[Translated from broadcast by Gegenstandpunkt-Verlag / Kein Kommentar! January 10 2001]
Once again there is fear of crisis. The financial markets are “nervous” because they hear the bell ring a “weakening of the American economy,” more and more companies announce so-called “profit warnings,” even an “open recession” is possible. Once again the machinery for increasing capitalistic wealth is plagued by the absurd concern that there is too much of its wealth: more and more companies can not fulfill the coercive capitalistic law of investing their capital with the prospect of increasing profits – they do not utilize it, they have too much of it, they have produced too many commodities that they cannot get rid of in the overcrowded and increasingly competitive markets; although certainly they would make nice use values, if no one can pay for them, they are only dirt; on the stock markets and money markets money and credit roam around for which it is ever more difficult or risky to find investment opportunities – there is an overabundance of money too. And because this is all just too much, the other capitalist coercive law steps forth ever more threateningly: then all this stuff is worth nothing and must be junked.
As anxious as entrepreneurs, stock traders, and ultimately politicians are, they have of course no time and no immediate interest in asking where this absurdity comes from and why their wealth, apparently according to laws of nature, moves again and again into this squeeze after every upswing. As men of praxis they cannot twiddle their thumbs. Their task is to “get a grip” on the crisis before it erupts as such and has to be called an “official recession.” How can you do that? America shows the way. The supreme money authority of the world, the American Federal Reserve, takes responsibility and lowers its key interest rate by 0.5 percent. The economics editor of the Süddeutsche Zeitung is in agreement:
"The central bank certainly cannot and will not prevent the downturn in the economy; but it will do its utmost so that the slowdown does not become an official recession because of a tight money supply. How effective the tools of monetary policy are in the current situation, no one can say exactly, but ... “ (SZ, Jan. 4 2001)
An interest-rate reduction is in every respect a curious “tool of monetary policy.” First, it is an “tool,” but in contrast to a hammer or stethoscope no one can exactly say whether and how it works “in the current situation.” Secondly, this “tool” is supposed to prevent a “tight money supply” – where nevertheless the utilization of the existing capital is the problem. Thirdly, this “tool” exhibits an effectiveness that is puzzling:
“The American central bank has again justified its reputation for always doing the right thing at the right time ... Because the step took the financial markets completely by surprise, its effect was decisive: the stock markets turned into a plus ... the floor of Wall Street turned into euphoria ... the central bank has after all managed to the transform the gloomy mood in the financial markets with one blow.”
“To do the right thing at the right moment” is therefore to shift the financial markets to “euphoria.” A rate cut, and the gentlemen on the stock market feel better – why, and why is this important? And then one has to still find out that not the lowering of interest rates had such an effect, but the timing of their announcement: The lords over the trillions may indeed have expected a rate cut, but they took them “completely by surprise” and were therefore “decisive.” The “euphoria” arises because the central bank has played a prank on them!? An economic editor will spout such nonsense. In truth the stock brokers have already understood how the surprise coup is meant: With the premature and – by normal standards – high interest rate cut, the central banks announces that it wants to avoid a “tight money supply,” sending – as it is called in these circles – a “positive signal.” The content of it is: if troubled times come upon the financial world, the central bank will use its “tools” with all its power to preserve their money and credit from a decline in value. This provides a start for the “euphoria.”
In the next moment, however, exactly this reassuringly meant “signal” gives rise to concern, and the Süddeutsche reports the next day and in the same place of “setbacks” and “falling prices.” And this is also completely logically so. As the central bank of the world’s stock market promises assistance, it underlines how important this body is for the functioning of the whole capitalistic shop. It says, however, that the body is in danger – with possibly bad consequences for this same capitalistic shop. This interpretation, which is inferred from the exact same lowering of interest rates, has the less “euphoric” among the brokers beginning to wonder whether or not soon outstanding debts must be repaid at last, whether the surprise coup of the central bank is not more of a “panic reaction,” whether the lowering of interest rates does not fight a dangerous situation, but on the contrary lays it bare and aggravates it.
The speculators are free to construe one and the same set of facts completely oppositely, in their language: to attach quite different “expectations” to it. The more optimistic trust the interest rate cut will have all kinds of positive effects; the pessimistic interpret it as an expression of an already dangerous situation. Neither faction commands any knowledge, but they are world champions in the stupid activity of assessment, which they inflate into an ability to feel out future developments, which is given to only a few. What they assess according to their information and what they are proud of is the “risks of uncertainty” – to “speculate” signifies exactly that. At the same time, however, they also want to collect a lot of clues and hints as to how “safe” their appraisals are – nobody knows, but they all know the market well, and in the end for all intents and purposes a well-founded shot in the blue should hit it. When the central bank wants to influence the speculators, the speculators ask themselves how it is meant, then whether it influences them. Then they ask the central bank, whether it now believes that it has had an influence, what it will likely do next, whether it will then confirm them – the speculators – in their optimism or in their pessimism, etc. An absurd, but also amusing, dialogue continues between the central bank and the speculators about how it is to be taken, as in, for example, the following quote:
“The upswing in stocks should be sustainable if the impression is solidified that the rescue operation of the American central bank does not come too late, that a recession can be avoided.” (FAZ, Feb 2 2001)
A classic circle: The central bank would like to do something against the “gloomy mood” at the stock market to avoid the “recession” – it succeeds if the stock market is of the opinion that is successful. The “tools of monetary policy” are therefore only effective if they are perceived to be effective; they prevent the great crash when the speculators believe that they have prevented it – if they do not believe it, it occurs. In this very reasonable way, the central bank speculates on the speculators and the speculators speculate on the central bank.
If then after every fierce application of all the “tools of monetary policy,” the “economic cooling” becomes a frost, of course the search for the culprits is on. The American central bank already has good prospects in the first place: probably their rate cut came too early or too late and was too high or too low, which can then be arbitrarily combined. If they are reasonable they will blame this upon themselves in silence and correct the ineradicable child’s belief: that crisis is only attributable to error and is only a matter of proper management.