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September 10, 2022
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September 24, 2022
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The Federal Reserve and Debt

Ralph does a deep dive into the real purpose of the Federal Reserve and other aspects of the American economy with progressive economist, Michael Hudson. Plus, our resident constitutional scholar, Bruce Fein, joins us to talk about the elected official from New Mexico, who got removed from office because of his role in the Jan. 6th insurrection and what that possibly could mean for Donald’s Trump eligibility for office. And he also discusses a letter from retired Secretaries of Defense and Joint Chiefs about military leaders rejecting illegal presidential orders.

Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends, a Wall Street Financial Analyst, and Distinguished Research Professor of Economics at the University of Missouri, Kansas City. He is the author of Super-Imperialism: The Economic Strategy of American Empire…and forgive them their debts – Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year, and Finance Capitalism and its Discontents.

The Federal Reserve was created to stop social purpose spending by the government, by essentially cutting the Treasury out of the monetary management process. And that’s true, not only of the Federal Reserve in America, but of central banks all over the world.

Michael Hudson

 

The economy has never really recovered from Obama’s bailout of the banks in 2008. And government and the Federal Reserve have been keeping the financial markets afloat by quantitative easing, but they really haven’t helped the population at large.

Michael Hudson

If money should be a public utility, just like the dollar bills in your pocket, the credit cards and the electronic payments should be a public utility. But instead, it’s privatized. It’s turned into a monopoly, and it’s a source of monopoly rents for the banks that really is unnecessary.

Michael Hudson

The important thing about gambling is the casino always wins, and the second important thing is that there’s always a loser for every winner. And if you’re gambling on the stock market or on derivatives, the insiders— especially the crooks— always end up the winners. And the honest people… end up the losers.

Michael Hudson

 

The drive is to get people not to use cash, check, or money order, and to do everything by credit card, debit card, and other multiplying payment systems. It impresses me as being a major controlling process. Once they suck you into the credit card gulag, they can penalize you, overcharge you, ruin your credit score… In effect, they strip you of control over your own money.

Ralph Nader

Bruce Fein is a Constitutional scholar and an expert on international law.  Mr. Fein was Associate Deputy Attorney General under Ronald Reagan and he is the author of Constitutional Peril: The Life and Death Struggle for Our Constitution and Democracy, and American Empire: Before the Fall.

 

[The decision to disqualify Otero County Commissioner Couy Griffin from holding office] demonstrates that when [Trump], if he does try to run for the presidency in 2024, that he will confront a hurdle of having provided material assistance to the insurrection of January 6th— irrespective of whether he’s committed a crime or not.

Bruce Fein

Ralph Nader Radio Hour Ep 445 Transcript (Right click to download)

41 Comments

  1. Seems like many of the topics in the “financialized” economy can be addressed through a more effective use of consumer cooperatives.

    Unfortunately, the co-op community takes a reductive approach and over emphasizes worker cooperative structures without seeking a natural partnership with the consumer. As a consumer, do I care if I get screwed by the conflicts represented by investor ownership or the same conflicts (from the consumer perspective) that exist with employee ownership?

    The US economy is over 75% a service based economy where frequently capital is not necessary to the consumer transaction (or B2B, for that matter). So, why pay a price for the service that includes a cost to amortize capital? Doing so apparently does nothing for the consumer except convert a desirable transaction into something that is inefficient and destroys (or at least transfers) wealth.

    Can someone change my view?

    PS.

    Re: Wrap-up

    While the Fed may not be necessary, we have the Fed. As with Ralph’s comments about jargon, is there a path towards improvement that does not require going to political war with the moneyed interests? With a voice such as Ralph’s being regularly ignored (reference frequent anecdotes where Ralph’s letters simply go unanswered and his calls simply go unreturned) it would appear that regular people need to pursue their financial incentives and then that might lead to political influence.

    • NooN says:

      Interesting what part each state must Play, since they can Review each corporation’s C0NTRACT to exist.
      Is the FederaL Reserve a Corporation calling themselves FEDERAL or NATIONAL while only being g a Corporatiom Woekkng in each State ?
      (Funny is they turn out to be Printers (of Dollars) Printers 4 IRS) each time the paper is uses Tax is charged🤣

    • Wendyyona NooN says:

      I would LOVE to HEAR Mr Michael HudsoN with Ms ELLEN BROWN of PUBLIC BANKING Rx

      This was a FASCINATING PROGRAM on the PRIVATE FEDERAL RESERVE CORPORATION.
      Is the PRIVATE CORPORATION ReVIEWED BY EACH STATE, EACH YEAR ??

      Is the only “BALANCE” to the PRIVATE FEDERAL RESERVE CORPORATION .vs.
      the STATE PUBLIC BANK$. Please INVITE the BRILLIANT ProPUBLIC BANKING EXPERT
      DR MS. ELLEN BROWN to TEACH US some more. Thank You So Much 4 ALL YoU Due.

  2. David Faubion says:

    Spot on Michael Hudson in your closing remarks proclaiming that you no longer talk with economists since they are now out of touch with economic history and thought. Since the issues of financialization, debt and credit are subordinated in the discourse now economic education is becoming increasingly a ruse. What caused us to turn our backs on what historically has worked for the easy money of gambling and disaster capitalism? Running low on innovation and work ethic.

  3. Thank you Ralph for calling out “neoliberalism” and other jargon. I’m guilty of using the term.

    Outreach dies a quick death if you come across as an out-of-touch egghead.

  4. David Hutchinson says:

    IMO Ralph is right about the word “neoliberalism.” My theory is (based on how I perceive what I hear) is that podcasters cannot fully empathize with listeners. Just the mere chance they’ve got (in that weird field) gives them what they think is a “Midas touch.” If they say a thing, it’s gold. No, they need to IMAGINE always to whom they are talking. But I give Hudson an “A” for effort…no slouch.

    The thing he said (this time) that I don’t get [and if I could get him in a 1 on 1 I DO TRUST that he’d come up with something] and right now don’t agree with is that: one, new money is not created with a bad loan, and two for the Fed to TAKE those loans and then LOAN’EM OUT AGAIN is not DOUBLING the initial amount of new money created. I think Hudson took extra care in this interview not to put things in a confusing way, but it seems this particular description of what I’ll call “double money creation” may have been where he erred yet again, despite the extra care taken. In his mind it’s not an error, and he may very well be able to make the description “work” if he took time to elaborate.

    Wrote the following for another blog…

    Faith in money is global. Whether it’s a fiat arrangment or not, it’s a fact. I used to opine on the net that there should only be as many dollars as there are real assets in the economy worth a dollar, or as many lumps of K dollars as there are assets worth a K dollars, etc. On top of those dollars you could print up ones representing the value of a rationallly realizable asset in the future, like the money for a home (loan). Well, for better or worse, after thinking about it, I now realize all of this is the case already…to an extent I will talk about below. And I will call the truism I’m talking about here: As Many Dollars As Assets…AMDAA

    We have built a structure where no one’s gonna get away from money. No one’s gonna get away from the structure. This goes for nations as well (a good time to mention Jacques Ellul wrote that the capital in this era is not money, but technology itself. If a nation deviates from AMDAA and has too many dollars or pounds (mismatch), in time the ice cubes it put on the scale (instead of real fiat money) will just melt. Whether the workers in Mexico are stiffed or not (making the wiring harnesses), if GMC in the US doesn’t route some Hummers abroad, no money from elsewhere will come in to pay GMC employees here. Better example: BMW has production plants in Brazil and Mexico.

    IOW, under the system we have now not enough money is coming in (abstract dollars or rubles DO have value, but an abstract dollar, or ruble, or yuan is like a photon with more than one quantum state…as many as the number of currencies you can exchange’em for…at x, y, z points in time.

    But, coming back to us, the mismatch vis a vis AMDAA is why there’s no money for anything. You could tax stock purchases, but since that whole “industry” is built on air, it might crash and no longer sell “financial vehicles” to buyers elsewhere…anywhere. No, Ellul was right and we make no tech (or way not enough) on the scale of Hyuandai or Samsung to keep bringing in from elsewhere “mo money” [you could compare what US investors rake off of Apple with all the salaries paid in China, I don’t know how they would compare]. Selling F-35s can’t compare, we loan countries money to buy the things.

    Anyway, that is why our public education is lousy, not enough money. Since Reagan the philosophy was to sell F-35s. Thus people can’t process issues, right when there are a slew of’em to process.

    • David Hutchinson says:

      Well, I myself failed to be clear enough for my readers in my long comment here (whether it’s above or below, not sure how that’ll end up). Left off closing parentheses bracket at least twice. My apologies. Unlucky time to be in a hurry.

      BTW, it might be good to come up with a hypothetical example of when/how money first arose. Here’s one. Suppose the cave people hoax (Mindanao, 1971) had been true; but the people were not on Mindanao (and not on Tanna), but had been found by John Frum on Vanua Levu [more plausible?]. There were 20 families. Frum DID return…with 20 hammers, 20K nails, 20 eight point hand saws (& 20 files to sharpen’em), 20 boxes of fish hooks, and twenty 40X refractor telescopes. Did the people keep their prior seashell currency?

      AMDAA might better go as: AMDAPAMARFA, shortened to APF (as many dollars as assets plus as many as realizable future assets)

      If I had a hammer.

  5. Don Klepack says:

    Not going to argue with Bruce Fein on whether you can stop someone from running for President if they were involved in an insurrection of the United States of America. What I dissagree with is that Trump planned or even encouraged an insurrection. Two days before the Capitol breach on Jan. 6, 2021, then-President Donald Trump personally authorized the use of up to 20,000 National Guardsmen to support local law enforcement if requested. But no request, as required by law, came from the Capitol police or from Mayor Muriel Bowser, says Kash Patel, who was serving as chief of staff at the Department of Defense at the time. I believe Trump should of acted sooner on Jan 6 but he did act.

  6. Tulse says:

    Hudson is conflating quantitative easing with bank bailouts which is invalid. He was very confused 🤔 in his explanation here. Wrong actually.

    His point that all central banks are designed to stop Treasury spending on social need is bunkum. Spending decisions are made by government. He is deceived by the smokescreen of arms length central banks.

    His terminology is flakey, for example his notion of debt deflation is an incorrect way to describe people getting poorer by inflation and greater debt.

    • Klassik says:

      I am a long time listener, but a first time commenter in the comments section here. I know that Mr. Nader has said before that having economists on the radio program makes for poor radio, but I for one look forward to hearing guests such as Prof. Hudson. The University of Missouri-Kansas City economics department and Levy Economics Institute at Bard College have produced some outstanding scholarship in recent decades.

      So, with that said, I do agree with Tulse that I am left a bit confused by some of Hudson’s statements. I don’t know if Hudson was trying to simplify certain discussion points for a general interest radio program, but if so, that might have led to some confusing, problematic points. Ultimately, government spending, and social spending specifically, are decisions made by government. If Congress wishes to fund, say, comprehensive debt forgiveness for college students, government grants for college students, or comprehensive healthcare reform such as the UK’s NHS system, it will be funded regardless even if neoliberals are in charge of the Fed as has been the case for a while now. Perhaps there will be voices at the Fed talking about the proverbial ‘national credit card’ and other monetarist nonsense that can be debunked empirically, but even then such strong-willed monetarism is mostly something heard out of the UK/Europe these days outside of Democratic Party favorites such as Larry Summers making their usually incorrect and dangerous comments which are then parroted by the likes of Sen. Manchin.

      So, with that in mind, perhaps it would be helpful to have some other economists on the show who can describe how government spending really works. I think this is a point which is unknown by many in the general public. UMKC professor emeritus Randy Wray, whose work was briefly mentioned by Hudson, would be a great guest. Stephanie Kelton, Fadhel Kaboub of Denison University, or Bill Mitchell from Australia would be excellent guests and all could also discuss the concept of a job guarantee. I’m sure this topic would be of great interest to RNRH listeners.

      Lastly, on the use of the term ‘neoliberalism’, I know Ralph has long opposed the use of that term. I suppose everyone has an opinion about certain terms. I know that Ralph likes using the term ‘corporate socialism’, but there are those who do not like that term. Anyway, I suppose ‘neoliberalism’ might confuse some people here in the US given the popular, and often incorrect, usage of the term ‘liberalism’, but neoliberalism was used by monetarists such as Milton Friedman decades ago and is actually a fairly simple and descriptive term. Nonetheless, given the problematic definition here in the US, perhaps another term could be used when discussing neoliberalism with the general public, but the term used must describe all the ills of neoliberalism such as globalization, deregulation, anti-competitive practices, anti-labor practices, pollution, and so forth. While corporatization might encompass all of that, I think the public has become so blasé about corporatization over the last few decades that I’m not sure if it has the impact that Ralph may wish that it has here in current times unless it is specifically tied to wage suppression and things which engender strong emotions.

      Keep up the good work, I hope to hear more about economics on future episodes.

    • David Hutchinson says:

      Spending on social needs will boost the “real” economy. But the Fed seems preoccupied only with inflation. Whatever this admin (Treasury) summons the courage to spend for, or despite what the next Dem admin (if there is one) mobilizes to spend for…kicking up the interest rates will counteract whatever boost that would have otherwise resulted, no? They’re not so stupid they don’t see the dynamic.

      “The proponents of taking a path of rapid rate hikes seem unconcerned about the harm caused by increases in the unemployment rate.” Dean Baker 7/20/22 https://www.commondreams.org/views/2022/07/20/urgent-message-fed-dont-get-bullied-sparking-recession

      The term debt-deflation as Hudson uses it has always confused me some. There was an article by Thomas Palley in the 90s that I thought at the time got the deflation concept across. Not that I think Palley’s analysis is “better,” but I’m going through his site right now just to get another angle. I’ve missed a lot he’s written since back then. After MANY tries I do not think I’ll be able to retrieve that article of his…either in Harpers or Atlantic Monthly one (maybe I haven’t searched with “harpers” enough). http://thomaspalley.com/

      • Tulse says:

        I agree with you David about the excessive focus on inflation at the moment. It is unlikely to persist as it relates to a temporary increase in fuel prices and labour doesn’t have the power to retain its real wage in a time of rising costs so a wage-price spiral is not likely. In any case hiking interest rates is unlikely to have a material effect on inflation whilst at the same time causing genuine hardship to some of those with large debts.

        It is best to view debt in terms of it being the way to retain real living standards for the majority when real wages have been declining since the seventies despite productivity increasing. Hudson’s focus on how rent and interest payments transfer wealth from the poor to rich is highly relevant and his conclusion that this is a main driver of increased inequality is valid too.

        By the way, I am enjoying the RN show as an occasional listener from Scotland. I would also like to see more economics discussions on the programme and I would particularly recommend Stephanie Kelton and Pavlina Tcherneva who are both brilliant at explaining economic issues to a non-economic audience. Tcherneva’s explanation of the Job Guarantee to remove unemployment overnight, is, in particular, a delight.

        • Klassik says:

          These are some interesting thoughts, David and Tulse, and I am inclined to agree with what was stated above. Just as was the case in the 1970s, cost of living increases caused by rises in fuel prices and supply shortages are of a temporary nature and increasing interest rates will not do much of anything to resolve those issues. If anything, it could well make the situation worse. Moreover, cost of living increases caused by privatization and deregulation (the impact of neoliberalism…or corporatization, Reaganism, Thatcherism, Blairism, or whatever names we assign to this) should be addressed by Congress on a policy front.

          I earlier mentioned Professor Bill Mitchell as someone who would make for a good guest on the RNRH. Mitchell is an economist focused on full employment in Australia. Mitchell maintains a blog where he discusses various economic topics and he has an excellent blog post today related to some topics mentioned by Prof. Hudson in his discussion with Mr. Nader. Mitchell is referring to matters relating to the UK and Australia in this post, but what is said is just as relevant in the US as it is in Australia and the UK. Mitchell’s point about ‘good deficits’ and ‘bad deficits’ is very, very relevant and worth consideration because there is much confusion about this as most people are stuck in a monetarist, Milton Friedman-esque, Reagan/Thatcher-esque neoliberal mindset which is not based on economically sound theory. The points made in the discussion about the Reserve Bank of Australia are also salient. Link: http://bilbo.economicoutlook.net/blog/?p=50502

          I know this comment has gone long, but I wish to make one more point about Prof. Mitchell’s work. I believe it would be worthwhile for the RNRH to discuss the matter of full employment. This is an achievable goal, one that would be welcomed by pretty much everyone of every political persuasion in the US, but we must understand how this is achievable. Furthermore, we must understand why voters cling to the oil and defense industries even with all the problems they cause in terms of pollution/health hazards in places such as my home of Houston due to these industries being one of the few providers of stable, benefits-paying employment. We must understand how it is possible to keep these workers employed in greener, safer, more beneficial industries for the public. Economics Prof. Pollin had some interesting insights into this on a recent RNRH show, but there is a lot more to discuss on that topic. Certainly the concept of the job guarantee is an interesting one and one very related to combating inflation.

        • David Hutchinson says:

          Pretty sure Kelton would have some high power critique of my APF theory (way above). It’s the way of talking about the whole thing that varies. Right or wrong, I view much of the national debt as new money. There are no paper dollars for it I realize, and no one’s stolen enough gold to back it up (I’m not a gold standard freak). But, as typed in, to me it’s “real” fiat money (they are real dollars). The way I get the picture is that MMT buffs are not thinking much about when balance of trade get’s WAY tipped. Seems like they think they can wave a wand and globalization will go away…if you think these sanctions have put things in a near unfixable state of affairs, then I agree with you. With whomever thinks thusly.

          I think inflation may continue, since as long as sanctions make things scarce; speculators will anticipate scarce commodities and buy’em up in futures. Jack Rasmus has said in so many words that after the speculator inflation chapter is over, when the REAL scarcities present then the cause of inflation (I’ll paraphrase) will be more “natural.” Unlikely to go away. I wouldn’t leave out Covid quarantines either…MSM barely likes to admit they’re still a factor (China) having bearing on supply chains. Nor would I stop pondering oligarchs removing money from our “system” when they witness assets continually being seized.

          National debt, and q-easing all seem to this unlearned mind to be astronomically high piles of dollars. Despite whatever adjustments anyone makes, the net global amt of dollars…if they vastly misrepresent tacit riches/technology/assets…would seem eventually, by some kind of financial osmosis, to make our dollars in hand worth less. Derivatives seem to figure in the same way (don’t understand’em much), as when any bet loses the dough has to come from somewhere to pay. My suspicion is that ultimately it’ll come from us. Which always puts mo money in the unmoving pool. And the real economy, without access to that unmoving stuff, will have to fix infrastructure that’s been running full bore without paid folks to attend to it. It’ll have to pay for that, and it’ll have to pay workers more [as TPTB wll not let go of Taylorism to solve things], so these factors will necessitate producers charge more.

          Good talks, and I’m not caught up. https://alternativevisions.podbean.com/

          • Ferdy says:

            Great discussion. QE and ‘debt’ aren’t new ‘high piles of dollars’. As the user ‘Tulse’ stated so-called ‘debt’ is an asset swap, not new money creation and the payment of the interest is small. The excess bank reserves drained by bond sales were already there and overwhelmingly as a result of normal government spending (that’s where the new dollars are being issued). The draining of excess bank reserves is why the bonds are sold at all. Calling it ‘debt’ is misleading really and confuses it in people’s minds. It refers to the mechanism as it existed prior to the abandonment of the gold standard. Perhaps that is even the reason they keep it, to frighten people with the word ‘debt’.

            QE is simply the reverse of this. Putting excess reserves back (which the banks neither need nor desire). In any case, as we know the U.S. has/had been paying direct interest on excess reserves rather than triggering bond sales. The key here is that we see from this that debt issue is actually not even necessary. The debt fear is a mirage.

            You mentioned trade balance though. Trade has always been ‘unbalanced’ and generally for the same few countries. For the U.S. being a larger importer than exporter is not a great concern.

          • Tulse says:

            David said ‘The way I get the picture is that MMT buffs are not thinking much about when balance of trade get’s WAY tipped. Seems like they think they can wave a wand and globalization will go away…’

            Imports are good because we get things. Exports on the other hand are goods and services which cost us and that we give away. So a trade balance in favour of imports is to be celebrated and it reflects the desire of those overseas to hold our currency.

            The government has the power to constrain some of the excesses of globalisation, not by wand waving but by enacting good policy. They try to convince us otherwise but the government has much more power than it claims.

            What specific problems are you thinking about that concern you here?

    • John Puma says:

      Would you then care to define both “quantitative easing” and “bank bailouts,” pointing out the critical differences between them that Mr Hudson allegedly missed?

      • Tulse says:

        Quantitative easing is the name given to the government buying back bonds before their due date. It is a simple asset swap for the institutions so does not improve their balance sheet. It does not bail out the banks.

        • John Puma says:

          OK, “half-thanks.”
          But, what DOES bail out banks?

          • Tulse says:

            This was done in several ways during the GFC but mostly it related to the government lending huge amounts to the banks, buying their shares and in some cases their toxic debt. In other words massive corporate welfare.

            The correct thing to have done would have been to nationalise the banks as they were failed institutions which should have disappeared from a capitalist economy.

          • Tulse says:

            I answered earlier John but my response didn’t pass moderation. I don’t know why. Hopefully someone else will be along soon to answer your question.

          • Klassik says:

            Again, I agree with what Tulse has said about the bank bailouts and it being corporate welfare. The corollary to this are sure to be questions such as ‘Did the taxpayers fund the bailout (or any corporate welfare)?’ and ‘Was this funding inflationary?’.

            At least on the taxpayer front, it must be understood that taxpayers do not fund federal government spending in the US. Although the ‘taxpayer’ refrain is used commonly by those all over the political spectrum, this is not the accurate way to describe US federal government spending. The US federal budget is not akin to a household or business budget no matter how much this gets parroted whenever issues such as the debt limit get brought up in Congress.

            Unfortunately, while this is used (without being explained) to fund corporate welfare, Congress has mostly been unwilling to use this to fund social spending and other spending which benefits the public. When social spending gets brought up in Congress, all of a sudden Congress starts turning into disciples of Milton Friedman-esque monetarism. With this in mind, it is important, in my opinion at least, for the public to understand how social spending is feasible and to make demands of Congress to ensure things such as healthcare, green infrastructure, full employment via a job guarantee, and education are funded just as the corporate lobby ensures that the war industry, private finance sector, automakers, airlines, privatized utilities, and so forth are funded. It is also important to understand the rôle of taxation and regulation.

            Some economists who would be helpful in explaining these thing were listed earlier, but I’ll also add Warren Mosler to the list of potential RNRH guests. In addition to Mosler’s economic knowledge, he once owned an automotive manufacturing and design business and I’m sure he’d have some unique insights on automotive safety and related environmental regulation that one would not hear from CEOs of companies such as GM. Furthermore, Mosler has a history in third-party politics in his home state of Connecticut and elsewhere. Mosler’s book, ‘Seven Deadly Innocent Frauds of Economic Policy’ is a quick, easy to understand read and Mosler makes it available for free on his website: http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

          • Tulse says:

            Yes Klassik Mosler would be a brilliant choice for this because he is ability to explain money to a layman is succinct and sometimes dramatic but never bettered.

        • David Hutchinson says:

          Like a pie chart, Tulse, but instead it’s a square pizza chart.

          https://www.motherjones.com/politics/2009/12/behind-real-size-bailout/

        • John Puma says:

          Thanks, your post on “bail outs” was finally posted. (Sept 22, 5:35am)
          I couldn’t agree with you more about what should have been done to/for the banks at the beginning of the GFC – that their recklessness essentially caused.

          From the start of the GFC until present, how much, roughly would you estimate, of taxpayer $$$$$’s have been expended on a) QE and b) bailouts?

          What was/is the actual purpose of QE, if not a method of bailing out banks?

          • Ferdy says:

            No ‘taxpayers $$$’ have been expended on anything. QE is the creation of money to flood the banks with excess reserves, on the (wrong) presumption that this causes or places them in a better position to lend. Bailouts are also newly-issued money.

            The effect of this on the ordinary taxpayer is something different. It is that the decision has been taken to fund banking and corporations (so corporate welfare spending) rather than public spending; as is the wont of economics following the New Money Consensus (new monetarism) school of thought.

            The public is then sent into penury by deficit being shifted to the private-domestic sector rather than the government sector. Problem being that unlike the government the private-domestic sector (that’s Joe Public) runs out of money. The tax liability then becomes even more of a burden, especially when those being funded (corporations) are evadng their liabilities.

          • Klassik says:

            John, as Ferdy explains (Sept. 25th, 1:43pm and also below in response to joe bongiovanni), looking at this from the perspective of the cost to taxpayers is perhaps not the appropriate way to look at the problem in the direct sense. Federal government spending in the United States does not come from recycled money (taxpayer money). Now, the situation might be different with foreign governments with non-sovereign currency or US state/local funding, but this is the case with US federal government spending.

            As Ferdy states, the ‘cost’, if you will, to the taxpayers is actually something different. As Ferdy states: “The effect of this on the ordinary taxpayer is something different. It is that the decision has been taken to fund banking and corporations (so corporate welfare spending) rather than public spending….”

            I believe this relates back to the point made by Prof. Hudson in the interview with Mr. Nader. The decision to spend on corporate welfare, whether we talk about bank bailouts during the GFC, Covid-era corporate handouts, excessive military and foreign misadventure spending, privatization of utilities and healthcare, and so forth, and the decision to take an austerity approach to social spending has shifted the debt burden to public. It is this which has and will burn the public as the public’s budgets are limited in ways that are not limiting to the US federal government.

            Congress, and certainly our recent presidents, like to say that the US federal government cannot fund single-provider healthcare like the UK’s NHS (though the UK seems to have no trouble funding it). They say we cannot afford a lot of other things, but yet corporate welfare gets funded. Beyond that, the question is if the country can afford not to fund healthcare, education, infrastructure, and so forth given the debt burden on citizens.

            I realize the details about federal government spending are rather confusing even to some of the most detailed Washington observers. I know that so many people wonder why corporate welfare continues unabated while social spending lags way behind. There surely must also be questions about the real purposes and benefits of taxation.
            Someone like the aforementioned economists, such as Stephanie Kelton, Warren Mosler, or Bill Mitchell, would help the public understand how federal spending works and what can be done to improve social spending, achieve full employment, and control inflation.

          • Tulse says:

            As Ferdy says, there was no tax money used, the currency was simply issued from the computer of the central bank. As QE is just an asset swap, the amount isn’t too relevant. On the other hand, the amounts given as bailouts is corporate welfare and has rewarded the bankers for their failed ponzi schemes. Privatise profit and socialise the losses is the neoliberal way.

            The most comprehensive calculation for the size of the bailout is a smidgeon under $30 trillion although you would be unlikely to see that in the mainstream media. It was calculated by James Felkerson of the University of Missouri-Kansas City in 2011.

    • Skro35 says:

      We want Professor Hudson to reply to your comments, but we would prefer to use your real name as opposed to the handle you use here. Could you please send a message to our inbox with that if you don’t care to do it on this page? Use the “contact” button in the upper right hand of this page. Thank you. Steve

  7. Tulse says:

    Neoliberalism quite clearly defines a movement that has roots in the late 60s and was a conscious plan for the power elite to fight back against the growing power of labour and it has done this through the ways that we are familiar with. i do not see the problem with the term.

    • KS says:

      For a non-economist like me this seems to be a long-winded way of saying that ‘taxpayers $$$’ have been expended on bailout.

  8. Bob says:

    Looking for the transcript of this great show, Don’t see it. I do see the transcript on the Crackup of the Republican Party page but not here. Am I missing something? Thanks.

  9. Bob says:

    Steve , still no transcript for this segment. I was looking for the 5 things that Ralph says Republicans do. He could not have said it any more perfectly or simply. Can you help me with this so I can tell my Republican friends in my defense of what they are doing that harms average Americans? Thanks.

  10. Lauren says:

    Excellent conversation here. Bottom line is that the Fed is undemocratic to have such a powerful agency whose members are not directly subject to the will of the people. ” . . . It is the goods that money can buy that are being divided up when money is divided up.” (George Bernard Shaw)

  11. Apps come with contracts. Email comes with a contract. I need an app (more than one) and a cell phone, and an email account just in order to do my laundry (Here in the Czech Republic) I just spent more than an hour trying to wash my clothes. The washing machines are on the ground floor. I’m on the sixth. The app supplied by the washing machine company doesn’t work. I called the company and the lady said her computer was ‘down”. I had to reinstall two apps: my bank’s and the washing machine company’s. But now the bank won’t let me use their app until I go to one of their ATM’s in order to get a code. Maybe I’ll wash my clothes tomorrow. I had the same problem last week. But, I have to go through the bank in order to wash my clothes….. ON top of everything else, the so-called security for these things is cumbersome and places work onto our shoulders. I endorse Michael Hudson’s thought that this is modern slavery.

  12. Great chat, thanks.
    Brainiacs unleashed. Good-oh.

    One little thing to clarify, maybe correct.
    In conversation Ralph said – :

    “” It’s obvious to anybody who pauses to contemplate what the game of the Federal Reserve is. Its budget is paid for by the banks. It doesn’t get appropriations from Congress. It’s run by the banks.””

    Sorry that we might all here think so. Not close to being true.

    The actual funding of the activities of the Federal Reserve Banking System(FRBS) are not, and have never been paid for by the Banks. The FRBS is certainly run by the banks but those bankers have their hands in the taxpayer’s pocketbook. Through Public Debt.

    The fact, first. The entire operating expenses of the FRBS are paid, 100 percent, by the taxpayers. All the salaries and all the benefits of all of the 12 Regional Federal Reserve Banks that make up the FRBS, the Board of Governors, the same, and also the Federal Open Market Account operations.

    We The People pay the Rents, the 3-hour lunches and generous PRIVATE retirement program; all are a mere deduction from the interest income that the FRBS Banks receive in payment on their holdings of US Debt in its Open Market Portfolio.

    There is even much more taxpayer injury in the Fed’s design.

    Another proud Nader voter 2000.

    Joe bongiovanni
    The Money Apprentice.

    • Ferdy says:

      They are not paid for by any taxpayers. The money for budgets is issued money not recycled spending. The federal government isn’t funded by banks or the public, both those are users of the currency, not issuers. Even the basic everyday spending is beyond the tax return. Tax is cancellation of already-spent money, not funding.

  13. Paul Palmer says:

    I am always bitterly disappointed when a brilliant analyst and critically important interpreter of reality – Ralph Nader – shows that he has been sucked in to a fraud and espouses a scam to his attentive listeners. I refer to his embrace of recycling as a solution to the problem of waste generation. Recycling is a corporate deception foisted on the public just like all the other corporate deceptions that Ralph loves to skewer. But in this case alone, Ralph seems to enjoy being deceived and enthralled by a scheme whose sole purpose is to maintain corporate control of waste generation. Think back! Recycling has never been a solution to any waste problem in history. Mostly it’s a joke, such as it’s laughable application to removing the plastic junk in the ocean. In a Frontline video a few years ago, the plastics industry even owned up to their fraudulent proposal for recycling to blunt any real work that could threaten their control of plastic crap manufacturing.
    Ralph, I beg you, please think more deeply and abandon your strange devotion to a corporate fraud.

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