Audio and transcript.
MichaelHudson.com
Set Up To Fail
Renegade Economist's interview 05.09.2012
Interview with Professor Michael Hudson by Karl Fitzgerald
KF: We welcome to the show Professor Michael Hudson, Distinguished Research Professor at the University of Missouri-Kansas City, the leading Post-Keynesian university in America. It’s been fantastic to see, Michael, that the public profile of UMKC has really taken off with Randall Wray, yourself and Stephanie Kelton being quoted quite widely these days. Can you explain what Post-Keynesianism is?A bit out of paradigm in places, though
So if you don’t create money – if the central bank doesn’t monetize the government deficit by just printing money electronically and spending it into the economy....
"A bit out of paradigm in places, though
ReplyDeleteSo if you don’t create money – if the central bank doesn’t monetize the government deficit by just printing money electronically and spending it into the economy...."
A bit out of paradigm…understatement…in this instance the description is incongruent with what is actually taking place in the system, and shows a fundamental misunderstanding of the central banks role.
Smart people continue to define the problem incorrectly. This must lead to sub-optimal outcomes at best.
The most important step in solving a problem is defining it correctly.
Hudson begins by saying that the Eurozone is different to 'civilized countries' (including the US) because it is controlled by the banks, but then goes on to say that the US is also controlled by the banks and that the system is set up to benefit them. A bit of confusion here I think.
ReplyDeleteHow is it correctly defined? Can you please put it in so simple way, that we stupid can understand?
ReplyDeleteCentral bank monetisation removes money from private sector and does not create extra demand?
ReplyDeletey, the bankers do control the EZ politically, having actually their cohort in rulership positions in some countries, and the push is to write this into the every structure of the way the EZ is governed.
ReplyDeleteIn the US all we have to be concerned with is crony capitalism and corruption. The EZ is in far worse shape wrt representative democracy.
How is it correctly defined? Can you please put it in so simple way, that we stupid can understand?
ReplyDeleteIt's incorrect in terms of actual operations in the US. The Fed doesn't "spend money into the economy," as Hudson states, because that is fiscal and the Fed isn't permitted to do fiscal under current the US law — although cb's may be permitted to do this in other countries.
Central bank monetisation removes money from private sector and does not create extra demand?
ReplyDeleteIn the first place, "monetization" is really only applicable under a convertible fixed rate system like the gold standard. This is not the system we are operating under for decades now.
Secondly, when the cb purchases financial assets by crediting bank accounts it increase liquidity. Increased liquidity doesn't not in itself increase the propensity to spend, which is the sine qua non of increasing effective demand. Instead those funds are generally shifted from one savings vehicle to another, often more speculative one, like tsys and MBS flowing to equities.
Good stuff Tom.Ross Ashcroft on the Renegade economist channel is a good interviewer and deserve more viewers. Ross actually listen to his guests and ask questions in a polite and engaged way that is rare among all those channels that think that talk fast and loud and shout out a lot unrelated numbers,spit out graphs etc.is the main point to deal economics.It is stupid i think,and cheap.Everybody that is intersted in this numbers could easily just check them on internet, but to cut deeper,and ask,that are fundamental,and sounds naive questions are sometimes much more profound.
ReplyDeleteAnon agreed on Ross, his interviews are great viewing.
ReplyDeleteThe central bank doesn’t monetize the government deficit
ReplyDeleteA bit out of paradigm? Very out of paradigm!
And it's not as if others haven't continually pointed out these things to him.