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Fri Mar 20, 2015, 04:01 PM

Understanding Quantitative Easing & Why Only The l% Are Thriving [View all]

Michael Hudson says quantitative easing is a pretext for assisting banks to make even more profit - March 11, 2015

Part 1 of 2

Michael Hudson, the president of the Institute for the Study of Long-Term Economic Trends, is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. He is a Research Associate at the Levy Economics Institute of Bard College. He is the author of Super Imperialism, The Bubble and Beyond and Finance Capitalism and its Discontents. His upcoming book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.

Killing The Host, Michael Hudson
“The financial sector has succeeded in depicting itself as part of the productive economy, yet for centuries banking was recognized as being parasitic. The essence of parasitism is not only to drain the host’s nourishment, but also to dull the host’s brain so that it does not recognize that the parasite is there.

This is the illusion that much of Europe and the United States suffer under today. The aim of this book is to pierce this illusion and replace junk economics with economics based on reality. In Killing the Host, Michael Hudson argues that financial crises will continue unless we radically transform our economic and political structures, and reclaim the best ideas of classical economics.”


http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=13385
Full interview at link:
its cover story is it's supposed to help employment. And the pretense is an old model that used to be taught in textbooks 100 years ago. The pretense is that banks lend money to companies to invest and build equipment and hire people. But that's not what banks do. Banks lend money to real estate. They lend money to corporate raiders. They lend money to buy assets. They don't lend money for companies to invest in equipment and hire. Just the opposite. They do lend money to corporate raiders, and when they take over companies, they outsource labor, they downsize labor, and they try to squeeze out more from the labor force, and they try to grab the pensions.
So the Fed was pretty open in what quantitative easing is supposed to do since 2008. It's supposed to lower the interest rates, which raises bond prices, and it inflates the stock market. And since 2008, they've had the largest monetary inflation history--$4 trillion of quantitative easing by the Fed. But it's all gone into the stock market and the bond market.
So what has this done? Well, it's helped stock and bond holders get richer. And who are the stock and bond holders? They're the 1 percent and they're the 10 percent. And people are wringing their hands and saying, why isn't the economy getting richer? Why is it since 2008 economic inequality and the distribution of wealth have worsened instead of gotten closer together? Well, it's because of quantitative easing. It's because quantitative easing has increased the value of the stocks and the bonds that the 1 percent or the 10 percent hold, and it hasn't helped the economy at all, because the Fed is really concerned with its constituency, which are the banks.

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