It’s amazing that Europe says, “What are we going to do with these refugees?” It’s as if it doesn’t realize that being part of NATO and bombing these countries forces them to choose to live by fleeing, or to stay and get bombed.
MICHAEL HUDSONMathematically, 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.
More Michael Hudson Quotes
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There are two definitions of deflation. Most people think of it simply as prices going down. But debt deflation is what happens when people have to spend more and more of their income to carry the debts that they’ve run up – to pay their mortgage debt, to pay the credit card debt, to pay student loans.
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Every government, from the Obama administration right through to Angela Merkel, the Eurozone and the IMF, promise to save the banks, not the economy.
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Money is not a factor of production. But in order to have access to credit, in order to get money, in order to get an education, you have to pay the banks.
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Most people think of the economy as producing goods and services and paying labor to buy what it produces.
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You could say that the vote to withdraw from Europe is, it’s really a vote of the British middle class, the working class, to withdraw from the U.S. neoliberalism that has been running Europe for the last ten years.
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People think of a parasite as simply taking money, taking blood out of a host or taking money out of the economy. But in nature it’s much more complicated.
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Economists often define their discipline as “the allocation of scarce resources among competing ends.” But when resources or money really become scarce, economists call it a crisis and say that it’s a question for politicians, not their own department.
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If the economy is growing, people want to employ more workers. If you hire more labor, wages go up.
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So we are in for years of debt deflation. That means that people have to pay so much debt service for mortgages, credit cards, student loans, bank loans and other obligations that they have less to spend on goods and services. So markets shrink.
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People are putting their money into treasuries because they worry that the risk of putting their money into the bond market, the stock market or even the money markets is very high.
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The one sure mark of a con, though, is the promise of free money.
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Small banks that lend to consumers are fine.
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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.
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The Eurozone die is cast. Countries must withdraw from the euro so that governments can create their own money once again, and resist creditor demands to carve up and privatize their public domain.
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You get a constituency; you make them believe your promises, and then you turn them over to your financial campaign backers. That’s what politics has become and that’s as much an art of deception as economics is.
MICHAEL HUDSON