Michael S. Wilson — Noam Chomsky — ‘Everyday Anarchist’: The Modern Success Interview

Basic Chomsky.

Modern Success
Noam Chomsky — ‘Everyday Anarchist’: The Modern Success Interview
Michael S. Wilson

Peter Cooper — Why Neoliberals Pretend Private Debt Doesn't Matter and Public "Debt" Does

The neoliberal policy approach in the decades leading up to the crisis basically amounted to enticing or pushing people into increasing levels of private debt. With private debt burdens mounting in relation to real GDP, we were told that consenting adults knew what they were doing. Then the crisis hit. Since then, as the private sector attempted to deleverage and get its unsustainable debt levels under control, we were told that the government's deficits, which increased as a matter of accounting, were unsustainable. The outcome, depending on which doomsayer you listened to, would supposedly be hyperinflation, escalating interest rates, sovereign default, a crippling debt burden on future generations, or some heady combination of any or all of these calamities. For governments that issue their own flexible exchange-rate nonconvertible currencies, these claims are nonsense. Even in the Eurozone the sovereign-debt crisis is a manufactured one that can be alleviated indefinitely by the ECB. So what explains the neoliberal preference for private debt and aversion to government deficits? The class-interested motivations seem crystal clear.

Private indebtedness, unlike government deficit expenditure, binds the majority of individuals more tightly to the wage labor relation. Workers with mortgages or other debt obligations will be more subservient in relation to their employers, and less likely to risk their present positions in negotiations over wages and conditions.

heteconomist.com
Why Neoliberals Pretend Private Debt Doesn't Matter and Public "Debt" Does
Peter Cooper

It's called "debt-slavery," "debt-servitude," and "debt serfdom."

A major purpose of public debt under the current operational method of bond financing instead of direct issuance of currency is to create fiscal space for private sector deleveraging by offsetting increasing private saving desire that is not offset by net exports, thereby allowing the private sector to run the surplus it desires without contracting the economy and creating unemployment.

Jeffery Atik — Debt! How Human Beings Become Enslaved to Powerful Interests

David Graeber's "Debt: The First 5,000 Years" traces the history of debt in human relationships, exploring the complex power dynamics at play.

AlterNet
Debt! How Human Beings Become Enslaved to Powerful Interests
Jeffery Atik | Los Angeles Review of Books

Michael Hudson — Reality Economics

“Whom the gods would destroy, they first make mad.” And if they would destroy economies, they first create a wealthy class on top, and let human nature do the rest. The acquisition of power soon leads to its abuse, to economic and social hubris. By seeking to protect its gains, perpetuate itself and make its wealth hereditary, the emergence of a power elite locks in its position in ways that exclude and injure those below. The wealthy indebt them, shift the tax burden onto the less powerful, and turn government into an oligarchy. 

It is an ancient tale. The Greeks got matters right in seeing how power leads to hubris, bringing about its own downfall. Hubris is the addiction to wealth and power, an arrogant over-reaching that involves injury to others. By impoverishing economies it destroys the source of profits, interest, capital gains, and even recovery of the original savings and debt principal.

This abusive character of wealth and power is not what mainstream economic models describe. That is why economic theory is broken. The concept of diminishing marginal utility implies that the rich will become more satiated as they become wealthier, and hence less addicted to power. This idea of progressive satiation returns gets the direction of change wrong, denying the basic thrust of the past ten thousand years of human technology and civilization.

Counterpunch
Reality Economics
Michael Hudson | Visiting Professor, UMKC

(h/t Kevin Fathi via email)

Covers most of the important points other than monetary economics. Good summary to pass on. Explains to people who are pissed off, why, and explains to those who are not pissed off yet, why they should be.

Michael Hudson — Debt Slavery

Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.

This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, also communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector. [emphasis added]

Read the rest at CounterPunch

Debt Slavery – Why It Destroyed Rome, Why It Will Destroy Us Unless It’s Stopped
by Michael Hudson

Debt Serfdom and the Origin of the Crisis

Trapped assets that generate no income streams in the present are not capital; the value of such non-productive assets is illusory. Strip away these trapped assets and the reality is revealed: most American households toil to service their debts.

The typical American household is insolvent: its debts exceed its assets.

There is nothing fancy about calculating insolvency: if debts exceed assets, the enterprise is insolvent. By this measure, most American households are insolvent, if their real assets are marked to actual market.

For example:

Auto loan balance: $9,000 
Actual market value of auto: $6,000

Credit card balance: $6,000 
Street value of stuff purchased with credit card: $300

home mortgage: $250,000 
Auction value of house: $200,000

Student loans: $60,000 
Market value of education: Not applicable, as it cannot auctioned off or securitized

And so on.

The typical American household is thus in service to its debt, not to its assets, and to the holders of that debt. This is debt-serfdom: serfdom in service to the owners of debt, debt that may well always exceed the value of the household's assets. This is debt-serfdom for life.

Read the rest at of two minds, Debt-Serfdom Is Now the New American Norm by Charles Hugh Smith

Smith continues in The Origins of American Debt-Serfdom where he traces the beginning and course of the long financial cycle culminating in Ponzi finance that was described by Hyman Minsky.