Letter to the Writer of

Inflation surge hits consumers, compounds global banking crisis
by Barry Grey

Dear Mr. Grey,

Thank you for your articles on the health of the economy specifically on credit. I support your point of view, but I wish to offer a broader panorama.

I assume you are basing your analysis on Marx's Das Kapital. Please, as Marx warns us in Volume III, don't just look at currency the most superficial form of capital as the “vulgar economist” so love to do. There is a definite boom in China and because of this boom there is and was a great easing in the money market at the beginning of this decade. Marx writes in Kapital volume I that when there is a boom the value of money decreases in relation to other commodities this devaluation is not the same as the devaluation that happened in the early 1970s. This devaluation is a direct result of a Chinese boom that is going on this very minute that no main stream media outlet is talking about, and rightly so because they do not understand their own economy. What they don't understand is how a boom in one part of the world can have an effect on the US dollar. Remember that in volume I chapter five Marx writes that for the capitalist they view the world in an inverted way their money-capital acts in an inverted way and therefore so do they, because they start out M-C instead of C-M as non-capitalist do (workers). What we, the non-capitalist, see as devaluation in money they the capitalist see as a valuation in the commodity-capital they deal in.

This devaluation of money-capital had the effect of easing the money market and thus a great real-estate swindle could and did happen all throughout the better part of this decade. These were great speculative soap-bubbles. To only look at banking-capital is a great mistake and could mislead readers into further fetishizing the money-form and not breaking free of this fetish as your website hopes its readers will do. Please remember that China is growing at an almost 10 percent rate and the NYT reports that the U.S. economy grew at 4.9 percent this summer.

Finally, as to the question of rising commodity prices this is a classic example of how Marx describes booms. A rise in the value of commodities and sometimes a rise in wages is the height of the boom, but these are not the symptoms of a crisis. A lowering of commodity prices and a lowering of salaries are symptoms of crises.

In summary, please do not look only to the money-form to explain to WSWS readers that we are in the middle of a devaluation crisis; this only perpetuates the currency fetish. The reason why banks around the world could swindle people by loaning them money was that the money market eased greatly due to the boom in China and the east. The continuing cheapness of the US Dollar even after the bursting of the real estate bubble shows that China’s great leap forward is the real cause of the devaluation in relation to other commodities.