Magical Monetary Thinking at the Fed Killed SVB

Stephanie Kelton and L. Randall Wray have published the article Magical Monetary Thinking at the Fed Killed SVB.

I think their final recommendation is embodied in this excerpt.

Stabilize interest rates—stop using them for demand management and instead focus on financial stability. Regulate and supervise financial institutions. Retain backstops like deposit insurance and lender of last resort when necessary to stop crises from spreading. And restore a proper role for fiscal policy in managing aggregate demand.

Michael Hudson Talks to Ben Norton About SVB and Bank Failures   Recently updated !

Naked Capitalism has the article Michael Hudson Talks to Ben Norton About SVB and Bank Failures.

The introduction by Yves Smith is well worth the read. Here is a small excerpt.

Yves here. Michael Hudson gives yet another meaty take on the recent spate of bank implosions in the US, with the spectacle of sick man Credit Suisse taking a big heave adding to rattled nerves. We’ll take the liberty of providing some additions and qualifications.

Here is the description of the video below.

Economist Michael Hudson analyzes the collapse of Silicon Valley Bank, Silvergate, and Signature Bank, explaining the similarities to the 2008 financial crash. He also addresses the US government bailout (which it isn’t calling a bailout), the role of the Federal Reserve and Treasury, the factor of cryptocurrency, and the danger of derivatives.

The introduction by Yves Smith is worth the read, and the video with Ben Norton and Michael Hudson is worth the price of admission (Of course the money price of admission is zero. You just have to spend the time to listen.)

If you don’t want to be financially swept away in the current crisis, you couldn’t make a better investment than watching this. If you don’t want to understand this, I will forgive you when you no longer can afford your “free” access to the internet.

I am just starting to read an article recommended by Michael Hudson. He seems to have a more favorable view of the author, Ellen Brown, than I do. The article is Ellen Brown: The Looming Quadrillion Dollar Derivatives Tsunami.

Unlike in 2008-09, when the big derivative concerns were mortgage-backed securities and credit default swaps, today the largest and riskiest category is interest rate products.

The original purpose of derivatives was to help farmers and other producers manage the risks of dramatic changes in the markets for raw materials. But in recent times they have exploded into powerful vehicles for leveraged speculation (borrowing to gamble). In their basic form, derivatives are just bets – a giant casino in which players hedge against a variety of changes in market conditions (interest rates, exchange rates, defaults, etc.). They are sold as insurance against risk, which is passed off to the counterparty to the bet. But the risk is still there, and if the counterparty can’t pay, both parties lose. In “systemically important” situations, the government winds up footing the bill.

Here is the bone I have to pick with MMT proponents.

While it is true that banks create the money they lend simply by writing loans into the accounts of their borrowers, they still need liquidity to clear withdrawals;

My contention is that these are deceptive words to use in conjunction with what private banks do. I contend it would be more honest to say that “banks create promises of money they lend by writing loans into the accounts of their borrower.” The description of the repo market explains one of the ways that banks make good on their promises when they have to fulfill those promises.

The Mechanics of a Bond Market and its Impact on the Banking Crisis

Michael Hudson has posted the article The Mechanics of a Bond Market and its Impact on the Banking Crisis.

That is the real financial crisis that the economy faces. It goes beyond banking. The entire economy is saddled with debt deflation, even in the face of Federal Reserve-backed asset-price inflation. So the great question – literally the “bottom line” – is how can the Fed maneuver its way out of the low-interest Quantitative Easing corner in which it has painted the U.S. economy? The longer it and whichever party is in power continues to save FIRE sector investors from taking a loss, the more violent the ultimate resolution must be.

Maybe more people will start to listen to the warnings from Michael Hudson.

Why the Banking System is Breaking Up

Michael Hudson has posted the article Why the Banking System is Breaking Up

My guess is that we will now see the Great Unwinding of the great Fictitious Capital boom of 2008-2015. So the chickens are coming hope to roost – with the “chicken” being, perhaps, the elephantine overhang of derivatives fueled by the post-2008 loosening of financial regulation and risk analysis.

Michael Hudson id the only MMT proponent that gives you the graduate school version of MMT. Most of the other proponents of MMT give you the high school version, or maybe the kindergarten version of the explanation.

After I absorbed the kindergarten version,, I had a few questions. Michael Hudson was the only one who had answers other than “Shut-up kid, and go away.”

I wonder if the MMT gurus can change their mind about my assertion that private banks do not create money, but instead they create promises of money. They have all sorts of tricks to come up with the money they promise when they are called to make good on the promises they have made. All is well (hidden) until it is not.

CIA Stories: The Jakarta Method

YouTube has this Empire Files video CIA Stories: The Jakarta Method.

Abby Martin speaks with journalist Vincent Bevins about the hidden CIA mass murder in Indonesia, which created the model for US extermination campaigns against communists in 22 countries during the Cold War.

If you are of a certain ideological frame of mind, you have to deny even the possibility of this being true. If you think of yourself as progressive, you won’t know what to do with this story. If you truly are progressive, this may get you thinking.

BUY The Jakarta Method by Vincent Bevins


This is what Marianne Williamson has posted on her Substack THE TRAGIC CONUNDRUM OF UKRAINE

The United States should support diplomatic solutions to any dispute, in Ukraine as well as anywhere else. On that point we should never waver. But in the case of the war in Ukraine, Russia would meet any such overture with nothing but further aggression until such time as military conditions made it difficult for him to refuse the offer. Why would he do otherwise, when in his mind he is winning the war? His brutal, autocratic rule in Russia and the atrocities committed by his troops in Ukraine give us a vivid picture of what his conquest of Ukraine would mean. Any withdrawal of U.S. support for Ukraine at this point means only one thing: the end of Ukraine.

Marianne Williamson seems to be infected by the USA propaganda against Russia. This is enough to disqualify her from my support.

The rise of US dollar imperialism, and why it failed – with Radhika Desai & Michael Hudson

YouTube has the video The rise of US dollar imperialism, and why it failed – with Radhika Desai & Michael Hudson.

Economists Radhika Desai and Michael Hudson explain the rise of the US dollar system, its central role in imperialism, and why it ultimately failed to accomplish Washington’s hegemonic goals.

This is a clear explanation of so much of what most of the neocons and neolibs do not want to know. Even if they do know this, they certainly don’t want you to know this. Even though the 99% of us need to understand this, we would prefer to pretend this isn’t true. We will fight the war against this truth to the last working class person.

Reversing 30 Years of Damage from the Clintons, the DOJ Closes A Price-Fixing Loophole Wide Enough to Drive a Truck Through

Naked Capitalism has the post Reversing 30 Years of Damage from the Clintons, the DOJ Closes A Price-Fixing Loophole Wide Enough to Drive a Truck Through.

Well, it took thirty years, but the DOJ has finally admitted this specific scheme started under the Clintons was a massive mistake, and it marks another sign that business as usual might be changing at the FTC and DOJ.

Here are some details on how the Clinton administration and the Obama administration opened the doors to inflation in health care and real estate.

America’s Real Adversaries are Its European and Other Allies

Michael Hudson has published the article America’s Real Adversaries are Its European and Other Allies.

Without subsidy from these countries, especially as China, Russia and their neighbors de-dollarize their economies, how can the United States maintain the balance-of-payments costs of its overseas military spending? Cutting back that spending, and indeed recovering industrial self-reliance and competitive economic power, would require a transformation of American politics. Such a change seems unlikely, but without it, how long can America’s post-industrial rentier economy manage to force other countries to provide it with the economic affluence (literally a flowing-in) that it is no longer producing at home?

I think this is in a nutshell why the current USA economic and political policies are not good for USA inhabitants,