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
The History of Debt Cancellation and Austerity in Europe
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
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

Rees Jeannotte [00:00:05] Hello and welcome. I’m Rees Jeannotte, and you are watching Know Your Stuff. Joining me today is economist and anthropologist Michael Hudson. He is a professor of economics at the University of Missouri, Kansas City, and an author of many books, including Killing the Host, J for Junk Economics, and his most recent “…and forgive Them their Debts”. Today, we’ll be talking with him about his latest book …and forgive them their debts, the eurozone crisis and the problem of ever-increasing rental and home ownership costs around the world. Professor Michael Hudson, thank you for joining us.

Michael Hudson [00:00:41] It’s good to be here.

Rees Jeannotte [00:00:43] How did you come to be both an economist and an anthropologist and in fact, combine the two the culmination of which is in large part at least is your latest book “…and forgive them their debts”?

Michael Hudson [00:00:55] I began as an economist on Wall Street dealing with third world debt for the Chase Manhattan Bank in the 1960s, and then by the 1970s for the United Nations Institute of Training and Research (UNITAR) writing about how the Third World was unable to pay its foreign debts to the United States and other creditors. That is, unable to pay without submitting to the IMF austerity programs, without having to sell off its raw materials and its industry and impose a permanent debt crisis on itself.

At Mexico City at a UNITAR meeting in 1979/78, I gave a speech to point out that the Third World could not pay its debts. This was four years before Mexico’s debt default. There was a riot, and I realized that the issue of debt cancelation – and the basic idea that debts chronically could not be paid – led me to want to write a history of debt cancellations and how society had handled the problem of debts growing beyond the ability to be paid. The problem is that compound interest rises steadily, compounding the debt much faster than an economy can grow.

It took about a year to write about Greece, Rome and the biblical lands. But then, while I was studying Israel, I realized that there were hints of an earlier tradition of debt cancelation in Babylonia and Sumer in Bronze Age Mesopotamia. So I began to read the literature on Sumer and Babylonia. The word “debt” almost never appeared in the index. I had to read through the whole book in order to find out about debt and its context.

I soon realized that most histories of antiquity were based on assumptions about what would happen if a modern economist – especially a Thatcherite kindred right-wing economist – would get into a time machine and go back to 3000 BC. How would they have created an economy? Of course, it would have been an economy just like Argentina or Greece. It would have gone bankrupt in a hurry and soon been conquered by the surrounding lands. Civilization wouldn’t have been able to take off from such an economy.

So I got very interested, and wrote a draft of a history of debt cancelation in Sumer and Babylonia by about 1984. A friend of mine at Harvard introduced me to the head of the anthropology department there, Carl Lamberg-Karlovsky. Anthropology included the archaeology department, and I became a research fellow in Babylonian archaeology. By the 1990s we decided that because most Assyriologists had never talked specifically about debt, we would begin to have some conferences on it. How did property and land ownership begin? How did economic rent begin? How did the economics of enterprise, interest-bearing debt and credit contracts began in Mesopotamia?

We decided on a series of three volumes, to culminate in the third volume, which to review debt cancelations in Mesopotamia. Well, I submitted the first draft to a university press and they sent it out to readers, as academic presses do. The readers replied that a debt cancellation was inconceivable, that this was a crazy book. Three decades ago it seemed inconceivable that any country, any society could have canceled the debts – because then the creditors wouldn’t lend any more money. Just about everybody believed that in the 1980s and early ‘90s.

What they did not understand was, number one, that most debts were owed to the palace. The palace had a choice when crops failed or debts mounted up: It could insist on all debts being paid. That would have reduced much of the population to bondage, in which case the palace doesn’t get any taxes or rent or labor services. The creditors would get all the crop surplus and an oligarchy would take form. In that case the local city was likely to be defeated by invaders. Or, the palace could cancel debts so as to restore economic order.

We decided to invite archaeologists and Assyriologists, and ask them to provide everything they knew from their particular period of Babylonia, Sumer, the Neo-Babylonian period and Israel. They explained how enterprise and economic techniques and profit seeking contracts began in the palatial sector of the economy. Money did not begin as barter as the free-enterprise boys say. Money was created as a means of paying taxes and fees to the palace. Basically, you had enterprise and private property beginning in the palatial sector, often with a symbiotic connection to private entrepreneurs.

Rees Jeannotte [00:06:19] The key here is that barter wasn’t the key to money or credit. That is, barter didn’t happen in the way that most people would imagine.


Michael Hudson [00:06:25] Right. The German firm Springer just published a Handbook of Money and Credit, in which I wrote the lead article on the origins of money, showing that the barter theory was made up by right-wing Austrian economists who hated governments acting in the public interest. Almost all the mainstream monetary theories are by right-wing anti-socialists claiming that government can play no positive role at all. Their conclusion is that money is best without government, and should be left to the private banks. The idea is that they would plan society better. So basically the libertarians, the free-enterprise boys, advocate a highly centralized economy – much more centralized than Soviet Russia, much more centralized than China. They want everything centralized in Wall Street or the City of London, that is, in the banks. They want the banks to be in charge of everything. They say that all this is all for the best.

So we find in antiquity, through Sumer, Babylonia, Greece and Rome, that whenever a financial oligarchy has taken power, it has created a depression – a disaster and an economic collapse. Almost all ancient historians have found this. This is what Livy and Dionysius wrote about in their histories of Rome. And Plutarch. That’s why the free-enterprise boys today in the United States have stopped teaching economic history in the economic curriculum. If you go to get an economics degree in the United States, you no longer study history. It’s out of the curriculum. You don’t even study the history of economic thought. It’s as if economics began in 1980 with Margaret Thatcher, Milton Friedman and other right wingers.

The result is a censorship about how civilization has been evolving for the last few thousand years, and how it has dealt with debt issues. I edited five big colloquia volumes for Harvard on the origins of money, privatization and land ownership, labor and economic accounting. After finishing five colloquia, I decided to write the popular summary of it all. That’s my book “… and forgive us our debts.”

Rees Jeannotte [00:08:52] It would be interesting to know why you chose that title. The image on the cover of the book is depicts Jesus as a mercilessly whipping a moneylender or tossing him out of the temple. I can imagine photoshopping someone like Jamie Diamond’s head on top of moneylender. You know, many people would think that’s why you chose those images. Why that image and that title?

Michael Hudson [00:09:16] I don’t think that I ever have chosen the title to any of my books. I’m not very good at choosing titles. I had wanted to call the book Bronze Age Finance. But my publisher said that nobody knows what the Bronze Age means. She said that what I’ve really written about is Jesus’s first sermon. He unrolled the scroll of Isaiah and talked about the Year of our Lord, meaning the Jubilee Year, and said that he had come to proclaim that. That is the revolutionary part of my book. People think that the Lord’s Prayer is all about forgiving sins. But in the time Jesus spoke, there was a fight over the debt issue just as there was in Rome. There also were riots demanding debt cancelation in Greece and indeed a long war with Mithridates in the Near East over debt cancelation. That is what Jesus’s first sermon was about, and that is what the Lord’s Prayer was about. That is what the original Judaism had been about, before the rabbinical class, the Pharisees – basically from the wealthy creditor class – took over and subverted the older Jewish religion that Jesus came to try to revive. So my publisher thought that I should tie my book into the origins of Christianity, because we’re living in a Christian society and more people are familiar with the Lord’s Prayer, forgiving their debts than they are about Bronze Age finance.

Rees Jeannotte [00:10:54] This is where the creditor class, I guess around the time of Christ, won the battle against central power, palaces and temples, at least in the western Roman Empire. There was a paradigm shift in how to treat debt.

Exponential growth of debt at compound interest, compared to the economy’s slow S-curve

Michael Hudson [00:11:15] That makes Western civilization different from everything that went before. Earlier civilization in the Near East had an idea that the economy always tends to get out of balance, always polarizing between the rich and the poor and causing poverty and ultimately depopulation and military loss as a result of creditors enslaving their debtors. Reducing debtors to clientage or bondage in the Near East was different. They had a different economic model, a much better economic model, much more mathematically sophisticated than any model that I’ve seen in modern academia. Their model said that you have interest-bearing debt growing exponentially, doubling every five years in Mesopotamia. But the overall economy grows in an S-curve, more slowly. So again and again, you have an inherent instability. If you don’t have a central authority to keep wiping out the arrears, to keep restoring balance, then you’re going to have an unbalanced economy.

Modern economic models are based on equilibrium theory. Its mathematics are based on circular reasoning. It says that the business cycle is self-correcting – without needing any government intervention. The guiding idea is that it is impossible that people become impoverished, because there are automatic stabilizers. If you just get the government out of the way and let Wall Street run everything, everybody will be happy and prosperous. Look at the stock market.

Well, the problem is that in America, 10 percent of the population owns 80 or 85 percent of the stocks and bonds. The stock market has gone way up. Government debt has gone way up. But the income for 90 percent of the people have gone down since 2008. The minimum wage has not gone up at all. So you have the financial economy growing at the expense of the real economy of goods and services. The population is being impoverished. Yet economists say that we’re getting richer, meaning that their class, the financial class, is getting richer.

That is the travesty of modern economies. It’s amazing that in the Bronze Age, 3000-1200 BC. They had better models. We have the training manuals they taught the scribal students. The mathematics they used were superior to the mathematics underlying today’s mainstream right-wing models, which say debt can never be a structural problem.


Rees Jeannotte [00:13:57] In those days they had an inverted concept of moral hazard. Right. It’s been completely flipped around. So can you explain what moral hazard is, and how democratic societies really should be thinking about debt? We often think about just personal debts, or maybe someone had murdered somebody. America is a great example where you get life imprisonment. There is no redemption, it seems. How do we deal with those concepts? Should we be moving away from them?

Failure to cancel personal and other non-business debts leads to chronic depression

Michael Hudson [00:14:31] Well, the right-wing economic fashion in the United States is that of Douglass North following the Austrian school, saying that civilization progresses if there is a sanctity of contracts. A contract is a contract, and you need enforcement, even if the contract is unfair. Therefore, you must not cancel debts, because that would cheat the wealthy people who’ve made the contract to get their money, even if enforcing the debt contract means that the rest of the economy has to starve. Suicide rates go up. The economy impoverishes itself. But a contract is a contract, and that’s called progress, as if it’s Darwinian economics.

In Bronze Age antiquity, by contrast, rulers put economic balance as being the key consideration. They recognized that you have to have a palatial or civic authority come in to cancel the debt contracts. If the price of making the debtors pay these contracts –which they’re forced to sign under “Your money or your life” conditions – is to cause economic collapse, as it ultimately did in Rome. For five centuries you had economic revolts of the plebeians and the poor wanting debt cancelation. In every case the right wing, the creditors won – not by argument, but by assassinating populist political leaders. They ended up killing Caesar. Long before that, there was century after century of assassination, for instance the Gracchi brothers and a long series of other reformers, just like today.

The basis of Chicago School economics is you cannot have a free market if you’re not willing to assassinate your major critics. They went to Chile, sent in their economists who named the labor union leaders that Pinochet had to assassinate. They named the land reformers he had to assassinate, and the socialists. This started a wave of thousands of assassinations, from Chile to Argentina. That huge assassination program was sponsored by the CIA, saying this was necessary to create a free market. “We’re doing this for freedom; we’re doing this for democracy.”

But even the wealthy elites in antiquity knew that was debt causing a problem, and that the problem with society basically was caused by greed. That is what Socrates said. That’s what the Solon of Athens wrote in his poetry when he canceled the debts. It’s what Livy and all the other major Roman historians and the Stoics wrote. Nowhere in antiquity do you ever find the idea that rich people should be able to enslave and impoverish society at large.

How do we deal with that problem? A system of laws to prevent wealthy creditors from reducing the rest of the population to bondage. That was their idea of economics in a social context.

Rees Jeannotte [00:17:47] There’s lots of light-bulb moments when one reads your book. But one thing that struck me is that revolutions really only started happening in earnest when these debt cancelations stopped happening. Right? There are so many interesting things in the book. I’d like to ask you about what the modern equivalents of these ancient institutions would be – the palace and the temple.

Michael Hudson [00:18:26] What I found out, looking at Bronze Age Mesopotamia, is how different it was from modern society. I’d been known as a futurist in the 70’s, working at the Hudson Institute and The Futures Group. It’s easier to forecast the future than it is to understand the Bronze Age palaces and temples. There were three groups: a palace, the temples (basically controlled by the royal family), and the landed communities at large with their own body of common law. Hammurabi’s laws, for instance, weren’t a code. They applied to the palace sector in its relations with the rest of society. Their structure was narrower than that of common law. I found in order to explain the origin of debt and commerce, interest rates, profits and land ownership, I had to describe a society quite alien from ours. I had to go beyond the debt issue itself and talk about the broad social context.

Rees Jeannotte [00:19:45] Do we have institutions that might be similar to something like a centralized institution? I don’t know – like the central banks of today.

Michael Hudson [00:19:56] No, they only have exactly the opposite aim. Central banks work for the commercial banks and their creditors. In 1913 in America, the Federal Reserve was broken off from the Treasury in order to shift monetary management away from the Treasury in Washington to the private banks of New York City and other commercial centers. Central banks are the antithesis of ancient palaces, because they represent the creditor interests. They act as the lobbyists for the banks. You actually had a Wall Street lobbyist, Alan Greenspan, head the Federal Reserve. Their job is to bail out the banks and to make the banks solvent, even when that impoverishes their customers, even when the banks make fraudulent loans such as the junk mortgage crisis that burst in 2008. The banks were saved despite the fact that this was the largest bank fraud that been seen in American history. They were saved, and the fake fraudulent debts were imposed on the hapless mortgaged homebuyers. That resulted in a million families kicked out of their homes. The result has been that rents are going up very rapidly here. Housing prices are going up rapidly. And Americans pay so much money to financial sector for debt service – for mortgages, student loans, car loans and credit card loans – that have less and less disposable income to spend on goods and services. That’s why the American economy has been shrinking now for 12 years, since 2008. Since the Obama crisis the economy has gone down because the banks and bondholders were saved, not the economy.

Rees Jeannotte [00:21:51] This is what you call regulatory capture.


Michael Hudson [00:21:54] Yes, and not only regulatory capture of the Federal Reserve, but beyond that, the intellectual capture of society. I tried to write my book and its sequel, The Collapse of Antiquity, to provide a mind-expansion exercise to understand that if you don’t write down the debts, there’s going to be a chronic financial crisis and austerity. You’re going to end up looking like Greece or Argentina or Latvia.

Rees Jeannotte [00:22:28] This is what we’re now seeing in Greece. This is an interesting example, because the Greek crisis is still on. At the time it was all over the news. You had the situation where they were demanding that Greece pay its debts. You often say that debts can’t be paid, won’t be paid.

Michael Hudson [00:22:53] The trick was to say that Greece should pay its debts. But these debts where the debts owed to pay for crooked tax evasion. The Greek debts to foreigners were about 50 billion euros. Christine Lagarde of the IMF had a list of all the Swiss bank accounts that Greek shipowners, industrialists and financiers had illegally put their money outside of Greece into Switzerland. All the money was there. It was stolen from the tax authorities. So it wasn’t the Greek people that owed the debts. These were debts that the wealthy people owed to the tax authority but were not paid. They were tax-evasion debts. But the European Community said that the Greek people have to pay the debts that the wealthy class had crookedly avoided paying. It stood up for the crooks.

The IMF had the usual junk economics theory that Greece would be much better off and would recover once it paid. But of course it hasn’t recovered. If there’s any institution that should be abolished, it’s the IMF, which seems basically to serve as a branch of the Defense Department to keep other countries subservient to the United States. I discussed the Greek crisis in Killing the Host, which is published as Der Sektor in Germany by Klett-Cotta. I outline the Greek debt crisis, the Argentine crisis and others.

Rees Jeannotte [00:24:41] What I was trying to get at was the disingenuousness from the EU that they would say constantly repeat that Greece must pay its debts, when they must have known they could not be paid back. And as you pointed out, who had to pay them back is also a question – or who really owed the actual debts. But they must know that. So what is the real aim of doing this? I remember seeing a website reporting that they’re auctioning off Greek islands. This is the key. I think it is what the oligarchs in ancient times did too – asset grabbing.

Michael Hudson [00:25:25] Yes, that’s it. It is an asset grab. In economics you have something called revealed preference. You assume that what happens is what is intended. So you can say that what the central bankers of Germany intended was to reduce Greece’s population, to increase the suicide rate, to shorten life spans, to collapse its economy to the point where Germans could come in and insist that Greece buy expensive submarines and military hardware, and that Greece would have to sell to German investors its electric utilities and other assets. Germany made this a power grab that it had its eyes on for over 50 years, ever since it backed the colonels and the assassinations of the Greek communists after World War II.

Rees Jeannotte [00:26:18] To think about a more sensible way to deal with a debt crisis. Maybe you can use the most recent example of a national debt cancellation, namely here in Germany.

Michael Hudson [00:26:32] That’s right. The German Economic Miracle was the Allied debt reforms of 1947/48. They essentially wiped out all debts except for what employers owed their employees – you know, the workers’ wages and minimum working balances at the banks. It was easy for the Allies to cancel the debts owed to German creditors. because the creditors were mainly Nazis. The whole idea was to wipe them out. They didn’t the want to leave the former Nazis with financial power to take over the economy again. They wanted a Clean Slate.

Canceling the debts created the German Economic Miracle. Because the economy was able to operate without personal debt, and without much public debt or corporate debt. It was able to take off. Today, essentially you’re dealing with a criminalized banking class that I think we should treat in the same way that the Allies treated the Nazis. If you don’t cancel the debts owed to them, the economy is going to shrink and shrink, and polarize. We’re going to have essentially a neo-feudalism controlled by the creditor class, like you had in Rome in the Dark Ages. Do you really want a new Dark Age?

Rees Jeannotte [00:27:53] No, not particularly. This leads us into the financial crisis of 2008, where you were among the few people to predict it accurately. It was largely based on a giant private debt bubble. Private debt is something that we don’t hear much about. I tried to look for the totals on private debt worldwide. You find out the debt to GDP ratio for public debt. For government debt, but it’s never about private debt.

Michael Hudson [00:28:24] That is because the right-wing politicians want to abolish government and the social services it provides. Apart from the money governments owe for military spending and NATO, they owe pensions and health care. The right-wing program in Germany and Europe is to get rid of pensions, to lower them, to financialize and privatize the pension system instead of Germany’s pay-as-you-go system, which is quite good. They want to get rid of social spending.


Also, they look at government debt as the adversary of private debt. For instance, in the United States, President Clinton finally ran a budget surplus in the last year of his rule. What happens when a government runs a surplus? That means that it doesn’t spend money into the economy. The economy has to rely on banks to get credit, because every economy needs credit to function and grow. Bankers realize that if the government doesn’t provide the economy with money – by spending deficits into the economy to promote employment – then people will have to borrow from the banks. But if they keep borrowing from the banks to buy homes rising in price and just to maintain their living standards, their families will end up looking like Greece or Argentina. They’re going to have to pay more of their income as interest. Bankers will end up with the houses, and with private industry. They will end up controlling everything, including the government.

For thousands of years the leading tension of civilization has been over who is going to dominate and plan society’s economy. Will it be democratic governments or wise rulers seeking stability and military security? Or, will it be a financial oligarchy that wants to get rich by impoverishing the rest of society?

The problem is that one person’s debt is another person’s savings. The situation you have today is that 10 percent of the population – the savers – are holding 90 percent of the population in debt. 90 percent in Americans are paying debt service to the top 10 percent. That is the key to today’s economic warfare. It’s not the kind of class warfare that the socialists talked about a century ago. It’s the old-fashioned financial warfare between creditors and debtors that’s been going on for thousands of years. That’s why I wrote the book to explain how this whole fight began.

Rees Jeannotte [00:31:14] So austerity obviously plays a key role here as well. It’s intimately linked with the expansion of private debt. Can you explain how that is?

Michael Hudson [00:31:23] Suppose you’re in Germany and your real estate prices are going up, while real estate prices going up. A home or an office building is worth whatever a bank will lend against it. Banks now find the way to get rich is to do what American and British banks do: Eighty percent of American and British bank credit is mortgage credit. They lend against houses, and the result is a huge inflation of real estate prices. If Germans have to pay more and more of their monthly income, either for rent or for mortgage interest or for debt service as in America, then they’re going to have less to spend on goods and services. You’re going to end up looking like New York, where the stores are going out of business. Fifth Avenue. Madison Avenue. Broadway – you go down the streets and block after block, “For Rent” signs in front of empty stores.

Rees Jeannotte [00:32:27] The same thing happening in the street that I live in in this three-block area. It’s sort of like a high-street area and boutique street. There are at least twelve shops closed. People just can’t afford the rents. We have a mayoral race coming up. One of the big topics is rental prices in Munich. It’s just everywhere the same in major cities. There’s lots of talk about capping rents for six years, and this kind of thing. But rents are too high already. You cap them at the rate they’re at, but that doesn’t make it more affordable. What should they be doing?

Michael Hudson [00:33:10] There’s a simple way to keep housing prices down: You prevent land prices from going up by doing what Adam Smith, John Stuart Mill and the whole 19th century of classical economics advocated. Land prices go up not because of enterprise, not because of population growth, but mostly because of bank credit. If you tax the increase in the land value, then the banks will not be able to lend against that. Now Germany has the lowest real estate taxes of almost any country. That’s because it has a tradition of not having a real estate class dominating society, not a Donald-Trump type economy. But if Germany begins to follow the U.S. and English pattern and you let the banks lend more and more to inflate housing prices, then you’re going to continue to shrink. Germany’s economy is beginning to shrink. I’ve seen bank reports that say that if German living standards can be lowered by 20 percent or 30 percent, German technicians and workers will have to emigrate. The German population would fall by 30 percent in 20 years. Your disposable personal incomes would have to fall by 50 percent in order to let the banks make the German real estate market look like the U.S. market.

Rees Jeannotte [00:34:45] Who was saying that?

Michael Hudson [00:34:47] The bank models predict that Germany’s population must fall, living standards must fall by 20 or 30 percent and your lifespans must shorten, your suicide rates must go up and your skilled labor must emigrate in order for your real estate market to provide the revenue to the keep banking system solvent as private-sector debt increases at today’s rates. That will make your banking system look like the American and British banking system, where eighty percent of bank credit goes into real estate. It’s a circular flow, pushing up the price of housing, causing an umbrella for rents to go up. Germany will end up looking like Greece. That is the “business as usual” economic plan. Your economic leaders of all your parties except the Linke want Germany to end up looking like Greece.. They say that that’s progress, but it’s only progress for the banking class. This is the implicit war, which somehow is not being discussed in Germany.

Rees Jeannotte [00:35:53] You often have talked about Europe as a dead zone. I’d like to know why you think it’s a dead zone. Where are we heading? What does the future look like for Europe?


Michael Hudson [00:36:05] The term “dead zone” was formulated by the U.S. Defense Secretary Donald Rumsfeld under Bush. He disparaged what he called “Old Europe.” The reason the eurozone is a dead zone is that it cannot run budget deficits of more than 3 percent. You believe that budget deficits should be avoided in order to make sure that all of the credit that the economy needs is created by banks at interest. And how do banks create this credit? They lend mainly for landlords to buy housing. Making Germans pay more rent is the new “growth area” of its economy – inflating asset prices. So the eurozone has a plan of asset-price inflation for real estate, stocks and bonds. Their prices are being supported. You’ve created about four trillion euros just to support the stock and bond markets. You could have spent this into the “real” economy, you could have made Europe into a utopia. Instead, you just used that government money to push up stock and bond prices for the 10 percent – whose economic model involves impoverishing you. That is a crazy policy to follow, because it imposes austerity.

Rees Jeannotte [00:37:16] So what’s the answer here? I’ve heard that in the United States there is some movement on public banking. Should we be looking toward something like that, democratizing the central banks?

Michael Hudson [00:37:30] You cannot democratize a central bank. They are the lobbyists for the commercial banks. You need to have the treasury take charge, appointed by democratically elected representatives, not unelected bankers. Central bankers are pretty much brainwashed. They believe that the way to make an economy prosperous is to impoverish 90 percent of the population. Instead of re-educating such people, you have to create a new institution – and the new institutions should be developed within the Treasury. But as long as you have the eurozone not permitting budget deficits of more than 3 percent – and believing that a balanced budget is an ideal – it really means letting the central banks and their clients, the commercial banks, take over and provide the economy’s money.

Commercial banks lend differently from what a public bank would do. They lend for corporate takeovers, for asset stripping and for raiding. They lend against assets. That inflates prices for real estate or for corporate raiders. Public banks can spend money into the economy to make it richer.

The German economy is shrinking. It doesn’t have to be this way, but in order to have an alternative, you have to have a different economic theory. That’s not taught in German universities. Your economic departments are very right wing. They’re looking at a parallel universe, a kind of science fiction world in which private enterprise, creditors and banks will make everybody rich, not impoverishing them by imposing financial and fiscal austerity. Academic economics is an inside out world.

Rees Jeannotte [00:39:24] You have released a German version of Killing the Host. It’s called Der Sektor. I highly recommend people go and check it out. I’ve read it twice, back to back. I found it so interesting. I would like to ask if there’s going to be a German addition of “…and forgive them their debts”.

Michael Hudson [00:39:43] Yes, it’s being translated now. It’s taken about a year to be translated in Berlin. I’m hoping that Klett-Cotta may publish it, as they did my Finance Imperium, which my Super Imperialism book. I wanted to have my own translation done by somebody who knew Assyriology instead of just turning it over to a publisher or to someone who didn’t know the Assyrian legal terms. So that should be finished in about a month or two. Then I’ll be turning it over to the publisher and it will probably take them until next year to produce it.

Rees Jeannotte [00:40:26] You also said that there will be a sequel. You mentioned it today. When can we expect that?

Michael Hudson [00:40:34] I’m just finishing it now in English, The Collapse of Antiquity. That will be published later this year, I hope. It shows that Greece and Rome collapsed because of debt. It’s part of a trilogy. The final volume will be The Tyranny of Debt, from the Middle Ages to the present. If you look at England and countries in the 12th and 13th century, you had the papacy treating the royal governments just like the IMF treats countries today. You had the protests by Matthew Paris and other English historians about how paying Peters Pence to Rome was impoverishing the country. What is happening today is part of an age-old story that happens in every era. So I want to have a whole history of debt leading up to the 20th century.

Rees Jeannotte [00:41:30] Professor Michael Hudson, thank you so much for joining us.

Michael Hudson [00:41:33] It’s been very good to be here. Thank you for having me.

[00:41:36] And thank you for watching. Please don’t forget to subscribe to our YouTube channel. Click on the bell if you’d like to receive notification when we release new material. And if you’d like what you just saw and would like to support us in our work, you can do so by way of donation. All the information on how to donate. You can find at Thanks once again and we’ll see you next time.

• Category: Economics • Tags: Debt, Debt Jubilee, EU, Germany 
Hide 44 CommentsLeave a Comment
Commenters to FollowEndorsed Only
Trim Comments?
  1. I’m curious: Is Mr. Hudson implying that debt cancellation should be selective or across the board?

    If it’s selective then people who made responsible economic decisions will be forced to subsidize the self-indulgent and/or foolish economic decisions of others. The family who sacrificed to pay off their mortgage and put their kids through school will be forced to make further sacrifices for the family who took on debt they could not afford to buy a really snazzy new car and a few bags of meth on the side.

    OTOH, if debt relief really is across the board then loans which people make to their bank via deposits – the banks pay interest on these because they are in effect loans – will be canceled. That’s a mighty big transfer of money to the banks!

    Bonds are loans made by individuals and other entities to corporations. I’m sure those corporations will be extremely happy to forego redeeming those bonds if Mr. Hudson’s debt forgiveness plan ever kicks in.

    Likewise, private and public pension plans, Medicare, and Social Security will all be canceled. These are also loans. Individuals pay/lend money to some entity with that entity’s promise that at a future time those payments/loans will be repaid with interest. There go pensions and all other such safety nets.

    • Replies: @Monotonous Languor
    , @jadan
  2. If anybody knows a good source on the Bible and debt from around the time of Thomas Aquinas to the time of Cornelius Van Til I would be very interested to see it. This is not a topic on which I am willing to consider Michael Hudson an authority. (Debt yes, the Bible no.)

    • Replies: @Rubicon
  3. Some interesting information but I wonder why Economists never talk about the Bradbury pound and the issue of debt free interest free money which is the right of sovereign nation to issue based on the wealth of the nation.
    The lack of Economists talking about this makes me think that they are part and parcel of the debt slave system. It is a tried and tested method in England the US had the green back dollar issued by President Lincoln.
    There will be no change in the system until the “Money Changers” (Central Banks) are thrown out of the temple.

    There is one question which will have system-serving politicians and economists running for cover: why can’t the British government through its Treasury issue interest free money based upon the common wealth and integrity of this country – worth trillions?
    Why do our politicians go straight to the private bankers, who simply create money completely out of thin air … just figures on a computer screen … and when this ‘money’, or more accurately this ‘nothingness’, is received by our government, we, as taxpayers, start paying the exorbitant interest which is currently costing the British people in real money at least £125,000,000 a day, or more than £44,000,000,000 a year?

    The answer, of course, is very simple and to the point.

    There is absolutely nothing to prevent the British Government, or indeed any sovereign nation, from issuing its own interest free paper money to meet the essential needs of its people. And best of all, a successful historical precedent is there for all to see.

    At the height of the American Civil War, the US Treasury warned President Lincoln that further funding would be needed if the Federal North was to have the resources needed to defeat the Confederate South. The President initially went to the Rothschilds and the private banks who wanted between 24 and 36 per cent interest. Lincoln knew that if he agreed to take loans from the bankers that he would be putting his country into a debt noose that would strangle the economic prosperity out of his country and which would be almost impossible to pay off.

    On the advice of a businessman with proven integrity, Colonel Dick Taylor from Illinois, Abraham Lincoln made the decision to print interest free paper money based on nothing more than the honour of the American Government. Called ‘Greenbacks’ because they were coloured green on one side only, the US Treasury issued 450 million dollars worth of these notes and they were immediately accepted as legal tender by a willing and grateful nation. The war was eventually won and this very popular new paper currency seemed set to continue. In the words of Lincoln himself:

    The government should create issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers … The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government’s greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power. (Senate document 23, Page 91. 1865)

    The response from the House of Rothschild to this sudden threat to their banking empire was swift and brutal as this extract from The Times of London in 1865 shows:

    If that mischievous financial policy, which had its origin in the North American Republic, should become indurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedence in the history of the civilised governments of the world. The brains and the wealth of all countries will go to North America. That government must be destroyed, or it will destroy every monarchy on the globe.

    On Good Friday, April 14th 1865, a lone gunman ended the presidency of Abraham Lincoln. Sadly, his Greenback legacy died with him as the private bankers managed to ‘persuade’ Congress to revoke this successful initiative, a policy which eventually led to the formation of the privately run Federal Reserve in 1913.

    Since then, America’s unlawful debt has risen to over 15 trillion dollars.

    However, the precedent has been set! And there is nothing to stop a British Prime Minister from authorising the creation of a debt free and interest free paper currency – a ‘Greenback’ Pound – to ensure the future well-being, security and happiness of the British people.

    The unlawful deficit and National Debt (one trillion pounds) can simply be written off with the issuance of the appropriate number of ‘Greenback’ Pounds leaving our ancient and supreme Common Law to bring to justice the House of Rothschild and all those who have sought to distress and enslave humanity. And like a falling line of dominos, other countries will almost immediately adopt this same strategy and throw off the unlawful corporate banking yoke that causes so much misery in the world. In no time at all, we will have a world where happiness, truth, integrity and justice reign supreme! It really is that simple!

    • Replies: @J. Alfred Powell
    , @GGAllin
  4. @Curmudgeon

    Sounds good in theory but in practise it is an Orwellian nightmare which will enslave us even more.

    China’s “Social Credit System” Will Rate How Valuable You Are as a Human
    What people can and can’t do will depend on how high their “citizen score” is.

    In a contentious world first, China plans to implement a social credit system (officially referred to as a Social Credit Score or SCS) by 2020. The idea first appeared in a document from the State Council of China published in June 2014. It is a technological advancement so shocking to modern-minded paradigms that many can do little but sit back in defeatist chagrin as science fiction shows us its darker side.

    The SCS seems relatively simple. Every citizen in China, which now has numbers swelling to well over 1.3 billion, would be given a score that, as a matter of public record, is available for all to see. This citizen score comes from monitoring an individual’s social behavior — from their spending habits and how regularly they pay bills, to their social interactions — and it’ll become the basis of that person’s trustworthiness, which would also be publicly ranked.

    • Replies: @Phryne's frock
  5. onebornfree says: • Website

    Yet another boring, clueless article by Unz’s favorite left-wing pseudo-intellectual, wholly statist “economist”, who fantasizes more “left-wing” statist, anti-market, mathematical” solutions , to “correct the economy”, as opposed to the dreaded “right-wing”,statist, anti-market, “economic solutions”of a Thatcher, or a Friedman etc. etc. blah blah blah.

    [BTW, Friedman was no “free-marketeer” as often portrayed. He engineered the {still enforced} WW2 income-witholding tax, and was up to his eyeballs in the 1971 scheme to take the \$US off of the gold standard. Even less so in the case of the wholly mercantilist Thatcher].

    I’m sure that this article will be fully approved /fawned over by all of the other “left-wing” statist psuedo-intellectuals who fancy themselves as economic overlords and who would “steer the economy correctly”, [if they ever got the chance], and who hang out here.

    According to Hudson, all “we” need is for a bunch of mathematicians on high practising Hudsons personally approved “correct” ancient mathematical ideology to shape/overrule the natural market processes , to make everything better- as if mathematics [beyond basic addition, subtraction, multiplication and division] , and persons from maths backgrounds, have any real ability to forsee future market conditions and to take appropriate actions to “steer” and micromanage them all to perform better than they will without any interference at all via state approved mathematicians and related [eg statisticians], or by any other busy body, annointed, state approved,pseudo – intellectual, pontificating, magical “market steerer” on high.

    Hudson’s fantasy : state approved mathematician overlords to “oversee”/ “correct”, what they deem , from on high, to be “wrong”with markets. My guess is that he fancies himself as one of the overlords.

    Never mind that economic history is rife with examples of economies and markets being destroyed and people made destitute by interference in the natural market processes [ which need no “help” or “guidance”from self -aggrandizing overlords and pontificating psuedo- intellectuals such as Hudson and his ilk].

    All that Hudsons [or any others] interference will guarantee is a continuance of the current economic scenario being played out right before our eyes: the rich getting richer, at the middle class’s [and belows] expense.

    The guy is so clueless that he hasn’t even figured out that the much trumpeted “Clinton budget surplus” was a fiction, a lie created by government approved “accountants” [and no doubt government approved “mathematicians” too], via the simple accounting trick of including non-existent Social Security funds within the published annual budget figures.

    “Regards” onebornfree

  6. Svevlad says:

    It’s a simple:

    In centrally controlled economies, debt cancellations are to be practiced

    In free market ones, interest must be eliminated entirely, replaced by a fixed sum, instead of the current compound interest

  7. @BDS Always

    Hi BDS Always. Love your handle. Your comment number 3 is excellent, but you missed the boat on number 5. You’re bright, so you’ll see your error instantly if you click Curmudgeon’s link. It is most unfortunate that China’s idea is being called “social credit” because rating human value has nothing whatsoever to do with the Social Credit economic system offered by Clifford Douglas. Just thought you’d want to know.

    • Replies: @BDS Always
  8. Mulegino1 says:

    With Usura

    With usura hath no man a house of good stone
    each block cut smooth and well fitting
    that design might cover their face,
    with usura
    hath no man a painted paradise on his church wall
    harpes et luz
    or where virgin receiveth message
    and halo projects from incision,
    with usura
    seeth no man Gonzaga his heirs and his concubines
    no picture is made to endure nor to live with
    but it is made to sell and sell quickly
    with usura, sin against nature,
    is thy bread ever more of stale rags
    is thy bread dry as paper,
    with no mountain wheat, no strong flour
    with usura the line grows thick
    with usura is no clear demarcation
    and no man can find site for his dwelling.
    Stonecutter is kept from his tone
    weaver is kept from his loom
    wool comes not to market
    sheep bringeth no gain with usura
    Usura is a murrain, usura
    blunteth the needle in the maid’s hand
    and stoppeth the spinner’s cunning. Pietro Lombardo
    came not by usura
    Duccio came not by usura
    nor Pier della Francesca; Zuan Bellin’ not by usura
    nor was ‘La Calunnia’ painted.
    Came not by usura Angelico; came not Ambrogio Praedis,
    Came no church of cut stone signed: Adamo me fecit.
    Not by usura St. Trophime
    Not by usura Saint Hilaire,
    Usura rusteth the chisel
    It rusteth the craft and the craftsman
    It gnaweth the thread in the loom
    None learneth to weave gold in her pattern;
    Azure hath a canker by usura; cramoisi is unbroidered
    Emerald findeth no Memling
    Usura slayeth the child in the womb
    It stayeth the young man’s courting
    It hath brought palsey to bed, lyeth
    between the young bride and her bridegroom
    They have brought whores for Eleusis
    Corpses are set to banquet
    at behest of usura.

    Ezra Pound

    Usury is a nasty product of unrestrained greed, as sodomy is a filthy product of perverse lust, which is why Dante put both the usurers and the sodomites in the same circle of hell. Usury and sodomy, as Dr. E. Michael Jones so eloquently points out- invert nature and art. Usury takes what is naturally sterile and makes it fertile – violence to art (in the sense of all productive industry) and sodomy takes what is fertile- the procreative faculty and renders it sterile- violence to nature.

    Up till the Renaissance, usury was forbidden for Christians- technically it still is. Unfortunately, disingenuous casuistry and claims about the “changing nature of money” have led to an entirely elastic redefinition of usury in Christianity- obviously to appease the money changers. Islam- an offshoot of early Christianity- categorically forbids riba . In this, the orthodox Muslim business of banking- based upon simple fees and no interest- is fare more in accord with Divine Tradition and the ultimate good of culture and civilization.

    • Agree: Monotonous Languor
  9. @onebornfree

    Natural market processes? What do you mean, what do you refer to by that phrase? Care to explain/elaborate?

    Cars operate under iron laws of mechanics, but do we let that fact keep us from steering the car where we want it to take us? No, because we would crash into walls or drive over cliffs, obviously.

    In the same way, humans must steer the economic system because taking our hands off the wheel is a fatal error. There are myriad legal thefts in our economic systems that ceaselessly shift wealth from its producers (billions of working families) to freebie-getters (1% leisure class). We desperately need to install counter measures to re-a-justice the imbalance caused by legal thefts.

    Taking our hands off the wheel provides us the tyranny/slavery injustice of an egregious ratio of overpay-underpay – which ratio today resides in the billions and is killing us all and this pretty planet.

    Governments have been devoured by superwealth. And the gigarich want you to get rid of government, not the gigarich who devoured it to use it against you.

    We humans have really put ourselves in a bind. We still don’t have a clue the can of worms we opened when we embarked on the community project known as division of labor. Specialisation in our work begat the necessity to trade our workproducts – and the robbing started right then. Because every transaction is a fair exchange of work, plus a little or a lot of theft. Why? Because nobody knows or can know the exact amount of work that went into the products being exchanged. One producer gets a bit of pay for no work and the other gets a bit of work for no pay. Multiply by all the transactions and you get extremes.

    Excepting Dr. Hudson – who is far better than most economists – fast forward to today when University economists are actually in the business of concocting a long list of attempted excuses for using division of labor as an excuse to overpay some and underpay others. To extremes. To my knowledge, not a one of them has ever explained how transacting is the root where inequality begins. Never mind that nature placed limits on individual contributions to the pool of wealth, we silly, self-harming humans go on tolerating and even applauding the genosadistic custom of allowing unlimited withdrawals from the pool of wealth, which is theft.

    Every theft comes with an angry person attached, eh? So we have violence today proportional to the legal thieving. We have all-grab-for-all, grab off and grab back, no one wins, eternal struggle economic dystems when we could easily counter for the automatic shift of wealth from earner to freebie-getter and all be rich in not only goods and services but rich in peace and leisure and harmony and education and advancements.

    With our failure to outlaw the obsolete, unworkable, selfharming, diabolically stupid idea to allow unlimited personal fortunes, and aim instead for everyone taking from the pool of wealth the amount we put in by our own work, no more and no less, we are choosing to ignore the natural order, ignore justice – which is a virtue essential to happiness for our species – and we are every day every hour every minute choosing to commit autogenocide.

    Work is the sacrifice of a human being’s time and energies. Only work produces wealth. Workproducts – goods and services – are the substantial wealth. Money is symbolic wealth, a symbol of the work done, a symbol of the workproducts. Money is a ticket that allows one to take from the pool of wealth. The only thing that justifies taking from the pool is putting into it. What is supposed to happen is we put into the pool of wealth by our work and take out the same amount, just in different products. So everyone’s needs are met. Division of labor lets us produce more – but the benefits belong to everyone because division of labor only works because everyone participates.

    Anyone not yet certain that only work creates wealth should right now take a dollar bill out of your pocket and command it to fix you a sandwich.

    • Replies: @onebornfree
    , @Anon
  10. Sean says:

    For a Marxist, Hudson does not talk about industrial capitalists in any negative way, for him it’s the land capitalists. Isn’t this price of land stuff very [email protected] I have the feeling there are important insights into the way world works here, but I think Hudson attributes intent much too ready.

    Do the bankers really understand that they are weakening a country like Germany by causing its productive capacity to wither away and the most valuable Germans to emigrate? If so, the German Civil Service must understand it also. By the way, emigration of Germans and Anglo capitalism were the two fears that drove Hitler to war, according to a new book by Brendan Simms.

    • Replies: @onebornfree
  11. onebornfree says: • Website

    Phryne’s frock says: ” Cars operate under iron laws of mechanics, but do we let that fact keep us from steering the car where we want it to take us? No, because we would crash into walls or drive over cliffs, obviously.In the same way, humans must steer the economic system because taking our hands off the wheel is a fatal error.”

    No, your [all too common “fatal error” is to , like most, assume that the economy is some sort of machine that must be “steered” like a car [ or whatever].

    Unfortunately, the “economy = a machine” line is the eternal mantra of central bankers, politicians, “economists”, control freaks,meddlers and busy-bodies ,everywhere. [ And yourself, presumably] .

    It is not a machine. Never was, never will be, never can be.

    See: “Man [and the Economy] Is _Not_ a Machine!”

    Regards, onebornfree

    • Replies: @Phryne's frock
  12. @Phryne's frock

    Hello there.
    Thanks. I did worry about the very thing you said. We are doing our best to educate people on our history of the Bradbury and the system of sovereign nations including us being able to issue it’s own debt free money.
    The issue of people being enslaved in deebt is something that people can unite on as the debt levels rise year by year.

    • Replies: @Phryne's frock
  13. @onebornfree

    Hmm. Why would onebornfree make a comment to Sean that is accusing me of saying an absurd thing I never said and never would? And why does onebornfree fail utterly to answer the simple questions I did ask?

    • Replies: @onebornfree
  14. onebornfree says: • Website
    @Phryne's frock

    Phryne’s frock says: ” Cars operate under iron laws of mechanics, but do we let that fact keep us from steering the car where we want it to take us? No, because we would crash into walls or drive over cliffs, obviously.In the same way, humans must steer the economic system because taking our hands off the wheel is a fatal error.”

    No, your [all too common] “fatal error” is to , like most, assume that the economy is some sort of machine that must be “steered” like a car [ or whatever].

    Unfortunately, the “economy = a machine” line is the eternal mantra of
    Marxists, central bankers, politicians, “economists”[like Hudson], control freaks,meddlers and busy-bodies ,everywhere. [ And yourself, presumably] .

    It is not a machine. Never was, never will be, never can be.

    See: “Man [and the Economy] Is _Not_ a Machine!”

    Regards, onebornfree

    • Replies: @Phryne's frock
  15. @BDS Always

    Hi again, BDS Always. I have not yet had time to watch your videos but will try to do so soon. At any rate I commend you for efforts to help people see through the harmfilled fraud of private entities having been given – for no REASON whatsoever – the power to issue nations’ credit/debt, rather than having governments wield the power that rightfully belongs to the people. Tis one of the biggest legal thefts in existence, this giant fraud you are combatting. Private banksters raking wealth for no work done and getting compounded interest on top. Too ridiculous to believe once you see through the smoke and mirrors. Happy to make your acquaintance and more power to you to increase consciousness. Be well.

    • Replies: @BDS Always
  16. onebornfree says: • Website
    @Phryne's frock

    My reply to Sean was by mistake [ sorry Sean] .

    Read my link- my reply is there, I’m not going to repeat just for your [dubious] benefit. If you don’t like it, too bad, continue to wallow in your “the economy is a machine” fantasies [ like everyone else here], I don’t care . 😊

    “Regards” onebornfree

  17. @onebornfree

    onebornfree, I believe it’s called a strawman argument when you argue against something I never said. Doing that twice makes you appear to have a reading comprehension problem – or perhaps you are just too simpleminded to take on board what I actually said. Also, I believe it’s called being evasive when you twice refuse to provide even one sentence to clarify what you mean by “natural market processes”. At any rate, I’ve no time for your confused non sense and will ignore further jabber from you to the same degree you have ignored every one of my demonstrably true, salient points.

    • Replies: @onebornfree
  18. @BDS Always

    Lincoln’s mistake — or rather, the device by which Congress subverted his “Greenback” interest-free dollars — was not to declare the Greenbacks “legal tender,” “good for all debts public and private.” This allowed private banks to keep operating their system based on gold tokens and fractional banking issuance of loans ten and twenty times their actual holdings of gold tokens. This allowed private banks to bid down the price of Greenbacks in “gold dollars” to far below one dollar, then buy them up and, eventually, bribe Congress to redeem them at par. Exactly the same maneuver was operated by Hamilton and his friends during and after the War of Independence, and another variation of the same fraudulent scheme was again deployed with Liberty Bonds after the first World War. As modern monetary theorist now understand, it is the state’s declaration of a monetary token as “legal tender” that creates money as money. Lincoln’s (or his advisers’, or Congress’s) failure to do this sabotaged his Greenback. Also, Congress worked hard to limit the issuance of Greenbacks and to fund the Civil War deficit as much as possible by private borrowing. Funding public expenses by private borrowing amounts to paying the investor class a toll on public finance — for a “power” which only exists because the state (induced by the interests that benefit) grants it in the first place.

  19. onebornfree says: • Website
    @Phryne's frock

    Phryne’s frock says:” onebornfree, I believe it’s called a strawman argument when you argue against something I never said. ”


    You had said: “Cars operate under iron laws of mechanics, but do we let that fact keep us from steering the car where we want it to take us? No, because we would crash into walls or drive over cliffs, obviously.In the same way, humans must steer the economic system because taking our hands off the wheel is a fatal error.”

    and I replied:

    No, your [all too common “fatal error” is to , like most, assume that the economy is some sort of machine that must be “steered” like a car [ or whatever].

    Unfortunately, the “economy = a machine” line is the eternal mantra of central bankers, politicians, “economists”, control freaks,meddlers and busy-bodies ,everywhere. [ And yourself, presumably] .

    It is not a machine. Never was, never will be, never can be.

    See: “Man [and the Economy] Is _Not_ a Machine!”

    Also see: “Repeat After Me: Economics Is NOT a Science”:

    Deal with it ,or not.

    No regards, onebornfree

  20. Sean says:

    I am going to have to read Hudson’s Super Imperialism. From what I can gather though he does not pay any attention to geopolitical concerns. The US entered WW1 just to make the the European debtors able to pay America back? Hudson is very good on the role of finance but he seem to ignore other the way countries are fighting over relative power of a non financial type. Did not the bankers finance Hitler’s rearmament.

  21. Forgive us our debts as we forgive those indebted to us. Imagine that. Said in every church every sunday and the ministers are silent?

  22. @onebornfree

    re “Yet another boring, clueless article by Unz’s favorite left-wing pseudo-intellectual, wholly statist “economist”, who fantasizes more “left-wing” statist, anti-market, mathematical” solutions , to “correct the economy”, as opposed to the dreaded “right-wing”,statist, anti-market, “economic solutions”of a Thatcher, or a Friedman etc. etc. blah blah blah.”

    no more left/right…..only right or wrong

    • Replies: @Sean
  23. @Phryne's frock

    Hello again..

    You should watch the videos. The one with Justin Walker, one of my mentors, is excellant. His Uncle was Lord Pilkington of Warrington who was a director at the Bank Of England from 1954-1976 and attended the first ever Bilderberg meeting.
    It was a another director from the Bank Of England who worked with his uncle that told Justin to look into the Bradbury (Pound) as it is the way to end austerity.

  24. Sean says:
    @mic pj fetch

    If you’re going to call something anti-liberal and against what Adam Smith and John Stuart Mill and other classical economists described as free markets, you pretend to be neoliberal. The focus of Smith, Mill, Quesnay and the whole of 19th-century classical economics was to draw a distinction between productive and unproductive labor – that is, between people who earn wages and profits, and rentiers who, as Mill said, “get rich in their sleep.” That is how he described landowners receiving groundrent. It also describes the financial sector receiving interest and “capital” gains.

    The UK is a medium sized economy that is running on the City Of London financial services sector, thanks to Thatcher. She did pursue the policies of Friedman for a few years but abandoned them by 1984 because they just didn’t work, and the productive capacity of the UK was severely eroded. Free trade within the EC took rather longer to be recognised as deleterious to the UK.

    Hudson’s introduction to a later edition of Super-Imperialism says that America’s military expenditures are unlike private enterprise because interventions abroad such as Vietnam gain momentum and grow to enormous proportions with no way of ending an unprofitable effort.

    Regarding my skepticism about Hudson’s assertion that decisive consideration for the US entering WW1 was ensuring that the US’s European debtors would be able to pay America back, Brendan Simms’s new book on Hitler reveals he thought this too.

  25. Rubicon says:
    @Morton's toes

    We have the same problem. In Dr. Hudson’s book about “Debt,” does he cite these sources?

    At the same time, we have expert philologists/anthropologists who have unearthed a number of ancient texts, scripts, etc regarding the Babylonian Empire, but we remain primarily skeptical about referencing Jesus words, “…..forgive them their debts.”
    Show us your evidence, Dr. Hudson.

  26. Anon[398] • Disclaimer says:

    “ Forgive us our debts as we forgive those indebted to us.” << THE TALMUD SAYS THIS IS A LIE

    • Replies: @restless94110
  27. @Jus' Sayin'...

    You’re overgeneralizing the term “debt”, in the same way that “all men are created equal” is overgeneralized to mean equal capabilities and equal outcomes.

    • Replies: @Jus' Sayin'...
  28. Banksters using Central Banks to emit bills of credit without limitation is the reason we need the extreme remedy of universal debt cancellation. Had the money and banking system remained rational, then, the normal operation of bankruptcy laws would serve to keep the economy healthy and functional. But now, since the entire system including all of our governments at all levels are effectively insolvent and bankrupt, the entire system needs a reset.
    The irresponsible act occurred in the creation of the fiat money system. Fiat money has made everyone everywhere especially governments irresponsible to the point of suicidal insanity. It’s too late to demand responsibility at this point, because, as any rational person knows, the debt is so large now it could not be paid off for a zillion years. Or, perhaps, I don’t know, maybe negative interest rates are an alternative cure. If rates are sufficiently negative, then, the debt could be mathematically paid off in full, in only a few million years or so.

    • Replies: @jadan
  29. Anon[240] • Disclaimer says:
    @Phryne's frock

    “To my knowledge, not a one of them has ever explained how transacting is the root where inequality begins.”

    Yes, they have. They called it rent extraction. That is, elements of price not coming from costs of production, transportation, etc. In other words, gouging. Fees, tolls, charges, interest, monopoly charges, etc. Gouging.

    It’s old news. But it is essential to know. It’s destroying the economy and society.

  30. @Monotonous Languor

    “You’re overgeneralizing the term ‘debt’”

    Please explain how I’m overgeneralizing debt.

    But do so without dividing money which is lent and owed with interest into two classes, the first being loans you want forgiven and choose to call debt, and the second being loans you don’t want forgiven and choose to call something else.

    Doing that would be would be nothing more than disingenuous pettifoggery.

  31. GGAllin says:
    @BDS Always

    1. Founders believed that real money ONLY comes from banks. Treasury can mint coins but not create money — not without an Amendment to Article One.

    2. Congress created Federal Reserve to fund govt spending for Capitalism in general and wars. Congress has changed the Law re Fed almost 250 times.

    3. Fed is independent in the sense that the USPS is independent, it doesn’t get a budget.
    Fed is autonomous in the sense that the US military is autonomous, Congress doesn’t vote daily on specific military operations, only on declaring war (if that). Fed has autonomy to run daily operations, like deciding whether to increase or decrease daily reserve balances to hit the interest rate they choose. Fed can keep a steady interest rate — like cruise control on your car — but Fed CANNOT control the overall money supply, that’s decisions of the Market .. borrowers and banks.

    4. Federal Reserve marks up interest from T-Secs in it’s own accounts. Fed pays itself interest. Fed annually gives 100% of total net profits from all sources, including fees paid by banks, directly to Treasury. Bank of England is presumably same.

    5. Fed CANNOT BE OWNED by anyone. Congress’ Law requires Fed to issue shares, but shares cannot be traded by brokers, can’t be sold in any stock exchange, nobody can buy Fed shares. Fed shares MUST be purchased by all commercial & retail banks (not stock market banks that do mergers) and then HELD. No voting rights. No takeover powers. Share owners get a 6% annual dividend, per Congress’ Law.

    Y’know what that is? A security deposit for bank corporations to operate under the Fed franchise.

    6. Conservatives in 1913 complained that the Fed was TOO DEMOCRATIC, because it has to answer to Congress, and President appoints leadership. Conservatives didn’t want such a “communist” relationship between Fed and Govt, they wanted Fed to be completely independent like all for-profit private banks, like the National Bank that Alexander Hamilton helped found.

    6. Fed is SUPPOSED TO regulate private banks so they don’t commit fraud or screw up the economy, but Fed Chairmen like Bernanke and Geithner have adopted an “Ayn Rand” ultra-libertarian conservative viewpoint on banking – thanks, Alan Greenspan — so they believe the financial system should answer to ONLY Market Forces (investors & speculators & CEOs), and NOT be subject to any democratic govt regulations.

    Like how Limbaugh hates “regulations” and “regulators” and GOP crushed even the modest post-Crash regulations.

    Greg Mankiw, Bush’s advisor and economist, and others of his ilk, have argued and taught classes that FINANCIAL FRAUD by banks should NOT be a crime, because fraud is a normal part of doing business .. investors are smart and will “weed out” fraud … like they weeded out fraud during the Housing Bubble before that peaked and collapsed. Not!

    CEOs reveled in fraud, because it was short-term profitable, throwing off instant gigantic bonuses. If banking collapsed in the future, so what? Not their problem.

    7. Since 5000 BC when Man first started living in agricultural communities — before anyone could refine ore and make coins — leaders who were smart were able to count and do arithmetic, they kept community economic records scratched on rocks or on bones, of financial transactions. These were primitive spreadsheets. Symbols initially were crops, later nominal “money”.
    Debts & Credits, and Assets & Liabilities were recorded.

    This is bookkeeping, not fraud. Sorry for anyone who can’t understand that. It’s not that hard. I learned addition and subtraction at age 6, multiplication by age 10.

    8. Banks *do* create credit “out of thin air” so to speak but it’s out of contracts signed by qualified borrower. In history, when lenders lent out capital they owned, interest rates even to elites was 40% to as much as 70%. The current system allows interest rates to be 3% to 10% and higher for higher risk. The current system allows credit to be cheap so that credit somewhat is compatible with Capitalism & rates of annual profits.

    Payday lenders that aren’t banks and loan out capital charge poor people 500%.

    When YOU sign a loan contract, the bank counts that as assets. The bank creates a deposit in your name, which the bank counts as liabilities. That’s how it works. The main way to screw the whole banking system is refuse to borrow anything … makes it difficult though, you need a credit card to rent a car or hotel, you need a credit rating to get a card .. but you don’t have to borrow with it.

    You can save up your pennies and pay cash for a house. Difficult but possible. My friend bought a house for \$2000 in the ghetto and used sweat equity to fix the leaky destroyed roof and make it liveable.

    Banks profit because people & businesses WANT cheap credit.

    Banks are also necessary because credit is functionally necessary for Capitalism to work, in core principle, because Capitalists borrow to invest to create value — initially a harvest in the fall– that didn’t exist before — during planting in the spring. In the days Michael Hudson describes, credit was created BY the Priests and Warlords who had become Govt, and it was known that both credit and periodic writedowns were necessary because the most important thing was growing enough food for the community — AND THE ARMY — to survive.

    national debt is merely net savings of everyone stored in Treasury accounts

  32. @Anon

    “ Forgive us our debts as we forgive those indebted to us.” << THE TALMUD SAYS THIS IS A LIE


    “ Forgive us our debts as we forgive those indebted to us.” << THE (((TALMUD))) SAYS THIS IS A LIE


  33. Anon[163] • Disclaimer says:

    That is because the right-wing politicians want to abolish government and the social services it provides. Apart from the money governments owe for military spending and NATO, they owe pensions and health care. The right-wing program in Germany and Europe is to get rid of pensions, to lower them, to financialize and privatize the pension system instead of Germany’s pay-as-you-go system, which is quite good. They want to get rid of social spending.

    Then, can you clarify Mr Hudson, what does this neeting will imply for us ub Canadan and particluarly for Québec a distributor of IMF?

    UE: visite surprise du commissaire au Commerce à Washington

  34. anon[151] • Disclaimer says:

    Five Myths about Jubilee (2012):
    by Art Lindsley, PhD

    Myth #1: Jubilee meant a forgiveness of debt.
    Myth #2: Jubilee involves a redistribution of wealth (land).
    Myth #3: Jubilee shows the relative nature (relativization) of private property.
    Myth #4: Jubilee leads to income equality.
    Myth #5: Jubilee is a universally applicable principle (applies to all people).

    Debt cancellation is bunk, money would have no value if money could always be reset. Neither, does Jubilee apply to ALL people, only the Jewish people. Michael Hudson has promoted these ideals over the past 10 years and does not know this? It seems like he holds this single narrative and is misleading people without interest, knowing nobody who listens too him would ever question such appeals.

  35. Athena says:

    The Greek debts to foreigners were about 50 billion euros. Christine Lagarde of the IMF had a list of all the Swiss bank accounts that Greek shipowners, industrialists and financiers had illegally put their money outside of Greece into Switzerland.

    Apart from the money governments owe for military spending and NATO, they owe pensions and health care. The right-wing program in Germany and Europe is to get rid of pensions, to lower them, to financialize and privatize the pension system instead of Germany’s pay-as-you-go system, which is quite good. They want to get rid of social spending.

    SInce the Chatham House (NATO-UK-MI6) says the EU isn’t tough enough to confront IRAN, and that the US and UK will have to help Europe (see below) vs Iran, my conclusion is that the NATO bankers deliberately weakened (poisoned) Europe with the IMF, to occupy Europe (12 new NATO military bases have been recently installed in Europe) and aggress or provoke Russia and Iran.

  36. eric says:

    The Keynesian and Marxist paradigm allows one to generate thousands of pages that might seem to make sense, but ultimately it’s all blather. His policy recommendation to cancel debts and run government deficits is what leads to Greece and Argentina. When profligate governments cry because outsiders won’t keep lending them money they blame the bankers.

  37. jadan says:
    @Jus' Sayin'...

    Mr. Hudson does not have a debt forgiveness plan so far as I know. You must be thinking of Bernie Sanders.

    If you’re a Christian, Jus’ Sayin’, you ought to be surprised to hear that the “Lord’s Prayer” refers to debt forgiveness and that Christ’s famous visit to the money changers in the Temple was a condemnation of usury and that his purpose, among others, was to announce the Jubilee Year. The creditor class in those days was vicious and it is even more vicious today because debt forgiveness is unknown and debts held to be sacred contracts, more important than your well being, or even your life! The so-called conservatives have tried to eliminate anti-usury laws so payday lenders can get away with financial rape, and bankruptcy has been severely restricted, which was a Democratic & Republican project to eliminate any escape for debtors. If you want to discuss a debt forgiveness plan, find out what Jesus said on the subject and consider why it was that he was murdered. He died for preaching debt forgiveness, not for “our sins”.

    • Replies: @James Solbakken
  38. jadan says:
    @James Solbakken

    “The irresponsible act occurred in the creation of the fiat money system. Fiat money has made everyone everywhere especially governments irresponsible to the point of suicidal insanity.”

    Money is a creation of law. Gold is not legal tender because it is too limited in quantity. The North beat the atavistic, barbarous South by creating the “greenback”, which traded at par with gold for as long as the bankers failed to get rid of it. The Revolution was won with the Continental, which was ultimately attacked by the British through massive counterfeiting and inflated out of existence.

    The rule of law is what makes us civilized. Law makes legal tender valuable. When law is not respected, society falls apart, and money is the first to go.

    If the gold standard were brought back, most people would not be able to afford a pot to piss in.

  39. “Money is a creation of law”

    This is not correct. Legal tender is a matter of law, but money itself predates the idea of legal tender. True money is something that transcends political jurisdictions. True money is something that does not need armies of police to back it up. True money has intrinsic value.
    The purpose of a gold standard would be to limit the amount of paper money that could be issued and circulated. Without some kind of “standard,” the amount of money that could be issued and circulated would be limited only by the supply of paper and ink, which we could call the “paper & ink” standard.
    Nowadays, the only limit on the supply of money is the number of electrons in the universe. We could call it the “electron” standard of monetary value.

  40. @jadan

    “debt forgiveness”

    The idea is that you forgive those who owe YOU a debt. The idea is not that you forgive people for debts that THEY owe OTHERS. At least as far as the Lord’s Prayer is concerned.

    The ancient rule of jubilee was tied to the ownership of the inherited lands of the various Hebrew tribes. The idea was to prevent the descendants from becoming alienated from the land their ancestors had been apportioned.

    Nowadays we have bankruptcy laws that can serve a similar purpose more appropriate to the post modern age. I think it’s horrible that student loans, for example, are singled out as ineligible for discharge in bankruptcy. Such a debt truly amounts to slavery, pure and simple, and ought to be anathema to our post modern society. There are a lot of things that ought to be anathema, but they are not, because we are so post modern.

    • Replies: @jadan
  41. jadan says:
    @James Solbakken

    Hudson’s ground breaking and timely scholarship serves to correct an ideologically motivated pseudo science of economics and lays bear the simplest fact of economic life throughout history as we know it, the tension between creditors and debtors. The so-called Messiah, worshiped by the global Christian cult was conservative in his day because he called for the reassertion of the ancient custom of debt forgiveness, but in our day this message is quite radical. It is actually revolutionary in our oligarchic system in which the concentration of wealth has reached such an extreme. Usury laws have been eliminated, bankruptcy laws have been gutted, the financial exploitation of the people has become so extreme through the miracle of compound interest that the social contract has been cancelled and the “American dream”, which was the middle class, is dead. Financial capitalism has failed. Social chaos is staring us in the face. We have no leaders. Hudson is not a politician. He’s done his part. Evidence that we are in big trouble is everywhere including the anemic response to this article in this forum which is essentially right wing and pissing into the wind, so to speak.

  42. “essentially right wing”

    The only people that complain about “Right Wings” are Marxist Revolutionary Left Wingers.

    And when Marxists refer to the Right Wing they mean anyone who is less than enthusiastic about the chaos and mayhem and destruction and murder committed by the Left Wingers.

    Normal tyrants kill people so they can grab power. Left Wingers grab power so they can kill people.

    Liars and thieves and murderers are essentially left wing.

  43. jadan says:

    No need for hysteria. I should have said “apologists for the creditor class”. That is what most conservative, so-called, people are. In the name of free markets they defend payday lenders and other crooks. These conservatives insist on their right to unearned income and they love to defend billionaires’ right to all they have “earned”, when they have earned very little on their own and grown rich off exploitation of the poor, sometimes their own sons and daughters in the case of the student loan racket. Conservative right wingers are not Christian and do not advocate for the poor as their putative “savior” told them to do. They are very often racist as is Ron Unz himself when he claims that the poor black man, Floyd, died because there was fentanyl in his blood not because some racist, conservative and perverted cop knelt on his neck. I get as sick of conservative right wingers as you do of the left wingers, even more, but I think you people are highly irrational when the plain fact is that nations such as Sweden, Denmark, Finland, Iceland, & etc, left wing social democracies, are the most successful societies on the planet.

Current Commenter

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