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Jul
2014
Monday 28th
posted by Morning Star in Features

A US economist came out and said it — capitalism needs a big war to get it out of crisis, writes Rainer Rupp


The US economic recovery is unstoppable, warbled the gurus in the “everything is wonderful” departments of propaganda in the US and Europe back in January. 

It was predicted that for the first quarter (Q1) of 2014 there would be growth of 2.6 per cent and over 3 per cent for the rest of the year. Such growth would pull the world economy out of recession, it was said. But then the actual figures were issued and these were very sobering. 

At first it was announced that US GDP in Q1 had fallen by 1 per cent, then by 1.8 per cent and later, by mid-week, the news came through that the fall was actually 2.9 per cent. That was the worst result since Q1 in 2009.

We need to be reminded that since 1947, the year in which the US began giving out quarterly GDP figures, there had only been a quarterly fall of over 1.5 per cent at the commencement of or in the middle of a recession. 

These most recent GDP figures for Q1 are an absolute disaster in a two-fold sense. 

US national debt has also risen dramatically while economic growth has fallen, and the debt-financed increase in spending by the Obama administration to the tune of $250 billion has been accompanied by a decrease in GDP of $73.6bn to $17,016bn.

The supposed stimulatory effect of accumulating debt on economic growth has turned into its opposite. 

Also, it has become ever more difficult to present a rosy picture of the situation by using clearly manipulated data. 

More and more people are recognising that the flood of money from the Federal Reserve is behind the continuously new stock market highs. It also becomes increasingly difficult for manipulators in the western “Ministries of Truth” to argue that there has been a supposed decrease in unemployment to just over 6 per cent, while at the same time the number of those looking for work is higher than it has been for decades. 

Simultaneously the causes of this appalling situation are sought everywhere, but in the rotten economic system and its present neoliberal mutation, it is leading humanity directly into the abyss.

In the meantime the best brains in the guild of US economists have been preoccupied with finding the causes behind the big GDP drop in Q1 2014 that allowed GDP to fall below $17 trillion. 

The majority of them blamed the bad weather. 

The fact that there was snow in winter was to blame for the difference between what the economists had predicted — a growth in Q1 of 3 per cent — and the actual figure of -2.9 per cent, which in the real economy represents hundreds of billions of dollars. 

Now that Q2 threatens to be no better than Q1, these same economists are blaming the weather again, but this time it is El Niño and the drought in California. 

Now, some very courageous members of the guild are even beginning to argue that the continuing manipulation of the financial markets by the zero-interest policy of the Fed is the reason for the deplorable situation of the US economy.

In the meantime, one of the best US economic brains has come up with “another explanation for the slow growth that has captured attention,” says the influential New York Times. 

In a recent article by Tyler Cowen, professor of economics at George Mason University, he uses arguments that undoubtedly represent the high point of cynicism. 

According to him, the reasons for the economic calamity are nothing to do with the US big banks or the gigantic sums of bad debt accumulated by the national and global financial systems, nor the overall indebtedness of US consumers, industrial enterprises and the state, nor the decades-long, systematic export of US jobs to cheap-wage countries that have also been accompanied by a ruthless redistribution of wealth from the bottom to the top. 

No, they are not to blame. 

According to Prof Cowen the problem is the fact that we haven’t had any big war nor is there a foreseeable one in the near future. “It is the persistence and expectation of peace,” he writes.

Under the headline, “The lack of major wars may be hurting rconomic growth,” Professor Cowen writes: “It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily.” 

That is a totally bankrupt explanation by a ruling system and its economic theory. 

There, economic growth is seen as the prerequisite for Western affluence and happiness, but according to Cowen strong growth can only by achieved through bigger wars.

 

Rainer Rupp is a former spy who worked for the German Democratic Republic’s intelligence service.




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