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tv   Front Running  RT  December 29, 2019 1:30pm-2:01pm EST

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running 2028 with me max kaiser and stacy herbert as we look ahead to all the excitement of the 2020 elections every episode we dig deep into something new this time we're going to look at the wealth tax stacy that's right we're looking at all the economic policies being presented by the democratic candidates many of them are very radical bernie sanders says billionaires should not exist and to find out whether or not they should we have a guest with us dr michael hudson and professor steve keen steve we'll start with you 1st well i have a very complicated position on this because part of my research is in to. what's called the financial instability hypothesis that explains where the 2008 process came from out of that part of what discovered from the mathematical modeling i did
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was this is a simple relationship between increasing level of private debt and a full name out of money going to work because as you had a rising level of debt which is what led to a cross that rausing level of debt meant a rising amount of money going to the bankers and rather than the capital of spain the ones who paid for it in fact it was the workers it was a foreign income going to the workers now look at the empirical data that's what's happened as well the rausing level of private debt has meant more money going to bankers list going to work because and capital is feeding in the middle how come this issue is so misunderstood by the democrats they don't they seem to be financially illiterate and this idea do we need billionaires should be really really phrased as where to billionaires come from other words how do you get billionaires that's right and it seems like there's a lot of area to examine in the banking system in the central banking just where.
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they seem to have engineers if you well using what in economics is called the cantillon effect where a central bank prince billions hundreds of billions and somehow it never circulates in the economy and it goes to the same people's pockets all the time so word of billionaires come through that spending the question one way billionaires come from is getting too much private debt through to a private to the bubble that shouldn't have been allowed to happen in the 1st place then and so that's the sort of billionaire i want to get rid of and i agree with bernie completely on that front the doing is you were talking about we have the corner missed mainstream economists who run central banks who didn't see the crosses coming still kind of stand watch happen and the way of rescuing it is being to pump up asset values in the belief that they will go what they call the will fix which will lead to more consumption and the idea is make make 1000000000 is even wealthier by making shows more expensive and they'll spend that money and stimulate the economy now there's a very good research paper by the strange little organization called the federal reserve of which shows there is no wealth effect from shares you did very little
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benefit at all out of that so that's been artificially created well so those 2 are about to get rid of but the entrepreneurial 1000000000 is i have a different feeling i know the 2 of you talk about debt and debt forgiveness all the time and there's a notion of odious debt is there a notion could you say odious wealth as well if it's being created artificially for a specific class i mean the data point out here that since 1989 the net worth of the top one percent in america went up $21.00 trillion dollars while the bottom 50 percent lost $900000000000.00 and wealth is that because the bottom 50 percent are just dom and they don't work as hard and the top one percent are just uniquely smart and entrepreneurial and wealth creating or is it an odious wealth situation dr my thoughts and if there is such a thing as odious debt or bad debt then there is such a thing as odious wealth on the other balance sheet the billionaires ask. that's of
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the one percent are the debts of the 99 percent and the question is should america keep all of these debts on the books if it keeps the debt on the book the economy is going to shrink and shrink and shrink for the 99 percent and the only people who will be growing is the one percent of the creditors so the issue isn't really should you tax billionaires should you just wipe out the overhead to get back to america's golden age which was 1945 when the economy emerged from world war 2 for chile debt free nobody owed anything the result was a takeoff a golden age everybody could buy a house there was industry going but nobody unclipping donald trump who says make america great again says make america great again by wiping out the debt and starting off with a clean slate and that means wiping out this 4.9 trillion dollars of money that is
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just held in cash all this cash is somebody else's step and all of this debt is strangling the economy and stephen i are in agreement that the problem of wiping out the debt is there is all this wealth on the other side of the balance sheet the good thing is that by canceling the debts you cancel out the these huge amount billionaires power to take over the government to replace it and ultimately to become the government and that's what you call them all of the arctic that you cannot have a democracy and at the same time have so many billionaires holding the rest of the economy in debt there was a time during the financial crisis of 2008 to 2009 when we had occupy wall street and there was a scene at the occupy wall street in london where these bankers were actually crumbling up money and throwing at the poor people protesting essentially is about $4.00 trillion dollars just sitting in a bank account collecting 0 percent. interest rate almost the equivalent is mocking
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the economy and all the people who are impoverished and this economy if it's money money should circulate so if you're letting money generates economic activity and if you have this money just walked in people's bank accounts not being spent that's a major part of why the economy's in a relative slump right they say money is like the new or it should be spread around for a good work effect of what you had as accumulation of this stuff rather than spreading it around and that's the great problem of a capitalist economy it works best when there's massive amounts of circulation when people get wealthy they look at a way and they who are good and they hoard they spend this most rapidly you have a lower level of economic performance so that will is correlated with slow economic performance not high economic before i'll say so this is all very interesting in terms of the flow of money etc you know going back to 2008 we had the emergence of the holder doctrine for america holder for attorney general who said that banks for strategic to the economy therefore he couldn't prosecute them he stablished they
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knew president that banks the biggest bankers were above the law used to be a simple moral hazard you know the central bank would say well if you keep bailing people out continue to act poorly here they've institutionalized what looking back now the prosecution that investigation of j.p. morgan is obvious racketeering you know they've made racketeering in the banking sector legal obviously that's going to create a concentration of wealth if i could steal money with no repercussions whatsoever i'm going to become a wealthy man now that's what's happened i mean the date of not intending on is really indicative here because i'm talking about trends and people capitalist economy with no stuff up spot central bank has but i 87 began the stuff about central bankers with the greenspan port and ever since then they've gone in there to rescue the banks whenever they stop before laiva to rescue the financial institutions when they stuff up the classic of course being a long term capital management so all this stuff is meant as well as the capitalists. driving inequality which slows the economy down the so called managers
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the central bankers in particular greenspan and his followers have extension why did the inequality and accentuated stagnation that comes out of that inequality so this wealth is giving a stag national post no prosperity the problem is what is a capitalist economy most people think that a capitalist economy is a billionaire is using their money to invest in factories and to employ people but that's an industrial capitalist economy and what we have a something different we have a finance capitalist economy and the idea of a finance capital isn't to make money by employing workers to make more goods to sell at a profit it's to make money from money it's to make money by buying real estate stocks and bonds not factories and stocks and bonds you can make money on fastest by closing down the factories by outsourcing you make money if you're a finance capitalist by closing your american factory and moving to china by taking all of your income and instead of reinvesting it in
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a factory you use it for stock buybacks to bid up the price of your stock or to pay out as dividends to push up the price was so difficult for the democrats to make the observation that when the monopolist and the monarchs the neo financial monarchs are strangling and economy a company or a country let's say in the case of grace they strangled grace they choked it out as a result they rewarded the financier's with a ballad what more hundreds of billions so every time they strangle a company or a country to death they get more capital they don't circulate the capital and so why can't the democrats why can't the opposition make that observation why can't those who are leading the democratic party say look these guys are choking out these economies these companies this economy here's how they do it it's a crime wave how can they don't 2nd the court why do they pretend it's something it's something other than that because the democratic party is wall street the democratic party is basically of the neo liberal wall street party that believes.
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if you give more money to the billionaires they'll spend it into the economy instead of doing what steve describes in the stowing spending it back into the financial markets to keep inflating asset prices well today isn't made by saving money it's not made by investing in factories it's made by buying stocks and bonds that the federal reserve inflates in price by this huge 4.6 trillion of quantitative easing that is all spent into the stocks and bonds not into the real economy that's why we're filming here in brooklyn across the bridge you see the financial center 14 trillion dollars gone into rescuing them saving that is the millennial generation z. the next generation that's going to have to pay all these debts that accumulated by these banks stirrers they live out here and this is the heart of where all these policies of like a wealth tax of medicare for all these you guys all these sort of ideas are coming from out here front running is
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a double entendre for this show because it's the political front runners as well as what you just described which is financial front running the insiders know what the government's going to do ahead of time what they're bailouts on their money printing and they front run they get ahead of that trade and they print profits risk list late and then their wealth skyrockets the rate dahlia hedge fund managers say oh the wealth and income gap is so big how am i going to save my family and friends from the torches and say well why don't you turn in jamie diamond want to turn in your fellow kleptocrats put him in jail and i'll do something positive for society let me clarify something that they see said you talked about the current generation having to pay off the debts of the their predecessors they're not going to pay him off these debts cannot be paid off they can go bankrupt they can starve they can die sooner but they cannot pay off the debts mathematically there is no way of these exponential growth and debts being paid off in the end every economy reaches. the point where the dead cannot be paid and it is
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a choice either can wipe out the debts and girl again or can leave the debt someplace and let it strangle the economy that's what the democratic party and the republican party stand for today and on that note that these debts will never ever ever never be paid back don't go away much more coming up in front running stay right there. is this is a stick from the water bottle phone in the stomach of a fish the brand is sponsor of the coca-cola company which shows millions of bottles of soda every day the idea was that let's tell consumers there are the bad ones there the litter bugs are trying this way industry shouldn't be blamed for all this waste the company has promised to reuse the plastic.
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on. the mountains of moist only grow. it is a long held tradition on cross talk to take stock of the year that is about to pass we have a look at what moved us what changed and what gave us concern 2019 the good the bad and the. good. the bad news in yemen. the good. the cia and the u.s. military were engaged in covert actions really. the world. where they were
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assassinating populist leaders they were backing up right away military quintos funding in our mean death squads there's no phones anymore because there's always a small colony of people for one really good this good for profit. welcome back to front running just learned from dr michael hudson that apparently the debts can never ever ever ever be paid simply because mathematically it's impossible stacie yes the debts have been rising exponentially and i think it's in an interesting way that context of front running is that we have the boomer generation dying off and the millennial generation is now a larger generation than the famous and the infamous boomer generation it feels
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like they're asserting themselves through these economic policies it's like hey you we hate we're not suckers like generation x. you know we're not going to pay your debt we're not going to like ryle long in your stream of like bad debts so it is. something that should be considered or are you just saying wipe out those debts completely the only way to do is to wipe out the debts rich people don't pay taxes only the poor people pay taxes rich people will declare all of this cash is really in liberia or panama or the cayman islands and it's not really in america at all so it can't be taxed the only thing to do is to wipe out the debts and by wiping out the debts you wipe out this excess wealth and does america really want to like archy that's the issue do you want group of billionaires to run your political parties to control all of your medical care by saying it should be. companies that we own not the public do you want to have
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a group of billionaires saying we are the government not a democracy or do you want to bunker say i hope to put things in a broader perspective and in proportion and that's the real proportion is a huge top of the economy who's debt is burdening it and crushing it and if you look at greece is greece america's future is latin america america's future are we going to end up as broke as the these other countries on this idea. that the rich paying taxes are not paying taxes of course the pushback on this is that the top billionaires will say well most of the taxes that are collected in the country we pay but we have to keep in mind that's on reported income most of the income is not reported for example if they pay taxes on all all income not just unreported income you need to have a not 3 have children doll taxes collected last year and probably because or 8 or 9 trillion collected in taxes last year amazing it may seem rich people don't earn income millionaires known an income if you are an income you pay tax on it but you
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know it's make capital gains and they don't have to pay taxes on these especially if they're there offshore if you look at the national income statistics for real estate you find the entire real estate industry all the real estate america has paid just about 0 income since $1045.00 is that donald trump says i love depreciation they have so many loopholes that they have no reportable income so taxes are not going to do it you have to go right to the root of things it's assets and debts at the balance sheet balance sheets is what they should talk about and that's where we can be clear because taxation is the dumb way of trying to get the will back from the from the wealthy who fix procreated rather than earned it as models been saying but we have the we're talking about private debt by the way it's been very careful here it's the private debt that's caused this inequality it's the private debt that stagnates the economy the government debt as modern monetary siri argues is something which is like it's the government's capacity to create money is
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mirrored in the amount of debt that it created so the government debt is something which is controllable it's not the problem of course all the attention the democratic party in the publicans is on the government debt but we can use the government's money creation capacity to give everybody an equal amount of wealth and what that would mean is you actually reduce the debt. so you can do it in a row rather than try to take it off in terms of checks which they can always of you could use the government's money creation capability to give everybody cash which could be used to pay the debt stem and consequently you'd reduce that concentration i don't want to pay the debts i don't want to make a $1000000000.00 there isn't a trillion there's i want to wipe out the debts and wipe out all of this massive capital that stifling but a lot of the assets that are as bad as the u.s. so that's why so you can do it using a. true boy which is used to start its capacity to create the money you get on per capita basis the debt that reduces the power of the oligarchy just for the tax
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rates just so you understand last year 2018 was the 1st year in u.s. history where billionaires paid a lower tax rate than the average worker so the average worker in america paid 28 percent state federal and local taxes and the billionaires paid 23 percent did up counting the wage withholding of 16 percent exactly only people who earn up to about $100000.00 have to pay it. if you're in more than that you don't have to pay any wage withholding for social security so only the lower income people have to pay for social security and medical insurance so it's even worse even worse and speaking of worse max had mentioned. you know is of course part of this financial world he is the biggest hedge fund manager in the world bridgewater capital over in connecticut not too far from here he has been writing a series of blog posts over the past few weeks few months and i would say that he
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seems very very concerned that the pitchforks. are going to come out for the billionaires and he himself seems to suggest it's a lot to do with the federal reserve giving people like me free money i get to borrow at less than 0 percent nobody else can that money being given over and over and over and when you see a round of all this quantitative easing. again it doesn't go into the economy it just goes into the finest as ramana going to still want to model streisand's here and the helicopter brain spencer look up to address the morning of a wall street not mine straight and use the old parasol it sang a low shoot and if you don't if you don't feed me i'm going to dog the host that's in trouble not the parasite in rebellion is like something out of a willy wonka story he's trapped in a chocolate factory eating himself to death. and i think you. are claiming about it and saying oh my god stop forcing this chocolate down my throat i can't stand it any more but they don't attack the origins of the problem is that they are soaking
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up trillions in free cash and in some cases they get paid to borrow money i mean imagine this somebody down the street here is going to be charged 2 to 3000 percent a year annual eyes rate for a payday loan. ballio he goes he shows up to get a loan and they pay him to borrow the money and he wonders why god how did i get so rich and what will bill i've been burned to death well if there is justice yeah that's because he makes loans to the payday loan maker exactly so there's a 360 degree of fraud being committed perpetuated by again the root source being the need to keep the central banks happy by allowing them to print you know what i call interest rate apartheid they simply give money to their friends and everyone else gets choked out to paraphrase president nixon when the billionaires do it it's not fraud. actually you know max brings up a good point there is he's talking about interest rate apartheid and the central
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bank policy the central bankers are not aleck did they're not they don't serve the people we elect a government to serve us to represent us fiscal policy is not even a thing in america anymore we don't have a policy we only have monetary policy monetary policy can only they can only. money to wall street so how do you tell these young voters looking for radical policies and the most they can come up with right now is a wealth tax how do you what do they do steve what actually gives life its quantitative easing for wall street let's have quantitative easing for the people with the nobody paid a tax for quantitative easing every year the said we're going to reserve was buying out 160000000000 dollars worth of bonds off the financial sector where did the money come from double entry bookkeeping they simply said we're going to put a trillion dollars in your bank accounts you give us a trillion dollars' worth of this pipe newborns and what that meant was they then
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had the financial sector had a trillion dollars worth of cash what could they do with it they bosch is what happened to the ship process they go up people who own the shares get wealthy just because of that. accounting trick by the federal reserve they can do exactly the same thing to inject money into people's bank accounts not into wall straight anybody who gets the monies got it their debt is paid down we could return back to the golden age of capitalism when private debt was about 40 percent of g.d.p. this is the period mochel stalking about from $45.00 to about $65.00 low levels of debt it didn't matter that you had created by his demand it didn't accumulate too much plenty of stimulus plenty of real economy activity that's what we need to get back to in your world here of wiping out the debt or having quantitative easing for the people or stuff like that what happens to a steve jobs or jeff bezos or the entrepreneurs or. not you might get some more cash i mean this is the when if you attack financial capital people defended
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by talking about the wonderful industrial capital is. now on the move i am a fanboy of ale in moscow i have to admit that i think is that it's an incredible engineering an incredibly gifted idea is that the sort of stuff that the saudi unaids he had to struggle he many ticket had cashed out of pay pal but he was struggling to get financial review. on many many occasions and it's because financial capital has taken over and as another one of the characters i like an old dog called calm ox once said that he called the financial sector the rising cavaliers of credit and said every now and then the systems let this bunch take over the real economy and they know nothing about the real economy and should have nothing to do with it when finance dominates capitalism sophos we need to go back to that i was in capitalism you know entrepreneurial stuff is dominant and that means weakening financial capital that's a clever sort of magicians trick is it like they confuse the populations mind of
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saying oh jamie diamond then and ray dal you know these guys are capitalists these guys but it's industrial capitalists that are actually always served up they never mention jamie diamond they'll mention on musk if you if you tax the wealthy you're going to lose that you it's the piece of the she has shown pay trick i mean we want to get the people who do the entrepreneurial stuff and take the genuine risks and then as i do the ones we want it's not them getting the money in the system now it's the we're inside it's the delhi as well dell is not so bad but it's the jamie dominance and so on the whole financial sector they're getting the money and we stole to far we stagnate they don't come up with new ideas they don't come up with with new concepts we all benefit from they actually stop it getting to the industrial capital of so we want to go back to the world with the industrial capitalism get the money and the financial sector of the lubricant of the system not the dominant drop as well as i'm sure the least productive capitalist in society would be warren buffett because he apps it does absolutely nothing he just
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collects money from the fed and he buys strategic positions and insurance and banks he was somebody who knew that a common theory was nonsense efficient market hypothesis and said if enough people if that's what you believe on that kind of billionaire and he was wrought ok so he's shown that the fail ever invented anything he's never produced anything now he simply hoards cash like a old lady in the attic. the horrid old telephone books you know they can't go on forever and if you know it can't go on forever what do you do you play for the short run and that's the real problem of finance capital finance capital the long run is the short run for the finance capital this every 3 months where industrial capital you actually have to invest something for the longer term they have to the risk is finance capital doesn't take risk it only wants her things when you bought the politicians final point is the wealth tax going to happen it wouldn't make any difference of it dead yes of the it will probably be passed in may may bring in $10.00 maybe $15.00 a year same attitude the rich going to via taxes we have to be cleverer than that
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make me clever by using the mechanism that the quantitative easing that the fed used to actually in flight asset prices to distribute wealth instead and reduce the disparity we come to it by taxation. what i learned is don't look so much at the income statement look at the balance. sheet thanks so much fellows and that's going to do it for this edition of frontrunning 2020 with me max. barges. in the room light of. my name is drawn more than i was. imprisoned by the my life.
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case to grab some media attention. and a 16 year olds to 16 birthday parties. so i think the police just a lot of pressure channel closed the case. for he is. just wrong it's like those. you know so far they are all for them to sure don't want peace with all those shoes because i was standing right next to. me for is because you got to keep in mind he wanted you know he was 1617 years old so. you could lose one blues or loses plunder it does appear that production. for more than. the truth.
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exists is a. phone in the stomach of a fish the brand is spawns of the coca-cola company which sells millions of bottles of soda every day the idea. let's tell consumers they're the bad ones they're the litter bugs are throwing this away industry should be blamed for all this waste the company has long promised to reuse the plastic. on. but for now the mountains of moist only grow higher. it is a long held tradition on cross talk to take stock of the year that is about to pass
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we have a look at what moved us what changed and what gave us concern 2019 the good the bad and the up. calls donald trump to thank him for information which helped to prevent terror attacks in st petersburg on the new year holiday. in stores in the week 12 people are killed after a passenger plane crashes went off to take up because it stuns largest city el monte dozens more are being treated in hospital. u.s. presidential candidate multi-billionaire michael bloomberg apologizes after his team use prison labor to promote his election campaign. which in the weekly here in the.


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