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US Coronavirus "Bailout" Scam Is $6 Trillion Giveaway to Wall Street
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Facing the Covid-19 pandemic, the US Congress rammed through the CARES Act — which economist Michael Hudson explains is not a “bailout” but a massive, $6 trillion giveaway to Wall Street, banks, large corporations, and stockholders.

Max Blumenthal and Ben Norton discuss the enormous financial scam with Hudson, who reveals how the economy actually works, with the Federal Reserve printing money so rich elites don’t lose their investments.

Michael Hudson’s website: michael-hudson.com

Michael Hudson, “A debt jubilee is the only way to avoid a depression,” The Washington Post, March 21, 2020

 

Transcript

(Teaser – 0:03)

MICHAEL HUDSON: Just think of when, in the debates with Bernie Sanders during the spring, Biden and Klobuchar kept saying, ‘What we’re paying for Medicare-for-All will be $1 trillion over 10 years.’ Well, here the Fed can create $1.5 trillion in one week just to buy stocks.

Why is it okay for the Fed to create $1.5 trillion to buy stocks to prevent rich people from losing on their stocks, when it’s not okay to print only $1 trillion to pay for free Medicare for the entire population? This is crazy!

The idea is that only the rich should be allowed to print money for themselves, but the government should not be allowed to print money for any public purpose, any social purpose — not for medicine, not for schools, not for personal budgets, not for full employment — but only to give to the 1 percent.

People hesitate to think that. They think, ‘It can’t possibly be this bad.’ But for those of us who have worked on Wall Street, for 60 years in my case, that’s what the numbers show.

But you don’t have the media talking about actual numbers. They talk about just words, and they use euphemisms. It’s a kind of Orwellian vocabulary, describing an inside-out world.

(Intro – 1:58)

BEN NORTON: The world is suffering right now from one of the worst economic crises in modern history. Definitely the worst crisis since the 2008 financial crash. And many economics experts are saying that we’re living through the worst recession actually since the Great Depression of 1929.

Well joining us to discuss this today, we have one of the best contemporary economists, who is really well prepared to explain what has been going on in this global recession during the coronavirus pandemic. And specifically today we’re gonna talk about the $6 trillion bailout package that the US Congress has passed.

The Trump administration is basically taking Obama’s corporate bailout on steroids, and injecting trillions of dollars into the corporate sector. And today to discuss what exactly the coronavirus bailout means, we are joined by the economist Michael Hudson.

He is the author of many books. And in the second part of this episode we’re gonna talk about his book Super Imperialism: The Economic Strategy of American Empire. So that’ll be much more in the vein of kind of traditional Moderate Rebels episodes, where we talk about imperialism, US foreign policy, and all of that.

Michael Hudson is also a former Wall Street financial analyst, so he’s very well prepared to talk about the financial thievery that goes on on Wall Street. And he is a distinguished research professor of economics at the University of Missouri, Kansas City.

So Michael, let’s just get started here. Can you respond to this global depression that we’re living through right now amid the Covid-19 pandemic? And what do you think about this new bailout that was passed?

(3:50)

MICHAEL HUDSON: Well the word bailout, as you just pointed out, really was used by Obama and only applies to the banks. The word coronavirus is just put in as an advertising slogan.

Banks and corporations, airlines, have a whole wish list that they had their lawyers and lobbyists prepare for just such an opportunity. And when the opportunity comes up — whether it’s 9/11 with the Patriot Act, or whether it’s today’s coronavirus — they just pasted the word coronavirus onto an act, which should be called a giveaway to the big banking sector.

Let’s talk about who’s not bailed out. Who’s not bailed out are the small business owners, the restaurants, the companies that you walk down the street in New York or other cities, and they’re all shuttered with closed signs. Their rent is accumulating, month after month.

Restaurants, gyms and stores are small-markup businesses, small-margin businesses, where, once you have no sales for maybe three months and rent accruing for three months, they’re not going to have enough money to earn the profits to pay the rents that have mounted up for the last three months.

The other people that are not being bailed out are the workers — especially the people they call the prime necessary workers, which is their euphemism for minimum-wage workers without any job security. There have been huge layoffs of minimum-wage labor, manual labor, all sorts of labor.

They’re not getting income, but their rents are accruing. And their utility bills are accruing. Their student loans are accruing. And their credit card debts are mounting up at interest and penalty rates, which are even larger than the interest rates. So all of these debts are accruing.

The real explosion is going to come in three months, when all of a sudden, this money falls due. The governor of New York has said, “Well we have a moratorium on actually evicting people for three months.” So there are restaurants and other people, individuals, wage-earners, who are going to be able to live in their apartments and not be evicted. But at the end of three months, that’s when the eviction notices are going to come. And people are going to decide, is it worth it?

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Well, especially restaurants are going to decide. And they’re going to say, “There is no way that we can make the money to pay, because we haven’t had the income to pay.” They’re going to go out of business. They’re not going to be helped.

The similar type of giveaway occurred after 9/11. I had a house for 20 years in Tribeca, one block from the World Trade Center. The money was given by the government to the landlords but not to the small businesses that rented there — the Xerox shops and the other things. The landlords took all of the ostensible rent loss for themselves, and still tried to charge rent to the xerox shops, the food shops, and ended up collecting twice, and driving them out.

So you’re having the pretense of a bailout, but the bailout really is an Obama-style bailout. It goes to the banks; it goes to those companies that have drawn up wish lists by their lobbyists, such as the airlines, Boeing and the large banks.

The banks and the real estate interests are going to be the biggest gainers. They have changed the real estate law so that the real estate owners, for a generation, will be income tax free. They are allowed to charge depreciation, and have other fast write-offs to pretend that their real estate is losing value, regardless of whether it’s going up and up in value.

Donald Trump says that he loves depreciation, because he can claim that he’s losing money, and gets a tax write-off, even while his property prices go up.

So there’s a lot of small print. The devil is in the small print of the giveaway. And then President Trump has his own half-a-trillion-dollar slush fund that he says he doesn’t have to inform a Congress or be subject to any Freedom of Information law. He gets to give to his backers in the Republican States.

And states and municipalities are left broke. Imagine New York City and other states. Most states and cities, have balanced budget constitutional restrictions. That means they’re not allowed to run a deficit.

Now if these states and cities have to pay unemployment insurance, and have to pay carrying charges on the schools and public services, but are not getting the sales taxes, not getting the income taxes, from the restaurants and all the businesses that are closed, or from the workers that are laid off, they’re going to be left with a huge deficit.

Nothing is done about that. There has been no attempt to save them. So three months from now, you’re going to have broke states, broke municipalities, labor that cannot, whose savings was wiped out.

As I’m sure you’ve reported on your show, the Federal Reserve says that half of Americans do not have $400 for emergency saving. Well now they’re going to be running up thousands of dollars of rent and monthly bills.

So the disaster is about to hit. They will not be bailed out. But no major investor, really will lose. You’ve seen last week, the stock market made the largest jump since the depression — the largest jump in in 90 years. And that’s because Trump says, “The economy is the stock market, and the stock market is the One Percent.”

So from the very beginning, his point of reference for the market and for the economy is the One Percent. The 99 Percent are simply overhead. Industry is an overhead. Agriculture is an overhead. And labor is an overhead, to what really is a financialized economy that is writing the whole bailout.

It’s not a bailout — it’s a huge giveaway that makes them richer than they ever were before.

(10:48)

BEN NORTON: Yeah and Michael, related to that — you mentioned that fine print is important. But I also have a kind of bigger question. And I don’t really know where exactly these numbers come from.

Officially the bailout is $2 trillion. Many media outlets reported it as effectively $4 trillion. But actually, according to Larry Kudlow — who is the director of the US National Economic Council, he’s the Trump administration’s kind of chief economist — Larry Kudlow is now saying that it’s actually $6 trillion in total, which is a quarter of all of US GDP.

And that includes $4 trillion in lending power for the Federal Reserve, as well as $2 trillion in the aid package.

So there is discussion of this aid package, but actually the aid package of $2 trillion is actually half the size of the $4 trillion that is given to the Federal Reserve.

What exactly is that $4 trillion that the Federal Reserve has? Is this some kind of slush fund, or how does it work?

(11:52)

MICHAEL HUDSON: No, the Federal Reserve was given special powers to create 10 times as many loans or swaps as others. The Federal Reserve represents the commercial banks and commercial investors.

Now here’s the problem: a lot of companies were issuing junk bonds. They were going way down in price, especially junk bonds for the fracking industry. The Federal Reserve says, “We’re going to be backed up by the Treasury. We can just create — as you know, Modern Monetary Theory — we can just create money on a computer, and swap. So we will, say, ‘Give us your poor.’ It’s like the Statue of Liberty: ‘Give us your poor, your oppressed,’ or Aladdin’s old lamps for new: Give us your junk bonds, and we will give you a bona fide Federal Reserve deposit.”

So the Federal Reserve has been pumping trillions and trillions of dollars into the stock market. That’s what’s been pushing up the stock market, the Federal Reserve. The bailout has gone to the stock market. As if the stock market got coronavirus! Stocks don’t get coronavirus! They don’t get sick on the virus! And yet it’s the stock market that’s going up through the Federal Reserve.

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There’s also another $2 trillion dollars, $2 to $4 trillion that the US government has, over and above the $2 trillion that’s going to the people. So most of the calculations that have been published cite it as a $10 trillion bailout. Of which the newspapers, to avoid embarrassing Mr. Trump, only refer to the money given to the the wage earners. And they’re sort of embarrassed that the vast majority are given to the financial sector that doesn’t need a bailout, but that doesn’t want to lose a single penny from the virus.

So when you see the stock market recovered almost to what it was before the virus, while the economy is going down, you realize, wait a minute they’re saving the 1 percent, or the 10 percent of the population that own 85 percent of the stocks and bonds. They’re saving the banks. They’re not saving the people, and they’re not saving the economy; they’re not saving industry; and they’re not saving small businesses.

So it’s an amazing hypocrisy that the mainstream press is not discussing, which is why your show is so important.

(14:29)

MAX BLUMENTHAL: Yeah and here in Washington, DC, we got I think $500 million from the, I guess what you accurately describe as the stock market bailout. And that’s a lot less than a number of red states that are less populous than Washington, DC got. So there’s a massive shafting here.

And then the city has only been able to provide for certain parts of the economy. Undocumented immigrants, who do a lot of work here, got nothing from the city. Vendors, which are a big part of the informal economy in DC, even though they have to be regulated, got nothing.

And then you mention all of these sectors of the economy — young people, college-educated young people who are deep in debt, and therefore less inclined to spend — are getting shafted here.

So you have called for a solution — well I guess, knowing so many of those people, they contribute so little to the economy because they can’t; they’re just putting all their money into debt. So you have called for a debt jubilee.

You say that debts that can’t be paid won’t be, and this is the best way out.

Maybe you can explain to our viewers and listeners what that is and why it would be the best remedy?

(15:42)

MICHAEL HUDSON: Well here’s what happens if you don’t write down the debts that are just going to accrue in the next three months: If you don’t say, “The rents will not have to be paid, and workers will not have to pay the debts that mount up,” if you leave those debts on the books, and you make the workers liable to keep paying the student debts, and the other debts, and the mortgage debts, and the rents, then they’re not going to have any money left to buy goods and services.

When it’s all over, they’re going to get their paychecks, and off the top is going to be the wage withholding, and the tax withholding, and the Medicare, and if they don’t want to get kicked out of their houses, they’re going to have to pay all of this money that’s accrued while they’re not making an income.

So you’re going to have a shrinkage of the economy, a vast shrinkage. How can they afford to buy anything but the most basic necessities, the cheapest food, the necessary transport? Obviously they’re not going to buy the kinds of goods and services that are supposed to be part of the circular flow.

Economics textbooks say employers pay the workers so the workers can have enough money to buy what they produce. But the workers don’t spend their income only on what they produce. They spend most of their income on rent, on debt service, on taxes, on finance, insurance, and real estate. And this is the only part of the economy that is being enabled to survive.

So how can you have the superstructure of rents and debts, of insurance charges, on an economy that doesn’t have the income to buy goods and services? And if they can’t buy goods and services, you’re going to have the stores closing down, because people can’t afford to buy what the stores are selling.

You’re going to have a whole wave of closures. And you’re going to go down the streets, and certainly in cities like New York, or where I live in Queens, just outside of Manhattan, where block after block, they’re going to be “For rent” signs. It’s going to be empty.

And the only way to avoid that is for a debt write-down.

Now you’ve had this occurring for 5,000 years. I’ll give you an example that may be easy to understand.

In Babylonia, we have the Laws of Hammurabi, in 1800 BC. One of the laws says that when you would buy beer or other things, they would write it on a tab in the bar, in the ale house, and all the debts were owed when the harvest was in. You’d pay the debt seasonally.

Well Hammurabi said, if there’s a drought, or if there’s a flood, then you don’t have to pay the debts. Most debts were owed to the palace, and others.

The implied policy is that, “The reason we’re doing this is, if we don’t do that, then you’re going to have these debtors become debt servants, bond servants to the creditors; they’re going to owe their labor to the creditors; they’re going to lose their land to the creditors; and they won’t be able to work on public infrastructure projects; they won’t work for Babylonia; they won’t serve in the army, and we can be invaded; and they won’t be able to use their crops as taxes, because they’ll owe the crops as debts. So we’re going to write it down.”

So the whole idea for thousands of years, of every Near Eastern ruler starting his reign by writing down the debts, was to begin everything in balance.

Because they realized, just mathematically, debts grow at compound interest. You’ve seen the coronavirus increase at an exponential rate. That’s how debts accumulate interest, at an exponential rate.

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But the economy grows in an S-curve, and then it tapers off. The American economy, the GDP since the Obama bailouts of 2008, the entire growth of the GDP has only accrued to 5 percent of the population. 95 percent of the GDP. But the population for 95 percent, the industry and agriculture, that’s actually gone down.

So we’re already in a 12-year depression, the Obama depression, that they like to call a recession, because most of the media are Democratic Party people.

But you’re going to have this recession turn into a genuine depression, and it will continue until the public debt, that is state and local debts, are written down; the mortgage debts written down; and the personal debts written down, starting with the student loans, the most obviously unpayable debt.

And the choice is, do you want to depression, or do you want the banks to be able to collect all the economic surplus for themselves? Well Donald Trump, supported unanimously by the Democratic Congress, says, “We want to protect the banks, not the population, not the economy. Let the economy shrink, as long as our constituents, the donor class, are able to avoid making a loss. Let’s make the loss borne by the 99 percent, not our donor class.”

(21:17)

BEN NORTON: Yeah, and Michael, you mentioned something, getting back to the Federal Reserve and understanding how this whole system works. I mean frankly it seems to me to kind of be a house of cards.

But you mentioned this idea of Modern Monetary Theory and just kind of creating money out of nothing. Can you talk more about that? You know this is a term that’s become more prominent, especially on the left: MMT, modern monetary theory.

There are socialists who argue in support of MMT and then there are others who are kind of skeptical of the whole notion that you can just print all this money to fund these social programs that you want to create, and that it won’t create inflation.

But at the same time, you and other people point out that that’s exactly how the economy already works. Where for instance, you want to fund a war, there’s never — you know frequently when someone on the left asks for universal health care or free public education, members not only of the Republican Party but many neoliberal Democrats often say, “Well yeah, where are you gonna get the money from?” And the response of some of the MMT supporters is, “Well we just fund the program, and we just create the money because we control the creation of the dollar.”

And we see that same attitude used actually by the Federal Reserve right now, but to bail out Wall Street. “Yeah we’re just gonna print” — they printed $1.5 trillion, and then just gave it, they just injected it right into Wall Street.

So does that not create inflation, or what exactly is happening economically there? I mean to me, it seems like a scam; it seems like totally a scam.

(22:59)

MICHAEL HUDSON: Since 2008, you have had the greatest inflation of money in history. And you have also had the greatest inflation in history, but it’s entirely asset price inflation.

You’re absolutely right: the money has gone into the stock market and the bond market, to support bond prices, meaning you’ve had the biggest bond boom in history. You’ve had a huge stock market boom. But consumer prices have gone down. So here you have an enormous amount of money creation, and consumer prices and real wages have been drifting down.

So they are really two economies. The question is, are you going to create money for public purposes by spending it into the economy, on industry, agriculture, and the goods and service production and consumption economy Or, are you going to put it into the financial economy?

Well the whole way of our banking system is that banks create credit. If you go into a bank and you take out a loan, you say, I’m gonna borrow $5,000 for something. The banker doesn’t go and say, let me see if we have any money to loan you; he says, okay I will write a loan on my computer. I will credit your deposit with $5,000, and you will sign this IOU, and we have an asset. And the asset is $5000, on which we’re going to charge interest on what we pay you.

So it’s just done by computer, on a balance sheet. And as long as money is created on a computer, the only cost is the electricity used to make that debt record.

Now the banks, when they make loans, 80 percent are against real estate. So they say, in case you can’t pay, you’re pledging your real estate – the home you’re buying, or the commercial building you’re buying, as collateral. So we’ll lend you up to 80 percent, maybe 100 percent, of the value of what you’re buying, and that’s the collateral we have.

So they lend against collateral. Well, if you lend the money against collateral to buy a building, or to buy stocks and bonds, which are the other collateral, then obviously this money you’re creating to buy houses, or commercial real estate, or stocks and bonds are going to bid the price up.

Banks don’t give loans for people who say, I want to go shopping and buy more goods because I need the money. That may be a little bit, that’s what credit cards are for, but that’s a small portion of the overall money supply. So banks don’t make loans to buy goods and services; they make loans to buy assets that obviously inflate the price of assets.

And the more money that you pay for houses that are rising in price, or medical insurance, or stocks and bonds, to make a retirement income for your pension fund; the more money you pay for houses that are inflating in price because of bank credit, the less money you have to buy goods and services.

So actually, the more money they create, the more consumer prices for goods and services fall. It’s the exact opposite of the usual theory.

On my website I have many articles about that, and I have something today in Counterpunch on that. It’s on how the economy works the opposite of the way the textbook says.

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Now unfortunately the left-wing doesn’t really study finance and money much. The discussion of finance and money has been monopolized by the right-wing, so left-wingers think, they don’t realize that they’re picking up a kind of junk theory of monetary relations and debt relations that’s all picked up from the right-wing of the political spectrum.

It’s a kind of parallel universe. That’s not how the economy really works, but in a way that sort of is easy to understand. And it’s very easy to make an erroneous, oversimplified view of the world easy to understand.

And when it’s repeated again and again and again, in the media, the New York Times and MSNBC, people really think that, well, maybe that’s how the world works — more money is going to push up prices, so we better not push for it, we better go along with trickle-down theory.

And most of the left believes in trickle-down theory. The Democratic Party leadership is absolutely convinced, if you just give enough money to the top 1 percent, or 5 percent, or Wall Street, it’ll all trickle down.

(27:49)

BEN NORTON: Well of course the Democratic Party is not the left.

MICHAEL HUDSON: That’s right, but it pretends to be. And it has crowded out the left. You can see in the recent election primaries that its job is to protect the Republican Party from any critique by the left, interjecting itself in between the Republican Party and any possible reform movement.

BEN NORTON: Exactly.

(28:20)

MAX BLUMENTHAL: Well they stood up really strongly against the bailout — I mean what was it, 96 to nothing? And in the voice vote, I was listening to the voice vote last night in the House; I didn’t hear AOC’s voice against it.

MICHAEL HUDSON: They did a voice so that everybody could say, “Oh it wasn’t me!”

MAX BLUMENTHAL: No, no! So you mentioned that foreclosure king Steve Mnnuchin gets like a $500 billion slush fund. I haven’t heard much discussion about that. What will he do with this sort of opaque slush fund, and how will this — I mean it’s a leading question, but how will this kind of reinforce or consolidate inequality for the next generation?

(29:10)

MICHAEL HUDSON: Well gee, I hope he gives some of it to Kamala Harris, who was the attorney general who let him do all of this, and who thoroughly backed him and led the foreclosure, was the iron fist behind his foreclosure program. So I’m sure he’ll press for Kamala to be the vice president on the ticket.

The Democrats have a problem. How can they guarantee that they have their candidate win? Their candidate is Donald Trump. How can they make sure that they have such a weak candidate that he’s sure to lose to Donald Trump? And the choice is, we’ll get a vice president that’s so unpopular that they’re sure to lose.

Now it’s a race between Kamala Harris and the Minnesota lady.

MAX BLUMENTHAL: Klobuchar? The one who throws staplers at her staff. She seems very charming.

MICHAEL HUDSON: Uh, I don’t know about that. But my wife can’t even look at her on television. But I think that the pretense is that she’ll help get Minnesota, as if Minnesotans, where I’m from, are so dumb just to vote for somebody from there. But by getting Minnesota, they’ll lose the whole rest of the country.

So I think she’ll be the vice president, because that guarantees a Trump victory. And that will enable the Democrats to say, here — they’ll have the president they want, that is for their donor class, but they can say, “That’s not us; that’s the Republicans.” So that’s the Democratic strategy.

MAX BLUMENTHAL: Right, then they can raise loads of money for the “Resistance,” and all of the outside think tanks. And that was the old Republican, William F. Buckley strategy, is we’re better throwing rocks outside the building and raising a ton of money for the National Review than actually having to govern. And that seems like the Democratic strategy.

But I guess I was asking about how you see the economy transforming, because the Obama bailout sort of transformed it or consolidated the gig economy, where everyone has to work three to five jobs, and what was supposed to be a highly educated middle class is deeply in debt.

Where do you see it after this next tranche of stock market bailouts?

(31:29)

MICHAEL HUDSON: Ok, let’s look at three months from now. Smaller companies are going to be squeezed, because all of their expenses are going to go up. Small companies have had to run up debts, and they have all sorts of other problems, and their earnings, their prospective profits, are not going to look that good. Because there’s not going to be a market for the things that they sell, because of the debt deflation that I talked about.

So what’s going to happen? You’re going to have a bonanza for private equity capital. The liquid, the 1 percent that have access to bank credit and have their own equity capital are going to come in and pick up a lot of real estate that’s going to be defaulted on — just like they did after Obama evicted his constituency, the mob with pitchforks, and evicted them.

Blackstone will pick up more real estate. Big companies are going to pick up small companies. You’re going to emerge with a highly monopolized economy, much more centralized.

The important thing to realize about free-market economics and libertarianism, is libertarians advocate central planning, The Chicago School of monetarists advocate central planning; the free marketers want central planning. But the banks are to be the planners, not the government. They want to exclude the government from planning, except to the extent that they can take over the government, as Trump has done, and plan all of the income to be transferred to themselves from the rest of the economy.

So we’re going to have a much more centrally planned by a coalition of monopolies and the government. In the 1930s, that was called fascism.

MAX BLUMENTHAL: It’s what we call a “public-private partnership” or something.

MICHAEL HUDSON: Right.

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MAX BLUMENTHAL: Just really quickly, and maybe we can kind of transition after this, but you mentioned Blackstone. I think this is one of the key components of the bailout. They own so much stake in so many of the companies getting bailed out. Can you just describe their role and what they are?

(33:38)

MICHAEL HUDSON: It’s appropriate that they were put in charge of bailout. So if they’re the largest company buying up defaulted real estate and buying, picking up the weak — it’s called moving assets from the weak hands to the strong — then they might as well be put in charge, because they’re going to be the company doing all the grabbing. So of course they’re in charge of it.

It’s called grabitization. That was the Russian word for privatization in the 1990s. So grabitization is I think a better word than public-private partnership. It’s not really a partner; it’s sort of a one-way partnership; there’s one subsidiary partner. It’s really financialization and grabitization.

MAX BLUMENTHAL: Right, just the looting of state assets.

BEN NORTON: Going back one step here, Michael, you were talking about the way that people should think about how the economy actually works. And I mentioned MMT. Can you kind of just walk through that again? Because you were talking about how actually, when the Fed creates — I mean really to me, as someone, I’m definitely not an economics expert, I just don’t understand really how this whole process works, because to me it just seems simply like, they’re literally just creating money and just giving it to banks, and corporate elites, and rich people.

I mean maybe that’s what it is. But I don’t understand, this is like the biggest scheme I can imagine, where the Federal Reserve is creating all of this money, printing — they’re physically printing money is my understanding. And then they’re just giving it to these banks, to bondholders. And then, but you said that what does is, instead of actually creating inflation, all that does is, if I understood correctly, it boosts the value of assets like real estate, while at the same time deflating wages and commodity prices.

So if that’s the case, then how should people who are advocating for socialized programs like Medicare for All, free public education, and maternity leave, and childcare, and all of these programs that the Bernie Sanders campaign and movement have been advocating for, how should we talk about the way to pay for all of those programs, if the reality of the economy is that the Fed is printing trillions of dollars, and then just giving that cash to banks?

(36:11)

MICHAEL HUDSON: Well I think the reason you’re having trouble understanding MMT is because what you described is what’s happening, but you think, “But that’s unfair!” And there’s a tendency to think, if it’s unfair —

MAX BLUMENTHAL: It’s not just unfair. It’s the biggest scheme I can imagine. There’s no other word other than just a con scheme.

MICHAEL HUDSON: Yes, and the brain recoils from thinking, “Can the government really be doing that to us?” Well, yes it can.

And just think of when, in the debates with Bernie Sanders during the spring, Biden, and Klobuchar keep saying, ‘What we’re paying for Medicare-for-All will be $1 trillion over 10 years.’ Well here the Fed can create $1.5 trillion in one week just to buy stocks.

Why is it okay for the Fed to create $1.5 trillion to buy stocks to prevent rich people from losing on their stocks, when it’s not okay to print only $1 trillion to pay for free Medicare for the entire population? This is crazy!

The idea that only the rich should be allowed to print money for themselves, but the government should not be allowed to print money for any public purpose, any social purpose — not for medicine, not for schools, not for personal budgets, not for full employment — but only to give to the 1 percent.

People hesitate to think that. They think, ‘It can’t possibly be this bad.’ But for those of us who have worked on Wall Street, for 60 years in my case, that’s what the numbers show.

But you don’t have the media talking about actual numbers. They talk about just words, and they use euphemisms. It’s a kind of Orwellian vocabulary, describing an inside-out world that they’re talking about.

They will buy stock; they’ll say we’re going to buy a million shares of Boeing; they’ll just write a check, and the check will be from the Federal Reserve, and Boeing will get the money. The Federal Reserve can create a deposit, just like a banker will write you a loan when you go in and borrow. It’s done on a computer – without levying taxes. The Fed can do the same thing.

Stephanie Kelton, my department chairman for many years at the University of Missouri at Kansas City, describes this. The University of Missouri’s website, New Economic Perspectives has a description of it. So if people want to google either her, UMKC, or what I’ve written, or Randall Wray at the Levy Institute, you’ll get walked through.

If you’re not already thinking in terms of balance sheets, which most people don’t, you have to sort of just read it again and again, and then all of a sudden, “Ah, now I get. It’s a ripoff! It’s created out of nothing. Now I get it.”

BEN NORTON: It’s just a house of cards. To me it proves the kind — there used to be this kind of very blunt orthodox Marxist view that the economy strictly follows politics, and it seems to me this is a case where the economy is just created by politics.

MICHAEL HUDSON: That’s true, and that’s not an un-Marxist position. Marx did distinguish between oligarchies and democracies, and finance capitalist economies and industrial capitalist economies.

MAX BLUMENTHAL: Right. And the $17 billion for “urgent national security measures” was straight into the pockets of Boeing, which had its 737 maxes falling out of the sky, and had been clamoring for this bailout for a long time.

I mean you saw 3M, the maker of these masks which are suddenly unavailable, gained a total exemption from lawsuits, if the masks that it mass-produced now somehow failed.

So all of these things stuffed into the bailout were what industry and finance had been clamoring for for years. And they finally had the opportunity to do it.

(Outro – 40:38)

ORDER IT NOW

BEN NORTON: All right, we’re gonna take a pause there. That was the end of part one of our interview here with the economist Michael Hudson. He is a Wall Street financial analyst, a distinguished research professor of economics at the University of Missouri Kansas City, and of course the author of many books on economics.

You can find some of his work at michael-hudson.com. We will link to that in the show notes. He has interviews with transcripts and articles.

You can also find some of his economics work and the work of some of his like-minded colleagues at the economics department at the University of Missouri Kansas City website. I will link to that as well in the show notes. You can find the show notes at moderaterebels.com.

In part two of this episode, we’re going to continue our discussion of the house of cards that is the international financial system, the economic system. And in the second part we’re going to talk about his book “Super Imperialism: The Economic Strategy of American Empire.”

This is an incredible book. You know here at Moderate Rebels, Max and I frequently talk about the political and military side of imperialism. Michael Hudson just spells out, in easy-to-understand terms, how imperialism works at an economic level, how the US government and the Treasury, through the backing of military force, force countries around the world to buy US bonds, Treasury bonds, and how there’s basically just a con scheme where countries pay for their own US military occupation through buying US Treasury bonds.

Michael Hudson explains that all in really simple terms. And we also talk about the rise of China, and how China does pose a so-called threat, in scare quotes, to not the American people but rather to the hegemony of the US financial system — and the main financial instruments, the weapons that the US uses to maintain that hegemony, the International Monetary Fund, the IMF, and the World Bank.

And Hudson describes how, in his terms, the IMF, and the World Bank, specifically, are some of the most evil institutions that are really maintaining the American dictatorial, authoritarian chokehold on the global financial system.

If you want to support this program, Moderate Rebels, and the kind of independent interviews we do like this, giving a platform to some of these voices who you’re never going to hear in mainstream corporate media, you can go to Patreon.com/ModerateRebels. Please consider supporting us. And definitely join us in part. See you soon.

(Republished from Moderate Rebels by permission of author or representative)
 
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  1. Great interview.
    I fear Mr Hudson may be right about the the imminent (3 month) smash up of small business & the “grabitization” of many medium sized Co’s by the Blackrocks of the world.
    It’s no mere academic pursuit to wonder how much main street destruction that our “Rulers” will allow before thoughts of pitchforks prompt them into some kind of (half-arsed) remedial action.
    Incidentally — “So we’re going to have a much more centrally planned by a coalition of monopolies and the government. In the 1930s, that was called fascism.”
    If Germany is an example then the above is not an example of “fascism”. In Germany all private, capitalistic pursuits were secondary to National priorities. There was no “partnership” — the Government ordered, the Capitalists obeyed.

    • Replies: @Dube
  2. Professor Hudson has underestimated the REPO bailouts in conjunction with the latest handouts to the wealth extracting classless parasites known as the one percent. If one follows Wall Street on Parade the bailout figures are much higher.

    Asset Inflation is the only game in town in a system of Fractional Reserve Banking that is highly financialized by constant Federal Reserve backstop so that the naturally occurring process of mean reversion never takes place to allow for overpriced assets to fall back to normal equilibrium to markets.

    Commercial & Residential Mortgage Backed Securities undergird the entire fraudulent enterprise & foster the money pump Greenspan Put continuous propping up of Monetary Heroin Wall Street culture whereby the central bank plays Dr. Feelgood to the Wall Street Monetary Heroin Junkies that must have their fix of monetary heroin or they will throw temper tantrums to incite the Orange Oaf into temper tantrums in order to get their way.

    Presently, the Orange Oaf is supporting the European Union banker that holds his bad loans for hotels & RE that are non-performing loans at present. And Deutsche Bank is the most systemically susceptible risk prone behemoth investment bank in the entire edifice of fraud throughout the entire Western Banking empire.

    Asset Inflation is always supported by the banking industry & beneficiaries of the financialized system to the tune of never paying down debt and continuance of the ever pervasive ‘Greenspan Put’ Monetary Heroin Theory of kill or be killed Wall Street money junkie culture where the name of the game is kill, or be killed. Hookers & Blow Monetary Heroin Culture parallels Keynesian Macroeconomic Theory aptly.

    Since 45/46 the world of macroeconomics has known that asset inflation eras always end badly especially without protections of assets for everyday people that are not members of the investment banking community.

    Wall Street corporatists are one trick pony thinkers and that’s why they all thought of Dr. Alan Greenspan as Maestro.

    Professor Hudson knows the ruse and can simplify better than myself.

    RW

    • Thanks: bluedog
  3. It seems these extended lockdowns are intended to cause chaos to hide this bank heist. Note that if the economy tanked, it would be a few months before banks faced problems by people defaulting on loans and mortgages. So help might be needed in July, but they got trillions just as this downturn began! Recall the Fed had been giving them billions of dollars in near zero interest loans in the months before this virus, so were they in serious trouble already, or just seeking more profits? Their corporate media refuses to cover this story.

  4. Namor says:

    Not only that! Remember that the FED is owned by Private Banks!
    Which means that this is not only a bail out, this is outright an asset transfer as well, funneling more and more ownership to Banks.
    This ownership is basically transfering American companies to Global Banks, owned by Jews.

    It’s another gigantic globalization, America’s companies won’t be anymore, they’ll just be Jewish companies operating outside of the country.

    Also, Hudson is good, but not nearly enough sufficient. His economics is flawed. Read the American Monetary Institute papers for a full disclosure, and if anyone wants a start, here’s a must read:

    https://ia800201.us.archive.org/34/items/StephenZarlengaTheLostScienceOfMoneyScan44Mb/Economics%2C%20NatSoc%2C%20Federal%20Reserve%20-%20Stephen%20Zarlenga%20-%20The%20Lost%20Science%20of%20Money%3B%20The%20Mythology%20of%20Money%20and%20Story%20of%20Power%20%282002%29.pdf

  5. 6 trillion?

    You need to think bigger.

    Unlimited QE says hello.

    Unemployment is at 20%. Stock market up by 20% during the same time period.

    It is like I am living in a twilight world.

    • Replies: @Anonymous
    , @Alfred
    , @starthorn
  6. FB says: • Website

    GRABITIZATION…

    Great word…very succinct and descriptive…

    So the US is now f*cked…

    I can’t say I’m surprised…PCR and Michael Hudson have been predicting this meltdown for years…

    But the brainwashed masses that continue to believe in capitalism just will not accept reality until it bites them on the ass…

    • Agree: bluedog
    • Replies: @Wally
  7. @Namor

    This is the same thing Obama did with an expansion. Hudson and friends don’t seem to really have the balls to tell the truth: This is the greatest raping of the US Treasury in history and it’s by the JEWS!

    You just might get inflation like Weimar Germany had. The Republicans and Democrats can’t wait to give our money to their Jewish Masters. You will be witnessing the total breakdown and collapse of the entire country. The sick Dems and most Repubs want more illegal immigration to support the complete collapse of the market with their cheap labor.

    Welcome to the New Jewish Utopia……you might want to get ready to defend yourself and family.

    • Agree: Alfred, RadicalCenter
    • Replies: @Mefobills
    , @james charles
  8. Dube says:
    @animalogic

    I hope that this bailout discussion does not get run off the road by the strenuous and interminable arguments elsewhere at Unz over the virtues/vices of fascism in its Nazi German expression. Michael Hudson’s remark, “So we’re going to have a much more centrally planned [sic above] by a coalition of monopolies and the government. In the 1930s, that was called fascism,” has at least as much reference to the Italian model, which the ascending Hitler admired greatly.

    Hudson qualifies emphatically: “But the banks are to be the planners, not the government. They want to exclude the government from planning, except to the extent that they can take over the government, as Trump has done, and plan all of the income to be transferred to themselves from the rest of the economy.”

    Recall the remark attributed to Mussolini: “Fascism should properly be termed corporatism, since it is a merger of the corporations with the state.” In both the Italian and German models, the conflict between labor and corporations was to be mitigated by commands of the state, of the fascist elite, for the benefit of the nation. But in the warning given by Hudson toward the current developments, the corporate interest subdues the state.

    • Agree: FB
    • Replies: @Emslander
    , @Parfois1
  9. Here: https://www.pragcap.com/forum/topic/what-the-hell-is-the-stock-market-doing/#postid-1883
    is C.R.’s ‘take’.
    “20 million people have filed for uninsurance benefits so far. We’ve got another 10-20 million in the hopper. So you’re looking at AT LEAST $500B in uninsurance benefits JUST from the govt’s side of the UI CARES Act. Then you have $800B in small business grants. Another $400B in state funding.
    This doesn’t even include all the other line items that are going to contribute to the deficit this year. Things like SNAP and disability, etc.
    There’s an inequality in this country that has contribute to the inability to save enough for many households. That’s true. But that’s a separate policy debate. The CARES Act, despite being imperfect is not just a bailout of rich people. It’s going to get trillions of dollars into middle class hands. That’s great and very different from the 08 bailouts which were mostly for bankers.”
    https://www.pragcap.com/forum/topic/what-the-hell-is-the-stock-market-doing/#postid-1883

    • Replies: @FB
    , @RadicalCenter
  10. “Why is it okay for the Fed to create $1.5 trillion to buy stocks . . . ”
    According to S.K.
    ‘Mar 3 at 3:08am
    A Modern Jubilee as a cure to the financial ills of the Coronavirus” by S Keen.
    “Extraordinary measures are needed now to stop the health effects of the Coronavirus triggering a financial crisis that could in turn make the Coronavirus worse. All of these actions can be undertaken by Central Banks and financial regulators, once they have been given permission by governments. Two of these measures are already being undertaken by some Central Banks:
    A per capita payment to all citizens so that renters can pay the rent, mortgagors can service their mortgages, and workers, whether unemployed or not, can buy food and other critical goods. This can be financed as Quantitative Easing was financed, without recourse to the Treasury, or taxation (Hong Kong has already done this);
    Normal bankruptcy rules for companies and especially banks should be suspended, to allow them to continue operating despite falling into negative equity if revenues fall sharply and share prices plunge; and
    “Central Banks should buy shares directly to support share prices, rather than simply buying bonds under Quantitative Easing, to prevent a stock market collapse undermining both business and banks (Japan’s Central Bank is already doing this, though for other reasons). . . .
    Banks will also suffer badly. The asset side of their ledgers includes corporate shares: if these fall in value, banks will find their assets plunging, while their liabilities remain constant. A private non-financial company can continue to operate, so long as it can pay their debts as and when then fall due, so they can operate for a time with negative equity: their liabilities can be greater than their assets. But a bank cannot: it must have assets that exceed its liabilities, or it is bankrupt.
    A credit-driven, private sector monetary system is not capable of handling a systemic crisis like this.
    In fact, if the rules of such a system are enforced, it will make the crisis worse. Renters and mortgagors will be evicted, putting them on the streets, where they are more likely to catch and transmit the virus. Personal hygiene and public health will suffer, when one is needed to slow the pandemic, and the other must be functional to support its current victims. Stock markets will crash. Banks themselves will fail as their shareholdings plunge in value, bringing the payments system to an end. Even those unaffected by the crisis will be unable to shop.
    It is, on the other hand, possible for Central Banks and financial regulators, once authorised by their governments, to take actions that prevent the medical crisis from becoming a financial one.’

    https://www.patreon.com/posts/modern-jubilee-34537282

    • Replies: @RadicalCenter
  11. @Namor

    “The Regional Fed banks are arms of the Fed system that serve like regional versions of the NY Clearinghouse.   One thing that muddies this discussion on “ownership” is the issuance of stock by the regional Fed banks to the member banks.  This stock pays a fixed 6% dividend and gives the banks a claim on the Fed’s annual profits.   But let’s keep this in the right perspective.  Last year the Fed earned $90.5B.  Of this, $1.6B was paid out in dividends.  The remaining $88B was remitted back to the US Treasury.  While the US Treasury doesn’t technically own shares in the Federal Reserve the Fed is required to remit its profits at the end of the year back to the Federal Government.  As you can see, remittance often dwarfs any dividends paid back to the banks.  In other words, the US Treasury is the recipient of most of the Fed’s profits.”
    https://www.pragcap.com/who-owns-the-federal-reserve/

    https://www.pragcap.com/common-myths-about-the-federal-reserve/

    • Replies: @Namor
    , @Meena
    , @Mefobills
  12. @Namor

    “Also, Hudson is good, but not nearly enough sufficient. His economics is flawed.”
    OK — it’s good you site some links for this view. You also say:
    “This ownership is basically transfering American companies to Global Banks”
    Again this is OK, & possiblely Hudson might agree but I think you need to present a bit more argument.
    For example, this transfer of US Co’s to Global banks? Some of the biggest US banks ARE global banks. How does this undercut Hudson?

    • Replies: @Namor
  13. Franz says:

    “So we’re going to have a much more centrally planned by a coalition of monopolies and the government. In the 1930s, that was called fascism.”

    Yeah, but let’s give fascism a bit more credit. They shunned hypocrisy.

    If Benito wanted to shut somebody up, or put an opposition paper out of existence, Benito did it. He did not hide behind the skirts of some morally outraged proto-Facefart company to “suspend do to violation of guidelines” or some crap, cutting off supplies of ink or paper over some phony hurt feelings.

    Besides, fascist regimes were often popular and often got good press, even Peron. Hitler was no fascist but his popularity is a matter of public record. Why do you think certain people still hate him?

    Letting the corporations censor due to the fact they own the government isn’t fascism as Franco and Mussolini and even Peron knew it. This is new. Finance capitalism has become an engine busy eating itself and taking the rest of us with it.

  14. Anonymous[661] • Disclaimer says:
    @Astuteobservor II

    Unfortunately, actual unemployment is probably closer to 35% plus:

    http://www.shadowstats.com/alternate_data/unemployment-charts

  15. Michael Hudson keeps per-using the vocabulary and logic of the financial world. That is giving credit to the credibility of the system. His suggested solutions are always within the systemics. We call it the Chomsky approach. The plain truth is that the economic and financial language is circular, infinite loops, the accounting is deceit and stands for nothing. Go that last mile Mr. Hudson, what have you got to loose, denounce the band of gropers that are in charge. There is not one single exception, including you for so many years of career.

    The surplus population does not and will not understand what is going on. What is going on? The Western elites have lost all credibility in the international elite circles that matter(China, Russia, Iran, even some South American countries understand the nihilistic schemes. Mind F. Maduro and Venezuela, a formally educated …bus driver.

    The Western elites are redressing their economics to be able to survive, less so compete. The key is easing out of the accepted way of consumerism for their masses. Tuning their population directly regardless of financial speak. A trillion means nothing, scaring to death the surplus population was and is. They (the Western elites) are in an existential crisis as to the planetary scale.

    The well-being of the surplus population is the least of their concerns. The religious belief in the “$” is dead, no venues left. Since these same elites wreaked havoc internally, within their own courtyard, they were never so vulnerable as today. If the people would rise, the “outside” world, would be willing to give the extra push with a reverence. Again disruption is constructive at this point. Not so pointing fingers and half-hearted solutions on technicalities that M. Hudson proffers. Way behind the curve. Dishonest, brain-dead translation of what is going on.

    • Replies: @WV Guerrilla
  16. onebornfree says: • Website

    “The important thing to realize about free-market economics and libertarianism, is libertarians advocate central planning, ”

    Total garbage. As far as I’m aware, serious libertarians advocate decentralization of _everything_, and abolishing the entirely unconstitutional , wholly criminal, Federal Reserve system, and replacing it with _nothing_.

    “The Chicago School of monetarists advocate central planning;”

    True, but then again, the Chicago school has little/nothing to do with free markets. For example, Milton Friedman was a dyed-in-the-wool statist who helped design and make “legal” the WW2 withholding tax whereby citizens money is to be deducted directly from their paychecks. He also tirelessly promoted the Federal Reserve’s stated policy of inflating the money supply continually by 2-3% per year, to [supposedly] “create prosperity”. And we can all see how that worked out.

    The Chicago school is, fundamentally, just another pseudo-intellectual cover/excuse for the ongoing state religion of Keynesianism [ i.e partially disguised Marxism]; in other words, its a pro-state, pro Federal Reserve [and therefor pro- fake money issuance via central monetary authority] school of deliberate doublethink who’s sole intent is to fool the public by acting as a “legitimate”, “trustworthy” intellectual cover for the wholly criminal government/central bank power duopoly cabal

    The criminal, government protected Federal Reserve needs to be put out of business, NOW!, and the criminal Federal government ,which is wholly dependent on the continuation of fake money creation by the Federal Reserve, needs to be returned to its original constitutional functions and limits, NOW!, if not entirely done away with.

    No regards, onebornfree

  17. I hope that Dr. Hudson is reading. Three questions, please:

    1. How does the Fed decide which bonds to buy?

    2. If I issued a bond, would the Fed buy it? If not, why not?

    3. Does any credible source report the names (with dollar amounts) of the specific persons the Fed’s actions are benefiting? If not, why not?

    After the bailout fiasco of 2008, many of us are inclined to suspect that the bailout of 2020 means to reward politically connected persons in Manhattan. Suspicions can be mistaken, though. Suspicions want the support of sound data. Wanted are names, some dollar amounts, and a sketch of the process by which the persons who benefit are selected.

    I am not inordinately skeptical, yet how can I believe aspersions without specifics?

    Are there any sound data?

    • Replies: @PetrOldSack
  18. Roger says:
    @onebornfree

    Well, I was going to comment on this, but you beat me to it.

    I was quite interested Hudson’s comments until I came to this, then I quit reading. Has he never heard of the Austrian School of Economics? Mises? Hazlitt? Rothbard? Lew Rockwell? If someone who is purported to be an ‘expert’ makes such a stupid mistake as this, then everything else he promotes becomes, like you say, total garbage.

    • Replies: @onebornfree
  19. 450.org says:

    It’s amazing, isn’t it? There’s effectively no testing and contact tracing and PPE and hand sanitizer, the price of food is skyrocketing, healthcare workers on the frontlines battling this virus are getting pay cuts and yet the executive and legislative branches of the American government collude in using this crisis as yet another massive giveaway to the extractive elite vultures.

    https://www.foreignaffairs.com/articles/united-states/2020-05-12/pandemic-chinas-sputnik-moment

    The economist Xu Chenggang has described the Chinese system as one of regionally decentralized authoritarianism, in which provincial authorities have broad powers, so long as they deploy them in the pursuit of objectives determined by the center. The central government’s priorities include maximizing economic growth, attracting foreign investors, and, sometimes, controlling pollution. The system is efficient in allowing provincial and local authorities to pursue these objectives using the means they know best and deem most appropriate. But central authorities reward local ones based on how they perceive their management, so local authorities also have an incentive to hide undesirable developments.

    The fateful response of the local authorities in Hubei Province to the first cases of COVID-19 was not an anomaly, then, but part and parcel of the Chinese system of regionally decentralized authoritarianism. The provincial authorities reacted with hesitation—and even denial—because they did not want to create an impression of lack of control or of poor management. They relayed as little information as possible to the center about the mysterious infections, even as the seeds of the pandemic were sown. Only when the problem was too obvious to conceal was the truth allowed to flow upstream. At that point, China’s central government responded with an efficiency and professionalism that made up for some lost ground.

    The American political system has reacted to the virus in a manner exactly opposite to that of China. The central authorities—the U.S. federal government and its agencies—have presented a picture of disarray and amateurism. In the pandemic’s first moments, the federal government was absent altogether, and so it has more or less remained. But American federalism assigns a role to the states that has helped compensate for the weakness of the center.

    When the U.S. federal government disappeared, consumed by meaningless press conferences, the states took over management of the crisis. In doing so, they showcased the power and resilience of federalism, which, unlike “regionally decentralized authoritarianism,” devolves real powers to the states even when they may conflict with federal priorities. States, variously, adopted social-distancing measures, ordered closures, shored up health-care systems, procured personal protective equipment for doctors and nurses, and developed their own regimes of testing and contact tracing. Some took these measures even against the advice or the timetable issued by the federal government.

    I would take it a step further and say not only is the federal government in America in disarray, but in fact is doing everything in its chaotic power to make the states, ones that are trying to act constructively and responsibly, fail in their own unique approaches. It’s as though Trump and the cabal that’s using him as a foil want America to fail. It’s their strategy and as part of it they will short and exploit in every manner possible that failure in the spirit of disaster capitalism.

  20. Again, great insights from Michael Hudson. And granted that a single interview pegged to the financial and economic outcomes of the lockdown and bailouts cannot cover the rest of the waterfront. But the discussion still leaves me with that basic question about how much money they can get away with creating before bankruptcy.

    Ron Paul and others still insist there’s no such thing as a free lunch, which seems to be the rationale behind Modern Monetary Theory. But Marshall Auerback and others have said there is no theoretical limit to the amount of fiat money a sovereign can call into being. It’s got to be one or the other. Seems to me our rulers have now saddled up a seasonal flu as a vast planetary laboratory experiment to learn once and for all which of those two opposing camps is on the money.

    Hudson tells us that the corona experiment will ruin millions of workers along with the shuttered small and mid-sized business that employ them, and that local and state governments must shrink as a result. That’s akin to carpet-bombing the actual tax base, even if the privileged FIRE sector simultaneously waxes fat on its bailouts. Can the United States now really do without the fig leaf of tax collections while continuing to run its global empire of dollar hegemony on just deficit spending, including huge foreign borrowings, ad infinitum?

    German writer Kurt Tucholsky observed during the NS era that people accept money because money is valuable and money is valuable because people accept it. Can our globalist leaders simply replicate fiat dollars that will be accepted around the planet forever or does something have to give?

    • Agree: Agent76
    • Replies: @V. K. Ovelund
  21. onebornfree says: • Website
    @Roger

    He’s heard of it, but as revealed in previous Hudson articles posted on this site [where I’ve also commented in his ignorance concerning Austrian economics], in his tiny, pro-Marxist/pro-state mind the Austrian school and Mises + Rothbard etc. are fundamentally no different from the Chicago school, that is, they’re just another bunch of right wing nutjobs to be summarily dismissed, as far as he’s concerned.

    He remains entirely ignorant of the Austrian school, and of its foundational basis in methodological individualism : https://mises.org/files/ultimate-foundation-economic-sciencepdf-0 – a foundation which, of course, entirely separates it from all other schools of economic thought [ie Classical, Marxist, Keynes, and the Chicago school], as they all dismiss/reject methodological individualism as any sort of foundational basis, as far as I’m aware.

    Bottom line: Hudson is just another Marxist fantasist/ignoramus.

    And so it goes……

    Regards, onebornfree

    • Replies: @DrWatson
    , @bluedog
  22. Emslander says:

    Now unfortunately the left-wing doesn’t really study finance and money much. The discussion of finance and money has been monopolized by the right-wing, so left-wingers think, they don’t realize that they’re picking up a kind of junk theory of monetary relations and debt relations that’s all picked up from the right-wing of the political spectrum.

    That’s about the level of seriousness in this entire article. It’s like a late night undergraduate exchange of half-baked Bolshevism.

    I’ve been waiting for a sophisticated explanation on Unz of the abomination that has become our “economy” since 2008. This isn’t it.

  23. Emslander says:
    @Dube

    When Mussolini talked about “corporations” he meant something different from corporate businesses. Corporate governance meant governance by a combination of military, business, Church, nobility and landowners. Those were the corporations. It might be good to learn some history before pontificating on it.

    • Replies: @FB
  24. onebornfree says: • Website

    “US Coronavirus “Bailout” Scam Is $6 Trillion Giveaway to Wall Street”

    But of course!

    This “just” in:

    1] the federal government is a criminal scam:

    “Because they are all ultimately funded via both direct and indirect theft [taxes], and counterfeiting [central bank monopolies], all governments are essentially, at their very cores, 100% corrupt criminal scams which cannot be “reformed”or “improved”,simply because of their innate criminal nature.” onebornfree

    2] the Federal reserve is also a criminal [monopoly] scam”legally” protected in its monopoly counterfeiting power by the criminal federal government scam artists : https://www.federalreserve.gov/aboutthefed/fract.htm

    And so, Mr Hudson, a question for you to ponder: we have two wholly criminal scam organizations working together in concert for their own mutual benefit. So why would any rational person still expect the latest bailout to be anything other than a scam, essentially no different from every bailout preceding it since the inception of the Federal Reserve system in 1913?

    You’re making no sense [again]

    “Regards” onebornfree

    • Replies: @bluedog
  25. @St-Germain

    German writer Kurt Tucholsky observed during the NS era that people accept money because money is valuable and money is valuable because people accept it.

    Tucholsky is right as far as I know but Modern Monetary Theory (MMT) also adds this anchor: money is valuable because one can pay taxes with it, and because one cannot normally pay taxes with anything else. Thus, the value of money is not entirely self-referential.

    The implication is that fiat money would probably fail if there were no taxes to pay.

    • Replies: @Mefobills
  26. Agent76 says:

    Mar 26, 2020 What the $2T coronavirus stimulus means for federal employees, retirees and contractors

    The massive bill, which the Senate passed in the early Thursday morning with a 96-0 vote, has two parts.

    https://federalnewsnetwork.com/legislation/2020/03/what-the-2t-coronavirus-stimulus-means-for-federal-employees-retirees-and-contractors/amp/

    May 16, 2020 US $3 trillion ‘Heroes Act’ passes the House of Representatives

    However, the package is expected to receive stiff opposition in the Senate with President Donald Trump declaring it will be “dead on arrival”.

    May 15, 2020 Democrats’ Plans for More Spending Could Mean a Lost Decade for America

    Jason Pye explains how FDR’s New Deal made the Depression worse and how Pelosi’s spending scheme will do the same to our economy!

    • Replies: @KA
  27. Agent76 says:
    @onebornfree

    You are absolutely correct Onebornfree! This is favorite and most accurate speech on and about Banking I have ever heard.

    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)

  28. KA says:

    Why does printing money in 3 world countries lead to inflation, and lead to devaluation of the currency ? We don’t see that in USA or EU or Yen . How does this scam or dishonest aspect of capitalism work?

    By printing money ,isn’t US actually shifting the tax burden abroad ?

  29. FB says: • Website
    @Emslander

    Mussolini talked about “corporations” he meant something different from corporate businesses.

    Corporate governance meant governance by a combination of military, business, Church, nobility and landowners…

    And where are the WORKING PEOPLE in this equation…?

    And let’s look at those components you mention shall we…?

    Besides business, we have the nobility and landowners…ie the aristocracy or plutocracy…

    The defense of the nation and hence the military has a central role in any major power anyway, regardless of its form of governance, so that is meaningless…

    And what about the church…why should the church play any role in governance…like Sharia law in the Gulf monarchies…?

    What a goof…you step on a solid comment with all kinds of grand puffery…and then proceed to show you are unable to think critically at all…

    • Replies: @Anonymous
    , @Alden
    , @Emslander
  30. KA says:
    @Agent76

    Is it the Democrats who are spending ?

    Or is it the GOP who are spending and the Democrats just throwing some additional crumbs for common folks which the GOP and the media are fighting and magnifying respectively ?

    • Replies: @Agent76
  31. Namor says:
    @james charles

    It’s a matter of ownership, remittances don’t matter. If these companies decide to leave the US tomorrow and leave it to dust.
    I’ll use an analogy to make you understand it better:

    Let’s say you created your company, an American building an American company in American soil.
    Then, by all sorts, your company, albeit very successful, is destroyed in this crisis.
    The FED will come to you, offering you money to save you, but this will cost most of your ownership in the company.
    Then, your company just changed hands, from you to some faceless Global Bank – not the FED, the FED has its owners as well.
    Then, you see that your company is required to advance a LGBT+ and Immigration/Minority agenda.
    Then you see your productivity chain moving out of the USA and going to India, Taiwan, China.
    Then you realize most of your profits are being funnelled to Banks who have no allegiance to your country, but to Israel alone.

    These people realized this, but they mistakenly thought of this as a “nationalization”:
    https://ellenbrown.com/2020/04/03/was-the-fed-just-nationalized/
    https://wolfstreet.com/2020/04/09/qe-4-cut-in-half-this-week-but-still-1-8-tn-helicopter-money-for-wall-street-and-wealthy-in-4-weeks-of-federal-reserve-balance-sheet-money-printing-and-bailouts/
    https://wolfstreet.com/2020/05/06/us-national-debt-spiked-by-1-5-trillion-in-6-weeks-to-25-trillion-fed-monetized-90/

    Fortunately enough, this happened post April:
    https://wolfstreet.com/2020/05/08/fed-cuts-qe-helicopter-money-for-wall-street-further-still-hasnt-bought-junk-bonds-or-etfs-was-just-jawboning/
    https://wolfstreet.com/2020/05/14/fed-finally-buys-whopping-305-million-in-corporate-bonds-after-two-months-of-jawboning-and-media-hype-that-triggered-a-huge-rally/

    But the mechanism for them to do so is there, and Michael Hudson doesn’t understand the consequences of that, because his model is essentially the same, but used to do other stuff.

    When the unstoppable US collapse comes, these companies won’t be here, won’t be American, they’ll survive elsewhere, owned by other people, leaving this country to dust.

    • Thanks: Parfois1
    • Replies: @KA
  32. Namor says:
    @animalogic

    >Some of the biggest US banks ARE global banks.
    Then they are not US Banks, are they? They only have US branches, or originated here. They can simply just leave.

    >How does this undercut Hudson?
    I’ll post this short essay here:
    http://www.paecon.net/PAEReview/issue66/Huber66.pdf

    He’s an MMT guy, his theory is incredibly pro Banks, it’s flawed by design. If you got interested in this short paper, read that book I posted earlier.

    • Thanks: V. K. Ovelund
  33. FB says: • Website
    @james charles

    The CARES Act, despite being imperfect is not just a bailout of rich people.

    It’s going to get trillions of dollars into middle class hands. That’s great and very different from the 08 bailouts which were mostly for bankers.

    No…that doesn’t change the BASIC FACT that this massive money printing is going to be another massive wealth transfer from the bottom to the top…on a much bigger scale than ’08…

    The fact that benefits for unemployed will be increased [by about half a trillion] is just what is absolutely necessary to prevent a total collapse…70 percent of the economy is consumer spending…if people have no money, the whole economy crashes…it’s as simple as that…

    And the first to crash will be the corporate and banking parasites that feed off the consumer economy…obviously they don’t want that [not that they actually care if people are starving on the sidewalk] so some helicopter money has to rain down on main street and ordinary folks…

    That is what’s called NECESSARY support for the economy…

    But that is simply dwarfed by the completely UNNECESSARY bailouts of big business and banks…just one company Boeing is set to get about fifty billion dollars, which is one tenth of the entire unemployment ‘CARES’ package [nice choice of acronym there…very Pavlovian]…

    So a handful of parasites that are major shareholders of Boeing are going to get as much cash as millions of workers…?

    But aside from the unfairness of it, the main problem is that it is UNNECESSARY…these same corporations and big banks have been hoovering up the people’s hard earned wealth for many many years…they have gorged themselves on profit and CORPORATE WELFARE from the taxpayer for decades…

    They are nice and fat and should be slaughtered in a feast for the people…not fed even more money that will eventually need to be accounted for one way or another…

    We are simply doing the same thing over and over again and expecting different results…namely, printing money out of thin air when the house of cards takes a hit and starts teetering…we do not know yet at what point, this money printing [given away to the oligarchy] will stop working at all and the house of cards comes crashing down anyway…

    We are just beginning now this latest barrel ride over Niagara Falls…let’s wait a few months and see how things play out…maybe the daredevil climbs out of the barrel at the end of the ride, or maybe the barrel just disappears for all time…

  34. nsa says:

    “they will buy stock; they’ll say we are going to buy a million shares of Boeing; they’ll just write a check, and the check will be from the Federal Reserve, and BOEING WILL GET THE MONEY.”
    Liar. Never had a professor who knew much beyond bloviating, and the learned pedagogue, Hudson, is no exception. Unless Boeing is issuing new shares of common stock, they will not be receiving a check. The shares being bought by the central bank were issued long ago and probably part of an ETF i.e. it is shareholders (pension funds, wealthy families and individuals, small investors, mutual funds, etc) who are being bailed out, not Boeing (known locally as the Lazy B Ranch).

  35. Meena says:
    @james charles

    “ But let’s keep this in the right perspective. Last year the Fed earned $90.5B. Of this,”

    Sounds good to me . How does this that Fed is giving billions to the banks and corporates with no string attached for years sound to you ? What does treasury ( US gov ) in return ? How does the zero interest policy factor in creating poverty for earners and savers ,in creating bubble in stock, helping super rich connected upper echelon sound to you ?

    100 billions are puny amount compared to trillions the Fed allows to rich unproductive rentier sectors to banks ,hedge fund and through the corrupt taxation system .

    • Replies: @Parfois1
  36. Derer says:

    In 2008 it was 1 trillion of serfs’ money without complains and therefore in 2020 it must be daring 6 trillion. By now the USA herd of sheep, although willingly dying for the deplorable elite, must realize that the nobility will not give up their financial, media and military grip on power. This will only change by REVOLUTION. Do not give up your slingshots.

    The American big lie: “Dictatorship is of the people, by the people, for the people.

  37. Wally says:
    @FB

    said:
    “I can’t say I’m surprised…PCR and Michael Hudson have been predicting this meltdown for years

    But the brainwashed masses that continue to believe in capitalism just will not accept reality until it bites them on the ass…”

    – LOL! You just refuted yourself.

    – ‘Years of predicted meltdowns which never happen’ are the reason the ‘masses’ reject the wishful thinking of PCR and Michael Hudson, aka: lack of credibility.

    – And of course we see the usual strawman in that what’s being described is not even “capitalism”?

    • Replies: @KA
  38. KA says:
    @Namor

    Sorry , you are either have got various disparate scenario mangled or you simply not taking times to clear the intricacies involved .

    “your company just changed hands, from you to some faceless Global Bank ”
    Did this happen in 2008 or later ? No . Bailout of car company did not change ownership .Neither US banks or airlines or restaurant or resort changed ownership .

    “Productivity chain moving out “ is the company ‘s doing . Not mandated or engineered by Fed .

    “ then you realize …profits … banks”. This is intrinsically related to western capitalism of banking and money creation .
    This is remotely or not at all related to outsourcing or moving out of USA .

  39. KA says:
    @Wally

    We are exporting our problem abroad . We have managed to shield ourseves from profligacy and inconsistency and even contradictions of US type capitalism by many unethicsl illegal means supported by military and by dollar denominated oil transactions .

    Why can’t Venezuela escape hyperinflation but US can despite being in the similar situations ( before and after oil price slumps )?
    US prints the money .
    Venezuela can’t without losing value or worth in comparison to world currencies?

    Let US follow the natural law of debasing the currency and clipping the edges of the coins and see the fate of this capitalism ?

    How dues US tax other countries? It can buy stuff from Nigeria and India with sand dollars at same price despite the value of dollars bring lowered or buy currency and gain the interest and call it capital gains and then repatriate again 1 shafting the 3 rd world 2 enriching self from free money and increasing wealth gap at home

    At home the 8 hours , 6 days work are paid by same dollars whose values have been reduced though marginally ( domestically ) . Cumulative loss of buying powers are seen in student tuition , utility bills, health care costs , and in the price of a cup of coffee from McDonalds.

    • Agree: Alfred
    • Replies: @Wally
  40. @V. K. Ovelund

    “At hominem”, Corporations, Banks, it is all a few men, jerking the rest of the surplus population around. And “they” are allowed cover on an industrial scale. All insiders are bought and sold, this is a matter of public affairs. A very opportune suggestion you made, V. K. Ovelund!

    As a second, there is this prime, not secondary reason for the reassessment internally all over the Western “democracies. The credibility of the elites are laughed at outside the Western world. The “gaming” is not even important any longer. The fact that the Western surplus coolies can no longer be offered a crumb of the global steal, since there is no way to tramp and trap the bigger players, China, Russia, Iran, the book-keeping must be sanitized on these players to be able to renegotiate the US part of the cake. The elites were never so vulnerable these ultimate years, in their own camp, EU(same disease), Deutschland(intensive care), Great Britain, Australia and Canada, to the likes of the Netherlands, France, little slavish Belgium, they all grasped the game, and want to renegotiate.

    Ultimately, and only to keep a lid on the surplus population, the internal theater of a US “crisis” is an issue.

    Thirdly, “scare ´m to death” trumped the “trillions bailout”. Financial juggling, and mechanistic solutions are for kids, so long the game shift is not understood (it is by all elite players), it only has an impact on the surplus populations. Not what matters in the first place. The US elites are sweating in their shoes, and nowhere to go. The waking up was brusque, they will have a lot of bartering to do in the back-rooms of other power players, and not from a position of force.

  41. @james charles

    I hope that readers here are not such inattentive and gullible schmucks as to believe that these “coronavirus” “relief bills” are in any meaningful way geared toward helping the middle class or the bulk of US Citizens generally.

    Big banks got hundreds of billions of dollars at zero percent, while small businesses got destroyed and became eligible for loans at NEARLY FOUR PERCENT INTEREST. This dwarfs the money given directly to US Citizens,

    More trillions of dollars of bad corporate debts and bad bank loans will get offloaded onto the taxpayer.

    Now the Dems are pushing for a trillion-dollar bailout of irresponsible state and city governments, when we could give money directly to the citizens — which is supposedly what the governments are going to do with the money. (In any event, irrational state governments panicking and shutting down life and commerce caused their own massive loss of sales tax, excise taxes, income taxes, and soon property taxes. Now they have us “printing” and borrowing trillions of dollars to make up for part of the harm that inflicted on themselves and their dependents (though not as much to make up for the damage inflicted on US).

    Between the trillions already spent in 2020 and the 3 trillion more to be spent in the upcoming bill, our rulers had enough to:

    — pay every adult US Citizen a basic income of $2,000 per month for six months of the fabricated “crisis”

    — start a network of publicly-owned medical facilities to manufacture our most commonly prescribed medications and medical devices here at home (and provide them to all US Citizens at cost)

    — fund the reopening of shuttered hospitals, or expand hospital capacity, in both urban and rural areas (sufficient to handle a surge in patients without shutting down surgical procedures and other treatments)

    Notice how none of this happened. Great middle-class bills indeed. Tens of millions of people are still losing or on track to lose their homes, their small businesses, their cars, drain their limited retirement saving and retire in near-poverty, cram in with less-screwed relatives like ants in a poor version of hong kong, or get evicted and live on the street with lazy and antisocial derelicts, drug addicts, the mentally ill, and african dimwits.

    These videos should dispel any naivete about whom the plandemic “relief bills” are helping most:

    They should also help anyone under the illusion that the “Democratic” Party is sincerely focused on helping Americans.

    • Agree: Mefobills
    • Thanks: Agent76, Alden
  42. Anonymous[285] • Disclaimer says:
    @FB

    And what about the church…why should the church play any role in governance…like Sharia law in the Gulf monarchies…?

    Some of us would be strongly inclined towards a more formal role of Catholicism in our governments. I can understand that you wouldn’t necessarily like that, being a heeb and all.

    • Replies: @anon
  43. Babbage says:

    LOL. The media is controlled by the top 0.1%. Why would you expect the media to report any of this? The media is carefully crafted and receives it marching orders from the top.
    The whole financial system is controlled by an alien population, bent on milking the fruits of the people’s labor until the last drop of blood. (FYI, they do consider themselves to be a separate species.)
    Until all the sheep are all slaughtered and eaten, they won’t stop.
    Happy eating. Hihi.

  44. @PetrOldSack

    You hit the nail on the head with your over simplified commentary! Nice! I particularly enjoyed the “surplus population” remark(s). Hudson is nothing more than controlled opposition. If he’s been on Wall Street so long why are his so called solutions nothing of the sort. The sheeple better wake up and stand up. We’re quietly watching Our Country and Our Heritage be destroyed by the same elites that have pillaged and ruined everything that can be. Stay Armed Stay Alert Love your enemy.

  45. Wally says:
    @KA

    – Like I said, we’ve been hearing such dire predictions (which never happens) for ages.

    – If the Venezuelas, Nigerias & Indias don’t like doing business with / ‘being shafted’ by the US then they shouldn’t do it.

    – The simple fact that they do business with the US, and plenty of it, disproves your point.

    • Agree: V. K. Ovelund
    • Replies: @KA
  46. anon[104] • Disclaimer says:
    @Anonymous

    What makes you think , thousands other religious groups will accept this ?

    • Replies: @Anonymous
  47. KA says:
    @Wally

    Getting raped at gun point , being blackmailed by police CIA drug lords , agreeing to self harm out of fears or concerns for family don’t count as good strategy or sustainable winning spree for the rapist , for the drugs lord and CIA or IMF or world bank .

    World will be doing business with Cuba and Venezuela but for the nuclear bomb of USA and bribing with same printed dollars .

    It undercuts nothing of my argument . This only proves that s rotten system is ready for explode anytime . It’s a fault line .

    Can happen today , can happen in few years down .

    But it has already happened for millions within the country . Millions .
    You know the job losses from 2007 to 2014 ? It’s about 2 millions now we have 40 millions

    Airlines resort town cruise ships ports and hotels will be out of business for a long time .Msy not come back . Car sales have dropped , Student loans have ballooned ,

    New York subway had dead bodies piled up .

    Mass graves in NY ! Did you see ?

    Hey , this country is exploding already .

    It’s a slow death , Are we better off today compared to yesterday or week or month or year or decade ago ?No .

    It has to be something pretty corrupt supported by pure military that allows money printing by US but not by Honduras .

    • Agree: bluedog
    • Replies: @Wally
  48. Mefobills says:
    @niteranger

    You just might get inflation like Weimar Germany had. The Republicans and Democrats can’t wait to give our money to their Jewish Masters.

    The weimar inflation was due to exchange rate pressure, which in turn was due to Versaille debts.

    Germany couldn’t sell enough goods to acquire dollars/pounds/francs to service the triangular flow.

    Germany>Allies (England/France)>U.S. Treasury. England/France owed Treasury for Dough Boy’s as mercenaries.

    To shorten the story, all hyperinflations in the modern era are due to exchange rate pressure, which in turn is due to debts monetized in a foreign currency. Bear raiders (like Soros) then sniff out the weakness and short the currency, causing a feedback which creates the hyperinflation.

    We (I’m American) don’t have hyperinflation conditions yet.

    The “real economy” is short of cash, and indebted. This is deflationary pressure. The Casino of wall street is not the real economy.

    • Replies: @niteranger
  49. Mefobills says:
    @james charles

    As you can see, remittance often dwarfs any dividends paid back to the banks. In other words, the US Treasury is the recipient of most of the Fed’s profits.”

    True.

    Rebates to Treasury happened after Texas Congressman Wright Pattman sniffed out the scam, whereby the “money trust” was profiting mightly on public debts. Heads I win, tails you lose.

    Where Cullen goes wrong is on Channeling.

    Who creates the money and how it channels – to whom it benefits, is of prime importance. The FED creates keyboard credit as an adjunct to the banking system. It is the lender of last resort, where private banks can go to find reserves if they cannot find them on the overnight market.

    In other words, the FED cannot meet its dual mandate, as it is a contradiction of terms.

    Money is part of the commons, it’s true nature is law, and ergo it is to channel to benefit the public (not financial plutocracy).

    Despite the rebates, the FED is malformed.

  50. @FB

    … just one company Boeing is set to get about fifty billion dollars….

    I believe that you are mistaken as to the facts.

    However, I do not blame you. The people on whom we rely to give us the facts can hardly be trusted, so unless one works in the Treasury Department or for the Fed, who knows what is really going on out there?

    I wish that our elites, as a class, were people we could trust.

    • Replies: @FB
  51. Mefobills says:
    @V. K. Ovelund

    The implication is that fiat money would probably fail if there were no taxes to pay.

    Using equal signs to show a relation (not equal but a relation).

    Money=Law=Force.

    Taxes = Force.

    I don’t get mad about gravity making me fall down and bump my head. The above relations are operative always.

    You don’t pay your taxes, then men with guns show up and haul you away.

    Rome got its start with fiat money; it was bronze disks which were the paper of that day. The stamped value of said disks was much higher than the metal content.

    When law and force get co-opted by finance oligarchy, it is a separate subject from money. Fiat (faith) has now been abrogated.

    Also, 2000 years of gold coins was fiat, where value of the coin was a function of the King’s stamp.

    • Replies: @PetrOldSack
  52. FB says: • Website
    @V. K. Ovelund

    OK…let’s try to unpack the Boeing example…

    First…this company which is no longer an engineering company, but a wall street casino, went begging for 60 billion…this despite the fact that it had used the easy money from several rounds of QE to buy back over 40 billion worth of its own shares…

    In other words a very rich bunch of scumbags that had driven the actual airplane business into the ground…literally…

    Now…a couple of weeks ago they said they no longer need the corporate welfare because they raised 25 billion selling bonds in a PRIVATE placement…

    And why not..?

    The FED private bank cartel has now guaranteed that it will buy any and every kind of junk bond at face value…

    So every pumpkin is now a Rolls Royce…and who is going to backstop this private bank cartel known deceptively as the Fed..?

    Why it’s Joe Taxpayer, through the good offices of Uncle Steve Munchkin and his ‘Treasury’…

    Also worth noting is that the airline industry IS getting 100 billion…and will be using some of that to buy Boeing airplanes…

    Now I am the last person to want anything but prosperity and blue skies for the aviation sector…however…all of this rescuing is being done in the wrong way…

    What should be happening is nationalization of the banking sector…not a banking takeover of the people’s treasury, which is what we’re getting…

    • Agree: acementhead
  53. I hate t have ti agree with the response to the current situation — though I would call it a freeze.

    No evictions, no rents due o any for any reason — time capsule the entire matter from top to bottom.

    Everyone makes lees or nothing. If the entire country is in lockdown — then it’s locked down.

    Ad I wholly agree, that if the system is locked docked down — then the markets should reflect that ebb and flow. If its not, its a clear sign that it does not represent the economy. And it doesn’t.

  54. Anonymous[102] • Disclaimer says:

    And most of the left believes in trickle-down theory. The Democratic Party leadership is absolutely convinced, if you just give enough money to the top 1 percent, or 5 percent, or Wall Street, it’ll all trickle down.
    WTF? This statement is so wrong that it almost discredits the whole opinion.

    Neoliberal economics was popularized under Reagan which incorporates Trickle down BS.

    Democats have their rats but they at least try to give us National Healthcare. Do you even understand what Obama care was all about?

    Lets not throw everyone under the bus. You do what you do to survive even when you know its not your best move. Obama knows that the bailout was not his best move but he learned from it and you know he would not repeat the mistake. Get your facts straight and keep your conspiracy theories to yourself.

    • Replies: @Meena
  55. Communists/Marxists always wish to destroy the Kulak/small businessman.

  56. Anonymous[285] • Disclaimer says:
    @anon

    They could always sod off back to Arabstan or Hindustan or whereverstan.

  57. This coronavirus scam is also being used to bring in a one world government viaUN Agenda 2030.

    • Replies: @Daniel H
  58. Agent76 says:
    @KA

    Actually, it is the single D.C. War Party where nothing ever changes! Here is some numbers for you.

    Jan 20, 2017 Here’s how much debt the US government added under President Obama

    Based on quarterly data released by the US Treasury, the debt at the end of 2008 – just before Obama took office – stood at roughly $10,699,805,000,000.
    As of the third quarter of 2016, the most recent data available, the debt as Obama is set to leave office stood at $19,573,445,000,000.

    https://amp.businessinsider.com/national-debt-deficit-added-under-president-barack-obama-2017-1

  59. Meena says:
    @Anonymous

    Thank god for him never having another opportunity again to fool us .
    Obamacare was deal for big pharmaceutical and big insurance . Worst of it ,he tried to make it compulsory .

    Premiums started going up just right from the beginning and the copay .

    Nothing good about this scotchtaping of the leaks .

  60. The 0,0001% only cares about the 0,0001%

    That’s 100% for sure…

    Justice for all or justice for none. Back to a principled lifestyle is the only way out [imo].

  61. Wally says:
    @KA

    – So according to you the US is threatening to use bribes, threats & nuclear bombs on your cited India, Venezuela, Nigeria if they refuse to do business with the US.
    Your proof is where exactly?

    The US has a 5 billion dollar trade deficit with India.
    The US has a 1 billion dollar trade deficit with Nigeria.
    The US has a 3 billion dollar trade deficit with Venezuela.

    So how does your imagined bribes, threats & nuclear bombs work to the US advantage?
    LOL

    – You’re a clown just making up stuff to suit you Communist agenda & wishful thinking.

    – You are simply in over your head.

    • Replies: @KA
  62. Alden says:
    @FB

    The workers were heavily involved in Mussolini fascist economics. The nobility as nobles were not involved at all. Farmers and business owners who happened to be nobles were involved as farmers and business owners.

    The church was not involved as a religion. The Catholic Church owned vast amounts of real estate thus were major landlords. The church would have to confirm to land lord tenant regulations. building codes etc. The church ran most of the hospitals colleges and universities in Italy. The church was more than a religion. It’s a vast temporal power that controls medical care education and vast amounts of real estate.

    The Catholic countries Spain and Italy were anti communist and began fighting communism and the Soviet Union from 1918 on. The Catholic Church, unlike the other Christian sects was anti communist and anti Soviet Union from 1918 on. Anti communist Catholic Church and atheist anti communist Mussolini cooperated to fight a communist take over of Italy.

    The fascist establishment of labor unions low cost housing child benefit so workers wives could stay home and care for the kids minimum wage industrial health and safety laws had already been set forth in a papal encyclical Reverun Novarun in the late 19th century.

    The FDR programs in America were a copy of Mussolini’s programs. After WW2 all European governments copied Mussolini’s programs.

    Fascism was is set up as a balance of the interests of all workers big and small business agriculture and public goods such as hospitals medical care education and infrastructure.

    Mussolini seized the Italian government in the early 1920s when it appeared the Italian communists were gaining power. You can look up the details if you wish. But wiki is very liberal. So you’ll probably find some tale of mean old fascist winning against good progressive communists.

    • Replies: @Dube
  63. KA says:

    Russian fleecing by local oligarch and international neocons was made possible by opening up of Russian economy ,meaning accepting of dollars for the state and public transactions and flooding of Russai with “cheap’ dollars.

    Venezuela Argentina ,Iran,Nicaragua,Syria and China are at the crosshairs of similar plundering . Trump’s anti China rhetorics is ventriloquism of those neocons and Chinese oligarchs with no loyalties to China.

    Still I dont see how the system can survive . I can delay the inevitable but it cant avoid.

  64. “And most of the left believes in trickle-down theory. The Democratic Party leadership is absolutely convinced, if you just give enough money to the top 1 percent, or 5 percent, or Wall Street, it’ll all trickle down.

    This statement is so wrong that it almost discredits the whole opinion.”

    In reality trickle down is a principle explains how growth might work, if the top actually reinvested into those that produce, but as production is something — in broad-base decline and the economy is built more and more to an insulary few, who send their money elsewhere — that principle as demonstrated has lost relevance. That aside,

    one can eschew the political incorrect assessment for the correct observation about how the deeply flawed the current system is. In the last several decades starting in the late 1970’s , the shift to bailing out the top has not been married to any one party. i would hate to miss the point because there’s an apple tree in an orange grove. And I think the main thrust is vitally important — even as a hard core capitalist — the mercantil system of operating should be addressed.

    ———————-

    It would be an interesting model to create and test:

    close down wall street and open open up everything else.

  65. Mefobills says:
    @onebornfree

    ONEBORN-DECeiVER, just like his (((austrian))) heroes.

    “The important thing to realize about free-market economics and libertarianism, is libertarians advocate central planning, ”

    Total garbage

    Here is the rest of the quote from Hudson, which you conveniently leave out… and hence lie by omission.

    the free marketers want central planning. But the banks are to be the planners, not the government. They want to exclude the government from planning, except to the extent that they can take over the government, as Trump has done, and plan all of the income to be transferred to themselves from the rest of the economy.

    Lolbertarianism and neo-liberal economics come from the same well spring, and have the same (((thought leaders))).

    They also lie with omission, and cherry pick history to fit their a-priori narratives. You’ve been duped, and are so far gone, you are now a deception agent.

    So, where is Hudson wrong? Nature abhors a vacuum. If civilization cannot do its planning, then it will be done by predators intent on self aggrandizing for their in-group. The banks are to be the planners, and by extension, the owners of the banks are the planners.

    To the extent they can take over the government is exactly what is happening today. Eject your brainwashing. Lolbertarianism is a gate keeping operation to snag and dupe normies.

    • Agree: Biff
  66. Daniel H says:
    @Desert Fox

    This coronavirus scam is also being used to bring in a one world government viaUN Agenda 2030.

    One world government couldn’t be any worse than the one we have now.

  67. KA says:
    @Wally

    The US has a 5 billion dollar trade deficit with India.
    – The US has a 1 billion dollar trade deficit with Nigeria.
    – The US has a 3 billion dollar trade deficit with Venezuela”

    That proves USA doesn’t make much of anything nowadays . Nepal runs trade deficit with India and China .Bangladesh runs deficits with India .India runs with China . These values have nothing to do with printing money at home to bolster crony capitalism until the dollars sinks . Here the bribes ,the military IMF and WB come tom play the role of keeping the dollar as reserve currency ( and threat to Saudi ) .

    Other country devalues the currency to make export attractive and reduce the deficits . US runs a system where dollar itself is bought as commodity by other to do business and draws the money form outside to support its deficits . The reserve status of Dollar allows it .Reserve currency using the printing is as illegal amoral and against the agreed upon policy as is the case when veto wielding power uses the veto or other powers at UN not for world peace and prosperity but to further its own interests .

    India has been threatened with sanction had it went ahead with business with Iran . That was outside the UN sanction . It bribed India with prospect of supplying nuclear fuel ( but did not deliver in time ) in 2006 in order to Indian acquiescence of sending IAEA matter to the UN .

    I hope you can digest the above .

    Here also comes the other leg that holds this thuggish exploitative practices of US style capitalism – monopolizing the printing market to print dollars and refusing other countries of reaping same benefits from printing their local currencies .

    • Replies: @FB
    , @Wally
  68. Sorry, All of you are wrong. It is much, much worse than you all think. I do not even want to think about how bad it might get.

  69. FB says: • Website
    @KA

    I hope you can digest the above .

    …says commenter KA in exasperation to Mushroom Wally…after having provided a quite thorough and insightful discussion of how the bankster paradise US operates…

    Buddy…you might as well have been talking to your toaster…as to the Mushroom Wally…🍄 🍄 🍄

    • Replies: @KA
  70. @Mefobills

    Reuters/Jonathan Ernst
    Fear indeed.
    ECON 101
    Trump wanted to print money to repay the national debt. That’s bananas
    September 12, 2018
    Gwynn Guilford
    By Gwynn Guilford

    [MORE]

    Reporter

    Donald Trump has made his ignorance of Economics 101 abundantly clear—from his late-night phone calls to ask how the dollar works to his constant confusion over the cause of the US trade imbalance. Bob Woodward just added another striking episode to the list.

    The latest tidbit comes from Fear: Trump in the White House, the renowned investigative journalist’s book on the internal struggles of the Trump administration. According to CNBC, Woodward reports the following exchange between Trump and Gary Cohn, the former director of the National Economic Council, while discussing the national debt:

    Trump: “Just run the presses—print money.”

    Cohn: “You don’t get to do it that way. We have huge deficits and they matter. The government doesn’t keep a balance sheet like that.”

    Cohn, writes Woodward, was “astounded at Trump’s lack of basic understanding.” The president has accused Woodward of fabricating quotes. But while Cohn has said the book “does not accurately portray” his experience of the White House, he hasn’t denied that any specific exchanges took place, as Axios notes.

    So why is Trump’s suggestion a big deal? Throughout his 2016 presidential campaign, Trump vowed to slash US national debt and balance the federal budget. Not only has he failed to do so—his exchange with Cohn suggests he doesn’t even understand how national debt works.

    Normally, when a government spends more than it earns in taxes and other revenue, it has to borrow from the public to cover those expenditures, running a budget deficit. When it repeatedly earns less in revenue than it spends, annual deficits keep s

    nowballing into the national debt. The US has now racked up more than $21 trillion in debt.

    From: Wikipedia:

    To pay for the large costs of the ongoing First World War, Germany suspended the gold standard (the convertibility of its currency to gold) when the war broke out. Unlike France, which imposed its first income tax to pay for the war, German Emperor Wilhelm II and the Reichstag decided unanimously to fund the war entirely by borrowing,[1] a decision criticized by financial experts such as Hjalmar Schacht as a dangerous risk for currency devaluation.[2]

    The government believed that it would be able to pay off the debt by winning the war, as it would be able to annex resource-rich industrial territory in the west and east and impose massive reparations on the defeated Allies.[3] Thus, the exchange rate of the mark against the US dollar steadily devalued from 4.2 to 7.9 marks per dollar, a preliminary warning to the extreme postwar inflation.[4]

    This strategy failed as Germany lost the war, which left the new Weimar Republic saddled with massive war debts that it could not afford, a problem exacerbated by printing money without any economic resources to back it.[3] The demand in the Treaty of Versailles for reparations further accelerated the decline in the value of the mark, with 48 paper marks required to buy a US dollar by late 1919.[5]

    Afterwards, German currency was relatively stable at about 90 marks per dollar during the first half of 1921.[6] Because the WWI Western Front had been mostly in France and Belgium, Germany came out of the war with most of its industrial infrastructure intact, leaving it in a better position to become the dominant economic force on the European continent.[7]

    However, in April 1921, the Reparations Commission announced the “London payment plan”, ordering Germany to pay reparations in gold or foreign currency in annual installments of two billion gold marks plus 26% of the value of Germany’s exports; despite German outcry at these demands, they were accepted the following month after an Allied ultimatum to impose economic sanctions that would force Germany to meet payments.[8]

    When you print money without backing it and the only thing you get is more debt…your currency becomes basically worthless ….this forces the collapse of the economic pathways which are worse now than ever due to the global economy. The dominoes will fall ….and so will the systems.

    • Replies: @Mefobills
  71. Dube says:
    @Alden

    Thank you for the exposition in Italian Fascism, including for its even tone. [#63.]

  72. Not even #110 will stop this. It’s a global criminal network and The Nose has goytroopers in every land.

  73. KA says:
    @FB

    Thanks . My understanding of economics comes entirely from the rich analysis of the wonderful people who post and write here .

  74. @james charles

    Excellent analysis, except that it never was a true medical crisis.

  75. Wally says:
    @KA

    So now you are changing your story.

    – First you say the US is coercing countries into unfavorable trade deals which benefit the US at the cost of those countries.

    – Then, after being shown that it is those countries who actually benefit from their trade with the US more that the US benefits, you desperately pivot to the equally absurd claim the US doesn’t make anything worth trading for in spite of the fact that those countries & countries worldwide do buy US products that they obviously find valuable and are often utterly incapable of producing themselves. LOL

    – You also desperately & incoherently try to change the subject to “the bribes ,the military IMF and WB come tom play the role of keeping the dollar as reserve currency ( and threat to Saudi )” for which you have no proof —after you nonsensically claimed that the US demands trade with countries like Nigeria Venezuela & India via ‘bribes, threats, and coercion with nuclear bombs’ for which you also have no proof.

    Your logical incoherence is at Communist level.

    Please give us proof that countries do not print their own currency, which is another laughable claim.

    • Replies: @KA
    , @FB
  76. Mefobills says:
    @niteranger

    You can just print money if it goes on to pay down debt instruments. This is especially true if the debts have mounted to be above the ability of an economy to pay. In other words, printer can go brrr, providing the new credit channels only toward debt removal. The debt instrument and the money then disappear simultaneously.

    You are right of course, that Trump is clueless on the money system, and so are his neo-liberal advisors.

    Hudson describes how you have to understand the balance sheet.

    If you’re not already thinking in terms of balance sheets, which most people don’t, you have to sort of just read it again and again, and then all of a sudden, “Ah, now I get. It’s a ripoff! It’s created out of nothing. Now I get it.”

    Here is a fairly accurate summary of Wiemar Hyperinflation.

    https://www.wintersonnenwende.com/scriptorium/english/archives/articles/hyperinflation-e.html

    • Replies: @antibeast
    , @Meena
  77. AWM says:

    Follow the money.
    Follow the money.
    Follow the money.

  78. KA says:
    @Wally

    You are very concrete ,you know that .

    Very concrete .

    Let me add few more that I didn’t cover .

    Other countries run deficit ,they go to IMF . IMF gives but the country has to shred public services and allow foreign corporations to enter banking ,insurance ,health or even buying of domestic essential services by ( US) . If IMF doesn’t ,it prints but loses values .

    USA never goes to IMF or WB ( it equally applicable honest system should have gone and shredded wars plans abroad and welfare at home ) it prints dollars .
    But it doesn’t lose value .

    ( reserve currency . How is that maintained . ? Ask Saddam , ask Ghaddafi , and ask Saudi of 1973 )

    With the cheap money ,the dollars travels to credit – poor but stable countries and food the market buying things cheap,increasing prices or simply investing in local currency and takes up millions in interest then the dollars return home again destabilizing the foreign economy ..

  79. FB says: • Website
    @Wally

    Hello…[knocking on Mushroom Wally’s lumpy noggin…🍄 🍄 🍄 ]…anybody in there…?

    What part of ‘common sense’ do you not understand…?

    Obviously if the US is running trade deficits with that many countries [which YOU brought up]…then it is BUYING a lot more stuff from them than it is selling to them…FOOL

    The key factor in all this is that the US gets to pay all these countries for their stuff in US dollars…it’s like me going to the car dealer and offering the guy my own paper instead of real money…

    Other countries have to pay for imported stuff in the currency of the country that is selling…

    So these countries from which the US is buying all these goods end up with a big pile of US dollars with which they can only do one thing…buy US treasury bills…ie they are changing one type of US paper for another type of US paper…

    Handing out this paper is like being a borrower from a bank…you get actual stuff for simply a promise to pay this loan back later…you are now on your way to DEBTOR PRISON

    At the same time the country is now pulled into being ‘invested’ in the US system…plus the US has all kinds of leverage over them because they are holding promisory notes from the US…

    Again…you are like the deadbeat that is threatening to not pay his loans…of course the creditor that lent you money is not going to appreciate this…

    This is all well and good Mushroom Wally…IN THE SHORT RUN…

    In the long run, especially with all the shenanigans with sanctions, wars and other bullshit that the US is constantly pulling…plus the fact that more and more of those countries that sell to the US don’t actually have to sell to the US because there are every year more and more countries that are growing and prospering and interested in buying those goods…

    All of these things come together to spell the end for the US being able to pass off its paper in exchange for real stuff…

    Eventually the deadbeat is kicked to the curb…

    I may have been clever enough to get the Ford people to give me a truck for an IOU…but after a while, when they have a lot of other customers paying cash on the barrelhead, I might not be so lucky…

    Does that help Mushroom Wally…?🍄 🍄 🍄

    • Replies: @jack daniels
  80. Parfois1 says:
    @Dube

    But in the warning given by Hudson toward the current developments, the corporate interest subdues the state.

    But that’s the inexorable law of power dynamics where the dominant force – such as the power of wealth characterized in capitalist societies – will assume absolute political power. And one doesn’t need a course in Marxism to understand that basic fact throughout history – it’s an axioma of social dynamics with its equivalent in the physical world.

    Fascism embraced the “middle term” position between capitalism and the emergent communism – that is, the merging of interests between labour and capital for the commonwealth (common good) where the State would be the impartial referee by striking a balance between the competing interests. But is it possible or even viable on the theoretical and even on a empirical level?

    As a theory, it is indeed an attractive proposition, but it would presuppose the maintenance of class differentiation enshrined in legislation and enforced by the state (as illustrated in Fritz Lang’s Metropolis). It would also presuppose that the State would remain as the “impartial referee” – equally defending labour against capital and capital against labour. There is an inherent contradiction in that concept of having a State with two faces.

    But even if such an impartial State could be set up, how long would the “impartiality” remain before the inexorable law of wealth power would come to the fore and assume its political dominance? The answer is before our eyes everywhere we look. Following the end of WW2 most, if not all, countries followed a political programme of basic social welfare for all citizens and some went further by nationalizing the drivers of economic activity such as banks, transport, national resources, utilities and so on. It did not last long; by the 1970s the Chicago School, Thatcherite and Reaganomics doctrine quickly dismantled the half-hearted post-WW2 social reforms to implement a vicious social Darwinism economic doctrine and privatise everything that remained in common ownership. The apex of such dominance reached the point where the State itself has become privatised and the consequence of all that is that national wealth has been concentrated in fewer hands, inequality has reached feudalistic proportions and the polarisation of societies into two camps: the filthy rich and the dirty poor. This is the human face of fascism, the same as depicted in Metropolis.

    The fascist experiment in Italy and Germany was not only a model of economic development; there were the other dimensions for the exercise of political power, namely the indoctrination of the masses by racial/nationalistic mythology, enforced dogmatism and idolization of the State. Hence the aggressive external policies to enhance domestic compliance and herd mentality. Look at the US now, even without the formal declaration of following the doctrine of fascism.

    But that fascist experiment in Europe was short-lived, a mere ten years before the great European disaster, not enough to draw conclusions from. But we have the US example (which is coming to its end too) to prove that, whatever constitution you draw, the power of wealth will dictate the true nature of the State: the formal political representation of the wealthy class, in other words, a dictatorship of capital.

    The above considerations lead to another conclusion: since the State is the enforcing branch of the dominant wealthy class, the only alternative to change an oligopoly regime is to bring on the dictatorship of labour (working class) and learn the mistakes from the dissolution of the USSR which, by the way, was opposed by an overwhelming majority of the people in all constituent republics.

    • Thanks: FB
    • Replies: @450.org
    , @FB
    , @Dube
  81. You’re talking to the wrong audience. The people on here love the rich and especially love giving the rich more and more of their money. They actually believe that the rich are people, too. Can you believe anybody in this day and age who believes such superstitious nonsense?

  82. @Mefobills

    Using equal signs to show a relation (not equal but a relation).

    Money=Law=Force.

    Taxes = Force.

    Essential Mefobills, textbook material and justly so. Some commenters should shed the drunks-parlay of theoretical economists, the financial speak, the media waffling. One cannot get an educated guess when the variables have no meaning.

    The elites “bailing”, stands for upping the disparity between surplus population and elite clusters locally. They are literally bailing their own boat.

    The “bailing” is needed to renegotiate the position of the dollar on the international scene, to regain credibility and bargaining power as to the real players. The “global” is out of the “globalism”. The Western, US, elites have no credibility left as to the above equation in Money=Law=Force Military menace=Force equation. Hence local infighting, no global understanding any longer.

    The local and international stresses must be solved, Corona takes only care(and that probably only in the short term) of the local part, as important as the last three months were, it is a minor part of the task. The repositioning of the US facing the elites on world level, is going to be the harder part. It could lead to globalism in a different shape and/or international conflict. Rough seas, now steer that boat out of the spell.

    China and any other players, which is to be expected, have not introduced different approaches as to how to share and divide the cake. Disappointing anyhow in the long run. Turbulence ahead, conflictive stances on the horizon, no long-term strategies ahead.

    To us: what money should stand for: unified accounting on a planetary scale. Quantifying and value attribution hedged against the assets – liabilities equation globally, incuding homonim populations variables. Not for tomorrow. That kind of globalism.

    Inspired by Mefobills, not with any consent of his, and he might very well disagree.

    • Replies: @onebornfree
  83. Parfois1 says:
    @FB

    …they have gorged themselves on profit and CORPORATE WELFARE from the taxpayer for decades…

    Not only for past decades – for decades to come… if the whole caboodle does not come down sooner. They are pawning the lives of future generations, the ones who are going to pay for this profligate “socialism” for bankers. Look at the mechanics of it (let’s pretend you don’t know):

    All this bonanza comes from and is guaranteed by the Treasury. The Treasury cannot print money, so it requests a loan from the privately owned Federal Reserve Bank. The Fed obliges and receives Treasury securities (debt obligations) for repayment of the debt plus interests. And where does the Treasury get the money from to repay the loans plus interest, currently about 600 billion yearly on interest alone? From the people, the taxpayers who cannot set up tax-avoidance schemes or hide their income in tax havens. The future taxpayers will have to pay the present (and past) handouts for the billionaires.

    This is another big transfer of wealth (sweat) from the common people to the bankers and big corporations. Business as usual… turning disasters into profit, same as wars.

    • Agree: acementhead
  84. Parfois1 says:
    @Meena

    100 billions are puny amount compared to trillions the Fed allows to rich unproductive rentier sectors to banks ,hedge fund and through the corrupt taxation system .

    That 100 billions also pale in comparison with what the Treasury pays in interest to the Fed, the biggest holder of Treasury securities by far. The people, through the Treasury, are the Fed’s milking cow.

    • Replies: @KA
  85. antibeast says:
    @Mefobills

    You can just print money if it goes on to pay down debt instruments. This is especially true if the debts have mounted to be above the ability of an economy to pay. In other words, printer can go brrr, providing the new credit channels only toward debt removal. The debt instrument and the money then disappear simultaneously.

    Sorry but you’re wrong.

    The Fed can’t just print money to pay down US public debt because the money that the Fed prints is private money. The only way for the US government to pay down its public debt is to collect more taxes or sell off public assets.

    • Replies: @Mefobills
  86. onebornfree says: • Website
    @PetrOldSack

    “Inspired by Mefobills”

    I fell sorry for any one foolish enough to believe the never ending state and central bank-worshiping B.S. emanating from that particular individuals tiny, er, “mind”.

    “Money=Law=Force.” [i.e. state-enforced mediums of exchange issued via central banks] is exactly what we already have right now, and it is the precise reason as to why why all of these state enforced, wholly fake mediums of exchange [ie fiat currencies], are continually devaluing and failing to be reliable stores of wealth, as natural market forces which are, in sum, far greater than, and outside of, these governments and their central banks control, continually readjust their fake monies back down towards their true market value.

    And yet that idiot [and yourself presumably] want even more fake “money” enforced by even more government laws [ ie by”legal tender” laws], and issued by the central banks.

    “Stupid is as stupid does” , as they say.

    Fortunately, the markets in sum are a far greater force than any government or totalitarian fantasist idiot, and will always eventually re-adjust all fake [i.e. fiat] currencies back to their true, real world market value [i.e. zero, or close to it].

    And so it goes….

    “Regards” onebornfree

    • Replies: @Mefobills
  87. KA says:
    @Parfois1

    Thanks . I dint know Fed receives interest from treasury . So does Fed pay tax ? Fed should start also paying taxes to Treasury whenever it creates money . Actually 90% rate above 1 billions.

    Sounds odd and illogical? Sure it does sound odd mad new but that’s the property of the idea.

    Government does it few times ,very soon people find meaning into it and accept it.

    • Replies: @Mefobills
  88. You can’t print money; you can just inflate the currency. Money is money only insofar as it can be exchanged for goods. But printing money creates no new goods.
    Having said that, it seems reasonable to inflate the currency as the cost of dealing with an emergency.
    Keynesianism squared.

  89. @FB

    In addition to buying US bonds they can buy equity in US corporations and thereby swipe the US capitalist’s profit on operations. Warren Buffett used to warn of this.

  90. Emslander says:
    @FB

    Please re-read my correction to your post.

    There will be too much of your kind of fuzzy thinking as we proceed, no doubt a consequence of legalized weed.

  91. @niteranger

    “Contrary to popular opinion, excessively high deficit spending and exorbitant government debt levels are not the primary cause of a hyperinflation. In most cases they have been the result of other exogenous events such as ceding of monetary sovereignty, war, rampant corruption or regime change. It is these exogenous events that result in the public’s rejection of the currency, a collapse in the tax system and the government response of printing more money to fill in the confidence void. Ultimately the confidence void cannot be filled and the currency is fully rejected by the public in the form of hyperinflation. In my treatise on the monetary system I discuss the importance of this unspoken agreement between the private sector and public sector.”

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1799102

    • Replies: @anon
  92. starthorn says:
    @Astuteobservor II

    It wasn’t so much a deliberate bailout but the corporations scamming the handouts, keeping certain staff while dropping the others. The 20% unemployed? In store retail, entertainment venues; low to low mid wage jobs TPTB don’t rely upon let alone care about. What a way to force digitization and automation, especially at the manufacturing level. Small businesses and hand crafted items (not just beer, think jewelry and personal and personalized items that come across as more thoughtful and dare I say intimate) are irrelevant to these people, and thus they are the ones kept closed while the big box remain unimpeded. If they could close small grocers without being caught they would have.

  93. @Mefobills

    Lolbertarianism and neo-liberal economics come from the same well spring, and have the same (((thought leaders))).

    They also lie with omission, and cherry pick history to fit their a-priori narratives. You’ve been duped, and are so far gone, you are now a deception agent.

    Exactly Kevin MacDonald’s point here, for example:

    https://www.unz.com/article/noam-chomskys-requiem-for-the-american-dream-jewish-activism-by-omission/

  94. The banksters want a bedt jubilee

    The coin landed on its side and their derivatives went up in smoke

  95. FB says: • Website
    @Parfois1

    Well done, Parf…

    The issue of POWER DYNAMICS is at the heart of what is REALLY going on in today’s world…[and in fact this has been going on forever]

    In the western system of ‘international law’, our world in practice is little more than a jungle. The powerful can do whatever they please and the weak have to put up with the actions of the powerful in order to survive.

    –Prof Dongping Han, The Socialist Legacy Underlies the Rise of Today’s China in the World

    I have occasionally dived into this subject here on this discussion forum, attempting to draw attention to the fact that private wealth has for the last 40 to 50 years been concentrating in fewer hands and thus making the vast majority less well off…

    Today the system is at a crisis point…the wealth of the nation is concentrated in a few hands precisely due to the fact that wealth brings with it political power, and our political system has by now been fully captured by the oligarchy with all the wealth…

    This is readily illustrated by the economic bailout under discussion here…as in 2008 the crisis results in massive corporate welfare to the oligarchy that controls the big corporations and banks, which the people are left even poorer at the end of the day…

    Also worth noting here is that you don’t need to be totally destitute to be part of the class that is ripped off…a professional couple making, say 200,000 dollars each, for a total household income of 400,000 dollars is going to qualify to be among the top One Percent…

    But you are still losing ground, and have been losing ground…just like the guy or gal trying to get by in the gig economy…

    Here is the breakdown of the share of national wealth from 1960 to 2012…with the top one percent further broken down into four groups…

    Note here that the broadest group in terms of population has the SMALLEST share of the wealth…this is the gray line representing the people in the top one percent to 0.5 percent…

    Now this group includes a lot of hard working professional people…doctors and dentists, scientists and engineers, etc…people who actually contribute a lot to our society…

    But look how this group has been ripped off, while the much smaller, population-wise, groups have shot skyward…the top 0.01 percent has shot up from having just two percent of the wealth pie in the 1970s…to nearly 12 percent of the pie today…

    This tiny group is 100 times less people than the one percent…yet it has MORE wealth…nearly double in fact of that bottom slice of the one percenters…

    In fact all three groups above that bottom slice have just taken off in the last 40 years, since the Reagan and Thatcher doctrine have taken over…

    By rights, the gray line should be at the top and the progressively smaller [population-wise] groups should line up underneath it…

    Yet we see exactly the opposite…

    So who exactly is getting the sweet deal and who is getting ripped…?

    There are a little over one million families in that bottom slice of the one percent…families that are increasingly being squeezed by the super rich above them…

    So even if you are a decent and hardworking couple and you have devoted your life to becoming valuable professionals, you find also that it now costs a lot more money to educate your children, perhaps even out of reach…

    Yet nobody is complaining about this…I find this quite incredible…

    And that is to say nothing of the millions of complete fools that are nowhere near the one percent level and who have in fact seen their life opportunities dwindle completely…yet they still support the agenda of the super wealthy oligarchs, which is Trump’s REAL constituency…

    This latest massive corporate welfare scheme simply proves what many of us have known all along…

    The super wealthy have totally captured the machinery of governance and regulation…

    In a recent article on this website Kevin Macdonald discusses the Noam Chomsky documentary Requiem for the American Dream, which deals expressly with this issue…tracing the history of how this has happened, starting from the progressive era of FDR when huge swaths of the people were brought out of poverty, much as what we have seen in China lately…

    And then after Nixon, it all starts to go downhill…as this chart from the same 2014 study on wealth distribution shows…

    Both of the above from Saez and Zucman, Wealth Inequality in the United States since 1913

    Some fantastic hard data and charts in the appendix pages of this 65-page study…

    And here is the Chomsky documentary…Macdonald, in his article on UNZ, does not dispute the meat of the message in this, but accuses Chomsky of underplaying the Jewish ‘issue’ in all of this…which does sound like a fair point, since Jews are heavily represented in the extremely powerful oligarchy…

    But your point is of course something that people need to think about…political power comes with wealth, and this is the only reason we are where we are today…you are not going to ‘fine-tune’ this system in some way…the only way to correct the entire problem is to take away the political power of the super wealthy oligarchy…and to do that you have to rebalance the wealth distribution…

    China is a very good example of how the new wealthy class in that country does not wield any political power…

    • Replies: @Astuteobservor II
    , @Miro23
  96. Blip Blop says:

    Interesting article on an infuriating situation. However, I can’t help but think that this is an example of front-running. They even go so far as to direct the anger toward “muh fascism.” No mention of the trew perpetrators.

    Whew owns the banks? Whew controls the banks? Whew is vastly over-represented in the billionaire class?

  97. DrWatson says:
    @onebornfree

    Thanks for the link – what a brilliant essay from the distant past of 1962!

    “If one raises the question what factors make the national income rise, one has only one answer: the improvement in equipment, the tools and machines employed in production, on the one hand, and the improvement in the utilization of the available equipment for the best possible satisfaction of human wants, on the other hand. The former is the effect of saving and the accumulation of capital, the latter of technological skill and of entrepreneurial activities. If one calls an increase in national income (not produced by inflation) economic progress, one cannot avoid establishing the fact that economic progress is the fruit of the endeavors of the savers, of the inventors, and of the entrepreneurs.”

    Where does that leave us if this is all true?

    • Replies: @onebornfree
  98. onebornfree says: • Website
    @DrWatson

    “Where does that leave us if this is all true?”

    “Us”? Headed straight down the $hithole, as far as I can tell. More importantly:

    [1] where does it leave _you_, if all that [and more besides that Mises said] is true?

    And…..

    [2] If you believe its true, then what can you do about it personally?

    Regards, onebornfree

  99. Dube says:
    @Parfois1

    Fascism embraced the “middle term” position between capitalism and the emergent communism – that is, the merging of interests between labour and capital for the commonwealth (common good) where the State would be the impartial referee by striking a balance between the competing interests. But is it possible or even viable on the theoretical and even on a empirical level?

    Well seen as the essence of fascism in its distinct practice. Is it possible…? I suppose so only with a clear general will, grand ceremonies, snappy tailoring and a charismatic enforcer. Heckuva balancing act. Thank you for the assessment. [#81.]

  100. bluedog says:
    @onebornfree

    Lol what a nut job..did your mother ever have any children that lived?

    • LOL: FB
  101. bluedog says:
    @onebornfree

    You keep rambling on with nothing but nonsense I have the feeling your either trolling or shilling………and now its time to either put up or shut up seeing you must be an economist an expert on finances lay out in spades step by step just what you would do so we could tear it down step by step…./.I take it you belong to the feel good party if it feels good do it…and I expect your reply will show just that.!!!!

  102. Mefobills says:
    @antibeast

    The Fed can’t just print money to pay down US public debt because the money that the Fed prints is private money.

    When the FED issues money from its keyboard, that is endogneous private money. The Treasury issues exogenous public debt. (Endogenous means within the private banking system.)

    When a TBill transfers to the FED’s ledger, it is the FED’s asset, and Treasuries liability. (Other instruments are now allowed to transfer.)

    The FED then issues money off its keyboard (the ledger) which is the FED’s liability.

    The operation is called expanding the ledger, where an asset (the TBill) and a liability (new FED dollars) expand simultaneously. Double entry ledger remains balanced.

    Those new keyboard dollars then go BRRRRR, and point at double entry ledgers held within private banks.

    If you have a mortgage debt at a bank, the debt instrument is the banks asset and dollars created its liablity. Your are on the hook for paying back the banks liability … its dollars.

    When FED dollars pay down principle on your mortgage, the mortgage disappears (asset) and Fed’s liability (dollars) disappear. Actually the mortgage will transfer to the FED and do nothing, and the bank now holds FED dollars as a new asset instead of the mortgage as asset.

    You have just been debt released.

    Hudson suggests that first year students should learn the balance sheet.

    The recent changes to the FED include the creation of SPV’s with the purpose of purchasing all kinds of debts. The same double entry magic will be done.

    Printer can go brrr to release debts.

    The SPV’S will have balance sheets that “expand” instead of the FED.

    https://ellenbrown.com/2020/04/03/was-the-fed-just-nationalized/

    Public debts don’t really matter, especially if they make no claims. It is private debts that matter.

    • Replies: @antibeast
  103. Mefobills says:
    @KA

    Thanks . I dint know Fed receives interest from treasury . So does Fed pay tax ? Fed should start also paying taxes to Treasury whenever it creates money . Actually 90% rate above 1 billions.

    Wright Pattman put a stop to that. The FED now rebates to Treasury after deducting its costs.

  104. Mefobills says:
    @onebornfree

    Tiny mind? Projection much.

    Lolbertarianism cannot occur in the real world. It is an impossiblility when there are in-groups operating to take rents and usury. They intend on owning the law = money = force.

    A group of piranha’s will take down “individuals” every time. It is self evident to anybody with two digits of IQ to rub together.

    No doubt your austrian ((heroes)) were initiates, and their purpose was to dupe normies as a gate keeping operation.

    Below is an excerpt from when the Kahal began. My view is that it began earlier in history, going back to Sumer with the Haibaru donkey tribes.

    From Waters flowing Eastward by L. Fry

    _____________

    In studying the Jewish people, special attention must be given to the Jewish community. This peculiar social order has for twenty centuries impressed its indelible mark on every one of its members in every quarter of the globe; uncrushed by pressure from without, it has administered its affairs according to its own arbitrary laws, often in defiance and to the detriment of the government of the land.

    The authority of the Jewish leaders, originally derived from the ten commandments delivered to Moses,l had already in the time of Augustus been widely extended2 by a learned but unscrupulous priesthood 3 over an ignorant, superstitious people. In that age, while a struggle was going on between two rival sects, Pharisees4 and Sadducees,5 certain political clubs 6 were formed which concealed under a religious mask the grasping aims of a clique.7

    These clubs were not slow to take advantage of their country’s misfortunes. A few years later, during the siege of Jerusalem by Vespasian, they won, by the betrayal of the Jewish cause, the favour of the Roman conqueror,8 and were subsequently entrusted by the imperial government with the administration of Palestine.’ Moreover, with the sack of Jerusalem, the destruction of the temple, and the death of the patriotic leaders, the common people found themselves utterly dependent, in spiritual as well as civil matters, upon these same self-styled societies of the learned, who alone possessed the secrets of the priesthood and copies of the sacred texts.

    By interpreting, altering, and augmenting the rules and ritual these texts contained, and by a system of espionage and assassination,10 the new rulers established a strict control over the daily life of their coreligionists. Thus having taken hold of the Jewish people through the medium of the Roman authority, this clique easily placed its laws above the ten commandments, and formed a government whose control over its subjects was absolute.11

    This government became henceforth known as the Kahal.

  105. Miro23 says:
    @FB

    …the only way to correct the entire problem is to take away the political power of the super wealthy oligarchy…and to do that you have to rebalance the wealth distribution…

    Since they own most of the assets, it would need to be a rebalancing through a fall in asset values (same as the Great Depression 1930’s).

    The difference here, is that the US government of the 1930’s didn’t run QE infinity to artificially prop un asset values (by indebting the 99.9%). In the Great Depression asset values were allowed to fall.

    At present, asset values are protected by expanding public debt. At the limit, the 0.01% own everything and the 99.9% own nothing – zero net worth . And if the public can only spend by being given more credit – then eventually they can’t pay the interest – and default. The default is covered by more debt until the whole thing falls apart in a hyperinflationary spiral.

    The import dependent US economy can no longer import (US dollar unacceptable to foreign suppliers) with the US finding itself in Weimar II (complete with the sleaze but without the manufacturing base).

  106. “Big Oil Taking $1.9 Billion in CARES Act Tax Breaks Aimed at Helping Small Businesses in ‘Stealth Bailout’: Report
    Posted on May 17, 2020 by Jerri-Lynn Scofield”
    https://www.nakedcapitalism.com/2020/05/big-oil-taking-1-9-billion-in-cares-act-tax-breaks-aimed-at-helping-small-businesses-in-stealth-bailout-report.html

  107. @FB

    Why don’t you {if you have the time} go to https://www.pragcap.com/forum/topic/what-the-hell-is-the-stock-market-doing/#postid-1883
    and explain to him where he is going wrong?

  108. antibeast says:
    @Mefobills

    When the FED issues money from its keyboard, that is endogneous private money. The Treasury issues exogenous public debt. (Endogenous means within the private banking system.)

    Agree. Fed USD is private money. US Treasuries (USTs) is public debt.

    When a TBill transfers to the FED’s ledger, it is the FED’s asset, and Treasuries liability. (Other instruments are now allowed to transfer.) The FED then issues money off its keyboard (the ledger) which is the FED’s liability. The operation is called expanding the ledger, where an asset (the TBill) and a liability (new FED dollars) expand simultaneously. Double entry ledger remains balanced. Those new keyboard dollars then go BRRRRR, and point at double entry ledgers held within private banks.

    Agree. That’s what Bernanke’s QE (expanding the ledger) and Powell’s QT (contracting the ledger) did for USD money supply: the Fed sequesters USTs by printing private money USDs to buy public debt USTs from private banks and then the releases USTs by selling back public debt USTs to private banks for private money USDs. The Fed is not “paying down” but sequestering public debt because those public debt USTs remain on the balance sheet of the US government as liability which can only be paid by 1) taxation, royalties, etc. or 2) asset sales.

    When FED dollars pay down principle on your mortgage, the mortgage disappears (asset) and Fed’s liability (dollars) disappear. Actually the mortgage will transfer to the FED and do nothing, and the bank now holds FED dollars as a new asset instead of the mortgage as asset.

    Wrong. When the Fed prints private money USD to buy private debt MBS (Mortage-backed Securities) from private banks, that financial asset is sequestered to the Fed’s balance sheet while the private banks now holds Fed-printed USDs. The Fed does not “pay down” your mortgage but merely sequesters the private debt MBS in order to increase money supply. Same principle as the Fed sequestering public debt (USTs).

    You have just been debt released.

    Wrong. Your debt has been sequestered by the Fed. You are still liable to pay down your debt once the Fed releases the debt to the banks.

    Hudson suggests that first year students should learn the balance sheet.

    You’re confused. The creditors are the private banks which holds either public debt owed by the public debtors (US government) or private debt owed by private borrowers. The Fed’s QE and QT programs affect the balance sheets of the creditors (private banks) but not debtors whose balance sheets will still show the public debt (USTs) or private debt (MBSs).

    The recent changes to the FED include the creation of SPV’s with the purpose of purchasing all kinds of debts. The same double entry magic will be done. Printer can go brrr to release debts.The SPV’S will have balance sheets that “expand” instead of the FED.

    Nope, they don’t release debts from debtors. Instead, they release the creditors (banks) from those debts by hiding those debts in SPVs!

    Public debts don’t really matter, especially if they make no claims. It is private debts that matter.

    This is a dumb statement. Public debts do have claims — on your TAXES. The difference now is that the Fed’s agreement (hidden in the US corona bailout bill) to buy (sequester) private debts forced the US government to GUARANTEE those private debts. Instead of the Feb being “nationalized”, the US Treasury is now being “privatized” because the US Treasury is legally liable for those private debts (MBS, junk bonds, bank loans, etc.) being unloaded via SPVs onto the balance sheet of the US government.

    • Thanks: FB
    • Replies: @Mefobills
    , @FB
  109. Mefobills says:
    @antibeast

    Wrong. When the Fed prints private money USD to buy private debt MBS (Mortage-backed Securities) from private banks, that financial asset is sequestered to the Fed’s balance sheet while the private banks now holds Fed-printed USDs. The Fed does not “pay down” your mortgage but merely sequesters the private debt MBS in order to increase money supply. Same principle as the Fed sequestering public debt (USTs).

    I gave you an example of how the balance sheet works to then pay off your mortgage, while public debt goes up.

    Another way would be simply change the law, and allow the FED to grab your mortgage and swap its keyboard dollars. So… not wrong. There are multiple ways of maneuvering the debt money system to get an output. The bottom line is that assets and liabilities offset, and all that needs to happen is some sort of paper needs to enter the ledger.

    Did the broad money supply go up with QE? The bulk of QE keyboard dollars were trapped in reserve loops and the “hyperinflation ” never happened. In order to hold the new dollars as reserves, law was changed to pay interest on dollars now held in reserve.

    Nope, they don’t release debts from debtors. Instead, they release the creditors (banks) from those debts by hiding those debts in SPVs!

    Again, you have to pay attention to the balance sheet operation. The law was changed to allow the SPV’s to buy junk paper. The same can be done to pay down private debts. Private debts are “paper finance” are they not?

    This is a dumb statement. Public debts do have claims — on your TAXES.

    Not dumb. What is Japan’s debt to GDP ratio? Payment on Japan’s debt service tends to go through Japan’s postal bank to Japanese housewives. So, the service to Japanese housewives is purchasing power injected into the population. The tax uptake is only part of the circular flow. If public debts are sequestered and make no claims, they are mere ink on paper. Are the Japanese being taxed to death to service their enormous debt, and are they in collapse?

    US Treasury is now being “privatized” because the US Treasury is legally liable for those private debts (MBS, junk bonds, bank loans, etc.) being unloaded via SPVs onto the balance sheet of the US government.

    That would be one way to look at it. It is mostly a question of power. Who is making claims on who. The Treasury could turn around and tax the public to pay the privateers claims. Or, the Treasury might realize they have the army, not the privateers.

    • Replies: @antibeast
  110. FB says: • Website
    @antibeast

    Interesting…but I think we are perhaps getting into technicalities, while losing sight of the forest…

    The simple fact is that money is at its root a mere symbol representing how much real stuff you can buy…if you don’t have real stuff then it does you no good to have money, because you can’t eat it, nor burn it in your stove…

    All these shenanigans with the Fed and Treasury etc appear to be going in a circular motion…try doing a math formula in excel where you reference another formula…you are told you have just made a circular construct that doesn’t work and to try again…

    This is how the real world works…these clowns in the ‘financial’ world can do all kinds of tricks and dazzle us with sound and visual effects like some kind of Vegas show…but at the end of the day you still need REAL STUFF…to eat, to put in your car’s gas tank etc…

    The problem is that the US doesn’t make much real stuff these days…the economy is now less than 10 percent manufacturing [see Chomsky doc Requiem for the American Dream to see how we got here…but the bottom line is that the parasite class decided that making money from money was easier than making real stuff…]

    The only thing that is keeping the US afloat is the global empire…Mike Hudson explained how this works nearly 50 years ago in Super Imperialism, which has now been updated…it works basically by getting the rest of the world to pay for your free ride…

    I’m not going to get into a lot of detail here, but it boils down to the fact that US military activities abroad [including wars and military bases] end up being profitable because they generate a demand for dollars…this means the US can pay for stuff it buys and imports in its own money, instead of the seller’s money…

    And all this money, both from military and importing activities is recycled back into buying US government debt…that is the only thing that is keeping this show going…

    What happens when China decides to say, well now we want Chinese Yuan for our stuff instead of your dollars…?

    This is how it worked before Nixon took the dollar off the gold exchange peg [France was exchanging its dollars for physical gold and this was not going to keep up very long, just like when England ran out of silver in the 1800s paying for Chinese tea and porcelain and decided to force the Chinese to take British India opium instead…]

    So there is an inflection point coming…it always comes…and most likely it’s going to come like a bolt out of the blue and catch these wall street ‘geniuses’ with their pants down…

    All of this moving money around between the Fed and Treasury and private banks doesn’t amount to diddly…the basic fact is that the US system is living on borrowed time…it is well past time to start preparing for a new way of doing things where the free ride no longer exists…

    So that means that another massive money printing and wealth transfer to the oligarchy is not going to help…which is what this whole scheme is…in fact it will only make things much worse…

    The piper always demands payment at the end…and when you don’t have real stuff to pay with, he will make do with your children…

    • Agree: bluedog
    • Replies: @Mefobills
  111. Mefobills says:
    @FB

    This is how the real world works…these clowns in the ‘financial’ world can do all kinds of tricks and dazzle us with sound and visual effects like some kind of Vegas show…but at the end of the day you still need REAL STUFF…to eat, to put in your car’s gas tank etc…

    Exactly.

    Finance capitalism is speculative capital, where you make money from money. (You cannot really make money from money, you can only make claims on the real world.)

    Industrial Capitalism injects purchasing power into the real economy (not on speculation), usually to improve the commons, build out industry, improve labor, public health … etc.

    Industrial Capital vs Finance Capital is two different worldviews. China is running a form of industrial capitalism, as I have pointed out repeatedly. China can also legally release public debts in a jubilee, because Yuan debt instruments are housed in a state bank.

    The U.S. has already lost, because we are in thrall to false ideology. Law/power has been codified to benefit finance plutocracy.

  112. antibeast says:
    @Mefobills

    Another way would be simply change the law, and allow the FED to grab your mortgage and swap its keyboard dollars. So… not wrong. There are multiple ways of maneuvering the debt money system to get an output. The bottom line is that assets and liabilities offset, and all that needs to happen is some sort of paper needs to enter the ledger.

    When the Fed buys private debt (MBS, junk bonds, bank loans, etc.) from private banks, debtors still owe their private debt to their new creditors as those private debts were sequestered but not extinguished by the Fed. The only difference now is that the Fed offloads those private debt (MBS, junk bonds, bank loans) from private banks onto SPVs which are backstopped by the US Treasury. The private banks are now off-the-hook from those private debts which are now backstopped by the US Treasury, similar to Credit Default Swaps where the US Treasury agrees to guarantee the private debts in the event of a debtor’s default. Those private debts are NOT monetized just because the Fed agreed to “buy” them from private banks. All the Fed did was to transfer those private debts to SPVs which are backstopped by the US Treasury in the event of a debtor’s default.

    Did the broad money supply go up with QE? The bulk of QE keyboard dollars were trapped in reserve loops and the “hyperinflation ” never happened. In order to hold the new dollars as reserves, law was changed to pay interest on dollars now held in reserve.

    You’re confusing the Fed money-making loop with the private bank credit-issuing loop. All the Fed did was to expand money supply by printing Fed money to provide private banks with liquidity in exchange for sequestering their debt instruments in the form of public debt (US Treasuries) or private debt (MBS, junk bonds, bank loans). The private banks now have new Fed money to make new loans while private debts are offloaded to SPVs backstopped by the US Treasury. In a diagram, it would look like this:

    Fed –> Creditors (Private Banks) –> Debtors to Fed –> SPVs (backstopped by US Treasury) –> Debtors

    Your mistake is to confuse the balance sheet of creditors (private banks) with the balance sheet of debtors. The balance sheet of the debtors remain the same while the balance sheet of the creditors (private banks) would now be free of those private debts which have been transferred to SPVs backstopped by US Treasury. The debtors would still owe their debt payments to their new creditors which are the SPVs instead of their old creditors which are the private banks.

    The rest of your post on Japan is immaterial to our discussion.

    • Replies: @Mefobills
    , @Mefobills
  113. “The private banks now have new Fed money to make new loans . . . “?

    Not the way ‘things work’?

    “Saving does not by itself increase the deposits or ‘funds available’ for banks to lend. Indeed, viewing banks simply as intermediaries ignores the fact that, in reality in the modern economy, commercial banks are the creators of deposit money. This article explains how, rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks.”
    http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf

  114. @onebornfree

    Without the Fed.?
    “The 1800s were a mess of economic booms/busts with an average -22% GDP contraction every FOUR years.”

  115. @onebornfree

    ” . . . wholly criminal, Federal Reserve . . . ”

    ‘This’ may be a definition of ‘criminal’?

    “If “full employment” is anything under 5% unemployment and “price stability” is core inflation below the Fed’s 2% target rate then the Fed has achieved its dual mandate a whopping 3.5% of the time since 1957 when core inflation was first tracked.  Yes, you read that right.  THREE POINT FIVE PERCENT OF THE TIME.*  That means the Fed has failed to simultaneously achieve both its mandates 96.5% of the time.  I wouldn’t call that failure.  I’d say they’re not even trying. And maybe they’re not?”
    https://www.pragcap.com/feds-dual-mandate-bull-sht/

  116. Mefobills says:
    @antibeast

    When the Fed buys private debt (MBS, junk bonds, bank loans, etc.) from private banks, debtors still owe their private debt to their new creditors as those private debts were sequestered but not extinguished by the Fed.

    You keep missing the forest for the trees.

    The FED, especially if it was nationalized – which it may have been in a quasi way, can just decide to rip up the paper, and hence there is no longer any debt servicing. It boils down to power and law. We paid you dollars at face value for your paper, and you no longer have any claims.

    The Japan discussion is along these same lines, and not immaterial, because you are caught up in a narrative.

    Japan has been busy shifting private debts into the public domain using Abenomics.

    • Replies: @antibeast
    , @antibeast
  117. Mefobills says:
    @antibeast

    Fed –> Creditors (Private Banks) –> Debtors to Fed –> SPVs (backstopped by US Treasury) –> Debtors

    Treasury exogenous public debt does make it into the “private” endogenous banking system, otherwise there would be no Tbills on banker ledgers.

    New TBill Deficit Spend > Bond Market buys said TBill> Government has new dollars to spend (this expands the broad money supply).

    FED TBTF banks (primary dealers) are told to make ready for bond purchase > The former t bill that entered the bond market, can now be bought and brought into the private banking system. There is never a bond collapse.

    The FED is downstream of the Creditors (private banks). Banks can always find reserves, and are not reserve constrained, they only care about interest price. They can find reserves at the last minute at the FED discount window, if they cannot find reserves from other banks.

    The new SPV for the FED acts like a bank in that it can make new loans using fractional reserve. This is where the leverage comes in, and it was TAX dollars from treasury that are the capital base for said new loans. You may have heard about how they can “lever” 10X .

    The loan route will require that the toxic paper is made to perform most likely.

    • Replies: @antibeast
  118. 6 trillion

    thats

    A million 6 milllion dollar men

  119. antibeast says:
    @Mefobills

    The FED, especially if it was nationalized – which it may have been in a quasi way, can just decide to rip up the paper, and hence there is no longer any debt servicing. It boils down to power and law. We paid you dollars at face value for your paper, and you no longer have any claims.

    But your premise — The FED, especially if it was nationalized — is wrong because nobody has yet attempted to nationalize the Fed. The US government could just abolish the Fed because it doesn’t need the private money of the Fed. All it needs to do is to transfer the power to create money to the US Treasury which can then print as much money as is necessary to buy out those private debts. But that’s not what’s happening in the USA precisely because the Fed is a private bank and Fed money is private money. The Capitalist owners of the Fed don’t want to give out their private money for free; somebody has to pay them for their private money and that somebody is the US government.

    The Japan discussion is along these same lines, and not immaterial, because you are caught up in a narrative. Japan has been busy shifting private debts into the public domain using Abenomics.

    Japan is a totally different story.

  120. antibeast says:
    @Mefobills

    Treasury exogenous public debt does make it into the “private” endogenous banking system, otherwise there would be no Tbills on banker ledgers.

    You misread my last post where I specifically mentioned private debts (MBS, junk bonds, bank loans) from private debtors. I wasn’t talking about public debt (US Treasuries including one-year-or-less TBills).

    New TBill Deficit Spend > Bond Market buys said TBill> Government has new dollars to spend (this expands the broad money supply). FED TBTF banks (primary dealers) are told to make ready for bond purchase > The former t bill that entered the bond market, can now be bought and brought into the private banking system. There is never a bond collapse.

    That’s just deficit spending. Nothing to do with the Fed.

    The FED is downstream of the Creditors (private banks). Banks can always find reserves, and are not reserve constrained, they only care about interest price. They can find reserves at the last minute at the FED discount window, if they cannot find reserves from other banks.

    The Fed is upstream of private banks because the Fed is the only entity that can create new Fed money. The US government is downstream of private banks who buy US public debt (US Treasuries including TBills). Fed money flows to private banks (creditors) and thence to US government (debtor), as follows:

    Fed –> Creditors (Private Banks) –> Debtor (US government)

    The new SPV for the FED acts like a bank in that it can make new loans using fractional reserve. This is where the leverage comes in, and it was TAX dollars from treasury that are the capital base for said new loans. You may have heard about how they can “lever” 10X .

    Yes, the SPV acts like a creditor to debtors such as oil producers, mortgage debtors, etc. by leveraging their reserves 10x using fractional reserve banking. The SPVs can loan out ten times their reserves which came from the US government.

    The loan route will require that the toxic paper is made to perform most likely.

    The US government agreed to provide guarantees to private debts offloaded from private banks onto SPVs. Those private debts (MBS, junk bonds, bank loans) have been transferred from the balance sheet of private banks but still remain on the balance sheet of private debtors (mortgage debtors, oil producers, finance firms). This was my point in my earlier post.

    Fed –> Creditors (Private Banks) –> Debtors
    to
    Fed –> SPVs (backstopped by US Treasury) –> Debtors

    If those debtors default on their private debt which are now on the books of the SPVs, US Treasury takes the hit not the private banks which no longer own those toxic debts.

    • Replies: @MrFoSquare
  121. Hudson is 100% correct in his assessment.

    This has been allowed to happen because the vast majority of the American people are too apathetic, too distracted or too lacking in intelligence to understand that they’ve been the unwitting accomplices in the corruption of their country’s financial affairs. A nation’s money supply is like the blood in our veins and arteries – it is the lifeblood of the economy.

    This, of course, all started way back in the 1800’s when the control of the US money supply began to change hands – culminating, for the 4th time, in the Federal Reserve Act, 1913, the President of the time expressing his regret a few years before his death:

    “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.” – President Woodrow Wilson

    [emphasis mine]

    The irony is, of course, that more than 170 years ago, Karl Marx predicted “a dual economy” and “increased centralization of wealth” occurring at end-stage Capitalism – but no one bothers to read it, and yet we have so many Americans on this site mouthing off about Bolshevism (85% of which was Jewish) and the Chinese government’s state capitalism.*

    When Hudson says after the 12 year Obama Depression where the total output of products and services in the economy (GDP) went to the top 5% of income earners and the bottom 95% received less than they did before, will be a bonanza for private equity again, he is right on the money! (pun intended). Why? Because they’re the only ones who are cashed up – while everyone else – workers, agricultural concerns, manufacturing firms, etc – have to sell the little that they have at bargain basement prices – just to survive!

    ‘So what does all that mean?’, I hear you ask.

    Well that means that the economy will be much more centrally planned (the same as the former USSR’s Central Industrialism) by a coalition of government and corporations – and that is called Fascism!

    But here’s the kicker: the USA fought the Second War to defeat fascism – and now you’ve got it back by stealth, so the American people are dishonoring all of those servicemen and women killed in battle to defend your personal liberties!

    Well done America, well done!!!

    *More on China’s market-based economic development in a later post – which I think may quite surprise you.

    • Thanks: bluedog
    • Replies: @Anonymous
  122. @antibeast

    If those debtors default on their private debt which are now on the books of the SPVs, US Treasury takes the hit not the private banks which no longer own those toxic debts.

    And the next question is what steps will the Fed take if a debtor defaults on its obligations. Will it foreclose on the loan? I don’t think so. Will it restructure the loan as would happen in a bankruptcy? It might, but I don’t think so: It’s not in that business. I suppose the goal is for the Fed to stabilize the corporate sector with loans and then resell (or re-privatize) its corporate bond holdings into the secondary market at a net loss (it purchased them at face value). In other words, the creditors sell their junk to the Fed at par and subsequently buy it back at a discount, for a tidy profit. I guess the Fed will absorb the losses, while the Treasury (taxpayer) guarantees up to 10% of the loans made through the SPV (or is it guaranteeing all of it?). Ultimately, the taxpayer will pick up more than 10% of the losses on the SPV loans, if it comes to that.

    Do you see it that way, or otherwise?

    I suppose this could be thought of as a kind of partial, or quasi, nationalization of the Fed. I think it can more accurately be described as a provisional partnership between the Fed and Treasury until the smoke clears and things return to the status quo.

    • Replies: @antibeast
  123. Anonymous[253] • Disclaimer says:
    @Patagonia Man

    Well that means that the economy will be much more centrally planned (the same as the former USSR’s Central Industrialism) by a coalition of government and corporations – and that is called Fascism!

    But here’s the kicker: the USA fought the Second War to defeat fascism – and now you’ve got it back by stealth, so the American people are dishonoring all of those servicemen and women killed in battle to defend your personal liberties!

    The people running the US today aren’t any different than the people who were running the US during the second zionist war. When you cling to the idea that the second zionist war was the last “good war”, you come to dumb conclusions that sound good in the context of your bog standard narrative of the 1930s-1940s.

  124. The stock market isn’t actually doing that well. A small number of internet stocks are doing very well, which makes it appear that the stock market as a whole is doing well. Most stocks have gone sideways since the sharp crash in March. And this isn’t just an American issue, its an issue in most developed countries.

    The reason for this is very low interest rates, coupled with low economic growth. Investors know the wider economy is stagnating, and get little or nothing from leaving their wealth in cash, hence they are over-investing in anything that is likely to do well (or continue to do well) in the near future. Hence Amazon and Netflix priced at a hundred times earnings.

  125. anon[138] • Disclaimer says:
    @james charles

    Contrary to popular opinion, excessively high deficit spending and exorbitant government debt levels are not the primary cause of a hyperinflation. In most cases they have been the result of other exogenous events”

    Other events are rare whether it is in Nepal Uruguay India or Bnagkdesh or Venezuela or Zimbabwe . These countries have faced hyperinfaltion for unrelated reasons. We can say cumulative hyperinflation in Nepal or India but it is real .Why so? Why cant they climb out of scarcity and poverty by printing more currency and issuing more bonds ?

  126. Meena says:
    @Mefobills

    Thanks

    From—Trump: “Just run the presses—print money.”

    Cohn: “You don’t get to do it that way. We have huge deficits and they matter. The government doesn’t keep a balance sheet like that.”

    Intersting situation.

    But thats what we just did . We pumped 3-7 trillions from Sept 2019. What did Cohn has to say ?
    Will be interesting to know. Also Trump has been asking to reduce the interest ,essentially supplying or printing more money .

  127. ” I just don’t understand really how this whole process works, because to me it just seems simply like, they’re literally just creating money and just giving it to banks, and corporate elites, and rich people.”

    Giving it?

    “Thank you for your recent correspondence in which you asked whether or not the Federal Reserve “gives” money to financial institutions.

    The Federal Reserve lends to banks and other depository institutions–so-called discount window lending–to address temporary problems they may have in obtaining funding.

    Those problems can range from garden-variety issues, such as funding pressures associated with unexpected changes in a bank’s loans and deposits, to extraordinary events, such as those that occurred after the September 11, 2001, terrorist attacks or during the financial crisis in 2008 and 2009. In all of these cases, the Federal Reserve provides loans when normal market funding cannot meet banks’ funding needs; while the discount window is not intended for ongoing use in normal market conditions, it is available to cover unexpected developments.
    To encourage banks to first seek funding from market sources, the Federal Reserve lends at a rate that is higher, and thus more expensive, than the short-term rates that banks could obtain in the market under usual circumstances. To minimize the risk that the Federal Reserve will incur losses from lending, borrowers must pledge collateral, such as loans and securities. Since 1913 when the Federal Reserve was established, it has never lost a cent on its discount window loans to banks.
     
    The Federal Reserve does not give money to financial institutions. For more in-depth information regarding the responsibilities of the Federal Reserve, you may wish to review our publication “The Federal Reserve System: Purposes and Functions,” available online at https://www.federalreserve.gov/aboutthefed/pf.htm

    I hope this information is helpful.

    Sincerely,
    Board Staff “

  128. antibeast says:
    @MrFoSquare

    And the next question is what steps will the Fed take if a debtor defaults on its obligations. Will it foreclose on the loan? I don’t think so. Will it restructure the loan as would happen in a bankruptcy? It might, but I don’t think so: It’s not in that business. I suppose the goal is for the Fed to stabilize the corporate sector with loans and then resell (or re-privatize) its corporate bond holdings into the secondary market at a net loss (it purchased them at face value). In other words, the creditors sell their junk to the Fed at par and subsequently buy it back at a discount, for a tidy profit. I guess the Fed will absorb the losses, while the Treasury (taxpayer) guarantees up to 10% of the loans made through the SPV (or is it guaranteeing all of it?). Ultimately, the taxpayer will pick up more than 10% of the losses on the SPV loans, if it comes to that.

    As I am not privy to the agreement between the Fed and the Treasury, I can’t say what exactly would happen if the debtor defaults on its debts. If it looks like a “credit default swap”, then the Treasury has to pay the Fed the face value of the debt minus whatever the SPV can salvage from the sale of those debts to other buyers. The way it looks is that the SPV serves as some kind of a bailout fund with the Treasury providing the capital.

    I suppose this could be thought of as a kind of partial, or quasi, nationalization of the Fed. I think it can more accurately be described as a provisional partnership between the Fed and Treasury until the smoke clears and things return to the status quo.

    All the Fed did was to print Fed money to “buy” private debts from private banks and then transfer those assets to SPVs. So there are two things going on here: 1) Fed “buying” those private debts based on something like a “credit default swap” agreement with the Treasury; and 2) Fed transferring those private debts to SPVs as capitalized by the Treasury. If a private debtor needs more bank loans, it goes to the SPV holding its junk bonds for more capital. This means the Treasury is now in the investment banking business of backstopping private debts and recapitalizing private debtors. That looks more like the privatization of the Treasury rather than the nationalization of the Fed.

    • Thanks: MrFoSquare
  129. Richo says:

    The main thing we need to do is to create money without also simultaneously creating a debt. Then everything will work out naturally.

    • Replies: @james charles
  130. @anon

    “Why cant they climb out of scarcity and poverty by printing more currency and issuing more bonds ?”

    This is the policy favoured by R.A.Werner in his book: Werner, Richard (2005), ‘New Paradigm in Macroeconomics’, Basingstoke: Palgrave Macmillan.

  131. antibeast says:
    @Mefobills

    You:

    The Japan discussion is along these same lines, and not immaterial, because you are caught up in a narrative. Japan has been busy shifting private debts into the public domain using Abenomics.

    Me: This article from seekingalpha compares the USA with Japan: https://seekingalpha.com/article/4334887-why-this-is-unlike-great-depression
    USA as debtor nation

    After World War I, the United States became the world’s largest creditor nation. Britain, France, and other nations owed us for our financing of the war effort in Europe. We had the most positive net international investment position in the world, meaning that we owned more foreign assets than foreigners owned of our assets.

    We kept this creditor status for quite a while, including through the Great Depression. That was another thing that buffered us from collapse, along with low government debt. We still had streams of interest and monies flowing to us from abroad. We eventually lost that status in the 1980s, and it has worsened since then.

    After becoming the world’s largest creditor nation after World War I, we gradually lost that honor after many years of current account deficits, and by 1985, we were a debtor nation. This means that foreigners own more of our assets than we own of their assets. They own more of our sovereign debt, corporate debt, stocks, and real estate than we own of their sovereign debt, corporate debt, stocks, and real estate. Specifically, they own $39 trillion of our assets and we own $28 trillion of their assets, for a negative position of about $11 trillion, according to the U.S. BEA.

    During the 2008 recession, our net international investment position was -10% of U.S. GDP, which is fairly small. It continued to worsen since then, and is now more than -50% of GDP. We are entering a recession as the world’s largest debtor nation. We’ve never entered a recession with a net international investment position at this negative of a level relative to GDP. Not in the Great Depression and not in the Great Recession.

    The United States does not have the decades of surplus that Japan had when they entered their demographic malaise from the 1990s to the present. The United States will not be retiring into a demographically aged economic slump and draw from our foreign investments. Instead, we have a deficit, not just fiscally but also in terms of trade and ownership. We are entering this debt bubble while owing foreigners more than they owe us.

    Many people ask, “Why is the U.S. government debt to GDP a problem at over 100%, when Japan’s is even higher? Why can’t our bonds go zero/negative for decades like Japan?” And the key answer, the key difference, is that we don’t have the privilege of being a creditor nation like Japan.

    We are a debtor nation, not a creditor nation. More interest and dividends leave our country each year than enter it. We are reliant on borrowing from foreign nations, both allies and even antagonists, more so than we lend to foreign nations. Foreigners own more of our assets than we own of foreign assets. Creditor nations can more easily face deflation; debtor nations more often face inflation.

    In the coming years, the United States will be effectively printing money to fund large fiscal deficits, while also having a large current account deficit and negative net international investment position.

    Japan as creditor nation

    I often see commentators refer to the “Japanification” of the United States in the coming years, meaning that we may be gearing up for a long malaise of zero interest rates, tons of disinflation, and sluggish growth.

    After all, Japan “printed” a comically large amount of money to buy government debt and other assets, including stocks, and yet has had constantly low inflation. People also tend to point out that Japan’s stock market is currently below where it was over 30 years ago when it peaked.

    However, timing is important to note. The balance sheet of the Bank of Japan started growing at an enormous rate in Q4 2012, and is now over 100% the size of Japan’s GDP.

    Much like how the United States was the world’s largest creditor nation after World War I, Japan has been the world’s largest creditor nation for the past few decades.

    After years and years of current account surpluses, Japan’s net international investment position is around +60% of their GDP, meaning they own a ton more foreign assets than foreigners own of their assets. Dividends and interest from abroad flow into Japan each year on net from their investments around the world.

    So, due to hard work for several decades through the 1980s, they built up a giant stockpile, and have been able to live off of that investment for decades since then.

    In conclusion, Abenomics works because Japan has the privilege of being the world’s largest creditor nation while the USA has the distinction of being the world’s largest debtor nation. And this is the main reason why Japan can’t be compared to the USA.

    • Replies: @james charles
  132. @antibeast

    If you are interested in the Japanese economy, you may like this?

    “Princes of the Yen: Central Bank Truth Documentary”

    • Agree: antibeast
  133. @Richo

    “6. Bank credit creation for transactions that are part of GDP has been identified as the main
    determinant of nominal GDP growth.24 Hence an increase in bank credit is required to boost
    23nominal GDP. By borrowing from banks, governments can pump-prime bank credit creation.
    This boosts nominal GDP growth and hence domestic demand, resulting in greater employment,
    lower expenditure on unemployment benefits, greater tax revenues and hence lower deficits
    and also larger GDP, lowering the deficit/GDP and debt/GDP ratios by lowering the numerator
    and increasing the denominator.”

    https://www.sciencedirect.com/science/article/pii/S0261560614001132

    Prof. R. A. Werner believes that the ‘wo/man-made problem’ was the issuing of the ‘wrong’ type of credit. There is ‘productive’ and ‘unproductive’ credit.

    “Importantly for our disaggregated quantity equation, credit creation can be disaggregated, as we can obtain and analyse information about who obtains loans and what use they are put to. Sectoral loan data provide us with information about the direction of purchasing power – something deposit aggregates cannot tell us. By institutional analysis and the use of such disaggregated credit data it can be determined, at least approximately, what share of purchasing power is primarily spent on ‘real’ transactions that are part of GDP and which part is primarily used for financial transactions. Further, transactions contributing to GDP can be divided into ‘productive’ ones that have a lower risk, as they generate income streams to service them (they can thus be referred to as sustainable or productive), and those that do not increase productivity or the stock of goods and services. Data availability is dependent on central bank publication of such data. The identification of transactions that are part of GDP and those that are not is more straight-forward, simply following the NIA rules.”
    http://eprints.soton.ac.uk/339271/1/Werner_IRFA_QTC_2012.pdf

  134. @anon

    “The finding indicates that advice to encourage developing countries to borrow from abroad is misguided. . . .
    Section 6 discusses the implications for development policies, and specifically, the advice for developing countries to borrow from abroad in order to stimulate economic growth. . . .

    If and when such foreign currencies are exchanged by developing countries into domestic currency, they will merely result in an increase in credit creation by the domestic banking system, denominated in domestic currency. However, this is something any developing country can arrange for without the need to borrow from abroad at all (Werner, 2000, Werner, Richard A., 2003a).
    So the advice to borrow from abroad was largely against the interests of the developing countries: it exposed these countries to foreign currency risk, often resulting in mounting debt and interest outflows in excess of any loans received.”
    https://www.sciencedirect.com/science/article/pii/S1057521915001477

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