| Subject: | [socialcredit] more on Michael Hudson's harangue of Richard Cook | | Date: | Sunday, August 19, 2007 23:45:59 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
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I invite commentary on this, what I believe to be a
Georgist absurdity, from Michael Hudson's posting to
gang8 yesterday:
[Hudson] "I view 'the economy' as divided into two
sectors. The biggest sector as far as credit is
concerned over 99% is the market for financial
securities, mainly bonds, stocks and mortgage loans
and other packaged bank loans. Each day more than an
entire year's GNP passes through the New York Clearing
House and the Chicago Mercantile Exchange."
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Yes, there's a tremendous amount of churning,
speculative purchasing and selling of various forms of
financial securities. Buying and selling and buying
and selling.
But that doesn't mean that "over 99%" of credit
CREATED in the overall economy--which the fallacious
argument infers--results in the inflationary run-up of
asset prices as a result of that credit creation, as
the Georgist argument alleges.
Almost all of what Hudson is talking about actually
offsets (or nets substantially to zero in terms of
profits and losses so relatively little cash changes
hands) day by day in the books of the New York
Clearing House, the Chicago Mercantile Exchange, etc.,
indicating very little net creation (or for that
matter contraction) of credit in the activity, despite
the huge volume of transactions.
But we would hope, should we not?, that the long term
trend is always capital gains, which is in principle
indicative of the long term strengthening of the real
economy.
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more on Michael Hu
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