Dr Michael Hudson defined fictitious capital as a loan that cannot be repaid because the collateral is not there. He cited real estate fraud where ratings agencies intentionally gave false AAA ratings to Mortgage Backed Securities that in reality had little or no value. Today no one really knows what the value of any bank’s assets are really worth.
Fictitious theories of economics are driven by greed. Junk economics says it is fine to cut wages 30%, raise consumer taxes and fees, cut pensions. Social Security, Medicare and Food Stamps. Because we will inflate asset values owned by the 1% and let the 99% drown in the government debt we issue to save the uber rich. Dr Hudson specifically says that cutting wages 30% is the goal of Obama and Bernanke. As for prosecuting fraud, Hudson quoted his colleague Bill Black who said, “The only major case these guys ever prosecuted was Bernie Madoff who walked into a police station and said I surrender.”
He estimates the Shadow Banking system to be 15 trillion dollars. The SBS includes Hedge Funds, Money Market funds and Structured Investment Vehicles (SIVs) which can be used by banks. The SBS is designed to go around central bank monitoring.The SBS does not include the 800 trillion dollar plus Credit Default Swap and derivatives market. A CDS is a bet on the future value of a bond or commodity like corn, wheat or oil. It insures the buyer against a potential loss so it appears to function as insurance. It is unregulated so banks who sold hundreds of trillions of dollars in CDS do not have to set aside funds to pay claims. The bankers defaulted in the past and will do so again in the future. That was what the Bailout of AIG by the taxpayers was all about. Your paycheck is the guarantee for the 800 trillion dollars in potential losses.
Central banks are pumping money into the banks to make it appear that they are solvent so banks can pay on the loans they borrow from other banks. He says the Central banks like the Federal Reserve want to eventually cancel debts for the banks so the 1% lose nothing. But increased government debt will not (at least in their dreams) be cancelled as it will be pushed onto the 99%. This would allow the 1% to keep everything they have stolen from us.
Dr Hudson has called this the greatest financial fraud in history.
The last 30 years has seen tremendous inflation but was restricted to education and housing which are financed by bank debt. I would add healthcare which is subsidized by the related insurance industry.
Hudson sees the invasion of Libya as part of a strategy to deny oil to emerging industrial powers in Asia. These wars are paid for by the US printing dollars. These dollars are accumulated by foreign Central banks who either hold onto them or buy Treasury bonds. If they dumped the dollar, their currency would rise in value making their economies less competitive thus pushing up their domestic unemployment rates. The US is not only acting belligerently against Syria and Iran, it is forming alliances in Asia to contain China. I might add they are also encircling Russia with missiles for a First Strike capacity. The world is rebelling against this war mongering by using Chinese yuan, Japanese yen and Russian rubles for trade. Ending the dollar debt system is the only way foreigners can vote to exit the threat of nuclear war.
Collapses come at a break point where payments cannot be made. The basic principle is that ‘Debts that cannot be paid will not be paid.’ Breaks in the chain of payments cannot be predicted. But we do know that the collapse will be forthcoming soon enough.
I have put forth my own plan for Debt Cancellation based upon the works of Michael Hudson and Professor Steve Keen though I have better sources of funds. Professor Keen wants to give every adult citizen a $20,000 credit against existing debts. He would fund that by simultaneously creating and destroying credit which under our system would keep Money Supply at its current level. I would add all the funds listed at http://www.CAFR1.com which lists all the investments held by tens of thousands of government agencies. I would also seize the assets held by economic and war criminals in the Cayman Islands and other Caribbean island nations, plus Lichtenstein, the Isle of Man, the Channel Islands (Jersey and Guernsey) and Gibraltar. This operation would not take more than 72 hours. It would be met with popular support by Europeans if they were told we were going to forever cancel their 20% VAT (sales) taxes and promised equivalent Debt Cancellations that Americans would receive. For the citizens of Great Britain and the Republic of Ireland that would be a 12 thousand English pound credit against existing debts with any excess going into individual retirement accounts..
I am of the opinion that the US military knows Israel did 911 and the Israelis have set a date certain for the destruction of America in WW III. The Israelis must have known there would be a day when the public would realize they did 911 and made preparations for that day. If the bankers wanted Americans to win WW III, they would not have passed NAFTA which sent our industrial base and 12 million jobs overseas. I would also seize the domestic assets of everyone who acted to cover up 911. I would cancel all government debt including state and local bonds, make government debt illegal and end fractional reserve banking.
By the way, the military would not have to hold these banking centers for more than 72 hours. It is either that or shoot a few billion people who have nothing to eat and nothing to lose. And that would include the 25 to 30 million Americans DHS and the bankers plan to send to FEMA concentration camps.
I am assuming that the US military will have to mutiny and refuse to attack Iran and Syria as that would be suicidal. The military must realize the bankers want us to lose WW III so we cannot demand the return of the tens of trillions of dollars they stole from us. All of that reparations money should be paid into accounts in our name at local cooperatively owned trusts so neither the bankers nor the politicians could ever again touch our retirement funds. Those trust associations should act as credit unions issuing small loans and credit cards. They should also sell fire, auto, life and health insurance with all profits being distributed into our retirement funds.
Notes: This first article explains why war against Syria and Iran will be a disaster for America and Israel.
Time Is Running Out For The Israeli Empire
This next article explains how we are being abused by the aristocrats of Wall Street.
Catherine Austin Fitts On Genocide And The Looting Of America
The next article explains how Debt Cancellation works on a practical level. It is my most popular essay on the subject though some object to the race of the people involved.
Eddie Reborn Into A World With Debt Cancellation.
This next article explains how Debt Cancellation and the repeal of the VAT might be spread throughout the world.
Will Brits Approve An American Military Invasion Of The City Of London?
The last article explains how Debt Cancellation, pension reform and healthcare reform could work:
What Real Debt Cancellation Combined With Pension And Health Care Reform Looks Like Part II
The video below is an interview between Dr Michael Hudson and Max Keiser on the occasion of the publication of the former’s latest book, The Bubble And Beyond Fictitious Capital, Debt Deflation And Global Crisis.
Reblogged this on the Mahoney.
Interesting stuff for sure
There is a solution (and only one) to the global impasse we are currently experiencing. It is certain to work and open global markets instantly. Zero out all existing debts immediately. If it is a worldwide mandate that allows no exceptions it will immediately unfreeze all trade and provide a massive “real” stimulus that will allow all people to begin purchasing again. Don’t try to over think it, just do it. Everyone will be on the same level playing field. The alternative is continued anguish as debtor after debtor defaults until the whole thing collapses. Any fool with a pocket calculator and an IQ at least as large as his hat size knows the existing debts, with compound interest can not possibly be reconciled,,,the natural result of debt fueled economies.
Will it hurt? A little. For a short time. Ironically, the same 1% will get it all back again anyway. I didn’t say this was the answer to keep it from occurring again but it is the answer to immediately ending the current crisis. Stop your incessant hand-wringing and eat your gawd-damned veggies.
I favor Debt Cancellation but it needs to be a little more complex than cancelling all debts. We need to cancel all government debt. We can and should take away the assets of the banking criminals. Plus government agencies have more than 30 trillion dollars we can use to pay off pensions and to retire government debt.
And fractional reserve banking must go.
Just cancelling debt will give homes free and clear to illegal aliens and take away the life savings and pensions of elderly citizens because that is where a lot of their retirement money is invested.
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Exactly wrong. Eliminating Government debt without eliminating everyone’s debt will not help the ones who have been victimized by the govt-bankster cartel and are under water on their homes and everything else that has been over priced by inflation. Fractional reserve banking is merely a high way to rob borrowers. If you remove that, the banksters will have to resort to sticking-up 7-Eleven stores again to make a living. Burn the Fed to the ground and make the Government fulfill their Constitutional duty to issue our currency (interest free).
You don’t need to be concerned about giving homes to illegals or other long-term problems (sufficient unto today are the evils thereof). Immediate relief is what is needed. Never fear. It won’t occur. The reason you are seeing the absolute lack of any progress or ideas to resolve the problem is because this is exactly what they want…for all of the Central Banks to go belly-up. Then they can have a one-world bank with digital currency, so every transaction can be tracked, taxed and service charged. After they scorch the earth with nuclear war, eliminating four-fifths of its inhabitants, it will make the process much easier for them.
Have a nice day.
Did you read what I wrote?
I can find enough money to cancel 19 trillion dollars to cancel government debt at federal, state and local levels.
I can find enough money to cancel $20,000 in debt for every adult citizen.
I can find enough money to cancel debts in Third World countries.
But there is not enough money out there to give half a million dollar house to every one of the 30 million illegal aliens.
Please have some compassion for the 55 million people who are retired because it is their pensions you will cancel.
Please do not write back about this issue. The case is closed.
We have deal with the real world and not with