The American Empire in a Changing World


Saturday, October 20, 2012

Michael Hudson: ''how finance capital leads to debt servitude''

From Ian Fraser

''Banks have the privilege of creating credit and charging for access to it. Most bank credit is extended to buy property or rent-seeking privileges already in place. Banks rarely are set up to evaluate new capital investment. Their time frame is notoriously short-term. It takes time to develop production facilities, mount a sales campaign and develop markets for new goods. It is easier simply to buy a privilege to extract charges without producing anything at all. This is what property rights are, along with special privileges such as charging interest without making a tangible investment. So banks back the kind of economy that makes money without new capital investment. The easiest way to do this is to make loans for real estate at increasingly debt-leveraged, bank-inflated prices. They call this a post-industrial “service” economy. It is simply a rentier tollbooth economy.''

read more 

No comments:

Post a Comment