The failure to distinguish between money (universal labour, alienation) money commodity (its materialisation/substantiation), and money tokens (mere representatives of money – reification) by bourgeois economists, is what leads to their confusion and errors, and their inability to understand inflation. At its worst, this failure to distinguish between money and money tokens is what leads to the delusion that money itself can simply be increased by printing additional money tokens, as a means of increasing national wealth. That delusion is what was behind the schemes of John Law and the Pereire Brothers, and today is purveyed by the proponents of MMT.
It is a delusion that, again, as with the schemes of Law and the Pereire Brothers, has been facilitated by the growth of the huge Ponzi scheme that has operated over the last 40 years by which the limitless increase in money tokens fed into the creation of astronomical asset price bubbles, which are today's equivalent of the South Sea Bubble, Law's Mississippi Scheme, the Railwaymania, just as Lehman's is the equivalent, on a large-scale, of the collapse of the Pereire's Credit Mobilier.
The delusion then appears that all of these asset prices continually rise, unrelated to the actual performance of the economy, indeed rising faster when the economy grows more slowly, as reflected in the speculators mantra that “bad news is good news”. The capital gains coming from the inflated asset prices can then be partly converted into revenue (profit-taking as the financial advisors call it) creating the illusion that wealth and revenues can be created out of thin air.
If these revenues, produced by converting paper capital gains, went into increased demand for actual goods and services (the proposed justification for QE, in creating a 'wealth effect') at a time when the expansion of production is relatively curtailed (because profits are used to pay dividends, buy back shares etc., rather than accumulate capital), then the result would be higher commodity price inflation, and an incentive for firms to accumulate capital. However, precisely because central banks, via QE, and governments, in their policies to promote property market speculation etc., have not only inflated those bubbles, but have put a floor under their prices (Greenspan Put), making it a one-way bet, they ensure that the revenues themselves, from capital gains plus from profits, rents, interest and even wages go into the demand for those same financial and property assets, inflating their prices further, whilst draining money from the real economy, and so having a disinflationary and even deflationary effect on commodity prices themselves.
No comments:
Post a Comment