A market is going to shrink and shrink and so we look like greece looks up in the last 5 years the think of the normal slipping away groups that if lation and rent this lady should be ok stephen well im really glad that michael brought up the 2008 financial crisis as we have a reputation a reputation about it and it in this year where this was a artificially induced recession benefited the one percent you cant not keep stressing that year but what 202020 in 2008 have been common is that you have this massive transfer of wealth upward again upward again ok and so again i mean my underlying theme in this whole program is that half the country liberate 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 more heads yeah i mean to do the work which sane. 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 as this was it as a little 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 wood kids and the basic story is they have the residual income earners in a capitalist system so as the. Debt by the rich goes up the servicing shock 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. Economists who know nothing about capitalism they 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 had property go up in value and then people would feel wealthier and spend more the trouble is the doing the people and not putting him down to people with a wealth of bill gates and bill gates might buy one and soon it will them illness of vincis koda but he doesnt go shopping it kind out and thats what you need to get demand going up and its the poor youve got to direct the spending through so we had a capitalist process that increased inequality and then the response of the managers made that inequality worse michael did so good program oh i dont like the word transfer of wealth you are trying to transfer of wealth that is is the 10000000 families that were closures and there are obama the banks know what theres been inflation not some bonds really under the tears and they are tears there was a trillion dollars to save the economy 8 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 just that asset Price Inflation not incorrect or 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 lastly 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 growing relevant and is it do that in 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 is the moment really going to 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 he will get a bit of i could use in a strange expression his starting with the and ending with che but i but i once you get this argument that you know they benefit through their Pension Funds is that your center with another percentage of the shares that unbiased 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 process benefits the extremely wealthy not just the middle class but the extremely wealthy the one percent or even the point one percent and what a 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 longs they couldnt buy bonds because the Federal Reserve was being the body of last resort so they board ships that drives up the ship process and that trillion of cost i think introduces us to process 5 maybe more all the netting phrase. But the wealthy will sell and benefit from the silo 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 multiplier this was a fractional laws or 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 year and in a term capitalism is been brought up i really dont what leads anymore ok if a little slogan but what you just described here is that you had a good reserve picking winners i thought thats what socialism is ok this is where theyre deciding who succeeds and who doesnt succeed this is this is a team yeah its an easy because i actually are a god like this is the product the. Local Central Banks stuff almost exclusively bought on the strength in the what they call the new possible school of thought and the new Classical School of thought fundamentally god is 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 actually have the Federal Reserve as part of the system is supposedly a control 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 the novels and then a close thats not the real world its the real world behaves in a way that 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 is. It was a conduit to the to the people through for example everybody having an account of the central bank and they might have been able to use that mechanism but i havent even set that up so its fairly again ill use one of the models to and see if theyre giving food to the parasite and saying please share it with the house ok im going to go ahead my job and legal you are you use the word real economy the real economy that youre referring to was what we used to call Industrial Capitalism but what steve and i esteem has just been talking about is finance capital is that 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 extra land rent 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 let you know officials in the 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 Capital but this is the one that knew what the upside goes only to a small say to 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 an amazing mechanism we saw and it is this year comes here served as you know and you know the banks call up and. They say this is what we want is not a good state ok but mains they dont even have a number to call who heads the you know thats the problem completely locked out from the Economic System of the whole rationale for Central Banks taking over Economic Management fundamentally which is what theyve done on the people like thomas and and revolution wrapping all the mainstream economists who push these models of capitalism is 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 where the up out of the comes from and fundamentally that the problem here is that mainstream economists have not understood money creation 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 sawed 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 while and so if you those 10 trillion become our estimates the chantry becomes a liability theyve got an infinite capacity to do that they can continue pumping the stock market up and its actually funny to watch trump crowing 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. Still i just know that the feeling is doubled ill just. Keep one mic out of quiet not. Out of the. Telly give me hope movie but there are also friends that the us are still slow but the soul hoping to do something to see. The charm. They have about them hasnt got the simple dollar going to bomb us i put them on them that you double booked it happen. Is youll media a reflection of reality. In a world transformed. What will make you feel safe. Isolation full community. Are you going the right way or are you being led so. Direct. What is true was his fate. In the world corrupted you need to descend. To join us in the depths. Or remain in the shallowness. Was abundant make no certainly no borders im just not into nationalities. We dont. Need to. Commentary. We can do better we should know. Everyone is contributing way but we also know that this crisis will not go on forever the challenge is grateful to respond. So many good people are helping us. It makes us feel very proud that we are in it together. Welcome back to crossfire where all things are considered im Peter Lavelle to remind you were discussing the state of the economy. Ok let me go back to michael in new york weve weve heard twice through the classical economy is the lead they claim that capitalism is inherently stable you know you guys are economists i mean what stable about 282020 explain that to our viewers well for for 2 centuries 18th and the 19th century almost all economists agree that a cut economies are not stable because the Financial Sector is not part of the economy the Financial Sector grows purely of mathematical laws exponential interests and the amount of debt is stephen i trace mathematically grows much faster than the economy now debt grows much faster than the economy then youre going to have more and more of the economies and a spent on and the banks for debt service and paying they you know monopolies at the banks support and less and less to spend on goods and services and theres a crash thats what 0. 19 or economics was 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. White light dont need you to explain how 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. To push a prius that price and pay dividends and pay everything out and so 90 percent of americas Corporate Income is used nonstop buybacks and dividends its not kloden to new Capital Formation thats why rhydian doesnt realize it now if you see american deindustrializing that is not stable thats an. Unstable and yet the industrialization pays for the one percent deindustrialization 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 the that is making us look like recently doing 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 find as little isnt as where very different from the kind of Industrial Capitalism but have a smith and marx and every 100 years ago was analyzed you know so you know i know im not the smartest guy in the world after all im the talk show host but you know what you guys are describing to me sounds like an elaborate on c scheme i mean that there has to be a reckoning some sign somewhere for someone or a group you know the ponzi schemes that did that is certainly a huge part of it i mean what would you have as unproductive investment which can only continue being service if you take up more debt to cover the hole thats created by the sally to make money out of the last amount of debt you took on and actually i recommend one of these guys getting richard vague on your show because richard doesnt expand cat 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 is this stability we want is you dont want a system to break down but stability as the near 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 may shift change technological change social change and so on is one of the strengths of capitalism is just by sheer in a sense happens stance that the 19th 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 the phonic characteristic of capitalism at its is defining it character its christic of capitalism as as for snow is of the sun but i think what theyve done its a myth yet and in search of that i mean if they are torturing the biblical enemy mine will jump and so why did economists make this basic mistake stephen is a mathematician is found if you believe in equilibrium automatically in the market then you dont need government so this whole idea of equilibrium was designed to prevent government from doing what government supposed to do protect the economy from the rent seekers protect it from predatory bankers protect it from the real estate speculators that rich but. Raise the rents take it from the privatizers that want to turn Public Services into monopolies the idea of equilibrium is dont have government interfere let wells 3 allocate the resources and determine the policy not the government so all of this is is only. Advertisement refined capitalism and for the one percent. Well you know they theyve been definition of stupidity is believing doing the same thing over and over again will give you the same the same results ok with different result there that is making the one percent rich of course its making because they like the results its going to bring it down to real life you write me one of the planes and we look at 2008 and look at 2020 you know theres a lot of young people you know it was you know in 2008 interesting be the work force you know these to be in now with a double whammy now when he 20 day havent recovere