Speaker 1: Hello, and welcome to another episode of the All Thoughts podcast.
Speaker 1: I'm Tracy Allaway and I'm Joe, So Joe. I think
Speaker 1: we've spoken about this a lot, but one of the
Speaker 1: defining factors of the COVID crisis and its impact on
Speaker 1: the economy has been this this idea that economic time
Speaker 1: has sort of stopped. People weren't going out as much,
Speaker 1: they weren't shopping as much, they weren't eating, but financial
Speaker 1: time kept going. So even though businesses aren't getting revenue
Speaker 1: and income, they still have to pay rent, pay back
Speaker 1: any loans they might have, and pay taxes and things
Speaker 1: like that. I think you actually wrote about this, uh
Speaker 1: when we were just getting started with the coronavirus crisis. Yeah,
Speaker 1: that was kind of like identified as the early theme,
Speaker 1: which is like, Okay, even if we can get through
Speaker 1: this crisis in a expedient manner, which at least in
Speaker 1: the US, we haven't, you still have this issue of
Speaker 1: like bills pile up today or next week or the
Speaker 1: month later, and without revenue, Uh, those bills suddenly become
Speaker 1: defaults and potentially bankruptcies. Right, That's exactly right. So a
Speaker 1: lot of the policy responses we've seen so far have
Speaker 1: been focused on bridging that gap between economic time and
Speaker 1: financial time, if you want to call it that, and
Speaker 1: they've been offering things like tax relief and loan forbearance.
Speaker 1: But the question, of course is eventually, you know, people
Speaker 1: are going to have to pony up the money that
Speaker 1: they owe, and what happens at that point, especially after
Speaker 1: they may have injured months, um, possibly even years of
Speaker 1: economic weakness, right, and less revenue than they would otherwise
Speaker 1: have gotten. Yeah, I mean, I think one way to
Speaker 1: sort of like conceptualize the policy responds, at least in
Speaker 1: the US, is that to some extent, you have the
Speaker 1: Federal Reserve having back stopped a fairly significant portion of
Speaker 1: credit market and done a number of things that actually
Speaker 1: caused um, sort of credit issuance to boom even in
Speaker 1: the middle of the crisis, so that companies would have
Speaker 1: enough liquidity, and then the other side of the coin,
Speaker 1: so to speak, would be fiscal policy makers and then
Speaker 1: the health policy makers trying to sort of get us
Speaker 1: to that other side so that all these bridge loans
Speaker 1: that have been taken out can actually be paid for
Speaker 1: at the other end. Yeah, that's right, And of course,
Speaker 1: the concern that you hear quite a lot. Is always
Speaker 1: that one man's or one person's repayment is another person's income. Right,
Speaker 1: So if you stop the flow of rent, for instance,
Speaker 1: landlords aren't going to be getting the income that they're
Speaker 1: expecting to get. And I know there's probably not a
Speaker 1: lot of sympathy for landlords at the moment, But the
Speaker 1: concern is that that ends up impacting the banking system,
Speaker 1: ends up impacting the flow of credit, which feeds back
Speaker 1: into the economy in a negative way. So today, instead
Speaker 1: of talking about debt forbearance, we're going to be focusing
Speaker 1: on something slightly different, and that is the notion of
Speaker 1: debt forgiveness. So not just telling everyone that they can
Speaker 1: pay their bills or their debts in a few months time,
Speaker 1: but actually writing them off right. That is not something
Speaker 1: that we've ever really done much in this country. There
Speaker 1: was a lot of talk about it um after the
Speaker 1: Great Financial Crisis, after two thousand and nine, there really
Speaker 1: wasn't much you hear about it. With student loans, you
Speaker 1: hear about the idea of like, Okay, this time we
Speaker 1: need a wash. But I would say books sort of
Speaker 1: culturally and politically we're sort of allergic to this idea
Speaker 1: of just sort of writing them off. Yeah, I think
Speaker 1: that's exactly right. Okay, without further ado, we're going to
Speaker 1: get into all of that. We have the perfect guests
Speaker 1: for this particular topic. We have Michael Hudson. He's the
Speaker 1: president of the Institution for the Study of Long Term
Speaker 1: Economic Trends, also a professor of economics at the University
Speaker 1: of Missouri, Kansas City. He's also the author of numerous books,
Speaker 1: including and Forgive Them Their Debts, which is a sort
Speaker 1: of very long term history and overview of the tension
Speaker 1: between creditors and borrowers, a really good book. So the
Speaker 1: perfect person to give us perspective on what's going on
Speaker 1: right now and how it compares to thousands and thousands
Speaker 1: of years ago. Professor Hudson, thanks so much for joining us. Well,
Speaker 1: it's good to be here, Tracy, thanks for having me.
Speaker 1: So maybe just to begin, I mean, where do we begin? Um?
Speaker 1: Can you sort of give us your top level view
Speaker 1: of how you view the coronavirus crisis and the impact
Speaker 1: on the economy in terms of creditors versus borrowers, Like
Speaker 1: where does the power actually you lie at the moment,
Speaker 1: and where's the biggest pain threshold. Well, both of you
Speaker 1: who have already in the introduction gone over what the
Speaker 1: problem is. And I think it's much easier to understand
Speaker 1: the logic of debt cancelations right down if you look
Speaker 1: at what happens if you leave business as usual, What
Speaker 1: happens if you leave things the way they are right now? Well,
Speaker 1: I think of restaurants, for instance, restaurants in New York
Speaker 1: City have been closed or operating at a minimal basis
Speaker 1: for six months. They've accrued back rents UH and taxes. UH.
Speaker 1: There's no way that they can reopen and hope to
Speaker 1: earn the six months rent uh in the next two
Speaker 1: or three or maybe four years. UH. And if they
Speaker 1: did have to pay the rents that have accrued when
Speaker 1: there are no revenues at all, then they're going to
Speaker 1: have to go out of business. And there's talk of
Speaker 1: of rest Bronson, New York City going out of business.
Speaker 1: You could say the same for Jim's. You've seen the
Speaker 1: Metropolitan Opera closed down, UH, Carnegie Hall concert stopping. So
Speaker 1: you're having an interruption in economic activity. And the main
Speaker 1: effect of debt people think of debt is transferring interest
Speaker 1: and money to the creditors. But in this case, we're
Speaker 1: talking about transferring property to creditors. We're talking about landlords
Speaker 1: or people who have bought a house in a mortgage.
Speaker 1: They've lost their job or they're on a part time basis,
Speaker 1: and UH, they're in danger of defaulting on the mortgage.
Speaker 1: And there's a danger of the same kind of decline
Speaker 1: in home ownership today that you had after two thousand
Speaker 1: nine when they were the widespread defaults. So the question
Speaker 1: is radical as it seems to write down the debts.
Speaker 1: Is even more radical to say, well, let's transfer property
Speaker 1: at to creditors. Let's close down business family businesses that
Speaker 1: have been there for many decades. Uh, let's not completely
Speaker 1: leave the economy and a closed down position. The reason
Speaker 1: people have canceled debts over the time is to restore
Speaker 1: economic normalcy. And this has been going on for over
Speaker 1: three thousand years, five thousand years. My book, UH, what
Speaker 1: is much of the UH news right now? Our acts
Speaker 1: of God by insurance companies. So you can look at
Speaker 1: the virus as being a kind of act of God.
Speaker 1: What do you do when something happens from outside the
Speaker 1: economy is not the fault of the income earner? Is
Speaker 1: not the fault of the restaurant, it's not the fault
Speaker 1: of the homeowner who's lost a job. It's just happens
Speaker 1: from outside the economy. Well, for thousands of years, not
Speaker 1: only in Babylonia, but in in Rome, when there was
Speaker 1: a problem, a disease, a flood, or a drought, the
Speaker 1: ruler would say, Okay, the taxes don't have to be paid,
Speaker 1: and in fact, the debts don't have to be paid.
Speaker 1: Most depths in the past where tax debts, and if
Speaker 1: they're not paid, the problems really taxes. And here in
Speaker 1: New York that's especially important. Uh, the transport system has
Speaker 1: been almost empty for six months. It's run up at
Speaker 1: dept of four billion dollars. The city has run up
Speaker 1: a debt of about six billion dollars. What is going
Speaker 1: to happen? The mayor has talked about drastically closing city services,
Speaker 1: laying off municipal labor, raising the transport fares on the subway.
Speaker 1: Obviously there's going to be a break in the chain
Speaker 1: of payments. How do you avoid that? Well, there are
Speaker 1: a number of ways of avoiding that. One would be
Speaker 1: for the Federal Reserve to simply create the credit to
Speaker 1: sustain the system for people who can't pay to transfer
Speaker 1: income to the restaurants enough to pay the costs of operation,
Speaker 1: the rents and the labor costs to pay a carry
Speaker 1: gate hall and the metropolitan opera enough not to go under.
Speaker 1: The other way is to simply write down the debts,
Speaker 1: because if you if you don't write down the state
Speaker 1: and local and public debt in this case, you're going
Speaker 1: to have a slash of government services. And the government
Speaker 1: has said, well, what can we sell off? We're going
Speaker 1: to have to begin to sell off public header prises
Speaker 1: like Chicago sold off the parking meters in the streets.
Speaker 1: We're going to have to sell off parks. Uh, we're
Speaker 1: gonna turn roads into toll roads. You can see the
Speaker 1: problems they're going to occur. You have to look at
Speaker 1: it as an overall system, and if you don't write
Speaker 1: down the debts, or if you don't provide the money,
Speaker 1: uh just print the money to let's the economy tread
Speaker 1: water what you call time out of time. Then you're
Speaker 1: going to have a drastic uh change in shrinkage of
Speaker 1: the overall economy and we'll end up looking like Greece
Speaker 1: did a few years ago. So what is an example
Speaker 1: in a history. I mean, you mentioned you you do
Speaker 1: a lot of work with history, and you mentioned this
Speaker 1: idea of debt forgiveness going back five thousand years. What's
Speaker 1: the what's the sort of relevant period we might look
Speaker 1: to a specific example where a disease came or some
Speaker 1: act of God happened in the solution was right off
Speaker 1: the debts. Well, the Laws of Hammurabi were announced around
Speaker 1: seventy BC are an example. That's the first uh set
Speaker 1: of laws that explicitly referred to an act of God,
Speaker 1: in this case added the storm God. Amurabi says that
Speaker 1: if the storm God added floods the fields or canceled
Speaker 1: the debts floods the fields that causes a drought, then
Speaker 1: the taxes don't have to be paid and the debts
Speaker 1: don't have to be paid. In another part of the
Speaker 1: Laws of Murabi, he said, if there's a disease and
Speaker 1: the disease prevent people from operating in normal activity, then
Speaker 1: the depths that they are canceled. Now, the reason he
Speaker 1: did that was if he did not cancel those depths
Speaker 1: of the cultivators. And we're talking about an agricultural economy,
Speaker 1: low surplus economy. Then you would have the debtors fall
Speaker 1: into bondage to the creditors, just like you have in
Speaker 1: the Bible, a debt bondage when you can't pay the debts.
Speaker 1: And if a debtor ended up owing his labor time
Speaker 1: to the creditor, then he wouldn't have the opportunity to
Speaker 1: work on corvet labor, that is public labor to build
Speaker 1: the castle, the walls, to dig the irrigation ditches. He
Speaker 1: wouldn't be able to serve in the army. And if
Speaker 1: you have the crops to the creditor, and we're talking
Speaker 1: about thirty three and the third percent interest for prop loans,
Speaker 1: then he wouldn't be able to pay the taxes. So
Speaker 1: the Hammurabi would have the palace economy would have not
Speaker 1: only collapsed, but you would have had the wealthy creditor
Speaker 1: class emerging from the palace bureaucracy, the local local leaders,
Speaker 1: and the first thing they would have done once they
Speaker 1: got power was to overthrow the king, as they did
Speaker 1: in Byzantium. UH powerful enough to overthrow the king and
Speaker 1: take and UH prevent the king from having the power
Speaker 1: to tax them, and the whole economy would have turned
Speaker 1: into an oligarchy instead of a steady state system. Now,
Speaker 1: the idea behind Hammarabi was taken over from the Sumarians
Speaker 1: UH and their word for these depth cancelations. Think of
Speaker 1: it as a clean slate. Everything goes back to the
Speaker 1: way things were before the christ Us. And the word
Speaker 1: for clean slate in Sumerian was a margie from Amma
Speaker 1: the mother. It was the mother condition, meaning it's the
Speaker 1: original condition. The whole idea is, how do you come
Speaker 1: out of a crisis, whether it's a doubt, drought, or
Speaker 1: disease and end up in the kind of way you
Speaker 1: were before, which you assume to be rough balanced. People
Speaker 1: produce enough to live and pay their taxes and get
Speaker 1: by and conduct normal activity. How do you restore the
Speaker 1: ability of life to get back to normal uh so
Speaker 1: that the equivalent would be in modern days. How do
Speaker 1: you let restaurants reopen without having to say, well, we're
Speaker 1: just going to go out of business rather than pay
Speaker 1: all the money that we owe that we end up
Speaker 1: working for the landlords and uh for the creditors through
Speaker 1: the city. How do you enable the cities to start
Speaker 1: their transportation system again at afford at rates that people
Speaker 1: can afford to pay on the subway or the other transportation.
Speaker 1: How do you prevent the economy from being permanently wounded?
Speaker 1: And again, the only way to do it is to
Speaker 1: write down UH say the deaths don't have to be paid.
Speaker 1: Somebody has to suffer because as Tracy pointed out, that
Speaker 1: one person's death is another person's claim. And uh, if
Speaker 1: you don't pay the debt, then some uh saver or
Speaker 1: the creditor is not going to be paid. And in
Speaker 1: this case it would be either the landlords are not
Speaker 1: paid or in special conditions where small small landlords, they'd
Speaker 1: lose the property in some way. The banks and the
Speaker 1: creditors are obliged, obliged to take the loss because they're
Speaker 1: rich enough to take the loss without disrupting society. If
Speaker 1: you have the debtors absorb the loss, society is disrupted
Speaker 1: and torn apart, and the tax systems turn apart. If
Speaker 1: the creditors lose, well they're not quite as rich as
Speaker 1: they used to be, but they still get by. That's
Speaker 1: why Hammurabi did not cancel the business debts debts of
Speaker 1: merchants debts that were denominated in silver for trade. None
Speaker 1: of the silver business steps were canceled. Only the personal
Speaker 1: debts manly of cultivators on the land were canceled. Same
Speaker 1: thing in Rome when UH Emperor Hadrian canceled the debts.
Speaker 1: Roman been UH engaged in fighting with the north, with
Speaker 1: the Germans. He canceled the debts so that you wouldn't
Speaker 1: have the army falling into bondage the creditors so it
Speaker 1: couldn't fight in the army anymore, and UH defend Rome.
Speaker 1: Fifty years later Marcus Aurelius did the same thing for
Speaker 1: the same reason. So almost every economy has in the past,
Speaker 1: has UH come to the point where it says, well,
Speaker 1: it's easier to make the creditors absorb the loss than
Speaker 1: to have the rest of the economy fall into bondage
Speaker 1: and a transfer property to U endow a creditor class
Speaker 1: at forecloses, and UH we end up in an economy
Speaker 1: with a very different shape. Do you really want the
Speaker 1: econom made a change and straight that way? So I
Speaker 1: think there's a general sense out there that debt forgiveness
Speaker 1: or debt jubilieves are a really leftist policy. And I mean,
Speaker 1: you just gave us all these great historical examples. Hammurabi
Speaker 1: wasn't exactly a liberal, right. He set out some pretty
Speaker 1: tough punishments for for crime, for I think theft. Some
Speaker 1: thefts were punishable by death. You laid out a really
Speaker 1: good rational economic reason why he would be interested in
Speaker 1: depth forgiveness. But I'm curious why that rationale doesn't seem
Speaker 1: to resonate in modern day times, especially in the US.
Speaker 1: As Joe kind of mentioned in the intro, whenever you
Speaker 1: talk about debt forgiveness in the States, even if it's
Speaker 1: something like student loans, you seem to get this knee
Speaker 1: jerk reaction from people who say, well, you know, I
Speaker 1: paid my student loans, why do you get a free ride?
Speaker 1: And it feels like once the system is in motion,
Speaker 1: it's very hard to change it. Why do you think
Speaker 1: the attitudes are so different now to I guess what
Speaker 1: they were in in ancient Samaria. I think because of unfamiliarity,
Speaker 1: uh with with history and the fact that you meant that, uh,
Speaker 1: the left in America doesn't discuss debt or finance. I
Speaker 1: don't think I've had any discussions about finance or debt
Speaker 1: for business or even monetary policy with the left at all.
Speaker 1: I've talked with federal reserve branches. I talked to Wall
Speaker 1: Street people, I talked to financial people, I talked to
Speaker 1: a Republican politicians. Nobody on the left has been interested
Speaker 1: in this. And in fact, in China, where I was
Speaker 1: a professor for the last few years in Beijing at
Speaker 1: Peking University, I went over a few years ago along
Speaker 1: with David Harvey at colleague of mine from Cooney here
Speaker 1: in New York, and UH, we didn't find any discussion
Speaker 1: in China. What are you going to do about the
Speaker 1: Chinese housing boom that's come up with all of the
Speaker 1: people borrowing to buy a real estate on credit. And
Speaker 1: because everything has to be couched in terms of Marxist
Speaker 1: capital there, because they say that there are Marxist state
Speaker 1: David Harvey said, well, you know Marks more than Volume
Speaker 1: one of Capital, which is all about labor and UH,
Speaker 1: employee employees working for their employers their volumes two and three.
Speaker 1: In Capital, Volume three, Mark talks about how debt grows
Speaker 1: by its own purely mathematical laws which have nothing to
Speaker 1: do with the economic rate of growth. UH. The financial
Speaker 1: system is wrapped around UH the economy as a whole
Speaker 1: and really is independent from capitalism. It existed long before capitalism. Uh,
Speaker 1: and probably and obviously is existing after capitalism In China,
Speaker 1: they did not seem very interested in the lend of
Speaker 1: approach at all. In fact, we could see that it
Speaker 1: made them feel very uncomfortable to talk about that. So
Speaker 1: I think the people who are realizing that something has
Speaker 1: to be done about that are mainly financial. They're mainly
Speaker 1: in Wall Street. For years I worked with Chase Manhattan
Speaker 1: is our balance of payments economists, And it was the
Speaker 1: banks that saw, well, wait a minute, how much can
Speaker 1: a third world country afford to pay? How much can
Speaker 1: such and such an industry afford to pay? The banks
Speaker 1: know that many sectors can't pay. The rest of the
Speaker 1: economy isn't looking at this because there's an assumption. Like
Speaker 1: you said that, the assumption is that anybody can pay
Speaker 1: if they just cut back on they're spending enough. But
Speaker 1: that's not the case. Uh. You mentioned student loans, and
Speaker 1: certainly many people think, well, I really straight by to
Speaker 1: pay my student loans. Why would other student loans be forgiven? Well,
Speaker 1: the answer is simple. If you were able to straight
Speaker 1: by and pay your student loans, good for you. You
Speaker 1: were able to survive most of the people who don't
Speaker 1: pay their student loans are not paying because they're going
Speaker 1: to the movies, or they're gambling, or they're consuming more.
Speaker 1: They're paying because they really don't have the money to
Speaker 1: do what you did to to scrape and pay, especially minorities,
Speaker 1: so have gone to junk colleges, the sort of private
Speaker 1: colleges that say they're going to get them a job
Speaker 1: and manual labor some kind of technology that really doesn't work.
Speaker 1: There are many people stuck with loans that they're unable
Speaker 1: to pay. And if they do pay, it suppose that
Speaker 1: all the people student loans now actually have to pay
Speaker 1: the student loans. If they then they're not going to
Speaker 1: have enough money to take out a mortgage to buy
Speaker 1: a home of their own uh and form a family. UH.
Speaker 1: They're going to have to live with their parents. UH.
Speaker 1: They get married, what are the children going to move
Speaker 1: in with the wife? And kids going to move in
Speaker 1: with their parents? The having to pay the student loan
Speaker 1: crowds out the ability to go to mortgage loan to
Speaker 1: take out other loans you need. And then of course
Speaker 1: you have the medical UH debt that is probably the
Speaker 1: maiden source of bankruptcy for many many people, you get sick,
Speaker 1: you go into the hospital, or even if you get tested,
Speaker 1: you're you're broke. And if the Federal Reserve is direct
Speaker 1: when it said that half the Americans cannot raise four
Speaker 1: hundred dollars in an emergency, and it costs uh that
Speaker 1: much just to have a COVID test. UH, And it
Speaker 1: costs maybe two thousand dollars or more if you go
Speaker 1: in and just to go and be admitted to a hospital.
Speaker 1: You can imagine the devastation that this causes to people
Speaker 1: that UH, not paying a debt is not a matter
Speaker 1: of choice. It's a matter of the money, isn't there Michael,
Speaker 1: I want to go back to something you said, which
Speaker 1: is just that you know, you could look at the
Speaker 1: current situation in which all these different entities, whether it's restaurants,
Speaker 1: whether it's museums, whether it's the New York City Transit Authority, UM,
Speaker 1: they all owe a lot of money. And there are
Speaker 1: sort of two different paths we could take. We could
Speaker 1: cancel all the debt or or some level of it
Speaker 1: canceled debt, or you have the government print a lot
Speaker 1: of money and UM sort of allow people just give
Speaker 1: it to people to make them whole. And you also
Speaker 1: said they're going to sort of back to the ancient
Speaker 1: times that UM, a lot of the debt that was
Speaker 1: in fact canceled was tax debt, so public debt essentially
Speaker 1: that the cost of the debt cancelation would essentially be
Speaker 1: on the public sector balance sheet. And so I'm curious
Speaker 1: whether functionally speaking, you know, talking about debt cancelation in
Speaker 1: terms of ripping it up sounds pretty radical. Talking about
Speaker 1: massive fiscal aid UM so that all these different entities
Speaker 1: could pay their bills during the crisis sounds a little
Speaker 1: less radical. But I'm curious if functionally they're kind of
Speaker 1: the same thing. This idea that what UM sort of
Speaker 1: in the ancient days was putting the you know, having
Speaker 1: the public balance sheet be the bearer of the losses.
Speaker 1: It's more translatable to aggressive fiscal expansion as opposed to
Speaker 1: pure debt ripping up per se. That happens very well. Uh.
Speaker 1: China is able to cope with this quite well because
Speaker 1: it's a monetary policy. It's central bank is part of
Speaker 1: the government. Uh. There are many companies in China for
Speaker 1: the last ten years are longer that have not been
Speaker 1: able to pay the debt. What do you do when
Speaker 1: a a industrial company can't pay the debt. Well, in UH,
Speaker 1: in the West, if a company can't pay a debt,
Speaker 1: it goes bankrupt and it's sold to the highest bidder,
Speaker 1: and it could be a foreign buyer, and UH it
Speaker 1: closes down and the workers are unemployed. But what the
Speaker 1: Bank of China does. The government simply keeps creating the
Speaker 1: credit and UH lending the bank the money that the
Speaker 1: corporation that's the debt or the money now here that
Speaker 1: the company would be called a zombie corporation. But China
Speaker 1: will just keep lending it the money. And then because
Speaker 1: it creates the money, it'll write it, write it off.
Speaker 1: It's easy to cancel the debts when the debts you're
Speaker 1: canceling or owe to yourself. Honorabi could cancel the debts
Speaker 1: because most of the debts ultimately were over to the palace.
Speaker 1: He didn't have to deal with a independent financial class
Speaker 1: that said, wait a minute, we're going to lose if
Speaker 1: you cancel the debts. We're going to overthrow you if
Speaker 1: you tried to do that. He was canceling debts to themselves.
Speaker 1: The Roman emperors were canceling debts owed to themselves, not
Speaker 1: to the wealthy Romans now in China is canceling it
Speaker 1: will because China's government provides the credit. It premises that
Speaker 1: finance and banking should be a public utility. It should
Speaker 1: not be privatized. And the advantage of having a banking
Speaker 1: is a public utility, or like operating the Federal Reserve
Speaker 1: here is a public utility. Is you can create the money.
Speaker 1: You can lend to keep a restaurant afloat, or a
Speaker 1: museum afloat, or a city UH and state afloat, and
Speaker 1: then you can simply wipe out the debt and you're
Speaker 1: only canceling the debt to yourself. You're not threatening to
Speaker 1: take it away from any banker or a bond holder
Speaker 1: or a stockholder. So by making finance a public utility,
Speaker 1: or at least making the credit emergency credit public utility, UH,
Speaker 1: you create the credit and then you say, okay, we've
Speaker 1: provided you the credit. And when we provide your credit
Speaker 1: in a shutdown, this is not inflationary. I think Germany
Speaker 1: is paying its labor of the normal wage income. The
Speaker 1: Federal Reserve could create enough credit to keep most employees
Speaker 1: have lost the jobs able to break even. Most restaurants
Speaker 1: and most renters who are unable to do business, they
Speaker 1: will owe a debt to the Federal Reserve that will
Speaker 1: continue to keep them afloat. And then when the crisis
Speaker 1: is over and the vaccine is in and life goes
Speaker 1: back to normal, the federals say, Okay, we've provided the credit.
Speaker 1: Now we can just wipe it out and life can
Speaker 1: go back to normal. The idea is to restore the
Speaker 1: status quote on ANTI. The idea is to make the
Speaker 1: economy is workable as it was before the crisis, since
Speaker 1: we were touching on fiscal stimulus as as one way
Speaker 1: to keeping the economy afloat and making sure that there
Speaker 1: are jobs available for people. I'm Joe is going to
Speaker 1: make fun of me for doing this, but I'm just
Speaker 1: gonna go out, go ahead and ask you, what do
Speaker 1: you think about m MT Modern monetary theory. It feels
Speaker 1: like it's maybe one version of what you're saying. And
Speaker 1: I know, um, I guess you would have worked with
Speaker 1: Stephanie Kelton when she was at the University of Missouri
Speaker 1: Kansas City with you, what do you think about that
Speaker 1: policy and how much difference or daylight is there between
Speaker 1: MMT and its policy recommendations and the kind of depth
Speaker 1: forgiveness that you are discussing and advocating. Well, I was
Speaker 1: one of the developers of m m T uh in
Speaker 1: the late nine things seventies, UH, and Stephanie was our
Speaker 1: department chairman there. We were all brought to Kansas City
Speaker 1: together in order to popularize m m D and Stephanie
Speaker 1: and I have gone around the world together giving lectures
Speaker 1: on it. She usually gives the introductory lecture about how
Speaker 1: running a deficit uh pumps money into the economy, and
Speaker 1: then I follow up with a second and the economy
Speaker 1: needs to be pumped up or el will have austerity.
Speaker 1: And then I give the lecture to say, well, the
Speaker 1: economy is really two sectors. There's the financial sector finance, insurance,
Speaker 1: and real estate, the property sector on the one hand,
Speaker 1: and then there's the production and consumption sector on the other. Now,
Speaker 1: most MMT people talk about the government printing money into
Speaker 1: the regular economy of production and consumption people who work
Speaker 1: and produce things. But you've just seen uh. The main
Speaker 1: practitioner of m m T, of course is Donald Trump,
Speaker 1: and uh he just did uh the enormous uh ten
Speaker 1: trillion U MMT example, but he didn't put He only
Speaker 1: put two trillion of that into the economy. The rest
Speaker 1: of the money went into the stock market, in the
Speaker 1: bond market. So the question is who are you going
Speaker 1: to run m m T four. Are you going to
Speaker 1: run it, uh in just in order to pump up
Speaker 1: the stock and bond prices and real estate prices and
Speaker 1: to keep the death system in place, or are you
Speaker 1: going to pump it into the economy and let the
Speaker 1: economy survive. Something has to give either the either the
Speaker 1: economy loses or the financial sector loses. And that really
Speaker 1: is UH the debate an m m T. Mr Trump
Speaker 1: didn't call what he was doing MMT, but it's exactly
Speaker 1: what mm T is. Creating the government just simply creating
Speaker 1: the credit. That's what quantitative easing is. Uh. That was
Speaker 1: all m MT, but it was MMT going into the
Speaker 1: stock market. And most of us in Kansas City are
Speaker 1: trying to upgrade prosperity for the economy as a whole,
Speaker 1: for labor and industry and agriculture, not simply high asset prices.
Speaker 1: So something you brought up and I thought it was
Speaker 1: interesting the way you framed it in comparison with China,
Speaker 1: and then what you identified right there, you know, thinking
Speaker 1: about MMT as a political project, or think about your
Speaker 1: own work, of course as a political project, how much
Speaker 1: can you ide defy it as essentially what you said
Speaker 1: of no longer having the financial sector be this sort
Speaker 1: of third entity out there. You have the sort of
Speaker 1: productive capacity of the economy, you have the government. And
Speaker 1: in China, as you described it, the sort of there
Speaker 1: isn't much daylight between the financial sector and the government,
Speaker 1: whereas in the US the financial sector is its own
Speaker 1: distinct set of private interests that's distinct from the government
Speaker 1: and distinct distinct from actual productive capacity. So how much
Speaker 1: is in your view the solution essentially collapsing the financial
Speaker 1: sector so that it's just it can no longer represent
Speaker 1: its own interests distinct from everything else. Well, what are
Speaker 1: its interests? I think you can say that a lot
Speaker 1: of the problems that America's UH been in slowing them
Speaker 1: for the last ten years, really slowing down since two
Speaker 1: thousand nine, has been financialization. And the problem is that
Speaker 1: the financial sector UH the and create credit for the
Speaker 1: reasons that m m T would, The financial sector creates
Speaker 1: credit against assets against collateral. Eight of bank loans are
Speaker 1: for real estate, and so as the credit standards have
Speaker 1: been loosened for real estate, banks will lend more and
Speaker 1: more and more money against any given UH piece of
Speaker 1: real estate. And the effect of financialization has been to
Speaker 1: increase to inflate real estate prices. Banks will lend money
Speaker 1: against stocks and bonds and UH they'll learn money to
Speaker 1: finance corporate takeovers. And they also lend money, of course
Speaker 1: for education. And just as a house is worth whatever
Speaker 1: a bank will lend against it for the new buyer,
Speaker 1: and education is going to be worth whatever a bank
Speaker 1: is going to lend to a student to buy an education.
Speaker 1: And as banks have made loans of government guarantees with
Speaker 1: no risk, they've made loans without taking into account the
Speaker 1: aility to pay. When I went into Wall Street sixty
Speaker 1: years ago, the first question any banker would ask is
Speaker 1: can the borrower pay well? Right now, that's not asked anymore.
Speaker 1: Now that the f h A is guaranteeing mortgages and
Speaker 1: the student loan are guaranteed, banks don't have to worry
Speaker 1: about repayment. So they're just creating as much credit as
Speaker 1: they can without reference to the ability to pay. The
Speaker 1: government isn't looking at the ability to pay the f
Speaker 1: h A. Now, let's mortgages be UH extended up to
Speaker 1: the point where they absorbent of the borrower's income to
Speaker 1: pay the mortgage that will be guaranteed. Will imagine if
Speaker 1: the government if you're paying forty three if your income
Speaker 1: to pay your mortgage, you're paying taxes maybe a ten,
Speaker 1: or you're paying health insurance, you're paying f I, your
Speaker 1: Social Security. Withholding, there's been less and less and less
Speaker 1: income available to spend on goods services because more and
Speaker 1: more American income is being used to pay the financial
Speaker 1: sector and its associated real estate and UH insurance sector.
Speaker 1: So as more money is paid to the financial sector,
Speaker 1: is debts grow. Same thing for corporations. As corporations have
Speaker 1: to pay more money to the bondholders UH and dividends
Speaker 1: and the banks, there's less and less for new capital
Speaker 1: investment in the economy's drinking, largely because there's been a
Speaker 1: diversion of income away from the real economy, the production
Speaker 1: and consumption economy, to the financial sector. So the financial
Speaker 1: sector in the United States, let's face it, has become dysfunctional.
Speaker 1: And I think almost every financial manager that I know
Speaker 1: realizes that the sector is become dysfunctional, and they're saying,
Speaker 1: this is a hell of a way to make a living. Uh.
Speaker 1: I'm going to play by the rules of the game,
Speaker 1: but I would be nice if the rules of the
Speaker 1: game were for me to be a banker and I
Speaker 1: was actually helping the economy instead of just diverting income
Speaker 1: from the economy into the banking system. So somehow the
Speaker 1: financial system has to be restructured so it can cope
Speaker 1: with a coronavirus, chroma or act of God like we're
Speaker 1: having now and be able to restore normalcy. And I
Speaker 1: think the only way to do it UH would be UH.
Speaker 1: China has shown the most successful way of doing it.
Speaker 1: There was hardly any interruption of activity there. There's a
Speaker 1: very quick recovery, and it's because of the way that
Speaker 1: China has structured financial sector under public direction instead of
Speaker 1: leaving it to individual banks for clothes, take over real estate,
Speaker 1: grad factories and UH create UH make the economy look
Speaker 1: like Greece. UM. I have a related question, but I
Speaker 1: think when when most people think about m MT and
Speaker 1: policy prescriptions, they think about things like a job scare
Speaker 1: and tee or maybe a green new deal. But you
Speaker 1: just mentioned this idea of Trump as an m m
Speaker 1: T or himself spending lots of money, but maybe spending
Speaker 1: it in the wrong way. How useful is an economic
Speaker 1: theory that can lead to such different policy outcomes. The
Speaker 1: important thing about m m T is you realize that
Speaker 1: money doesn't Governments don't have to borrow to spend money.
Speaker 1: Governments can create the money. Uh. They don't have to
Speaker 1: borrow from a bank or a bond holder to lend out.
Speaker 1: They can. The effect of borrowing from a bond holder
Speaker 1: uh and and creating money is identical. If a central
Speaker 1: bank will print the money to spend them to the economy.
Speaker 1: It's no more inflationary than borrowing from a bondholder because
Speaker 1: the bond holder do what a bank does. Simply take decide, okay,
Speaker 1: I'm not going to spend money on other financial assets.
Speaker 1: A bond holder is not going to up back consumption
Speaker 1: spending in order to lend money to the government. Definitely.
Speaker 1: An m m T S point is that government money
Speaker 1: creation is no more inflationary than borrowing, and you don't
Speaker 1: have to borrow and pay interest to an independent financial
Speaker 1: sector where you're limited to what bond holders will let
Speaker 1: you do. You can simply print the money, and by
Speaker 1: printing it you save the amount of taxes that have
Speaker 1: to go to paying interest. You would save h the
Speaker 1: amount of taxes that have to go to advertise and
Speaker 1: pay down the debt. UH. Certainly for states and local
Speaker 1: governments here it would be the probably the only way
Speaker 1: the states and local governments can avoid drastic downsizing is
Speaker 1: government lending to them, not going to private bond holders.
Speaker 1: Because in New York, UH, if New York State borrows
Speaker 1: from private bond holders, the bond holders will say, well,
Speaker 1: you'll have to balance the budget by selling off proper
Speaker 1: or cutting back public services, less transportation, and with less transportation,
Speaker 1: people are just going to begin moving out of out
Speaker 1: of New York. It'll become not as livable as it
Speaker 1: used to be. So uh that that's the main thing
Speaker 1: that m MT says that there are two ways of
Speaker 1: creating of financing governments printing it borrowing, and the effect
Speaker 1: on inflation is identical. I want to ask you, I
Speaker 1: want to go back to this situation in China again
Speaker 1: real quickly. We actually uh several months ago, we actually
Speaker 1: talked to our Bloomberg, one of our economists here at
Speaker 1: Bloomberg Tom Orlick, who is a new book, Uh, China
Speaker 1: The Bubble That Never Pops, And we talked about some
Speaker 1: of this, which is that due to the structure of
Speaker 1: finance in China, um that all of this sort of
Speaker 1: the debt bubble is about to explode fearst they're misguided,
Speaker 1: there's sort of based on a misunderstanding. Nonetheless, I'm curious
Speaker 1: what you see as the costs of a system like
Speaker 1: that that because some critics would look at it and say, okay, yes,
Speaker 1: you could certainly keep companies a lot. I've indefinitely, but
Speaker 1: what about corruption? What about productivity? What about the sort
Speaker 1: of what in the West we might say as well,
Speaker 1: what about the disciplining effect of the market by having
Speaker 1: by not allowing you know, companies to roll over their debts? Uh?
Speaker 1: And definitely do you see costs associated with the Chinese
Speaker 1: system whereby okay, uh, debts and bankruptcies aren't as much
Speaker 1: of an issue necessarily or systemic, But what are but
Speaker 1: in terms of um, you know, keeping all these companies
Speaker 1: alive with sort of ongoing access to credit. Well, I
Speaker 1: think the recent weeks newspapers have shown there's just as
Speaker 1: much corruption in the United States. Uh financial system, Uh,
Speaker 1: as there is in China. I mean, look at the
Speaker 1: Deutsche Bank and look at all the banks that have
Speaker 1: been uh uh involved, Um there are. Ten years ago,
Speaker 1: corruption was a very serious problem in China, and UH
Speaker 1: when I had lecture there to students, there was you
Speaker 1: could see the idealism I hadn't in any other country,
Speaker 1: an idea that they can really they'll graduate, they'll go
Speaker 1: into government, They're going to clean up corruption. Uh. And
Speaker 1: really they felt it was their country and they had
Speaker 1: a chance of actually shaping the economy because it was
Speaker 1: something entirely new. Well, the problem ten years later that
Speaker 1: we can see is a cleaning up corruption does entail
Speaker 1: a lot of government oversight into the economy. And uh
Speaker 1: some of the cost of cleaning up corruption is a
Speaker 1: very heavily regulated economy. They're trying to get rid of
Speaker 1: corruption now and that's there. Uh from what I what
Speaker 1: I'm told by Chinese businessmen, it seems to be working
Speaker 1: uh quite well, certainly compared to what it was before.
Speaker 1: But getting back to the other question, UH, what is
Speaker 1: the cost? Begin by what the benefit? The benefit is
Speaker 1: When there's an economic downturn like a coronavirus. The company
Speaker 1: did not go out of business layoff its employees to
Speaker 1: be sold to foreign buyers. It was the economy was
Speaker 1: able to maintain stability. So the cost really is UH
Speaker 1: money is cost free if the government creates it. Borrowing
Speaker 1: is not cost free, but money creating has cost free
Speaker 1: as long as it's not inflationary. And China does not
Speaker 1: create money in an inflationary way. It creates money simply
Speaker 1: to stabilize UH employment in a way that has not
Speaker 1: caused any more inflation there than it would here. If
Speaker 1: New York City in New York State received money creation
Speaker 1: to just continue up, continue operation, that wouldn't inflate prices
Speaker 1: at all. In fact, what we're in now is that deflation.
Speaker 1: If we don't write down the debts, then the debt
Speaker 1: service is going to cause a deflation of prices. That's
Speaker 1: the real problem today, not inflation, but deflation, as people
Speaker 1: can can't afford to buy goods and services and have
Speaker 1: to cut back their family budget and by less and
Speaker 1: less to UH employ fewer and fewer people producing and
Speaker 1: selling goods and services, fewer restaurants in business, and and
Speaker 1: so on. So if if you look ahead to the future.
Speaker 1: And you know, if you recognize that there may be
Speaker 1: some desirable aspects of Chinese style command economy as you're describing,
Speaker 1: or at least one where the government has a little
Speaker 1: bit more influence over the financial industry. Do you see
Speaker 1: the US becoming more like the Chinese system? Or alternatively,
Speaker 1: do you see China becoming more like the U S
Speaker 1: system because of global competition. I'd be curious to get
Speaker 1: your views if you had to choose China. China certainly
Speaker 1: is not going to privatize banking. It is absolutely drawing
Speaker 1: the line. It is not going to let banking be
Speaker 1: private because credit is the main public utility. UH An
Speaker 1: economy is basically plan there was credit system, Who's going
Speaker 1: to supply the credit? UH America is turning into a
Speaker 1: centrally planned economy, not planned by Washington, but planned by
Speaker 1: Wall Street, just like UH European countries are planned by
Speaker 1: their financial sector. And the problem is who's going to
Speaker 1: do the planning and what is their planning going to
Speaker 1: be for. Is it going to be to make the
Speaker 1: economy grow or is it going to get rich off
Speaker 1: the economy by shrinking the economy? UH that the whole
Speaker 1: question I don't see the United States getting more like China,
Speaker 1: despite uh MMTV used modestly. I I see the United
Speaker 1: States getting more like Greece. Uh in England, austerity, more
Speaker 1: and more austerity, a slow crash, a slow debt deflation.
Speaker 1: And uh, that's what I've outlined in my book Killing
Speaker 1: the Host. I described debt deflation, which was discussed in
Speaker 1: the nineteen thirties when it was actually happening and when
Speaker 1: people had to pay their debts and couldn't have had
Speaker 1: to buy goods and services. What happened in the Great
Speaker 1: Depression is happening to get again today, but it's happening
Speaker 1: in slow motion. It's interesting the Grease comparison, because I
Speaker 1: remember the Grease comparisons like in eleven and people would say, oh,
Speaker 1: the U. S has all this national debt, we're becoming
Speaker 1: like Greece. But you're using it in a different way,
Speaker 1: not that uh, we're piling on all this debt, but
Speaker 1: that we're unwilling to spend and going into this sort
Speaker 1: of forced austerity mode. And of course we might see
Speaker 1: it here in New York City. Without further aid, I'm
Speaker 1: gonna ask you a bigger question, you know. On episode
Speaker 1: after episode, interview after interview that Tracy and I do
Speaker 1: on this podcast, this sort of idea that like we've
Speaker 1: had this like forty year run in a way of
Speaker 1: the existing model seems to come up, and it comes
Speaker 1: up when we talked to economists, we recently talked to
Speaker 1: Paul McCulley a few others, this idea that really over
Speaker 1: those at last forty years, we've crystallized this idea of
Speaker 1: the sort of financialized, asset driven economy. And I'm curious
Speaker 1: whether you um sort of see the same day as
Speaker 1: roughly forty years ago, either some turning point or some
Speaker 1: great acceleration towards now. And I'm curious also it's like,
Speaker 1: is coronavirus is this crisis a turning point for that
Speaker 1: or is it just in your view, just going to
Speaker 1: sort of keep accelerating on the existing trajectory. Well Night
Speaker 1: certainly was a turning point. You had Margaret Thatcher in
Speaker 1: England and Ronald Reagan in the United States. The whole
Speaker 1: tax system was shifted to favor real estate UH and
Speaker 1: the financial system, not the real economy. And then you
Speaker 1: had the shift of American corporate employment to wait low
Speaker 1: wage countries in Asia so yes, nineteen eighty was the
Speaker 1: turning point, and all of the trends made that from
Speaker 1: World War two UH to nine eight for more and
Speaker 1: more prosperity for labor were suddenly reversed. In retrospect, the
Speaker 1: nineteen seventies looked like a golden age now, but since
Speaker 1: nineteen eighty, real wages haven't really gone up very much.
Speaker 1: Death has gone way way up. So you've had a
Speaker 1: depth driven economy that leverage to economy. You had the
Speaker 1: corporate takeover UH and corporate rating movement again in the
Speaker 1: nineteen eighties. UH. You had the as interest rates came
Speaker 1: down from my former boss that chased both workers. In
Speaker 1: nineteen eighty, you've had You had the greatest bond market
Speaker 1: boom in history, bond prices sword, stock market sword. You had.
Speaker 1: You created huge financial wealth without creating actual industrial and
Speaker 1: consumer wealth. So you had a shift of the beneficiaries
Speaker 1: of the system from labor and business to UH, finance,
Speaker 1: the Wall Street, the real estate sector, and the insurance sector.
Speaker 1: So the whole economy changed nineteen eighty, and it's changed
Speaker 1: in a way that has left us now depth and
Speaker 1: the economy's run up as much dead as it can
Speaker 1: it can't really push up anymore, although the Federal Reserve
Speaker 1: can certainly keep pushing up the stock market, but it
Speaker 1: is not pushing up the economy the way it's going,
Speaker 1: and so I don't see the economy as recovering. The
Speaker 1: coronavirus is simply leftist idling at a low level, and
Speaker 1: I don't see any way of getting out of the
Speaker 1: level as long as we have to pay the debt legacy. Uh,
Speaker 1: the arrears that have all mounted up and are just
Speaker 1: a burden on families, on businesses, uh, and on states
Speaker 1: and localities. They can't carry it. And UH it's crunch time.
Speaker 1: And unless you alleviate the depth problem, you're going to
Speaker 1: be in a slow new depression. It's always a good
Speaker 1: podcast when you can go from Hammurabi to Mark Margaret Thatcher.
Speaker 1: I think all right, Professor Hudson, thank you so much
Speaker 1: for joining us. I really enjoyed that conversation. Thank you. Yeah,
Speaker 1: that was great to be here for having so Joe,
Speaker 1: that was a wide ranging conversation, it was, and you know,
Speaker 1: of course it did touch on a lot of themes
Speaker 1: that we've discussed lately. But a I liked um. I
Speaker 1: liked his sort of obviously historical perspective, that's a big
Speaker 1: part of what he's known for. But I thought the
Speaker 1: comparisons to the sort of Chinese model were pretty interesting,
Speaker 1: and it's sort of helped me crystallize, like, sort of
Speaker 1: what are some of the tensions here, perhaps about going
Speaker 1: at things in a different way, whether it's through much
Speaker 1: more um fiscal fiscal authorities, central realization of credit and spending,
Speaker 1: sort of a sort of useful, useful current counterpoint I think,
Speaker 1: to how things work out. Yeah, and it actually reminded
Speaker 1: me quite a bit of the episode we recorded with
Speaker 1: Victor Schutz a few months Definitely, I think he made
Speaker 1: similar points about what works in the Chinese model and
Speaker 1: this idea of the US perhaps moving closer to it.
Speaker 1: There is another thing that I was thinking about, which
Speaker 1: is Professor Hudson's point about when something like this happens
Speaker 1: in the economy, you know, an act of God, as
Speaker 1: you put it, you know there's going to be pain,
Speaker 1: and the policy prescription is basically all about finding who
Speaker 1: can bear that pain most efficiently, or who can bear
Speaker 1: it with minimum disruption to the economy. And you know,
Speaker 1: as he put it, it's usually the creditors they have
Speaker 1: lots of money, they can do this, or they could
Speaker 1: be back stopped by the government, which has the balance
Speaker 1: sheet to endure the pain. Yeah, I mean it's right exactly.
Speaker 1: I mean it's almost like you could say that initially
Speaker 1: in the crisis, that sort of March and April consensus
Speaker 1: is like, nobody should have to endure the pain, right,
Speaker 1: that this was like a true act of God. It
Speaker 1: was extraordinary, and we're going to get things back to normal.
Speaker 1: No one should be permanently put out of work, no
Speaker 1: one should have to lose their businesses. And we actually
Speaker 1: did a lot of spending that was on a scale
Speaker 1: and sort of monot say generosity, but maybe generosity is
Speaker 1: the word that was sort of unparalleled throughout history. I mean,
Speaker 1: the fact that Unemployment Insurance um I was supposed to
Speaker 1: basically be a complete replacement for the medium worker, fact
Speaker 1: that we had no strings attached, almost paral protection program,
Speaker 1: money for small businesses and so forth. But you know,
Speaker 1: we did lose that appetite pretty quickly, and it's like, okay,
Speaker 1: even though the fact that public health authorities failed to
Speaker 1: contain the virus or people's behavior failed to a few
Speaker 1: months later is like, right, you're kind of out of luck.
Speaker 1: Get back to work, find a job. Do we have
Speaker 1: to do? It's like we didn't that that appetude really
Speaker 1: did not last very long in this country. Yeah. Well,
Speaker 1: I mean not just that, but a lot of the
Speaker 1: forbearance programs that were either past or the ones that
Speaker 1: were discussed, like the payroll tax cut, all of those
Speaker 1: are still predicated on people eventually paying that money back. So,
Speaker 1: for instance, in the housing market, I think most of
Speaker 1: the forbearance programs are renewed every three months, So you
Speaker 1: can kind of see this wall of forbearance maturities coming
Speaker 1: every three months, and at some point you get the
Speaker 1: sense that they're not going to be rolled over, and
Speaker 1: you know, all of a sudden, the bills are going
Speaker 1: to come do again, and you're probably going to have
Speaker 1: a rerun of the economic pain that we experienced in March.
Speaker 1: The other thing to think about, it's not something that
Speaker 1: we really went into, but you know, there's a lot
Speaker 1: of like talk about the future of X, the future
Speaker 1: of cities, the future of offices, the future of working
Speaker 1: from home, the future of e commerce and stuff like that,
Speaker 1: and you know, all that's important, but there is a
Speaker 1: sort of sinister way to think about that, which is
Speaker 1: because remember, you know, something that Professor Hudson said is like,
Speaker 1: you know, the idea is like to just go back
Speaker 1: to the previous state. And I forget the word he cited, um,
Speaker 1: but it's like, no, the purpose of a forgiveness and
Speaker 1: a blank slate is just just go back to the
Speaker 1: pre the pre normal. And if you're sort of preoccupied
Speaker 1: with thinking about the future of X and how will
Speaker 1: coronavirus change everything, which there were like tons of articles
Speaker 1: about for the last six months, it almost like provides
Speaker 1: a pretext in a way for not doing the clean slate.
Speaker 1: In other words, it's like, well, we can't just go
Speaker 1: back to the old normal and we can't just wipe
Speaker 1: everything out because everything is going to change post coronavirus,
Speaker 1: and maybe something's will change. But you can sort of
Speaker 1: see how that rhetoric becomes a sort of excuse for
Speaker 1: not making everyone whole. I feel like there's a tension
Speaker 1: there because on the one hand, someone like Michael Hudson
Speaker 1: is very clear that the existing system is flawed, But
Speaker 1: on the other hand, the whole point of the debt relief,
Speaker 1: as you put it, is that blank slate to go
Speaker 1: back to where we were before. So there's a tension
Speaker 1: between wanting to fix the system and using a big
Speaker 1: moment of change to do so, and doing maybe what
Speaker 1: might be most economically expedient and just going back to
Speaker 1: the system as it was before. Yeah, no, no easy,
Speaker 1: no easy. Uh. Answers to resolving that and that always
Speaker 1: sort of is the challenge post to sort of crisis
Speaker 1: policy makers of how do you fix the system and
Speaker 1: repair system at the same time, they're kind of it's
Speaker 1: kind of different at the same time. Yeah, under immense
Speaker 1: time pressure as well. Well, this is why we aren't policymakers.
Speaker 1: So we just talked about it, all right, Uh, shall
Speaker 1: we leave it there? Let's leave it there. This has
Speaker 1: been another episode of the All Thoughts podcast. I'm Tracy Alloway.
Speaker 1: You can follow me on Twitter at Tracy Alloway and
Speaker 1: I'm Chill I Send though You can follow me on
Speaker 1: Twitter at the Stalwart. Follow our producer on Twitter, Laura Carlson.
Speaker 1: She's at Laura M. Carlson. Follow the Bloomberg head of
Speaker 1: a podcast, Francesca Levie at Francesco Today, and check out
Speaker 1: all of our podcasts under the handle at podcasts. Thanks
Speaker 1: for listening,