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    As published in Harper’s Magazine. Let’s start with your 2006 Harper’s article. What did you see happening at that point? It was very clear that more and more of everybody’s income had to go to buying a
  • @Anonymous
    Land value, from which the landlord derives his rent, does not derive from the landlord's input. That's why empty lots can sit idly for years and increase in value. That's why absentee landlordism is a thing.

    I am no economist. I am quoting my father, who worked in the financial side of the oil and gas business for his entire career, mostly for what became Exxon. He said they learned very early on that undeveloped property did not actually increase in value greater than the rate of inflation. Empty lots are not the same as absentee landlordism. The latter might make you some money. The former will not.

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  • anon • Disclaimer says:

    The United States is the richest country in the history of the world. Our poor may be starving for something but it isn’t food, since they are fat.

    Why do people feel so poor? I have no real idea.

    Consider this. Commodity prices are declining. Since 2008, the US has built out the infrastructure to produce its own oil. Manufactured goods are cheaper than ever. The only things that aren’t have government dictated supply constraints. Medical care and higher education. And real estate in desirable locations where zoning and other supply constraints prevent building more. The rule of real estate is location/location/location.

    Capital has even gotten cheaper. There is a shortage of safe investment. Hence government bonds pay zero real interest rates — with 10 year treasuries yielding slightly more than inflation.

    Right now, the issue is immigration and health care. Without governmental constraints on supply, the latter would be cheap. But it is now absurdly expensive in the US. If we have open borders and give away governmental funded services it is an ugly situation. Open borders creates the illusion of growth. It prevents deflation, since it creates demand for certain services and it creates a demand for housing new people and an even greater demand for housing that is isolated from the externalities caused by poor neighbors.

    The problem being that you can import cheap manufactured goods but you can’t import highly productive taxpayers.

    Your property is theft. My property is hard earned and deserved.

    The problem with capitalism is growth. We can’t grow our way out of entitlement imbalances by importing poor people. Yet people think it can be done. Because short term, it appears to have some benefit.

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  • @bluedog
    Damn I like your thinking one of the few who can see beyond "I want mine too" and it exposes all that is wrong with the capitalist system...

    Yeah, because in “socialist” systems people aren’t selfinterested. I hadn’t noticed that.

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  • @Sunbeam
    "I was with Prof. Hudson until his last comments. Not everyone who collects “rent” considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don’t consider it unearned."

    That's nice. But are you economically useful?

    Looking at it as a game, tell me what benefit you bring to the other players as a game theory argument.

    If you had been feckless in youth, your consumption would have required someone to service it, providing an economic benefit as the Keynes argument about broken windows and repairmen goes.

    But let's consider the case of a young Poindexter that saves his money, so he can buy his first rental property so he can be a rent seeker too.

    Specify to me the benefit to anyone else in the system?

    You look at yourself and see virtue in the Horatio Alger sense. To my eyes you are the game theory version of AIDS though.

    Dunno though. Maybe I got you wrong and you made your money by manufacturing or making specialty porn.

    Couldn’t get your act together enough to buy rental property, eh? “Game theory version of AIDS”? Bitter, man, and strange.

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  • TG says:

    Response to Diversity Heretic: Yes, I hear you. And I applaud your diligence and personal self-denial. But yes, you are indeed a rentier. Sorry.

    Suppose that I worked hard and saved a lot of money. Then I buy a section of highway that is the only way to get into a city, and I charge everyone who passes through twenty bucks. (Oh, and I used some of my savings to bribe a politician so I got the road paying only 10 cents on the dollar). I don’t even maintain the road – I let the city do that, or threaten to let the road decay – I just collect rent automatically, forever, for nothing, having produced nothing.

    I think there is a separation here between my honorably accruing wealth, and then using the wealth to bribe politicians and buy a tollbooth and scam everyone else forever.

    Even Adam Smith said that there is a difference between passive rent collection, and active management – though sometimes an individual may wear two hats and do both (an owner-operator of a farm), but still these are separable. Or someone may own apartment blocks and collect unearned rent – but also add value through active management. These are two separate activities, even if done by the same person.

    I don’t fault you for taking advantage of the system as it is, but that you would get tax advantages for passively collecting rents, while people who are actively building things and doing things are taxed at higher rates, is, I think, not fair, and not good for the whole of society.

    Suppose everyone tried to do what you did at the same time? Suppose all of us ‘saved,’ and lived on very little, then invested in passive rent-seeking without building anything or doing anything. The society would collapse and we would all starve. What is good for an individual might not be good for the society as a whole (‘the paradox of thrift’). I suggest that any activity that, if everyone did it at once, would result in a disaster, might not be so benign.

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    • Agree: bluedog
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  • @CanSpeccy
    So you your unstated argument is that inherited wealth is as good as merit as the determinant of an individual's social status material advantages.

    Most people, most of whom inherited nothing of any significance, probably disagree. So, in a democracy, the sovereign people would confirm the merit of estate taxes — or as I would prefer, a capital tax, levied at the rate of 1.5% with generous exemptions to limit application of the tax to the truly wealthy. That would generate something like half a trillion in the US, which would go a long way toward eliminating the deficit and fulfilling Warren Buffet's plea to be taxed more — about a billion a year more.

    And a flat tax would raise much more but then again with the corruption in the government that will never come to light..

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  • @ANON
    My questions at the end were of course rhetorical simply intended to remind you or prompt you to think of the obvious. That some people wbo inherit wealth do not use it well is as obvious as the examples of those that have taken publicly beneficial advantage of inherited wealth. But, so what?

    So you your unstated argument is that inherited wealth is as good as merit as the determinant of an individual’s social status material advantages.

    Most people, most of whom inherited nothing of any significance, probably disagree. So, in a democracy, the sovereign people would confirm the merit of estate taxes — or as I would prefer, a capital tax, levied at the rate of 1.5% with generous exemptions to limit application of the tax to the truly wealthy. That would generate something like half a trillion in the US, which would go a long way toward eliminating the deficit and fulfilling Warren Buffet’s plea to be taxed more — about a billion a year more.

    Read More
    • Replies: @bluedog
    And a flat tax would raise much more but then again with the corruption in the government that will never come to light..
    ReplyAgree/Disagree/Etc.
  • @Diversity Heretic
    I hadn't intended to comment further but I'm going to anyway about "collecting rents." Does anyone out there think that rents just magically appear in the mailbox or the bank account? Lots of tenants are deadbeats and getting them out of property, and paying tenants in can be agony. In one case in which I was involved, a tenant failed to pay the rent for several months and then claimed damages because the refrigerator had malfunctioned and spoiled a $700 bottle of wine. Can't pay the rent but can afford a $700 bottle of wine to put in the fridge? And the judge bought it!

    I remember seeing a segment on French TV about a property owner who was living in a shelter because he could not evict a non-paying tenant. And what about the tenant who not only doesn't pay the rent but trashes the apartment? There are a lot of landlords who refuse to rent to Section 8 tenants, even tough most of the rent is guaranteed, because they know what they'll find when the tenants move out, or are finally evicted when they can't even come with their minimal share of the rent. Industrial and commercial property evictions are easier but finding new tenants for property configured a certain way can be difficult.

    So anyone who thinks that the life of a rentier is easy, make sure your unicorn is fed and watered and say hi to the trolls under the bridge and the fairies that dance around the toadstools on your lawn. They're all just as real as your perception.

    Yep then you have the slumlords who have the right connections who rent places out without a working toilet or anything else, and the cities are full of them but they charge a lower rent because in many cases its people can pay, and that’s with two working, and of course that’s the other side of the coin..

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  • Anonymous • Disclaimer says:
    @ANON
    I suspect you are wrong about the tax situation in your second par as you certainly are in the distinction you make wrt IP in the first. Like land titles IP is created by decision of the lawmaking sovereign authority (and upheld by the same system of courts). The beneficiaries may have had absolutely nothing to do with the "productive labor". It may in fact be Agatha Christie's great-grandchildren who have reaped the royalties for productions of "The Mouse Trap" decades after her death but it could have been an opportunistic speculator who bought the copyright cheap from her son when he was in debt....

    Yes, all formal property titles are government constructs. But the assets themselves aren’t. A piece of land or a novel aren’t government constructs. The difference between land and intellectual property is that the latter is created by productive labor and enterprise, whereas the former isn’t. Thus the incentive structure affects them differently.

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  • I hadn’t intended to comment further but I’m going to anyway about “collecting rents.” Does anyone out there think that rents just magically appear in the mailbox or the bank account? Lots of tenants are deadbeats and getting them out of property, and paying tenants in can be agony. In one case in which I was involved, a tenant failed to pay the rent for several months and then claimed damages because the refrigerator had malfunctioned and spoiled a $700 bottle of wine. Can’t pay the rent but can afford a $700 bottle of wine to put in the fridge? And the judge bought it!

    I remember seeing a segment on French TV about a property owner who was living in a shelter because he could not evict a non-paying tenant. And what about the tenant who not only doesn’t pay the rent but trashes the apartment? There are a lot of landlords who refuse to rent to Section 8 tenants, even tough most of the rent is guaranteed, because they know what they’ll find when the tenants move out, or are finally evicted when they can’t even come with their minimal share of the rent. Industrial and commercial property evictions are easier but finding new tenants for property configured a certain way can be difficult.

    So anyone who thinks that the life of a rentier is easy, make sure your unicorn is fed and watered and say hi to the trolls under the bridge and the fairies that dance around the toadstools on your lawn. They’re all just as real as your perception.

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    • Agree: RadicalCenter
    • Replies: @bluedog
    Yep then you have the slumlords who have the right connections who rent places out without a working toilet or anything else, and the cities are full of them but they charge a lower rent because in many cases its people can pay, and that's with two working, and of course that's the other side of the coin..
    ReplyAgree/Disagree/Etc.
  • ANON • Disclaimer says:
    @CanSpeccy
    Rather than placing the responsibility upon me to rebut arguments that you do not make, I suggest that you first make those arguments. In particular, I should like to know your case for inherited property. And in making that case, I suggest that you explain why it was a good thing, for example, that David Rockefeller was enabled to devote time and vast wealth to a conspiracy to destroy the nation state, to the great benefit of the globalist (mainly inherited) Money Power but at great cost to the American people, merely because his grandfather created an oil monopoly.

    My questions at the end were of course rhetorical simply intended to remind you or prompt you to think of the obvious. That some people wbo inherit wealth do not use it well is as obvious as the examples of those that have taken publicly beneficial advantage of inherited wealth. But, so what?

    Read More
    • Replies: @CanSpeccy
    So you your unstated argument is that inherited wealth is as good as merit as the determinant of an individual's social status material advantages.

    Most people, most of whom inherited nothing of any significance, probably disagree. So, in a democracy, the sovereign people would confirm the merit of estate taxes — or as I would prefer, a capital tax, levied at the rate of 1.5% with generous exemptions to limit application of the tax to the truly wealthy. That would generate something like half a trillion in the US, which would go a long way toward eliminating the deficit and fulfilling Warren Buffet's plea to be taxed more — about a billion a year more.

    ReplyAgree/Disagree/Etc.
  • ANON • Disclaimer says:
    @Anonymous
    IP is created by the productive labor and enterprise of a particular person. Land isn't. If the Duke of Westminster died or never existed, the land his estates sit on would still exist. That's not the case with IP.

    Ownership does motivate people, which is why the situation whereby people's labor and enterprise are taxed to pay for the ownership rights of the Duke of Westminster while the Duke of Westminster pays relatively less or no property tax is a severe corruption of that incentive structure.

    I suspect you are wrong about the tax situation in your second par as you certainly are in the distinction you make wrt IP in the first. Like land titles IP is created by decision of the lawmaking sovereign authority (and upheld by the same system of courts). The beneficiaries may have had absolutely nothing to do with the “productive labor”. It may in fact be Agatha Christie’s great-grandchildren who have reaped the royalties for productions of “The Mouse Trap” decades after her death but it could have been an opportunistic speculator who bought the copyright cheap from her son when he was in debt….

    Read More
    • Replies: @Anonymous
    Yes, all formal property titles are government constructs. But the assets themselves aren't. A piece of land or a novel aren't government constructs. The difference between land and intellectual property is that the latter is created by productive labor and enterprise, whereas the former isn't. Thus the incentive structure affects them differently.
    ReplyAgree/Disagree/Etc.
  • @Clearpoint
    There are economists who are propagandists for the elite, who benefit from the system as is, and who use macroeconomic models to justify the system and hide the truth, and there are economists like Hudson who have stayed true to the wisdom of classical economics. Agenda matters. It doesn't matter if you're selling magical elixers or magical economic models.

    There are economists who are propagandists for the elit

    They are virtually all propagandists for the elite, or so said Harvard economics professor John Kenneth Galbraith.

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  • @jilles dykstra
    The 2008 crash in my opinion had a very simple cause: 'economists' believing their own phantasies, laid down in complicated mathematical models, that they themselves did not understand.

    As Varoufakis states 'since 1970 macro economics has not been taught anywhere in the world'.
    There is no such thing as 'absolute minimum value'.
    No value is guaranteed, if anyone invents synthetic gold tomorrow, the value of gold will drop to the production costs of synthetic gold.

    Stupidity of economists is a disaster, in 1997 70 Dutch economists warned that the euro cannot function, they were severely harmed in their careers, the euro is a disaster, yet agriculturalist Dijsselbloem, chairman of the euro group, promotes 'muddling on'.
    The only sensible analysis of the derivates disaster I found in
    Thilo Sarrazin, 'Europa braucht den Euro nicht, Wie uns politisches Wunschdenken in die Krise geführt hat', 2012 München

    Sarrazin was a member of the Board of the Bundesbank, after he publicised a book on how immigration destroys Germany Merkel fired him immediately
    Thilo Sarrazin, 'Deutschland schafft sich ab, Wie wir unser Land aufs Spiel setzen', München 2010

    Varoufakis, in my opinion also a very competent economist, also was silenced.

    This is the present world governed by believers in fairy tales, the few that see reality are fascists, Trump, nationalists, extreme right, as Le Pen, extreme left, as Mélenchon.

    People like Sarrazin and Varoufakis are silenced, a man whose education was bookbinding wants to lead Germany, a woman educated in physics leads Europe.

    In the Netherlands someone who for eleven years studied art history, and someone with little more than primary education, are deciding on the future of our country: immigration, climate, EU and euro.

    Politics seems to be for those who are unfit for any productive job.

    There are economists who are propagandists for the elite, who benefit from the system as is, and who use macroeconomic models to justify the system and hide the truth, and there are economists like Hudson who have stayed true to the wisdom of classical economics. Agenda matters. It doesn’t matter if you’re selling magical elixers or magical economic models.

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    • Replies: @CanSpeccy

    There are economists who are propagandists for the elit
     
    They are virtually all propagandists for the elite, or so said Harvard economics professor John Kenneth Galbraith.
    ReplyAgree/Disagree/Etc.
  • @annamaria
    And you are confusing the efforts and the dogma. What is the difference between building a house for a kindergarten and rehabilitating and making livable an old house nearby the kindergarten for parents' convenience? Is the owner of a house for a kindergarten is a malicious rentier or part of normal business process in a functioning society? To follow the dogma, each human being has to build his/her own house and live there. Imagine that not everyone is skillful in construction and management. This level of explanation simply follows your comparison of an empty lot in center city and an underwater disaster.

    The owner of a kindergarten who runs it and earns income selling kindergarten services would not be a rentier. He would be a rentier if he rented out the building to someone who used it to run a kindergarten.

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  • anonymous • Disclaimer says:

    The description of the “rentier class” reminds me that my company had a client who was a nationally known real estate holding company in NYC which owned scores of buildings mainly in Manhattan but also in the other boroughs (No, not Trump). Many were luxury residential buildings but just as many were commercial buildings. The buildings were worth billions. Each building had a group of different owners with one exception: the president/CEO of the parent holding company owned a piece of EVERY one of the properties. In addition, this individual used to simultaneously serve as broker in the sale of the properties. It was amusing to see how buildings used to change ownership literally two, sometimes three times a day. And with each change of ownership the value would grow like topsy. It was like a Monopoly game with real property. And on each occasion the “managing partner” would extract a fee–this in addition to the vested interest he had in the sale of the property itself as an owner. It was my understanding that this is supposed to be illegal but in the world of NY real estate it’s honored in the breach.

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  • @Medvedev

    You can see for instance that blacks and Hispanics have almost no savings at all, and 50 percent of the American population as a whole doesn’t have any savings because if you’re earning a low salary
     
    What they lack is called financial responsibility. I'm a bad example, since I arrived to US with a degree. Yet, I know Asian/Slavic people, who arrived with no degree, worked minimum-wage jobs, managed to save money for local community college, became nurses, accountants, tradesmen etc and now earn more than average American.

    Rent is somebody who earns income every month or every quarter without doing any work at all, just by ownership privilege, just by inheriting wealth or somehow acquiring wealth and getting money without any work or any real value being produced
     
    Complete and utter BS. You gotta be a socialist to believe in such nonsense. Even a child in the kindergarten doesn't want to share his toy unless he gets something in return.

    You gotta be a socialist to believe in such nonsense.

    Yes, that is very “Labor Theory of Value” thinking Hudson’s displaying there. Apparently the time value of money (and assets) doesn’t figure into his view of economics.

    That’s why Henry Ford paid his workers $5.00 a day, so that they could afford to buy cars.

    What is it about economic myths like this that makes them almost unkillable (hello, “gender pay gap”)? Is it because so many people don’t really grasp economic basics? Ford paid his workers well to cut turnover, which is the lesson that need to be emphasized today, rather than the garbage about Ford “wanting them to be able to buy his cards.”

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  • @Anonymous
    You're confusing building value and land value. Most of the rent derives from land value, not building value. This is why a mansion in a volcano or underwater will have no value, and why an empty lot with no buildings on it in a city will be worth millions.

    And you are confusing the efforts and the dogma. What is the difference between building a house for a kindergarten and rehabilitating and making livable an old house nearby the kindergarten for parents’ convenience? Is the owner of a house for a kindergarten is a malicious rentier or part of normal business process in a functioning society? To follow the dogma, each human being has to build his/her own house and live there. Imagine that not everyone is skillful in construction and management. This level of explanation simply follows your comparison of an empty lot in center city and an underwater disaster.

    Read More
    • Replies: @Anonymous
    The owner of a kindergarten who runs it and earns income selling kindergarten services would not be a rentier. He would be a rentier if he rented out the building to someone who used it to run a kindergarten.
    ReplyAgree/Disagree/Etc.
  • @ANON
    Since the Grosvenor Estate includes many properties that need to be professionally managed if they are to be kept in good condition, used by those who get most value out of them and replaced when too far depreciated do you think thete are others than the Duke of Westminster's managers who would do a better job of it while paying no less tax on the net income generated?

    As for your last sentence are you sure you mean "inequity" rather than "inequality" and are intending to say that property ownership and inheritance of property are morally bad? If not, what are you saying? And what should follow from it?

    Are you aware of societies that are without the concept and practice of ownership (of thine and mine) or that do/did not recognise family claims on the deceased's properties? Do you not recognise the place that ownership has played in motivating people to achieve economic improvement? Was the creation of patent law and copyright so that IP could be worked for and enjoyed morally misconceived?

    Rather than placing the responsibility upon me to rebut arguments that you do not make, I suggest that you first make those arguments. In particular, I should like to know your case for inherited property. And in making that case, I suggest that you explain why it was a good thing, for example, that David Rockefeller was enabled to devote time and vast wealth to a conspiracy to destroy the nation state, to the great benefit of the globalist (mainly inherited) Money Power but at great cost to the American people, merely because his grandfather created an oil monopoly.

    Read More
    • Replies: @ANON
    My questions at the end were of course rhetorical simply intended to remind you or prompt you to think of the obvious. That some people wbo inherit wealth do not use it well is as obvious as the examples of those that have taken publicly beneficial advantage of inherited wealth. But, so what?
    ReplyAgree/Disagree/Etc.
  • Anonymous • Disclaimer says:
    @ANON
    Since the Grosvenor Estate includes many properties that need to be professionally managed if they are to be kept in good condition, used by those who get most value out of them and replaced when too far depreciated do you think thete are others than the Duke of Westminster's managers who would do a better job of it while paying no less tax on the net income generated?

    As for your last sentence are you sure you mean "inequity" rather than "inequality" and are intending to say that property ownership and inheritance of property are morally bad? If not, what are you saying? And what should follow from it?

    Are you aware of societies that are without the concept and practice of ownership (of thine and mine) or that do/did not recognise family claims on the deceased's properties? Do you not recognise the place that ownership has played in motivating people to achieve economic improvement? Was the creation of patent law and copyright so that IP could be worked for and enjoyed morally misconceived?

    IP is created by the productive labor and enterprise of a particular person. Land isn’t. If the Duke of Westminster died or never existed, the land his estates sit on would still exist. That’s not the case with IP.

    Ownership does motivate people, which is why the situation whereby people’s labor and enterprise are taxed to pay for the ownership rights of the Duke of Westminster while the Duke of Westminster pays relatively less or no property tax is a severe corruption of that incentive structure.

    Read More
    • Replies: @ANON
    I suspect you are wrong about the tax situation in your second par as you certainly are in the distinction you make wrt IP in the first. Like land titles IP is created by decision of the lawmaking sovereign authority (and upheld by the same system of courts). The beneficiaries may have had absolutely nothing to do with the "productive labor". It may in fact be Agatha Christie's great-grandchildren who have reaped the royalties for productions of "The Mouse Trap" decades after her death but it could have been an opportunistic speculator who bought the copyright cheap from her son when he was in debt....
    ReplyAgree/Disagree/Etc.
  • @annamaria
    "It’s unearned because it’s not generated by your productive labor or enterprise."

    Imagine someone building/renovating and making livable a house to make it a rental property, while paying off the expenses for the construction -- before seeing any profit. Not everybody likes to possess a house with all the problems coming up along with having a private property. This situation (having a few apartments for rent) is akin to having a farm as compared to mega-agribusiness.

    You’re confusing building value and land value. Most of the rent derives from land value, not building value. This is why a mansion in a volcano or underwater will have no value, and why an empty lot with no buildings on it in a city will be worth millions.

    Read More
    • Replies: @annamaria
    And you are confusing the efforts and the dogma. What is the difference between building a house for a kindergarten and rehabilitating and making livable an old house nearby the kindergarten for parents' convenience? Is the owner of a house for a kindergarten is a malicious rentier or part of normal business process in a functioning society? To follow the dogma, each human being has to build his/her own house and live there. Imagine that not everyone is skillful in construction and management. This level of explanation simply follows your comparison of an empty lot in center city and an underwater disaster.
    ReplyAgree/Disagree/Etc.
  • @dearieme
    "That’s why Henry Ford paid his workers $5.00 a day, so that they could afford to buy cars." Dear God, an economist who believes this fairy tale!

    "and then gouging the renter for whatever will bear ": oh for heaven's sake - charging a market price is "gouging"?

    "If you’re given a forest or an oil well or a mine": what tittishness. Is there no start to this fellow's understanding of society?

    I agree and well put. Next he’ll roll out the evil origin of the Rule of Thumb.

    In his last ramble Mr Hudson said Blackstone had bought houses with Cash because of the unprecedentedly low cost of borrowing. Huh?

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  • @Anonymous
    It's unearned because it's not generated by your productive labor or enterprise. When you were younger, the money you received in income from productive labor or enterprise would have been earned income.

    If you use your land to run a farm or factory, then the income you receive from your productive labor and enterprise is earned income. If you rent out your land to someone however, the rent you receive is not generated by your productive labor or enterprise, but must come from the earned income of the tenant.

    “It’s unearned because it’s not generated by your productive labor or enterprise.”

    Imagine someone building/renovating and making livable a house to make it a rental property, while paying off the expenses for the construction — before seeing any profit. Not everybody likes to possess a house with all the problems coming up along with having a private property. This situation (having a few apartments for rent) is akin to having a farm as compared to mega-agribusiness.

    Read More
    • Replies: @Anonymous
    You're confusing building value and land value. Most of the rent derives from land value, not building value. This is why a mansion in a volcano or underwater will have no value, and why an empty lot with no buildings on it in a city will be worth millions.
    ReplyAgree/Disagree/Etc.
  • @Medvedev

    Yes but you have to remember those that come here pay no taxes for x number of years
     
    This assertion is not true.

    Oh my but it is if you look it up for they have a five year grace period on taxes, then they can sell it to a family member who is an immigrant and they will receive a 5 year grace period and on and on and on..

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  • ANON • Disclaimer says:
    @CanSpeccy
    Years ago it was said of the last the Duke of Westminster that he "earned" ten thousand pounds an hour, and his heir presumably earns a lot more. But does anyone "earn" the equivalent of the national median annual income in an hour?

    In fact, most of the great rental empires, like that of the Duke of Westminster, are mostly inherited, so even if someone at some time in the past had earned money and invested it in rental property, the income from that investment has probably long ago repaid the investment in labor. Thereafter, the income is a benefit of ownership, not a reward for effort expended. Property ownership and the inheritance of property is thus a major cause of inequity between man and man.

    Since the Grosvenor Estate includes many properties that need to be professionally managed if they are to be kept in good condition, used by those who get most value out of them and replaced when too far depreciated do you think thete are others than the Duke of Westminster’s managers who would do a better job of it while paying no less tax on the net income generated?

    As for your last sentence are you sure you mean “inequity” rather than “inequality” and are intending to say that property ownership and inheritance of property are morally bad? If not, what are you saying? And what should follow from it?

    Are you aware of societies that are without the concept and practice of ownership (of thine and mine) or that do/did not recognise family claims on the deceased’s properties? Do you not recognise the place that ownership has played in motivating people to achieve economic improvement? Was the creation of patent law and copyright so that IP could be worked for and enjoyed morally misconceived?

    Read More
    • Replies: @Anonymous
    IP is created by the productive labor and enterprise of a particular person. Land isn't. If the Duke of Westminster died or never existed, the land his estates sit on would still exist. That's not the case with IP.

    Ownership does motivate people, which is why the situation whereby people's labor and enterprise are taxed to pay for the ownership rights of the Duke of Westminster while the Duke of Westminster pays relatively less or no property tax is a severe corruption of that incentive structure.
    , @CanSpeccy
    Rather than placing the responsibility upon me to rebut arguments that you do not make, I suggest that you first make those arguments. In particular, I should like to know your case for inherited property. And in making that case, I suggest that you explain why it was a good thing, for example, that David Rockefeller was enabled to devote time and vast wealth to a conspiracy to destroy the nation state, to the great benefit of the globalist (mainly inherited) Money Power but at great cost to the American people, merely because his grandfather created an oil monopoly.
    ReplyAgree/Disagree/Etc.
  • @Agent76
    I roll the Madison way without believing the two party mythology. I am an old man who was writing computer programs long before the first P.C. ever came to market in the 1990's. View this other post on this topic. Mar 20, 2017 US Debt of $20 Trillion Visualized in Stacks of Physical Cash

    Madison said it best for me, "Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives." James Madison

    Why is that idea so easily violated, then, in places like South Africa and Zimbabwe, where the ignorant lord over the knowledgeable and destroy all in the process?

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  • Years ago it was said of the last the Duke of Westminster that he “earned” ten thousand pounds an hour, and his heir presumably earns a lot more. But does anyone “earn” the equivalent of the national median annual income in an hour?

    In fact, most of the great rental empires, like that of the Duke of Westminster, are mostly inherited, so even if someone at some time in the past had earned money and invested it in rental property, the income from that investment has probably long ago repaid the investment in labor. Thereafter, the income is a benefit of ownership, not a reward for effort expended. Property ownership and the inheritance of property is thus a major cause of inequity between man and man.

    Read More
    • Replies: @ANON
    Since the Grosvenor Estate includes many properties that need to be professionally managed if they are to be kept in good condition, used by those who get most value out of them and replaced when too far depreciated do you think thete are others than the Duke of Westminster's managers who would do a better job of it while paying no less tax on the net income generated?

    As for your last sentence are you sure you mean "inequity" rather than "inequality" and are intending to say that property ownership and inheritance of property are morally bad? If not, what are you saying? And what should follow from it?

    Are you aware of societies that are without the concept and practice of ownership (of thine and mine) or that do/did not recognise family claims on the deceased's properties? Do you not recognise the place that ownership has played in motivating people to achieve economic improvement? Was the creation of patent law and copyright so that IP could be worked for and enjoyed morally misconceived?

    ReplyAgree/Disagree/Etc.
  • @jacques sheete

    I don’t consider it unearned.
     
    I have no doubt you've earned every penny, but I suspect Hudson is using the term in a specific, "academic" sense and that it probably doesn't have the same meaning that you and I would use in ordinary speech.

    I admit I haven't read the article yet, but I intend to especially since Hudson is a better thinker than most. Waaay better than the bankster mouthpieces, the Krugmans of the world, although I admit that's a pretty low bar.

    Well, he is an academic and an economist. Talk about unearned income! He knows words have meanings and, like most academics, he uses them as a bludgeon to advance his preferred objective. Rent as unearned income is similar to being told by Obama that businesses didn’t “build” that business.

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  • Anon • Disclaimer says:
    @Anonymous
    No, because the land would still be there. Rent derives primarily from land value, not building value.

    “No”? What’s your point? A purely verbal one that Humpty Dumpty *chooses* to apply the word “rent” only to what is [notionally] derived from the land?

    As empitical fact it is obvious rubbish. Just in case someone who thinks it worth making your comment can’t see it, suppoae the recipient of the landlord’s rents has. Invested $10 million in the land and then built a $60 million building on it…. And think of the case where the landord who receives the building rents has leased the land for (an initial) $400,000 a year from the state before building the $60 million high rise.

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  • @Anonymous
    It's unearned because it's not generated by your productive labor or enterprise. When you were younger, the money you received in income from productive labor or enterprise would have been earned income.

    If you use your land to run a farm or factory, then the income you receive from your productive labor and enterprise is earned income. If you rent out your land to someone however, the rent you receive is not generated by your productive labor or enterprise, but must come from the earned income of the tenant.

    Your point being? Surely not that some people use the word “unearned” narrowly and tendentiously ignoring the fact that we are not normally productive beings who can produce more than we consume from birth to death.

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  • @Miro23

    If you had been feckless in youth, your consumption would have required someone to service it, providing an economic benefit as the Keynes argument about broken windows and repairmen goes.
     
    Isn't it time to bury these stupid Keynesian arguments?

    Keynes gets the government to pay the unemployed to dig holes and fill them in again - and their spending will benefit the economy right?

    Wrong. Any use of capital is an investment and a valid investment has to be of enough quality to return the capital and pay interest. Otherwise it just builds up more government debt.

    Keynes was into being cute and clever , and unfortunately generations of leftists followed him with the "stimulus spending " idea while having no interest in the quality of the investment. They just built ever larger and more dysfunctional welfare states loaded with debt and high taxation.

    A real national investment would involve developing a world competitive workforce, world competitive manufacturing and top class infrastructure, but that would require a whole different type of government and an unimaginable level of national unity.

    Keynes would have been horrified at much of what was done or proposed as Keynesian for decades after his death and the end of the 30s Depression.

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  • @AaronB
    If you borrowed money from a bank, bought property and rented it out, and made way more in rents that it took to pay back the bank, you pretty much "did nothing" to earn that extra income. Its income earned while you sleep.

    Maintenance costs are also paid by the rent, so cost nothing.

    Hudson's point is that most property now is like this. And inheritance as well.

    Obviously, "some" people worked really hard, saved,. and bought property.

    However, even so, once you buy that property and rent it out, if your income from it vastly exceeds your investment, it is "unearned" - you produced nothing to get it. To that extent, you aren't a productive member of society.

    The second instance is obvious less bad than the first, but it is questionable if an economy should be set-up to favor these kinds of things, even if they are not entirely avoidable. An economy that favors these kinds of activities too much, especially the first, will become highly fragile.

    It makes sense.

    You almost completely ignore the passage of time and the need to have a pattern of incentives to produce, inter alia, modern residential accommodation.

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  • @bluedog
    Yes but you have to remember those that come here pay no taxes for x number of years one who came from Turkey said he paid almost nothing for his first house, and another from Romania said the same the one from Turkey said his daughter got a free pass to college, both were preparing to sell their homes and return back to their home countries, and as the one said "I can sell my home and my savings are already banked in Romania and my S.S can be sent to me there ,so I can go back and live like a queen" it seems you just didn't know how to work the system at the American taxpayers expense.!

    Yes but you have to remember those that come here pay no taxes for x number of years

    This assertion is not true.

    Read More
    • Replies: @bluedog
    Oh my but it is if you look it up for they have a five year grace period on taxes, then they can sell it to a family member who is an immigrant and they will receive a 5 year grace period and on and on and on..
    ReplyAgree/Disagree/Etc.
  • “Hudson got it entirely right”

    WHAT HE DIDN’T GET RIGHT WAS THE MILLIONS WHO GOT TO LIVE IN THEIR UNDERWATER HOUSES FOR YEARS MORTGAGE FREE.

    shoot damn caps lock.

    I know one of these people. They lived mortgage free for 48 months….and the taxes got paid by the bank.

    what a fucking scam where the honest people lose every time.

    if you pay your bills and play by the rules you’re a damn fool……..

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    • Agree: jacques sheete
    ReplyAgree/Disagree/Etc.
  • @bluedog
    Indeed as the man said "we have destroyed the one great evil communism now we must destroy the other great evil capitalism and he was right...

    Both are on different curves sides. Capitalism had exhausted its usefulness while communism or whatever it might be called was just the first attempt. I remember reading comparison between modern capitalism and Soviet style socialism as between cool sport car as Western capitalism and rusty but still primitive space ship as Soviet socialism. In any case I would take early socialism over early capitalism any time of the day. Socialism despite all its faults in the first edition still provided people with certainty and all things human needs to live and live decently. While early capitalism was quite frankly hell on earth. It takes time and there is no alternative or we shall perish.

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    • Agree: bluedog
    ReplyAgree/Disagree/Etc.
  • @edNels
    Godfrey Bloom tell's it pretty convincing but Peter Schiff...? Blahdy Blah, what a Tool!

    I roll the Madison way without believing the two party mythology. I am an old man who was writing computer programs long before the first P.C. ever came to market in the 1990′s. View this other post on this topic. Mar 20, 2017 US Debt of $20 Trillion Visualized in Stacks of Physical Cash

    Madison said it best for me, “Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives.” James Madison

    Read More
    • Replies: @Negrolphin Pool
    Why is that idea so easily violated, then, in places like South Africa and Zimbabwe, where the ignorant lord over the knowledgeable and destroy all in the process?
    ReplyAgree/Disagree/Etc.
  • @Miro23

    [But] you could say that the whole stock market is a kind of a Ponzi scheme, because $4.3 trillion has been provided to the banks by the Federal Reserve in quantitative easing to keep the interest rates down.
     
    So $4.3 trillion went into a Ponzi scheme and another $4-5 trillion went to destroy the Middle East.

    I suppose that in a parallel universe all those $trillions could have gone into developing a world competitive US workforce, world competitive US industries, middle class employment and first class US infrastructure.

    Damn I like your thinking one of the few who can see beyond “I want mine too” and it exposes all that is wrong with the capitalist system…

    Read More
    • Replies: @RadicalCenter
    Yeah, because in "socialist" systems people aren't selfinterested. I hadn't noticed that.
    ReplyAgree/Disagree/Etc.
  • @Agent76
    This is how the one that triggered the faux bailout of the Bank's.

    Barney Frank Does Not Believe a Housing Bubble Exists Although He Created it 2005

    In 2005 Said Barney Frank on September 25, 2003: "I want to roll the dice a little bit more in this situation towards subsidized housing."

    https://youtu.be/rgsxtbI9N68

    How The Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo & Barack Obama

    It started under Jimmy Carter with the CRA which was put on steroids under the leadership of President Bill Clinton and his thug in chief, Sec of HUD, Andrew Cuomo.

    https://youtu.be/gpj4gcdm_JQ

    Oh they knew they were creating a bubble when under Reagan, when David Stockman Reagans budget director wanted to remove Freddy and Fannie from a GSP and force them to go to the street for the money, but the house republicans threw a fit crying about all the business’s who would loose money if they did that,thus the bail-outs que’s which would follow a few years later that plunged the country neck deep in debt, a debt left for the taxpayers and their g grand children to pay off a debt they will never pay off…The Great Deformation by David Stockman

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  • @Sunbeam
    "I was with Prof. Hudson until his last comments. Not everyone who collects “rent” considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don’t consider it unearned."

    That's nice. But are you economically useful?

    Looking at it as a game, tell me what benefit you bring to the other players as a game theory argument.

    If you had been feckless in youth, your consumption would have required someone to service it, providing an economic benefit as the Keynes argument about broken windows and repairmen goes.

    But let's consider the case of a young Poindexter that saves his money, so he can buy his first rental property so he can be a rent seeker too.

    Specify to me the benefit to anyone else in the system?

    You look at yourself and see virtue in the Horatio Alger sense. To my eyes you are the game theory version of AIDS though.

    Dunno though. Maybe I got you wrong and you made your money by manufacturing or making specialty porn.

    If you had been feckless in youth, your consumption would have required someone to service it, providing an economic benefit as the Keynes argument about broken windows and repairmen goes.

    Isn’t it time to bury these stupid Keynesian arguments?

    Keynes gets the government to pay the unemployed to dig holes and fill them in again – and their spending will benefit the economy right?

    Wrong. Any use of capital is an investment and a valid investment has to be of enough quality to return the capital and pay interest. Otherwise it just builds up more government debt.

    Keynes was into being cute and clever , and unfortunately generations of leftists followed him with the “stimulus spending ” idea while having no interest in the quality of the investment. They just built ever larger and more dysfunctional welfare states loaded with debt and high taxation.

    A real national investment would involve developing a world competitive workforce, world competitive manufacturing and top class infrastructure, but that would require a whole different type of government and an unimaginable level of national unity.

    Read More
    • Replies: @ANON
    Keynes would have been horrified at much of what was done or proposed as Keynesian for decades after his death and the end of the 30s Depression.
    ReplyAgree/Disagree/Etc.
  • @TomSchmidt
    According to Drucker, Ford's profits doubled the year after raising the wage, because it so dramatically cut his labor costs. Ford understood the cost of training, and the usual way that companies pay for training is by hiring someone and paying a salary while they learn the ropes. That's 3-6 months of low productivity, so basically a half year's salary is spent on training for companies that do not effectively on-board people. Because the assembly line was so miserable for skilled labor, you had to offer a lot of economic balm to get people to stay.

    I think it was Walter Reuther, head of the UAW, who, when shown a car-making robot, asked how many cars it would buy.

    Hitler admired Ford, Ford could produce a car for 300 dollar while in Germany an Opel cost 1500 RM.
    USA production methods were far superior to European methods.
    After Pearl Harbour USA production specialists visited British aircraft factories, they were flabbergasted about the inefficiënt methods.
    In 1942 Ford began to produce bombers as if they were cars.
    Charles Lindbergh assisted him in setting up the production.
    Liberty ships were built faster than German U boats could sink them.

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  • @Agent76
    Jun 9, 2017 Political Theater Trumps Economic Data

    https://youtu.be/ozbX1dzlTUA

    Godfrey Bloom tell’s it pretty convincing but Peter Schiff…? Blahdy Blah, what a Tool!

    Read More
    • Replies: @Agent76
    I roll the Madison way without believing the two party mythology. I am an old man who was writing computer programs long before the first P.C. ever came to market in the 1990's. View this other post on this topic. Mar 20, 2017 US Debt of $20 Trillion Visualized in Stacks of Physical Cash

    Madison said it best for me, "Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives." James Madison

    ReplyAgree/Disagree/Etc.
  • Anonymous • Disclaimer says:
    @Diversity Heretic
    I was with Prof. Hudson until his last comments. Not everyone who collects "rent" considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don't consider it unearned.

    It’s unearned because it’s not generated by your productive labor or enterprise. When you were younger, the money you received in income from productive labor or enterprise would have been earned income.

    If you use your land to run a farm or factory, then the income you receive from your productive labor and enterprise is earned income. If you rent out your land to someone however, the rent you receive is not generated by your productive labor or enterprise, but must come from the earned income of the tenant.

    Read More
    • Replies: @Anon
    Your point being? Surely not that some people use the word "unearned" narrowly and tendentiously ignoring the fact that we are not normally productive beings who can produce more than we consume from birth to death.
    , @annamaria
    "It’s unearned because it’s not generated by your productive labor or enterprise."

    Imagine someone building/renovating and making livable a house to make it a rental property, while paying off the expenses for the construction -- before seeing any profit. Not everybody likes to possess a house with all the problems coming up along with having a private property. This situation (having a few apartments for rent) is akin to having a farm as compared to mega-agribusiness.

    ReplyAgree/Disagree/Etc.
  • [But] you could say that the whole stock market is a kind of a Ponzi scheme, because $4.3 trillion has been provided to the banks by the Federal Reserve in quantitative easing to keep the interest rates down.

    So $4.3 trillion went into a Ponzi scheme and another $4-5 trillion went to destroy the Middle East.

    I suppose that in a parallel universe all those $trillions could have gone into developing a world competitive US workforce, world competitive US industries, middle class employment and first class US infrastructure.

    Read More
    • Replies: @bluedog
    Damn I like your thinking one of the few who can see beyond "I want mine too" and it exposes all that is wrong with the capitalist system...
    ReplyAgree/Disagree/Etc.
  • @jacques sheete
    Ouch!

    I must admit that I agree with your comment.

    Hudson did define "rent" and he certainly appears to not give adequate credit to the landlord's foresight, negative time preference, labor, vigilance, discipline, risk assumption,and other extremely important forms of input.

    I wonder how he'd respond to the charge!

    Land value, from which the landlord derives his rent, does not derive from the landlord’s input. That’s why empty lots can sit idly for years and increase in value. That’s why absentee landlordism is a thing.

    Read More
    • Replies: @BCR
    I am no economist. I am quoting my father, who worked in the financial side of the oil and gas business for his entire career, mostly for what became Exxon. He said they learned very early on that undeveloped property did not actually increase in value greater than the rate of inflation. Empty lots are not the same as absentee landlordism. The latter might make you some money. The former will not.
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  • @Anon
    Indeed. On the logic of the Hudson view you would be a rentier ripe for plucking if you bought land and built houses on it that you then rented out for more than would pay your outgoings to maintain them and your ownership of them. Obviously you wouldn't have spent your money and time to build them if you weren't allowed to get a deferred reward for tbat expenditure which made it worthwhile.

    No, because the land would still be there. Rent derives primarily from land value, not building value.

    Read More
    • Replies: @Anon
    "No"? What's your point? A purely verbal one that Humpty Dumpty *chooses* to apply the word "rent" only to what is [notionally] derived from the land?

    As empitical fact it is obvious rubbish. Just in case someone who thinks it worth making your comment can't see it, suppoae the recipient of the landlord's rents has. Invested $10 million in the land and then built a $60 million building on it.... And think of the case where the landord who receives the building rents has leased the land for (an initial) $400,000 a year from the state before building the $60 million high rise.
    ReplyAgree/Disagree/Etc.
  • @Diversity Heretic
    I was with Prof. Hudson until his last comments. Not everyone who collects "rent" considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don't consider it unearned.

    If you borrowed money from a bank, bought property and rented it out, and made way more in rents that it took to pay back the bank, you pretty much “did nothing” to earn that extra income. Its income earned while you sleep.

    Maintenance costs are also paid by the rent, so cost nothing.

    Hudson’s point is that most property now is like this. And inheritance as well.

    Obviously, “some” people worked really hard, saved,. and bought property.

    However, even so, once you buy that property and rent it out, if your income from it vastly exceeds your investment, it is “unearned” – you produced nothing to get it. To that extent, you aren’t a productive member of society.

    The second instance is obvious less bad than the first, but it is questionable if an economy should be set-up to favor these kinds of things, even if they are not entirely avoidable. An economy that favors these kinds of activities too much, especially the first, will become highly fragile.

    It makes sense.

    Read More
    • Replies: @Anonymous
    You almost completely ignore the passage of time and the need to have a pattern of incentives to produce, inter alia, modern residential accommodation.
    ReplyAgree/Disagree/Etc.
  • Jun 9, 2017 Political Theater Trumps Economic Data

    Read More
    • Replies: @edNels
    Godfrey Bloom tell's it pretty convincing but Peter Schiff...? Blahdy Blah, what a Tool!
    ReplyAgree/Disagree/Etc.
  • @jilles dykstra
    The 2008 crash in my opinion had a very simple cause: 'economists' believing their own phantasies, laid down in complicated mathematical models, that they themselves did not understand.

    As Varoufakis states 'since 1970 macro economics has not been taught anywhere in the world'.
    There is no such thing as 'absolute minimum value'.
    No value is guaranteed, if anyone invents synthetic gold tomorrow, the value of gold will drop to the production costs of synthetic gold.

    Stupidity of economists is a disaster, in 1997 70 Dutch economists warned that the euro cannot function, they were severely harmed in their careers, the euro is a disaster, yet agriculturalist Dijsselbloem, chairman of the euro group, promotes 'muddling on'.
    The only sensible analysis of the derivates disaster I found in
    Thilo Sarrazin, 'Europa braucht den Euro nicht, Wie uns politisches Wunschdenken in die Krise geführt hat', 2012 München

    Sarrazin was a member of the Board of the Bundesbank, after he publicised a book on how immigration destroys Germany Merkel fired him immediately
    Thilo Sarrazin, 'Deutschland schafft sich ab, Wie wir unser Land aufs Spiel setzen', München 2010

    Varoufakis, in my opinion also a very competent economist, also was silenced.

    This is the present world governed by believers in fairy tales, the few that see reality are fascists, Trump, nationalists, extreme right, as Le Pen, extreme left, as Mélenchon.

    People like Sarrazin and Varoufakis are silenced, a man whose education was bookbinding wants to lead Germany, a woman educated in physics leads Europe.

    In the Netherlands someone who for eleven years studied art history, and someone with little more than primary education, are deciding on the future of our country: immigration, climate, EU and euro.

    Politics seems to be for those who are unfit for any productive job.

    Jilles Dykstra, know and share these with folk’s for a reality check.

    The Fed Audit

    GAO (Government Accountability Office) report Of the Federal Reserve

    http://www.gao.gov/new.items/d11696.pdf

    May 21, 2013 Why the whole banking system is a scam – Godfrey Bloom MEP

    • European Parliament, Strasbourg, 21 May 2013

    • Speaker: Godfrey Bloom MEP, UKIP (Yorkshire & Lincolnshire)

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  • @Jonathan Mason
    The pending real estate crash will be a great boon for those who are currently renting and saving to buy a home in the future. It is an ill wind that blows nobody any good.

    “The pending real estate crash will be a great boon for those who are currently renting and saving to buy a home in the future. It is an ill wind that blows nobody any good.”

    You’re assuming their savings won’t be wiped out in the big reset. Ever notice that the super-wealthy keep very little of their wealth in banks or financial assets?

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  • The pending real estate crash will be a great boon for those who are currently renting and saving to buy a home in the future. It is an ill wind that blows nobody any good.

    Read More
    • Replies: @The Alarmist

    "The pending real estate crash will be a great boon for those who are currently renting and saving to buy a home in the future. It is an ill wind that blows nobody any good."
     
    You're assuming their savings won't be wiped out in the big reset. Ever notice that the super-wealthy keep very little of their wealth in banks or financial assets?
    ReplyAgree/Disagree/Etc.
  • @dearieme
    "That’s why Henry Ford paid his workers $5.00 a day, so that they could afford to buy cars." Dear God, an economist who believes this fairy tale!

    "and then gouging the renter for whatever will bear ": oh for heaven's sake - charging a market price is "gouging"?

    "If you’re given a forest or an oil well or a mine": what tittishness. Is there no start to this fellow's understanding of society?

    According to Drucker, Ford’s profits doubled the year after raising the wage, because it so dramatically cut his labor costs. Ford understood the cost of training, and the usual way that companies pay for training is by hiring someone and paying a salary while they learn the ropes. That’s 3-6 months of low productivity, so basically a half year’s salary is spent on training for companies that do not effectively on-board people. Because the assembly line was so miserable for skilled labor, you had to offer a lot of economic balm to get people to stay.

    I think it was Walter Reuther, head of the UAW, who, when shown a car-making robot, asked how many cars it would buy.

    Read More
    • Replies: @jilles dykstra
    Hitler admired Ford, Ford could produce a car for 300 dollar while in Germany an Opel cost 1500 RM.
    USA production methods were far superior to European methods.
    After Pearl Harbour USA production specialists visited British aircraft factories, they were flabbergasted about the inefficiënt methods.
    In 1942 Ford began to produce bombers as if they were cars.
    Charles Lindbergh assisted him in setting up the production.
    Liberty ships were built faster than German U boats could sink them.
    ReplyAgree/Disagree/Etc.
  • @Sergey Krieger
    Current state of affairs is a logical development of this system called capitalism which was predicted by Marx. This cancerous growth is going to have us all firstly enslaved then killed be if allowed to continue. The stage when capitalism was progressive is long past which has been obvious for about some 50 years. It had fullfilled it's goal but as social development is not precise science it is hard to predict when next stage will come. Quite obviously it is about more fair, just, communal and sustainable society which would provide decent life for all and allow full development for those with true talents and true fruition of what science has achieved in all society interests. We also must go and develop and explore Solar system as our continuos survival depends on it. Capitalism is a dead end. I hope next stage will be achieved before capitalism kills us all.

    Indeed as the man said “we have destroyed the one great evil communism now we must destroy the other great evil capitalism and he was right…

    Read More
    • Replies: @Sergey Krieger
    Both are on different curves sides. Capitalism had exhausted its usefulness while communism or whatever it might be called was just the first attempt. I remember reading comparison between modern capitalism and Soviet style socialism as between cool sport car as Western capitalism and rusty but still primitive space ship as Soviet socialism. In any case I would take early socialism over early capitalism any time of the day. Socialism despite all its faults in the first edition still provided people with certainty and all things human needs to live and live decently. While early capitalism was quite frankly hell on earth. It takes time and there is no alternative or we shall perish.
    ReplyAgree/Disagree/Etc.
  • The idea that rent doesn’t involve work is ludicrous to people that own or manage rental properties. However, maybe the author is correct in his overall assertion, that the rules of the economic game have changed / been changed to reward asset ownership too much, vs. Production of beneficial goods…. especially in manufacturing, agriculture, and mining. There’s much more and easier money to be made renting out properties, owning stocks, and manipulating currencies …. than making and servicing things. By the way, I have rental properties, am involved in stocks, and speculate on cryptocurrencies, etc….. but also have worked in, and have relatives who presently work in manufacturing , service industries, and agriculture. So my observations come from reality. I would prefer being of greater benefit like my relatives, but to make money I have to play by the creepy new rules of this economic game.

    Read More
    ReplyAgree/Disagree/Etc.
  • Mar 20, 2017 US Debt of $20 Trillion Visualized in Stacks of Physical Cash

    Showing stacks of physical cash in following sequence: $100, $10,000, $1 Million, $2 Billion, $1 Trillion, $20 Trillion. The faith and value of the US Dollar rests on the Government’s ability to repay its debt. “The money in the video has already been spent”

    FEBRUARY 23, 2016 The World’s Debt Is Alarmingly High, But Is It Contagious?

    The world has continued to borrow hand over fist since the financial crisis, adding nearly $60 trillion since 2007 in the process of pushing the worldwide debt load to $200 trillion, or nearly three times the size of the entire global economy.

    http://www.bloomberg.com/news/articles/2016-02-22/the-world-s-debt-is-alarmingly-high-but-is-it-contagious

    Read More
    ReplyAgree/Disagree/Etc.
  • @Medvedev

    You can see for instance that blacks and Hispanics have almost no savings at all, and 50 percent of the American population as a whole doesn’t have any savings because if you’re earning a low salary
     
    What they lack is called financial responsibility. I'm a bad example, since I arrived to US with a degree. Yet, I know Asian/Slavic people, who arrived with no degree, worked minimum-wage jobs, managed to save money for local community college, became nurses, accountants, tradesmen etc and now earn more than average American.

    Rent is somebody who earns income every month or every quarter without doing any work at all, just by ownership privilege, just by inheriting wealth or somehow acquiring wealth and getting money without any work or any real value being produced
     
    Complete and utter BS. You gotta be a socialist to believe in such nonsense. Even a child in the kindergarten doesn't want to share his toy unless he gets something in return.

    Yes but you have to remember those that come here pay no taxes for x number of years one who came from Turkey said he paid almost nothing for his first house, and another from Romania said the same the one from Turkey said his daughter got a free pass to college, both were preparing to sell their homes and return back to their home countries, and as the one said “I can sell my home and my savings are already banked in Romania and my S.S can be sent to me there ,so I can go back and live like a queen” it seems you just didn’t know how to work the system at the American taxpayers expense.!

    Read More
    • Replies: @Medvedev

    Yes but you have to remember those that come here pay no taxes for x number of years
     
    This assertion is not true.
    ReplyAgree/Disagree/Etc.
  • @Diversity Heretic
    I was with Prof. Hudson until his last comments. Not everyone who collects "rent" considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don't consider it unearned.

    Ouch!

    I must admit that I agree with your comment.

    Hudson did define “rent” and he certainly appears to not give adequate credit to the landlord’s foresight, negative time preference, labor, vigilance, discipline, risk assumption,and other extremely important forms of input.

    I wonder how he’d respond to the charge!

    Read More
    • Replies: @Anonymous
    Land value, from which the landlord derives his rent, does not derive from the landlord's input. That's why empty lots can sit idly for years and increase in value. That's why absentee landlordism is a thing.
    ReplyAgree/Disagree/Etc.
  • This is how the one that triggered the faux bailout of the Bank’s.

    Barney Frank Does Not Believe a Housing Bubble Exists Although He Created it 2005

    In 2005 Said Barney Frank on September 25, 2003: “I want to roll the dice a little bit more in this situation towards subsidized housing.”

    How The Democrats Caused The Financial Crisis Starring HUD Sec Andrew Cuomo & Barack Obama

    It started under Jimmy Carter with the CRA which was put on steroids under the leadership of President Bill Clinton and his thug in chief, Sec of HUD, Andrew Cuomo.

    Read More
    • Replies: @bluedog
    Oh they knew they were creating a bubble when under Reagan, when David Stockman Reagans budget director wanted to remove Freddy and Fannie from a GSP and force them to go to the street for the money, but the house republicans threw a fit crying about all the business's who would loose money if they did that,thus the bail-outs que's which would follow a few years later that plunged the country neck deep in debt, a debt left for the taxpayers and their g grand children to pay off a debt they will never pay off...The Great Deformation by David Stockman
    ReplyAgree/Disagree/Etc.
  • On more practical note. As I live in Toronto prices here are out of control and I daily see signs house sold about asking price. I wonder what part of their bodies people use while making decision to get into real estate market which is in obvious bubble stage. Last year I was talking with one real estate guy who while doing his job was also wondering same about people taking on $500-700000 mortgages. Now it is even more. $1000000 is quite a possibility. One with a little beat of basic math skills should have known long time ago that even after mortgage is paid off he is never going to be expenses free. I got into this in 2004 when prices were just starting to rise and even with far smaller mortgage expense was quite significant. Now it must be total murder especially considering property taxes which are through the roof and hydro expenses which are out of control . People are just like lemings. In real estate just like in all other markets there is a limited window of opportunity to enter be to make real gains. The only difference is that real estate market has far longer cycles. I’m hoping real estate should have never been in the market game as it is just a shelter.

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  • Isn’t fha only a small amount of overall loans?

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  • Current state of affairs is a logical development of this system called capitalism which was predicted by Marx. This cancerous growth is going to have us all firstly enslaved then killed be if allowed to continue. The stage when capitalism was progressive is long past which has been obvious for about some 50 years. It had fullfilled it’s goal but as social development is not precise science it is hard to predict when next stage will come. Quite obviously it is about more fair, just, communal and sustainable society which would provide decent life for all and allow full development for those with true talents and true fruition of what science has achieved in all society interests. We also must go and develop and explore Solar system as our continuos survival depends on it. Capitalism is a dead end. I hope next stage will be achieved before capitalism kills us all.

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    • Replies: @bluedog
    Indeed as the man said "we have destroyed the one great evil communism now we must destroy the other great evil capitalism and he was right...
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  • @Diversity Heretic
    I was with Prof. Hudson until his last comments. Not everyone who collects "rent" considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don't consider it unearned.

    I believe this may be what we’re looking for, but it’d be nice if Hudson would comment.

    “Economic rent.”

    http://www.investopedia.com/terms/e/economicrent.asp

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  • Anon • Disclaimer says:
    @Diversity Heretic
    I was with Prof. Hudson until his last comments. Not everyone who collects "rent" considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don't consider it unearned.

    Indeed. On the logic of the Hudson view you would be a rentier ripe for plucking if you bought land and built houses on it that you then rented out for more than would pay your outgoings to maintain them and your ownership of them. Obviously you wouldn’t have spent your money and time to build them if you weren’t allowed to get a deferred reward for tbat expenditure which made it worthwhile.

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    • Replies: @Anonymous
    No, because the land would still be there. Rent derives primarily from land value, not building value.
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  • “I was with Prof. Hudson until his last comments. Not everyone who collects “rent” considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don’t consider it unearned.”

    That’s nice. But are you economically useful?

    Looking at it as a game, tell me what benefit you bring to the other players as a game theory argument.

    If you had been feckless in youth, your consumption would have required someone to service it, providing an economic benefit as the Keynes argument about broken windows and repairmen goes.

    But let’s consider the case of a young Poindexter that saves his money, so he can buy his first rental property so he can be a rent seeker too.

    Specify to me the benefit to anyone else in the system?

    You look at yourself and see virtue in the Horatio Alger sense. To my eyes you are the game theory version of AIDS though.

    Dunno though. Maybe I got you wrong and you made your money by manufacturing or making specialty porn.

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    • Replies: @Miro23

    If you had been feckless in youth, your consumption would have required someone to service it, providing an economic benefit as the Keynes argument about broken windows and repairmen goes.
     
    Isn't it time to bury these stupid Keynesian arguments?

    Keynes gets the government to pay the unemployed to dig holes and fill them in again - and their spending will benefit the economy right?

    Wrong. Any use of capital is an investment and a valid investment has to be of enough quality to return the capital and pay interest. Otherwise it just builds up more government debt.

    Keynes was into being cute and clever , and unfortunately generations of leftists followed him with the "stimulus spending " idea while having no interest in the quality of the investment. They just built ever larger and more dysfunctional welfare states loaded with debt and high taxation.

    A real national investment would involve developing a world competitive workforce, world competitive manufacturing and top class infrastructure, but that would require a whole different type of government and an unimaginable level of national unity.
    , @RadicalCenter
    Couldn't get your act together enough to buy rental property, eh? "Game theory version of AIDS"? Bitter, man, and strange.
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  • I don’t consider it unearned.

    I have no doubt you’ve earned every penny, but I suspect Hudson is using the term in a specific, “academic” sense and that it probably doesn’t have the same meaning that you and I would use in ordinary speech.

    I admit I haven’t read the article yet, but I intend to especially since Hudson is a better thinker than most. Waaay better than the bankster mouthpieces, the Krugmans of the world, although I admit that’s a pretty low bar.

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    • Replies: @Anonymous White Male
    Well, he is an academic and an economist. Talk about unearned income! He knows words have meanings and, like most academics, he uses them as a bludgeon to advance his preferred objective. Rent as unearned income is similar to being told by Obama that businesses didn't "build" that business.
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  • @Diversity Heretic
    I was with Prof. Hudson until his last comments. Not everyone who collects "rent" considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don't consider it unearned.

    Your children will inherit your holdings – because there is no effective estate tax generational wealth is preserved – and become rentiers, collecting profit without ever producing work.

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  • “That’s why Henry Ford paid his workers $5.00 a day, so that they could afford to buy cars.” Dear God, an economist who believes this fairy tale!

    “and then gouging the renter for whatever will bear “: oh for heaven’s sake – charging a market price is “gouging”?

    “If you’re given a forest or an oil well or a mine”: what tittishness. Is there no start to this fellow’s understanding of society?

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    • Replies: @TomSchmidt
    According to Drucker, Ford's profits doubled the year after raising the wage, because it so dramatically cut his labor costs. Ford understood the cost of training, and the usual way that companies pay for training is by hiring someone and paying a salary while they learn the ropes. That's 3-6 months of low productivity, so basically a half year's salary is spent on training for companies that do not effectively on-board people. Because the assembly line was so miserable for skilled labor, you had to offer a lot of economic balm to get people to stay.

    I think it was Walter Reuther, head of the UAW, who, when shown a car-making robot, asked how many cars it would buy.
    , @David
    I agree and well put. Next he'll roll out the evil origin of the Rule of Thumb.

    In his last ramble Mr Hudson said Blackstone had bought houses with Cash because of the unprecedentedly low cost of borrowing. Huh?
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  • I’d only quibble with the idea that the economy has ‘grown’ over the past decade. The only ‘target’ Bernanke and Yellen have hit is their 2% annual consumer price index increase. Any GDP growth has been, at best, nominal and in reality just additional debt. Its a bit like running up your credit card balance by $10,000 over the course of a year and imagining you got a pay increase.

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    • Agree: bluedog
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  • You can see for instance that blacks and Hispanics have almost no savings at all, and 50 percent of the American population as a whole doesn’t have any savings because if you’re earning a low salary

    What they lack is called financial responsibility. I’m a bad example, since I arrived to US with a degree. Yet, I know Asian/Slavic people, who arrived with no degree, worked minimum-wage jobs, managed to save money for local community college, became nurses, accountants, tradesmen etc and now earn more than average American.

    Rent is somebody who earns income every month or every quarter without doing any work at all, just by ownership privilege, just by inheriting wealth or somehow acquiring wealth and getting money without any work or any real value being produced

    Complete and utter BS. You gotta be a socialist to believe in such nonsense. Even a child in the kindergarten doesn’t want to share his toy unless he gets something in return.

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    • Replies: @bluedog
    Yes but you have to remember those that come here pay no taxes for x number of years one who came from Turkey said he paid almost nothing for his first house, and another from Romania said the same the one from Turkey said his daughter got a free pass to college, both were preparing to sell their homes and return back to their home countries, and as the one said "I can sell my home and my savings are already banked in Romania and my S.S can be sent to me there ,so I can go back and live like a queen" it seems you just didn't know how to work the system at the American taxpayers expense.!
    , @Oleaginous Outrager

    You gotta be a socialist to believe in such nonsense.
     
    Yes, that is very "Labor Theory of Value" thinking Hudson's displaying there. Apparently the time value of money (and assets) doesn't figure into his view of economics.

    That’s why Henry Ford paid his workers $5.00 a day, so that they could afford to buy cars.
     
    What is it about economic myths like this that makes them almost unkillable (hello, "gender pay gap")? Is it because so many people don't really grasp economic basics? Ford paid his workers well to cut turnover, which is the lesson that need to be emphasized today, rather than the garbage about Ford "wanting them to be able to buy his cards."
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  • The 2008 crash in my opinion had a very simple cause: ‘economists’ believing their own phantasies, laid down in complicated mathematical models, that they themselves did not understand.

    As Varoufakis states ‘since 1970 macro economics has not been taught anywhere in the world’.
    There is no such thing as ‘absolute minimum value’.
    No value is guaranteed, if anyone invents synthetic gold tomorrow, the value of gold will drop to the production costs of synthetic gold.

    Stupidity of economists is a disaster, in 1997 70 Dutch economists warned that the euro cannot function, they were severely harmed in their careers, the euro is a disaster, yet agriculturalist Dijsselbloem, chairman of the euro group, promotes ‘muddling on’.
    The only sensible analysis of the derivates disaster I found in
    Thilo Sarrazin, ‘Europa braucht den Euro nicht, Wie uns politisches Wunschdenken in die Krise geführt hat’, 2012 München

    Sarrazin was a member of the Board of the Bundesbank, after he publicised a book on how immigration destroys Germany Merkel fired him immediately
    Thilo Sarrazin, ‘Deutschland schafft sich ab, Wie wir unser Land aufs Spiel setzen’, München 2010

    Varoufakis, in my opinion also a very competent economist, also was silenced.

    This is the present world governed by believers in fairy tales, the few that see reality are fascists, Trump, nationalists, extreme right, as Le Pen, extreme left, as Mélenchon.

    People like Sarrazin and Varoufakis are silenced, a man whose education was bookbinding wants to lead Germany, a woman educated in physics leads Europe.

    In the Netherlands someone who for eleven years studied art history, and someone with little more than primary education, are deciding on the future of our country: immigration, climate, EU and euro.

    Politics seems to be for those who are unfit for any productive job.

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    • Agree: jacques sheete
    • Replies: @Agent76
    Jilles Dykstra, know and share these with folk's for a reality check.

    The Fed Audit

    GAO (Government Accountability Office) report Of the Federal Reserve

    http://www.gao.gov/new.items/d11696.pdf

    May 21, 2013 Why the whole banking system is a scam - Godfrey Bloom MEP

    • European Parliament, Strasbourg, 21 May 2013

    • Speaker: Godfrey Bloom MEP, UKIP (Yorkshire & Lincolnshire)

    https://youtu.be/hYzX3YZoMrs
    , @Clearpoint
    There are economists who are propagandists for the elite, who benefit from the system as is, and who use macroeconomic models to justify the system and hide the truth, and there are economists like Hudson who have stayed true to the wisdom of classical economics. Agenda matters. It doesn't matter if you're selling magical elixers or magical economic models.
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  • @Diversity Heretic
    I was with Prof. Hudson until his last comments. Not everyone who collects "rent" considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don't consider it unearned.

    Agree. Going without to buy a property to rent, then the interminable hassles of collection, insurance, repairs, etc for ~6.0% (taxable) income. That’s not hard work? Slum landlords might have it better. Flipping real estate is a better game.

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  • I was with Prof. Hudson until his last comments. Not everyone who collects “rent” considers it unearned. I deferred a lot of consumption in my younger days and now have investments that produce a reasonable amount of income. I don’t consider it unearned.

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    • Replies: @JGarbo
    Agree. Going without to buy a property to rent, then the interminable hassles of collection, insurance, repairs, etc for ~6.0% (taxable) income. That's not hard work? Slum landlords might have it better. Flipping real estate is a better game.
    , @Noah Way
    Your children will inherit your holdings - because there is no effective estate tax generational wealth is preserved - and become rentiers, collecting profit without ever producing work.
    , @Anon
    Indeed. On the logic of the Hudson view you would be a rentier ripe for plucking if you bought land and built houses on it that you then rented out for more than would pay your outgoings to maintain them and your ownership of them. Obviously you wouldn't have spent your money and time to build them if you weren't allowed to get a deferred reward for tbat expenditure which made it worthwhile.
    , @jacques sheete
    I believe this may be what we're looking for, but it'd be nice if Hudson would comment.

    "Economic rent."

    http://www.investopedia.com/terms/e/economicrent.asp
    , @jacques sheete
    Ouch!

    I must admit that I agree with your comment.

    Hudson did define "rent" and he certainly appears to not give adequate credit to the landlord's foresight, negative time preference, labor, vigilance, discipline, risk assumption,and other extremely important forms of input.

    I wonder how he'd respond to the charge!
    , @AaronB
    If you borrowed money from a bank, bought property and rented it out, and made way more in rents that it took to pay back the bank, you pretty much "did nothing" to earn that extra income. Its income earned while you sleep.

    Maintenance costs are also paid by the rent, so cost nothing.

    Hudson's point is that most property now is like this. And inheritance as well.

    Obviously, "some" people worked really hard, saved,. and bought property.

    However, even so, once you buy that property and rent it out, if your income from it vastly exceeds your investment, it is "unearned" - you produced nothing to get it. To that extent, you aren't a productive member of society.

    The second instance is obvious less bad than the first, but it is questionable if an economy should be set-up to favor these kinds of things, even if they are not entirely avoidable. An economy that favors these kinds of activities too much, especially the first, will become highly fragile.

    It makes sense.
    , @Anonymous
    It's unearned because it's not generated by your productive labor or enterprise. When you were younger, the money you received in income from productive labor or enterprise would have been earned income.

    If you use your land to run a farm or factory, then the income you receive from your productive labor and enterprise is earned income. If you rent out your land to someone however, the rent you receive is not generated by your productive labor or enterprise, but must come from the earned income of the tenant.
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  • For 66 years the Glass-Steagall act reduced the risks in the banking system. Eight years after the act was repealed, the banking system blew up threatening the international economy. US taxpayers were forced to come up with $750 billion dollars, a sum much larger than the Pentagon’s budget, in order to bail out the banks....
  • […] = window.adsbygoogle || []).push({}); Read more at: http://www.unz.com Share on FacebookShare on TwitterShare on […]

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  • Booming auto sales have more to do with low rates and easy financing than they do with the urge to buy a new vehicle. In the last few years, car buyers have borrowed nearly $1 trillion to finance new and used autos. Unfortunately, much of that money was lent to borrowers who have less-than-perfect credit...
  • Good way of telling, and good post to obtain information concerning my presentation subject, which i am going
    to present in academy.

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  • @Thorfinnsson
    You can criticize these loans without defending the losers who take them out.

    Nobody needs a new car. $5,000 is the most anyone needs to spend for reliable transportation, and you can easily get away with a lot less.

    The people who take out subprime auto loans for new cars are irresponsible dipshits.

    That said, a sensible financial system would prevent dipshits from harming themselves this way.

    I agree. It’s amazing how much you can save simply by buying an older, used car. I was talking to a friend a few weeks back, and he had just bought a used van for use in his business. The van had a lot of mileage on it, but he paid just $500 for it, figuring he could get at least three to five years out of it before buying a “new” vehicle. The same applies to boats. Only a fool would buy a new boat, when you can buy a relatively new boat with few miles on the engine(s) for roughly 1/3 the price of a new boat. When I heard that Marco Rubio had shelled out $80,000 for a new 24 foot boat, I concluded he was a total fool since he could have bought the equivalent used boat of the same size for about a third of that price. The problem is that it takes a little time and a lot of brains to locate the real bargains, either in cars or boats.

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  • Of course, we could just pass legislation that made it a criminal offense to intentionally issue loans to anyone who fails to meet strict, government-approved underwriting standards.

    Hellooo.

    All we’ll get is more hollow claims of “racism” and “discrimination”.

    Those issuing the loans are simply doing what Big Government Left is demanding of them.

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  • I remember about ten years back Mitsubishi had a brilliant idea to give cars to college students who had no credit, jobs, or permanent addresses, presumably because they could build brand loyalty among young educated adults. As I remember, the deal was that the payments would be deferred for the first year with the idea that once the kids graduated and got jobs they would catch up on the payments. There was a TV commercial for the offer depicting a diverse group of hipster looking kids riding around in a Mitsubishi listening to hipsterish music.
    Needless to say it was a fiasco. A lot of kids leave college with no real jobs and don’t always leave any forwarding address. In thousands of cases, the company not only never collected a payment, but Mitsubishi could not even track down the cars to repossess them. Ended some careers at Mitsubishi USA and helped further drive their US auto business into the dirt.

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  • @Diversity Heretic
    What about the idea of forcing car dealers to repurchase loans in default? Years ago, I think the financing arm of Deere and Co. had a policy of forcing a dealer to repurchase the "paper" (note and associated security interest documentation) from the financing company when a purchaser went into default. Deere & Co would help with the repossession, but the bad loan went back onto the dealer's books. If dealers knew that bad loans would come back to haunt them, their incentive to lend to very risky borrowers would be reduced. Of course, Deere didn't securitize the loans but i don't think a version of the Deere system would be impossible.

    Deere became a “bank holding company” in the last desperate days of 2008. I have a feeling they may have gone full ‘tard since then. They have been investing in stock buybacks ever since. Money that has not gone into R&D for improved products.

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  • @Heymrguda
    Right you are. In 2010 we were in temporary $ difficulties & got an '04 Mercury sable wagon for $5000. Still runs like a rr locomotive.
    You can get a good car for $5k or even less if you're patient and have some mechanical knowledge.

    What you say is true, but how much mechanical knowledge do most buyers have?

    Maybe you buy a 7 yr old car that runs like a finely-tooled Swiss watch for the next decade, or maybe you buy one that starts going to crap 6 months later, and costs you more every few months than what you’d be shelling out in car payments for a better ride. Not to mention that you’d better have a forgiving boss (and a forgiving girlfriend) if your transportation is unreliable. Even having a mechanic look it over before buying is no guarantee. I’ve bought used cars that have gone both ways, even with getting a mechanic to check them out ahead.

    That being said, a lot of poor people do go for more wasteful “bling” in their cars than people who are more financially secure.

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  • @Thorfinnsson
    You can criticize these loans without defending the losers who take them out.

    Nobody needs a new car. $5,000 is the most anyone needs to spend for reliable transportation, and you can easily get away with a lot less.

    The people who take out subprime auto loans for new cars are irresponsible dipshits.

    That said, a sensible financial system would prevent dipshits from harming themselves this way.

    Right you are. In 2010 we were in temporary $ difficulties & got an ’04 Mercury sable wagon for $5000. Still runs like a rr locomotive.
    You can get a good car for $5k or even less if you’re patient and have some mechanical knowledge.

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    • Replies: @Grandpa Jack
    What you say is true, but how much mechanical knowledge do most buyers have?

    Maybe you buy a 7 yr old car that runs like a finely-tooled Swiss watch for the next decade, or maybe you buy one that starts going to crap 6 months later, and costs you more every few months than what you'd be shelling out in car payments for a better ride. Not to mention that you'd better have a forgiving boss (and a forgiving girlfriend) if your transportation is unreliable. Even having a mechanic look it over before buying is no guarantee. I've bought used cars that have gone both ways, even with getting a mechanic to check them out ahead.

    That being said, a lot of poor people do go for more wasteful "bling" in their cars than people who are more financially secure.
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  • You can criticize these loans without defending the losers who take them out.

    Nobody needs a new car. $5,000 is the most anyone needs to spend for reliable transportation, and you can easily get away with a lot less.

    The people who take out subprime auto loans for new cars are irresponsible dipshits.

    That said, a sensible financial system would prevent dipshits from harming themselves this way.

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    • Replies: @Heymrguda
    Right you are. In 2010 we were in temporary $ difficulties & got an '04 Mercury sable wagon for $5000. Still runs like a rr locomotive.
    You can get a good car for $5k or even less if you're patient and have some mechanical knowledge.
    , @tbraton
    I agree. It's amazing how much you can save simply by buying an older, used car. I was talking to a friend a few weeks back, and he had just bought a used van for use in his business. The van had a lot of mileage on it, but he paid just $500 for it, figuring he could get at least three to five years out of it before buying a "new" vehicle. The same applies to boats. Only a fool would buy a new boat, when you can buy a relatively new boat with few miles on the engine(s) for roughly 1/3 the price of a new boat. When I heard that Marco Rubio had shelled out $80,000 for a new 24 foot boat, I concluded he was a total fool since he could have bought the equivalent used boat of the same size for about a third of that price. The problem is that it takes a little time and a lot of brains to locate the real bargains, either in cars or boats.
    ReplyAgree/Disagree/Etc.
  • What about the idea of forcing car dealers to repurchase loans in default? Years ago, I think the financing arm of Deere and Co. had a policy of forcing a dealer to repurchase the “paper” (note and associated security interest documentation) from the financing company when a purchaser went into default. Deere & Co would help with the repossession, but the bad loan went back onto the dealer’s books. If dealers knew that bad loans would come back to haunt them, their incentive to lend to very risky borrowers would be reduced. Of course, Deere didn’t securitize the loans but i don’t think a version of the Deere system would be impossible.

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    • Replies: @Big Bill
    Deere became a "bank holding company" in the last desperate days of 2008. I have a feeling they may have gone full 'tard since then. They have been investing in stock buybacks ever since. Money that has not gone into R&D for improved products.
    ReplyAgree/Disagree/Etc.
  • These remarks were made at the World Congress on Marxism, 2015, at the School of Marxism, Peking University, October 10, 2015. The presentation was part of a debate with Bertell Ollman (NYU). I was honored to be made a permanent Guest Professor at China’s most prestigious university. When I lectured here at the Marxist School...
  • @Wizard of Oz
    Help my clear thinking...

    Isn't all money credit apart from currency made of something of intrinsic value?

    That being so how does one make the crucial distinctions all the way along the spectrum from the IOU which I accept from you because I trust you and someone accepts from me, even if I haven't added my signature because everyone trusts you, to a bank cheque to a deposit acknowledged in a bank statement and the various manoeuvres central banks and Treasuries undertake to make lots of money available at low interest rates?

    Other questions. How can all the fulminating against "fiat money" stand up against the reality of what I have called a spectrum above? Why isn't the $US as good as gold as long as people accept it - as they do at all levels - and inflation doesn't take off? Why isn't it actually better than gold which fluctuates greatly in exchange value and costs money to keep (which is usually not true of money at the bank)?

    If, as I think, the US has a problem of decaying infrastructure, isn't that evidence that all the primitive "Austrian" politicians in DC should have had shovel ready projects that could have got under way in 2008 instead of leaving stimulus to the Fed which can only print money and hope it's going into the hands of those who will invest it to productive effect. Superficially the labor market has recovered so that fiscal (and/or monetary) stimulus is no longer needed but that ignores the gross underemployment. Low wages are mostly the consequence of immigration and globalisation in a world where half of the American population at least has nothing in the way of talent or education to make it worth paying them a lot more than Chinese or Mexicans.

    I'm not sure how Mr Hudson's explanations wrap all that up and blame the banks for current discontents.

    “Isn’t all money credit apart from currency made of something of intrinsic value?”

    Credit is the driver of economic expansion, along with in-hand capital. Credit increases the money supply. The ‘intrinsic value’ is there of course and you are correct. This is the capitalist virtuous circle of growth.

    Otoh, credit is extended on the basis of sound investing, whether in your house mortgage, or among firms. It gets tricky when the investment based on credit is not sound.

    Your remark about gov’t (Fed and Treasury) using Keynesian stimulus in the money supply is again a bit tricky. I am a Keynesian, but the other side of the coin of Keynesian stimulation during a slowdown, is that it assumes a return to good economic times and hence a withdrawal of all that stimulus money. Loans in effect are called back and excess green backs are literally burned.

    So far, there appears to be no end insight of present stagnation, and the Fed as well as gov’t spending (fiscal policy ) is about run out of gas. You cannot get past zero interest rates as well as too much taxation that presumably slows investment and savings. All of this appears to be the beginning of the end of the Keynesian policies. The Fed does not have any more ammunition, ditto the gov’t.

    Fiat money is just fine as long as the economy chugs along. A US dollar buys lots of nice things. A Cuban fiat peso buys less than zero. Reality . Gold is atavistic.

    Your last paragraph is correct, thank you.

    I confess that I was once a student of marxist economics. There is something to it of course, but Hudson’s obsession with Debt is single-factor analysis.

    Debt is fine as long as it leads to production and services, like a municipal bond for a sewer system that will be paid off in 10 years, and will continue to service sewage for much longer.

    You see too the importance of Consumer Demand and its sickness right now with the consequence that the economy continues to decline thru lack of consumer spending. A corollary here is that financial capital as well as American firms don’t give a damn about Americans. They will sell internationally and to hell with Americans.

    We need a nationalist economics, one partnered with White Europe to some large degree, but your country is first in practical terms, even if your race is first in theory at least.
    Both-And. thanks, Joe Webb

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  • Perfect analysis.

    And why the destruction of the nation-state is so dear to the hearts – such as they are – of the global financed system.

    Can’t have the peasantry owning their own resources can they?

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  • Excellent article.

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  • @joe webb
    more communist bum magicians auguring the entrails of Das Kapital.

    Instead of this ju-ju magical thinking, try this:


    Continuing the headline...."...stagnation, and..." immiseration of white working people who lack the money to stimulate Consumer Demand by spending lots of same. The economy has been going down hill for several years now in growth terms, per the WSJ.

    Apparently the establishment economists fail to see what is so simple that any child could see it if left unmolested by internationalist economics propaganda: Globalism is Good For You.

    For the last couple of years I have been commenting on this factor. No money in workers' hands equals no growth, only stagnation. As far as the Mexers are concerned all 50 million of them squatting in the US, as one of them said recently, the worst day in the US is better than the best day in Mexico. Think Europe in this regard with the muzzle squatters.

    Most folks think that the low interest-rate environment is a function of Fed actions. Not true. The low interest rates are due to Surplus Capital which cannot find anything worthwhile in which to invest, again, due ultimately to lack of consumer spending. No consumer spending, nothing in which to invest. A perfect storm as the cliche goes.

    Low interest rates are due to the old supply and demand equation. Weak demand for capital cheapens its price. Econ 101 in this regard.

    No way will Demand go up for Capital. Thus, there will be no increase in interest rates. More and more stagnation will finally drive down stock prices as well. Likewise, bond prices are similarly effected.

    If you are yawning now, you are making a mistake, an intellectual mistake of the first order.

    Joe Webb

    today in WSJ. I cannot get the url to show up here.


    Big Banks to America’s Firms: We Don’t Want Your Cash
    Profit-crunching low interest rates have banks judging cash too costly to keep
    By JULIET CHUNG And SARAH KROUSE
    Oct. 18, 2015 5:38 a.m. ET69 COMMENTS
    U.S. banks are going to new lengths to ward off a surprising threat to their financial health: big cash deposits.
    State Street Corp., the Boston bank that manages assets for institutional investors, for the first time has begun charging some customers for large dollar deposits, people familiar with the matter said. J.P. Morgan Chase & Co., the nation’s largest bank by assets, has cut unwanted deposits by more than $150 billion this year, in part by charging fees.
    The developments underscore a deepening conflict over cash. Many businesses have large sums on hand and opportunities to profitably invest it appear scarce. But banks don’t want certain kinds of cash either, judging it costly to keep, and some are imposing fees after jawboning customers to move it.
    The banks’ actions are driven by profit-crunching low interest rates and regulations adopted since the financial crisis to gird banks against funding disruptions.
    The latest fees center on large sums deemed risky by regulators, sometimes dubbed hot-money deposits thought likely to flee during times of crises. Finalized last September and overseen by the Federal Reserve and other regulators, the rule involving the liquidity coverage ratio forces banks to hold high-quality liquid assets, such as central bank reserves and government debt, to cover projected deposit losses over 30 days. Banks must hold reserves of as much as 40% against certain corporate deposits and as much as 100% against some deposits from hedge funds.
    “At some point you wonder whether there will be a shortage of financial institutions willing to take on these balances,” said Kelli Moll, head of Akin Gump Strauss Hauer & Feld LLP’s hedge-fund practice in New York, saying that where to hold cash has become an increasing topic of conversation as hedge funds are shown the door by long-time banking counterparties.
    ENLARGE
    The push comes as the globe is awash in cash, reflecting soft economic growth and low interest rates that limit investment. Some asset managers have been increasing the amount of cash they are holding in their portfolios, in part because of an increased focus by the Securities and Exchange Commission on liquidity management in mutual funds.
    Domestic deposits at U.S. banks in the second quarter hit $10.59 trillion, up 38% from five years earlier, Federal Deposit Insurance Corp. data show. Loans outstanding at U.S. banks as a share of total deposits tumbled to 71% from 78% in 2010 and 92% in mid-2007, before the financial crisis, the data show.
    Jerome Schneider, head of Pacific Investment Management Co.’s short-term and funding desk, which advises corporate and institutional clients, said that as a result of the bank actions, he and his customers have discussed as cash alternatives boosting investments in U.S. Treasury bonds, ultrashort-duration bond funds and money-market funds.
    When it comes to cash, Mr. Schneider said, “Clients have been put on warning.”
    Auctions for one- and three-month Treasury bills this week sold bills at zero yields, reflecting outsize demand for the securities.
    Few banks disclose how much in “nonoperating” deposits they hold. Credit Suisse GroupAG analysts estimated in August that the top four U.S. banks by assets hold roughly $650 billion in those deposits that require the highest levels of reserves.

    Help my clear thinking…

    Isn’t all money credit apart from currency made of something of intrinsic value?

    That being so how does one make the crucial distinctions all the way along the spectrum from the IOU which I accept from you because I trust you and someone accepts from me, even if I haven’t added my signature because everyone trusts you, to a bank cheque to a deposit acknowledged in a bank statement and the various manoeuvres central banks and Treasuries undertake to make lots of money available at low interest rates?

    Other questions. How can all the fulminating against “fiat money” stand up against the reality of what I have called a spectrum above? Why isn’t the $US as good as gold as long as people accept it – as they do at all levels – and inflation doesn’t take off? Why isn’t it actually better than gold which fluctuates greatly in exchange value and costs money to keep (which is usually not true of money at the bank)?

    If, as I think, the US has a problem of decaying infrastructure, isn’t that evidence that all the primitive “Austrian” politicians in DC should have had shovel ready projects that could have got under way in 2008 instead of leaving stimulus to the Fed which can only print money and hope it’s going into the hands of those who will invest it to productive effect. Superficially the labor market has recovered so that fiscal (and/or monetary) stimulus is no longer needed but that ignores the gross underemployment. Low wages are mostly the consequence of immigration and globalisation in a world where half of the American population at least has nothing in the way of talent or education to make it worth paying them a lot more than Chinese or Mexicans.

    I’m not sure how Mr Hudson’s explanations wrap all that up and blame the banks for current discontents.

    Read More
    • Replies: @joe webb
    "Isn’t all money credit apart from currency made of something of intrinsic value?"

    Credit is the driver of economic expansion, along with in-hand capital. Credit increases the money supply. The 'intrinsic value' is there of course and you are correct. This is the capitalist virtuous circle of growth.

    Otoh, credit is extended on the basis of sound investing, whether in your house mortgage, or among firms. It gets tricky when the investment based on credit is not sound.

    Your remark about gov't (Fed and Treasury) using Keynesian stimulus in the money supply is again a bit tricky. I am a Keynesian, but the other side of the coin of Keynesian stimulation during a slowdown, is that it assumes a return to good economic times and hence a withdrawal of all that stimulus money. Loans in effect are called back and excess green backs are literally burned.

    So far, there appears to be no end insight of present stagnation, and the Fed as well as gov't spending (fiscal policy ) is about run out of gas. You cannot get past zero interest rates as well as too much taxation that presumably slows investment and savings. All of this appears to be the beginning of the end of the Keynesian policies. The Fed does not have any more ammunition, ditto the gov't.

    Fiat money is just fine as long as the economy chugs along. A US dollar buys lots of nice things. A Cuban fiat peso buys less than zero. Reality . Gold is atavistic.

    Your last paragraph is correct, thank you.

    I confess that I was once a student of marxist economics. There is something to it of course, but Hudson's obsession with Debt is single-factor analysis.

    Debt is fine as long as it leads to production and services, like a municipal bond for a sewer system that will be paid off in 10 years, and will continue to service sewage for much longer.

    You see too the importance of Consumer Demand and its sickness right now with the consequence that the economy continues to decline thru lack of consumer spending. A corollary here is that financial capital as well as American firms don't give a damn about Americans. They will sell internationally and to hell with Americans.

    We need a nationalist economics, one partnered with White Europe to some large degree, but your country is first in practical terms, even if your race is first in theory at least.
    Both-And. thanks, Joe Webb
    ReplyAgree/Disagree/Etc.
  • The idea that China is not a financialized economy is bizarre.

    The author also seems confused by credit creation – veering between banks lending savings and banks creating money on a keyboard. The distinction between the two is everything.

    Read More
    ReplyAgree/Disagree/Etc.
  • more communist bum magicians auguring the entrails of Das Kapital.

    Instead of this ju-ju magical thinking, try this:

    Continuing the headline….”…stagnation, and…” immiseration of white working people who lack the money to stimulate Consumer Demand by spending lots of same. The economy has been going down hill for several years now in growth terms, per the WSJ.

    Apparently the establishment economists fail to see what is so simple that any child could see it if left unmolested by internationalist economics propaganda: Globalism is Good For You.

    For the last couple of years I have been commenting on this factor. No money in workers’ hands equals no growth, only stagnation. As far as the Mexers are concerned all 50 million of them squatting in the US, as one of them said recently, the worst day in the US is better than the best day in Mexico. Think Europe in this regard with the muzzle squatters.

    Most folks think that the low interest-rate environment is a function of Fed actions. Not true. The low interest rates are due to Surplus Capital which cannot find anything worthwhile in which to invest, again, due ultimately to lack of consumer spending. No consumer spending, nothing in which to invest. A perfect storm as the cliche goes.

    Low interest rates are due to the old supply and demand equation. Weak demand for capital cheapens its price. Econ 101 in this regard.

    No way will Demand go up for Capital. Thus, there will be no increase in interest rates. More and more stagnation will finally drive down stock prices as well. Likewise, bond prices are similarly effected.

    If you are yawning now, you are making a mistake, an intellectual mistake of the first order.

    Joe Webb

    today in WSJ. I cannot get the url to show up here.

    [MORE]

    Big Banks to America’s Firms: We Don’t Want Your Cash
    Profit-crunching low interest rates have banks judging cash too costly to keep
    By JULIET CHUNG And SARAH KROUSE
    Oct. 18, 2015 5:38 a.m. ET69 COMMENTS
    U.S. banks are going to new lengths to ward off a surprising threat to their financial health: big cash deposits.
    State Street Corp., the Boston bank that manages assets for institutional investors, for the first time has begun charging some customers for large dollar deposits, people familiar with the matter said. J.P. Morgan Chase & Co., the nation’s largest bank by assets, has cut unwanted deposits by more than $150 billion this year, in part by charging fees.
    The developments underscore a deepening conflict over cash. Many businesses have large sums on hand and opportunities to profitably invest it appear scarce. But banks don’t want certain kinds of cash either, judging it costly to keep, and some are imposing fees after jawboning customers to move it.
    The banks’ actions are driven by profit-crunching low interest rates and regulations adopted since the financial crisis to gird banks against funding disruptions.
    The latest fees center on large sums deemed risky by regulators, sometimes dubbed hot-money deposits thought likely to flee during times of crises. Finalized last September and overseen by the Federal Reserve and other regulators, the rule involving the liquidity coverage ratio forces banks to hold high-quality liquid assets, such as central bank reserves and government debt, to cover projected deposit losses over 30 days. Banks must hold reserves of as much as 40% against certain corporate deposits and as much as 100% against some deposits from hedge funds.
    “At some point you wonder whether there will be a shortage of financial institutions willing to take on these balances,” said Kelli Moll, head of Akin Gump Strauss Hauer & Feld LLP’s hedge-fund practice in New York, saying that where to hold cash has become an increasing topic of conversation as hedge funds are shown the door by long-time banking counterparties.
    ENLARGE
    The push comes as the globe is awash in cash, reflecting soft economic growth and low interest rates that limit investment. Some asset managers have been increasing the amount of cash they are holding in their portfolios, in part because of an increased focus by the Securities and Exchange Commission on liquidity management in mutual funds.
    Domestic deposits at U.S. banks in the second quarter hit $10.59 trillion, up 38% from five years earlier, Federal Deposit Insurance Corp. data show. Loans outstanding at U.S. banks as a share of total deposits tumbled to 71% from 78% in 2010 and 92% in mid-2007, before the financial crisis, the data show.
    Jerome Schneider, head of Pacific Investment Management Co.’s short-term and funding desk, which advises corporate and institutional clients, said that as a result of the bank actions, he and his customers have discussed as cash alternatives boosting investments in U.S. Treasury bonds, ultrashort-duration bond funds and money-market funds.
    When it comes to cash, Mr. Schneider said, “Clients have been put on warning.”
    Auctions for one- and three-month Treasury bills this week sold bills at zero yields, reflecting outsize demand for the securities.
    Few banks disclose how much in “nonoperating” deposits they hold. Credit Suisse GroupAG analysts estimated in August that the top four U.S. banks by assets hold roughly $650 billion in those deposits that require the highest levels of reserves.

    Read More
    • Replies: @Wizard of Oz
    Help my clear thinking...

    Isn't all money credit apart from currency made of something of intrinsic value?

    That being so how does one make the crucial distinctions all the way along the spectrum from the IOU which I accept from you because I trust you and someone accepts from me, even if I haven't added my signature because everyone trusts you, to a bank cheque to a deposit acknowledged in a bank statement and the various manoeuvres central banks and Treasuries undertake to make lots of money available at low interest rates?

    Other questions. How can all the fulminating against "fiat money" stand up against the reality of what I have called a spectrum above? Why isn't the $US as good as gold as long as people accept it - as they do at all levels - and inflation doesn't take off? Why isn't it actually better than gold which fluctuates greatly in exchange value and costs money to keep (which is usually not true of money at the bank)?

    If, as I think, the US has a problem of decaying infrastructure, isn't that evidence that all the primitive "Austrian" politicians in DC should have had shovel ready projects that could have got under way in 2008 instead of leaving stimulus to the Fed which can only print money and hope it's going into the hands of those who will invest it to productive effect. Superficially the labor market has recovered so that fiscal (and/or monetary) stimulus is no longer needed but that ignores the gross underemployment. Low wages are mostly the consequence of immigration and globalisation in a world where half of the American population at least has nothing in the way of talent or education to make it worth paying them a lot more than Chinese or Mexicans.

    I'm not sure how Mr Hudson's explanations wrap all that up and blame the banks for current discontents.
    ReplyAgree/Disagree/Etc.
  • Anonymous • Disclaimer says: • Website
    @johnny memeonic
    What's amazing is that in this day and age Marxists believe far more in capitalism than the so called "capitalists" of today. The "capitalists" of today are merely corporatists that use their special relationships with the government and with other corporations to create an economy wide monopoly that supports an entire network of oligarchic billionaires that rule from above while the middle and lower classes are taxed and regulated into nothingness.

    There should be more regulation on the top and less on the bottom, but instead it's the other way around. There's almost no regulation for the billionaires, but there's tons of regulation and taxation for the average person on the street.

    Excellent comment!
    And the only way to accomplish that is transparency and accountability as a precondition of political or financial power. I am a mere Industrial mechanic, and I have surveillance, drug testing, and sometimes sting operations done to test my honesty. Yet someone can be a governor, head of the fed, or a judge, and never be scrutinized in any way. We have the means to make power accountable by using political and surveillance technology on those who are allowed to have financial or political power. Where is the movement demanding this?

    Read More
    ReplyAgree/Disagree/Etc.
  • I’m not absolutely sure about the genes but I look forward to 40 years or so as a comfortably retired rentier if that’s what makes receipt of the fruits of diversified investments makes me. How would Marx want a Hudson led government to treat me?

    And what would Marx say about all those couples with 1.3 children and how those children can be expected to support their increasingly longlived and already aged rentier parents? Did Marx ever give his opinion on the future importance of those birthrates that gave us not only an industrial revolution which Europeans spread around the world but WW1 and Germany still needing Lebensraum in the 1930s?

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  • War for Blair Mountain [AKA "Great Battle for Blair Moutain"] says:

    And in the meantime, Michael Hudson and Noam Chomsky are cheerleaders for importing an unbounded amount of nonwhite legal immigrant scab labor to the Greedy Cheating Mega-CEO Class.

    Michael Hudson and Noam Chomsky…two frauds….friends of the Greedy Cheating Mega-CEO Class.

    Read More
    • Agree: Alfa158
    ReplyAgree/Disagree/Etc.
  • My goodness! When one reads of all these problems one might almost think there are limits to growth.

    Naahh.

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  • @unit472
    We might all agree than 'financialization' of an economy hollows it out and shifts income away from wages to those who control credit. The issue today is that credit creation has been nationalized through Central Banking and , while financial profits are still private, the risks and losses tend to end up on the public balance sheet.

    Banks today do not need deposits to make loans. In fact, the modern bank is increasingly nothing more than a data processing system whereby government extends Central Bank credit to consumers with the bank merely managing the loan. Mortgages and student loans are between the borrower and government agencies with the risk of default being born by government agencies not the bank. Government even sets the interest rates banks will charge and, because government itself is the largest debtor of all, it sets them as low as possible. The distortions this arrangement creates is the problem. NINJA loans today are better known as 'student loans' and low interest rates have created incentives for leverage that would not otherwise exist.

    Government even sets the interest rates banks will charge and, because government itself is the largest debtor of all, it sets them as low as possible

    Or the bankers are able to successfully exert influence for the lowest possible rates, because they want to continue making massive profits by leveraging. It matters which country stands behind a bank.

    Read More
    ReplyAgree/Disagree/Etc.
  • We might all agree than ‘financialization’ of an economy hollows it out and shifts income away from wages to those who control credit. The issue today is that credit creation has been nationalized through Central Banking and , while financial profits are still private, the risks and losses tend to end up on the public balance sheet.

    Banks today do not need deposits to make loans. In fact, the modern bank is increasingly nothing more than a data processing system whereby government extends Central Bank credit to consumers with the bank merely managing the loan. Mortgages and student loans are between the borrower and government agencies with the risk of default being born by government agencies not the bank. Government even sets the interest rates banks will charge and, because government itself is the largest debtor of all, it sets them as low as possible. The distortions this arrangement creates is the problem. NINJA loans today are better known as ‘student loans’ and low interest rates have created incentives for leverage that would not otherwise exist.

    Read More
    • Replies: @Sean

    Government even sets the interest rates banks will charge and, because government itself is the largest debtor of all, it sets them as low as possible
     
    Or the bankers are able to successfully exert influence for the lowest possible rates, because they want to continue making massive profits by leveraging. It matters which country stands behind a bank.
    ReplyAgree/Disagree/Etc.
  • Western neoliberal economists claim that this financialization of erstwhile industrial capitalism is “progress,” and even the end of history. Yet having watched China grow while their economies have remained stagnant since 2008 (except for the One Percent), their hope is that socialist China’s market can save their financialized economies driven too deeply into debt to recover on their own.

    It sounds like Western neoliberal economists have the least accurate idea of what is gong on. Bankers currently have interest rates ideal for leveraging and that probably is why they are being kept at the present level. With that much money behind a point of view within the US, economists will be found to serve it. China’s economy growing is a recipe for the Chinese asserting themselves against the US in due course. Financialized interests are paramount at present, but China can’t be compared to Russia (which is asserted itself internationally against its own financialized interests). The US is fated to clash with China, but it might too powerful by the time of the confrontation.

    Read More
    ReplyAgree/Disagree/Etc.
  • What’s amazing is that in this day and age Marxists believe far more in capitalism than the so called “capitalists” of today. The “capitalists” of today are merely corporatists that use their special relationships with the government and with other corporations to create an economy wide monopoly that supports an entire network of oligarchic billionaires that rule from above while the middle and lower classes are taxed and regulated into nothingness.

    There should be more regulation on the top and less on the bottom, but instead it’s the other way around. There’s almost no regulation for the billionaires, but there’s tons of regulation and taxation for the average person on the street.

    Read More
    • Replies: @Anonymous
    Excellent comment!
    And the only way to accomplish that is transparency and accountability as a precondition of political or financial power. I am a mere Industrial mechanic, and I have surveillance, drug testing, and sometimes sting operations done to test my honesty. Yet someone can be a governor, head of the fed, or a judge, and never be scrutinized in any way. We have the means to make power accountable by using political and surveillance technology on those who are allowed to have financial or political power. Where is the movement demanding this?
    ReplyAgree/Disagree/Etc.
  • Why no reference to Lenin’s theory of imperialism, which he diagnosed as the last stage of capitalism and involving the domination of industrial capital by finance capital?

    Read More
    ReplyAgree/Disagree/Etc.