Government is Monopoly Capital
The recent market jitters are a well-founded example of monopoly capital. Many commentators say that the market declines, and subsequent “emergency liquidity” injected by the Fed and European Central Bank, is due to the decline in mortgage quality in the USA. Let’s deconstruct this:
1) The reason that mortgage values dropped 30% is because lenders are encouraged to lend. Government-sponsored Fannie Mae and Freddie Mac guarantee 100% (yes no risk to the bankers) bonds which are backed by mortgages. This means there is really no reason for mortgage lenders to be careful about who they lend to. Because central banks stealthily and continually increase the money supply, this money needs to go somewhere, why not to risk-free (and risky) mortgages to people who can’t really afford them? So, in summary the government guarantees that mortgage bankers (government-backed monopoly capital) make money on the backs of people who can’t afford the credit. To make matters even more insidious, this increase in money then increases the prices in the housing sector making rents and houses more expensive than they should be anyway.
2) The central banks then stepped in to keep liquidity in the market, e.g., to keep investors from pulling there money out (to where is the question? To somewhere not controlled by monopoly capital is the answer). First off, because as the great philosophers say, the moral (ethical) life is the good life, the question is why should the government support investors over non-investors? Eg. why should the government support the rich with government money that is provided by both the non-rich and the rich? This is plain unethical and immoral. Economically, the central banks stepped in and gave the monopoly power (banks) reduced borrowing rates to keep the money flowing. Investors aren’t stupid or they wouldn’t be investors. Why do they need to be protected? Because the government uses its monopoly power to protect the vested-interest banking power. The Financial Times said the liquidity injections were “akin to to the central banks giving every financial institution – for a limited period – a credit card with a subsidized interest rate and no spending limit.”. The FT is part right, monopoly capital does not have a time limit in our current superstructure.
3) This vested-interest banking power also manifests itself in the whole enterprise itself. When the government borrows money it does so through the banking system. When the central banks change the interest rates (either up or down) it does so through the banking system. It is a prostitution-like sleeping arrangement. Only not really because prostitution is voluntary. And in monopoly capital, it is the people who pay (involuntary - very few people pay taxes because they want to) for the pleasures (money-making) of the partners.
4) This monopoly capital has well-documented historical precedence. Banking was not a government monopoly until the 1890s at which time the National Banking System centralized banking under the Lincoln Administration, which gave monopoly rights to issue government bonds to Henry and Jay Cook. Then, banks which wanted to issue loans had to back these loans, with, you guessed it, government bonds. Its been downhill ever since, not least of course to mention monopoly capital backing both sides of all major wars. US foreign policy was relatively non-interventionist, as the founders had wanted it, until, again, the 1890s when monopoly capital started to seek overseas markets, through peaceful means or force, but mostly force, starting with war against Spain and intervention in the Philippines and Cuba. War is a great way to make money !
5) The Federal Reserve system created in 1913, and its like across the world created afterword, are too, and were created as, part of monopoly capital, bailing out and making money on interest rate and monetary aggregate changes for the banks.
So ignorance is bliss, but knowledge of how things really work might be better as it may allow – encourage political change. However, how one deals with this knowledge in the short-term is a subjective existential dilemma.