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Saturday, August 11, 2012
Michael Hudson — Overview: The Bubble and Beyond
Michael Hudson just posted the TOC and a summary of his new book.
Michael Hudson and some other familiar names will be speaking at: http://www.monetary.org/2012-conference
Steve Keen Prof. Michael Hudson Prof. William Black
I read his book ~8 years ago, will have to re-read and compare to MMT, circuit, environmental economics. I remember he went through the history of money in the US. http://www.monetary.org/intro-to-monetary-reform
Tom Hickey: Although I think that Prof. Hudson has an excellent grasp of how finance extracts the wealth from economies, when I read the summary I had the feeling that he doesn’t quite agree with Randle Wray on how the central bank works nor with MMT on the stability of the dollar. In particular I am thinking of the idea that QE is just an asset swat. Prof. Hudson seems to be implying that QE is creating more new money into the economy. Also, Prof. Hudson seems to be saying that fiat money is just fictitious capital and will collapse without the currency being backed by gold, which is why the BRICS may be trying to create an alternate currency to the dollar. Do you think there is a difference of opinion or am I just misunderstanding what I read? GLH
GLH, Michael Hudson's argument is based on his understanding of Minsky. How close that is to Randy's understanding of Minsky, I don't know, but from what I have been able to gather there is at least a difference in terminology.
It seems to me that the MMT terminology is clearer. But both Bill Black and Michael Hudson have been moving closer to the MMT mode since they joined the UMKC faculty, Black further and more quickly than Hudson.
What Hudson is saying about fictitious capital and dollar is that the present policy favoring finance capital and financialization is undermining the real economy and hollowing it out, and if this continues unabated in will also undermine the value of the dollar, which is based on the capacity of the real economic to produce things of actual value instead of shuffling papers and driving up asset prices.
Michael Hudson's major point is to tax away economic rent, which is unproductive and parasitical on the circular flow, and not to tax productive contributions, such as primary investment, commitment of firm earning to expansion and innovation, and productive work by the working force.
This may illuminate what MH is talking about wrt fictitious capital
Dear Geoffrey, You use a good term, Monetary capital gains. that in fact was what I was referring to, not rising “real” asset prices. I was simply applying the financial principle of “total returns”: income + monetary capital gains. As central banks have driven down the interest rate, they have created capital gains by raising the capitalization rate of a given income (at the lower interest rate), while national treasuries and local authorities have cut property taxes. This has created Monetary capital gains without any real growth in productive capacity at all. The effect of monetary capital gains on the “real” economy is to oblige homeowners to go further into debt to buy housing, and also — as you have pointed out -- to oblige pension funds (and pensioners) to save much more in order to secure a given retirement income. Michael Re: [gang8] Interesting things
Hudson is a Marxist economist, but in addition, he has a political agenda, which is a Marxist one. Yes, like Marx the classical economist, he understands how rentier interests are parasitical. Other than that, he is totally outside the MMT paradigm. Example: the nonsensical remark that US deficits represent unpayable debts, and that the gov't creates "money without regard for the ability (not to mention the will) to pay." His remarks on the US "free lunch," and so on, are of the nature of ideological propaganda not economics. In short, he is a Marxist politically speaking.
Michael Hudson and some other familiar names will be speaking at:
ReplyDeletehttp://www.monetary.org/2012-conference
Steve Keen
Prof. Michael Hudson
Prof. William Black
I read his book ~8 years ago, will have to re-read and compare to MMT, circuit, environmental economics. I remember he went through the history of money in the US.
http://www.monetary.org/intro-to-monetary-reform
Has an MMT blog or article made a comparison?
Tom Hickey:
ReplyDeleteAlthough I think that Prof. Hudson has an excellent grasp of how finance extracts the wealth from economies, when I read the summary I had the feeling that he doesn’t quite agree with Randle Wray on how the central bank works nor with MMT on the stability of the dollar. In particular I am thinking of the idea that QE is just an asset swat. Prof. Hudson seems to be implying that QE is creating more new money into the economy. Also, Prof. Hudson seems to be saying that fiat money is just fictitious capital and will collapse without the currency being backed by gold, which is why the BRICS may be trying to create an alternate currency to the dollar. Do you think there is a difference of opinion or am I just misunderstanding what I read?
GLH
GLH, Michael Hudson's argument is based on his understanding of Minsky. How close that is to Randy's understanding of Minsky, I don't know, but from what I have been able to gather there is at least a difference in terminology.
ReplyDeleteIt seems to me that the MMT terminology is clearer. But both Bill Black and Michael Hudson have been moving closer to the MMT mode since they joined the UMKC faculty, Black further and more quickly than Hudson.
What Hudson is saying about fictitious capital and dollar is that the present policy favoring finance capital and financialization is undermining the real economy and hollowing it out, and if this continues unabated in will also undermine the value of the dollar, which is based on the capacity of the real economic to produce things of actual value instead of shuffling papers and driving up asset prices.
Michael Hudson's major point is to tax away economic rent, which is unproductive and parasitical on the circular flow, and not to tax productive contributions, such as primary investment, commitment of firm earning to expansion and innovation, and productive work by the working force.
This may illuminate what MH is talking about wrt fictitious capital
ReplyDeleteDear Geoffrey,
You use a good term, Monetary capital gains. that in fact was what I was referring to, not rising “real” asset prices.
I was simply applying the financial principle of “total returns”: income + monetary capital gains. As central banks have driven down the interest rate, they have created capital gains by raising the capitalization rate of a given income (at the lower interest rate), while national treasuries and local authorities have cut property taxes. This has created Monetary capital gains without any real growth in productive capacity at all.
The effect of monetary capital gains on the “real” economy is to oblige homeowners to go further into debt to buy housing, and also — as you have pointed out -- to oblige pension funds (and pensioners) to save much more in order to secure a given retirement income.
Michael
Re: [gang8] Interesting things
Thank you Tom Hickey.
ReplyDeleteHudson is a Marxist economist, but in addition, he has a political agenda, which is a Marxist one. Yes, like Marx the classical economist, he understands how rentier interests are parasitical. Other than that, he is totally outside the MMT paradigm. Example: the nonsensical remark that US deficits represent unpayable debts, and that the gov't creates "money without regard for the ability (not to mention the will) to pay." His remarks on the US "free lunch," and so on, are of the nature of ideological propaganda not economics. In short, he is a Marxist politically speaking.
ReplyDelete