The Unz Review • An Alternative Media Selection$
A Collection of Interesting, Important, and Controversial Perspectives Largely Excluded from the American Mainstream Media
 BlogviewMichael Hudson Archive
Economic Rent and Exploitation
Interview by Jonathan Brown
Email This Page to Someone

 Remember My Information



=>

Bookmark Toggle AllToCAdd to LibraryRemove from Library • B
Show CommentNext New CommentNext New ReplyRead More
ReplyAgree/Disagree/Etc. More... This Commenter This Thread Hide Thread Display All Comments
AgreeDisagreeThanksLOLTroll
These buttons register your public Agreement, Disagreement, Thanks, LOL, or Troll with the selected comment. They are ONLY available to recent, frequent commenters who have saved their Name+Email using the 'Remember My Information' checkbox, and may also ONLY be used three times during any eight hour period.
Ignore Commenter Follow Commenter
Search Text Case Sensitive  Exact Words  Include Comments
List of Bookmarks

Part One:

Part Two:

Jonathan Brown
Michael, welcome to the podcast.

Michael Hudson
It’s good to be here. I’m looking forward to it.

Jonathan Brown
Michael, I think you have one the most extraordinary upbringings and journeys into economics. And I just wanted to give our listeners just some sense of how you got from being the godson of Leon Trotsky all the way to what I consider to be probably the most important economist in the world today.

Michael Hudson 00:23
There’s no direct causality there that could have been anticipated. I never studied economics in college, because I went to school at the University of Chicago. We know that there were some students at the university who were at that business school. They were such strange people that we never even thought of going near them, because there was something otherworldly about them, something abstract.

My degree was in German language and history of culture, because the head of the History of Culture Department was Matthijs Jolles, a German professor and translator of von Clausewitz, On War. And in at the time, my intention was to become a musician. And I had to learn German in order to read the works of Heinrich Schenker. In music theory, my teachers were German. And for the History of Culture, most of the books that I was reading were, were all in German. And the German professors were also heads of the Comparative Literature Department and other departments. That meant that I could take all the courses cafeteria style at the university that I wanted.

I had to go to work when I graduated. I went to work for a while for direct mail advertising for the American Technical Society, a publisher a block away from the university, and then went to work for Free Press that was headed by Jerry Kaplan, a Trotskyist follower of Max Shachtman. And he wanted to send me to New York to help set up Free Press there.

Soon after I came to New York, Trotsky’s widow died. And Max Shachtman was the executor of her estate. He thought I should go into publishing by myself. And I had already had the copyrights for George Lukacs, the Hungarian Marxist and I thought tried to get funding for a publishing company with Trotsky’s works and other works. I’ve been writing a history of music and art theory. And needless to say, I didn’t get any funding because nobody was at all interested in publishing the works of Trotsky. I even tried to get Dwight Eisenhower the write the introduction to his military papers, wouldn’t work.

I was urged to meet Terence McCarthy, the father of a girlfriend of one of my schoolmates, Gavin MacFadyen. He was the first English-language translator of the first history of economic thought that was written: Karl Marx’s Theories of Surplus Value (Mehrwert), reviewing the value theory of classical economics. Terence said that he would help guide me in economic thinking if I’d get a PhD in economics and go to work on Wall Street to see how the world works. But I had to read all of the bibliography in Marx’s Theories of Surplus Value. So I had to begin buying the books, and ended up working as a sideline with one of the reprinters, Augustus Kelly, who was reprinting many of the classical economists. He was a socialist. There were other dealers in New York: Samuel Ambaras, Sydney Millman. I began buying all of the 19th-century classical economic books that I could, sinse that was the only way that I could get copies.

I took graduate classes in the evening while working at a bank for three years, the Savings Banks Trust Company. It was a commercial bank, but was acting as a central bank for the savings banks that in America finance mortgages. All their savings are reinvested in mortgages. So for three years my job was to track the real estate market, the mortgage market, interest rates, the funding of mortgages, the growth of assets by the savings banks, all growing at compound interest. All the growth in savings in the New York savings banks in the early 1960s was simply the accrual of dividends. So you’d have a step function at dividend time every quarter, going up exponentially. There was hardly any new savings inflow. It’s as if you’ve just left a given amount of savings in 1945, and let the amount rise exponentially. All this increase in savings was recycled into the real estate market.

The New York banks wanted to extend their market so they couldn’t just keep bidding up New York housing prices. They won the right to lend out of state, especially the Florida. So my job was basically seeing that real estate prices were whatever a bank would lend. At that time, banks would not lend you a mortgage if the debt service exceeded 25% of your income. And you had to put up usually 30% of the purchase price as a down payment, but possibly 10%. So housing was affordable. You could buy a really nice house for you know, \$20 or \$30,000. Now, it costs \$400,000 to buy just a one room apartment in a condominium.

I bought a house for \$1 down – it was \$45,000 total. I took out a mortgage from Chase for half the price, and the other half was a purchase-money mortgage. So it was easy. Anybody coul get a house in New York at that time. Housing was readily affordable.

ORDER IT NOW

After I finished my PhD courses, I changed jobs. My real interest at the time was international finance and the balance of payments. So I went to work at Chase Manhattan as their balance of payments economist. This was at a time when the balance of payments and even balance-sheet analysis was not taught in schools. It was very specialised. I realised that what I was taught, especially in monetary theory, had nothing at all to do with what I was learning in practice.

In monetary theory, for instance, that was the era of Milton Friedman in the 60s and 70s. He thought that when you create more money, it increases consumer prices. Well, I thought that obviously was not how things worked. When banks create money, they don’t lend for people for spending. About 80% of bank loans in America, as in England, are mortgage loans. They lend against property already in place. They also lend for corporate mergers and acquisitions, and by the 1980s for corporate takeovers.

The effect of this lending is to increase asset prices, not consumer prices. You could say that money creation actually lowers consumer prices, because 80% is to increase housing prices. Banks seek to increase their loan market by lending more and more against every kind of real estate, whether it’s residential or commercial property. They keep increasing the proportion of debt to overall real estate price. So by 2008 you could buy property with no money down at all, and take 100% mortgage, sometimes even 102 or 103% so that you would have enough money to pay the closing fees. The government did not limit the amount of money that a bank could lend against income. The proportion of income devoted to mortgage service that was federally guaranteed increased to 43%. Well, that’s a lot more than 25%. That’s 18% of personal income more in 2008 than in the 1960s – simply to pay mortgage interest in order to get a house. So I realised that this was deflationary. The more money you have to spend on mortgage interest to buy a house as land and real estate is financialized, the less you have left to spend on goods and services. This was one of the big problems that was slowing the economy down.

Well, it was obvious to me that rent was being paid out as interest. Rent is for paying interest. If I talked with various developers about buying buildings, they said, “Well, we try to buy our buildings without any money at all. The banks will lend us the money to buy a building, and they calculate how much is your rental income going to be? That rental income will carry how much of a bank loan at a given interest charge, and lend the money to buy it.” That is how real estate rent was financialized.

Democratization of real estate on credit means turns rental income into interest, not taxes
This meant that the role that had been played in the 19th century by landlords is now played by banks. In the 19th century, the problem was absentee landlords, the heirs of the warlords who conquered England or other European countries in the Middle Ages. You had hereditary rent. Well, now our rent has been democratised. But it’s been democratised on credit, because obviously, the only way that a wage earner can afford to buy is is on credit. For an investor you can buy whole buildings on credit.

Finance has transformed real estate into a financial vehicle. So that that’s what rent is for paying interest means. There’s a symbiotic sector, Finance, Insurance and Real Estate – the FIRE sector. It’s the key to today’s financialised economy. Most real estate tax in America is at the local level, because after the income tax was introduced, commercial real estate was made tax exempt by the pretence that buildings depreciate in value, as if they don’t in fact rise in price. The pretence is that they wear out, even though landlords normally pay about 10% of the rental income for repairs and upgrades to keep the building from wearing out.

Today in New York, and I’m sure in London too, the older a building is, the better it’s built. Real-estate developers have crapified building codes so that the newer the building, the more shoddily it’s built. They call shoddy buildings “luxury” real estate, meaning is built with really not very thick walls. I think the junkiest building in New York is Trump Tower, which is sort of the model of shadiness which they call luxury. It’s very high-priced.

The academic economics curriculum finds unproductive credit to embarrassing to acknowledge
While I saw the importance of finance and real estate, none of that was discussed in the university’s economics courses at all. The pretense is that money is created by banks lending to investors who build factories and employ labour to produce more. All credit is assumed to be productive, and taken on to finance productive investment in the form of tangible capital formation. Well, that that was the hope in the 19th century, and actually was the reality in Germany and in Central Europe, where you had banking becoming industrialised. But after World War I, you had a snap back to the Anglo-Dutch-American kind of banking, which was really just the Merchant banking. It was bank lending against assets already in place.

<h4>Classical economics as a reform program to free economies from economic rent and rentier income</h4>

I realised that the statistics that I worked on showed the opposite of what I was taught. I had to go through the motions of the PhD orals. and avoided conflict by writing my dissertation on the history of economic thought, because anything that I would have written about the modern economy would have driven the professors nutty. Needless to say, none of the academic professors I had ever actually worked in the real world. It was all very theoretical. So that basically how I came to realise that the 19th century fight for 100 years – we can call it the long 19th century, from the French Revolution, up to World War I, and from the French Physiocrats, to Adam Smith, Ricardo and Malthus, John Stuart Mill, Marx, Simon Patton and Thorstein Veblen – was the value and price theory of classical economics to quantify economic rent as unearned income.

ORDER IT NOW

The purpose of value and price theory was to define the excess of market price over actual cost value. The difference was economic rent. The essence of classical economics was a reform campaign – that of industrial capitalism. It was a radical campaign, because the basic cost-cutting dynamic of industrial capitalism was radical. It realised that in order to make Britain, France or Germany, or any country competitive with others, you had to get rid of the landlord class and its demands for economic rent. You also had to get rid of monopolies and their economic rent. You had to get rid of all payments of income that were not necessary for production to take place. The aim was to bring prices in line with the actual cost value of production, to free economies from this rake-off to unproductive investment, unproductive labour and economic rent – land rent, monopoly rent and financial interest charges. Those were the three basic categories of rent on which classical political economy focused.

To translate classical rent theory into practice, you needed a political reform, You had to get rid of the landlord class’s political power to block reform. It wasn’t enough simply to say that economic rent was not a necessary cost of production, not part of real value. The landlord class would simply say, “Well, what are you going to do about it?”

The proponents of industrial capitalism saw that the constitution of England, France and America required giving governments the power to pass laws to free economies from economic rent. in order to do that, they needed democratic reform of the political system. In England they needed to empower the House of Commons over the House of Lords. That effort led to a constitutional crisis in 1909 and 1910, when the House of Commons, Parliament, passed a land tax. That was rejected, as I’m sure you know, by the House of Lords. The crisis was resolved by saying the Lords could never again reject a Revenue Act passed by the House of Commons. That political reform was part and parcel with classi9cal economic theory defining rent as an unnecessary cost of production.

But where did this leave the interests of labor – the majority of the population? As a broad social reform, classical economics began to falter by 1848. You had revolutions in almost every European country. These revolutions were not fully democratic in the sense of they weren’t really for wage labour, which was the bulk of society. They were bourgeois revolutions, including land reform. They were all for getting rid of the landed aristocracy and the special privileges that the aristocracy held. But they were not very interested in helping consumers, and labour’s working conditions, shortening the workweek, shortening the workday and promoting safety. There was nothing really about public health, or public social infrastructure spending. So things began to falter by 1848.

But they still made progress through the balance of the 19th century. By the time World War I broke out in 1914, it looked like the world was moving towards socialism. Almost everybody in the 19th century, across the political spectrum, whatever you were advocating was called socialism.

Socialism and strong government as the program of post-rentier industrial capitalism
At the broadest level, socialism meant collecting economic rent and getting rid of the landlords and the aristocracy, either by taxing away rent or nationalizing land and natural monopolies, in hope that that by itself would create a viable industrial economy. you had libertarian socialism, Marxist socialism, anarchist socialism, industrial socialism and Christian socialism. Almost every reformer wanted that as a label. The question is, what kind of socialism were are you going to have?

That was what the aftermath of World War I was fought about. The fight was largely shaped by the Russian Revolution, which unfortunately went tragically wrong under Stalin and gave socialism and communism a bad name. But it still had a good name in England after World War II. And also in America in the 1930s, as a result of Franklin Roosevelt’s New Deal that saved capitalism by investing in public infrastructure.

I can give you an example of where pro-capitalist theory was in the 1890s. In the United States. The industrial interests in America faced a problem once the Civil War ended in 1865. They wanted to create an industrial society – ideally, a fair society with rising living standards. How do you do that without training people to administer such an economy? You need to train people in a university. You have to teach them how economies worked. But the main universities in America were religious colleges, founded to train the clergy. Yale, Harvard, Princeton and most taught British free-trade theory, which trivialized economic theory.

So the business interests and the government saw the need to teach reality-based economics. They saw that there was little hope in trying to reform the existing universities. Their economics departments – called moral philosophy – were unreformable. So it was necessary to create new universities. All through America, each state was given a land grant to enable it to create a new university and teach reality economics. They also would teach economic history and how the world actually works. Most of all, they would teach protectionist trade theory and how to create a society and economy that is more efficient than other economies?

Well, the first business school in America was the Wharton School at the University of Pennsylvania. Its first economics professor was Simon Patton, a protectionist. And he explained that if you’re going to make industrial products at prices that outcompete those of England, you need public infrastructure spending. You need as much of the cost of living as possible to not to be paid by the employers to factor into the price of their products, but to be paid by the government.

Patten cited public roads and canals to lower the cost of doing business. He also noted that every time you build a road or railroad, you’re going to raise the land value along these routes – and lower land prices for areas replaced by the now-more-accessible producers. You can simply self-finance the cost of these by taxing the rent.

ORDER IT NOW

You also need public education, and that should be free so that you don’t have like today, to earn enough money to pay an enormous student debt – and receive a high salary to afford to pay that. If the government would provide free education, you wouldn’t have to pay workers enough to pay this student debt, so they wouldn’t need such high wages simply to break even.
Today 18% of America’s national income is from medical insurance. If you have a public health system and socialized medicine, as England had after World War II and as Bernie Sanders advocates today, then you wouldn’t have to pay workers a high enough salary to afford this enormous medical expense. England realised this already in the 1870s and ‘80s, when Benjamin Disraeli campaigned as a conservative for health.

So the movement towards public infrastructure towards government spending was led by the industrialists. It was they themselves who wanted strong government. The common denominator of politics from Adam Smith through all of the 19th century was to free economies from the unnecessary economic rent, to free them from unearned income, from the free lunch. To do that, you have to have a government strong enough to take on the vested interests – first the landlord class in the House of Lords, and then the financial class behind it.

Jonathan Brown 26:00
Well, just to clarify that, Michael, I think what you’re, what you’re saying is, I know in some of your writing you talk about the view of government or the public sector was it was a fourth means of production. So you got land, labour, capital and the public sector.

Michael Hudson 26:16
That was the term that Simon Patten used. Government infrastructure is a fourth means of production. But what makes it different from profits and wages is that if you’re a wage earner, you want to make as high a wage as possible. If you’re a capitalist, you want to make as high a profit as possible. But the job of public investment is not to make an income, not to do what was done under Thatcher and Tony Blair, not to treat public utilities, education and health as profit making opportunities. Instead, Patten said, you should measure their productivity by how much they lower the cost of doing business and the cost of living for the economy at large.

Jonathan Brown 27:03
And what that allows a country to do, so if you’re good at it, is to get together and ask how to educate our people, lower the cost of transportation so we’ve got we’ve got a mobile workforce, all those things. We can then start to compete against other nations who are ahead of us, who may have more expensive means of production, and we can maintain that advantage. We’re not stuck in a lower level of the economy where we’re basically working for someone else. We’re able to develop ourselves as a nation. And I guess the benefit of us doing it collectively is that we can minimise the cost, then use a natural monopoly power in government hands to provide efficient services across the board. Is that right?

Michael Hudson 27:46
Yes, but they went further. Protectionists in America said the way to minimise costs – and it may seem an oxymoron to you – the way you minimise costs is to have high-wage labour. You raise the wages of labour, or more specifically, you want to raise the living standards, because highly paid labour, highly educated labour, well fed labour, well rested labour is more productive than pauper labour. So they said explicitly, America’s going to be a high wage economy. We’re not like Europe. Our higher wages are going to provide high enough living standards to provide high labour productivity. And our higher labour productivity, shorter working day, better working conditions, healthy working conditions, public health, well educated labor will undersell that of countries that don’t have an active public sector.

Jonathan Brown 28:45
and Henry Ford being the poster boy for that approach, of doubling his employees’ salaries and so on.

Michael Hudson 28:53
Yes.

Jonathan Brown 28:54
Amazing.

<h4>The fight against classical economics and its concept of rent as unearned income</h4>
Michael Hudson 28:55
Needless to say, the fight for the kind of democracy that will free economies from economic rent was not easy. By the late 1880s, and especially the 1890s, you had the rentiers fighting back. In America the fight was led by John Bates Clark. There was a movement, which today is called neoliberalism, to deny the entire thrust of classical economics. Clarke said that there is no such thing is unearned income. That meant that economic rent does not exist. Whatever a businessman makes, he is said to earn. Whatever a landlord makes, he earns – so there was no unearned income.

This came to a head around 1890 the Journal of Ethics. Clark wrote the first essay, and it was refuted by Simon Patton. There was a fight against the concept of economic rent by academic economics, especially in New York City at Columbia University, where Clark ended up, This is really the dividing line: You recognise that much of the economy is unearned income and you want to get rid of it. To do that, you have to pass laws that will tax away the unearned income, or better yet, you put land and other natural resources and natural monopolies in the public domain where the public sector directly sets prices. That was what Teddy Roosevelt did with his trust busting.

Jonathan Brown 31:13
Michael, I just want to say reading your work is something of a revelation. I’ve got a degree in economics for what it’s worth. And I would say the only valuable thing that I found from a getting a degree in economics is that I know, resolutely when an economist is talking bullshit. How do you know that? It’s when his lips move.

Michael Hudson 31:32
If it’s an economist, they’re talking bullshit – let me make it easy, right!

Jonathan Brown 31:36
And then the thing is, that reading your work, for example, going back to Thorstein Veblen, his work, which only made it into the mainstream when I was getting a degree in the 90s, was conspicuous consumption. It had nothing to do with absentee landlords or, and the profound importance of that, and then I’m looking in J is for Junk Economics, and you talk about the free lunch, and how Milton Friedman said that there’s no such thing as a free lunch.

ORDER IT NOW

When you look at your work, you prove that actually there is, and that he’s having it! And you say, “Most business ventures seek such free lunches not entailing actual work or real production costs, and to deter public regulation or higher taxation of rent-seeking recipients of free lunches. They have embraced Milton Friedman’s claim that there’s no such thing as a free lunch”.

And you talk about: “Even more aggressively rent extractors accused governments of taxing their income to subsidise freeloaders, pinning the label of free lunches on public welfare recipients, job programs, beneficiaries of higher minimum wage, when the actual antidote to free lunches is to make governments strong enough to tax economic rent, and keep the potential rent extracting opportunities and natural monopolies in the public domain.”

Michael Hudson 32:51
Veblen was indeed was the last great classical economist. He coined the term neoclassical economics. I think that’s an unfortunate term. When I went to school in my 20s, I thought neoclassical meant ‘Oh, it’s a new version of classical economics’. It’s not that at all. What Veblen meant was there used to be the old classical economics of Adam Smith, John Stuart Mill and Marx, all about economic rent and exploitation. “Neo” means there’s a new body of completely different, post-classical economics aiming to make classical economics obsolete. That is the new mainstream economics of today, trying to make itself “classical.” So Veblen he should have used the terms post-classical or anti-classical economics.

Jonathan Brown 33:44
Or even pseudo classical?

Michael Hudson 33:49
It’s antithetical, because the root of classical value and price theory was to isolate and define economic rents statistically. To deny economic rent is to deny the whole point of classical value and price theory. That is where economics became untracked.

Unfortunately, it became untracked largely by Henry George, who rejected classical economics and very quickly followed J.B. Clark and accepted his mushy value and price theory. Removing all elements the cost of production from value theory, analysing prices simply in terms of consumer demand and what people want, and not analysing what determines land and other asset prices, loses focus.

George became very popular as a journalist. He wrote wonderful journalism to expose the railroads in California as landlords, and he wrote a wonderful book on the Irish land question. But when he tried to talk about the whole economy, he didn’t want any competition. He said, in effect, “Economics begins and ends with me. Forget everything, Adam Smith and classical economics.” He’s sort of an early Margaret Thatcher. There’s no such thing as society or the economy. Only “tax the landlords.”

Jonathan Brown 35:35
What are you doing? You’re destroying my view of Henry George! He’s an early Margaret Thatcher? How, how could that possibly be?

Michael Hudson 35:47
Well, in two ways. The first way is that in the 19th century, in order to tax the land rent, you had to take on the most powerful vested interests of all: the real estate interests and the financial interests. But Henry George was a libertarian. He was for small government. He broke with the socialists, because he warned that socialism had a potential for authoritarianism. Well, we know that he was right in that warning, because we saw what happened in Stalinist Russia. But obviously, what you want is a government that is strong and democratic, and with enough authority to tax and regulate the vested interests. (That term is Veblen’s, by the way.) That was the ideal in America, but it needed a strong enough government so that Teddy Roosevelt could come in and be able to bust the trusts.

The government was strong enough in 1913-14 to impose an American income tax that fell just on 1% of the population, almost entirely on economic rent, on land rent, mineral rent on monopoly rent of the big corporations. If you’re a libertarian, your government is too small to take on these vested interests. And you’ll never win. You’ll end up like the Social Democrats or like today’s Labour Party under Mr. Starmer, not able to be very efficient. So that was George’s first problem.

The second problem was when he said that all you have to do is tax the land and everything else will take care of itself. Well, as you know, he was nominated as a celebrity candidate by the socialist and labour groups in New York City in 1876 to run for mayor. They gave him their programme – safe housing, workers housing, safe working conditions, food laws that protect people from poison, like you don’t want to use chromium for cake frosting to make it yellow.
Well, George threw out the whole labour programme and said that there’s only one thing that mattered: If you tax the land rent, the cakes will take care of themselves, worker safety conditions will take care of themselves. You don’t need socialism; just tax land rent.

Well, the word “panacea” came into popular use in the English language at that time, because George didn’t see the economy as a whole. That was a tragedy. He was great as a journalist describing rent and the machinations of the railroads. But once he tried to talk about the economy, without really describing how it worked as a system, saying there really isn’t any economic system, it’s just about land rent. That separated him from the other reformers.

By the 1890s you had many of reformers in America, who had been inspired by George’s journalism in the 70s and early 80s, including attacks on the oil monopoly and the Rockefellers. They asked what happened to George? Well, he became a sectarian. He formed his own party and said, we’re only going to talk about land rent. This diverted attention away from how the overall economy works. And if you don’t understand how the economy is all about providing a free lunch in one way or another, not only to landlords but to the financial sector primarily, then you’re really not going to address the interests of most of the population.

ORDER IT NOW

So his sectarian party shrank. Still, in the first decade of the 20th century you had followers of Henry George and socialists going around the country debating each other. They had great debates, they spelled out the whole problem. I wanted to reprint all these debates somewhere, what both the socialists and the Georgists said: “One thing we can agree on is that society is going to get go either your way or our way. We’re talking about how is the future of the political system and the economic relations and taxes that follow from this system. How are they going to evolve?”

The socialists focused on labour’s working conditions, because these were getting worse and worse. In America the fight for labour unionisation got quite violent, and corrupt. The abuse of consumers, the growth of monopolies, all these were growing problems. The socialists focused on these problems – and decided to leave the discussion of rent to followers of George. I think that was very unfortunate, because George had pried the discussion of economic rent away from the classical value theory and its political dimension, which was socialist.

I find little interest in today’s socialist movement or the socialist movement 50 years ago about land rent. They are more concerned about international issues, about war, about almost everything except land rent. And today I find the greatest interest in rent theory as a guide to a tax system in the context of an overall economic system to be in China. So that’s really where the debate over how to keep the price of housing down by keeping the financial sector from trying to capitalise the land rent into a bank loan.

That’s a big fight in China today. It should have been also in Russia. Fred Harrison, in the early 1990s, brought a group of people including me over to Russia. We made two trips to the Duma and did everything we could to explain that Russia could have a great advantage to rebuild its industry into a productive economy. The first thing that it should have done was to keep housing prices down. It could have given everybody their houses, free and clear, without any debt. Of course, some places would be more valuable than others, but Russia would have had the lowest-priced economy in the world. In America, the rent can take up to 43% of a home buyer’s income.

Well, there was pushback from the Russians. They had no rent in a socialist economy. Ted Gwartney, an American real estate appraiser, walked down the streets of St. Petersburg with the local mayor, I think on a fall or winter days. He pointed out that one side of the street was very sunny. The other street was in the shade. That’s how the sun is in the northern latitudes in the winter. Most people were walking on the sunny side of the street. That means that if you’re going to have a store, whether it’s a bakery, a food store or a restaurant, the store on the sunny side of the street is going to be able to attract more customers. Their site has more economic rent than the dark side of the street. Same thing with buildings near a subway. They will be worth more than sites far away from transportation.

The mayor said understood the point, and asked how to actually make a land value tax so to collect this rent? Ted explained that St. Petersburg’s layout was much like that of Boston, where a land map was easy to make. It showed that there was a peak centre of values near the subway, with rents tapering off further away. He suggested to apply Boston as a scale model to St. Petersburg. Just plug in a few prices, and you have a land-valuation map.

Russia could have been a low-cost economy. It could have kept the oil and gas, Yukos, GazProm, nickel and platinum resources all in the public domain to finance investment in re-industrialization, to become independent of the West. But as we all know, Ted and the people that Fred Harrison bought were completely overwhelmed by the billions of dollars that U.S. diplomats spent on promoting kleptocracy and shock therapy in Russia. Its officials and insiders worked for themselves, not Russia.

And it wasn’t only Russia that missed opportunities. I brought Ted Gwartney and his mathematical model-maker to Latvia, where I was Economic Research Director of the Riga Graduate School of Law. I was asked by the leading political party of Latvia, the Centre Party – basically the party of Russian speakers, with 1/3 of the population and votes – to draw up a model for how Latvia could restructure its post-Soviet economy and industry. Ted met with the tax authorities and housing authorities and explained how to use land rent as the tax base. They were amazed and said, “This is great. We can hire a separate appraiser for every single building. This will create a lot of employment”. No he said. He had been the appraiser for Greenwich, Connecticut, the state’s wealthiest city. He said, “We can do a whole city in about one week.” They couldn’t believe this in Latvia.

Around the time of his visit there was a meeting in Boston of the Eastern Economics Association. It was largely created by John Kenneth Galbraith to go off the economic mainstream. I think the Schalkenbach Foundation had a session on political critics of Henry George, so there were a lot of Georgists. Other people who came to the Eastern Economic Association meeting were socialists, including Alan Freeman who was the assistant to Ken Livingston, the Mayor of London.

When everybody was having lunch after the economic meetings, I brought Alan over to sit down with Ted Gwartney. Ted explained what he did, and Alan said, “Oh, I’ve never heard of this! I’ve got to come and meet you some more.’ So he came to New York and we went up to visit Ted in Connecticut. He explained how to make a land value map. Alan said, “You should win the Nobel Prize for this! This is amazing! There’s nothing like this in England.”

Ted explained that there are about 20,000 appraisers in America that do what he did. There are abundant statistics. Every city has a map of land and building appraisals: here’s the value of the building, here’s the value of the land. So smoothing out a land value map is pretty easy to do. Alan could hardly believe it.

ORDER IT NOW

Well, I went back to London shortly and met with Alan. It turned out that political pressures in England, especially from the Labour Party, led London to hire Weatheralls, a real estate company, do appraisals. So we never got to do our version of a real estate appraisal of London to calculate land rent.

But this is what all of the theories of the Physiocrats, Adam Smith, Ricardo, John Stuart Mill, Marx, Veblen, Alfred Marshall, all of them were focusing on. Yet this idea is so alien that from London to St. Petersburg, they don’t have any idea of how the simple concept can be done. The economics profession is in denial. It’s followed the idea that there’s no such thing as unearned income, everybody gets what they make.

The National Income and Product Accounts treat rent as a product, not a subtrahend
A byproduct of this value-free doctrine is how countries calculate their national income and product accounts. And if you look at the GDP accounts for the United States (and I’ve published a number of articles on my website and in major economic journals), rent is counted as part of GDP.

This is easiest to see in real estate and finance. The Bureau of Labor Statistics sends its employees around to ask homeowners what the rental income of their home would be if they had to rent it. If you were a landlord and rented yourself how much rent would that be? This appears in the NIPA statistics as “homeowners imputed rent.” That’s 8% of GDP. But it is not really income, because it is not actually paid. Nobody gets it. But value-free designers of GDP want to describe all of the income that landlords make as contributing to GDP. They say that landlords provide a productive service, they provide housing to people who need it, and they provide commercial properties to businesses that need it. Well, that’s not exactly how John Stuart Mill put it. He said that rent is what landlords make ‘in their sleep’. So how can you rationalize how productive landlords are?

Another element of American GDP is financial services. I called up the Commerce Department where they make the NIPA statistics and asked what happens when credit card companies increase their interest charges. And where do penalty charges for late payments appear? Credit card companies in America make billions of dollars in interest a year and even more billions in fees, late fees and penalties. Most of the income that credit card companies make are actually on these fees and penalties. So where does that appear in that GDP? I was told, in “financial services.’ So the “service” of calculating how far the debtors must pay for falling behind in their payments. They typical charge 29%. That’s all counted as a contribution to GDP. But in reality it is a subtrahend, leaving less to spend on real “product.”

This raises the question of just what income and product actually mean. Well, this brings us back to what classical economics is all about. The “product” should be measured by what its actual necessary cost of production is. But there’s a lot of income over and above this necessary cost of production. Namely, economic rent, that’s unearned income. But the income and product accounts don’t say how much is “earned” and how much is “unearned” land rent, monopoly rent, natural resource rent, interest and financial charges.

A classical economic accounting format would show how much of the prices for what our society produces is actually necessary, and how much is a subtrahend. Classical economists treat the land rent that you pay, interest charges and monopoly prices as a rake-off. So not all of your income is income equals “product,” because only a portion of that income represents a real product.

In America, the head of Goldman Sachs a few years ago said Goldman Sachs partners – a financial management firm – make more money than almost anyone else in America, because they’re the most productive. If you make a lot of money, by definition, you make it by being productive. That’s the false identity.

Jonathan Brown 55:25
That’s really the John Bates Clark idea that if you make the money, you’ve earned it. And it’s not just because you control the gate. You’re the gatekeeper, to stop people and make them pay the toll. You’re the troll under the bridge, taking people’s money as they cross, which is essentially what financial economics is about.

Michael Hudson 55:48
Right. I have spoken with a number of political advisors, many of whom were followers of Henry George. They’ve described to me how political all of this definition of the economy is. A number of friends of mine have been trying to show how much of what the United Nations calculates as income and product is actually economic rent. Steve Keen, Dirk Bezemer and Jacob Assa are in this group. There are a number of others who do it. We publish in places like the Review of Keynesian Economics, Journal of Economic Issues and other not-mainstream journals. A lot of this was taught where I was a professor for decades, at the University of Missouri in Kansas City.

Our graduates had problems getting jobs, because in order to get an appointment at a university, you have to publish articles in prestige journals. The University of Chicago, the Milton Friedman boys, the Chicago Boys control the editorial boards of all these prestige magazines, just like they control the Nobel Economics Prize Committee. The prize basically is given to Chicago Boys every year for not explaining how the economy works.

A precondition for what you call an economist, especially a Nobel Prize winning economist, is not to understand how the economy works. Because if you understand that, you’re going to threaten the vested interests that are getting the free lunch. You have to say there’s no such thing as a free lunch, everybody earns whatever they can get. Robbers and criminals like that idea. “Yeah, we stole it fair and square!”

Crime pays, and rent seeking also pays.

ORDER IT NOW

You can get much more money quicker by extractive means – by rent extraction – than you can by investing in plant and equipment and developing products and marketing them and making a profit over time, and spending on research and development. That’s why in today’s United States, 92% of corporate revenue, called earnings, (although not all of it is earned – that’s a euphemism) is spent on stock buybacks and dividend payouts, not on new capital investment.

So the way that the economy works today is no longer industrial capitalism; it is finance capitalism. Instead of Industrial Engineering, making society produce more with all of the environmental protection cost included, you have financial engineering, making wealth by increasing stock-market prices. Wealth is not achieved by earning it. You don’t save up your earnings and get wealthy. I think half of Americans are unable to raise \$400 In an emergency. They have no savings at all.

For most people it’s very hard to save up money, especially if they have student debt, credit-card debt, medical debt and mortgage debt. After paying this, there’s really no income left to be saved. So you have the 1% of society, the rentier portion that had to pay income tax back in 1914, getting huge amounts of income and the rest of the society getting less and less. The result is economic polarisation. The dynamics of society are financial and basically rely on rent seeking that has been financialized.

I’ll give you another example of the GDP. One of the problems that makes GDP statistics meaningless is depreciation, the idea that buildings depreciate. When Ronald Reagan came in, the real estate interests and their banks basically took over the government. Henry George and the Libertarians oppose central planning by elected democratic governments, and that leaves central planning to Wall Street’s financial interests. Every economy is planned, and if you don’t have a government strong enough to do the planning, then the planning is done by the financial sector and the real estate sector, and they were given free rein under Ronald Reagan.

Under Reagan’s 1981 tax “reform” you could pretend that if you buy a big commercial building, you can write off 1/7 of the entire costs every single year as tax deductible income. At the end of seven years, you change your ownership from one name to another name, and you start all over again. The same building can be re depreciated again and again and again.

Donald Trump wrote in his autobiography, he loves depreciation, because he said thanks to the pretence of depreciation, his buildings are all going up in value, but he gets to pretend they’re falling, and deduct all of that fictitious over-depreciation from his taxable income. It’s actually economic rent. But if you look at the national income statistics, you can’t find economic rent in them at all. I was able to piece it together by adding up what goes into economic rent: Real estate taxes are part of economic rent, and also interest payments, because interest is paid out of economic rent. But fictitious depreciation tax loopholes also should be there.

But nowhere in the national income statistics is a report of how much income real estate owners actually claim as depreciation. They haven’t done that because if they showed this, people would think, ‘Wait a minute, this is a giveaway. This is utterly unrealistic.” So they only put in a figure for how much they [think] buildings are actually depreciating over a period of decades. So you have a fictitious national income accounting format that makes it impossible to calculate what land rent is – and that was the major focus of classical economics.

How are you going to get a statistical system that actually reflects this? Well, one associate of mine, Jacob Assa, has written a few books on this criticising economic rent. He worked in the United Nations here in New York until quite recently. But as I said, our graduates can’t publish in the University of Chicago economic journals whose party line is that ‘there’s no such thing as economic rent’, just like there’s no such thing as society is beyond “the market.”

I wanted to publish statistics on this and in 1994 the Henry George School in New York asked me to calculate what rent was and the land value. I found out that the value of land, the market price of land in the United States was twice what the government reported.

The government pretends that real estate prices rise mainly because buildings keep growing in value, even though they’re supposed to depreciate. They pretend that buildings grow in value by taking the original cost of the building, and multiplying it by the Construction Price Index. Whatever is left is reported as land value. Well, in 1994 the Federal Reserve reported that the land value of all of the commercially owned real estate in the United States was negative \$4 billion. This is crazy.

The statistics are drawn up by a methodology that the real estate interests lobbied for. When I calculated this, the Georgists in America got furious. They said that I was showing that land value and rents were much higher than they thought. They worried that this might lead people to want to tax real estate. Lowell Harriss of Schalkenbach explained that Georgists today represent mainly real estate developers, and that their major audience was local mayors, whose biggest campaign funders are the real estate interest.

These Georgists called themselves “two raters,” wanting to keep overall real estate taxes unchanged (“revenue-neutral”) but shift the tax from commercial landlords onto homeowners by taxing land, not buildings – e.g., electric utilities, office buildings and other capital-intensive structures.

By representing the developers, Georgists proposed to save society by having the developers build up those slums, build up those vacant lots. Like George, they said that there was no need to worry about ecology or any problem except cutting property taxes for large real estate owners. You don’t need to worry about workers conditions or anything else. Let’s just give an economic incentive (i.e., a tax cut) to help contractors build up those vacant lots.

ORDER IT NOW

I was told if I published a new explanation of my statistics showing that most rent was paid out as interest, I could never have any relations with Schalkenbach and the Henry George school again. So I published them in a Harper’s Magazine cover story and have lived happily ever after.

Jonathan Brown 1:06:13
And was that “The New Road to Serfdom”?

Michael Hudson 1:06:22
Yes. I chose that title because the purpose of industrial capitalism was to free economies from the legacy of feudalism. And the legacy of feudalism was the landlord-warrior class collecting hereditary rent and the predatory banks that were not making loans for industry. None of the industrialists got their money to invest in banks. The inventors of the steam engine couldn’t get loans except by mortgaging their houses. Banks don’t lend money to create capital, only for the right to foreclose on it.

Jonathan Brown 1:07:02
This is all included in your in your latest book that just came out, The Destiny of Civilization: Finance Capitalism, Industrial capitalism, or Socialism, which I gather was a series of lectures to a Chinese University. Is that correct?

Michael Hudson 1:07:16
Yes. There were 160,000 viewers for the first lecture, and there’s a huge interest in this in China, because they realise that higher housing prices make them poorer and more highly indebted, not richer. What is pushing up housing prices in China is the amount of credit that banks will lend against the property.

A land tax would keep housing prices down, because the rent could not be available, to be capitalized into a bank loan. As China gets more productive and more prosperous, people obviously are going to be able to afford housing, which is how most people define their status. If a site gets more valuable because of public investment in transportation, or schools or parks nearby, that’s going to make it more valuable. But if you tax this rental income, then you’re going to keep the housing price down.

I think Fred Harrison and Don Riley wrote a book Taken for a Ride where they show that the money that London spent on extending the Jubilee Line increased real estate prices by twice as much as the line cost. London could have simply collected the land’s increase in rental value that this public investment created and made it self-financing.

Instead it was a giveaway.

They ended up taxing labour and business, and the effect was to increase Britain’s cost of living and hence the cost of production, which is why Britain is de-industrialising. It’s been de-industrialising because despite the attempts through 1909 and 1911, to free itself from landlordism, the bankers have taken the place of the landlords. They are the class today that the landlords were in the 19th century. So we’re back on the revival of what really was feudalism – a rake-off by a hereditary privileged class.

<h4>America’s monetary imperialism coming to an end with de-dollarization</h4>
Jonathan Brown 1:09:47

I’m wondering where we go next. I want to get into the conversations that you started with the 1972 first edition of Super Imperialism. I know we had a third edition fairly recently, with your prescience of the predictions in analyzing the situation for America, and how the balance of payments deficit was a result of U.S. expenditure by the military. Getting into the current manifestation of the de-dollarization challenge that seems to be accelerating through the Ukraine and Russia crisis, I wonder what background we need to give the listeners just to tell them about how that system works.

Michael Hudson 1:10:39
One of the things that most people don’t understand is money, largely because of the academic discussion confusing matters. Until 1971, countries running a balance of payments deficit would have to settle it either in gold or by selling off their industry to investors in the payments-surplus countries. Well, beginning with the war in Korea in 1950-1951, the U.S. balance of payments moved into deficit. The entire U.S. balance of payments deficit from the Korean War to the 1970s was a result of its foreign military spending.

By the time the Vietnam war was ending, the Americans had to sell its gold every month. Vietnam had been a French colony, so the banks there were French. As America spent more dollars in Southeast Asia, these dollars were sent from local French bank branches to their head offices in Paris. The Paris bank would turn over these dollars to the central bank for francs, and the central bank, under General de Gaulle, would cash in these dollars for gold.

Germany was doing the same thing, using its export proceeds that were paid in dollars to buy gold. So America’s gold stock was steadily going down, until finally it had to withdraw from the London Gold pool and stop making the dollar gold convertible. Back in 1950 when the Korean War began, the American Treasury had 75% of the world’s monetary gold. It had used this monetary power to control diplomacy in other countries. The basis of America’s political power was its gold stock.

Once they left the gold-exchange standard there was hand wringing. How was the United States going to dominate the world if it didn’t have gold anymore, if the military spending abroad had made it run out of gold? My Super Imperialism pointed out that henceforth when foreign central banks got more dollars, what were they going to use them for? Well, there’s only one thing that central banks at that time did: That was to buy government securities. So the central banks of France, Germany and other payment-surplus countries had little option except to buy U.S. Treasury bills and bonds. Some of these were special non-marketable bonds that they couldn’t sell, but they were stores of value.

So the money that America was spending abroad was simply recycled to the United States. It didn’t mean that America had to devalue the dollar through running a balance-of-payments deficit, like today’s Global South countries do, or do as England had to do with its’ stop-go policies, always raising interest rates to borrow when its deficits threatened to force the pound sterling to depreciate.

Jonathan Brown 1:13:57
Michael, this insight was that was that when you were working at Chase Manhattan, and you were advising the State Department on what to do with the fact that they were having these balance of payments problem, because of military spending?

ORDER IT NOW

Michael Hudson 1:14:07
My job at Chase was to analyse basically the balance of payments of Third World countries and then of the oil industry. I had to develop an accounting format to find how much does the oil industry actually makes in the rest of the world. I had to calculate natural-resource rent, and how large it was. I did that from 1964 till October 1967. Then I had to quit to finish my dissertation to get the PhD. And then I developed the system of balance-of-payments analysis that actually was the way it had been calculated before GDP analysis.

I went to work for Arthur Andersen and spent a year calculating the whole U.S. balance of payments. That’s where I found that it was all military in character, and I began to write in popular magazines like Ramparts, warning that America’s foreign wars were forcing it to run out of gold. That was the price that America was paying for its military spending abroad.
I realised as soon as it went off gold in 1971 that America now had a cost-free means of military spending. Suppose you were to go to the grocery store and just pay in IOUs. You could just keep spending If you could convince the owner, the grocer to use the IOU to pay the farmers and the dairy people for their products. What if everybody else used these IOUs as money? You would continue to get your groceries for free.

That’s how the United States economy works under the dollar standard, at least until the present. This is what led China, Russia, Iran and other countries to say that they don’t want to keep giving America a free ride. These dollarized IOUs are being used to surround them of military bases, to overthrow them and to threaten to bomb them if we don’t do what American diplomats tell them to do.

That led already a few years ago to pressure to de-dollarize the world economy and make it multipolar, not simply an extension of the U.S. military, U.S. investors, mining and oil companies. The post-dollar aim was for other countries to keep their economic surplus among themselves to promote their own economic growth, instead of imposing IMF dictated austerity programmes to impose austerity so that they can pay foreign dollarized bondholders.

Just about everybody thought that it would take many years for China, Russia, Iran, India, Indonesia and other countries to get their act together and create an alternative. But this year the Biden administration itself destroyed America’s free ride for the dollar. First the United States grabbed Venezuela’s foreign exchange, then Biden grabbed all of the foreign exchange of Afghanistan, just confiscated it. And then a month ago he confiscated \$300 billion of Russia’s foreign exchange reserves. He said, in effect, that we are the leading democracy in the world, and global democracy means that America’s military gets to appoint foreign presidents.

And so we don’t like the person you’ve voted in as president for Venezuela. We’re going to hire this little nitwit that we bought out, Juan Guaido, and appoint him president. To force you to accept this, we’re going to take away all of your gold reserves held in the Bank of England, and we’re going to give it to Mr. Guaido as our nominee for the bastion of democracy, to do what a democratic regime is supposed to do: hiring terrorist groups to kill all land reformers and labour leaders, to finance a neo-Nazi takeover like we did in Chile under Pinochet, and just like we’ve done in democratic Ukraine with our funding of neo-Nazis to fight against the Russians there.

This confiscation of foreign reserves and foreign money held in U.S. banks shocked the rest of the world. Nobody had believed that countries would actually grab other countries’ financial savings. If you go back to the wars in the 19th century, the Crimean War and others, countries would continue to pay their foreign debts.

All this was ended by President Biden rejecting the international rule of law. He said that “We have a ‘rules-based’ order, in which we can make up the rules. Number one, we are exempt from the rules. Only you have to follow them. Number two, the rules or whatever we say.” China, Russia and India would have taken years by themselves to denominate their trade in their own currencies. Biden’s money grab has impelled them to create a new economic order independently of the United States and Europe, whose euro and sterling are satellite currencies of the United States.

Jonathan Brown 1:19:54
So Michael, this is a crazy situation that we’ve got. Even If you have deposits in a bank, the deposits don’t really belong to you, but they used to be respected.

Michael Hudson 1:20:07
Well they belong to you, but they can be stolen.

Jonathan Brown 1:20:09
Yeah, but then they don’t belong to me, do they? They’re kind of mine, but not. Likewise, if I annoy the wrong person, I could have my car impounded, because I’ve just annoyed the local politician, which is essentially what’s happened to a Russian oligarch. Now, whether or not the oligarch deserved that \$500 million yacht, obviously, they didn’t, but it was technically theirs. So what Americans are doing is showing that if you piss them off, they will take all your resources, which has happened in other countries, right? We’ve stolen it.

The British did that, right? We appropriated resources and stole resources from other nations. If you want the best example of that, you can just go into the very beautiful British Museum and see all the artefacts that we’ve appropriated, one of which was a Rosetta Stone, which I know you write about.

So we’ve got this situation now that the Americans have declared the most profound economic war on Russia, threatening China that we can do the same. China’s got trillions of U.S. dollars. And one of the things that I don’t quite understand, looking at your philosophy and Super Imperialism, was in demonstrating that the Americans can have a free lunch by getting people to buy U.S. Treasury bonds. How is it that the U.S. dollar has gone up against all currencies pretty much other than the rouble since declaring war in Ukraine?

Michael Hudson 1:21:43
Europe has committed economic suicide, United States offered its leaders a lot of money in their offshore accounts, and made sure that their kids got free education in the United States. But in return, they would have to represent the United States, not Germany, France or other countries. The Americans have been meddling in European politics for years. European politicians do not represent their own countries. They represent the American State Department and American diplomacy. And they were told to lock their countries into the U.S. economy.
For instance, European businesses had a hope that Americans really hated. The Europeans hoped that after 1991, now that communism was over, they could invest in Russia to make money. They could sell exports to Russia and make mutual gains from each other. But the Americans wanted to make all the money off Russia for themselves, mainly by using the kleptocrats they backed to sell the natural resources that they grabbed to U.S. investors. The Harvard Boys wanted to make sure that rent-yielding natural resources were given the kleptocrats – who could only make their money in hard currency by selling shares abroad in the assets they grabbed, keeping their payments in England or the United States.

So they’ve asked Europe not to buy Russian gas, but to spend seven times as much buying American liquefied natural gas, and spend \$5 billion to build the ports to accept this gas – while going without gas for about three or four years…let their pipes freeze… stop making fertiliser… Don’t feed your land, we’ll take it on the chin for America. Your standard of living is going to have to drop by 20%, but it’s all for American democracy. And the European heads said that’s fine.

America said that you Europeans are bothering them by trying to stop global warming. That’s a direct attack on a major arm of U.S. diplomacy, the oil industry. American companies control almost all the world’s oil trade. It’s the highest rent-yielding sector in the world. And it’s income-tax free. It’s politically powerful, and as long as America can control the oil trade, it can talk to Latin American countries or African countries and say if they elect a leader that U.S. officials don’t like, it can impose sanctions and stop exporting oil to them to freeze them out. They won’t get fertilizer, so the U.S. can starve you out. It can put a sanction on their food trade. 

Agriculture is Americans biggest trade surplus.

Jonathan Brown 1:25:14
That’s what they’re doing with the conflict in Ukraine to Russia, and also China as well. Are there other major sources of grain, wheat and rice?

Michael Hudson 1:25:26
Yes. But President Biden has blamed Putin for creating a world food shortage and threatening to cause a famine, because Ukraine can’t export its grain. Ukraine, at American direction, has put mines all over the Black Sea. So the Black Sea’s ports have mines around them. If a ship hits them, it’ll blow a hole in the hull and will sink.
As a result, if you’re a shipping company and want to transport grain, you have to get insurance, because if you don’t have insurance, then you’re in danger of going bust if your ship goes under. But no insurance company will insure it until the Ukrainians remove the mines that they put. You need minesweepers for that. Needless to say, Russia doesn’t want American minesweepers in, because they may very well attack as there’s a war on.

So you have the United States blocking Ukrainian grain exports, which was a huge export. You’ve had the American dollar area, the NATO countries, refusing to import food from Russia, which is the world’s largest agricultural exporter. This is creating a crisis for Global South countries, for Latin America and Africa.

Meanwhile, global warming is causing droughts that are reducing the harvest. The Green Party in Germany has a pro-war policy that is making global warming rise faster. By supporting military warfare against Russia, and U.S. military adventurism in general, they are becoming major lobbyists for the air polluters. The largest air polluter is the American military. The Green Party in Germany advocates fighting Russia more, providing it with more arms, and thus supporting the military that is now the largest new contributor to global warming. In effect, this means that Europe is willing to say, ‘Okay, we are willing to have the sea levels rise another 10 feet, as long as we can help America dominate Russia’.

Europe even is letting America keep the Trump tariffs on its exports, in place, so it can’t export more for America. It looks like Europe will have to de-industrialize, maybe we’ll go back to the 19th century and become a country of farmers. That basically is the situation that its subservience is imposing.

Jonathan Brown 1:28:49
I’d like to come back to the just what China and Russia can do, given their reserves. They understand they’ve got… they’ve got lots of reserves of gold, and also large grain stores, China having the most as I understand it, but can you help me understand why all these nations around the world have U.S. dollar reserves in some form or other, most of it in bonds? Why is the dollar still increasing at this moment in time?

Michael Hudson 1:29:28
Because the Euro was going down. The Japanese Yen is going down. The Yen is the worst performing currency, because they’ve held their interest rates very low. Their aim is for banks to make money by borrowing low at low rates and lending to foreign countries at a higher rate. Europe is also keeping its interest rates low. The American Federal Reserve is raising the interest rate, and that is money from low interest rate countries. Capital from Europe and Japan is flowing to America.

ORDER IT NOW

Currency values are primarily set by relative interest rates and capital flows. They’re not set by the cost of production for imports and exports. They are not caused by trade, unless there’s a radical breakdown of trade. All these zigzags that you see are short-term capital movements. America tells other countries to keep their interest rates low, so that money will flow from their banks and financial to the United States to buy American securities that yield higher returns. As long as the Euro is a satellite currency to the dollar, it’s going to continue to go down. So the both the euro and the British Sterling are now moving towards \$1 per pound and \$1 per euro.

Jonathan Brown 1:28:49
That’s a short-term measure. The long-term measure is that countries have to start selling the bonds that they’ve got in U.S. currency. So long term, it has to come down. Is that right?

Michael Hudson 1:29:28
Yes. They’re going to hold each other’s currencies. Especially now that Russia is denominating its exports, in roubles instead of dollars. The American banks have lost the trade financing of the world oil trade, certainly Russian oil and agricultural trade. Instead of holding dollars, countries will hold rouble reserves to stabilise their currencies via the rouble, China is holding rouble reserves, and Russia is holding Chinese yuan reserves.

The balance will be held more in gold and some kind of assets without a liability attached to them. I think the logical direction in which this is moving is that the non-dollar countries will create their own version of the International Monetary Fund, their own World Bank, their own trade organization. So there will be one set of trade and financial and development organisations and military organisations in the U.S. and Europe, in NATO, that is, in the white countries, and another set of relations and the non-white countries that are actually developing while America and Europe shrink.

Jonathan Brown 1:33:06
So what’s your idea of how much gold China actually holds, because there’s the published numbers [which] are really extraordinarily small aren’t they for an economy that’s so big.

Michael Hudson 1:33:18
I don’t know. Governments can hold gold not only through their own treasury, but through some subordinate agency. I no longer go into the financial statistics like I used to, because it takes a whole year to do a balance sheet that is comprehensive. All I know is that they saw how America simply grabbed Russia’s dollar holdings, and they don’t want the same thing done to them. President Biden has said China is America’s number one long-term enemy, and he wants to destroy the Russian economy first and then attack China after prying them apart.

Obviously, China is reading the newspapers and wants to avoid that fate.

Jonathan Brown 1:34:16
The other thing that I find utterly remarkable, for example, is that Biden in his speech said that he wants to get rid of Putin. I think if it was a U.S. Defence Secretary or Secretary of State saying that he wants to arm Taiwan……. If I ran China and I said I want to arm Mexico, or if anyone in South America wants any weapons then my doors open to you, I would expect the Americans to be very upset with that because I’m breaching the Monroe Doctrine. Can you help me understand, having been in the corridors of power, whether Chase Manhattan or the contacts you’ve got, how can …. how can politicians be so delusional to think they can say stuff like that without having a negative consequence?

Michael Hudson 1:35:18
Well you know who’s really upset by that? The Taiwanese! They say, Oh, they want to make Taiwan into another Ukraine, to fight to the last Taiwanese, just like the Ukrainians have been used. They see two choices before them. If they do arm and get weapons that can hit China, then China is likely to bomb them. On the other hand, I’ve met Taiwanese officials for 40 years, and many have said that their long-term hope is to be reintegrated. They want to be investors in China, but they want to merger under terms where they can be sort of like Hong Kong, able to have a merger that will make them prosperous too.

So Taiwan’s choice is between following the Americans and becoming the Ukraine of the Pacific, or joining with China. Given the fact that China is growing and America is shrinking, what are they going to choose? Well, I would imagine that you will see a strong, peaceful integrationist movement with China. But China remembers that Chiang Kai Shek massacred the communists in 1927.

Jonathan Brown 1:36:47
So what are we looking at then, who is in charge, President Biden or other people?

Michael Hudson 1:36:56
President Biden is a front man. They’re all the front men for the faceless people in the State Department, the neocons who are controlling things. Biden has always been right-wing, just a corrupt party politician. He does what he’s paid to do. He’s unimaginative. He’s brought in some real Russia haters – people who have a visceral hatred of Russia because of their family background under the tsars or under Stalin. Blinken said that his family was Jewish and lost under the tsars, and maybe under Stalin. He wants to kill Russians because he’s so angry at what they did to his ancestors. That is the neocon mentality in a nutshell. It’s a crazy mentality.

The Federal Reserve and the Treasury officials say they were not consulted in the political moves that Biden and Blinken and the neocons are making. There is the kind of single-minded tunnel vision at work. They really are Russia haters and China haters. There is a lot of racism you’re seeing in New York, where it’s very dangerous for Asian women to take a subway. Almost every week, the lead news item is yet another Asian woman attacked or pushed in front of a subway. There’s a there’s a new race hatred in America. And they are treating Russians as the Ukrainians do, as if Slavic speaking people are a separate race.

Jonathan Brown 1:38:49
Extraordinary. So Super Imperialism came out, as I understand it, and was used by the State Department to figure out how to continue running their economics …

Michael Hudson 1:39:04
At first U.S. officials thought that going off gold was going to be a disaster. Herman Khan told me, “You’ve shown that we’ve run rings around the British Empire.” He hired me for the Hudson Institute, which is a national security institute, and brought me to the State Department for meetings and to Army War colleges and Air Force war colleges to talk about it. I guess I shouldn’t be surprised that the main people who wanted to learn how imperialism works were the imperialists themselves. I had thought that the anti-imperialists were going to be my main audience, but the imperialists really needed to know what was new.

Jonathan Brown 1:39:50
They took your book, Super Imperialism and they read it as a love letter, right.

Michael Hudson 1:39:56
Not a love letter. They saw it as a “how to do it” book. I was a technician.

Jonathan Brown 1:40:04
Right. And working for Herman Kahn, he’s a powerful guy that people don’t talk about so much anymore, but he was, he was extraordinarily influential at the time, right?

Michael Hudson 1:40:14
Yes, he had a great sense of humour. He was a great speaker. He was absolutely brilliant. He wrote a book on thermonuclear war, saying that even if there were to be a war, somebody would be left to survive. That made him one of the models for Dr. Strangelove in the movies. I would sit and hear Herman talk about military strategy, and was awed by how he thought it all through. He was a brilliant military tactician. He would bring me and sit down with generals, and they would explain things. I don’t have a good military sense, or any military training at all. He wrote that, personally, he wanted to be right under the first hydrogen bomb. He didn’t want to live in the post-nuclear world. But there would be some survivors somewhere. That made him notorious. He was so reviled for even having brought up discussion of the topic that needed to be discussed, that he wanted to have ideas that people liked. And that was the corporate environment study. That was what I was pretty much in charge of. I was the economist, he was the military. We had the same salary there.

We would go around the world disagreeing with each other. It would be like a show. He’d talk about the world being a cup half full. I talked about the cup being half-empty, as he put it. I talked about the debt overhead, and how debt was growing and would ultimately stifle the economy. He talked about how productivity would be sufficient to pay debt, although productivity doesn’t necessarily give you the money to pay the debt. Productivity does not grows exponentially, but tapers off. As debt grows, any rate of interest is a doubling time. And it doubles quicker than the economy can double.

Jonathan Brown 1:42:24
And this is really coming back to one of your initial questions from Terrence McCarthy, which was to focus on productivity, wasn’t it?

Michael Hudson 1:42:33
Yes. And the idea was focusing on productivity, you realise that it all comes down to labour ultimately. How do you make labour more productive? How do you make industry more productive? You get rid of what is unproductive – and the unproductive overhead is rent. So how much corporate spending is just plain overhead? How much is unnecessary for corporate industry to take place? That line of questioning brings you back into the classical economics.
Marx is really the last great classical economist who pushed it all to its logical end. His contribution was to explain that just as the landlord exploits by taking rent, the industrial capitalist exploits labour by charging more for the products of labour than it costs to hire labour to produce.

However, unlike the rentier, unlike the landlord, the capitalist uses this economic surplus value to expand production, to build yet more factories, to employ yet more labour. This is an expanding society, whereas the rent paid to landlords is a kind of exploitation that is pure overhead and shrinks industrial capitalism. That’s why Marx said that the political aim of industrial capitalism was to free society from the landlords, predatory bankers and monopolists. That’s why the Communist Manifesto‘s program begins with collecting rent for the public sector. You can tax the land as a transition to socialising it. That was the Communist Manifesto’s classical economics.

Jonathan Brown 1:44:26
You have these views, and yet you were still a valued member of the team at the Hudson Institute.

Michael Hudson 1:44:33
Yes, because I was explaining how the world worked. Herman and I disagreed so much, we were genuine friends. I liked him, and we couldn’t believe that the other would actually believe something so different. But we said okay, if the arguments that we’re having is the “big argument,” it’s going to determine where the economy is going. Either he’s right or I’m right.
This is like the debates between Henry George’s followers and the socialists in the early 1900s. It was going to be one world or another.

What is the key to analysing the economy? Is it to focus on rent and finance, or on technological potential? My point is that technological potential can be smothered by so much overhead paid to the rentier class via the FIRE sector – finance, insurance and real estate – that there’s no money left to invest, no income left for wage earners to spend on buying the goods and services that they produce.

Jonathan Brown 1:45:48
And yet the technology sector in my opinion is actually the new monopolist. Instead of having a competition, in that sense they’re the new landowners. So Google is a spectrum landowner. If I want to host these videos, then I’ve got to negotiate or accept the terms of the landowner YouTube. I’m posting them there, but I won’t be making any money on it. Because I’m one of the serfs on YouTube.

ORDER IT NOW

Michael Hudson 1:46:16
This is the problem that China is dealing with in its own way. What do you do when Jack Ma and other IT specialists end up as billionaires? Well, China did not have an anti-monopoly group. It let 100 flowers bloom and let billionaires develop, but would then have them transfer their money to the government in one way or another. They haven’t done this in the way that Western economies do, by an anti-monopoly tax, but by a political consensus way.

In countries like Russia, I’m trying to get them to formalise this into formally calculating the magnitude of economic trends. You want innovation to take place, you want people to make the fortune, but at a certain point they can’t somehow make so big a fortune that it ends up crashing the economy.

Jonathan Brown 1:47:37
But looking at your writing from the Byzantine times and the ancient Near East, is the importance of the leader of that particular economy or society to make sure that no one got so rich that they could overthrow the leader? Which is really what you’ve got with someone like Zuckerberg, the power that he was able to wield in the election, whether you agree with him or not, was extraordinary. And likewise, if you look at the fight that’s currently going on with Elon Musk and Twitter, is to recognise that actually we want, we want our people to own these resources that we pretend are private, but actually have tremendous social power.

Michael Hudson 1:48:24
Yes, they financialized politics in America, by the Supreme Court’s Citizens United ruling. Anyone can contribute as much as they want, if you’re a corporation. The rentier interests give to pro-rentier politicians to act as their puppets. The money goes for advertising airtime on television and the media to overwhelm all the people who normally would want to minimise the rentier class. So essentially, you’ve financialized politics in America much more than has occurred in Europe. But in Europe, it’s the right wingers who basically control the press, commercial television and media. So if the media are controlled by the right wing with their own agenda, they frame the economic issues from the vantage point of the rentier class instead of from the vantage point of how an economy actually develops and grows wealthier in a fair manner.

Jonathan Brown 1:49:48
I know we need to need to wrap up. Just thinking about the scenarios for Russia and China currently. Everybody who is part of the original white economies of Europe, realises that if they don’t side with America, they get overthrown. But also right now they have a short-term challenge that the Americans are going to let them starve because they’re stopping wheat exports coming through the European ports. But then you’ve also got Russia with resources, you’ve got China with grain resources.

So there is a potential that when people start to starve, and you look at the challenges in Sri Lanka, with politicians being murdered and people running out of food, there’s a chance for China to step in and say, we can send you grain exports. And by lucky coincidence, because of the all the lock downs that China’s got right now, a lot of the world’s boats and ships are currently waiting outside ports in China.

Michael Hudson 1:50:54
[Missing part here] Computer chips are part of the problem. And that’s probably going to make them friendlier with Taiwan. Taiwan has the computer chips.

Jonathan Brown 1:51:03
And by your assessment, because Taiwan do not want to be another Ukraine, American actions are likely to accelerate the reintegration.

Michael Hudson 1:51:12
There’s a bell shaped curve, I haven’t met with the Taiwanese in quite a few years so I don’t know, up to date what the dynamic is. But just by logic, you can see the international environment in which they’re operating. You wonder how they are going to calculate the plusses and minuses of the U.S. versus China? What economy do they want to attach themselves to so that they can get richer fastest?

Jonathan Brown 1:51:46
And also stay safe and not get involved in unnecessary wars. When you look at the tragedy in Ukraine, all these people dying when you’ve got such a strong opponent in Russia, how can you go to war with them for any period of time?

Michael Hudson 1:52:07
Well, that’s what the world is divided into. The U.S. and European society is built on war. It’s the only foreign policy they have, because they don’t have an economic power anymore. They’ve de-industrialised and the rest of the world that is trying to industrialise and trying to feed itself. China, Russia, India, the Global South are the anti-war part of the world. So the world is dividing into two parts: a rentier part supporting finance capitalism [that] is trying to impose it on other countries, to financialize China and Russia to make them put a Margaret Thatcher or Boris Yeltsin in charge of China. While they try to put their own candidates in charge, a la General Pinochet, the rest of the world is trying to defend itself against this terrorism.

So the Western world that calls itself democracy is the terrorist military world. The nations that it calls authoritarian are any authority strong enough to control and tax the financial interests – that is, any government strong enough to regulate finance and real estate. Such an economy is by definition authoritarian as opposed to a democracy, where Wall Street and the financial centres are the democratically elected central planners. So what’s at issue is who’s going to plan society: the financial sector, or the people as in China and other countries.

Jonathan Brown 1:53:41
I think that says it. From a Western lens it’s a different type of democracy.

Michael Hudson 1:53:48
Yes. But democracy really means an economy run to benefit the great bulk of the population, who happen to be wage earners? Or is it going to be for the 1%? Is the economy run for on behalf of the 99% and the 1%? Well, the 99% need a strong government to run it in their own interests and cope with the counter-revolutionary policies, the neo-feudal rentier policies of the 1%.

Jonathan Brown 1:54:22
Okay, so knowing China, then your take on its zero-COVID policy that the authorities are implementing in some parts of the country?

Michael Hudson 1:54:32
The more I read about long COVID here, the worse it seems. I’m 83 years old, so my wife and I have not gone to a restaurant since 2020. We haven’t even gone to our friends’ houses for dinner. We’re isolating ourselves. China has isolated itself at great cost, but it saved the population not only from having COVID itself, but from having long COVID. There are now a million Americans with long COVID. They also say that long COVID lowers your, your IQ by 10%.

It’s almost as dangerous is inheriting a trust fund when it comes to impairing your IQ. It’s debilitating.

My webmaster in Australia and his family have COVID. So I’m very sympathetic with what China’s doing, even though it means that I can’t go there, because I’d have to be isolated in a hotel room for two weeks just to give a few days’ meeting – and then be isolated again when I come back. So China is making a huge effort not to sicken its population with COVID. And now of course, since the Russians have began to publish all their findings of the US bio-warfare labs in Ukraine that were designed to spread a COVID like diseases by migrating birds and bats and manmade aircraft over Russia.

Now, they’ve reopened the question ‘was COVID a US bio-warfare from the very beginning’? And the Chinese are looking at it and saying ‘was it engineered’? If the Americans are trying to engineer COVID to affect mainly Slavic population and their DNA signatures, could they have been doing the same thing against Asians? So all of this is suddenly opened up. The World Health Organisation has refused to divulge any of the USA biowarfare efforts, and the U.S. has stonewalled all efforts to find out about the bio-warfare. This is isolating America and Europe.

If American Europe is left with its current foreign policy, biowarfare and atomic bombs, NATO will be shunned by the civilised world. As Rosa Luxemburg said a century ago, the choice is between socialism or barbarism. NATO, Europe and America represent the new barbarism. The alternative is socialism. That is how the world seemed to be developing in Europe and America until World War I untracked everything. The rest of the world now has a chance to get back on track. I don’t know what’s going to happen in the West.

Jonathan Brown 1:57:47
Michael, as always, you always get more into your stuff than I expected. Are there any things that you’d like to say to our listeners, before we finish up,

Michael Hudson 1:57:56
I’ve probably said too much. And I hope you can edit out anything that’s embarrassing.

Jonathan Brown 1:58:01
I may get thrown off YouTube for publishing some of your comments. So you may have to go back and review a few of them. But as always, Michael, thanks so much your time what we’ll do is we’ll send a link to everybody for the website and also for the new book, as well which I think and those series of lectures when I was researching for this conversation were the single best economic lectures I’ve ever listened to – truly extraordinary levels of insight and real economics rather than theoretical or textbook stuff. So as always from ShepherdWalwyn, thanks so much for your time and for your contribution.

Michael Hudson 1:58:41
Well, if you transcribe it all in will be worth it.

Jonathan Brown 1:58:45
That’s, that’s our promise 100%. So thanks very much.

Michael Hudson 2:00:05
Thanks a lot.

 
• Category: Economics • Tags: Inequality, Rentier 
Hide 54 CommentsLeave a Comment
Commenters to Ignore...to FollowEndorsed Only
Trim Comments?
    []
  1. Wow! Fabulous! It’s going to take me way more than 2:00:05 to read this in full, years of study here, but thanks!

    Money is magic, but wow! what a magician!

    Many thanks, Michael Hudson.

    • Agree: dogbumbreath
  2. EH says: • Website

    Good read. Even the civil RICO laws, if they were enforced, would take out all the major rentiers, it’s the very model of racketeering. Anybody can file civil RICO suits — I doubt anybody can win against the rentiers’ mental hold on judges, though.

    • Replies: @mulga mumblebrain
  3. Hudson seems to be a pretty smart guy but sadly he’s bought into the Covid propaganda. Admittedly, my wife and I are younger though still in the “high risk” group. We had Covid early on and since then have never isolated ourselves, nor did we give in to the vax. We don’t have “long covid” and we haven’t caught any other strains. Hudson should check out RFK Jr’s book on Fauci. Many of the deaths attributed to Covid came from the way the government and medical authorities handled it rather than the actual risks of the virus.

    • Replies: @peterAUS
    , @Mefobills
  4. peterAUS says:
    @Fidelios Automata

    I’m 83 years old, so my wife and I have not gone to a restaurant since 2020. We haven’t even gone to our friends’ houses for dinner. We’re isolating ourselves.

    A public figure who failed a character test.

    • Replies: @Mefobills
  5. And I just wanted to give our listeners just some sense of how you got from being the godson of Leon Trotsky all the way to what I consider to be probably the most important economist in the world today.

    As if a Jewish Bolshevik would stand as a godparent. This is another of Hudson’s fabrications.
    The rest of the article is full of distortions and confabulations.
    As ever, there is no mention of the Jewish hand in unilateral free trade and offshoring which has destroyed the American economy. No change there.

    • Replies: @Mefobills
  6. “Learning by doing” but learning hardly anything, because there is no fundamental knowledge. At the end all there was is one “Long Covid”…

    (By the way: “Land Tax” is one of the worst and most criminal thefts of all; add the minority Jewed gvt. and the IRS has no legitimacy whatsoever.)

    Amazing how Jewmericans mess and mingle and bastardize really everything and all over the world. May God pull a fence around Jewmerica – no one allowed out and no one allowed in and the world will slowly but surely start to heal.

    • Agree: Towey
    • Replies: @Mefobills
  7. While I learned a few minor things this time, I had to keep looking at the date these videos wee done since much of this is the exact same things–down to the words–the Hudson says.

    It’s depressing.

    • Replies: @Rubicon
  8. bert33 says:

    If they’re serious about ever having affordable housing, then we need: Cheap campgrounds, showers, toilets, amenities cafeteria type situation, trailer parks/RV parks, mobile home parks, and apartment complexes. The housing market is crashing because too many speculators payed their high dollar money games with a place of domicile. Now in america we have people working full time, living in their cars. WTF?!?!

  9. Mefobills says:
    @peterAUS

    A public figure who failed a character test.

    When Hudson was economic advisor for Kucinich, he received death threats. And of course, those threats were from vested interests.

    He didn’t wuss out and go and hide. That says volumes about his character.

    Have you received death threats and shrugged them off? That takes a giant set of balls, especially when vested (((interests))) don’t play around.

    • Replies: @Michael Hudson
  10. Mefobills says:
    @Verymuchalive

    As if a Jewish Bolshevik would stand as a godparent. This is another of Hudson’s fabrications.

    Your making an unfounded allegation, so you can then cast aspersions.

    Try to figure out how Hudson is foursquare against Finance Capital and simultaneously a Trotskyite.

    Trotsky took money from Finance Capitalists, especially Schiff of Khun, Loeb and Co.

    You can’t be for something and against it at the same time, that is – unless you are moron, and Hudson is not a moron. Try to resolve your contradictions.

  11. Agent76 says:

    May 20, 2022 Introducing The Reset: The Great Reset Docuseries

    In episode one of The Great Reset Docuseries, we introduce The Great Reset. We provide the background of the World Economic Forum and its chairman, Klaus Schwab, along with the other global elites who assisted in the birth of the organization. We explore the organizations that compliment each other, working alongside the WEF to plan and enact a new form of global governance through The Great Reset.

    Mar 4, 2021 Banking below 30: Banks own many of Dallas’ high-crime apartments and they’re rewarded for it

    Banks are required to lend to low-income borrowers. But, instead of loans, regulators incentivize banks to invest in housing built in areas of crime and blight.

    Nov 11, 2020 World Economic Forum: “You’ll own nothing, and you’ll be happy” (While Oligarchs Own Everything)

    All video and audio content belong to the respective owners and creators.

  12. Mefobills says:
    @Fidelios Automata

    Hudson seems to be a pretty smart guy but sadly he’s bought into the Covid propaganda.

    And yet, Hudson seems to be aligning himself with Ron Unz’s theory that Covid was militarized.

    Below is quote from Hudson’s personal experience, and he is not a medical expert, he is an economist. He has suspicions about the engineering of the virus, especially to be DNA specific.

    Getting into Hudson’s brain space, if one can do that, then the virus might well have been engineered, and hence could cause “long covid.” Also, when you are 83, your immune system is not as robust as when you are young.

    My webmaster in Australia and his family have COVID. So I’m very sympathetic with what China’s doing, even though it means that I can’t go there, because I’d have to be isolated in a hotel room for two weeks just to give a few days’ meeting – and then be isolated again when I come back. So China is making a huge effort not to sicken its population with COVID. And now of course, since the Russians have began to publish all their findings of the US bio-warfare labs in Ukraine that were designed to spread a COVID like diseases by migrating birds and bats and manmade aircraft over Russia.

    Now, they’ve reopened the question ‘was COVID a US bio-warfare from the very beginning’? And the Chinese are looking at it and saying ‘was it engineered’? If the Americans are trying to engineer COVID to affect mainly Slavic population and their DNA signatures, could they have been doing the same thing against Asians?

    ______________

    My personal view is that it is the gene therapy shots that causes long-covid. The mRNA molecule is man made with Pseudouridine and this creation was never really looked at for its negative effects. Also, mRNA gene therapy mystery juice goes on a field trip, going everywhere in the body, and then replicates where it shouldn’t. The spike protein itself is bad, like a prion. So, your body is turned into a spike protein factory.

    A healthy person has a lymphatic system that can deal with virus or bacterial invaders that enter into your nose, throat and lungs. Older people, not so much, which is why they succumb to things like the flu.

    Don’t be the enemy of perfection; Hudson is an economist -not a medical expert, and even now the Covid mystery still hasn’t unraveled fully.

    If you are an economist, then Hudson’s view is consistent with Ron Unz’s theory. Also, the bio labs in Ukraine WERE getting Slavic DNA to run experiments on.

    https://www.thelibertybeacon.com/the-ukrainian-biolabs-the-globalist-plan-to-exterminate-the-russian-people/

    In November 2017, something very unusual occurred. Russian President, Vladimir Putin, publicly stated that there were foreign subjects on Russian soil who were engaged in anomalous activities, like the collection of Russian DNA samples.

    Putin released a statement where he clearly said that someone was keenly interested in the ethnic composition of the Russian population.

  13. Mefobills says:
    @Kurt Knispel

    (By the way: “Land Tax” is one of the worst and most criminal thefts of all; add the minority Jewed gvt. and the IRS has no legitimacy whatsoever.)

    That’s a tough one to wrap your mind around. You are getting screwed now by rake-offs, by rents.

    The screwing is in prices, where people (on average) have to bid against each other to buy housing. This bidding process drives up prices, so that you are paying a large fraction of your income, just so your kids can go to a school that is not completely bombed out by minorities.

    Right? White people and North East Asians circle through neighborhoods in their cars, looking at the demographics. So, the house loan is the entry point for a “good neighborhood” which in turn relates to the nearby public school. Schools populated by minorities, especially blacks, don’t do well. But, OH! is that raaacist? I can say it, but Hudson cannot. Undoubtedly, racism is a functional part of economics, as people make choices.

    So, the idea is to lower rents, and the rake-offs that are stealing from your pocket. Adam Smith’s invisible hand is in your pocket, and squeezing your testicles. Paradoxically, rent taxes lower prices.

    Land, as one of the main contributors to production, has to be taxed to prevent rents. The proper way to do the taxing is complex. And the mortgage money creation process has to be controlled as well. So, it is both money creation and taxation that has to come under control. Hudson gave some examples:

    The more money you have to spend on mortgage interest to buy a house as land and real estate is financialized, the less you have left to spend on goods and services. This was one of the big problems that was slowing the economy down.

    So, if you are not buying and selling goods that you produce, with your fellows, then that is bad. You are not consuming those rib eyes from your rancher friend, and he is not enjoying the boats you created.

    The invisible hand is siphoning away your money, to pay the mortgage. The banker could give a shit how big your mortgage is, he cares mostly about the interest income. When you pay back your loan, the money you are paying back disappears when it pays down principle. So, housing prices are empty calories that force people into the streets, while paying the 1%.

    The banker is taking rents on you in the form of prices, and then your income vectors away from you to disappear into the banker’s ledger.

    Here is another “rent” charge, that society ultimately pays for:

    Under Reagan’s 1981 tax “reform” you could pretend that if you buy a big commercial building, you can write off 1/7 of the entire costs every single year as tax deductible income. At the end of seven years, you change your ownership from one name to another name, and you start all over again. The same building can be re depreciated again and again and again.

    Our Indian and Paki friends are big time into this scam. They use it to buy and sell convenience stores to each other. When one of the scammers is about at the end of his 7 year period of depreciation, he sells the building to his friend. Basically they swap their building with each other.

    The Jews in New York do the same thing with their buildings. They rub their hands in glee.

    The idea is to think in terms of rents and the taking of sordid gain. Taxes that land on rents are something like cutting out a tumor, so producers can produce, rather than feed energy to a cancer.

    But democracy really means an economy run to benefit the great bulk of the population, who happen to be wage earners? Or is it going to be for the 1%? Is the economy run for on behalf of the 99% and the 1%? Well, the 99% need a strong government to run it in their own interests and cope with the counter-revolutionary policies, the neo-feudal rentier policies of the 1%.

    Rents cause polarization. Debt mechanics caused Rome to fall into feudalism, as the land polarized into rentiers owning big estates (Latifundia). Gold was consecrated to the vaults, to then start the greatest depression, the dark ages. The 99% were dispossessed from owning land, and became serfs.

    • Replies: @Anon
  14. Knowing what money is and where it comes from makes much of what is written and discussed here…well, it’s nonsense.

    • Replies: @obviouslie
  15. Rubicon says:
    @restless94110

    We agree with restless94110.

    The problem seems to be *who* is interviewing Dr. Hudson. It appears many do not have a background in economics, thusly, they don’t ask the right questions. This is seen repeatedly throughout many months if not years of interviewing.

    Some relevant questions that should be asked:
    1. Dr. Hudson, some of us don’t understand what you mean by the “rentier” class of people.
    How is Big Pharma, or Big Agriculture, Big Banks, Big Real Estate, etc. part of the “rentier class?”
    Is there a different phrase you could use to better understand them?

    2. Could you explain *why* gas/oil/food products are rising? How much of that is caused by the monopolists in the US/EU? What are the specific reasons behind these significant rises in food, oil, gas, natural gas? What are the mechanism behind this? We don’t understand.

    3. What do you mean by “Europe is committing suicide” when the Super Wealthy there arre making huge profits from the US/EU Financial Centers. Are you talking about the European *citizenry* that is being hammered? Could you be specific in terms of classes: average citizens vs European wealth?

    What other questions would you folks like answers to? Let’s see if our combined queries could be far more specific that relate to us…..to common citizens.

    • Replies: @restless94110
  16. Jim H says:

    ‘That’s why in today’s United States, 92% of corporate revenue, called earnings, (although not all of it is earned – that’s a euphemism) is spent on stock buybacks and dividend payouts.’ — Michael Hudson

    One understands that misstatements and misquotes can occur in a transcript.

    But equating corporate revenue to earnings is egregious.

    Corporate earnings average about 10 percent of corporate revenues. Most of corporate revenue is spent on cost of goods sold, wages, and rent.

    What remains as profit (earnings) is available to buy back shares and pay dividends.

    Did anyone proofread this transcript?

    • Replies: @JR Foley
  17. The problem seems to be *who* is interviewing Dr. Hudson. It appears many do not have a background in economics,

    You have a good point because Paul Craig Roberts just released a 2-papter column where Hudson goes first and he does address many things in ways different than before. He says something new or he says it in a new way. I have not read through his side entirely (and not read PCR’s at all) yet, and it is not an interview (neither video nor transcript), but it truly is interesting for once in a long time.

    1. Dr. Hudson, some of us don’t understand what you mean by the “rentier” class of people.
    How is Big Pharma, or Big Agriculture, Big Banks, Big Real Estate, etc. part of the “rentier class?”

    Completely disagree. Ever since I heard Hudson’s description of the rentier class–at least 5 years ago–it was immediately apparent. The rentier class is the class that make profit doing nothing but collecting rents, royalties, depreciation, etc. Not sure why you don’t understand this. As for all of the Bigs in your sentence, those are too nebulous a term to be useful. For example, Big Real Estate: it makes no difference at all if it’s Angela owning 3 small apartment complexes in Bakersfield or Joe Smith Inc, that holds REITs and 50 shopping centers and 1000 duplexes. It’s still the rentier class and Hudson’s solution to many things (really the solution of the 19th century economists) was to tax the property, and to do it straightforwardly (no fake depreciation either), which would then mean there would be no need to tax income. The tax from the rentiers would easily be enough for the society.

    A very very small tax on each financial transaction would be included in this. And these changes would go a long way to ending our financial economy and most speculative investing (in real estate, stocks, etc.) forcing us back to a manufacturing economy and returning us to the producing of things, things we will be desperately needing soon.

    2. Could you explain *why* gas/oil/food products are rising? How much of that is caused by the monopolists in the US/EU? What are the specific reasons behind these significant rises in food, oil, gas, natural gas? What are the mechanism behind this? We don’t understand.

    Speak for yourself, my friend. Not only do we understand very clearly, your question is more Hudson-like than Hudson himself. Meaning, what if Michael can do some mansplainin’ on those issues? Doesn’t make a drop of difference at all. However, if you do read his piece in the Paul Craig Roberts column I believe he mentions that energy prices are going up “in anticipation” of shortages. And those shortages are clearly being negligently caused by misguided ideas about CO2 and climate change. They may not be doing it deliberately, and/or they may not be doing it well or efficiently, but it looks like they believe so strongly (religiously) that CO2 will boil the world and it’s all the fault of fossil fuels and meat eaters that even if they screw it up, they will still save the world. And if that means they make money on the way there, well, that’s just icing on the cake.

    3. What do you mean by “Europe is committing suicide” when the Super Wealthy there arre making huge profits from the US/EU Financial Centers. Are you talking about the European *citizenry* that is being hammered? Could you be specific in terms of classes: average citizens vs European wealth?

    Your question answers itself or is so obvious that you can answer it yourself. In every economy there is and will be the rich. The question is how rich compared to the rest of us. I firmly believe that FDR saved America when the percentage the rich had was far too lopsided. This lopsidedness happens regularly in capitalism–and as Hudson points out, all ancient civilizations–and there’s nothing to do for it but to take concrete, real, true, measures to spread the wealth around.

    That is why it is clear that an immediate and complete wipe of student loan debt would be the smartest thing for failing Biden to do and that doing so would be a huge, powerful stimulus for people, the economy in general, and also for the psychological health of the entire society.

    And of course, there are many other measures big and small that would add to this spreading of the wealth among the general population (see Ellen Brown’s Web of Debt blog and writings for many of the specifics).

    These measures (the loan debt and Ellen Brown’s suggestions and reporting on some things that other countries did or are doing right now) would cost most if not all of them next to nothing. Student loans are done by the Federal government in the large majority, thus meaning the creditor is electronic, governmental, and could be done quickly. I am sick of all arguments against this from a moralistic point of view. It’s far more damaging this huge debt overhang than whether you ate dog food for 10 years in order to pay off your personal student loan. Sometimes you’re the windshield, sometimes you’re the bug. Stop being selfish and acting like a school marm. It’s not about you, it’s about the country entire.

    What other questions would you folks like answers to? Let’s see if our combined queries could be far more specific that relate to us…..to common citizens.

    Well, I think I just answered your questions and I’m not even Michael Hudson. My problem with Hudson though has always been that he continues to repeat over and over again the history of what happened in primarily 2 time periods–and then today in the 20th-21st century.

    To wit, Hudson explains how it was done a few thousand years ago, but then explains that the Greeks began changing that and it was cemented (through assassination and other measures) by the Roman oligarchy—and then that’s it, he leave it there. Historically he is correct.

    He then moved up into the 17th through the 19th century and explains some of the great economists explaining the rentier mess and how to get out of it and what things would look like if we did get out of it. It’s quite probable that doing those things in that way as proposed a century or so ago would save capitalism and save the world and its people really.

    Because capitalism regularly groups a few winners up there and lets the rest of us losers languish at serious levels at the bottom. And that never works–eventually. It’s the eventually that is the problem, because humans have a defective trait–long-term understanding, putting things off until things are too catastrophic to fix or reform. Nothing left to lose, people lose it and it’s real hard to control a revolution.

    And you can easily see this to be true. To this day many people yowl that FDR was a dirtbag and capitalism was doing just fine in the early 30s. No. It was not. You have to give people nice things at least some nice things and at least some of the time or people will kill you. And kill the society.

    I wish that Hudson was more didactic in this, where he and others like him seem more tentative and timid. I wish all his future talks and papers would be about what can and should be done right now.

    He’s done a great job of reporting on the history. We know all about it now, Michael, thanks mostly to you. But when you just repeat that history over and over? You are just resting on your laurels.

    Start writing almost totally about what should be done now and in the near future. That’s all we have. History is gone. Use it to guide if you want to. But stop repeating yourself.

  18. @Rubicon

    I just posted a long full response to this but apparently did not hit Reply, thus it posted as an orphan comment. You can easily find it (comment #17 I think).

  19. @restless94110

    You can probably benefit from articles annotated at MoneyDelusions beginning with this one:
    https://moneydelusions.com/wp/2017/07/30/what-is-money/

    With this view, see:
    https://moneydelusions.com/wp/2022/06/22/economic-rent-and-exploitation/

    • Replies: @restless94110
    , @Mefobills
  20. @Todd Marshall

    You can probably benefit from

    No I can not. Unless you care to respond to my reply to you, and connect those things (my reply and your detailed response that you would need to write), then I would have no reason to read some random link to articles that frankly sound like nonsense on their face.

    Not interested in any discussion around the nature of money: money is what we have to deal with. I’m showing you ways to deal with it, while you (probably) want to deconstruct. If it happens one day (deconstruction), I’ll be more interested.

    But really, you are sounding mighty lazy, after I spent a good 10 minutes writing you a detailed, thought-out comment.

    It’s like you are saying: I’m not going to take the time and effort to reply to him because he just doesn’t understand (the nature of money, why your dad left your mom, how to bake a fruit cake, etc.).

    Well, I do understand. But do you? Looks like not.

  21. Mefobills says:

    Start writing almost totally about what should be done now and in the near future. That’s all we have. History is gone. Use it to guide if you want to. But stop repeating yourself.

    Hudson’s policy prescriptions are pretty much the same, over and over, and relate to history for justification. Debts are written down, or erased. Society is to be de-polarized.

    To deal with the debts, banks have to be public-private, or pure public option.

    https://michael-hudson.com/2013/03/too-big-to-jail/

    For the next crises, the banks are to be nationalized, and then ledgers examined. Then the loans are written down. This is the top and first action: nationalize the banks.

    Isn’t that inherent that as long as you have private banking become so powerful that it also will be parasitic?

    HUDSON: The key word that you just said is “private banking.” So the answer so far, empirically speaking, is “Yes, that’s how it’s working out. [parasitism] That’s the logic of things.”

    But it doesn’t have to be this way. If the government would have taken over Citibank it would not have done the kind of things that Citibank did. The government would not have used depositors’ money and borrowed money to gamble. It wouldn’t have gone down the casino capitalism route. It wouldn’t have played the derivatives market. It wouldn’t have made corporate takeover loans. None of these are productive from the vantage point of economic growth and raising productive powers and living standards. They would not be the proper behavior of a public bank.

    I haven’t read his latest book, but it seems to be more like, here are you choices, door #1,2 or 3. Finance Capital (Atlantacism), Industrial Capitalism, or Socialism. (Socialism is supposed to evolve from Industrial Capitalism)

    https://braveneweurope.com/the-destiny-of-civilization-by-michael-hudson

    To be successful, any reform has to be system-wide, not merely a single part. Today’s western economies have become financialized, leaving credit creation in private hands – to be used to make financial gains at the expense of the industrial economy… This aim has spread like leprosy throughout entire economies – their trade patterns (dependency on US agricultural and oil exports, and IT technology), labor relations (anti-unionism and austerity), land tenure (foreign-owned plantation agriculture instead of domestic self-reliance and self-sufficiency in food grains), and economic theory itself (treating finance as part of GDP, not as an overhead siphoning off income from labor and industry alike).”

    My position is that the Atlantacist finance capitalist construct is at an end, it is in its death throes. The real question to my mind, is how we, who are embedded in the West, are to survive the fall-out?

    If Glazyev’s synthetic currency becomes implemented, then the global south will be off to the races, and the fracture from dollar hegemony will be complete. Two different word views will manifest, and one will work for the 99%, and the other will be mired in debt polarization and riven with class conflicts.

    Hudson concludes by reiterating what the New Cold War is really all about:

    “In short, it is a conflict between two different social systems, each with their own philosophy of how societies work. Will they be planned by neoliberal financial centers centered in New York, supported by Washington’s neo-cons, or will they be the kind of socialism that the late 19th century and early 20th century envisioned – a ‘market’ and, indeed, society free from rentiers? Will natural monopolies such as land and natural resources be socialized and used to finance domestic growth and housing, or left to financial interests to turn rent into interest payments eating into consumer and business income? And most of all, will governments create their own money and steer banking to promote domestic prosperity, or will they let private banks (whose financial interests are represented by central banks) take control away from national treasuries?”

    History tells us that rentiers and oligarchs do not take their hand off the tiller willingly, they have to be forced, or killed.

    Hudson pretty much admitted that Democracy is too chicken shit to do the job of killing/forcing Oligarchs and rent seekers back into their box.

    So the Western world that calls itself democracy is the terrorist military world. The nations that it calls authoritarian are any authority strong enough to control and tax the financial interests – that is, any government strong enough to regulate finance and real estate. Such an economy is by definition authoritarian as opposed to a democracy, where Wall Street and the financial centers are the democratically elected central planners. So what’s at issue is who’s going to plan society: the financial sector, or the people as in China and other countries.

    Russia/China continue to win. The white/European Atlantacist countries continue to slide into polarization and feudalism. Democracy and Parliament fail – a new Caesar arises who is a new Tyrant to release debts, and to protect the general population from internal and external predators.

    • Agree: frankie p
  22. @EH

    ‘Mental’??? Try ‘financial’.

  23. @restless94110

    I hate the expression ‘rentier’. I far prefer ‘parasite’.

    • Agree: JR Foley
  24. That’s a valuable addition to all discussions about rentiers. I also prefer words like: dirtbag, shithead, Goofy’s best friend.

  25. Rubicon says:
    @restless94110

    We posed those queries to Dr. Hudson because, if you observe the majority of responses, invariably, most individuals wander off by commenting issues that don’t pertain to the meat of Hudson’s thesis. Instead, if it’s a subject they’re more familiar with, they will express themselves.

    This strongly suggests that most do not understand Hudson’s views because they do NOT understand how the US System works.

    We do know what he is referring to with the rentier class. In past interviews, he points out, that it is largely the wealthiest Americans within the top 1%-10% range and not Joe Smith in Bakersfield, who are in command of most large rental complexes, shopping malls, and corporatized stores.

    We do want Dr. Hudson to explain why he thinks “Europe is committing suicide.” How will this impact the EU’s wealthiest? We don’t see that happening. We have friends in Europe who all say that the EU wealthiest are doing just fine. Part of that has to do with their very close ties to the US Financial/Fed structure. But it’s European citizens are impacted by gas/oil, food products that keep rising.

    Oil, gas/etc costs are going up. What, exactly, is causing this? What are the mechanisms behind this? In other words, we know the The FED doling out billions of \$\$s to the US’ super wealthy, is there something else deep within this rank system that is actually driving up the costs? Is it the growing impact of China/Eurasia, Russia, parts of Latin America who are pivoting away from using less US\$\$s with their trading partners while they are establishing alternative currencies? Hegemony? OR, is it because the very smart folks in those corporations sense “free lunch” is definitely faltering?

    As for Ellen Brown and your ideas about student loans, etc. etc. If we truly understood how US predatory capitalism actually works, we would fully recognize there are NO solutions, especially for Americans. An issue Dr. Hudson *has* explained in some detail in past interviews and articles.

    • Replies: @restless94110
  26. Mefobills says:
    @Todd Marshall

    Keynes would have called you a “crank.”

    This is the old saw, already debunked, about how money came about due to markets, and to make barter more efficient.

    From your link:

    Definition: Money is an “in-process promise to complete a trade over time and space”

    No mention of credit and debts I see? Credit and Debt PREDATE money. For an economy to have money, it has to have enough people, and some sort of advanced law.

    Money stands in, and acts a substitute for settling debts. For example, you pick up a can of beans at the super market. You are now in a quasi debt status relative to the store.

    When you check out, you pay the store money, and this money divides down (by law) to then match a price. The price is paid, and the debt relation is released.

    In the sixth century code of Jusitinian, Julius Paulius – a Jurisconsult is quoted (from around 300AD).

    A device was chosen (money), whose LEGAL AND PERMANENT VALUE remedied by its homogeneity, the difficulties of barter. The device being officially promulgated, circulated, and maintained its purchasing power, not so much from its substance as from its quantity. Since that time, only one consideration in an exchange is called merchandise, and the other is called price.

    The first money was barley, in the temple cults. It was an extension of the ledger, brought into being by legal fiat. Only later was gold cut off of a rod, to then balance on a balance beam scale in relation to barley. Hence gold is weighed in ‘grains.”

    The Romans obviously did not understand debts, as they polarized.

    More BS from your link:

    In simple barter exchange in the “here-and-now”, (2) and (3) happen simultaneously, on the spot. Any exchange of “value for value” (e.g.corn for piglets; gold or gold backed exchange for other stuff; etc.) is in this category and does not involve money.

    Above you try to deconvolute gold from money as a form of propaganda at variance with know monetary history. The temple priests made gold money when they bequeathed it as so, via their law. All money relates to law, and can settle credit/debt relations, or can divide down to do trade (and hence facilitate barter).

  27. You are aware that anyone you know who owns any property (rentals, oil well royalties, copyright to a work of art) is a rentier, right?

    Could be–probably is–your father or sister.

    If not them, then your best friend, your boss. Etc.

    You get the idea.

    Rentiers are how the world currently works.

    So instead of calling them names? Just tax them.

    So much easier to do. Smoother.

  28. JR Foley says:
    @Jim H

    Profit is not cash —-revenue can come from credit transactions —recorded as revenue but cash received later.

  29. @Rubicon

    We posed those queries to Dr. Hudson because, if you observe the majority of responses, invariably, most individuals wander off by commenting issues that don’t pertain to the meat of Hudson’s thesis. Instead, if it’s a subject they’re more familiar with, they will express themselves.

    When you are replying to me, reply to me, not what most people do or don’t do. What is up with the We business?

    This strongly suggests that most do not understand Hudson’s views because they do NOT understand how the US System works.

    Here is how the US System works. RENTIERS are not taxed as they should be. Period. That is how the US System works.

    We do know what he is referring to with the rentier class. In past interviews, he points out, that it is largely the wealthiest Americans within the top 1%-10% range and not Joe Smith in Bakersfield, who are in command of most large rental complexes, shopping malls, and corporatized stores.

    Then you DO know that anyone can be and is a rentier. And IT DOES NOT MATTER the specs of each rentier. It is about funding a government and a society through taxation. Either taxation of income or taxation of assets. Or both. It matters NOT how big or small the rentier is.

    We do want Dr. Hudson to explain why he thinks “Europe is committing suicide.” How will this impact the EU’s wealthiest? We don’t see that happening. We have friends in Europe who all say that the EU wealthiest are doing just fine

    .

    Of course the European wealthy are doing just fine. So are the Latin American wealthy. You seem mentally challenged. You do not apparently understand what I said in my first reply: you have to have a more even distribution. Too lopsided and that is COMMITTING SUICIDE. The have nots have no investment in the society. They then destroy it. As they are WITHIN the society, the society commits suicide. That the wealthy are doing just fine has nothing at all to do with their ties to any person place or thing. The wealthy ALWAYS do just fine.

    Oil, gas/etc costs are going up. What, exactly, is causing this? What are the mechanisms behind this?

    Who cares? That has nothing to do with the piece and nothing at all to do with my comments.

    As for Ellen Brown and your ideas about student loans, etc. etc. If we truly understood how US predatory capitalism actually works, we would fully recognize there are NO solutions, especially for Americans.

    If you truly sincerely believe what you said? Do the following:

    1. Go to your kitchen
    2. Find a bare corner of the floor.
    3. Sit there. (at this point clothing is optional)
    4. Put your head in your hands.
    5. Lean over.
    6. Weep uncontrollably.
    7. For the rest of your life.

  30. Anon[424] • Disclaimer says:
    @Mefobills

    invisible hand

    ?

    • Replies: @Mefobills
  31. wilbur says:

    I like the cut of Mr Hudson’s jib. Scarce is someone that believes the evidence of his own eyes and who calls it the way he sees it as opposed to people that first look to what everyone else is saying. And that bushwah that flows from an economist’s hole is most certainly bushwah, but it’s all most certainly bushwah that tells you who the economist works for. They talk their book in other words. If you listen carefully you’ll figure it out.

    Having said all that, Mr Hudson sounds like that rare economist that dispassionately takes the measure of things, which after all is what science is all about, or it’s supposed to be, even one that’s politically infused.

  32. Mefobills says:
    @Anon

    It was a joke about Adam Smith and his invisible hand of the market.

    Lolbertarians especially worship the market as if it is Magick and God.

    I thought it was funny, but then I laugh at my own jokes like some crazy person cackling and muttering to themselves.

  33. @Mefobills

    Well, right after I wrote Super Imperialism I got death threats.
    But by the late 1970s they tapered off. that actually was disappointing, because it seemed that my adversaries simply didn’t care enough to kill me, or even beat me up.
    But they began again when I brought a RICO suit against LaRouche and his cult. I think he liberal Judge Sweet was the one who let him off.) Morecai Levy was hired, and indeed, he would phone me around 2 or 3 AM to wake me up, soI began to take the phone off the hook at night. Mordecai then turned over LaRouche’s orders to the FBI, and that helped me throw him in jail as prosecutors brought suits in various states.
    Then there was Dennis Kucinich. He said, “If anyone kills me, it’s …” (Oops, I can’t say whom here. I wouldn’t want to get us both plugged.)
    So i’ll just have to get appreciation for my writing from other people than would-be assassins.

    • Replies: @Mefobills
  34. Mefobills says:
    @Michael Hudson

    But by the late 1970s they tapered off. that actually was disappointing, because it seemed that my adversaries simply didn’t care enough to kill me, or even beat me up.

    Ha Ha, that’s super funny. Giant Balls.

    Well you know you are over the target when you are taking flak.

    Thanks for all your hard work and insights – and don’t lose 10 IQ points; your strategy to stay healthy is rational and reasonable.

  35. @Todd Marshall

    How do you know when an economist is spewing bullshit? when their mouth is moving.
    Makes perfect sense that he is trotskys godson bc he is utterly unimpressive.
    Forgive them their debts is a great book though. Theres good history there but its funny he cant come to an obvious conclusion.

    • Replies: @Mefobills
    , @Todd Marshall
  36. Mefobills says:
    @obviouslie

    Theres good history there but its funny he cant come to an obvious conclusion.

    I just said what the overall conclusion is. It is right here in this thread. You didn’t read, you are just popping off.

    I guess to get through to knuckleheads, Hudson has to repeat it louder maybe? I don’t know – some people are cranks, and always will be.

    https://www.unz.com/mhudson/economic-rent-and-exploitation/#comment-5405931

    Hudson’s policy prescriptions are pretty much the same, over and over, and relate to history for justification. Debts are written down, or erased. Society is to be de-polarized.

    To deal with the debts, banks have to be public-private, or pure public option.

    Basically, you have some sort of axe to grind against economists. You lump them all together as if they are one group, and there isn’t a distribution. That is very simple minded, infantile way of thinking.

    How do you know when an economist is spewing bullshit? when their mouth is moving

    Here is Hudson practically agreeing with you, but you wouldn’t know that, because you didn’t read the article:

    A precondition for what you call an economist, especially a Nobel Prize winning economist, is not to understand how the economy works. Because if you understand that, you’re going to threaten the vested interests that are getting the free lunch. You have to say there’s no such thing as a free lunch, everybody earns whatever they can get. Robbers and criminals like that idea. “Yeah, we stole it fair and square!”

  37. @restless94110

    I did respond to your comment but my email reply was rejected by the process. Here is my reply:

    If this isn’t the reply you refer to let me know and I’ll dig deeper to find it. I only got 2 comments. The other one certainly didn’t take 10 minutes.

    [MORE]

    On 6/22/2022 6:10 PM, The Unz Review wrote:
    > The Unz Review • An Alternative Media Selection
    > Subscribe
    > A Collection of Interesting, Important, and Controversial Perspectives Largely Excluded from the American Mainstream Media
    > Is this email not displaying properly?
    > View it in your browser
    > Mefobills says:
    > June 22, 2022 at 10:36 pm GMT • 400 Words
    >
    > Keynes would have called you a “crank.”
    Fine. Now what? Should be easy to prove a crank wrong. Keynes proves himself wrong…and admits it. I don’t think the Mises Monks have ever come close to admitting it…or gotten close to being right.
    >
    > This is the old saw, already debunked, about how money came about due to markets, and to make barter more efficient.
    Who gets credit for debunking it…and who got debunked. Money didn’t come about due to markets. You have no reference to when the current “flawed” consideration of money and markets even became formalized. But we’re all grown up now. The obvious is now obvious…and the con is visible for all to see.
    >
    > From your link:
    >
    > Definition: Money is an “in-process promise to complete a trade over time and space”
    >
    > No mention of credit and debts I see? Credit and Debt PREDATE money. For an economy to have money, it has to have enough people, and some sort of advanced law.

    What mention is required? Credit from “who”. Debt to “who”. Money isn’t the only method of keeping track. But these days it’s far and away the best…in spite of the obvious corruption by the money-changers. Money doesn’t require “law” at all. And it can work with as few as two people. And there can be as many economies as needed. But the money process described cannot be improved upon. It can only be matched…and would be universally matched once instituted. It would compete our nonsensical current process out of existence in less than a year. I prove the definition of money. It’s up to you to disprove it…or show the defect in the proof.
    >
    > Money stands in, and acts a substitute for settling debts. For example, you pick up a can of beans at the super market. You are now in a quasi debt status relative to the store.

    When I pick up a can of beans at the super market nothing happens. If I try to walk out with it, something needs to happen first. When I go to the cashier and submit cash…or a credit card…or even sign an IOU to the grocer, money is used. But the credit card and the IOU are the only instances of money being created. In the case of the credit card, it is created for about 30 days and ceases with my monthly payment. With a debit card it is not created there…a record is just passed. And with the IOU (assuming the grocer and I know each other), money isn’t really used because he can’t hand that IOU to you in exchange for anything…except maybe an adjustment to your account. There is no such thing as a “quasi” debt status. When you “create” money, you create a “debt to the process”. When you use money within the process, no debt is created or destroyed…except at the very end when you deliver as promised by returning money…and that money is destroyed.
    >
    > When you check out, you pay the store money, and this money divides down (by law) to then match a price. The price is paid, and the debt relation is released.

    Law is every bit a defect as government. We get 40,000 new ones every year…and prosecutors and lawyers and judges are in the business of rendering them useless. There’s a better process for laws too…but let’s not complicate things here. Suffice it to say, democracy doesn’t ever work with more than 50 people involved. Law has no place in a “real” money process. All that is required is to make “counterfeiting” impossible…and failing that, expose it to “everyone” in the process. It “will” get taken care of…and to the extent it is discovered, it is taken as DOA (Default on Arrival). DEFAULTs in a “real” money process are always “immediately mitigated” by INTEREST collection of equal amount. This “guarantees” perpetual perfect for the supply/demand balance for the money itself. You obviously haven’t read anything I gave you to read. Your exposure is perfunctory at best. But really closer to non-existent.
    >
    > In the sixth century code of Jusitinian, Julius Paulius – a Jurisconsult is quoted (from around 300AD).

    Prove it. And then prove that makes any difference to what money really is. It’s only relatively recently that “real” money can be instituted. The reason is it is only recently that the creation of money can be made at zero cost and transparent to all and visibility of the creator from creation to destruction (that’s the only time any money ever exists for a given creation).
    >
    > A device was chosen (money), whose LEGAL AND PERMANENT VALUE remedied by its homogeneity, the difficulties of barter. The device being officially promulgated, circulated, and maintained its purchasing power, not so much from its substance as from its quantity. Since that time, only one consideration in an exchange is called merchandise, and the other is called price.

    Why do you keep bringing law into the discussion. The corruption of law is even worse than the corruption of money. And money obviously does not have “permanent” value. It has meaning, and thus value, only between the time the promise is made and the promise is delivered. And only at the time of creation and destruction does it have unambiguous value. Otherwise, it is valued by the traders like any other “stuff” and that varies all over the map.
    >
    > The first money was barley, in the temple cults. It was an extension of the ledger, brought into being by legal fiat. Only later was gold cut off of a rod, to then balance on a balance beam scale in relation to barley. Hence gold is weighed in ‘grains.”

    And obviously none of the “stuff” that you enumerate was money. It was just clumsy stand in for money. A ledger is the closest thing to money you mention…but it must be transparent to all to be useful. “All” money like “all” promises is obviously fiat. You don’t have to look back more than 150 years to see the folly (and abuse) of precious metals as money. The specie wars at the end of the 19th century in the USA are vivid proof. And more vivid proof is the removal of silver from coins in 1964. I was there. In 1964, a quarter containing 90% silver traded for a gallon of gas…as it did in 1965. But in 1965 I could also trade a brand new quarter containing 0% silver for the same gallon of gas. This proved silver had nothing to do with that trade. It was the token that mattered. And today, your 90% silver quarter trades for the same amount of gas as the 0% one…but who’s so stupid to do that? If we had a real money process, that trade would be equal today to the 1964 …or 1934 …or 1913 trade. That’s what your corrupt law and process have lost for us.
    >
    > The Romans obviously did not understand debts, as they polarized.

    Oh really? It’s not material at all…but give me an instance of such misunderstood debt.
    >
    > More BS from your link:
    >
    > In simple barter exchange in the “here-and-now”, (2) and (3) happen simultaneously, on the spot. Any exchange of “value for value” (e.g.corn for piglets; gold or gold backed exchange for other stuff; etc.) is in this category and does not involve money.
    >
    > Above you try to deconvolute gold from money as a form of propaganda at variance with know monetary history. The temple priests made gold money when they bequeathed it as so, via their law. All money relates to law, and can settle credit/debt relations, or can divide down to do trade (and hence facilitate barter).

    You will “never” understand money until you understand “stuff” and “promises” and can distinguish. The BS you cite “is” the proof. Money history isn’t going to get us very far. In all history that I have read there has “never” been an instance of a “real” money process. We came very close in recent mercantile practice with shop keepers selling farmers stuff on account. They could actually become the money process for the small collection of customers that did business with them … and between each other.

    A test I use for a concept people don’t understand is to assume the concept “is” in practice. Then I ask them to make the case (e.g. in your case gold is better) to replace the practice with something else. You then compare and contrast. Your process needs to have (1) a zero cost for money creation and destruction…i.e. perfect efficiency; (2) perpetual perfect balance for supply and demand for the money itself…i.e. zero INFLATION or DEFLATION; (3) zero intrinsic value of the money itself…i.e. again perfect efficiency; (4) a universally known unit of measure…e.g. HUL (Hour of Unskilled Labor)…we’ve all been one at one point in our lives … and through all history it has traded for the same size hole in the ground; (4) DEFAULT immediately mitigated by INTEREST collection of like amount (paid by irresponsible traders)…of which there are very few (surely you’re not one); (5) maximum possible resistance to counterfeiting through transparency.

    When a “real” money process is finally instituted, “you” needn’t participate. No government, no law, no money-changer need be involved at all. And when universally adopted, there is no such thing as “exchange rates” and “monetary policy” and for sure, a “business cycle”.

    • Replies: @Mefobills
  38. @restless94110

    June 22, 2022 at 9:12 pm GMT • 15.8 hours ago • 200 Words ↑
    @Todd Marshall

    You can probably benefit from

    No I can not. Unless you care to respond to my reply to you, and connect those things (my reply and your detailed response that you would need to write), then I would have no reason to read some random link to articles that frankly sound like nonsense on their face.

    [MORE]

    >>> I’m having trouble finding your reply…and likely confusing it with a reply from Mefobills

    Not interested in any discussion around the nature of money: money is what we have to deal with. I’m showing you ways to deal with it, while you (probably) want to deconstruct. If it happens one day (deconstruction), I’ll be more interested.

    >>> I disagree that we must tolerate our existing process. We should institute a “real” money process and compete the current process into oblivion.

    But really, you are sounding mighty lazy, after I spent a good 10 minutes writing you a detailed, thought-out comment.

    >>> Actually communication here is difficult because it doesn’t keep conversations in threads.

    It’s like you are saying: I’m not going to take the time and effort to reply to him because he just doesn’t understand (the nature of money, why your dad left your mom, how to bake a fruit cake, etc.).

    >>> But you’re pursuing a false premise. I took the time to (1) annotate the article and (2) to reply to the two comments made back to me. Those were rejected by whatever process is being applied here. My reply to the comment is being moderated as #39.

    Well, I do understand. But do you? Looks like not.

    >>> Well, if you want to put this conversation back on the tracks let’s first put aside the false premises. Where is the careful reply you refer to. You can also use the comment facility available at my annotated article link.

    • Replies: @restless94110
  39. The stuff you pasted above is addressed to someone called Mefobills.

    I’m not Mefobills.

  40. @obviouslie

    How do you know when an economist is spewing bullshit? when their mouth is moving.

    >>> same test works for lawyers.

    Makes perfect sense that he is trotskys godson bc he is utterly unimpressive.

    >>> If we’re talking about the same “he” (i.e. Hudson), I’m tending to agree.

    Forgive them their debts is a great book though.

    >>> At least one of us doesn’t understand “great”.

    Theres good history there but its funny he cant come to an obvious conclusion.

    >>> And now I’m totally lost.

    • Replies: @Mefobills
  41. Mefobills says:
    @Todd Marshall

    What mention is required? Credit from “who”. Debt to “who”. Money isn’t the only method of keeping track. But these days it’s far and away the best…in spite of the obvious corruption by the money-changers. Money doesn’t require “law” at all.

    Sophomorism:

    adjective
    Of or characteristic of a sophomore.
    Exhibiting great immaturity and lack of judgment.
    Of or pertaining to a sophomore; resembling a sophomore; hence, pretentious; inflated in style or manner.

    So, professor Hudson is at the post Phd level, and you are barely a sophomore. Sophomoric cranks are always postulating their pet theories, and haven’t done the hard work of scholarship.

    Small tribes simply remember who owes who what. This is credit and debt relations, which pre-date any sort of money economy.

    When the tribe gets a little bigger, then people might make marks on a stick, to then talley their debts and credits with each other. No money!

    When the tribe gets even bigger, say over 200 people, then there are mutual credits and debts with each other, and the King or Chieftain has to step in and mediate. They might even be using clay tablets at this point, to record their debts and credits with each other. Oh Wait! Hudson and the Harvard colloquium have looked at these clay tablets – have you?

    The first money cultures were those that settled down in alluvial plains to then farm, especially for Barley. They wanted to get drunk and screw, it was a lot more fun than hunter-gathering. Even then the money culture did not come about as you say it did. Your pet theories are BS.

    Barley cultures are when money came into being, and required a King and Temple Cult to administer the law. Money was more convenient as mutual credits and debts became unwieldy.

    Hunter gatherer cultures had tool money they used to trade long distance, where there were jewelry like figurines to represent an object; say a small axe to represent the real thing.

    In the old days, while in the ale-house, if you popped off continuously with nonsense, then annoyed others would grab you by the ear, and throw you out. So, we do have some problems today, as the internet allows sophomores and cranks to speak out of turn, without consequence.

    • Replies: @Todd Marshall
  42. @Todd Marshall

    >>> I disagree that we must tolerate our existing process. We should institute a “real” money process and compete the current process into oblivion.

    You would be wrong then. You keep saying “we” all the time. What you mean we, white man? A “real” process to you is not one to me. Why are you wasting your time? Fix what we got. It’s easy to fix.

    >>> But you’re pursuing a false premise. I

    What was it?

    >>> Well, if you want to put this conversation back on the tracks let’s first put aside the false premises. Where is the careful reply you refer to.

    Comment #22.

    • Replies: @Todd Marshall
  43. @Mefobills

    So, professor Hudson is at the post Phd level, and you are barely a sophomore. Sophomoric cranks are always postulating their pet theories, and haven’t done the hard work of scholarship.

    I guess that’s close to right. I’m 5 years younger than Hudson.

    Small tribes simply remember who owes who what. This is credit and debt relations, which pre-date any sort of money economy.

    And…?

    When the tribe gets a little bigger, then people might make marks on a stick, to then talley their debts and credits with each other. No money!

    Correct. Just record keeping between a tiny portion of the marketplace/community.

    When the tribe gets even bigger, say over 200 people, then there are mutual credits and debts with each other, and the King or Chieftain has to step in and mediate. They might even be using clay tablets at this point, to record their debts and credits with each other. Oh Wait! Hudson and the Harvard colloquium have looked at these clay tablets – have you?

    Why is a “King or Chieftain” required? Yes. I have looked at “pictures” of the clay tablets. I have tried to learn how someone makes anything of them. Supposedly the “rosetta stone” gave them some help. I have to take their word for it. It has nothing to do with the principles here.

    The first money cultures were those that settled down in alluvial plains to then farm, especially for Barley. They wanted to get drunk and screw, it was a lot more fun than hunter-gathering. Even then the money culture did not come about as you say it did. Your pet theories are BS.

    And do you think all cultures were homogeneous? What did they have in common? Did they trade? Can you even imagine a world containing human beings at any time in history where trade didn’t exist? I haven’t said anything about how “money culture” came about. I have described what money obviously is: “an in-process promise to complete a trade spanning time and space.” I prove it by beginning with the three components of all trade. It’s not theory…it’s indisputable.

    Barley cultures are when money came into being, and required a King and Temple Cult to administer the law. Money was more convenient as mutual credits and debts became unwieldy.

    Correction. “Real” money has never existed. Only the “kludges” you historically describe…and the forces tied to it have been used. And a tip from a “sophomore” : If you have chosen government as the solution to any problem, you are still looking for a solution. Re: wieldy of mutual credits and debts: The process I describe is simple to the extreme. A trader creates money. A trader destroys money. In the interim that money exchanges as the most common object in virtually all “simple barter exchange”. This is because if meets the needs better than any other alternative tried. But the process we have doesn’t come close to competing with a “real” money process.

    Hunter gatherer cultures had tool money they used to trade long distance, where there were jewelry like figurines to represent an object; say a small axe to represent the real thing.

    So what? You just keep describing clearly inferior kludges for money. Money, first and foremost, is about keeping score. Score keeping begins with a blank record. It progresses with regular record updates. And it ends when the game ends. In a trade, which begins with (1) NEGOTIATION, score keeping begins with (2) PROMISE TO DELIVER. It ends with (3) DELIVERY. And that’s the complete life of the trade. And as I have shown: Money exists to allow (2) and (3) to span time and space. Kludges like big rock wheels and shells and tally sticks and shinny stuff of all kinds have been tried. We now have the capability (transparent record keeping) to remove the kludges.

    In the old days, while in the ale-house, if you popped off continuously with nonsense, then annoyed others would grab you by the ear, and throw you out. So, we do have some problems today, as the internet allows sophomores and cranks to speak out of turn, without consequence.

    Let’s pretend you’re my teacher. You have been spewing nonsense for most of the semester and I have been quietly making notes.

    Now I say: “money is an in-process promise to compete a trade spanning time and space. It is always, and only, created and destroyed by traders like you and me.”

    As proof I begin with trade (which money facilitates).

    I say for all trade there are three steps: (1) Negotiation; (2) Promise to Deliver; (3) Delivery. I further state: For simple barter exchange, (2) and (3) happen simultaneously “on the spot”.

    I then say: Money enables (2) and (3), which is simple barter exchange, to span time and space. And since at (2) it begins with a promise, and at (3) ends with delivery as promised…thus “extinguishing” the promise, and in the interim we have what we call money that exchanges just like any other “stuff” in virtually all simple barter exchanges, then money is “obviously” a “promise.”…and promises are obviously “fiat and debt”…and that’s not bad.

    And you’re the professor. Now profess away…but cut all the historical non-sense that does nothing but prove you wrong all the way up to this point. We can’t go further if you dispute the content right here. So dispute away. If you prove your case it ends here. If you can’t you must prove what I describe has nothing to do with money…or you must agree.

    When you agree, you can go back to all the statements you make and prove them irrelevant and counter productive.

    The ball’s in your court now professor.

    Unless you prove me wrong right here, we must be in agreement; we can move on to how and why it works and delivers the proper attributes: (1) perpetual free supply; (2) perpetual perfect supply/demand balance; (3) near zero cost of operation; (4) perpetual zero resistance to responsible trading; (5) perfect mitigation of DEFAULT and COUNTERFEITING (which is just DOA…Default On Arrival).

    • Replies: @Mefobills
  44. @restless94110

    >>> I disagree that we must tolerate our existing process. We should institute a “real” money process and compete the current process into oblivion.

    You would be wrong then. You keep saying “we” all the time. What you mean we, white man? A “real” process to you is not one to me. Why are you wasting your time? Fix what we got. It’s easy to fix.

    What white man mean by “we” is all those participating in the “real” money process. It’s totally voluntary. It is imposed by no one. It competes openly with any other process out there…and wins.

    >>> But you’re pursuing a false premise. I

    What was it?

    I can’t recall the context…and on reflection it’s not singular. It’s hard to think of any premise you use that is not false.

    >>> Well, if you want to put this conversation back on the tracks let’s first put aside the false premises. Where is the careful reply you refer to.

    Comment #22.

    Comment #22:
    @Todd Marshall

    You can probably benefit from

    No I can not. Unless you care to respond to my reply to you, and connect those things (my reply and your detailed response that you would need to write), then I would have no reason to read some random link to articles that frankly sound like nonsense on their face.

    I presume I’ve replied to this comment, but if not, here goes:
    I think what has happened here comes from this kludge of a conversation system we are trying to use here. If it kept the conversation threaded, rather than flat across “all” conversations, I could quickly make reference. All I can say is I remember seeing this #22 comment and believe I replied.

    Not interested in any discussion around the nature of money: money is what we have to deal with. I’m showing you ways to deal with it, while you (probably) want to deconstruct. If it happens one day (deconstruction), I’ll be more interested.

    But really, you are sounding mighty lazy, after I spent a good 10 minutes writing you a detailed, thought-out comment.

    It’s like you are saying: I’m not going to take the time and effort to reply to him because he just doesn’t understand (the nature of money, why your dad left your mom, how to bake a fruit cake, etc.).

    Well, I do understand. But do you? Looks like not.

    I’m still not remembering anything that looked like 10 minutes on anybody’s part beyond my own. But look at your infantile reply. You should be embarrassed.

    Here’s where I’m going to leave it. Either dispute the simple principles regarding trade (see comment 45…which I now see went to Mefobills…and of course was in the sidebar of the link I referenced which wasn’t worth your time to look at) and let’s move on with those principles as basic “truths”.

    or…

    Prove these basic “truths” to be false.

    Let’s dispense with all this other nonsense.

    Here’s the link again for your quick reference:
    https://moneydelusions.com/wp/2022/06/22/economic-rent-and-exploitation/

    Boy…I do hate this medium of communication. This is 2022!!!

    • Replies: @restless94110
  45. Mefobills says:
    @Todd Marshall

    Your type is a dime a dozen.

    You feel part of the elephant, and then ah-ha, you come up with some sort of philosophy of why that part of the elephant feels the way it does.

    Also, when you get older, you can broker no dissension from your false world view. This process is called demoralization, and it means that your brain has myelin sheathed to such an extent, no rewiring is possible. I have no desire to convince you of anything, because it is impossible. Others may read this and be elucidated, especially young people who are trying to figure things out.

    Humans have two way relations with each other. They also have three way relations.

    Two way, two people negotiate their credits and debts. Say, you borrow a lawn mower and return it broken. You may pass money to the former lawnmower creditor, probably your neighbor, to stand in for your debt. If you broke the wheel, then you are in a wheel lawnmower debt to your neighbor.

    Three way: Your neighbor doesn’t like or want your money, and wants you to buy him a new lawnmower instead. Even if you fixed the wheel – no bueno, you owe him a new lawnmower. You disagree and think your neighbor is making an excessive claim against you.

    No money has changed hands!

    You then go to the Village Chieftain, and ask him to bash in the head of your neighbor. A third party has now entered to mediate your two way credit/debt relation. You feel that bashing in your neighbor’s head is a fine way to settle the debt relation, because now you hate him. No Money has changed hands, yet there is a debt wanting to be paid!

    All human relations are two way, or three way, and are also hierarchical. Man’s relations consist of credits and debts, and money is only a legal device set up by civilization to intermediate credit/debt and to ease commerce. Your definition of money deviates far from what Eastern Rome finally understood. You made it up, it is a shiny, a figment in your mind.

    There is always hierarchy in human relations, deal with it. That means there will always be a third party to intervene when there is conflict. There is a party above the third party. Say you want to appeal to to the King, as the Chieftain is banging you neighbor’s wife.

    Since money settles between credit and debts, it has a legal function. Deal with it. But, you won’t deal, because you are enamored of your shiny. We don’t need no pesky governments or third parties, we can all just get along… let’s all make pretend!

    Cranks make up theories that are at variance with reality.

    Hudson spent a considerable amount of effort in this article, discussing how the Georgists are cranks because they leave out of account important variables that describe reality. They then become cultists and can broker no dissent, because they worship their shiny. The single Tax! It solves all problems.

    Another group are cultists, like the LaRouche crowd, which depend on a glorious leader. These leaders typically shape a false reality by leaving out of account certain historical accounts, or making attributions that don’t exist. If you challenge these cultists, they can turn on you violently.

    Or, mathematically perfected economy, money can be perfected! No government needed. This is all some sort of weird wish fulfillment that humans have. They want a god.

    Maybe you can find Mike Montagne of MPE, and have some esoteric arguments about how money can be perfected, and no need for government. You can argue forever the nuances of your pet theories, where your elephant bump feels different than his elephant bump.

    Hudson is resurrecting Classical Economy, which is fairly complete in describing the real world.

    • Replies: @Todd Marshall
  46. @Todd Marshall

    What white man mean by “we” is all those participating in the “real” money process.

    You got Kamala beat at moving your mouth and saying nothing. What you mean we, Kimosabe??????

    I can’t recall the context…and on reflection it’s not singular. It’s hard to think of any premise you use that is not false

    SINGULAR??????????????????????????????????????????? An 80 dollar word when a 25 cent one would have communicated something at least. So we have to guess at what you mean because you are being intentionally obtuse. You’re starting to irritate us. Your 2nd sentence is an obvious lie. It’s not hard to think of any premise I used that is not false, since I have presented you a very limited number of premises. You lazy git. Stop hiding behind your pretentious nonsense.

    I presume I’ve replied to this comment, but if not, here goes:
    I think what has happened here comes from this kludge of a conversation system we are trying to use here.

    You have not replied even now. You changed subject and are instead complaining about the commenting system.

    I’m still not remembering anything that looked like 10 minutes on anybody’s part beyond my own. But look at your infantile reply. You should be embarrassed.

    So a man telling you that he spent time replying to you and you spit on his effort with your insulting retarded nonsense? That doesn’t embarrass you? What was infantile about a man telling you he spent time dialoging with you? Effort doing so?

    Here’s where I’m going to leave it. Either dispute the simple principles regarding trade

    Principles regarding trade was neither the focus of Hudson’s walk nor did it have anything to do with my comments. You’re out of touch.

    Boy…I do hate this medium of communication. This is 2022!!!

    Well, I don’t because it so clearly reveals the empty suits like yourself. I have no interest in the subject you are doing your little bitty damnedest to change things to: the principles of something.

    No one cares about that, no one was commenting about that.

    Tax rentier assets. No other discussion is permitted.

    I’m going to leave “it” at that.

  47. Mefobills says:
    @Todd Marshall

    How do you know when an economist is spewing bullshit? when their mouth is moving.

    >>> same test works for lawyers.

    Makes perfect sense that he is trotskys godson bc he is utterly unimpressive

    ____________

    So, now you have outed yourself as completely full of shit.

    As if the godson had some sort of say in the matter. The sins of the father are the sins of the son and so on right? You just want some sort of seam to pour your bile and acid into.

    Hudson has a significant corpus of work that is outside of Trotysky, and stands on its own. Going all the way back in time to near east civilizations is now voided because of Trotsky or Marx, right? – because your weird standard of perfection is not met.

    As a general matter, you should withhold judgement until you are in possession of all the facts. I’m no fan of Trotysky, but I also am not in possession of his works, and haven’t read them, so I withhold judgement. And even if I did hold Trotysky’s papers, that would not automatically make me a Trotskyite.

    Hudson is like honey that attracts the fleas. The fleas fly on over from their parallel universe. In flea bag hotel parallel universe, up is down and left is right.

    Its interesting how angry the fleas get, they buzz around madly like cultists because their pet theories are challenged.

    • Replies: @Todd Marshall
  48. Now, they’ve reopened the question ‘was COVID a US bio-warfare from the very beginning’? And the Chinese are looking at it and saying ‘was it engineered’?

    An Iraqi gentleman who got his PHD in England claimed that the virus was indeed engineerd. In his own words : The smoke (evidence) is there for anyone to see but we can not locate the fire i.e I can not point out a suspect who is responsible for the engineerd virus.

  49. @Mefobills

    So, now you have outed yourself as completely full of shit.

    Oh really? Please expand. BTW: When I have a bowel movement it’s about 1/2 pound. And I weigh 200 pounds. Does that mean it’s going to take me over a year to expunge all this guano?

    As if the godson had some sort of say in the matter. The sins of the father are the sins of the son and so on right? You just want some sort of seam to pour your bile and acid into.

    I don’t think I ever made reference to a godson. But I’m sure you can show where I did. We’ll take that up when you do.

    Hudson has a significant corpus of work that is outside of Trotysky, and stands on its own. Going all the way back in time to near east civilizations is now voided because of Trotsky or Marx, right? – because your weird standard of perfection is not met.

    Fine. His work that I’m annotating here does “not” stand on its own…and I’m pointing that out. Your saying that I’m full of dung doesn’t change that. It just illustrates your vocabulary limitations. It’s not about a standard of perfection. It’s about simple reasoning and deduction.

    As a general matter, you should withhold judgement until you are in possession of all the facts. I’m no fan of Trotysky, but I also am not in possession of his works, and haven’t read them, so I withhold judgement. And even if I did hold Trotysky’s papers, that would not automatically make me a Trotskyite.

    How did this become about Trotsky? It’s about what Hudson is saying. Trotsky was a member of a tribe that I have great disdain for. And thus using him as shoulders to stand on won’t work with me. But Hudson is standing on his own here.

    Hudson is like honey that attracts the fleas. The fleas fly on over from their parallel universe. In flea bag hotel parallel universe, up is down and left is right.

    What????

    Its interesting how angry the fleas get, they buzz around madly like cultists because their pet theories are challenged.

    Ah…what’s not to love about anonymity.

    • Replies: @Mefobills
  50. @Mefobills

    Humans have two way relations with each other. They also have three way relations.

    I’m hoping this is where you get onto the subject at hand.

    Two way, two people negotiate their credits and debts. Say, you borrow a lawn mower and return it broken. You may pass money to the former lawnmower creditor, probably your neighbor, to stand in for your debt. If you broke the wheel, then you are in a wheel lawnmower debt to your neighbor.

    But that has nothing to do with “money creation”. When I borrow a lawn mower I don’t create money. In your example it’s not even simple barter exchange. I’m getting use of a lawn mower…in exchange for nothing. Is your though process and ability to express it always this confused?

    Three way: Your neighbor doesn’t like or want your money, and wants you to buy him a new lawnmower instead. Even if you fixed the wheel – no bueno, you owe him a new lawnmower. You disagree and think your neighbor is making an excessive claim against you

    No money has changed hands!

    You then go to the Village Chieftain, and ask him to bash in the head of your neighbor. A third party has now entered to mediate your two way credit/debt relation. You feel that bashing in your neighbor’s head is a fine way to settle the debt relation, because now you hate him. No Money has changed hands, yet there is a debt wanting to be paid!.

    Foggy as your little story is, it has nothing to do with “money creation”. It doesn’t even have to do with money. And the “real money process” I describe has no need, nor use for, a chieftain…ever. It is fully transparent for all to see as far as the money creation part is concerned. It needs no application of force to deal with deadbeats. It merely eschews them. As far as the money exchange part is concerned, the “real money process” plays no role at all.

    All human relations are two way, or three way, and are also hierarchical. Man’s relations consist of credits and debts, and money is only a legal device set up by civilization to intermediate credit/debt and to ease commerce. Your definition of money deviates far from what Eastern Rome finally understood. You made it up, it is a shiny, a figment in your mind.

    There is always hierarchy in human relations, deal with it. That means there will always be a third party to intervene when there is conflict. There is a party above the third party. Say you want to appeal to to the King, as the Chieftain is banging you neighbor’s wife.

    Since money settles between credit and debts, it has a legal function. Deal with it. But, you won’t deal, because you are enamored of your shiny. We don’t need no pesky governments or third parties, we can all just get along… let’s all make pretend!

    This is about human relations only to the extent that only humans are involved. Beyond that, it cares nothing about how they relate. It is a process that “records promises” and “monitors delivery”…and makes that open for all to see. Further, it’s only concerned with promises that institute simple barter exchange spanning time and space. Don’t make this more difficult than it needs to be. You’re clearly confused enough over the simplest of concepts. The “law” is every bit the failed concept that our current money process is…and always has been. When it’s broke, fix it.

    The “real” money process I describe does just that. If you make a money creating promise and don’t keep it (i.e. DEFAULT), that’s open for all to see. Next time you try to make a money creating promise, you pay INTEREST. When the INTEREST escalates to the point it exceeds the money you are creating, you are “implicitly cut off”. The process has automatically removed you from the money creation sphere. You can cause no further damage.

    You can argue forever the nuances of your pet theories, where your elephant bump feels different than his elephant bump.

    Yes. And I will. But clearly a discussion with you is a waste of time. You don’t even know what my “pet theory” is. You haven’t even read the less than 500 words that describe and prove it.

    I engage in these conversations to try to learn how to cope with the likes of you. It doesn’t take long to see I don’t need the likes of you in my space…so I need not cope with you.

    Adios.

  51. Mefobills says:
    @Todd Marshall

    This is you cloaking yourself in cloths of righteousness.

    Fine. His work that I’m annotating here does “not” stand on its own…and I’m pointing that out. Your saying that I’m full of dung doesn’t change that. It just illustrates your vocabulary limitations. It’s not about a standard of perfection. It’s about simple reasoning and deduction.

    Flea Tricks:

    1) Buzz on over from alternate universe
    2) Demonize the Author
    3) Proclaim yourself as the arbiter of Truth.
    4) If not you as the glorious arbiter of truth, then it is your glorious leader – something like a cult figure you want to direct the audience to.
    5) Then appear as if rational once you have culled out some suckers.

    The problem with fleas is that you get into circular arguments with them, as their world view is unreal. Usually, if one is alert, the foundational principle upon which this false world view rests, is stated up front. The fleas state their foundational principle, and then quickly – and I mean quickly, move on to their towering edifice of BS.

    Cloaking in cloths of righteousness is something like a wolf in sheep’s clothing.

    Good try flea man.

    If you want to be taken seriously, write up your theories and submit them to Ron Unz for publication.

    Buzzing on over like some sort of Carnival Barker is not going to win any converts to your ideology.

  52. If you want to be taken seriously, write up your theories and submit them to Ron Unz for publication.

    Ok. Do you think this link will do?

    https://moneydelusions.com/wp/2017/07/30/what-is-money/

    Or is there some other ritual I need to go through.

    Todd Marshall
    Plantersville, TX

    PS: Are you Jewish?

Current Commenter
says:

Leave a Reply - Personal attacks and gratuitous insults are not acceptable and this author will ban such commenters.


 Remember My InformationWhy?
 Email Replies to my Comment
$
Submitted comments have been licensed to The Unz Review and may be republished elsewhere at the sole discretion of the latter
Commenting Disabled While in Translation Mode
Subscribe to This Comment Thread via RSS Subscribe to All Michael Hudson Comments via RSS