to discuss this and more i'm joined by my guest michael hudson in new york he is a professor of economics at the university of missouri kansas city and author of through give them their debts and in bangkok we're joined by steve keen he's a crowdfunding professor of economics as well as a distinguished research fellow of the institute for strategy resilience and security of university college london gentlemen crossed up rules in effect that means you can jump in anytime you want and i always appreciate it ok let me go to michael in new york you know this just term the new normal is bandied about and what really worries me is that the people that use the new normal where it's a normal that is beneficial to them ok and they're not particularly concerned about it ok because i hear more and more top read more and more about a cave recovery and that is that ignition defeat in my in my opinion because it means the if you have the k. it's the the leg of the k.

you've given up on ok because the other part. of the economy it's true because it's to their benefit here i really worry when people talk about new normals and when they talk about the economy you're my friend well who has become normal since 2008 has been completely different from the old normal people have the normal you go back to a balance but really the economy hasn't grown at all since the 2008 crisis all of the growth in g.d.p. all of the growth in wealth has accrued to the financial sector to the real estate sector to the one percent for the 99 percent of all they've gone down and down and down so the new normal is you can't get rich again by housing and join the middle class like a ghost or the new normal is an all of the year increase in wages and debt service in rents and in monopoly prices so that they mark the new normal is the market is going to shrink and shrink into. we look like greece looks in the last 5 years the

length of the normal is looking way routes that if and run. ok stephen i'm really glad that michael brought up the 2008 financial crisis as we have a reputation a reputation about and this year where this was a artificially induced recession benefited the one percent you can not keep stressing that year when what 202020 in 2008 have in common is that you have this massive transfer of well upward upward again ok and so again i mean my underlying theme in this whole program is that perhaps the country speaking specifically about the united states that michael's reference to greece is a perfect one i think you're basically writing off tens of millions of people america hundreds of millions of people in the western world heads yeah i mean to do what we're saying is a process where the wealthy who go will they go through debts and this is something

which markland. very very strong on and on a mathematical model. and one thing which came out of my modeling of what's called miscues financial instability cloth asus was that as a level of debt rose even when i had the capitalists borrowing the money and paying the interest on it the ones who actually fight for our level of debt with a work as a basic stories they had the residual link on the nose in a capitalist system so as the men of wealth did it by the rich goes off the servicing shot goes up and it came at the expense of what is incomes and that turned up in the system as well and then in the response to the crosses. on a mystery know nothing about capitalism i know a lot about a blackboard model that i call capitalism which is bears no resemblance to the real thing this solution was to boost consumption is what they call the wealth effect and the wealth effect was to make shares go off in value and that property go up in value and then. would feel wealthier and spend more of the trouble is they doing

the people and not putting him down to people with the wealth of bill gates and bill gates might buy one and soon have elements of vinci's koda but he doesn't go shopping it came out and that's what you need to get the man going up and it's the poor have got to direct the spending so so he had a capitalist process that he produced inequality and then the response of the managers made that inequality worse michael didn't the whole point of the program oh i don't like the word transfer of wealth the only kind of transfer of wealth that is spent is the $10000000.00 families that suffered foreclosures and if there are obama the banks not the debtors where there's been inflation of stocks and bonds and real estate under the stairs at the tears there was a trillion dollars to a save the economy a trillion was put into pushing up stop and are real estate prices and only 2 trillion was put into the so-called real economy namely in 1000000 of the corporate

sector and a little bit in the labor so there's been just an asset price inflation not a trick for the one percent 00 already owned maybe 80 percent of the stocks and bonds in the country didn't transfer yet more they simply use the federal reserve to lower interest rates quantitative easing and vastly increase the price of housing in stockton by putting them further and further out of reach for the 99 percent you know we don't need to wait where is the real economy here i mean how relevant to relevant and is it to the larger scheme of things because this is something i keep noticing too i mean i get up you know we can talk about math or numbers and look how as them all but that really has nothing do with what's going on particularly for average people going yeah i mean the average people are completely excluded from this was michael says they average person doesn't on shares. you will get a bit of i could use in

a strange expression is starting with the ending with che. when you get this argument that you know they've been if it's true that pension funds is that your center with another percentage of the shit is that a would because as a fraction of the overall ownership or shares would be well on the will ended with low single figures. the vast majority of inflation of asset crosses benefits the extremely wealthy not just the middle class but the extremely wealthy the one percent or even the point one percent and what quantitative easing did was boost stock prices by buying a trillion dollars worth of bonds for a year off the financial sector which meant they had a trillion dollars additional cash in a train that was less vaughn's they couldn't buy bonds because the federal reserve was being the body of last resort so they bush is that drives up the ship process and that trillion of course i think introduces us to process by maybe mole the net increase but the wealthy will sell and benefit from the sun go and they might buy

the occasional gamble gaining in somebody to wash it for them and the result of that is you get a trickle of that trillion dollars of on his head of easy money turning out in the real economy so did benefit to some extent but rather than a multiply this was a fraction the laws are effects you put in one trillion into the wealthy maybe you get 50 to 100000000000 for the poll. ok but you know it's a real quick here and the term capitalism is been brought up here i really don't what he's any more ok in it a little slogan but what you just described here is that you had a good reserve picking winners i thought that's what socialism this is that this is where they're deciding who's succeeds and who doesn't succeed this is this is a team yeah it's an easy because i actually rig out like this is their product the . local central banks stopped almost exclusively bought on the strength in the what they called a new possible school of thought and the new classical school of thought fundamentally

argues that capitalism is inherently stable so the government should get out of the why but they are in is the in the last 30 years they've built models which ah good you can ensure troll the right of inflation by moving the right of interest washes fos effectively is the inflation rate is changing and that is stuff which is controlled by the federal reserve so in them models to actually have the federal reserve as part of the system is supposedly a controller now it's a control that leaves out the most important parts of the economy and market and i have this all the time they leave banks and it and money out of thin models and then a close that's not the real world it's the real world behaves in a way that's for a while looks like it's their model then goes completely gaga and they go gaga as well as i what can we do we can continue boosting share process because the wonder a conduit they have is from themselves of the financial sector so it's easy for them to pump money into the financial sector if there was a conduit to the to the people through for example everybody having an account of

the central bank and then not have been able to use that make an ism but they haven't even set that up so it's physically it make an ism but they haven't even set that up so it's physically again i'll use one of the models to see if they're giving food to the parasite and saying please share it with the house. go ahead michael definitely vote your. use the word real economy the real economy that you're referring to is what we used to call industrial capitalism but what steve and i esteem has just been talking about is finance capital ism and finance capitalism is completely different from industrial capitalism industrial capitalism in the 19th century seem to be moving to socialism because it's more efficient to have the government provide public health and public education at a low price because then the capitalists don't have to pay their labor so much if the government supports their cost of living but finance capitalism wants to increase the price it wants the privatized education raise the price of the private

housing it wants to not have access. then once they're really support the finance insurance real estate sector the financial sector and so who takes over the state their libertarianism in neoclassical economics is a you know some throw planning but they shift central planning away from the government and elected officials into wall street and the financial sectors so we're in a state of central planning that would have shot adam smith and all of the classical icon of us were central planning by banks and their interest is not that of industrial capitalism but the system like that new song what the upside goes only to a small set of a group of people and all the downside goes to well people like us we get i don't know but when things go really well i believe transfer well it mean it's amazing mechanism we saw me as this year concierge service you know and you know the banks

call up and they say this is what we want this is we're going to take ok but main street they don't even have a number to call their hands you know that's the problem we are completely locked out from the economic system of the whole rationale for central banks taking over economic management fundamentally which is what they've done and the people like thomas sargent and and rather lucas unwrapping all. mainstream economists who push these models of capitalism as an inherently stable system they've completely focused on the financial sector and ignore the real economy the real economy just you know trips along and librium all the time and all that but it was control the interest right so the it but the end product of this is fundamentally as you say it's a weird form of socialism for the rich the close they are the ones who are being elevated by tactics like quantitative easing and now you could say the same thing happening again the in going this money going in to the financial sector which is driving up the stock market that's what the up out of the kind come in strong and

fundamentally that the problem here is that mainstream economists have not understood money. but if you're running a central bank you know that you can put as many elements on the billions are true those on the asset side and by would if you lock on the liability side so they have simply said we're going to buy 10 trillion dollars worth of shares a few those 10 trillion become our estimates the chantry becomes a liability they've got an infinite capacity to do that so they can continue pumping the stock market up and it's actually funny to watch trump crying about how well he's drawing it it's actually the federal reserve the striving it up we're going to jump in here gentlemen we're going to break now that's a break we'll continue our discussion on the economy stay with marty.

was a lot about that and this other. on the i want to let you know what why. i think not. out of the. pope but there are some friends of the us are still so but the sole bill hoping to do something this year. which i hope. they have about them has a lot of political allies a cell phone and i was able to put them on the back of a book that. caused . the demick no certainly no borders and is blind to

nationalities. has emerged little to be we don't look like seeing the whole world needs to be. judged 2 as commentary crisis at least system things. we can do better we should be. everyone is contributing each or own way but we also know that this crisis will not go on forever the challenges crayfish the response has been masked so many good people are helping us. it makes us feel very proud that we are in it together. nuclear power plants have become a battleground in the u.s.

in vermont people are demanding the shutdown of a local plant from my yankee is right now my focus because it's a very dangerous oh no prayer power plant the owner is attempting to run the reactor beyond its operational limit this case just sort of puts a magnifying glass on where's the power in this country where is it going is it moving more towards corporate interests or is it more in the idea of a traditional participatory democracy is for power lies with the people this case demonstrates that struggle in a very real way. a struggle on r.t. . welcome back to cross talk where all things are considered i'm peter lavelle dreaming to be discussing the state of the economy.

ok let me go back to michael in new york we've heard twice through the classical economy is the lead they claim that capitalism is inherently stable or you know you guys are economists i mean what's stable about 20082020 explain that or viewers well for 2 centuries 18th and the 19th century almost all economists agree that a car economies are not stable because the financial sector is not part of the economy the financial sector grows purely of mathematical laws exponential interests then the amount of debt is stephen i trace mathematically growth much faster than the economy grows much faster than the economy then you're going to have more and more of the economies and a spend on and the banks for debt service and saying they you know monopolies at the banks that are. unless unless the spend on goods and services and there is

a crash that's not maintained sensor economics is all about and that's why they wanted. money creation to become productive but it hasn't been productive most almost 80 percent of bank loans are real estate loans and the rest are for stocks and bonds banks one for industrial capital formation they don't lend to play his acolytes whitely don't need you to explain because they can make money quickly the financial time frame is short term you can make money much quicker without taking all the effort of building a factory and making a good and developing a marketing plan for it all before couldn't make it much quicker just like pushing up using your revenue to push a prius that price and pay dividends and pay everything out and so many percent of america's corporate income is used nonstop buybacks and dividends it's not float into new capital formation that's why rhydian doesn't realize it now if you see

america deindustrializing that is not stable that's an. unstable and yet the industrialization pays for the one percent the industrialization pays if you want to use all your money to make money in the stock market. and you really don't care about the real market that that is making us look like greece and leaving us debt ridden and without much of her ability to grow you make money and you're the one percent and you make money by having the 99 percent in debt to yourself and owing money to yourself then they're not going to have enough money to buy goods and services from the factories and so it's not as apple isn't as well very different from the kind of industrial capitalism that have a smith and marx and every 100 years ago was analyzed you know so yeah i know i'm not the smartest guy in the world out. you're all on the show but you know what you guys are describing to me sounds like you know

a lot of the scheme i mean that there has to be a reckoning someone somewhere or someone or a group of you know the ponzi schemes that did that is certainly a huge pot of it i mean you have this unproductive investment which can only continue being service if you take up more debt to cover the whole it's created by the way to make money out of the last amount of data you took on and actually i recommend one of these guys getting richard vega on your show because richard doesn't expand has read a brilliant history called a brief history of doom and he can show you from inside knowledge what the euphoric behavior of bankers is when they get caught up in one of these now growing ponzi schemes but one of what i wanted to actually talk about is also what's so good about stability because when you think about it this stability we want is we don't want to just to break down but stability as the name of classical stuff on it is effectively the same as being frozen to absolute 0 and nothing is changing whereas the most important thing about capitalism which distinguishes it from any previous

social system is the right of china so in that since instability when it means you get china technological change social change and so on is one of the strengths of capitalism is just by sheer innocence happens stance that the nonce in century people who try to defend capitalism against mox focused on the concept of equilibrium as a modeling tool knowing that it wasn't relevant to capitalism was a shortcut for them but the 20th century economists had no knowledge of their own history let alone the broader history of economic thought made equilibrium it was supposedly of defining characteristic of capitalism and its is the finding it character it's christic of capitalism as as for snow who is of the sun but i think what they've done it's a myth and in search of that myth they are torturing the biblical enemy. so why did economists make this basic mistake steve is a mathematician is found if you. believe an equilibrium automatically in the market

then you don't need government so this whole idea of equilibrium was designed to prevent government from doing what government supposed to do protect the economy from the rent seekers protect it from predatory bankers protect it from the real estate speculators that read that. raise the rents or take it from the privatizers that want to turn public services and the monopolies the idea of an equilibrium is don't have government interfere let well straight allocate the resources and determine the policy not the government so all of this is is a logical. advertisement for finance capitalism and for the one percent well you know that they've been a definition of stupidity is believing doing the same thing over and over again will give you the same the same results ok when different is often i mean that is making the one percent rich of course it's making because they like the results it's going to bring it down to real like you i mean one of the planes in we look at

2008 and look at 2020 you know there's a lot of young people you know it was you know in 2000 interim be the work force you know these the n.l. the double whammy we have 2020 they haven't recovered from 2008 they're not going to create families they're not going to be buying homes and some of them can't even buy current so a lot of them are moving back in with their parents i mean what are the long term implications of this because that's where and you know introduction you know this is a model because sooner than half the country now people that work are irrelevant or a new a nuisance and that ok i mean this is not the scary and when you have people that have no future and they believe they have a new future they will we do embrace other ideas and ideas that i'd be very afraid of personally. you know that's that's the thing i mean if you look at the level of profit to it and that's the driving force of capitalism which michael and i got 5 percent on which is complete. lee emitted from mainstream economics if you go back to the end of the 2nd will wall that process of the great depression of the 2nd

world will reduce american private debt by 75 percent when from about 130 percent to about 40 percent of g.d.p. and then you had of course plenty of room for credit by stripping demand because there wasn't a great deal of debt interest rates were as low as they are now pretty much so the servicing call swallow so you could have growing credit demand you reach saturation to some extent with the business sector in the 87 crosses and then at that point the banks that is then into houses to try to create still more debts of them then they've walked out the housing sector another going for student loans car loans etc etc they've got to the point where the target market is completely saturated with debt and contact on any mold so the engine is eaten it's ok for mention they'll go for the pension. but you know it ain't nobody can afford to handle anymore debt right now the big picture the corporate sector now has the haunch level of debt compared to g.d.p.

in the history of american capitalism the housing sector is slightly below the 2008 fake but they're trying to get the house as a consumer borrowing but it's needles not going anywhere because we simply don't have the capacity to carry more parasites again selling monfils fries and that's where we've got to you richard end where you simply construct in the more blood out of the real economy but you continue trying to do it the parasites themselves if they eat the host is middle of the model the key thing about parasites is an order to eat those you have to take over the host's brain you have to make the host the parasite as are those to be protected like a baby and it isn't the financial sector is it says you have if you're going to save the economy you have to give more money to the one percent the financial sector and the local down well they're doing everything that and certainly they've taken over the brain and stephen. you're not part of it we've somehow got an immunity and you know we're on your show where you go around the world together

saying the same but. the world doesn't seem to change to make a long story short. you know when that when we looked at the reacts to me. it is bailouts whatever you want to call it i mean obviously i mean they the politicians out there are a list there is a can care right away i mean what is the naacp what is the age of the county roads all with the one percent i mean these create new knowledge stations or assembly you know representatives i mean that's what they were or ok i mean well i think i think actually that's smop not i understood that but then again i get a lot of bankers that are very smart ok only trying to get to the top of a system lack of morals gets to the top of the system out of your market my uncle and i have too much in the way of morals to get to the top well you know it is greed that out of sure. if they've all swallowed a fish or economics textbook or my favorite answer this is actually the previous

president obama because if you read his speech in 2009 when he came to power it was under bush's watch that of course the process began back in september of 2008 before the election but it when a bomb of power in february he gave a speech which said that people lost it's a pickle obama speaks people ask where's my bailout and he says the truth is it's the dollars given to banks can create an extra $10.00 in loans to the private sector a multiplier effect that is straight out of new york school textbooks and he didn't know any better he only has a degree and lol he didn't have he done economics might even have swallowed the ip is critical enough not to have done so nobody nobody forced them to drink the kool-aid it's quite obvious yeah and the kool-aid isn't a classical economics textbooks are often they don't even know they're doing something so stupid some of them of. you know enough to know that's the case but most of them have swallowed the audiology and they're promoting the audiology which

if it matched the system would actually be productive because it's got nothing to do with the system it actually destroys a well if you have 3 houses and a hammer why should you care ok if you have the last minute michael going well i think obama know just exactly what he was doing when he invited the bankers and goldman sachs nearest to the white house and said i'm the only guy standing between you and the mob with a pitchfork the mob with a pitchfork for the voters who voted for the job the obligation to day is to deliver his voters to his campaign contributors and that's what he did he didn't necessarily believe the neo classical economics they use it is a demo of that is and it is a pretense that is a campaign slogan and they know what they but they know who's supporting their loyalty is still the interpreter's and just as we privatized infrastructure we've privatized all attack certainly in america by turning it over to. new york i'm

really sick and tired of servitude and the g.o.p. in america talking about socialism because you know what everyone is going to end up getting. ok i want to thank my guests in new york and in bangkok and i want to make our viewers for watching as you are he xenix i remember ross and. his wrong. american citizen they didn't want to call that. matter an attack on the other i'm fasting. and if. i would vote for a republican for trouble i would vote for anyone who is not evil and has half a brain. the future.

she can handle. because. the president. election. in our history. list of the months to go before the presidential election is the history of the u.s. . troops they do. just some of the questions we see in the. dark industry comes to life in los angeles every night. dozens of women. on the street many of them under age. police reveal a taste of their daily challenge. to

see officers going undercover as 6 workers and customers to fight the trade. in the headlines this wednesday russia report of the global chemical weapons watchdog the russian opposition figure election was poisoned with a nerve agent. bringing in a new round of sanctions its purpose is obvious denigrate russia with unsubstantiated accusations by create a far fetched reason for introducing another tranche of sanctions against our country. as a former chief of the o.p.c. . barred from speaking at the un security council about a controversial probe into an alleged 28 'd chemical attack in syria that's led to outrage from the russian side. with pride like that was her.