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The Use and Abuse of MMT
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Summary

After being attacked by monetarists and others for many decades, MMT and the idea that running government budget deficit is stabilizing instead of destabilizing is suddenly gaining applause from the parts of the political spectrum that long opposed MMT: the banking and financial sector, especially the Republicans. But what is applauded is in many ways something quite different than the leading MMT advocates have long supported.

Modern Monetary Theory (MMT) was developed to explain the logic of running government budget deficits to increase demand in the economy’s consumption and capital investment sectors so as to maintain full employment. But the enormous U.S. federal budget deficits from the Obama bank bailout after the 2008 crash through the Trump tax cuts and Coronavirus financial bailout have not pumped money into the economy to finance new direct investment, employment, rising wages and living standards. Instead, government money creation and Quantitative Easing has been directed to the finance, insurance and real estate (FIRE) sectors. The result is a travesty of MMT, not its original aim.

By subsidizing the financial sector and its debt overhead, this policy is deflationary instead of supporting the “real” economy. The effect has been to empower the banking sector, whose product is credit and debt creation that has taken an unproductive and indeed extractive form.

This can clearly be seen by dividing the private sector into two parts: The “real” economy of production and consumption is wrapped in a financial web of debt and rent extraction – real estate rent, monopoly rent and financial debt creation. Recognizing this breakdown is essential to distinguish between positive government deficit spending that helps maintain employment and rising living standards, as compared to “captured” government spending to subsidize the FIRE sector’s extraction and debt deflation leading to chronic austerity.

Origins and policy aims of MMT

MMT was developed to explain the monetary logic in running budget deficits to support aggregate demand. This logic was popularized in the 1930s by Keynes, based on his idea of a circular flow between employers and wage-earners. Deficit spending was seen as providing public employment and hence consumer spending to absorb enough production to enable the economy to keep producing at a profit. The policy goal was to maintain (or recover) reasonably full employment.

But production and consumption are not the entire economy. Modern Monetary Theory (MMT) was formally developed in the 1990s, with roots that can be traced by Abba Lerner’s theory of functional finance, and by Hyman Minsky and others seeking to integrate the financial sector into the overall economic system in a more realistic and functional way than the Chicago School’s monetarist approach on the right wing of the political spectrum. A key point in its revival was Warren Mosler’s insight that a currency-issuing country does not “tax to spend”, but instead must spend before its citizens can pay tax in that currency.

MMT was also Post-Keynesian in the sense of advocating government budget deficits as a means of pumping purchasing power into the economy to achieve full-employment. Elaboration of this approach showed how such deficits created stability instead of the instability that results from private-sector debt dynamics. At an extreme, this approach held that recessions could be cured simply by deficit spending. Yet despite the enormous deficit spending by the U.S. and Eurozone in the wake of the 2008 crash, the overall economy continued to stagnate; only the financial and real estate markets boomed.

At issue was the role of government in the economy. The major opponents of public enterprise and infrastructure, of budget deficits and market regulation, was the financial sector. “Austrian” and Chicago-style monetary theorists strongly opposed MMT, asserting that government budget deficits would be inflationary, citing Germany’s Weimar inflation of the 1920s, and Zimbabwe, and portraying government deficits (and indeed, active government programs and regulation) as “interference” with “free markets.”

MMTers pointed out that running a budget surplus, or even a balanced budget, absorbed income from the economy, thereby shrinking demand for goods and services and leading to unemployment. Without government deficits, the economy would be obliged to rely on private-sector banks for the credit needed to grow.

That occurred in the United States in the final years of the Clinton administration when it actually ran a budget surplus. But with a public sector surplus, there had to be a corresponding and indeed identical private sector deficit. So the effect of that policy was to leave either private debt financing or a trade surplus as the only ways in which economic growth could obtain the monetary support that was needed. This built in structural claims for interest and amortization that were deflationary, ultimately leading to the political imposition of debt deflation and economic austerity after the 2008 debt crisis.

Republican and financial sector opposition to budget deficits and MMT

If governments do not provide enough purchasing power by running budget deficits to enable the economy to grow, the role of providing money and credit will have to be relinquished to banks – at interest, and for purposes that the banks decide on (mainly, loans to buy real estate, stocks and bonds). In this respect banks are competitors with government over who will provide the economy’s money and credit – and for what purposes.

Banks want the government out of the way – not only regarding money creation, but also for financial and price policies, tax policy and laws governing corporate behavior. Finance wants to appropriate public monopolies, by taking payment in natural resources or basic public infrastructure when governments are, by policy rather than necessity, short of their own money, or of foreign exchange. (In times past, this required warfare; today foreign debt is the main lever.)

ORDER IT NOW

To get into this position, banks need to block governments from creating their own money. The result is a conflict between private bank credit and public money creation. Public money is created for social purposes, primarily to maintain production and consumption growth. But bank credit nowadays is created largely to finance the transfer of property and financial assets – real estate, stocks and bonds.

Opposing the logic for running budget deficits

The Reagan-Bush administration (1981-82) ran budget deficits not to pay for social spending, but as a result of tax cuts, above all for real estate.[1]Real estate was given a fictitiously short accelerated depreciation allowance – as if a building lost its entire value in just 7½ years, providing all rental income to be charged as an expense and even to generate a fictitious tax-accounting tax loss. This catalyzed the great conversion of rental properties to co-ops. Landlords (called “developers”) took out a mortgage equal to the entire market price of the building, and then sold apartments at a price not only greater than zero, but typically equal to the entire mortgage. It was one of the great “wealth creation” ploys in modern history. And it was left out of the National Income and Product Accounts (NIPA), which used “realistic” depreciation – which still pretended that buildings were losing value, despite the maintenance and repair expenditures to prevent such loss. The resulting budget deficit led to proposed “cures” in the form of fiscal cutbacks in social spending, starting with Social Security, Medicare and education. This aim became explicit by the Clinton Administration (1993-2000), and President Obama convened the Simpson-Bowles “National Commission on Budget Responsibility and Reform” in 2010. Its name reflects its recommendation that “responsibility” meant a balanced budget, which in turn required that social spending programs be rolled back.

Opponents of public spending programs saw the rise in government debt resulting from budget deficits as providing a political leverage to enact fiscal cutbacks in spending. Many Republicans and “centrist” Democrats had long sought a reason to scale back Social Security. Austrian and Chicago-School monetarists urged that government shrink its activity, privatizing as many of its functions as possible to let “the market” allocate resources – a largely debt-financed market whose resource and monetary allocation would shift away from governments to financial centers – from Washington to Wall Street, and in other countries to the City of London, the Paris Bourse and Frankfurt. However, no such critique was levied against military spending, and the government responded to the 2000 dot.com and 2008 junk-mortgage financial crises by enormous monetary subsidy and bailouts of the economy’s credit and asset sector.

The Obama and Trump financial bailouts as a travesty of MMT

To advocates of MMT, and indeed to most post-Keynesian economists, the positive function of budget deficits is to spend money and therefore income into the economy. And by “the economy” is meant the production-and-consumption sector, not the financial and property markets. That “real” economy could have been saved in a number of ways. One way would have been to scale back mortgage debts (and debt service) to realistic market prices and rent rates. Another would have been simply to create monetary grants and subsidies to enable debtors to remain in their homes. That would have kept the financial system solvent as well as employment and existing home ownership rates.

But Obama double-crossed his voters by not rolling out bad mortgage debts and other obligations to realistic market prices, and instead bailing out the banks for credit creation in the form of bad loans (“liars’ loans” to NINJA borrowers, and bad financial bets on derivatives by brokerage firms that were designated as “banks” in order to receive Federal Reserve credit and bailouts. With bank balance sheets impairing their ability to create new credit, the government stepped in by creating its own credit. This gave the banks, shadow banks and other non-bank financial institutions a bonanza of credit – replete with the opportunity to buy up foreclosed homes and create rental properties This policy was organized by Blackstone, and turned the crisis into an opportunity to make enormous rates of return for its participants. The effect was to intensify the economy’s polarization, as investors typically needed a minimum $5 million tranche to join.

The Federal Reserve’s $4.6 trillion in Quantitative Easing did not show up as money creation, because it was technically a swap of assets – like Aladdin’s “new lamps for old, in this case “good credit for junk.” The effect of this swap was much like a deposit inflow. It enabled banks to ride out the downturn while making a killing in the stock and bond markets, and to lend for takeover loans and related financial speculation.

Wall Street’s Financial capture of MMT to inflate asset prices, not revive the economy

At issue is how to measure “the economy.” For the wealthy One Percent, and even the Ten Percent, “the economy” is “the market,” specifically the market value of the assets that they own: their real estate, stocks and bonds. This property and financial wrapping for the “real” production-and-consumption economy has steadily risen in proportion to wages and industrial profits. It has risen largely by government money and credit creation (and tax breaks for property and finance), along with its economic rent, interest and financial charges and service fees, which are counted as part of Gross Domestic Product [GDP], as if they were actual contributions to the “real” economy.

So we are dealing with two economic spheres: the means of production, tangible capital and labor on the one hand (what is supposed to be measured by GDP), and the market for financial and property assets, along with their rentier charges that ae taken from the income earned by this labor and real capital.

Financial engineering replaces industrial engineering – along with political engineering by lobbyists seeking tax breaks, rent-extraction privileges, and government subsidy. To increase property and financial asset prices and corporate behavior, companies are drawing on credit and government subsidy not to increase their production and employment, but to bid up their stock prices by share buyback programs and high dividend payouts. Buybacks are called “repaying capital,” so literally this policy is one of disinvestment, not investment. It is favored by tax laws (taxing “capital” gains at a lower rate or not at all, as compared to taxes on dividends).

The blind spot of vulgarized MMT: The FIRE sector vs. the “real” economy

ORDER IT NOW

Much superficial confusion between the FIRE sector and the production-and-consumption economy comes from repeating the over-simplification of classical monetary formula MV=PT, namely, dividing the economy into private and government sectors. Setting aside the balance of payments (the international sector), it follows that government spending will pump money into the domestic economy, and that conversely, budget surpluses will suck money out.

The problem is that this analysis, used by many MMTers, for instance, the Levy Institute’s typical chart, does not distinguish between government spending into the FIRE sector and asset markets as compared to spending into the “real” economy on employment and production (including the building of public infrastructure, for instance). Without this distinction it is not possible to see whether deficit spending is productive by aiming at supporting employment and output, or merely aims at supporting asset prices and making sure that creditors do not lose the value of their financial claims on debtors – claims that have become unpayable and thus are a bottomless pit of government deficit spending in the end.

Trying to keep the financial sector and its debt overhead afloat implies imposing austerity on the rest of the economy, IMF-style. So “MMT for Wall Street” is an oxymoron, and is the opposite of MMT for a full employment economy.

MMT, public and private debt

Money is debt. Government money creation for public purposes – to pay for employment and output – spurs prosperity. But in its present form, private-sector debt creation has become largely extractive, and thus leads to the opposite effect: debt deflation.

Governments can pay public debt without defaulting, as long as this debt is denominated in their own domestic currency, because the governments can always print the money to pay. To the extent that public debt results from spending that supports output, employment and growth, this process is not inflationary. The government gives value to money by accepting it in payment of taxes. So the monetary system is inherently bound up with fiscal policy. The classical premise of such policy has been to minimize the economy’s cost structure by taxing mainly unearned income (economic rents), not wages and profits in the production-and-consumption sector.

The problem nowadays is private debt. Most such debt is created by banks. This bank credit – debts owed by bank customers – tends to increase faster than the ability of debtors to earn enough income to pay it. The reason is that most of private debt is not used for productive, income-generating purposes, but to finance the transfer property ownership (affecting asset prices in proportion to the rate of credit growth for such purposes). That use of credit – not associated with the production-and-consumption economy – leads to debt deflation. Instead of providing the economy with purchasing power (as in running government budget deficits), private debt works over time to extract interest and amortization from the economy, along with servicing fees.

The typical mortgage, including its interest charges ends up exceeding the value that the property seller received. As a result of compound interest, the mortgage debt is repaid several times to the bank. The effect is to make banks the main recipient of rental income (as mortgage debt service) and ultimately the main beneficiaries of “capital” gains (that is, asset-price gains).

What gives bank credit its monetary characteristics – and enables debt to be monetized as a means of payment – is the government’s willingness to treat banks as a public utility and guarantee bank deposits (up to a specified limit) and ultimately to guarantee bank solvency.

A budget deficit resulting from a financial bailout reflects the inability of the economy to carry its exponentially growing debt overhead. Because this overhead increases as a result of the mathematics of compound interest, the size of bailouts must increase – and with it, the budget deficit (plus swap agreements) to subsidize this debt overgrowth as an alternative to imposing losses by banks and financial investors.

That is what we have seen since the financial crisis of 2008, both in Europe and the United States. Led by the financial sector, much of the economic mainstream finally has come to embrace the idea of budget deficits – now that these deficits are benefiting primarily the financial and other parts of the FIRE sector, not the population at large, that is, not the “real” economy that was the focus of Keynesian economics and MMT.

This kind of endorsement for government money creation thus should not be considered an application of MMT, because its policy goal is almost diametrically opposite. Much as the Reagan-era budget deficits were used as the first part of a one-two punch to roll back social spending (Social Security, Medicare, education, etc.), so today’s Obama-Trump deficits are being used to warn that the economy must preserve fiscal “stability” by rolling back social programs in order to bail out the financial economy. Wall Street magically has become transmogrified into “the economy.” Labor and industry are viewed simply as deadweight expenditures on the financial sector and its attempted symbiosis with the central bank and Treasury.

The Financial Sector, Private Capital and Austerity and Central Planning

If Wall Street is bailed out once again at the expense of the “real” economy of production and consumption, America will have turned decisively away from democracy into a financial oligarchy. Ironically, the initial logic is the claim that an active state is inherently less efficient than the private sector, and thus should be shrunk (in the words of lobbyist Grover Norquist, “to a size so small that it can be drowned in a bathtub”). But relinquishing resource allocation to the financial sector leads to its product – that is, debt – creating a crisis that requires unprecedented government intervention to “restore order,” defined as saving banks and financial investors from loss. This can only be achieved by shifting the loss onto the economy at large.

ORDER IT NOW

Today, the financial sector – banks and financial investors – play the role that the landlord did in the 19th century. Its land rents made Britain and continental Europe high-cost economies, as prices exceeded cost-value. That is what classical economics was all about – to bring market prices in lines with actual, socially and economically necessary costs of production. Economic rent was defined as unnecessary costs, which were merely payments for privilege: hereditary landownership, and monopolies that creditors had carved out of the public domain or won as legal compensation for financing public war debts.

The rentier class not only was the major income recipient of the economic surplus, it controlled government, via the upper house – the House of Lords in Britain, and similar houses across continental Europe. Today, the Donor Class controls electoral politics in the United States, via the Citizens United ruling. Political office has become privatized, and sold to the highest bidders. And these are from the financial sector – from Wall Street and financialized corporations.

The post-2008 stock market and bond-market boom raised the DJIA from 8500 to 30,000. This gain was engineered by central bank support far in excess of what a “free market” would have priced stock at. Before QE, U.S. shares had fallen only slightly below the market average for the previous century. QE drove it to its highest level outside the 1929 and 2000 bubbles. Even after the Coronacrash, shares are still overpriced compared to pre-“Greenspan Put” prices.

The result is best thought of as a blister, not a bubble. Its only hope of surviving without bursting is for the government to continue to support it in the face of a drastically shrinking post-coronavirus economy.

So the question is what will be saved: The economy’s means of livelihood, or an oligarchy of predators living in luxury off this shrinking livelihood?

All this was explained by classical economists in their labor theory of value, which was designed to isolate economic rent and other non-production overhead charges (perceived to be mainly services in the 18th and 19th century, especially by the wealthy classes).

The Hudson Paradox: Money, Prices and the Rentier Economy

Without distinguishing between the FIRE sector and the “real” economy there is no way to explain the effects of government budget deficits on asset-price inflation and commodity-price inflation

Here is a seeming paradox. Bank credit is created mainly against collateral being bought on credit – primarily real estate, stocks and bonds. The effect of increasing loans against these assets is to raise their prices – mainly for housing, and secondarily for financial securities. Higher housing costs require new home buyers to take on more and more debt in order to buy a home. Their higher debt service leaves less disposable income to spend on goods and services.[2]Higher stock and bond prices lower the yield of dividend income. (Most such income is spent on new financial assets, not goods and services, so the effect of lower yields probably is minimal, and may be offset by a “wealth effect” of higher asset prices and net worth.)

The asset-price inflation effect of money creation by banks is thus to exert a downward impact on commodity prices, to the extent that the carrying cost on bank credit reduces the net purchasing power of debtors to buy goods and services. This deflationary effect of bank money ends in a bad-debt crash, to which the government responds by bailing out the financial sector with a combination of money creation and central bank swaps (which do not appear as money creation). This is just the reverse of the MV = PT tautology, which only measures the volume of new money (M) without considering its use – what it is spent on. By failing to distinguish the use of bank credit to buy assets (hence, adding to asset-price inflation) as compared to government deficit spending, both the old monetary formulae and the frequent MMT contrast between public and private sectors neglect the need to distinguish the FIRE sector’s “wealth and debt” transactions from how wages and profits are spent in the production-and-consumption economy.

The commercial banking system’s “endogenous” money creation takes the form of credit at interest. The volume of this interest-bearing debt grows exponentially, absorbing and extracting more and more income from industry and labor. The effect on the overall economy is debt deflation.

It may be epitomized as

Give a man a fish, and you feed him for a day;
Teach him how to fish, and you lose a customer.
But give him a loan to buy a boat and net to fish, and he will end up paying you all the fishes he catches. You have a debt servant.

Footnotes

[1] Real estate was given a fictitiously short accelerated depreciation allowance – as if a building lost its entire value in just 7½ years, providing all rental income to be charged as an expense and even to generate a fictitious tax-accounting tax loss. This catalyzed the great conversion of rental properties to co-ops. Landlords (called “developers”) took out a mortgage equal to the entire market price of the building, and then sold apartments at a price not only greater than zero, but typically equal to the entire mortgage. It was one of the great “wealth creation” ploys in modern history. And it was left out of the National Income and Product Accounts (NIPA), which used “realistic” depreciation – which still pretended that buildings were losing value, despite the maintenance and repair expenditures to prevent such loss.

[2] Higher stock and bond prices lower the yield of dividend income. (Most such income is spent on new financial assets, not goods and services, so the effect of lower yields probably is minimal, and may be offset by a “wealth effect” of higher asset prices and net worth.)

 
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  1. I have always though Keynes was misunderstood. As I saw it, he recommended the deficits in recessions or depressions, but those were to be paid by surpluses in good times. I have no idea how much contact, if any, Keynes and Clifford Douglas had, but I always saw them as understanding that interest was a drain on the economy, and that government needed to intervene where necessary. They just had different ways of approaching the problem.
    For that matter, the Lincoln Greenbacks and NS Labour certificates were doing the same thing. It is a deficit without being a real deficit.

  2. Fedspeak on MMT is that without the financial sector the main street economy would not exist. The debt trap that has causally created austerity policy worldwide was engineered by Greenspan himself with never ending asset inflation for his entire tenure as Federal Reserve Chairman post-Volcker fiscal responsibility.

    Greenspan’s Put placed Wall Street on bankruptcy row as USD is unsupported worldwide post-08 Great Financial Crisis & Lehman Moment debacle.

    One Belt One Road initiative precipitated bioweaponized nCorona COVID-19, and Treasury/Fed bailout for the corporate world & investor class of financial parasite.

    Main street first world economy looks like a third world banana republic boarded up in anticipation of rioting & civil unrest all due to imposed austerity from on high White House Oligarch & Federal Reserve/Treasury functionaries with Ph.Ds & requisite Elmer PhuD persona.

    RW

  3. Anonymous[980] • Disclaimer says:

    Good article.

    I’m just hoping Hudson sticks to what he knows best and abandons that embarrassing CO2 baking narrative. One would think he’d be sceptical when these same parasites propose to fix the planet by controlling everyone’s energy with another paper “market”.

  4. onebornfree says: • Website

    “Austrian and Chicago-School monetarists”

    Once again, you prove that you don’t know what you are talking about. There are no Austrian school monetarists, you silly person. Boiler-plate Austrian school monetary theory [eg Von Mises and Rothbard] has NOTHING to do with the statist/monetarist theories forever oozing out of Chicago; all of its basic monetary recommendations actually oppose the fake free-market [ie statist] recommendations of the Chicago school, and call for complete separation of monetary creation from the state, and for the removal of all state granted/protected monopoly power to issue currency in _any_ form[ which is not the current situation, where the Federal Reserve enjoys complete government protected monopoly power to instantaneously create, in any amount it deems necessary, all of its wealth-destroying fake money, to the detriment of most people in the world].

    No regards, onebornfree

  5. swamped says:

    Give a man a fish, and you feed him for a day…and he will return the next day & you will have a welfare client.
    Teach him how to fish, and you lose a customer…and gain a sprawling public education & regulatory system.
    But give him a loan to buy a boat and net to fish, and he will end up…catching all the fishes & exhausting the sustainable stocks. You have an empty ocean.

    Face it, you just can’t win.

    • Replies: @another fred
  6. Anon[230] • Disclaimer says:

    Governments can pay public debt without defaulting, as long as this debt is denominated in their own domestic currency, because the governments can always print the money to pay.

    Correct. Which means there is plenty of money for Medicare for all and UBI. Medicare for all and UBI (Universal Basic Income) are the ways to get MMT to work for all Americans not just the financiers and Wall Street.

    To the extent that public debt results from spending that supports output, employment and growth, this process is not inflationary.

    Complete BS. This completely ignores the role that imports play in the economy. The reason MMT works for the US is because most international transactions, especially oil are performed in dollars which creates a huge demand for dollars. This just shows how treasonous the US environmentalists who want to get the world off an oil based economy are.

    The dollar is also backed by the US military and you get sanctioned and regime changed if you don’t want to accept it.

    The government gives value to money by accepting it in payment of taxes.

    Correct. This is why Bitcoin and Commodities are not money because you cannot use them to pay taxes.

    Although it is good that Michael Hudson finally has somewhat educated himself on MMT, below is a link to a 2012 interview Harry Shearer did with Stephanie Kelton who has concise, clear thoughts and understands MMT much better.

    https://harryshearer.com/transcript-stephanie-kelton-interview/

    Note that there is a link to the audio of the interview if you don’t want to take the time to read the transcript .

    • Thanks: V. K. Ovelund
    • Replies: @Mefobills
  7. @swamped

    “You have an empty ocean. ” And cities teeming with dependent, purposeless, unproductive masses who demand to be fed and sustained.

    The real interesting part comes when the people on top of the pyramid realize that the unproductive masses are a liability, not an asset.

    • Replies: @Daniel H
  8. I like how none of the bozos on here understand Hudson. I could have predicted it. Categorically.

  9. So the question is what will be saved: The economy’s means of livelihood, or an oligarchy of predators living in luxury off this shrinking livelihood?

    When “we” decided to destroy the small farmers, retailers, and merchants in favor of agri-business, big box retail, and mega-corporations (all done through finance) “we” made that decision long ago.

    “God laughs at those who deplore the effects of which they cherish the causes”. – Bossuet

    Don’t look now, He might be laughing.

  10. onebornfree says: • Website

    “MMT was developed to explain the monetary logic in running budget deficits to support aggregate demand. This logic was popularized in the 1930s by Keynes,”

    This just in:

    Keynes was a fraud – a scam artist, as anyone whose read/seriously studied his godawful “General Theory” is fully aware. He was nothing less than [another ] obfuscating, post Marxist scam artist who impressed only useful idiots, bankers and government employees anxious for more [fraudulent] pseudo- intellectual gibberish to justify their wholly destructive , central bank fueled, monetary shell games.

    MMT is a no less of a fraud, a continuation of the ongoing , worldwide central bank -run, fiscal scam in the grand tradition of Marx and Keynes et al. A scam made to fool the gullible while they are all robbed blind via it and yet remain completely oblivious to that obvious fact , and instead blame their misfortune on “capitalism”. Anybody who seriously believes that either Keynes’ theories, [or Hudsons, for that matter] , and MMT make any actual economic sense, needs to get their head examined, however, as someone once said : “there’s a sucker born every minute”.

    “Regards”, onebornfree

  11. I’m glad Prof. Hudson has done a critique of MMT. I’m a long time proponent of MMT, but I appreciate an educated opinion on the subject, critical or not.

    His point about the misuse of MMT is well placed, which is why MMT proponents generally propose policies along with analysis.

    Policies usually include things like:

    A Federal job guarantee.

    Universal healthcare.

    Expanding Social Security payments.

    Funding Infrastructural programs.

    Funding research programs.

    Putting money directly in the hands of the consumer allows the private sector to change with the consumer needs. It allows for a trickle-up economy.

    Any institution too big to fail should be broken up.

    “Government by Organized Money is Just as Dangerous as Government by Organized Mob”

    • Replies: @V. K. Ovelund
  12. Thomasina says:

    Mr. Hudson – the jobs got offshored. Wages stood still, so people turned to debt. Inflation was underreported, and Greenspan and the rest of the central bankers artificially suppressed interest rates. The taps were left wide open and everyone drank. Malinvestment galore.

    You can’t keep blowing up the balloon. Let it deflate and clear out the bad. Yes, it will suck for a few short years, but that will soon pass.

    I’ve read you for a long time now. You seem a good and kind man, but you always seem to favor only one side and forget about the other side, the people who did not take on risk or debt. You are absolutely screwing them.

    No, the government shouldn’t be coming in and stimulating and, no, the Fed should not be bailing out the banks and hedge funds.

    Let the bubble deflate.

  13. onebornfree says: • Website

    “You can’t keep blowing up the balloon. Let it deflate and clear out the bad. Yes, it will suck for a few short years, but that will soon pass. I’ve read you for a long time now. You seem a good and kind man, but you always seem to favor only one side and forget about the other side, the people who did not take on risk or debt. You are absolutely screwing them.”

    “Suckers think that you cure greed with money, addiction with substances, expert problems with experts, banking with bankers, economics with economists, and debt crises with debt spending” ― Nassim Nicholas Taleb

    Regards, onebornfree

  14. Bill H says:

    So, it sounds like you regard the Federal Reserve Bank’s balance sheet as part of US government debt?

  15. Daniel H says:
    @another fred

    The real interesting part comes when the people on top of the pyramid realize that the unproductive masses are a liability, not an asset.

    Actually, no. The real and really interesting part comes when the “unproductive masses” do finally understand what the 10% really think about them and decide to take revolutionary (left/right/religious…don’t matter) action, and then we shall see who is really an asset and a liability.

    • Replies: @another fred
  16. Mefobills says:
    @Anon

    Somewhat educated. LoL. Hudson is affiliated with UMKC. MMT theorists seek him out for advice.

    Hudson is delivering a framework for understanding how MMT can be misapplied.

  17. Talk about money, and all the gooks come out to play. Did your Paw not teach you not to talk religion in the club?
    When a thing sounds this complicated, you can be sure of one thing only: someone is bullshitting.
    I dare any of you economists to explain your nonsense without using jargon or ‘technical terms’. Five minutes explanation to a five-year-old. If you cannot manage that, you do not understand your subject matter. That explains why economists, even in this article, happily conflate theory, biased polls, biased prophesy-in-retrospect and bolshevik bullshit all in one sentence.
    It is not what you said, people, it is the way you say it that betrays your acceptance of the underlying truisms of so-called economics.
    The fisrt rule of economics? Multiply theories and interpretations until the common man throws his hands in the air and shouts “who can understand all this” and hires us as advisors to perform his financial functions (paraphrase from the Protocols of Zion).
    The solution is simple: Let us all see the books of public account. Not one of our esteemed academics even suggests honesty, only law.
    Honesty does not exist, anyway, so open those darn books! Then we’ll all see the law we live by.

    “You must understand, this system (of wealth aggregation to a few individuals) was not for a month, or a year, it is for ever. Eventually all this money will be competed out, and that’s when it will benefit everyone…(shrugs) …or something like that.” Jaimi Dimon, CEO of JPMorganChase, the “world’s most successful banker”, explaining to Congress the principle of Trickle-Down Economics.
    Any English translations, please?

    • Agree: Thomasina
  18. @onebornfree

    Yeah, Hudson is the one who is full of shit and you are the expert economist who’s got it all figured out. Right, of course.

    The Chicago School “Austrians” so beloved by Thatcher, Reagan and central bankers have had 40 years to prove that their methods lead to prosperous and stable economies…and they have unequivocally failed.

    Western economies, particularly the EU and the United States, are hollowed out husks rigged to hoover wealth into the overflowing pockets of the 0.1% while everyone else is fed flowery lies about prosperity and how great their lives supposedly are, while being left to go pound sand while the looting continues apace.

    The coronavirus fiasco has shown that the economies of the “free and democratic” west cannot handle even the slightest crisis without going into breakdown mode. And once again the sociopathic oligarchs who preach small government, competition and the end of the welfare state are lining up at the door of big bad gubmint with begging bowl in hand and given trillions of dollars while working folks and small enterprises are condescendingly lectured and contemptuously tossed a few coins.

    The economic philosophies promoted by the Chicago School, “Austrians” and libertarians are not fit for purpose and need to be abandoned and replaced or the societies on which they are based will collapse into failed states.

    • Agree: Mefobills, Daniel H
    • Replies: @onebornfree
    , @MarathonMan
  19. This excellent article seems to have been written by authors who know their subject.

    A layman, I had to read the article thrice to grasp its counterintuitive position. I am hardly sure that the article’s position is the right one (I know too little to judge that) but reading the article has improved my appreciation of the debate.

  20. onebornfree says: • Website
    @Squarebeard

    “The Chicago School “Austrians” so beloved by Thatcher, Reagan and central bankers have had 40 years to prove that their methods lead to prosperous and stable economies…and they have unequivocally failed.”

    There were/are , no “Chicago School “Austrians”, you frickin’ idiot. They are completely different, diametrically opposed schools of thought. Chicago school was/is is pro central banks [likewise non-economists Thatcher and Reagan], While the Austrian school is anti central banks. Hudson revealed his ignorance by lumping them together. You have followed in your idiot masters footsteps, it appears. “Stupid is as stupid does”

    No regards, onebornfree

    • Replies: @Mefobills
    , @james charles
  21. @Si1ver1ock

    A nonspecialist, I have read Hudson’s article thrice and at last believe that I grasp its point. Now I would like to learn the argument against Hudson. Whom and what should I read, please?

    Should I learn about MMT?

    My reading level is this: I hold an advanced degree in a STEM field but lack specialized knowledge of macroeconomics.

    • Replies: @james charles
    , @Si1ver1ock
  22. Anonymous[156] • Disclaimer says:

    Here’s a good take-down of MMT from the (New Keynesian) left:

    https://mainlymacro.blogspot.com/2016/03/mmt-not-so-modern.html?m=1

  23. It all starts with Economics. Economics is a fraudulent profession. Economics can’t prove anything, economists can’t predict anything without another economists saying the opposite and economists can’t even come up with why past events happened with a consensus OPINION.

    In short, Economics is just BS OPINION spread around by people with degrees that shouldn’t exist. If you can’t PROVE something, then that ‘profession’ shouldn’t be able to hand out PhD’s. Having a PhD in an opinion is worthless to society and does real harm.

    • Agree: Daniel H, Steve Penfield
  24. Rich says:

    America was never a “democracy “, was always a “financial oligarchy “. Although the blood of many a poor or middle class man was spilled in the founding of this nation, it was a country founded by the rich, for the rich. That being said, the people are well fed, well treated and have the opportunity to build at least a decent life if they stay off drugs, show up to work every day and refrain from producing too many illegitimate children.

    I realize this could all change, but no matter what crazy system emerges after this next depression is over, you can bet it’ll be the same “oligarchs ” sitting at the top.

    • Agree: Jedi Night
  25. Miro23 says:

    Instead, government money creation and Quantitative Easing has been directed to the finance, insurance and real estate (FIRE) sectors. The result is a travesty of MMT, not its original aim.

    Wall Street’s Financial capture of MMT to inflate asset prices, not revive the economy.

    And announced on April 9th there’s the $2.3 trillion of QE4 (not allowed to call it that) Fed buying any old rubbish and fueling the “Corona recovery” bubble, which will no doubt drive the S&P to new highs for further gaint speculative gains.

    • Replies: @Mefobills
  26. Mefobills says:
    @onebornfree

    They are completely different, diametrically opposed schools of thought. Chicago school was/is is pro central banks [likewise non-economists Thatcher and Reagan], While the Austrian school is anti central banks.

    Chicago school is free market stock-owned PRIVATE central bank. The PRIVATE central bank backstops the PRIVATE banking system. Who are the stock owners? The PRIVATE central banking system hypothecates money from nothing and at debt. In other words the money is conjured as “market” money and is controlled ostensibly by the “free market,” but in reality there are hidden “stock owners” trying to make gains at the public’s expense.

    Austrian School is for “market” money, where the money erupts from the ground as seigniorage on the money supply. This money is metal, where the scarcity of the metal provides for its value.

    The Austrian School also acknowledges that some form of Credit has to ride on top of the gold/Silver as metal money. There are arguments about how this credit should be “bills of exchange” and other angels dancing on the heads of pins, but the arguments fall down and the credit is always “private” conjuring.

    The nuances on how “credit” is created between the Austrian School and Chicago School is not so great – and hence they are lumped together as non-chartalist market derived money. This lumping together of the doctrines is accurate to my mind, and hence I give Hudson the win in this argument.

    This “market” emphasis of both doctrines is why Government is always the boogey-man and demeaned. Neo-liberal Chicago Skool Jews and Austrian Lolbertarian Jews demean government and make pretend about a “free market.”

    It is no coincidence that our merchant (((friends))) historically have stood outside of the city-states, and worked to “tear those gates down.”

    Neo-Liberal thought and Lolbertarian thought come from the same well-spring. Both are heavily Jewish “merchant” in origin, with luminaries of both thought constructs being primarily Jews.

    The reality is that money’s true nature is law, and it is both a distribution and control system. Money is part of the commons as everybody uses it. Ergo money is to be controlled to benefit the commons.

    But who gets to control money? The market god has been spun up as a mythical character, because somehow markets are above man, when in point of fact, they are man’s creation – the same as money.

    Both Chicago Skool Neo-Liberals and Lolbertarian’s carefully conceal the control nature of money, and rake off usury to their hidden control masters. The commons are then privatized so the hidden control masters can make gains. The usury rake off is socialized onto the commons, to benefit hidden privateers – who are usurers.

    Money has type, volume, velocity, and channeling among other factors. Both neo-liberal Chicago Skool monetarists and Lolbertarians make pretend that their market god can control all of money’s variables, when that contention is easily disproved by observing reality.

    Today’s reality especially gives lie to both Lolbertarian and Neo-Liberal assertions, proving them to be little more than vapor.

    Making a god of money, and making false assertions about “free markets” when there is no such thing is part of hypnosis to allow usurious “rake-offs” to fund nefarious activities of the tribe and their fellow usurers.

    Lolbertarians can easily become ideolgues, who cannot learn and adjust when basic facts are presented. One born free-dumb has fallen for the hoax of lolbertarianism, and gets butt-hurt when it is compared with Chicago Skool Neo-liberalism, when they both come from the same source, the same zeitgeist.

    Onebornfree-dumb shows us why Lolbertarianism is so dangerous, as it sucks in well meaning people and deceives them. Some adherents become so brain-washed, they can never escape.

    The plain fact of the matter is that money’s true nature is law, and is part of the commons, and is the blood stream of civilizations. We had better get a handle on it, or the future will not be so great.

    Hudson is doing good work to help us understand the nature of money, where it originated, and how to see things. He is putting spectacles on our noses.

    There has been far too much deception in the past, and deceivers who make their illicit gains, do not want to loose their easy life of control and income at the expense of the commons.

  27. Mefobills says:
    @Miro23

    And announced on April 9th there’s the $2.3 trillion of QE4 (not allowed to call it that) Fed buying any old rubbish and fueling the “Corona recovery” bubble, which will no doubt drive the S&P to new highs for further gaint speculative gains.

    That’s probably correct. Neo liberal chicago skool economic orthodoxy (and Lolbertarianism) has no mechanisms for discerning speculative “raking offs.”

    In order to channel money into the physical economy of producers and labor, rather than speculation, requires a control system, which forces that channeling.

    In other words, money has to be a public creation, either with state banks or nationalized money.

    Sovereign money is one form of chartalism, where banks remain private while the money supply is nationalized. This form of economy might appeal to those who want some sort of “arms length” from government. When you go to a bank, the banker is not a government employee, but is a private citizen who works for you. You pay him/her a fee for creating a new credit/debt contract.

    https://sovereignmoney.site/

  28. Usura [AKA "Macht"] says:

    Editing issue: Paragraph 13, line 2, should read: “public money creation”, not “pubic money creation”, no? 😉

    Interesting article. I especially like this part:

    […]But relinquishing resource allocation to the financial sector leads to its product – that is, debt – creating a crisis that requires unprecedented government intervention to “restore order,” defined as saving banks and financial investors from loss. This can only be achieved by shifting the loss onto the economy at large.

    The irony is almost Nietzschean.

    A question I have: why the insistence that mortgage debt and rent-seeking are non-productive forms of income de-facto? Small businesses can’t exist without property, and middle class families have for centuries improved their financial positions through the appreciating value of their homes, not to mention the middle to upper-middle class people who rent portions of their own property to locals, or other family members. These are hardly “oligarchs”. Why say these aren’t “real” production? It seems like an inherited Marxian concept, the idea that there must be a clear conceptual cleavage between labor and capital; I don’t find that distinction convincing. To be clear: the current mechanisms by which common people acquire and pay their mortgages are probably usurious, but to just lump real estate and rent-seeking as such into non-productive activities like finance comes off as ridiculous. Perhaps I just don’t get it.

    • Replies: @Mefobills
  29. @Daniel H

    Your response shows a moral stance, like you think that will “solve something”. Surely that reaction you speak of will happen, but then they will meet the new boss, same as the old boss.

    The only question is how much carnage and death fills the chasm between. It’s an old story.

  30. Mr. Hudson;

    I want to apologise for the slanderous comments from the great unwashed who verbally infest this site because nobody else will have them. To a greater extent than perhaps is prudent, you are casting your pearls before swine.

  31. Agent76 says:

    “It is easier to rob by setting up a bank than by holding up a bank clerk.” Bertolt Brecht

    May 21, 2013 Why the whole banking system is a scam

    Godfrey Bloom MEP • European Parliament, Strasbourg, 21 May 2013 • Speaker: Godfrey Bloom MEP, UKIP (Yorkshire & Lincolnshire)

    • Replies: @MarathonMan
  32. Michael Hudson has worked as a deep state propaganda agent most of his life. His flock loves him because he pretends to be opposed to the world’s great nexus of fraud and they pretend along with him. Note that this Fed Reserve propaganda project seemed to start along with the financial crisis. MMT is too inane to really garner any serious criticism, instead the web is filled with even lamer excuses for capitalism that no one but the even more clueless would accept.

    • Replies: @Mefobills
    , @Robert White
  33. Mefobills says:

    Here is a link from UTU, where he makes the case that Lolbertarianism beats sympathetically with American frontier thinking. We are no longer on the frontier.

    https://www.unz.com/akarlin/mask/#comment-3819297

    Libertarianism is a frontier ideology and pipe dream for the modern world at best, and a malignant / subversive replacement ideology that played a large part in weakening our post WWII ethnic self defense against Marxist ideology at worst. Hint: it’s the latter. It’s not a coincidence that false conservative Jewish gatekeepers for the Right love libertarian ideology.

    He makes other good points as well, and says it better than I can.

    for example, this:

    In my experience, committed libertarians usually have some single quirk of personality that expresses itself in at least one socially disapproved behavior (i.e., recreational drug use) that they defend by use of the libertarian ideology.

  34. JamesD says:

    Treating the symptoms and not the cause. There is an ancient term called usury, which is charging interest for non-productive loans. Examples include credit card debt, government debt, and college loans. Outlaw that, and the problem is cured. If we take the author seriously, the U.S. is better off carrying $24 TRILLION in federal debt than if the U.S. government had zero debt. You don’t need an economics degree to see the absurdity of this, just common sense.

    That the government needs to support “general demand” is stupid. You need savers, through their banking representatives, to pick through investment ideas and invest in the most productive. Is this error free? No, there will be mistakes, but overall you will have more successes, far more than a blanket policy by the Feds.

    Furthermore there is nothing wrong with a mild deflation, where prices slowly drop as productivity improves. I’m glad I now pay less for a new computer.

  35. Usura [AKA "Macht"] says:
    @Mefobills

    The nuances on how “credit” is created between the Austrian School and Chicago School is not so great – and hence they are lumped together as non-chartalist market derived money. This lumping together of the doctrines is accurate to my mind, and hence I give Hudson the win in this argument.

    In America, the difference is that currently a private bank is explicitly protected by the monopoly of government force, and in a true free-banking paradigm the monopoly of force would not exist, or so goes the libertarian argument. Consider America prior to the creation of the first bank of the U.S.: private banker scam artists (like “founding father” Morris) could dupe the public with their paper for a time, but such banks could and did go under constantly. The public marketplace was highly chaotic, but at least people like Morris couldn’t direct agents of the FBI to come arrest you and convict you in a kangaroo court if you tried to undermine his paper by printing your own. Which is worse, the monopolization of force and withdrawal of the legal right to explore alternative systems of exchange, or a public sphere where commerce is made cumbersome and very risky because of a proliferation of private banks? The libertarian preference is for risk over monopoly.

    I’m no longer convinced by this argument for a number of reasons, but to my understanding the Austrian claim is that this distinction is not subtle. And yes Rothbard and Mises were Jews (and Ayn Rand, and both Friedmans), but so was Alexander Del Mar, and FDR’s administration (another one of Zarlenga’s heroes, no?) was so infiltrated by Soviet Jewish agents that it’s basically impossible he didn’t know about and abet them.

    @Onebornfree @Squarebeard

    Paul Craig Roberts wrote a book called “Supply Side Revolution” which may contain a unique perspective on the debate you’re having. It traces the fiscal policy of the early Reagan administration, showing how they were maneuvered into Austrian-in-name-only reforms, probably through agents of the Bush family at the Office of Management and Budget, in opposition to the policy of Treasury, by repeated leaks to the press stressing over the effects of budget deficits to result from tax cuts; OMB’s claim that this would be inflationary would only be the case if the deficits were then monetized by the Fed, Roberts argues. Deficits reflect, rather than determine, the state of the economy. I recommend the book highly, perhaps he will weigh in with his current take.

    • Replies: @Mefobills
  36. @V. K. Ovelund

    If you wish to learn about MMT, then here: http://bilbo.economicoutlook.net/blog/ is a good introduction.

    • Thanks: V. K. Ovelund
  37. GeeBee says:
    @Mefobills

    Once again sir, many thanks for your continuing and inestimable input here; it’s an education and more. As for those sad ‘Lolbertarians’ whom you correctly point out are often beyond hope, for what it’s worth, I for one have undergone a profound change in my political views (although I was never infected by any of this Liberal nonsense – for most of my life I was a hard-core ‘Old Tory’ – I’m English of course). Indeed I stood for election for the Conservative party in Local Authority (i.e. not parliamentary) elections when in my early twenties. Until I retired in my mid-fifties a few years ago I remained more or less that way inclined.

    Once retired, however, there was a lot more time to read and learn. Gosh! How knowledge has the power to transform. I pride myself on having an open and objective mind, and for the past five or six years my whole worldview has been turned upside down. I shan’t bang on about this too much, but suffice it to say that my erstwhile belief in ‘the market’ and ‘small government’ and ‘rugged individualism’ has been replaced by a yearning for ‘the third way’ that was briefly on offer in the West, but which – inevitably -was brutally snuffed out in 1945.

    The state is the only entity in any, inevitably hierarchical society, that has the power to restrain and control those selfish and unpatriotic elements that inevitably descend upon any society where they have sniffed out money. These people are, more often than not, of a certain ethnic persuasion as well you know. They are self-serving parasites and they hollow out our very souls in ruthless pursuit of their own ends. Unless they are stopped, there is no hope for us.

    What this means in practical terms is that there must come an end to ‘democracy’ (at least as we now know it) and there must be a strong, well-equipped polity that has the knowledge and the will to serve the many not the few. We are often accused of being ‘commies’ (especially by the likes of Onebornfree and his dismal gang). Nothing could be further from the truth, in the respect that ‘communism’ is no more socialism than is Liberalism.

    For there are of course many flavours of true socialism. One of them Marx called ‘feudal socialism’. This paternal system, in place in England and elsewhere in the late Middle-Ages, was defended by, ahem, Benjamin Disraeli (we’ll skip over any discussion here – I am more interested in his words to Parliament in 1846, when he spoke in defence of maintaining the Corn Laws.) In his fine oration he said:

    When [in 1066] William the Conqueror carved out parts of the land, and introduced the feudal system, he said to the recipient, “You shall have that estate, but you shall do something for it: you shall feed the poor; you shall endow the Church; you shall defend the land in case of war; and you shall execute justice and maintain truth to the poor for nothing.”

    This, as I say, was recognised by Marx as a form of socialism, albeit one that he anathematised as ‘reactionary’. Very telling: the only form of socialism now ‘allowed’ by the left is that deriving from Marxist-Leninism (rather like the triumphal march of Protestantism in the sixteenth century swept Catholicism aside at the point of the sword and the end of the rope).

    One important – yet little understood – matter that I have come to understand is that ‘Communism’ and ‘Capitalism’ are inextricably part of the same toxic political system. Under ‘Communism’ the government owns big business and controls the media. Under ‘Capitalism’ the government is owned by big business and controlled by the media. Thus under both systems the same tiny elite gets to do what it wants. ‘Communism’ is not socialism (at least where socialism is defined as a system which delivers the greatest good to the many, not the few). Orwell’s ‘1984’ is as good a summation as any of what life under Marxist-Leninist ‘Communism’ is actually like. To quote from it: ‘a boot stamping on a human face forever’.

    ‘Ethical’ forms of socialism (as Spengler described National Socialism) are strictly verboten. They have been cast into the uttermost pits of hell by the tsunami of propaganda that has, since 1945, persuaded ‘the people’ into hating their salvation, exactly as in ‘1984’, where the arch-enemy Emmanuel Goldstein was actually agitating against the dystopian nightmare in which the people dwelt, but who was the subject to the compulsory ‘two minutes hate’ which all the ‘proles’ were forced to direct at him each day.

    I thank you once again for your stirling efforts!

    • Thanks: Mefobills
  38. Mefobills says:
    @Kathy Arizechukwu

    MMT is too inane to really garner any serious criticism, instead the web is filled with even lamer excuses for capitalism that no one but the even more clueless would accept.

    MMT is an analysis on how the current “banking” money system works.

    The analysis is fact based, and can be verified scientifically, using experimental method.

    Conclusions based on the facts, then lead to policy prescriptions.

    One conclusion about MMT, I disagree with – is the conflation of government being a sovereign issuer of money, with debt.

    Government is a sovereign issuer of debt instruments, such as TBills, not money. TBills are only later monetized by the private banking system.

    My quibble with MMT is based on a rational analysis, and I am not flinging ad-hominems.

    People who have the ability to think analytically, can appreciate MMT for its analysis. People who criticize MMT, usually blast away with epithets and don’t have anything constructive to say, because they have no rational fact based arguments.

    As Keynes would call them…. cranks. The Cranks have crawled out of the woodwork.

  39. Mefobills says:
    @Usura

    To be clear: the current mechanisms by which common people acquire and pay their mortgages are probably usurious, but to just lump real estate and rent-seeking as such into non-productive activities like finance comes off as ridiculous. Perhaps I just don’t get it.

    You don’t get it, because it is complicated. It is to be expected.

    Here is a quick decoder ring:
    ______________________________________

    All wealth springs from the land:

    Labor + Earth = Tool

    Tool+ Earth+ Labor = Machine

    Machine + Labor + Earth = Goods

    Machine + Labor + Earth + Energy = Goods in abundance.

    Add in money and smart machines:

    Smart Machines (including robots) + Labor + Earth (energy is part of earth in the form of oil, electricity) = Goods at a money price.

    The land is the earth, and if land is captured, then goods as prices are no longer at lowest cost value.

    Humans labor in the production system is to make goods as prices, and then prices fetch money from money supply. Money is then thrown backwards into the production system and distributed to labor.

    Today, money comes into being as hypothecations against land, approximately 70% of the total money supply. The reason for this is the malformed private banking system, which wants to grab your land in the event of default. There are lines of law that allow the grabbing of your land, especially in inevitable debt induced depressions. You do pledge your land as collateral to get a loan don’t you?

    But, since you (most people) work in industry to make prices, then there is a mismatch between how money is created and how prices are derived. Private bank money-supply relates to land, which then pushes land prices, which then lowers your ability to live at the lowest price cost.

    To make things worse, land is not taxed in accordance with georgist principles, hence the “free ride” of site value is not captured, and you get distortions like San Francisco, or Vancouver, where absentee land owners take rents and unearned income on their site value increase, when in fact they did nothing but sit on their ass and rake in profits – another form of usury.

    Land is included in FIRE sector (finance, insurance, and real estate) because they are tightly linked in the private banking system.

    You may remember Graham Leach Blily Act, which broke Glass Steagall, to then allow firewalls between insurance, commercial banking, wall street banking to come down? FIRE sector funded GLB as part of a scheme, proving that FIRE should be lumped together.

    What happened after GLB? A land bubble formed where Wall Street Banks pushed risk into the commercial “real economy” banking of everyday transactions. Then ultimately there was 2008 crash as the land price bubble was popped, which then took the real economy with it.

  40. Neoconned says:

    8I hate to sound nihilistic but as Keynes put it – “….in the end we’re all dead anyway…..”

    Some Keynesian economists have said that quote doesn’t mean what it obviously says but whatever it does….

    Therefore some variant of MMT should probably be implemented in the MEDIUM TERM…japan has been printing money for 20 to 30 yrs doing New Deal type projects promoted by Japan’s oligarchy party the LDP. They’re still solvent….

    In the medium term buy stable cryptocurrencies that are deflationary in nature and buy precious metals, farmland close enough to but away from urban centers, and of course guns, ammunition, and a good supply of fresh water.

    And hold physical cash….

    We’ll get MMT and deflation and UBI anyway because THERE IS NO ALTERNATIVE to automation and deflation besides genocide and hot civil war….

    • Replies: @Ondra Hada
    , @GeeBee
  41. @Kathy Arizechukwu

    Dr. Michael Hudson is pretty much the only Economist in the entire United States of America that I would be honoured to work under and attain a Ph.D. in Economics if he was in tertiary education, and running a graduate programme. If I could not study under Hudson my only other choice would be Dr. Yanis Varoufakis in Greece.

    I sincerely doubt that Hudson is an Intelligence propagandist.

    RW

  42. @Neoconned

    Yea it seems as if this virus has introduced a dry run for UBI. There wasnt even any resistance to it really. Of course it’s being called a “stimulus check” because people have lost their jobs, but who knows how many of those jobs are ever coming back.

    • Agree: MrFoSquare
    • Replies: @Neoconned
  43. Anonymous[247] • Disclaimer says:
    @Mefobills

    Mefobills, what is your opinion on the legitimacy and usefulness of gold clauses in private contracts?

    • Replies: @Mefobills
  44. gT says:

    TPTB don’t want the “real economy” supported. That will just increase the middle class numbers and the population overall, power to the people is not in their interests. New technology and processes developed by a vibrant “real economy” will weaken the hold of the 1% and strengthen the people, so rather hinder “development” and progress and the people by supporting the banking and finance sector (FIRE); and the 1%’s hold on power will last longer, maybe forever. Woe betide any country which tries to help its people by supporting the “real economy” instead of the banks and finance, the government of that country will soon be changed to accommodate a more co-operative vision.

    Guess where the next coup / colour revolution is going to be (people’s banks aren’t allowed, banking is only for the benefit of the 1%, or else …)

    https://www.fort-russ.com/2020/04/portillos-spirit-haunts-the-oligarchy/

  45. Mefobills says:
    @Usura

    Which is worse, the monopolization of force and withdrawal of the legal right to explore alternative systems of exchange, or a public sphere where commerce is made cumbersome and very risky because of a proliferation of private banks? The libertarian preference is for risk over monopoly.

    Lolbertarianism and Neo-Liberal thought constructs cannot and do not account for speculative activity that is harmful to the commons. In other words, the libertarian preference for risk over monopoly is a canard, because the ideology itself leads to monopoly. It is a cover, sop or camouflage, so rent seekers can hide in plain sight.

    All gains are equal, and if you didn’t get yours… well there must be something wrong with you.

    Referring again to UTU at link I posted above:

    There was no push for libertarianism in an age when the so called libertarians were not protected by large nations as they are today, and were subject to large group competition. There were no sane, non-suicidal early Germanics, Levantines, or Romans looking to be “free” from their tribe. It would have meant death.

    Also to your point:

    Which is worse, the monopolization of force and withdrawal of the legal right to explore alternative systems of exchange

    Law and Force are flip sides of the same thing. Taxation is force. Taxes are fiscal policy, and money is monetary policy; taxes and money .. flip sides of the same thing and related to force. To argue against this is like getting mad at gravity for making you fall down and bump your head. There is always force and hierarchy.

    If you “hide” the ruling hierarchy and then give it money power, then why would you be surprised when nefarious things happen?

    The real questions are, “How is force deployed?” “How is the hierarchy constructed, and who benefits?”

    My favorite type of money system is to nationalize the money rather than have public banks. Both are public options. I’m not an enemy of the good, because what we have now is crap squared. Privateer money systems have shown themselves as complete failures.

    If you nationalize the money into one headwater for creation, say a “monetary authority,” then an armed citizenry knows where to point their guns. Maybe even Lolbertarians can agree to that.

    • Replies: @Usura
  46. Neoconned says:
    @Ondra Hada

    I’ve posted the links before in Steve Sailers sub-blog on here but studies ranging from the OECD have automation taking ~10% of jobs by 2030 on the low end and a 2013 study from Oxford Uni. in the UK from Frey & Osbourne put automation as taking “25% to 47% of jobs” by 2030.

    Automation is comingGLOBALLY….its not just our govt who will have to figure out solutions to this mess.

    UBI combined with a piecewise mix of welfare/pension schemes and New Deal type Japanese public works projects seems to me preferable to hot civil war….which will probably come anyway….southern white elites are greedy & stupid and still long for some vestigial form of slavery to return….they may get it but i see if we do get a “hot civil war” i see population transfers akin to what you saw w the Partition of India:

    https://en.m.wikipedia.org/wiki/Partition_of_India#Independence_and_population_exchanges

    …..as could be seen on the 1980s biopic of Gandhi.

    Mexicans and Central Americans removed to the SW states….blacks to the American South. And then probably southern whites back to the North etc….perhaps a new border set up w fences around the Mexican Cession and say the Mason Dixon…..

    • Replies: @Ondra Hada
    , @Anonymous
  47. Neoconned says:
    @Mefobills

    Since some cryptocurrencies are inherently deflationary in nature do you think Austrians could use a cryptocurrency as a substitute for physical metals?

    • Replies: @Mefobills
  48. Kouros says:

    Add to the discussion the rabid fury of the financial sector to block any attempts to let US Post Service to also function as a bank, the way Japan Post does, servicing every corner of the country at rock bottom costs… The Economist has for years berated Japan Post for this trait, daring to take away profits from the private banking sector…

    • Replies: @Mefobills
    , @dogbumbreath
  49. Mefobills says:
    @Anonymous

    All contracts are three party.

    Creditor, Debtor and the third party adjudicator.

    The adjudicator is brought into play when creditor and debtor have disagreements. Or, the third party can write up the contract at point of inception.

    In the modern era, creditor debtor contracts are usually monetized, where the contract is satisfied with the transmittal of money.

    If the money has been made “legal” then the third party would be the legal system or its representative.

    Gold no longer receives the King’s stamp, hence it is not money. But, people like to hold it, and hence has value.

    If you specify in your credit/debt contract that X amount of gold is to transfer given X situation, then that is a binding contract that would likely stand up in a court of law. In the same way, if you demanded a lawn mower transfer or some other “goods or commodities” it would also be binding.

    Humans since the very beginning, have created credits and debts with each other. If one party felt sufficiently put out, they would use force and bash in the head of the other party.

    To expand on my earlier comments, there is always force, hierarchy, credits and debts.

    And lolbertarians who get mad at the notion of a third party interlocutor are sophomoric in the extreme. The third party dispensing justice, is part of our evolutionary heritage.

    • Replies: @Anonymous
  50. archeon says:

    Wow , when such intellects leave you gasping in their dust , what a pleasure . Thank you

  51. @Neoconned

    Mexicans and Central Americans removed to the SW states….blacks to the American South. And then probably southern whites back to the North etc….perhaps a new border set up w fences around the Mexican Cession and say the Mason Dixon…..

    Funny you mention a partition like that because White Nationalists have proposed a similar sort of division in the United States, although ideally under peaceful conditions. The program consisted of paying people to leave the European portion of the United States, rather than forceful expulsion. As well as a liberal ( multicultural ) partition in the New York Area …

    • Replies: @Neoconned
  52. Anonymous[156] • Disclaimer says:
    @Neoconned

    “ southern white elites are greedy & stupid and still long for some vestigial form of slavery to return…”

    They have Internet in loony bins?

  53. Anonymous[156] • Disclaimer says:
    @Mefobills

    There are only two parties, creditor and debtor. Any third party arbitrator to handle disputes must be agreed upon prior to the agreement by both signatories, so he’s at most part of the contract, not a participant on equal terms with the other two.

    • Replies: @Mefobills
  54. Mefobills says:
    @Neoconned

    Since some cryptocurrencies are inherently deflationary in nature do you think Austrians could use a cryptocurrency as a substitute for physical metals?

    I think Austrians should hold gold as a hedge. I think Austrians should own real assets that can produce, especially land that can produce crops, or business that makes things that people want. And even further, do it without debt so privateer banker’s cannot harvest you for your life energy.

    Crypto-currencies are market money, and not good for taxes. Like gold, they are an escape valve. I’m for an escape valve, because the current system is mal-formed.

    What I want for Austrians is life in full, just as I would want that for everybody.

    With regards to money’s true nature being law, there is nothing we can do about that. It is like gravity – it just is.

    If humans choose to pervert the law for their own selfish gain, that is a different story than the nature of money. If humans choose to ignore usury, rents and other illicit gains within their civilization, then that is another story. That civilization won’t last long.

    My beef with neo-liberals and lolbertarianism, is that these constructs short-circuit critical thinking, and instead installs false narrative that makes people malfunction. It takes quite a lot of energy to undo bad thinking. Propaganda depends on the human brain myelin sheathing the first information it hears. To undo that “first” information is 3-6 times harder.

    I’m sure you have experienced the difficulty of overcoming what you thought you knew.

    • Replies: @Anonymous
    , @Neoconned
  55. Mefobills says:
    @Kouros

    Add to the discussion the rabid fury of the financial sector to block any attempts to let US Post Service to also function as a bank, the way Japan Post does, servicing every corner of the country at rock bottom costs

    The speculative sector of finance capital wants to buy up Postal office land cheap, and then sell it high, while pocketing the profits – like they did in England.

    Hudson calls this “privatizing the commons.” And you are also right in that a public bank option will take away the illicit gains of the privateer banking system.

    I created a system for Douglas style credit for medical, which includes using post office banking for direct injections. This of course is anathema to the finance capitalists ensconced in wall street and corporate board rooms.

    https://www.unz.com/proberts/a-new-world-is-being-born-what-will-it-be/#comment-3831413

    1) Create Douglas Health Debit Cards
    2) Fill said Cards with debt free money
    3) Health Money is given to each child born
    4) The Card stays with the new citizen for life, and out of it they can pay for medical bills. The objective is to inject debt free money into the population to pay for the gap. (Social Creditors will know what Gap theory is).
    5) The card also pays for a third party bonded agent. The bonded agent works for you – he/she is a private citizen who is your go to person for medical advice, and he/she makes sure you are not being screwed over with your money. He/She also makes sure you are not screwing over the system yourself. The third person also argues the case for you when you stop paying money out of your account, and gap insurance kicks in.
    6) Card also pays for end of life insurance, and gap insurance. Gap insurance is if you get into some sort of extreme medical situation hence you cannot go bankrupt.
    7) All medical providers have to list their pricing structure – that way you can shop for lowest prices/best services which brings in benefits of competition. Germany is an example of medical pricing being available for comparison shopping.

    To issue Douglas Medical Cards, it would be done through a “postal banking system.” This would revitalize post office into a public bank, and would also be a single point of contact.

    The argument is not private health care vs socialized health care. That is a dialectic. Always beware of dialectic.

    • Replies: @Neoconned
    , @Ondra Hada
  56. Neoconned says:
    @Ondra Hada

    For the record i am NOT a white separatist or supremacist nor am i a xenophobe or anti Semitic. Im even quite tolerant towards the LGBT community. Hell I’ve seriously thought about moving to Asia as i see this country sputtering about and my generation getting anally raped by the economic circumstances we find ourselves in. I’m pushing 40. I have close to a grand(that’s it) saved for retirement. I owe the feds ~30k dollars in student loan debt etc

    Assuming my health holds up i jave 25 yrs left of working before i die or my body falls apart. We’re in our 2nd human induced recession in what? 9 yrs? As in DEEP RECESSION….i mean what is this shit? Seriously…..when in the early 00s when i got out of high school you would have told me this crap would have happened i would have laughed at you & said you were nuts.

    I may yet immigrate….

    Its just I HATE WAR and i see what has happened over the past century in places like India and the ME

  57. Anonymous[156] • Disclaimer says:
    @Mefobills

    “ With regards to money’s true nature being law”

    What do you mean by this? Are you referring to money’s role as legal tender, payment for taxes, etc?

    • Replies: @Mefobills
  58. Neoconned says:
    @Mefobills

    I had never really studied the economic history of WW2 but i found it interesting that Hitler& Stalin had set up some kind of trade credit system….

    Unz user “nokangaroos” had a little conspiracy theory that that was why international bankers so enthusiastically supported war on Germany at the time….an interesting theory but one i find “interesting, but wrong”….

    History certainly would have been different had there been a Soviet/Nazi/Japanese axis…..

    • Replies: @Anonymous
    , @Mefobills
  59. @Mefobills

    Did you know that the Federal Reserve got rid of Reserve requirements last month?

    https://www.federalreserve.gov/monetarypolicy/reservereq.htm

    Someone linked to me on another website. Not sure if it really changes how the Private Banks will operate, but interesting timing along with this COVID thing.

    • Thanks: Mefobills
  60. @onebornfree

    The Keynesian era saw massive increases in wages, no huge debt overhang, no bank runs, no bailouts, huge improvements in infrastructure, massive technological changes, enormous increases in human welfare, life expectancy and so on. The post Keynesian era has stalled or reversed all that.

  61. onebornfree says: • Website

    “With regards to money’s true nature being law”What do you mean by this? Are you referring to money’s role as legal tender, payment for taxes, etc?”

    You’d best ignore it .

    It’s just more pseudo-intellectual commie obfuscation designed to impress dimbulbs and other commie know-nothings . That is, ignore it unless you are yet another gullible commie fool and it sounds like music to yours, [and all the other idiots here]ears .

    All this particular individual ever posts here is long-winded, pseudo-intellectual Marxist gobbledegook. Don’t get sucked in, the Marxist Hudson and this cretin continually fantasize about how they can run everyone’s lives for them via their own personal favorite monetary policy[etc. etc.] ; it’s an endless stream of blather and Marxist propaganda that only fools morons, know-nothings, dimwits, dunderheads and lintheads, although, admittedly , the vast majority of commenters here fall easily into those categories.

    Regards, onebornfree

  62. @onebornfree

    Flee from onebornfree, everyone. He wasn’t.

    • LOL: Mefobills
  63. @onebornfree

    One born fried. As in Milton Friedmaniac.

  64. Anonymous[282] • Disclaimer says:
    @Neoconned

    You find it wrong because you’re desperate to uphold your own [demonstrably wrong] belief in WWII as a “good war” where the “good guys” won, because you like jews and fags and blacks and stuff, as you’ve let us know. I’m sure you believe that the outcome you’re experiencing in your own life is as a result of some kind of corruption of the postwar path, rather than the direct result of it. Nazis under your bed and in your closet and all that.

    • Agree: Ondra Hada
  65. @Kouros

    Canada has also run into road blocks setting up a Postal Banking System from the usual suspects. Germany’s Postal Bank was a success until it was privatized and acquired by Deutsche Bank.

  66. Mefobills says:
    @Anonymous

    Money has many properties including “legal tender, payment of taxes, type, velocity, channeling.”

    It also has a time function embedded, especially bank credit as money. It gets recalled to the ledger at an accounting rate, which in turn is a weekly or monthly function, does it not?

    When you distill it down to it’s core, money is a function of the law. We used the law to bring it into existence, and every-time the law is changed, the money system behavior changes.

    To say it comes out of the ground as metal… we’ll that is just plain BS. Money isn’t metal, and it isn’t credit in the same way that math is an abstraction but still real. Do we say that math is metal?

    Basically, the pea and shell crowd wants to take rents on your life energy, and they will adjust the law to do it. They can do this because there are doctrines that blind you to reality.

    Usury funds hypnosis.

    • Replies: @Anonymous
  67. Mefobills says:
    @Neoconned

    I had never really studied the economic history of WW2 but i found it interesting that Hitler& Stalin had set up some kind of trade credit system….

    Schacht’s trading banks scared the crap out of the “international bankers.”

    The trading banks bypassed the rents that the “international” want to take on all international transactions.

    So, Germany’s trading banks, and Germany removing itself from the world trade system, while simultaneously using its own internal credit, was a step too far. The trading banks were used in various countries, not just Russia.

    This is why Germany was attacked. WW1 was basically the same, as Germany was running Frederick List’s “American System of Economy,” and Germany was unbeatable in the marketplace.

    http://www.renegadetribune.com/winston-churchill-germanys-unforgivable-crime/

    Winston Churchill

    Germany’s most unforgivable crime before the Second World War was her attempt to extricate her economic power from the world’s trading system and to create her own exchange mechanism which would deny world finance its opportunity to profit.

    • Replies: @Neoconned
    , @GeeBee
  68. @onebornfree

    Go and join Joe McCarthy in his grave, fried maniac. You’ll love it. Childhood brainwashing. Anything but free.

  69. “The rentier class not only was the major income recipient of the economic surplus, it controlled government, via the upper house – the House of Lords in Britain, and similar houses across continental Europe. Today, the Donor Class controls electoral politics in the United States, via the Citizens United ruling. Political office has become privatized, and sold to the highest bidders. And these are from the financial sector – from Wall Street and financialized corporations.”

    And what do the House of Lords, political donors in the USA, and Wall street have in common?

    Massive Jewish over-representation. The author is apparently too polite to point out the rather obvious connection.

    • Replies: @Mefobills
  70. Art says:

    Hmm – maybe Andrew Lang’s 1000 dollars a month given to the 80%ers is a better way to stimulate growth vs. banking money being given directly to the flush 20%ers. Now the banking money never gets to the folks – it just circulates between the 20%ers.

    The 20%ers would have to earn their way in the marketplace. This market solution will not get in the way of competitive production of goods and services. Vigorous market competition would stymie inflation.

    The 1000 dollars will turn over many times in a year – and generate many tax dollars.

    • Agree: Mefobills
  71. Neoconned says:
    @Mefobills

    What do you mean by “market money”?

    Can you give me a technical definition?

    • Replies: @Mefobills
  72. Neoconned says:
    @Mefobills

    VERY INTERESTING take.

    1) if i may ask….are you some sort of academic? Or just a well read jack of all trades type?

    2) Can you provide further reading both online and perhaps with a few books in advance.

    I’m still not totally convinced but this is definitely interesting reading…..

    • Replies: @Mefobills
  73. “Deficit spending was seen as providing public employment and hence consumer spending to absorb enough production to enable the economy to keep producing at a profit.’

    Key principle, Keynesian models were originally applied to economies in profit or in the black. Keynesian economics has never worked in margins that in deficit and the kinds of debt we are experiencing today — totally out of range for the Keynes’ theory.

  74. Mefobills says:
    @jbwilson24

    Massive Jewish over-representation. The author is apparently too polite to point out the rather obvious connection.

    The author is smart not to point out obvious connections. Naming the Jew can kill your career… or worse things can happen to you -if you know what I mean. Hudson is obviously very smart and operating at the highest intellectual level, and quite probably will go down as one of the greatest economists who has ever lived. Hudson’s work on ancient near east, and biblical debts change man’s conception of his past, and hence mankind’s future. The past informs the future.

    Hudson has already named (((Hillel the elder))) as a major malefactor in history… Hudson has done enough.

    Others, such as yourself can make connections for him, thus you are doing a signal service.

    Also, there is the honorable Jew (HJ) phenomenon, and these sort of folks have to be protected. They are swimming upstream against tribal leaders (agents of mammon) and said HJ’s have put their lives in danger.

  75. Mefobills says:
    @Neoconned

    Any kind of money not created by sovereign will be market derived money.
    ________________

    Bitcoin is mined into existence on a computer. It is hard to create, and hence bitcoins are scarce. The utility of bitcoin is its security and ability to settle transactions across national barriers.

    Hence bitcoin is a creature of the market, and not law. It has no lines of law other than what the creator gave it. It is not good for taxes, and likely if you get stiffed there is no legal recourse. The bitcoin system works on faith that their security is solid and that people will play by the rules.

    Our ((friends)) historically have liked gold, because it can be melted down and then spirited out of a country when you are kicked out. You can also do tricks by issuing paper against your gold stores. Hence ((goldman, silverman, etc.)) For example, when King Edward kicked the Jews out of England, they were allowed to take their gold and silver with them. This then collapsed the English economy, and ushered in the King’s Talley sticks.

    So, the gold was King’s money when it got the King’s stamp, and it was market money when it was spirited across national borders, and melted down into gold by weight.

    Talley sticks were the kings money, which everybody used, and had lines of law attached. You had to pay your taxes in the King’s money. Debts were settled with Talley or divisions thereof. (Sticks would be divided down by using script at large fairs – like Mayfair. So, don’t let the large denomination fool you.)

    Private bank notes prior to the Federal Reserve, were paper which rode on top of Gold in a 10:1 ratio. The paper was supposedly backed by gold, but that was always a canard. The paper would fall off in power by geometric distance from the bank until the Treasury got involved and created the national banking system. This then guaranteed that bank paper money could be redeemed far away from an issuing bank. If you took a loan out in Midland Texas, and spent Midland Bank money in Peoria Illinois, the Midland bank money (bank credit) could find its way home to its debt instrument.

    Private banking is market derived money. The bankster money trust wanted its bank credit good for paying taxes, and they got what they wanted in 1912 when it was sanctioned by law. So, market derived money overtook the sovereign, which is against the Constitution and wishes of the founders.

    Today’s events have a straight line of causality to 1912.

  76. Mefobills says:
    @Neoconned

    1) if i may ask….are you some sort of academic? Or just a well read jack of all trades type?

    I had to guide my company into China, as the first large industrial concern to do so.
    While we were giving away our Patrimony to the Chinese, I (and others) wanted to know why.

    I then worked with a team of engineers, often in our spare time, to figure out the money system and why we were operating against our best interests, especially as we gave away hard won key technology. We were making monetary gains in the present, but screwing the future for simple wage arbitrage.

    Basically, it was a small team that worked things out. Engineers figuring things out is what we do.

    So you could say it was academic in a way, just not the usual way.

    Of course we eventually went bankrupt because of our ill-advised and blinkered moves. Now the rot has spread to the economy at large, and the same forces are at play.

    • Replies: @Neoconned
  77. Neoconned says:
    @Mefobills

    I’m at work right now on my break so i can’t write a super detailed response but if i may inquire further….of course if youre comfortable going there….are you an accountant? Engineer? Corporate bigwig? Imeet all kinds of interesting ppl on this site….

  78. GeeBee says:
    @Neoconned

    ‘as Keynes put it – “….in the end we’re all dead anyway’

    It is worth bearing in mind that Keynes was a homosexual. Such a man has no concept of Blud und Boden therefore. As such, I for one regard anything he says with a degree of suspicion.

  79. GeeBee says:
    @Mefobills

    Well said. ‘Neoconned’ is by no means alone in finding himself unable to surmount the morraine of propaganda, whose purpose was and remains somehow to justify the atrocious and criminal war which Britain and the USA were determined to wage on the Third Reich – for nothing more than the precise reasons you state. My tactic whenever I find myself in conversation with the likes of poor old ‘Neoconned’ is casually to ask whether they believe that Iraq had ‘weapons of mass destruction’ or that Gadaffi’s Libya constituted a real threat to world order. They usually answer with a confident ‘No’.

    I then suggest to them that these examples of ‘regime change’ were perpetrated not to counter the stated threats, but to satisfy international bankers, and others in the Military-Industrial complex who form the matrix of economic and political power in the West. In other words, the stated excuses were nothing more than propaganda, concocted in pursuance of what are base and nefarious deeds of bloody war, waged on largely innocent ‘enemies’. They usually agree.

    It is but a small step from here to point out that the Second World War was the first (and by far the largest and bloodiest) of these exercises of ‘regime change’, and that all they think they know about Adolf Hitler and the Third Reich – and indeed about Winston Churchill and FDR – is little more than this same propaganda.

    • Agree: Mefobills, dogbumbreath
  80. “The effect of this swap was much like a deposit inflow. It enabled banks to ride out the downturn . . . ”

    Probably a ‘good thing’?

    “Guarantees would have been the easiest form of intervention to present politically because they would have emphasised the true purpose of government assistance to the banking system: to prevent the savings of depositors – especially wholesale depositors such as corporations, foundations, savings institutions, and local governments. These depositors would have seen trillions of dollars in payrolls, pensions, and working capital evaporate if the banks were allowed to fail. Guarantees would have underlined the fact that the main beneficiaries of all bank rescues were not greedy bankers or shareholders but wholesale depositors whose money is not covered by retail guarantees.”
    A. Kaletsky: Capitalism 4.0. P150.

  81. Anonymous[156] • Disclaimer says:
    @Mefobills

    “ We used the law to bring it into existence, and every-time the law is changed, the money system behavior changes.”

    Still not clear to me what you mean. Many things change when laws change, what is special about money in this regard?

    • Replies: @Mefobills
  82. Neoconned says:

    https://www.the-sun.com/news/678192/essential-workers-25000-hazard-pay-hero-fund/?utm_medium=browser_notifications&utm_source=pushly

    Chuck Schumer is promoting a scheme to give 25k to all “essential workers” for “hazard pay”…..this includes everything from nurses to cops to fast food workers to janitors….THIS WILL NEVER HAPPEN. It can’t.

    Too many low wage workers would quit their jobs….i knew UBI was inevitable….i just didnt think it would be this rapid….

  83. small group of people seize the printing press and the political class of the united state,uses it to control the rest of the “democracies”of the west,is using super computers to permanently loot the entire world,including the citizens livin in the host nation (usa),when the day will come when we will quiestion this “sacred” “democratic system?
    ,

  84. @Squarebeard

    Sorry but I believe the Austrians and libertarians have been ignored. Think those bail outs in 2008 were ‘libertarian’? Nope. Libertarians would have let the whole ‘sucker’ go down. Iceland was the only country that took this route and within a few years, they were running again without all the debt.

    I side with the libertarians but it has blind spots as well. Repealing Glass-Steagal regulation was a mistake as was allowing CEO’s and financiers to strip mine companies with share buybacks. Governments are needed to enforce rules. The idea of the government to provide for everyone with free sh!t is also not libertarian as it destroys personal responsibility and ultimately will make everything worse.

    Libertarians will still be ignored and the monetarists, socialists, and banksters will all fight it out as the republican burns to the ground.

    Shrug.

  85. Usura says:
    @Mefobills

    Law and Force are flip sides of the same thing. Taxation is force.

    Of course most libertarians would agree with you that taxation is force, and many would probably say theft.

    If you “hide” the ruling hierarchy and then give it money power, then why would you be surprised when nefarious things happen?

    The libertarian argument is that cloaking monetary and fiscal powers in the quasi-religious ceremonial trappings of a national government is hiding it. After all, that is why the Fed pretends it’s a government institution by putting the word “Federal” in its name.

    A sovereign money system would no doubt be better than our current hybrid, which leverages the pomp of government, but hides the identities of its shareholders…if you could keep it. President Jackson was nearly assassinated for his attempts to eliminate the second “bank of the U.S.”, and President Lincoln was assassinated, perhaps because of the risk to the financial class of him continuing to issue greenbacks. Knowing “where to point our guns” has a flaw, because the rent-seekers then also know where to point their guns, and historically they have been more likely to pull triggers. This isn’t a claim that monetary policy is futile, just that the centralization of that power has been attempted repeatedly, and has repeatedly led to monstrous private-public hybrids like the Fed.

    We must know who the money-creators are rooting for, whether private or public; the question of in-group is prior to monetary policy. National identity seems overly broad to libertarians, and in a country where immigration laws are not evenly enforced, and modern interpretations of the constitution recognize no non-propositional aspects of American identity, who can blame them for wanting to break free? Popular libertarian sentiment is using privatization as a stand-in for a desire for tribalism; the idea that every libertarian is “duped” by heirarchy-hating pothead defectives and/or “financial oligarchs” isn’t an accurate take. Most of the American financial and academic class are very publicly in the camp of neo-liberalism, or the social-democracy fad; libertarianism is no more weaponized and co-opted than other ideologies. Its advocacy of “freedumb” as you call it, in the context of a system which does everything it can to mitigate natural hierarchy through its tax and welfare policies, must be interpreted as a desire for a return to hierarchy, not a critique of it. This is partly why there is such cross-over between libertarians and fascists in the online era; both desire radical heirarchization, but the former often find themselves trapped in a society with a liberal lineage, and so pick a contextual solution rather than a more principled one.

    • Replies: @Ondra Hada
  86. @Agent76

    Video was spot on. He was of course completely ignored and marginalized I’m sure.

  87. Mefobills says:

    Libertarians will still be ignored and the monetarists, socialists, and banksters will all fight it out as the republican burns to the ground.

    Libertarians should be ignored. The ideology ignores rents, unearned income, usury. It cannot discern between productive and unproductive capital. It has no mechanisms for channeling state credit into the real physical economy.

    It is actually dangerous, because it is a blankey for people who want to see the world in simple black and white terms. It is something like bed time stories for children.

    The first step of grief is denial. Go ahead and retreat to your safe space.

    Hudson has resurrected classical economy, which was almost erased from history, because it has the ability to see the defects in liberatarianism, monetarism, socialism and all the others. I wish I had known about classical economy when I was digging through the great mass of world economy – which took years of effort.

    I had to learn things the hard way… the very hard way, while you are being handed salient data on a silver platter.

    Every kind of ism can become unbalanced and cause problems. The republic will burn to the ground precisely because it has been usurped and blinded; libertarianism is blinkered and because it is blinkered, it is dangerous and unhelpful and not up to the task. It is the wrong tool for the job.

  88. onebornfree says: • Website
    @onebornfree

    To summarize, this site is basically nothing more than a thinly disguised circle-jerk wank fest for commies, socialists and associated pea-brains, ideologically essentially no different from the New York Times.

    Hudsons purpose at Unz.com is that of a court [ie state approved] “economic intellectual”; in this regard he serves the exact same purpose as does the fake economist Krugman at the NYT, and spouts almost the exact same state-approved “intellectual” gibberish.

    The purpose is to make half-baked, state-sanctioned “solutions” to economic problems sound reasonable and credible to the average dimbulb slave, via a thin veneer of painted on fake credibilty achieved via establishment “credentials”, plus pseudo-intellectual verbosity and obfuscation, in the time-honored tradition of Krugman, Marx, Keynes, and many other charlatans besides.

    Unz.com is therefor designed as safe place where all of state-worshiping would-be mini-dictators can get together and blather/fantasize /circle jerk about how, if everyone bows to _their_ particular top down set of rules, and does things _their_ way, everything will then be “hunky dory”.

    If one rejects laissez faire on account of mans fallibility and moral weakness, one must for the same reason also reject every kind of government action.”Ludwig von Mises

    “Every socialist is a disguised dictator.”
    Ludwig von Mises

    These Unz clowns cannot even run their own lives successfully, and yet have the hubris to fantasize that they, via ever more government, are fully capable of running everyone elses life for them better than the individuals themselves.

    Quite sickening really,🤮 , although I usually find it more therapeutic to laugh at all of these pretentious, verbose, pseudo-intellectual, self-aggrandizing, know-nothing know it alls and all of their grandiose “save the world via more government” plans.

    Modern Monetary Theory- AKA Magic Money Theory:

    Which brings me to, of course, their latest braindead “economic theory” skam , aka “Modern Monetary Theory”[MMT] , as presented here by the local in-house fake economist rep. Hudson; as he circle-jerks for ever more state-enforced, fake money creation [ie MMT], when the plain fact of the matter that the US and the world has been consistently suffering from the economy and life-destroying effects of fake money creation [ie MMT, which should really be renamed “Magic Money Theory”], ever since the creation of the Fed.

    Magic Money Theory is nothing new, its just been given a new moniker [the old “lipstick on a pig”, trick, basically], to make the scam sound more “scientific” , intellectual [and therefor “correct”] to the average pro-state dimbulb slave who is naive enough to believe the pseudo-intellectual , pseudo-scientific gobbledegook and obfuscations dished out by scam-artist court intellectuals such as Hudson,Krugman,Keynes and similar.

    And so it goes…..

    “Regards” onebornfree

  89. Mefobills says:
    @Anonymous

    “ We used the law to bring it into existence, and every-time the law is changed, the money system behavior changes.”

    Still not clear to me what you mean. Many things change when laws change, what is special about money in this regard?

    If I’m the king, and I decide to demonitize old gold coins in favor for a new re-issuance, then what happens?

    The old gold coins come out of hiding/savings in order to be melted down into a new stamping. The old gold coins by law became demonitizied, and they received a kick that gave them velocity (velocity means movement, where before they were static.)

    The law was changed, and the behavior of the money was changed. Your behavior was forced to change. Maybe as the King I do a tax on the restamping, and then spend the tax on clearing the harbor, now the new money is circulating in the economy and doing something useful for the commons.

    By the way, that is actually how they flushed gold coins out of hiding in the past – as gold is depressionary.

    Earlier Ondra was informing me how bank reserve requirement was being driven down to zero, and was wondering what effect that would have. Money exists within a framework, it is abstract and related to the law. Reserves going to zero will mean nothing by the way, as banks are not reserve constrained. Driving reserves down to zero means that banking monetarists are out of bullets, and their world view is crap squared.

    Fiscal policy is what is needed now.. change in tax law and direct spending from Treasury into the real economy. Treasury money in turn has different properties than bank money.

  90. @Usura

    A sovereign money system would no doubt be better than our current hybrid, which leverages the pomp of government, but hides the identities of its shareholders…if you could keep it. President Jackson was nearly assassinated for his attempts to eliminate the second “bank of the U.S.”, and President Lincoln was assassinated, perhaps because of the risk to the financial class of him continuing to issue greenbacks. Knowing “where to point our guns” has a flaw, because the rent-seekers then also know where to point their guns, and historically they have been more likely to pull triggers. This isn’t a claim that monetary policy is futile, just that the centralization of that power has been attempted repeatedly, and has repeatedly led to monstrous private-public hybrids like the Fed.

    The Rentseekers are ALREADY in charge. The International Debt Salesmen have responded viciously to their power being taken away in the past, yes, if anything this is a call for more fervent resistance to Private Banking Power. I am confused that you are attempting to point out a flaw of Sovereign Money by saying that criminals would not like it.

    When you say “centralization of power has been attempted repeatedly”, you are insinuating that Power is not already centralized, in contrast to the past. That is not correct. Sovereign Money would rather change the centralization of Money Issuance from Private Banking to the U.S. Government. Moreover, such Money Issuance would have the opportunity of being issued without unnecessary DEBT!

    • Replies: @Usura
  91. Mefobills says:

    https://www.ft.com/content/664c575b-0f54-44e5-ab78-2fd30ef213cb

    The UK has become the first country to embrace the monetary financing of government to fund the immediate cost of fighting coronavirus, with the Bank of England agreeing to a Treasury demand to directly finance the state’s spending needs on a temporary basis. 

    The move allows the government to bypass the bond market until the Covid-19 pandemic subsides, financing unexpected costs such as the job retention scheme where bills will fall due at the end of April. 

    Although BoE governor Andrew Bailey opposed monetary financing earlier this week, Treasury officials felt it was best to have the insurance of the central bank willing to finance its operations in the short term.

    It highlights the extraordinary demands on cash the government has experienced in recent weeks, which it feels it cannot finance immediately in the gilts market.

    In a statement to financial markets on Thursday, the government announced it would extend the size of the government’s bank account at the central bank, known historically as the “Ways and Means Facility”, which normally stands at just £370m.

    This will rise to an effectively unlimited amount, allowing ministers to spend more in the short term without having to tap the gilts market. In 2008, a similar move saw the facility rise briefly to £20bn.

    The scale is likely to be large. The government has already tripled the amount of debt it wanted to raise in financial markets in April from £15bn announced in the March 11 Budget to £45bn by the start of this month.

    …………

    Fran Boait, executive director of Positive Money, an advocacy group, said: “This use of direct monetary financing demonstrates once and for all that the government does not depend on the market to finance its spending. Hopefully now we can have an honest debate about how our collective resources should be allocated.”
     

  92. @V. K. Ovelund

    Fortunately, Macro Economics is pretty easy. MMT is also pretty easy, but it is counter-intuitive. MMT answers basic questions about the economy.

    What is money? Where does it come from? Where does it go to?

    The godfather of MMT is Warren Mosler. His original book called Soft Currency Economics can be found on Amazon. His free pdf book The 7 Deadly Innocent Frauds of Economic Policy can be read for free online.

    http://moslereconomics-kg5winhhtut.stackpathdns.com/wp-content/powerpoints/7DIF.pdf

    Mosler interview:

    MMT vs. Austrian School Debate

    • Thanks: V. K. Ovelund
  93. It is basic common sense that during a deflationary depression, when lack of money is destroying economic activity, a benevolent government should supply extra money to facilitate the market activities that would be occurring if there weren’t a money shortage. [If they supply too much money, it causes inflation, because it is no longer creating economic activity.] When the problem is “lack of money”, it makes perfect sense to provide the money.

    Economic thinkers like Hudson and Keen have called for debt Jubilees right now, precisely because an economic downturn under high debt conditions quickly becomes a deflationary depression. The money powers love deflationary depressions because it allows them to confiscate collateral and scoop up assets because they are sitting on cash during the deflation. Cruelly enough the central government actually pumps their coffers fill of cash during the crash [the largest and first bailouts always go to the banks].

    Who the government bails out is simply a function of political power. It could liquidate the holders of the bad debt and directly help the people, but it doesn’t. Obviously the people who run the government like the way the current system works, relentlessly transferring wealth upward into the hands of the wealthy. After all, we are just cattle to them.

  94. @Jedi Night

    “ a benevolent government should supply extra money to facilitate the market activities ”

    Yes, with President Bigfoot and Senator Tooth Fairy at the helm, no doubt.

    • Replies: @Mefobills
  95. Mefobills says:
    @Beefcake the Mighty

    Yes, with President Bigfoot and Senator Tooth Fairy at the helm, no doubt.

    And you have put your thumb right on the problem. How do you staff your government, or ruling hierarchy with sober people, who are not psychopaths or power mad?

    Our nuclear weapons are supervised by sober people, but our government is a kakistocracy of paid off sock puppets.

    Where does the money come from to select or groom sock puppets? The worst kind of people are present in any population.

    • Replies: @Beefcake the Mighty
  96. @Jedi Night

    Inflation in some areas?

    “Less obviously – but far more dangerously – actions which are being taken by governments around the world today threaten huge food shortages in the autumn. “
    https://consciousnessofsheep.co.uk/2020/04/07/getting-the-economy-wrong/?fbclid=IwAR3Rml1S0lwcrTO1WkBXw_WzAKm1T_a0_VqAND4iWOr-t34zdTAJDvREbf4

    • Replies: @Jedi Night
  97. @Mefobills

    I wish I knew the answer. Unfortunately oligarchy appears to be a natural tendency among human societies. Probably the best that can be hoped for is something like the old American republic with strict limitations on central government power, checks and balances, and devolution of authority to smaller units like the states. Yes, I know even that system was deeply flawed and corrupted almost from the start, but I can’t think of anything better. Abolishing fractional reserve banking would a good step in the right direction. Barring that, better to simply nationalize the banks, bad as that would be, it’s better than the current system of private gains, public losses.

    • Replies: @Jedi Night
  98. @james charles

    Prices on food are rising, but I don’t think that is rightly blamed on inflation. Mainly we have supply shortages due to demand increases, ie normal market function. Everyone suddenly wants to be a prepper plus there is a real increase in residential demand which cannot quickly be met from commercial suppliers.

    Food isn’t really a commodity that is financed, so we wouldn’t expect it to undergo much deflation.

    The keystone here is real estate values. Our money supply is basically built on real estate loans. When our real estate markets collapse, our money supply collapses with it, a deflationary depression.

    The best immediate cure for a deflationary depression is debt jubilee. Our entire mental control matrix is a collection of lies and fantasies designed to prevent us from knowing that Jubilee would work, how it would work, or even that it is an option.

    • Thanks: Ondra Hada
  99. @Beefcake the Mighty

    The American system of government was designed to block the power of the people from interfering with the money system. Even today, the money power and monetary policy is the furthest removed from popular control. That is no accident.

    It is literally impossible to ban fractional reserve banking. The idea that frb is bad is part of the matrix of control to keep you helpless and enslaved.

    ALL sovereign level banking is frb in the sense that it is fantasy money backed by nothing. There is no magical reserve that makes money worthwhile. The real reserve that makes our money worth something is the productive activity of the people. Money is just a trick that gets us to cooperate and coordinate our lives in a productive fashion.

    Banking is already fundamentally nationalized. Who do you think creates our money and backstops all the commercial banks? Nationalizing all commercial banking is not necessary, any more than nationalizing any other industry. Limiting their power and abuses would be nice, via such traditional ideas as limits on fees and interest rates, not to mention bankruptcy protections.

    By nationalizing you probably mean the creation of a public banking option. Things like education, housing, and infrastructure should definitely be financed interest free by public banks.

    • Replies: @Beefcake the Mighty
  100. @Jedi Night

    “Literally” impossible? Do tell.

  101. Usura says:
    @Ondra Hada

    The Rentseekers are ALREADY in charge. The International Debt Salesmen have responded viciously to their power being taken away in the past, yes, if anything this is a call for more fervent resistance to Private Banking Power. I am confused that you are attempting to point out a flaw of Sovereign Money by saying that criminals would not like it.

    Fed criminals (and their predecessors) didn’t like attempts at sovereign money, but they also won’t tolerate their pseudo-governmental image and privileges being stripped. My point was that sovereign money policy localizes monetary power in such a way that it is easily co-opted, corrupted, or eliminated through assassination of its officers. A true free banking system might be more resistant to such attacks, because its practitioners are more numerous and distributed; there are more moles for the criminals to whack. It’s clear from the fate of the Federal Reserve Transparency Act that the Fed fears a libertarian-backed audit.

    When you say “centralization of power has been attempted repeatedly”, you are insinuating that Power is not already centralized, in contrast to the past. That is not correct. Sovereign Money would rather change the centralization of Money Issuance from Private Banking to the U.S. Government. Moreover, such Money Issuance would have the opportunity of being issued without unnecessary DEBT!

    I meant no such insinuation, my claim is that the money power is now centralized, with the assistance of government. The centralization of monetary power in government has lead to the centralization of monetary power in a private monopoly which masquerades as government. It seems we agree that’s criminal; I was attempting to contrast two differing proposed solutions to that, and argued that sovereign money has a particular weakness which free banking does not (“knowing where to point our guns”). You write as if there is no difference between the government sanctioned Federal Reserve system, and a true free-banking system. I agree it’s absurd that our government is indebted for the creation of its own currency, but I think it’s clear that the mythology of state power has helped to create that absurdity.

    • Agree: Ondra Hada
    • Replies: @Ondra Hada
    , @Mefobills
  102. What kind of a ridiculous name is “SABRI ÖNCÜ”?!

    • Agree: Thorfinnsson
  103. @Usura

    You write as if there is no difference between the government sanctioned Federal Reserve system, and a true free-banking system.

    Depends what you mean by true free-banking system. The fact remains that banks have basically always created new deposits when making loans in exchange for your interest bearing debt asset, on top of a fractional amount of reserves. This is no different than issuing currency, because the new deposits are used as money. What the Federal Reserve did was make this system of Banks link up and have post facto access to reserves based on the loans they make. So it increased their power and security Hugely.

    Joseph Huber in his Sovereign Money proposal suggests that Banks could offer two type of accounts.

    1) A Safe Account where the bank could not legally touch the Sovereign money

    2) An Investment Type Account that the bank could make use of as investable funds but are also subject to loss if the Bank fails. Even if a bank failed, the first type of account would be Secure.

    In the Sovereign Money System, Banks could not create new deposits when issuing loans, rather only having access to existing Sovereign Money that they own or is made available to them via customer Investment accounts. Such could be considered a true free-banking system.

    • Agree: Mefobills
  104. If one truly desired decentralization of currency, that might be something along the lines of States issuing their own money. Otherwise I would rather have the Central Government creating Dollars ( or whatever you wish to name them ) for Infrastructure, and channeling credit towards productive private industries. Hence it would be ” Work based ” FIAT, in a way. Not foolproof, but it would actually have transparency.

    Citizens have to really go out of their way to discover how our Money is created at present.

  105. “Citizens have to really go out of their way to discover how our Money is created at present.”

    That is key. The money power and monetary policy is intentionally obscured. It was kept as far away from popular control as possible at the founding of the system, and remains so today.

    The democratization of monetary policy would be the death knell for the economic vampires.

  106. @onebornfree

    “While the Austrian school is anti central banks.”

    “The 1800s were a mess of economic booms/busts with an average -22% GDP contraction every FOUR years.”

    Silly ‘Austrian school’?

    • Replies: @Mefobills
  107. Mefobills says:
    @james charles

    Silly Austrian/Lolbertarian’s are caught in a fantasist ideology at variance with observable reality. The ideology is dangerous as it traps adherents with false shibboleths – it is bad programming.

    Reality is breaking through to many, but some like onebornfree can probably never be reached:

    https://www.strategic-culture.org/news/2020/04/16/the-decapitation-effect/

    Here are the last three paragraphs from link above:
    _______________

    In Britain, Prime Minister Boris Johnson has been critically ill. Notably, on being discharged from an intensive care unit (ICU) he graciously thanked the country’s National Health Service for saving his life. This is not as much of a volte face as it might appear as Johnson pledged after his general election victory last year to invest much more money in the NHS. But it will stick in the craws of the Thatcherite slash-government purists in his Conservative Party.

    Under the remorseless Audit of Pandemic, Johnson is therefore moving in the same direction as Trump in the United States and General Braga Netto in Brazil: Away from the idealized minimum or zero government role in the economy and health care and instead towards a nationalist, hands-on central government that at least acknowledges its responsibility for the wellbeing of the general population.

    Eighteenth century, sheltered, romantic libertarians will continue to shake their heads wearing their quaint tricolor hats and muttering darkly about the anger of their ridiculous false gods Adam Smith, David Ricardo and Ayn Rand. But in Brasilia, as in Washington and London we see welcome signs of reality belatedly breaking in to shatter the old fantasies.

  108. Mefobills says:
    @Usura

    A true free banking system might be more resistant to such attacks, because its practitioners are more numerous and distributed; there are more moles for the criminals to whack.

    A free banking system upends the law nature of money. Free banking enables privateers to hypothecate new money/bank credit into existence. The money power has been distributed to pirates – so to speak.

    Money belongs to the commons, it is the lifeblood of civilization, and it must have legal controls due to its inherent nature. You are asking for something unnatural, and the outputs are destined always to fail.

    If the centralization of money issuance is prone to attack, then more defense is in order. For example, constitutional guarantees. This would actually be more robust than a distributed system of sociopath privateers hiding in smoke filled rooms, hatching schemes to self aggrandize.

    The law done in advance has the opportunity for morality (and defense) to be encoded.

    Also, sunlight is a disinfectant.

  109. @Mefobills

    Thank you, Mefobills, for this precious knowledge lighting the only path to FREEDOM:

    This “market” emphasis of both doctrines is why Government is always the boogey-man and demeaned. Neo-liberal Chicago Skool Jews and Austrian Lolbertarian Jews demean government and make pretend about a “free market.”

    It is no coincidence that our merchant (((friends))) historically have stood outside of the city-states, and worked to “tear those gates down.”

    Neo-Liberal thought and Lolbertarian thought come from the same well-spring. Both are heavily Jewish “merchant” in origin, with luminaries of both thought constructs being primarily Jews.

    The reality is that money’s true nature is law, and it is both a distribution and control system. Money is part of the commons as everybody uses it. Ergo money is to be controlled to benefit the commons.

    But who gets to control money? The market god has been spun up as a mythical character, because somehow markets are above man, when in point of fact, they are man’s creation – the same as money.

    Both Chicago Skool Neo-Liberals and Lolbertarian’s carefully conceal the control nature of money, and rake off usury to their hidden control masters. The commons are then privatized so the hidden control masters can make gains. The usury rake off is socialized onto the commons, to benefit hidden privateers – who are usurers.

    Money has type, volume, velocity, and channeling among other factors. Both neo-liberal Chicago Skool monetarists and Lolbertarians make pretend that their market god can control all of money’s variables, when that contention is easily disproved by observing reality.

    Today’s reality especially gives lie to both Lolbertarian and Neo-Liberal assertions, proving them to be little more than vapor.

    Making a god of money, and making false assertions about “free markets” when there is no such thing is part of hypnosis to allow usurious “rake-offs” to fund nefarious activities of the tribe and their fellow usurers.

    Lolbertarians can easily become ideolgues, who cannot learn and adjust when basic facts are presented. One born free-dumb has fallen for the hoax of lolbertarianism, and gets butt-hurt when it is compared with Chicago Skool Neo-liberalism, when they both come from the same source, the same zeitgeist.

    Onebornfree-dumb shows us why Lolbertarianism is so dangerous, as it sucks in well meaning people and deceives them. Some adherents become so brain-washed, they can never escape.

    The plain fact of the matter is that money’s true nature is law, and is part of the commons, and is the blood stream of civilizations. We had better get a handle on it, or the future will not be so great.

    • Thanks: Mefobills
  110. BAP says:

    Nobody mentions the endless gambling, scams, frauds, financial welfare, money printing and other bizarre characteristics of the financial system, which currently is worth many times of GDP of the entire planet.
    Markets like stocks and real estate are basically gambling yet nobody talks about this problem.
    Printing money via debt forces more debt to be accumulated to pay existing loans and gives a money multiplying effect for bankers.
    The government, banks, financial institutions and big corporations have massive money black holes that shouldn’t even exist.
    Theories like this one are patchwork and damage control for an entire system that is completely nonsensical, outdated, criminal, expensive and sustained by “faith” alone.

  111. Richard T says:

    There is one thing we could do, create our money without also simultaneously creating an equivalent debt.

  112. Mefobills says:
    @Anonymous

    Third party can be government, lawyers or whatever is set up for the task. The notion that two party agreements are the basis of transactions is more lolbertarian BS. Mans relations are three way, especially when two way breaks down.

  113. @onebornfree

    “…anxious for more [fraudulent] pseudo- intellectual gibberish to justify their wholly destructive , central bank fueled, monetary shell games.”
    The sad part is, after that statement, it has to be explained to people like Eugene d’Normal over here. But my challenge stand to you holy warriors of Mammon:
    Explain your theory in 5 minutes to a 5-year old, I dare you. As a matter of fact, show us a success story that lived on because of any of your theories. Then the bastards get given nobel prizes for excremental matter like ‘inventing’ Derivatives. How can we refuse to take part in a multi-quadrillion dollar pyramid scam, when the whole thing rests on a theory that won a Nobel? A Nobel, I tell you!
    The biggest joke (sorrow?) is that every one of my dictionaries declares:
    Economy: n. Good housekeeping or money management. Or somesuch.
    How do you grow ‘good housekeeping’? How do you grow ‘proper financial management’? It’s like saying you want to grow hard work, or diligence, or love.
    “…we shall answer all questions with a promise of future economic growth…” and “…growing economy from what? More taxes?” Both statements from the Protocols of Zion.
    .

  114. As I understand it MMT rests on the rather dubious proposition that a free-floating exchange rate is the general rule and is generally a good thing. Both of these are axioms are incorrect, however. Sure a sovereign state can print its own currency, but it cannot print foreign currencies. And free-floating exchange rates need a universal equivalent if it is to facilitate international trade. In short a gold standard. Keynes actually proposed ‘Bancor’ but was overruled by the American representative, Harry Dexter White, during the Bretton Woods conference. The system finally collapsed due to American profligacy and the suspension of the gold standard in 1971. Which is when all the trouble started. The weakness of Keynesian theory was self-evident and the Chicago school saw its opportunity to pounce – unfortunately.

    I don’t disagree with MMT’s critique of neoliberal economic theory, which both clearly fatuous and merely exists to served sectional class interests, but I am not convinced either that state issue of money is somehow a form of value production. MMT’s critique of actually existing capitalism seems based purely on the circulation process and doesn’t fully take account of the process of production which also contains internal contradictory processes. The reproduction of value is not crisis free, but historically speaking has been subject to fits and starts characteristic of its internal mechanisms.

    I have to say that I find MMT has more in common with accountancy than political economy

    • Replies: @Jedi Night
  115. @Donald Duck

    I am not convinced either that state issue of money is somehow a form of value production

    How could full employment not be considered a form of value production? One of the basic planks of MMT is full employment, using soverein money creation to put everyone to productive work.

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