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Michael Hudson: Marxism, Economic Parasites, and Debt Cancellation

Robinson Erhardt・2 minutes read

Michael Hudson explores the history of Economics, debt's role in shaping history, and discusses contemporary domestic and international finance in his book "Killing the Host." He highlights debt cancellations in ancient civilizations and the parasitic nature of the financial sector, emphasizing the need to understand the historical context of debt for societal evolution and economic stability.

Insights

  • Debt cancellations throughout history were crucial for maintaining economic stability by preventing debt crises and societal unrest, with rulers like Enmetena of Lagash in Sumer and historical figures in Athens implementing these measures to avoid economic collapse.
  • The financial sector, particularly banks, operates in a parasitic manner, focusing on lending against real estate rather than supporting productive ventures, leading to rising debt burdens for individuals and corporations, distorting economic growth perceptions, and influencing government policies to benefit financial interests.

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Recent questions

  • What is the main focus of Michael Hudson's research?

    Debt, history, and economic systems.

  • How did ancient civilizations handle debt crises?

    By regularly canceling debts.

  • What led to the introduction of interest-bearing debt in Europe?

    Venetian and Near Eastern traders.

  • How did debt bondage lead to revolutions in Greece?

    By tyrants canceling debts.

  • What is the significance of the fire sector in the economy?

    Comprising finance, insurance, and real estate.

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Summary

00:00

Debt, History, and Economics: Michael Hudson's Insights

  • Michael Hudson is a distinguished research professor of Economics at the University of Missouri Kansas City and president of the institute for the study of long-term economic Trends.
  • He discusses the history of Economics, the role of debt in shaping history, and contemporary domestic and international finance.
  • Hudson's book "Killing the Host" delves into debt rhythms, economic crashes, history's impact on Economics, debt cancellations, Marxism, economic parasites, and healing alien economies.
  • The timing of financial collapses, particularly in agricultural economies, intrigued Hudson due to the regular rhythm and increasing debt burden leading to system crashes.
  • Throughout history, societies primarily used money during harvest times, with debts accumulating and coming due in the Autumn.
  • Hudson's interest in the history of debt cancellations stemmed from his realization that many countries couldn't repay their debts, leading to a debt crisis.
  • He explored debt cancellations in ancient civilizations like Athens, Rome, and Babylon, where rulers regularly canceled debts to avoid crises.
  • Hudson's research led him to focus on the ancient Near East's economic practices, including weights, measures, coinage, interest charges, and contracts.
  • Collaborating with Harvard, Hudson aimed to rewrite economic history, emphasizing the ancient Near East's role in shaping modern economic practices.
  • Despite initial skepticism, Hudson's work highlighted the importance of debt cancellations in maintaining economic stability throughout history.

19:10

History of Debt Cancellation and Governance

  • China's government can write down debts without causing bankruptcies due to debts owed to them, creating money as needed.
  • Debt cancellations date back to 2500 BC, with records of debt cancellations by Enmetena of Lagash in Sumer.
  • Debt cancellations continued until about 1200 BC, including by Assyrians and Babylonians.
  • Bad weather around 1200 BC led to a Dark Age in Europe, affecting trade and recordkeeping.
  • Interest-bearing debt was introduced to Europe by Venetian and Near Eastern traders in the 8th Century BC.
  • Interest-bearing debt was not universal but originated in Sumer and Babylonia in Mesopotamia.
  • Debt bondage led to revolutions in Greece, with tyrants canceling debts and redistributing land.
  • Solon in Athens canceled mortgage debts, leading to his exile due to aristocratic opposition.
  • Pisistratus and his sons introduced democracy in Athens through reforms in the 6th century.
  • Aristotle and Plato's teachings on governance and debt cancellation were influenced by the need to prevent oligarchies and wealth addiction.

37:50

Myth of Wealth Concentration in Economies

  • Oligarchs promote a myth to stabilize the economy by convincing people that wealth concentration is a natural process.
  • Debt cancellation, like the Rosetta Stone's purpose, was historically used to stabilize economies by forgiving tax debts.
  • Ancient philosophy and history were manipulated to erase the context of social issues and economic instability.
  • Economies naturally polarize, requiring intervention to prevent destabilization and societal harm.
  • Western civilization's foundation overlooks the economic and social context, leading to misconceptions about its origins.
  • China's economic success is attributed to centralized money creation, a concept historically prevalent in ancient societies.
  • Economic models neglect crucial historical lessons, focusing on barter systems and free markets without considering broader societal impacts.
  • Neoliberalism and libertarianism advocate for unregulated markets, favoring the wealthy and leading to economic polarization.
  • The Catholic Church's historical role in promoting debt and interest payments shaped Western economic and social structures.
  • Understanding the historical context of debt is crucial for comprehending societal evolution, political systems, and cultural values.

56:28

Banking and Real Estate: A Parasitic Relationship

  • The fire sector comprises finance, insurance, and real estate, with banks primarily lending against collateral like real estate rather than for productive purposes.
  • Banks focus on making loans for existing properties or corporations, not for building new businesses, relying heavily on real estate as collateral.
  • Bank lending against real estate dominates the market, with 80% of bank loans collateralized by real estate, creating a symbiotic relationship between banking, real estate, and insurance.
  • Bank lending does not boost income or production but rather increases housing costs by continually lending against properties, leading to a rise in debt for individuals and corporations.
  • The financial sector, including banks and insurance companies, operates in a parasitic manner, siphoning off income through interest payments and increasing debt burdens for individuals and corporations.
  • The financial sector manipulates the concept of economic growth, with interest payments and bonuses counted as contributions to GDP, distorting the perception of prosperity.
  • The financial sector influences government decisions by funding political campaigns and appointing officials, shaping legislation to benefit the donor class and financial interests.
  • Financial crashes can end parasitic relationships, as smart parasites aim to keep the host alive until they can fully exploit it, with economic terminology referring to countries as hosts for investors.
  • International financial institutions like the IMF and World Bank encourage countries to borrow excessively, leading to dependency on foreign debt and policies that benefit American corporations.
  • Countries like Argentina face economic challenges due to heavy taxation, reliance on foreign debt in US dollars, and oligarchies that prioritize bondholder repayment over domestic industry and agriculture.

01:15:02

"IMF warns oligarchs of collapsing countries"

  • IMF advises oligarchs to move money out of countries about to collapse
  • IMF supports right-wing governments, leading to economic collapse in other countries
  • Argentina's economic downfall due to parasitic ruling class and lack of reforms
  • Argentina's history of missed economic potential due to oligarchy's control
  • Austerity measures prevent economic growth and maintain dependency on the US
  • Classical economics suggests taxing economic rent to prevent exploitation
  • Ideal economic system involves free market without economic rent, landlords, or monopolies
  • Current banking sector plays a parasitic role similar to historical landlords
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