PKT message, The Money Power vs Wartime green financing

Dear Michael,

I am convinced we ought to be on a wartime budget, interest and debt regime?as we were in WW II?to become today the arsenal of change from a global race to the bottom (colored by terror) to achievement of that list of attainable goals we would prepare when we're not angry with all who don't get it exactly the way we do.

This would mean we were producing the "weapons" of policing and nation building for victory (as well as such heavier weapons systems that prudent professional responsible authority find necessary)?and by producing them, finance them to the extent our physical resources allow.

If WW II type bonds (printed and held without purchase or sale in the vaults of the Federal Reserve) were used to justify the Treasury's overdraft payments by government check, that would be fine.

If Lincoln type greenbacks were used instead, that too would be fine.

Any updated version of such financing of physically potential output would be welcome?recognizing that private saving or heavy taxation (and possibly wage and price control) would be required to delay private spending until the supply of domestic needs caught up to monetized demand.

Let us call any and all of the above financial regimes, a low interest, high spending regime, that was willing to mix debt-free money with bank credit?but insist on full employment at fair wages, as well as profits based on cost, not windfall of monopoly circumstance.

Since such regime would pay for greening our system of production, and it would feature greenback relief from debt constraints, ? for short, call it green finance.

Now, dear Michael, I know such a plan for green finance is not presently suggested by any of the Democratic candidates. The Bush Administration is incurring high deficits?but without being willing to put still higher ones (to stop the race to the bottom) to a vote of the people?people who are fearful of losing both their jobs to China and their savings to inflation.

And I know. further, that academics on the Keynesian side of the issues generally hate the crony capitalists so, they will embrace anything likely to bring Bush-Chaney down.

Still, my questions to you are these:

Dare we take the conservative view that we cannot afford to meet all the challenges green finance implies we should?
Dare we sit back and let free trade kill the skilled working and middle classes?

Dare we live with terror and hope it won't turn us into a third world police state banana republic with no bananas?
Can we afford to stop terror and the race to the bottom by traditional deficit financing accompanied by higher income taxes and without resorting to green finance.
Assuming question 4's answer is "yes"?we can afford our traditional tools as a matter of economic theory: BUT can we afford it politically? Will it not be much easier to sell the whole program for change, if it includes a promise to change from taxes to savings?as the best way to fight inflation?

John Gelles

Above in reply to:

----- Original Message -----

From: Hudsonmi@xxxxxxx

To: indexed-savings@xxxxxxxxxxxxx ; pkt@xxxxxxxxxxxxxxxx

Cc: TheNewForum@xxxxxxxxxxxxxxx ; cyber-soc@xxxxxxxxxx

Sent: Friday, January 30, 2004 9:35 AM

Subject: Re: Davidson and Hudson How to reclaim lost US industrial might?

Dear John,

I hope you're right. But in my experience the money power has been able to buy up enough mental power to confuse most of the world.

. . . <snip> . . .

Michael Hudson

Above in reply to:

Message to PKT, Cyber-soc, TNF

From John Gelles

Jan 29 2004

Michael Hudson is author of Trade, Development and Foreign Debt, an area of economic discipline that looms large this election year.

America is either building, defending or destroying its economic power in the world by transferring manufacturing abroad in its embrace of the English free trade tradition. It is enriching the few as it impoverishes the many and transfers its real economic power to rival nations. But it does this for only so long. Then it comes to its senses.

Paul Davidson has his oar in these troubled waters, as well. He would limit the power of currency traders to further confound the confused situation.

Michael and Paul talk of teaching not trade. But the real issue is manufacturing power in coming decades. Either America will reverse course and reclaim its lost industrial might or it will lose out to rivals not so stupid as to believe you can be politically free and industrially weak at the same time.

Of the present crop of candidates for leadership of the free world, John Kerry seems to grasp some of the problem. Unfortunately the relation between production and money is for the moment beyond his ken,

It seems certain, however, that soon the American people will re-embrace manufacturing and reform of money at home to monetize debt as necessary -- and clean up the corruption in congressional elections if it wants to last as a major power.

Although there has been a monumental failure of intellect in banking, law, economics and information technology to merge the best of competitive enterprise tactics with the best of intelligence strategies to anticipate a national need for money to protect both manufacturing and the workers and firms who do it, that failure is being met as we speak by America's traditional freedom to invent what we need in pinch.

What evidence is there for this happening? Take any Kerry speech and add to it World War II technique to mobilize money for victory and you have the answer.

Will we do this in time and in tune with grand alliances? There is no doubt that we will. These will include Europe, Russia, Japan and China.

The war between academics over who teaches what for a reason will be resolved in favor of the mental not the money power. And the mental power is biased in favor of technologies that eventually work.

John Gelles