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« MMT's Fatal Flaw Elaborated | Main | Corbyn and Imperialism. Any Answers Here? »

June 09, 2017


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Steve Clark

As near as I can tell, the Bank for International Settlements (Basal, Switzerland) is responsible for overseeing the system of transaction settlements, though, of course, these are conducted purely by automated keystroke and don't require much office space or staff power. The BIS is governed by the 60 largest central banks. In addition to overseeing transaction settlements, the BIS sets the regulations for international investment and trade, and it devises policy that it pursues among the financial ministers of these 60 states. Countries have no choice but to borrow from global capital unless they (like Russia due to its natural gas) have substantial capital reserves piling up in their home economies. Of course, owing to centuries of imperialist plunder, few nations have such reserves. Cuba is a good example of an excluded country that has difficulty accumulating reserves; even Iceland and Argentina, who are making efforts to work outside the system, suffer from a lack of investment capital. While they can invest in their domestic economy by allowing local banks to lend businesses (per MMT guidelines) to extend credit, these banks, themselves, are ultimately tied into global credit lines of the Big Five currency zone financial institutions (and, thus, subject to global financial pressures). And the borrowers, if their products and services compete in global markets, must compete against foreign corporations that have access to unlimited, cheap (relative to their domestic) credit from the big banks' credit monopoly. By a billion threads, virtually all credit into today's economy is controlled by the Big Five central banks and their private sector benefactors. The rest is insubstantial.

Even if, somehow, states could adopt MMT and begin efforts to spur national growth, the question arises from where will such growth come? Let's say that the global industrial economy has reached its ecological max growth position. If that's the case, the only avenue of strategic employment is expansion of non-profit (NGO-led) services which, by their very nature, do not generate profit. A way must be invented to finance non-profit growth, but that will never be possible so long as corporate, for-profit credit syphons all profit into its coffers. A way must be found to compel corporate support of non-profit credit expansion and thereby hold corporations to account for civilization's salvation.

I'm not saying there's no way to challenge the Big Banks in the present system (as Iceland is doing); all I'm saying is it's a very steep climb for any single nation (aka, Greece), and, for victory to ever be secure, the other nations of the world (especially the Big Five zone states) must end their relentless drive to conquer and control every substantial credit market in our world. That means we either need revolution, state by state, in every nation of the world (especially the Big Five), or we need a global revolution that subordinates today's all of today's states and their financial system(s) to the strategic interests of people. Maybe, the first route is actually the more feasible or the only one possible, but, IMO, the second route (global revolution) is more feasible, more likely and, ultimately, way more able to secure a future for people over corporate profit.


This is very interesting. So where, more specifically, does the settlement of global accounts occur? I assume that the reason most countries are caught in this cycle is because they borrowed into the system. So once they reach a critical point like Greece, where austerity no longer works, their best option is to default. So what do they do for capital at that point? MMT says, as a sovereign country, they can return to lending in their own currency. In other words, stop participating in the system. As the issuer of their currency they control how much to lend to what enterprises, and their own further economic development. Foreign investors have to go elsewhere. Isn't that what happened in Argentina and Iceland for example?

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