. in equipment, buildings, structures, machinery, inventories, etc. that creates jobs and wage incomes. Instead, investors got QE bailouts and banks borrowed the free money from the Fed and then loaned it out at higher interest rates to U.S. multinational companies who invested it abroad in emerging markets; or they loaned it to shadow bankers and foreign bankers who speculated in financial asset markets like stocks, junk bonds, derivatives, foreign exchange, etc.; or the banks borrowed and invested it themselves in financial securities markets; or they just hoarded the cash on their own bank balance sheets; or the banks borrowed the money at 0.1 and then redeposited it at the central bank, which paid them 0.25%, for a 0.15% profit for doing nothing.

This massive money injection, in other words, was then put to work in financial markets. Behind the 9- year bubbles in stock and bond markets (and derivatives and currency exchange markets as well) is the massive $7 to $10 trillion Federal Reserve bank money injections. And how high have the stock-bond bubbles grown? The Dow Jones U.S. stock market has risen from a low in 2009 of 6,500 to almost 22,000 today. The U.S. Nasdaq tech-heavy market has surpassed the 2001 peak 5,000 before the tech bust, now more than 6,000. The S&P 500 has also more than tripled. Business profits have also tripled, Bond market prices have similarly accelerated. Free money in the trillions $ from the central bank and trillions more in profits from financial speculation. But that’s not all. The 9- year near-zero rates from the Fed have also enabled corporations to issue corporate bonds by more than $5 trillion in just the last 5 years.

So how do these financial asset market bubbles translate into historic levels of income inequality, one might ask? The wealthiest 1%—i.e. the investor class—cash in their stocks and bonds when the bubbles escalate. The corporations that have raised $5 trillion in new bonds and seen their profits triple in value then take that massive $6 to $9 trillion cash hoard to buy back their stocks and to issue record level of dividends to their shareholders. Nearly $6 trillion of the profits-bond raised cash was redistributed in the U.S. alone since 2010 to shareholders in the form of stock buybacks and dividends payouts. The 1% get $6 trillion or more distributed to them and the corporations and banks sit on the rest in the form of retained cash. Or send it offshore into their foreign subsidiaries in order to avoid paying taxes in the US.

Congress and Presidents play a role in the process, as well. Shareholders get to keep more of the $6 trillion plus distributed to them by passing tax cut legislation that sharply cuts capital gains and dividend income. Corporations also gain by keeping more profits after-tax, as a result of corporate tax cuts—which they then distribute to their shareholders via the buybacks and dividends.

The Congress and President sit near the end of the distribution chain, enabling through tax cuts the 1% and shareholders to keep more of their distributed income. But it is the central bank, the Fed, which sits at the beginning of the process. It provides the initial free money that, when borrowed and reinvested in stock markets, becomes the major driver of the stock price bubble. The Fed’s free money also drives down interest rates to near zero, allowing corporations to raise the $5 trillion more from issuing new corporate bonds. Without the Fed and the near zero rates, there would be nowhere near $5 trillion raised from new corporate bonds, to distribute to shareholders as a consequence of buybacks and dividends. Furthermore, without the Fed and QE programs, investors would not have the excess money to invest in stocks and bonds (and derivatives and currencies) that drive up stock and bond prices to bubble levels before investors cash in on those bubble level prices.

The Fed, as well as other central banks, are therefore the originating source of the runaway income inequality that has plagued the U.S. since late 1970s.

Income inequality is a function of two things. On the one hand, accelerating capital incomes of the wealthiest 1% households are largely a result of buybacks and dividend payouts. Such capital gains incomes constitute nearly 100 percent of the wealthiest 1%’s total income. On the other, income inequality is also a consequence of stagnating or declining wage incomes of non-investor households. Inequality may therefore rise if capital gains drive capital incomes higher; or may rise if wage incomes stagnate or decline; or may rise doubly fast if capital incomes rise while wage incomes stagnate or decline. Since 2000 both forces have been in effect: capital incomes of the 1% have escalated while wage incomes for 80 % of households have stagnated or declined.
Mainstream economists tend to focus on the stagnation of wage incomes, which are due to multiple causes like de-unionization, the rise of temp-part-time-contract employment, free trade treaties’ wage depressing effects, failure to adjust minimum wages, high wage manufacturing and tech industries offshoring of investment and jobs, cost shifting of healthcare from employers to workers, reduction in retirement benefits, shifting tax burdens to working and middle classes, etc. But economists don’t adequately explain why capital incomes have been accelerating so fast. Perhaps it is because mainstream economists simply don’t understand financial markets and investment very well; or perhaps some do, and just don’t want to go there and criticize runaway capital incomes.

Central Banks as Source of Financial Instability

As a result of Fed and other central banks’ money injections, underway now for decades, and especially since 2008, there is a mountain of cash—virtually trillions of dollars—sitting on the sidelines globally in the hands of professional investors and their shadow bank institutions. That money is looking for quick, speculative capital gains profit opportunities. That means seeking reinvestment short term in financial asset markets worldwide. The mountain of cash moves in and out of these global financial markets, creating and bursting bubbles as its shifts and moves. Periodically a major bubble bursts—like China’s stock market in 2015. Or a housing speculation bubble here or there. Or junk bonds or consumer debt in the U.S. Or the bubble in U.S. stocks which is nearing its limit.

A new global finance capital elite has arisen in recent decades, having directly benefited from and controlling this mountain of cash. There are about 200,000 of them worldwide, mostly concentrated in the U.S. and UK, some in Europe, but with numbers rising rapidly in Asia as well. They now control more investible assets than all the traditional commercial banks combined. Their preferred institutional investment vehicles are the global shadow banking system and their preferred investment targets are the global system of highly liquid financial asset markets. This system of new finance capitalists, their institutions, and their preferred markets is the real definition of what is meant by the financialization of the global economy. That financialization is generating ever more instability in the global capitalist system as it increasingly diverts trillions of dollars, euros, etc., from investing in job creating real things to investing in financial assets worldwide. That’s why global productivity and growth are progressively slowing, putting even more downward pressure on wage incomes. And central bank policies are a major contributor to this new trend in global capitalism in the 21st century.

Will the Central Banks Retreat?

In 2017, a minority of policymakers in the Fed and other central banks have begun to recognize the fundamental danger to their capitalist system itself from their providing free money and QE bond and stock buying money injections. So, led by the Fed, the central banks of the major economies are together now considering raising interest rates from the zero floor and trying to reverse their QE buying. Western central bankers met in late August 2017 at their annual Jackson Hole, Wyoming gathering, with the main topic of discussion being raising rates and reducing their QE bloated, $15 trillion official balance sheets. (China’s PBOC was absent or the total balance sheets would have amounted to more than $21 trillion.)

As I have argued, however, the Fed and other central banks will fail in both raising rates and selling off their balance sheets in 2017-18 and beyond—just as they failed in generating normal levels of real economic recovery since 2009. For the global capitalist banking system has become addicted and dependent on their central banks’ free money injections and their firehose of central bank bond-stock buying QE programs. Should the central banks attempt to retreat and raise rates or sell off their balance sheets to any meaningful extent, they will precipitate a serious credit contraction and provoke yet another financial and economic crisis. In other words, the global capitalist system has become dependent on the permanent subsidization of the banking system by their central banks after 2008. That is its new fundamental contradiction.

Jack Rasmus is the author of the just published book, Central Bankers at the End of Their Ropes?: Monetary Policy and the Coming Depressions, Clarity Press, August 2017. For information, see http://claritypress.com/RasmusIII.html. To purchase, go to Amazon.com or to author’s website: http://kyklosproductions.com which is accessible from this blog (see the blogroll to get to the website)

.

For my analysis of the Fed and other central bankers gathering at Jackson Hole, Wyoming, expressing their growing concern for financial stability, listen to my Alternative Visions radio show of August 25, 2017.

Go to:

http://prn.fm/?s=Alternative+Visions

Or go to:

http://www.alternativevisions.podbean.com

SHOW ANNOUNCEMENT

The Fed and other central bank leaders gathering at Jackson Hole Wyoming today express concern for financial instability. Fed chair, Janet Yellen, warns of the Trump administration’s current fast tracking of financial deregulation, driven by the Goldman Sachs-driven US Treasury Secretary, Steve Mnuchin. Dr. Rasmus explains how shadow bankers, like Goldman Sachs, now have almost complete dominance over Trump economic policy, with former Goldman Sachers Mnuchin at the Treasury, Bill Dudley in charge of the NY Fed, and Gary Cohn aschair of Trump’s Economic Council (and soon to replace Janet Yellen next February as head of the Fed). Rasmus explains how the Fed and other major central banks have provided bankers and investors $25 trillion in free money since 2008, but have still not bailed out the banking system leaving a residue of financial problems. More than $15 trillion in non-performing bank loans still exist, not counting trillions more added to corporate bond debt, 3 trillion more in US consumer loans, and $12 trillion more in US government debt just since 2008. Globally, the capitalist system has added more than $50 trillion in debt above its 2008 levels. Where did the $25 trillion go is explained. Why the Fed and other central banks can’t (and won’t) raise interest rates without precipitating another financial crisis. How a new global finance capital elite now control the central banks and economic policies of the governments of the advanced capitalist countries.

Today the chairs of the world’s major central banks are meeting in Jackson Hole, Wyoming, to discuss their planned big changes in interest rates and QE policies that have injected more than $20 trillion into the coffers of bankers and investors since 2008. That massive injection of virtually free money for 9 years has produced a doubling and tripling of stock and bond markets and boosted capital gains income to unheard of levels in modern history. It produced tepid improvements in jobs and wage incomes, a weak economic recovery that is now about to end, and set the stage for the next financial crisis within the next 2-3 years.

What follows is an excerpt from my just published book, ‘Central Bankers at the End of Their Rope: Monetary Policy and the Coming Depression’, Clarity Press, July 2017, which documents how the Federal Reserve and other central banks have failed and have set the stage for the next crisis. (For more information on the book, go to the publisher, Claritypress.com/RasmusIII.html). Books may be purchased at discount from this blog and my website through Paypal.

EXCERPT FROM CHAPTER ONE:

Why Central Banks Are Failing

Central banks are failing because their ability to perform their primary tasks of lender of last resort, money supply management and bank supervision is in decline. The question then is what are the causes of that decline? What developments and forces in the global economy are disrupting central banks efforts to carry out their primary tasks? The following is a brief introductory overview of the key problems and fundamental contradictions with which central banks today are confronted.

a. Globalization and integration rendering central bank targets and tools ineffective

First, there’s the problem of the rapid globalization and integration of financial institutions and markets that emerged in the 1970s and 1980s which has grown ever since. Central banks are basically national economic institutions. The global financial system is beyond their mandate. Not only that, there is no single central bank capable of bailing out the global banking system during the next inevitable global financial crash. In 2008 it didn’t even happen. The US Federal Reserve and the Bank of England bailed out their respective banking systems, providing more than $10 trillion in direct liquidity injections, loans, guarantees, tax reductions and direct subsidies. The Federal Reserve even provided a loan in the form of a currency swap of $1 trillion to the European Central Bank and its affiliated national central banks. But the Euro banking system has not been effectively bailed out to this day. Nor has Japan’s. Together both have the equivalent of trillions of dollars in non-performing bank loans. Total liquidity injected into the private banking system by the world’s major central banks was in excess of $25 trillion. But non-performing bank loans today are also still more than $15 trillion. So much for the alleged ‘bailout’ of the banking system since 2008. While China’s banks and central bank, the Peoples Bank of China, was not involved in the 2008 banking crash and subsequent bailout, it almost certainly will be involved in the next financial crisis. In fact, China’s financial system may be at the center of it.

The fact that the financial-banking system today is highly integrated and globalized raises another problem for central banks. With today’s banking system composed not only of traditional commercial banks, but of shadow banks, hybrid shadow-commercial banks, non-bank companies engaging increasingly in financial investing, and financial institutions in various new forms serving capital markets in general, no national central bank’s operational tools or policies can control the global money supply or ensure stability in goods and services prices.

The global 21st century financial system is also well beyond the reach of central bank supervision. How does a single central bank supervise banks that operate simultaneously in scores of countries and economies? Or banks that operate solely on the internet, or with a formal headquarters located on some remote island nation? Massive sets of real time data are required for effective supervision by any single central bank. But access may be denied by national political boundaries, or significantly delayed and obscured by the same. To be able to bailout in the event of a crash, to effectively control the global money supply, or to reasonably supervise, national central banks would have to integrate and coordinate their policies and actions across their respective national economies. But they are far from being able to achieve such coordination at present, and in fact appear increasingly fragmented and going in different, and at times, even opposite directions. As the capitalist banking system becomes more complex, more integrated and more globalized, central banking has become less coordinated across national economies, not more.

Even the most influential central bank, the US Federal Reserve, is unable to globally coordinate national central bank actions with regard either to bailout, money supply management, or bank risk activity supervision. As of 2017, the Fed appears even more intent on going its separate way, independent of other major national central banks in Europe and Asia.

b. Technological changes generating instability

A second area of major problems is associated with technological change. Apart from technology enabling the rapid globalization and integration of finance, and the problems that has created for central banks, technology is also changing the very nature of money itself, creating new forms that are difficult to measure and monitor. A gap is also growing between forms of money and forms of credit. Money may be used to provide credit, but credit is increasingly made available without central bank and traditional forms of money. Credit is increasingly issued by banks (and non-banks) independent of money supply provision policies and goals of central banks. Hence, central banks are losing control over the creation of credit regardless of efforts to influence it through money supply manipulation. And credit means debt and debt is critical to instability.

Twenty-first century technology is also upending the manipulation of the supply of money by central banks as well. By various means, technology is accelerating the movement of money capital, speeding up the ‘velocity of money’ flow, both cross-borders and in and out of markets. Technology has also enabled fast trading, split micro-second arbitrage, and is contributing to an increasing frequency of ‘flash crashes’ in recent years, in both stock and bond markets, that are capable of precipitating broader financial instability and crashes. Technology also accelerates the contagion effect across markets and financial institutions when an instability event erupts. Not least, technology makes it possible for banks to avoid central bank general supervision. It is easier to hide data on a server in the internet cloud than it is to store paper records in filing cabinets away from central bank inspectors. Central banks, with relatively small numbers of supervision staff and inspectors, simply cannot compete with banks with technical staffs and leading edge technical knowledge.

c. Loss of control of money supply and declining effect of interest rates

Technology is broadening the very definition and meaning of money, beyond the scope of influence available to central banks’ via the traditional tools they have used to influence money supply. That is one reason why central banks since 2008 have been experimenting so aggressively (and even recklessly) inventing new tools, like quantitative easing (QE), to try desperately to reassert control and influence. But other forces minimizing central bank control over money are at work as well, among them the rise and expansion of shadow banking (see section d. to follow).

Another related source of loss of control is associated with non-bank multinational corporations, which invest on a global scale. Should the US central bank, the Fed, seek to reduce the national money supply by raising national interest rates, multinational corporations can and do simply borrow elsewhere in the world, ignoring US central bank’s efforts. They can even borrow in dollars offshore, since dollar markets exist in Europe, Asia and elsewhere as a consequence of the Federal Reserve having flooding the world with liquidity in dollars for more than a half century.

Since their earliest development in the ‘middle’ period of banking, central banks have attempted to stimulate (or discourage) real investment in construction, factories, mines, transport infrastructure, machinery, etc. by raising (or lowering) benchmark interest rates. Interest rates are simply the ‘price of using or borrowing money’. But the price of money—i.e. the interest rate—is not determined solely by the supply of money; it is also determined by the demand for money and by the velocity of money as well. Both supply and demand
determine price fundamentally. . But central banks have never had much, if any, influence over money determinants of interest rates. Money demand is determined by general economic conditions at large, not by central bank actions.

Furthermore, both the supply and the demand for money (and thus interest rates) are determined also by the velocity of money. The velocity of money, however, is increasingly determined by technology developments.
Both money demand and money velocity are drifting further from central banks’ influence. And to the extent they do so, central banks may be said to be steadily losing control over interest rates since interest rates are determined by all three: money supply, money demand, and money velocity. Central banks are left with trying to influence just one element—money supply—as a means to control interest rates, but their influence here is diminishing as well, as the globalization of financial markets accelerates and multinational companies grow,enabling access to a multitude of forms and sources of credit.

Central banks thus have decreasing influence over even the money supply determinants of interest rates, let alone influence over both money demand and the velocity of money which are equally important determinants of rates. Central banks are steadily losing control of their key operational lever, the interest rate, as the means by which to influence economic activity. As will be addressed in subsequent chapters, this general fact is perhaps why central banks have abandoned the manipulation of interest rates as the means by which they
attempt to influence real economic activity in a given economy.

d. The rise and expansion of shadow banking

Shadow banks constitute a particular problem for central banks along a number of fronts. Shadow banks engage in high risk/high return investing and are thus often at the center of financial crises requiring central bank bailout. Shadow banks exacerbate the decline in central banks’ ability to determine money supply and in turn interest rates. And shadow banks are mostly beyond the scope of central banks’ supervisory activities, although some very minimal central bank supervision has been extended to some segments of the shadow banking world (e.g. mutual funds in the US) since 2008.

A body of academic and central bank literature has developed since 2008 on whether and how central banks (and governments in general) should increase their regulation of shadow banks. Standard financial regulation legislation and agencies’ rules address financial regulation of traditional banks. The new area addressing shadow banks is sometimes referred to as Macroprudential Regulation. But to quote Rubin—a former shadow banker himself—once again, central banks today are still light years away from being able to regulate the
shadow banking world. This is because “no one comes close to having identified the full reach of shadow banking or the systemic risks it poses”, which “would be a monumental undertaking for the United States alone” but “it becomes even more daunting once shadow banking outside of our borders is considered.”

As this writer has previously concluded, thinking that central banks can macro-prudentially regulate or effectively supervise shadow banks—given the magnitude and global scope of operations and growing political influence of shadow banking—is delusional. “Technology, geographic coordination requirements, opacity, bureaucracy, the massive money corruption of lobbying and elections by financial institutions, fragmented regulatory responsibilities, the sorry track record to date of Fed and other agencies’ regulatory efforts, and the multiple interlocking ties involving credit and debt between private banking forms—all point to the futility of regulating shadow banks in the reasonably near future.”

e. The magnitude and frequency of financial asset price bubbles

Central banks are failing to prevent or contain financial asset price bubbles. This particular failure is not just that they lack the tools, but that they lack the will to do so. This is in part political. There’s a lot of money to be made by capitalist investors and institutions when financial bubbles are growing. To intervene when the financial elite is ‘making money’ is to court the ire and intervention in turn by government supporters, political friends, and the corporate media.

As the former head of a major US bank during the 2008-09 crash, Charlie Prince, admitted when interviewed after the crash and asked did he not know the banking system was headed for financial Armageddon? Why did he not stop the excessive and risky investing practices at the time? Prince simply replied, ‘when you come to the dance, you have to dance’. What he meant was he (and likely other banker CEOs) knew the system was headed for a crash. But he couldn’t buck the trend without his shareholders, demanding to participate with other banks in the great profits and returns from the risky speculation in subprime bonds and derivatives. If Prince had swum against the tide, he undoubtedly would have been sacked by his Board and shareholders.

A similar powerful opposition would likely have descended on the Federal Reserve officials at the time in 2007-08, had they acted to ‘prick the asset bubble’ before it burst. But burst it did, causing trillions of dollars in bailouts in its wake. Central banks would rather try to clean up the mess from a bubble and crash than try to prevent it, or even slow it down. They and supporters in the media and academia therefore raise excuses and arguments justifying their non-intervention to prevent destabilizing financial asset price bubbles.

The main arguments include it is not possible to determine whether a bubble is in progress or not, until after the fact. Or it is too difficult to know if it’s a de facto bubble or just a normal financial market price escalation.Or, to deflate a financial bubble in progress is likely to set off a financial panic prematurely, and thus provoke the very condition that it was supposed to prevent. Or, central banks’ monetary tools aren’t designed to stop excessive asset price inflation in any event. Nor is responding to asset price bubbles part of the ‘mission’ of central banking. The mission is to prevent excessive price instability in real goods and services; to stabilize the price of money (e.g. interest rates), or maybe even to modestly encourage wage (factor prices) growth in order to support their mission of encouraging economic growth and employment (through consumption). But ‘hands off’ preventing on financial asset inflation or instability. Without saying it in such direct terms, what is meant is regulating financial asset prices and preventing bubbles is de facto directly regulating the rate of profit realization from financial asset market capital gains!

Nearly fifteen years ago, when just a member of the board of governors of the US Federal Reserve, for example, Ben Bernanke addressed in a formal speech the subject of financial asset bubbles intervention. He made it clear, leaving no doubt as to the policy of the central bank at the time, that it was neither desirable nor
possible to intervene to prevent financial asset bubbles. All a central bank was mandated to do was set a target for inflation, by which he meant a target for inflation in goods and services prices, not financial asset prices. Stabilizing goods prices would eventually stabilize financial asset prices in turn, it was assumed. But: to quote Bernanke at the time, before he was made chair of the US central bank in 2006, “an aggressive inflation-targeting rule [say 2% ?] stabilizes output and inflation when asset prices are volatile, whether the volatility is due to bubbles or to technological shocks…there is no significant additional benefit to responding to asset prices.” Years later, in 2012, as Federal Reserve chair, well after the crash of 2008-09, Bernanke held to the same view: “policy should not respond to changes in asset prices…trying to stabilize asset prices per se is problematic for a variety of reasons”…and it runs the “risk that a bubble, once ‘pricked’, can easily degenerate into a panic.”

What this mistaken view represents, however, is a denial that asset price bubbles are always followed by asset price bust and deflation, and that collapsing asset prices can and do have significant negative effects on the real economy and therefore on production, unemployment, decline in consumer spending and on prices of goods and services. The Bernanke view was simply wrong. But it served as a logical economic justification to not address financial price bubbles. And not a word about how monetary policies depressing interest rates for years, might cause central bank-provided liquidity to flow into financial asset markets and create the very bubbles that, according to Bernanke, the Fed and central banks should do nothing about!

Since Japan’s early financial crash in 1990-91, and its subsequent banking crash in 1997, scores and perhaps hundreds of academic journal articles and books have been written on the futility of doing anything about financial bubbles. Most echo the same logic: just target reasonable inflation for real goods and services and the rest will take care of itself. This traditional central bank view refusing to address financial bubbles continues to this day.

f. The growing political power of the global finance capital elite

Central banks both facilitate and are confronted with the rising political influence and power of the new global finance capital elite. The elite constitute the human agency driving the restructuring of the global economy in the 21st century that is responsible for creating most of the problems and contradictions confronting central banking today. Symptoms of their political influence include the successful deregulation of financial activities by governments, their corralling of an accelerating share of income and financial wealth from financial investing and speculation, and the absence of any prosecution and incarceration of their members when their practices precipitate financial crashes and their disastrous consequences on the public at large. Central banks have been unable thus far to ‘tame’ this new, aggressive, and ultimately destabilizing form of capitalist investment.

To listen to this show, go to:

http://prn.fm/?s=Alternative+Visions

Or go to:

http://alternativevisions.podbean.com

SHOW ANNOUNCEMENT

Alternative Visions radio welcomes guest, Pablo Vivanco, of Telesur Media in Latin America to explain what’s really going on in Venezuela as the Trump administration raises the spectre of possible military intervention in the democratic revolution in that country. Dr. Rasmus describes the measures by which US elites and its deep state since the 1950s typically engineer an overthrow of governments, by wrecking first the economy of the country (precipitating recessions, inflation, food-medical shortages,etc.), funding political opposition parties and groups, then taking over government institutions, generating domestic unrest and conflict, and ultimately counterrevolution regime change. Rasmus argues the US since 2015 has been ‘pivoting’ from the middle east to Latin America, as well as to Asia. Venezuela is now at the point of the US regime change spear in the western hemisphere. Journalist Pablo Vivanco is interviewed at length and explains what’s going on today with the recent election of a new Constituent Assembly in Venezuela and what it aims to accomplish as it blunts counter-revolution and regime change efforts by US and domestic business interests in Venezuela. The popular support for the Constituent Assembly, structured on grass roots organizations, is described by Vivanco and where events may be next leading.

Now publicly available for order from the publisher, Claritypress/RasmusIII.html, from public bookstores, and from this blog, the following is the synopsis of the book, ‘Central Bankers at the End of Their Rope?: Monetary Policy and the Coming Depression’.

BOOK SYNOPSIS

“Central banks of the advanced economies—despite having been
designated by their respective economic and political elites as
their states’ primary economic policy institution—have failed
since 2008 to permanently stabilize the world’s banking systems or
restore pre-2008 economic growth.

Rather, central bank liquidity injections since the 1970s not only
produced the 2008-09 crisis, but they then became the central
banks’ solution to that crisis; and now promise to cause of the
next one, as a further tens of trillions of dollars of liquidity-
enabled debt has since 2008 been piled on the original trillions
before 2008.

Fed policy since 2010 has represented an historically
unprecedented subsidization of the financial system by the State,
implemented via the institutional vehicle of the central bank.
Central banks’ function of lender of last resort, originally
designed to provide excess liquidity in instances of banking
crises, has been transformed into the subsidization of the private
banking system, which today is addicted to, and increasingly
dependent upon, significant continuing infusions of liquidity by
central banks.

Taking away this central bank artificial subsidization of the private
sector, especially the financial side of the private sector, would
almost certainly lead to a financial and real collapse of the global
economy. It is thus highly unlikely that the Fed, Bank of England,
Bank of Japan or European Central Bank will be able any time
soon to retreat much from their massive liquidity injections that
have been the hallmark of central bank policy since 2008. Nor will
they find it possible to raise their interest rates much beyond
brief token adjustments. Nor exit easily from their bloated
balance sheets and extraordinary historic policies of liquidity
provisioning. That liquidity not only bailed out the banks and
financial system in 2007-09, but has been subsidizing the system
ever since in order to prevent a re-collapse.

Truly, as this book addresses in painstaking detail, central
bankers are at the end of their rope. Wrought by various growing
contradictions, central banks, as currently structured, have failed
to keep pace with the more rapid restructuring and change in the
private capitalist banking system. As a result, they have been
failing to perform effectively even their most basic functions, or
to achieve their own declared targets of price stability and
employment.

Official excuses for that failure are critiqued and rejected.
Alternative reasons are offered, including:
• the declining effects of interest rates on investment,
• the relative shift to financial asset investing at the expense
of real investment,
• failure of central banks to intervene and prevent financial
asset bubbles,
• the purposeful fragmentation of bank supervision across
regulatory institutions,
• mismanagement of the traditional money supply,
• rapid technological changes transforming the very nature of
money, credit and financial institutions and markets worldwide,
• monetary tools ineffectiveness and incorrect targets, and
• central bankers’ continuing adherence to ideological
notions of the mid-20th century that no longer hold true in the
21st—like the Taylor Rule, Phillips curves, and, in the case of ZIRP(zero interest rates) and NIRP (negative interest rates), the idea that the cost of borrowing is what first and foremost determines real investment.

Central banks must undergo fundamental restructuring and
change. That restructuring must include the democratization of
decision making and a redirecting of central banks toward a
greater direct service in the public interest. A Constitutional
Amendment is therefore proposed, along with 20 articles of
enabling legislation, addressing what reforms and restructuring
of central banks’ decision making processes, tools, targets,
functions, as well as their very mission and objectives, are
necessary if central banks are to become useful institutions for
society in general. The proposed amendment and legislation
defines a new mission and general goals for the Fed—as well as
new targets, tools and new functions—to create a new kind of
public interest Federal Reserve for the 21st century.

Jack interviews Labor Fightback Network representatives on their recent conference in Cleveland on the Alternative Visions Radio Show, and discusses recent grass roots worker-community movements and debates how to resurrect the US union movement.

To Listen Go To:

http://prn.fm/?s=Alternative+Visions

or to:

http://alternativevisions.podbean.com

SHOW ANNOUNCEMENT

Host Jack Rasmus interviews guest members of the Labor Fightback Network and their recent conference held in Cleveland. The Network is an organization of local union activists, elected officers, and select union representatives attempting to return the US union movement to a tradition of independent political action, progressive economic demands like ‘Medicare for All/Single Payer’, and labor community alliances. Jack interviews Alan Benjamin, a member of the LFN steering committee, on the program of the organization. A lively discussion follows on the need to resurrect the labor movement in the US, now at a nadir, and restore it to the role it once had. Discussion ranged from new forms of independent political action occurring, movements for $15 minimum wage, single payer, efforts to draft Bernie Sanders as a candidate for a Peoples Party, the accelerating rise of membership in the Democratic Socialists of America, DSA, grass roots electoral efforts like the Richmond Alliance, and others. Rasmus argues union resurrection in US history were always associated with new organizational forms—from the Knights of Labor to the AFofL to the industrial union CIO—and today a new organizational form of struggle will be required once again, not just the traditional union structure that remains. Benjamin differs and sees a resurrection and lead by the union movement itself. Both agree new resistance from below, led by young workers, is beginning to occur. (For more information on the Labor Fightback Network and its program, go to the website, http://laborfightback.org.

(Next week’s August 18 Alternative Visions radio show will feature activists from inside Venezuela and a first hand report on what’s really happening there not available in the US mainstream media)

The following article appeared August 10 on Global Research, Canada, and other major blogs. The analysis is based on content from the just published book, ‘Central Bankers at the End of Their Rope?: Monetary Policy and the Coming Depression’, by Dr. Jack Rasmus, Clarity Press, July 2017

“As central bankers, finance ministers, and government policy makers head off to their annual gathering at Jackson Hole, Wyoming, this August, 24-26, 2017, the key topic is whether the leading central banks in North America and Europe will continue to raise interest rates this year; another topic high on the agenda is when the three major central banks – the Federal Reserve, European Central Bank and Bank of England – might begin to sell off their combined $9.8 trillion dollar balance sheets that they accumulated since the 2008-09 banking crisis.

But the more fundamental question – little discussed by central bankers and academics alike – is what are the likely effects of further immediate rate hikes and/or commencement of central banks’ balance sheet reductions? The assumption is further rate hikes and sell-offs will have little negative impact on the real economy or financial markets. But will they? The effects of hikes and sell off will prove the opposite of what they predict.

Central banks in the US and Europe were grossly in error predicting in 2008 that massive liquidity injections and zero interest rates would re-stimulate their economies and return them to pre-crisis real GDP growth rates. They are now about to repeat a similar error, as they presume that raising those rates, and retracting excess liquidity by selling off balance sheets, will not have a significant negative impact on the real economy or financial markets.

Central banks’ balance sheets have been growing for almost nine years, driven by programs of zero-bound (ZIRP) interest rates and the introduction of firehose liquidity injections enabled by quantitative easing, QE, bond and other securities purchases.

After eight years, the official consensus among central bankers and government policy makers is that the 2008 shift to unlimited central bank liquidity and zero (or below) interest rates is now over. The front page business press and media lead story is that central banks are now about to embark collectively in a new direction – raising their benchmark rates and selling off their massive, bloated balance sheets. But don’t bet on it. They may find sooner, rather than later, that rates cannot be raised much higher and that balance sheets—now totaling $9.8 trillion for the US, UK and Europe alone—may not be reduced much, if at all, without provoking a further slowdown of their still chronically weak real economic recoveries, or without precipitating a serious contraction in equity, bond and other financial asset markets.
Image result

Globally, balance sheet totals are actually far greater than the $9.8 trillion accumulated to date by the big 3 central banks—the Fed, Bank of England, and European Central Bank. When other major central banks, like Switzerland’s, Sweden’s, Canada’s and others are added, it’s well more than $10 trillion. And then there’s the nearly $5 trillion balance sheet of the Bank of Japan and the more than $5 trillion of the People’s Bank of China. Worldwide, central banks’ balance sheets therefore exceed well over $20 trillion…with the total still growing.

It’s equally important to understand that the $20 trillion in central bank balance sheet debt essentially represents bad debt from banks, corporations, and private investors that was in effect transferred from their private balance sheets to the balance sheets of the central banks as a result of nine years of bailout via QE (quantitative easing), zero interest rate free money, and other policies of the central banks. The central banks bailed out the capitalist system in 2008-09 by shifting the bad debts to themselves. In the course of the last 9 years, the private system loaded itself up on still more debt than it had in 2007. Can the central banks, already bloated with $20 trillion bail out bankers and friends once again? That’s the question. Attempting to unload the $20 trillion to make room for the next bailout—as the central banks now propose to do—may result, however, in precipitating the next crisis. That’s the contradiction.

Attempting to sell off such massive balance sheet holdings will prove far more daunting than those central banks now anticipate. And their coordinated raising of interest rates risks precipitating another recession – given their fundamentally weak economies with chronic low bank lending, slowing investment, stagnating productivity, contracting public investment, and lack of real wage income gains. For the global economy has undergone a major structural change in recent decades that has been rendering central bank interest rate policies increasingly ineffective with regard to stimulating real investment and growth, while simultaneously contributing to further financial fragility as well.1

The US Economy is Fragile and Weakening—Not Robust and Stable

All eyes are on the US central bank, the Fed, and what signals it gives at the Jackson Hole August 24-26 gathering, and the Fed’s subsequent policy committee in September. Will it continue to raise rates? Will it announce formally a schedule for balance sheet reduction in September? If the latter, will the announcement of sell-off be so minimal and token that it will generate a mere 0.25% hike in rates by year end 2018, as some pundits predict? Or will the psychological effects on investors – who have enjoyed eight years of record equity, bond, property, and derivatives asset price and thus extraordinary capital gains – consider the announcement as the signal to “cash in” and take their money and run, given the bubble levels already attained in equities, some bond markets, and real estate? And should the Fed continue to raise interest rates at a pace of 3 to 4 a year, what will be the impact on the US real economy?

Economic potholes are beginning to appear in a number of places. Bank lending to US business has declined sharply, now growing at only 2%; consumer loans for auto, mortgages and credit cards have halved over the past year; real investment and productivity have nearly collapsed; the so-called “Trump Bump” has dissipated; government investment has contracted below 2007 levels and infrastructure spending is still but a discussion envisioned for 2019 at the earliest, if at all; and job growth has been consistently low quality, resulting in wage stagnation or worse for the vast majority of the labor force.

In this unstable environment the Fed has nonetheless has announced plans to continue to raise interest rates and to begin selling off its balance sheet. The question is just how much and when? Consensus thinking at the Fed is that rates can continue rising 3 to 4 times a year at .25 basis points a crack through 2019 without serious negative effects. And that the Fed’s balance sheet can start selling off immediately in 2017, initially at a modest rate of $10 billion a month, accelerating further at a later date.

But these were the same central bankers who believed their QE and zero bound rate programs would return the US real economy to robust growth by 2010 but didn’t; who maintained the Fed’s massive liquidity injections would attain a 2% goods and services inflation rate, which it still hasn’t; who argued that once unemployment fell to 4.5% (in the US), wage growth and consumption would return to past trends and stimulate the economy, which has yet to occur; and who argued in 2008, also incorrectly, that Fed QE programs providing bankers virtually free money would stimulate bank lending and in turn real investment and growth. The Fed’s latest predictions could prove no more correct about the consequences of further rate hikes and balance sheet reductions than they were about QE, ZIRP, and all the rest for the past eight years.

It’s Not Your Grandpa’s Global Economy

To assume that selling off that magnitude of securities – even if slowly and over extended time – will not have an appreciable impact on nominal interest rates is the kind of assumption that resulted in previous predictive errors circa 2008 since the possible effects on investors’ psychological expectations of more rate hikes and balance sheet selling are completely unknown.
Image result

After eight years of treating symptoms and not the disease, the global financial system has become addicted to super-low rates and to continued central bank excess liquidity provisioning. What started in 2008 as a massive, somewhat coordinated central bank lender of last resort experiment – i.e. global bank bailout – has over the past eight years evolved into a more or less permanent subsidisation of the private banking and financial systems by central banks. The system has become addicted to free money. And like all addictions, the habit won’t be broken easily. That means central bankers’ plans to raise interest rates in the immediate months ahead will likely “hit a wall” well before the announced rate levels they are projecting. Plans to sell off balance sheets will almost certainly be limited to the US Fed for some time. The ECB and BOE – as well as Bank of Japan and others – will wait and see what the Fed does. The Fed will proceed at a snails pace that will represent little more than mere tokenism, and in the event of further slowing of real GDP growth, or US financial markets correcting in a major way, it will halt selling altogether. In short, there will be little Fed balance sheet reduction before the next recession, and a continued escalation of balance sheets by central banks globally. Central banks will enter the next recession with further bloated balance sheets.

After eight years of treating symptoms and not the disease, the global financial system has become addicted to super-low rates and to continued central bank excess liquidity provisioning.

The Fed is thus on the verge of another major disastrous monetary policy shift and experiment. It will be unable to raise interest rates as it has announced, by 3 to 4 times a year for the next two years. Nor will it be able to sell off much of its current balance sheet, since anything but token adjustments will accelerate rates even higher. In this writer’s opinion, the federal funds rate cannot be raised above 2%, or the 10 year Treasury yield much above 3%, without precipitating either a serious financial market correction or an abrupt slowing of real economic growth, or both.

What the eight years since the 2008-09 financial crash and great recession reveals is that the major central banks, led by the Fed, have painted themselves in a corner. The massive liquidity provided to their banking systems – engineered by zero rates and QEs – failed even to adequately bail out their banks. Today more than $10 trillion in non-performing bank loans still overhang the major economies, despite the more than $20 trillion added to their central bank balance sheets in just the past eight years.

The fundamental changes in the global economy and radical restructuring of financial, capital and labor markets have severely blunted central banks’ main monetary tool of interest rate management. Just as reduction of rates have little positive effect on stimulating real investment and economic growth, rising rates will have a greater negative impact than anticipated on investment and growth. The Fed and other central banks may soon discover this should they raise rates much faster and further or engage in more than token balance sheet reduction.
Central bankers at the Fed, the BOE and ECB will of course argue the contrary.

They will promise the economy can sustain further significant rate hikes and can commence selling its balance sheet without severe negative consequences. But these are the same people who in 2008 promised rapid and robust recovery from QE and ZIRP programs that didn’t happen. What happened was an unprecedented acceleration in financial asset markets as equity and bond prices surged for eight years, high end real estate prices rose to prior levels, derivatives boomed, gold and crypto-currencies escalated in value, and income inequality soared to record levels – all fueled by the massive $10 trillion central bank liquidity injections that drove interest rates to zero or below. And now they tell us they plan to raise those rates without serious negative effects. Anyone want to buy the Brooklyn bridge? I think they’re also trying to sell that as well.

Dr. Jack Rasmus is author of the just published book, “Central Bankers at the End of Their Ropes? Monetary Policy and the Next Depression”, Clarity Press, July 2017, and the previously published “Systemic Fragility in the Global Economy”, also by Clarity Press, January 2016. For more information: http://ClarityPress.com/RasmusIII.html.

He hosts the radio show, Alternative Visions, on the Progressive Radio Network. He blogs at jackrasmus.com.

Source

1. For the author’s 2016 analysis of global financial restructuring, Systemic Fragility in the Global Economy, Clarity Press, January 2016. How central banks’ policies are failing is addressed in more detail in the just published book, Central Bankers at the End of Their Ropes: Monetary Policy and the Next Depression, by Jack Rasmus, Clarity Press, July 2017.

My August 4, 2017 Alternative Visions radio show was dedicated to providing an overview of the 35 year neoliberal strategy of corporate-investor tax cutting in the USA and the shifting tax burden to the working and middle class. A new major round of tax cuts has now risen to the top of the Congress-Trump agenda, with a target for passage either late this year or, if not, certainly before the 2018 midterm Congressional elections. To understand the background history and trends to the latest in neoliberal tax cutting 2017-18, access the podcast.

To Listen to the Show

Go to:

http://prn.fm/?s=Alternative+Visions

Or go to:

http://alternativevisions.podbean.com/

SHOW ANNOUNCEMENT

Multi-trillion dollar corporate and investor tax cuts by December have moved to the top of the Republican Congress-Trump legislative agenda. Dr. Rasmus puts the proposals in historical context, describing the corporate-investor tax cuts from Reagan through Clinton and GW Bush to Obama and now Trump. From the $750 billion Reagan bill in 1981-82 to Bush’s $3.7 trillion to Bush-Obama $480 billion in 2008-09 to Obama’s $1.245 trillion in 2010-12 and Obama’s continuation of the Bush tax cuts in 2013 for another decade that cost $5 trillion. Corporate-investor tax cutting as an essential element of Neoliberal economic policy since 1978. How Congress alternates between nominal tax rate reduction and token tax loophole reduction, then raises nominal tax rates and expands tax loopholes. How for 40 years the share of total taxes paid by corporations and wealthy household investors has declined, while the share of taxes for working and middle class has accelerated. The key elements of the Trump-Ryan tax proposals to date are reviewed.

(Listen to my Alternative Visions radio show this coming week, August 11, 2pm new york time, on the progressive radio network, when I interview a guest from Venezuela, to discuss events underway in that country as class conflicts intensify: see the link above to the radio show)