Debt And Power – With Michael Hudson

YouTube has the video Debt And Power – With Michael Hudson.

In this post we discuss debt in the current context, and consider where the very high levels of debt will take us. And as importantly, who wins and who loses.


If you really wanted to know what the 2020 Presidential contest is all about and the stakes involved, you would watch this interview. The trouble is that most people think interviews like this are too tough sledding to make it through. I started listening to talks like this over 5 years ago, and I am still learning. I am a slow learner, but given the opportunity, I persist.

We’ll probably have to have our 30% unemployment before people have enough spare time to learn enough about this stuff. I am trying to do my best. Any suggestions for doing better would be much appreciated.


COVID-19 News   Recently updated !

I am trying to track down the source of an audio on advice for protecting yourself from the worst effects of COVID-19. I posted the first article on Facebook, but Facebook would’t let me post the link to the second article.

Here I am going to post all I can find.

From news.com.au comes the March 5 article Chinese doctors say coronavirus ‘like a combination of SARS and AIDS’, can cause irreversible lung damage.

Veterans Today has an article Facebook would not let me share China publishes coronavirus patients autopsy results, infection sources determined from March 7.

Here is the audio/video that started me on this search. Its source was obscure when I first received it in a Facebook message.

YouTube has How to kill / prevent corona virus ( from new Chinese autopsies ). I don’t know the traceable source of all this.

This is the new information found from autopsies done in china, you must listen please.


Here is all that the USA Centers for Disease Control and Protection will tell you How to Protect Yourself

Thanks to Mary Depew, here is a BBC article to debunk part of what was in the video, No, drinking water doesn’t kill coronavirus

Here is an article Micosoft News published from the South China Morning News First coronavirus autopsy highlights how illness targets lungs published February 28.

Here is an article that will be published tomorrow Sunday, March 22, 2020 in the Telangana Today newspaper, How coronavirus affects lungs of infected patients decoded.

Patients’ lungs exhibited edema, liquid proteinaceous secretions, fibrous connective tissue lesions with patchy inflammation, and multinucleated giant cells
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Despite comprehensive treatment, assisted oxygenation, and other supportive care, the researchers said her condition deteriorated, and she died. Subsequent clinical information confirmed that she was exposed to another patient in the same room who was found to be infected with COVID-19.


An Economic Hit Man Confesses and Calls to Action

YouTube has the video An Economic Hit Man Confesses and Calls to Action | John Perkins | TEDxTraverseCity.

John Perkins describes the methods he used to bribe and threaten the heads of state of countries on four continents in order to create a global empire and he reveals how the leaders who did not “play the game” were assassinated or overthrown. He brings us up to date about the way the economic hit man system has spread from developing countries to the US, Europe, and the rest of the world and offers a strategy for turning this around. “Each of us,” he says, “can participate in this exciting revolution. We can transform a system that is consuming itself into extinction into one that is sustainable and regenerative.”


You have to understand this topic if you want to understand how we have to reform our country and our corporations.

YouTube also has a shortened, animated version John Perkins – Economic Hitman.


Loans Create Deposits: Inside vs Outside Money   Recently updated !

YouTube has the video from 2016 Loans Create Deposits: Inside vs Outside Money.

Warren Mosler talking about the difference between bank-created money and government created money.

In our floating exchange rate system, the textbook explanation of the money multiplier does not apply. Instead, loans create deposits, and the Central Bank must supply any necessary reserves after the fact in order to be able to hit their interest rate target.


Warren Mosler’s explanation would be much more intuitive if he said that the bank creates a promise to give you high powered money when it makes you a loan. In exchange, you promise to pay it back. So far, no high powered money is involved. If the seller of the house uses the same bank where you got the loan, the bank just moves its promise of high powered money to the account of the seller when you pay for the house. No high powered money is involved., just the promise of that money is involved. If the seller of the house decides to take some of the money out of that bank, then, and only then does the bank have to fulfill its promise of high powered money. As long as the flows of high powered money into the bank and out of the bank are balanced, there is no need for the bank to get some high powered money to fulfill its promises. If there is an imbalance in those flows, and there are no real reserves at the bank because it already has an overdraft at the Fed, then it needs to get some high powered money from somewhere. Isn’t that part of what the repo market is all about. The Federal Reserve Bank also lends money to banks at very low interest rates, zero at the moment.

I have been told that MMT people don’t like the idea of promises of money. I have yet to hear an MMT authority address this terminology. Can someone point to an article or video where an MMT authority disparages the description of “promises of money”? It seems to me that when the financial system freezes up, it is often because the banks don’t trust each other over their promises of money.


You Can Create Money Just Like A Bank

Lately, I have been explaining that private banks do not create the same kind of money that The Federal Reserve Bank of the USA does. The Federal Reserve Bank creates what Modern Money Theory (MMT) calls “high powered money” With fractional reserve banking, private banks create a promise that when you need the money from your bank account, they will give you “high powered money”. The private bank does not hold all the money to cover all the promises of money that it has created because it knows that only a small fraction of people will want to take out more “high powered money” from the bank than other people will put into the bank.

You can simulate doing the same thing, except for you it is illegal to do. Look up the explanation of check kiting on Wikipedia.

Check kiting or cheque kiting is a form of check fraud, involving taking advantage of the float to make use of non-existent funds in a checking or other bank account. In this way, instead of being used as a negotiable instrument, checks are misused as a form of unauthorized credit.

Private banks are chartered by the government to practice fractional reserve banking. Private individuals are not so chartered. Under normal circumstances you can’t tell the difference between the private bank’s promise of money and “high powered money”. If the private bank runs out of reserves to fulfill its promise of giving you “high powered money” when you want it, The Federal Reserve Bank in the USA rides to the rescue to provide the private bank with the needed “high powered money”.

The Federal Reserve Bank is an entity within the USA federal government that is independent of other entities within the USA federal government. (See the post Who owns the Federal Reserve?)


MMT is a Political Problem: Part 1

New Economic Perspectives has the article MMT is a Political Problem: Part 1.

Developers and promoters of MMT have seen their task as a teaching problem; explaining how America’s sovereign money system works to those who still believe that money is a scarce commodity that restricts what the country can do. Their assumption has been that when more people, particularly political leaders, see that scarce money is not a true constraint, a new world of possibilities will open up for building a brighter future.

But what if those who seem impervious to the new knowledge are resisting because they see very clearly how it can lead in directions counter to their interests? Evidence that they have wanted to keep money scarce and under their control goes back at least a hundred years. (And longer if you consider the Civil War.)
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From what I have read, MMT promoters have not discussed the role of banks very much. But the number of dollars they create by making loans is many times greater than the number of new dollars the government creates by paying out more than it takes in with taxes. Banks see large government public funding operations as competitors.

A better explanation of the difference between private bank “money” and Federal Reserve Bank money is that private banks do not create money. They create promises of money. When they make a loan to you, it is a promise that if you should need real money, they will fulfill their promise. As long as you use your loan money to pay someone who deposits it in the same bank, no real money is involved. The bank only transfers its promise to you to the person you paid. They only need real money to cover the net outflow from the bank. Some of that real money comes from the Federal Reserve Bank and some of it comes from other sources in the private sector (including interest payments on their loans they made to you, and service fees, selling mortgages to investors). Because of fractional reserve banking and the fact that thee are only 6 major banks in the USA, the need for real money by the banks is very small compared to the obligations on their books.

If MMT would explain the difference between high powered money and private bank created promises of money, I think it would lift a big cloud from everybody’s minds.


Inside the World Uyghur Congress

The Grayzone has the article Inside the World Uyghur Congress: The US-backed right-wing regime change network seeking the ‘fall of China’.

While posing as a grassroots human rights organization, the World Uyghur Congress is a US-funded and directed separatist network that has forged alliances with far-right ethno-nationalist groups. The goal spelled out by its founders is clear: the destabilization of China and regime change in Beijing.

I must confess that I only read half of this, but it was enough. We don’t want foreign countries meddling in our elections, but we keep doing meddling that is far worse in other countries. You won’t hear this from the oligarchs’ news mafia. Whatever China may be doing, don’t put your faith in what is reported in the USA.


Gresham’s Dynamic As Applied To Billionaires

I wrote an email response to a friend who described to me what his ideal billionaire would do for his/her workers and society as a whole.

Something I learned in my first economics course, and I have seen it played
out over the years.

From Encyclopedia Britannica:

Gresham’s law, observation in economics that “bad money drives out
good.” More exactly, if coins containing metal of different value
have the same value as legal tender, the coins composed of the
cheaper metal will be used for payment, while those made of more
expensive metal will be hoarded or exported and thus tend to
disappear from circulation. Sir Thomas Gresham, financial agent
of Queen Elizabeth I, was not the first to recognize this monetary
principle, but his elucidation of it in 1558 prompted the economist
H.D. Macleod to suggest the term Gresham’s law in the 19th century.

Nowadays, when economists apply this to more than coins, they call
it a Gresham’s Dynamic. What I saw in the dot com bubble, was a
Gresham’s Dynamic of mutual fund managers. The one’s who could
keep their wits about them, and not succumb to the mania, were driven
out of the business by the mutual fund managers that were racking up
great performance numbers by going wild for dot com. I didn’t get
hurt at all by the bursting of the bubble, because I was adamant about
not jumping on the band wagon. As I used to say to my colleagues
who were boasting about how much money they were making ”

The goal
is not to have the highest peak theoretical wealth ever, but how much
of that wealth you still have after the bubble bursts.

I wasn’t the one to have a higher tax bill from stock options that I never got
to cash in before they became worthless.

So, in your dreams about ideal capitalists, there is a Gresham’s
dynamic going on. The ones who want to do right by their employees
and society get taken out by corporate raiders. The rules have
been rigged to reward the raiders, and leave the good capitalists
with no protection. The good capitalists either get driven out of
business, or they have to take on some of the predatory practices
just to survive. This is why we must have some entity (the
government for example) to set the rules to prevent the Gresham’s
Dynamic. So, while I love your idealism, I am aware of how things
work when everybody is set free to do whatever they want.


Elizabeth Warren, This Is A Test

Elizabeth Warren has told us that she is a capitalist to her bones. Here is her biggest test. Will she act like a true capitalist and sell her endorsement for President to the highest bidder? She has also told us that she believes in markets. Will she use her market power in this situation to extract the highest price she can?

This would be a perfect demonstration, sort of a textbook example, of what it means to be a capitalist with near monopoly power. There couldn’t be a better example of what the 99% are up against in this class war.

The pièce de résistance to her little scheme would be to announce her decisions on the Sunday morning talk shows on March 15.

I woke up early this morning with the driving desire to write this piece before someone like Jimmy Dore does a comedy routine with these ideas. I tried this idea out on a sample audience. Perhaps this reference to the ides of March is a bit too cerebral.

Writing this post reminds me of my Bridge playing days, when the winner of the auction would play a trump card, and as the second player, I would decide to play my ace, and think what could possibly go wrong. Well, here goes the ace. Maybe that is too cerebral, also.


Being Mr. Nice Guy Won’t Save The USA

At a meeting of Bernie supporters this evening, I was castigated for expressing ideas like this from Jimmy Dore. (I hadn’t seen this video before I went to the meeting.) The one good thing I heard at the meeting was the question from Steev, “What do exit polls mean when Bernie Sanders’ supporters voted early?” It never dawned on me that the trick to early voting was to skew the exit polls.

If Bernie is Mr. Nice Guy, good for him. He has no control over his supporters, which should be obvious when some of us defy what he suggests. I support Bernie, not just because I like him. I support Bernie because I think he espouses the formula for saving the country. Saving the country is too important to sacrifice because you want to play nice.

If Elizabeth Warren wants to sell us out to advance her career, then I cannot support her anymore. I rue the many days I worked to get her elected. #RecallWarren. Should we keep it a secret from Warren that some of her former supporters would like to see her recalled? Or should we tell her this while she still has a chance to redeem herself?