After 1999, the new long wave cycle uptrend saw powerful global growth and capital accumulation. It was that which created the conditions for rising interest rates, which crashed asset prices in 2008. After the 2008 crisis had been stabilised, and particularly after 2010, a huge amount of additional currency was pumped into financial and property markets to reflate those asset prices, and, thereby, restore the paper wealth of the top 0.01%, which had been shredded by the 2008 crisis. At the same time, by reinflating those assets, it again created the conditions for profits once more to be used for the purchase of financial and property assets, rather than capital accumulation.
Even at the level of the ordinary citizen, inflating property prices created a powerful speculative motive to get on the housing ladder, to become a buy to let landlord, and so on. It created conditions for money to flow out of commodity circulation, thereby having a deflationary and depressive impact on commodities, and into finance and property markets. Yet, whilst all of this activity, by the state and central banks, to hold back economic growth, to thereby limit the upward pressure on interest rates, so as to inflate asset prices, has had the effect of suppressing economic recovery, and resumption of the growth, prior to 2008, it has not changed the underlying economic laws and conditions.
Global economic growth, driven by the laws of the long wave has continued. It has been suppressed, but, thereby, only increased in duration. The US has now experienced the longest period of uninterrupted growth in its history, for example. The interests of the top 0.01% have affected the path of the economy, particularly since 2010, but they have not changed the laws of economics. They have restored their paper wealth that was decimated in 2008, but only at the cost of preparing an even bigger financial crash from which the central banks will not be able to save them. They have suppressed the economic recovery, after 2010, so as to suppress interest rates, and keep asset prices inflated, but, in so doing, they have merely lengthened the period of the long wave uptrend. The same economic laws continue to drive capital to accumulate.
The process of capital accumulation, even having been artificially suppressed, has continued. One consequence has been the ability of capital in China and elsewhere to accumulate at an even more rapid pace. The capital accumulation has continued to see increased numbers of workers employed and thereby increased demand for wage goods. As this causes the market to expand, so competition drives capital to accumulate so as not to lose market share. In 2018, we saw, therefore, this feeding through into rising interest rates and a 20% fall in US stock markets. Trump's global trade war, along with the similar effect of Brexit, has further curtailed trade and growth, but this can only be a temporary phenomenon. Trade is already being diverted into alternative channels, and when the trade disputes are resolved, there is likely to be an even greater rebound in trade and economic growth, with a consequent rise in interest rates, and fall in asset prices.
Ultimately, the fictitious capital is subordinated to real capital.
“It would be still more absurd to presume that capital would yield interest on the basis of capitalist production without performing any productive function, i.e., without creating surplus-value, of which interest is just a part; that the capitalist mode of production would run its course without capitalist production. If an untowardly large section of capitalists were to convert their capital into money-capital, the result would be a frightful depreciation of money-capital and a frightful fall in the rate of interest; many would at once face the impossibility of living on their interest, and would hence be compelled to reconvert into industrial capitalists.”
(Capital III, Chapter 23)
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