Comment I posted following the above youtube video speech by economist Michael Hudson.
by Glen Wallace
I still have some questions. I guess my main question, from which all my other questions or concerns regarding Michel Hudson’s philosophy, revolves around how to safely extricate the parasitic elements of FIRE (finance, insurance and real estate) from the main street host. I say, the parasitic elements of FIRE, because I think it oversimplifies things to imply that all of FIRE is a parasitic malevolent force on society. But reading and listening to Mr. Hudson, it isn’t entirely clear to me whether he thinks all of FIRE is parasitic or for what aspects are so, how do we go about the extrication process safely. It would seem to me that we living in a much more complicated situation insofar the parasite and the host are sharing the same ‘blood supply’, so to speak. Therefore, just yanking off the parasite could be very hazardous to the health of the host. While the top 5 percent may own the bulk of stock equities, I think a lot more than 5 percent of the population own a significant amount of stocks, usually through their 401k’s or 403b’s and IRA’s. So any actions that has knock-on effect of crashing the stock market and a lengthy trough could be financially devastating to much of the remaining middle class population. While maybe the markets and the economy could have let Citibank fall, I’m not so sure about AIG. While lending may be currently tight, correct me if I’m wrong, but I believe there is still a great deal of small business lending going on with banks and credit unions providing loans for businesses very frequently. However, if that lending were to really dry up completely as we were warned could have happened if not for the infusion of stimulus cash into the economy soon after the fall of Lehman Brothers, then wouldn’t we be facing an economic crisis on a scale severe enough to lead to a civil emergency similar to a natural disaster?
Further complicating matters, isn’t that there is a legitimate element to each area of FIRE. How are we going to, in any parasite extraction process, separate any legitimate actors from the malevolent ones? I’m not saying it can’t be done, but we need to make sure we aren’t throwing the baby out with the bath water, so to speak. To take an analogy from the movies that I think has some realistic relevance to main street finance — let’s make sure we don’t take measures that bring down the Bailey’s Savings and Loan of the world while trying to go after the Potter’s empire of the world, from the movie ‘It’s a Wonderful Life’. And to take examples not from the movies but straight from today’s economic realities — in terms of a mass discharging of debt, that sounds nice for the students facing mounting student loans but it doesn’t sound so nice for the current and future retirees expecting municipalities and corporations to meet their highly underfunded pension debt obligations.
I don’t mean to be a naysayer but we need to come up with a plan where we have covered all the bases so that we can not only answer the tough questions, but also to get to where we are to trying to go. Indeed, I’m concerned that if we were to implement a plan, for instance, that did crash the markets and dry up small business loans, then the parasitic malevolent elements would sweep in like the Potter character from the movie previously mentioned, and say to the effect “see, you were wrong all along, so from now on let me do the thinking and planning while I buy up all of your land and shares for pennies on the dollar.”
I have all sorts of ideas myself for how to go about the parasite extraction process. I think Bernie Sanders has some good ideas that are a good start, but I think we can safely be a lot more aggressive with progressive reforms than even he is suggesting. For instance, I haven’t heard Sanders even mention what I think we need to delve into and that is Federal asset taxes on corporations and the top one tenth of one percent of individuals. That, and we need to access revenue from other novel sources as well such as a Wall Street high frequency trading machine transaction tax. We can also get revenue from increased Tariffs and Excise taxes. We should also be better leveraging revenue when natural resources are extracted from federal lands. Personally I would rather Federal lands be preserved as much as possible in their natural state, but if it is already decided to sell some of the land’s resources, we might as well do so in a financially responsible manner. So, instead of selling off the rights to all the timber in a tract of Federal land in a no-reserve auction, sell the timber for the going rate per board foot just as a private landowner would. Additionally, the US Treasury could bypass the private Federal Reserve, and increase the money supply by minting more coins in larger denominations. Then all this new revenue and money could be used towards instituting an FDR type of civilian conservation corp like program to rebuild our nations infrastructure. Additionally we will be needing a lot of revenue if we are to have any chance of making up for the looming pension shortfalls that, if not remedied, will be hard on not only the pensioners, but also the overall economy due to the resultant lowering of aggregate demand from retirees have much less dollars to spend in their pockets.