A Discreet Capitalist Collapse?’ The Onset of Pre-Panics

Commentary No. 465, January 15, 2018

The New York Times has been suggesting that major bondholders – both national and private banks – are discreetly reducing their bond holdings, out of a fear of nominal inflation. How discreet can it be if it is discussed in The New York Times?

Everyone is hoping that no one panics and sells too rapidly. And if someone does that they do it one mega-instant after my discreet withdrawals. Of course, no one wants to withdraw too soon – and not too late. So, when one arrives at a pre-panic moment, no one can be sure, which more or less guarantees the sudden collapse of the bond market.

We know we’re in a pre-panic moment when we are discussing it. But why now and not before? Because so much paper money has been earned in runaway market profits based on no real increase in surplus-value that the market has caught up with the bond market, and therefore one discreetly withdraws from the bond market.

In addition, the paid workers seek higher wages, everywhere. So many workers have been forced out of the labor market that there is now a labor-available shortage. And this makes bonds still a safe haven. Confusion, confusion!

Everyone becomes more protective – of self, of country. And it is self-reinforcing. Even countries using strong anti-protectionist rhetoric like Canada practice it nonetheless or suffer internal political loss.

All this is what happens in a structural crisis of the world-system, in which wild swings of everything is the reality. Pre-panics are one of these wild swings.


Note: A correction was made on January 20, 2018.