Thursday, October 21, 2010

The Waste Land

In a Macrobuddies post from June of last year, Murph quotes Michael Hudson and then summarizes:

The Government has committed Trillions of dollars (over $12 Trillion and counting) to bail out institutional Creditors (Banks) rather than Debtors (Citizens), in the misguided belief that we need more lending. "Hair of the dog" may be an effective pallative for a hangover, but a crisis caused by overindebtedness is unlikely to be cured by creating additional debt.

Then Murph quotes John Hussman and summarizes again:

A point made in both articles is that government aid to financial institutions, rather than directly to distressed debt relief, has been misguided.

In other words, don't print money and use it to buy up bad debt from banks so that banks can make more loans... Print money and use it to pay off debt!

So lessee... We have Michael Hudson... John Hussman... Murph... JBPeebles... and me. That's five. Anybody else wanna fix the economy?



Tschäff said...

If it gets Michael Hudson's approval, it's fine with me. He co-authored with L. Randal Wray with one the best "money books" ever written this side of the Atlantic.

The Arthurian said...


I didn't know... Maybe I should have: I do know mmt & i have a lot in common.

I keep waitin'fer an English major to stop by and say Oh look at that! A poetry reference in an economics blog or maybe to notice my subtle but dramatic eleventh hour reference in the time of posting...

A lot in common: I think we get to the same place, or nearly, if by two very different routes.

Hudson's remark is excellent: a crisis caused by overindebtedness is unlikely to be cured by creating additional debt. It is so glaringly obvious to me. How can it not be obvious to Bernanke? But then, I can't even find internuts that agree with such thoughts.