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How the West Poisoned Its Money

When a factory wants to remove toxic waste, it charges a negative price for it: its managers pay someone to get rid of it. But when central banks begin to treat money like car manufacturers treat spent sulfuric acid, one knows that something is rotten in the kingdom of financialized capitalism.

ATHENS – Capitalism conquered the world by commodifying almost everything that had a value but not a price, thus driving a sharp wedge between values and prices. It did the same to money. The exchange value of money always reflected people’s readiness to hand over valuable things for given sums of cash. But, under capitalism, and once Christianity accepted the idea of charging for loans, money also acquired a market price: the interest rate, or the price of leasing a pile of cash for a given period.

After the 2008 financial crash, and especially during the pandemic, a strange thing happened: money held its exchange value (which inflation diminishes), but its price tanked, turning negative on many occasions. Politicians and central bankers had inadvertently poisoned “humanity’s alienated ability” (Karl Marx’s poetic definition of money). The poison they administered was the post-2008 policy, in Europe and the United States, of harsh austerity for most to finance socialism for the few.

Austerity reduced public expenditure precisely when private expenditure was falling like a brick, accelerating the decline of the sum of private and public expenditure – which is, by definition, national income. Under capitalism, only Big Business has the capacity to borrow significant amounts of the money that lenders, mostly rich people with large savings, are willing to lend. This is why the price of money tanked after 2008: demand for it dried up, as Big Business responded to austerity’s calamitous effect on demand by canceling investments, even as the supply of money (to Big Business) burgeoned.

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