the Voice of
The Communist League of Revolutionary Workers–Internationalist
“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx
Sep 28, 2015
The U.S. central bank, the Fed, has again decided not to raise the interest rate it charges the banks. After the financial crisis of 2008, the Fed lowered the rate. This rate has been at almost zero, between 0 and 0.25 percent, ever since. For more than two years the Fed has talked about the need to raise the rate, but it has backed off each time.
Under the pretext of trying to help the economy recover, the central bank has loaned the banks hundreds of billions of dollars, practically free. The whole economy has been infused with this money. The result has not been an economic recovery, but an enormous growth of profits and a speculative frenzy at least as crazy as the one before the crash, but with more and more enormous sums of money.
To raise the interest rate – to make its debtors pay actual interest on the astronomical sums that the Fed has loaned them: this could provoke the crash of some speculative bubbles. The banks in debt to the Fed could fail because they couldn’t keep borrowing in order to pay their debts. And it could provoke a crisis of confidence like the one of 2008, which froze the whole system.
The fear that the system could fall into a coma if the infusion of money slows down made the Fed pull back from a rate increase once again. No matter how slowly it would raise rates, the Fed could set off a new crash in the stock market, the massive withdrawal of capital loaned to the already very indebted state, and a financial panic that could be very difficult to stop.
But the Fed also fears that by not raising the rates, it is signaling that the economy isn’t going as well as the governments want us to believe. It seems like that’s what some people took from the Fed’s latest inaction, since the European stock markets fell after the Fed decided not to raise the rate. Nevertheless, the head of the Fed weighed her words and mentioned – one more time – the possibility of raising interest rates, this time at the end of the year!
The owners of capital know well that their system has put the whole economy on the edge of a giant abyss, and that any little thing could set off a catastrophe. They know well that all their remedies have just aggravated the problem. Their only policy is to try and push off the crisis until after they’re dead! They are useless, dangerous parasites. It will be a great day when we finally force them to quit the scene.