Comments on: Michael Hudson on the Autonomy of the Financial System and Accrued Interest https://blog.p2pfoundation.net/michael-hudson-on-the-autonomy-of-the-financial-system-and-accrued-interest/2011/06/04 Researching, documenting and promoting peer to peer practices Sun, 26 Jun 2011 13:30:50 +0000 hourly 1 https://wordpress.org/?v=5.5.15 By: Edward Miller https://blog.p2pfoundation.net/michael-hudson-on-the-autonomy-of-the-financial-system-and-accrued-interest/2011/06/04/comment-page-1#comment-485364 Sun, 26 Jun 2011 13:30:50 +0000 http://blog.p2pfoundation.net/?p=16487#comment-485364 This is the first time I’ve heard Hudson say something blatantly wrong. Georgists don’t think interest comes from land rent, we think it comes from capital. We know that when land rent has been eliminated that wages and interest will both rise.

The financial system which is “autonomous” from the real economy, only seems that way because it doesn’t make its money through interest, but primarily through rent.

Think about the subprime bubble, and all the “complex financial instruments” and the interest rates and Fannie and Freddie and all the stupid crap people talk about . Why was selling mortgages profitable? land speculation! Why were credit default swaps profitable? land speculation! What did the low interest rates fuel? land speculation! See the pattern? If any of those absurdities of the current system were fixed, we’d have a more smoothly running machine to milk everyone, but in either case we’re livestock.

None of the absurdities would matter so much if land speculation were made impossible via a heavy annual Land Value “Tax.”

]]> By: George https://blog.p2pfoundation.net/michael-hudson-on-the-autonomy-of-the-financial-system-and-accrued-interest/2011/06/04/comment-page-1#comment-485077 Sat, 04 Jun 2011 19:46:59 +0000 http://blog.p2pfoundation.net/?p=16487#comment-485077 Maybe he means, in even more dumbed down terms, that in a bank driven finance economy, bankers create money out of thin air (“debt is created freely on computer keyboards”), perhaps subject only to bank cartel lending limits (“the unique banking and financial monopoly”). The total amount of money banks create, i.e., the money banks loan as debt, does not include the creation of the additional amount of money needed for debtors to pay the accumulating interest on the principal. Since the banks create only the principal and not the additional interest, it is impossible for all debts to be repaid (“the problem is that many debts can’t be paid – except by eating into the bone, NOT the surplus). Failure to repay all debts means banker losses. Given large enough losses, governments, i.e., the bankers’ (and their investors’) political agents, step in and redirect taxpayer funds from social programs etc…to programs to repay the banks. Maybe that’s what he means.

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