On January 14, 2024, 400,000 pro-Palestinian anti-genocide demonstrators marched in Washington, D.C., to the White House (occupied by the Democrat President “Genocide Joseph Biden”). Tens of thousands more marched in support of Gaza in San Francisco, California, the following day.
The stakes could not be higher. Those of us living in the United States have a special responsibility to do all we can to force the government to halt its support to Israel. Though it is the Israeli government carrying out the genocide on the ground, it could not commit these nightmarish crimes without the financial, political, military, and moral support provided by the government headed by Genocide Joe.
The genocide — there is no other word for it — has continued without let-up in Gaza. Israel aims to kill people directly or through hunger and disease, then drive out the rest of the population as far away as possible from Palestine. The January 3 edition of the Middle East Monitor reports, “According to the Times of Israel, Prime Minister Benjamin Netanyahu’s coalition is discreetly exploring the acceptance of thousands of migrants from Gaza, with the Democratic Republic of Congo being one of the countries under consideration. ‘Congo will be willing to take in migrants,’ said a senior source in the security cabinet, ‘and we’re in talks with others.’”
Israel’s plan has the advantage over simply driving the Gazans into the Sinai desert, where they would remain close to their Palestinian homeland. With deadly irony, the plan closely resembles a solution to the Jewish question the Hitler government considered just before it decided to launch the “final solution”: To ship European Jews to the island of Madagascar, located off the east coast of Africa.
Only when the plan proved impractical — the British Navy dominated the seas — did Hitler decide on the physical extermination of all European Jews we now call the Holocaust. The media has, as far as I know, failed to notice the similarities between Hitler’s proposed “Madagascar solution” to Europe’s “Jewish problem” and Israel’s proposed solution to its “Palestinian” problem. U.S. imperialism’s solution to the Jewish problem – which was no solution at all – birthed the Zionist entity — the State of Israel — laying the foundation of today’s genocide. (1)
If Israel succeeds in driving Palestinians out of Gaza, its next move will be to drive them out of the West Bank. Will West Bank Palestinians be sent not just over the river to Jordan but deported to Africa or beyond? The deadly genocidal logic of Zionism and its U.S. imperialist masters points in this direction. Fortunately, Palestinians in both Gaza and the West Bank are fighting back, inflicting heavy casualties on Israel’s ground forces in Gaza. The easy victory of the Six-Day War ending in victory for Israel and its U.S. masters is long gone.
Whatever the attitudes of Arab governments, the peoples of West Asia and North Africa, as they pass through their centuries of humiliation, are realizing that the only way to end it is to fight back, arms in hand. Considering the nature of their enemy — imperialism — there is no other way. And this growing realization is the biggest problem that Washington and Tel Aviv face.
The U.S. military war against Yemen begins
Last month, I noted that Yemen’s attacks against ships supplying Israel’s genocide against Gaza are a threat to what is of prime importance for the capitalists: the profit rate. Profit is measured over a certain period of time. Capitalists want to know how much they obtain on a given quantity of capital measured in money terms — the use value of the commodity that serves as money — over a year.
The profit rate calculated in this manner is determined by the rate of surplus value, the relationship between variable capital (labor power is the only commodity that produces value) and other commodities that make up real capital, Marx’s constant capital, and the turnover rate of variable capital. This variable capital turnover rate is determined by the sales rate — how long commodities remain on the shelf before they are sold and the length of the production period, including how long it takes to move commodities from their place(s) of production to the final consumer. The faster commodities can be moved, the shorter the variable capital turnover period and the higher the annual profit rate.
Yemeni moves in support of Palestinians force ships carrying commodities from the point of production to the point of consumption to bypass the Suez Canal and the Red Sea. Instead, ships must make the longer trip around the Cape of Good Hope at the southern end of Africa. Increasing the shipping period increases the turnover period, lowering the profit rate. To counter this, Genocide Joe’s administration has launched Operation Prosperity Guardian, a military war against Yemen, designed to guard the annual profit rate on capital advanced.
So far, Operation Prosperity Guardian is an air and somewhat a naval war. If this tactic proves insufficient, will U.S. and NATO ground troops follow? Will this degenerate into yet another costly quagmire, a forever war like Afghanistan, Iraq, and, before that, Vietnam? Will body bags from Yemen soon be flowing back to U.S. shores?
The return of Donald Trump
The New Hampshire election primary was held on January 23 this year. It is usually of little interest because the only question at stake is what two servants of capital will run for president on the Democratic and Republican tickets. It is indeed important to the presidential candidates but minor to anybody else. This year, it took on more importance.
The primary held fifty-six years ago was also one of the times the New Hampshire primary took on unusual importance. Back then, “pro-peace” Senator Eugene McCarthy ran against incumbent Democrat President Lyndon B. Johnson. Much to the surprise of the observers of the time, McCarthy almost defeated the incumbent. A few weeks later, LBJ announced he would not run for reelection.
It was the forever war against the people of Vietnam and Indochina that destroyed LBJ’s chances for a second term. The Vietnam War was preceded by a communications revolution centered on television, a technology pioneered in Nazi Germany but not widely deployed until after World War II.
Unlike past times, in the 1960s, people who were safe on the home front could see images of war, not just hear radio’s verbal propaganda. To many of that generation, it was not just the body bags and the danger facing young men of being drafted and sent to fight in Vietnam, but the feeling that this war was plain wrong. (2)
It was clear that Vietnam and other Southeast Asian nations were no threat to the United States and its people. Yet the military was killing them in huge numbers. The military reports issued featured not claims of territory captured as in earlier wars but of grotesque body counts.
A revolution in technology and communications also preceded the Gaza genocide. Today, people carry two-way TV sets called smartphones — actually powerful computers — in their pockets. Smartphones would have been considered way-out science fiction to people alive in 1968 but are taken for granted today. This is an example of the advance of productive forces.
Social media has made it possible for pocket-size smartphones, along with laptop computers, to break the monopoly corporations previously had on information. Even if the corporate media networks suppress information from Gaza, the truth is coming out on social media. The days are gone when we have to depend on corporate news anchors and morning and evening editions of corporate-owned and controlled local newspapers for our news, and many young people ignore corporate outlets altogether.
They are aware of the genocide occurring in Gaza and know that it’s wrong, very wrong. This why so many are in the streets in the hundreds of thousands — millions worldwide — doing everything to stop the unspeakable crime unfolding in our name.
A similarity between 1968 and 2024 is the presence of an increasingly hated Democratic incumbent president running for reelection. In 1968, it was Lyndon B. Johnson. Today, it is Joseph R. Biden. Unlike 1968, however, no Eugene McCarthy-like (or later Robert Kennedy, Sr.-like) candidate has emerged within the Democratic Party to oppose Biden. (3)
Due to internal Democratic Party squabbles, Genocide Joe wasn’t even listed in the New Hampshire primary, though he won by default as a write-in candidate. Senator Bernie Sanders, who created some excitement as a “socialist” alternative to Hillary Clinton in 2016 and “Corporate Joe Biden” in 2020, has failed to even call for a ceasefire in Gaza. Now well into his 80s, Sanders is considered too old to run for president even by 2024 standards and supports Biden for reelection.
But this year, it was the Republican primary that was interesting. In the weeks leading up to it, all the major Party of Order candidates (except former South Carolina Governor Nikki Haley) dropped out. The Party of Order earlier rallied behind the arch-reactionary and pro-business Governor Ron DeSantis. DeSantis tried to run to the right of Trump, including, for example, against the right to abortion, which turned out to be very unpopular even among most rank-and-file Republicans. Despite his attempts to present himself as an opponent of The Corporations, he could not hide that he was, in fact, Wall Street’s candidate.
DeSantis finally withdrew following his thrashing by Trump in the January 15 Iowa Caucuses. He then endorsed Trump — indicating he thinks Trump will win the nomination.
Earlier, when the Wall Street power brokers were looking for an alternative to Trump, Republicans considered Nikki Haley. Haley is an Indian (India, the country, not a Native American) American. Darker skinned than most American “whites,” she is presented as a “woman of color.” If she somehow becomes president, she would be the first woman to serve as president and the first woman of color as well.
The thinking was that she could be the face of a new GOP that might appeal to Latinos and even some African Americans who are disillusioned with the Democrats. At the same time, Haley is thoroughly pro-war and a pillar of the Party of Order. She is essentially a Republican version of Hillary Clinton. In a Biden-Haley race, Wall Street would not have to stay up for returns election night since Wall Street and its servants, the Pentagon — the war makers, as well as their junior war makers in Tel Aviv and Kiev would win in either case.
In the end, the Party of Order decided to back DeSantis — a major miscalculation. After an initial surge, he dropped steadily in the polls. In the end, the Party of Order is left with Haley. There was some hope she might come close or even upset Trump in the New Hampshire primary. The state has lots of traditional Republicans as opposed to the MAGA-Trumper type. Independent voters who do not declare an alliance with either party can vote in New Hampshire. They were expected to, and did, vote for Haley in large numbers.
It wasn’t enough: Trump defeated Haley by eleven points. She insists that, for now, she’s staying in the race but is given little chance. Most of the coming primaries are in more Trump-friendly states — including her own Trump-friendly South Carolina — than New Hampshire.
Can Trump be stopped in the courts?
Even before the events of October 7 and the genocidal Israeli reaction, Biden’s hopes of reelection looked slim. Polls showed all Republican candidates, including Trump, would defeat Biden in the popular and the electoral vote. If the polls are to be believed, all major Republican candidates would defeat Biden by wider margins than Trump. Plenty of voters are looking for an alternative to Biden but despise Trump. Some would be willing to give any other prominent Republican a chance. But in the wake of the Iowa and New Hampshire primaries, the chance of Haley defeating Trump in the remaining primaries looks slim.
There’s still a possibility Trump can be blocked in the courts. There are 91 felony indictments against him, some at the federal level and some in the states of Georgia and New York. Back in 2000, when George W. Bush was running for president against Albert Gore, his youthful DUI — drunk driving — conviction was considered to be a problem to be overcome. The 91 felony charges against Trump seem powerless to slow his electoral momentum. No U.S. law says that a person charged with or even convicted of a felony at the state or federal level cannot serve as president. But never before in U.S. history has someone accused of, let alone convicted of, a felony ever come close to being elected president.
There are certainly obstacles to convicting Trump. These obstacles underscore the class nature of the legal system under capitalism.
When it comes to ordinary crimes that working-class people are likely to be charged with, such as DUI and shoplifting, conviction rates (if they’re even brought to trial) run to over 90%. In reality, cases against working people seldom go to trial — they usually end in plea bargains. Defendants are advised by overworked, often inexperienced, public defenders to make a plea bargain regardless of guilt or innocence. To insist on their constitutional right to be tried by a jury of their peers often leads to conviction and stiffer sentences.
Rich defendants charged with serious crimes, like Donald Trump, are well served by the legal system. They get to hire the best defense lawyers. In Trump’s case, jury selection will be a problem. Under the law in a criminal case, all twelve jurors must vote to convict. If even one juror refuses to convict, the jury “hangs.” The government then has the choice to drop the case or try it again.
While in theory, the charges against Trump are a collection of purely criminal cases, in reality, his cases are widely seen as political. Instead of bringing charges against him right after he attempted to stay in office illegally by staging a putsch that included the seizure of the Capitol building by a violent mob that dispelled Congress for several hours as it was attempting to certify Biden’s victory, the state and federal justice systems waited more two years to move against Trump. Because the population is divided, it’ll be hard to find a truly neutral jury, and should he come to trial, any jury is likely to “hang.”
In the so-called documents case where Trump is charged with illegally retaining possession of top secret documents after he left office, the case was assigned to pro-Trump Republican judge Aileen Cannon. She was nominated for her judgeship by none other than Donald J. Trump. Imagine you are charged with shoplifting a pair of shoes at Walmart, and the judge assigned in your case is not only your friend but was appointed to the bench by yourself.
If Trump is convicted, there will be an immediate appeal. While the appeal route for working-class defendants rarely bears fruit, convictions of the rich and powerful are usually thrown out, often on a technicality. The odds of a conviction surviving the appeals process seem long, and the process would last well past the November election. Should he be elected, any case against him will suspended during his term in office. Though it is a debatable legal point, he could also try pardoning himself. It’s also likely a Trump Justice Department would drop any charges.
There’s another possible legal road to block him. A loosely worded clause in the 14th Amendment bans from office anyone who “having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution” who then participates in an insurrection against the U.S. government.
The Supreme Court would hear the case. The dangers of going this route from the viewpoint of the Party of Order are apparent. It could lead to Biden running in many states unopposed. Even though he is unpopular, he’d win in that case, but he’d have no democratic authority in the eyes of the people of the U.S. or the world. It seems likely the Supreme Court would order that Trump cannot be taken off the ballot. But stay tuned for that in the coming months.
Genocide Joe’s hopes for reelection
Trump’s rapid march to the Republican nomination is good news for Biden since any other Republican would almost certainly defeat him. Democrats claim that nothing less than U.S. democracy is at stake. If Trump wins, Democrats claim he will rule as a dictator.
Because of Trump’s extreme racism and Islamophobia, African Americans, Latinos, Latinas, and Arab Americans, as well as all Muslims, would turn out in great numbers against Trump. Biden hopes the Republican-dominated Supreme Court’s decision to throw out abortion as a constitutional right will cause many women to vote for him.
Before October 7, Biden had few positive achievements. He made little attempt to get Congress to pass a proposed federal law guaranteeing the right to abortion. The fact that the Supreme Court claimed the Constitution doesn’t guarantee abortion rights does not mean a federal law cannot be passed to guarantee it.
Nor did the Democratic president push for passage of a law to guarantee the right to vote, making illegal many Republican voter-suppression tactics. Though Biden claimed to support these laws, he never applied any pressure even when the Democrats had majorities in both houses of Congress during his first two years in office. Nor did he press Congress to restore basic labor rights taken away by the 1947 Taft-Hartley Act. All this means that even pro-Biden voters have no enthusiasm for him — he is just a lesser evil to them. In contrast, many Trump supporters have a cult-like attachment to him.
October 7 changed the prevailing lesser-evil Biden support among Muslim and Arab voters, reflecting intense hatred of Trump turned into hatred for Genocide Joe. Since the Palestinian cause is winning support among younger Americans, the African-American community, and many working-class Latinos, many say they won’t vote for Biden. Polls taken after October 7 show Trump leading among Arabs, Muslims, Latinos, and youth. Though he still leads among African Americans, his support is eroding even here. Biden cannot afford to lose these votes to avoid a landslide against him.
Biden and the Democrats hope that when they’re faced with the probability that Trump will be returning to the White House, many voters, no matter how reluctantly, will cast their vote for Genocide Joe as a lesser evil. Democrats are running a fear campaign, claiming that if Trump wins, U.S. democracy will morph into a 21st-century version of the Third Reich, and there will never be another U.S. election.
Then there’s the economy. Democrats crow about the amazing, strong economy that resisted recession last year while the rate of price increases dropped toward the Federal Reserve System’s 2% target rate. The mass media is flooded with stories on how the Fed will lower interest rates perhaps as early as March, cementing the soft landing.
Much is made of now tiny declines in the estimated rate of inflation reported by the Labor Department. Ignored is the fact that the dollar price of gold stubbornly remains above $2,000 an ounce over the first weeks of 2024, something that has never happened before. Whenever market interest rates fall, the gold price spikes upward, but whenever they rise, the dollar gold price falls back toward $2,000.
This implies that if the Federal Reserve System attempts to lower interest rates before a recession arrives — meaning that commodity overproduction relative to gold (the money commodity) production is being liquidated — the dollar price of gold spikes upward. If the dollar price of gold rises substantially above, the rate of dollar inflation will increase again, and the dollar-centered international monetary system will be thrown into crisis. (4)
If recession arrives in the next few months, the Federal Reserve System will no doubt lower the federal funds rate later this year. If this happens, Biden will face the consequences of running for reelection while unemployment soars. Few presidents are reelected under these conditions, especially a president as unpopular as Genocide Joe Biden.
This adds one more wildcard to the economic and political situation in what’s shaping up to be a critical year. While some capitalists have always supported Trump and others feel they can live with him, the Party of Order wants to keep him out of the White House. If legal attempts come up short, the only hope of keeping him out will be for Genocide Joe to be reelected. Biden’s reelection chances, already slim, become none if the economy falls into deep recession before November.
The Federal Reserve System will be under more pressure than usual to lower the federal funds rate perhaps as early as March. This would increase the chances the economy will avoid recession through November. Due to his age, if Trump is defeated, he’ll no longer be a problem in future years. Even if the dollar price of gold soars (or, more accurately, the dollar plunges against gold), it’s unlikely to be reflected in consumer prices until months after the election. However, major long-term economic damage would be done by postponing the liquidation of the overproduction and credit-fueled over-trading. Will the Fed leadership overcome their banker’s instincts and cut the federal funds rate prematurely as part of a last-ditch attempt to reelect Biden? We’ll soon find out.
To get some idea of what could happen if the Fed cuts prematurely, we’ll examine what happened in the wake of the Vietnamese Tet Offensive in early 1968. The world has changed in many ways since then, but one thing hasn’t: The basic laws governing the capitalist economy.
The year 1968
Last month, I noted: “On the evening of March 14, [1968] the U.S. government requested that the London gold market be closed the following day. The gold pool was dead, and the world had changed.”
How had it changed? To review, the previous weeks had seen a run on what was called the London Gold Pool. The Gold Pool was a U.S. initiative set up to stabilize the dollar price of gold on the open market. The dollar price of gold measures the number of ounces of gold a dollar represents. As of January 2024, gold’s open market dollar price is somewhere north of $2000. Just before the gold pool collapsed on March 14, 1968, the dollar price of gold was $35. Then, a dollar represented 1/35 of an ounce of real money; today, it represents about 1/2000 of an ounce of gold. Today’s dollar represents only a tiny fraction of the amount of real money — gold — than it did in 1968, and this is why the cost of living measured in dollars is so much higher today.
The Gold Pool was created to avoid the massive dollar depreciation that has occurred in the decades since its collapse. Set up in 1961, the Pool worked with an initial sum of 240 tons of gold paid in by the U.S. and satellite European imperialist powers. It would sell gold if the free market price rose above $35 to lower the free market dollar gold price back to $35. It would purchase gold if the price dropped below $35, increasing its gold reserves until the price returned to $35. The run on the London Gold Pool in March 1968 resembled a classic bank run.
When a bank run develops — like the one in 2023, beginning with Silicon Valley Bank — the Federal Reserve System wastes no time signaling it’s prepared to prop up the commercial banking system by producing additional dollars the commercial banks and the Federal Deposit Insurance Corp. so they can continue to meet their legal liabilities that are payable in legal tender U.S. dollars.
There’s one critical difference between the 1968 run on the Gold Pool and a run on a commercial bank. Paper dollars can be run off the printing press — but gold cannot be. Gold must be mined from the earth’s crust and refined, requiring the expenditure of human labor. This includes the labor needed to produce the mining machinery, as well as the plant and equipment necessary to refine it, and the labor needed to search for new gold-bearing lands. Included is the labor necessary to produce the machinery to search for gold-bearing lands that today includes planes and earth satellites. It also includes the labor needed to produce the rockets and fuel needed to put the satellites into orbit, and so on.
At any moment, an ounce of gold represents a defined quantity of abstract human labor. In contrast, a paper (or bookkeeping) dollar represents human labor only insomuch as it can be exchanged for a definite quantity of gold. It’s only because gold is a commodity that it can function as the measure of the value of other commodities in terms of its use value. Neither paper (or bookkeeping) dollars represent human labor except insofar as they are exchangeable for the money commodity, gold. (5)
No currency represents value simply because the state declares it does, as governments, beginning with the invention of coined money about 2,500 years ago, have repeatedly found to their sorrow.
Once a sufficient number of money capitalists — who under the capitalist system are obliged by the laws governing the system to look out for their interests and not those of the system as a whole — became convinced that the collapse of the Gold Pool loomed, they were obliged to act in the way that brought about the very thing they feared. They bought large amounts of gold on the open market at $35 an ounce, forcing the Pool to sell an equal amount on the open market to keep the dollar price of gold from rising.
Since the Pool had a finite amount of gold when demand soared in March 1968, it was only a matter of weeks before all the gold was gone. President Johnson and the lesser warlords around him, plus his team of “brilliant” economists, were powerless to save the Gold Pool. But what economic and political forces were at play to make this happen?
At the simplest level, there just wasn’t enough gold in the world to support the gold value of the U.S. paper dollar at a dollar gold price of $35 an ounce at the rate the Federal Reserve System was creating new dollars. Things finally reached the point where the Fed would have to reduce the number of dollars in circulation, or the dollar would start representing less gold (and through the mediation of gold, less abstract human labor).
Why did the Federal Reserve System feel obliged to create dollars faster than the amount of physical gold created by human labor? The Fed realized they were creating dollars at a rate bound to destroy the dollar gold exchange standard that had dominated since the end of World War I, dominating the international monetary system. But political circumstances of the time prevented them from taking the steps that would have saved the dollar-gold exchange standard.
Concretely, the Fed felt obliged to keep creating dollars as it was forced to provide the additional dollars needed to circulate the rising quantity of commodities circulating in the world capitalist economy and finance the Cold War military and other government expenditures, but also the rising expenditures needed to finance the escalating Vietnam war.
If the quantity of dollars in circulation contracted, competition for the remaining dollars would have broken out between the Treasury and other borrowers. This would have saved the dollar gold-exchange standard — at the price of driving interest rates higher, leading to a financial crisis followed by deep recession and massive unemployment. The Johnson administration, its Republican rivals, and most mainstream economists were determined to avoid this outcome.
The only way to avoid, if only for a while, a deflationary recession exceeding anything that had occurred in the post-World War II era or face the end of the dollar-gold exchange standard with all its inflationary consequences was to abandon LBJ’s “Guns and Butter” policy. Guns included the war against the peoples of Vietnam and Indochina. Taxes would have to be raised and/or the growth in federal government spending would have to be reduced. The war against Vietnam had to be fought on a budget.
On March 31, 1968, the president addressed the nation. LBJ announced he was opening peace talks with the Vietnamese leadership, ordering a pause in the bombing of North Vietnam (the pause was short-lived), halting any further increase in the number of ground troops in Vietnam — though no withdrawals were announced — and that he was withdrawing from the 1968 presidential race.
What had changed between February 24, when the yellow flag of the Saigon puppet government was again hoisted over Hue, and LBJ’s speech on March 31st? In February, the London Gold Pool was under pressure but was intact. On March 31, it was gone! The historians I’ve read treat these two events as unrelated. They ignore the collapse of the Gold Pool. They’re taught by economists, including academic Marxists, that modern money is non-commodity money and gold doesn’t matter in these enlightened times. In reality, the two events are linked. Without the heroic resistance of the Vietnamese people and the massive anti-war actions in the United States and other imperialist countries, U.S. imperialism would never have been defeated in Vietnam.
Against the background of the historic resistance of the Vietnamese people capped by the heroic Tet Offensive, combined with the antiwar movement in the imperialist countries, the Gold Pool collapse dealt a blow to the U.S. war effort. It proved to be fatal in the end. As of March 31, though the beast of the U.S. war effort was wounded, it was far from dead. Many years of fighting lay ahead, and many more people were to die in the criminal war (mostly Vietnamese and other Indochinese), as well as tens of thousands of U.S. soldiers. Others were badly wounded, and there was such damage done to the environment that even today, the Vietnamese and other Indochinese nations are trying to overcome it. The bombing pause over North Vietnam that Johnson announced in his speech was transitory. And the biggest anti-war demonstrations were yet to come.
The immediate results of the Tet Offensive
Let’s examine the account of the results of the Tet Offensive our class enemy today is teaching to the generations — now the great majority — who were not alive in the days of the Vietnam War. I take this account from a website called “History”:
“As 1968 began — the third year of U.S. ground-troop fighting in Vietnam — U.S. military leadership was still confident that a favorable peace agreement would soon be forced on the North Vietnamese and their allies in South Vietnam, the Viet Cong.
“In many respects, the Tet Offensive was a military disaster for the communists: They suffered 10 times more casualties than their enemy and failed to control any of the areas captured in the opening days of the offensive.”
Right after it ended, the commander of U.S. forces in Vietnam, General William Westmoreland (1914-2005), claimed he had won a decisive victory and that if only LBJ sent another 200,000 U.S. troops, he would soon finish the job. LBJ granted the request.
The History article continues:
“However, because the Tet Offensive crushed U.S. hopes for an imminent end to the conflict, it dealt a fatal blow to the U.S. military mission in Vietnam.”
A few weeks later, the London Gold Pool was gone, and LBJ was reduced to a lame duck; his long political career, like the Gold Pool, was in ruins. Westmoreland’s request for another 200,000 U.S. soldiers to finish the job had to be turned down after all.
The deeper reasons behind the 1968 London Gold Pool collapse
The financial strains of the war (including the Fed’s need to create additional dollars to finance government borrowing without a rise in interest rates on the money market) played a role. Another factor was the prospect of additional dollars flowing abroad, some of which would be spent on purchasing foreign currencies and gold. Yet the dollar-gold exchange standard had survived the greater financial strains of World War II, later the Korean War, and the Cold War without too much strain. The Tet Offensive, followed by the request for more troops, was the immediate cause of the Gold Pool collapse. It would have lasted longer without these events, though it would have been doomed all the same. Why was it doomed?
Let’s see what Wikipedia — by no stretch of the imagination a Marxist source — says:
“As the economic post-war upswing proceeded, international trade and foreign exchange reserves rose, while the gold supply increased only marginally. In the recessions of the 1950s, the U.S. had to convert vast amounts of gold, and the Bretton Woods system suffered increasing breakdowns due to U.S. payment imbalances.”
Translated into plain language, as production and circulation of non-money commodities increased after World War II and commodity prices increased, gold production came nowhere near to growing as fast as the sum of all prices of all the commodities in circulation on the world market. The dollar-gold exchange standard — called the Bretton Woods System — lasted as long as it did only because of the huge amount of gold that had accumulated in the Depression years when the production and circulation of commodities stagnated. Their prices fell while the production of new gold was accelerating.
After World War II, Keynesian economists — and Marxists who believed that non-commodity money is possible under capitalism — claimed that a problem that had haunted capitalism from the early 19th century on and almost destroyed it in the 1930s was now solved. That problem was that the periodic crisis of the relative general overproduction of commodities would send the world capitalist economy into depression, resulting in mass unemployment. According to the economists, the solution was for the government to create whatever amount of money was necessary to circulate the growing amount of commodities produced.
The gold supply’s failure to keep up with the increasing production and circulation of commodities — the opposite of what happened in the Depression years — is the definition of the relative general overproduction of commodities. Drunk with what they saw as the success of the Keynesian revolution, U.S. imperialist policymakers thought they had permanently banished the problem of overproduction.
But in March 1968, they began to find out that the problem of overproduction — or as Wikipedia puts it, “the economic post-war upswing proceeded, international trade and foreign exchange reserves rose, while the gold supply increased only marginally” — had returned. And it was this that provided the break the Vietnamese and other besieged peoples of Indochina so desperately needed.
The imperialist response
In March 1968, as the Gold Pool collapsed, it was announced that a two-tier price system for the dollar price of gold had been established. Government and central banks would continue to trade gold at the official $35 an ounce — there was no official devaluation of the U.S. dollar. The first tier — the centerpiece of the gold exchange standard, the $35/ounce price — was still intact. Like before the Gold Pool, traders could buy and sell gold at any dollar price. Otherwise, there would be no change in the international monetary system, and everything would go on as before, or so it was claimed. But in reality, this was far from the truth.
The dollar-based gold exchange standard developed after World War I. In addition to gold, countries would hold dollars (or short-term U.S. Treasury securities easily convertible into dollars) to back their currencies. The dollars were convertible into gold at the Federal Reserve before the New Deal and from the New Deal on at the U.S. Treasury.
In 1944, an international conference was held in Bretton Woods, New Hampshire, to formalize the dollar gold exchange standard and buttress it with additional institutions dominated by the U.S. government. Three main institutions emerged: the World Bank (designed to provide long-term money to rebuild European capitalist countries devastated by the war), the GATT— General Agreement on Trade — (later renamed the World Trade Organization or WTO) (to police world tariff policies), and the International Monetary Fund or IMF. The World Bank acts as an international investment bank, while the IMF acts as a commercial bank that provides short-term loans for countries short of dollars to prop up their currencies.
Much as what happens to a business facing liquidity problems that turns to a commercial bank for short-term loans to meet payments that cannot be postponed, a country running low on dollar reserves can get short-term dollar loans from the IMF. But (as with a business facing a liquidity crisis), these loans are conditional. The conditions involve austerity policies such as cuts in social programs, allowing foreign businesses to buy up cheap assets within the country, removing protective tariffs, and devaluing the local currency. This is why the IMF has become hated around the world.
In addition to the GTT (now WTO), the World Bank, and the International Monetary Fund, the London Gold Pool was created in 1961. The old international gold standard that reached its peak on the eve of World War I featured the convertibility into gold at fixed rates of all currencies of all the imperialist powers. Since imperialist currencies were all convertible into gold at fixed rates, the exchange rate among currencies was also essentially fixed, fluctuating within narrow ranges called gold points. (6)
If a currency fell below the gold points, the country lost gold reserves; if it rose above the points, it gained reserves. Its domestic interest rates rose when it lost gold reserves, attracting new gold. When gold flowed into a country, its domestic interest rates fell, causing gold to flow out. When gold worldwide was in short supply relative to non-money commodities (overproduction), competitive interest rate hikes occurred as nations scrambled to hold on to their remaining gold. This process would end in a worldwide recession. The Bretton Woods system, established in 1944, aimed to prevent such competitive interest rate increases and avoid world recessions.
The Bretton Woods system aimed to return to the system of fixed exchange rates in a more flexible form. All the main currencies were convertible into dollars at fixed rates of exchange, though changes in these rates could be negotiated up or down. For example, if a country was running a deficit in its balance of payments on its current account and losing dollars, it might negotiate a devaluation of its currency against the dollar. On the other hand, if a country was running a chronic surplus in the balance of payments on the current account, it could revalue its currency in terms of the dollar.
The aim was to keep world trade more or less in balance with no country running chronic deficits or surpluses. It was hoped that the deflationary monetary policies that had periodically been necessary under the old international gold standard to defend the currency and had been associated with crises and mass unemployment would be avoided.
If a country faced a chronic balance of payment deficit, it would devalue its currency, which, according to prevailing economic theory, would solve its balance of payments deficit without having to pursue a deflationary recession-causing monetary policy. In addition, a nation facing a short-term run on its currency could apply for a short-term conditional loan from the IMF to prevent a foreign exchange crisis from leading to recession that could spread around the world, as had occurred under the old system.
The system’s centerpiece was the dollar and the promise of the United States Treasury to redeem dollars to foreign central banks and treasuries at the rate of an ounce of gold (money material) for every $35 presented to it for redemption. But there was a big flaw in the system that ultimately proved fatal. While there were elaborate rules for the devaluation and revaluations of currencies against the dollar, there were no rules for the devaluation or revaluation of the dollar against gold. It was assumed that the dollar price of gold — $35 per ounce — would last forever. However, the Keynesian revolution that dictated that government and central banks must not allow the general price level to fall made the devaluation of the U.S. dollar inevitable sooner or later.
The Bretton Woods system worked well only as long as there was plenty of gold relative to the socially necessary quantity of currency needed to circulate commodities globally. There was plenty of gold in the aftermath of the Great Depression. Before then, there was a shortage of gold relative to the socially necessary quantity of currency needed to circulate commodities globally. The shortage ended with the Great Depression — that could also be called the great under-production of commodities. During the Depression, it was gold that was overproduced relative to non-money commodities.
As we’ve seen, after World War II, the situation reversed, and non-money commodities were being overproduced relative to gold. The Bretton Woods gold exchange standard was designed to economize gold. Instead of all the main currencies being convertible into gold at a fixed exchange rate, only the dollar was convertible. The new international monetary system was an inverted pyramid, with the gold hoard at Fort Knox (the tip of the pyramid) being the bottom of the pyramid, the dollar reserves of all other countries held in their central banks being the next layer, and the reserves of the commercial banks held in various national currencies the top layer.
This system remained stable only until the overproduction of the post-World War II period had done its work, making the gold at the tip of the inverted pyramid insufficient to support the structure. When the crisis came, there were only two choices: One was for the Federal Reserve System to allow interest rates to rise, creating more gold at the system’s tip. This would save the system but at the price of a global deflationary economic crash with massive unemployment throughout the capitalist world (what the Bretton Woods system was supposed to avoid). A deflationary crisis would have rebuilt the gold reserve and eventually stabilized the system economically and financially, as happened as a result of the Great Depression, but at the price of destabilizing it politically. (7)
The other choice was to attempt to create a new international monetary system that would eliminate the role of gold and rebuild the international monetary system around “non-commodity money.” During the 1960s, a favorite occupation of economists who considered themselves to be “experts” on the international monetary system was to write books on how gold could be eliminated once and for all from the international monetary system. During the 1970s, the U.S. government and its imperialist satellites attempted to create such a system. We will examine the results of this experiment over the next few posts. The inevitable failure of this attempt was indeed crucial to the victory of Vietnam over U.S. imperialism. However, immediately after the collapse of the London Gold Pool, the U.S. government still hesitated to take this step.
Instead, U.S. policymakers attempted to walk a middle path between what they saw as the extremes of a full-blown world deflationary depression or attempt to create a new international monetary system around “non-commodity money.” As we saw above, in 1961, the three basic institutions of the Bretton Woods system, GATT-WTO, the World Bank, and the IMF, were joined by a fourth institution, the London Gold Pool. The latter’s function was to stabilize the dollar price of gold. In March 1968, it was this fourth institution that ingloriously collapsed.
The U.S. did not formally devalue the dollar when the Gold Pool ended. The official value remained as it had been since 1934 at 1/35 of an ounce of gold. The Treasury promised to continue to redeem dollars held by foreign central banks and treasuries at the official exchange rate. What changed is that the attempt to keep the free market dollar price of gold that determines the actual gold value of the dollar as far as the circulation of commodities is concerned had to be abandoned. With demand for gold strong in the wake of the pool’s collapse, gold’s market price rose to just over $40 an ounce and stayed there for the rest of 1968.
The fact that gold’s dollar market price was above $40 while the official price was $35 created a problem that the now-defunct Pool was designed to avoid. Central banks could easily make dollar profits by redeeming their dollars at the Treasury for $35 an ounce and selling their gold on the open market at a price above $40. They then used the dollars earned in this manner to repeat the operation. If central banks did this, Fort Knox would be drained of its gold as the now-defunct London Gold Pool had been. But if the central banks of Europe and Japan failed to do this, the dollar currency reserves they’d accumulated from their growing trade surpluses with the U.S. could be wiped out by the resulting inflation. The central banks were, therefore, under economic pressure to convert their dollars into gold as long as gold’s free market dollar price remained above $35.
Here, the political and military realities of the U.S. empire came into play. West Germany had a large amount of gold. But its government, though nominally a sovereign one, in reality, was under U.S. control through NATO and other mechanisms. In line with this reality, the West German central bank announced it would not redeem any of the growing quantity of dollars it accumulated from its trade surplus balance.
France, however, was a problem. Unlike Germany, which was defeated in the war (mainly by the Soviet Union), France was a nominal victor and enjoyed greater autonomy within the U.S. global empire than West Germany did. Also, due in part to their experience with paper money during the Great French Revolution and earlier in the 18th century with John Law’s bank in France, the French had a reputation of being “gold bugs.” (8)
During the crisis year of 1931, the Bank of France, reflecting this distrust of paper and banknote credit money, reacted to the British pound’s devaluation by redeeming some of its dollars, causing the Federal Reserve System to lose gold. To counteract the drain, the Fed was obliged to raise interest rates when the U.S. economy was already in a free fall — further deepening the super-crisis.
In 1968, France was under the rule of strongman nationalist President Charles De Gaulle (1890-1970). In addition to his gold bug leanings, De Gaulle openly chafed at U.S. domination. During his rule, France tested its first nuclear weapons. Wikipedia writes:
“In November 1967, an article by the French Chief of the General Staff (but inspired by De Gaulle) in the Revue de la Défense Nationale caused international consternation. It was stated that the French nuclear force should be capable of firing ‘in all directions’ — thus including even America as a potential target.”
In addition, “On September 1966, in a famous speech in Phnom Penh in Cambodia, he expressed France’s disapproval of the U.S. involvement in the Vietnam War, calling for a withdrawal.”
De Gaulle represented the greatest threat to U.S. domination in the sphere of the international monetary system. The Feb.12, 1965, edition of Time magazine complained:
“There was Charles de Gaulle last week proclaiming that the primacy of the dollar in international dealings was finished, calling for an eventual return to the gold standard — which the world’s nations scrapped 50 years ago — and practically inviting other countries to follow France’s lead and cash in their dollars for gold. It was a particularly nettling irritant just as the U.S. was deeply involved in making some hard decisions about its monetary policy.”
DeGaulle’s France was a major headache for U.S. policymakers. In the wake of the collapse of the Gold Pool, France would be expected to start to cash in its dollars if the gold’s free market price rose and stayed above $35 for any period of time. If this happened, the U.S. would have no choice but to repudiate its promise to redeem dollars for gold, striking a fatal blow to the Bretton Woods dollar gold-exchange-standard-denominated international monetary system. This eventually happened in August 1971, and we will explore the consequences in the coming months. Alternatively, the Federal Reserve System would have to allow interest rates to rise drastically, relieving the pressure on gold’s dollar price — at the cost of a major financial crash and subsequent depression.
Under these financial and political circumstances, the Federal Reserve System had little choice after the collapse of the Gold Pool but to allow U.S. interest rates to rise to prevent the gold’s free market dollar price from rising above $40, then send it back toward $35. This was designed to stave off the day of reckoning a little longer. As we’ve seen, all other things remaining equal, the demand for gold is inversely proportional to the rate(s) of interest.
After the Gold Pool’s collapse, the U.S. and world money market steadily tightened. The tightening money market meant that competition for the remaining loanable funds was set up between the Treasury on one side and all other borrowers on the international credit market on the other. The other borrowers included national, provincial, and local governments, corporations, home buyers seeking mortgages, and consumers buying durable consumer goods — like automobiles — on credit worldwide.
To prevent the competition for credit from quickly leading to recession, the U.S. government had no choice but to stop borrowing money to finance the Vietnam War and instead finance it by increasing taxes. This meant that LBJ’s “Guns and Butter” policies were as dead as his political career. On June 28, 1968, as a now “lame duck” president, Johnson signed the Revenue and Expenditure Control Act of 1968. In the words of Wikipedia, it “created a temporary 10 percent income tax surcharge for both individuals and corporations through June 30, 1969, to help pay for the Vietnam War. It also delayed a scheduled reduction in the telephone and automobile excise tax, causing them to end in 1973 instead of 1969.”
Remember, the real reason for rising interest rates in 1968 was not the policies of the Federal Reserve System but the ongoing overproduction and over-trading of commodities. The Vietnam War that had been financed not by tax increases — taxes had been cut in 1964 just before the war escalated — but by borrowing as part of LBJ’s “Guns and Butter” policies was a strong secondary cause of the upward pressure on interest rates. The tax increase aimed to slow the economy in an orderly way — a relatively soft landing — and avoid a crash that would be brought on if interest rose too far too fast.
The tax increase resulted in the federal government running a brief budget surplus in 1969. The federal budget surplus bought some time. There would only be a government budget surplus again at the end of the 1990s, thirty years later. (9) It meant that the federal government no longer had enough money to continue increasing the number of ground troops in Vietnam while meeting other federal expenses at the same time. Importantly, this situation did not occur because the U.S. economy wasn’t big enough to support the war.
Instead, the ongoing overproduction within the U.S. and the world’s capitalist economy led to a situation where there was no longer enough money to finance a continuing increase in U.S. troops in Vietnam, finance other government expenses, and finance the ongoing economic expansion that kept unemployment relatively low. There was no longer enough money to continue to escalate the war through borrowing and leaving enough left over for continued economic expansion and still meet other government expenses. Something had to give.
Unlike before the collapse of the Gold Pool, the war now had to be fought on a budget within financial restraints. This was a hugely positive development for the Vietnamese people. Though it was costly in terms of casualties and lives, the Tet Offensive was a victory for the Vietnamese people, after all. But the war was far from over. The struggle went on in the battlefields of Vietnam and other Indochinese countries and on the streets of America and other imperialist countries, as well as on the money markets of the world.
The 1968 presidential election and the assassination of Martin Luther King
In addition to the two events discussed above, 1968 was also a presidential election year.
The previous year (1967), Rev. Dr. Martin Luther King, considered the Civil Rights Movement’s central leader, came out against the Vietnam War. Until then, the Civil Rights Movement leaders were solidly allied with LBJ’s Democratic Party. They used their influence to discourage the African-American community from participating in the growing anti-war movement. They feared if they participated in the anti-war movement, they’d begin to question whether it made sense to vote for what was commonly seen as the war party, the Democrats. After all, the people of Vietnam are people of color.
Dr. King broke this policy despite other leaders trying to talk him out of it. King denounced the war in a historic speech at Riverside Church in New York City on April 4, 1967. His opposition represented a threat to both the Democratic Party and the entire two-party system. One year later (April 4, 1968), Dr. King was assassinated in Memphis, Tennessee, while supporting a strike by city sanitation workers. A wave of uprisings in African-American communities around the country followed his death. However, his assassination removed a major headache for the Democratic Party and the entire Party of Order.
With LBJ out of the picture, the question arose of who Democrats would nominate in his place. Three primary candidates emerged: One was Johnson’s pro-war vice president Hubert Humphrey (1911-1978); opposed to Humphrey was the dovish Democratic Senator from Minnesota, Eugene McCarthy (1916-2005); the third contender was the late President Kennedy’s brother and senator from New York, Robert Kennedy (1925-1968). Like McCarthy, Kennedy had carved out a dove position on the Vietnam War. According to Wikipedia: “Despite his criticism of the Vietnam War and the South Vietnam government, Kennedy also stated in his 1968 campaign brochure that he did not support either a simple withdrawal or a surrender in South Vietnam and favored instead a change in the course of action taken so it would bring an ‘honorable peace’”.
As vice president, Hubert Humphrey was Johnson’s official political heir. Before becoming vice president, Humphrey had been a Cold War Democratic labor-liberal senator. A virulent anti-communist, Humphrey was a staunch supporter of winning the war. Like Johnson, Humphrey was hated by the growing number of anti-war young people. However, though some anti-war students were drawing Marxist conclusions about the need to replace the capitalist system entirely, the majority of anti-war students continued to have illusions about reforming the system. These students rallied around the McCarthy and Kennedy campaigns.
In the New Hampshire presidential primary held on March 16, to the astonishment of political observers of the time, McCarthy almost defeated the incumbent president. But once he entered the race, Robert Kennedy became the odds-on favorite to beat the hawkish Hubert Humphrey in the remaining primaries. In those days, a kind of cult of personality surrounded the assassinated John F. Kennedy. Robert Kennedy, the attorney general in the JFK administration, was heir to the Kennedy name. Humphrey, however, had the support of the Democratic establishment. On June 6, Robert Kennedy was assassinated in Los Angeles. This left McCarthy as the only Democratic dove running against the hawkish Humphrey in the race. Anti-war youths who had put their hopes in Kennedy now shifted to McCarthy.
Democratic convention of 1968
Between August 26 and 29, the Democratic National Convention was held in Chicago, Illinois. Anti-war youths descended on the city in a desperate hope that Democrats would “Dump the Hump,” as the slogan went, and nominate pro-peace McCarthy. The Chicago police, controlled by the corrupt mob-ridden Democratic political machine of Mayor Richard Daley, attacked the youthful anti-war demonstrators in a vicious police riot.
According to the website History, “At home in their living rooms, horrified Americans alternated between watching images of police brutally beating young, blood-splattered demonstrators and Humphrey’s nomination.”
While there are many differences between 1968 and 2024, there’s one striking similarity. Today, awakening youth and Muslims and Arab Americans who traditionally vote Democrat are determined not to support Genocide Joe in this year’s election. In 1968, the anti-war youth were determined not to support Hubert Humphrey despite the extremely unappealing nature of alternatives presented by the U.S. capitalist political system.
The Republican nominee was none other than “Tricky Dick” Richard Nixon, vice president under Dwight Eisenhower, notorious “red baiter” during the McCarthy era and John F. Kennedy’s Republican opponent in 1960. There was one other choice: the arch-racist segregationist Alabama Democratic Governor, George Wallace (not be confused with Henry Wallace, the 1948 presidential candidate of the Progressive Party supported by the U.S. Communist Party, left-wing trade unionists, and other progressives). George Wallace was an old-time Southern racist Democrat. In 1968, he ran for president in a third party, the American Independent Party. He used the campaign to bring his racism to the North.
What Donald Trump is today, Wallace was in 1968. His campaign attracted the support of Neo-Nazis and neo-fascists like Trump does today.
Wallace ran to Nixon’s right on the theme of “Law and Order.” This was a code phrase used by both Nixon and Wallace for police repression of African Americans and anti-war youth. Wallace appealed to Northerners, including some Northern industrial white workers who feared competition from African-Americans and other nonwhite workers in the capitalist labor market. In the wake of changes brought on by the Civil Rights Movement, non-white workers sought employment in trades like construction that had been reserved exclusively for white men up to that point.
The old Democratic Party had been built on racism not only in the South but in the North as well. Democratic Party machines in the North used their control of job-trust labor unions, restricting membership to keep African Americans out of the trades. While Northern white workers supported New Deal reforms like Social Security (old age pensions), legalization of labor unions, and unemployment insurance, many remained racist. As many Northern white workers lacking class consciousness saw it, they benefited from both job trust unions, New Deal reforms, and continued racism. From their point of view, there was no contradiction between being pro-New Deal and pro-Democratic Party and being pro-war and racist because, in reality, the New Deal itself had been all these things.
If in the South, Wallace wrapped himself in the “stars and bars” (Confederate flag); in the North, he wrapped himself in the red, white, and blue — which would have been ironic to anybody who remembered the war of the slaveholders’ rebellion, the Civil War.
The Wallace campaign was both an opportunity and a problem for Richard Nixon. Nixon, following the example of Barry Goldwater in 1964, decided to follow William F. Buckley and his National Review magazine’s strategy of regrouping American politics by gathering all the right-wing anti-New Deal forces in the North with the traditional racist Democratic base into a “new” Republican Party. Many Southern Democrats began to follow the example of South Carolina Senator James Strom Thurmond (editor’s note: Biden gave the eulogy at Thurmond’s funeral), who in 1964 moved into this new Republican Party that was taking shape. The old-time in-your-face open racism of traditional Southern Democrats was replaced by dog whistle racism that Republicans specialize in today.
Thurmond ran for president in the 1948 presidential election as a State Rights Democrat (nicknamed “Dixiecrats”) against Harry Truman, Thomas Dewey (the Republican candidate), and the Progressive Party’s Henry Wallace. Thurmond’s beef with Truman was that though Truman himself was a racist of the old school, he was forced to sign Executive Order 9981 on July 26, 1948, which repealed Woodrow Wilson’s extension of Jim Crow to the federal government and the military.
Starting with Wilson and ending with Truman, African Americans were banned from federal government employment while the military was strictly segregated. Though Executive Order 9981 kept the system of legal Jim Crow intact in the South, this was too much for arch-racist Thurmond and many other Southern Democrats. The Southern Democrats feared that the political pressures that forced Truman to sign 9981 would lead to the end of Jim Crow altogether and deal a fatal blow to its in-your-face racism on which they had built their political careers.
But 9981 was enough to secure for Truman the African-American vote that otherwise might have gone to the anti-Cold War Henry Wallace. George Wallace never turned Republican but remained a traditional Southern racist Democrat. In 1968, Wallace, running as a third-party candidate, won many Democratic racist votes in both the North and the South. He won the electoral votes of Alabama, Arkansas, Georgia, Louisiana, and Mississippi.
While Wallace denied Hubert Humphrey the votes of the Deep South — traditionally Jim Crow states that in earlier elections went to the Democrats — he also prevented Nixon from carrying Deep South former slave and Jim Crow states that Barry Goldwater had won in 1964. Humphrey, with the racist-reactionary vote divided between Nixon and Wallace, might still have edged out Nixon except for the fact that many anti-war young voters refused to vote for the pro-war Humphrey. This enabled Nixon to narrowly defeat Humphrey in 1968.
Next month: Nixon’s “Secret Peace Plan” to win the Vietnam War
(1) The term “Zionist Entity,” used widely in the Arab and Islamic world, is preferable to the term “Israel.” For over two thousand years, “Israel” has been used as a synonym for the Jewish people. According to the Hebrew Bible, the Jewish people are the descendants of Jacob, a grandson of Abraham and the common ancestor of the Jewish people. In the Bible, God renames Jacob “Israel.” The Jewish people are called the children of Israel or just “Israel” for short. In Islam, “Jacob-Israel” is a prophet. Therefore, in Islam, when you denounce “Israel,” you’re denouncing an Islamic prophet, something Muslims do not like to do.
Zionists were aware of the meaning of the word Israel even if those in the secular West had forgotten it. By calling their entity the State of Israel, they know that when people denounce Israel, it sounds as though they’re denouncing the entire Jewish people. This is what the Zionists want. (back)
(2) This is an example of how what Marx called the development of the productive forces undermines the old society and prepares the way for a new one. (back)
(3) Robert Kennedy’s son, Robert Kennedy Jr., is running as a third-party candidate for the presidency. Before that, Kennedy Jr. had declared himself a candidate against Joseph Biden for the 2024 Democratic presidential nomination. Unlike his father, Kennedy Jr. is given no chance of winning. Kennedy Jr. is an opponent of vaccination, a medical procedure that’s saved countless lives. There would have been far more victims of COVID-19 if the vaccines had not been developed and applied. The same is true of many other infectious diseases, for example, smallpox and polio. The problem is that the vaccine production monopoly held by a handful of Western corporations enforced through the patent laws of the U.S. world empire has prevented countless millions worldwide from receiving needed vaccines. The policy of the U.S. and other capitalist governments on using patent laws to prop up super-profits of a few corporate monopolies has prevented millions — especially in the Global South — from receiving needed vaccines. Kennedy Jr. opposes the vaccines themselves, not the criminal patent system.
During his 2023 campaign for the Democratic nomination, Kennedy Jr. claimed the COVID-19 virus was engineered to exclude infections in Chinese and Ashkenazi Jewish populations. His view represents a throwback to the Middle Ages when Jews were often held responsible for the plague by poisoning water wells. It also represents dangerous racist war-mongering against the People’s Republic of China and is a threat to people of Chinese descent and other East Asians who “look Chinese” who live in the United States. Kennedy Jr.’s anti-Semitism does not prevent him from being, like Biden and Trump, a staunch Zionist and supporter of the State of Israel and its genocidal crimes against the Palestinian people. If somehow Trump does not win the GOP nomination, Kennedy Jr. will likely take votes away from whoever wins the Republican nomination. (back)
(4) The inflation following the COVID shutdowns reflected a genuine shortage of commodities relative to effective monetary demand. If gold rises above the current levels and stays there for any period, a different type of inflation will develop- currency depreciation inflation. In this type of inflation, the price of commodities rises in depreciated currency terms but falls in terms of the use value of the money commodity (gold). While these two types of inflation are economically different, both cases put strong downward pressure on real wages. In addition, currency depreciation inflation represents an unstable state of the economy that is followed by recession. (back)
(5) Paper dollars take a certain amount of labor to produce. However, the U.S. government owns the printing presses that print the dollars, so they are not true commodities because the consumer of the product, the paper dollars, is also the producer. (Some countries have their currencies printed by private, for-profit companies. The paper currencies are then bought as commodities before they’re circulated at a price far below their nominal denomination.) Uncirculated paper currency doesn’t become money before it‘s circulated — it only becomes a monetary token in circulation. Paper currency notes cost less abstract human labor to produce than the amount of abstract human labor they represent in circulation, where they represent defined weights of gold. (back)
(6) The gold points were determined by the costs of shipping and insuring — a ship carrying gold could always sink — between nations. As long as exchange rate fluctuations stayed within the gold points, it was cheaper for the capitalists to eat any exchange rate loss rather than demand payment in gold. (back)
(7) In those days, the Soviet Union and its Eastern European allies plus Cuba, thanks to their planned economies, enjoyed real full employment without periodic economic crises of mass unemployment associated with crises of overproduction. There was great fear among the capitalists that if anything like the Great Depression ever occurred again, the example of the socialist camp would show in practice that full employment is possible — and that it was capitalism that caused unemployment. Capitalists feared this would lead to a socialist revolution within the imperialist countries, ending their system worldwide. (back)
(8) The Scottish-born John Law (1671-1729) created France’s first central bank, the Banque Royale, in 1716 -1717. He believed (not entirely incorrectly) that the need to convert commodities into gold and silver was holding back the development of productive forces. What Law did not understand was that this barrier to the development of production could only be overcome by abolishing the commodity character of the product. This cannot be done without abolishing private property. Anticipating Keynes and today’s advocates of non-commodity money and modern monetary theory, Law attempted to transform the banknotes of the Banque Royale into non-commodity money. The result was the collapse of the Banque Royale and its notes. The outrage that followed forced Law to flee France. (back)
(9) This budget surplus was quickly squandered when George W. Bush pushed through a large tax cut in 2001. The return to deficit spending intensified (though it did not cause) the crisis of 2007-09 by creating renewed competition for funds between the Treasury and other borrowers as the crisis approached and developed. (back)
A Critique of Crisis Theory 