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Saturday, April 4, 2020
Home Letters The Covid-19 virus pricked the bubble

The Covid-19 virus pricked the bubble

Dear Editor,

The Federal Reserve took its rate to zero and additional $700 billion in stimulus on 15 March, 2020. The Federal Reserve balance sheet will be at its peak of $4.5 trillion. This will be done by purchasing assets — in this case, $500 billion in Treasury securities and $200 billion in mortgage-backed securities.

The purchases will begin right away, with $40 billion in purchases set to take place on Monday, 16 March, 2020.

About 40 % of the world economy is at zero or negative interest rate. That means money is like your septic tank, of little value – interest rate tells the value of money. To understand how we got here, I need to give a summary of global economic history.

From 1870 to World War 1, the gold standard was the prescription to facilitate global trade due to the Industrial Revolution. After the Great Depression in the 1930’s, the creation of maximum employment or full employment was the prescription for the global economic ills.
The New Deal, where government creates employment for the populace in the United States, exemplifies this prescription. This created inflation around the world, as workers unions pushed for higher wages.

This created the global middle class, as real wage increased globally. From 1980 to 2008, the prescription was to control inflation, which was popularized by neoliberalism. This made capital superior to labour, because labour costs increased, and were seen as the main cause of inflation.

Real income stagnated, for growth was driven by debt. Credit cards became common place. This is not sustainable, as the great Recession of 2008 proved. This crisis was a debt crisis triggered by subprime mortgage default. After 2008 to present, the prescription is low interest rate and creating liquidity by, for example, quantitative easing and other complex money creation. The ineffectiveness of this prescription will be proven as we are going into a global recession that the Covid-19 virus pricked the bubble.

I assert: capitalism, socialism and communism are diluvian (outdated)

80% of the world lives on less than $10 a day. The poorest half of the population live on $2.50 a day. 1.3 billion people live on $1.25 a day. The world’s 2,153 billionaires have more wealth than the 4.6 billion people who make up 60 percent of the planet’s population, reveals a recent report from Oxfam International. It is government policies that created inequality globally and locally. Taxation is “wealth favoured” globally and locally.

More than 172,000 people in Belize live in poverty, and thousands live in extreme poverty. That’s 43 percent of the country’s population who don’t have access to a decent way of survival.

I am not concerned how rich the richest Belizeans are: I am concerned about the people who are living like sub-humans. This is immoral, and must change. Crime and murder are a result of the oppressed trying to survive; turn the needy into the greedy. No justice, no peace. Belize, land of the free – home of the serfs (economic slaves).

Your truly,
Brian E Plummer

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