Limitations of Capitalism. An amazing 10 min Interview with Michael Hudson - My star economist

[AsifAmeer]

I am a believer of Free- markets. But how do you reconcile the realities Dr Hudson shares here with your beliefs? Simple, dont make a belief! Open up your mind to accept more complexity, rather than being a redneck.

Share your thoughts...

 

[Unicorn]

Nice Interview Asif. The question, is it better if the government is involved in dispensing loans or banks? Which is the lesser of two evils?

Ponzie schemes are always going to be there.

 

[Skeptic]

Ha-Joon Chang destroys the biggest myths of our times and shows us an alternative view of the world

 

[AsifAmeer]

There r 2 types of credits/loans. One for Industrial Production expansion use and the other is for consumption use.

Till we got this mentality of Interest driven financing, its gonna continue to inject moral hazard in economic systems. Let the banks share in equity and spilt profits i.e. Equity Injection Banking or Equity Partnership.

Now think for a min, why will any bank lend you money to buy a house or a car or whatever for personal use? If any asset doesnt have a positive cashflow and profits, banks wont touch it. Then banks will be forced to do what it is their JOB to do - seek industrial financing. And when Govt sees prices deflating, they can simply print some money and spending it into the economy to bring about stable prices.

Nice Interview Asif. The question, is it better if the government is involved in dispensing loans or banks? Which is the lesser of two evils?

Ponzie schemes are always going to be there.

 

[Unicorn]

Ha-Joon Chang destroys the biggest myths of our times and shows us an alternative view of the world

I think he is talking about socialism/capitalism like in Sweden vs US.

Its interesting at the end he says in a democracy people can force politicians to go with a particular financial system. It is funny because politicians promise moon and sun and those who are realistic never get elected.

 

[AsifAmeer]

This book has been sitting in my wishlist for about 6 months now. I think I am gonna go thru it next month.

This is what I do when I like something. I try to find its critics! And when u can answer the critics, you know ur getting somewhere. Ever tried that strategy with religion? lol

Ha-Joon Chang destroys the biggest myths of our times and shows us an alternative view of the world

 

[Unicorn]

There r 2 types of credits/loans. One for Industrial Production expansion use and the other is for consumption use.

Till we got this mentality of Interest driven financing, its gonna continue to inject moral hazard in economic systems. Let the banks share in equity and spilt profits i.e. Equity Injection Banking or Equity Partnership.

Now think for a min, why will any bank lend you money to buy a house or a car or whatever for personal use? If any asset doesnt have a positive cashflow and profits, banks wont touch it. Then banks will be forced to do what it is their JOB to do - seek industrial financing. And when Govt sees prices deflating, they can simply print some money and spending it into the economy to bring about stable prices.

Yes, its a catch 22. I don't know if there is a perfect system.

 

[guest]

Asif I thought you were a libertarian. haha, come a long way since I guess. A thread with Michael Hudson and Haa-Jun Chang. Incredible. what next? Slavoj Zizek?

 

[Skeptic]

Asif as you said you find critic to take the critical view of subject.Yes that's good approach and the above book is a critic of capitalistic view. Writer is professor at Cambridge uni.

 

[only_truths]

There is no limitations to capitalism. China is the best example. No technocrat, no financial manager just a politician with financial instincts to be followers of capitalism.

There are still companies like Apple which believes in technological excellence, while Walmart could be best example of Financial management in cheap outsourcing. Both belong to capitalism.

 

[guest]

not necessarity. the government can make it extremely costly for banks indulging in making money on money by having a progressive tax system.

Nice Interview Asif. The question, is it better if the government is involved in dispensing loans or banks? Which is the lesser of two evils?

Ponzie schemes are always going to be there.

 

[Skeptic]

He says that govt. should establish & maintain a proportion between protectionism and globalization that is an essence of capitalism.

 

[AsifAmeer]

If following labels was ever the answer... right?

Truth comes in many labels, flavors and philosophies. We are handed labels by our parents, teachers and friends. Like beta, u should be proud that u were born in a Parsi/Muslim/Hindu/Christian/Jewish faith. Or boy, one day you will become a successful business man. Then we become part of the infection too.

And life continues to get distorted....

Asif I thought you were a libertarian. haha, come a long way since I guess. A thread with Michael Hudson and Haa-Jun Chang. Incredible. what next? Slavoj Zizek?

 

[AsifAmeer]

Well you see, there financial economy and there's real economy. They are supposed to be proportional. When financial starts to grow faster than the real sector, it needs to be taxed to keep it in line with the real economy.

Look up Exter's pyramid. Thats the composition of a financial sector.

Many economists are now calling Banks as Public utilities. I think they are correct in calling banks that!

not necessarity. the government can make it extremely costly for banks indulging in making money on money by having a progressive tax system.

Nice Interview Asif. The question, is it better if the government is involved in dispensing loans or banks? Which is the lesser of two evils?

Ponzie schemes are always going to be there.

 

[AsifAmeer]

Read up Chartalism, or what they now call the Modern Money theory. This was 1st practiced in Ancient rome.

Its a free-market within an big aquarium that is maintained by a military. In the last 5000 years, there has been no history of the existence of free-market without the existence of Govt.

These things are really scary because i do not want to believe them. But I dont wanna b delusional either...

He says that govt. should establish & maintain a proportion between protectionism and globalization that is an essence of capitalism.

 

[lurker]

Why can't these economists tell me how to make a boat load of money real fast? :P

 

[Unicorn]

not necessarity. the government can make it extremely costly for banks indulging in making money on money by having a progressive tax system.

That in fact will only raise the cost of borrowing the banks will simply hand the taxes down to consumers.

 

[guest]

i dont think you understod what i said. as long as banks do regular loans and deposits no one cares what they do. I said that they should not be allowed to also be investment firms. thats what the glass-steagal act in US was all about. there was also something called commodity futures modernization act which allowed instrments of the sort like over the counter derivatives.

lastly when it comes to taxation, investment firms hand out most of the "salary" to their partner/managers in the form of year end bonus, capital gains and stock options. most of these are taxed at a lower rate than income tax. for e.g. capital gains at 15% while I pay 35% income tax. so i guess you get the point.

That in fact will only raise the cost of borrowing the banks will simply hand the taxes down to consumers.

 

[Unicorn]

i dont think you understod what i said. as long as banks do regular loans and deposits no one cares what they do. I said that they should not be allowed to also be investment firms. thats what the glass-steagal act in US was all about. there was also something called commodity futures modernization act which allowed instrments of the sort like over the counter derivatives.

lastly when it comes to taxation, investment firms hand out most of the "salary" to their partner/managers in the form of year end bonus, capital gains and stock options. most of these are taxed at a lower rate than income tax. for e.g. capital gains at 15% while I pay 35% income tax. so i guess you get the point.

That is true. There should be limitations on the bank. I think everyone agrees, including me, that reforms are needed but the problems is disagreements among liberals and Conservatives as to what the they should be.

 

[AsifAmeer]

The way Dr Hudson explains it is that there r 2 types of Credits - Good and bad. Credit issued for industrial and production use is good credit and credit issued for consumption or existing capital is called bad credit. This is a bit similar to Minsky's view of debt.

And that Futures modernization act you spoke of, the douche Phill Gramm allowed the banks to treat commodities as an investment asset class, allowing them to buy or sell more than x % of the daily volume. This wasnt the case before 1999. Now Oil was an asset glass, so was Gas and grain and corn... Plus they dropped the Glass Steagal act which allowed I-Banks to access deposits to further leverage their bets. Notice how this new credit falls in the category of "financing existing capital"...

i dont think you understod what i said. as long as banks do regular loans and deposits no one cares what they do. I said that they should not be allowed to also be investment firms. thats what the glass-steagal act in US was all about. there was also something called commodity futures modernization act which allowed instrments of the sort like over the counter derivatives.

lastly when it comes to taxation, investment firms hand out most of the "salary" to their partner/managers in the form of year end bonus, capital gains and stock options. most of these are taxed at a lower rate than income tax. for e.g. capital gains at 15% while I pay 35% income tax. so i guess you get the point.

That is true. There should be limitations on the bank. I think everyone agrees, including me, that reforms are needed but the problems is disagreements among liberals and Conservatives as to what the they should be.