Youve given up on ok because the other part. Of the economy its true because its to their benefit here i really worry when people talk about new normals and when they talk about the economy youre my friend well who has become normal since 2008 has been completely different from the old normal people have the normal you go back to a balance but really the economy hasnt grown at all since the 2008 crisis all of the growth in g. D. P. All of the growth in wealth has accrued to the Financial Sector to the real estate sector to the one percent for the 99 percent of all theyve gone down and down and down so the new normal is you cant get rich again by housing and join the middle class like a ghost or the new normal is an all of the year increase in wages and debt service in rents and in monopoly prices so that they mark the new normal is the market is going to shrink and shrink into. We look like greece looks in the last 5 years the length of the normal is looking way routes that if and run. Ok stephen im really glad that michael brought up the 2008 financial crisis as we have a reputation a reputation about and this year where this was a artificially induced recession benefited the one percent you can not keep stressing that year when what 202020 in 2008 have in common is that you have this massive transfer of well upward upward again ok and so again i mean my underlying theme in this whole program is that perhaps the country speaking specifically about the United States that michaels reference to greece is a perfect one i think youre basically writing off tens of millions of people america hundreds of millions of people in the western world heads yeah i mean to do what were saying is a process where the wealthy who go will they go through debts and this is something which markland. Very very strong on and on a mathematical model. And one thing which came out of my modeling of whats called miscues financial instability cloth asus was that as a level of debt rose even when i had the capitalists borrowing the money and paying the interest on it the ones who actually fight for our level of debt with a work as a basic stories they had the residual link on the nose in a capitalist system so as the men of wealth did it by the rich goes off the servicing shot goes up and it came at the expense of what is incomes and that turned up in the system as well and then in the response to the crosses. On a mystery know nothing about capitalism i know a lot about a blackboard model that i call capitalism which is bears no resemblance to the real thing this solution was to boost consumption is what they call the wealth effect and the wealth effect was to make shares go off in value and that property go up in value and then. Would feel wealthier and spend more of the trouble is they doing the people and not putting him down to people with the wealth of bill gates and bill gates might buy one and soon have elements of vincis koda but he doesnt go shopping it came out and thats what you need to get the man going up and its the poor have got to direct the spending so so he had a capitalist process that he produced inequality and then the response of the managers made that inequality worse michael didnt the whole point of the program oh i dont like the word transfer of wealth the only kind of transfer of wealth that is spent is the 10000000. 00 families that suffered foreclosures and if there are obama the banks not the debtors where theres been inflation of stocks and bonds and real estate under the stairs at the tears there was a trillion dollars to a save the economy a trillion was put into pushing up stop and are real estate prices and only 2 trillion was put into the socalled real economy namely in 1000000 of the corporate sector and a little bit in the labor so theres been just an asset Price Inflation not a trick for the one percent 00 already owned maybe 80 percent of the stocks and bonds in the country didnt transfer yet more they simply use the Federal Reserve to lower Interest Rates quantitative easing and vastly increase the price of housing in stockton by putting them further and further out of reach for the 99 percent you know we dont need to wait where is the real economy here i mean how relevant to relevant and is it to the larger scheme of things because this is something i keep noticing too i mean i get up you know we can talk about math or numbers and look how as them all but that really has nothing do with whats going on particularly for average people going yeah i mean the average people are completely excluded from this was michael says they average person doesnt on shares. You will get a bit of i could use in a strange expression is starting with the ending with che. When you get this argument that you know theyve been if its true that Pension Funds is that your center with another percentage of the shit is that a would because as a fraction of the overall ownership or shares would be well on the will ended with low single figures. The vast majority of inflation of asset crosses benefits the extremely wealthy not just the middle class but the extremely wealthy the one percent or even the point one percent and what quantitative easing did was boost stock prices by buying a trillion dollars worth of bonds for a year off the Financial Sector which meant they had a trillion dollars additional cash in a train that was less vaughns they couldnt buy bonds because the Federal Reserve was being the body of last resort so they bush is that drives up the ship process and that trillion of course i think introduces us to process by maybe mole the net increase but the wealthy will sell and benefit from the sun go and they might buy the occasional gamble gaining in somebody to wash it for them and the result of that is you get a trickle of that trillion dollars of on his head of easy money turning out in the real economy so did benefit to some extent but rather than a multiply this was a fraction the laws are effects you put in one trillion into the wealthy maybe you get 50 to 100000000000 for the poll. Ok but you know its a real quick here and the term capitalism is been brought up here i really dont what hes any more ok in it a little slogan but what you just described here is that you had a good reserve picking winners i thought thats what socialism this is that this is where theyre deciding whos succeeds and who doesnt succeed this is this is a team yeah its an easy because i actually rig out like this is their product the. Local Central Banks stopped almost exclusively bought on the strength in the what they called a new possible school of thought and the new Classical School of thought fundamentally argues that capitalism is inherently stable so the government should get out of the why but they are in is the in the last 30 years theyve built models which ah good you can ensure troll the right of inflation by moving the right of interest washes fos effectively is the inflation rate is changing and that is stuff which is controlled by the Federal Reserve so in them models to actually have the Federal Reserve as part of the system is supposedly a controller now its a control that leaves out the most important parts of the economy and market and i have this all the time they leave banks and it and money out of thin models and then a close thats not the real world its the real world behaves in a way thats for a while looks like its their model then goes completely gaga and they go gaga as well as i what can we do we can continue boosting share process because the wonder a conduit they have is from themselves of the Financial Sector so its easy for them to pump money into the Financial Sector if there was a conduit to the to the people through for example everybody having an account of the central bank and then not have been able to use that make an ism but they havent even set that up so its physically it make an ism but they havent even set that up so its physically again ill use one of the models to see if theyre giving food to the parasite and saying please share it with the house. Go ahead michael definitely vote your. Use the word real economy the real economy that youre referring to is what we used to call Industrial Capitalism but what steve and i esteem has just been talking about is finance capital ism and finance capitalism is completely different from Industrial Capitalism Industrial Capitalism in the 19th century seem to be moving to socialism because its more efficient to have the government provide Public Health and Public Education at a low price because then the capitalists dont have to pay their labor so much if the Government Supports their cost of living but finance capitalism wants to increase the price it wants the privatized education raise the price of the private housing it wants to not have access. Then once theyre really support the finance insurance real estate sector the Financial Sector and so who takes over the state their libertarianism in neoclassical economics is a you know some throw planning but they shift Central Planning away from the government and elected officials into wall street and the Financial Sectors so were in a state of Central Planning that would have shot adam smith and all of the classical icon of us were Central Planning by banks and their interest is not that of Industrial Capitalism but the system like that new song what the upside goes only to a small set of a group of people and all the downside goes to well People Like Us we get i dont know but when things go really well i believe transfer well it mean its amazing mechanism we saw me as this year Concierge Service you know and you know the banks call up and they say this is what we want this is were going to take ok but main street they dont even have a number to call their hands you know thats the problem we are completely locked out from the Economic System of the whole rationale for Central Banks taking over Economic Management fundamentally which is what theyve done and the people like Thomas Sargent and and rather lucas unwrapping all. Mainstream economists who push these models of capitalism as an inherently stable system theyve completely focused on the Financial Sector and ignore the real economy the real economy just you know trips along and librium all the time and all that but it was control the interest right so the it but the end product of this is fundamentally as you say its a weird form of socialism for the rich the close they are the ones who are being elevated by tactics like quantitative easing and now you could say the same thing happening again the in going this money going in to the Financial Sector which is driving up the stock market thats what the up out of the kind come in strong and fundamentally that the problem here is that mainstream economists have not understood money. But if youre running a central bank you know that you can put as many elements on the billions are true those on the asset side and by would if you lock on the liability side so they have simply said were going to buy 10 trillion dollars worth of shares a few those 10 trillion become our estimates the chantry becomes a liability theyve got an infinite capacity to do that so they can continue pumping the stock market up and its actually funny to watch trump crying about how well hes drawing it its actually the Federal Reserve the striving it up were going to jump in here gentlemen were going to break now thats a break well continue our discussion on the economy stay with marty. Was a lot about that and this other. On the i want to let you know what why. I think not. Out of the. Pope but there are some friends of the us are still so but the sole bill hoping to do something this year. Which i hope. They have about them has a lot of political allies a cell phone and i was able to put them on the back of a book that. Caused. The demick no certainly no borders and is blind to nationalities. Has emerged little to be we dont look like seeing the whole world needs to be. Judged 2 as commentary crisis at least system things. We can do better we should be. Everyone is contributing each or own way but we also know that this crisis will not go on forever the challenges crayfish the response has been masked so many good people are helping us. It makes us feel very proud that we are in it together. Nuclear power plants have become a battleground in the u. S. In vermont people are demanding the shutdown of a local plant from my yankee is right now my focus because its a very dangerous oh no prayer power plant the owner is attempting to run the reactor beyond its operational limit this case just sort of puts a magnifying glass on wheres the power in this country where is it going is it moving more towards corporate interests or is it more in the idea of a traditional participatory democracy is for power lies with the people this case demonstrates that struggle in a very real way. A struggle on r. T. Welcome back to cross talk where all things are considered im Peter Lavelle dreaming to be discussing the state of the economy. Ok let me go back to michael in new york weve heard twice through the classical economy is the lead they claim that capitalism is inherently stable or you know you guys are economists i mean whats stable about 20082020 explain that or viewers well for 2 centuries 18th and the 19th century almost all economists agree that a car economies are not stable because the Financial Sector is not part of the economy the Financial Sector grows purely of mathematical laws exponential interests then the amount of debt is stephen i trace mathematically growth much faster than the economy grows much faster than the economy then youre going to have more and more of the economies and a spend on and the banks for debt service and saying they you know monopolies at the banks that are. Unless unless the spend on goods and services and there is a crash thats not maintained sensor economics is all about and thats why they wanted. Money creation to become productive but it hasnt been productive most almost 80 percent of bank loans are real estate loans and the rest are for stocks and bonds banks one for Industrial Capital formation they dont lend to play his acolytes whitely dont need you to explain because they can make money quickly the financial time frame is short term you can make money much quicker without taking all the effort of building a factory and making a good and developing a marketing plan for it all before couldnt make it much quicker just like pushing up using your revenue to push a prius that price and pay dividends and pay everything out and so many percent of americas Corporate Income is used nonstop buybacks and dividends its not float into new Capital Formation thats why rhydian doesnt realize it now if you see america deindustrializing that is not stable thats an. Unstable and yet the industrialization pays for the one percent the industrialization pays if you want to use all your money to make money in the stock market. And you really dont care about the real market that that is making us look like greece and leaving us debt ridden and without much of her ability to grow you make money and youre the one percent and you make money by having the 99 percent in debt to yourself and owing money to yourself then theyre not going to have enough money to buy goods and services from the factories and so its not as apple isnt as well very different from the kind of Industrial Capitalism that have a smith and marx and every 100 years ago was analyzed you know so yeah i know im not the smartest guy in the world out. Youre all on the show but you know what you guys are describing to me sounds like you know a lot of the scheme i mean that there has to be a reckoning someone somewhere or someone or a group of you know the ponzi schemes that did that is certainly a huge pot of it i mean you have this unproductive investment which can only continue being service if you take up more debt to cover the whole its created by the way to make money out of the last amount of data you took on and actually i recommend one of these guys getting richard vega on your show because richard doesnt expand has read a brilliant history called a brief history of doom and he can show you from inside knowledge what the euphoric behavior of bankers is when they get caught up in one of these now growing ponzi schemes but one of what i wanted to actually talk about is also whats so good about stability because when you think about it this stability we want is we dont want to just to break down but stability as the name of classical stuff on it is effectively the same as being frozen to absolute 0 and nothing is changing whereas the most important thing about capitalism which distinguishes it from any previous social system is the right of china so in that since instability when it means you get china technological change social change and so on is one of the strengths of capitalism is just by sheer innocence happens stance that the nonce in century people who try to defend capitalism against mox focused on the concept of equilibrium as a modeling tool knowing that it wasnt relevant to capitalism was a shortcut for them but the 20th century economists had no knowledge of their own history let alone the broader history of economic thought made equilibrium it was supposedly of defining characteristic of capitalism and its is the finding it character its christic of capitalism as as for snow