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One basic myth is that rich people get wealthy by earning income. But that's not how most get rich. Most of the gains of the rich people since 1945 have been "capital gains".
Mathematically, debts grow exponentially at compound interest. Banks recycle the interest into new loans, so debts grow exponentially, faster than the economy can afford to pay.
The ideological foundation of today's business schools is that economic control should be shifted out of government hands into those of financial managers - that is, Wall Street.
There are so many currency exchange rate problems that people are buying gold as a safe haven. Right now, gold looks like a safe haven if international exchange rates break down.
People are putting their money into treasuries because they worry that the risk of putting their money into the bond market, the stock market or even the money markets is very high.
You're having government spending on the economy being cut almost everywhere. That means that the only source of spending for growth has to come from borrowing from the banking system.
As you have to pay more interest and amortization on what you owe, you're left with less and less money to buy goods and services - unless you borrow even more and go further into debt.
If a lot of money goes into the stock market, it'll push up prices, making money for stock speculators. Then the insiders can decide that it's time to sell out, and the market will plunge.
The world's politics are in turmoil, not to mention the Mideast, where the US has mounted attacks from Libya to Iraq to Syria, and ISIS is attacking governments in today's pipeline rivalry.
Trump has said that he wants to remove the tax deductibility of interest. If he can do that, fine. But I hope that Trump knows that it's not the President that sets tax policy. It's Congress.
The aim of academic trade theory is to tell students, "Look at the model, not at how nations actually develop." So of all the branches of economic theory, trade theory is the most wrongheaded.
The problem is indeed that one party's debt finds its counterpart in some other party's savings. Not paying debts therefore involves annulling some other party's financial claims on the debtor.
Normally, if someone goes bankrupt, you wipe out the debt and get a fresh start. But that's not permitted with student loans. So the effect is to impoverish many graduates with very high debts.
Elites play the role today that landlords played under feudalism. They levy interest and financial fees that are like a tax, to support what the classical economists called "unproductive activity."
The Eurozone die is cast. Countries must withdraw from the euro so that governments can create their own money once again, and resist creditor demands to carve up and privatize their public domain.
The banks' product is debt. They try to tell customers that "debts are good for you," but the customers can't afford any more debt, so there's no way the banks can continue their current business plan.
Throughout history, the only way of restoring stability is to write down the debts. That is treated now as if it's something that can't be done. But it's the only thing that's going to revive the economy.
The financial time frame always has been short-term. Projects with long-term paybacks are cut back, because CEOs and financial managers simply want to take their money and run. That is the financial mentality.
The result of this anti-classical revolution you had just before World War I was that today, almost all the economic growth in the last decade has gone to the One Percent. It's gone to Wall Street, to real estate.
So the political choice today is much like the 1930s, when the global economy also broke down. The choice is between nationalism and populism on the right, or socialism reviving what used to be left-wing politics.
The IMF acts as the collection agent for global bondholders. Its projections begin by assuming that all debts can be paid, if economies will cut wages and wiping out pension funds so as to pay banks and bondholders.
You could say that the vote to withdraw from Europe is, it's really a vote of the British middle class, the working class, to withdraw from the U.S. neoliberalism that has been running Europe for the last ten years.
Oil is a special case. Saudi Arabia is trying to drive U.S. fracking rivals out of business, while also hurting Russia. This lowers gas prices for U.S. and Eurozone consumers, but not by enough to spur economic recovery.
The price decline is a result of having to pay debts. That drains income from the circular flow between production and consumption - that is, between what people are paid when they go to work, and the things that they buy.
When Mr.Trump says he wants to help all Americans, he means he wants to help all Americans in the 1% by really letting Wall Street get a huge debt from the 99% of the Americans. It's just the opposite of what people believe.
It's amazing that Europe says, "What are we going to do with these refugees?" It's as if it doesn't realize that being part of NATO and bombing these countries forces them to choose to live by fleeing, or to stay and get bombed.
When economists speak of money, they neglect that all money and credit is debt. That is the essence of bookkeeping and accounting. There are always two sides to the balance sheet. And one party’s money or savings is another party
Canada is a malstructured. You could almost call it a failed economy, except that its natural resources are so rich that everybody can get wealthy off making holes in the ground and digging up the oil and polluting the environment.
More and more money is being extracted from of the production and consumption economy to pay the FIRE sector. That's what causes debt deflation and shrinks markets. If you pay the banks, you have less to spend on goods and services.
The United States and Europe are in a state of debt deflation, where people and businesses have to pay banks instead of spending their income on goods and services. So markets shrink, sales and profits fall, and the stock market turns down.
Today, people are having to spend so much of their money, to acquire a house and to get an education that they don't have enough to spend on goods and services, except by running into yet more debt on their credit cards and other borrowings.
The aim of promoting low down payments is to push prices back up so that fewer houses are going to be in negative equity and fewer people are going to walk away from the mortgages. That will save the from taking a loss on their junk mortgage loans.
We're living in a world that's divided into two economies: the economy of the 1%, and the economy of the bottom 99%. I guess you could be more "centrist" and say the top 10% versus the bottom 90%. But there's definitely a stratification at work here.
Economists often define their discipline as "the allocation of scarce resources among competing ends." But when resources or money really become scarce, economists call it a crisis and say that it's a question for politicians, not their own department.
I think the Republican tax law is so bad that it almost guarantees a Republican victory, precisely because it's so bad. The seeming irony is that it's so bad that it enables the Democratic Party to think, "A-ha, all we have to do is be the lesser evil.
Stocks always go down much faster than they go up. That's why it's called a crash. People who put their money into the stocks will find, all of a sudden, that stock prices are no longer being supported by the debt leveraging that's been holding them up.
Deflation is a leakage from this circular flow, to pay banks and the real estate, called the FIRE sector - finance, insurance and real estate. These transfer payments leave less and less of the paycheck to be spent on goods and services, so markets shrink.
Debt deflation is when there's less money that people have to spend out of their paychecks on goods and services, because they're paying the FIRE sector. Oil going down is a function of the supply and demand of oil in the market. It's a separate phenomenon.
Income is sucked upward to the creditors, who then foreclose on the assets of debtors. This shrinks tax revenue, forcing public budgets into deficit. And when governments are indebted, they becomemore subject to pressure to privatization of public enterprise.
We're in a chronic debt-deflation. There's no way we can recover unless you write down the debts. And that's what the IMF basically is implying (and it was explicit regarding Greece), but its not spelling it out, because that's not what can be said in polite company.
The biggest industrial sector next to real estate is oil, gas and other mineral resources. They don't report any taxable income, because if you depict yourself as earning a profit, you have to pay a tax on it. So, it's all about what accountants choose to declare as profit.
Most banks - with Deutsche Bank at the top of the spectrum here - have decided that they can't make money lending to barrowers anymore, so they're going to the second business plan: They lend money to casino capitalists. That is, to people who want to gamble on derivatives.
One of the big problems in America's economic polarization and shrinkage is that pensions can't be paid. So there are going to be defaults on pensions here, just like Europeans are insisting in rolling back pensions. You can look at Greece and Argentina as the future of America.
When they say inflation is bad, deflation is good, what they mean is, more money for us 1% is good; we're all for asset price inflation, we're all for housing prices going up, and we're all for our stock and bonds prices going up. We're just against you workers getting more income.
The establishment Trump talked about wasn’t really Wall Street. He said, “When Washington got rich.” Bernie Sanders would have said, “When Wall Street got rich, the country didn’t.” So I think when Donald Trump says "Washington," what he means is the government regulatory agencies.
Debts grow and grow. And the more they grow, the more they shrink the economy. When you shrink the economy, you shrink the ability to pay the debts, so it's all an illusion that the system can be saved. The question is, how long are people going to be willing to live in this illusion?
We're at the end of long cycle that began in 1945, loading the economy with debt. We're not going to be able to get out of it until you write down the debts. But that's what the IMF believes is unthinkable. It can't say that, because it's supposed to represent the interest of the banks.
Deflation means a slowdown of income growth. Markets shrink, new capital investment and employment also taper off, so wages decline. That is what's happening as deliberate policy in Europe and the United States. Falling or stagnant prices are simply the result of having less income to spend.
When there's deflation, it means that although most markets are shrinking and people have less to spend, the 1% that hold the 99% in debt are getting all the growth in wealth and income. Deflation means that income is being transferred to the 1%, that is, to the creditors and property owners.
The myth is that if housing prices go up, Americans will be richer. What banks - and behind them, the Federal Reserve - really want is for new buyers to be able to borrow enough money to buy the houses from mortgage defaulters, and thus save the banks from suffering from more mortgage defaults.