The other day, economist Michael Hudson dropped by our New York studio to flip through the usual [non]-CNBC talking points...in other words, everything that is relevant to our economy and that exposes the regulatory and monetary subsidies to the very advertisers on that certain network (the ratings of which are down 60% since 2008...nice job, CNBC!).
So let's get to Michael Hudson (Mosler appears at the bottom of this article). At 2:40, we jump right into Uncle Ben's QE and its disastrous and [un?]-intentional effects:
At 3:35, we get to what is perhaps the most important topic related to the end game for the Fed: that would be when the world's largest central bank takes capital losses that do not cover its interest on reserve expenses (IOER), which subsidize US banks (actually, mainly US branches of foreign banks). This would be the Fed going cash flow negative, (or, similary put, when it's net interest margin goest negative, which Zero Hedge wrote about here), and, as we wrote in our open letter to Congress here, at EconomicPolicyJournal.com in December, 2011:
"Third, the articles make no mention that the emergency loans and other assistance have generated considerable income for the American taxpayers. As reported in the Annual Report of the Board of Governors, alongside the Board's audited financial statements, the emergency lending programs have generated an estimated $20 billion in interest income for the Treasury. Moreover, in 2009 and 2010, the Federal Reserve returned to the taxpayers over $125 billion in excess earnings on its operations, including emergency lending.These amounts have been publicly announced and are reflected in the Office of Management and Budget's financial statements for the government and have been verified by the Federal Reserve's independent outside auditors. The Federal Reserve is on track to return a comparable amount to taxpayers this year as well."
Back to Michael Hudson (again, here's the link). At 5:20, we talk about the new phenomenon of speculators buying properties for cash, and venture capital and hedge funds cashing out, prematurely IPO'ing them back to the public. Then there's our return to 19th century post-feudalism, the 1945-1980 secular trend in bonds (and why that is most relevant to the opposite trend, the end of which we're seeing now), how the Fed and Feds have saved the banks at the expense of mainstreet, the folly and swindle of austerity. And at 11:27, we even get into some Modern Monetary Theory (MMT)...yes, that oh so controversial topic we once wrote about here.
But, we like to give our guests a fair platform to make their case, so we discussed MMT with one of its founders, Warren Mosler here (2:29) in.
And don't forget to catch Justine Underhill's interview with Sheila Bair at 16:20 in (Click the pic or here for the jump):
That's all for today, kids. Tomorrow, we go toe to toe with Steve "the Keenenator" Keen.