Michael Hudson: Why do they call for governments to balance the budget by pushing the economy at large deeper into debt, while trying to save the banks from …
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In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss tipping points on the way to the Bondpocalypse, a time when flipping houses to gre…

53 Responses to “Government Debt and Deficits Are Not the Problem – Private Debt Is”

  • StrafingMoose:

    Anti-austerity is what you had before people started talking about austerity…

  • Wayne Manzo:

    Why is the budget deficit is so large and growing expontially. The
    reason is that America has been taken over by a Super Jew Klan Race
    whose policy is to steal all the money from the Federal Government!
    They are a million years ahead of human people. That means they own all
    the banks, the jobs, and the people. Yup, they have been exterminating
    since Reagan said it was okay to kill human Gentiles and ordered VoDoo
    economics( Free Money to the Klan )
    while human people slave and struggle.

  • jblisk:

    I understand the argument but is there not wasteful spending? Shouldn’t we demand how our government spends adds value?

  • TheGreatSpaces:

    Debt Jubilee! Separate Investment Banking from Consumer Banking! Steve Keen for Treasurer!

  • Colin Dempsey:

    clear as a bell and bang on the money. Bill Still has been saying much the same for years.

  • Pablo Ruthere:

    The interviewer is an asshole

  • reader642:

    If anyone can write knowledgeably about the role of debt in our current economic downturn, we’d be happy to publish you. Visit WhiteRoseReader(dot)org and read the ‘About’ page for submission guidelines.

  • hrmIwonder:

    I like Prof Hudson, but he’s a terrible explainer… For example, the Fed set’s the rates. The fed can control the entire rate curve. Was that that hard to say? Paul Jay, still doesn’t understand that for the non-govt sector to net save, ie earn more than they spend, then then govt must run a deficit. It’s an accounting identity. One person’s surplus is another person’s deficit.

  • Jack194343:

    Great commentary

  • Serban V.C. Enache:

    The alternative is anti-austerity – counter cyclical spending (debt jubilee for ALL households). I didn’t label you as part of an elite. It’s a simple fact that financial elites have a vested interest in keeping unemployment present, in keeping wages down, in bankruptcy – because that’s how ownership is traded at bellow market price. This capital is not purely in my mind, you can google it. Like you can google Chartalism. It’s up to you. Good luck.

  • Rob Mews:

    Serban – you aren’t addressing the issues but only labeling people who disagree with your comments like “Elites” and your unsupported statements like “there is a lot of private capital lying idle” for which you have no explanation or evidence as to where or what kind. Is it under someone’s bed? In a bank? if not then Where? Or is this capital purely in your mind? AND ” People are seeking to limit their consumption in order to pay off their debts” Yet you have offered them no alternative.

  • Serban V.C. Enache:

    When you hear politicians talking about balancing the government budget (reducing the deficit), they’re actually talking about reducing the surplus of the private sector. If the government is taxing more than it’s spending, households and companies cannot net save. The government deficit equals the net savings of the private sector in a given year. Did you lookup on google images the key words “sectoral balance” ?

  • Serban V.C. Enache:

    The only way the private sector can be in surplus, is if the government is running a deficit. All recessions in the US up to the great depression came on the heels of budget surpluses (the government working to reduce its deficit). The same applies to Australia and other countries. Producers will produce only in as much as they expect to sell. That output gap requires new aggregate demand to be created in order to be employed in production.

  • Serban V.C. Enache:

    Public spending finances taxation, not the other way around. Taxation destroys money, it’s used to drain the system of excess aggregate demand. It’s not used as a source of financing federal expenditure. Japan has a public debt of over 220% of GDP and it’s chances of default are 0%, just as they are for any country with monetary sovereignty indebted in its own currency.

  • Serban V.C. Enache:

    Governments are not households. You have to unlearn the neoliberal myths about money and economics. Government doesn’t have to tax its own currency for it can spend it. The government doesn’t borrow to “finance” its deficit. If the government were running a balanced budget, then the economy would stagnated during the course of the business cycle. Look at the Clinton surpluses. The only way government can make a surplus of its own money, is if the private sector is running a deficit.

  • Serban V.C. Enache:

    Where is the excess of money? I fail to see it. When you have unemployment and resources standing unused, are you telling me the economy is working at full output? No it’s not. The USA has a GDP output gap of 4,4 trillion dollars. Monetary inflation would happen if the US would already work at full employment, and the government would expand the deficit past that threshold. Since households are looking to deleverage, it’s insane to reduce the deficit during this period.

  • Serban V.C. Enache:

    Zimbabwe’s inflation was caused by the land reform. It caused output to drop, that’s where the inflation comes from. 90% of money is in digital form. You don’t have to print new money in order to credit accounts. The government is talking about reducing the deficit because politicians think it’s a popular issue. They don’t understand the role that the government deficit plays in the private sector, in savings, and in economic activity – growth.

  • Rob Mews:

    The government cannot inject funds without causing debt – What you are talking about is so incorrect !!. It is true the government can print money without incurring debt because the injected money competes for goods and services already in the economy thus depreciating the value of money already in the economy. The debt is thus transferred to those holding money in the economy – this is how government debt works. Private companies and persons cannot do this since it is illegal to do so.

  • Rob Mews:

    If the economy is ‘starved for dollars’ why isn’t the government printing even more trillions of paper money – even ten times that and there will be lots of dollars floating around, enough to substitute for all types of paper. This explanation can only be Flawed since the printing of excess money has caused the downfall of many a currency – one of the latest being Zimbabwe. Some time before that it was Brazil – I used to deal with their 30% a week inflation rate! – as was its demise.

  • Serban V.C. Enache:

    Likewise, my friend. Good hunting (the truth) to us all.

  • Serban V.C. Enache:

    Issuing debt is one way to satisfy the desire of this institutions, but it’s a way of custom, rather than an operational necessity. Government can control interest rates in the market without having to issue public – which always gets politicized by ignorant and or bought politicians, who use public debt as an excuse to implement austerity on the middle class and poor – using the joke threat of bankruptcy. Indebted in its own currency, a government cannot default.

  • Serban V.C. Enache:

    Yes. The government can inject funds to its 20.000 citizens without issuing debt, and leave the people to organize themselves. The government can deficit spend without issuing debt. Public debt serves a few purposes, but one of those purposes is NOT financing public expenditure or the deficit. Our society is dominated by institutions who are meant to be net savers in order to function – pension funds for instance.

  • Serban V.C. Enache:

    Yes. Once you add up the pluses and minuses they balance. Fiat money is public property and thus should be used for public purpose. Taxation allows for economic activity to happen in a non-inflationary environment. A government deficit creates net financial assets for the private sector. Horizontal transactions between members of the private sector always net to 0. The only way the private sector can grow is via vertical transaction (government spending more than it taxes).

  • HellenicDigital:

    Okay, let’s say there are 20,000 of us on this island. We agree that each of us will be issued with $1,000. We then auction bid for the various resources in order to monetize the economy.
    We each start with $1,000 as a proxy for $1,000 “worth” of land and resources, as part of a $20m economy. There is no “debt” and if we play nice/fair, there needn’t ever be any debt.

  • HellenicDigital:

    “Since we pay no taxes to anyone.”
    It matters not. An equity stake in a school, for example, is not different from an equity stake in a cow. “Taxation payment” is just entrusting monies to a third party. You can call that “debt” if you want, but really it’s a proxy for economic value. The government’s assets are that which it has been entrusted with, it’s liabilities that which it has granted to undertake on our behalf. If the government fulfills its end of the bargain, they sum to zero.

  • 007ohboy:

    Hehe, many Americans like myself find the English accent to be quite pleasant to the ear, I suppose much like how French sounds pretty to many others. I always wondered how the English thought of the typical generic American accent.

  • humboldthammer:

    I noticed that the Present Value Calculation for the Lottery changed from 0.72 to 0.588.
    Never thought the Lottery PV could be used as an indicator, until now.

  • courageousdose:

    Quality disinfotainment!

  • John Constantine:

    And the result of that kind of win is the economy stops because only the winner has any money.

  • Louis Becker:

    A real time bomb
    Search For the series

  • So1othurn:

    Hence the trap the elite has sprung on them.

  • smithart101:

    you are correct, nobody can believe about this quickly. and i can tell u, it’s way easier than i thought do a few surveys and boom a few $100 extra in your bank every week. if you wanna try just try now: bit.ly12vFoxn

  • Riki Cooper:

    Is Max moving from France to England to somewhere else as long as his visa’s last?

  • gabigowriel:

    @RussiaToday : HEY MAX, what’s in it for you with all these shows that have little of NO EFFECT IN REAL LIFE?Also, a worrying thing for me is that you’re an “EX-BANKER”;How come you gave up this enormesly good job robbing people on a legal basis?

    cheers from ROMANIA; a country turned into a colony/slave state in just about 20 years!

  • gabigowriel:

    @RussiaToday : HEY MAX, what’s in it for you with all these shows that have little of NO EFFECT IN REAL LIFE?Also, a worrying thing for me is that you’re an “EX-BANKER”;How come you gave up this enormesly good job robbing people on a legal basis?
    cheers from ROMANIA; a country turned into a colony/slave state in just about 20 years!

  • London5Stars:

    yuk @ these vile american accents.  so fake and over-the-top

  • Ami Islam:

    sure is right, nobody can believe about this quickly. Listen, my spouse is getting paid monthly for doing some surveys and browsing sites. i got it from here. you can also try it: bit.ly12srJqY

  • xyz12345abc1:

    sure is right, nobody can believe about this quickly. Listen, my spouse is getting paid monthly for doing some surveys and browsing sites. i got it from here. you can also try it: bit.ly12srJqY

  • Fred Slocombe:

    Are mortgages becoming tools for banks to acquire hard assets for reserve collateral?

  • Tim Caffery:

    Max! Do a mock episode punning at Kramer. Have a call in q/a, ask about GeoGroup & Comp. Then cite recent closed public schools with high promise, “if trends stay true to scientific date, 30% of these kids are guaranteed to increase the over all prison pop, and generate a… +16% over ten years, saving the bond market!

  • Tim Caffery:

    Right @ 20:00ish, high level propagandist. Genocide in scientifically proven rhetoric. Triage! Eugenics! Social Darwinism! “Welfare Queen” association. Austerity is rape! Nothing less. Not fiscally motivated: racially; culturally; national obsession. Murder by definition, not judicial review.

  • Kinkspace:

    cont… What you have done is reinforce “my buddy’s” “belief” structure of racism by engaging in debate with them the ridiculous concept that there is such a thing as “race” within the human race, ie: sub species. Scientifically there’s not. In willfully being defined by the prejudice “my buddy” believes, you are simultaneously supporting negative reinforcement, competition/devision, elitism, entitlement etc etc etc…That “my buddy” aspires to when given the boundaries of “my buddies “beliefs”

  • Kinkspace:

    You needed to read & understand the context of my missive: Any “belief” ie: non syllogy/scientific embodiment of a train of thought derived from opinion/mythology be that from “tradition” pier pressure, blatant ignorance etc is a prejudice by definition.

    Or maybe you did understand & you learned something about yourself. The problem with the likes of “my buddy” which we both know they are not, but lets refer to them as such for ease of purpose.


  • blimpy49:

    Well “stop spending” means dramatically reducing every major social-service apparatus of the Federal Gov’t. How is that going to happen without destroying those Americans who need such services to make ends meet, let alone the ones that almost singularly depend on them, for whatever reason?

  • Vladimir Ulyanov:

    If i’m prejudiced, there’s no help for you buddy. Trust me lol

  • Vladimir Ulyanov:

    Once again…eeeeehhhhh. Wrong. We are the human species defined by our aptitudes/shortcomings through the different races. It is overcoming racism/bigotry that we achieve Humanity.

  • Darrell May:

    Mr. Keiser is a little over the top,but he makes some sense!

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