Dollar Diplomacy Down

Michael Hudson has posted the podcast he titles as Dollar Diplomacy Down. At this link there is a transcript.

On YouTube the title is The dollar system’s contradictions after de-linking from gold, with Radhika Desai & Michael Hudson

I missed this episode when it first came out. It’s now 3 weeks old.

I don’t know if you think this is important, but it is starting to change my investment thinking. I haven’t decided exactly how I will change my strategy, but now that I have been so forcefully jolted, my mind will be more receptive to new ideas.

It is beginning to dawn on me that my investing success over the last 40 years has depended on the financialized fiction that I have been trying to avoid, The places to hide are shrinking.

Introducing China’s Leading Economist

Michael Hudson has published the post which he titled Introducing China’s Leading Economist.

I had been avoiding looking at this because the title didn’t tickle my fancy. I have since learned that I should have looked at this.

Unfortunately, I don’t have the time to watch this now, so I will have to watch most of this tomorrow. So far I have watched about 12 minutes of this.

On YouTube this is titled SSFS7 Day 1 China USA in the New Cold War (Michael Hudson and Wen Tiejun).

You might prefer watching this on the YouTube link above where you can find this video segmented into several clips of important moments. Below is the entire video.

The Treasury Privatized?

Michael Hudson has posted the video The Treasury Privatized?.

Radhika Desai and Michael Hudson are trying to rap you upside the head with the proverbial two by four to try to get you to see what is happening.

Can they finally get the public to understand what is being done to them?

I picked out the following excerpt from somewhere in the middle to see if I can tease you into watching this video.

MICHAEL HUDSON: Well I think then we need to define “predatory” and as you said, it basically means “unproductive overhead the non-financial economy has to bear.”

I think a predatory loan is one that does not provide the means to help the debtor repay its creditor.

For instance, people believe that they’re getting rich by borrowing from the bank to buy a house whose value goes up, but the value of housing going up is because so many people are borrowing that the housing is worth whatever a bank will lend, and it’s all been bid up on credit.

So what’s really gone up is the housing debt.

People say, “My house is worth a lot more.” But the equity that people have in their houses has been falling and falling and falling as the economy becomes more debt-leveraged.

So it’s not simply wages and profits that banks want. What they want is to transform property into financial gains. It’s all about capital gains. It’s about asset-price inflation that they love, as opposed to wage-inflation.

Forcing UBS to swallow Credit Suisse

The Duran has posted the episode Forcing UBS to swallow Credit Suisse.

I don’t think either of these guys have the financial expertise to opine on financial matters. I think I have studied this area with a more open mind than they have. This is not to say that they may not have come up with some obvious and probably right forecasts, but for some of the wrong reasons. For the most part it won’t matter to most people if their reasoning is right or wrong.

One example that remains in my mind as I write this, is the hint that MMT does not say that inflation is defined as too much money chasing too few goods. MMT does not disagree at all with this definition of inflation. Perhaps the novel idea that MMT introduces is that you can increase the amount of goods as well as decreasing the amount of money chasing these goods.

The point that Alexander is making is that if traditional economics is applied, we could end up with less money chasing vastly diminished supply of goods. This would be the tragedy of misunderstanding MMT.

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

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