MH: The price decline is a result of having to pay debts. That drains income from the circular flow between production and consumption – that is, between what people are paid when they go to work, and the things that they buy. Deflation is a leakage from this circular flow, to pay banks and the real estate, called the FIRE sector – finance, insurance and real estate. These transfer payments leave less and less of the paycheck to be spent on goods and services, so markets shrink. Some prices for some products go down when people can’t afford to buy them anymore.…He goes out of paradigm though:
When you pay a debt to the bank, the banks use this money to lend out to somebody else or to yourself.Funny mistranslation.
Look at Ukraine. Its currency, the hernia, is plunging.(Should be hryvnia.)
Counterpunch
The Slow Crash: When Global Economies are Run by Banks
Bonnie Faulkner interviews Michael Hudson
So let's deprivilege the banks!
ReplyDeleteWho can legitimately oppose that?
No one can, logically or in my experience.
Indeed, it is passing absurd that I even have to argue for it except, like a cancer, those privileges will have to be delicately removed lest the patient, the economy, be injured.
Still, it's only inexpensive fiat and some wisdom that's needed.