Returning to Normal?

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  • [[capitalism]] [[political economy]] [[marxism]] [[covid-19]]

  • the COVID-19 crisis has allowed banks and companies to borrow money at zero or negative interest rates

  • central banking has become the name of the game in the 20th century, so to speak, which has propped up the capitalism of the 20th and (so far) the 21st century

    Between 1992 and 2007, central bank monetary injections (“power money”) doubled as a share of global GDP from 3.7% of total ‘liquidity’ (money and credit) to 7.2% in 2007. At the same time, bank loans and debt nearly tripled as a share of GDP. From 2007 to 2019, power money doubled again as a share of the ‘liquidity pyramid’. Central banks have been driving the stocks and bond market boom.

  • it’s these monetary injections from central banks that have kept markets float

  • the market (or its apologists) believe that a “V-shaped” recovery is in the works: that the COVID-19 pandemic was temporary, and now that the economy can return to normal, things will be fine in a few years

  • Roberts argues here that the economy wasn’t doing very well in the first place

  • The profitability of capital was slowing, and was indeed at its lowest in years

  • The Congressional Budget Office expects a V-shaped recovery but doesn’t expect the economy to recover until 2030

  • Third world countries will have the last decade essentially wiped out

  • If the world economy can return to normal, it will be decided in the next few months.

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