It’s the Debt, Stupid

A distinguished and liberal economic historian, Prof. Michael Hudson has laid bare the secret of the present American dilemma—why we suffer a declining and artificial economy and a widening chasm between the rich and the rest.  The interest-collecting rich absorb ever more of the national income.  “Instead of creating a mutually beneficial symbiosis with the economy of production and consumption,” writes Hudson, “today’s financial parasitism siphons off income needed to invest and grow.”

“A financialized economy,” he adds, “becomes a mortuary when the host economy becomes a meal for the financial free luncher that takes interest, fees and other charges without contributing to production.”

Contrary to official capitalist wisdom, debt does not create economic growth.  This idea is a swindle.  Interest to the very rich, the author shows, does not produce anything.  It does not multiply creatively into new enterprises and jobs; it merely diverts ever-greater proportions of earnings that might be fruitfully invested.  The proof is all around us.  How could the vast unpayable federal debt, which absorbs much of the government’s income just for the interest to bondholders, foreign and domestic, possibly be an economic stimulus?  How can the immense and near universal burden of personal mortgage and credit-card debt possibly...

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