By Ramin Mazaheri – for The Saker Blog

Western economies have not colluded separately to devalue their currencies as in the past, but instead have collectively colluded in order devalue their economies.

They have manipulated the Great Recession to devalue their economies in order to reduce labor costs back to 19th century standards – if it means reducing the quality of their infrastructure, commercial products and technological innovation to do so that is fine… as long as high finance gets their due.

This is the path the West has chosen for 10 years. The reality is never discussed, but is easily proven. It is also quite predictable, given the ever-more proven Marxist principle that in the modern economy capital unites the rich far more than national or cultural interests.

But how is it that the Western economies have been strengthened, that dollar- and euro-dependence has increased, and that innocent developing economies have been weakened in the past decade even though the economic crimes lay entirely with the West?

The results are totally illogical ONLY IF we fail to recognize that capitalism is always the crime of collusion/oligarchy/cartelism, and that the G20 nations and allies of the US have circled the wagons to protect their damaged leader.

This 10-part series uses as its jumping-off point the 2018 book Collusion: How Central Bankers Rigged the World by Nomi Prins, a former Wall Street executive who saw the light and is now informing on the crimes of Western imperialism-capitalism. Prins gives a thorough and chronological account of central banker doings in key areas – Mexico, China, Brazil, Japan and Europe – ever since US banker crimes set off the Great Recession in 2007. The essence of her thesis is that the US orchestrated collusion among the central bankers of many of the G20 economies and the Eurozone in order to primarily save busted US banks, and then also to maintain the 1%-enriching policies of QE, ZIRP and no-strings attached bailouts.

To this we must add another paradox: why hasn’t their mass money printing caused massive dollar, euro and yen inflation? These currencies should be worth much less, after all, as there is so much more supply? The answer is partially explained here:

Prins notes that US QE 3 in 2012 was perceived as a, “… ‘selfish’ effort by the Fed that harmed emerging countries by stealing their share of exports (by falsely deflating the dollar via flooding the market with more dollars, and also by sending too much paper capital (debt) into foreign nations which thus strengthened these foreign currencies (via falsely inflating demand for those currencies) and provoking volatility in currency markets. According to (Brazilian minister Guido) Mantegna, ‘Advanced economies cannot count on exporting their way out of the crisis at the expense of emerging market economies.”

But this is exactly what has happened:

QE, by deflating their own currencies with vast printing, has definitely been a currency war – thus the valid complaints of Brazil. However, the new currency war has been not advanced economy versus advanced economy, as in the past, but advanced economies versus developing economies. It is by collusion – the very title of Prins’ book – that QE and ZIRP have allowed advanced economies to collectively lower their currencies and thus steal developing world exports/increase their own exports; to raise the currencies of developing world by falsely fabricating demand for their currencies; to flood the developing world with newly-printed money for usurious debt traps, as well as to cheaply buy third world assets.

This “new currency war by collusion” is a very important concept, but don’t expect any talk of it in the Western Mainstream Media.

This new “currency war by collusion”, which Prins did not develop as I have, explains why what was logical did not occur: developing economies did not take advantage of the failures of the developed economies which provoked the economic crisis. It was only via “socialising the losses” with QE printing and beggar-your-own-savers ZIRP that Western capitalism saved itself from the market forces which they selfishly and hypocritically insist upon inflicting on developing economies.

Iran has, fortunately, missed all this – they have had economic pain now because of their resistance to play by the West’s financial and moral rules, but Iran will not have economic pain later. However Brazil, for example, expected to soar back in 2010 but instead has foundered, as I detailed in Part 3.

The Troika: it works better when they don’t know you work you actually work for The Troika

From Brazil to Brussels to Bulgaria it has been made crystal-clear to all that the only way bankers and the 1% will ever let trickle down some of the taxpayer money that is being rapidly printed in the trillions (Quantitative Easing) and being given to them at Zero Percent Interest Rates (ZIRP) is if austerity is enforced.

Prins quotes ex-Greek Finance Minister Yanis Varoufakis in July 2016: “He said, ‘(German finance minister Wolfgang) Schauble’s plan is to put the troika everywhere, in Madrid too, but especially in… Paris…. Paris is the larger prize. It’s the final destination of the troika. (ECB, IMF, EU) ‘Grexit’ is used to create the fear necessary to force Paris, Rome and Madrid to acquiesce.”

Firstly, isn’t it absolutely absurd to view Varoufakis and Schauble as “enemies” when they both accept capitalism and reject socialism? It’s the narcissism of small differences, like how Trotskyists claim to be superior to Maoists or Stalinists or Naxalites or whoever. Both finance ministers fundamental accept each other – they just want to wring the best deal out of each other in classic capitalistic fashion/Varoufakian “game theory”.

Varoufakis is correct that Paris is the main prize, but only in a cultural sense. France has always been something of an anomaly: it is a Latin culture with an Anglo-Saxon sense of governance and a Scandinavian-level social safety net. The last part rankles the Anglo-Saxon world the most, and they obviously dominate Western high finance. The “French paradaox” is not that women stay slim (via the shocking method of “not overeating”), but that France shows it is possible to be both neo-imperialist and to have a domestic safety net which cares for its own citizens. This is anathema to the Anglo-Saxon world, and so the French model must be destroyed lest it spread to other neo-imperialist/neoliberal states.

However, Varoufakis is wrong in that the Troika would ever consider Paris as a viable “destination”: the Troika actually in Paris would mean that the entire Western capitalist-imperialist model is dead, such is the importance of France in the West economically, culturally and philosophically. The only way the Troika would openly undermine and openly control Paris is if they are ordered to by Beijing one day. In the 21st century Greece is not France, just as in the 5th century BC France was not Greece.

Given this geopolitical reality – that the Troika cannot be in London, Paris or Washington without totally gutting confidence in the West’s self-image and global pro-Western and pro-globalisation capitalism propaganda – the Troika can only have Paris as a “destination” philosophically, culturally and in a sneaky, backhanded manner.

Part 2 talked about how QE fundamentally changed the West’s financial system – this part shows us how easy money (for the rich) policies have enabled the 1%-class to change the West’s social system in the American/Anglo-Saxon model.

This article illustrates the direct link between 1%-er empowering QE and 99%-er disempowering austerity – we couldn’t have one without the other: if the 1% had to rely on broad economic growth instead of free taxpayer dollars, surely they would have rejected the guaranteed failure which austerity policies have repeatedly proven themselves to be.

The QE rising tide is obviously not lifting all boats because it was never meant to lift anything but a yacht. Austerity has only produced a Lost Decade in the Eurozone; Abenomics has failed to produce growth in Japan; the average American has seen plummeting equality even as their media keeps talking about the allegedly-great economic recovery.

Therefore, something had to get devalued to pay for the bailouts for failed banker bets which caused the Great Recession: the practical result has been a race to the bottom – for workers.

Beggaring your own country is what austerity is all about

That is what austerity truly is: gutting the labor code, deregulating and reducing taxes on financial transactions, lowering pension contributions from bosses, increasing part-time work, making it easy to fire workers, creating inequality- and identity politics-increasing two-tier systems (like US auto wages post-bailouts, or Emmanuel Macron’s “no one born before 1975 pays” pension proposal), allowing existing pension funds to be used by hedge funds for speculation, and many other policy choices which fundamentally make it more precarious to be a worker and more stable to be a boss.

Why does every new austerity measure and the arrival of every pro-austerity politician push stock markets higher even though it is certain to not lead to economic growth for years and years? It is because the rich know that they can now afford to gamble in the stock market and speculatively invest in an even more carefree, risky fashion because their future has just gotten even more richer, less taxed and more secure.

Austerity is not producing growth in the nations which are being subjected to it in large part because everybody is doing it: competitive advantages are not gained when one Western economy makes their workers as insecure as in the United States.

Thus, the goal was never truly “competitive advantage” at all – the goal in capitalism is always 1%-er enrichment. The failure to see through their propaganda is what non-socialists lack.

Austerity is helping propel a key, never-discussed necessary corollary to globalisation: neoliberal globalisation ultimately can only work if there is globalisation of work standards… and there can be no doubt that the West’s 21st-century leaders want those standards to be quite, quite poor.

It is not accurate to say that G20 economies need austerity because a globalised world forces them to compete with 3rd-world countries like factory workers in India, Bangladesh and the Philippines. Such an argument assumes that every job is outsourceable, when it is not; it obviously totally excludes much of the service industry, upon which Western economies are increasingly based. An Indian can only perform one task in the hotel industry, for example – answering a phone – it cannot greet the customer, wash their sheets, bring them food, etc. Even more obviously the status of Bangladeshi wages have nothing to do with French pension stipends – capitalist propagandists want us to believe that they are related, but they never point out that the hundreds of billions in tax cuts and bailouts over the past decade paid for by France could have re-capitalised their pension fund “deficit” (i.e., starved of government funding) 20 times over. Of course, those increased pension stipends would have gone into the “real” economy, creating more euros via a stronger economy.

Developed markets like the Eurozone nations say they started enforcing austerity simply because they felt they had to keep up with the Joneses, or more accurately the German Jerrys.

Germany has thrived over the past decade mainly because it devalued its own economy first via the Hartz Reforms, which sought to make sure that East German ideas of socialism and equality were totally obliterated and that the minijob was allowed to proliferate even though only a housewife or a student could covet a part-time job. Germany willingly made itself more like the United States, its Anglo-Saxon sister, whereas France preferred not to see inequality and poverty rates rise. France’s far superior economy – when these two indicators are chosen as the barometers (and why aren’t they? Because the Anglo-Saxon-dominated Mainstream Media decides in favor of neoliberal capitalism and against the French model) – is still besting Germany in these areas despite a decade of far-right economic rollbacks. Kudos to France!

When neighbors like France began adopting austerity in order to “catch up” with Germany’s downward pressure on labor, what did Germany do? They invited a half-million well-educated Syrians to move in, which served as a new downward pressure on workers. Of course, these refugees were only created thanks to longtime Western support of Islamic terrorism. The idea that Germany’s hospitality was based on humanity and not these reactionary and right-wing economic tactics is simply false and totally out of keeping with capitalist history, EU history and German history.

Contrarily, developing nations like Brazil only embraced austerity because domestic bankers – given the crucial historical fact that they had all the profits they needed supplied by Western QE influxes and thus did not need to seek profits via solid investments in a broadly-productive domestic economy – explicitly insisted that this was the only trade they would make in order to start letting a little of their QE profits trickle down to their domestic populations.

This is why politicians from Dilma Rousseff to Francois Hollande all agreed to enforce austerity – because they could not enforce anything on their own central and private banks. They agreed to devalue their own nations because they have non-socialist models, unlike China, Iran, etc. France and Brazil don’t mind being 2nd-tier countries and neoliberal vassals: China, Iran, Cuba refuse to do anything like that, and the reason must be because they have systems inspired after 1917.

The end for those with West European/liberal democratic/bourgeois systems is not a “race to the bottom”, because the bottom is different in every nation, but a “race to push the 99% everywhere to the bottom” – that is the ultimate goal of neoliberal, anti-state ideology.

Sad reality: imperialism has made the West a permanent safe haven, which enabled QE

This unjust reality is reflected by the fact that even though the morally and financially unsound Western nations provoked the Great Recession, they have only increased in power.

The long-standing economic rules I have listed here and throughout this series don’t apply to QE nations: they don’t need to attract capital because their currency is considered a “safe haven”. This perception exists despite their fundamentally ever-more rotten financial systems and despite printing huge amounts of their own currency.

Prins relates how since 2011 foreign bank deposits at the Fed went from $350 billion to $715 billion. This was the illogical result of the crisis, but it’s what QE expressly fought against – the dollar becoming less important, less held and devalued. It worked: the dollar and the euro compose 80+% of the global reserves – the yuan just 2%.

All the talk about the yuan taking over as the dominant currency tomorrow… this is video game-style thinking, I guess.

The reality is that for the dollar, euro, pound and yen to lose their safe-haven status – solely due to the long-consolidated gains of imperialism (i.e., unpaid wages, stolen natural resources, theft, brutal taxation of their colonial peasantry, etc.) – is not something which could possibly happen overnight. The fall of empires is never swift but a protracted process of slow decline. You are better off hoping for Judgement Day in your time than a total collapse of the dollar or euro – these two nations simply have too much (stolen) stuff.

The massive money-stealing and wage-garnishing which is imperialism allowed Japan, the US and Germany to become the biggest suppliers of international credit by 2013. The other global reserve currency nations – the UK, Canada, Switzerland and Australia – are all either neo-imperialist nations or nations which became rich via collusion with fascists and neo-imperialists (with the sole exception of the socialist continent of China). None of these countries (except China, again) have any right to be so flush with money given their involvement in the causes of the Great Recession: voila, QE.

QE has the US using newly-printed money to indebt Latin America; Germany the same to Europe and Japan the same to East Asia. Breaking their usurious debt bonds is only something which can happen via revolution, and any revolution must necessarily be socialist or else it is obviously not a “revolution” because it lacks truly new political & economic structures.

While the way foreign capital ruins developing countries is something which has been well-documented in the Muslim world since the 19th century – but is rarely relayed in the Western world – we still must return to all those paradoxes I raised at the start: how can the West spark such a Great Recession and wind up stronger 10 years later?

The answer Prins gave for why the US dollar has doubled its reserves since 2011, even though the US was the cause and the root of the Great Recession, is the never-disused collusion in coordinating QE policies:

“This behavior struck at the core of the problem of international currencies. The market, investors, and most economists couldn’t conceive of a change in the international monetary system structure. Instead, they clung to the same unreliable system.”

Exactly… but Prins is still half-wrong: “collusion” is indeed a practical answer and technique explaining how the West caused the Great Recession and yet was strengthened by it; on a philosophical level the explanation is “via the West’s hatred of socialism”. Marxism proves that the 1%’s wealth will never fail to get greater more concentrated unless their power is gutted, and the Western 1%’s power has not been gutted via liberal democratic legislation/elections/judicial involvement/protests or even the very rare Western strike.

The West cannot conceive of any new system, because the sole alternative humans have conceived of – socialism – is so totally suppressed, therefore they went deeper and deeper in to the 99%-gutting capitalist rabbit hole.

However, it is not just a collusive conspiracy and human-social evolution: What the pro-capitalist Prins fails to see is that the system – the Petrodollar system, and now the addition of the QE-fortified dollar system – is completely “reliable” when it comes to supporting US, UK, EU and Japanese neo-imperialism and neoliberalism. It is a great system for that!

For decades or longer these nations have been 100% against socialist control of banks (and their many “strings” in exchange for bailouts) and central planning of the economy to avoid the busts which ruin the Everyman, and this explains why money flowed to the neoliberal and neo-imperial Rome, the United States, at height of the crisis: Markets, investors and economists will do anything – justify any devaluation or degradation – in order to fortify capitalism.

This is why the answer of “it’s because they always repress socialism’s solutions” is ultimately the most far-reaching and the most satisfying, especially compared to the answer of “collusion” – deep down everyone already knows that capitalism is one big collusive scheme. Nothing new there….

Because Prins lacks the worker-class mentality, she appears genuinely surprised that there is a type of collusion at play among the bosses. Because she lacks the anti-imperialist mindset she is genuinely surprised that interplay between the G7/G20 national central bankers is not at all nationalistic or patriotic – 1%ers are a class, not a nation.

Truly, the average American has not at all benefitted since 2009 from the rape of Greece or the tripping up of Brazil. The collusion is for the 1% because the collusion is to save Western imperialism-capitalism which neoliberalism has fully turned on its own Western populations, full-stop. That’s an idea which is never broached in the Mainstream Media, nor by Prins.

This is why the financial press began talking about “QE infinity” two years after my 7-part series on QE in 2017 had hoped QE was finally over: they will do anything, and helicopter-drop any amount of fake money necessary, in order to avoid a socialist-inspired economy which protects the 99% more than it protects the 1%.

The good news is that the socialist reckoning is still coming: collusion did not buy time for genuine reforms and repentance, but only time to paper over fundamental weakness – fabricated paper was not used in a way to properly fix problems but only to selfishly recreate asset bubbles.

QE policies have empowered, quite stupidly, the investor class more than ever

QE could have made Western governments more powerful than ever, but the idea of a “powerful government” is an explicitly socialist idea and totally anathema to the neoliberal form of capitalism.

If QE nations weren’t consumed by the desire to increase shareholder dividends we can imagine that QE would have created banks which were “too strong to fail”, strength being different from merely “big”. Instead of making public banks more powerful than ever – as in China, Iran, etc. – private banks have been made more powerful than ever. The incredible stupidity of such a dangerous tactic seems quite obvious to me, LOL, but….

QE could have also empowered the broadest class – the laboring classes – if almost any sensible tack had been taken: put QE money directly in people’s pockets to increase demand, or broad infrastructure projects to increase the efficiency of business, or broad education projects to create the intelligence to devise and carry out groundbreaking projects which improve efficiency – all would have reaped both short- and long-term societal rewards.

Instead, international investor opinion has been made more powerful than ever.

This is all because of the capitalist insistence that a middleman simply MUST BE involved.

They insist on principle – not because the known results are good, because they are obviously poor -that governments cannot directly be involved in the economy, and thus newly minted money must pass first to private banks – with no strings attached – before money can arrive in the hands of the small and medium businesses which compose such a huge percentage of the everyday, “real” economy.

Strings, however, will of course be attached by the middlemen. That is all that they do – that and some paperwork. Legally protecting only the aristocratic 1% investor class means that everyone must come running to them and do their bidding.

Then, maybe, they will give money, build a factory, etc. This principle is similar to how cities raced to the bottom to offer Amazon the best deal to build their new HQ2. However, at least Amazon was sure to build it – far more vague are the supposed rewards of broad economic growth in return for years of accepting austerity.

However, the 1% does not care about – and central banks do not have mandates which focus upon – broad economic growth. What these two groups want is targeted economic growth above all, and that target is obviously themselves, the 1%.

The truth of these claims are laid bare by the fact that investor and central banker opinion have become far more important in determining policy than domestic public opinion in the West. Furthermore, Western politicians are increasingly drawn from the high finance class (Trump, Macron, Papademos, etc.).

Flush with cheap money, they call the shots more than ever and unlike Islamic Socialists (God), or Chinese Socialists (the Communist Party), there is no higher calling reining them in.

The investor class is the one class the least in touch with what it’s like to work in real life, and thus they do not value the working class, and thus they have devalued these people via austerity.

The absurdity of this system is not lost on the developing world. The absurdity of the Western system is laid bare by this fact: per capitalist ideology, China will eventually have to re-devalue their workforce, which they have tried to so hard to lift out of peasantry, just like Germany has done – no?

Their “heavenly mandate” will be replaced with “proper” free-market ideology, right? Or if the holy spirit of your faith compels you to testify: the free market is an iron law, and thus China will eventually have to submit, right?

Wrong.

The wars to devalue labor – to devalue humans – will end eventually. This idea is very Islamic, as Islam insists that God always ensures that good triumphs over evil. (Incidentally, it is this very concept which explains why Muslims do not believe that Jesus died on the cross, but that God only made it appear that way: God would never let such a bad thing happen to such a good apostle of His.)

This may perhaps explain why China chooses to find friends via heading west and not east – Westerners need more time to evolve politically. Of course the main problem is cultural: the West must find a way to valuing the average labourer and not the CEO in a truly modern sense for the first time in their history.

If they won’t do that, then the best first step would be to stop devaluing China, LOL! That is the subject of the next part in this series: Blaming China for the Great Recession… to avoid emulating China’s (socialist-inspired) success

Here is the list of articles slated to be published soon, and I hope you will find them useful in your leftist struggle!

Part 1 – Western central bankers: they’re God, they trust – a 10-part series on the QE economy

Part 2 – How QE has radically changed the nature of the West’s financial system

Part 3 – QE paid for a foreign buying spree: developing countries hurt the most

Part 4 – Iran vs Mexico: ‘economic inflows’ versus ‘economic independence’

Part 5 – Understanding the West’s obsession with inflation

Part 6 – The new ‘beggar thy neighbor’: wars to devalue labor, not currencies

Part 7 – Blaming China for the Great Recession… to avoid emulating China’s (socialist-inspired) success

Part 8 – 1941, 1981, 2017 or today – Europe’s mess is still Germany’s fault

Part 9 – Don’t forget the real root of Brexit: fear of Eurozone economic contagion

Part 10 – Bankocracies: the real Western governance model

Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books I’ll Ruin Everything You Are: Ending Western Propaganda on Red China and the upcoming Socialism’s Ignored Success: Iranian Islamic Socialism. His work has appeared in various journals, magazines and websites, as well as on radio and television.