Monday, September 24, 2012

Michael Hudson — Surviving Progress transcript

Theme: In the name of “progress,” the world is regressing to neoserfdom.
Surviving Progress transcript
Michael Hudson


Matt Franko said...

This is obviously false:

"Roman governors looted their colonies, especially Asia Minor and Egypt, and brought the money to Rome."

Impossible for the "colonies" to possess the state currency in the first place unless it was first spent by the Roman authorities.

This is like saying that today, the US is "borrowing from the Chinese".

Calls into question Hudson's entire understanding of what really happened in the first Roman empire...

Perhaps what REALLY happened was that the Roman monetary authorities did not provide adequate balances of NFAs to the non-government sector of the regions they ruled, or there were leakages of balances into savings/hoarding.

In any case, Hudson's use of the metonym "money" here is imprecise and devoid of the detail necessary for a true understanding of what happened back then...


John Zelnicker said...

Matt -- Phil Pilkington has a post at Naked Capitalism that I'm sure you would appreciate:

"It is only true of the hoarder, the gold bug and the miser who removes wealth from circulation or transfers it into useless fetish-objects and sits upon it until he acquires more purchasing power."

Matt Franko said...

Thanks John,

lately, I'm starting to think that the easiest way to deal with these people may be to just let them have the balances and let the rest of us get on with our lives... perhaps negotiate with them to identify a very large amount that they would have to be satisfied with and put a cap on it... and leave the rest of us alone...

It looks like they suffer from pleonexia or "more having" and are another group of disgraced humans that we can see out there to go along with the ones suffering from 'arguriaphilia' or 'metal-loving'.

Paul here: "18 their comprehension being darkened, being estranged from the life of God because of the ignorance that is in them, because of the callousness of their hearts,
19 who, being past feeling, in greed (pleonexia) give themselves up with wantonness to all uncleanness as a vocation." Eph 4

Their comprehension is darkened and they are left ignorant, it's a real shame. Their brains are devoid of any true mathematical cognition on these issues.

They seem blind to Paul's observation here too: "7 for nothing do we carry into the world, and it is evident that neither can we carry anything out." 1 Tim 6:7

These people seem like they do not realize this is true (to me anyway). Irrational at best, morons at worst.


paul meli said...


here is (I think) an excellent post on money at the Asymptosis blog:

More people with math-based minds are beginning to penetrate the envelope of stupid.

Unknown said...

Matt, did the Romans at that time use precious metals in their coins? If so, gaining more precious metals meant you could create more coins without having to reduce their precious metal content. In effect getting hold of more precious metals was the equivalent of getting more 'money'.

Matt Franko said...


yes, looks like it based on the archeology records.

The 'denarius' looks like it was made of silver for instance, and the aureus looks like it was gold, then the as shows up as basically copper.

You may have to look at the history of metallurgy too. I believe they definitely had copper, silver, gold, iron, some steel.

but for instance I was looking into Tungsten with the gold bar counterfeiting going on and wiki says tungsten was not "discovered" until the 1700s or something.

So lacking the IT to run things like we can today (networked computers), what metals did they have to choose from to make their tokens out of? Seems like their choices were limited.

So like you say, if they went into an area and removed any raw silver they would then strike it into their "nomisma" and have to spend it back into circulation and tax it at some rate with an eye towards maintaining economic output a la Plato...

This would seem to be the key flows to get right in order to maintain a well functioning economy.

So I dont see where the problems would come from with them going in and taking all the "money" back to Rome per se.... obviously they would never do that in the first place if you are running a nomisma system which used silver coins denominated according to the law.

I dont think they could end up as stupid as our people today as the system was not as abstract as it used actual physical coins which OBVIOUSLY they could never expect to tax without having put them in circulation in the first place... seems like no one could be that stupid...

I guess I could be making a false assumption but it seems highly unlikely to me that they could get it wrong using actual coins.


Unknown said...

in the US though, when the government first issued coins they allowed people to bring metal to the mint and have it turned into coins for a small fee. So they issued the coins without spending them into circulation.

Unknown said...

If the Egyptians used silver coins as their currency, as did the Romans, then taking the Egyptians' coins back to Rome would be the equivalent of taking money back to Rome. Once in Rome the coins would be melted down and made into Roman coins.

Perhaps the modern day equivalent would be if the US expropriated all of China's USD and treasury holdings.

Matt Franko said...


I believe Egypt was first part of the Greek empire before Rome took it over... so Cleopatra was a Greek and I believe she and Antony were involved in one of the Roman civil wars, etc..

So I look at "Rome going into Egypt" as some sort of civil war and if Rome took Egypts silver it was probably only to take it back to the mint for re-striking with the images of the group that won the civil war... like here in the US with the Union and the Confederates...

I agree with your basic point that it looks like Rome needed actual metal (looks like silver mostly) to make their coins out of and they had to get it from somewhere... either by mining or taking it from a conquered territory...

But this is not accurately described as "they took the money"...


Matt Franko said...


I like del Mar's designation of the word "money" as a metonym.... not a very scientific word.

also it is interesting to see that blog also take on the word "capital", that is another nebulous term imo...

We got into those two words here a while back so it look like math oriented people are seeing the same problems:

Seems like a big semantic problem as I think you would agree that these systems are best understood NOT from a semantic approach but rather from a mathematical approach... the problem is that we have put semantic type people in charge of all of this...

with semantics, if someone looked upon as having some sort of authority says "we're borrowing from China" or "we're out of money" these people just flat out have to believe it as they have no other options available to their brains, Leverage has documented a complete shutdown of their neocortexes... sad for them...


Unknown said...

money is counterintuitive, I think. It's strange to think of money as a liability when you're used to thinking of it as an asset. Most people have it back to front.

paul meli said...

Real money (financial assets) is only a liability by abstraction. As far as you and I are concerned money is an asset, period.

If the fact that private-sector credit includes both an asset and a liability is difficult to comprehend it goes a long way towards explaining why we are in such dire straits currently.

Think of credit liablities as negative future spending, the asset portion as current spending. Net spending is zero overall.

Matt Franko said...


Hudson here: "Real estate prices are bid up on credit as families borrow to buy homes and rental properties. The winner normally is the borrower willing to pay the bank the property’s entire rental income in exchange for a mortgage loan. The hope is to make a gain by selling the house or office building – and above all its land, that is, its site value – to a new buyer. Of course, all of this has to stop at some point. "

I thought this was good and gets to the point you often have made that at loan inception, balances are only created for the principle and not the interest (What a f-ed up design huh????)

And the system balances required for the interest has to come from other loans ex post of the original loan... and the government has to approve all of these new loans or a refinance of existing loans on the same property for a new larger amount... so it all goes back to the govt sector authorities facilitating all of this...


paul meli said...

"balances are only created for the principle and not the interest (What a f-ed up design huh????)"

Even if there was zero interest this source of spending would be unsustainable because of leakages such as saving and wealth accumulation (same thing mathematically but different motivations). Interest accruing just speeds up the bubble-burst.

Deficit spending makes the credit cycle sustainable for a longer period before it blows up. I can't say I know precisely what a Ponzi is but this seems like a good candidate.

I've gotten some pushback on this idea of credit unsustainability to the effect that it is possible to drive an economy with credit alone but that rings to me of a perpetual-motion machine so I will continue to rule it out until proved otherwise.

Arguments such as "so and so says such and such" won't cut it because I no longer give any quarter to "experts". An expert can be anyone 50 miles away from home (where no one knows him) carrying a briefcase.

Apparently Steve Keen has demonstrated sustainability but I will have to see how his "black box" is programmed before I lose my skepticism.

Intuitively I just can't see it working, plus I am certain as one can be of the impossibility of perpetual-motion, and that's how it looks to me.

Tom Hickey said...

MMT economists advise not using "money" other than as a cover term that is left intentionally imprecise. Otherwise, say exactly what you mean in the context.

"Money" cannot be not a commodity since "commodity" is defined as what is produced for others' use, i.e., for exchange rather than own use, and money is not produced for exchange. "Money" is that which serves as a unit of account, a medium of exchange, a store of value between transactions, and a record of credit.

Money need not be a "thing" at all, just an accounting entry. Even if the substance of what serves as money can also serve as a commodity, e.g., gold, silver and copper, it is not a commodity when serving as money, since it is not produced for exchange but rather serves as a unit of account, medium of exchange, store of value, and record of credit in intermediating exchange. Money, banking and finance is about financial intermediation, not production of real resources as intermediate and final goods.

"Money" is an "idea," that is, a social construct involving rules — customs, conventions, and institutional arrangements. There is no "natural" money," as commodity fetishists claim.

Tom Hickey said...

y money is counterintuitive, I think. It's strange to think of money as a liability when you're used to thinking of it as an asset.

This is key. Because most people don't think in terms of accounting, they don't get that every asset must have a corresponding liability by definition. As a result their thinking is contradictory, i.e., logically impossible, probability zero.

paul meli said...

"MMT economists advise not using "money" other than as a cover term that is left intentionally imprecise."

In technical discussions yes, I see the point here. For the rest of us "money" is that which is used for spending or saving. Not overly complicated.

As far as the sectoral balances are concerned, that is the only definition of money necessary or relevant.

If we are to get through to the masses with the MMT message, dancing around the various abstract views of money will not be helpful to the cause.

If we can't explain this stuff in simple terms we may as well give up.

When Apple sells an iPhone, no one cares how the internal circuitry is arranged.

Tom Hickey said...

@ paul

Yeah, the problem is that when we break it down for common understanding, then the technical people jump all over us, and when we are precise, no one without a background in monetary economics or finance can understand it, even people in monetary economics and finance often can't seem to get it.

The people that get it are systems people of one sort or another.

paul meli said...

"Yeah, the problem is that when we break it down for common understanding, then the technical people jump all over us"

This cohort usually turns out to be the hyper-anal semantic dotted-i crossed-t police that are generally missing the forest for the trees anyway.

I don't recall ever being criticized for being imprecise by anyone that matters.

The irony is that if the critics were so smart they would understand the points we are making and engage in the discussion.

The fact that they choose to correct our grammar pretty much tells you they've got nothing. They are promoting themselves at the expense of others.

Matt Franko said...

"Arguments such as "so and so says such and such"

that's play #1 right out of the semantic playbook... they HAVE to rely on this as it is all they have got.

Ive posted this thought before but here goes again: Set the policy rate to zero and we can have the govt pay the interest on loans to the lender and NOT the borrower, ie if the borrower makes the principle payment, then the lender gets the interest directly from the govt, at a top level systems POV seems to me that should work at least mathematically.

When everything inevitably blows up the govt ends up bailing out the banks anyways... this way the system is at least guaranteed to have the balances available to pay interest.

Doesnt allow for savings leakage but one step at a time....