Commentary on Political Economy

Tuesday 9 August 2011

More On Bernanke

I enjoy reading Karen's commentary (here but I disagree with her 'reading' of Bernanke's actions. As I have tried to outline at, Bernanke's actions must be read in a geo-eonomic context. Essentially, in the absence of decisive fiscal action on the part of the Presidency and Congress, the Fed is judging quite correctly that US investment, employment and industry will simply collapse in the face of "competitive devaluations", domestic demand and wage suppression, and export subsidies from 'dictatorships' past and present such as China, Germany and Japan and Korea.
It is incumbent and imperative on Bernanke (a scholar of the 'Rooseveltian Resolve' like myself) that he seek to protect Western capitalist democratic regimes against the all-out assault and incursions of capitalist regimes based on what I call "absolute exploitation" and Paul Krugman calls "the mobilisation of resources".

Far from being a 'placebo', far from being caught in a maze of his own making, as Maley suggests, Bernanke is saying that so long as the US economy does not show vital signs of recovery against its "competitor" economies, he has no choice other than either seeing American democracy collapse with its industry or else to destroy the economies of the "mercantilist countries" (again, China, Germany, Japan and Korea) with a tsunami of greenbacks, inflation and uncompetitive currencies!

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