As someone who hasn’t figured out how to pay on 13% in income taxes or avoid the necessity of a real job, I usually reduce my involvement in financial matters to the occasional therapeutic rant. When I want to actually learn something, I tend to just listen to others who actually know something substantive.
One source of periodic enlightenment is the random emails I receive from time to time from Dean Rindy, the man responsible for me getting elected many years ago. He’s smart, except that he is older than me and just adopted two Russian girls about 2 and 4, which proves some level of insanity.
Today, Dean sent me an article in the Guardian on how the Afghan government wants to afford due process rights to its imprisoned citizens, while at the same time that the Obama administration is fighting in court for the right to indefinitely detain U. S. citizens without filing any charges. As Dean pointed out to me quite succinctly – “unbelievable”.
Dean also sent me this jewel the other day (as though I was not mad enough at banks these days) – the following all his words -
Valuable thought of the day, from an interview with economic historian Michael Hudson titled “How Finance Capital Leads To Debt Peonage,” at the website Naked Capitalism—which is the best day-to-day economic policy blog on the web.
A word of explanation. Hudson defines “rentier income” as unearned income that derives from privilege. Government has granted banks a monopoly privilege to create credit—i.e., money. When they make loans, they don’t haul up bags of gold from their vaults and count it out to you; they just make an entry in their account books. They create money with a few clicks on the computer keyboard, then charge you interest on what they created out of thin air. To Hudson that is “unearned income,” as opposed to income earned in the “real economy” from working and producing and making and selling tangible things. Society will always need credit, of course; but the modern financial industry has drowned us in debt, and when they go too far, captive governments bail them out at taxpayer expense. This can’t continue indefinitely. Hudson asserts high finance has perverted the real economy and earns its profits from speculation and debt creation, not useful production. The “financial parasite class,” in his view, is draining the blood out of the host, which is the greater society. The implicit conclusion is that we need a revolution—in our thinking and our policy. That would result in social upheaval. But, of course, social upheaval is what we are already going through. The idea of “revolution” isn’t necessarily Marxist. You could also view it as a revolt against Vampire Capitalism by the forces of grassroots Productive Capitalism.
From the Naked Capitalism article -
“…..Rentier interests have escalated their fight against Progressive Era reforms to defend financial interests. They have gained control of the mass media and universities, the courts and now the government itself under the U.S. “Citizens United” ruling that relinquishes election campaign financing to whomever has the most money – which is turned into TV commercials and a massive ideological propaganda machine to convince voters that There Is No Alternative to debt peonage. This bold ideological inversion of Enlightenment values even celebrates asset-price inflation anddebt peonage as the workings of the “free market” as if it were a natural evolution, not a hijacking and derailing of economic development.
At issue is how society will liberate itself from the buildup of debts that can’t be paid. If governments let the financial sector foreclose, they will end up being forced to privatize the public domain under duress conditions at distress prices. They will have to dismantle public administration and welfare services. The problem is capped by having to turn tax policy over to financial lobbyists who claim to be objective technocrats. The result must be economic polarization between creditors and debtors ushering in a new Dark Age of poverty and deepening debt peonage. Wages, profits and property rents will be earmarked to pay interest – on loans that can’t be paid in a shrinking economy.
This is the point at which the financial sector uses its political clout to demand bailouts from the government, adding to public debt. The new credit given to the banks is sent abroad as banks jump ship. This is what happened to the U.S. Federal Reserve’s $800 billion Quantitative Easing #2 in 2011.”
—–Economic Historian Michael Hudson