Chapter 69 The "British patient" gets sicker as he gets treated

〖The beggar-thy-neighbor financial and foreign policies of the US and UK governments not only failed to solve domestic economic problems, but also plunged the third world into a comprehensive debt crisis.In response to the deteriorating economic situation at home and abroad, the United States once again placed its bet on oil by invading Iraq. 〗 Before Karl Marx formulated the concept of class struggle, British liberals had developed a concept of society in which they gave special meaning to "upper class" and "lower class." In the 19th century, the free trade policy of the liberals represented by Adam Smith and David Ricardo led to the abolition of the protective Corn Law in 1846, which opened the floodgates of food imports.The flood of imported food drove down food prices, had a devastating impact on domestic production and, as has been pointed out, contributed to the poverty of the majority of the British population and the concentration of social wealth among a few.This minority is the so-called "upper class".The political philosophy of British liberalism was to justify this economically unfair process.

The most influential American advocate of British liberalism in the nineteenth century was the aristocrat Walter Lippmann.He defined class society in the modern framework for Americans.Lippmann believed that society should be divided into the elite and the masses. The elite leads the masses. The elite is a "special class" composed of "responsible people" who determine the composition of the "national interest", while the masses are mainly composed of ignorance. The "public" composition.The elite will become professional bureaucrats, serving the interests of private power and private property.But the relationship between the elite and the disposition of private property is never revealed to the broad ignorant public "because they don't understand it".

Lippmann believed that ordinary people must have the illusion of exercising their "democratic" rights.And this fantasy has to be shaped by the "responsible" elites of society, a process named "fabrication of consent".Decades before Paul Volcker set foot in Washington, the concept had been described by Lippmann as "the political philosophy of liberal democracy". With the inflection point of the 1957 recession in the United States, a small number of international banks with enormous power and multinational oil companies, increasingly concentrated in New York, began to define the "liberalism" of the United States, based on the example of the British Empire in the 19th century. ’ process, which is a progressive American version of the liberal model.The model is defined by the financial aristocracy, not the hereditary aristocracy.However, as the results of economic policies developed by the liberal establishment on the US East Coast (so called because the US financial and oil conglomerates gather here and form the center of power) have become increasingly apparent, the US has shifted direction.The United States, a country that was once purely free in the eyes of most people in the world, is slipping step by step towards the opposite of freedom.Especially during the 1970s and 1980s, this process was accelerated, although she still retained a "free" beautiful face.

Two spectacular oil shocks in the 1970s and the hyperinflation that followed created a new "land aristocracy" in America.During the course of the crisis, those who owned property suddenly found themselves suddenly rich and millionaires.The reason for becoming a millionaire is not to run a business and invest in manufacturing or scientific inventions at all, but simply to own land and real estate. However, if the oil shock is only the beginning of social differentiation, which increases the wealth of a few people, while the living standards of the majority begin to gradually decline, then, after October 6, 1979, the policy implemented by Paul Volcker in the United States Financial shock therapy has promoted the final completion of social differentiation.

It would be a big mistake to regard this policy as Volcker's invention.While this policy had been drawn up and implemented in Britain months earlier, Volcker and his close friends in New York banking had only introduced the Thatcher government's model of financial shock in the United States.Among his friends were Lewis Preston of the Anglophile Wall Street financial firm Morgan Trust & Guarantee. In early May 1979, Margaret Thatcher won the British general election, defeating her Labor opponent, James Callaghan.During the campaign, she strongly advocated "curbing inflation".But Thatcher and the modern Adam Smith "free market" theorists who gathered around her misled consumers by claiming that government deficit spending was the "culprit" for 18% inflation, not Iran Oil prices jump 140% after King's downfall.

The Thatcher government argued that inflated prices could be brought down simply by reducing the economy's money supply, arguing that the main reason for the surplus was persistent government budget deficits.In order to reduce the "expansion of funds", government spending must be resolutely cut.The Bank of England, as a supplement to fiscal policy, also adopted a policy of high interest rates to limit credit.The predictable result of this policy was depression, but it was dubbed the "Thatcher Revolution". Reducing the money supply and raising interest rates, that's all Thatcher did. In June 1979, just one month into his election, Thatcher's Chancellor of the Exchequer, Sir Geoffrey Howe, began the process of raising the base rate by five percentage points.Bank rates rose from 12% to 17% over a 12-week period.For businesses and small business owners, borrowing costs rose an unprecedented 42%.Never before in modern history, except during a wartime economic emergency, has an industrialized country experienced such a shock in such a short period of time.

To keep interest rates high, the Bank of England also began to cut the money supply.Unable to pay loans, businesses went bankrupt, and households were unable to buy new homes; long-term investments in energy, subways, railroads, and other infrastructure eventually ground to a halt as a result of Thatcher's monetarist revolution. But the main problem for the British economy in the late 1970s was not the government owning Reyloy, Rolls-Royce, or many other businesses (which had been auctioned off to private investors), but the lack of public infrastructure. There is a lack of government investment in upgrading, developing a well-trained workforce, and research and development.In dealing with the economic turmoil of the past decade or so, it was not the government that was at fault, but the government's policies were at fault.

Thatcher's "economic revolution" was the wrong prescription for "curing" Britain's economic ills.The real beneficiaries are the international interest groups in the City of London, the rich oil companies surrounding Shell and BP, and their allies. This is exactly the same as the result of the "balanced" strategy envisioned by the United Kingdom.Thatcher was just a grocer's daughter, and the supporters who brought her to power wanted her to be cannon fodder for their larger geopolitical strategy. Thatcher's policies earned her the nickname "Iron Lady".But at the same time, the number of unemployed in the UK has doubled, from 1.5 million when she entered Downing Street to 3 million 18 months later.In Thatcher's view, trade unions were an obstacle to the success of the monetarist "revolution" whose main enemy was inflation.BP and Royal Dutch Shell priced their North Sea oil at $36 a barrel, a sky-high price at the time, but there was not a word to criticize these big oil companies and the London banks in Britain.In this case, North Sea oil has brought them enormous capital wealth.Thatcher's policies continued to advance. She abolished foreign exchange controls. Instead of investing in rebuilding Britain's decaying industrial base, capital flowed to Hong Kong real estate for speculation or to Latin America for more profitable loans.

The monetarist policies of Thatcher and Volcker are spreading like a virus, starting from Britain, gradually turning to the United States, and spreading from Britain and the United States to the whole world.The main content of this policy is to cut government spending, lower taxes, deregulate industries, and weaken the power of labor organizations.Interest rates around the world have risen to levels previously considered impossible. In the US, Volcker's financial shock therapy brought US interest rates up to British levels in the early 1980s, and even surpassed them in the next few months, reaching an astonishing 20 percent.The tightening implications of interest rate policy in economics are obvious to all. An interest rate of 20%, even 17%, means that any normal investment with a period of more than four or five years can never be profitable.Interest charges on construction projects would deter such investments.

In the United States, anti-nuclear activities at Three Mile Island have delayed the completion of nuclear plants already under construction by several years.Since then, the nuclear regulatory environment in the United States has changed again.Under the Volcker rate system, the United States prohibited electric power companies from investing in nuclear power plants. After 1979, no new nuclear reactors were built in the United States, and nuclear projects under construction or planned were canceled due to excessive financial costs.A most advanced productive sector of the economy was thus forced to its death.

Walker shock was imposed on a desperate and ignorant President Carter.Carter voluntarily signed an extraordinary piece of law, the Depository Institutions Deregulation and Currency Control Act of 1980, in March 1980.The law authorized Volcker's Federal Reserve Board to impose reserve requirements on banks, even if the bank was not a member of the Fed.The Act ensured that Walker's credit suppression worked.In addition, the new law removes the maximum interest rate limits that banks may impose on customers and removes all interest rate limits set by state laws (so-called anti-usury laws), following a Federal Reserve Board regulation known as "Regulation Q." There are also restrictions on loan interest rates. Under the teachings of the new Anglo-American monetarism, there was no limit to interest rates; money was supreme and the whole world was its faithful servant, at least to the usurious borrowers of London and New York banks. In the early 1980s, government-financed infrastructure and capital investments such as railways, highways, bridges, water and electricity were wiped out by Thatcher Walker's policy offensive.From the first oil crisis in 1975 to 1985, according to calculations by the International Iron and Steel Institute (IISI), total government spending in major industrialized countries devoted to public infrastructure fell by half compared to the level of the mid-1970s .World steel production, shipping ton-miles, and real physical economic flows reflect the disastrous consequences of Anglo-American monetary policy.The world steel industry is in the worst depression since the 1930s. Paul Walker's financial shock therapy and the ensuing U.S. recession were the main reasons for Jimmy Carter's November 1980 election defeat.The new Republican "conservative" president, ex-Hollywood actor Ronald Reagan, fully supported Walker's shock therapy.When Reagan was governor of California, he had been educated by the master of monetarism, the economist Milton Friedman of the Mount Pilgrim Society.Britain's Margaret Thatcher carefully cultivated what she called a "special relationship" with Reagan.She "encouraged" Reagan to support Walker's shock therapy and the administration's austerity policies, as well as its anti-union policy leanings.During this period, Reagan and Thatcher shared a group of economic advisers, largely drawn from the dogmatic Mount Pilgrim Institute, founded by Friedman in 1947, to ensure policy coherence between Britain and the United States. , including Carl Bruner, Milton Friedman, Alan Walter. Shortly after entering the White House in 1981, one of Reagan's first actions was to disband the Professional Air Traffic Controllers Union (PATCD).The move sent a strong signal to other unions not to demand relief from soaring interest rates.Reagan, like his British partner Thatcher, was keen on "tamping down" inflation.Some sources in the City of London even suggested that the main reason for the existence of the Thatcher government was, first of all, to influence the monetary policy of the world's largest industrial country - the United States, and to divert the economic policy of the entire industrialized world away from the long-term development of nuclear energy and industry. direction. It worked, if in fact it was a premeditated plan.Six months after Thatcher became prime minister, Ronald Reagan was elected president of the United States.According to reports, President Reagan always liked to use every opportunity to repeat his mantra to his cabinet members, "Inflation is like an electric wave. Once it is turned on, it will spread and continue to grow."Reagan continued to have Milton Friedman as an informal economic policy adviser.The Reagan administration was full of followers of Friedman's monetarism, just as the Carter administration was full of members of David Rockefeller's Trilateral Commission. This outright monetarist conception, first proposed by Thatcher's British government in the early 1980s, followed by the US Federal Reserve Board and the Reagan administration, is an economic deception of the most brutal kind.Its purpose is quite different from that advocated by the advocates of supply-side economics. In order to break into the Chilean economy under the military dictatorship of Pinochet, Friedman used the same tactics that the powerful establishments in London and New York decided to use. The long-term investment world economy takes a fatal second blow.As a result, the power of the Anglo-American financial magnates became even more dominant.For a world that had not yet been shocked and disoriented by the crisis of the 1970s, it was unimaginable what would happen in the 1980s.