When you say "paying the banks," what they really mean is paying the bank bondholders. They are basically the One Percent. Michael Hudson More Quotes by Michael Hudson More Quotes From Michael Hudson 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 Trump's junk economics is the illusion that if we cut the taxes on the wealthiest brackets, it'll all trickle down. But it doesn't trickle down. Michael Hudson illusion junk cutting Mathematically, debts grow exponentially at compound interest. Banks recycle the interest into new loans, so debts grow exponentially, faster than the economy can afford to pay. Michael Hudson debt economy pay When you say "bank," a bank is a building, a set of computers and chairs and things. The bankers are the people running these banks. They're the chief officers, and they push the loans because they don't care if they go bad. For one thing, they may package these bad loans and sell them off to gullible institutional investors. Michael Hudson running people bankers Trump's claims that he's making taxes more democratic for the people, but it actually is a vast sucking of income and wealth upward. Michael Hudson income wealth people Wages for the ninety-nine percent have gone down, steadily, since 2008. They've gone down especially for the bottom twenty-five percent of the population. This means that they've gone down especially for Blacks and Hispanics and other blue-collar workers. Their net worth has actually turned negative, and they don't have enough money to get by. Michael Hudson ninety-nine blue mean No price is too high to pay to try to make the financial system go on a little bit longer. But ultimately it can't be saved, because of the mathematics that are involved. Michael Hudson littles trying pay Deflation means a slowdown of income growth. Markets shrink, new capital investment and employment also taper off, so wages decline. That is what's happening as deliberate policy in Europe and the United States. Falling or stagnant prices are simply the result of having less income to spend. Michael Hudson europe mean fall I think we're in the take-the-money-and-run stage of the economy. So the banks may go under, but the bankers, who make the policy, clean up. Michael Hudson running bankers thinking The fact that you have government-guaranteed student loans has created a whole new sector in the American economy that didn't really exist before - private for-profit universities that sell junk degrees that don't help the students. They promise the students, "We'll help you get a better job. We'll arrange a loan so that you don't have to pay a penny for this education." Their pet bank gets them the government-guaranteed loan, and the student may get the junk degree, but doesn't get a job, so they don't pay the loan. Michael Hudson government pet jobs Normally, if someone goes bankrupt, you wipe out the debt and get a fresh start. But that's not permitted with student loans. So the effect is to impoverish many graduates with very high debts. Michael Hudson fresh-start debt wipe Just like a house is worth whatever a bank's going to lend against it, an education is worth whatever the bank is going to lend the student to pay the university. So the availability of government-guaranteed student loans has vastly inflated the cost of education, just like it's inflated the cost of housing. Michael Hudson availability government house In housing you have jingle mail and you can walk away and leave the bank holding the bag. In the case of student loans, the debt follows you through life, and the banks or government will turn it over to collection agencies that are not very nice people and can do all sorts of harassing things to you. It's becoming a nightmare. Michael Hudson agency nice government Education is something that should not be organized on a for-profit basis, because in that case its purpose is not really to provide an education. It's not to teach students how to get better work, but how to provide banks with a free giveaway opportunity from the government, by making junk loans that are defaulted on. The effect may be to wreck the futures of the graduates that fall for the false promises that are being made. Michael Hudson government opportunity fall That's the problem with the financial sector. Banks and the financial sector live in the short run, not the long run. In principle the government is supposed to make regulations that help the economy over time. But once it's taken over by the financial sector, the government lives in the short run too. Michael Hudson government taken running The other dynamic keeping the stock market up - both for technology stocks and others - is that companies are using a lot of their income for stock buybacks and to pay out higher dividends, not make new investment,. So to the extent that companies use financial engineering rather than industrial engineering to increase the price of their stock you're going to have a bubble. But it's not considered a bubble, because the government is behind it, and it hasn't burst yet. Michael Hudson engineering technology government A bubble is only called that after it bursts, after the insiders get out, leaving the pension funds and small investors, Canadians and other naïve investors holding the bag. Michael Hudson bags fund leaving If a lot of money goes into the stock market, it'll push up prices, making money for stock speculators. Then the insiders can decide that it's time to sell out, and the market will plunge. Michael Hudson plunge making-money push-ups Stocks always go down much faster than they go up. That's why it's called a crash. People who put their money into the stocks will find, all of a sudden, that stock prices are no longer being supported by the debt leveraging that's been holding them up. Michael Hudson debt crash people I think something like three-quarters of American currency is held abroad, by drug dealers, by tax evaders, Russians and Chinese. Other people think that they want to protect themselves against their own currency going down. When you have 75% of the currency and even more of the high-denomination $100 bills held abroad, you wonder whether these are people we really want to pay. If you get rid of the $100 bills, its foreign holders will be the main losers. Michael Hudson drug people thinking
