Current Affairs

January 8, 2009

Capital Vol. III p. 621:

“In a system of production where the entire interconnection of the reproduction process rests on credit, a crisis must evidently break out if credit is suddenly withdrawn and only cash payment is accepted, in the form of a violent scramble for means of payment. At first glance, therefore, the entire crisis presents itself as simply a credit and monetary crisis. And in fact all it does involve is simply the convertibility of bills of exchange into money. The majority of these bills represent actual purchases and sales, the ultimate basis of the entire crisis being the expansion of these far beyond the social need. On top of this, however, a tremendous number of these bills represent purely fraudulent deals, which now come to light and explode; as well as unsuccessful speculations conducted with borrowed capital, and finally commodity capitals that are either devalued or unsaleable, or returns that are never going to come in. It is clear that this entire artificial system of forced expansion of the reproduction procerss cannot be cured by now allowing one bank, e.g. the Bank of England, to give all the swindlers the capital they lack in paper money and to buy all the depreciated commodities at their old nominal values.”

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One Response to “Current Affairs”

  1. Tim Says:

    The funny thing about the Madoff Ponzi scheme here in the U.S. is that it’s an exaggeration of this so-called “artificial system” of “expansion.” It epitomizes the whole spending of future money thing – or spending of hypothetical money – except the Madoff example is obviously crazy and on steroids. And then there is the folding of the auto and realty industries all caused by people getting high on money they didn’t have but were confident they would earn later on down the road.

    Sometimes the liberal spending of nonexistent money is a good thing, such as when the funds for natal care seem to pour like golden sand from out of the sky. My friends’ explaining how the cost of their newborn infants that had already totaled $1 million (which they didn’t pay a penny of) said, “We’re not sure where the money comes from, but it has to come from somewhere.” Lately, however, the media has been inundating us with gloomy stories of corruption, greedy corporate executives and reckless banks (not to mention a lot of blame gets dumped on the consumers as well). And it’s going to take more nonexistent money to fix this whole mess.

    Weird.


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