Decadent Capitalism and Central Banks

“Design ideas are always context-dependent and reflect the prevailing economic doctrine and economic interests.”

The history of neoliberalism and it's exploitative practices has left the world at large and Europe in particular incapable of dealing with its internal imbalances and speculative markets. The Eurozone was internally hand-cuffed during the financial crisis as it had no Treasury to re-allocate federal funds, nor bonds to open new lines of credit. The immaturity of Eurozone institutions was tied to the German Bundesbank as a rigid institution working only in the context of German federalism and their own relations between business, labour and government. It was not translatable to the rest of Europe.

Germany historically has a regional policy within which fiscal transfers are made as part of their system since Bismarck’s 1871 Reich. The Deutsche Mark was secure within this framework, but not the Euro. With no EU Treasury or Finance Ministry, and the EU being a confederated association and not a federation; other Eurozone central banks moved a large proportion of their reserves to the European Central Bank, and thereby lost their ability to independently fight and manage their own financial crises.

Monetary policy is now undiscerning with regard to regions and everything outside the Central European core out in the periphery will likely always be in deficit to the core. Austerity has been imposed by the northern-dominated part of the Eurogroup on periphery countries which reduces their aggregate demand and squeezes the citizenry. Surplus profits and bank credit from the core are ideally to be reinvested in the periphery, but too often arrived wrapped in speculative schemes or gambits that have created mountains of non-performing loans. Time after time in history the creditors that unscrupulously influenced governments to over-extend, when crashes inevitably occur the banks repossessed property or other assets at a pittance, and expropriated from citizens on the basis of debt deflation as demand seized up.

@clumsysilverdad

https://www.socialeurope.eu/federal-central-banks-and-decadent-capitalism