Economic ‘Recovery’ Feels Weak Because the Great Recession Hasn’t Really Ended

Lambert here: Best economy ever. What’s wrong with these people?

Originally published at The Real News Network.

KIM BROWN, TRNN: Welcome to The Real News Network. I’m Kim Brown, in Baltimore. With the worst of the great recession, supposedly, behind us, economic analysts still see signs that we’re not yet completely out of the woods. A new report released Wednesday by the International Monetary Fund shows that some banks in the United States and Europe may not be strong enough to survive another downturn, even with States assistance.

Joining us from New York is Michael Hudson. Michael is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. His latest book is Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy. Michael, thanks again for joining us.

MICHAEL HUDSON: Its good to be here. But we can’t get out of the woods.

BROWN: Okay, let’s get into that. The IMF report on financial stability says, in spite of banks being stronger now than before the economic crisis of 2007-2008, about twenty-five percent of US banks and about a third of European banks are too weak to even benefit from a potential rise in interest rates and any recovery aid, should the global economy take a downward turn. But before we get into any specific questions about the health of banks, Michael, are we still in a recession or are we firmly in a recovery now?

HUDSON: We are not in a recovery and we’re not really in a traditional recession. People think of a business cycle, which is a boom followed by a recession and then automatic stabilizers revive the economy. But this time we can’t revive. The reason is that every recovery since 1945 has begun with a higher, and higher level of debt. The debt is so high now, that since 2008 we’ve been in what I call, debt deflation. People have to pay so much money to the banks that they don’t have enough money to buy the goods and services they produce. So there’s not much new investment, there’s not new employment (except minimum-wage “service” jobs), markets are shrinking, and people are defaulting. So many companies can’t pay their banks.

The banks’ product is debt. They try to tell customers that “debts are good for you,” but the customers can’t afford any more debt, so there’s no way the banks can continue their current business plan. In fact, there’s no way that banks can be paid everything that they’re owed. That’s what the IMF doesn’t follow through its analysis, by saying, “Look, the banks are broke because the financial system is broke; and the financial system is broke because the whole idea of trying to get rich by running into debt doesn’t work.”

It was a false model. So really, we’re at the end of long cycle that began in 1945, loading the economy with debt. We’re not going to be able to get out of it until you write down the debts. But that’s what the IMF believes is unthinkable. It can’t say that, because it’s supposed to represent the interest of the banks. So all the IMF can say is to wring their hands over the fact that the banks won’t make money even if there is a recovery.

But there really isn’t a recovery, and no signs of it on the horizon, because people have to pay the banks. It’s a vicious circle – or rather, a downward spiral. Basically, the IMF economists are just throwing up their hands and admitting that they don’t know what to do, given the limits of their tunnel vision.

BROWN: Well, Michael, help us figure out why growth has been so weak over these past eight to six years or so.

HUDSON: If you take the average family budget – and I’ve said this on your show many times –we can go through the numbers. If you have to pay about forty to forty-three percent of your income for housing, you also have to pay fifteen percent of your paycheck for the FICA for Social Security wage withholding. You have to pay medical care, you have to pay the banks for your credit card debt, student loans. Then you only have about twenty-five or thirty-five percent, maybe one-third of your salary to buy goods and services. That’s all.

The problem here is that the way you get a job is with a company that sells goods and services. The companies aren’t hiring, because consumers don’t have enough money to buy the goods and services.

We’re in a chronic debt-deflation. There’s no way we can recover unless you write down the debts. And that’s what the IMF basically is implying (and it was explicit regarding Greece), but its not spelling it out, because that’s not what can be said in polite company.

BROWN: Michael the headline from MarketWatch about this IMF report, it reads, “Forget too big to fail. The big concern is banks too weak to survive.” If big banks almost capsized the global financial system, are weaker banks actually better for consumers?

HUDSON: Banks that are very narrow and do what banks used to do (before President Clinton abolished Glass-Steagall in 1999). Small banks that lend to consumers are fine. Most banks – with Deutsche Bank at the top of the spectrum here – have decided that they can’t make money lending to barrowers anymore, so they’re going to the second business plan: They lend money to casino capitalists. That is, to people who want to gamble on derivatives.

A derivative is a bet on whether a stock, or a bond or a real estate asset, is going to go up or down. There’s a winner and a loser. It’s like betting on a horserace. So the biggest bank lending for gambles – not for real production, not for investment, but just for gambles – was Deutsche Bank. Borrowers borrowed from Deutsche Bank to gamble.

What’s the best gamble in the world, right now? Its betting that Deutsche Bank stock is going to go down. Short sellers borrowed money from their banks to place bets that Deutsche Bank stock is going to go down. Now, it’s wringing its hands and saying, “Oh the speculators are killing us.” But it’s Deutsche Bank and the other banks that are providing the money to the speculators to bet on credit.

BROWN: Michael, the IMF report says that in the Eurozone, if the Eurozone governments could help banks dump their bad loans, it would have a positive effect on bank capital. What would be the effect on consumers in the EU economy, at large, if banks were able to just dump these bad loans?

HUDSON: Its really very simple mathematics. You have to abolish pension plans. You have to abolish social spending. You have to raise taxes. You have to have at least fifty percent of the European population emigrate, either to Russia or China. You would have to have mass starvation. Very simple. That’s the price that the Eurozone thinks is well worth paying. It’s the price that it thought Greece is worth paying. To save the banks, you would have to turn the entire Eurozone into Greece.

You’ll have to have the governments sell off all of their public domains; sell off their railroads, sell off their public land. You’ll essentially have to introduce neo-feudalism. You’ll have to roll the clock of history back a thousand years, and reduce the European population to debt slavery. It’s as simple a solution as the Eurozone has imposed on Greece. And it’s a solution that the leaders and the banks are urging for responsible economists to promote for the population at large.

BROWN: Let’s talk about the other little nugget of information released by the IMF about debt. Global debt has now reached about a hundred and fifty-two trillion dollars. This includes government debt, household debt, non-financial firms’ debt. What does all this debt mean for the global financial system and for everyday people here, Michael?

HUDSON: It means that the only way people can repay the debt is by cutting their living standards very drastically. It means agreeing to shift their pension plans from defined benefit plans – when you know what you’re going to get – into just “defined contribution plans,” where you put money in, like into a roach motel, and you don’t know what’s coming out.

To save the banks from making losses that would wipe out their net worth, you’ll have to get rid of Social Security. It means that you’ll essentially have to abolish government and turn it over to the banking system to run, with an idea that the role of governments is to extract income from the economy to pay to the bondholders and the banks.

When you say “paying the banks,” what they really mean is paying the bank bondholders. They are basically the One Percent. What you’re really seeing right now in the IMF report, in this growth of debt, is the One Percent of the population owns maybe three-quarters of all this debt. This means that there’s a choice: Either you can save the economy, or you can save the One Percent from losing a single penny.

Every government, from the Obama administration right through to Angela Merkel, the Eurozone and the IMF, promise to save the banks, not the economy. No price is too high to pay to try to make the financial system go on a little bit longer. But ultimately it can’t be saved, because of the mathematics that are involved. Debts grow and grow. And the more they grow, the more they shrink the economy. When you shrink the economy, you shrink the ability to pay the debts, so it’s all an illusion that the system can be saved. The question is, how long are people going to be willing to live in this illusion?

BROWN: That was my next question for you. Not only how long are people going to be able to live in this illusion, but how much longer is this illusion actually sustainable before we see another collapse of economies around the world? Is this something that is impending, that we should just be expecting to come, we should be readying ourselves for this?

HUDSON: We’re still in the collapse that began after 2008. There’s not a new collapse, there hasn’t been a recovery. Wages for the ninety-nine percent have gone down, steadily, since 2008. They’ve gone down especially for the bottom twenty-five percent of the population. This means that they’ve gone down especially for Blacks and Hispanics and other blue-collar workers. Their net worth has actually turned negative, and they don’t have enough money to get by.

In fact, one of the big consulting firms just did a study of the millennials. Ernst and Young did a study and they found seventy-eight percent of millennials are worried about not having enough good paying job opportunity to pay off their student loans. Seventy-four percent can’t pay the health care if they get sick. Seventy-nine percent don’t have enough money to live when they retire. So, already, we’re having a whole generation that’s coming on, not only here but also in Europe, that isn’t able to get good-paying jobs. The only way it can live the life they were promised is if they have rich enough parents who have given them a trust fund.

BROWN: We’ve been speaking with Michael Hudson. Michael is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. His latest book is Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy. Michael, you said you had another book coming out, is that right?

HUDSON: Yes, later this month. It’ll be J is for Junk Economics. And it’s a review of why the economists promise that somehow we’ll recover. Why this is basically junk, and why in order to be an economist these days, you have to participate in this fairytale that somehow we can recover and still make the banks rich. And it is a fairytale. J is for Junk Economics is about why it won’t work.

BROWN: Coming to a bookstore, near you, later this year. Michael, we appreciate you lending your time and expertise to us, as always. Thank you.

HUDSON: It was good to be here.

BROWN: And thank you for watching The Real News Network.

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This entry was posted in Banana republic, Banking industry, Doomsday scenarios, Economic fundamentals, Guest Post, Income disparity, Macroeconomic policy, The destruction of the middle class on by .

About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

54 comments

  1. Jim Haygood

    Debts grow and grow. And the more they grow, the more they shrink the economy.

    Reinhart, Rogoff and Michael Hudson agree: excessive debt slows growth.

    1. lyman alpha blob

      Har har. I pretty sure you know what the difference between their arguments is comrade.

      1. Alejandro

        I’m not so sure…if he did, he wouldn’t make such an absurd conflation…if he doesn’t, why not engage with honest questions? Seems like a red herring, to distract from Michael Hudson’s cogency.

        1. BecauseTradition

          While you prefer Pottersville?

          Maybe not you but the Austrian Economists you apparently follow are surely fans of punishing the innocent for the sins of the guilty to “purge the malinvestments.”

          If only the purge would start with their jobs!

        2. Alejandro

          Austerity and debt-peonage are the roads to “Dismalville”…debt write-downs and spending to-full-capacity are the roads out.

          Are Austrians ‘Austerians’?

          1. BecauseTradition

            Are Austrians ‘Austerians’?

            Yes, and deflation loving, hypocritical* gold standard advocates.

            *Because they claim to be for liberty but would force us all to use gold-backed fiat – thus profiting gold owners and money hoarders (by deflation).

    2. sgt_doom

      Imagine, mentioning the names of two complete douchetards (and Excel-challenged) individuals like Reinhart and Rogoff with the highly brilliant, Prof. Hudson — what an atrocity.

      Why I’ve always like both the movie, The International, and Prof. Michael Hudson:

      https://www.youtube.com/watch?v=UiN1xHaNDJ0

    3. diptherio

      The difference between private sector debt and public debt denominated in a nation’s sovereign currency is….? Nothing, so far as Jim can tell. {yawn} Maybe some day it’ll dawn on him….

  2. BruceNY

    Ray Dalio just presented to NY Fed on exact same topic, albeit from a more macro perspective.

    1. Chauncey Gardiner

      “from a more macro perspective”?…

      Um, I think not, but certainly a different perspective. Dalio runs Bridgewater, the largest hedge fund in the world. Although he too discussed the troubling high level of debt in his talk, Dalio’s policy prescriptions were tailored to and aligned with the preferences of his viewing audience that day: invitees to the Federal Reserve Bank of New York’s 40th Annual Central Banking Seminar.

      Unsurprisingly, his policy prescriptions were for more intensive and targeted austerity and maintaining the status quo. I can’t think of a better example of the old maxim: “Where you stand depends on where you sit.”

      Dalio ignored the possibility of policies based on MMT and said, “Coordination of fiscal and monetary policies cannot occur due to political fragmentation”.

  3. cnchal

    Global debt has now reached about a hundred and fifty-two trillion dollars. This includes government debt, household debt, non-financial firms’ debt. What does all this debt mean for the global financial system and for everyday people here, Michael?

    That works out to only USD $20,540 for every man, woman and child on the planet. I’m sure the debt serfs can take double or triple that.

    1. a different chris

      Yup, barely over 2 million dollars per 1 percenter. You can barely buy a passable vacation mansion for that, let alone staff it with peons. C’mon, guys, work harder for (and borrow more from) your betters!

    2. Pat

      Yes, but what is it if you include financial firms debts?

      Because we know when it comes to those, they will be paid off and not by any who enriched themselves from the establishment of that debt. Everything else has a designated loser.

    3. Dave

      Yeah, but many people worldwide have no, or a tiny income. Adjust it for wage earning populations and I know the number is a lot higher than double or triple per capita.
      One thing’s for sure, the best way to exacerbate a worrying trend for the One Percenters, and seemingly the only thing that is manifest in the economy, is to deliberately help it along.
      Our family spends zero on discretionary purchases from corporations until after the election, after Christmas and after New Years. Sorry kids, you’re getting Christmas cookies and stuff we only buy for cash from little businesses. Easter vacation will be great!

    4. Synoia

      The solvency of many life insurance companies and pension funds is threatened by a prolonged period of low interest rates.

      Consequently then, to make money the Financial Sector has to depend on a Central Government set interest rate?

      That is the the Financial Sector is dependent on the Government for profit?

      Why then are the Banks not a Department of the Government, as shareholders would not want such investments?

    5. Crazy Horse

      The richest 62 people in the world own as much wealth as the lower 50% of the entire rest of the world’s population.* Doesn’t that suggest a solution to anyone?

      Just to get the ball rolling, line all 62 up in front of a firing squad, seize all their wealth, and distribute it equally among every remaining man, woman and child on the planet. Most multi-billionaires are useless eaters, and the few worthwhile individuals in the group certainly are not vital to the human species. The benefits of putting that wealth in the hands of hundreds of potential Einsteins or Gandhis and millions of needy people would far outweigh any loss.

      In subsequent years give the Fortune 500 winners in the capitalist game a choice— give half of your wealth away to public projects selected by the 99.9% or face the firing squad. A much more equitable solution to the debt slavery that the Overlords have engineered than a debt jubilee that rewards those who have acquired the most indebtedness.

      *https://www.theguardian.com/business/2016/jan/18/richest-62-billionaires-wealthy-half-world-population-combined

  4. apber

    The banking and corporate elites certainly have a problem. The agenda for many decades has been to steal and rape enough from the 99% to maintain positive balance sheets and earnings per share. It has worked too well, but pure math has a way of biting the 1% in the ass. Fewer and fewer of the 99% can now afford to pay for the promoted goods and services. It has reached a tipping point. Name one major bank that could afford to mark-to-mark its balance sheet assets. Name one S&P corporation that has shown solid earnings growth absent stock buybacks. And from here on, it only gets worse.

  5. DanB

    Possibly I’m having an idiosyncratic reaction, but this interview strikes me as psychologically dissociative. For instance, I was stunned as Hudson talked about virtually depopulating Europe, and then the interviewer moved on to the next question.

    1. Duncan Hare

      Hudson was saying that either there is a debt jubilee, or Europe would be depopulated.

      As Greece is being depopulated now. Please read it again.

      The concept of depopulation Europe, especially France, raises the consequences of 1789 for the 1% again.

      1. BecauseTradition

        re debt jubilee:

        1) Eliminating privileges for depository institutions could easily be deflationary since creating new deposits/liabilities to replace existing deposits/liabilities as they are repaid would be much more risky – i.e. real liabilities wrt the public are more dangerous than largely virtual ones.

        2) A Steve Keen “Modern Jubilee”-like fiat give away could be metered to just counter the deflation from 1) for no net increase in purchasing power in the economy.

        Neatly, reform allows restitution without inflation and restitution allows reform without deflation.

      2. DanB

        I heard it rather than read it. My point is that there was no real discussion of this stark scenario.

    2. apber

      More likely that the North American continent will be depopulated. There is no one talking about the cumulative effects of Fukushima radiation that has already decimated marine life in the Pacific Ocean and has produced evacuation level radiation counts in US cities where monitored. From the Nuclear Emergency Tracking Center in Counts per Minute (CPM):

      Colorado Springs 567 cpm
      Anaheim 335 cpm
      Worcester 353 cpm
      Phoenix 301 cpm
      Carlsbad 214 cpm

      Note that anything above 50 is cause for evacuation; above 100 is dire. The inhalation or ingestion of just one cesium particle gives you a 50:50 chance of getting a life threatening cancer within 10 years.

      1. JEHR

        The end result: depopulation of the planet caused by supper bugs, radiation, accumulation of garbage, innumerable wars, pollution of potable water and arable soil, genetically modified foods, the decimation of insects and birds, toxic air and water, despoiling of oceans, melting of glaciers, overpopulation, decimation of animal species, deforestation, continued accumulation of carbon in the atmosphere, huge floods, long lasting droughts, etc.

        1. Tony Wright

          You nailed it. Overpopulation by the top predator, Homo sapiens. Although where they got the sapiens from was delusional.

          1. Dave

            “Information from the Bible”….

            Make it nutc.com

            We still have to shut down and eliminate nuclear power plants.

          1. human

            My name is Harlan and I design this Netc.com system, so let me help you understand the numbers. First of all, the system is design to tell when the radiation is increasing, not to tell you if it is bad or good. Only your Doctor know for sure. Second, Netc.com server calculates the NORM background radiation over a 3 month period, so when the alert message email is sent, the radiation is at least 10% higher than it was in the past 3 months. Third, do not compare one site with another because each site has different equipment, different locations, inside or outside and many other conditions.

            In light of the lack of government monitoring, analysis and reports it is not heartening to see private (commercial) exploitation of the data of harmful effects to Gaia. A quick reading of this data, as commenter apber has done, is actually detrimental to fuller understanding of the meaning of the data.

            Granted, the public has been deliberately mis-led regarding radiation and any number of additional facts affecting our lives, but, utilizing the very neo-liberal policies that some abhor to disseminate this knowledge is not in the interests of all.

            Perhaps a funding model is in order, preferably with a portion of taxes meant for DOD, to flesh out monitoring solutions and increase staffing and education.

            (still dreaming on this first cold, wet New England afternoon)

              1. Jeremy Grimm

                Why are you retracting your comment about nutc.com?

                I am confused by this path in the thread. Given sea level rise and the location of most/all nuclear power plants we need to start shutting them down before they are shut down less gracefully by other means. Given the fragility of our power grid and the apparent dependence of our nuclear plants on the grid to power their cooling pumps it might be a good idea to learn what must be done to gracefully shut down a nuclear plant before it ungracefully melts/shuts down.

      2. Jeremy Grimm

        Maybe it will mean a big come-back for leaded glass — for fiber glass insulation and for window glass. We’ll just need to stay indoors a bit more.

  6. KPL

    “Every government, from the Obama administration right through to Angela Merkel, the Eurozone and the IMF, promise to save the banks, not the economy.”

    Exactly. It will not work simply because it only postpones the day of reckoning. Central bankers cannot operate with a eye on the stock market forever. I cannot understand how the central bankers cannot see how they are impoverishing the people who are likely to provide demand and thus adding to their problem. Why this fetish for the stock market? By focusing on the stock market they are screwing the economy.

    Once you lack the capacity to pay debt (not there due to lack of growth/demand – 99% is screwed) it is just a matter of time before it blows up. It is a mathematical certainty. Bailing out is a sensible decision only if it clears debt and ensures growth, which at this stage is asking for too much. So ending bail out (even if accompanied by pain) is the only way forward but then whether the elites will accept this is another matter altogether.

    By propping up banks you do these things:
    1. Create moral hazard — socialize losses and privatize profits
    2. Destroy capitalism — encourage malinvestment
    3. Allow speculators to run riot as their back is covered
    4. Screw general public who get in on the top floor and make the masses poorer, with demand implications
    5. Postponing the inevitable and make the problem bigger

    The shrewd guy will allow 99% to grow and thus create growth and demand (remember Ford and $5) instead of hollowing them out. At this stage a reset of the system is the only way forward. But then when it will be accepted as THE ONLY SOLUTION is a million dollar question.

  7. sunny129

    ‘could help banks dump their bad loans, it would have a positive effect on bank capital’

    ??

    What will happen to LENDERS/Holders of those LOANS, which by the way are 1% centers, Banks themselves, Hedgefunds, Public and Pension funds etc

    A DEBT which cannot be paid will NOT be paid, no matter what! It has to be taken off by Bkcy, written off by lenders, or default of the borrowers1

    The DEBTS have been rolled over to new forms of debt and to new OWNERS since ’45. The can of DEBT has been kicked down the road, again and again!

    DEBT induced Consumption based Economy is slowly coming to an end after nearly 70 years of bringing on DEBT!

    Now what?

  8. BecauseTradition

    A DEBT which cannot be paid will NOT be paid, no matter what!

    Debt is denominated in fiat, which is cheap to create. So the debts CAN be repaid. The question is how to do so fairly and that’s not unsolvable either given that bank loan repayment is deflationary by itself.

    1. Jeremy Grimm

      The Greeks don’t have a fiat currency they can use to implement your payback scheme. Besides — why do you want to worry about paying back the banks?

      In the U.S. the inflation you seem to be suggesting as a policy for debt repayment (Cross-of-Gold?) runs into a problem when the inflation of incomes lags so far behind the rate of inflation as it does here and has in the past.

      1. BecauseTradition

        The Greeks don’t have a fiat currency they can use to implement your payback scheme. Jeremy Grimm

        Which is why a Steve Keen “Modern Jubilee”-like fiat distribution would have to be for the entire Eurozone – including to German savers.

        Besides — why do you want to worry about paying back the banks?

        So just declare the debt null and void? What about non-debtors? Do debtors get to keep their homes while non-debtors get nothing*?

        In the U.S. the inflation you seem to be suggesting as a policy for debt repayment (Cross-of-Gold?) runs into a problem when the inflation of incomes lags so far behind the rate of inflation as it does here and has in the past.

        De-privileging the banks is deflationary while a fiat distribution is inflationary; it can be contrived that the two cancel each other.

        *Well, maybe they get to keep their jobs since even old fashion debt abolition might help the economy.

  9. Jack

    This really is a simple problem to solve. If…you don’t mind the 1% getting screwed. Simply do what Brazil did in 1992, with a twist. Brazil had runaway inflation so they created a new currency. Everything started being valued in the new currency and overnight, inflation was under control. My twist is that the US would just set a specific date as a debt jubilee. The US government would buy most debt, private consumer, student, and mortgage debt, and federal and state public debt, on that specific day in the current currency. The Fed could issue the trillion dollar coins that were talked about several years ago to pay for it. The next day, a new currency would go into effect and everything would be denominated in the new currency, i.e. wages, rents, bank deposits. If you had cash in the old currency you could turn it in for the new. Stocks would be valued in the new currency. The government could decide whether to pay its debt holders back in the new, or old currency. A minimum “pay back” could be set in the new currency for instance, thereby setting a threshold so the little guy didn’t get screwed, e.g. anyone owed $1 million or less could be paid in that amount in the new currency, the rest would be denominated in the old.

  10. John k

    Somebody – preferably a rich somebody – should start a progressive party.
    Major planks:
    Save Social Security; both major parties want to cut/gut SS. (Simpson-Bowles is strong evidence.)
    No more ME wars – spend the money here on our crumbling infrastructure.
    Targeted spending; block infrastructure grants to states with high unemployment. (Counter cyclical.)
    If CEO’s break the law, put them in jail!
    Expand Medicare to over 60. (Incremental.)
    Make it legal to import prescription drugs that meet safety regulations.
    No more bad trade deals! 5% duty on all manufactured imports to pay for training/relocation of workers that lose their jobs due to imports.

    Limited to popular items not controversial to the bottom 2/3. (They’re not ready for MMT, probably not for a jobs guarantee, either, but a successful party might eventually introduce them.

    Bernie has shown the country is ready for the above platform.
    Who? Maybe Mosler could form a group…

    1. philnc

      So we wait for a one-percenter to emerge as the new messiah? Ain’t gonna be that easy. Bernie was right about one thing: real change comes from the bottom up. He learned that from Debs, who was the inspiration for those who led the workers movements in the Depression. That’s actually how we got the New Deal, which wasn’t a giveaway but a peace offering. The big business Republican plan was to just let the surplus population starve to death. In the end it was the clear and present danger of a popular uprising that moved most of the elite to acquiesce to the New Deal (although the Ronald Reagan and others would continue to echo the opposition in the mid-1960’s and beyond). The only way to turn things around is if enough of the elite sense the same danger. The probability is that won’t happen for another decade or two, when it will be way too late for them.

      1. Jeremy Grimm

        I find myself torn between your comment and John K’s comment. FDR was a rich guy who became a progressive as a matter of practicality. G. William Domhoff builds an interesting case for suggesting the New Deal was a policy of one faction of the Elite who apparently was frightened of the present danger of a popular uprising.

        Debs makes a bad example as a role model. He and much of the IWW were rounded up and imprisoned. I am afraid today’s elite believe they now command the kind of trained attack dogs they only hoped the Pinkertons might be. I am also afraid they may be right after reading in today’s Links how our vaunted DoD and Military Intelligence handled the Taliban uprising in Afghanistan. I am afraid our police come from the same source judging by the way prosecutions are handled and the way street “justice” is meted out by our “police”. Blacks take the brunt not solely on account of racism but probably more on account that Blacks have proven themselves the vanguard.

        Those shaking the tree from below need to invent new means. Tossing bricks at military vehicles isn’t a viable way forward and non-violent civil disobedience relies on having a non-violent police force. Even without a broken head or a serious bullet wound the outrageously high financial penalties attending arrests argue for a new strategy.

        1. human

          Debs makes a bad example as a role mode

          What?!? Because he was imprisoned for speaking out against a rich man’s war? How do you think non-violent civil disobedience works?

          WOW. Not ’till I had completed “eugen debs” did wikipedia offer his article as a completion! Thought I would find it listed under just “debs.”

          “Of course, Socialism is violently denounced by the capitalist press and by all the brood of subsidized contributors to magazine literature, but this only confirms the view that the advance of Socialism is very properly recognized by the capitalist class as the one cloud upon the horizon which portends an end to the system in which they have waxed fat, insolent and despotic through the exploitation of their countless wage-working slaves.” ~ Eugene Debs

          1. Jeremy Grimm

            I too hold Eugene Debs in high regard but I would admire him more if he had managed to get out of the country ahead of the arrest warrants. Too many martyrs are held up as exemplars. I prefer heroes who run away to fight another day. I think they make better exemplars.

            I think I indicated I think non-violent civil disobedience is not a good path forward. No — I don’t know a good path — but I can tell a bad path. I have always admired the statement attributed to GEN Patton that he didn’t want his men to die for their country — he wanted them to help as many Germans as possible die for their country.

            1. John Zelnicker

              @Jeremy Grimm – “I too hold Eugene Debs in high regard but I would admire him more if he had managed to get out of the country ahead of the arrest warrants. Too many martyrs are held up as exemplars. I prefer heroes who run away to fight another day. I think they make better exemplars.”

              That sounds a lot like Trump’s criticism of John McCain for being captured by the North Vietnamese. And, running away, even to fight again, is likely to draw accusations of cowardice and/or lack of commitment to one’s principles.

              1. Cry Shop

                Jezz, you just called every intelligent soldier, right up to the level of Napoleon, a coward. Want to re-think that?

                “Damn those Minute Men, Vietcong, etc, why don’t they stand up like men so we can slaughter them.”

  11. VietnamVet

    Since I was raised while the New Deal was still in effect; I am prejudiced. The 21st century has two fundamental economic problems; the stockpiling of wealth and debt that cannot be paid off. The only way to solve this is 1) the government deciding how much wealth is redistributed by taxes and what debts are written off in accordance to the public good or 2) war. If FDR was one of a kind, mankind may not survive the people’s revolt that is starting to percolate or the world war bubbling in Syria.

    1. Jeremy Grimm

      I don’t know that FDR was one of a kind and like you I more than take his programs for granted. I hope the only portion of mankind who will fail to survive the people’s revolt — if things come to that — will be the members of the 0.01% and their paid supporters — and I would rather that no one would fail to survive said revolt. A few just need to have some adjustments made to how they live — possibly including most of us in the “developed world” — to avoid the world war Hillary and our neocons [unfortunately including Trump’s VP (?) ] are hoping to start in Syria.

  12. FedUpPleb

    We have entered secular decline, like the Soviet Union.

    I think the coming Hillary Era will be compared to the Brezhnev era of the USSR/

  13. ewmayer

    [i]BROWN: …The IMF report on financial stability says, in spite of banks being stronger now than before the economic crisis of 2007-2008…
    [/i]
    Because the banks, working with newly re-energized regulators, have done a lot to delever and improve their risk profiles, right? Oh, wait, the ‘strength’ is only due to the now-explicit government backstop-unto-infinity and roughly a global GDP’s worth of central bank largesse. Whoda thunk that by doing zilch to address the underlying structural and criminal-cartel problems, said problems would not magically resolve themselves? But, Hillary in one of her now-famous ‘private positions’, said self-policing and getting the banks to write the regs is the way to go! I guess we just haven’t done *enough* of that … yeah, that’s the ticket…

    [Hudson gives nice several-paragraphs-long explanation about false prosperity due to ever-higher private indebtedness, and how the modern banking business model of ‘debt slavery from birth unto death’ has hit its rent-extraction capacity limit].
    [i]
    BROWN: Well, Michael, help us figure out why growth has been so weak over these past eight to six years or so.
    [/i]
    Uh, Tina, he just *told* you, you ninny. I know ya gotta fill your allocated airtime, but sheesh.

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