Wednesday, May 9, 2018

Paul Craig Roberts — For Economic Truth Turn To Michael Hudson

The reeducation of a Reaganomics supply-sider.

It's the rent, stupid.

Michael Hudson
For Economic Truth Turn To Michael Hudson
Paul Craig Roberts


GLH said...

I know of no better economist alive today than Michael Hudson.

Kaivey said...

Boy, do I love Micheal Hudson. It's but not just his economics, but his lovely nature. He paints a world I would love to have, a world we could all have, where work is joy and we have the spare time time to get on with our hobbies, or spending quality time with our friends and families. But no, despite all the advances in technology, we work harder than ever and for longer hours, but the wealth trickles up instead, to just a few.

Konrad said...

PART 1 of 3

Michael Hudson is correct, but he needs clarifications.

Example from Paul Craig Roberts…

“Hudson shows that international trade and foreign debt also comprise a financialization process, only this time a country’s entire resources are capitalized into a mortgage. The West sells a country a development plan and a loan to pay for it. When the debt cannot be serviced, the country is forced to impose austerity on the population by cutbacks in education, health care, public support systems, and government employment and also to privatize public assets such as mineral rights, land, water systems and ports in order to raise the capital with which to pay off the loan. Effectively, the country passes into foreign ownership. This now happens even to European Community members such as Greece and Portugal.”

Why Greece and Portugal? And why is the Western Empire able to lend to countries like Greece and Portugal, and thereby reduce them to debt slaves?

Hudson doesn’t provide an answer.

MMT does.

Greece and Portugal have trade deficits, and their governments cannot create their own currencies out of thin air. The Greek and Portuguese governments surrendered their monetary sovereignty to the Troika (IMF, ECB, and European Commission). Therefore Greece and Portugal are plunging ever-further into debt and austerity. Their politicians could not stop this nightmare even if they wanted to (which they don’t, since the politicians are on the bankers’ payroll).

The USA has a trade deficit like Greece and Portugal. However the U.S. government can create dollars out of thin air, and those dollars are accepted worldwide. The USA does not need foreign currency in order to buy imports. The USA uses dollars to buy imports. This allows the USA to lend to countries that cannot produce their own currency, and to countries that produce their own currency, but whose currency is not accepted outside their borders. As a result, the USA is able to reduce many foreign nations to debt slavery.

Imagine the following scenario. Which of these three will have the most power?

TOM cannot create his own currency out of thin air. If he lacks money to pay his expenses, he must borrow money, or else he must sell whatever assets he has.

DICK can create his own currency out of thin air, simply by using computer keystrokes. However his currency is only used inside his house by his personal family members. If he lacks money to pay his expenses outside the house, he must borrow money, or else he must sell whatever assets he has.

HARRY can create his own currency out of thin air, simply by using computer keystrokes, and his currency is used outside the house by Tom, Dick, and everyone else in town. If Harry lacks money to pay his expenses, Harry simply creates more money.

Harry is the U.S. government. Of the three parties above, Harry is the only one who will never have any money worries. Harry will be able to lend to Tom and Dick, thereby reducing them to debt slaves.

Michael Hudson fails to clearly distinguish between Tom, Dick, and Harry, since Hudson doesn’t quite get MMT. Hudson is not wrong; he just needs some clarification. Hudson does a good job of explaining the neoliberal cancer that is reducing the world to a hellish dystopia.

(Continued below)

Konrad said...


Paul Craig Roberts is a closet neoliberal.

Example from his blog post…

“Supply-side economics, with which I am associated, is not an alternative theory to neoliberal economics. Supply-side economics is a successful correction to neoliberal macroeconomic management.”


Supply-side economics is a direct forerunner to neoliberalism.

Supply-side economics seeks deregulation (i.e. decriminalization of financial fraud) plus lower taxes on unearned rent income.

Supply-side economics falsely pretends that rent payments and debt payments should be included as “production” when we measure a nation’s GDP.

Supply-side economics favors an economy that is geared to maximize debt.

Supply-side economics falsely pretends that if we let rich vampires reduce us to debt slaves, then some of the blood they suck from us will “trickle down” to us.

Supply-side economics says that the purpose of the middle and lower classes is to serve the USA’s “national interests” (i.e. to make rich people richer).

Supply-side economics, taken a step further, becomes NEOLIBERALISM.

Paul Craig Roberts is blinded by his worship of St. Ronald Reagan, whose administration (1980-88) started the USA on its neoliberal path to extinction.

(Continued below)

Konrad said...

PART 3 of 3

Roberts writes, “Russia is suffering much more from neoliberal economics than from Washington’s economic sanctions.”

Unless Roberts can justify this claim, I reject it. How exactly is Russia neoliberal? Moreover Russia cannot be compared to the USA, since the Russian ruble is not widely accepted outside Russia’s borders. How is Russia reducing foreign nations to debt slavery like the USA is? Roberts is out of his depth.

Roberts is a Russia-basher because of his blind worship of St. Ronald Reagan. Also, Roberts claims to oppose neoliberalism, yet he favors supply-side economics, which is neoliberalism-lite.

Then we read this…

“China herself is overrun with US trained neoliberal economists whose policy advice is almost certain to put China on the same path to failure as all other neoliberal economies.”

Unless Roberts can justify this claim, I reject it.

Roberts is confused. His comments appeared on Michael Hudson’s blog. I’m surprised that Hudson let Roberts’ errors and contradictions stand.

Kaivey said...

Micheal Hudson often does say this, but maybe but this time for she reason. He is always saying that Greece should leave to euro zone so that it can create it's own money to get the economy going and get itself out of debt.

Kaivey said...

I try to overlook that contradiction in PCR'S views. I tell myself that he can't admit he was wrong. If he agrees with Micheal Hudson so much, then he was definitely wrong before.

PCR also still loves Reagan, and says he brought nuclear disarmament with the Russians. But Reagan was also behind all the evil wars in Central America. PCR says that these dirty wars were being done in secret behind Reagan's back, but I doubt it.

PCR credits himself with Reaganomics, the start of the rot. Yep, PCR is real mixed up here.

Konrad said...

Post script

Roberts writes, “Capitalists were not content to exploit only one member of a family. They wanted more, and by using economic policy to suppress pay while fomenting inflation, they drove married women into the work force, imposing huge external costs on the family, child-raising, relations between spouses, and on the children themselves. The divorce rate has exploded to 50 percent and single-parent households are common in America.”

It is true that capitalists drove women into the workforce, but they had massive help from militant feminists.

Feminists, in their endless jihad to castrate men, end up hurting themselves. For example, 60% of college students today are female. Therefore 60% students with lifelong slavery from student loan debt are female.

Naturally feminists blame this on men. The more that feminists hurt themselves with their hate, the more they seek to further castrate men.

Working class men submit to all this because they are downwardly mobile. They have been have been castrated by psychopathic feminists and by capitalists.

The reality is that male and female are yin and yang; two halves of a whole. To hurt one side is to hurt both sides.

The more that feminists castrate men, the more feminists cripple themselves. Naturally they blame this crippling on men. They blame EVERYTHING on men.

Kaivey said...

I wrote to Michael Hudson a few years back and said to him that PCR appears to be one of us now, and he wrote back and said that even right wingers get it right sometimes. Now they are friends, but guess what, Hudson said the other day that maybe we needed a but a of supply economics in the 70's. I know Micheal doesn't really believe this, but now be is friends with PCR he doesn't want to disagree with him too much as they are trying to find common ground. It's human nature. PCR had really come over to our side over the recent years so why get into disagreements when there is so much in common, I guess.

PCR supported Hugo Chávez which is a big step. He hates the ruling elite in Central America. PCR even says he hates capitalism. So, it's a mystery.

Konrad said...


Paul Craig Roberts pretends to praise Michael Hudson’s attack on neoliberalism, only to fall back on supply-side economics, which is essentially neoliberalism.

Roberts does this because he continues to blindly worship Ronald Reagan thirty years after Reagan left office, and fourteen years after Reagan returned to hell.

Perhaps Robert’s worship of Reagan is a romantic longing for Roberts’ own “glory days.” In 1981 at age 42, Roberts was U.S. Assistant Secretary of the Treasury for Economic Policy under Reagan. In those days he frequently visited the White House. He was a somebody. He mattered (or so he thought).

From 1993 to 1996 he was a distinguished fellow at the Libertarian (and very neoliberal) Cato Institute. He also was a senior research fellow at the neoliberal Hoover Institution. He has also been a contributor to the neoliberal Wall Street Journal.

Oh well. Roberts tries to wake up, but he continually backslides. At 79 he is too old to change, or to learn anything new. Michael Hudson is the same age as Roberts, yet Hudson is still alive.

Kaivey said...

I see PCR as being a little bit of a social conservative while being a little bit on the left economically. Not many people at like that, but I wonder if you are like that, Konrad, I'm not saying your views are the same as PCR'S, though, certainly not by what you have written above.

I have read that in primitive times men and women were considered equal, they just had different roles to play. I remember being a small child and seeing my mum as equal to my dad, although they had different tasks to do. I saw my dad as the stronger when it came physical strength and defence, but their authority was equal.

I do get fed up with identity politics, though. We hag Celebrity Big Brother on TV here recently which my GF is a big fan of. On it they had a transsexual, a gay guy, and a transvestite gay cross dresser. I didn't like it much and found it to be vulgar, but these people can't help being who they are. I just ignored it. I do find Russia with it's more simpler easy of life appealing, but there is no perfection, I guess.

I have a book written by a psychologist who suffered from chronic depression up to the age of 40 until he admitted he was gay and found love.

Konrad said...

KAIVEY WRITES: "I see PCR as being a little bit of a social conservative while being a little bit on the left economically. I wonder if you are like that, Konrad.”

Yes I am. And it grieves me to see right-wingers and “white nationalists” falsely equate economic leftists with social leftists. The two are opposed in some ways. For example, social leftists tend to be Democrats, whereas economic leftists see no difference between Democrats and Republicans.

Establishment Democrats are neoliberals, and are just as pro-war as are Republicans. By contrast, Paul Craig Roberts and I are anti-war. This is why I qualified my claim that PCR “worships” Reagan. I suggested that PCR is perhaps not worshipping Reagan as much as being nostalgic for PCR’s own youth.

Anyway, if we say anything positive about socialism, the “white nationalists” falsely lump us with the gay rights people, the feminists, Antifa, and other social leftist groups, most of which I oppose. (For example, I regard “gender fluidity” as mental illness.)

Also, social leftists and establishment Democrats are staunch supporters of big-Pharma. Mandatory vaccination bills (which I oppose) are almost always introduced by Democrats.

KAIVEY WRITES: “I have a book written by a psychologist who suffered from chronic depression up to the age of 40 until he admitted he was gay and found love.”

I have no problem with gays as long as they are not militant. (Feminists cannot help but be militant.)

Regarding chronic depression, this is a mental habit created by hostility turned inward. Hostility is almost always the result of frustration. Check yourself when you feel angry, and you’ll see that in one way or another you’ve been frustrated.

Kaivey said...

It looked like we're on the same page on the whole, Konrad. I always enjoyed your posts.

Tom Hickey said...

Back in the Thirties, my mother held a managerial position with a large insurance company at good pay. she also like the job. Granted, is was managing a department exclusively of females (secretaries), since women didn't boss men back then.

When she got married, she was required to resign her job and become a "housewife" even though this was not of her choosing. She was very happy to see that policy change so that younger women would have opportunities that she did not.

Believe it or not, a lot of women want careers, and the wan to be treated on the same basis as men if they are equally qualified, or better if the women is more qualified. That is finally happening in some areas.

Konrad said...

Yes, women have finally gotten what they wanted, which is all of the rights and privileges, with none of the duties and responsibilities. (Men alone have duties and responsibilities.)

The mass economic and social castration of working class males is a global phenomenon, and it is one of the reasons why the human race (excuse me, humyn race) is headed for dystopia.

Some men cope with this growing nightmare by pretending that it is a good thing.

Ryan Harris said...
This comment has been removed by the author.
Konrad said...

@ Ryan Harris: Reagan did not make a “smaller government.” Reagan expanded deficit spending and the military budget to record levels.

For right-wingers like Reagan, “big government” is that which serves everyone. “Small and efficient government” is that which widens the gap between the rich and the rest. The actual size of government is irrelevant to these definitions.

As for the rest of your comments, I do not understand them, but I saw this… “Until you get rid of orthodox economists like Noah Smith and Paul Krugman who educate the public, there is no hope.”

Paul Krugman is a pro-Wall Street, pro-inequality neoliberal elitist who calls himself a “liberal.” Shame on anyone who reads Krugman’s filth.

“MMT advocates and academics are nearly as bad as monetarists who make false claims about their ability to influence inflation. Fiscal policy is only one piece of distribution of financial assets along with Mon policy and regulatory policy.”

I have never once heard any MMT advocates disagree with this. There are several ways to control inflation, whether by monetary policy (i.e. interest rates) or by fiscal policy (i.e. government spending, taxation, and the sale of US government securities).

Kaivey said...

I think I put it out here same time back, or maybe it was one I missed. Apparently, Paul Krugman told a student to never criticise banking otherwise they would ruin his career. This guy was on YouTube talking about it speaking to an audience. Well, who knows if he actually said it, but it sounds feasible.

Tom Hickey said...

That was Bernard LietaerBernard Lietaer

Here's the YouTube link.

Konrad said...

“Never touch the money system.” ~ Belgian economist Bernard Lietaer

Translation: you can b.s. all you want about economics, but you can nevert talk about money, since money is power.

Money is a fundamental social institution. Whoever controls money controls society. Therefore economists cannot talk about money if they want a professorship or a Nobel Prize.

What’s more, the peasants don’t want to talk about money. The peasants form stupid little “explanations” (e.g. they claim that all money is created by banks as loans) and that’s all they need or want. If you explain that the “national debt crisis” is a hoax, the peasants call you a conspiracy theorist. If you explain that the U.S. government can create infinite money, they snugly dismiss you.

The peasants would rather cling to their petty hatreds and their childish dream-worlds than be free. They would rather sit blaming each other for why they are in prison, rather than walk out of their prison cell (whose door is always open).

This is why we have rich and poor. The rich are at most 20% to blame for this. The other 80% of blame rests with the peasants themselves.

The 1% rule because the 99% want to be ruled. (I'm not being sarcastic.)

Kaivey said...

Thanks Tom.