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The "Next" Financial Crisis and Public Banking as the Response
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Introduction and Transcript:

Left Out, a podcast produced by Paul Sliker, Michael Palmieri, and Dante Dallavalle, creates in-depth conversations with the most interesting political thinkers, heterodox economists, and organizers on the Left.

In this episode of The Hudson Report, we speak with Michael Hudson about the implications of the flattening yield curve, the possibility of another global financial crisis, and public banking as an alternative to the current system.

‘The Hudson Report’ is a Left Out weekly series with the legendary economist Michael Hudson. Every week, we look at an economic issue that is either being ignored—or hotly debated—in the press that week.

Paul Sliker: Michael Hudson welcome back to another episode of The Hudson Report.

Michael Hudson: It’s good to be here again.

Paul Sliker: So, Michael, over the past few months the IMF has been sending warning signals about the state of the global economy. There are a bunch of different macroeconomic developments that signal we could be entering into another crisis or recession in the near future. One of those elements is the yield curve, which shows the difference between short-term and long-term borrowing rates. Investors and financial pundits of all sorts are concerned about this, because since 1950 every time the yield curve has flattened, the economy has tanked shortly thereafter.

Can you explain what the yield curve signifies, and if all these signals I just mentioned are forecasting another economic crisis?

Michael Hudson: Normally, borrowers have to pay only a low rate of interest for a short-term loan. If you take a longer-term loan, you have to pay a higher rate. The longest term loans are for mortgages, which have the highest rate. Even for large corporations, the longer you borrow – that is, the later you repay – the pretense is that the risk is much higher. Therefore, you have to pay a higher rate on the pretense that the interest-rate premium is compensation for risk. Banks and the wealthy get to borrow at lower rates.

Right now what’s happened is that the short-term rates you can get by putting your money in Treasury bills or other short-term instruments are even higher than the long-term rates. That’s historically unnatural. But it’s not really unnatural at all when you look at what the economy is doing.

You said that we’re entering into a recession. That’s just the flat wrong statement. The economy’s been in a recession ever since 2008, as a result of what President Obama did by bailing out the banks and not the economy at large.

Since 2008, people talk about “look at how that GDP is growing.” Especially in the last few quarters, you have the media saying look, “we’ve recovered. GDP is up.” But if you look at what they count as GDP, you find a primer on how to lie with statistics.

The largest element of fakery is a category that is imputed – that is, made up – for rising rents that homeowners would have to pay if they had to rent their houses from themselves. That’s about 6 percent of GDP right there. Right now, as a result of the 10 million foreclosures that Obama imposed on the economy by not writing down the junk mortgage debts to realistic values, companies like Blackstone have come in and bought up many of the properties that were forfeited. So now there are fewer homes that are available to buy. Rents are going up all over the country. Homeownership has dropped by abut 10 percent since 2008, and that means more people have to rent. When more people have to rent, the rents go up. And when rents go up, people lucky enough to have kept their homes report these rising rental values to the GDP statisticians.

If I had to pay rent for the house that I have, could charge as much money as renters down the street have to pay – for instance, for houses that were bought out by Blackstone. Rents are going up and up. This actually is a rise in overhead, but it’s counted as rising GDP. That confuses income and output with overhead costs.

The other great jump in GDP has been people paying more money to the banks as penalties and fees for arrears on student loans and mortgage loans, credit card loans and automobile loans. When they fall into arrears, the banks get to add a penalty charge. The credit-card companies make more money on arrears than they do on interest charges. This is counted as providing a “financial service,” defined as the amount of revenue banks make over and above their borrowing charges.

The statistical pretense is that they’re taking the risk on making loans to debtors that are going bad. They’re cleaning up on profits on these bad loans, because the government has guaranteed the student loans including the higher penalty charges. They’ve guaranteed the mortgages loans made by the FHA – Fannie Mae and the other groups – that the banks are getting penalty charges on. So what’s reported is that GDP growth is actually more and more people in trouble, along with rising housing costs. What’s good for the GDP here is awful for the economy at large! This is bad news, not good news.

As a result of this economic squeeze, investors see that the economy is not growing. So they’re bailing out. They’re taking their money and running.


If you’re taking your money out of bonds and out of the stock market because you worry about shrinking markets, lower profits and defaults, where are you going to put it? There’s only one safe place to put your money: short-term treasuries. You don’t want to buy a long-term Treasury bond, because if the interest rates go up then the bond price falls. So you want buy short-term Treasury bonds. The demand for this is so great that Bogle’s Vanguard fund management company will only let small investors buy ten thousand dollars worth at a time for their 401K funds.

The reason small to large investors are buying short term treasuries is to park their money safely. There’s nowhere else to put it in the real economy, because the real economy isn’t growing.

What has grown is debt. It’s grown larger and larger. Investors are taking their money out of state and local bonds because state and local budgets are broke as a result of pension commitments. Politicians have cut taxes in order to get elected, so they don’t have enough money to keep up with the pension fund contributions that they’re supposed to make.

This means that the likelihood of a break in the chain of payments is rising. In the United States, commercial property rents are in trouble. We’ve discussed that before on this show. As the economy shrinks, stores are closing down. That means that the owners who own commercial mortgages are falling behind, and arrears are rising.

Also threatening is what Trump is doing. If his protectionist policies interrupt trade, you’re going to see companies being squeezed. They’re not going to make the export sales they expected, and will pay more for imports.

Finally, banks are having problems of they hold Italian government bonds. Germany is unwilling to use European funds to bail them out. Most investors expect Italy to do exit the euro in the next three years or so. It looks like we’re entering a period of anarchy, so of course people are parking their money in the short term. That means that they’re not putting it into the economy. No wonder the economy isn’t growing.

Dante Dallavalle: So to be clear: a rise in demand for these short-term treasuries is an indication that investors and businesses find too much risk in the economy as it stands now to be investing in anything more long-term.

Michael Hudson: That’s exactly right. It’s not that the inverted yield curve causes a slowdown. Rather, it’s a symptom reflecting that investors are expecting a further slowdown and non-recovery. The economy is in a debt quandary.

I should add that short-term interest rates are determined by the Fed, and it is pushing up short-term rates ostensibly to show down price rises (its euphemism for the possibility of wage increases). So that is the “given.” Long-term rates have moved up slightly – meaning that their bond prices have declined a bit. There’s so little chance of their going down much (and rising in price), and so much chance of rates rising further (and lowering bond prices) that investors are afraid of taking a loss during the bond’s remaining maturity.

So the Fed is setting short-term rates. Obviously, there are still a lot of takers – but not enough to overwhelm the Fed’s insistence of raising rates. My point is that there’s not going to be a “recovery.”

Dante Dallavelle: OK. So we have prominent economists and policymakers, like Geithner, Bernanke Paulson, etc., making the point that we need not worry about a future crisis in the near term, because our regulatory infrastructure is more sound now than it was in the past, for instance before 2008. I know you’ve talked a lot about the weak nature of financial regulation both here at home in the United States and internationally. What are the shortcomings of Dodd Frank? Haven’t recent policies gutting certain sections of the law made us more vulnerable, not less, to crises in the future?

Michael Hudson: Well, you asked two questions. First of all, when you talk about Geithner and Bernanke – the people who wrecked the economy – what they mean by “more sound” is that the government is going to bail out the banks again at public expense.

It cost \$4.3 trillion last time. They’re willing to bail out the banks all over again. In fact, the five largest banks have grown much larger since 2008, because they were bailed out. Depositors and companies think that if a bank is so crooked that it grows so fast that it’s become too big to fail, they had better take their money out of the local bank and put it in the crooked big bank, because that’s going to be bailed out – because the government can’t afford to let it go under.

The pretense was that Dodd Frank was going to regulate them, by increasing the capital reserves that banks had to have. Well, first of all, the banks have captured the regulatory agencies. They’re in charge of basically approving Federal Reserve members, and also members of the local and smaller bank regulatory agencies. So you have deregulators put in charge of these agencies. Second, bank lobbyists have convinced Congress to de-tooth the Dodd Frank Act.

For instance, banks are very heavily into derivatives. That’s what brought down AIG in 2008. These are bets on which way currencies or interest rates will go. There are trillions of dollars nominally of bets that have been placed. They’re not regulated if a bank does this through a special-purpose entity, especially if it does it through those that are in Britain. That’s where AIG’s problems were in 2008. So the banks basically have avoided having to back up capital against making a bad bet.

If you have bets over where trillions of dollars of securities, interest rates, bonds and currencies are going to go, somebody is going to be on the losing side. And someone on the losing side of these bets is going to go under, like Lehman Brothers did. They’re not going to be able to pay their customers. You’re going to have rolling defaults.


You’ve also had Trump de-tooth to the Consumer Financial Protection Agency. So the banks say, well, let’s do what Wells Fargo did. Their business model is fraud, but their earnings are soaring. They’re growing a lot, and they’re paid a tiny penalty for cheating their customers and making billions of dollars off it. So more banks are jumping on the high-risk consumer exploitation bandwagon. That’s certainly not helping matters.

Michael Palmieri: So, Michael we’ve talked a little bit about the different indicators that point towards a financial crisis. It’s also clear from what you just stated from a regulatory standpoint that the U.S. is extremely vulnerable. Back in 2008 many argue that there was a huge opportunity lost in terms of transforming our private banking system to a publicly owned banking system. Recently the Democracy Collaborative published a report titled, The Crisis Next Time: Planning for Public ownership as Alternative to Corporate Bailouts. That was put out by Thomas Hanna. He was calling for a transition from private to public banking. He also made the point, which you’ve made in earlier episodes, that it’s not a question of if another financial crisis is going to occur, but when. Can you speak a little bit about how public banking as an alternative would differ from the current corporate private banking system we have today?

Michael Hudson: Sure. I’m actually part of the Democracy Collaborative. The best way to think about this is that suppose that back in 2008, Obama and Wall Street bagman Tim Geithner had not blocked Sheila Bair from taking over Citigroup and other insolvent banks. She wrote that Citigroup had gambled with money and were incompetent, and outright crooked. She wanted to take them over.

Now suppose that Citibank would had been taken over by the government and operated as a public bank. How would a public bank have operated differently from Citibank?

For one thing, a public entity wouldn’t make corporate takeover loans and raids. They wouldn’t lend to payday loan sharks. Instead they’d make local branches so that people didn’t have to go to payday loan sharks, but could borrow from a local bank branch or a post office bank in the local communities that are redlined by the big banks.

A public entity wouldn’t make gambling loans for derivatives. What a public bank would do is what’s called the vanilla bread-and-butter operation of serving small depositors, savers and consumers. You let them have checking accounts, you clear their checks, pay their bills automatically, but you don’t make gambling and financial loans.

Banks have sort of turned away from small customers. They’ve certainly turned away from the low-income neighborhoods, and they’re not even lending to businesses anymore. More and more American companies are issuing their own commercial paper to avoid the banks. In other words, a company will issue an IOU itself, and pay interest more than pension funds or mutual funds can get from the banks. So the money funds such as Vanguard are buying commercial paper from these companies, because the banks are not making these loans.

So a public bank would do what banks are supposed to do productively, which is to help finance basic production and basic consumption, but not financial gambling at the top where all the risk is. That’s the business model of the big banks, and some will lose money and crash like in 2008. A public bank wouldn’t make junk mortgage loans. It wouldn’t engage in consumer fraud. It wouldn’t be like Wells Fargo. It wouldn’t be like Citibank. This is so obvious that what is needed is a bank whose business plan is not exploitation of consumers, not fraud, and isn’t gambling. That basically is the case for public ownership.

Paul Sliker: Michael as we’re closing this one out, I know you’re going to hate me for asking this question. But you were one of the few economists to predict the last crisis. What do you think is going to happen here? Are we looking at another global financial crisis and when do you think, if so, that might be coming?

Michael Hudson: We’re emphatically not looking for “another” global crisis, because we’re in the same crisis! We’re still in the 2008 crisis! This is the middle stage of that crisis. The crisis was caused by not writing down the bad debts, which means the bad loans, especially the fraudulent loans. Obama kept these junk mortgage loans and outright fraud on the books – and richly rewarded the banks in proportion to how badly and recklessly they had lent.

The economy’s been limping along ever since. They say there’s been a recovery, but even with the fake lying with statistics – with a GDP rise – the so-called “recovery” is the slowest that there’s been at any time since World War II. If you break down the statistics and look at what is growing, it’s mainly the financial and real estate sector, and monopolies like health care that raise the costs of living and crowd out spending in the real economy.

So this is the same crisis that we were in then. It’s never been fixed, and it can’t be fixed until you get rid of the bad-debt problem. The bad debts require restructuring the way in which pensions are paid – to pay them out of current income, not financializing them. The economy has to be de-financialized, but I don’t see that on the horizon for a while. That’s s why I think that rather than a new crisis, there will be a slow shrinkage until there’s a break in the chain of payments. Then they’re going to call that the crisis.

Hillary will say it’s the Russians who did it, but it really is Obama who did it. The Democratic Party leadership is in the hands of Wall Street, and has not done anything to prevent the same dynamics that caused the crisis in 2008 and are still causing the economy to shrink.


Paul Sliker: That’s exactly why I wanted to reframe that question, because I think a lot of people look at economic and financial crises through just the simple paradigm of a bubble and the bubble bursting. But I think you did a fine job of clarifying that.

Well Michael, as always, we could go on but we have to end here. Thank you so much for joining us on The Hudson Report.

Michael Hudson: Well you’ve asked all the right questions.


Paul Sliker is a writer, media consultant, and the co-host of LEFT OUT— a podcast that creates in-depth conversations with the most interesting political thinkers, heterodox economists, and organizers on the Left. Follow him on Twitter: @psliker

Michael Palmieri is the co-host of LEFT OUT — a podcast that creates in-depth conversations with the most interesting political thinkers, heterodox economists, and organizers on the Left.

Dante Dallavalle is a graduate student in economics at John Jay College of Criminal Justice and the co-host of LEFT OUT — a podcast that creates in-depth conversations with the most interesting political thinkers, heterodox economists, and organizers on the Left. Follow him on Twitter @Drax138.

• Category: Economics • Tags: Debt, Federal Reserve, Unemployment, Wall Street 
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  1. Anon[125] • Disclaimer says:

    The economy’s been limping along ever since [2008]. They say there’s been a recovery, but even with the fake lying with statistics – with a GDP rise – the so-called “recovery” is the slowest that there’s been at any time since World War II.

    There has been no recovery. The US economy is based on the NATO_Narco_Petro dollar and it is currently stalled in Iran.

    The petrodollar “crashed” in 2008 was the result of the failed coup attempt in Georgia, on August 8, 2008, (ie, on the Olympic night), by the US-NATO war criminals and their Canadian friends.

    … followed by the disaster in Libya.

    —- followed by the disaster in Syria.

    ….followed by the disaster in Yemen.

    … soon the disaster in Iran.

    • Replies: @Respect
    , @Rich
  2. Respect says:

    and soon the disaster of the EU .

    • Replies: @jilles dykstra
  3. Deutsche Bank had derivates assets with a book value of something like fifteen times the German national income.
    Anyone who follows developments sees Deutsche Bank sliding down.
    Italian banks are nearly or completely bankrupt, Spanish banks are not much better.
    In a discussion with Stiglitz former leader of the euro group Dijsselbloem admitted the euro problems, but, he said, the solution Stiglitz sees as necessary, is politically impossible.
    In his last interview as leader of this euro group Dijsselbloem saw as only possibility ‘aanmodderen’, muddling through.
    One of the best present economists, in my opinion, Varoufakis foresees a world wide crisis which, in comparison will make the 1929 Wall Street crash look like children’s play.
    Now, how could all this happen ?
    Here, in my opinion, Varoufakis also has the answer, ‘since 1970 nowhere in the world macro economics has been taught’.
    Instead, the market religion.
    And the model belief, model builders believing their own phantasies on absolute minimum value of packets of derivatives.
    In economics, there is no such thing as absolute minimum value.
    If tomorrow somone finds out how to make gold, the value of gold drops immediately to the production costs of gold.

    • Replies: @Respect
    , @Endgame Napoleon
  4. @Respect

    Of EU and euro.
    Possibly the best thing that can happen to these destructive illusions.
    However, my future, and that of children and grandchildren, does not look bright in case of an uncontrolled collapse and/or dissolution.

    • Replies: @Respect
  5. The EU will fail!
    The EURO is doomed!

    Lets see what happens to the petroscamdollar,

  6. What has the EU ever done!!!

    Well they made sure I get my 4000 €/month pension. Which is not bad since I only started saving earnestly 20 years ago. Apart from my 650 000 € paid home I have nothing for my old age, i might destitute when I hit 65 in three years time. Think of my kids on final run to a PHD in Oxbridge and MIT, what are to become of them! My racehorse I will sell and my 30 foot seacruiser too, My Mercedes 350 SL already flogged for electrical bike, and a more sensible convertible bought.
    And I am only a marine/naval engineer. I am useless.
    I am buggered!
    Brother can you spare a dime?

  7. The problem is the Zionist privately owned central banks and the Zionist owned central bank of all central banks the Bank of International Settlements ie the BIS , these Zionist creations that create money out of thin air have destroyed the lives of hundreds of millions via the Zionist created wars and Zionist created depressions that have been the plague of nations since the central banks came into existence.

    Here in America the Zionist privately owned diabolical creation the Federal Reserve aka the FED is the greatest scam ever foisted on the American people in our history, as the FED creates money out of thin air and loans this ether created money to the gov and to the people and then requires repayment off the labor of the people and it creates unpayable debt and this is not to mention the fractional banking which also involves creation of money out of thin air.

    The whole thing is a diabolical draconian Zionist creation that has enslaved every country that has a Zionist owned central bank , which is just about every country in the world and the central banks have caused continual wars for the profit of the Zionist bankers and that and drug running are the main things that Zionist central banks are involved in for profit.

    Free America from the clutches of the Zionist central banks , ABOLISH THE FED, and return the money making power to the U.S. gov as it was before December 23, 1913, and with the abolishment of the FED the debt creation mechanism of the Zionist bankers will be destroyed.

    By the way read the 10 planks of the communist manifesto , a central bank is one of the 10 planks, the communist bastards are not hiding their control of humanity, and in fact if the 10 planks are read you will find America is close of being communist and that is a fact.

    • Agree: Druid
  8. What is shocking for me is that interest rates for long term loans are actually higher than short term loans. This is total reverse of the general practice of the banks being in practice for many decades.
    Only possible explanation I do see here is that banks do really worry about inflation.
    So far economic measures under Trump are working. The danger is in the rising wages.
    If the wages will start to rise the inflation will set in, and everything will go to hell.
    And that is what banks are worried about.
    It is interesting to watch which companies do have money to advertise.
    These are all insurance companies.
    Very sad!

  9. Renoman says:

    The house of cards is shuddering, civil war in the USA will be next, death to the one percent will be the battle cry. Bring it on.

  10. And then he went and spoiled it all by saying something stupid … If he had left Italy alone he might have got away with it but he couldn’t resist taking a swipe at his pet hate! Mr Hudson has been predicting the imminent and inevitable demise of the euro and, indeed, of the EU itself, for so many years that I can’t even remember how long it has been! Since practically nobody in Europe visits these American websites, I wonder why it matters so much to Mr Hudson to convince his fellow Americans that “most investors [sic!] expect Italy to exit the euro in the next three years or so”. What difference would it make if he succeeded?

  11. Respect says:
    @jilles dykstra

    The euro has benefited mainly Germany ( 2 marks = 1 euro ) , Holland and the City of London megacorporations` tax heavens , the french banks , arab and black inmigrants , and little else .

    When Merkel and Schaube went , full of rage , to execute little Greece , insulting Greece , as well as Italy , Spain ,Portugal and even France , insulting the very same Greece that was massacred and robbed with impunity by Merkel and Schaube `s parents in the 40`s , it was evident that Germany was doing with banks what she could not accomplish with tanks in ww2

    The dutch Dijselbloem also insulted the european countries of the south , called
    them pigs

    Germany & friends participated in the destruction of Yugoslavia , and in the catastrophic nazi coup d`etat of Ucraina , which has destroyed Ucraina , and has taken the panzers at the russian border …… again . Germany wanted the admission in the EU of a lot of eastern european countries that never should have joined , just like an economic operation Barbarrossa II , ah this suicidal german lust to conquer the east !!! drang nach osten

    Germany always ends up messing up everything , they always overestimate their capacities .

    • Replies: @jilles dykstra
    , @Wally
  12. Rich says:

    If you’re right, and I’ve read a lot of people who agree with your sentiments, then we should all support the neocons and their expansionist, war-mongering policies. I spoke with an old fellow recently who taught economics and his argument was that the US economy is based on on a policy of constant war. He argued that if the US were to stop its military adventurism, we’d end up in a serious depression. In fact, he argued, we should expand our adventurism even further to grow our economy. I’ve always been an ‘end the empire’ guy, but he made some very compelling arguments.

    • Replies: @anon
    , @peterAUS
    , @renfro
    , @Iris
  13. After Fannie Mae and Freddie Mac, what could go wrong with a “public bank”?

    I’m sure Maxine Waters would make a great bank CEO.

    Instead of getting rid of the Fed and deposit insurance, these knuckleheads want to combine the worst aspects of socialism with the worst of banking.

    • Replies: @Wally
    , @gwynedd1
    , @Curmudgeon
  14. Respect says:
    @jilles dykstra

    During the crisis germans , dutch , english , and nordics called the south europeans pigs , for portugal , italy , greece and spain . These northern european countries insulted and despised the european south , they do not give a fig for the future of south europe , for the future of south europe children and grandchildren . So I do no give a fig for yours , I want the dissolution of the UE .

    • Replies: @jilles dykstra
  15. RT Rider says:

    Remove the state guarantees to the banking system and it will take a much more prudent risk profile. Fractional reserve banking will still exist, I’m sure, but at a much lower multiple of 2 or 3 to one rather than the current minimum of 10, and with use of derivatives and sweeps, effectively anywhere from 20 to 30 to one.

    Capital will be much better deployed to the real economy, rather than its current use in the markets, massively inflated by unbacked credit and central bank counterfeit money.

    • Agree: Iris
  16. @RT Rider

    Remove the state guarantees to the banking system …


    (Goes for other “corporations,” too.)

  17. @Respect

    In 2005 three referenda were held on the so called EU constitution, France, Netherlands and Ireland.
    All three two thirds against, yet the ‘constitution’ was signed.
    Since then in the Netherlands three or so anti EU referenda, all three two thirds against, the result, referenda are no more possible.

    • Agree: cassandra
  18. @Respect

    The real capital of the European continent is Berlin.
    Merkel, it seems, on the one hand wants power, on the other believes the fairy tales of the bad Germans just witheld of war by an EU.
    And, of course, it is great that at the same time Germany profits from the euro.

    • Replies: @Respect
    , @jacques sheete
  19. MarkinLA says:
    @RT Rider

    Wrong. This is just more economic theory claptrap. In spite of all the stupidity of people blaming the ERA and other excuses for the banking bust of 2008, the real reason it happened had nothing to do with government policies (or at least the ones cited by the experts).

    If you want to see the government policies that caused the home mortgage bubble then look to bankruptcy laws and the laws that shield people from criminal prosecution as long there is no intent to defraud.

    The CRA did not force anybody to make bad loans and Fannie and Freddie got into the game well after it got started. I know a mortgage broker who claims he never made liar loans – he lost a lot of business then but is still in business today.

    The people making, selling, repackaging, and managing the banks doing the loans were all getting rich. No matter how shady their business, they all knew one thing – they are immune from prosecution if they just stick to the lie “Nobody could see this coming”.

    They knew that nobody was going to come after their money even if the bank was taken over by the FDIC. They were going to end this run just like the CEO who gambles the whole company on his
    “vision”. Heads he wins if it works, tails he wins if they buy him out to get rid of him.

    Did anybody associated with a failed bank or investment bank lose more than a few months pay as compared to all their bonuses? No, so why wouldn’t you dance while the music was playing even if you know a crash is coming? Not dancing means no job and no bonus. You would only be stupid if you spent that money instead of putting it away.

    • Replies: @Wally
  20. anon[317] • Disclaimer says:

    Sorry @ Rich but you are dead wrong.. The problem is in the laws that enable monopoly powers to private interests. The copyright law, the patent law, and government private or government NGO contracts that produce massively powerful competition denying and competition block powers against all private interests that do not have government grants of monopoly powers.. Privatization it is called.

    The fix is really simple.. Make government-private or quasi-private-government contracts illegal and reduce the copyright, patent and other rule of law monopoly powers to less than 2 years duration. Every patent expires in two years from date of invention mo matter its filing date.

    Over night monopoly free American would generate one on one competition between Americans; monopoly free America would fix the American economic problem though it might destroy the USA economy. BTW Americans don’t give a wham about the USA economy.

    Day before yesterday el Presidente of the USA asked Xi of China to refuse to buy Iran oil, Xi told Trumpy no such thing, and possibility China might sanction the USA; refuse any goods made in China to be sold directly or indirect to the USA or to America (that could be done by export tax) .. Of course it is the Americans that would suffer, the USA people would go to Israel and wait it out, while the Americans would stay in America and try to fix their homelands back to pre neo excon days. . pre Israel days.

    • Replies: @Rich
  21. So a public bank would do what banks are supposed to do productively, which is to help finance basic production and basic consumption, but not financial gambling at the top where all the risk is.

    It’s nice to hear an intelligent discussion every now and then.

    The Governor of New Jersey wanted to start a public bank, but he seems to have gotten lost in the weeds.

  22. cassandra says:

    1. Hudson’s proposal for national banking would amount to a partial reinstatement of Glass-Steagal. It would be opposed by the banks because it would establish a competitor (US government) for their business. The immediate downside for them would be loss of some consumer transactions, and, in the long term, people might become politically accustomed to government financial operations, which could initiate an unwelcome examination of the Fed, threatening its demise. So I think the idea is stillborn.

    2. Most money is fiat currency nowadays. IMHO, it has an undeservedly bad rep (I can’t imagine why…). When Lincoln went to the banks to finance the Civil War, and the banks offered ~20% interest loans, he started printing Greenbacks as national currency, and this actually worked fine. Repeal was generally un-popular, but was achieved by financial interests about 10 years after the Panic of 1873, who pushed for gold-backing. The details of the history of this struggle reveal the interests of the parties on opposite sides of the debates and make interesting reading.

    3. I’m less concerned about money being created out of thin air, than I am about the associated debt being created that way. As it is now, when the FED issues money, the US winds up owing the private FED the interest. If you wonder what idiot let this happen, read about the interesting history of the origin of the FED. Hint: the law was passed the day before Christmas Eve.

    4. The Constitution restricts the right to coin money to the US, rather than private interests. Use of paper money is a loophole to this otherwise sensible principle. There’s no intrinsic reason why the US, or any other country, for that matter, could print its own money without paying overhead to a private central bank. But the poor banks would face the loss of all that interest on all those debts, and financial decisions would be placed in the hands of nations rather than financiers.

    5. Along with Hudson there are a few voices in the wilderness crying out about this. Ellen Brown who ran in California comes to mind. Videos and books are widely available (Bill Still, Zarlenga, G. Edward Griffin). They get little publicity and less respect.

    I’d be amazed and heartened if reform along the lines proposed by Hudson, or any others, gets traction.

    • Replies: @Iris
  23. JR says:

    Take it one step further:
    The link to a PDF is included in the link above.

    Sovereign money eliminates the kernel of the big banks business model: creation of money out of this air.

    Sovereign money also eliminates both the structural pro-cyclical effect and actual ineffectiveness of central banks trying to control the money supply trough ‘fractional reserve banking’.

    In addition to that one ought to excise the national payment system from the banking oligopoly. Holding the payment system hostage is one of the aspects forcing to bail out banks ‘too big to fail’.

  24. Rich says:

    Your economic theory may be right, and if followed could lead to a new Golden Age. If, on the other hand, your theory turns out to be wrong, we could all be in deep trouble. I’ve always leaned toward the laissez-faire side of economic theory, but the gentleman I was talking to made a pretty good argument that America’s economy is actually a war economy and has been since the Second World War. The fact is, the US has been doing very good since that war, and if not for the Great Society boondoggle, might be doing even better. It’s a fair argument, I think, and one I’ve got to spend a little more time with.

    As for the US and Iran and China, a lot of signs are pointing toward some kind of action against the Iranians. Some very powerful groups are in favor of it, and President Trump appears to be in their hands at the present time. We’ll see. I personally would oppose any military action, but they don’t invite me to any of their private meetings.

    • Replies: @peterAUS
  25. peterAUS says:

    ….I’ve always been an ‘end the empire’ guy, but he made some very compelling arguments…..

    Makes you think, a?

  26. The masters steal trillions and spend it on the military to “protect” us. Here we read the same old flimsy implications of “good” “productive” capital, and “evil” “speculative” “money-lending” capital according to a former economic hitman who was evil but has since become good.

    “Feudal” or “neo-feudal” or “post feudal feudal” interests? How do we guarantee forced work for every publically banked slave? When will we have another hoax war to drain the morons of their hard earned money? Questions, questions, questions.

  27. Mefobills says:

    Excellent comments by Michael Hudson as always. I would like to add:

    1) Public Banks, like private banks, issue bank credit – which disappears when paying back loan principle.

    (So, the pushing on a string problem still exists with public banks. People won’t show up to be hypothecated wtih new debt if they are already in debt deflation.)

    There has to be a Treasury mechanism whereby permanent floating money enters the money supply through productivity channels. The permanent money then goes on to become people’s savings, and represents stored demand. In other words, Treasury has to issue exogenous money, preferably debt free, into the public commons.

    As of now, public debt represents the stored savings in money supply. See Wynne Godley’s sector equations for details.

    So, public banks are better than private at issuing bank credit because it channels better, meaning new public credit is less likely to vector toward finance paper and fraud. However, their is a huge glaring weakness in the lack of permanent debt free money, which automatically means some sort of public debt must be maintained. The average person doesn’t understand these sort of things, and confuses government budgets with their household budget. Any talk of public banking must also include Treasury having constitutional authority to issue exogenous money.

    2) The other weakness is the lack of a standard for international trade. As Michael points out in his book “Super Imperialism” the Bretton Woods gold standard worked pretty well at marking international trade. It fell apart due to Nixonian deficit spending on Vietnam war.

    Keynes noted that all international trade is only barter. Therefore, any international flows of goods and services should be marked in a unit other than the dollar. This other unit ideally would be a bancor. Bancor is not money, but an accounting device that marks international trade.

    Public banking is a stop -gap in that it ONLY deals with changing the nature of bank credit. It does not deal with the need for permanent exogenous treasury money, nor does it deal with international goods trading e.g. mercantilism and exchange rate manipulations inherent in today’s floating exchange rate regime.

  28. peterAUS says:

    ….the gentleman I was talking to made a pretty good argument that America’s economy is actually a war economy and has been since the Second World War.


    It’s a fair argument, I think, and one I’ve got to spend a little more time with.

    Same sentiment exactly.

    Actually, I’ve been trying, on this very site, for several months, to hear something, of substance, against that appraisal.

    Especially re:

    ….a lot of signs are pointing toward some kind of action against the Iranians.


    ..We’ll see…

    So far, nada.
    Plenty of the “Team Russia” propaganda, US/West haters bile and a decent amount of online therapy, I mean virtue signalling.
    But, no hard data as to what would happen to US economy should it start “engagement” with Iran.

    Any chance that gentleman of yours pointed to some place where one could take a better look?
    Or, you’ve found something along the same lines ?

    • Replies: @Respect
    , @bluedog
    , @Mefobills
    , @Rich
  29. Respect says:
    @jilles dykstra

    No way , Berlin does not have an army . Dozens of USA bases occupy Germany . Close to the Reichstag there is a monument to the occupation of Berlin by the soviet troops in 1945 , with a couple of old T-34 tanks , just to remember .

    Fhürerin Merkel has no sons / daughters , like so many european Presidents , like your Rutte , Macron , May , Michel , Lofven , Bettel . No children no future . I don`t think they can have a vital perspective for the future of Europe , just greed , just ” profits ” , profits for today , and nothingness for tomorrow .

  30. Wally says:

    “Germany wanted the admission in the EU of a lot of eastern european countries that never should have joined , just like an economic operation Barbarrossa II , ah this suicidal german lust to conquer the east !!!”

    Except that Germany’s attack on Stalin’s USSR was pre-emptive, and easily proven as such.
    You have taken the bait or you are part of those who knowingly promote fake history for their benefit.

    Operation Barbarossa Was A Preventive Attack:

    • Replies: @Respect
  31. Wally says:
    @Captain Willard

    Nailed it.

    As bad as it is now, imagine a “public bank” under control of US neo-Marxists.

    Just think of ditz Alexandria Ocasio-Cortez getting access.

    Neo-Marxist Hudson’s solutions inevitably reveal his real goals.


  32. Wally says:

    You’re contradicting yourself.

    All this “dancing” is ultimately due to the fact of government guarantees, which what RT Rrider is opposed to.

    • Replies: @RT Rider
    , @MarkinLA
    , @MarkinLA
  33. Respect says:

    I just read that Chinese troops are going to Idlib , to Siria , called by Assad , to fight Uigur terrorists fighting with Isis .

    If the USA & allies dare attack Iran , my opinion is that many economies of the world will crash , oil will skyrocket . Iran is a big coutry , armed to the teeth , the USA& allies don`t have good ground troops to invade Iran . The iranians can block the strait or Ormuz . And probably Iran would be backed by many more countries than we westeners imagine . The world is very tired of the US-UK-Canada-Australia continuous devastation of countries .

    • Replies: @peterAUS
  34. renfro says:

    He argued that if the US were to stop its military adventurism, we’d end up in a serious depression. In fact, he argued, we should expand our adventurism even further to grow our economy. I’ve always been an ‘end the empire’ guy, but he made some very compelling arguments

    Evidently he didnt read enough history to find out what happened to countries when their expand the economy thru wars and empire building ran out of war money.

  35. RT Rider says:

    Well said and exactly right. What we have witnessed is the continuous capture of government regulators – and not just the financial sector, but any monopolistic industry, promoted and protected by government. This is corruption and racketeering at the highest level of public trust.

    • Replies: @RT Rider
  36. Well. Capitalism has no future. It survived thanks to freed resources of the former Eastern block especially former USSR, but it is over. It is whether we move to higher socio economic state of which ussr was just the first experiment or we shall perish. Capitalism is literally killing the planet.

    • Replies: @Apollonius
  37. @jilles dykstra

    The real capital of the European continent is Berlin.

    Nah, the real capitol (capital too) is in New York. Merkel is just an agent of the global mafia headquartered in NYC.

  38. RT Rider says:
    @RT Rider

    One option to the current system is to provide guarantees to the public using deposit banks, who extend credit unleveraged, with a prudent cash reserve for depositor withdrawals. Any bank employing leverage, should not have any guarantees and depositors using these banks would be subject to the full market risk.

    The market would force such banks to pay significantly higher rates for these deposits, and so limit their numbers dramatically, but also quell any accommodation-style lending which is so prevalent today. By accommodation lending, I mean consumption loans, rather than commercial.

  39. Respect says:

    my ass Wally , Germany invaded Russia the 22 June 1941 , they called the invasion ” Operation Barbarossa ” they arrived at the doors of Moscow , it was a big big big big invasion , not just a few hitlerjugend getting lost in the russian border doing camping . Germany shooted first

    Russia did not invade Germany , Russia did not shoot first , resisted the invasion , and counterattacked and finally invaded Germany and won the war .

    You and Irving and all the english ” historians ” of the word can say that the german invasion was ” preemptive ” hahahhaa , what a mental perversion , ” preemptive ” hahahhahahha . What a distortion of reality , you are out of touch with reality , delusional , you don`t live according to he principle of reality , come on wally take your risperidone .

    • Replies: @ploni almoni
    , @Wally
  40. peterAUS says:

    Sorry to disappoint, mate.
    Just can’t get myself to “discuss” serious things with somebody who writes:
    “coutry”, “iranians”, “Ormuz” and “wsterners” in one paragraph, only.
    Just me. No offense.
    Moving on.

  41. SteveK9 says:
    @RT Rider

    Well, we had the Glass-Steagal Act, which did just that for more than 60 years. There were no government guarantees for investment banks (just commercial banks). It worked very well for that whole time, and was destroyed by Bill Clinton and Robert Rubin (Goldman Sachs before becoming Treasury Secretary, and Citigroup Chairman after).

    • Replies: @MarkinLA
  42. bluedog says:

    Only a fool would wish for endless war, but then again the country is full of fools…..

    • Replies: @peterAUS
  43. Mefobills says:


    The U.S. economy is financialized.

    Your war thesis is a function of financialization. War makes profits for the war-lobby in the form of goods produced. War also causes assets in the target country to fall in price. Later the foreign economy can be priced in dollars, and bought up cheap.

    With regards to re-building the war torn country, that is funded by taxpayers, which then keeps downward pressure on the producing population.

    There are two main kinds of capitalism, industrial and financial. Finance capitalism won out in WW2. The U.S. used to have industrial capitalism as evidenced by Peshine Smith’s/Henry Clay economy.

    Hudson talks about this type of economy in his book, “America’s Protectionist Takeoff 1815-1914.”

    Industrial Capitalism has banks lending national credit (sovereign credit issued by public banks) into industry. This builds out industry and the commons, making the nation efficient, which then lowers prices. Both Smith (U.S.) and List (Germany) promoted Industrial Capitalism.

    To keep capital from raping the earth and seeking out increasing gains, and demanding war (for gain), then the money itself has to NOT make claims for its existence.

    If you read one of my earlier comments, I talk about how a component of the money supply has to be debt free which then allows savings, and said savings is under no pressure to return to a debt instrument.

    Hudson is also very good on debt jubilees, as debts will be monetized in some form and will then make unnatural claims against the earth. Humans are rent seeking animals, and predators will find some way to make claims. In those cases, claims have to be dismissed/legally erased. Money’s true nature is law.

    In general, if a debt has been paid 1.5X or 2X, then the debt has become usurious. For example, if you paid for your house 3X over a long span of time, then issuing private bank is taking you for a ride.

    We allow this screw job, because we “voluntarily” went to the bank to take out a loan (to then create new credit.) In evolutionary terms, we are being used as dupes because we are honor bound to meet our obligations.

    Finance capitalism is mostly interested in extractions, and it must create more future debt to pay off old past debts. New debtors in the form of immigrants are then desired to make new debts, women are required in the workforce to make new debts, and BONUS, wages are driven down by women and immigrants.

    The economic effect is the same as waling in a funnel, as the exponential (interest) at the base of bank credit as money creates this unnatural function.

    Higher civilization is impossible until the money problem is addressed.

    And yes, our ((echoing)) friends are heavily implicated in this “international” scam of epic proportions.

    • Agree: Iris
    • Replies: @peterAUS
  44. peterAUS says:

    Let’s assume, for a second, that you really believe that.
    You could be also virtue signalling, of course.

    If a person/his family/inner circle/wider circle can increase their power, material wealth and position in a society, at somebody else’s expense, by an “endless war”, they aren’t fools; on the contrary.

    The problem with honest people is that they can’t get that fact.
    I know why they can’t, but still….

    Besides, skip “endless” in this case. Just as long as there is somebody/something that doesn’t listen to, say, Washington, dictate. When all the world does listen, perhaps, we’ll see the end of war.
    Or….”only the dead have seen the end of war”.

    In meantime, still waiting for …somebody…with some hard data projections about US economy in the case of “engagement” against Iran.
    10 % chance for that here.

  45. Rich says:

    The retired professor was someone I met at a party at a mutual acquaintances house. It was a long discussion between several people and my usual argument, shared by several others, was that the US should pull its military back. The professor argued that the Military Industrial Complex actually employs too many people and that our military presence, and even expansion, keeps the economy strong. It was a conversation among a few people and it went on for some time. It’s a viewpoint few of the people in my small circle of friends argues, and I found it very interesting. But not something I’m presently able to make a case for. I’m going to spend a bit more time on it, and see if my opinion can be changed. At present, and like I said I’m no expert, I think he was arguing that a war time economy serves as a stimulus that helps augment the economy by providing good paying jobs to people, among other things. I’ll try to get back to you when I understand it a little better.

    • Replies: @bluedog
  46. Art says:

    Gee golly – why don’t the Democrats make big noises about student debt – they could take over the House, promising to allow bankruptcy for student loans.

    Are they stupid or what — oh I know – the Jew oligarchs would not like that — SORRY little folks.

    Think Peace — Art

    p.s. Surprise – surprise — 95% of student loan money goes to liberals.

  47. @Respect

    What’s with all the hahaha. Are you crazy?

  48. peterAUS says:

    At present, and like I said I’m no expert, I think he was arguing that a war time economy serves as a stimulus that helps augment the economy by providing good paying jobs to people, among other things.

    I think, in this particular case (Iran), it’s even more important.

    I’ll try to get back to you when I understand it a little better.

    Appreciate that, but, no need, really. I guess we are both in the same boat there, so, it’s only fair if I do my own homework:).

    I am, still, hoping that somebody here would chime in, with competence, re that very topic.
    As I said….10 % chance, hopefully.

    I guess we’ll just need to endure the “usual” comments/posters while waiting. Good for practicing skim reading with skipping, though.

    All good.

  49. peterAUS says:

    Civil and, apparently, competent comment.

    What I got from it:

    Your war thesis is a function of financialization. War makes profits for the war-lobby in the form of goods produced. War also causes assets in the target country to fall in price. Later the foreign economy can be priced in dollars, and bought up cheap.

    With regards to re-building the war torn country, that is funded by taxpayers, which then keeps downward pressure on the producing population.

    Money’s true nature is law.

    The conclusion is simple, I guess: war is simply necessary to keep THAT system running.
    If that’s correct, and I feel it is, the war with Iran is simply inevitable.

    Now, re your approach to the problem, I’ve read quite a bit about that.

    And, yes, I do agree with:

    Finance capitalism is mostly interested in extractions, and it must create more future debt to pay off old past debts. New debtors in the form of immigrants are then desired to make new debts, women are required in the workforce to make new debts, and BONUS, wages are driven down by women and immigrants.

    and especially with:

    Higher civilization is impossible until the money problem is addressed.

    I get there is a serious problem. I also get that addressing that problem has been a challenge for quite some time. I also get that there are a couple of approaches that appear to be a solution.
    Implementing those approaches doesn’t seem likely in foreseeable future.
    That leaves a war as simple inevitability; the only issue is where/with whom.

    So….any way you cut it, the regime in Tehran is for some interesting times.

    • Replies: @Jeff Stryker
  50. Wally says:

    Chimpanzee Varufockers:

    I see you dodged what I posted previously about Operation Barbarossa. What are you afraid of, the truth? You’ve already made an ass of yourself, so what the hell, maybe you’ll learn something for a change.
    Operation Barbarossa Was A Preventive Attack:
    Introduction to HITLER’S WAR:
    Apparently you need this:

    adjective: pre-emptive
    serving or intended to preempt or forestall something, especially to prevent attack by disabling the enemy.

    • Replies: @Respect
  51. @peterAUS

    ISIS and every other group has been chomping at the bits for a war that would finally bankrupt the US. After 20 years in Afghanistan and a nice deficit from Iraq, I’d say Iran would be the one that did it.

    Meanwhile China, whose economy is number one on the planet anyhow, would simply become a greater Superpower.

    Hicks in the Flyover just cannot learn. No matter how wars result in stalemates, deficits, incompetent puppet governments and places that look like Iraq…they want another one.

    Last I checked, the VA was still struggling to meet the needs of a war that started 15 years ago.

  52. It’s hard not to believe the eruditely trustworthy, Michael Hudson… the philosopher!

  53. Iris says:

    “if the US were to stop its military adventurism, we’d end up in a serious depression”

    This is partly correct, will remain correct on the short term, and has actually been so since WW2.

    But military adventurism as an economic solution should also take into account the not-so desirable long-term consequences:
    – Control of a tiny minority over an increasing share of the nation’s wealth
    – Ineluctable disappearance of the nation’s middle class (and of its nation-building capabilities)
    – Destruction of the nation’s economy by the diversion of its financial resources to crony monopolies instead, the military sector being only one of them.
    – Out-of-control increase of public debt, which unfortunately will set the stage for long-term anarchy and violence in America
    – Irretrievably undermining the USA’ position in the world of tomorrow (if ever there is any).

    Your friend may be right, as long as he does not have grandchildren and does not rely on the US economy prospects for a pension.

  54. Iris says:

    I couldn’t use the “Agree” button, but thanks for your excellent comment.

    I would add only one thing: while public debt has increased everywhere in the world, it has had opposite effects on the living standards of the people, depending on whether the considered country’s central bank is private or public. The American people’s standards of living have dropped, those of the Chinese have tremendously improved.

  55. MarkinLA says:

    Wrong, the dancing was due to market forces rewarding people for doing seemingly (after the fact) stupid things. The government guarantees had nothing to do with this (except for allowing the dancers to keep their ill-gotten gains).

    So many people cannot see that a so-called free market runs off the rails all the time and that has nothing to do with the government. The government tries to prevent this from happening but it is not very successful since the one thing the government can’t control is who can enter the market.

    This is nothing more than the repeat of the junk bond blow-up under Michael Milken. NONE of that was due to the government or any guarantees. In the beginning Milken was the only game in town and he was making a fortune. He could pick and chose who he did business with. He didn’t do crappy deals. Everybody made money, everybody was happy. Other Wall Street firms got into the business and the profits slowly went down. This is a natural occurance in a free market system. However, what is never mentioned is that standards also went down to make sure deals got done.

    Instead of somebody voluntarily closing up shop and making the environment better for everybody else (why would anybody do that), they dropped their underwriting standards. Now the crappiest of crappy deals got done and the world was awash in junk bonds going into default even before their first payment. Only Chinesae style punsihment for financial crimes (a bullet in the head) can stop these free market run-aways.

    In the real estate game there is nothing special about subprime lending – if you do your do diligence on the borrower. The problem was that the first guys were making a lot of money and everybody got into the game. Standards dropped and crappy loans got made. There was no way that the government could stop that since most of the loans were made by mortgage companies outside any real regulatory control. Even capital requirements were skirted because most of the loans were sold off to Wall Street where there are even less controls. The loans became assets on the banks books because they retained servicing rights in many cases.

    Just how was the government going to stop this short of making a socialist style decision and declaring all such loans illegal? What about the guys making good subprime loans, why should they be penalized for the actions of a few bad apples. How do you know what is good and what is bad before the collapse comes? The government cannot get involved once the bubble starts to expand. Even if they shrink the bubble, the free market clowns will insist there never was a bubble to worry anout and that the government got in the way of sound business practices.

    I know people like to believe the government causes all the problems in the world but they simply cannot look at the major conflicts in the free market system that are the real causes of boom-bust capitalism.

  56. MarkinLA says:

    After all this time there are still people who stupidly believe that left to its own a free market is self-correcting. There are also people who believe that under such a system people will generally do the right thing. What do you do when the right thing for you personally is to process as many crappy loans in the shortest amount of time as you can and bank that bonus?

    Multiply that by everybody in the residential lending industry.

  57. MarkinLA says:

    Actually it didn’t work that well. It was needed but the Fed had a lot more room to maneuver in 1992 when we had a similar meltdown in the junk bond and commercial real estate market. A lot of big banks were technically insolvent and the Fed bailed them out behind the scenes. The Savings and Loans industry imploded. The oil patch was in a depression when the prices collapsed at about the same time.

    This was, again, the result of the failure of free markets to regulate themselves. The one problem was that it should have been a lesson NOT to end Glass-Steagal but was probably used as proof that market do self-regulate and Glass-Steagal was no longer needed.

    You see how that sleight of hand works when you are dealing with a pseudo-science like economics. Two people can point to the same thing and scream 180 degree opposite conclusions. Who is right? The guy who screams loudest usually.

  58. Respect says:

    If Barbarrossa was a preemptive war , then , the nazi invasions of Austria , France , Belgium , Holland , Chekia , Italy , Greece , Poland , the baltics etc… were also ” preemptive ” attacks ??

    And Napoleon who invaded all Europe , from Moscow to Cadix , it was an invasion or just ” preemptive ” attacks ??

    Hitler , the german armies and even german civilians vere a bunch of drug adicts , they got high on PERVITIN ( anphetamine ) and other things , no wonder they were paranoid , psychotic and organic

    see link

    • Replies: @Curmudgeon
  59. nickels says:

    Nationalize the banks.
    Purge the libertarians.

    • Replies: @gwynedd1
  60. @Sergey Krieger

    I know from your other comments that you are rather knowledgeable about the true reasons for the collapse of the USSR. If it isn’t too much trouble, could you provide some good resources on this question? I am very interested to know more about how this collapse really happened.

  61. bluedog says:

    Perhaps you should of ask them about the debt these wars create, the taxpayer dollars that are paying those high paying wages,the extreme profit, and their solution of the coming bankruptcy, or better yet ask about the old British empire and what wars and debt did to it…

  62. gwynedd1 says:
    @Captain Willard

    We have the worst of everything now, loss side socialism and private side profits. The Federal government should end the private mortgage industry and run a savings and loan. It would absorb the current rent funneled in the commercial banking industry. So now the government would be capturing the rent. Any idiot can run a savings in loan and the government is any idiot.

    Now that I have every conservative and libertarian horrified, the true horror will be revealed which is their ignorance. All of the thirteen colonies were started with a charters with the idea of rent in mind. Rent is the freebie. Who ever is collecting rent privately is collecting a freebie that the government is backing. All it really is is a land , right of way, and resource user fee. If you use something someone else wants, and you didn’t personally make, shouldn’t you pay? All land lords are agents of the government and we are privatizing the profits. Even worse is the land lords are just handing that to the banks, which means the banks are the effective rent collectors , aka the real government.

    That should be the tax base.

    What should not be the tax base is direct taxes on labor, ya know like the income tax which should be abolished. Most sales taxes should also be abolished. Why is no one horrified at income taxes and sales taxes which is a direct tax on productivity? Rents don’t make squat its the passive income stream and the banks soak it all up. The only one that makes any sense is the gas tax because its basically a user fee for roads and bridges. See how that works? That nice little location in town is a location that is being used. its not a valuable piece of capital manufactured by industry. Its simply a toll booth created by the surrounding prosperity. While taxes should remain low , why is that not the tax payer?

    So a public mortgage entity that takes 20% down and forecloses on dead beats should be something the government can handle and they can shove their privacy violating income taxes and commerce killing sales taxes where is came from.

  63. gwynedd1 says:

    There is no need. If a bank want to loan money for a business that is exactly what we want. I have no problem with consumer debt either. As long as they eat any loses…

  64. @Captain Willard

    what could go wrong with a “public bank”?

    Well, nothing has gone wrong with the Bank of North Dakota for almost a hundred years. It’s the politicians who have created problems there, not the state owned bank.

  65. @Respect

    Wally forgot this on Barbarrosa:

    France invaded Germany before Germany invaded France:

    Germany invaded Belgium and Holland, because they had allowed the RAF to use their countries for flyovers of German territory, thereby breaking their promise of neutrality.

    When Germany invaded France, there were already British and French troops in Belgium. Germany did not occupy all of France.

    Churchill had ordered the mining of neutral Norway’s harbours in order to stop Germany getting iron ore.
    Denmark was invaded to get to Norway.

    Chekia???? If you mean Czechoslovakia, the Sudetenland was German. The Czech government was less than honourable:
    By the way, Poland invaded Czechoslovakia before Germany

    Italy was an ally. Did the US invade Britain? Hitler asked Mussolini not to invade Greece. Germany followed its commitment to Italy.
    AJP Taylor was criticized for stating the obvious:

    It was the Allies, including the USSR, which invaded Poland, Finland, Romania and Bulgaria, who spread the war.

  66. @jilles dykstra

    Isn’t that what has been done to wages partially via Cheap Labor in the developing world, where US-owned corporations shipped millions of jobs, starting in the Nineties?

    There’s the financialization of the economy.

    But US-owned corporations also spun gold for the top 20% via a cheap, massive global labor pool that undercuts American & European workers to an extreme.

    It did not drive prices down on anything but nonessentials that are infrequently purchased, like furniture and electronics, as the job shippers stripped their nations of sector after sector that used to provide a basic, household-supporting set of jobs even in retail. Luxury retail used to offer far more household-supporting jobs. Except at the managerial level, those jobs did not pay that much, but people could afford rent.

    Obama’s grandfather was one of them. He was a furniture salesman, while Obama just sold the USA to the big banks, even letting them pick his cabinet.


    Even though I am not an economist, I do know what it did first hand from owing a small shop, trying to compete with the big-box peddlers of volume-bought Made in China goods and have worked in multiple luxury retail stores, talking to countless salespeople and designers who used to make a decent living in all of the related niche sectors of that business. A few of the retailers even tried to keep on manufacturing their own brands, providing jobs to local citizens, but all succumbed to the forces of globalization after many decades in business.

    This article, along with articles from other economists telling the truth, explains a ton about some of the underlying dynamics that are driving the cost of the necessities of life—like rent—through the roof, stranding whole generations in mom’s basement. It is a fabulous article, with the first Amazon review of the book also explaining a lot.

    But it does not explain all of the through-the-roof rent issues.

    It also doesn’t propose a solution to curb the corporate chasing of Cheap Global Labor. Nor does it get to the way that Big Government helps businesses in the USA to replace massively undercounted, unemployed and underemployed citizens with low-cost, welfare-eligible, immigrant workers and welfare-subsidized citizens who likewise drive wages into the ground.

    It proposes more government—a government bank—but how will that pump up wages to rent-covering levels when Big Goverment is so determined to facilitate US employers in keeping wages and work hours at rock-bottom levels?

    Ninety-five million US citizens of working age are not in the labor force before you even get to the seven million who recently applied for UC, granting them the privilege of being counted as unemployed, and the average employed person in the USA works only part time. There’s a reason for that.


    Wages have been purposefully undercut by government programs that supply the “financialized” businesses in the US service sector—the insurance companies, the credit-processing companies, parts of banking, etc,—with a huge labor market full of single-breadwinner moms who do not need higher pay or full-time hours due to their free EBT food, reduced-cost housing from .gov, monthly cash assistance, electricity assistance and up to \$6,431 in refundable child tax credit cash.

    Law offices and other unexpected office settings also hire mostly this same crew of unearned-income consumers.

    Combined with the married moms adding a little keeping-up-with-the-Jones’ money to a household-supporting spousal income and the divorced moms with rent-covering child support checks, these moms absolutely dominate the back end of the voted-best-for-moms financial services industry. And they dominate the vast bulk of jobs in other office job categories, too.

    They also commandeer a lot of the sales-related office jobs, selling products in some cases that “require” costly licenses that others pay biannually to maintain, jumping through additional testing hoops as well. Mom gangs dominate most of the back office and many sales jobs without jumping through the legally required hoops. Ditto for degrees. Most of them do not have one, including most of the mom managers, albeit a few do.

    Computers are doing more and more of the moms work, explaining why it is even possible for employers to be so lenient with their diversity of 90 — 100% mom employees, allowing them to take off whole mornings, whole afternoons, whole days and whole weeks—frequently—in addition to PTO and pregnancy leave, even though many of them fail to meet the quotas.

    Everything seems to be nothing but a matter of overall sales or other production volume and controlling labor costs, independent of individual sales performance or everyday, all-day attendance, explaining why employers are lax to the max with moms in consolation for their acceptance of low pay. Low pay is acceptable to the mom gang only due to their streams of unearned income for sex and reproduction from government, spouses or ex spouses.

    Single-breadwinner moms often work officially part time, unlike many of the crony, back-watching, married moms who work unofficially part time in America’s large and small-scale offices. Single-breadwinner moms have to stay under the earned-income limits for welfare programs, making official part-time jobs a financial advantage for them, but they staff many of the slightly higher paying temp jobs, too, dropping the means-tested welfare during months when they go over the earned-income limits, but still collecting up to \$6,431 in refundable child tax credit cash each year.

    America has a lot of discriminatory, absenteeism-friendly, low-productivity jobs for citizen / noncitizen parents.

    This plan will eliminate some of those low-wage mom-gang jobs related to banking, but not the low-wage mom-gang jobs in insurance, credit processing, etc. There are many corporate temp-churn mills of the same ilk, including many with big government contracts.

    The Government bank will LOVE handling all of that pay from Government for womb productivity that also undercuts US citizens in male-dominated jobs, like construction, since so many legal / illegal immigrants can afford to work for low wages, or in under-the-table gigs, due to their access to pay-per-birth welfare from Government.

    Millions of legal / illegal immigrants keep their traceable income low in male-breadwinner households with multiple US-born kids, receiving more welfare with each additional birth of a little US citizen. They get the same buffet of wage-undercutting, government-paid, major monthly bills and refundable child tax credit cash as the single moms.

    The government-facilitated wage suppression via offshoring and the intentional 40 years of welfare-rigged wage suppression by the US government are the reasons why I always hesitate to believe that the banks are the only problem. Maybe, I just don’t understand the connection between this undercutting of wages by goverment and banking.

    This article does a great job of explaining the difficult-to-understand way that banks and government work together to keep the money at the top flowing more & more to the top, but why will a goverment that already rigs the labor market by picking and choosing low-wage workers to support, making some easier for cheapskate employers to hire, do anything but more of the same through another arm?

    The problem for single, childless, non-welfare-eligible women and single, non-welfare-eligible moms with kids over 18, especially, is the historically low pay scales in the many, many, many female-dominated jobs, plunging even lower due to the welfare-rigged labor market.

    These underemployed women are far more numerous in the era of fake, womb-productivity-based feminism—when every mom is accommodated to work part time six ways to Sunday—an era with dwindling marriage rates.

    This large group needs for earned-only income from one person to cover all household bills, including rent that takes more than half of monthly pay. Thanks to a churn job market, full of jobs that openly cater to moms with unearned income streams related to womb-productive sex who can afford to work part time, women with no unearned income must impossibly cover all of their unaffordable bills between low-wage churn jobs.

    I’m not sure that freeing up Blackstone-purchased cathedral-ceiling houses for more dual-high-earner crony parents to purchase will ease the apartment-renting woes of underemployed, single college grads and other single, non-welfare-eligible earners.

    The underemployed group of single, non-welfare-eligible earners is mainly competing for the unaffordable, one-room apartments in safe areas of cities. These one-room apartments are often occupied by families of 10 from the Third World. Crappy, expensive, one-room apartments in safe areas near universities, for instance, are often full of the low-wage immigrants who fill many of the extremely low-wage jobs on university campuses—the ones not filled by married moms at \$10 per hour.

    Universities are the biggest employer in many states when ambulatory services doesn’t comprise the largest employer……..

    Those Blackstone rentals are family-sized houses that will be sold to the top-20% group of college-educated womb producers who keep two of the few household-supporting jobs with benefits under one roof, regardless of absenteeism, hiring and retaining mostly above-firing, family-friendly, absenteeism-friendly groups of “needs-the-job” crony parents.

    Those families will not be vacating one-room apartments, reducing the cost of rent in safe areas for citizens with one, earned-only income stream.

    Those dual-earner families—and the welfare-consuming, womb-producing citizens & noncitizens—are the only real concern of our elected leaders and other leaders, even though the apparatus that enables the dual earners to take two household-supporting jobs out of the economy has halved the size of the college-educated middle clsss, affecting not just the throw-away non-womb-productive citizens but also new household formation among young singles in the massive, 76-million-person Millennial Generation that might lead to more womb production, the main driver of the economy, apparently.

    That includes the Nanny-Cam-surveilled, low-wage daycare apparatus and the informal, at-their-beck-and-call grandparent babysitter rings, accommodating the crony-parent job-protection racket in concentrating decent jobs in fewer households, not just during work hours but also during their libertine and copious vacation schedules.

    The wealth concentration from assortative mating is made possible by computers that do more of “the talent’s” work for them while their parents do the work of raising their kids for them.

    Those are the parents snagging two higher paying, family-friendly, absenteeism-friendly corporate jobs per household via the crony-parent job network or one higher paying corporate job for the dad and a safe, benefits-rich mom-dominated government job for the mom, like teaching in our nation’s stellar public schools, where the mom teachers can be at home with their own kids during the summers, and the test scores stay at rock-bottom.

    In the bottom 80%, there is less job availability for the many US citizens with zero unearned income for sex and reproduction from a spouse or government or, as one interviewer put it, “somethin’ comin’ in,” particularly after they reach an age when the moms-basement rent-covering option appears less stable to cheap-labor-seeking employers than when the applicants are young.

    A lot of never-married and divorced men, too, are in this situation because of the way 40 years of mass-scale, welfare-buttressed immigration has tanked wages in multiple, male-dominated industries that used to supply a lot of household-supporting jobs. But even though the welfare-rigged labor market also affects single-breadwinner men, policymakers keep right on bringing in hordes of immigrants and paying their major household bills to reward them for womb-productive sex.

    Womb-productive noncitizens will LOVE the government bank!

    It’ll give them deals on housing their refundable child tax credit money, not that the whopping \$6,431 refundable child tax checks of single moms will stay in there very long. Many of them brag in workplaces about spending that money on beach trips with boyfriends and expensive tattoos, as their non-womb-productive, single colleagues worry about how they’ll cover their non-government-funded rent when this churn gig ends.

    It’s easy to spend pay for sex and reproduction from government on mom-pampering treats when your rent, food and electricity are covered by Uncle Sam, with monthly cash assistance added to the bigly, yearly, sex-and-birthing tax-cash payments from the US Treasury Department.

    It is unclear how government banks would help the many non-welfare-eligible, single citizens, living on earned-only income from temp and churn jobs, albeit the lack of bank fees would help….a tiny bit in cases where people go over with no overdraft protection. Every penny certainly counts when most of the non-womb-productive, non-welfare-pumped citizens live in a state of stressful uncertainty over every \$5, but it really doesn’t solve the much bigger issues of the welfare-rigged churn-job economy, rent that soaks up over half of monthly earnings and the concentration of the few decent jobs in fewer households due to the crony-parent job protection ring.

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