The past few years saw frequent anticipations of an Economic Recession hitting the world’s largest economies following the Coronavirus Pandemic. The Pandemic unleashed a lot of Inflation that much of the world has yet to fully bring under control. Central Banks responded by increasing Interest Rates. The fear was that the heightened Interest Rates would reduce borrowing Kapital to such an extent that a Recession becomes inevitable, if not implausible. Since so much of economic life under Neoliberalism depends on borrowing Kapital over creating it through tangible economic activities, it becomes natural to assume that the cause would stem from the Fractional-Reserve Banking System rather than the Market/Mixed Economy.
This leads to a notable trend that I had discovered earlier in the month. There is growing evidence of a disconnect between the expectations of a Recession among financial institutions and Central Banks and those among average people. If the former thought that the Recession would be the result of high Interest Rates, then the latter has to be because of the high Prices of everyday goods and services. For most people, Prices increased in the years from 2021 to 2023. As of late, it would seem that Prices are beginning to stabilize, although it is difficult to ascertain whether that would truly last or whether it is a temporary phase.
Whichever the case happens to be, the fact remains that the expectations for a Recession occurring are at best wishful thinking. A Recession in the Market/Mixed Economy, initiated by the actions of the Fractional-Reserve Banking System, might cause the Prices of everyday goods and services to fall. Thus, the Central Banks would then be forced to their lower Interest Rates in order to get the Market/Mixed Economies of the world out of the Recession. It is not the Fractional-Reserve Banking System that wants that Recession, instead it is the Market/Mixed Economy that is wishing for it. The Central Banks are obviously aware of that implication, otherwise they would not be touting rhetoric about trying to aim for a “soft landing.”
By “soft landing,” the Central Banks would prefer to keep the Interest Rates reasonably high in order to bring Inflation Rates down to their optimal levels of 2%. Once Inflation Rates fall anywhere from 2% to 3%, the Interest Rates are going to have to be lowered. At that point, it can be inferred that the Central Banks had returned to original conditions prior to the Coronavirus Pandemic.
There are of course two problems with those conclusions, both the one from the Market/Mixed Economy and the Fractional-Reserve Banking System. Not every Recession is guaranteed to be on the scale of, for instance, the Great Recession that happened in 2008. It may not happen as suddenly as the one in 2020, which stemmed from the Coronavirus Pandemic. It is more plausible that the Recession might be as minor as the one that occurred back in 2015, which was hardly felt by most people outside of the Fractional-Reserve Banking System.
The other issue is that the Market/Mixed Economy is sending “contradictory signals” to the Fractional-Reserve Banking System on what is happening in economic life. Between the Pandemic, the Special Military Operation, Climate Change dampening Petroleum production, and the latest round of hostilities in the Holy Land, there is a lot of economic insecurity among everyday people. It creates imperatives for some kind of governmental intervention in the Market/Mixed Economy, although it is currently unclear on what that might entail.
Categories: Blog Post
The Fourth Estate 
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