My Per Capita Talk on Debt

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I haven’t yet had time to post Michael Hudson’s talk at Cus­toms House–hopefully I’ll man­age that this weekend–but in the mean­time here is the talk I gave a cou­ple of days ear­lier at Per Capita’s Pol­icy Exchange 2009 Con­fer­ence in Can­berra on Octo­ber 21st 2009. The good folk at SlowTV put this together, and this is the link to the video on their site.

I open this talk by refer­ring to the first pre­sen­ta­tion at the con­fer­ence (after Julia Gillard’s open­ing speech) by Pro­fes­sor Joshua Gans, in which he began by describ­ing both Mil­ton Fried­man and Hyman Min­sky as “Key­ne­sians”. Had one of the stu­dents in my His­tory of Eco­nomic Thought sub­ject at UWS made such an obser­va­tion, he/she would have been well on the way to a fail grade. I was hop­ing that SlowTV might have also posted Joshua’s talk so that you could make your own minds up on this, but that doesn’t seem to have occurred. Those curi­ous about his approach to eco­nom­ics should check this link to his home page and a blog he estab­lished called Core Eco­nom­ics.

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  • ak


    The pro­posal of debt reduc­tion and mea­sures pre­vent­ing relpse have been men­tioned on the last slide of this pre­sen­ta­tion:

    and there:

    It has been men­tioned on sev­eral pod­casts as well.

    Since the polit­i­cal cli­mate is not appro­pri­ate and tim­ing is not right in Aus­tralia these ideas haven’t been dis­cussed exten­sively.

  • Bull­turned­bear

    Hi Namke,

    I’m happy to leave the dis­cus­sion there to. It is a plea­sure to debate such a gen­tle­man. Thank you.

    Don’t con­cern your­self about tak­ing up space though. The ideas you raise and many sim­i­lar are per­fect for dis­cussing on this blog IMHO.

  • soho44

    Some thoughts on Obama’s visit to China:

    The Chi­nese nat­u­rally want to pro­tect their tril­lions in dol­lars in the States. Pre­serv­ing face is also very impor­tant.

    Obama says he wants to com­mit more troops to Afghanistan in Jan. This time, “we’ll have a def­i­nite plan on how much it will cost. How long it will take.” And so on.

    Sound famil­iar?

    This means that the Chi­nese are pay­ing for much of this war. Eco­nom­i­cally, what’s in it for China for the States to stay in Afghanistan? The U.S. is pay­ing var­i­ous Tal­iban not to attack con­trac­tors. Then when they deliver their goods it’s now ok to kill them (thanks very much).

    In the States, the real unem­ploy­ment rate is almost 20% nation­ally. Locally it can go as high as 35%. If you’re the Chi­nese govt., how long would you pro­tect your invest­ment?

    They (and other govts.) con­tinue to stock up on gold. The buy-gold-now pun­dits keep scream­ing to buy more. I’m going to go the other way and say it won’t reach $5,000 an oz.

    Why? Because it’s in nobody’s best inter­est. If the dol­lar goes down, the Chi­nese pull out. If they do, it’s a domino effect world­wide. What does that acoom­plish? Noth­ing.

    The Ron Paul types are still scream­ing for audit­ing the Fed. But the truth is it’s not going to hap­pen. All of the key eco­nomic peo­ple are ex Wall Street types. And it’s clear that Obama won’t do any­thing to replace them. Because if he does polit­i­cally he apprears to be weak (accord­ing to the well-paid Demo­c­ra­tic “cam­paign strate­gists”).

    Another FYI point: many key Con­gress peo­ple are mak­ing mil­lions in defense cor­po­ra­tion invest­ments. Ex: John Kerry (almost $40 mil­lion this past year). Which means while he talks a mean game about “rethink­ing our Afghanistan strat­egy”, notice how he never says we should just pull out.

    Obama doesn’t have the nerve to stand up to the mil­i­tary indus­trial com­plex. Yet he has the nerve to con­tinue to use vets with PTSD as a polit­i­cal foot­ball. If you’re a vet and diag­nosed with PTSD, under Tri-Care (the mil­i­tary uni­ver­sal care), treat­ment is free. If you’re a civil­ian and you get sin­gle per­son cov­er­age AND you’re diag­nosed and start treat­ment six months prior, then it’s cov­ered. If you don’t, then it’s not. 

    10% of the State­side pop­u­la­tion has some form of PTSD. How come that’s not a “national emer­gency” that war­rants an Exec­u­tive Order imple­ment­ing sin­gle payer health care? Because if Obama did that the anti-sin­gle-payer lobby would roast him alive. And then his career’s over.

    The hypoc­racy in this is mind-bog­gling.

  • ak

    I agree with the most of your post except for one sen­tence:

    If the dol­lar goes down, the Chi­nese pull out. If they do, it’s a domino effect world­wide. What does that accom­plish? Noth­ing.”

    I believe that this would in fact be the only thing which would save the Amer­ica. Just look at the Argen­tin­ian cri­sis and how quickly they recov­ered. It is the real econ­omy what mat­ters.

    The real war is not in Afghanistan — this is a fake war. The real war is a trade ware between the Amer­i­can work­ers and the mer­can­tilist Chi­nese state. Guess who is win­ning?

    I think that it might be inter­est­ing to see the com­ments made by he guy called “Panda@War” to the arti­cle writ­ten by AEP which I have already men­tioned:
    Check out all his/her com­ments — he/she sounds like a new over­lord, doesn’t he/she?

    It is prob­a­bly good time to ditch all the rub­bish about the “US bank­ruptcy” — the argu­ments why this is impos­si­ble unless the US Gov­ern­ment actu­ally wants it are there:

    But the Amer­i­can gov­ern­ment and the Amer­i­can peo­ple in gen­eral are still con­strained in the way they are think­ing. They prob­a­bly know they can print USD with­out wreck­ing the real econ­omy but they will do noth­ing to solve the unem­ploy­ment prob­lem unless they have to. For the Gov­ern­ment play­ing the geo-strate­gic game with Iran and North Korea seems to be more impor­tant — and they need both Rus­sia and China on their side.

    Don’t be fooled — the Chi­nese are print­ing their money in the name of ster­il­iza­tion. This is how the infa­mous peg is imple­mented. They don’t care what the “mar­kets” will say. They don’t care what the con­cerned econ­o­mist say about the straw man of hyper­in­fla­tion. Just look at the data there (I am not say­ing that I agree with the con­clu­sions)

    Remov­ing the dol­lar peg won’t rebal­ance the trade instantly but at least Amer­i­can work­ers will have a chance to com­pete.

    Any sig­nif­i­cant right-wing (“get rid of the Chi­nese import”) or left-wing (“work for all”) polit­i­cal move­ment may save the day in the US. But I am pes­simistic because peo­ple are buy­ing the offi­cial pro­pa­ganda which is self-con­tra­dic­tory (“our over­con­sump­tion is good but this is the debt we have to pay, prop­erty right are sacred, glob­al­i­sa­tion is good”). 

    Unem­ployed peo­ple should just go to the streets and demand jobs, for­get about all the mon­e­tarist pseudo-sci­ence related to hyper­in­fla­tion, for­get about the pub­lic debt. Take what­ever Mil­ton Fried­man said — and do the oppo­site. The rest is irrel­e­vant in the long run in my opin­ion.

  • AK
    I am cer­tainly not dis­agree­ing with you, it sounds like a rev­o­lu­tion is needed from the peo­ple to make the Govt wake up as to whom they rep­re­sent. What do we call Bastille Day 10 days after Inde­pen­dence Day? 4th July to 14 th July?
    Think of a name and the Amer­i­cans will ban­ner it and fight for it.

  • soho44


    It’s needed. But sadly what’s also needed is for more peo­ple to be affected by this. Sounds bizarre. But some­how that seems to be the “Amer­i­can Way” (what­ever that means).

  • Fred

    Namke, Your idea has merit. I think what you are describ­ing is a sys­tem where all tax­pay­ers are auto­mat­i­cally mem­bers of a “credit union”. The state and it’s assets/liabilities are “depos­i­tor owned” and extend­ing this to include the right to a cash account and draw your share of any­thing “bor­rowed” in your name. Yes the cur­rent sys­tem is wrong in that the tax­payer is sub­si­diz­ing the bank­ing sys­tem. The prob­lem with your sys­tem is that when the Gov­ern­ment bor­rows they want to spend it on stuff they want to spend it on and wouldn’t trust indi­vid­u­als to spend the money dropped on them from above wisely. 

    But here’s a halfway house, and it can be done now that we have the inter­net. Instead of guar­an­tee­ing bank deposits, the Gov­ern­ment gives every tax­payer the option of open­ing a “reserve account” 100% guar­an­teed by the fiat paper that they are at lib­erty to print. It’s an inter­net bank­ing only account and hooked up to the ATM sys­tem so you can draw out money (pay­ing the bank charges of course). To deposit money the Gov­ern­ment sim­ply signs up agents (banks, city coun­cils — any­one with POS ter­mi­nals) to accept deposits, or you use inter­net bank­ing to trans­fer the money into the account.

    Money in these accounts is there­fore not sub­ject to the frac­tional reserve money mul­ti­plier effect, inter­est can be paid (but less than the mar­ket rate for a bank). Move your money out of one of these accounts to a bank or any other invest­ment and it’s a case of “buyer beware”. The banks won’t like this idea, but it seems to me to one path avail­able to exit the bank deposit guar­an­tee which is a bit of a trap at present.

  • soho44

    Just checked out the BBC’s site re: recent stuff on cli­mate change. It seems that their World Have Your Say pro­gramme can’t get enough debate on this.

    I sug­gested a BBC con­test to find the best solu­tion for global warm­ing. It must meet 3 cri­te­ria:

    It must be eco­nom­i­cally fea­si­ble.
    No sci­en­tists work­ing for the anti-global-warm­ing lobby are allowed to do “in-depth stud­ies” on this.
    And, this must be approved by Her Majesty the Queen before being imple­mented. Because she’s the Queen, that’s why.

    Or maybe, the ABC could run it’s own con­test as well. The more the mer­rier.

  • soho44

    Just read some new com­ments by Jim Rogers re: invest­ing in sil­ver and other com­modi­ties (instead of gold).

    His rea­son­ing: when 99.9% of the crowd goes one way, con­sider the oppo­site. But other than that, is any­body see­ing any other signs to go with other com­modi­ties?

    (1) China’s econ­omy con­tin­ues to grow. Their bailouts have worked much bet­ter than other coun­tries.
    (2)Historically, hasn’t sil­ver always lagged behind gold?
    (3)In every bub­ble, there’s always a limit to the hype.
    (4)A finite amount (vs. the “infi­nite” appeal of gold). Ex: oil. The oil pro­duc­ing coun­tries and cor­po­ra­tions area nau­rally all say­ing no wor­ries. We have LOTS of new fields to develop.

    If that’s true, the how come Saidi Ara­bia was talk­ing about the West pay­ing them a fee for reduc­ing demand? Is that just cap­i­tal­is­tic arro­gance? Or, a sign that yes sup­plies are going down?

    (5) Global warm­ing. How come Copen­hagen won’t pro­duce an agree­ment? Because there’s no ratio­nal debate about it using actual facts. Instead, it’s sci­en­tists (cor­po­rate employ­ees) who are paid to put out pro­pa­ganda. In one aspect, it’s like lit­tle kids argu­ing. Which means, you’ll never have a solu­tion.

    If it is a lie, then why would these world class sci­en­tists throw their careers away? Does this also mean that Al Gore has THAT MUCH POWER worl­wide? I don’t think so.

    I once saw a CBC-TV doc­u­men­tary on this. They spoke to sci­en­tists all over the world. Who was lead­ing the anti-global warm­ing crowd? Neo­con “poll­ster” Frank Luntz. Then, at the end when he was in Toronto, he actu­ally said on-cam­era, “in the States, I get paid really well to put this out. But, I know it’s all crap.” 

    Maybe this is Roger’s strongest hunch right now?

  • The bru­tal truth about our migra­tion pol­icy (apart from the reluc­tance to accept ille­gal migrants even if they are true refugees) is that the pop­u­la­tion of Aus­tralia has to grow even if this means dam­ag­ing the envi­ron­ment – or else we will be set­tled with­out our con­sent when the envi­ron­men­tal or polit­i­cal cri­sis in the region kicks in. You can­not get enough high qual­ity migrants from Europe or Latin Amer­ica
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