From Michael Hudson’s website, the summary of this SoundCloud segment reads as follows:
“In Extraenvironmentalist #67 we discuss the implications of the bursting global credit bubble with economist and historian Michael Hudson. Our conversation covers many of the themes in Hudson’s new book, The Bubble and Beyond which covers the process of quantitative easing, neofeudalism and more.”
A quote from the ‘partial transcript’ of this interview and posted at Michael Hudson’s website (here), reads as follows:
Justin Ritchie: “There’s a lot of people on the left and the right who are becoming increasingly critical of Quantitative Easing and the question we have is how does it work? What does it mean that the US Federal Reserve is buying these $85 billion dollars each month of assets even though they are talking about tapering now?”
Michael Hudson: “Quantitative Easing only has to do with the Federal Reserve and the banking system. There used to be an idea that if the Federal Reserve creates money for any purpose, that somehow that spills over into prices and that prices reflect the money supply. In this case, the Federal Reserve is only trying to affect asset prices. It is trying to affect mortgage prices and it is trying to affect bond and stock prices and so the effect of QE3 is only going into the stock and bond markets. You have the press saying, ‘look there is a recovery for the 1%, the 1% is getting richer, isn’t that wonderful, they are the job creators.’ But the 1% use their money not to create jobs but to kill jobs, so more money is being given to financial markets to basically kill the economy.”
“The result is that instead of inflating real prices and especially instead of inflating wages, the effect is to bail out the banks, to save them from having to write down the debts and to impose debt deflation. The results of QE are the diametric opposite of what the Federal Reserve promises they are. This is hurting the economy, this is shrinking the economy, it is helping the banks, it is not helping employment, this is only helping the clients of the central banks which are the banks. The Federal Reserve is supposed to be working in favor of the economy but instead over time, it has began to treat its stockholders, namely the banks, as its clients to be protected and its job is to protect the banks from the economy and we’re in a situation now where the economy is so heavily layered down with debt that either the banks are saved or the economy.
“The Federal Reserve says, ‘save the banks, not the economy’ and that’s basically the result of the Obama Administration’s decision to follow Rubinomics and to follow campaign contributors rather than to follow campaign promises. The Federal Reserve is in effect breaking all of the promises that Obama made.”