The US Has Now Had Its Longest Continued Economic Expansion Ever

For some time I have argued against the stream of catastrophism that the global economy is NOT suffering a Long Depression, Great recession of Secular Stagnation.  The 2008 Financial Crisis, was precisely that, a financial not an economic crisis, of the type analysed by Marx, and detailed in my book on his and Engels' theories of crisis.  The 2008 financial crisis caused an economic shock, in the same way that the 1847 financial crisis and credit crunch, caused by the implementation of the 1844 Bank Act, did, when it resulted in a 37% contraction as described by Marx.

In fact, the contraction after 2008 was much less than that 37% in contraction in 1847.  Marx described how that financial crisis occurred early into a period of expansion that ran from 1843 until around 1865.  As Marx and Engels explain as soon as the 1844 Bank Act was suspended, and the credit crunch relieved, the boom soon continued on its way.

The conditions after 2008 were similar.  Samuel Britain proclaimed "We are all Keynesians now," as the state in the US, UK, and in the EU all sprang into action with fiscal expansion, and use of thre state to nationalise failing banks etc.  The difference is that in 1847, many of those financial speculators who lost money were not bailed out as they were after 2008, and money printing only continued for as long as was necessary to eliminate the credit crunch.  By contrast, as soon as the immediate crisis was overcome, and capitalism appeared stabilised, in 2009, the state and central banks reversed course, and implemented severe austerity.  They combined it with even greater money printing, despite the ending of the credit crunch and financial crisis. 

How are these two apparently contradictory policies reconciled?  Easy, the real objective of the state and the central banks, once the immediate crisis was resolved, was not to boost the real economy.  Quite the contrary.  Their ambition was to slow economic growth, whilst not wanting to provoke an actual recession.  Why?  because it was rapid economic growth between 1999 and 2008 that had caused interest rates to start to rise, and rising interest rates crash asset prices, such as shares, bonds, and property prices.  And, it is in these assets, fictitious capital that the global top 0.01% now own all their wealth.

The state and central banks sought to protect the interests of that top 0.01%, by reflating the paper prices of their assets at the expense of the real economy, and of real capital.  That is why at the same time that they were depressing the real economy with their policies of austerity, whether it be that imposed in the UK by the Liberal-Tories, or that imposed in parts of the US by Republican State legislatures, or imposed on parts of the EU periphery by conservative politicians and the ECB, they combined that austerity with measures of unprecedented money printing, whereby central banks bought up the worthless bonds of countries and companies in a desperate attempt to push the prices of those assets back up.  It is why they have continued that policy, now, ten years after the financial crisis, with bond prices being pushed in many places into negative yields, i.e. where the state pays people to lend to it!

In addition to using money printing to buy up and raise the prices of these financial assets, states also undertook measures to boost collapsing property prices, for example with the Tories Help To Buy scam in the UK.  All of this is aimed to restrict growth in the real economy, and to divert money into boosting the prices of financial and property assets, to protect the wealth of the top 0.01%.  It is not any underlying economic crisis that is holding back global growth, but deliberate government policies to hold back economic growth so as to protect those financial assets, in an attempt to prevent another financial crash.  Trump's global trade war, and Brexit are further political actions that are causing economic growth to be constrained.

Yet, even despite these deliberate attempts to hold back global economic growth the global economy has continued to grow.  Global levels of employment have continued to rise.  The FT now reports that the US has, this month now enjoyed its longest continuous period of growth, at least since 1858, if not ever.  What this means, as I have suggested previously is that the long wave cycle is still firmly in place.  The deliberate measures to restrain growth over the last 8-9 years, since 2010, have simply acted to stretch out the current Summer phase of the long wave cycle.  That phase, which began around 2012, should have ended around 2025, as a new crisis phase began.  I expect that it has now been prolonged until around 2030.

But, the measures undertaken to restrain economic growth, so as to prevent a rise in interest rates and a renewed crash in asset prices are failing.  Even Trump's global trade war, and Brexit is only having a dampening effect, with  trade and investment being channelled into different paths, and by increasing costs, reducing productivity, those effects will, in fact, cause interest rates to rise even more sharply as that trade picks up pace.  The central banks and capitalist states have merely succeeded in delaying, and thereby intensifying the inevitable financial crash that is coming, not as a result of a faltering global economy, but as a result of a growing global economy.