Sirwin
Sirwin
Agent Smith clones from The Matrix series

Your [Fiat] Money or Your Life: The Tyranny of Global [Traditional] Finance (Preface)


My last post on this subject left off just before the preface to the book. In this one, I'm going to set out my thoughts thereon, as I read it.

Preface

This work is openly hostile to the world of neo-liberal finance and its mainstream thinking. Despite this (or perhaps because of it), Toussant's book is also available in French, Dutch, Spanish, German, Greek and Turkish.

A Global and Systemic Crisis

Throughout the world, there are countries that have experienced significant decreases in their consumption and production.

The economic strategies of large private financial institutions and global powers have hit a bump or two as a result of increasing imbalance and instability in the world's economic situation, hence why it's a global and systemic crisis.

A Sentinel from The Matrix A couple of Sentinels from The Matrix

However, it's not the first crisis to be experienced by the Capitalist system and it won't be the last. It's very ability to continue existing has been called into question many a time, but it always manages to persevere. The human cost is incalculable, as are the means by which the system has managed to keep itself going.

It is highly likely that Capitalism will survive whatever crisis hits it, now or in future. You can be pretty certain that those oppressed by it are not likely to find a non-capitalist solution to any given problem (or that their corporate overlords will accept it). While there is no guarantee of success, it is of paramount importance that we fight the system, find ways to minimise the human cost of any negative situation and "pursue a strategy of collective emancipation that offers real hope for humankind". I'm hoping that Toussant offers us one throughout the course of his book (or at least in closing, after detailing the horrors and injustices of life under a global Capitalist system).

A Worldwide Fall in Income (and Purchasing Power)

Purchasing Power of the US Dollar Over Time Infographic by Visual Capitalist

Purchasing Power Chart (1913-2020) by Statista USD Purchasing Power Chart (1913-2020) by Statista

Studies carried out by economists in both UN and government agencies/committees confirm that buying power has dropped drastically in various parts of the world. For example, Robert Reich, former Secretary of State for Labor during the Clinton administration, has said this:

"Workers have less money to spend on goods and services [...] The crisis is upon us. The sluggishness of American income levels is a highly sensitive matter, given the role played by household spending in overall economic performance. [Household debt] accounted for 60 per cent of available income at the beginning of the 1970s; it is now more than 90 percent [...] We have hit the ceiling."
 — Robert Reich, "Guerre à la spirale de la déflation", Le Monde, 21 November 1998

The United Nations Development Programme (UNDP) report for 1998 provided an indication of the levels of household debt, to some extent. As a consequence of the drop in income, households incurred greater dept as a consequence of spending.

"Between 1983 and 1995, as a share of available income, debt has risen from 74 to 101 per cent in the USA; from 85 to 113 per cent in Japan; from 58 to 70 per cent in France."

In absolute terms, US household debt was 5.5 trillion (5,500 billion) dollars in 1997, according to the book.

US Household debt as a percentage of GDP (1999-2001) US Household debt as a percentage of GDP (1999-2001): CEIC Data

If that was at the tail end of the 1990s (when the book was published), imagine what the situation is like now! Apparently, it's not as bad as you might expect (but it's far from great).

US Household debt as a percentage of GDP (1999-2020) US Household debt as a percentage of GDP (1999-2022): CEIC Data

As can be seen from the above charts, CEIC's data only goes back as far as March 1999, so I can't verify the claim Toussant makes. Unfortunately, there are no inline or footnote citations.

This occurrence has been observed in so-called "advanced" Third World countries, such as Brazil. In 1996, at least 66% of Brazillian families with household incomes of at least $300 per month were in debt. (That's one million out of 1.5 million families.) According to the UNDP, cashing/writing bad cheques were a frequently-used method of financing consumer spending in that country, so much so that up to six times as many of them were recorded between 1994 and 1996.

Robert Reich may have claimed that a ceiling had been reached, but things only ot worse in the early 2000s (particularly 2006-2010, if CEIC's chart is to be believed).

"A recession in the North and an increase in interest rates in the South could lead to a huge drop in consumer spending in the North and across-the-board bankruptcy of households in countries of the periphery — in line with what we saw in the 1994-1995 Mexican crisis, and with what we have seen in the Southeast Asian crisis of 1997-1998 and the Russian crisis of 1998."

These financial crises had far-reaching effects, threatening to double poverty in Indonesia and by as much as one quarter in Africa.

"According to the World Bank, even before the crisis there were 60 million poor in Indonesia out of a total population of 203 million [at the time]. Third, according to Robert Reich, real incomes continue[d] to fall in much of Latin America. According to a World Bank report released at the end of 1998 (Agence France Presse, 3 December 1998), 21 countries experience[d] a fall in per capita income in 1997. The same report estimate[d] that in 1998, some 36 countries — including Brazil, Russia and Indonesia — [would] register a drop in per capita income."

According to a 26 November 1998 press release issued by the Russian undersecretary of the economy, unemployment was expected to rise by 71 % between 1998 and 2001 (affecting from 8.4 million to 14.4 million people).


My Takeaway from Reading the Preface

You might earn more each year (in terms of the number of dollars or whatever is your national currency), but when compared with inflation and the diminishing buying power of that amount, you'll probably find that it's actually the same (or less) in terms of what it actually gets you in practical terms. That's how you're kept in the rat race, forever chasing the next incentive or promotion just to remain afloat (not thrive) financially. As Robert Kiyosaki says/writes, you can definitely put away a tenth or more of your income each month (such as in a bank account), but if the interest you earn on that isn't higher than the rate of inflation, you're not actually saving money; you're losing it. If a federal reserve can print 3.8 trillion in a year or two, what chance do you have if you're not a multi-billionaire or trillionaire yourself? Are you fine with this? Do you think this is "just fucking dandy"? I certainly don't!

Do you still have faith in central banks, fiat (particularly the US dollar) and governments? I don't, not when there are cryptocurrencies with a finite supply and immunity to inflation and devaluation. Some are even deflationary, apparently. 1 BTC = 1 BTC, always (or at least until means of exchanging, transferring and using it no longer exist, by which stage humanity will probably have bigger problems).

To be continued ...


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Great White Snark
Great White Snark

I'm currently seeking fixed employment as a S/W & Web developer (C# & ASP .NET MVC, PHP 8+, Python 3), hoping to stash the farmed fiat and go full Crypto, quit the 07:30-18:00 grind. Unsigned music producer; snarky; white; balding; smashes Patriarchy.


The Snark Returns: Random Musings from The GWS
The Snark Returns: Random Musings from The GWS

SW/Web developer: ~12 years of C# (yay!) & ASP .Net MVC, Java (blargh!), Python (woot!) experience. I'm currently hitting faucets and writing for crypto to stake/invest . | I work part-time with animals. Sadly, my cerebellum and medulla oblongata aren't Einsteinian in proportion. However, I possess a Brobdingnagian vocabulary and get by with being a barbigerous logophile. I can probably write you into bed, if smashing Capitalism and Patriarchy turns you on. Kink is political!

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