G is for Groundrent

Part G to The Insider’s Economic Dictionary. Gains from Trade: A euphemism for trade dependency resulting from the specialization of production between food-surplus nations and food-deficit countries, and the parallel polarization between high-technology and low-wage producers. Originally coined by free-trade advocates, the term is now used primarily by the agriculturally protectionist economies of North America and Western Europe. Under Ricardian trade theory, the gains from trade are measured by the amount of labor and related costs to importers of producing similar products at home. Left out of account are foregone improvements in agricultural and industrial productivity. Gains-from-trade theorizing thus encourages passivity and reinforces existing production patterns, economic polarization and debt dependency. (See Colonialism, Washington Consensus and World Bank.) General Theory: The title ...

Extra Economist

Please click on the following link to hear my latest radio interview. In Extraenvironmentalist #67 we discuss the implications of the bursting global credit bubble with economist and historian Michael Hudson. Our conversation covers many of the themes in Hudson’s new book, The Bubble and Beyond which covers the process of quantitative easing, neofeudalism and more. Partial Transcript Justin Ritchie: “There’s a lot of people on the left and the right who are becoming increasingly critical of Quantitative Easing and the question we have is how does it work? What does it mean that the US Federal Reserve is buying these $85 billion dollars each month of assets even though they are talking about tapering now?” Michael Hudson: “Quantitative Easing only has to ...

Global Property Ponzi Policy

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I appear at the 12 minute mark. Max Keiser focuses on the global property ponzi game. The UK housing policy 'Help to Buy' - a 15% underwriting of loans under £600,000 is a technique to re-inflate land prices. A 15% rise will bail out the bad loans UK banks have made. Meanwhile the tax dodging continues globally as property speculation is ignored.

F is for FIRE sector

Part F in The Insider's Economic Dictionary Factoid: A hypothesis, rumor or story so consonant with peoples’ preconceptions that it is accepted as a fact or working assumption, even though it often is made up a priori. Among the most notorious examples are the ideas of diminishing returns, equilibrium, that privatized ownership is inherently more efficient than public management, and that trickle-down economics works. (See Junk Science.) Factor of production: Labor and capital are the two basic factors of production, creating value. Many classical economists also treated land as a factor of production, but it is rather a property right. It is needed for production, like air, but as a legal right it becomes an institutional opportunity to charge rent, via a ...

E is for Earned Income

Part E in The Economics Insiders Dictionary. Earned income: Wages or profits earned by labor or capital for their role in producing goods and services. As such, earned income excludes economic rent and interest, which are property and financial returns that must be paid out of profits and wages. Ebitda: An acronym for earnings before interest, taxes, depreciation and amortization. A more colloquial term is cash flow. Economic rent: See Rent, economic. Economist: Originally a member of the Physiocratic School (L’Économistes) founded by Francois Quesnay who developed the Tableau Économique as the first formal national income statement. They sought to replace France’s proliferation of excise and income taxes with a land tax” (l’impôt unique), on the logic that the sun and other forces of ...

D is for Debt

Part D in The Economic Insider's Dictionary Debt: Only pure assets and equity ownership exist without corresponding debt. For financial saving, one party’s saving deposit, loan or credit appears as another party’s debt on the opposite side of the balance sheet. (Even net worth appears on the liabilities side of the balance sheet.) Debt bondage: The obligation of debtors to provide their own labor and/or that of family members to creditors to carry the interest and principal charges on loans or other financial claims. In today’s postindustrial economy this obligation takes the form of homeowners and employees spending their working lives paying off their mortgages and other personal debts in an attempt to improve or merely to maintain their economic position. Debt drag: ...

C is for Camouflage

Part C in The Insider's Economic Dictionary Camouflage: A cloak of artificial attractiveness or even of invisibility. Financial debt-claims on the economy’s income and assets camouflage themselves as wealth, although the financial tactic is to strip it. (See Euphemism and Parasite.) Capital: From Latin caput, “head,” as the political seat of government, society’s guiding intelligence or brain. Economically, the term is used ambiguously to represent two antithetical forms of capital. Physical capital in the form of tools, machinery and buildings are means of production evaluated by the cost of producing or acquiring them. Finance capital represents the rentier claims on these means of production and their revenue. Its dynamics tend ultimately to strip the means of production via the claims of compound ...

B is for Bailout

Part B to the Insider's Economic Dictionary Bailout: Reimbursement to speculators and savers of losses incurred by bad loans, investments or deposits in banks that fail. The effect of this moral hazard is to preserve financial control in the hands of the economy’s wealthiest 10 percent, “making them whole” by shifting the loss onto the bottom 90 percent of the population in order to benefit those at the top of the pyramid (see Rentier and Oligarchy). Balance of payments: Every country has offsetting trade and financial movements. And as in any balance sheet, every country’s payments are in overall balance by definition. The balance of payments is an accounting statement of international credits or inflows such as export receipts, the run-up of ...

Obama’s Master Class in Demagogy 101

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Yesterday President Obama chose Knox College in Galesburg, Illinois (originally founded by anti-slavery activists in the 1830s) to float the economic program he has been working out with Wall Street investment bankers. His aim is to wrap this program in a democratic rhetoric. The speech’s actual content boils down to: “I’m doing fine and housing prices are recovering. The way to heal the economy faster is to make a Public-Private Partnership (with Wall Street) to finance new infrastructure investment. The government will guarantee a return – and if there’s any loss, we (you taxpayers) will bear it.” His political genius was not to sugar-coat the shady parts of ...