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The Democrats Role in Distracting with Identity Politics

Published by Anonymous (not verified) on Tue, 23/02/2021 - 7:36am in



Vrettos 2021
The Radical Imagination episode February 10, 2021

Vrettos: 1.  We’re waiting to see how the rhetoric of the new Biden administration will play out in actual policies.

Hudson: Biden’s long political career has been right-wing. He’s the senator from Delaware, the country’s most pro-corporate state – which is why most U.S. corporations are incorporated there. As such, he represents the banking and credit-card industry. He sponsored the regressive bankruptcy “reform” written and put into his hands by the credit-card companies. As a budget hawk, he’s rejected MMT, and also “Medicare for all” as if it is too expensive for the government to afford – thereby making the private sector afford to pay 18% of US GDP for health-insurance monopolies.

Hardly by surprise, Biden has chosen cabinet members as corporate lobbyists, including the new Secretary of Defense. And on February 9 he invited Jamie Dimon and other business leaders to the White House and asked them what they recommended. These billionaires said that they didn’t need $1.400, so why should anyone else? They pretended that spending money might cause inflation – yet we are in the midst of debt deflation and falling disposable income for most families.

Biden’s prejudices are why the Democratic National Committee pushed him as their candidate over Sanders, and why Rep. Jim Clyburn made his pharmaceutical industry backers happy by pushing Biden over the top in South Carolina, delivering the black vote in that state’s big primary.

What amazes me is the ability to attract this vote despite the degree to which Biden has sponsored legislation that hurts blacks and other minorities: his cutbacks in welfare spending, his anti-crime laws falling mainly on the black community, his bankruptcy laws, and of course his denial of universal public medical care to that part of the population with the highest death rates, shortest lifespans and worst medical care.

He has tried to cover up this history by appointing Neera Tanden as head of the budget, claiming that she’s a progressive presumably simply because she’s non-white. Yet she’s a leading opponent of Bernie Sanders’ Medicare for All proposals.

V: In our polarized economy, wages have stagnated since 1971 – home ownership rates have fallen as foreclosures, evictions and homelessness have jumped dramatically during the 2020-2021 Covid pandemic. 

The big decline in home ownership was the result of Obama’s double-crossing his campaign promises by bailing out the banks and leaving all the junk-mortgage debts and other fraudulent loans on the books. This led to foreclosures and evictions of about 9 million American families, most of them Hispanic and black. Home ownership rates plunged from 68 to 61 percent of the population (an enormous and rapid 10% drop).

The covid epidemic is leading to enormous arrears mounting up – for renters and for mortgage debtors. Evictions have been suspended by moratoriums that expire in March or April, and unpaid mortgages have been added onto later due dates (with appropriate penalties making this remunerative for the banks).

So the question is whether Biden can outdo Obama in reducing U.S. home ownership rates by another 10% — say, to just 56% of the population.

Let’s look at what could be done – today and a decade ago. Obama and Biden COULD have written down the junk mortgages to realistic market prices (and thrown the mortgage brokers and bankers in jail for fraud). Instead, they supported the fraudsters against the voters who had been promised “hope and change.” Most of the millions of foreclosed homes were bought by absentee owners and turned into rental property. Companies such as Blackstone were major players. The evicted families entered the rent market – and U.S. rent charges have soared. So consumer income has been spent much more on real estate, finance and insurance than for goods and services.

V: It’s most severe and unstable at the bottom of the housing market where tenants who have lost jobs have amassed $11 billion in rental arrears — a broader measure which includes all delinquent renters puts the number at $53 billion. 

There are two kinds of results. The first will be an enormous accrual of back-rent debts and mortgage arrears to be paid off. For commercial businesses such as restaurants, these arrears are so large that they probably will choose to go out of business rather than paying all the profits for the next few years to their landlords.

Unless these debts are written down, most of the population is too debt-strapped to buy goods and services. So corporate profits can come only from rising prices, or getting government subsidy,

A second result is going to be a rise in homelessness in many cities. Entire camps of evictees will be forming in tents, perhaps in the major parks – or on the subways as in the past.
Many properties will be sold – yet housing prices are still rising.

V: What are some of the specific racial effects of this housing and job crisis, what’s been the Bidden administration’s response so far and how does this relate to your own work on racial reparations measures? 
The low rates of black home ownership reflect a vicious history of red-lining. Limiting the areas where non-whites can buy has gone together with charging much higher interest rates than white buyers receive.

Housing is the basic criterion for joining the middle class. And for a century, blacks were excluded, not only by banks but from the government mortgage-insurance programs dating from FDR’s reforms in the 1930s. That’s what made black buyers “more risky” and hence charged higher interest rates.

I grew up in Hyde Park, in Chicago. The University of Chicago and its property management companies were among the worst abusers. For them, a “free market” meant a market free of blacks. But in the late 1950s they saw that they could do “block busting,” that is, selling a home in a white neighborhood to a black buyer. This panicked the neighboring owners, who sold their homes. The buyers were largely the speculators, who flipped them to black buyers at marked-up prices.

That happened on my block, on 48th and Dorchester, a block from where Obama has bought his home. Once a few houses had changed hands, Mayor Daley condemned the block. My house was torn down, as were others, and the land is not gentrified.

To put the issue in perspective, think of the situation in 1945. That is when the great increase in middle-class wealth – today’s middle-class net worth – took off. It was limited to white people, because they were the only people who qualified for the great increase in net worth created by the house-price boom over the past 75 years.

The norm was that banks limited their mortgages to a level that would absorb up to 25% of a buyer’s salary. The buyer would get a self-amortizing mortgage, to be paid off in 30 years free and clear. This limit on debt leveraging kept housing affordable.

You and I have spoken about the issue of black reparations before. It’s very hard to pay reparations for slavery, because the enslaved families have died long ago. The reparations need to be paid to the living – and after all, it’s the living blacks who remain injured.

There is one way to make the black population economically as resilient as the white population has been. That is to give it the same deal that created most white middle-class wealth. The government should buy or build homes – private homes, just like white neighborhoods, not public housing. They should offer buyers the same deal that was given in 1945. Any black family would be given a home, with a mortgage of 25% of the household head’s income, to be amortized over 30 years.

Suppose the black buyer earns the minimum wage, or about $25,000 a year. Then 25% of this would be $6,250 – just about $500 a month. Over 30 years, the buyer would pay $187,500 – much of it in interest, guaranteed by the FHA.

As a practical political matter, of course, such a windfall would have to be offered to all Americans across the board. Hispanics and white poor would qualify.

That is the only way to create economic resilience of a class that has been excluded on racial lines, and which remains excluded today.

Without special subsidy of this sort, there cannot be any serious talk of equality. Minority buyers were the great victims of the junk-mortgage run-up and the Obama evictions.

V: In a recent N.Y. Times piece, David Leonhardt raises the question of why the U.S. economy has fared so much better under Democratic presidents than Republicans? 
In fact, he argues the gap is “startlingly large” when one measures annual growth rate, Gross Domestic Product growth rate, jobs, incomes, productivity — even stock prices. 

Well, the New York Times has been the leader in “fake news,” not least for its support of real estate and financial interests, and of the Democratic Party.

The focus on growth rates as measured by GDP is a travesty of reality. Since 2008, GDP for 95% of Americans has actually declined. We are still in the Obama Depression – that was the state of affairs when the covid-19 crisis hit. Pavlina Tcherneva at the Levy Institute at Bard College has produced the statistics.

When debtors fall behind and have to pay penalty interest rates to banks and credit card companies, this is counted as an “increase in GDP,” classified as “financial services.” As if the banks are providing a service by charging higher fees to indigent debtors who are unable to keep current on their living costs.

About 7% of GDP is hypothetical “homeowners rental value” – what homeowners would have to pay themselves if they rented out their homes to themselves as tenants. As rents have risen (largely by absentee owners who bought homes that were foreclosed), this increases GDP. It leaves out minority owners, whose home ownership rate is much lower than that of whites.

What The New York Times and others looking at GDP leave out of account is how unequal the distribution of wealth and income have become since 2008, and indeed since the 1980s. Economists are now talking about a K-shaped recovery: up for owners of stocks and bonds (about One Percent of the population owns something like 80 percent of these securities), and real estate. But wage earners are being squeezed. The “recovery” is not a recovery for them. It’s a boom for the wealthy, for the rentier class, mainly in the Finance, Insurance and Real Estate (FIRE) sector.

That sector is the main audience for The New York Times. And most of the Democratic Party’s donor class comes from the FIRE sector. Despite this, the Democratic success at identity politics has created a political situation in which only the Democrats can enact anti-labor and anti-black policies, because their politicians are able to deliver the labor and black votes.

I don’t see how there can be real progress unless the Democratic Party is replaced, at least with the DNC leadership that has turned its politics into demagogy. Its identity politics is based on every identity except being a wage-earner.

V: Central to Biden and America’s neoliberal vision of world order is an economic philosophy of privatization and financialization. How do you think this will play itself out in the Biden administration’s foreign and economic policy of military spending and arms sales and use of military threats and force if necessary, to enforce U. S. international dominance and technological hegemony? 

Biden has spent his career defending the financial sector, and its leading policy is to privatize basic infrastructure. That means blocking governments from providing basic services at cost or on a subsidized basis – education, health care, roads and communications. Yet that is how America became the leading industrial economy from the late 19th century onward. Financialization and privatization have left it a high-cost economy, uncompetitive in world markets. that is why the economy is de-industrialized.

Privatized and financialized economies are high-cost. America spends 18% of its GDP on health care – far more than any other country. And then there is the military budget. A year ago January, Biden wrote an article in Foreign Affairs in January 2020 promising that his incoming “foreign policy agenda will place the United States at the head of the table.”

So what is he going to lead? He’s already said that he’s not going to negotiate with Iran, but to keep the Trump administration policies in place. He’s appointed neocon hawks to leadership positions, especially Victoria Nuland and other anti-Russians. Biden seems to want to use sanctions to isolate countries he sees as rivals or enemies – which is turning out to be a rising share of the world’s population, from Russia and China to Venezuela and Iran.
The reality is that the United States is isolating itself! It is trying to block Europe from importing Russian gas, and insisting on U.S. IT monopolies directed against China. And Biden has as little respect for treaties as Trump had – that’s why he’s retaining Trump’s withdrawal from the Iran deal.

Even if Biden makes a new treaty, Congress would have to approve it. But Congress has remained firm that no foreign countries can set policy for the United States. It therefore insists on not subjecting itself to any international rule of law not drawn up by its own political donors.

The looming global fracture is becoming a fight against the most basic organizing principles of economies throughout history. All successful economies have been mixed. And to promote survival and prosperity, it is necessary to subordinate private gain-seeking to public objectives benefitting the 99 Percent, not just the One Percent.

That isn’t Biden’s policy or any other Democratic or Republican policy.

V: You see a basic conflict between financialized rentier economies and democratic-socialist ones that seek to promote public objectives benefiting the 99 percent, not just the one percent. 

Privatized economies are high-cost economies. This is mainly because basic infrastructure is a natural monopoly: roads and other transport, communications, the post office. When they are privatized, they are run for a profit – consisting mainly of monopoly rent, over and above normal profits, plus capital gains as these rentier claims are capitalized into stocks and bonds at rising prices.

The policy of American industrial capitalism in the 19th century is the same as that of socialism: to minimize the cost of living and doing business. Privatization is largely responsible for de-industrializing the U.S. economy. While leaving 95 or 99 percent of the population to stagnate, it has been a bonanza for the 5 to 1 percent.

V: Could you expand on what you mean by that conflict and where you see the Biden administration heading on it?  

The conflict often is put by juxtaposing Wall Street to Main Street – that is, the FIRE sector to the industrial goods-and-services economy. Wall Street’s objective is to increase wealth. This is done largely by capital gains, not by hiring workers to produce more goods and services – such investment is done mainly abroad by today’s multinational firms.

V: How does the $1.9 trillion stimulus aid package fit into this debate?

I don’t think you should call it a “stimulus.” It’s disaster relief. The idea is to catch up. The aim should be to at least put the economy back where it was before – that is, still in the Obama Depression.

What WAS a “stimulus” was the $6 to $8 trillion created by the Federal Reserve to buy stocks and bond, including junk bonds, to fuel the Wall Street boom. That is the essence of the K-shaped recovery. Rising prices for wealth, falling wages and net disposable income for living labor, after deducting the payments to the FIRE sector that families have to pay off the top – rent and debts, medical insurance contributions, FICA paycheck withholding (the most regressive tax), and monthly payments to privatized utility monopolies.

The $1.9 trillion checks of $1,400 or $2,00 actually should be sent out monthly, not part time. Europe pays its laid-off work force 80 percent of their normal wages, so that they will not be plowed under by the covid shutdowns.

V: There’s profound disagreement about how to handle increased bankruptcies here and in Europe.  

Biden himself is largely responsible for the bankruptcy problem. He was the politician who steered the regressive bankruptcy reform through Congress, making it harder for low-income families to wipe out their debts – and making it impossible to wipe out student debt through bankruptcy.

In that sense, he “owes” it to the economy to make up for his opportunistic water-carrying for his campaign backers in corporate-run Delaware.

Will he do it? Can he do it? He’s a deficit hawk, and has appointed deficit hawks such as Neera Tanden to his cabinet. He also promised that “nothing will change.” This is just how the Obama administration was run (demagogically running on a slogan of “hope and change”). So will Biden be Trump 2.0 or Obama 3.0? It really doesn’t matter much. Because both Obama and Biden were basically Republicans running with a different ethnic profile for the voters that they delivered to their campaign contributors.

V: Chapter 11 bankruptcy filings in the U.S. rose in the third quarter to the highest level since the 2010 financial crisis.  In the last week 900,000 Americans have filed new unemployment claims. 

John Williams’ Shadow Statistics puts the real unemployment rate at 20 percent. Many people have dropped out of the work force, as no jobs are available, at least, no jobs for them.

The rent moratorium has enabled many unemployed or low-income workers to remain in their homes. If they’re evicted and become homeless, how can they work? The real crisis is scheduled to fall in March and April. Small businesses such as restaurants and stores will give up and close.

V: Europe has been more receptive in extending national programs to keep troubled businesses afloat, but there too a sharp debate exists as to whether a strategy of protecting businesses and workers “at all costs” will cement a recovery or whether it will leave economies less competitive and more dependent on government aid when the pandemic recedes. 

Europe and other countries are trying to avoid disaster. U.S. policy is to see disaster as an opportunity. It’s easier to make fortunes in a disaster than in normal times, at least if you are wealthy, liquid and have access to bank credit to buy up distressed businesses and properties.

The aim of Europe – and of economies through the ages – has been to provide resilience. That is what is missing here. The doctrine of “individual responsibility” is a euphemism for letting the financial classes take control of economic and social planning. And their objective is their own self-enrichment, not that of economies as a whole.

What is it that can be “recovered”? To most politicians, it means that creditors – the economy’s top One Percent – can “recover” the money that is owed to them by the indebted 99 Percent.

In Europe’s system of parliamentary politics, third parties can arise to promote a social policy of economic resilience. That isn’t possible in the United States, because of the two-party duopoly. Duopolies resolve themselves into monopolies, which is what we really have today: pro-Wall Street and anti-labor, pro-creditor and anti-debtor.

Photo by Unseen Histories on Unsplash

The post The Democrats Role in Distracting with Identity Politics first appeared on Michael Hudson.

Multipolarity and Financial Capitalism

Published by Anonymous (not verified) on Thu, 07/01/2021 - 1:38pm in



Ross Welcome to Renegade Inc. However you look at it, 2020 was a train wreck. So as we look forward to 2021, we wanted to get political and economic insight from two friends of the show. Chris Williamson and Michael Hudson share their views on what we can look out for in the new year.

Ross Michael Hudson, fantastic to have you back at Renegade Inc.

Michael Hudson Good to be back, Ross.

Ross Michael, describe 2020 in one word.

Michael Hudson In one word? The pandemic, setting the stage for homelessness.

Ross Wow! what is the one thing? Because we focused hard on the negative throughout the year. What’s the one thing you think has been positive or been something that’s transpired from this pandemic which actually we should look at and think, you know what, that’s quite a good bit of advancement?

Michael Hudson Well, the pandemic’s been a bonanza for the stock market and for the wealthiest one percent. They’ve gained a trillion dollars since the start of the pandemic. Amazon stock is going through the roof. And with 70 percent of restaurants in New York City going bankrupt, this is made Doordash and other Internet firms make a fortune by essentially wiping out the restaurants, taking 30 percent of the receipts and the charge for the restaurant menu. Essentially, this puts most restaurants in America out of business.
That means that it’s a bonanza for the really big companies to pick up all the slack now that you’re wiping out the middle class. It’s a great prospect for private capital real estate companies like Blackstone, because they can buy a huge number of foreclosed properties and empty properties that can’t be rented out and Blackstone can pick up these homes that are defaulted on, buy them out, turn them into rental property and make a fortune by raising the cost of housing in the United States, all increasing the rent by the people who have lost the jobs. And it’s great prospects for the big restaurant chains, McDonald’s and the others. The big chains can survive, whereas the small individual restaurants have basically been driven out of business. So if you’re a billionaire, it’s been just a wonderful year.

Ross So we’re talking about the One Percent here as the late, great David Graeber termed?

Michael Hudson But if you look at Donald Trump, that is the economy. When he says the economy’s getting better, he means the One Percent is getting better. Is that what you’re talking about?

Ross But isn’t it the case in the US, your president and lots of others confuse the stock market and the real economy. We’re not in an industrial capitalist society in the US and the UK anymore. It’s a rentier financial capitalist society. And that confusion between the stock market doing well and the real economy, doing well. Actually, those two things are starkly different, aren’t they?

Michael Hudson Yes, of course. So if you say what’s been good, all the good is indeed for the rentier economy. All the good is for the stock market, for the absentee property owners, for the big chains, but not good for the 99 percent. They’re pretty much left behind.

Ross Is there going to be a lot of what is called jingle mail in the US, which is basically owner occupiers sending keys back, saying it is totally economically unviable for us to even consider reopening this restaurant, small business, whatever it might be?

Michael Hudson The only people who are going to voluntarily walk away from buildings are basically absentee owners of commercial buildings. There’s going to be a great shortage, a great downsizing, of our commercial properties, especially because so many businesses have gone out of business. Jingle mail was basically on private homeowners whose mortgage was far above the actual market value. The mortgages were not written down and so these were voluntarily walking away. But housing prices have gone up in the United States. So nobody’s going to want to voluntarily walk away from their home. If you’ve been unemployed, haven’t got a pay cheque and are not able to pay your mortgage, you’re going to want to stay there and put off eviction for just as long as you can. But if you’ve invested in a small office building that had a restaurant on the ground floor and its offices have now decided that everybody can work from home, we don’t need so much office space anymore. In that case the heavily mortgaged commercial owner may walk away. That’s going to affect primarily the smaller banks, the community banks that have made most of these small loans to small business owners. The big absentee owners have gone to the big banks, Chase and Citigroup etc. So you’re going to have a weakening of the small banks and the community banks and they’ll probably be absorbed into the larger banks as a result.

Ross What do you think was revealed in 2020 that we all intuitively knew but couldn’t actually see because it hadn’t crystallized?

Michael Hudson Well, it’s obvious that the economy never recovered from the Obama depression after he bailed out the banks, not the economy. So the question is, how long can the economy limp along without recovery?
Well, it’s obvious now that the debts can’t be paid, but the coronavirus only catalyzed that. It’s made it even clearer. So in a sense, the Biden administration is going to be picking up just where the Obama administration left off, namely with huge evictions. Obama evicted about 10 million families. Most of them were black and Hispanic, lower income families who were the victims of the chump mortgages. Biden’s going to start his administration by kicking out probably another five million families. Again, black and Hispanic families are going to be the big losers because they were the people who had the highest coronavirus or were the first to be laid off. So it’s going to begin with a large eviction.
This reverses the trend in homeownership going up to 2008. It’s been going down, and this is going to continue now. People somehow imagined that there was going to be a recovery, that somehow we could recover from the post 2008 breakdown. But now it’s obvious we can’t recover. You’re going to have the polarization of the economy that has been occurring for the last 12 years. It will simply accelerate.

Ross What do you think are the megatrends that we should be looking at in 2021? What do you think is the direction of travel, if you like, for so-called developed economies?

Michael Hudson Well, the big trend in any economy is the growth of debt, because the debt grows exponentially. The economy has painted itself into a debt corner. We can see that in real estate. We can see that for small business. There’s also almost no way to recover. The Federal Reserve has been printing quantitative easing to keep stock and bonds high. But for the real economy, the trend is polarization and lower employment.
The trend also is that state and local finances are broke, especially in the biggest cities, New York City, San Francisco and Los Angeles. They’re not getting income tax revenue from the unemployed or closed businesses. They’re not getting the real estate tax with so many defaults and mortgage arrears. In New York City there’s talk of cutting back the subways by 70 percent. People will be afraid to take the subways when they’re overcrowded with people with the virus. So you’re having a breakdown not only in state and local finances, but of public services that are state run – public transportation services, health services, education is being downsized. Everything that is funded out of state and local budgets is going to suffer.
And living standards are going to be very sharply downward as people realize how many services they got are dependent on public infrastructure.

Ross Which, of course, opens the door for vulture funds and predatory capital, whether it be private equity, VCs or whatever else to come in and do public infrastructure deals?

Michael Hudson Well, you’ll have privatizations. The American economy will be privatized because the states can’t support their transportation system and other systems. The pressure to privatize subway and transport system, schools are going to be more privatized, as jails have been in the United States. So you’re going to have a huge privatization trend.

Ross What is the one thing that has really surprised you in 2020? What have you laughed at? What has given you a chuckle?

Michael Hudson The surprise – that I really shouldn’t have been surprised at – is how naive Bernie Sanders supporters were in thinking that they were going to get a fair deal and that the elections were going to be fair. The illusion is that people were actually going to have a fair election when the last thing the vested interests wanted was Bernie Sanders or Elizabeth Warren or any kind of reformer. So what happened to Sanders is what happened to Corbyn in Britain and the Labour Party’s neoliberal leadership.
So what’s for laughs? I guess, Tulsi Gabbard’s takedown of Kamala Harris was absolutely wonderful. Everybody just broke out laughing, cheering for her. And of course, that’s why she was marginalized, and now we have Kamala Harris as the senior vice president.

Video clip (Tulsi Gabbard) Senator Harris says she’s proud of her record as a prosecutor and that she’ll be a prosecutor president. But I’m deeply concerned about this record. She put over 1500 people in jail for marijuana violations and then laughed about it when she was asked if she ever smoked marijuana. She blocked evidence that would have freed an innocent man from death row until the courts forced her to do so. She kept people in prison beyond their sentences to use them as cheap labour for the state of California. And she fought to keep the cash bail system in place that impacts poor people in the worst kind of way.

Ross Michael, one prediction or three, over to you for 2021. What should our viewers be thinking about looking at, and considering as we go into the New Year?

Michael Hudson What’s on the upswing is poverty, homelessness, crime. It’ll be very good to invest in crime prevention services, burglar alarms other things. You’re going to have a lot of bond defaults for tax exempt bonds for cities and states can’t pay. And the transportation costs are going to rise, I think. So the cost of living is going to rise as public services are privatized and cut back. That will all be good news for the stock market.

Ross You mentioned Bernie Sanders and Jeremy Corbyn. The current sort of divisive political climate is engendering needless sort of scapegoating, recriminations, witch hunts and all the rest of it. How does that logically end, in your view?

Michael Hudson With Sanders certainly, capitulation. He wants to remain a player in the game. So he’s jumped on the Biden bandwagon, and he’s denounced everything that he stood for. He’s all for the Obamacare now, postponing socialized medicine. He’s joined the flock.
He was a catalyst for a left wing movement in the United States. But a catalyst is not part of the reaction, the chemical reaction. So he’s put something in motion that he’s not a part of. We’ll just have to see whether there is a recognition in America that no progress can be made in the context of the Republican and Democratic Party. They’re the same party. It’s a duopoly that takes third parties off of the ballot. Unlike in Europe, where you can have in parliament all sorts of other parties, you’re having just a really a political lockdown in America to go hand in hand with the economic lockdown.

Ross So, the world is incredibly divided, as we know. But it’s divided on different lines now, isn’t it? Because this multipolarity is here to stay. However, in the Beltway in Washington, the Americans think that unipolarity is here, which is laughable. But this multipolar world is split between, let’s say, finance capitalism and everybody else, because the West, the developed west, wants financial capitalism, doesn’t understand that it’s sowing the seeds of its own demise. Just elaborate on this a little bit – the West and financial capitalism versus growth economies that create real value.

Michael Hudson Well, that’s exactly what’s happening. Countries are beginning to say no to the US demands that they neoliberalize their economies and follow the Washington consensus. So you’re going to have China, Russia and the Shanghai Cooperation Organization nations essentially going their own way, de-dollarizing and creating their own economy on non-neoliberal lines, as opposed to the United States. In United States, there’s going to be a lot of people losing their status. And when people lose their status and they’re impoverished, that’s the breeding ground for fascism.

Ross Why is it that the US as a political class, have never understood that meeting other nations halfway is way better than trying to throttle them into economic submission?

Michael Hudson Well, it’s a mentality. Donald Trump said America has to win every deal, that we won’t be a member of any deal that we won’t. The American mentality also for one hundred years, actually, since the beginning of the republic, says we will never follow what other nations tell us to do. We will not join the World Court. We will not join any international organization unless we have a veto power in it. So America has veto power in the International Monetary Fund, the World Bank and the United Nations, and it refuses to compromise with other nations because we’re the exceptional country.
“Exceptional” means that we don’t have to abide by the treaties we signed. We don’t have to abide by international law. We can do whatever we want, because we’re America. That spirit has increased, especially as people are impoverished, living on the street and homeless. They think, well, at least we’re exceptional and we can do whatever we want.

Ross That kind of hubris puts all the Greek heroes to shame. And you know what happened to all of them?

Michael Hudson That’s right. It’s wealth addiction. It’s an addiction to power. Hubris really is when you become so successful, it goes to your head and you think you can do absolutely anything. And after all, you never know when other countries will push back until they actually begin to push back. So America, after World War Two, expanded and expanded and expanded its power with no pushback. So it thought we could do this forever. And now there’s a pushback and it thinks this is not natural. “America is exceptional. Don’t countries get it?”

Ross Michael Hudson, always a pleasure to have you. Thank you very much for your time and happy New Year.

Michael Hudson Happy New Year to you, too, Ross.

Photo by George Pagan III on Unsplash

The post Multipolarity and Financial Capitalism first appeared on Michael Hudson.

Rentiers a bunch of gangsters

Published by Anonymous (not verified) on Thu, 07/01/2021 - 1:30pm in



Michael Hudson and Pepe Escobar discuss rent and rent-seeking, i.e., unproductive economic activity, in the US and China mainly but including the Russian, Iranian and Brazilian economies.

In the first 15 minutes, an overview from Michael Hudson explains what happened in the US economy once jobs and manufacturing were offshored to mainly China.  He proposes that even if China did not exist, the US economy has been changed to the extent that it is almost impossible to change back to a productive economy without material changes in the economic model.

Pepe keeps the conversation flowing quickly with incisive questions.  The two esteemed gentlemen take a look at the Chinese view on a possible Biden administration and how the military hawks in Washington could be countered.   Outlining the ‘conflict of systems’ between the US and China, Michael Hudson explains the thinking of the Pentagon and paying ‘protection money’ historically to fund oligarchies.  It is a ‘war between systems’, Hudson explains with the thinking being:  “If only China did not export to us, we could reindustrialize.”

“It’s over”: says Hudson, because “we’ve painted ourselves into such a debt corner.  So much money flows to the top 5% that there is no money for investment, no money for growth.”

Hudson explains the concept of capitalism, how it was conceived to work against neo-liberalism, and how it has changed to systemic support for rentier economics.

A wealth of detail follows, around fictitious debt and wealth creation.   Michael discusses the ‘brainwashing’ of Russia vis a vis economic policy and central bank to end up in a position where Russia was paying 100% interest for years under American advisors and privatized rentiers, “a bunch of gangsters.”   Very interesting is the discussion on how the perpetrators, the leading university of the US in the destruction and looting of Russia, could not be brought to a court.

“You don’t need an army to destroy a country any longer.  All you need to do is to teach it American economics.”  Michael Hudson

A question from Pepe regarding the economies of North East Asia, South East Asia, the Asia Crisis and currently further integration with Russia, resulted in this very cogent quote from Michael Hudson.

“The current mode of warfare is to conquer the brains of a country, to shape how people think.  If you can twist their view into unreality economics, to make them think you are there to help them and not to take money out of them, then you’ve got them hooked.  You need to lend them money, and then crash it.”  Michael Hudson.

The conversation ends with an extensive question from Pepe regarding the biggest myth regarding Belt and Road, the supposed ‘debt trap’.  The difference in systems, non-rentier, and rentier, debt, and neo-liberalism again is illustrated in a crystal clear fashion.

Transcript : 

December 16th, 2020

Henry George School of Social Science


Alanna Hartzok (Secretary of the International Union for Land Value Tax): So, let’s formally start. Once we start to record Ibrahim is going to introduce the Henry George school and welcome everybody then I’m going to introduce from the bios; Michael and Pepe and then Michael will start with rent and rent seeking those who have comments or questions could put that in chat and then we’ll go to the chat at some point.

Ibrahima: Welcome, my name is Ibrahima Drame and I’m the director of education at the Henry George school of Social Science it’s a great honor to have you with us today for this joint webinar co-organized with the International Union for Land Value Taxation with two great thinkers, professor Michael Hudson and Pepe Escobar to discuss rent and rent seeking. I’d like to thank Michael and Pepe for kindly accepting to share their insights and of course our good friend Alanna Hartzok co-founder of Earth Right Institute, she will be moderating this session.

So, before I hand it over to Alanna, I’d like to ask all attendees to keep their microphones muted until we open the Q & A in the meantime you are free to use the chat and please do so responsibly. Alanna please go ahead and introduce our speakers.

Alanna: Okay yes thank you so much to Michael and Pepe for joining us and having this conversation I know that you two have admired each other’s work and writings for many many years so this is your first time to actually, talk together so I’m going to introduce you both from your bios.

Michael Hudson is an American economist professor of economics at the university of Missouri Kansas City and a researcher at the Levy Economics Institute at Bard College he’s a former wall street analyst political consultant commentator and journalist. He identifies himself as a classical economist. Michael is the author of J is for Junk Economics, Killing the Host, the Bubble and Beyond, Super Imperialism subtitled the Economic Strategy of American Empire, Trade Development and foreign debt and the myth of aid among others his books have been published translated into Japanese, Chinese, German, Spanish and Russian.

Pepe Escobar, born in Brazil is a correspondent editor at large at Asia Times and columnist for consortium news Washington dc and strategic culture Moscow since the mid-1980s he’s lived and worked as a foreign correspondent in London Paris, Milan los Angeles, Singapore Bangkok. He has extensively covered Pakistan Afghanistan, Central Asia to China, Iran, Iraq and the wider middle east pepe is the author of Globalistan – How the Globalized world is dissolving into liquid war red zone blues, A Snapshot of Baghdad during the surge he was contributing editor to the empire and the crescent and tuto in 03:09 vendita in italy and his last two books are empire of chaos and 2030. Pepe is also associated with the Paris-based European academy of geopolitics when not on the road he lives between Sao Paulo, Paris and Bangkok so we’ll have Michael begin now then he’s going to describe what uh the meaning is of rent and rent seeking and we’ll just take it from there please put comments and questions in chat thank you let’s go.

Michael Hudson: Well, I’m honored to be here on the same show with Pepe and discuss our mutual concern. And I think you have to frame the whole issue that China is thriving, and the West has reached the end of the whole 75-year expansion it had since 1945.

So, there was an illusion that America is de-industrializing because of competition from China. And the reality is there is no way that America can re-industrialize and regain its export markets with the way that it’s organized today. Financialized and privatized and if China didn’t exist. You’d still have the rust belt rusting out. You’d still have American industry not being able to compete abroad simply because the cost structure is so high in the United States.

The wealth is no longer made here by industrializing. It’s made financially, mainly by making capital gains. Rising prices for real estate or for stocks and for bonds.  In the last nine months, since the coronavirus came here, the top 1% of the U S economy grew by $1 trillion. It’s been a windfall for the 1%. The stock market is way up, the bond market is up, he real estate market is up while the rest of the economy is going down. Despite the tariffs that Trump put on, Chinese imports, trade with China is going up because we’re just not producing materials.

America doesn’t make its own shoes. It doesn’t make its own nuts and bolts or fasteners, it doesn’t make industrial things anymore because If money is to be made off an industrial company it’s to buy and sell the company, not to make loans to increase the company’s production. New York City where I live used to be an industrial city and, the industrial buildings, the mercantile buildings have all been gentrified into high-priced real estate and the result is that Americans have to pay so much money on education, rent and medical care that if they got all of their physical needs, their food, their clothing, all the goods and services for nothing, they still couldn’t compete with foreign labor because of all of the costs that they have to pay that are essentially called rent-seeking.

Housing in the United States now absorbs about 40% of the average worker’s paycheck. There’s a 15% taken off the top of paychecks for pensions, Social Security and for Medicare. Further medical insurance adds more to the paycheck, income taxes and sales taxes add about another 10%. Then you have student loans and bank debt. So basically, the American worker can only spend about one third of his or her income on buying the goods and services they produce. All the rest goes into the fire sector, the finance insurance, and real estate sector and other monopolies.

And essentially, we became what’s called a rent-seeking economy, not a productive economy. So, when people in Washington talk about American capitalism versus Chinese socialism this is confusing the issue. What kind of capitalism are we talking about? America used to have industrial capitalism in the 19th century. That’s how it got richer originally,but now it’s moved away from industrial capitalism towards finance capitalism. And what that means is that the mixed economy that made America rich. The government would invest in education and infrastructure and transportation and provide these at low costs so that the employers didn’t have to pay labor more to afford high financialized and privatized costs of living.

All of this has been transformed over the last hundred years. And we’ve moved away from the ethic of what was industrial capitalism. Before, the idea of capitalism in the 19th century – from Adam Smith to Ricardo, to John Stuart Mill to Marx – was very clear. Marx stated it quite clearly – Capitalism was revolutionary: It was to get rid of the landlord class. It was to get rid of the rentier class. It was to get rid of the banking class essentially, and just bear all the costs that were unnecessary for production, because how did England and America and Germany gain their markets?

They gained their markets basically by the government picking up a lot of the costs of the economy. The government in America provided low-cost education, not student debt. It provided transportation at subsidized prices. It provided basic infrastructure at low cost. And so, government infrastructure was considered a fourth factor of production.

And if you read what the business schools in the late 19th century taught like Simon Patten at the Wharton School, it’s very much like socialism. In fact, it’s very much like what China is doing. And in fact, China is following in the last 30 or 40 years pretty much the same way of getting rich that America followed.

It had its government fund basic infrastructure. It provides, low-cost education. It invests in high speed railroads and airports, in the building of cities. So, the government bears most of the costs and, that means that employers don’t have to pay workers enough to pay a student loan debt. They don’t have to pay workers enough to pay enormous rent such as you have in the United States.  They don’t have to pay workers to save for a pension fund, to pay the pension later on[1]. And most of all the Chinese economy doesn’t really have to pay a banking class because banking is the most important public utility of all.  Banking is what China has kept in the hands of government and Chinese banks don’t lend for the same reasons that American banks lend.

80% of American bank loans are mortgage loans to real estate and the effect of loosening loan standards and increasing the market for real estate is to push up the cost of living, push up the cost of housing. So, Americans have to pay more and more money for their housing, whether they’re renters or they’re buyers, in which case the rent is for paying mortgage interest.

So, all of this cost structure has been built into the economy. China’s been able pretty much, to avoid all of this, because its objective in banking is not to make a profit and interest, not to make capital gains and speculation. It creates money to fund actual means of production to build factories, to build research and development, to build transportation facilities, and to build infrastructure. Banks in America don’t lend for that kind of thing.

They only lend against collateral that’s already in place, because they won’t make a loan if it’s not backed by collateral. Well, China creates money through its public banks to create capital, to create the means of production. So, you have a diametric opposite philosophy of how to develop between the United States and China.

The United States has decided not to gain wealth by actually investing in means of production and producing goods and services, but in financial ways. China is gaining wealth and the old-fashioned way actually by producing it. And whether you call this, industrial capitalism or a state capitalism or a state socialism or Marxism, it basically follows the same logic of real economics, the real economy, not the financial overhead.  So you have China operating as a real economy, increasing its production, becoming the workshop of the world as England used to be called. And America trying to draw in foreign resources, live off of foreign resources, live by trying to make money by investing in the Chinese stock market or now, moving investment banks into China and making loans to China, not in actual industrial-capitalism ways.

So, you could say that America has gone beyond industrial capitalism, and they call it the post-industrial society, but you could call it the neo-feudal society. You could call it the neo-rentier society, or you could call it debt peonage. But it’s not industrial capitalism.

And in that sense, there’s no rivalry between China and America. These are different systems going their own way. I better let the Pepe pick it up from there.

Pepe Escobar: Okay. Thank you, Michael, this is brilliant. And you did it in less than 15 minutes. You told the whole story in 15 minutes. Well, my journalistic instinct is immediately to start questions to Michael. So, this is exactly what I’m gonna do now. I think it is much better to basically illustrate some points of what Michael just said, comparing the American system, which has finance capitalism essentially with industrial capitalism that is in effect in China. Let me try to start with a very concrete and straight to the point question, Michael.

Okay. let’s says that more or less, if we want to summarize it, basically they try to tax the nonproductive rentier class. So, this would be the Chinese way to distribute wealth, right? Sifting through the Chinese economic literature, there is a very interesting concept, which is relatively new, correct me if I wrong, Michael, in China, which they call stable investment. So stable investment, according to the Chinese would be to issue special bonds as extra capital in fact, to be invested in infrastructure building all across China and, and they, choose these projects in what they call weak areas and weak links. So probably in some of the inner provinces, or probably in some parts of Tibet or Xingjian for instance. So, this is a way to invest in the real economy and in real government investment projects.

Right? So, my question in fact, is does this system create extra local debt, coming directly from this financing from Beijing. Is this a good recipe for sustainable development, the Chinese way and the recipe that they could expand to other parts of the global South?

Michael: Well, this is a big problem that they’re discussing right now. The localities, especially rural China, (and China is still largely rural) only cover about half of their working budget from taxation. So, they have a problem. How are they going to get the balance of the money? Well, there is no official revenue sharing between the federal government and its state banks and the localities.

So, the localities can’t simply go to central government and say, give us more money. The government lets the localities be very independent. And it is sort of the “let a hundred flowers bloom” concept. They’ve let each locality just go its own way, but the localities have run a big deficit.

What do they do?  Well in the United States they would issue bonds on which New York is about to default. But in China, the easiest way for the localities to make money, is unfortunately to do something like Chicago did. They will sell their tax rights for the next 75 years for current money now.

So, a real estate developer will come in and say; look we will give you the next seventy-five years of tax on this land, because we want to build projects on this (a set of buildings). So, what this means is that now the cities have given away all their source of rent.

Let me show you the problem is what Indiana and Chicago did. Chicago also was very much like China’s countryside cities. So, it sold parking meters and its sidewalks to a whole series of Wall Street investors, including the Abu Dhabi Investment Fund for seventy-five years. And that meant that for 75 years, this Wall Street consortium got to control the parking meters.

So, they put up the parking meters all over Chicago raised the price of parking, raised the cost of driving to Chicago. And if Chicago would have a parade and interrupt parking, then Chicago has to pay, the Abu Dhabi fund and Wall Street company, what it would have made anyway. And this became such an awful disaster that finally Wall Street had to reverse the deal and undo it because it was giving privatization a bad name here.  The same thing happened in Indiana.

Indiana was running a deficit and it decided to sell its roads to a Wall Street investment firm to make a toll road. The toll on the Indiana turnpike was so high that drivers began to take over the side roads. That’s the problem if you sell future tax revenues in advance.

Now what China and the localities there are discussing is that we’ve already, given the real estate tax at very low estimates to the commercial developers, so what do we do? Well, what I’ve advised them to do, Alanna didn’t say it, but I’ve been a professor of economics at the Peking University, School of Marxist studies for three years, and I’ve had discussions with Central Committee members. I also have an honorary position at Wuhan University. We’ve discussed how China can put an added tax for all of the valuable land, that’s gone up. How can it be done to let the cities collect this tax? Our claim is that the cities, in selling these tax rights for 75 years, have sold what in Britain would be called ground rent. i.e. what’s paid to the landed aristocracy and over and above that there’s the market rent. So, China should pass a market rent tax over and above the ground rent tax to reflect the current value. And there they’re thinking of, well, do we say that this is a capital gain in the land? Well, it’s not really a capital gain until you sell the land, but it’s value. It’s the valuation of the capital. And they’re looking to do whether they should just say that this is the market rent tax over and above the flat tax that has been paid in advance, or it’s a land tax on the capital gain for land.

Now, all of this requires that there be a land map of the whole country. And they are just beginning to create such a land map as a basis for how you calculate how much the rent there is.  What I found in China is something very strange. A few years ago, in Beijing, they had the first, international Marxist conference where I was a main speaker and I was talking about Marx’s discussion of the history of rent theory in volume two and volume three of Capital where Marx discusses all of the classical economics that led up to his view; Adam Smith, Ricardo, Malthus, John Stuart Mill, and Marx’s Theories of Surplus Value was really the first history economic thought that was written, although it wasn’t published until after he died. Well, you could see that there was a little bit of discomfort with some of the Marxists at the conference. And so, they invited for the next time my colleague David Harvey to come and talk about Marxism in the West.

Well, David gave both the leading and the closing speech of the conference and said, you’ve got to go beyond volume one of Capital. Volume I was what Marx wrote as his addition to, classical economics saying that there was exploitation in industrial employment of labor as well as rent seeking and then he said, now that I’ve done my introduction here, let me talk about how capitalism works in Volumes II and III. Volumes II and III are all about rent and finance and David Harvey has published a book on Volume III of Capital and his message to Peking University and the second Marxist conference was – you’ve got to read volumes II, and III.

Well, you can see that, there’s a discussion now over what is Marxism and my friend and colleague at PKU Sasha Buzgalin said, Marxism is a Chinese word; It’s the Chinese word for politics. That made everything clear to me. Now I get it!  I’ve been asked by members of the Academy of Social Sciences in China to create a syllabus of the history of rent theory and value theory. And essentially in order to have an idea of how you calculate rent, how do you make a national income analysis where you show rent, you have to have a theory of value and price and rent is the excess of price over the actual cost value. Well, for that you need a concept of cost of production and that’s what classical economics is all about. Post-classical economics denies all of this. The whole idea of classical economics is that notall income is “earned.”

Landlords don’t earn their income for making rent in their sleep as John Stuart Mill said. Banks don’t earn their income by just sitting there and letting debts accrue interest and compounding and doubling. The classical economists separated actual unearned income from the production and consumption economy.

Well, around the late 19th century in America, you had economists fighting against not only Marx, but also against Henry George, who at that time, was urging a land tax in New York. And so, at Columbia university, John Bates Clark developed a theory that everybody earns whatever they can get. That there was no such thing as unearned income. That has become the basis for American national income statistics and thought ever since. So, if you look at today’s GDP figures for the United States, they have a figure for 8% of the GDP for the homeowners rent. But homeowners wouldn’t pay themselves if they had to rent the apartment to themselves, then you’ll have interest at about 12% of GDP.

And I thought, well how can interest be so steady? What happens to all of the late fees; that 29% that credit card companies charge? I called up the national income people in Washington, when was there. And they said well, late fees and penalties are considered financial services.

And so, this is what you call a service economy. Well, there’s no service in charging a late fee, but they add all of the late fees. When people can’t pay their debts and they owe more and more, all of that is considered an addition to GDP. When housing becomes more expensive and prices American labor out of the market, that’s called increase in GDP.

This is not how a country that wants to develop is going to create a national income account. So, there’s a long discussion in China about, just to answer your question, how do you create an account to distinguish between what’s the necessary cost to production and what’s an unnecessary production cost and how do we avoid doing what the United States did. So again, no rivalry. The United States is an object lesson for China as to what to avoid, not only in de-industrializing the economy, but in creating a picture of the economy as if everybody earns everything and there’s no exploitation, no unearned income, nobody makes money in their sleep and there’s no 1%. Well, that’s what’s really at issue and why the whole world is splitting apart, as you and I are discussing what we’re writing.

Pepe: Thank you, Michael. Thank you very much. So just to sum it all up, can we say that Beijing’s strategy is to save especially provincial areas from leasing their land, their infrastructure for 60 years or 75 years?  As you just mentioned, can we say that the fulcrum of their national strategy is what you define as the market rent tax. Is this the number one mechanism that they are developing?

Michael: Ideally, they want to keep rents as low as possible because rents is a cost of living and a cost of doing business. They don’t have banks that are lending to inflate the real estate market.

However, in almost every Western country, the US, Germany, England the value of stocks and bonds and the value of real estate is just about exactly the same. But for China, the value of real estate is way, way larger than the value of stocks.

And the reason is not because the Chinese central bank, the Bank of China lends for real estate; it’s because they lend to intermediaries and the intermediaries have financed a lot of housing purchases in China. And, this is really the problem for if they levy a land tax, then you’re going to make a lot of these financial intermediaries go bust.

That’s what I’m advocating, and I don’t think that’s a bad thing. These financial intermediaries shouldn’t exist, and this same issue came up in 2009 in the United States. You had the leading American bank being the most crooked and internally corrupt bank in the country, Citibank making junk mortgage, and it was broke.

Its entire net worth was wiped out as a result of its fraudulent junk mortgages. Well, Sheila Bair, the head of the Federal Deposit Insurance Corporation (FDIC) wanted to close it down and take it over. Essentially that would have made it into a public bank and that would be a wonderful thing. She said, look Citibank shouldn’t be doing what it’s doing. And she wrote all this up in the in an autobiography. And, she was overruled by president Obama and Tim Geithner saying, but wait a minute, those are our campaign contributors. So, they were loyal to the campaign contributors, but not the voters; and they didn’t close Citibank down.

And the result is that the Federal Reserve ended up creating about $7 trillion of quantitative easing to bail out the banks. The homeowners weren’t bailed out. 10 million American families lost their homes as a result of junk mortgages in excess of what the property was actually worth.

All of this was left on the books, foreclosed and sold to a private capital companies like Blackstone. And the result is that home ownership in America declined from 68% of the population down to about 61%. Well, right where the Obama administration left off, you’re about to have the Biden administration begin in January with an estimated 5 million Americans losing their homes. They’re going to be evicted because they’ve been unemployed during the pandemic. They’ve been working in restaurants or gyms or other industries that have been shut down because of the pandemic. They’re going to be evicted and many homeowners and, low-income homeowners have been unable to pay their mortgages.

There’s going to be a wave of foreclosures. The question is, who’s going to bear the cost. Should it be 15 million American families lose their homes just so the banks won’t lose money, or should we let the banks that have made all of the growth since 2008. 95% of American GDP of the population has seen its wealth go down. All the wealth has been accumulating for the 5% in statistics. Now the question is should this 5% that’s got all the wealth lose or should the 95% lose. The Biden administration says the 95% should lose basically. And you’re going to see a wave of closures that the question in China should be that, these intermediate banks (that are near banks) they’re not really banks they are sort of like payday loan lenders, should they come in and, bear the loss or should Chinese localities and the people bear the loss. Somebody has to lose when you’re charging, you’re collecting the land’s rent that was paid to the creditors, and either the creditors have to lose or, the tax collector loses and that’s the conflict that exists in every society of the world today.  And, in the West, the idea is the tax collectors should lose and whatever the tax collector relinquishes should be free for the banks to collect. In China obviously, they don’t want that to happen and they don’t want to see a financial class developing along US lines.

Pepe: Michael, there’s a quick question in all this, which is the official position by Beijing in terms of helping the localities. Their official position is that there won’t be any bail outs of local debt. How do they plan to do that?

Michael: What they’re discussing, how are you not going to do it? They think they sort of let localities go their own way. And they think, well you know which ones are going to succeed, and which ones aren’t, they didn’t want to have a one size fits all central planning. They wanted to have flexibility. Well, now they have flexibility. And when you have many different “let a hundred flowers bloom”, not all the flowers are going to bloom at the same rate. And the question is, if they don’t bail out the cities, how are the cities going to operate? Certainly, China has never let markets steer the economy, the government steers the markets. That’s what socialism is as opposed to finance capitalism. So, the question is, you can let localities go broke and yet you’re not going to destroy any of the physical assets of the localities, and all of this is going to be in place. The question is, how are you going to arrange the flow of income to all of these roads and buildings and land that’s in place? How do you create a system?  Essentially, they’re saying well, if we’re industrial engineers, how do we just plan things? Forget credit, forget property claims, forget the rentierclaims. How are we just going to design an economy that operates most efficiently? And that’s what they’re working on now to resolve this situation because it’s got fairly critical.

Pepe: Yes, especially in the countryside. Well, I think, a very good metaphor in terms of comparing both systems are investment in infrastructure. You travel to China a lot so, you’ve seen. You’ll travel through a high-speed rail. You’ll see those fantastic airports in Pudong or the new airport in Beijing.

And then you’ll take the Acela to go from Washington and New York city, which is something that I used to do years ago. And the comparison is striking. Isn’t it? Or if you go to France, for instance, when France started development of the TGV, which in terms of a national infrastructure network, is one of the best networks on the planet. And the French started doing this 30 year ago, even more. Is there……, it’s not in terms of way out, but if we analyze the minutia, it’s obvious that following the American finance utilization system, we could never have something remotely similar happening in United States in terms of building infrastructure.

So, do you see any realistic bypass mechanism in terms of improving American infrastructure, especially in the big cities?

Michael: No, and there are two reasons for that. Number one let’s take a look at the long-term railroads. The railroads go through the center of town or even in the countryside, all along the railroads, the railroads brought business and all the businesses had been located as close to the railroad tracks as they could. Factories with sightings off the railroad, hotels and especially right through the middle of town where you have the railway gates going up and down. In order to make a high-speed rail as in China, you need a dedicated roadway without trucks and cars, imagine a car going through a railway gate at 350 miles an hour.

So, when I would go from Beijing to Tienjin, here’s the high-speed rail, there’s one highway on one side. One highway on the other side, there’ll be underpasses. But there it goes straight now. How can you suppose you would have a straight Acela line from Washington up to Boston when all along the line, there’s all this real estate right along the line that has been built up? There’s no way you can get a dedicated roadway without having to tear down all of this real estate that’s on either side and the cost of making the current owners whole would be prohibitive. And anywhere you would go, that’s not in the center of the city, you would also have to have the problem that there’s already private property there.

And there there’s no legal constitutional way for such a physical investment to be made. China was able to make this investment because it was still largely rural. It wasn’t as built up along the railways. It didn’t have any particular area that was built up right where the railroad already was.

So certainly, any high-speed rail could not go where the current railways would be, and they’d have to go on somebody’s land. And, there’s also, what do you do if you want to get to New York and long Island off from New Jersey. 60 years ago, when I went into Wall Street, the cost of getting and transporting goods from California to Newark New Jersey was as large as from Newark right across the Hudson river to New York because not only because of the mafia and control of the local labor unions, but because of the tunnels. Right now, the tunnels from New Jersey to New York are broke, they are leaking, the subways in New York city where I am continually break down because there was a hurricane a few years ago and the switches were made in the 1940s. The switches are 80 years old. They had water damage and the trains have to go at a crawl. But the City and State, because it is not collecting the real estate tax and other taxes and because ridership fell on the subways to about 20%, the City’s broke. They’re talking about 70% of city services being cut back.

They’re talking about cutting back the subways to 40% capacity, meaning everybody will have to get in and, when there’s still a virus and not many people are wearing masks, and there was no means of enforcing masks here. So, there’s no way that you can rebuild the infrastructure because, for one thing the banking system here has subsidized for a hundred years junk economics saying you have to balance the budget. If the government create credit it’s inflationary as if when banks create credit, it’s not inflationary. Well, the monetary effect is the same, no matter who creates the money. And so, Biden has already said that president Trump ran a big deficit, we’re going to run a bunch of surpluses or a budget balance. And he was advocating that all along. Essentially Biden is saying we have to increase unemployment by 20%, lower wages by 20%, shrink the economy by about 10% in order to, in order for the banks not to lose money.

And, we’re going to privatize but we are going to do it by selling the hospitals, the schools, the parks, the transportation to finance, to Wall Street finance capital groups. And so, you can imagine what’s going to happen if the Wall Street groups buy the infrastructure. They’ll do what happened to Chicago when it sold all the parking meters, they’ll say, okay, instead of 25 cents an hour, it’s now charged $3 an hour. Instead of a $2 for the subway, let’s make it $8. You’re going to price American economy even further out of business because they say that public investment is socialism.

Well, it’s not socialism. It’s industrial capitalism. It’s industrialization, that’s basic economics. The idea of what, and how an economy works is so twisted academically that it’s the antithesis of what Adam Smith, John Stuart Mill and Marx all talked about. For them a free market economy was an economy free of rentiers. Free of rent, it didn’t have any rent seeking. But now for the Americans, a free market economy is free for the rentiers, free for the landlords free, for the banks to make a killing. And that is basically the class war back in business with a vengeance. That blocks and is preventing any kind infrastructure recovery. I don’t see how it can possibly take place.

Pepe: Well, based on what you just described, there is a process of turning the United States into a giant Brazil. In fact, this is what the Brazilian finance minister Paulo Guedes, a Pinochetista, as you know Michael, has been doing with the Brazilian economy for the past two years, privatizing everything and selling everything to big Brazilian interests and with lots of Wall Street interests involved as well. So, this is a recipe that goes all across the global South as well. And it’s fully copied all across the global South with no way out now.

Michael: Yes, and this is promoted by the World Bank and the International Monetary Fund. And when I was brought down to Brazil to meet with the council economic advisors under Lula, they said, well the whole problem is that Lula’s been obliged to let the banks do the planning.

So, basically free markets and libertarianism is adopting central planning, but with central planning by the banks. America is a much more centrally planned economy than China. China is letting a hundred flowers bloom; America has concentrated the planning and the resource allocation in Wall Street. And that’s the central planning that is much more corrosive than any government planning, could be. Now the irony is that China’s sending its students to America to study economics. And, most of the Chinese I had talked to say, well we went to America to take economics courses because that gives us a prestige here in China.

I’m working now, with Chinese groups trying to develop a “reality economics” to be taught in China as different from American economics.

Pepe: Exactly because of what they study at Beijing university, Renmin or Tsinghua

is not exactly what they would study in big American universities. Probably what they study in the US is what not to do in China. When they go back to China, what they won’t be doing. It’s an object lesson for what to avoid.

Michael, I’d like to go back to what the BRICS had been discussing the 2000s when Lula was still president of Brazil and many of his ideas deeply impressed, especially Hu Jintao at the time, which is bypassing the US Dollars. Well, at the moment obviously we’re still at 87% of international transactions still in US Dollars. So, we are very far away from it, but if you have a truly sovereign economy, which is the case of China, which we can say is the case of Russia to a certain extent and obviously in a completely different framework, Iran.

Iran is a completely sovereign, independent economy from the West. The only way to try to develop different mechanisms to not to fall into the rentier mind space would be to bypass the US Dollars.

Michael: Yes, for many reasons. For one thing the United States can simply print the Dollars and lend to other countries and then say, now you have to pay us interest. Well, Russia doesn’t need American Dollars. It can print its own Rubles to provide labor. There’s no need for a foreign currency at all for domestic spending, the only reason you would have to borrow a foreign currency is to balance your exchange rate, or to finance a trade deficit. But China doesn’t have a trade deficit. And in fact, if China were to work to accept more Dollars, Americans would love to buy into the Chinese market and make a profit there, but that would push up China’s exchange rate and that would make it more difficult for her to make its exports because the exchange rate would come up not because it’s exporting more but because it’s letting American Dollars come in and push it up. Well, fortunately, president Trump as if he works for the Chinese national committee said, look, we don’t want to really hurt China by pushing up its currency and said we want to keep it competitive. So, I’m going to prevent American companies from lending money to China, I’m going to isolate it and so he’s helping them protect their economy. And in Russia he said, look Russia really needs to feed itself. And, there’s a real danger that when the Democrats come in, there are a lot of anti-Russians in the Biden administration. They may go to war. They may do to Russia what they tried to do to China in the fifties. Stop exporting food and grain. And only Canada was able to break the embargo. So, we’re going to impose sanctions on Russia. So immediately, what happened is Russia very quickly became the largest grain exporter in the world. And instead of importing cheese from the Baltics, it created its own cheese industry. So, Trump said look, I know that Russians followed the American idea of not having protective tariffs, they need protective tariffs. They’re not doing it. We’re going to help them out by just not importing from them and really helping them.

Pepe: Yeah. Michael, what do you think Black Rock wants from the Chinese? You know that they are making a few inroads at the highest levels? Of course, I’m sure you’re aware of that. And also, JP Morgan, City Bank, etc.…. What do they really want?

 Michael: They’d like to be able to create Dollars to begin to buy and make loans to real estate; let companies grow, let the real estate market grow and make capital gains.

The way people get wealthy today isn’t by making an income, it’s been by making a capital gain. Total returns are current income plus the capital gains. As for capital gains each year; the land value gains alone are larger than the whole GDP growth from year to year. So that’s where the money is, that’s where the wealth is. So, they are after speculative capital gains, they would like to push money into the Chinese stock market and real estate market. See the prices go up and then inflate the prices by buying in and then sell out at the high price. Pull the money out, get a capital gain and let the economy crash, I mean that’s the business plan.

Pepe: Exactly. But Beijing will never allow that.

Michael: Well, here’s the problem right now, they know that Biden is pushing militarily aggressive people in his cabinet. There’s one kind of overhead that China is really trying to avoid and that’s the military overhead because if you spend money on the military, you can’t spend it on the real economy. They’re very worried about the military and they say, how do we deter the Biden administration from actually trying a military adventure in the China sea or elsewhere. They said well, fortunately America is multilayered. They don’t think of America as a group. They realize there’s a layer and they say, who’s going to represent our interests.

Well, Blackstone and Wall Street are going to represent their interests. Then I think one of the, Chinese officials last week gave a big speech on this very thing, saying look, our best hope in stopping America’s military adventurism in China is to have Wall Street acting as our support because after all, Wall Street is the main campaign contributor and the president works for the campaign contributors.

The politician works for the campaign contributors. They’re in it for the money! So fortunately, we have Wall Street on our side, we’ve got control of the political system and they’re not there to go to war so that helps explain why a month ago they let a wholly owned US banks and bankers in. On the one hand, they don’t like the idea of somebody outside the government creating credit for reasons that the economy doesn’t need. If they kind of needed it, the bank of China would do it. They have no need for foreign currency to come in to make loans in domestic currency, out of China.

The only reason that they could do it is number one, it helps meet the world trade organization’s principles and, number two especially during this formative few months of the Biden administration, it helps to have Wall Street saying; we can make a fortune in China, go easy on them and that essentially counters the military hawks in Washington.

Pepe: So, do you foresee a scenario when Black Rock starts wreaking havoc in the Shanghai stock exchange for instance?

Michael: It would love to do that. It would love to move things up and down. The money’s made by companies with the stock market going up and down; the zigzag. So of course, it wants to do a predatory zigzag. The question is whether China will impose a tax to stop this all sorts of financial transactions. That’s what’s under discussion now. They know exactly what Black Rock wants to do because they have some very savvy billionaire Chinese advisers that are quite good. I can tell you stories, but I better not.

Pepe: Okay. If it’s not okay to tell it all, tell us part of the story then.

Michael: The American banks have been cultivating leading Chinese people by providing them enough money to make money here, that they think that, okay they will now try to make money in the same way in China and we can join in. It’s a conflict of systems again, between the finance capital system and industrial socialism. You don’t get any of this discussion in the U S press, which is why I read what you write because in the US press, the neocons talk about the fake idea of Greek history and fake idea of the Thucydides’ problem of a country jealous of another country’s development. There’s no jealousy between America and China. They’re different, they are own way. We are going to destroy them. And if you look at what the analogy that the Americans draw, and this is how the Pentagon thinks with the war between Athens and Sparta. It’s hard to tell, which is which. Here you have Athens, a democracy backing other democracies and having the military support of the democracies and the military in these democracies all had to pay Athens protection money for the military support and that’s the money that Athens got to ostensibly support its Navy and protection that built up all of the Athenian public buildings and everything else. So, that’s a democracy exploiting its allies, to enrich itself via the military. Then you have Sparta, which was funding all of the oligarchies, and it was helping the oligarchies overthrow democracies. Well, that was America too. So, America is both sides of the Thucydides war.  If the democracy is exploiting the fellow democracies and is the supporter of oligarchies in Brazil, Latin America, Africa, and everyone else.

So, you could say the Thucydides problem was between two sides, two aspects of America and has nothing to do with China at all except, for the fact that the whole war was a war between economic systems. And that’s what’s they’re acting as if somehow if only China did not export to us, we could be re-industrialized and somehow export to Europe and the Third World.

And as you and I have described, it’s over. We Americans painted ourselves into such a debt corner that without writing down the debts, were in the same position that the Eurozone is in. There’s so much money that goes to the creditors to the top 1% or 5% that there is no money for capital investment, there is no money for growth. And, since 1980 as you know, real wages in America have been stable. All the growth has been in property owners and predators and the FIRE sector, the rest of the economy is in stagnation. And now the coronavirus has simply acted as a catalyst to make it very clear that the game is over; it’s time to move away from the homeowner economy to rentier economy, time for Blackstone to be the landlord. America wants to recreate the British landlord class and essentially what we’re seeing now is like the Norman invasion of England taking over the land and the infrastructure. That’s what Blackstone would love to do in China.

Pepe: Wow. I’m afraid that they may have a lot leeway by some members of the Beijing leadership now, because as you know very well, it’s not a consensus in the political arena.

Michael: We’re talking about Volume II and III of Capital.

Pepe: Exactly. But you know, you were talking about debt. Coming back to that, in fact I just checked this morning, apparently global debt as it stands today is $277 trillion, which is something like 365% of global GDP. What does that mean in practice?

Michael: Yeah, well fortunately this is discussed in the 19th century and there was a word for that – fictitious capital – it’s a debt that can’t be paid, but you’ll keep it on the books anyway. And every country has this. You could say the question now, and the Financial Times just had an article a few days ago that China’s claims on Third World countries on the Belt and Road Initiative is fictitious capital, because how can it collect. Well, China’s already thought of that. It doesn’t want money. It wants the raw materials. It wants to be paid in real things. But a debt that can’t be paid, can only be paid either by foreclosing on the debtors or by writing down the debts and obviously a debt of can’t be paid won’t be paid.

And so, you have not only Marx using the word fictitious capital. At the other end of the spectrum, you had Henry George talking about fictive capital. In other words, these are property claims that have no real capital behind them. There’s no capital that makes profit. That’s just a property claim for payment or a rentier claim for payment.

So, the question is, can you make money somehow without having any production at all, without having wages without having profits without any capital? Can you just have asset grabbing and buying and selling assets. And as long as you have the Federal Reserve in America, come in, Trump’s $10 trillion COVID program gave 2 trillion to the population at large with these $1,200 checks, that my wife and I got and 8 trillion all just to buy stocks and bonds. None of this was to build infrastructure. None of this 8 trillion was to build a single factory. None of this 8 trillion was to employee a single worker. It was all just to support the prices of stocks and bonds, and to keep the illusion that the economy had not stopped growing. Well, it’s growing for the 5%. So, it’s all become fictitious. And if you look at the GDP as I said, it’s fictitious.

Pepe: And the most extraordinary thing is none of that is discussed in American media. Absolutely, there’s not a single word about what you would have been describing.

Michael: And it’s not even discussed in academia. Our graduates at the University of Missouri at Kansas City are all trained in Modern Monetary Theory. And to be hired as professors, they have to be able to publish in the refereed journals and the refereed journals are all essentially controlled by the Chicago school. So, you have a censorship of the kind of ideas that we’re talking about. You can’t get it into the economic journals, so you can’t get it into the economics curriculum. So, where on earth you’re going to get it. If you didn’t have the internet you wouldn’t be discussing at all. Most of my books sell mainly in China, more than in all the other countries put together so I can discuss these there. I stopped publishing in orthodox journals so many years ago because it’s talking to the deaf.

Pepe: Absolutely. Yeah. Can I ask you a question about Russia, Michael? There is a raging, debate in Russia for many years now between let’s say the Eurasianists and the Atlanticists. It involves of course, economic policy under Putin, industrial capitalism Russian style, and the Eurasianists basically say that the central problem with Russia is how the Russian central bank is basically affiliated with all the mechanisms that you know so well, that it is an Atlanticist trojan horse inside the Russian economy. How do you see it?

Michael: Russia was brainwashed by the West when the Soviet Union broke up in 1991. First of all, the IMF announced in advance that there was a big meeting in Houston with the IMF and the World Bank. And the IMF published all of its report saying, first you don’t want inflation in Russia so let’s wipe out all of the Russian savings with hyperinflation, which they did. They then said, well now to cure the hyperinflation the Russian central bank needs a stable currency and you need a backup for the currency. You will need to back it with US Dollars. So, from the early 1990s, as you know, labor was going unpaid. The Russian central bank could have created the rubles to pay the domestic labor and to keep the factories in place. But, the IMF advisors from Harvard said, no you’ll have to borrow US Dollars. I met with people from the Hermitage Fund and the Renaissance Fund and others, we had meetings and, I met with the investors. Russia was paying 100% interest for years to leading American financial institutions for money that it didn’t need and could have created itself. Russia was so dispirited with Stalinism that essentially that it thought, what’s the opposite of Stalinism must be what they have in America.

They thought that America was going to tell it how America got rich, but America didn’t want to tell Russia how it got rich, but instead wanted to make money off Russia. They didn’t get it. They trusted the Americans. They really didn’t understand that, industrial capitalism that Marx described had metamorphosized into finance capitalism and was completely different.

And that’s because Russia didn’t charge rent, it didn’t charge interest. I gave three speeches before the Duma, urging it to impose a land tax. Some of the people I noticed, Ed Dodson was there with us and we were all trying to convince Russia, don’t let this land be privatized. If you let it be privatized, then you’re going to have a such high rents and housing costs in Russia that you’re not going to be able to essentially compete for an industrial growth. Well, the politician who brought us there Vyatchislav Zvolinsky was sort of maneuvered out of the election by the American advisors.

The Americans put billions of Dollars in to essentially finance American propagandists to destroy Russia, mainly from the Harvard Institute of International Development. And essentially, they were a bunch of gangsters and the prosecutors in Boston were about to prosecute them.

So, the attorney general of Boston was going to bring a big case for Harvard against, the looting of Russia and the corruption of Russia. And I was asked to organize and to bring a number of Russian politicians and industrialists over to say how, this destroyed everything. Well, Harvard settled out of court and essentially that made the perpetrators the leading university people up there. I’m associated with Harvard Anthropology Department, not the Economics Department.

So, we never had a chance to bring my witnesses, and have our report on what happened, but I published for the Russian Academy of sciences a long study of how all of this destruction of Russia was laid out in advance at the Houston meetings by the IMF. America went to the leading bureaucrats and said; look, we can make you rich why don’t you register the factories in your own name, and if you’re registered in your own name, you know, then you’ll own it. And then you can cash out. You can essentially sell, but obviously you can’t sell to the Russians because the IMF have just wiped out all of their savings.

You can only cash out by selling to the West. And so, Russia’s stock market became the leading stock market in the world from 1994 with the Norilsk Nickel and the seven bankers in the bank loans for shares deal through 1997. And, I had worked for a firm Scudder Stevens and, the head advisor, a former student of mine didn’t want to invest in Russia because she said, this is just a rip off, it’s going to crash. She was fired for not investing. They said look, we know that’s going to crash. That’s the whole idea it’s going to crash. We can make a mint off it before the crash. And then when it crashes, we can make another mint by selling short and then all over again. Well, the problem is that the system that was put in with the privatization that’s occurred, how do you have Russia’s wealth used to develop its own industry and its own economy like China was doing. Well, China has rules for all of this, but Russia doesn’t have rules, it’s really all centralized it’s president Putin that keeps it this way.

Well, this was the great fear of the West. When you had Yevgeny Primakov, beginning to plan, to do pretty much what is done today, to restrain private capital, the IMF said hold off is that we’re not going to make any loans to stabilize the Russian currency until you remove Mr. Primakov.

The US said we won’t deal with Russia until you remove him. So, he was pushed out and he was probably the smartest guy at the time there. So, they thought the Putin was going to be sort of the patsy. And he sort of almost single-handedly holding the oligarchs in and saying, look, you can keep your money as long as you do exactly what the government would do. You can keep the gains as long as you’re serving the public interest, but none of this has resulted in a legal system, a tax system, and a system where the government actually does get most of the benefits. Russia could have emerged in 1990 as one the most competitive economy in Eurasia by giving all of the houses to its people instead of giving Norilsk Nickel and the oil companies to Yukos, it could have given everybody their own house and their own apartment, the same thing in the Baltics. And instead it didn’t give the land out to the people. And Russians were paying 3% of their income for housing in 1990. And rent is the largest element in every household’s budget. So, Russia could have had low price labor, it could have financed all of its capital investment for the government by taxing, collecting the rising rental value and instead, Russian real estate was privatized on credit and it was even worse in the Baltics. In Latvia, where I was research director for the Riga Graduate School of Law, Latvia borrowed primarily from Swedish banks. And so, in order to buy a house, you had to borrow from Swedish banks.

And they said, well, we’re not going to lend in the Latvian currency because it can go down. So, you have a choice; Swiss Francs or German Marks or US Dollars. And so, all of this rent was paid in foreign currency. There came an outflow that essentially drained all the Baltic economies, Latvia lost 20% of its population, Estonia, Lithuania followed suit.

And of course, the worst hit by neo-liberalism was Russia. As you know, president Putin said that neo-liberalism cost Russia more of its population than World War II. And you know that to destroy a country, you don’t need an army anymore. All you have to do is teach it American economics.

Pepe: Yes, I remember well, I arrived in Russia in the winter of 91 coming from China. So, I transited from the Chinese miracle. In fact, a few days after Deng Xiaoping’s famous Southern tour when he went to Guangzhou and Shenzhen.  And that was the kick for the 1990’s boom, in fact now a few years before the handover and then I took the Trans-Siberian and I arrived in Moscow a few days after the end, in fact, a few weeks after the end of the Soviet Union.

But yeah, I remember the Americans arrived almost at the exact minute, wasn’t it, Michael? I think they already were there in the spring of 1992. If I’m not mistaken.

Michael:  The Houston meeting was in 1990.  But all before that already in, 1988 and 1989, there was a huge outflow of embezzlement money via Latvia. The assistant dean of the university, Gregor Lautchansky,  who ended up creating Nordex. Essentially the money was all flying out because Ventspils in Latvia, was where Russian oil was exported and it was all fake invoicing. So, the Russian kleptocrats basically made their money off false export invoicing, ostensibly selling it for one price and having the rest paid abroad and, this was all organized through Latvia and the man who did it later moved to Israel and finally gave a billion Dollars back to Russia so that, he went on to live safely for the rest of his life in Israel.

Pepe: Well, the crash of the Ruble in 1998 was what, roughly one year after the crash of the Bath and the whole Asian financial crisis, no? it was interlinked of course, but let me see if I have a question for you, in fact, I’m just thinking out loud now. If the economies of Southeast Asia and Northeast Asia, the case of South Korea and Russia were more integrated at the time as they are trying to integrate now, do you think that the Asian financial crisis would have been preventable in 1997?

Michael: Well, look at what happened in Malaysia with Mohammed Mahathir. Malaysia avoided it. So of course, it was preventable. They had capital controls. All you would have needed was to do what Malaysia did. But you needed an economic theory for that.

And essentially the current mode of warfare is to conquer the brains of a country to shape how people think and how they perceive the economy from working. And if you can twist their view into an unreality economics, where they think that you’re there to help them not to take money out of them, then you’ve got them hooked. That was what happened in Asia. Asia thought it was getting rich off the Dollars inflows and then the IMF and all the creditors pulled the plug, crash the industry. And now that all of a sudden you had a crash, they bought up Korean industry and other South Asian industries at giveaway prices.

That’s what you do. You lend the money; you pull the plug. You then let them go under and you pick up the pieces. That’s what Blackstone did after the Obama depression began, when Obama saved the banks, not the constituency, the mortgage borrowers. Essentially that’s Blackstone’s modus operandi to pick up distressed prices at a bankruptcy sale, but you need to lend money and then crash it in order to make that work.

Pepe: Michael, I think we have only five minutes left. So, I would expect you to go on a relatively long answer and I’m really dying for it. It’s about debt, it about the debt that trap. And it’s about the New Silk Road, the Belt and Road Initiative, because I think rounding up our discussion and coming back to the theme of debt and global debt. The number one criticism apart from the demonization of China that you hear from American media and a few American academics as well against the Belt and Road is that it’s creating a debt trap for Southeast Asian nations, Central Asian nations and nations in Africa, etc…. Obviously, I expect you to debunk that, but the framework is there is no other global development project as extensive and as complex as Belt and Road, which as you know, very well was initially dreamed up by the ministry of commerce. Then they, sold it more or less to Xi Jinping who got the geopolitical stamp on it, announcing it, simultaneously, (which was a stroke of genius) in Central Asia in Astana and then in Southeast Asia in Jakarta. So, he was announcing that the overland corridors through the heartland and the Maritime Silk Road at the same time. At the time people didn’t see the reach and depth of all that. And now of course, finally the Trump administration woke up and saw what was in play, not only across Eurasia but reaching Africa and even selected parts of Latin America as well. And obviously the only sort of criticism and, it’s not even a fact-based criticism, that I’ve seen about the Belt and Road is it’s creating a debt wrap because as you know Laos is indebted, Sri Lanka is indebted, Kyrgyzstan is indebted etc…. So, how do you view Belt and Road within the large framework of the West and China, East Asia and Eurasia relations? And how would you debunk misconceptions created, especially in the U S that this is a debt trap.

Michael: There are two points to answer there.  The first is how the Belt and Road began. And as you pointed out, the Belt and Road began, when China said, what is it we need to grow and how do we grow within our neighboring countries so we don’t have to depend upon the West, and we don’t have to depend on sea trade that can be shut down. How do we get to roads instead of seas in a way that we can integrate our economy with the neighboring economies so that there can be mutual growth? So, this was done pretty much on industrial engineering grounds. Here’s where you need the roads and the railroads. And then how do we finance it? Well, the Financial Times article, last week asked, Didn’t the Chinese know that railroad development, they’ve all gone broke. The Panama Canal went broke, you know, the first few times there were European railway investment in Latin America in the 19th century, that all went broke. Well, what they don’t get is China’s aim was not to make a profit off the railroads. The railroads were built to be part of the economy. They don’t want to make profit. It was to make the real economy grow, not to make profits for the owners of the railroad stocks. The Western press can’t imagine that you’re building a railroad without trying to make money out of it.

Then you get to the debt issue. Countries only have a debt crisis if their debt is in a foreign currency. The first way that the United States gained power was to fight against its allies. The great enemy of America was England and it made the British block their currency in the 1940s. And so, India and other countries, that had all these currencies holdings in Sterling, we’re able to convert it all into Dollars. The whole move of the US was to denominate, world debt in Dollars. So that number one US banks would end up with the interest in financing the debt. And number two, the United States could by using the debt leverage control domestic politics. Well, as you’re seeing right now in Argentina, for instance, Argentina is broke because it owes foreign Dollars debt. When I started the first third world bond fund in 1990 at Scudder Stevens, Brazil in China and Argentina, we’re paying 45% interest per year, 45% per year in Dollarized debt. Yet we tried to sell them in America, no American would buy. We went to Europe, no European buy this debt. And so, we worked with Merrill Lynch and Merrill Lynch was able to make an offshore fund in the Dutch West Indies and all of the debt was sold to the Brazilian ruling class in the central bank and the Argentinian bankers in the ruling class, we thought oh, that’s wonderful.

We know that they’re going to pay the foreign Yankee Dollars debt because the Yankee Dollars debt is owed to themselves. They’re the Yankees! They’re the client oligarchy. And you know, from Brazil client oligarchy is, you know, they’re cosmopolitan, that’s the word. So, the problem is that on the Belt and Road, how did these other countries pay the debt to China?

Well, the key there again is the de-dollarization, and one way to solve it is since we’re trying to get finance out of the picture, we’re doing something very much like, Japan did with Canada in the 1960s. It made loans to develop Canadian copper mines taking its payment, not in Canadian Dollars, that would have pushed up the Yen’s exchange rate but in copper. So, China says, you know you don’t have to pay currency for this debt. We didn’t build a railroad to make a profit and you want, we can print all the currency we want. We don’t need to make a profit. We made the Belt and Road because it’s part of our geopolitical attempt to create what we need to be prosperous and have a prosperous region. So, these are self-reinforcing mutual gain. Well, so that’s what the West doesn’t get – Mutual gain?  Are we talking anthropology? What do you mean mutual? This is capitalism! So, the West doesn’t understand what the original aim of the Belt and Road was, and it wasn’t to make a profitable railroad to enable people to buy and sell railway stocks. And it wasn’t to make toll roads to sell off to Goldman Sachs, you know. We’re dealing with two different economic systems, and it’s very hard for one system to understand the other system because of the tunnel vision that you get when you get a degree in economics.

Pepe:  Belt on Road loans are a long-term and at very low interest and they are renegotiable. They are renegotiating with the Pakistanis all the time for instance.

Michael: China’s intention is not to repeat an Asia crisis of 1997. It doesn’t gain anything by forcing a crisis because it’s not trying to come in and buying property at a discount at a distressed sale. It has no desire to create a distressed sale. So obviously, the idea is the capacity to pay. Now, this whole argument occurred in the 1920s, between Keynes and his opponents that wanted to collect German reparations and, Keynes made it very clear. What is the capacity to pay? It’s the ability to export and the ability to obtain foreign currency. Well, China’s not looking for foreign currency. It is looking for, economic returns but the return is to the whole society, the return isn’t from a railroad. The return is for the entire economy because it’s looking at the economy as a system.

The way that neoliberalism works, it divides the economy into parts, and it makes every part try to make a gain. If you do that, then you don’t have any infrastructure that’s lowering the cost for the other parts. You have every part fighting for itself. You don’t look in terms of a system the way China’s looking at it. That’s the great advantage of Marxism, you’ll look at the system, not just at the parts.

Pepe:  Exactly and this is that at the heart of the Chinese concept of a community with a shared future for mankind, which is the approximate translation from Mandarin. So, we compare community with a shared future for mankind, which is, let’s say the driving force between the idea of Belt and Road, expanded across Eurasia, Africa and Latin America as well with our good old friends’, “greed is good” concept from the eighties, which is still ruling America apparently.

Michael: And the corollary is that non greed is bad

Pepe: Exactly and non-greed is evil.

Michael: I see. I think we ran out of time. I do. I don’t know if Alanna that one wants to step in to wrap it up.

Michael: There may be somebody who has a question.

Pepe: Somebody has a question? That’ll be fantastic.

Alanna: Okay. Alanna here. This has been just great guys. I mean, this is the only webinar I’ve been on where the attendance kept increasing with time instead of decreasing.

So, we had spam in the chat but there is a one question that was good from Ed Dodson. He wanted to know why there are these ghost cities in China and he who’s financing all this real estate that’s developed, but nobody’s living there. We’ve all been hearing about that. So, what is happening with that?

Michael: Okay. China had most of its population living in the countryside and it made many deals with Chinese landholders who have land rights, and they said, if you will give up your land right to the community, we will give you free apartment in the city that you could rent out.

So, China has been building apartments in cities and trading these basically in exchange for support what used to be called a rural exodus. China doesn’t need as many farmers on the land is it now has, and the question is how are you going to get them into cities? So, China began building these cities and many of these apartments are owned by people who’ve got them in exchange for trading their land rights. The deals are part of the rural reconstruction program.

Alanna: Do you think it was a good deal? Vacant apartments everywhere.

Pepe: You don’t have ghost cities in Xinjiang for instance, Xinjiang is under-populated, it’s mostly desert. And it’s extremely sensitive to relocate people to Xinjiang. So basically, they concentrated on expanding Urumqi. When you arrive in Urumqi is like almost like arriving in, Guangzhou. It’s enormous. It’s a huge generic sitting in the middle of the desert. And it’s also a high-tech Mecca, which is something that very few people in the West know. And is the direct link between the eastern seaboard via Belt and Road to Central Asia.

Last year I was on an amazing trip. I went to the three borders, the Tajik-Xinjiang border, Kirgiz-Xinjiang border and the Kazakh-Xinjiang border, which is three borders in one. It’s a fascinating area to explore and specially to talk to the local populations, the Kirgiz, the Kazakhs and the Tadjik’s how do they see the Belt and Road directly affecting their lives from now on. So, you don’t see something spectacular for instance, in the Xinjiang – Kazakh boarder, there is one border for the trucks, lots of them like in Europe, crossing from all points, from central Asia to China and bringing Chinese merchandise to central Asia.

There’s the train border, which is a very simple two tracks and the pedestrian boarder, which is very funny because you have people arriving in buses from all parts of Central Asia. They stop on the Kazakh border. They take a shuttle, they clear customs for one day, they go to a series of shopping malls on the Chinese side of the border. They buy like crazy, shop till it drops, I don’t know for 12 hours? And then they cross back the same day because the visa is for one day. They step on their buses and they go back. So, for the moment it’s sort of a pedestrian form of belt and road, but in the future, we’re going to have high-speed rail. We’re going to have, well the pipelines are already there as Michael knows, but it’s fascinating to see on the spot. You see the closer integration; you see for instance Uyghurs traveling back and forth. You know, Uyghurs that have families in Kirgizstan for instance, I met some Uyghurs in Kyrgyzstan who do the back and forth all the time. And they said, there’s no problem. They are seen as businessmen so there’s no interference. There are no concentration camps involved, you know, so but it’s you have to you have to go to these places to see how it works on the ground and with COVID, that’s the problem for us journalists who travel, because for one year we cannot go anywhere and Xinjiang was on my travel list this year, Afghanistan as well, Mongolia.

These are all parts of Belt and Road or future parts of Belt and Road, like Afghanistan. The Chinese and the Russians as well; they want to bring Afghanistan in a peace process organized by Asians themselves without the United States, within the Shanghai Cooperation Organization, because they want Afghanistan to be part of the intersection of Belt and Road and Eurasian Economic Union. This is something Michael knows very well. You don’t see this kind of discussions in the American media for instance, you know integration of Eurasia on the ground, how it’s actually happening.

Michael: That’s called cognitive dissonance.

Alanna Hartzok: To try to understand it gets you cognitive dissonance.

Pepe: Oh yeah, of course. And obviously you are a Chinese agent, a Russian agent. And so, I hear that all the time. Well, in our jobs we hear that all the time. Especially unfortunately from our American friends.

Alanna: Okay. I know you have other things to do. This has been fabulous. I want to thank you so much, both of you, uh, with so easy to get attendance for this webinar. There were 20 people in five minutes enrolled and in two days we were at capacity. So, I know there are many more people who would love to hear you talk another time, whenever you two are so willing. And I think you both got much out of your first conversation in person. Everybody listening knows these two wonderful gentlemen, they have written more than 10 books, and they have traveled all over the world. They are on the top of geopolitical and geonomic analysis, and they are caring, loving people. So, you can see that these are the people we need to be listening to and understanding all around the world.

So, thank you so much. Ibrahima Drame from the Henry George School is now going to say goodbye to you and will wrap this up.  Thank you again.

Pepe: Michael it was a huge pleasure. Really, it was fantastic. Really nice, we’re on the same website. So, let’s have a second version of this.

Ibrahima:  So, let’s have a second version of this two months from now. Thank you very much for participating and I really hope you liked this event. And, we also want to ask for your support by making a tax-deductible donation to the Henry George School. I believe I shared the link on the chat. Thank you. And see you soon.

Pepe: Thank you very much. Thanks Michael. Bye!


[1] When I said that China can pay lower wages than the U.S., what I meant was that China provides as public services many things that American workers have to pay out of their own pockets – such as health care, free education, subsidized education, and above all, much lower debt service.

When workers have to go into debt in order to live, they need much higher wages to keep solvent. When they have to pay for their own health insurance, they have to earn more. The same is true of education and student debt. So much of what Americans seem to be earning more than workers in other countries goes right through their hands to the financial sector, landlords and insurance companies – the Finance, Insurance and Real Estate (FIRE) sector. So, what seems to be “low wages” in China go a lot further than higher wages in the United States.

Photo by Brian Wertheim on Unsplash

The post Rentiers a bunch of gangsters first appeared on Michael Hudson.

Jubillee Perspectives with Steve Keen

Published by Anonymous (not verified) on Tue, 08/12/2020 - 9:39am in

DEC 4, 2020
Is it time for a debt jubilee?

Steve Keen and Michael Hudson have both been arguing for a debt jubilee for some time. Now, as COVID-19 hits the poorest hardest, and leaves those with money better off than before, is this the right time to write off debt? Can the economy recover without it? After all, its stagnated since the 2008 global financial crisis. If you were to have a debt jubilee, how would you do it. Steve and Michael have different ideas about how it should be implemented. They explain their thinking to Phil Dobbie on this week’s free edition of the Debunking Economics podcast.


PHIL: It is obvious COVID-19 and our response to it is having a devastating impact on the world economy. And perhaps the biggest impact will be the rising rich poor gap, with the poor finding themselves deeper and deeper in debt and with the rich coming out of it better off than they went into it. Particularly if they’re holding lots of shares. So, why is this happening? And is it time to revisit the idea of a debt moratorium – we’ll talk to two people who think that yes, the time is right. One is Steve Keen, of course … after all, this is is his podcast … but we’re joined by Michael Hudson as well today .. and I’m Phil Dobbie, this is the Debunking Economics podcast, welcome along.

Steve has, of course, been talking about a modern-day debt jubilee for some time – we’ve talked about it on the podcast before, but not for some time. And with COVID-19 changing just about everything, it’s time to revisit the idea. And who better to talk about it with than Michael Hudson, Professor of Economics at the University of Missouri–Kansas City, and author of many books, including “Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy” … if ever there was a title that says it all, that’s it …

Michael, when you talk of debt, particularly right now, people’s first thoughts go to public sector debt, because so much has been racked up paying for furloughing schemes and the like. The main topic of conversation seems to be, how do we pay that back? Not concerns over private or household debt, the fact that, in the UK for example, government gross debt at the end of October was 107% of GDP. Every day the media is asking, how do we pay this back? That’s more in the mindset of people than the debts that individuals are carrying, isn’t it?

MICHAEL: Well, this is the result of a lot of propaganda. The point is that government debt doesn’t have to be paid back. It’s not supposed to be normally because if you pay, it back then you destroy the money supply and also the government simply won’t pay. When the United States runs at deficit usually, foreign central banks end up holding it and the US says, ‘well, you know, we can just write our IOUs’. And imagine if individuals could go to the store and you would pay for your groceries by writing an IOU, and buy a car, and buy things with IOUs and say, ‘well, you can just use my IOUs to pay among yourselves and use it as money’. Well, obviously, everybody would be in a much happier world that way. But that’s not how it happens. The private IOUs have to get paid and they have to get paid by somehow either earning the money ,or more often losing your home or losing your assets to pay. But governments can simply print the money, so government that can never in run a risk of nonpayment as long as it’s in it’s own currency.

PHIL: So, this is the idea behind modern monetary theory isn’t it, which for some reason just hasn’t got traction. I mean, there’s a lot of people talking about it. And yet governments and banks, the world over seemed to ignore it.

MICHAEL: That’s because the condition of being appointed to a central bank in the government is that you’re working for the financial interest of the banks, not for the government. The banks would love governments to borrow from the banks in the financial sector and pay them interest because then they get to tell the government what to do. If the government can just print its own money then it can decide what voters wanted to do and of course, that would be democracy and that it’s not exactly what the vested interests are for.

STEVE: But it’s also the accounting and I’ve got to take my hat off to Stephanie Kelton for making a best seller out of an argument over what is fundamentally issues of accounting. Because when you take a look at how the government actually creates money right now, it creates it by simply running a deficit. When it creates a deficit it spends into the private sector and increases the amount of money in peoples bank accounts.

When you tax you do the opposite, you take money out of their bank accounts. Now when you spend to put money in somebody’s bank account you have to deposit into their account, which is on the liability side of the banking sector’s balance sheet and then that is shown as an increase in the reserves on the asset side of the bank’s balance sheet, so the gap between the spending, which creates money and tax which destroys it, first of all adds money to the deposit account, which is on the liability side of the banking sector and, secondly, at the same time, it has to add to the reserves. So the increase in money is created by the deficit, which is what we get in our bank accounts, but the increase in reserves is also created in exactly the same act and that gives banks reserves, which either don’t earn interest or in some crazy countries like Switzerland actually give you a negative rate of interest so that’s where the money is created by running a deficit.

And when it comes to the government debt that’s the government issuing bonds to cover the gap, to cover the deficit. But what that means is the private banks are being offered, ‘do you want to help your money in an account with reserves at the central bank that earn you zero interest or even worse, negative interest? Or would you like to buy these Treasury bonds that earn you only 1% or 2% interest per annum?’ I’ll take the Treasury bonds, thanks very much.

PHIL: For a while, though they didn’t issue bonds. The Bank of England actually allowed the UK Treasury (the intention was that it would be issued as well as bonds down the track), but it was sort of like a short-term reaction to the crisis. We’ll just we’ll just let you run an overdraft in effect.

STEVE: And that effectively is what the bonds actually do, because normally when the government spends, it’s effectively creating negative equity for itself, which creates positive equity of the rest of society, and I’m looking at a set of double entry balance book sheets here to make this argument, so it’s a bit airy fairy for anybody hearing just the verbal side of things. But when the government spends more than it gets back in taxation, it wears that on its own overall government assets and government liabilities. Now, one of the government assets, of course, is its bank account at the central bank and, if that government didn’t issue bonds and out of that account the government spent more than a got back in taxation indefinitely, you would end up with a negative balance in its deposit account. Now, lots of us in the in the private sector end up with that as well and it’s called an overdraft.

Overdrafts are a common structure in private banking and if the government didn’t. issue bonds it would have an overdraft account at the central bank. So, when it issues bonds normally it issues bonds proactively, it knows that it’s got to it, it knows it’s got a rough estimate of what its deficit is going to be so it sells bonds before it incurs the deficit, but it’s driven by the deficit. So, when it issues those bonds, it’s fundamentally saying, ‘we’re going to sell those bonds to the private banks, they’re going to buy it with money which is reserves, which created by the deficit in the first place, and when we then pay that money into our Treasury account of the central bank, it can maintain a positive or non negative balance and we will end up with negative equity if we work out our overall sums’, but nobody ever tries to work out what’s the equity of the American economy or the British economy. So, it’s a way of the government running in negative equity so the rest of us can have positive equity.

The bonds themselves just mean that that means that rather than that negative equity turning up as an overdraft a bank account at the central bank, it turns up as debt that the government notionally owes to the rest of the economy, but that debt is an asset to the private sector. There’s an excellent blog by Richard Murphy, I must mention this., saying well what would happen if we try to pay off their debt back? Well, we would eliminate all the Treasury bonds that are currently held by pension funds ,so we drop the income of pensions. Does that sound like a good idea? And he went through each of the particular ways in which this debt is used and said, ‘getting rid of any of this is a bad idea because the private sector is benefiting from the cash flows generated by these assets.

PHIL: That was gonna be my next question for Michael actually. Nicely led into, thanks for that. The fact that if you look into the UK budget accounts sorry I’m in the UK, so I’m looking more at the UK figures, perhaps from the US figures Michael, but it’s it’s the same, the world over. The amount of money that that that is spent on paying the supposed interest on the on these bonds goes into the into the government accounts and it’s roughly an amount of money that is pretty much the equivalent of how much Britain spends on defence or educationally each year. It’s a slug of money, so that’s why people are fearful of this, because this is interest payments paid for bonds that have been issued, and everyone is fearful that that is going to increase. But do we need to issue bonds? Could we just I mean? Could we do without them? Could it just be an overdraft with a very low interest rate and and just. avoid the issuing of government bonds altogether.

MICHAEL: Well, I want to make sure that we don’t fall into a misunderstanding. When Steve uses the word ‘us’, it’s as if the government runs a deficit to ‘us’ well. He also made it very clear that it’s not the ‘us’ that gets the government money. The government runs a deficit. The government money helicopter only flies over Wall Street. It creates money for the banks. And the banks basically provide money to real estate and to the financial sector, not to the economy at large.

So, you can say that the government runs a deficit by putting money into the economy. But there are two ways of doing this. One is to put money into the banking sector, in which case you use quantitative easing, you inflate asset prices, you raise the price of real estate or at least loans for real estate, you raise stock and bond prices. Or the government can run a deficit by actually doing real physical spending into the economy, by building infrastructure, by doing social spending. And there’s all the difference in the world between whether the government spends the deficit on the FIRE sector (finance, insurance and real estate), or whether it does it on the real economy. And for the last quote 12 years, since 2008, the government’s been spending money on the financial sector, not into the real economy.

PHIL: But it has changed a bit this year though hasn’t it, because we have seen money being paid, furloughing workers. In the United States that money that was paid into everyone’s bank account. OK it only happened once, but that was money that was being thrown into to where it was needed rather than into the finance sector.

MICHAEL: Well, here’s what happened. The cares act with President Trump gave everybody 1200 dollars. The 1200 dollars for most people was paid into their bank account or their credit card account.

So what happened? More than half of the Cares money was spent on paying down the debts of companies and d the banks. It wasn’t spent on goods and services. People got a credit in the bank account, with the bank immediately using that for writing down the debt. So, what did by giving 1200 dollars to everybody was to defer their falling further behind in their credit card account, further behind in their bank account and overdraft, and you enabled them to avoid being even deeper in debt, but not that much was spent on goods and services. And you can see that from the statistics on retail sales and what was happening.

PHIL: Well that’s been the interesting, that we’ve actually seen an increase in savings for a large part of the economy. We’ve got this K shaped curve where we’ve got people who’ve got money saving money, and people on low incomes, they’re the ones who have been struggling through this whole thing. In fact, there’s evidence that they have reduced their savings and resorted to borrowing more than usual. The Resolution Foundations says 54% of adults and families from the lowest fifth quartile for income, borrowed more in March to June to cover everyday costs like food and housing, whereas in other parts of the economy the upward shape of the K, there were lots of people with enforced savings. They weren’t able to to spend the money that they did have. So that shows that maybe more of that was needed. There wasn’t anything wrong with putting money into people’s bank accounts, it just needed to happen more often. The helicopter needed to fly more frequently didn’t it?

MICHAEL: Well, there’s what a K-shaped curve means. The 1% at the top is doing the savings. What are these savings invested in? They’re loans to the 99%. So the 1% gets richer by lending its savings out to the 99%, borrowing at 0.1 percent for government and charging credit card people 29%. It’s a win-win game. Of course, there’s a K-shaped curve. Of course, the rich are getting richer and their savings are other people’s debts on the opposite side of the balance sheet. But the balance sheet is the 1% on the one hand with the assets, and the 99% with the liabilities. That’s what the economy is looking like.

PHIL: So is it just that 1% that’s been gaining through all of this then? Surely we’re also seeing there is more money being paid by the government into broader sections of the economy than there have ever been before. I mean, they’ve always obviously taken money away through tax. Just the notion that in the United States you would have twelve hundred dollars paid into People’s Bank accounts – okay a lot of it was used to pay off debt and it deferred what was a bad situation – but it’s a step in the right direction. And if they repeatedly did that, then those debts would be paid off and people would end up spending, presumably.

MICHAEL: But the reality is there’s been an enormous increase in debt because of the Covid crisis. So many people, 20,000,000 people, have lost their jobs, they are unable to pay their rents, the restaurants are not able to do business so they haven’t paid their commercial rents. Whole swathes of the economy have not only not paid their rents, but they haven’t paid their taxes and they haven’t paid their credit cards and their bank accounts. Now on January 1st, all of a sudden, the moratorium on evictions is going to be over and they’ve estimated 5,000,000 Americans will be thrown onto the street. The landlords have already been filling out the eviction notices for 5,000,000 Americans. So the Biden administration is going to begin right where the Obama administration left off. Obama threw 10,000,000 families – mainly Blacks and Hispanics – out of their homes by enforcing the junk mortgages of the banks, bailing out the banks, [and] not writing down the debts and the junk mortgages [of] the victimized, low-income borrowers. Well just as Obama kicked 10,000,000 families out, Biden’s going to begin, in the first week, [kicking] 5,000,000 more families out. This is going to put the class war back in business in an even more vicious way than Obama was able to do.

PHIL: So how do you fix that situation then, if you’ve got people who have got mortgages that have turned sour, I mean the natural tendency from the government, obviously, is to say, ‘Oh, this is bad for the banks because they’re going to lose out on all this money from these mortgages. So we’d better bail out the banks’, without necessarily thinking about the people who are being turfed out of their houses at the same time. So you’ve almost got to hit both sides haven’t you? You don’t want the bank to collapse, but also you don’t want people on the streets.

MICHAEL: There are numerous ways of handling it. The Germans handled it by paying about 80% of people’s income to them when they’re not at work or when they can’t go into work. The way that ancient society handled it was very simple. You’d have a moratorium on all ends of the financial process: a moratorium on rent, a moratorium on debt service, and a moratorium on what the banks – right down the line – what the banks had to do. This is what was literally written into the original document, called the act of God Clause, and that was in Hammurabi’s laws in 1750 BC. Hammurabi said that if there is a flood, or a drought, or a disease, the rents didn’t have to be paid, the taxes didn’t have to be paid; there was a tax holiday and they were cancelled out. Otherwise you’d have people losing their land, and all the land and homesteads would have been concentrated in the hands of a few wealthy creditors. Otherwise, you’d have a polarization and society would have fallen apart. So you already had – 4000 years ago – a plan to suspend payments at times, and obviously the payments can’t be made, and if you do insist on the rents being paid, then you’re going to evict 5,000,000 families, and the restaurants will go out of business permanently, and all the gyms and the other businesses that have closed down since March, and have not been able to make an income, obviously are not going to say, ‘OK now we’re going to reopen in January but we have to somehow pay the last 9 months rent, and if we do that we will never have a profit for the next 5 years. We’re just going to go out of business and close down’.

STEVE: Well, I think the thing that’s interesting about that historical example, Michael, is that you had a reason. The rulers had to give a bias towards the mass of the population because if you hadn’t enabled people not to pay those rents and not to pay the debts they had, they would have become debt-slaves and they therefore couldn’t have been part of the army and couldn’t have defended the empire. So that gave the ancient civilizations a reason to revise debt – to do a debt jubilee – that benefited the mass of the population. But what we have now is a world where the same thing would actually apply if the powers that be – the Obamas, the Bidens and even the Trump’s – realized that. But the whole thing has been turned in favour of the finance sector and every time there’s a crisis in capitalism, the behaviour of the governing groups is to say, ‘Oh, we can’t have the finance sector collapse! How do we rescue the finance sector?’, when to use your beautiful phrase, ‘That’s rescuing the parasite not rescuing the host’.

PHIL: But if you have some form of debt jubilee, if you say, well okay, there’s so many people in debt now, we’ve got to have some sort of moratorium, they’re in debt to somebody. So if you were in debt to me and, you know, the government was to say, ‘Well you’re not going to pay me back’, I’d want the government to pay me. You know, it has to work that way, and the problem is, of course, normally the person you’re in debt to is a bank, which is why banks say, ‘Well, okay, if you’re going to write this dead off someone’s got to pay us for the debt that you want to write off’, which is why we get to this situation where you’re bailing out the banks.

STEVE: This is where […] about Michael’s version of a jubilee versus mine, so Michael do you want to take the lead?

MICHAEL: Well, the virtue of cancelling the debts is that you also cancel somebody’s savings, and the Babylonian rulers and the Byzantine rulers 2000 years later said, ‘Look, we don’t want the financial class to gain the power because if they gain the wealth, they’re going to hire an army and they’re going to overthrow us and put in their own government instead of, you know, our government that’s looking out for the people.’ And the advantage of cancelling the debts on the liability side of the balance sheet, is, you cancel the debts on the asset side, and these were the debts of the 1%, or let’s say the 10%. All of the growth since 2008, for 12 years, all of the growth and wealth has accrued to this 10%. If you do not write down the savings that they have, you’re going to make them into an almost feudal type of landlord or finance-lord aristocracy that’s going to impose an oligarchy here, so if you don’t want it – oligarchy – you have to write down not only the debts, but you have to write down the enormous overgrowth of savings that is what’s holding the debtors in bondage.

PHIL: So you’d say that anybody who has any debt whatsoever, that debt gets written off. So if I if I owe my bank my mortgage, a few hundred thousand pounds, I would just not owe that money to the bank anymore. Is that what we’re saying.

MICHAEL: Well, not quite. That was the mistake that the Spartan Kings – Agis and Kleomenes – [made] in the third century BC. If you were to write down all the debts just by itself, you’d make the landlords, you make the Donald Trump’s of the world, the richest people, the old landlord class because most of them have very low equity. It’s all debt and all of a sudden you give them all this property without owing any debt. So you would have to have a debt cancellation go hand in hand with a tax on either the real estate so that they would pay to the government what they previously paid to the banks in interests – they’d pay the government a rent tax – or you do what happened in the Soviet Union when it dissolved, you’d give everybody their own houses. All the occupants of any business or home would get their own home, but instead of paying the mortgage to the bank they would pay the rental value to the government instead. So a debt cancellation would have to be hand in hand with a fiscal policy if you don’t want to create a new enormous ruling class.

PHIL: So you’re really talking, like, social housing aren’t you, where there are countries, which are quite capitalist in their nature, like Singapore, which are predominantly social housing in fact.


PHIL: So, how does that differ from.. it seems quite drastic then because the basically…

MICHAEL: It is drastic. We’re in a drastic situation today; look at the polarization, look at the people who are going to be put out in the street, look at the unemployment, look at the austerity that you’re having as a result of debt deflation. From America to Europe we are in a drastic situation and any solution cannot be marginal, it has to be structural and any structural solution is drastic.

PHIL: But under your arrangement anybody who has loaned out money, is going to lose that money.

MICHAEL: That’s correct, that’s correct.

PHIL: And that is not just necessarily going to be banks, but then your point is it’s always going to be someone pretty wealthy.

MICHAEL: No, take pension funds for instance, what do you do about pension funds, the pension obligations would be taken over by government and the government would pay the pensions out of the rent tax that it gets from the money that previously was financialized and paid to the banks as interest, instead of paid to the government as rent, which is what Adam Smith and John Stuart Mill and the whole 19th century of classical economists were pushing for.

PHIL: So, we will go to Steve’s approach in just a second, does this fix this problem though Michael, which I think is the real problem in the United States right now: I’m looking at numbers from the Bureau of Labour Statistics of permanent jobs lost in the United States. Now, this is figures to September totalling over 4 million. Of course, it was much worse than that; it’s bounced back a bit, but that is going to be the biggest issue and I’m just thinking, even if you cancel debt, is that going to bring those jobs back?

MICHAEL: You cannot bring them back without cancelling the dept: let’s put it that way, because if you leave the restaurants owing the rent debt, if you leave the businesses is owing the rent and back debts when they don’t have any and if you leave the states and localities; New York City is broke, the transport system is broke, the transport system is going to have, it doesn’t have the money now, the subways to fix the signals that are dating from the 1940s and the trains don’t run, there’s an almost complete breakdown. Unless you write down the state and local debt or somehow pay it off or fund it with a property tax, you’re going to have a close down on the state and local infrastructure and, without transport, nobody can get to work or out to get a job so we’re in a systemic crisis that is very close to paralysis that looks like it’s going to be peeking around March.

PHIL: But could those debts be paid back with government money rather than saying to the people who are issuing the debt or is that part and parcel of it, you want to change the system so to do that they’ve go to feel the heat or could you or could the government just step in and say, well ok, we are going to pay you the money to cancel out the debt; that I think it’s getting pretty close to your idea actually isn’t it Steve, that’s more your approach?

STEVE: Yeah, mine is, I mean I agree with Michael about the structural issues in the inequality, but I’m trying to get something which actually might get through politically as well, and one reason I had, like the last time I wrote on the debt Jubilee was about 10 years ago and the reason I haven’t bothered writing about it since is I thought it had a snowflake’s chance in Hell of actually happening. You know it’s one of the frustrations of being somebody like Michael or myself is, you would give an accurate analysis of capitalism, putting forward ideas that might make it less rentier dominated and more actually capitalist, which is my Michael’s point a moment ago.

Ricardo and Smith were both trying to stop the rentier class taking over capitalism. We have let them do so by letting the finance sector grow without restraint. But,I’m still trying to say, let’s get something that is politically feasible. And, within that context, that would be let’s abolish the debt, but not reduce the money supply at the same time, because part and parcel of the whole endogenous money vision is that when you eliminate debt you also eliminate money, because when you reduce the asset side of the banking sector, you reduce the liability side as well. The assets are the debts, sure that’s why we want to get down, but the liabilities are the money we’ve have in our bank accounts and if you wipe out one, you wipe out the other.

So, my idea was to give an equal amount of government created money to everybody, so everyone gets the same per capita amount and then those that are in debt have to pay their debt down. Of course, that’s going to be complicated by all the debt covenants that exists and so on, but some scheme by which the debt was either paid down or offset for those who had debts then those people who had debts have benefited but people always came back to me, saying what about people who didn’t speculate, didn’t gamble, of course that includes me, and the idea was well let’s make a per capita. To everybody and those that don’t have debt get a cash injection and then with the cash injection… when I was looking at this, this was back in the days when the economy had come out of the deepest part of the whole of the financial crisis in 2007, it was about 2010 /2011. So, you didn’t necessarily want that money to be spent on goods and services; but you could say well, we want to reduce corporate debt as well and then in the United States right now corporate debt and household debt are pretty much equal, so I want to get corporate debt down as well as changing the bias between debt and equity in the corporate system; so the proposal was that people who got a cash injection, who weren’t in debt, would have to use that money to buy newly issued corporate shares, which would have to be used to pay corporate debt down and reduce the corporate debt ratio as well as the household debt ratio.

PHIL: But it would be a big amount of money wouldn’t it so be a big broadening of the money supply.

STEVE: It wouldn’t change the money supply one cent, but it would change what the money supply is backed by, so at the moment, if you look at the American economy, is roughly a $20 trillion economy; its roughly got $20 trillion worth of cash, at the rate of turnover money is declined so much that it’s pretty much one for one. So, what you do is you change that being from being credit based, where like at the moment something in the order $18 trillion of that is debt based money, reduce that to say $5 trillion and you’d be injecting in $13 trillion worth of fiat money to cancel $13 trillion worth of credit money, leaving you with exactly the same amount of money in the economy, but at far lower debt levels.

PHIL: The ECB is saying the amount of bad debt that they’ve got this year could reach €1.4 trillion. That’s the bad debt; then obviously, they’re looking at, you know, how do they save the banks again for that bad debt, without thinking about those poor people have actually got that bad debt; there are lives sitting behind that you know, at times like this people are losing money through no fault of their own so, and they are the people who have taken out loans that have turned bad. Then there’s all the people who would have taken out loans, but they’ve been refused loans by the bank because the bank sees them as being too risky because they know their businesses are going to fail. So, we’re talking trillions and trillions just within Europe and around the world. This would be a massive amount of money that would be needed to cancel out debt and it’s just got that much worse this year of course.

STEVE: But it’s easy to do …….

MICHAEL: …..The amount is going to be much greater next year and much greater the year after that because accruals of interest and it’s going to; you know, you talk about bad debt, that’s the propaganda word! Why don’t you say bad savings, bad loans? When you say bad debt, you put all the blame on the debtors. The fact is the banking system has become dysfunctional, the debts cannot be paid. No economy can ever pay off all the debts because of the exponential growth of debt being faster than the S shaped curve in the economy. So, no matter what, we’re going to have rising and rising and soaring exponentially soaring volume of debts that can’t be paid. If you say they are bad loans what should be done to the banks is what you did, in Germany in 1948, ‘The Economic Miracle’, you start all over again.

You cancel the debts and the savings except for the basic bank balances of everybody so they have enough to get by, and you just sort of wipe out the whole financial overgrowth because if you don’t do that, then the economy cannot get out of the debt deflation that we are in and cannot recover.

PHIL: How do you stop it happening again once you’ve done that? How do you stop it repeating itself?

MICHAEL: You don’t, of course, it will repeat itself.

STEVE: Hang on., you’re being pretty radical about those changes there. This is radical policies about the financial sector as well.

MICHAEL: It’s natural for people to run into debt. The idea is to have a good financial system would be about productive credit, credit to actually enable people at the economy that produce more to earn enough to carry the debt, but the financial system is not focused on productive loans, it’s focused on loans to increase the asset prices. Yeah, banks lend against the real estate and stocks and bonds already in place, not to really help the economy grow, so all you have is a financial overgrowth of overhead.

STEVE: OK, yeah, yeah, as well as like trying to make up for the previous sin of accumulating far too much debt, private sector debt, my idea for modern a modern Jubilee would say, let’s stop it happening again by changing what the finance sector can do. Because the huge part of the problem is, we’ve trusted the finance sector, again in Michael’s terminology, that’s trusting a parasite that it’s really good to the host. Garbage, the finance sector, as Marx once said, is a great servant and a terrible master, so we need to send it back to the stage where it’s a servant once more, and servants get told by the master what they can do so my two proposals, fundamentally proposals to control what the banking sector lend for, was to stop it lending for asset speculation and force it to lend for productive investment. One, I called the Pill, which used to be very funny, people don’t know what pill is any more it seems; that’s Property Income Limited Leverage. You would say the banks, the kind of banks that pretend that they’re landing on the basis of the income of the borrower and therefore if you had a high income, you can borrow larger amount than a small income person can. Of course, they have been pushing that level up over time, you used to be able to borrow 70% and then you borrow 90%, 95%, so they’ve been gearing it up on the basis of a fictional measure of your income anyway. My idea was to say, let’s limit the amount that banks can lend to some multiple
of the income earning capacity of the property being purchased and we have imputed rented series throughout the world. People actually calculate what rent would be earned by an owner occupied property if it was on the rental market rather than owner occupied, so we already have the stats to say what this could be and my rule of thumb is to say, let’s limit the amount of lending to 10 times the annual income of the property being purchased, so in that case like if you look at a property, which is like where I used to live in London, the income earning potential of that place was 12 times my rent, which is £180,000 total, £15,000 times 12. I would limit it to 10 times that rental income with £15,000 that would be £180, 000, that’s all you could borrow to buy the place.

Now at the moment if you and I were competing over that property to buy it, the one of us that got the bigger loan would win. But if you said … neither of us could borrow more than £180,000, and that would be stated on the contract of sale and on all the advertisements, then the one of us [that] would win the contest […] would be the one that had saved more money. So rather than having a [negative] positive amplifying feedback between house prices and leverage, you’d have a dampening effect, and that’s to tame the property market.

PHIL: What do you do about equities though? The crazy thing we’ve seen this year, obviously, is the fact that share prices have been hitting new highs. We’ve had, you know, all this bullshit about the wealth effect, that it’s all going to trickle down and, you know, the counter argument is that, ‘Oh, well, you know, but everyone wins because, you know, their pensions are tied up in it.’ Well, some figures in the UK: pension funds account for 2.4 percent of all the shares that are held in the UK. More than half of UK shares are actually held by people who aren’t even in the country. 13.5 percent are owned by UK individuals, and private non financial companies own 2.6 percent, which is more than pension funds hold. So I mean, this just adds to the argument doesn’t it? It’s the top – well it’s actually not even the top 10% … it’s actually the top 13.5 percent who are the shareholders in the UK. Well actually, no it’s 13.5 percent of shares are owned by UK individuals.

STEVE: … A tiny fraction of the population. So they’ve benefited both from the … Government spending is actually benefiting them because it’s driving up share prices; quantitative easing has had that effect. So we’re doing completely the wrong thing. We’re making capitalism more unequal than it would be on its own merit, which is pretty damn bad to begin with. So my idea on the shares [is] what I call Jubilee Shares. And the idea there was that when a share is first issued by a company, and therefore when you buy it, you’re buying the share off the company, then that share lasts just like a normal share does, gets dividends, lasts indefinitely. As soon as you sell it, or maybe after one or two sales maybe – we might allow that – it becomes a Jubilee Share, and at that point, it has a life for 50 years, after which it terminates.

PHIL: Yeah, and we’ve talked about this before of course, and I had the other idea which was actually, ‘No, you sell it back to the company …’.

STEVE: …Which you could also do, yeah. I mean, the idea is not to eliminate the secondary share market as you want some “price discovery” to go on there, but to trivialize it compared to the Initial Public Offering asset, the primary market. … Like you said, people say we can’t touch shares because, you know, pension funds own so much. How much do they own? Less than 2%. It’s a bullshit argument.

Equally, the same thing applies on the share market discovery side of things … Rather than raising capital, you’re financing massive amounts of speculation, which again is all covered by levered money, with margin debt. So make it such that we make the stock market do what it pretends to do, which is raise capital, and therefore the primary market will become dominant, the secondary becomes trivial and then you’d have a tamed financial sector. Of course, again, the chance of that is a snowflake’s chance in hell.

PHIL: Then you are giving money to … Michael, your point, I saw you on an interview recently where you were talking about the difference between industrial capitalism and finance capitalism, and that’s what we need, we need share investments to fund industrial capitalism, not finance capitalism.

MICHAEL: Well, Steve’s suggestion is good to the extent that it replaces debt with equity. And of course, if you replace debt with equity then the money you owe is automatically reflected by your ability to pay. But I want to get back to what Steve began this whole discussion with, and that’s talking about real estate. What he’s suggesting, of rules for bank lending against real estate, is exactly what existed in the United States from 1945 for the next 20 years. Anyone could go into a bank and ask for a mortgage. The banks were limited … and the amount of money they could lend for real estate – it was limited. Debt service could not absorb more than 25% of your income. And that 25% of income would be in the form of a self-amortizing 30 year mortgage. So what that did was limit the amount of real estate lending throughout the country to the amount that anybody could afford, and housing prices were low.

Well, the banks fought against this, they lobbied against it and now instead of being the limit of 25% of your income, the government Federal Housing Authority guarantees mortgages – government guarantee the mortgages – up to 43% of your income, and the banks can fiddle by saying, ‘OK we won’t have to pay any amortization so you won’t own your house in 30 years. You won’t have repaid any of your debt at all. You’ll just be paying the … it’s an interest only loan and you don’t have to make any down payment’. After World War 2 you had to make 20 or 30 percent of the price of the down payment so the banks have added, they’ve leveraged the whole market because banks don’t ever want the loans to be repaid. They want the loans to grow and grow and that’s what makes, ultimately, the debts impossible to be repaid. So the banks and financial system have lobbied for a system that must mathematically collapse. That’s what Steve and I are talking about. It’s the way it’s set up.

PHIL: So when did this idea of risk disappear from all of this? Because logic would tell you, wouldn’t it, that a bank, you know …

MICHAEL: Well wait a minute, don’t fall for the propaganda. There never was any risk, banks don’t take risks. They have collateral. The banks gain when … When you can’t pay, the bank gets to grab your property. The risk is all on the part of the borrower, not the lender. This is just Chicago School propaganda … They don’t take risks.

PHIL: If we got to a situation where we said, ‘Well, okay, when debt levels get so high we will have some sort of debt moratorium, and people come to expect it, then … isn’t that going to actually grow risk even more, you know, we’ll get to the stage where people go, ‘Well if it’s going to be paid back who cares’.

MICHAEL: No, here’s the following reason. Most people’s debts are not as a result of borrowing. Most people’s debts are accrual. They just grow by leaving them in place and grow and grow and grow, and the bulk of debt for real estate, for corporations, are just accrued interest on the debts that mount up and mount up. That’s how the financial sector, essentially, gains money in their sleep. They don’t make new loans. They just gain the money in their sleep and they leave it. They recycle it and recycle it into more and more lending at an exponential rate, because any interest rate is a doubling plan. And the 29 percent, you know, for the credit card with [special?] rates that doubles in less than 3 years. So you don’t want to pick up their Orwellian rhetoric. You have to pierce the rhetorical shell and talk about reality.

PHIL: Just one final point then, because we’re running out of time now, you mentioned earlier about how in Germany, they were paying – basically furloughing workers – paying 80% of what would have been their salary if they’d been working. It was actually the same in the UK in fact, still is, and in Australia, many other parts of the world … The United States didn’t go down that road for whatever reason; it obviously costs the government too much money to do that. Does this become – you can take this on first Steve – but is this perhaps the beginning of a proof of the idea of a universal basic income. The fact that, you know, the government is paying money with money that the government can in effect create by overspending its budget … What will that do to debt, will that reduce this accumulated debt …?

MICHAEL: Well, if you give everybody a basic income of $1,000,000 a year because that’s how fast the debt will grow, they grow to infinity. Are you willing to pay everybody an infinity basic income to pay the 1% of predators at the top of the scale.

PHIL: Yeah, give me a million a year and then I’d get a very big house … an even bigger house. Well, it would cost a lot but it would be the same size as the house we have now. Your point Steve, on that …

STEVE: I think in one sense it is a proof that UBI can be done, because we had all these, you know, ‘This can never be done, this is not possible, etcetera, etcetera’, and then a crisis happens and ‘Wang’! They throw the neoclassical textbooks out [of] the window (which is where they bloody well belong, so long as they don’t kill a homeless person on the way down) and then they go into panic response so that capitalism won’t fail on their watch, and they do everything they say isn’t possible.

So for example, you mentioned earlier, the Bank of England directly paying for the Treasury’s furlough scheme rather than issuing bonds to cover it. We’re told that can’t be done, that can’t be done, ‘Bang!’ It was done during a crisis. And the same thing for the furlough itself, [it’s] a form of universal basic income, and again that couldn’t be done until it was necessary in a crisis, and then it’s done, it’s a mechanical thing fundamentally. So the trouble is, we try to … The ‘powers that be’, mainstream economists in particular, who don’t like this sort of stuff at all, but also politically conservative types want to ‘unlearn’ these lessons after the crisis.

I often think of the story of Rosie the Riveter (Remember that story during the Second World War? … Where the American government was trying to encourage women to come out and work in the factories when the men were off in the armed forces?) Rosie the Riveter, to sell the idea of women making all the weapons the men would use in the war, and then when the war was over and then we’re back, what do they do? Encourage women to become housekeepers! So, you have an attempt to manipulate public thinking and public opinion and unlearn lessons which were learned during a period of crisis.

PHIL: By the way on that Bank of England thing I think that was only a temporary measure. They allowed them to go into debt just because they couldn’t issue the bonds quickly enough. I don’t think the intention was that they would ever allow an overdraft to sit there.

STEVE: Yeah, it could be done? Absolutely.

PHIL: So Michael it seems your point, you don’t agree that universal basic income would be a step forward.

MICHAEL: No, I think it’s a good idea, I’m just saying that if more and more income is going to be paid for debt service, then more and more of the basic income is going to be paid to the 1% of the 10% of the creditor class . Do you really want that to happen because if we were only to pay for basic needs, then a basic income would be fine. But what are you going to do about the fact that debt is eating more and more and more into disposable personal income?

You have to figure out some way of writing down or limiting the existing debt. And if you do basic income right now, then so many people who run up arrears, but they’re just gonna be vehicles, to pay the pay the the fire SECTOR.

PHIL: Do we care about the top if the top 1% have got themselves heavily into debt? And universal basic income is only gonna take a tiny dent, an insignificant dent out of that? Do we care about how much that’s been carried by the top 1%?

MICHAEL: No, we care about the savings in the 1% that hold the rest of the economy in debt.

STEVE: One fascinating thing that’s happening right now in the data is that the household sector – individuals are having to borrow money as best they can to survive the impact of the coronavirus on their income stream. But when you look at the aggregate level, it’s all turning up on the corporate sector as an increase in corporate debt. To give you an idea, in the beginning of 2020, the level of corporate debt was 74.9 percent of GDP. It was 75.5 in February, 76.6 in in March, and 78% in April. So we’ve had this enormous increase in debt of the corporate sector and what’s really going on there I think is people are simply dipping into their lines of credit, their overdrafts, to avoid shutting their doors. So I think when this when we get through this, yes there’s going to be lots of people evicted from their houses – the rent holiday that were given, the mortgage holidays are gonna come back and bite them because it was only a delay, it wasn’t writing off as it should have been during the crisis. We’re also going to have a large level corporate failures. So I expect we’re going to see the first ever economic crisis without a boom proceeding it.

PHIL: So yeah, it’s an interesting thing there isn’t it because we’re seeing in the UK, (and again it’s the same around the world, but I think the UK’s got a particularly bad) so many retail chains that are disappearing now, there’s not gong to be many left and being put up for fire sales. So they’ve accrued massive debts, those debts are going to have to be written off, the business gets sold off at at a very, very low rate or zero. Someone else comes along, isn’t carrying that that debt burden, can undercut its competition. ’cause it’s set up for a song.

STEVE: The carpetbaggers so back again. Yeah.

PHIL: Are you seeing that sort of thing happening in in the US Michael?

MICHAEL: Yes yes exactly yeah, what’s happening. You’re going to have the very large companies benefiting as the small mom and pop stores go out of business. So you’re going to have restaurant chains surviving but not small restaurants. You’re going to have Amazon have an enormous game. That’s why Amazon stock has been rising so much because you have the small stories going out of business as people are not going shopping. So you’re going to have a huge concentration of wealth and we’re turning into an oligarchy.

And what Steve just said that the first depression was out of a boom. He’s absolutely right and people should realize that we’re still in the Obama depression that began in 2009, when Obama said. ‘I’m going to pay my campaign backers., the banks, and I’m going to kick 10, million families out. I’m going to cause a depression because I’m working for the 1%, and he invited them to the White House and he said, ‘I’m the only guy standing between you and the mob with pitchforks’, namely the people who voted for him. And we’re still in the depression from Obama’s refusal to write down the real estate debts to the realistic value of real estate and Sheila Bair of the FDIC said crooked banks like Citibank, that were mismanaged, hopelessly corrupt, should have gone under but it was all about the bondholders. And the Obama chose to bail out the bondholders instead of the people. This was the start of fascism in the United States and we’re still in it, and we cannot get out of it until we undo the damage that Obama did.

PHIL: You know Michael I really wish you would come out and say what you think! Those pitchforks by the way, those pitchforks are coming just as soon as we’re told we’re allowed out of the house. Maybe that’s part of it, maybe they’re running scared. The fact that they think that the pitchforks are coming so they’ll tell us everything we all gotta lock down for a good year or so..

It’s been fascinating talking to both of you, it’s been fun, as well. We need Michael to get you on again sometime soon, but thanks for your time today.

MICHAEL: Great good to be here.

PHIL: And that’s it. We do this every week, me and Steve Keen. If you want to listen then you need to become a subscriber at or become a supporter of Steve Keen on Patreon – go to I’m Phil Dobbie. Thanks for joining us today. Hopefully we’ll catch you again next week, thanks for listening.

Thanks to Andrew Cox and David Moon for help with the transcript.

Photo by Michelle Bonkosky on Unsplash

The post Jubillee Perspectives with Steve Keen first appeared on Michael Hudson.

A chat on ANOTHER NOW with The Guardian’s Zoe Williams – The Guardian Live

Published by Anonymous (not verified) on Fri, 04/12/2020 - 8:59pm in

‘Another Now is structurally, ideologically and linguistically an extraordinary work’ Zoe Williams


Invited by Ian McMillan, along with a poet and an archaeologist, to discuss ANOTHER NOW – On BBC Radio 3’s The Verb

Published by Anonymous (not verified) on Sat, 28/11/2020 - 8:37pm in

What might a zero-growth world mean for writers? The Verb offers this provocation to this week’s guests, and asks how poets in particular can adjust to a world economy that’s changing rapidly under long-down. Is there such a thing as a sustainable poem? Ian McMillan is joined by: Yanis Varoufakis, economist, author and member of the Greek Parliament, Dr Seren Griffiths, an archaeologist and Radio 3 New Generation Thinker (fascinated by time and the taxonomy of soil), by novelist and poet Patrick McGuinness who is intrigued by the idea of a poem that leaves the ‘ordinary’ just as it is, and we welcome Jade Cuttle, (critic and poet) back to the Verb for second time this season – she reads French eco-poetry to her house-plant for us and we listen to its reaction via special technology.

Yanis Varoufakis’ new novel is ‘Another Now’, Jade Cuttle’s album of poem/songs is called ‘Algal Bloom’, and Patrick McGuinness’s most recent publication is the novel ‘Throw me to the Wolves’.

Discussing ANOTHER NOW with Joe Walker – The Jolly Swagman Podcast

Published by Anonymous (not verified) on Fri, 27/11/2020 - 9:20pm in

The Triumph & Tragedy Of Capitalism – a conversation occasioned by my new book ANOTHER NOW: Dispatches from an Alternative Present

Also listen on:


Show notes

Selected links

Topics discussed

  • Utopia. 4:46
  • The Sovereignty of Good. 9:14
  • Has capitalism enabled people to pursue higher goods? 12:38
  • What is capitalism? 16:08
  • Monopolies. 23:19
  • The problem with capitalism. 28:54
  • Are workers robots or autonomous souls? 34:40
  • Is capitalism making us happier? 54:30
  • Milton Friedman’s 1970 article on profit maximisation. 1:02:41
  • What is Yanis’s alternative to capitalism? 1:09:12
  • Should change be brought about through revolution or incrementalism? 1:26:08

A discussion I enjoyed hugely with Matthew Taylor of the Royal Society of the Arts on my ANOTHER NOW

Published by Anonymous (not verified) on Wed, 25/11/2020 - 7:36am in


How can a Marxist-feminist, a libertarian ex-banker and a maverick technologist help us navigate our new future? Economist Yanis Varoufakis explains all.

Global crises cause big changes and reveal deep structural weaknesses.

In this special interview series from the RSA its chief executive, Matthew Taylor, puts a range of practitioners on the spot – from scholars to business leaders, politicians to journalists – by asking for one big idea to help build effective bridges to our new future.

Yanis Varoufakis is an economist and the author of Another Now.

Tempo & Talker production for the RSA.

In this time of global change, strong communities and initiatives that bring people together are more invaluable than ever before. The RSA Fellowship is a global network of problem solvers. We invite you to join our community today to stay connected, inspired and motivated in the months ahead.

You can learn more about the Fellowship or start an application by clicking here.

Matthew Taylor

Yanis Varoufakis


A Big List of Philosophy Podcasts (updated)

Published by Anonymous (not verified) on Tue, 24/11/2020 - 1:42am in

How many philosophy podcasts are there?

At least 60 Over 80, and they take a variety of forms.

Andrew Lavin (CSU Chico, Butte College, Feather River College), himself the host of the podcast Reductio, compiled a list of them, below:
[Update, Nov. 30, 2020: several additions have been made to the list since its original publication earlier this month]

Dr. Lavin knows that he may have missed some, so podcasters are encouraged to  e-mail him at to join the list, and we’ll update it. Feel free, as well, to mention any additions to the list in the comments, including hosts’ names and the kind of podcast it is. (Revisions will be made to the list on an ongoing basis, typically without a major announcement of an update.)

See also Kelly Truelove’s list of philosophy and ideas podcasts, philosophy podcasters on Twitter and his TrueSciPhi radio (an internet radio station streaming participating philosophy & ideas podcasts).

The post A Big List of Philosophy Podcasts (updated) appeared first on Daily Nous.