Left Forum with Prof Michael Hudson

when Michael suggested to me that that he wanted the topic to be negative economics he explained to me that he was going to talk about what he just had the fact that most economists advise that austerity is good for you yeah negative economics has become anti labor it's become anti-government and increasing late by supporting the financial sector it's become even anti industrial but I'm going to talk about negative economics in a different sense and it may seem to be a more philosophical sense it's the literal sense of the area that I work in which is financial economics as you know most of my writing is about debt and the the easiest way to think of death is that's the negative the liability side of the balance sheet you can think of almost any economic activity in terms of a balance sheet for instance one of the best things about canceling the deaths is you cancel the savings on the other side of it one person's debt is another person savings well that sounds just sort of like maybe a boring tautology but for the modern economy the depth of the 99% of Americans are the savings of the 1% so as Lenin would say the whole economics should be who who know when I begin to talk can teach economics at the new school not a single economist had ever us that eat accountant and most economics simply focuses on the means of production on assets on people on capital goods there is no concept of the negative side of the balance sheet and yet what the distinguishing feature of today's economy is that the negative side of the balance sheet is becoming stronger than the positive side the liability side is stronger that's why you have bankruptcies that's why Obama said let's have 10,000 forfeitures the deaths have to be paid my constituency has to pay the debts to my donors that's basically negative economics literally in a nutshell so people usually calculate wealth and when Adam Smith wrote The Wealth of Nations or when the media talked about the American economy they talked about the tangible means of productions they talked about factories they talked about agriculture farms and fields transportation and yep if you look at what is the value of all this wealth how do people value the wealth it's all on the negative side of the balance sheet its stocks and bonds and property claims and real estate property claim is largely a a negative claim it it's a means that someone who rents the property owes something to you or some somebody who buys a home owes something to you so stocks bonds and real estate are all part of the negative economy and this is the sector that is dominating American politics and it's dominating dominated ha economies ever since ancient Greece and Rome not Babylonian sumers we'll get to now the problem is that the the negative side of the balance sheet is taking over the positive side you say you've seen before before the statement via the Harvard economist leskanic that of all of the profits the cash flow of Standard & Poor 500 in the last ten years ninety two percent have been spent on dividend payments to the stockholders and on stock buybacks to benefit stockholders only eight percent has actually gone in to the appositive economics most of the growth that you hear about in GDP when the numbers came out for gross domestic product it's all by the fire sector and in the work that I'm doing in Washington with gar alperovitz book group that we'll be talking about at 10 o'clock tomorrow morning we found that the more rapidly GDP grows the worse the economy does the worst wage earners yet the worst industry gets and that's because we found we did some statistics and all of the growth since 2008 has been in tooth and GDP has been in to statistics and they're called imputed statistics one category is the imputed home owners rent if you own a home you're asked by the Bureau of Labor Statistics and other government statisticians if you had to rent your house to yourself how much rent would you be paying and all of this computed homeowners rent is counted as an increase in GDP the other great increase in GDP is financial capital gains and financial earnings the they do a measure of financial services in the fight I called the de Commerce Department last time I was in Washington they stopped meeting with me because they say I always say something it's embarrassing yeah so they were only up read a statement to me over the phone they said financial earnings are the amount of interest income and financial income that banks make when they make mortgages of five and a quarter percent or credit card loans of eleven percent or penalty rates of twenty nine percent compared to the cost of interest which is zero point one percent so all of the bank earning all what they extract from the economy other people's debt service other people's interest is counted as an increase in GDP so what we're doing is remaking the GDP statistics to treat them the way the classical economists in the nineteenth century would have treated them we're creating the financial sector is a subtrahend is an overhead and that was just as the a focus of Adam Smith the physiocrats John Stuart Mill Marx and others were to get rid of the landlord class that was a non-productive class that simply extracted absentee rent income their role has been taken over by the financial sector today which whose role is also passive extractive and yet the GDP because this negative side of the economy has achieved so much money it's been able to buy control of the statisticians see this change in the GDP only happened about 10 or 15 years ago and back then I was working with a number of groups and both here and in Canada and the United Nations we were all coming up against the bank lobbyists who said look the economy's not productive factories aren't productive we're productive because we make the money out of them to extract to pay to the rich people and to trickle down and they they any politician who disagreed with them did not get the funding the politicians who applauded were the ones who got the funding and that's part of the privatization of the political process so at any rate the result is that what's counted is a rise in production today is the rise in extraction it's the rise and what the 1% or the finance insurance and real estate the fire sector is able to extract from the economy largely in the two ways that I found we were trying to make a chart of interest payments and I couldn't figure out I looked at the statistics and if you look at interest payments as a proportion of wage payments the national income hasn't changed at all in 20 years and I called again I called back the Federal Reserve that makes the statistics in the Commerce Department's of how can the speak I said what happens when the credit card debtors going and their charges go up to 29% they said oh we don't count that as interest we count that as a financial service and I said how do you I was out of service they said that's the service of taking a risk and I said taking a risk and they said yes and they show it's all in print they printed a sort of a GDP handbook for how to put it together and they say the the role of the economy can't work without banters taking the risk of lending the money now for instance so they make a credit student loan these are all guaranteed by the government risk-free loans and yet that's counted taking the risk the risk is you may elect another government to change the rules and the same thing with mortgages you kept every mortgage in the United States below about five hundred thousand dollars is federally guaranteed by Fannie Mae or Freddie Mac no risk at all they're all guaranteed and if the banks do make junk loans they're all bailed out the quantitative easing the four point three trillion that the Federal Reserve is monetized again in the eight years of the Obama administration so essentially you have a risk-free government guaranteed extraction of money from the economy all counted is taking a risk to help the economy produce more when actually it's shrinking the economy because it's I guess you've all heard me say before if you have to pay more and more of your income to the banks is death service you have less and less to pay for goods and services and the Federal Reserve just published the report I think a month ago saying that 46% of Americans are unable to raise four hundred dollars in an emergency so when the NBC and CBS talked about the stock market going up making everyone rich it's not making the people who can't raise the four hundred dollars in an emergency because again the I think the upper 1% or maybe it's 5% on 87% of the stock market value so again when you divide the economy into the fire sector versus the rest or the 1 percent of the 5 percent versus the 95 percent essentially you're having the two sides of the balance sheet there and then you ask who's the economy run for is it run for the positive side of the balance sheet Labor and Industry and agriculture or is it run for the negative side of the balance sheet finance insurance and real estate and monopolies the other form economic rent well all of classical economics was about economic rent is unearned income and their their idea of social capitalism was a capitalism is evolving into socialism by freeing economies from the legacy of medieval feudalism landlords finance that is youth extractive banking and the monopolies that were created initially to give back to the creditors and the bondholders of England and Holland other countries France in exchange for their tearing up the government debt so the result is that what you're having today is a repetition of what happened in this whole transfer of the 16th and 17th century the transfer of property including the Bank of England of the East West Indies trading companies all of the great public infrastructure monopolies were sold off after the bondholders and began to be privatized you're having another privatization today and the logic behind this privatization is another form of negative economics and it comes it's it negates the mixed economy as you know today 40% of the US economy 50% of most European economies are the government sector the neoliberal economists today account all of this is a deadweight they there is nothing in the national balance sheet for capital formation for government infrastructure because they assume it's all worth zero the only private companies can create an emphasis can create capital in the form of infrastructure and only it's all measured by the extent of which they can create stocks and bonds against it in other words the negative side of the balance sheet defines the magnitude of the positive side of the balance sheet so there's a whole movement today's you know ever since Margaret Thatcher in the 1980s Ronald Reagan here and now under Trump ah to privatize and Trump's plan I'm told in after November is going to be to push his infrastructure plan meaning give away the infrastructure all that all that he can to his campaign donors for nothing and let them turn them into monopolies let them turn our roads into toll roads let them turn the communication system into a monopolies to extract as much as you can let you have Betsy DeVos trying to privatize education and get rid of the public education so that in order to get an education to qualify for a job you have to go into something so high a lifetime of student debt that you can't afford to take out a mortgage loan anymore to buy a house and start a family so again we're having the negative side of the balance sheet define what is productive and what is unproductive in the economic statistics so that negative economics will have what it calls an empirical right justification and you can actually measure it the theory is that if you can put a decimal point to it it's real and that will is used to justify well that's what they give Nobel Prizes for these days well the whole idea is you know in the 19 cent was that America got rich in the same way that Germany France and other countries were getting rich by having governments ever since the medieval period to build the roads build a postal system build the hospitals the conservative Prime Minister of England Benjamin Disraeli said health all his health had got to put a health system in Bismarck in Germany another conservative introduced Social Security all of these ideas were originally the idea that to make a competitive capitalist industrial capitalist economy you needed to lower the cost of living the lower the price of doing business so that you can under self other countries the only country that is going Hatcher's this rational capitalist approach today is the country I just got back from which is my horse in China where the government there is making wonderful high-speed railroads of the time you won't find here they're providing free education they're providing on the infrastructure that is why they're industrializing and America isn't because America's are privatizing the infrastructure era specifically loading it down with debt to build the cost of providing public services into payment to bondholders payment to stockholders management fees of the kind that Bain Capital and money managers Express the vastly increase the cost of living that again put a squeeze on the population because what used to be provided by the productive economy and the government sector freely is now provided at a cost that goes not to the company not to the means of production itself the the roads of the schools but to the bondholders and to the stockholders and it's basically the bondholders people talked about as if corporations and banks are owned by the stockholders but they're really owned by the bondholders that's why the the whole key to the jump bond takeover movement the whole k to the corporate rating movement is bondholders not stockholders it's a private equity is essentially finance capital working on its own behalf not under from the people the whole increase in home ownership in recent years over ten percent has gone to hedge funds and institutional capital not even real estate investment trusts but groups like black stone that had what tens of thousands of apartments more cheaply so at any rate you're having other result of this privatization of all of a sudden turning a positive public infrastructure asset into something negative is you're going to have less education you're going to have fewer people talking this taking the subway service you're having less education lower lower housing you're having economic shrinkage and that basically if you had a realistic picture of the GDP it would direct this economic shrinkage which is exactly why the bank lobbyists want to come in and reverse reverse the mathematical sign now you could look at property acquisition in the form of this privatization as a buildup of financial fortunes as dispossession in and the most people think of dispossession well they're expropriating Obama's a 10 million homeowners but the most fortunes have always been made out of the private sector out of privatizing of the public sector by privatizing the public sector by taking over the public domaine that's how the great railroad fortunes were made in America that's if you read Gustavus minors history the great American fortunes it was all made by privatizing the public domain that essentially is how the oil and gas and mining industries operate the forestry industry you you're having basically an expropriation of government end of the public sector and now it's spread to an ex-pro creation of popular homeownership is you're having a very sharp rise in absentee ownership the rate of home ownership in America since Obama has gone down from 68% to 62% so it's been devastating no longer is homeownership a way to build up wealth as it did for the middle class for a half century after World War Two buying a house is a way to get into a lifetime of debt and getting an education is a way to become poor not not a way to become rich especially if you're go to a profit college and you're a high school graduate you want at least to get some kind of a academic degree and you go for one from college or any of the other colleges there up it doesn't help you you can't get rid of the debt you can't abolish them because what the government calls making adding to the economy by taking your wrist turns out to be risk free from the bank the risk is all on the victim who registers for the education well yeah the final aspect of the negative economics you do hear about budget deficits the deficits are bad and yet budget deficits are the only way of pumping money into the economy to help provide it with the means of payment that it needs to grow so the one aspect of the economy that should be treated positively money is is treated is a death oh the money Oh government money all official money is technically on the liability side of the balance sheet its debt and as you know on a balance sheet you have assets on the left hand side and liabilities and net worth on the right hand side so I mean I would prefer to call when government debt is monetized you could call it equity money it's technically net worth money it's a depth that doesn't have to be repaid because nobody's going to do today what they did in the 1880s and 1890s and turn in their turn in their money for actual metal for gold or silver which was expropriate which was sacrificing as you know the economy on the Crucifier cross of gold it's now being crucified on on debt you don't need gold for that but again when they say crucified for debt that means paid to the savers the depths are owed to the savers the savers are the 1% who operate through the finance insurance and real estate sector so essentially we're we're back to the points that I began with the savings of the 1% are the liabilities of the 99% and if you think of everything in terms of a balance sheet it'll become you can see that there's a a gainer and maybe a not so much of the gainer on the other side every asset has a liability claim against it if you're thinking of making of looking at anything in the news you can think of it in terms of this balance sheet and you'll see that it's almost always the liability side of the balance sheet that is the key well what that means is that this kind of negative economics of running the economy for the liability side of the balance sheet turns out to be anti labor it imposes austerity the economy for the 95% of Americans has not grown since 2008 they keep talking about it growing because the stock market goes up and housing prices are going up but that doesn't mean the economy is going up it's counted as if the economy is going up in the GDP statistics because although they call it the national income and product accounts paying a debt isn't does not add the product having a given house a physical structure that you live in go up in rental value is not a product that's something that is a cost for the people who increasingly have to rent the apartment yes see I was completely unable to get this idea across to the new school when I was there unfortunately many of them thought they were Marxists and I came back in the sixties and seventies I've never met a Marxist who'd read volume two or three of capital in fact in the 1940s I knew all of the Marxist leaders the leaders of the German Revolution the Russian Revolution had come to America I'd go over to their house and I was a little kid and the one I usually look at the books that I recognized on their bookshelf Capitol and I open them up and I'd say they've never been open but they were all there I think it's like people who have Piketty book has this binding ever been stretched always an interesting question if you're looking at somebody's house to see how many are Justice these are what a smart person should read I'm a smart person therefore draw your own conclusions it was largely for show and I could not convince these people to talk about volume three of capital and as a matter of fact I just got back from the second global Marxist conference the University of no baking University where I'm a professor and the opening and closing speech was given by my friend David Harvey all about volume three of capital and he was saying look you're having a Marxist kepta conference here and you're all talking about let's have world friendship and everybody be happy and you know that actually Marxism a little what's beneath the surface and if you look at volume three it's all about how the tendency of debt and finance is to grow exponentially and the question is now that more and more money's being lent out to Chinese to buy their housing look at Shanghai look at the billionaires who are Shanghai real estate developers all this money is going to spread to the rest of China looking for somebody to lend to and the government around that time was talking about letting American banks in to China and how was an American bank in China we're falling not a minority ownership like it was before but full ownership how is it going to make a market and that is five underselling other banks how do you understand ease banks by making more and more reckless loans in this country they've just changed the law to let community banks be deregulated compared to commercial banks let's help the communities know I've been a consultant to community banks in Chicago and they explained to me how do they expand their market to make more money they make more reckless loans to other commercial banks the year before the bank I worked for went bankrupt I asked why are you making a loan to this apartment house and they said well you know it's twice what it's worth they think they can kick everybody out a the renters out and they can turn them into coops and load it down with debt and then sell up to the buck people were buying the coops like they did in New York and just add the price on to the depth and we've got double the price and all that is ours for nothing and that pays the bank and we get all the money and I said how long can that work and they said well we don't make the loan they will they want bankrupt the neck here in 2008 so I didn't get any more consulting fees from them unfortunately another negative aspect of that so the point of all this is that the debt problem is simultaneously a savings problem because the Deaf's are owed to the 1% and the only way to solve it don't solve a debt cap to write down the depths to right now if you write down the student debts then you're writing down the banks have to take a loss and if you write down the student debts and say they want to be paid all the big banks go bankrupt I think that's a wonderful thing and so does sheila bair we had a discussion she said in 2008 she wanted to take over the most crooked bank in America Citigroup it was bankrupt it had zero negative net worth and she said we can take it over by the FDIC and we can make a public bank out of it and the advantages they're not going to make junk mortgage loans they're not going to make crooked lungs but Obama's a Treasury secretary the bagman him Geithner was Citibank most of the guy who'd become City head of Citibank Rubin and he said no we we've got to pay the bondholders it could be ended and essentially Sheila wrote in her autobiography I learned it was all about the bondholders and that that's a problem the same problem you had I'm writing a history of the collapse of antiquity now I want to read one quotation from what Socrates said and I was it's basically a financial history of the debt revolts in Greece and Rome but in the process I wanted to see what Plato and Socrates said about it so new at the very outset of Plato's Republic in 3 380 BC Socrates is discussing the morality of paying paying debts should you pay debts or not and syphilis a businessman who's living in the commercial Piraeus port district says that the tip isn't it fair to pay back a debt that you borrowed and Socrates said well is it fair to return a weapon to a man who's become a lunatic in view of the adverse consequences paying back a creditor is the wrong thing to do because what's the creditor going to do he's going to try to buy the land and expropriate a land on Homer he's going to try to reduce a debtor to bondage the conclusion that financial wealth is destructive and input for the Republic our Socrates says that wealth is just as destructive as poverty he said we'll pop a Potter who's gotten rich they'll be willing to attend to his art and will he become idler and more careless doesn't he become a worse party and what if from poverty he's not even able to provide himself with tools or anything else for his art he'll produce shoddy or works so both from both poverty and wealth the product of the Arts are worse and the men themselves are worse well that's imagine you know so now although I went to the University of Chicago that's all based on the classics they never I missed this the first time I read the Republic and it turns out it's all about debt and credit and hubris and that wealth leads to hubris and the whole attempt of Socrates at the reform is to prevent the rich people from destroying the economy well they didn't have this problem in Babylonian Sumer and in about a month or two I'll be publishing my book of the origins of depth the first thousand years of death cancellation in Sumer and Babylonia and the rule of every no ruler would take the throne by proclaiming a cancellation of personal debts mainly agrarian debts and the advantage was of this is that first of all he could do what the Chinese government is doing when it cancels debts you're cancelling debts owed to yourself and it's easy that nobody's going to kill you for cancelling death so to yourself and the Despero to the palace collectors and by Babylonian times around Hammurabi's time in 18th century BC and there are more and more wealthy individuals who tried to become rivals of the palace so the advantage of canceling depths is you wipe out the rival class that's trying to arise to take over the economy as it succeeded in doing in Greece and Rome and they they did it and they they were able to remain stable by canceling debts stability ended when you are no longer able to cancel the debts and all of a sudden you move through cyclical time cyclical cancellation of death to progress progress means you can't cancel the debts that build up exponentially well I found the closest approximation in modern times at least 9th century AD in Babylonia and in Babylonia you had the ninth and the tenth century strong emperors canceling the depths because they didn't want who they call the Dino toy the same word the socket II is from dynasty dyeing power you didn't want the powerful creditors to be able to have enough money to expropriate to take the land over in which case you wouldn't have the landowner serving in the Army you wouldn't have the owner-occupants providing corvée labor to work on the public works and you had other rich people there doing essentially what they did under the Obama administration and the primp administration they said let's get rid of the government and at that time they did it not financially they did it militarily and they back the wealthy families back to generals to overthrow the Byzantine governor well finally the governor the Emperor defeated the general they and invited him to a meal to sort of celebrate like people used to do to celebrate the peace making and the Emperor asked the general what can I do to you know prevent these guys from starting again against my successor and sell us the chronicler who wrote about this saying the general gave I gave a response to the end wherever that might be surprising to hear from the wealthy general he said you've got to kill him or you've got to tax them you've got to make sure that you take away their wealth you've got Vikon pendant he proclaimed a debt cancellation and reversed all of the land transfers that it takes place in the last hundred years - you've got to prevent them from getting land and that is essentially exactly what Socrates ended up proposing in the Republic he said you can't have the wealthy people run the government if you put Betsy DeVos in there you're going to have oberus and they're going to overreach themselves and they're going to destroy the economy you've got to have public servants that don't have any money and that don't have any property yet once you let the property people and the money property and they're going to destroy the government and that's a book eight of the Republic that's a long speech by Socrates again somehow people don't think of Plato Socrates is talking about this issue this is what Linda what and in the next century in the third century you had the revolutions in Sparta you had even Sparta's King Aegeus and Cleo - cancelled the debts and the result was that the oligarchies called in armies to defend them they called him the Romanov Rome to defend them there was a half-century of debt revolts all through the Peloponnese up to Argos Corinth and finally Rome to go over the whole thing and we all know what happened there the end of debt peonage was serfdom and that's the model of where our economy is going today it's the victory of the negative side of the balance sheet we are going to move to QA but I do want to ask you one thing because I think it helps bring your points into more of a relevant current perspective particularly looking at the distinguishing features of China versus the us when we recently spoke I brought the point that China's private debt to GDP ratio is now at 220 percent which is basically the biggest in the history of capitalism and I basically asked Michael if that was an issue and he basically said at this current point it's not but this threat of potentially the foreign banks the US and European banks getting into China could totally rearrange that situation but maybe talk a little bit of a little bit more about the distinguishing features in China can essentially here's what I thought I do continue to let the American banks in the 49 percent alone make all the loans you want what flood give-give industry as much money as you can give real estate as much money and then proclaim a debt cancellation will cancel the debt for yourself you can then resell the apartments to the actual occupants at the grain rental value and you'll buy you'll wipe out the Chinese reactions of the American banks wipe out the entire Western banking system and you don't have to do it by computer manipulation it's free market policy and they seem that they didn't think President Xi would go for that so they resulted however enough people thought it that in October we're going to have a meeting on fictitious capital in Tianjin University just at the northwest adjoining Beijing where I'm bringing my gang over to try to my vol 3 game to try to promote that idea I think we have a lot of questions I can see so why don't we take start over here thank you Michael Essien you recommended reading volume 3 of capital I have been radiant it's fascinating the law of the genitive the way possible I just want to throw out one let's all our development I have a legal crew freedom through the highest level I didn't want people to know they're not only on the now hedge funds that it takes twenty five billion dollars in the hitch line they have a 250 page that's respect your system and you cannot understand because then I'm ready to be a and they have one development then the sofas are when I was reading the documents that's a wall broke out laughing and I couldn't stop land I don't know what you've heard about this they have something called a blank check operation when groups of executive simply get together solicit hundreds of millions of dollars not indicating for what the purpose is and simply saying they're going to try to achieve certain mergers and acquisitions they are private equity funds there is something people around us when you've asked for money unless your credentials you do what you want to do with the money and if they well I guess the confidence in the u.s. dollar would erode other countries they like the value of the dollar would be rude so what would be like the counter-argument to that and then I understand that you know theoretically people are just gonna stop trading in the United States the resource-rich country and but I don't know anybody who has said that the dollars would go down if we cancelled the debts I'll give you the reason in a minute but the last successful debt cancellation was the German economic miracle of 1947-48 they cancelled the debts and so Germany became debt-free German industry is able to operate without debt imagine if American companies could operate without debt they would become more competitive without death people housing could be more affordable the economy would become competitive again and in terms of foreign governments couldn't couldn't sell their dollars for the simple reason it it is now the government is now released the documents that I was given in confidence when I visited the White House in 1974 there was a meeting with Saudi Arabia and the US government and what I was told by the Assistant Secretary of State was if you don't keep your money in US dollars we would come that Saudi Arabia will count that as an act of war and look Willem thank you so they don't want to be invaded of course they're going to keep their dogs the same thing with I mean German can you imagine Germany or England doing something that it would offend the United States is unthinkable but if most of all it would make the economy more more productive by cancelling the deaths what it would force it would almost force other countries to cancel their debts to be competitive because countries that did not cancel their debts would become high-cost countries so Greece could have cancelled the debts they they could have had a Jamie go great had a good idea the central bank had a lot of Euro notes that they could have done he had the idea of what we'll just over print the Euro notes and we'll stamp them like you would called drachma no the advantage of the negative stop stamp them and said they're dropping in their own uh currency no no these heroic notes will be circulating but he do it just an ink imagine people going to Greece buying drachma lower price then going to Germany and putting him into an ATM there I'm getting real low back then the event you'd completely screw up you know hello my name is Adam in Europe I was all for it his face that have dropped when I said yeah that haven't been his intention but I did but that's a surprise benefit yeah but again the borough Bacchus didn't do it what can I say they were all don't always work out for the best I'm looking for women that's all men who have questions what regards I'm obviously Puerto Rico is a country that can't pay its debts and as you know my motto is deficit can't be paid won't be paid the question is how long they be paid the America the American financial institutions say this is wonderful that it can't pay now we can say ok give us your electric company give us your public domain give us your ports give us the little snooty you what we've done to Greece and Argentina give us everything that you have so now they're trying to use this to figure out how much they can take as a result of Puerto Rico not canceling the debts Porto Rico although it's their US citizens they don't have the ability to have a state a bankruptcy like the southern states used to wipe out their debts so they can't cancel the debts and the principle here is you don't know how much you can take from them until they begin to fight back and instead of fighting back a large proportion who can afford it just move to America I mean Porto Rico is essentially unlivable now because the yesterday according to FEMA they can't sustain another hurricane and we're right at the beginning of the next hurricane season so it's obvious the power still isn't on there the power authority was completely corrupt given to inside insider dealings the Puerto Rico legally could claim this is an odious debt and it could have my Greek friends come over who wrote the whole documentation of my Greek debt is an odious debt to come over there or they could secede and say they're a sovereign country and repudiate the debt that would be another but then they'd lose our citizenship so I don't know if you can convince the debtor that somehow they have to pay because it's moral that's what Socrates is talking about you've got to get them over the that's the right thing to pay the debt and the society will fall apart if you don't pay the debts society only falls apart when you do pay the debts yeah you're describing a situation that's it's going down down down hill that's taking money out of out of the populace and it doesn't that decrease spending decrease I mean eventually the economy has to contract we have to get deflation that's right the if you want to see what's happening to America look at what's happened to Greece since the IMF came in and it didn't I write down the odious steps that literally I mean the the the the original deaths were faked by goldman sachs him over there that turned out to misrepresent the depths the resultant graces and depopulation shorter life spans as they're having in the united states rising suicide rates as we're having in the United States your demand goes down yes okay nobody learns are all closed when I was in Greece last you saw all sorts of stories being boarded up it's almost beginning to look like a street their upper Broadway you know they're all others they're all closing or Sears you know I mean that's what's happening here and nobody MP Palais it's an act of nature that there's something natural about it and it doesn't have to be this way it's really not nature it's because people are don't really understand how the economy works and they don't understand the distinction between negative and positive economics and then you've had your hand up oh that's a trick question because neither understood free-trade they didn't understand that free trade means that the ability of countries to make other countries dependent on you it was called free trade imperialism the idea that if Finland can get other countries not to protect themselves and essentially not to have the government provide basic infrastructure and develop their own industry that England can charge monopoly prices now you're having that whole thing come to an end in America right now America promoted free trade when we get reduced cheaper than Europe because they were all bombed and we can under sell them and we we could provide government support to our agriculture but free trade meant that other countries could not protect their industry is America protected it isn't it's industry and they could not protect their agriculture as America would put quotas import quotas on and only and through the World Bank would only give loans for export crops not for agricultural crops that will compete with a American export so free trade is a way to make other countries so dependent on you that you can charge a monopoly rent and instead of exchanging for labor is Ricardo thought trade is who's going to get the economic rent the monopoly rent from selling goods at a higher than a higher price than is actually warranted by the intrinsic cost value by the fact that other people can't compete and you have a monopoly like the Americans have monopolized agricultural trade and are trying to monopolize i information technology look at these screams that's growing up today that China is trying to become independent in information technology well fortunately you can almost believe that Donald Trump indeed is a nature the Putin because he realizes that Putin and the Russians don't not understanding capitalism because they never read capital well protect their own industry so Crump says okay I'm gonna help you protect your own industry I'm gonna force you to protect it I'm going to put sanctions on all all your industrial goods in your agriculture so you'll have to protect industry and develop your own self-sufficiency just like we did in spite of yourself so unfortunately Trump is acting is the Russian national a protectionist by preventing a free trade imperialism's from destroyed the Russian economy is the no they foreclose on the property of your parents or you've gotten a lot of legal trouble because you're legally responsible for these boy a boycott you'd essentially be making yourself sacrificial victims and of course they that would be counted simply as a default and if enough of you did it the default rate would be high enough to make a difference but you've got to make that the only way you can do it without being destroyed by the federal coming in and grabbing your property or any of your parents of co-designed for your debts is to make it a up up a public issue with politicians I don't know any politicians who are really willing it is a group to back up that that's the problem you're you're screwed so the boycott should really just come in the form of the default what are you going to do well they will garnish your salaries if you make any salaries they will try and it'll grow exponentially at a rate that will highly benefit the banks the banks want you to do the facts probably have agent provocateurs I assume you're being well paid by a bank to suggest that because of that if you do that the bank's get to charge a penalty rate and get an enormous amount from the government commits all guaranteed that's how they take the risk that you may fight back and elect politician to change all of this but now you'll make much point cop would make a lot more money for the banks what that's an advantage yeah if you don't have money then then you can say you're doing it for a good social purpose and you get a two way benefit from it so yes of course the Deaf shouldn't be paid but you need to get more black I'm not sure I'm not sure if you saw it but the stephanie kelton and a couple of other colleagues that levy Institute just came out with a really good paper on the macroeconomic effects of student debt cancellation they basically found it would have a net positive on the economy because people would have more money to pay for housing or buy a car or whatever whatever it might be we don't want people buying cars too many cars that's a but it's it's a term to my knowledge it's it's a federal suit it's a felon guarantee yeah yeah so they don't pay it right yeah which is different than cancellation no no it's it's it's just a pure cancellation maybe you've reframe your question I'm not sure well notification yeah cancellations right now in this case the government would pay the banks yes and then they would forgive the long study is no they don't forgive them no the government collectors will come after you and the gun and I'm sure that some equivalent of Betsy DeVos will be in charge of hiring the collective's to come after us or whoever your countersign is I would be arrested if I gave you US Oh can you maybe just yeah tell me but tell me what I collect to know if you repeat it again yes yes what do you say we is a private corporation and the Bolivian government the government you've been making loans to Chinese palaces trying to make loans to you good good in what currency do they make these loans I think it's in their own currency they don't want me to nominate them in death but I was in China for the first time they insisted in paying me in these 100 yet these red Chinese currency that I then had to take the bank so I think they're trying to denominating they do in their own currency that means yeah then you can do it so yeah they expect you to pay them on the term so you can be sure that the their mentality is to collect everything to this owed to them I'd certainly read the viral from China because they won't send in the Marines collector yeah and the Americans would send in the Marines and I don't think the Chinese engage in targeted assassination which the United States does to people who can't pay their debts or who don't save their money in dollars so China so far I would certainly recommend it I mean obviously they want to get as many people into the non dollar area as possible and I if you email me I can call you at work with the government oh you mean when you say you you mean I'm an American well it means that a people want to avoid the dollar trend if they want to avoid I mean the most Nate if you're talking about negative economic certainly the most negative institution in the world is the World Bank followed by the IMF I mean that's negative economics internet and you want to get free at that ball system we love them to buy a desk I don't understand what do you mean by you know it used to be you know what he meant not aware of course I'm not aware that we never let other people buy our bonds everybody you want as many people as possible to buy your phones I'm not even aware of it they could they could have always caught made an American company by I mean the British held American bonds Dutch did I'm not sure who couldn't buy them I'm not just not aware of that it seems to be a long time there is a misunderstanding of death that reason we have to be careful this whatever each one stands so he stopped so I just wish you as it pains you we know that we need our business is about deficit it leads back well if the government when the gut if the government would repay its debt there wouldn't be any money because money is debt that's the important thing out to sea so the the reason that the neoliberal think tanks criticize government debt is they want people to rely entirely on the commercial banks that was Clinton's program in the 1990s he said if we if the government doesn't run a deficit and pump money into the economy then people there's only one source of supply of money my donor class the banks are going to lend so that's why he was convinced to run deficits are bad meaning borrowing from banks are good and the differences of course when government's run a deficit if you used to be before Obama you spend money into the economy and when banks mint money they lend it against against property is he against a balance sheet they against real estate homes corporations for completely different reasons than governments and you can't cancel debts when they're over to the private people as easily as you can do in their own to use the government in other words what I'm saying is isn't it a fraudulent metric for determining living standards okay you've just given us today's oxymoron financial product the pretence it's something that's negative is actually a product that's exactly the policy underlying on the balance sheet it's not a product at all it's a claim on a product a financial product is a claim on somebody else's production somebody else has to do the work to earn the money to pay the interest that gives market price I won't say value to the financial product do you have any other questions Oh like yeah of course when I think about a copy I think about great schools that have good programs for teaching people about how the right fish and that's fictional writing continues in our accounting system which is why so many banks died and leave other people and there's a piece I mentioned to Michael that before discussed the creation of the Constitution being run predominantly by bankers they were very secretive about it all the windows info in Philadelphia had to have shades full down so no one could look in and see what was happening and came up with the Constitution and it's really weird because one of the basics of the Constitution was to keep slavery in the place even the star-spangled banner' has a couplet and I don't remember exactly I can find it on the computer it's a story that neither neither late knaves or slaves if they tried to end its escape they're going to be getting the ground that's the star-spangled banner how do they come to leave that hope that first first football games I think that's what a lot of athletes should begin singing they should think that first it's all about we have four minutes if we have any other questions I like to just take them all at once and then we can decide yeah so just so how would something how did you to use the tabulation George killing the core machine or the common support right which is they keep super consuming and consume a consumption is what the industry so if you kill if you produce the translation basically killing the credit so how companies are a new credit for producing when the bankers of music the ready credits are going to be afraid or even more credit repeat the last part of that I think I didn't catch that ah when you produce bit translation yes okay basically you're telling a your teen banker not to give more credit because you're please know they'd begin making credit the next day because once you cancel the deaths now you're able to run up depths all over again so you just have new people making the loans yeah yeah yeah yeah the banks will be back in business the next day my god those new people know the reason that eventually today we're not necessarily I mean it goes and say it it builds up until the deaths can't be paid and then I saw what there's a crisis and it's wiped out and then they begun all over again this used to happen every 11 years or so in the 19th century they'd all be up as they go bankrupt we begin again allah when i was a chase we were told that chase prefers to lend money to businesses that have gone bankrupt because they've had a bad experience and they've learned from it but to be if any would sovereign money so credit ascents credit functions too money and the money supply well is elastic the great example of sovereign money is cute acuity quantitative easing the banks would love sovereign money if it's on use to pay the banks so sovereign money really would only worked after you have a debt cancellation you don't want to create money to enable death to be paid to the banks that would just be facilitating the existing status quo so that that would be how to do it how to do it better in the future we have time for one more yeah Jesus's first sermon and Luke for once he said he had come to pray he unrolled the scroll of Isaiah and said I have come to proclaim a clean slate that's why he was put to death and that's what my book goes all into how the jubilee year was all based on a word for word on the Babylonian debt cancellations when the Jews returned some of the richest textiles returned from Babylonia that was what Jesus's message was and at the only example of his using violence and the whole Bible is where he threw the money lenders out of the temple so I mean to me that that that was what the original Christianity was all about but later a few centuries later when it begins by the time it began to gain momentum they just sort of gave up and they said okay the clean slate is only going to come at the end of history at the day of judgment it we can't we can't achieve it in our world but that's exactly the topic of my book so Jesus was a social socialist economic justice activist who wanted to cancel the people's deaths by the way Michels at that point in particular has I think it's what near complete content a raw material you're setting the type and forgive them their deaths because all about Babylonian clean slates the Jubilee year

Channel: Prof Michael Hudson

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Keywords: Prof Michael Hudson, negative economics, debt, neoliberalism, banking, economics, finance

Id: t_YLUwJeD34

Length: 70min 7sec (4207 seconds)

Published: Wed Jun 20 2018