Michael Hudson - on bank bailouts, the gold standard & the US dollar

3 Jul 2011 RT
Michael Hudson is President of the Institute for the study of long-term economic trends.

[Is the failure of American banks a symptom of a larger problem that's causing other countries to decouple themselves from the dollar?]

The reason they are decoupling is because the United States owes $4.5trillion to foreign central banks. It's running a chronic trade deficit and a military deficit. Money managers on Wall Street have taken the $600bn of bailout money abroad [!]. You have capital flight by the very people who are bailed out financed by the Federal Reserve itself.


[An interesting fact: Mr Hudson used to work as Chase Manhattan's balance of payments economist. This makes what he says here even more relevant] --

Every Friday we'd sit and look at the Federal Reserve's reports on the gold cover of the dollar. And it was going down and down and down. And you could see in advance that the dollar was going to have to close the gold pool. That's what my books were about. And we are in the same position today. The war spending forced us off gold in 1971. And now, we have been giving IOUs to foreign governments. But foreigners are now saying that the US has destroyed its industry they are asking if they will be paid back. It is so highly indebted an economy. Americans pay on average about 35 to 40% of their income on housing (mostly for mortgage costs), 12% for social security, another 15 to 20% in taxes. So before they buy any goods or services at all Americans have to pay the financial sector over two-thirds of their income no matter how little their paid. They're already priced out of the world market. Foreign governments see that. There are 800 military bases of the Pentagon...

Conservatives and libertarians scream this is socialism. They think it's low cost. But every single industry that is privatized from railroads to roads to telephones to water has raised the costs of privatization substantially. They pay enormous interest, enormous executive salaries, huge stock bonuses. Government doesn't have these costs. Privatization raises the prices for education, for Medicare. They are turning the American economy into a toll booth economy.

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[Victorvoyage]

Jobs are going offshore to Asia mainly because of its cheap and without rights labour. But it's the West neoliberalism who is responsible for that as it all come from the close relation between politicians and big economic powers: big multinational companies and the will of politicians to satisfy them making it easier to move abroad and hire half slaves workers.

[MrNChoudhury]

@Victorvoyage

I agree with you. When I was making my website I called up a company here in London to find out how much they would do it for. They quoted me £3000! You know how much somebody in India will accept to do the same job? About one fifth of that price. In the end I found a good person to do the project in the UK.

I think there are people in the west who live in a dreamworld and demand excessively high wages. But there are also good people who are innovative and who work hard.

[g77enn1]

Paul vows to "End the Fed" and replace it with a deregulated rat's nest of private bank currencies.

No mention of bankruptcy for Wall Street or nationalization of credit and currency. He implicitly opposes all tariffs, regulations, subsidies, and any notion of morality in law.

Paul is committed to paying Wall Street's debts. His recently-published "Plan to Restore America" is an austerity handbook that puts the costs of free trade and bailouts on the backs of poor people.

[g77enn1]

RON PAUL VOTED NO ON PREVENTING FORECLOSURES, ON MONITORING TARP TO INSURE MORTGAGE RELIEF, VOTED NO ON JOB PACKAGE, VOTED NO ON SHAREHOLDERS VOTING ON CEO COMPENSATION, VOTED NO ON CRIMINALIZING CARTELS LIKE OPEC, VOTED NO ON LOBBYIST DISCLOSURE OF BUNDLED DONATIONS, VOTED AGAINST MINIMUM WAGE & EXTENDING UNEMPLOYMENT BENEFITS

[pkpapers]

Good work from RT. Thank goodness we don't have to endure the usual RT news-bimbo interviewer this time. Hey, RT, stop hiring bimbos!

[megagagnon1]

"We only learned about it because of Bernie Sander's audit". Thom it was Sanders and Ron Paul working together, and at the last minute without warning, Sanders introduced the bill, a weak sauce version of the bill, and blindsided Ron Paul by doing so. In other words Bernie Sanders did the bidding of the banksters.

[marniespeaks]

secede