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More and more money is being extracted from of the production and consumption economy to pay the FIRE sector. That's what causes debt deflation and shrinks markets. If you pay the banks, you have less to spend on goods and services.

Michael Hudson

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Michael Hudson
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More quotes by Michael Hudson

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When economists speak of money, they neglect that all money and credit is debt. That is the essence of bookkeeping and accounting. There are always two sides to the balance sheet. And one party’s money or savings is another party
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What's bad for the frackers usually is good for the rest of the world.
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So the political choice today is much like the 1930s, when the global economy also broke down. The choice is between nationalism and populism on the right, or socialism reviving what used to be left-wing politics.
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I don't think that governments should permit speculation in raw materials, because they're what the economy basically needs.
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In fact, there's no way that banks can be paid everything that they're owed.
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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.
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On the flat tax, the more you compress the tax rates, the more you untax where the income is really made, at the top of the pyramid.
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As you have to pay more interest and amortization on what you owe, you're left with less and less money to buy goods and services - unless you borrow even more and go further into debt.
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Paying debt service to banks leaves less income to buy goods and services.
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The effect of metals speculation was to push up the prices that China had to pay to countries like Australia. This squeezed China. Once the speculative demand ended, all of a sudden the added production facilities that had been brought into production by the high prices went out of production again, and there was a glut.
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The companies aren't hiring, because consumers don't have enough money to buy the goods and services.
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Nobody prefers to earn income any more, because that's taxable. Rich people prefer to make capital gains.
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We're in a chronic debt-deflation. There's no way we can recover unless you write down the debts. And that's what the IMF basically is implying (and it was explicit regarding Greece), but its not spelling it out, because that's not what can be said in polite company.
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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.
Michael Hudson
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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.
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That's the magic of double-taxation treaties: you can shop around for the lowest taxer.
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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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