Financial Capitalism: The Endgame
Surely the biggest human failure is not learning from failure…
In 2008, we had the opportunity, collectively, to reboot a broken financial system so it became fit for purpose.
But instead of reconfiguring finance to serve the real economy politicians and central bankers used quantitative easing to buy time which lulled the mainstream media into reporting that everything was back on track. Some people haven’t bought that story.
Marc Friederich and Matthias Weik are two economists who didn’t succumb to groupthink after the 2008 crash and now see financial capitalism’s end game.
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Friedrich explained to Renegade Inc. that the authors’ intention is to help translate the complexity of a financial system by inverting it into a language that everybody understands. Having studied economics, and as children of the dot com bubble, the authors of four best-selling books in Germany, stress the important role sarcasm and dark humour play in their work in respect to making seemingly complex matters accessible to the wider public.
According to Weik, the aim behind mainstream economists’ use of convoluted language is to create a camouflage in order to prevent them from having to explain what their terminology means. “It’s like the language of law spoken in secret phrases whose purpose is to garner public trust”, said Friedrich.
But what mainstream economists and politicians haven’t explained is the structural nature of a crisis that hasn’t been remedied since the 2008 crash. Instead, the metaphorical can has been kicked down the road.
“We’re at the end game because it’s the final bubble. We’ve got the government bond bubble and there won’t be another bubble afterwards. It will burst because last time China and all the states rescued the world. They won’t save us anymore. We used cheap money like a drug. We just put more and more drugs into the system”, said Weik.
“Economists and politicians have learnt nothing in the last decade, rather they have merely bought time. The banks who created the last financial crisis continue to be the big winners”, says Friedrich. The losers are the working class and underclass who were encouraged to borrow recklessly. And yet it is these latter groups who the American and British press blame for the crisis.
According to Friedrich, the catalyst for the crisis was low-interest rates and too much cheap money. “They tried to solve it with even lower interest rates and much more money. The debts have doubled since 2008”, said the economist. In Friedrich’s view, the Fed, ECB and other central banks will try to print more money “like they always do.”
“We will definitely see negative interest rates….Since 2008 debts worldwide doubled for private people and for companies even three times more debts than 2008. So this is the final bubble. And the central banks create one bubble after the next one to keep the whole thing running. That’s it.”
And we all know the patient is dead but nobody is ready to unplug the life support. The aim is to keep the system alive for as long as possible.
“Over the past two years real estate prices exploded, the share prices exploded, lots of people earned a lot of money and a lot of people can’t afford living anymore.”
Spread of revolutions
In Weik’s view, the growing crisis, indicative of the widening divide between the rich and poor, will culminate in the spread of revolutions throughout Europe. As the authors make clear, the inability of the political establishment to find any solutions to the crisis of 2008, the phenomenon of Brexit, Trump and the other symptoms that led to the emergence of the far right across Europe and the world, all emanate from the lack of political will to deal with these things in 2006.
“The establishment are afraid of facing the consequences of a real change in the system”, argues Friedrich.
“The banks have betrayed all of us…. They manipulated interest rates, for example. Everybody who bought a house with credit was suffering. Then, the politician’s we elected bailed out the banks with our taxes. And we thought the politicians are here for us….The banks are still here. Goldman Sachs, JP Morgan, the European Central Bank — they’re all still here. Nothing happened. And then, since 2008, the people lost trust in the media as well.”
So it’s a historical loss of trust all over the place.
The authors argue that it’s not just the holy trinity — banks, politicians and media — who are to blame. They also point a finger at the public’s inability to take personal responsibility.
“Change always comes from the people. We are more than them. And if we’re not taking the step forward and change something nothing will change”
Friedrich also adds, “That’s why we say we the people have to create the change right now. The monetary system failed. It’s bankrupt. We have to change it. Let’s think about a new monetary system…. We have to create the change. And if not creating it there will be a lot of damage. That’s what we all have to face right now.”
Friedrich and Weik posit that big opportunities predicated on a system that prioritises people above profit could emerge from the chaos of the next crash. Aligned with Marx, the authors note how the productive capacities capitalism has engendered over the centuries has greatly benefited humanity while recognising that, over recent decades, capitalism has been hijacked by a form of cronyism — its extreme variant — neoliberalism:
“If you make a bad economical decision as a private person or as a business owner, that’s it, you’re out of business. But if you are a bank no problem at all….The United Kingdom sells bonds to finance the whole system. So who’s buying the bonds? The answer is hedge funds, insurance companies, banks and now, central banks.”
This kind of crony capitalism exists in what Friedrich acknowledges is a context in which politicians tell the public that they have got record employment and everybody’s better off. “But nobody tells them that more and more people are doing two or three jobs within low and stagnating wage sectors”, says Friedrich.
“There is a problem in the monetary system. And if the currency collapses the people have to pay for it, not the government….In 2001 we established a currency monetary union in Europe with the euro. It was just not going to work. It’s madness to put strong economies like Germany with weak economies like Italy or Greece in one currency. For Germany the Euro is too cheap which is why the country is exporting so many goods and so they can’t even get into the market. It’s like it’s too expensive. Meanwhile, Germany is getting stronger while the weaker nations are getting weaker. This then opens the door for reactionary political leaders. And so the cycle continues.”
While in Argentina during the crisis in 2001, Friedrich first realized that in the event of an economic crisis and currency collapse, it’s the public who are forced to pay. The economist understood that there are only three possibilities to delete the debts in the system — inflation, devaluation of the currency and war. In each case, it’s the people who are forced to pay.
What are the likely consequences of the end game — the biggest bubble in human history?
According to Weik:
“The morning after the end game we can solve the crisis, if we are smart. …But if it is postponed, there will be an implosion of the markets globally on something like the scale of 1929, maybe even worse.
So we have to rethink how to restart the system from scratch…Otherwise there would be a big bang and then it’s getting really nasty and much more expensive.”
Friedrich proffers a slightly different perspective:
“We need a new currency system — a new monetary fund. If the people don’t take control of the system, the alternative digital system could be like ‘1984’, it will be horrible. It’s why we have to get power back to the people. Solutions will likely be utilized through artificial intelligence controlled by people for the benefit of people. We explain this in our books and videos.”
Watch the full episode now:
Tue, 03/30/2021 – 20:45