https://socialistaction.org/2018/05/25/global-debt-hits-164-trillion/
Global debt hits $164 trillion
/ 21 hours ago
End Austerity Now National Demonstration, London, Britain - 20 Jun 2015
Massive national anti-austerity demonstration in London, June 20,
2015. In order to reduce corporate and state debt, capitalist
governments will saddle the working class with even more social
cutbacks. (Photo: Nils Jorgensen/REX Shutterstock)
By BARRY WEISLEDER
The world’s debt load has ballooned to a record $164 trillion, a trend
that could make it harder for countries to cope with the next capitalist
recession and pay off debts if financing conditions tighten, the
International Monetary Fund said in April. Global public and private
debt swelled to 225 per cent of global gross domestic product in 2016,
the latest year for IMF figures, according to its semi-annual Fiscal
Monitor report. The previous debt peak was in 2009.
The IMF is an international body based in Washington, D.C. of 189
countries. It claims to be “working to foster global monetary
cooperation, secure financial stability, facilitate international trade,
promote high employment and sustainable economic growth, and reduce
poverty around the world.” But its behaviour tells a different story.
Formed in 1945 at the Bretton Woods Conference in line with the ideas of
Harry Dexter White and John Maynard Keynes, it started with 29 member
countries and the goal of reconstructing the international payment
system. It now plays a central role in the management of balance of
payments difficulties and international financial crises. Countries
contribute funds to a pool through a quota system from which countries
experiencing balance of payments problems can borrow money to buy
essentials and meet payroll. As of 2016, the fund had about $668 billion.
But in order to borrow from that fund, “conditionalities” must be met.
The latter often require severe cuts to social expenditures and public
sector employment, plus major concessions to private capital, especially
to foreign investors operating in poor and less developed economies.
The IMF forecast expansion of 3.9 per cent in 2018 and 2019, while
saying that in subsequent years the global economy could be impacted by
tighter monetary policy and the shrinking effects of U.S. spending.
Surging private-sector debt, particularly in China, is driving the
buildup. China is responsible for almost three-quarters of the increase
in private debt since the financial crisis, according to the IMF. Its
report reveals the debt hangover from which the capitalist world is
still recovering—a decade after the global banking system went to the
brink, triggering a deep recession. Governments increased spending to
boost growth, while central banks resorted to unconventional methods to
ease financial conditions, such as buying bonds, in effect, printing
huge sums of money.
Now the focus is on “recalibrating” fiscal policy to reduce debt-to-GDP
levels. Welcome to the austerity agenda—social cutbacks, precarious
work, no benefits, de-regulation of the natural environment and
privatization of public assets. Why? Make the working class and the
impoverished pay for the irrational, violent, and wasteful capitalist order.
Those at the top of the income pyramid will do better, while the
“hollowing out” of the so-called middle class continues apace. Liberals
pledge to help the squeezed “middle.” Right-wing populists talk about
opposing the elites, but they follow their policies aggressively. The
challenge to the left is to fight austerity and, at the same time, to
target the system that fosters it.
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May 25, 2018 in Economy.
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