Governments create money and spend it into the economy by running budget deficits. The paper currency in your pocket is technically a government debt. Michael Hudson More Quotes by Michael Hudson More Quotes From Michael Hudson When I say the economy is shrinking, it's the economy of the 99%, the people who have to work for a living and depend on earning money for what they can spend. The 1% makes its money basically by lending out their money to the 99%, on charging interest and speculating. So the stock market's doubled, the bond market's gone way up, and the 1% are earning more money than ever before, but the 99% are not. They're having to pay the 1%. Michael Hudson shrinking gone people I don't think that governments should permit speculation in raw materials, because they're what the economy basically needs. Michael Hudson government needs thinking The effect of metals speculation was to push up the prices that China had to pay to countries like Australia. This squeezed China. Once the speculative demand ended, all of a sudden the added production facilities that had been brought into production by the high prices went out of production again, and there was a glut. Michael Hudson demand australia country There are so many currency exchange rate problems that people are buying gold as a safe haven. Right now, gold looks like a safe haven if international exchange rates break down. Michael Hudson safe-haven gold people The United States is pushing as policy division of the world into rival currency camps - the dollar area on the one hand, and the Russia-Chinese-Shanghai Cooperation Organization group on the other, especially now that the IMF has changed its rules. People think that if there are rival currency groupings and national currencies are going bust, we might as well use gold as a safe haven. Michael Hudson safe-haven russia thinking The world's politics are in turmoil, not to mention the Mideast, where the US has mounted attacks from Libya to Iraq to Syria, and ISIS is attacking governments in today's pipeline rivalry. Michael Hudson isis iraq government The natural geopolitical arrangement is for Europe to be part of Eurasia, especially for Germany to develop trade and investment relationships with Russia. Michael Hudson germany russia europe US opposition to Russia and China has entailed sanctions against Russia, and Russia in turn has made counter-sanctions against Europe. So Europe is essentially sacrificing its opportunities for trade and investment in order to remain part of NATO. It is also agreeing to bomb Syria and the Near East, creating a wave of refugees that it doesn't know what to do with. Michael Hudson sacrifice russia opportunity Most people think of the economy as producing goods and services and paying labor to buy what it produces. But a growing part of the economy in every country has been the Finance, Insurance and Real Estate (FIRE) sector, which comprises the rent and interest paid to the economy's balance sheet of assets by debtors and rent payers. Michael Hudson real country thinking Europe is creating the flight of refugees that's tearing it apart politically, and leading rightwing nationalist parties to gain power to withdraw from the Eurozone. Michael Hudson creating party europe Europe is acting in a very self-destructive manner, but is doing so because it's trying to be loyal to the United States. Michael Hudson self trying europe Most of the European leaders look at themselves as having to follow the United States, because if the US opposes them, there will be a regime change. Michael Hudson united-states leader looks More and more money is being extracted from of the production and consumption economy to pay the FIRE sector. That's what causes debt deflation and shrinks markets. If you pay the banks, you have less to spend on goods and services. Michael Hudson debt fire pay If you look at payments to labor as a proportion of national income or gross domestic product, you find profits going way up, investment and savings going up. Michael Hudson income saving looks If you want to see where Trump is moving, look at what the United States neoliberals advised Russia to do after 1991, when they promised to create an ideal economy. Russia was under the impression that the neoliberal advisors were going to make Russia as rich as the United States. What they really did was create a kleptocracy that was virtually tax-free. Michael Hudson united-states russia moving In order to be an economist these days, you have to participate in this fairytale that somehow we can recover and still make the banks rich. And it is a fairytale. Michael Hudson fairytale rich order The worst loophole is what Donald Trump has talked about: the tax deductibility of interest. If you let real estate owners or corporate raiders borrow the money to buy a property or company, and then pay interest to the bondholders, you'll load the company you take over with debt. But you don't have to pay taxes on the profits that you pay out in this way. You can deduct the interest from your tax liability. Michael Hudson real pay way Seventy-eight percent of millennials are worried about not having enough good paying job opportunity to pay off their student loans. Seventy-four percent can't pay the health care if they get sick. Seventy-nine percent don't have enough money to live when they retire. So, already, we're having a whole generation that's coming on, not only here but also in Europe, that isn't able to get good-paying jobs. Michael Hudson eight opportunity jobs On the flat tax, the more you compress the tax rates, the more you untax where the income is really made, at the top of the pyramid. Michael Hudson flat-tax income pyramids From 2008 to 2016 all the growth in the American economy, all the growth in national income, was earned just by the wealthiest 5% of the population. So they got all the growth. 95% of the population didn't grow. If you can get a flat tax or other lower tax, as Trump is suggesting, then this richest 5% will be able to keep even more money. That means that the 95% will be even poorer than they were before, relative to the very top. Michael Hudson population growth mean
