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tv   Keiser Report  RT  July 6, 2021 7:30am-8:01am EDT

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why do you have such a problem with that? it's one of 2 ways of looking at how the economy operates. which is to say, it's all about the objective value of things, or the amount of time it takes something determines its value, etc, etc. versus then they are cross courses. now it's actually the subjective satisfaction utility one gets out of something that gives the value. so the previous attitude was from the classical school of economics and the physics perhaps before them. and fundamentally, they would say the use value of this chairs affect the doctrine sidenote. whereas the near classical site, the utility, this cares how couple of makes me fail. now, when you're working on terms of the objective number, i can say how many hours alive? how many ounces of stay all went into making this thing, etc, etc. they're all non measurable quantities. when i talk about the utility and it's subjective, i might find this chair more comfortable in united, stacy and, and there's no way to really compare satisfaction to get out of them. now if you
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think that might give you a bit of a problem doing mathematics, it does. and that's what's actually happened, an aircraft leak and i'm excited the time they started might look like a sensible foundation of saying, you know, the supply and demand. this is as of the supply and demand curves them in price and quantity. and they then tried to build backwards from that the mathematical foundations while going forward in terms of how they model the economy. and unfortunately, the backward work filed every last important mathematical principle. they needed to apply, did not apply that were wrong, but they built this huge edifices like giant jargon of intellect. that has taken over people think about capitalism. and that's what they've rolled forward. and it's no damn wonder, it didn't say the actual class was coming because it doesn't live on this planet. it can't happen here. so that's in a very, very broad choice. that's, that's the problem with narr classical economics. it's a fantasy model of economic stress up and what i call mr. maddox and i think as mathematics, let's take a look at the contrast between classical economics and neo classical. you can so
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classically comics would include adam smith, who is part of the enlightment who coined the phrase, the invisible hand, which would indicate that prices are derived through market action. and that no in fact that doesn't max. so let me, let me, let me, let me, let me, let me finish my question, you know? yeah. and then neo classical economics, which would include canes in that group. bully alarm tries and so on. you have more in the pricing to be set by a central authority, a committee, a group of people, a group of academic, a group of mathematicians. funnily enough, that ended up in that situation, that literally had to pretend there's a benevolent central authority who distributes income before we all spend. and i need to make that assumptions of that i can explain the downward sloping market demand curve. i wish i was joking, but i'm not. so they actually started up with
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a model of a pure free market economy and to make the model work mathematically, you're going to assume there's a benevolent dictator who we allocates income before we go shopping. and everybody is happy with your allocation. that with dictator brings about, that's called the social mental birthday, or the benevolent dictator being the absence of a market function. right? so your, so for example, in the soviet union, there was a benevolent market maker dictator, a guy who said this is the price of tractors and the company and the country collapsed under adam smith. they said, well, let's let the market decide prices and there was party enlightenment which gave us the united states. right now. it's a difference between having a market price discovery and having a benevolent dictator. market discovery, right is not the fundamental difference between classical economics and neo classical economics. it's the difference between classical economics and being there, classical economics in reality. because the,
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obviously the market system says the process here. and obviously the market reflects the distribution of incoming wealth and power. and i don't like that. they want to argue that they, everything was in a very fair way, what they call the marginal productivity theory of income distribution. so the only way they could get that resolved ends up, i'm assuming exactly the same effect as having an benevolent dictator. i'm actually going to write this. i'm going to, how crazy it is. and unfortunately, that's been one of my fights and having to raise originally are classical texts. and they have gone so far up the rabbit hall of thinking that this is an accurate and mathematical model of the economy that they've made various twists and bends along the way, which are slightly absurd. like, for example, assuming that there's a benevolent dictator, allocating income before tried tags box, that was poll samuels, them in non change, 56. okay. so they've, they've gotten cells coordinate large of conundrums. now why out of it is the end of the entire analysis of capitalism. which is what i want to bring back,
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which is the dynamic and non equilibrium monetary system. we actually live in. and the, the, the market system plays up on the metal role. and, but it behaves in a completely different fashion than the supply and demand. now the system there, classical thing called so you mentioned, you know, reading the texts of the neo classical economists. you do provide a lot of quotes in your book. i've read the 1st chapters. so yeah, wrap your head around that. but i want to read one of your quotes there because you mentioned librium and how they're mathematical models basically say that they're, it's always in equilibrium, right? that, that their focus exclusively on equilibrium. so i want to bring up a good point here, especially when we are looking at all these interventions by the fed. in order to make, you know, creditors whole in order to keep markets stock markets climbing in order to keep house prices climbing. so euro quote, the obsession with equilibrium as
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a mathematical state of the economy has led to exalting it as desirable as well. certainly, as i explained in the next chapter, the financial instability of capitalism is a serious weakness. but as shown, derrick argued almost a century ago in 1928. instability is one of the strength of industrial capitalism, not a weakness. it leads to the innovation and change that is the essential strength of capitalism compared to other systems. the fact that the system is out of equilibrium all the time is partly because of and partly the motivation for entrepreneurial activity. so this whole notion of zombie banks, zombie corporation, zombie, everything seems to arrive out of the fact that so you're saying that they have to stick to this model. that all is in equilibrium. yeah, they do. and to do what they actually leave out the existence of money. actually a little bit of fun. so i see search on you on, on you,
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on good google for poll cronin master class. and you'll see a little $47.00 per 2nd promotion where curriculum sells the course he's giving in that master class series. and as part of it, he says, you know, watch it all about. you said it's about people. it's not about money. that's their analysis of capitalism. without money, and that's, you know, that's like bodies without blood cap. i mean, it's crazy, but that's what they've done by capitalism without capital. but yeah, so let's look at something here. i'll give it an analogy. it's a see saw. and on one end of the see saw is a $500.00 pound man. and at the other end of the see saw is a $100.00 pound man. and the $500.00 pound man is sitting on 99 percent of all the wealth. the $100.00 pound man is one percent of the wealth. it's obviously and not an equal system. however, the neo classical economists will find that point on the see saw data cheese
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equilibrium. and now therefore they'll say the system is sound. so it's almost like a post hoc rationalization of the system, they'll say, in other words, the system is broken, but the neo liberal economist, neo classical economists come in and say, well, we'll find that point on this unequal see, saw where there is equilibrium. and claim that this is somehow rational, right? so it's just, it's a, it's coming after the fact they're not, they're not actually describing alchemy is work. they're describing how to rationalize the broken economy. absolutely. i mean, it's actually me of human knowledge even is a, is a brilliant one. next, what's called the price, our optimal situation. and as, as well as to finding like an overall, i think the optimal situation for all of society, say where we are to get from where we are to somewhere else. the best place we can get to is where nobody can might be made better off without making somebody else worse off. i'm sorry, that defined that situation. you've just given
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a beautiful analogy for a way, you know, the, this a sores know 20 percent. the fact i'm id present the thing to balance out the imbalance in there. well 499 and one in the real world. and also that's right optimal. sorry, because the, the, the 99 percent to a poor because we'll have to make somebody in the one percent his rich, less wealthy. that's price optimal, isn't that nice? so then we're not talking about economics. you're talking about propaganda fundamental as what they've turned into, the not even aware of that. and this is what i also discuss in the book out of the enough to explain why the wealthy mob like near classical economics is a defensive, a higher and balanced system as well. you've given that analogy for, but it's why economists themselves and love are that most of them. and i must say, this is from meeting thousands of economists of in my life. most of them actually believe they're doing good and i wanted to good. and they think they doing good by making the real world look more like eric and i'm a textbooks they don't realize they behaving large zealots. and i have
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a false vision of how the economy operates by the last 5 of those bits. because the overall picture is so beautiful to them. but the trouble is it's like one of those diamonds where if you, if you tap it on a particular point, the whole diamond shadows and they are classically college is full of those more points. so any, any particular thing as acknowledge, like for example, that money matters. so soon as you acknowledge that the rest of the edifice, goals, aga, if you acknowledge that income, the interpretation effects aggregate demand, it falls over. so there's so many why is that that for job that he combined with the what they see is the beauty of the dom. and before you shattered, that's what they hang onto. and they're basically religious zealots. while we're going to take a break. and when we come back part to number i interview with steve cain, author of a new book, the new economics, a manifesto, don't go away. the me the
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i ah, today industries prefers millions of you know, the regulations. i will be all about making money. i think it's about big corporation, international markets. import export. do you imagine the number of the diseases are in every family today due to new viruses or new microbes?
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it's not true. so it is due to environment. they're not going to take either the momentum much effectively come in today. mostly they don't allow us. the food industry is successful, it will create more jobs, it will create more value added. it will create more. so i don't see why we shouldn't also fight for the interest of the industry that we have regulation. we want the regulation of the industry and if we don't have any specialty, that's fine. ah, it's been decades since the fall of spain, fascist regime, but old wounds still haven't hailed your interest in going into them from us because only coming out the nickel feeding people to me simple for me on the bus at the station. you know, i think ultimately, you know,
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thousands of newborn babies were torn from their mothers and given away and forced adoption. that only bought about a year for vista. that of my own, roberson fairly well to this day mothers still search for grown children, while adults look in hope for them. the parents the me welcome back to the kaiser report time to continue our conversation with processor steve cane. it's got a new book coming out, you can pre order it. it's called the new economics amount of festa. we were talking about classical economics versus near possibly can amex and near classical economics gets taken to the wood shed. i would say by steve cain, the fact is that they try to explain all the inequality and nonsense that we have
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in our current system after the fact. and as you point out, none of their studies include money. now i want to give another analogy here. you know, when i was a kid, a christmas tree under the christmas tree would be a cool toys. then i would rip open the package and i'm like, oh wow, this is a cool joy. and then i look at the package and it says, batteries not included. and i my, oh man, i need a battery. now isn't this kind of similar because here's a model. let the neo classical economists give us. it looks really pretty. but money's not included, batteries, not included, it doesn't run state game. absolutely. like when the model, like everything else is a pair of intersecting curves, supply and demand. they tend to draw the money, supplies a vertical line and say that's under the control of the government. so the government sets a certain quantity of money and you'll see this man, food textbook for example. and then there's
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a demand for money which slopes down are going to go the reverse way to show on your camera. i think the damage, let me demand ha, the interest rate, the lower the demand. and they say, well, the government moves the supply by the central bank, but the demand could include the demand from the government sector. so the government check the demands more money by borrowing money to cover cover a deficit that drives up the interest rate and then harm to the right reduces the amount of private sector borrowing and that causes or decline and investment therefore recession. that's the model about the effect of the government running a deficit. and you'll see this. and then they say the borrowing government has to borrow off the private sector to finance it's spending, and that's the big debt, puts an unconscionable burden on future generations. again, that's quoting man, care you look at the real world and government spending. as a deficit puts money in your bank account of the government spends more, spends more and using a tax is you. you've got more money in your bank account. so deficit creates money . it doesn't that just the demand that's of the supply of money and then to finance
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that when you look at the bank and says of assets, liabilities and equity. when the government puts money, people's deposit accounts and civil chinese asleep, which identical number them out of reserves in the banks, assets. and then it offers the treasury bonds on reserves. they go to an interest on treasury bonds. i do buy contract reserves. i can try treasuries, they buy them, and that is, it's like it's not financing at all. and as you and already barring off a bank, it's simply letting the banks make money out of the reserves. they've got by turning them into bonds. so that, that vision completely inverts with an aircraft sales think is the right around a government. so let's look at the real world that what happened in the past year, especially in the united states. trillions and trillions of dollars were printed by the government. this is the 1st we've seen since the financial crisis of 2008, whereby, you know, it's been the central bank that has been, you know, taking bad assets and putting it on their balance sheet and whatever, you know,
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games with wall street. but this is the 1st time we've seen during the locked down where the actual us government issue treasury bonds, trillions of them and sent them out. the result has been, according to the fed, reserved data that they released every quarter about household wealth. you see the parabolic increase in wealth from the top one percent. now the bottom, 50 percent, their wealth increased by $10000.00, household wealth from $4000.00 before it. but the likes of say jeff bezos, his wealth, increased by 88000000000 last year. also eli mosque, similar amount of money and wealth increase. so you know, the deficits don't matter. they say caught palsy with says, debt is just we money we owe to ourselves. but speaking of deceit, disequilibrium, and instability. it seems like this sort of explosion of wealth gap. it seems like
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that money that they say doesn't exist. it all finals always to the elite 1st. and then it never trickles down, especially in economy like the u. s, which is just purely financial life. there's no manufacturing, there's no wealth creation, there are no real jobs except for like service sector. so like, it seems like that system is totally broken and all your models are destroyed. yeah . and the funny thing is that the central banks and governments economists who used to argue that we shouldn't have here on the market. the main role these days is making sure i said markets downfall. so i was that was where i went when i saw and when i, when i started doing q a back into 1009 or 10, i come into the charm. this is a like signing, signing and likewise met estoppel is once you sign the dotted line you can pull out of the contract. and what that means is that literally got involved in driving of asset prices and on the message stock a late point when they began to weigh, you should probably remember the value of the s and p 500 index was 666.
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so they drive it up in the mark of the devil drive and $3000.00 those fill in the be in the housing markets and a lot of the markets as well. massively as a delegate assets. so they've got what's actually going on as they have it in incredible capacity to create money. the treasury has at the risk the central bank and christ reserves for the banking sector and thereby drive up share process in around about why they've doing this all the time. and actually amplifying the underlying and equality of capitalism was bad enough without the right of engine that night. it was near a criticism of neo classical economics and you've got a new book out. the new economics, a manifesto, boils down to the intellectual and academic dishonesty. that's masking a system that's just printing too much money and distributing it in a corrupt fashion. the money should be going to the working class and the middle
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class being distributed in a corrupt fashion under the cover or mask of neo classical economics under like paul curriculum. for example, the new york times is constantly writing pieces to, to propagandized. what is essentially a broken system? so my question is that you've got 3 choices now to rectify the situation. as i see it and tommy, or i'm wrong, if i'm wrong, the 3 choices would be allow for debt. the false number 2 would be to raise rates, and number 3 would be to revisit exactly what is money you know use for example of gold standard. come back. those seem to be the 3 choices right now. ah, or this are a 4th choice. you know, the full choices you understand money properly to begin with, and then say, what if we have, we've done that, we have to why should create money in a market economy, they start the government, come on a deficit and sell bonds to the banks. if the banks sell bonds to the public that
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reduces the amount of money, but that's one way of creating mine and the other is banks lending. i'm will get back and retirements, so there's government money and credit money and career fair to say it money is actually less dangerous for the public than credit money. because of you know, government putting money in your bank account, it's the government is carrying the repair and debt impact of that, not you. but if you get a $100.00 from the bank, you are the bank $100.00 and it's you can produce your own money, whereas the government can to service its financial commitments. so for all these reasons, it's dangerous to have too much credit money. but what we have let happened in the last 40 years and they are classical economists because they don't understand it actually encourage the growth of private debt. that means the far too much of our money is credit based and thought a little is at best. and will also lead banks decide who is in to and why, rather than saying the power to create money as a social license, you're granted by the government. you should use that. you're responsible purposes
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. done finance. as speculation, finance, entrepreneurship, finance, working capital corporations. so all that stuff spend less aside. now money in that sense has always been a promise. okay, a promise of a 3rd party. and it's just like the, the 3rd party promised to do garbage with that power rather than promised to do socially responsible things like fund entrepreneurs on business fund fund consumers instead of being funding speculators. and now we have this crazy situation, therein. it shows what happens when you have people who don't understand the system, trying to reform it. on top of this, we have global monetary system, which is the us dollar rails system. we have that terrific dilemma problem of the basically the u. s. needs to run these massive deficits. so here we have the governments and stimulus checks, thousands and thousands of dollars. us income went up by 20 percent for that bottom, 50 percent because of all this money. however,
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it went from their bank to china because china is manufacturers everything. so you have the bottom leaking out that way to china, where the top it accumulates in these asset prices. house prices were 25 percent year on year in the united states. obviously at the bottom, 50 percent got $10000.00 in household wealth. now because of the stimulus checks, house prices actually went up 100001 average. so it just seems like the us dollar itself is also part of the problem. like there's some sort of like, how do you even fix this if, if there's always that basic, underlying disable librium and global trade on a middle course that was america insisting on being there was a currency after world war 2 bretton woods that was harry dexter was the american representative, i have a ruling kinds and saying rather than having a specific currency created for national tried called the bank. cool. which is what kinds want to use the american dollar. now that's, you know,
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that's why we're the big guys. we basically base the, roger there, the, the, the germans way should be the result of country rather than a british pound. and that's how the americans sort can store it as a catastrophe. because what i meant was you're using a domestic currency, french national tribe. now what that meant was, you necessarily have a demand for that country's money over and above the demand for its goods. so consequently, you actually know the american dollars for tried, you're going to be want to, you're going to be driving up the process of american dollars and making it hard for american explorers. and that's what happened at a time. i think you last had to tried surplus back in 1980 and there's been dramatic relocation of production as well by american corporations, china, to take advantage of low wages. now the chinese have turned that into making china an industrial power house and building its own major manufacturing corporation. so america has created its latest rival as usual, rather than being enemy, this time with one of the gun bomb. it's an economy which can out can pay them,
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and that's the price america is paying for its bravado. at the end of the 2nd world war wanting to be the reserve currency. we talk about the money printing and pass up asset prices with rewards. the top 110th of one percent. and part of that asset price appreciation has to do with the central bank buying into the bond market. so they buy the bonds off wall street banks, junk bonds, particularly. and this has the effect of driving interest rates lower. so my question is, as the summer solutions, what if there were a parameters that would make it impossible for any of these moratti's disease, swashbuckling robber barons to borrow money for less than 4 percent? in other words, it's when i call interest rate apartheid they, they manipulate interest rates to make it so that if you're a fan of goldman sachs,
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like for example of louis, if at all in france bought tiffany's. and they borrowed money from the airplane central bank at 0. right. i can't do that. i can't buy a company at 0 percent interest rate. so that's, and it's all political. those body cannot, there's no contracts involved whatsoever. it's a pure political favortism, right? so what about saying, you know, the interest rates half that we can allow anyone to borrow money for free, essentially that that's the, allowing someone to collect the chronically own, the entire productive base of the economy for nothing. this should be a positive interest rate for, for private borrowers, definitely. but the trouble is by letting, say, much bought product our entire lives even go to the level of debt that if you brought in a full percent right, you'd bankrupt most of american industry. it's carrying 5 times the level of that it was back and not in $45.00 when rights for similar to now. so the only way out is to write the debt off, and that's why i'm in favor. what i call a modern debt you believe,
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which is one of the things i detail in the book. so you picked door number one to reduce debt with a modern debt jubilee. congratulations, steve chain. you in a copy to the new economics. i'm out of festa by professor steve came. thanks to bring i shouldn't. you shouldn't have max. well, i was going to do it for this edition of kaiser report with may max kaiser and stacy herbert want to thank our gas professor. steve came in. so next time via the me ah, you don't want to leave, you will move a toy move he will turn when she gets home later to love
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me. as soon as she too will be starting for me to teach julia control the traditional building where she's she's, she's really pushing. you see the one doing the best for me was she could out said for me in the last with the metro. okay. she yeah. and so i've always been in this deal, and that is what i need from the new new new which is what friday if you go back to see exactly what she put up when i got to pull it up on that,
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got mixed up with me . ah, the the
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ah, morristown said both francis scrap almost all co good restrictions in england and despite the number of infections rising while a chest frontline work is battling that case, celebrates the 73rd anniversary in a chest, but no much anticipated pay her eyes to present to them that they did get a metal from the queen. i think that one was a real shock to the site. and i want to make sure that all of these, these kinds of things i do that the depth and so disturbing scenes of self harm in belgium is migrant. go to extremes. in 5 for a saw the majorities, they say they won't be blackmailed. elaborate only just days away from a social explosion and how can i take pride.


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