Lula questions central banking model, will Sheinbaum understand? | Article by Alberto Vizcarra Ozuna

Alberto Vizcarra Ozuna

Overlay central bank diagramor autonomous banking, which has grown in the midst of the high wave of neoliberalism over the last thirty years, has deprived most Western countries of the constitutional powers they had to influence the direction of monetary policy. Central banks have thus they have ceased to serve the development of nations and they became enclaves and guarantee funds for the growing financial speculation that now dominates the dollar system.

Governments suffer silently from this international financial dictatorshipalthough there is no shortage of those who happily accept it. Fortunately, there are governments that have the courage to condemn it and present it for what it is: aberration. On Wednesday, June 19, Central Bank of Brazilannounced that it would maintain the base interest rate at a level bordering on usury, that is, above 10 percentclaiming that the government had overspent and was worried about the market over the federal budget deficit. President Lula da Silva responded to this apparent act of economic warfare against his country by explaining to Brazilians in a wide-ranging radio interview that this policy, designed to benefit speculators, was being carried out to the detriment of the country’s development.

Lula said that high percent give benefit private bankswho prefer to earn money at high interest rates instead of lending. He also noted that while cuts are necessary to avoid budget deficits, interest payments on government bonds and debt are defined as a sacred category that should not be cut. It should be noted that last year (2023), the Brazilian government paid 145 billion dollars only in debt interest.

The Brazilian president does not hide the truth from his people and directly points out the harmful nature of this policy: “It is Brazil that loses, it is the Brazilian people, because the more they pay in interest, the less money they have to invest here.” To then explain: “So we must realize that when we do something and it leads to a collective benefit, to a better quality of life, it is an exceptional investment that we are making. We investing in the brazilian peopleThe Central Bank’s decision was invest in the financial systeminvest in speculators who make money on interest. And we want to invest in production.”

What the Brazilian President noted is undoubtedly critical point around which the present and future existence of nations is determined. This is becoming more and more insolvent That coexistence between interests Related to production physical goods, to improve infrastructure basic economic, to strengthen production food and other twists and turns in the real economy, with an international financial system whose only prerequisite is to ensure growing flows of money income into a global debt that has reached unpayable proportions.

Lula’s presidency has the popular support to speak these truths that most presidents remain silent about, but its greatest strength is that Brazil had the courage to be one of the founding countries BRICS(Brazil, Russia, India, China and South Africa) – a group of countries, recently strengthened by the inclusion of Egypt, the United Arab Emirates, Ethiopia, Iran and possibly Saudi Arabia – that represent an organizational platform for socialization and promotion of alternatives to economic development, financing, fair trade, which represent the beginning of a new financial and economic architecture that includes the development and growth of all countries, especially those that are part of the isolated and impoverished Global South.

Lula’s words are addressed to his people, but they point to a problem that structurally affects most Western economies, with particular emphasis on Latin America. Mexico This comes after Brazil, the country hardest hit by the introduction of central bank autonomy (Banco de Mexico), whose policy high interest rates They have driven the national debt to unsustainable levels and then applied even more budget cuts to satisfy the insatiable greed of speculators.

Mexico has been subject to a monetary policy that is regulated by speculationIt is a nation that has been emasculated in its ability issue a loan and the balance sheets are eloquently catastrophic. The six-year period that is about to end (2018-2024), according to INEGI, continued, despite its landmark works, with growth rates that did not reach one percent per year.
In the Mexican elections, the official candidate Claudia Sheinbaum Pardo won an overwhelming victory, gaining a qualified majority in the Congress of the Union. It is commonly said that this could represent strong presidencywith the possibility of resuming a monetary policy that will restore to the state the constitutional power to exercise sovereign policy in matters of credit, to protect the national food market and to resume a policy of industrialization, supported by a vigorous pursuit of science and technology.

The election results show that the Mexican people are ready to wage a battle of this magnitude, but the candidate elected is currently focusing more on those in power than the popular support he had received in the recent elections. From the moment the election authorities recognized his victory, Sheinbaum was responsible for announcing that I wouldn’t cross the red line compiled by large speculative investment funds, and immediately declared that it would respect the autonomy Bank of Mexico and will deepen budget savings.

That since March of this year Finance Minister Ramirez de la O.already warned in the document “Preliminary General Criteria for Economic Policy until 2025”, where he suggested that there will be no government investment significant and yes, a budget cut of more than 8 percent compared to the current fiscal year.
Given these criteria, the Sheinbaum government does not seem to understand what Lula da Silva has proposed. If this continues, it will continue to add years to the long neoliberal period that, as has been noted, does not disappear with the cannon shots of official discourse.

Ciudad Obregón, Sonora, June 27, 2024