Hello and welcome to cross talk were all things are considered im Peter Lavelle it remains unclear who will be the occupant in the white house this january what can be easily predicted is the state of the economy where tens of millions of citizens it appears what is called the case shaped recovery is permanently dividing the country and the house and the have nots and this seems to be acceptable for those who are the outs. To discuss this and more im joined by my guest Michael Hudson in new york is a professor of economics at the university of missouri kansas city and author of through give them their debts and in bangkok were joined by steve keen hes a crowdfunding professor of economics on a tree on as well as a distinguished research. Fellow of the institute for strategy resilience and security of University College london originally crossed up rules in effect that means you can jump in anytime you want and i always appreciate it ok let me go to michael in new york you know this just term the new normal is bandied about and what really worries me is that the people that use the new normal where its a normal that is beneficial to them ok and theyre not particularly concerned about it ok because i hear more and more talk read more and more about a cave recovery and that is that in mission defeat in my in my opinion because it means the if you have the k. Its the the leg of the k. Youve given up on ok because the upper part. Of the economy its true because its to their benefit here i really worry when people talk about new normals and when they talk about the economy youre my friend well who has become normal since 2008 has been completely different from the old normal people have the idea of a normal you go back to a balance but really the economy hasnt grown at all since the 2008 crisis all of the growth in g. D. P. All of the growth in wealth has accrued to the Financial Sector to the real estate sector to the one percent for the 99 percent of all theyve gone down and down and down so the new normal is you cant get rich again by housing and join the middle class like it goes through the new normal as an all of the year increase in wages and debt service in rents and in monopoly prices so that they mark the new normal is a market is going to shrink and shrink and so we look like greece looks up in the last 5 years the end of the normal is looking way groups that if lation and rent this. Ok stephen im really glad that michael brought up the 2008 financial crisis as we have a reputation a reputation about it and that in this year where this was a art. Usually induced recession benefit if the one percent cant not keep stressing that year when what 202020 in 2008 havent come in is that you have this massive transfer of well upward upward again ok and so again i mean my underlying theme in this whole program is that perhaps the country speaking specifically about the United States that michaels reference to greece is a perfect one i think youre basically writing off tens of millions of people america hundreds of millions of people in the western heads yeah i mean to do what were saying is a process where the wealthy who go will they go through debts and this is something which markland. Very very strong on and on a mathematical model. And one thing which came out of my modeling of whats called misuse financial instability clock offices was it as a little of debt rose even when i had the capitalists borrowing the money and paying the interest but the ones who actually fight for our level of debt with a wood kids and the basic story is theyre the residual income earners in a capitalist system so as the. Debt by the rich goes off the servicing shot goes up and it came at the expense of what is incomes and that turned up in the system as well and then in the response to the crosses. Economists who know nothing about capitalism i know a lot about a blackboard model that cycle capitalism which is bears no resemblance to the real thing this solution was to boost consumption is what they call the wealth effect and the wealth effect was to make shares go up in value and of property go up in value and then people would feel wealthier and spend more the trouble is that doing that people are not putting him down to people with the wealth of bill gates and bill gates might buy one and soon elements of the vincis koda but he doesnt go shopping at kai not and thats what you need to get demand going up and its the poor youve got to direct the spending through so we had a capitalist process that in pretty cynical. Policy and then the response of the managers made that inequality worse michael did and so Point Program oh i dont like the word transfer of wealth the only kind of transfer of wealth that it spends is the 10000000 families that suffered foreclosures and if there are obama the banks not the debtor its what theres been inflation of stocks and bonds and real estate under the care is that they are tears there was 10 trillion dollars so a save the economy a trillion was put into pushing up stop and are real estate prices and only 2 trillion was put into the socalled real economy namely in 1000000 of the corporate sector and a little bit in the labor so theres just that asset Price Inflation not incorrect or the one percent 00 already owned maybe 80 percent of the stocks and bonds in the country didnt transfer yet more they simply use the Federal Reserve to lower Interest Rates quantitative easing and vastly increase the price of housing in stocks and bonds putting them further and further out of reach for the 99 percent you know behind it where where is the real economy here i mean how relevant relevant and is it to that in the larger scheme of things because this is something i keep noticing too i mean i get up you know we can talk about math or numbers until the cows come home but that really has nothing do with whats going on particularly for average people going yeah i mean the average people are completely excluded from this was michael says they average person doesnt on shares he will get a bit of i could use in a strange expression his starting with the and ending with che but i put our lives at this argument that you know they benefit through their Pension Funds or sector centra but another percentage of the share is that on by work because as a fraction of the overall our shipper shares would be well under well ended with low single thing. Its. The vast majority of inflation of asset process benefits the extremely wealthy not just the middle class but the extremely wealthy one percent or even the point one percent and what quantitative easing did was boost stock prices by buying a trillion dollars worth of bonds for a year off the Financial Sector which meant they had a trillion dollars additional cash in turin that was less vaughns they couldnt buy bonds because the Federal Reserve was being the body of last resort so they bush is that drives up the ship process and that trillion of course i think introduces us to process by maybe mole the net increase but the wealthy will sell and benefit from the sun go and then not by the occasional gamble gaining in somebody to wash it for them and the result of that is you get a trickle of that trillion dollars of on his head of easy money turning out in the real economy so did benefit to some extent but rather than a multiply this was a fraction the laws are effects you put in one trillion into the wealthy maybe you get 50 to 100000000000 for the poll. Ok but you know its a real quick here and in the term capitalism is been brought up here i really dont what he said he more ok in it a little slogan but what you just described here is that you had good reserve picking winners i thought thats what socialism is ok this isnt it this is where theyre deciding who succeeds and who doesnt succeed this is this is a team yeah its an easy because i actually are a god like this is the product of it into figures of like all Central Banks as stuff almost exclusively bought on the strength in the well they call the new possible school of thought and the new Classical School of thought fundamentally argues that capitalism is inherently stable so the government should get out of the why but they are in is the last 30 years theyve built models which ah good you can ensure troll the right of inflation by moving the right of interest washes fos effectively is the inflation rate is changing and that is stuff which is controlled by the Federal Reserve so in them models to actually have the Federal Reserve as part of the system is supposedly a controller now its a control it leaves out the most important parts of the economy and market and i have this all the time they leave banks and it and money out of thin models and then a close thats not the real world its the real world behaves in a white its for a while looks like its their model then goes completely gaga and they go ga ga as well as i what can they do we can continue boosting share process because the wonder a conduit they have is from themselves to the Financial Sector so its easy for them to pump money into the Financial Sector if there was a conduit to the to the people through for example everybody having an account of the central bank and then not have been able to use that mechanism but they havent even set that up so its fairly again ill use one of the models to see if theyre giving food to the parasite and saying please share it with the house. Go ahead michael definitely vote your to use the word real economy the real economy that youre. It was what we used to call Industrial Capitalism but what steve and i esteem has just been talking about is finance capital is that and finance capitalism is completely different from Industrial Capitalism Industrial Capitalism in the 19th century seem to be moving to socialism because its more efficient to have the government provide Public Health and Public Education at a low price because then the capitalists dont have to pay their labor so much if the Government Supports their cost of living but finance capitalism wants to increase the price it wants the privatized education raise the price. Of private housing at once to not have access. Then once theyre really support the finance insurance real estate sector the Financial Sector and so who takes over the state their. Libertarianism in neoclassical economics is a you know some throw planning but they shift Central Planning away from the government and let you know officials in the wall street and the Financial Sectors so were in a state of Central Planning that would have shocked adam smith and all of the classical icon of us were Central Planning by banks and their interest is not that of Industrial Capital but this is the one that is all then what the upside goes only to a small set of a group of people and all the downside goes to well People Like Us we get i dont know when things go really well but i believe transfer well it mean its amazing mechanism we saw and it is this year comes here served as you know and you know the banks call up and they say this is what we want this is not going to take ok what means they dont even have a number to call go ahead you know thats the problem we are completely locked out from the Economic System of the whole rationale for Central Banks taking over Economic Management fundamentally which is what theyve done and the people like Thomas Sargent and and rather lucas unwrapping all the mainstream economists who push these models of capitalism isnt here. Stable system theyve completely focused on the Financial Sector and ignore the real economy the real economy just you know trips along and librium well thats almost all of what it was control the interest right so the it but the end product of this is fundamentally as you say its a weird form of socialism for the rich to close they are the ones who are being elevated by tactics like quantitative easing and now you could say the same thing happening again the in goal missed money going in to the Financial Sector which is driving up the stock market thats where the upper part of the chi comes from and fundamentally that the problem here is that mainstream economists have not understood money korea but if youre running a central bank you know that you can put as many elements on the billions are true those on the asset sawed and buy wood if you lock on the liability side so they have simply said were going to buy 10 trillion dollars worth of shares a few those 10 trillion become our estimates the chantry becomes a law ability theyve got an infinite capacity to do that if they can continue pumping the stock market up and its actually funny to watch trump crowing about how well hes drawing it its actually the fed reserve the striving it up were going to jump in here gentlemen were going to go to a break now so a break well continue our discussion on the economy stay with. The United States economy resembles to a large degree the economies of countries that the United States typically makes fund you know the u. S. Or the United Nations will send aid and send money to countries lets say in africa for example not to pick on africa but it does happen where the money never gets distributed it just ends up the good leaders of that particular country and then they become fabulously wealthy. As the u. S. Economy was booming growing numbers of people were made homeless. You can work 40 hours d in a week and still not have enough to get housing everybody believes america still is the land of opportunity the reality of the not financial inequality and the lack of Affordable Housing for a living minimum wage give many people no choice. Thats been a problem with the city knows turn every time told to stay way out of home is. Considered if there is no answer because yes that requires resources the most vulnerable are abandoned on the streets to become the invisible cops. Join me every thursday on the alex salmond show and ill be speaking to guest of the world of politics sports business im show business ill see of and. Welcome back to cross top where all things are considered im Peter Lavelle dramatic were discussing the state of the economy. Ok let me go back to michael in new york we weve heard twice are the classical economy is the lead they claim that capitalism is inherently stable you know you guys are economists i mean whats stable about 282020 explain that to our viewers well for for 2 centuries 18th and the 19th century almost all economists agree that a cut economies are not stable because the Financial Sector is not part of the economy the Financial Sector grows by a purely mathematical loss exponential interests and the amount of debt its even i traced mathematically grows much faster than the economy grows. Much faster than the economy then youre going to have more and more of the economies and a spent on and the banks for debt service and paying day you know monopolies at the bank support and less and less to spend on goods and services and theres a crash thats not made in sense or economics is all about and thats why they wanted. Money creation to become productive but it hasnt been productive most almost 80 percent of bank loans are real estate loans and the rest are for stocks and bonds banks one for Industrial Capital formation they dont lend to play his acolytes whitely dont need you to explain how they can make money quickly the financial time frame is short term you can make money much quicker without taking all the effort of building a factory and making a good and developing a marketing plan for it all before couldnt make it much quicker just like pushing up using your revenue to push a prius that price and pay dividends and pay everything out and so many percent of americas Corporate Income is used on stuff buybacks and dividends its not float into new Capital Formation thats why rhydian doesnt realize it now if you see america deindustrializing that is not stable thats an. Unstable and yet the industrialization pays for the one percent did just realization pays if you want to use all your money to make money in the stock market. And you really dont care about the real markets and that that is making us look like greece and leaving us debt ridden and without much of her ability to grow you make money and youre the one percent and you make money by having the 99 percent in debt to yourself and owing money to yourself then theyre not going to have enough money to buy goods and services from the factories and sell it. I do have a little isnt this where very different from the kind of a real effort lou somebody had. Every 100 years ago was never was you know so you know i know im not the smartest guy in the world out there all on the show but you know what you guys are describing to me sounds like you know a lot of the scheme i mean that there has to be a reckoning sometime somewhere or someone or a group of you know the ponzi schemes did that is certainly a huge pot of it i mean what would you have as unproductive investment which can only continue being service if you take up more debt to cover the whole its created by the way to make money out of the last amount of data you took on and actually i recommend one of these days getting richard vague on your show because richard doesnt expand his read a brilliant history called a brief history of doom and he can show you from inside knowledge what the euphoric behavior of bankers is when they get caught up in one of these now growing ponzi schemes but one of what i wanted to actually talk about is also whats so good about stability because when you think about it is this stability we want is you dont want to just to break down but stability as the name of classical stuff on it is effectively the same as being frozen to absolute 0 and nothing is changing whereas the most important thing about capitalism which distinguishes it from any previous social system is the right of china so in that since instability when it means you get china technological change social change and so on is one of the strengths of capitalism is just by sheer innocence happens sense that the nonsense century people who try to defend capitalism against mox focused on the concept of equilibrium as a modeling tool knowing that it wasnt relevant to capitalism was a shortcut for them but the 20th century economists had no knowledge of their own history let alone the broader history of economic thought made equilibrium into or supposedly of the founding characteristic of capitalism and its is the finding of character its christic of capitalism as as for snow who is of the sun but i think what theyve done its a myth. Yeah and in search of that myth they are torturing of economy michael jump in so why did economists make this basic mistake steve as a mathematician has found if you believe in equilibrium automatically in the market then you dont need government so this whole idea of equilibrium was designed to prevent government from doing what government supposed to do protect the economy from the rent seekers protect it from predatory bankers protect it from the real estate speculators that read that. Raise the rents take it from the privatizers that want to turn Public Services and the monopolies the idea of an equilibrium is dont have government interfere let well straight allocate the resources and determine the policy not the government so all of this is is a logical. Advertisement for finance capitalism and for the one percent well you know that theyve been a definition of stupidity is believing doing the same thing over and over again will give you the same the same results ok with different result yeah i mean that is making the one percent rich of course its making because they like the results its the kind of break it down to real like you i mean one of the things and we look at 2008 and look at 2020 you know theres a lot of young people you know it was you know in 2000 interim be the work force you know these the n. L. The double whammy now 2020 they havent recovered from 2008 theyre not going to create families theyre not going to be buying homes and big some of them cant even buy current so a lot of them are moving back in with their parents i mean what are the long term implications of this because thats where i you know in my introduction you know this is a model because sooner than half the country now people that work are irrelevant or a new can use it and that ok i mean this is the scary and when you have people that have no future and they believe they have a new future they will we do embrace of the right me as an idea that id. Be very afraid of any. You know thats thats the thing i mean if you look at the level of profit to it and thats the driving force of capitalism which model and discipline which is completely emitted from mainstream economics if you go back to not in the end of the 2nd will will that process of the Great Depression of the 2nd world will reduce American Private debt by 75 percent when from about 130 percent to about 40 percent of g. D. P. And then you had of course plenty of room for credit by stripping demand because there wasnt a great deal of debt Interest Rates were as low as they are now pretty much so the servicing call swallow so you could have growing Credit Demand you reach saturation to some extent with the business sector in the 87 crosses and then at that point the banks i was turning to houses to try to create still more debts of them then theyve wiped out the housing sector another going for Student Loans car loans etc etc theyve got to the point where the target market is completely saturated with debt and contact on any mold so the engine is a minute so mention theyll go for the pension. But you know it didnt nobody can afford to handle anymore debt right now but actually the corporate sector now has the hostile level of debt compared to g. D. P. In the history of american capitalism the housing sector is slightly below the 2008 take but theyre trying to get the house as a consumer borrowing but its needles not going anywhere because we simply dont have the capacity to carry them all parasites again selling monfils fries and thats where weve got to you richard and when you simply construct in the more blood out of the real economy which you continue trying to do it the parasites themselves if they eat the host is middle of the mako the key thing about parasites is an order to eat those you have to take over the hosts brain you have to make the host think that the parasite is hard to be protected like a baby and it isnt the Financial Sector is it says you have if you go to this. The economy you have to give more money to the one percent the Financial Sector and the local down well theyre doing everything that and to prevent it from tripoli theyve taken over the brain and steve and i are not part of it weve somehow got an immunity and you know were on your show where you go around the world together saying the same. The world doesnt seem to change to make a long story short. You know when that when we looked at the reaction in the. Bailouts whatever you want to call it i mean obviously i mean they the politicians out there are a list that there is no you can care right away i mean what is the naacp what is the stage of the county roads all with the one percent to meet the needs create new knowledge stations or assembly you know representatives i mean thats what they were or ok i mean well i think i think actually thats smop not i understood that but then again i get a lot of bankers that are very smart guy ok only trying to get to the top of a system lack of morals gets to the top of the system out of your market my uncle and i have too much in the way of morals to get to the top well you know it is greed that out of sure. If theyve all swallowed a fish or economics textbook or my favorite answer this is actually the previous president obama because if you read his speech in 2009 when he came to power it was under bushs watch that of course the process began back in september of 2008 before the election but it went to become a power in february he gave a speech which said that you people lost its people obama speaks people ask wheres my bailout and he says the truth is its the dollars given to banks can create an extra 10. 00 in loans to the private sector a Multiplier Effect that is straight out of near possible textbooks and he didnt know any better he only has a degree and lol he didnt have he done economics might even have swallowed the ip is critical enough not to have done so. But if somebody forced them to drink the koolaid its quite obvious yeah and the koolaid isnt a classical economics textbooks are often they dont even know theyre doing something so stupid as some of them are venal enough to know thats the case with most of them a solidly audiology and theyre promoting the audiology which if it matched the system would actually be productive because its got nothing to do with the system it actually destroys a well if you have 3 houses in the hamptons that why should you care ok you get the last minute that michael got well i think obama know just exactly what he was doing when he invited the bankers and Goldman Sachs nearest to the white house and said im the only guy standing between you and the mob with us for the mob with a pitchfork for the voters who voted for and the job of allah titian today is to deliver his voters to his Campaign Contributors and thats what he did he didnt necessarily believe the neo classical economics they use it is a demo of factors and as a pretense as a Campaign Slogan and they know what they have but they know whos supporting their loyalty is still the interpreters and just as we privatized infrastructure weve privatized all attack certainly in america by turning it over so. Near i am really sick and tired of servitude and the g. O. P. In america talking about socialism because you know what everyone is going to end up getting. Ok i want to thank my guests in new york and in bangkok and i want to thank our viewers for watching as you are he see you next i remember ross and. As the u. S. Economy was booming numbers of people were made homeless. You can work 40 hours d in a week in still not have enough to get housing everybody believes america still is the leader but the reality of the. Financial ecology and the lack of Affordable Housing for a living minimum wage give many people new choice you know theres been a problem with the city turn. Cold. Because you have to require. The most vulnerable or abandoned on the streets to become invisible comes. The Global Chemical weapons watchdog confirms germanys findings that the prominent kremlin critic was poisoning the 5 another truck nerve agent. As fighting rages between armenia and azerbaijan russias intelligence chief says mercenaries from terror groups are travelling to the no go to the conflict zone. The United States for coronavirus hotspot to seize infection the surge began you restrictions are rolled out in new york starting with the shutdown of the city schools. And following massive riots kyrgyzstans Electoral Commission known as the weekend this putative parliamentary vote chaos in the Central Asian state has left the