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Who then is "the government"?

[I think I'm going to sticky this. I mean, if the State isn't where we think it is... --lambert]

Michael Hudson:

Altogether, the post-2008 crash saw some $13 trillion in such obligations transferred onto the government’s balance sheet from high finance, euphemized as “the private sector” as if it were the core economy itself, rather than its calcifying shell. Instead of losing on their bad bets, bad loans, toxic mortgages and outright fraudulent claims, the financial institutions cleaned up, at public expense. They collected enough to create a new century’s power elite to lord it over “taxpayers” in industry, agriculture and commerce who will be charged to pay off this debt.

To get a sense of how that $13 trillion relates to other national projects, see this chart. Note also that TARP, at a trivial $700 billion, and coming at the end of the bailout process, had the role of (a) bringing the bailouts to "public" attention, (b) misdirecting attention to the billions, as opposed to the trillions*, and (c) normalizing them. (In this, as in so much else, the Obama and the Bush administration are more alike than different.) And now the bright side!

If there was a silver lining to all this, it has been to demonstrate that if the Treasury and Federal Reserve can create $13 trillion of public obligations – money – electronically on computer keyboards, there really is no Social Security problem at all, no Medicare shortfall, no inability of the American government to rebuild the nation’s infrastructure. The bailout of Wall Street showed how central banks can create money, as Modern Money Theory (MMT) explains. But rather than explaining how this phenomenon worked, the bailout was rammed through Congress under emergency conditions. Bankers threatened economic Armageddon if the government did not create the credit to save them from taking losses.

Even more remarkable is the attempt to convince the population that new money and debt creation to bail out Wall Street – and vest a new century of financial billionaires at public subsidy – cannot be mobilized just as readily to save labor and industry in the “real” economy. The Republicans and Obama administration appointees held over from the Bush and Clinton administration have joined to conjure up scare stories that Social Security and Medicare debts cannot be paid, although the government can quickly and with little debate take responsibility for paying trillions of dollars of bipartisan Finance-Care for the rich and their heirs.

In other words, we already have MMT; we live under it. Money is the creation of the state, and is indeed used for "public purpose."

The real questions, then, are: (1) What is the state, and (2) who is "the public"?

NOTE * The largest upward transfer of wealth in world history, according to Jamie Galbraith.

UPDATE Another way of saying this is that the real operations of the state need to have attention paid, as much as the real operations of the financial system.

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malagodi's picture
Submitted by malagodi on

the state is the apparatus. the question is why is it 'sovereign' in the 21st century?

Submitted by Hugh on

Transfer sounds so innocuous and I use the term myself, but it was looting, plain and simple and endlessly criminal.

Submitted by jcasey on

to get more people like my neighbors, friends, and family to see the "transfer" for what it was, and to understand that it becomes such even more of an atrocity in the context of the disemployment, impoverisation, sickening and outright murder of millions by the same "government".

People in Europe who are participating in the demos, even as bystanders, get to see first-hand what the modern state looks like, its use of clubs, gas, and guns in violent repression. They experience the reality that their opinions, even their lives, don't really matter to the financial elites. I hate violence, but sometimes I wonder if that experience is what's necessary for us to understand that if we don't find a way to help ourselves out we will be crushed under foot by a small but powerful group of psychopaths.


Eureka Springs's picture
Submitted by Eureka Springs on

was the reward/bonus/ shock doctrine hostage payoff money (so far). The looting amount, we may never be able to count. 100 of trillions in CDS, derivatives, ten million us homes foreclosed, leveraged counterfeiting ponzi actions with all sorts of acronyms which we are propping up as if it's real, etc., no?

Jessica Yogini's picture
Submitted by Jessica Yogini on

I have read how Geithner is pushing hard on the Europeans to avoid any default there because it would cost US banks hundreds of billions on CDSs (=default insurance) that they wrote. But if they can create 13 trillion out thin air, why get so bent out of shape over a "measly" hundred billion or two.
I understand that their greed is both limitless and petty. But it makes no sense to create tensions with your fellow thieves over 1% or 2% of the loot.

Phillip K. Dick wrote a book in which WW3 breaks out, but the Soviet and American leaders make a deal to stop the war but not tell their populations, who are all living underground. So the leaders lead lives of unimaginable luxury and the only work any of them do is to produce "news" videos for the non-existent war that they use to keep the populations underground.

okanogen's picture
Submitted by okanogen on

Or the federal government could just write checks to pay for health care.

For example.

Just sayin'.

Just write checks for it. If the USG wants to institute cost-containment, fine, if not, fine. Write the checks in US dollars, and pay the checks in US dollars. Everyone in the US gets health care, and our currency pays for it.

Part of the revolutionary (and that is really the accurate word) "danger" (to the MOTU) in the idea of MMT, is that if the general populace actually starts to understand how it works, they will understand that our government could use it's power as holder of the valuation of our currency to direct unlimited (only by the threat of inflation) resources at any problem our government chooses. Unlimited resources. In a so-called representative democratic government, that means the people have unlimited resources. So there really is no such thing as "can't afford health care", or "can't afford to house or feed the poor". No such thing as a "homeless" problem. No such thing as not being able to keep a major city like New Orleans from drowning.

The only limit to our resources is inflationary pressure on the currency, and/or lack of productivity (if everything is paid for, why work?).

But really, this all brings up a very interesting (and not inconceivable) question: what is going to happen when (and I do believe "when") the entire public understands MMT (it's not that difficult), and it begins to dawn on them what the implications are? When they understand that there is no such thing as unpayable federal debt?

Submitted by JuliaWilliams on

around the world are gathering strength, and momentum, and I think I see fear in the eyes of the MOTU, which explains their doubling down on repressive and over-the-top responses to our efforts. These over-reactions, the hyper-securty responses are the "tell" of fear, and that tells me we are having an impact. (See the "quick hit" I just posted, and watch in awe as Madrid rises up!-Barcelona soon to follow today)