The Connecticut River Valley was home to many Indigenous tribes before European settler colonialism. The area now known as Hartford was held by the Suckiag Tribe until they were ethnically cleansed by Dutch and English settlers. Suckiag was valuable due to its prominent position along the Connecticut River. Ever since the displacement of its Indigenous populations, the city now known as Hartford has been a “rearguard garrison”¹ for settler colonialism in Occupied North America and imperialism across the globe. When English Hartford was founded in 1636, the Connecticut colony consisted of scattered settlements along the Connecticut River. These towns acted in self governance for the first time to declare war against the Pequot Nation, which governed what is today southeastern Connecticut. Settlers from the river valley towns sent delegates to Hartford, where the colonial court issued its decree to recruit 30 men from each town to commit genocide of the Pequot. The English also recruited hundreds of soldiers from the Narragansett and Mohegan Nations to assist in the war effort. Together, they killed most of the Pequot and forced the survivors into slavery, with the English seizing all their land. The English successfully took advantage of the competition between Indigenous nations in Connecticut, a tactic of exploiting existing contradictions the modern U.S. state now regularly employs to destabilize nations. Of course, the temporary allies, the Narragansett and Mohegan, also saw all of their land – at first slowly, then all at once – stolen by settlers in the ensuing, decades-long land grab. 

Hartford’s dominant industries at this time were agriculture and rum distillation. Both were dependent on slave labor; in Hartford, Black and Indigenous enslaved people worked the farms, while in the Caribbean they harvested sugarcane that was fermented and shipped up the eastern coast to Hartford and other northern cities. These Caribbean plantations were made dependent on such cities for food supplies, because even though the islands could grow ample food, sugar was the only crop produced on the land since it was more profitable to sell. The Caribbean experienced waves of manufactured famine that continue to this day. Census data for slavery in Hartford only goes back to 1791. In that year there were 263 enslaved people in Hartford out of 2,764 in the state. There were 430 “free persons” (free Black citizens) in Hartford who were members of the city’s proletariat and sub-proletariat. The first recorded murder victim in Hartford was a Black man named Louis Berbice, murdered by his enslaver in 1639. The enslaver, Edward Opdyck, faced no punishment. 

From Garrison Town to Inventor’s Workshop

Hartford became a manufacturing city beginning around the 1850s, when Samuel Colt opened the largest private gun factory in the world. Colt revolvers were key to westward expansion, used by both individual settlers and the U.S. army. A half century earlier, Eli Whitney initiated the local mass production firearms industry with the interchangeable parts design, developed out of a factory in New Haven. A year later, he would invent the cotton gin, kickstarting an exponential expansion of slavery production and New Afrikan misery. Additional companies, such as Billings and Spencer, Spencer Arms, Winchester Repeating Arms, and Smith & Wesson have bestowed a historic tie between settler militarism and Connecticut. 

The city’s role in colonial occupation did not change, but its form of service took on a new, advanced appearance. Amerika’s new settler armies needed advanced, mass-produced weaponry that could overwhelm the western Indigenous nations still fighting for their national territory. Tucked away safely in the Northeast and bolstered by several centuries of superprofits, Hartford was well-positioned to serve as an inventor’s workshop for the next era of military technology. 

We see the same transition fulfilled today by “israel” in Occupied Palestine. The zionist entity is both a garrison launchpad for the U.S. in Asia, and the empire’s principal inventor of military technology. Their weapons are primarily used against Palestinians to continue the Zionist occupation of Palestine. Their secondary purpose is that of testing and experimentation; advanced technology is exported from occupied Palestine to wherever in the world the empire needs them for asymmetric violence, including U.S. cities such as Hartford. 

From Inventor’s Workshop to Financial Hub

Hartford’s modern image as a finance center is characterized by massive insurance companies whose offices take up most of the city skyline. Connecticut’s capital is the birthplace of the insurance business itself. River captains, dealing in enslaved people and foodstuffs for slavery plantations, wanted to avoid the expectable financial hits from the dangerous sailing business; storms, piracy, and disease were threatening enough to the capitalists’ fortunes that it benefited the overall class to compensate one another when an individual merchant lost their investment. Thus, they created a system of profit and risk sharing among the merchant class. The financial logistics of slavery laid the foundation for the emergence of the insurance industry. Hartford is still considered the insurance capital of the world, although there are fewer actual insurance employees working in the city than in the past. 150 of these companies generate $16 billion a year combined. They are centered in the downtown area and housed in the largest office buildings. This industry is, of course, white dominated.

Lastly, Hartford and Hartford county continue to serve the U.S. war machine with several weapons manufacturers. In West Hartford, the Colt factory produces M4 rifles that are continuously sent to Occupied Palestine. The modern “inventor’s workshop” has moved across the Connecticut River to East Hartford, where Raytheon operates a five-story “research” facility to engineer new weapons systems like radars, missiles, and drones for the US and its vassals. A short walk away, Pratt & Whitney builds engines for the F35 fighter jet. While many of these weapons workers are commuters, it is also the perception among community members that the companies are too powerful and entrenched for anti-imperialists to challenge them.  Tracking the city’s development from garrison fortress, to inventor’s workshop, to financial hub of global imperialism, can we really say Amerika was ever not fascist? No, we cannot; it is only the form and proximity to genocide that has changed. 

Demographics

The city has 17 neighborhoods, which are more sharply segregated by national and class contradictions than the average U.S. city. Population maps show that the New Afrikan population is primarily segregated to the north end of the city. The New Afrikan neighborhoods are separated from the Hispanic neighborhoods by insurance offices and the I-84 highway, constructed in 1964 to connect the downtown offices with the white suburbs in West Hartford. As in many cities, the construction of the giant highway through the city devastated the “minority” neighborhoods it crossed over. 

National Groups in Hartford according to 2020 census

Map of the I-84 Highway through Hartford

Although the downtown area saw the highest rate of population growth between 2010 and 2020 (increasing by 53%), this area is still notoriously empty at night and on weekends, when office commuters leave for the suburbs. Downtown is the only neighborhood with a majority white population in Hartford. Note that the North Meadows neighborhood has no official population, since the area contains the Hartford Prison and commercial businesses. (See below.)

Hartford Neighborhoods, Population Change 2010 – 2020

We began our social investigation at the intersection of Park and Main St. In 1969, this intersection was the site of an uprising of the Puerto Rican community against a white biker gang. As the story goes, a white man belonging to the Comanchero biker gang assaulted an elderly Puerto Rican, and the community decided they had had enough. The groups confronted each other in the streets, but Hartford police only arrested Puerto Ricans. This agitated the community even further. The cycle of protesting, followed by police repression, followed by even heavier protesting, would continue for weeks, until an even greater escalation occurred. On August 29, 1969, West Hartford police shot Dennis Jones, a 16 year old New Afrikan, to death. Two days after the murder, a slumlord tenement building burned down, killing three people. These two events were too much for the community to bear, and people took to the streets against both police and white-owned businesses in the north end. But unlike the “Comanchero clash,” this time New Afrikans and Puerto Ricans fought together. The protests spread from the Clay Arsenal Neighborhoods, through downtown, and into Charter Oak and South Green. By September 5, over 500 people had been arrested and 4 people were shot. 

1969 Hartford Uprisings, August-September 1969

This one and a half month period marks the most significant uprising of the oppressed communities in Hartford. Since then, Puerto Ricans have gained representation on the Hartford City Council, giving the community a chance for a larger “piece of the pie” of imperial superprofits. They now have a place in government to address economic inequalities and police oppression. Of course, representation in local politics has not smoothed over the glaring contradictions between different nations in Hartford. Puerto Ricans are still concentrated in specific neighborhoods that receive lower investment ratings than nearby white neighborhoods, and the contradictions of homelessness, drug addiction, and poverty are more present in the Hispanic neighborhoods than in the white-dominated West End. Puerto Ricans make up 74% of the Hispanics in Hartford, but there is a significant Dominican population (8%) now as well. 

Beginning each outing with a briefing of goals and logistics, we set out in both directions along Park Street and the surrounding area. Below are the major contradictions we observed. 

A Note On Methodology 

Methodology refers to a system of methods used in a particular area of study or activity. As Scientific Socialists, our area of study is the material world. Our activity is Social Revolution. This means that we study the material world in order to apply the data we perceive — creatively and usefully — towards our material goals. In the context of a social investigation in Occupied North America, our methodology guides us to find those pockets of space and human groupings which could be the situs of a Communist beginning. 

In practice, this means we need to do a cursory study of the local area before committing to a social investigation on the ground. This introductory investigation may require more than just visual information (the phenomena we can see with our eyes in a community). Most often, we will need to study economic and political data as well. For example, studying that an area has an average household income which is significantly less than bordering neighborhoods could clue us in towards an investigation in that area.  

We chose Park St. for several reasons:

1. The area has a high proportion of nationally oppressed people, primarily from Occupied Puerto Rico, but also from the Dominican Republic and other Spanish speaking countries. 
2. ICE has kidnapped more immigrants in Hartford than in any other city. 
3. Most of our political education work occurs in Hartford, making it the best area from which to draw labor. 
4. Visibly, we observe a high degree of homelessness in the Park St. area. 
5. The street has a number of empty residential buildings, indicating ongoing gentrification.

Homelessness

Roughly one third of the people we interviewed were experiencing homelessness of some sort. Some were living in a shelter or a halfway house. Others reported living outside in parks or under building edifices. One person reported an incident of homeless displacement by the city. According to the community member, a group of people were previously sleeping in tents at Barnard Park. The city reportedly moved them and their belongings to a larger park elsewhere in the city, after complaints of drug use. Of course, these community members reported huge difficulties finding housing in Hartford and Connecticut. 

For every one homeless person, there are 28 abandoned properties. At the site of the Comanchero riot, a new luxury apartment building sits empty. Buildings just like it are being built in several neighborhoods, increasing rent beyond what people can afford. For example, in the North End Blue Hills neighborhood, aging and starved of government investment, the Bowles Park Public Housing Complex was torn down to be replaced with Willow Creek. The new development having fewer dwellings is part of the reason why the Blue Hills population decreased 13% between 2010-2020. 

Of the people we spoke to who did have housing, many reported homelessness as the biggest issue in the city. Some had been homeless previously themselves. We also spoke to people who disparaged the homeless, to varying degrees, for presumed drug use and lack of social etiquette. Most, however, assign blame in both directions; they might blame the individual for poor choices, while the government is blamed for not helping them. There was a common understanding that the shelter and post-incarceration assistance programs do not help people find permanent housing. To this, several people brought up abuse that takes place within the shelter system.

In connection with the lack of housing, another major contradiction we observed is the dominance of slumlords. Just about everyone we spoke to who had housing was a renter. Most, if not all, complained about their rents going up every year. We could have asked more follow up questions about people’s specific living conditions, such as whether repairs are made, whether security deposits are returned, etc.  At times, our investigators were too focused on getting a general sense of the neighborhood’s problems, and this likely caused us to leave certain wells of information untapped. One reason for this error was that we were looking for broad themes of oppression, themes that could take center stage in a future agitation program. But any possible theme would depend on the experiences of individuals in the Park St. area, therefore we should have sought a detailed explanation of exactly why housing access is such an issue in the neighborhood. The individual and the whole are two ends of the same dialectic, and we should ruthlessly investigate both if we expect to organize in any community. Going forward, we have a better idea of when we need to ask more follow-up questions, and we declare our intention to do so in the future. As part of our investigation process, some of our investigators created a hotline for community members to report incidences of abuse by the structures that be. People can now report slumlords, police brutality, ICE activity, and other instances of oppression to this hotline. This reporting would not only continue the investigation process, but refer us toward material injustices which could form the basis of a future program. A future program could take on one of several forms: agitation, Mass Meetings, Community Defense or CopWatch, Red Aid (Communist form of Mutual Aid), or another experimental program that solidifies our contacts with the masses. 

Police

Several community members reported feeling a sense of danger on and around Park St., especially at night. They reported high rates of crime and heavy drug use. When asked about solutions to these problems, several responded that more police were needed. This was a relatively prominent idea of a solution for many people. A slightly lower number of people had nothing but bad things to say about the Hartford police. They reported corruption, harassment, and a lack of material assistance from the police. Based on these conversations, the contradiction between police and the oppressed communities is not the sharpest contradiction in this part of the city, currently. However, this is an issue that needs to be “brought back” to the people in subsequent outings. Hartford currently has 3.42 police officers for every 1,000 residents, while the national average in cities of similar size is 1.6. Hartford already has over twice as many police officers as comparably sized cities. The city spends 8.8% of its budget on police. Hartford is happy to throw as much money as possible into the police force. 

However, the community either does not perceive this outsized number of police, or the police do not prevent crime in the way community members expect. We know that the latter is the case, and that police do not prevent crime. In order to bring this issue back to the community, our investigators need to explore some tactical questions that get to the heart of the fundamental antagonism between the community and the police force. Some questions we may wish to put forward are: 

• What kinds of crime do you perceive most in the community? 
• If the current number of police is not enough to prevent crime, how would increasing their numbers address the problem?
• How could the community itself perform the task of protecting local residents?

We should also bring forth the current statistics that show an already outsized police force to cast doubt on the idea that more police would reduce crime.  

Occasionally, the people we were interviewing would ask us about our ideas for solutions to these contradictions. We generally responded with a critique of state institutions and the fact that they do not help the people. We highlighted the need for grassroots organizing that did not simply participate in the election cycle. Most responded positively to these ideas, and were happy to share their contact info to keep up with our progress. On this note, we could have done a better job at seeking the community’s participation in the social investigation itself. A common goal of social investigation is to recruit those you are interviewing – the people who actually live there – into the project itself. 

Individualism 

Individualism was a very common outlook among the people we spoke to. In regards to problems in the city, one person phrased it as “caring but not caring.” We have heard nearly verbatim reports from other social investigations in the past. Previously, someone phrased it as, “It’s like I give a fuck but at the same time I don’t.” This tells us that community members perceive the contradictions around them, but do not believe there is any movement currently capable of addressing them. The result is a recognition of existing oppression, and perhaps feeling bad about it, but not yet taking the crucial step of organizing the community. 

Mutual Aid Groups

We encountered one mutual aid/ charity group, Food4Lives, conducting a free lunch program in Barnard Park. The organizers were from a different area, considering the large amount of cars they brought. They serve meals once a week, drawing crowds of over 50 people each time we see them. We did not interact with the group, mainly because all of the members were busy serving meals to the large crowd. We were also somewhat skeptical of what information the organizers could provide on the local community. In hindsight, this was an error on our part because we should not neglect interacting with organizers who may be from outside the community, especially considering we are also not residents of the Park Street neighborhood. We did speak to some community members who were waiting in line for food, who reported that the group has been serving meals consistently for several months. 

Based on their website, Food4Lives does not appear to have a firm ideological standpoint besides feeding the homeless through regular meal services. Their vision is “a community where homelessness is addressed with compassion, empowering every individual to rebuild their lives.” We will make sure to interact with the group the next time we see them in person. In the meantime, our investigators should brainstorm ways in which we can constructively struggle alongside existing charity groups such as Food4Lives. 

From Investigation, to Agitation, to Organization

Social investigation is an important first step to community organizing, but we cannot investigate forever. Once enough information has been gathered and the key contradictions are identified, the organizers should collectively synthesize this information before returning to the community with the “new” information. To “synthesize” means to combine a number of things into a coherent whole. By synthesizing contradictions, we are taking the reported issues and connecting them to the capitalist system as whole. Therefore, when we return to the community with this synthesized information, it is not “new,” but it is being presented in a different form.  

The agitation stage can take the form of speaking with people, posting flyers, or other creative means of propaganda. Whereas social investigation is primarily about listening to the concerns of community members, agitation requires a more mutual conversation. Social investigation is listen, listen, listen, while agitation is listen, respond, listen, respond. It is a conversation in which we expose the contradictions in their barest form, while gauging the community member’s own opinions and political consciousness. 

For example, we know that homelessness is a fundamental law of capitalist development, that this sub-proletariat serves as a reserve labor pool for the capitalist, and that the Amerikan welfare system tries to paper over this contradiction with a small percentage of imperialist superprofits. In the social investigation phase, we hear all varieties of opinion on the homelessness question. We hear both sympathy and chauvinism from property owners. In the agitation phase, we may push back on chauvinist ideas from the petit-bourgeois, in order to investigate which, if any, progressive causes can be used to organize small property owners. For example, a renter may say something along the lines of, “I feel bad for the homeless and I know pushing them out won’t solve the problem, but I hate it when they trespass on my property.” A statement like this shows at least some level of consciousness on the homeless question, but there is still a clear element of respect for private property and a short term interest in labor discipline against the homeless. This sentiment is also another example of individualism; empathy for the homeless person is subverted because they are being personally impacted in a negative way. While we may not fully challenge these ideas on a social investigation, we should challenge them when we return to the community for agitation. 

Among those already displaying a revolutionary, or at least anti-state, consciousness, we can take the conversations much further, and even begin to approach the person’s thoughts on organization. 

We should expect the politically advanced individual to hold unacknowledged contradictions in their ideology. For example, a person may agree with the need to organize the community, and to hold mass meetings outside the electoral framework. In this same conversation, the same community member might express the long term goal of setting up a non-profit organization, applying for grant money, and other forms of integration with the state. We would agree with the need for grassroots organizing and mass meetings, but would almost certainly disagree with the notion of embedding ourselves in the non-profit complex. Those grants generally come with strings attached. The agitation stage is the correct time to pose these problems to the community member, to start a conversation around correct organizing models. 

The agitation phase should be used as a precursor to more grounded and collective forms of organization. We have identified the mass meeting as one possible method having significant potential in many oppressed localities. The mass meeting is not a new concept, having been utilized by Indigenous nations for centuries, as well as among the “heretics” in Medieval Europe. In more recent times, both the American Indian Movement (AIM) and the Black Panther Party (BPP) took their original forms through a series of mass meetings. For more information on the Mass Meeting, read The Mass Meeting by the Red Clarion. 

Investigation Never Truly Ends

While we emphasize the need to create organizing models that extend beyond the initial investigatory phase, there is also the need to continuously analyze the situation through a dialectical lens. The contradictions are fluid; they may be exacerbated or reduced by a number of factors, especially the state, which may or may not make concessions depending on the situation. To say that the investigation never truly ends means to affirm our role as dialecticians, always looking to criticize and improve our past analyses. 

The All-Empire Worker’s League encourages all its member organizations to conduct propaganda among the masses with revolutionary potential. If you or your organization are interested in beginning or refining a social investigation, do not hesitate to reach out. 

Dare to Struggle, Dare to Win!

1. A garrison refers to a fortified location from which military campaigns are planned and enacted against outside groups.
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The modern executive branch of the US government is designed to work in the general interests, not only of the entire class of US capitalists, but also for the general welfare of the US economy and, as a result, manages the interests of the entire petty bourgeois and labor-aristocratic classes. But what does this mean? There are three classes that directly benefit from the US empire’s stability and economic success: 1) the big imperialist bourgeoisie, the finance capitalists invested in US firms like Bill Gates, the Kochs, etc.; 2) the petty bourgeoisie, those who own their own capital but also have to work; and 3) the labor aristocrats, roughly defined here as those proletarians who receive more than the global average pay for their labor-time.² It is the political expectation that the executive branch will look out for the interests of these three classes. Affordable college and healthcare and access to purchasing land (usually in the form of housing) is part of that understanding. Most division between the Republicans and the Democrats actually comes down to which section of these classes to favor the most.

The Fed has generally played a neutral role in these feuds, leaning toward the Democratic camp of stability to benefit the petty bourgeoisie and labor aristocrats. The reserve system regulates the country’s money supply, which has a direct impact on the velocity of exchange (how quickly money or credit changes hands; in other words, how many transactions occur in any given time), on the total price of all commodities produced in the US market, and on the total number of those commodities produced. These figures are interdependent and related to one another on a push-pull basis, and they trend toward an equilibrium. That equilibrium can be expressed through the following equation:

(p * q) / v = m

Where p = the price of all commodities produced in the economic unit (the US market), q = the total number of commodities in that unit, v = the velocity of money, and m = the total money supply.³ Changes in any of these variables will cause subsequent changes in the others as they move toward the above equilibrium.

Inflation is reflected in the variable (p). For instance, all things remaining equal, if (m), the money supply, increases, either (p) or (q) must increase, or (v) must decrease. The regulation of this process is central to the purpose of the reserve system to prevent, on the one hand, runaway hyperinflation, and on the other, the velocity of money trending toward zero, either of which would cause a catastrophic collapse in the US economy, freezing transactions and halting production. For more details on the role of the Fed, see “The Inevitable Capitalist Crisis Looms” in the Red Clarion.

The thing now under dispute is the Fed’s overnight bank funding rate,⁴ the rate of interest which other banks must pay to one another or to the Fed if their own money supply is below the reserve amount required by the Securities and Exchange Commission (SEC) for large broker-dealers to ensure the bank can cover its loans at the end of any given day. This rate determines the interest rate for all lending in the US economy. All other lending rates are set somewhere higher than this Federal rate. The lower the lending rates, the more speculative investments will become as money can be loaned with less risk to the lender and thus the borrower. The reason this number is the source of conflict among the ruling class is because it embodies a contradiction in the interests of the major classes invested in the performance of the US economy.

For the big bourgeoisie, it is objectively better for their capacity to invest and make profits if the interest rates are zero. Although the Fed had historically always maintained some interest rate, in the wake of the 2008 crash the Fed set the interest rates to 0%. The US economy had been on this “life support” rate from 2008 until the 2020 economic crisis triggered by COVID-19. An interest rate of zero, however, will not remove excess money from the economy. At the beginning of 2020, the money supply was at 4,000 thousand billion USD. Today, the money supply is at 19,000 billion USD, reflecting a nearly five-fold increase.⁵ It also tends to make banks more unstable (as they will lend far more than they can safely cover), and increase the velocity of money by encouraging increased lending and investment. As a consequence, either the total number of commodities in US markets must fall (and why would they? There has been no change in production) or the price of commodities must rise. This rise is inflation.

The rise in the price of articles of consumption – consumer commodities – has a negligible effect on the big bourgeoisie. They can afford any increase, however large, because personal consumption is a marginal amount of their overall money. Even the rise in the price of means of production – raw materials, machines, factories, land, etc. – would lag significantly behind the gains made as a result of zero-percent lending at the federal level. Indeed, even if the banks should fail and the economy collapse, history has proven that the big bourgeoisie are shielded from the worst effects of that crash and would be able to buy up the resources of those smaller bourgeoisie and petty bourgeoisie that are driven into bankruptcy, default, or foreclosure for pennies on the dollar, further concentrating their stranglehold on the country’s economic resources.

Conversely, the labor aristocrats cannot weather such a storm and consumer inflation, particularly of necessary staples like food and healthcare. It can drive labor aristocrats into the ranks of the working proletariat and cost them their comfortable class-basis – their homes, their long-term investments, etc. It is in their interests to keep interest rates high, reduce or slow the rate of inflation, and ensure that the banks remain stable.

The petty bourgeoisie, possessing economic relations that are both bourgeois and proletarian, tend to be more like the labor aristocracy when it comes to this question than the big bourgeoisie. Inflation in the costs of the means of production will inevitably drive a significant portion of the petty bourgeoisie out of their class and down into the proletariat as the continued running of their businesses becomes financially untenable. The upper ranks of the petty bourgeoisie – those able to draw on reserves of credit or who are becoming regionally powerful and are on the cusp of entering the lower ranks of the big bourgeoisie – tend to prefer the lowering of the interest rates so they can attempt to grow their money-capital and progress out of their class and enter the big bourgeoisie.

What, then, does this grand jury indictment mean? The Fed has consistently kept the interest rates higher than they had been since 2008 for the past several years. President Trump, acting as the hammer of the big bourgeoisie, has made repeated demands that the Fed lower those interest rates.

On Sunday, January 11, the chair of the Federal Reserve, Jerome Powell, released a video statement in which he said that the subpoenas are an attempt to force him to capitulate to the White House’s political demands. That, in essence, Trump will force him out unless he does not agree to lower the federal interest rate. This matters for three reasons. First, it is an unprecedented breaking of ranks and airing of internal political differences between the Fed and the White House. Second, it suggests a continued feud within the ruling class over how to distribute the spoils of empire. Third, if the Fed does lower the interest rate and if, as a result, inflation explodes more than it already has done, this will result in the proletarianization of large numbers of labor aristocrats and petty bourgeoisie, the closure of many routes available to students and young people intent on entering those classes, and an overall increase in the size of the revolutionary mass base.

For us, the first issue means we have an opportunity to expose the machinery of the state and how it functions. We must also be aware of the concurrent risk here; the left-liberals, the Democrats mostly, will use the extraordinary nature of this rupture to bang their anti-Trump drum and try to recuperate their ramshackle coalition. This risk is real and requires our active intervention to minimize the number of petty bourgeoisie and labor aristocrats who are ideologically drawn back into their orbit.

As to the second reason, we must be extremely wary of declaring that the imperialist bargain between the big bourgeoisie and the upper ranks of the working class is breaking down.⁶ However, we do have the benefit of the bourgeoisie’s own mouthpieces such as the Wall Street Journal and the Financial Times to help understand their perspective. Although both sources have been moderate in their reporting of the Powell investigation, both have taken soft pro-Powell and anti-Trump stances.⁷ We can also look to the stock market, which has registered constrained disapproval as investments were moved from stocks into gold.⁸

If there is a fracture between elements of the big bourgeoisie, that group supporting Trump’s nationalist position (as opposed to the old neoliberal internationalism of capital) is growing and the neoliberal position is dwindling.⁹

Therefore, we must begin to prepare for our third conclusion. Trump has rarely allowed himself to be stymied by decorum or procedural niceties. He now holds the US Supreme Court by a wide margin should any of his actions be enjoined by a federal judge. We should first prepare immediate agitation, not demanding that Trump step back and allow Powell to continue as chair, but exposing the manner in which the Federal Reserve serves to stabilize an inherently unjust and exploitative world order. We must do our utmost to ensure the masses correctly understand that any complaints from the Democrats about Trump’s behavior aren’t on their “behalf,” but rather are intended to secure the supply of anesthesia with which they have been dulling the class struggle for a century; that the Democrats are attempting to lull US workers and petty bourgeoisie back to sleep so the empire can continue to burn, loot, and rape the world in their name.

In the intermediate term, we should prepare for a potential economic crash that may result in the unleashing of the contradictions contained by the Fed and its policies since 2020: a collapse in the real estate market and a subsequent depression triggered by numerous bank failures.

Careful attention must be paid in the coming weeks to the way in which this mini-crisis is handled by the state and by the political actors. We must continue to weigh evidence of one kind or another, and determine where the chips will fall so we can formulate a concrete plan of action. As of today, it seems that Trump is routing the supporters of neoliberal stabilization and preparing to enter a new phase of class warfare. This aligns with the White House strategy on increasing friction with ICE and the kidnapping of President Maduro: a global assault on behalf of the big bourgeoisie and the upper ranks of the petty bourgeoisie to repudiate the imperialist power-sharing that had been achieved during the last century.¹⁰ Washington has exploded the “rules-based order” it went through pains to establish over the last hundred years by acting unilaterally, in defiance of international law, and stating the geopolitical-economic interests which it is pursuing, rather than hiding its maneuvers behind high rhetoric of “democracy.”

1. The US central banking system. 
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2. Here we are using the term labor aristocracy, as elsewhere in pieces published by Clarion staff, to mean anyone who is paid more for each hour of labor than the global average. For more, see Lauesen, Torkil. Unequal Exchange: Past, Present, and Future (Iskra Books, 2025). ︎
3. See Marx, Karl. Capital, Chapter 3. This is consonant with Adam Smith’s understanding of the velocity of money.
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4. Also called the “Federal Funds Rate.”
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5. The M1 money supply over ten years, as reported by the Federal Reserve Bank of St. Louis. Accessed at https://fred.stlouisfed.org/series/M1SL.
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6. See, for instance, H.W. Edwards’ groundbreaking work Labor Aristocracy, Mass Base of Social Democracy. ︎
7. The Economist, which represents British capital, has much more firmly presented an anti-Trump position on Powell as well as on the ICE killing of Renee Good. The re-emergence of national (as opposed to international) capitalist planning in the US empire has rattled many cages in Europe. See, for instance: Financial Times, “Justice department’s probe into Jay Powell galvanizes Fed leaders to repel Donald Trump’s attacks,” Jan 12; Wall Street Journal’s, “The Fed Fights Back,” Jan. 13.
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8. On the following Monday, the day after Powell’s video, trading was muted and the DOW opened down 500 points. The transfer of money out of the stock market and into commodities represents a fear that the value of the stock market may fall.
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9. Hatred of the Federal Reserve’s regulatory power has been poured into the Libertarian movement and thus embodies a certain kind of right-liberal settlerism. This has been the preserve of an alliance of right-leaning big capitalists and upper ranks of the petty bourgeoisie since at least the early 2000s. It seems this logic is now winning over more and more of the big capitalists themselves.
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10. The neo-liberal position on immigration has always been the Democratic party line: “We need immigrants to do the jobs no one wants to do, that are too difficult, grueling, intense, or low-paying for real Americans!” The ICE sweeps represent a new ideology that flatly denies this rather grotesque logic and embodies instead the naked nationalist nativism in Washington.
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The capitalist world was rocked last week with the failure of an important venture capitalist banking firm, Silicon Valley Bank (SVB), which puts the topic of capitalist crisis once again on the forefront of everyone’s minds. What exactly is credit, and how did the bank collapse so swiftly? Where did all that money go? The answers to these questions seem like mysteries, particularly when you listen to the babbling of capitalist economists. They talk a lot about confidence and contagion, but they fundamentally leave you feeling like money itself isn’t real. That’s because they don’t understand it.

What is the Federal Reserve?

The U.S. central banking system was created in 1913 after two centuries of fighting between Yankee merchants and Dixie planters. The Civil War and Reconstruction had finally settled the fight between slave and industrial capital and, with the economic death of the slave-based planter class, the slavers’ objections to banks gave way to the need for a rationalized banking system to support the industrializing U.S. east.

After experimenting with many small private banks and no organizing authority at the end of the 19th century (this was, after all, the period of “free market” capitalism), the many monetary crises and bank failures that resulted convinced the wealthy U.S. capitalists that they needed a system to ensure monetary stability. Enter, the Federal Reserve Act of 1913. Today, the Fed (as it’s known) prints all paper bills, monitors and controls the money supply, and (loosely) controls the credit system. Because it “impinges” on the old unfettered right of capitalists to engage in certain kinds of speculative theft, extreme fiscal reactionaries are always screaming about abolishing it so they can more nakedly swindle the working masses. In reality, the Federal Reserve is one of the most important tools in the U.S. capitalist arsenal to maintain stability and delay the periodic crises of overproduction that cause depressions and recessions.

The Fed is a system of 12 chartered, state banks, funded by an excise on the private banks in the U.S. that operate as the country’s monetary authority. It operates through the tacit agreement of the capitalist class. Above all else, it serves the monopoly capitalists by giving structure and stability to finance capital. As a “neutral” arbiter, the Fed stands above the individual whims of the thieving capitalists and works to coordinate the overall economy. It manipulates U.S. credit and currency, punishes the capitalists that step too far out of line or try to cheat other capitalists too brazenly or completely, and works diligently to shift the result of every  capitalist misstep from the shoulders of the capitalists themselves so their costs are borne by the working classes.

The Fed controls the money supply. That’s the amount of circulating currency (and credit) in the U.S. economy. It controls real physical bills because it is the issuer of all new currency and it destroys old currency to maintain a desired number of bills in circulation. Credit is a more complicated creature, but rest-assured that the Fed has a wide variety of tools for controlling the credit system, all of which will be addressed below. Finally, the Federal Reserve is the so-called lender of last resort.

Raising Money

When the federal government of the U.S. empire needs to spend money to act – for instance, to pay off a segment of its bourgeois capitalist class so it can buy the shiniest and deadliest new weapons for the U.S. armed forces – it can’t turn to taxes. The federal government has been engaged in “deficit spending” – spending more than it raises in taxes – since 2001.

To get new money to spend on programs to buy off the working classes, to pay the salaries of flunkies and lackeys, to manufacture deadly missiles or fund invasions, the Federal Reserve sells securities. These are debt-instruments, basically government I.O.U.s. They’re known as treasury bills, notes, and bonds. You may see savvy capitalists referring to these as T-bills, T-notes, and T-bonds.

Treasury bills are a promise to pay at a future date – a kind of credit. Treasury bills have a face value, generally $1,000 although bills in excess of $5m have been sold. They have a maturity date which can be 4, 8, 13, 26 or 52 weeks. Treasury bills are sold at a discount, meaning the Fed promises to pay $1,000 for some amount less than $1,000 at the time of purchase. The Fed auctions off treasury bills in exchange for currency. The currency thus acquired is used to pay current government debts.

Treasury notes are essentially the same as treasury bills, however they have a maturity date between 2 and 10 years and they pay interest rather than maturing to face value.

Treasury bonds are exactly the same as treasury notes, except they have maturity dates between 10 and 30 years.

When these state debt instruments are sold, they are exchanged for currency, which can either be used to fund government spending, or taken out of circulation if the Fed is attempting to shrink the money supply.

They are also sold in secondary markets – that is, traded between people who own them. Their exchange value in the secondary market is a function of the interest rate that was set at the time of the bill’s issuance (which is usually related to the Federal Funds Rate, more on that below), maturity date, and demand. When the Fed increases the Federal Funds Rate to control inflation (as it is doing now), older T-bills are worth less because all newly issued T-bills will tend to match the higher Federal Funds Rate – and why buy a bill with an interest rate of 2% when you can buy one with a rate of 5%?

Quantitative Easing

This is the actual mechanism by which the Federal Reserve increases the money supply. Quantitative easing is performed by the Federal Reserve printing new money or creating new demand accounts or other forms of currency, and then using that sudden increase to buy back outstanding T-bills, notes, or bonds. Redemption auctions are how the money enters circulation. Money that did not exist before is thus exchanged for outstanding federal debt.

If this sounds to you like circular logic of the capitalists paying themselves for the benefit of buying their own debt and money, you aren’t far off. For instance, let’s say Northrop Grumman wants to sell its new, unreleased, B-21 for $700 million to the U.S. air force. The Fed issues 700,000 $1,000 T-bills and the money for the B-21 comes pouring in from the other corporations. The government turns around and buys the bomber using the money it’s taken in through these auctions. Then, let’s say there’s a credit crunch and the economy is “in danger” – that is, a number of banks fail and suddenly firms all over the U.S. are in danger of folding. The Fed can turn around and buy back that very same $700 million in T-bills using newly created money.

The logic behind this is to grant further liquidity to the economy – that is, to make it possible to circulate more money on investments, to stimulate spending and borrowing, and to keep capital turning over. In practice, this means devaluing the already-issued currency that’s out there. Because production hasn’t increased, because there are no new products on the market, the only thing that can change to handle the increased currency amount is an effective reduction in value; that is, inflation.

The Fed helps capitalist firms trade values like this, and every time anything goes wrong, it uses quantitative easing to make sure the capitalists have enough money to keep operating… and, because the new money is always issued to capitalist firms, the real, material effect of this is to shift the burden to those who can’t afford or don’t know to participate in these auctions: the working classes. By engaging in this practice, the Fed changes the overall distribution of currency, increasing its concentration in the hands of capitalists and reducing the purchasing power of the money in the hands of the working classes. It is the most sophisticated scheme of defrauding the public that has ever been devised.

The Reserve Requirement

The Fed, as a response to the market crash of 1929 which began the Great Depression, took regulatory steps to try to prevent bank runs from occuring in the future. A bank run occurs when a bank has lent more than it actually has (borrowing on credit and leveraging debt as described above) and enough account holders attempt to simultaneously withdraw their money that the bank can’t cover all the withdrawals.

The Fed has historically required banks to maintain a certain amount of currency so they can cover their debts. This requirement is flexible and generally set by the Federal Reserve Board. This rate each bank is required to keep is calculated by using the current reserve ratio. This is calculated as Bank Deposits x Reserve Ratio. For instance, if the Board sets the reserve ratio at 10% and a bank has deposits of $1 billion, the bank is required to keep at least $100 million of currency so it can cover a bank run of up to that amount.

Currently, the Reserve Ratio is 0%. This means banks are not required to keep any currency on-hand. The Fed changed this rule during the pandemic as part of the federal government’s program to force people back to work without crashing the capitalist economy. This is, of course, instead of a planned economy in which we would have been quarantined and taken care of – all of us – until the danger from the pandemic passed. Instead, Washington declared open season for speculation by telling the banks they could literally spend all of their money, and the Fed would make sure everyone’s deposits were covered.

Interest Rates, the Discount Rate, the Federal Funds Rate, and the Prime Rate

Interest rates are how much future production is owed for presently-issued credit. That is, if a loan is taken out and currency is given, a certain amount of currency will be due back at a future date, calculated at a percentage rate based on the loan agreement. This percentage-rate-over-time is the interest rate of the loan.The Federal Reserve controls interest rates by controlling the federal funds rate, which in turn is used by banks to set the prime lending rate, and all other rates for progressively less “credit-worthy” loans are calculated using the prime lending rate as a starting point.

Discount Rate and Federal Funds Rate

The federal funds rate is the rate that the Federal Reserve banks charge other banks to borrow excess cash reserves. What does this mean? If a bank is going to close its business day with less than the federally mandated reserve requirement on hand, it is required to borrow the difference from its local branch of the Federal Reserve bank, and to repay it with an interest rate set by the Federal Reserve. This is called the discount rate.

Banks could also choose to borrow from other banks to cover the reserve amount on the overnight loan. This is usually cheaper than borrowing from the Federal Reserve by 50 basis points (1/100th of 1%) and is called the federal funds rate. The federal funds rate is also set by the Fed. It is currently 0.25 as a result of the pandemic. The rate was 1.5 prior to the pandemic.

Prime Lending Rate

The prime rate is the interest rate offered by banks to their most creditworthy corporate customers. All other loan interest rates are calculated using the prime rate as reference. Prime rates are different at every bank, and calculations are done as to how much they should charge customers who have very little chance of defaulting, but almost all of these calculations use the federal funds rate as a benchmark. Thus, by changing the federal funds rate and the discount rate, the Fed can influence the rates of all loans and all credit throughout the entire U.S. imperial monetary system.

Lender of Last Resort

The Fed is the U.S. “lender of last resort” – which means that, should a major bank or other institution fail to secure funds to remain solvent, the Fed will lend the required amount out to that bank to prevent its collapse. This is accomplished using the tools listed above, and is the Fed’s primary purpose: as a backstop to secure the entire U.S. economy.

The Current Crisis

The collapse of SVB and the threats now facing the economy are the direct result of this atmosphere of deregulation. It’s tempting to frame this as a return to the “bad old days” of the early 20th century, before regulations were adopted as the result of the Great Depression, but the fact of the matter is that this situation is actually worse. This isn’t a case where there is a kind of lawless frontier where there are no regulations – instead, the Fed has been actively encouraging wild speculation by promising cheap (actually, essentially free) and easy money.

That means loans have been given out like candy. The atmosphere of excessive speculation on bad investments started in 2008 with the general reduction in regulation to try to pull the economy back from the brink of the huge crisis that struck it that year; ever since, speculative investments (investments on things that promise huge returns but likely won’t pan out) have been spreading. Why not, if the Fed is going to give you zero-interest money to try things out with? As the rate of profit sinks, speculation becomes more attractive.

With COVID, things kicked into overdrive. The bourgeoisie, always half-grifter to begin with, has seen an explosion of companies that do absolutely nothing and promise the moon. Because firms, particularly tech firms, can take many years to pan out into profitability, every investor is looking for the next Apple- or Microsoft-to-be. Some of these tech companies, like Uber and DoorDash, model their entire business on keeping themselves alive through venture-capital infusions until they manage to take over the whole market, driving out the already-existing firms, and creating a tech-based monopoly. To get from plucky startup to tech supergiant, these firms need constant infusions of “venture capital,” or investment cash, because they don’t turn a profit. With money as loose and liquid as it has been, the number of hucksters and snake-oil salesmen has ballooned. Firms that never had any intention of producing anything resembling a profit sprang up overnight. Their “plucky” CEOs filled their pockets with investment cash and have every intention of declaring bankruptcy, shuttering the non-producing firm, and doing a runner with the money.

SVB was one of the chief repositories of investment cash for this kind of non-firm. As the Fed tried to reign in the inflation it had caused by creating and injecting twice the already-existing currency into the system (you read that right, the Fed increased the money so much during the pandemic that 2/3rds of all U.S. dollars currently in circulation have been created just since 2020) it put SVB and other speculator’s banks in danger. In order to fight inflation, the Fed raised the interest rates. When the interest rates go up, the value of Treasury bills goes down. 

SVB, already under-capitalized and exposed to a potential catastrophe, held a lot of Treasury bills. The bank also “owned” a lot of intellectual property – the valuation of which is completely subjective. Intellectual property can’t be liquidated at a moment’s notice either; the only way to transform it into hard currency is either to sell it or to use it to produce profit.

As the price of its assets plummeted and its owners realized it wouldn’t be able to cover withdrawals from its major clients, it started emergency procedures to get more money… which tipped off its clients that it was in trouble, who then all simultaneously tried to withdraw their funds – causing a run on the bank.

Now the Fed has come in to save the day and repay all the depositors. Where will they get the money to do that? You guessed it, by selling Treasury bills! In fact, they announced they would sponsor a special loan program where they overvalue collateral. You can already see how this is kicking the can down the street for the next big crash, which is just around the corner. They’re trying to shore up a leaking ship. And the thing is, they’re shoring it up by punishing the working classes, none of whom receive any of this benefit.

Every day, a dollar in your hand is worth less than the day before. Every day, food costs more, fuel costs more, heat and cooling cost more. Every day, your paycheck shrinks. Why? Blame the thieves of thieves at SVB. Blame the flunkies and lackeys at the Fed. Blame your senator, who probably had dinner with a huge SVB investor last night – a man that asked them to make sure they were protected. But most of all, blame the monopoly capitalist – the speculator, who gets to walk away from the speculation, purse intact.