Yves here. Michael Hudson explains how the American fixation on protecting creditors is making our bad response to the coronacrisis even worse. And unlike the 2008 crisis, this time the damage to the real economy is overwhelming, meaning the logic of putting financial firms at the head of the line is even weaker than back then.
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is “and forgive them their debts”: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year
Before juxtaposing the U.S. and alternative responses to the coronavirus’s economic effects, I would like to step back in time to show how the pandemic has revealed a deep underlying problem. We are seeing the consequences of Western societies painting themselves into a debt corner by their creditor-oriented philosophy of law. Neoliberal anti-government (or more accurately, anti-democratic) ideology has centralized social planning and state power in “the market,” meaning specifically the financial market on Wall Street and in other financial centers.
At issue is who will lose when employment and business activity are disrupted. Will it be creditors and landlords at the top of the economic scale, or debtors and renters at the bottom? This age-old confrontation over how to deal with the unpaid rents, mortgages and other debt service is at the heart of today’s virus pandemic as large and small businesses, farms, restaurants and neighborhood stores have fallen into arrears, leaving businesses and households – along with their employees who have no wage income to pay these carrying charges that accrue each month.
This is an age-old problem. It was solved in the ancient Near East simply by annulling these debt and rent charges. But the West, shaped as it still is by the legacy of the Roman Empire, has left itself prone to the massive unemployment, business closedowns and resulting arrears for these basic costs of living and doing business.
Western civilization distinguishes itself from its Near Eastern predecessors in the way it has responded to “acts of God” that disrupt the means of support and leave debts in their wake. The United States has taken the lead in rejecting the path by which China, and even social democratic European nations have prevented the coronavirus from causing widespread insolvency and polarizing their economies. The U.S. coronavirus lockdown is turning rent and debt arrears into an opportunity to impoverish the indebted economy and transfer mortgaged property and its income to creditors.
There is no inherent material need for this fate to occur. But it seems so natural and even inevitable that, as Margaret Thatcher would say, There Is No Alternative.
But of course there is, and always has been. However, resilience in the face of economic disruption always has required a central authority to override “market forces” to restore economic balance from “above.”
Individualistic economies cannot do that. To the extent that they have a strong state, they are not democratic but oligarchic, controlled by the financial sector in its own interest, in tandem with its symbiotic real estate sector and monopolized infrastructure. That is why every successful society since the Bronze Age has been a mixed economy. The determining factor in whether or not an economic disruption leaves a crippled economy in its wake turns out to be whether its financial sector is a public utility or is privatized from the debt-strapped public domain as a means to enrich bankers and money-lenders at the expense of debtors and overall economic balance.
China is using an age-old policy common ever since Hammurabi and other Bronze Age rulers promoted economic resilience in the face of “acts of God.” Unless personal debts, rents and taxes that cannot be paid are annulled, the result will be widespread bankruptcy, impoverishment and homelessness. In contrast to America’s financialized economy, China has shown how natural it is for society simply to acknowledge that debts, rents, taxes and other carrying charges of living and doing business cannot resume until economic normalcy is able to resume.
Near Eastern Protection of Economic Resilience in the Face of Acts of God
Ancient societies had a different logic from those of modern capitalist economies. Their logic – and the Jewish Mosaic Law of Leviticus 25, as well as classical Greek and Roman advocates of democratic reform – was similar to modern socialism. The basic principle at work was to subordinate market relations to the needs of society at large, not to enrich a financial rentierclass of creditors and absentee landowners. More specifically, the basic principle was to cancel debts that could not normally be paid, and prevent creditors from foreclosing on the land of debtors.
All economies operate on credit. In modern economies bills for basic expenses are paid monthly or quarterly. Ancient economies operated on credit during the crop year, with payment falling due when the harvest was in – typically on the threshing floor. This cycle normally provided a flow of crops and corvée labor to the palace, and covered the cultivator’s spending during the crop year. Interest typically was owed only when payment was late.
But bad harvests, military conflict or simply the normal hardships of life frequently prevented this buildup of debt from being paid. Mesopotamian palaces had to decide who would bear the loss when drought, flooding, infestation, disease or military attack prevented the payment of debts, rents and taxes. Seeing that this was an unavoidable fact of life, rulers proclaimed amnesties for taxes and these various obligations incurred during the crop year. That saved smallholders from having to work off their debts in personal bondage to their creditors and ultimately to lose their land.
For these palatial economies, resilience meant stabilization of fiscal revenue. Letting private creditors (often officials in the palace’s own bureaucracy) demand payment out of future production threatened to deprive rulers of crop surpluses and other taxes, and corvée labor or even service in the military. But for thousands of years, Near Eastern rulers restored fiscal viability for their economies by writing down debts, not only in emergencies but more or less regularly to relieve the normal creeping backlog of debts.
These Clean Slates extended from Sumer and Babylonia in the 3rdmillennium BC to classical antiquity, including the neo-Assyrian, neo-Babylonian and Persian Empires. They restored normal economic relations by rolling back the consequences of debts personal and agrarian debts – bondage to creditors, and loss of land and its crop yield. From the palace’s point of view as tax collector and seller of many key goods and services, the alternative would have been for debtors to owe their crops, labor and even liberty to their creditors, not to the palace. So cancelling debts to restore normalcy was simply pragmatic, not utopian idealism as was once thought.
The pedigree for “act-of-God” rules specifying what obligations need not be paid when serious disruptions occur goes back to the laws of Hammurabi c. 1750 BC. Their aim was to restore economic normalcy after major disruptions. §48 of Hammurabi’s laws proclaim a debt and tax amnesty for cultivators if Adad the Storm God has flooded their fields, or if their crops fail as a result of pests or drought. Crops owed as rent or fiscal payments were freed from having to be paid. So were consumer debts run up during the crop year, including tabs at the local ale house and advances or loans from individual creditors. The ale woman likewise was freed from having to pay for the ale she had received from palace or temples for sale during the crop year.
Whoever leased an animal that died by an act of god was freed from liability to its owner (§266). A typical such amnesty occurred if the lamb, ox or ass was eaten by a lion, or if an epidemic broke out. Likewise, traveling merchants who were robbed while on commercial business were cleared of liability if they swore an oath that they were not responsible for the loss (§103).
It was realized that hardship was so inevitable that debts tended to accrue even under normal conditions. Every ruler of Hammurabi’s dynasty proclaimed a Clean Slate cancelling personal agrarian debts (but left normal commercial business loans intact) upon taking the throne, and when military or other disruptions occurred during their reign. Hammurabi did this on four occasions.
Bronze Age rulers could not afford to let such bondage and concentration of property and wealth to become chronic. Labor was the scarcest resource, so a precondition for survival was to prevent creditors from using debt leverage to obtain the labor of debtors and appropriate their land. Rulers therefore acted to prevent creditors from becoming a wealthy class seeking gains by impoverishing debtors and taking crop yields and land for themselves.
By rejecting such alleviations of debts resulting from economic disruption, the U.S. economy is subjecting itself to depression, homelessness and economic polarization. It is saving stockholders and bondholders instead of the economy at large. That is because today’s rentierinterests take the economic surplus in the form of debt service, holding labor and also corporate industry in bondage. Mortgage debt is the price of obtaining a home of one’s own. Student debt is the price of getting an education to get a job. Automobile debt is needed to buy a car to drive to the job, and credit-card debt must be run up to pay for living costs beyond what one is able to earn. This deep indebtedness makes workers afraid to go on strike or even to protect working conditions, because being fired is to lose the ability to pay debts and rents. So the rising debt overhead serves the business and financial sector by lowering wage levels while extracting more interest, financial fees, rent and insurance out of their take-home pay.
Debt Deflation and the Transition from Finance Capitalism to an Austerity Economy
By injecting $10 trillion into the financial markets (when Federal Reserve credit is added to U.S. Treasury allocation), the CARES act enabled the stock market to recover all of its 34 percent drop (as measured by the S&P 500 stocks) by June 9, even as the economy’s GDP was still plunging. The government’s new money creation was not spent to revive the real economy of production and consumption, but at least the financial One Percent was saved from loss. It was as if prosperity and living standards would somehow return to normal in a V-shaped recovery.
But what is “normal” these days? For 95 percent of the population, their share of GDP already had been falling ever since the Obama Depression began with the bank bailout in 2009, leaving an enormous bad-debt overhead in place. The economy’s long upswing since World War II was already grinding to an end as it struggled to carry its debt burden, rising housing costs, health care and related monthly “nut.”
This is not what was expected 75 years ago. World War II ended with families and businesses rife with savings and with little debt, as there had been little to buy during the wartime years. But ever since, each business cycle recovery has started with a higher ratio of debt to income, diverting more revenue from business, households and governments to pay banks and bondholders. This debt burden raises the economy’s cost of living and doing business, while leaving less wage income and profit to be spent on goods and services.
The virus pandemic has merely acted as a catalyst ending of the long postwar boom. Yet even as the U.S. and other Western economies begin to buckle under their debt overhead, little thought has been given to how to extricate them from the debts and defaults that have accelerated as a result of the broad economic disruption.
The “business as usual” approach is to let creditors foreclose and draw all the income and wealth over subsistence needs into their own hands. Economies have reached the point where debts can be paid only by shrinking production and consumption, leaving them as strapped as Greece has been since 2015. Rejecting debt writedowns to restore social balance was implanted at the outset of modern Western civilization. Ever since Roman times it has become normal for creditors to use social misfortune as an opportunity to gain property and income at the expense of families falling into debt. Blocking the emergence of democratic civic regimes empowered to protect debtors, creditor interests have promoted laws that force debtors to lose their land or other means of livelihood to foreclosing creditors or sell it under distress conditions and have to work off their debts.
In times of a general economic disruption, giving priority to creditor claims leads to widespread bankruptcy. Yet it violates most peoples’ ideas of fairness and distributive justice to evict debtors from their homes and take whatever property they have if they cannot pay their rent arrears and other charges that have accrued through no fault of their own. Bankruptcy proceedings will force many businesses and farms to forfeit what they have invested to much wealthier buyers. Many small businesses, especially in urban minority neighborhoods, will see yeas of saving and investment wiped out. The lockdown also forces U.S. cities and states to cope with plunging sales- and income-tax revenue by slashing social services and depleting their pension funds savings to pay bondholders. Balancing their budgets by privatizing hitherto public services will create monopoly rents and new corporate empires
These outcomes are not necessary. They also are inequitable, and instead of being a survival of the fittest and most efficient economic solutions, they are a victory for the most successfully predatory. Yet such results are the product of a long-pedigreed legal and financial philosophy promoted by banks and bondholders, landlords and insurance companies reject economy-wide debt relief. They depict writing down debts and rents owed to them as unthinkable. Banks claim that forgiving personal and business rents would lead absentee landlords to default on their mortgages, threatening bank solvency. Insurance companies claim that to make their policy holders whole would bankrupt them.So something has to give: either the population’s broad economic interests, or the vested interests insisting that labor, industry and the government must bear the cost of arrears that have built up during the economic shutdown.
As in oligarchic Rome, financial interests in today’s world have gained control of governments and captured the political and regulatory agencies, leaving democratic reformers powerless to suspend debt service, rent arrears, evictions and depression. The West is becoming a highly centrally planned economy, but its planning center is Wall Street, not Washington or state and local governments.
Rising Real Estate Arrears
Canada and many European governments are subsidizing businesses to pay up to 80 percent of employee wages even though many must stay home. But for the 40 million Americans who haven’t been employed during the closedown, the prospect is for homelessness and desperation. Already before the crisis about half of Americans reported that they were living paycheck to paycheck and could not raise $400 in an emergency. When the paychecks stopped, rents could not be paid, nor could other normal monthly living expenses.
America is seeing the end of the home ownership boom that endowed its middle class with property steadily rising in price. For buyers, the price was rising mortgage debt, as bank credit was the major factor in raising property prices. (A home is worth however much a bank will lend against it.) For non-whites, to be sure, neighborhoods were redlined against racial minorities. By the early 2000s, banks began to make loans to black and Hispanic buyers, but usually at extortionately high interest rates and stiffer debt terms. America’s white home buyers now face a fate similar to that which they have long imposed on minorities: Debt-inflated purchase prices for homes so high that they leave buyers strapped by mortgage and compulsory insurance payments, with declining public services in their neighborhoods.
When mortgages can’t be paid, foreclosures follow. That causes declines in the proportion of Americans that own their own homes. That home ownership rate already had dropped from about 58 percent in 2008 to about 51 percent at the start of 2020. Since the 2008 mortgage-fraud crisis and President Obama’s mass foreclosure program that hit minorities and low-income buyers especially hard, a more landlord-ridden economy has emerged as a result of foreclosed properties and companies bought by speculators and vast absentee-owner companies like Blackstone.
Many businesses that closed down did not pay the landlords. Realizing that if they are held responsible for paying full rents that accrued during the shutdown, it would take them over a year to make up the payment, leaving no net earnings for their efforts. That was especially the case for restaurants with compulsory limited “distance” seating and other stores obliged to restrict the density of their customers. Many restaurants and other neighborhood stores decided to go out of business. For hotels standing largely empty, some 19 percent of mortgage loans had fallen into arrears already by May, along with about 10 percent of retail stores.
The commercial real estate sector owes $2.4 trillion in mortgage debt. About 40 percent of tenants did not pay their rents for March, April and May, from restaurants and storefronts to large national retail markets. A moratorium on evictions put them off until August or September 2020. But in the interim, quarterly state and local property taxes were due in June, which also was when the annual federal income-tax payment was owed for the year 2019, having been postponed from April in the face of the shutdown.
The prospective break in the chain of payments of landlords to their banks may be bailed out by the Federal Reserve, but nobody can come up with a scenario whereby the debts owed by non-elites can be paid out of their own resources, any more than they were rescued from the junk-mortgage frauds that left over-mortgaged homes (mainly for low-income victims) in the wake of Obama’s decision to support the banks and mortgage brokers instead of their victims. In fact, it takes a radical scenario to see how state and local debt can be paid as public budgets are thrown into limbo by the virus pandemic.
The Fiscal Squeeze Forces Governments to Privatize Public Services and Assets
Since 1945, the normal Keynesian response to an economic slowdown has been for governments to run budget deficits to revive the economy and employment. But that can’t happen in the wake of the 2020 pandemic. For one thing, tax revenue is falling. Governments can create domestic money, of course, but the U.S. government quickly ran up a $2 trillion deficit by June 2020 simply to support Wall Street’s financial and corporate markets, leaving a fiscal squeeze when it came to public spending into the real economy. Many U.S. states and cities have laws obliging them to balance their budgets. So public spending into the real economy (instead of just into the financial and corporate markets) had to be cut back.
Sales taxes from restaurants and hotels, income taxes, and property taxes from landlords not receiving rents. U.S. states and localities are having a huge tax shortfall that is forcing them to cut back basic social services and infrastructure. New York City mayor de Blasio has warned that schools, the police and public transportation may have to be cut back unless the city is given $7 billion. The CARES act passed by the Democratic Party in control of the House of Representatives made no attempt to allocate a single dollar to make up the widening fiscal gap. As for the Trump administration, it was unwilling to give money to states voting Democratic in the presidential or governorship elections.
The irony is that just at the time when a pandemic calls for public health care, political pressure for that abruptly stopped. Logically, it might have been expected the virus to have become a major catalyst for single-payer public health care, not least to prevent a wave of personal bankruptcy resulting from high medical bills. But hopes were dashed when the leading torch bearer for socialized medicine, Senator Bernie Sanders, threw his support behind Joe Biden and other opponents for the presidential nomination instead of focusing the primary elections on what the future of the Democratic Party would be. It decided to focus the 2020 U.S. election merely on the personality of which candidate would impose neoliberal policy: Republican Donald Trump, or his opponent running simply on a platform of “I am not Trump.”
Both candidates – and indeed, both parties behind them –sought to downsize government and privatize as much of the public sector as possible, leaving administration to financial managers. Past government policy would have restored prosperity by public spending programs to to rebuild the roads and bridges, trains and subways that have fallen apart. But the fiscal squeeze caused by the economic shutdown has created pressure to Thatcherize America’s crumbling transportation and urban infrastructure – and also to sell off land and public enterprises, basic urban health, schools – and at the national level, the post office. Fiscal budgets are to be balanced by selling off this infrastructure, in lucrative Public-Private Partnerships (PPPs) with financial firms.
The neoliberal rent-extractive plan is for private capital to buy monopoly rights to repair the nation’s bridges by turning them into toll bridges, to repair the nation’s roads and highways by making the toll roads, to repair sewer systems by privatizing them. Schools, prisons, hospitals and other traditionally public functions. Even the police are to be privately owned security-guard agencies and managed for profit – on terms that will provide interest and capital gains for the financial sector. It is a New Enclosures movement seeking monopoly rent much as landlords extract land rent.
Having given $10 trillion dollars to support financial and mortgage markets, neoliberals in both the Republican and Democratic parties announced that the government had created so large a budget deficit as a result of bailing out the banking and landlord class that it lacked any more room for money creation for actual social spending programs. Republican Senate leader Mitch McConnell advised states to solve their budget squeeze by raiding their pension funds to pay their bondholders.
For many decades, public employees accepted low wage growth in exchange for pensions. Their patient choice was to defer demands for wage increases in order to secure good pensions for their retirement. But now that they have worked at stagnant wages for many years, the money ostensibly saved for their pensions is to be given to bondholders. Likewise at the federal level, pressure was renewed by both parties to cut back Social Security, Medicare and Medicaid, with Obama’s 2010 Simpson-Bowles Commission on Fiscal Responsibility and Reform to reduce the deficit at the expense of retirees and the poor.
In sum, money is being created to fuel the financial sector and its stock and bond markets, not to increase the economy’s solvency, employment and living standards. The coronavirus pandemic did not create this shift, but it catalyzed and accelerated the power grab, not least by pushing public-sector budgets into crisis.
It Doesn’t Have To Be This Way
Every successful economy has been a mixed public/private economy with checks on the financial sector’s power to indebt society in ways that impoverish it. Always at issue, however, is who will control the government. As American and European industry becomes more debt ridden, will they be oligarchic or democratic?
A socialist government such as China’s can keep its industry going simply by simply writing down debts when they can’t be paid without forcing a closedown and bankruptcy and loss of assets and employment. The world thus has two options: a basically productive public financial system in China, or a predatory financial system in the United States.
China can recover financially and fiscally from the virus disruption because most debts ultimately are owned to the government-based banking system. Money can be created to finance the material economy, labor and industry, construction and agriculture. When a company is unable to pay its bills and rent, the government doesn’t stand by and let it be closed down and sold at a distressed price to a vulture investor.
China has an option that Western economies do not: It is in a position to do what Hammurabi and other ancient Near Eastern palatial economies did for thousands of years: write down debts so as to keep the economy resilient and functioning. It can suspend scheduled debt service, taxes, rents and public fees from having to be paid by troubled areas of its economy, because China’s government is the ultimate creditor. It need not contend with politically powerful bankers who insist that the economy at large must lose, not themselves. The government can write down the debt to keep companies in business, and also their employees. That’s what socialist governments do.
The underlying problem is finance capitalism. Its roots lie at the heart of Western civilization itself, rejecting the “circular time” permitting economic renewal by Clean Slates in favor of “linear time” in which debts are permanent and irreversible, without public oversight to manage finance and credit in the economy’s overall long-term interest.
It often is easier to get rich in such times of disaster and need than in times of normal prosperity. While the U.S. economy polarizes between creditors and debtors, the stock market anticipates fortunes being made quickly from the insolvency of business with assets and property to be grabbed. Coupled with the Federal Reserve’s credit creation to support the financial and real estate markets, asset prices are soaring (as of June 2020) for companies that expect to get even richer from the widespread distress to come in autumn 2020 when evictions and foreclosures ae scheduled to begin again.
In that respect, the coronavirus’ effect has been to help defeat the financial sector’s enemy, governments strong enough to regulate it. The fiscal squeeze resulting from widespread unemployment, business closedowns, rent and tax arrears is being seized upon as a means of dismantling and privatizing government at the federal, state and local levels, at the expense of the citizenry at large.
I provide a detailed history of Clean Slate acts from the Bronze Age down through Biblical times and the Byzantine Empire in “… and forgive them their debts”(ISLET 2018).
I provide the details in Killing the Host: How Financial Parasites and Debt Destroy the Global Economy((SLET, 2015).
Lawsuits are exploding over the role of insurance companies supposed to protect business from such interruptions. See Julia Jacobs, “Arts Groups Fight Their Insurers Over Coverage on Virus Losses,” The New York Times, May 6, 2020, reports that “insurance companies have issued a torrent of denials, prompting lawsuits across the country and legislative efforts on the state and federal levels to force insurers to make payments. The insurance industry has argued that … fulfilling all of these requests would bankrupt the industry.”
Conor Dougherty and Peter Eavis, “In Commercial Real Estate, the Domino Effect Escalates,” The New York Times, June 9, 2020.
Excellent, as usual.
and i think that the “New Enclosures movement” needs a lot more attention….and not limited to finance, but to how us individuals have been taught to think about a great deal of our habits and activities and relationships.
while i’m reading this, track 2 of my brain is obsessing over the asset limit frenzy of ssi/medicaid(and other Poor People Programs), and how it encourages frivolous spending and discourages investment in more productive and/or dependency-lessening ways.I was advised by a cpa and my mother to go out and blow the windfall that found us…since pretty much everything on my list would be counted as an asset(a tractor, a cover for the giant greenhouse, etc), or require uncomfortable explanation(for instance, the way we buy groceries and cook, divided between 2 households, is not readily quantifiable in a way that those bureaucracies can contemplate(there’s not a box to check for that, and we don’t keep a ledger on who owes what in the feeding of everybody)))
my point is that the current Paradigm(!) of “take care of the rich at all costs” requires numerous very often subtle methods of social engineering…the Enclosures continue apace, especially in the Mind.
(everything is in italics, and i don’t know why. But i kinda like italics, so it’s cool and all)
Krystyn wrote of his inner fascist. I think the darker corners of my mind harbor a minotaur that looks a lot like Robespierre. And it is way too early to start drinking.
I remember reading, decades ago, about Nelson Rockefeller’s parents. They purchased furniture that they could leave to their heirs, but bought, if I remember correctly, Early American (the real stuff, not Furniture Barn type) antiques. Who was to know, in the estate valuation, that a ‘dining room’ set was original Sheraton, rather than a copy. It all sounds a bit naive, but the principle might work. The sort of rules and regs that you describe do almost force one to become, well, devious. Not that you would ever do anything off the straight and narrow path.
Occupy your mind!
Occupy Mind Street!
Occupy Brain Street!
or some other pithy phrase which takes the point and turns it into a guiding principle.
“Labor was the scarcest resource”. That was then.
Yes that jumped out for me too. That is why, in a nutshell, we have to completely rethink “productivity.” The neoliberal capitalist financialists think productivity means making a profit. It means no such thing. Productivity has traditionally been the way we pay for societies and civilizations. It is the result of human energy by which we create all the good things in society. And I also think that the only way we humans (as symbolic thinkers) could go from “circular time” to “linear time” was by inventing money. First as gold; then as promises based on gold. Money is a totally synthetic idea, just as gold itself is. It’s the original insurance policy. All it really is is a medium of exchange and it is certainly very useful. It will be even more useful when it is digital, if it is used properly. As credit. We need to go all the way back to credit. Because debt isn’t accomplishing what we have come to rely on – which is productivity to sustain societies. It is debt that is linear. Just like slavery. We should certainly make the financial sector a public utility. And at the same time we should make money itself a public utility – so nobody will ever want to monopolize it again. And using it will once again become productive. This will require legislation. So we need to get rid of all the neoliberals in Congress as soon as possible.
I can’t tell you how important it was for me to read this today. Yesterday, I was offered a chance to buy a struggling auto repair shop for the ever popular “pennies on the dollar”. I decided to spend a few hours a week for a while to see if my experience can get the owner over the hump. It will be hard. He may not make it. But I have the time. People helping people is the only path I see forward. One hand washes the other, dammit!!
Kudos to you for thinking outside the box and trying to help the auto repair shop.
Kudos to any American wise enough to spend only cash in small businesses, thus handing them an extra 2-6%, depending on how much credit cards withhold from them. It also allows the small business owner to voluntarily participate in the taxpayer funded corporate bailout scheme.
Kudos to you for thinking outside the box and trying to help the auto repair shop.
I applaud your instincts. I too have been doing this for years now. My family occasionally gets upset at me for not applying my efforts toward enriching the family even though I do bring home some fruits of labor from some of the farmers, ranchers I help get started.
Everyone has the need to get involved in something meaningful, unfortunately that can mostly only happen if it makes money.
He’s going to have a problem with EVs going forward. They are 1% of the installed base, but going forward this is expected to ramp up, within limits of manufacturing capability. They run cool and don’t require much service. A mechanic shop that is already having trouble will have a lot of structural issues to fix, if it expects to be one of the few still operating in a decade or two.
I’m Cdn an I applaud you helping the Auto Repair shop owner!!!! As Jimmy Stewart helped Clarence the Angel in training get his wings, I have a feeling you’ve earned yours!
Thanks for posting any and all writing by Michael Hudson, he is fantastic.
For what it’s worth, I feel that commercial evictions may not occur as rapidly as Dr Hudson predicts. Many landlords would rather have a slow-paying tenant than no tenant at all.
From my perch in the sector: agreed. That said, workout is often driven by debt. Commercial landlords with flexible balance-sheet (as in, they keep the loans they make) lenders like banks or insurance companies will have an easier time working through tenant-driven cash flow problems. A regional bank’s loan officer isn’t interested in managing property himself or marking a bad loan on the bank’s balance sheet. Those lenders have and will continue offer forbearance and other temporary loan modifications, in many instances proactively. If your bank is flexible, it’s easier to be flexible with your tenants.
Property owners financed with Wall Street style products like CMBS or what are commonly known as debt fund lenders will find themselves facing down either inflexible loan servicers or a vulture class of property investors waiting with lots of “dry powder” to acquire distressed assets. Everyone in the business remembers what happened only a decade ago, and many expect a redux. That said, I expect a LOT of kicking the can down the road by lenders that aren’t eager to take on massive workouts. That may allow property owners that aren’t completely leveraged to the gills to ride out the worst of the crisis, take some lumps on their equity positions, but still retain their assets.
Separately, Hudson hits on a trend in the business that I find more distressing. One of the fastest growing niches in the residential rental sector is what is called Single Family Rental (SFR), the most well known of which is Blackstone’s Invitation Homes. That business has matured and the massive SFR landlords are much more efficient at operating than they were 5-7 years ago, but it should be relatively intuitive even for those outside the business that it is less efficient to operate 800 or 80,000 single family rentals than a comparable number of rental units in say, a garden-style suburban apartment complex. Some developers are creating new purpose-built SFR communities, but the bulk of the inventory in that business is in existing homes acquired by SFR operators. If you go back a few years and watch any interview with Blackstone’s Jonathan Gray, he’ll tell you Blackstone’s primary strategy coming out of the recession was to buy below replacement cost (essentially, the cost to build a new equivalent). Would it surprise anyone that one of the “best” ways to acquire single family homes in bulk at prices well below replacement cost is through mass foreclosures? I expect that niche will keep growing rapidly…
I read somewhere the other day that Blackstone alone has over $154bn in dry powder capital to mop up distressed assets globally. You can be sure the opportunity to “cut their losses” will be tempting for mortgage lenders with non-performing loans on their books, so it’s perhaps debatable how much forbearance will be extended to overleveraged debtors. Writing from South Africa, I think when the dust settles and anything that resembles an asset is now an entry in the balance sheets of the top 1%, the myth that America is the land of opportunity for all will be laid to rest for good.
When that myth is laid to rest for all Americans themselves, then all Americans may be ready for a rethink about how to organize society and power relations.
” Before there can be a revolution, there must first be a revolution between the ears”.
” America needs a cheaper dream.”
MAOKA! ( means . . . Make America O K Again).
Can we make American Okayness Ordinarianism the new aspirational state?
MAOKA could work with a steady state economy: http://www.steadystate.org.
It would be paradise compared to our current circumstances.
Thanks for the link, Carla. Here’s hoping the steady state/ degrowth movement gains support.
I think there will be plenty of forbearance for commercial landlords, who are generally well-heeled if they’re individuals.
(Plebian) Homeowners on the other hand… I’m right there with you.
I just read this last night:
“Blackstone plunged into the single-family rental business in the wake of the real estate bust 12 years ago, and took that vehicle – Invitation Homes (NYSE:INVH) public in 2017. It fully exited its stake in Invitation last year.“.
(This is a quote I saved from an article I found through the Investing.com app. I couldn’t save the link. The title is “Blackstone bets on rentals with $300M Tricon investment”
Aug. 27, 2020 3:17 PM ETTricon Residential Inc. (TCNGF)By: Stephen Alpher, SA News Editor6 Comments)
Maybe. But I see a different dynamic happening. Those landlords , especially small landlords, who can’t get their rent will be encouraged and/or forced to sell their properties to large corporations who would rather see the property sit empty (tax write-off) than let it go for reduced rent.
Despite what I said, I do think you’re right in part. The property world is hardly monolithic, just about any situation you can imagine exists somewhere. Smaller commercial landlords may have less ability to kick the can down the road, but I think it really ends up being driven by the lender’s willingness to work with its borrower. In the case of commercial landlords who own property debt free (rare but they exist!), why sell during a time of distress rather than hang on with likely minimal operating costs?
Interesting comment. It implies that people are, in effect, taking a different course than their government. Those tolerant landlords are following the ‘ancient’ course of debt forgiveness rather than the modern (and typically English-derived) course of putting the debtors in a real or virtual poorhouse.
I have been told that it is easier to sell a property that has a tenant, even one paying below-market rent. A vacant property is evidently perceived to be less valuable than one that has tenants.
It’s not that it’s perceived to be less valuable… it is less valuable! Sure, there are developers who would rather buy an empty property than one with a tenant they need to remove before a renovation or building something new, but most property purchases are financed, and lenders generally base the size of their loans on projected cash flow. If there isn’t a plan in place to redevelop the property, that below market tenant is still presumably paying something, and is probably sharing in a portion of the building’s operating expenses (e.g. taxes, insurance, cleaning, utilities), which adds to value.
Perhaps when Labor is no longer the scarcest resource the predators seek to kill off the weak. Other people’s lives are cheap. The ruling elites can scour the world for labor as needed. And when not needed, they can let them fend for themselves.
From Article: (all the fonts are italics for some reason)
Labor was the scarcest resource, so a precondition for survival was to prevent creditors from using debt leverage to obtain the labor of debtors and appropriate their land. Rulers therefore acted to prevent creditors from becoming a wealthy class seeking gains by impoverishing debtors and taking crop yields and land for themselves.
Your also seeing the end result of dying growth. Creditors and debtors are overwhelmed. Leaving cosmopolitan and decadent consumption behind will be very very hard.
Presumably conservatives would say–and some did say at the time of the 2008 bank bailout–that the problem is a capitalism that isn’t pure enough and that the reckless big banks should have been allowed to go under and the same for landlords who now own lots of empty malls and foreclosed on houses.
So could it be that part of our dilemma is a US system that now sees the business cycle as obsolete–at least for finance and real estate–and a political system that gives the megawealthy the clout to ensure this outcome? By this view it’s a problem of power and inevitably the starving and unhoused will rise up–hopefully attacking more appropriate targets than their own neighborhoods.
No, the starving and unhoused won’t rise up. They will just die.
Dr. Hudson points out something I’ve observed for years but I get dismissed and ridiculed when I bring it up: that China has a sovereign currency but the U.S. does not.
“China has an option that Western economies do not”
I also tend to see in the MMT debate that “here is a novel new approach that we could try”. But with CARES we have already fully implemented MMT for the institutional, corporate and banking sectors, just need it for the inconvenient plebes.
OpenThePodBayDoorsHAL–I have often said the same thing. Neoliberals treat MMT as an idea that is aspirational, as something that woke Marxists would love to see implemented in some future hellscape. But in fact, as you state, MMT is merely accurately descriptive of a system that has already been implemented since at least 1971. Since that is the case, all this talk about creditors and debtors is poppycock because it is the “debtors” who have created their own currency via promissory notes which are then reified by banks and their divine right of “money creation” into legal tender precisely to make it seem as though banks actually loaned anything. It is now and always has a ruse of the highest order. RIP David Graeber.
Hi Jules or whoever is on today, errant italics formatting and a missing space at “Rising Real Estate Arrears(problem is right here) Prompta Mortgage Bailout”,
This has happened before. Somebody somewhere in the chain from Prof. Hudson to nakedcapitaism.com seems to have a macro that kills “⋖/i⋗” and a following space whenever it kicks in.
For many decades, public employees accepted low wage growth in exchange for pensions. Their patient choice was to defer demands for wage increases in order to secure good pensions for their retirement. But now that they have worked at stagnant wages for many years, the money ostensibly saved for their pensions is to be given to bondholders.
Excellent view of socially conscious history. In my opinion, where 50% or more of our population works (directly or indirectly) for the Federal, State, or Local bureaucracy – along with businesses that feed the beast – we have to realize that our society has become the beneficiary or incredibly reckless financial standards. The bulk of Americans participate in the irresponsible behaviors of reckless consumption and endless greed for things. This culture is excessively narcissistic and materialistic – and the commoners are as bad as the lenders, as bad as the spinless leaders. What Americans want is a drug and alcohol induced lifestyle combined with lots of free and cheap things. Forget real education and learning – because American colleges are a cesspool of mindless kids doing mindless things, with a little dose of schooling. So sadly – we are learning that real life involves sacrifice and simplicity and structure. It’s not so simple as the author suggests – to simply fund the people who are losing their shirts.
Michael Hudson is a “God That Walks the Planet”.
Thank you Michael for taking the time to create this recent post. Your common sense approach to everything is
duly noted and greatly appreciated.
All very well, but if debt is written off what happens to the saver? This is the one question Hudson continuously fails to answer
He has answered it. When the debt is wiped out so are the savings. In fact Dr Hudson says wiping out the savings is just as important as wiping out the debt.
Don’t forget Prof. Hudson’s watchword: “Debts that can’t be repaid won’t be repaid.” At the bitter end, savers have the choice of:
1) having debts cancelled and never getting their savings back, or
2) never getting their savings back.
Government-provided deposit insurance that keeps savers from being totally destroyed due to failed loans is probably a Good Thing.
There are dimensions to the ongoing need for forgiveness of private and state and local government debt overhangs that were not discussed in Michael Hudson’s excellent post. These pertain to the creation and destruction of money, who is authorized to do both, how they do it, why, and who suffers financial, economic and political losses versus who enjoys gains. Financial predation, corruption, abdication of the rule of law, austerity policies, and concentration of wealth and political power have exploded since passage of the Gramm-Leach-Bliley Act during the Clinton administration, the Supreme Court’s Citizens United decision, and the advent of military conflicts in the Middle East and Afghanistan. Why is this so? Further, why can’t pandemic force majeure losses of both debtors and creditors be addressed through direct issuance of money by the Federal government? Who and What is preventing adoption of this solution?
The nation’s extremely poor public health record against the virus compared to that of other nations, the disproportionate acts of violence by a narrow segment of municipal police against racial minorities, and the casual disregard of civil rights together with economic inequality and lack of opportunities that have led to protests and social unrest in US cities and have been used as an excuse to deploy federal paramilitary forces. Absent reclaiming representative democracy and the rule of law in the coming elections, it appears we are traveling on an engineered freeway to a deeply troubling destination.
“Absent reclaiming representative democracy and the rule of law in the coming elections, it appears we are traveling on an engineered freeway to a deeply troubling destination.”
Chauncey Gardiner: how would the “coming elections” allow us to reclaim representative democracy and the rule of law? Please elucidate.
By actually voting rather than ceding the election of the nation’s president to a relatively small minority of our fellow citizens. A journey begins with a single step.
I am mindful of arguments regarding lending legitimacy to a fundamentally flawed candidate selection process, questions about the accuracy of electronic voting systems, issues concerning the electoral college, and reasons Lambert recently cited for why many people do not vote. But I circle back to this minimal level of citizen responsibility in the selection of those who hold public offices. Why else do you think so much effort is being expended on suppressing the vote?
I can’t agree. Somebody who seemed to know wrote that the answers don’t have to matter much to somebody who gets to choose the questions. Every two and four years the U.S. electorate gets set up with some irrelevant questions to answer, so that afterwards they can’t claim that nobody asked.
It has to start with local organizing. The populace has to make voices for themselves that will be heard, and with those voices they can ask the questions that have to be answered. They can wield their responsibility then. Not before.
Yanis Varoufakis recently said he advocates making banks utilities; eliminating the shares/stock market; and eliminating the “labor” market. And in the process finding a way to protect individual liberties. Sounds like a good solution given the hard reality that the whole world is going down. Nobody who lives by demand and profit can survive climate change, pandemics, overpopulation and blatant exploitation of resources.
Thanks for reposting Michael’s article from yesterday–it’s a great read and needs to be shared widely. Debt is hardly discussed when the problems of our US economy are spoken of, despite the fact that it’s really a cornerstone of the process for ripping off working people so the uber rich can get richer.
Seems to me that the most important elected official going forward in America is not going to be the president and governor, but rather the county sheriff. That is who enforces court ordered, finance rigged, evictions and seizures.
A pro-publica sheriff who refuses to evict people based on financial acts of god will be akin to a local god and will become very popular.
If and when finance attempts to privatize the functions of the sheriff, there is an impediment they will have to overcome; The Second Amendment.
Interesting times ahead.
To see what a collapsed society based upon guns looks like, there’s a myriad of African countries that did just that in Robert Young Pelton’s The World’s Most Dangerous Places.
We’ve already got underage gunmen murderers, so we’re making great strides in that direction.
Know what you mean. Ten and Eleven year olds in Chicago.
I just sent a message to Prime Minister Trudeau and Finance Minister Freeland thanking them for their compassion in supporting the people who needed it the most during this pandemic.
The missing part of the equation, which Michael has addressed numerous times, is the creditor. When the creditor makes loans that can not be repaid, they won’t be. The creditor should take the loss, they made a bad loan. This is the banks justification of the debtor paying interest. The problem is the creditors aren’t taking losses, they are being made whole, and the debtors are being destroyed. You need to wipe out the savings of the creditors so they come back to proper lending norms i.e. 25% of income for housing payments not 43%, not over burdening students with debt (had a doctor as a customer the other day, he says he is 43 and still making student loan payments that are the size of a monthly mortgage), limiting the “vicarage”; interest rates not higher than 21% for anything ever, restricting late fee charges, etc. etc.
It’s not hard to do, it was once done. But in the Ayn Rand/University of Chicago world view where everyone is on their own look out, it’s not up to government to make good laws. It’s up to citizens not to be entrapped.
Good luck with that. It’s not working now and it hasn’t since at least 1996. But that, in a nutshell, is part of the debtors plan.
I just want you to know that I prepaid my Citi credit card bill, then didn’t make a payment during August, and got a $39 late fee because I paid /before/ the billing cycle. Obviously this amounta to an Early Payment Penalty, so I contacted Customer Service. Got transferred up the totem pole to Ultimate Karen, who in a perfect “friendly righteous Midwestern auntie” timbre told me to read my contract. It is all too bananas now.
it’s happened many times before, but i find myself right now wanting to pat my own head for never having had a credit card….and i’m fixin to be 51.(this is definitely NOT schadenfreude)
makes it hard to do things, sometimes…increasingly, in fact…but dern…i shore am glad i resisted.
Does Delaware look like Mordor, or is it nice, like Isengard?
My folks…and pretty much every person of influence after them in my life encouraged “building your credit”…by going into Debt.
My grandparents, on the other hand, were all about patience and saving up and making do.
The former is the “way it’s done”…the latter seems like the better option, even with all the hardship that comes with it.
Amfortas, I definitely salute, respect, admire, and enjoy you and your posts immensely.
Of course, it wasn’t always like this –
From an article by James K. Galbraith ‘The Ownership Myth’ –
‘In the case of business, should the law give stockholders the natural right to rule? The notion is akin to the divine right of kings. In 1937 the economist J. M. Clark, in Social Control of Business, was emphatic: “With most thinkers today, however, the phrase ‘natural rights’ stands discredited.” Further, whatever Delaware’s legislators may contend, “many legal rights are themselves but the perpetuation and sanctification of moral and social wrongs,” including:
the loot gained in the past by such wrongs as unfair competition and monopoly, corrupt acquisition of public resources, the looting of corporate funds by their guardians and trustees, laborers contracting under the duress of economic compulsion, human lives sacrificed to material commodities and to the increase of employers’ profits, children deprived of a fair start in life, and the crowning wrong of the inheritance of the swollen fortunes gained by all other wrongs . . . in a country where hereditary overlordship was supposed to be a thing of the past.”
Enough said. Or as Clark concludes, “We have been looking for the social stake in private business, and we have found it.”’
The shapeshifting globalist neoliberal attack has been festering the collective psychology in the U.S. for decades now. All this press on looting when all the macro-looting has been perpetrated by the creditor class –
…crickets about this tho…
Marginalism is the economic version of identity politics.
Their are alternatives but what are the chances they see the light of day?
Here in the USA, we could forgive at least 85% of student loan debt rather easily, since this debt is owed to the federal government.
We can also forgive all law enforcement debt, for essentially the same reason.
We can forgive the medical debt that has been purchased by vulture funds (about $90 billion worth), since much of that debt is beyond the state statutes of limitation already.
In my own writing entitled “Debt Forgiveness is Urgent”, I do propose that we forgive the last 6 months of rent for the unemployed. However, we must set up a fund for non-corporate landlords, perhaps $100 billion. They are as blameless as the tenants.
The Democrats actually included this in their Heroes Act proposal, but no one is talking about it now sad to say.
The student loan debt doesn’t need to be forgiven. It can simply be made available to be written off in bankruptcy. That gives the borrowers an opportunity to eliminate the debt but eliminates the moral hazard of people who can afford the student debt (it was supposed to be investing in yourself after all) defaulting. They can continue paying to get the benefits of not being in bankruptcy, suc has buying a house, car etc. on credit.
In the US, the 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression.
No one realised the problems that were building up in the economy as they used an economics that doesn’t look at debt, neoclassical economics.
The 1920s roared with the money creation of bank loans.
Claims on future prosperity were building up in the financial system, but no one was looking.
The 1920s roared, the 1930s were impoverished.
Bank credit effectively moves money forwards in time.
You spend it now and pay it back later.
It is like borrowing your own money from the future.
The interest is the charge you pay for this service.
Japan moved lots of money forwards into the 1980s.
The Japanese real estate boom of the 1980s was so excessive the people even commented on the “excess money”, and everyone enjoyed spending that excess money in the economy.
It feels like there is lots of money about because there is.
They spent the next thirty years making the repayments.
They had impoverished the next thirty years by leaving the debt in place.
Banks – What is the idea?
The idea is that banks lend into business and industry to increase the productive capacity of the economy.
Business and industry don’t have to wait until they have the money to expand. They can borrow the money and use it to expand today, and then pay that money back in the future.
The economy can then grow more rapidly than it would without banks.
Debt grows with GDP and there are no problems.
Banks – What is the idea?
The idea is that banks lend into business and industry to increase the productive capacity of the economy.
Business and industry don’t have to wait until they have the money to expand. They can borrow the money and use it to expand today, and then pay that money back in the future. SoS
Gold standard thinking rendered obsolete by inexpensive fiat, i.e. we could have an ethical loanable funds model using unlimited supplies of inexpensive, ethically distributed fiat .
The economy can then grow more rapidly than it would without banks. ibid
You ignore the boom-bust cycle that is inherent when money is lent into existence.
Debt grows with GDP and there are no problems. ibid
There are major distributional problem inherent in creating purchasing power for the so-called “credit worthy” – thereby subtly stealing from the less and non “credit worthy.”
Each of these episodes of chaotic ‘creative destruction’ and ‘disruption’ only served to narrow the field of competitive players.
Great post. Thanks.
Every successful economy has been a mixed public/private economy with checks on the financial sector’s power to indebt society in ways that impoverish it. Always at issue, however, is who will control the government. As American and European industry becomes more debt ridden, will they be oligarchic or democratic?
Except, except, we’re new and modern and the past has no relevance to our new, modern economy? Right? Right….? (/s) Well, yes the past societies do have relevance. Never mind what the Libertarian or Mont Mont Pèlerin Society says, or how well they stroke the billionaire Libertarian fantasies. Those guys seem to think history has come to an end and that human society, with enough philosophical stroking, can escape the human condition. (Nope.)
Will the US and the EU continue to be democratic or shuffle off into oligarchic (or worse ) rule? That’s the question. Paul Kennedy wrote an interesting book in 1987 titled “The Rise and Fall of Great Empires.”
“the beginning of wisdom in human as well as international affairs was knowing when to stop.”
― Paul Kennedy, The Rise and Fall of the Great Powers
The US in terms of rising poverty and substance abuse and falling life expectancies sounds much like end of the Dutch empire (yes, Netherlands had an empire at one time, and when it faltered the living standards of everyday people and rising substance abuse was similar).
Thanks for Prof. Hudson’s posts. People who do not remember history, or read history etc.
The Obama Depression—wtf.
How about the “Neoliberal Depression?” It took nearly thirty years, i.e,. since the advent of Reagan) to get to the bubble bursting. Deregulation, a delusional Greenspan, calamities visited on other parts of the world and willful ignorance got us to the collapse that began under Bush 43. TARP was on his watch, and the “stimulus” under Obama was widely seen as inadequate at the time.
This isn’t a mere quibble: because the Obama administration didn’t make everything better by 2010, the American electorate punished us all with the Tea Party and the subsequent gerrymandering. There’s a lot more than this, but please don’t lay the blame at BHO’s feet.
This is an excellent post at which to go a bit off topic and thank Yves and all for really good selections of articles this past week, (if not beyond). It now takes me a full day to read through articles and comments, both of which are chockfull of ideas and polite give and take that as a US citizen give me great hopes for a wiser future I probably will never see, being elderly. At least I can enjoy the foretaste, and I am very grateful for that.
And of course my accolade includes Michael Hudson, one of my favorite explainers of critical economic judgments and opportunities. His patience with us know-nothings is only to be more highly praised than I have the ability to do. Thank you, Professor Hudson.
Michael Hudson is just so very good. Thanks so much for posting this. <3
> §48 of Hammurabi’s laws proclaim a debt and tax amnesty for cultivators if Adad the Storm God has flooded their fields
Finally, a use for religion….
> In that respect, the coronavirus’ effect has been to help defeat the financial sector’s enemy, governments strong enough to regulate it. The fiscal squeeze resulting from widespread unemployment, business closedowns, rent and tax arrears is being seized upon as a means of dismantling and privatizing government at the federal, state and local levels, at the expense of the citizenry at large.
I keep noting that in the riots, banks (and other financial insitutions, like PayDay lenders*) are not touched, although chains (insured) and many small businesses are (helping the chains and Amazon).
It seems then that the riots are accelerating the process Hudson describes.
NOTE * Not sure about pawn shops,
I used to frequent pawn shops in search of numismatic items and it was hit or miss, usually the latter. I keep in touch with a few of them, and their backrooms are full of 55 inch HD tv’s they loaned $50 on, and other consumer items of dubious value that have little demand as people are getting rid of stuff, not wanting to buy tchotchkes.
One told me he really only wants to loan on gold (jewelry primarily) as it’s dead easy to sell it into the marketplace, and when you loan 50% of the melt down value it’s a no brainer.
The key to the business is the ‘redemption rate’ which has nothing to do with dogma, it’s how much stuff goes back to the lender when they get flush and pay the pawn shop what was loaned plus interest and other fees, and before Covid-19 one gent told me he was at around 80%, and has now dropped to 65%.
Pawn Stars is 100% completely fake, one of their ‘experts’ lives in Orange County and shows up when they call him on air to come down and ascertain the value on something interesting in Colonial Americana and the like, and he’d know as it’s his merchandise, ha!
always wondered how to spell tchotchkes
It’s tantamount to a religion, keeping the faith in high finance, so that the high priests of money can lord over us in a way they’ve become accustomed to. You’ll get your cherished jubilee alright, but in accordance with a complete reset of society as we knew it with ramifications like you wouldn’t believe, none of this biblical longing for something that happened a few thousand years ago and was done willingly, nope it’ll only come when it’s forced upon us.
The bigger question is what happens after the reset and there is no faith in markets or money as we knew it, and both treated like pariahs as well they should be?
While I agree with your general thesis about a debt jubilee for citizens, I think there should be a double standard for corporations. They are un-things and should be allowed to go bankrupt and be recycled for parts by other corporations. Specifically the assertion that China is good because its banks can keep zombie corporations alive for ever by simply writing down debt is a recipe for long term stagnation and failure. Corporations should be kept hungry.
The current problem with corporations is precisely the moral hazard of the bail out. They have decided they can socialize the risks and pay every last dime earned (or not) out the investors. Investors who tolerate the recklessness should lose their shirts.
1. The Fed realize the inequality that it is stoking?
2. Do they care?
3. If not, how come?
All these “forgive all debts” cheerleaders seem to forget that on the other side of the debts there is a saver who has voluntarily embraced some austerity in order to save for his pension. Apparently it is fair to wipe him out because he didn’t participate in the debt orgy and housing speculation madness of the past decades?
No, there isn’t. Banks create new money every time they make a loan.
Exactly. It means holders of currency (savers) pay the price for the debt orgy and mad speculation in houses and stocks that they had nothing to do with. How is that fair?
I’m getting sick of all these elitist “forgive all debts” and inflation cheerleaders talking their own books, while pretending to be progressive when they f*ck over the prudent and vulnerable.
It might come as a shock to you but conflating defunct commodity money optics with antiquarian moralization’s is a side show, same yada yada that was deployed long ago that ushered in neoliberalism.
“voluntarily embraced” – ugh.