by Ramin Mazaheri for the Saker Blog
Isn’t it interesting that nobody at all has used the phrase “QE 5” – the fifth round of Quantitative Easing – to describe the 2020 bailouts? I found just a single, brief use of it, from three months ago.
That’s because – look around yourself – we are in the thick of it right now. Once it finally stops and we can add it all up, then surely this is what the sum total of 2020 QE will be dubbed, no?
If we cannot manage to learn from neoliberal economic history then we are surely incapable of learning any history at all – neoliberalism has only been around for 40 years. We don’t need to read Gibbons’ The History of the Decline and Fall of the Roman Empire and all its secondary tangents – most of us just have to adequately recall our own lives!
We know that the Western Mainstream Media and their mainstream politicians will not make that type of an effort: in order to sell newspapers, capture ratings, win votes and distance themselves from their very own wrong decisions the architects and mouthpieces for the post-Great Lockdown era are currently trying to repackage the world as being something entirely new, and to make us disregard and doubt the real experiences of our own lives.
The 2020 bailouts are indeed “somebody’s fault” – there was a moral hazard which created the endemic precariousness which the coronavirus pin popped. Therefore, we cannot let this round of QE wipe clean the moral and political failures of the Western chattering classes.
What we slaves need to do is to admit our powerlessness – to realise that we are in slavery, whether still under a stay-at-home order or not – and be cynical about our helplessness: this is not some “new” fifth round of Quantitative Easing – this is merely a restart to the same cycle which began with the first round of QE in 2008.
Remember when QE was new? Sure, but do you remember when we became cynical about QE?
The history of QE is very simple to relate if one analyses it with a socialist lens, i.e. a lens which demands that the burden of proof that “capitalism is good and efficient” be put on the defenders of Western capitalism.
The history of QE matured into pure vinegar by 2012, with the third round – history will show that this is when “QE Infinity” really started:
In 2012 it had become clear to all that the previous, unprecedented two rounds had not, in fact, finally trickled-down to the “real economy” despite more than three years of waiting. (“Trickle down” is a Western euphemism for “economic redistribution”, but modern history has only ever seen that occur in socialist-inspired economies.) It was now indisputable that the Western economy had indeed been severely damaged in the 2008 financial crisis, and that the QE collusion of Western central bankers had only succeeded in money-papering over those problems and padded the pockets of corporate banks and the 1%.
However, the US still decided to force its central bank allies to print as much as they could with QE 3 even though it was fixing nobody’s economy.
The goal of QE 3 thus became clear, and it’s why this round generated a lot of international anger from developing countries: the West would print as much money as they could to ensnare developing countries in debt traps and unsustainable loans via the free capital flows required in neoliberal globalisation. Or, as capitalist-imperialists call it: “just good business sense”.
This concept – those who can print the dollar, euro and yen at will are manipulating this very “exorbitant privilege” in order to buy up the assets of poorer nations – is never, ever discussed in the Western Mainstream Media. For them, foreign capital is only a boon to non-Western nations.
But wait, QE 3 also made it just as bad, if not actually worse, for the “non-imperialised” West.
It is no coincidence that 2012 was the year of the European Sovereign Debt crisis – QE 3 made everyone lose faith in the West, in Western leadership, in Western economic ideology, and the proof of this is that the biggest symbol of neoliberal ideological victory in the Cold War – the Eurozone – nearly collapsed.
However, the beauty of this deeply flawed version of the pan-European project is that it has opened the eyes of Westerners to the fact that Western capitalism-imperialism 100% trains its sights on its own people as well: the Western, colluding, high finance-dominated 1% undoubtedly tried to economically gut and dominate places like Greece – the alleged birthplace of “European” civilisation (despite ancient Greece being half in Turkey, LOL) – as deeply as they did any Developing World nation during this current neo-colonial era. This is why the European Union has come to be called a “neoliberal empire”, and neo-imperialism is an always-unsaid pillar of neoliberalism.
In 2020 the corona crisis will show Westerners once more about the rapaciousness of the neoliberal system they allowed to take over out of fear of the USSR and its “socialism NOT for the 1%”: high finance will gobble up the certain upcoming wave of Great Lockdown-related bankruptcies, further increasing the power of Corporate Circle while hollowing out Main Street.
Corona has provided a global economic reset, but Western neoliberals will only repeat the same play in their playbook: QE
2012 proved that assertion emphatically: when it comes to fiscal/monetary ideology the only solution they have is QE & Zero Interest Rate Policies.
If giving the rich as much soft money as possible doesn’t work for the West this time… then it will be more years of stagnant near-chaos for the 99% amid a protracted “class war of attrition” waged by the 1%. I described how the West’s medium-term future perfectly meets the definition of the economic condition known as “stagflation”, the Western endemic malaise of the 1970s, last week in Scarce jobs + revenue desperation = sure Western stagflation post-corona.
Corona, however, has provided a chance to wipe the mistakes from 2008-19 relatively clean. The biggest bailout in history is “nobody’s fault” – just hand over $2 trillion to high finance (and that’s only in the US, AND that sum only marked the start of QE 5).
Imagine if that sum was divided among the 130 million households of the US – think $15,000+ wouldn’t have increased demand for goods and services, thus increasing employment, thus creating broad wealth instead of the economic disaster building daily in May 2020? I bring this statistic up to remind that if the West would come to their senses then they could save themselves. Change IS possible. Especially for the rich.
But I predict the West will not deviate from its course, because without renouncing imperialism a capitalist economy & culture can never truly change for the better – such peoples are taught to admire the 1% and to scramble to join them, not to end them and their scramble-forcing.
Therefore, to avoid falsely believing that there is “progress” in the West, I propose a new concept: We should call the historic 2012 third round of QE not QE 3, but “QE 1.3”. Western central bankers will not permit new plays in their fiscal playbook and thus will issue even more rounds of QE – therefore the Great Lockdown has NOT wiped the slate clean in any real ideological sense, but has merely created a space for an “updating” of the same old operating system – the 2020 QE should thus be referred to as “QE 2.1”.
As the same playbook will be obstinately followed, and as the Western economy has the exact same flaws (but worse) as they did in 2008, we should expect more QE rounds in 2021, 2023, 2025, etc., which should be called “QE 2.2, 2.3, 2.4” respectively, not “QE 6, QE 7, QE 8”.
The reason we have not seen “QE 5” yet is because many who follow modern economics are still grappling with its accompanying reality of “QE Infinity” – some understood this back in 2012. However, infinity does not denote something which cannot be counted, but its exact opposite – something which can be counted forever.
Must we persist in playing such a game? Surely only the perpetrators of QE Infinity would benefit.
Calling this latest round “QE 2.1” is thus an act of resistance. Of course, the Mainstream Media would never use such a cynicism-inducing term. They will start using “QE 5” no later than the start of “QE 6” in a year or two from now.
Older readers may need to note that “QE 2.1” is exactly the language the younger class is habituated to, thanks to the seemingly bi-monthly messages that (for example) “iPod update 9.1 has been uploaded” to your computer, and without your ever even asking for it. It can allow for even more precision with, for example, “iPod update 9.1.14 has been uploaded”. So the less tech-interested readers should understand that this type of wording is not groundbreaking but quite common and current.
QE 2.1 is going to the same places as QE 1.1. did – it’s an imperialist crisis
QE 2.1 is not going to be used on for more debt traps for the developing world, like QE 1.3 was in 2012. Just as in 2008 money is flowing back to the financial centre (New York City) and corporate national hubs in order to protect them from the current financial chaos.
(I first described how corona is leading to a repeat of 2008, instead of to some Western neoliberal revolution, last month with No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all. I detailed a socialist analysis of QE 3’s effect on the Developing world in How QE has radically changed the nature of the West’s financial system as part of a 10-part series last winter on the Western “bankocratic” system.)
It’s not that history repeats itself perfectly and that we can assume that we can exactly overlay the financial history from 2008-19 to the upcoming era of 2020-31. No, it’s that we should realise that – whatever the exact future historical timeline – the neoliberal system can afford no other path: shutting off the spigot (ending “no strings attached” QE and raising interest rates back up to the 20% of 1980, or just a more typical 3-5%) would cause massive bankruptcies in high finance, and they are the vanguard party in the West’s bankocracy.
Unlike the USSR, there is not chance the elite of the US vanguard party is going to wilfully implode themselves. They are radicals who believe There Is No Altnernative (to Western capitalism-imperialism).
That’s why, just like QE 1.1, QE 2.1 is being used domestically to protect the imperial centre during the outbreak of crisis. Some is even finally being downloaned to non-banks and non-corporate entities, and to subsidise wages in some Western countries, but only a very inadequate portion – it is, like in 2008, being primarily used to “socialise the losses” of the 1%.
The new, recent, easily-graspable history of QE is that it has altered the flow of capital everywhere. While developing countries are hurt the most, corona is going to ram home to the Western domestic audience just how unpatriotic and immoral Western capitalism-imperialism really is.
How many rounds will of QE 2.0 will it take for Westerners to realise that?
Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis.
A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020
If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020
Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020
Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020
The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020
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 NEW ‘Socialism’s Ignored Success: Iranian Islamic Socialism’.