Stewart vs Krugman and the Religion of Austerity


PAUL JAY: Welcome to The Real News Network.
I’m Paul Jay in Baltimore. And welcome to this week’s edition of The Black Financial
and Fraud Report with Bill Black, who now joins us from Kansas City. Bill is an associate professor of economics
and law at the University of Missouri-Kansas City. He’s a white-collar criminologist, a
former financial regulator, and author of the book The Best Way to Rob a Bank Is to
Own One. Thanks for joining us, Bill. BILL BLACK: Thank you. JAY: So you’ve been talking in many of our
interviews and you’ve been writing about what you thought was the likelihood of a coming
grand betrayal, in other words, President Obama making deals for cuts to the social
safety net and various other kinds of austerity measures, as part of a deal dealing to get
the fiscal cliff done, and then to get the debt ceiling deal done. But President Obama
recently has been saying he’s not going to, he says, negotiate under the gun of the debt
ceiling. So isn’t that what you want to hear? BLACK: Well, it may be. I certainly agree
that you certainly shouldn’t make concessions to people who engage in extortion, ’cause
if you do, they’ll simply extend the debt limit for only a very short time period, and
they’ll keep coming back, and it’ll be the death of 1,000 cuts. So Obama, if he has any
competence as a negotiator, should be refusing to give in to the extortion. Problem is that he’s been engaged in unilateral
disarmament as a negotiator leading up to these talks. He had a couple of ways, clear
ways, that he could have completely defused what Donald Trump called his “nuclear weapon”
of threatening to use the debt limit to extort concessions from Obama. One is the requirement
under the Fourteenth Amendment to pay U.S. debt, and the second was the idea of minting
this $1 trillion platinum coin. JAY: Okay. Let me just ask you about the coin
thing, ’cause John Stewart on The Daily Show went after Paul Krugman– JOHN STEWART, HOST, THE DAILY SHOW: If somebody’s
ruining their brand with a $1 trillion coin idea, I don’t think it’s the non-economist.
[snip] So I stand by our research on the topic, the due diligence, and my ignorant conclusion
that a $1 trillion coin minted to allow the president to circumvent the debt ceiling,
however arbitrary that may be, is a stupid [bleep] idea. JAY: –’cause Krugman apparently in one of
his articles took this as a serious idea that he could do this, and Stewart was kind of
ridiculing him about it. I mean, this is a serious thing he could do. I mean, do you
think it’s a legitimate policy alternative? And let’s explain to everybody this is the
idea the Treasury mints a $1 trillion coin, deposit it–the Fed mints it, is that it?
Who mints this coin, anyway? BLACK: The Mint mints the coin. JAY: The Mint mints the coin. Under whose
direction? Treasury Department. BLACK: Under the Treasury, and which is to
say the president’s direction. And they could–and the law expressly says you can make it in
whatever denomination you want. So if people are trying to extort you using the debt limit,
make it a $1 trillion coin, or $2 trillion, $4 trillion. It doesn’t matter. And then you
deposit it at the Federal reserve, and, poof!, all of the leverage goes away by the House
Republicans and the Tea Party in particular that’s trying to use this nuclear weapon of
extortion where they hold hostage the U.S. economy. So it was actually a very good idea. And,
you know, it would have required all of about $0.80 worth of platinum–that’s literally
how much platinum would have been required, because you just make it a clad, you know,
coin. And for reasons that, you know, make perfect
sense as a humorist, you know, John Stewart’s had a lot of fun with this. And then Paul
Krugman, I think, made the tactical mistake of playing in John Stewart’s garden by saying,
hey, this is, you know, a serious idea, and you didn’t research it at all; it just sounded
funny to you, so you made fun of it. And, you know, John Stewart says, yes, that’s what
we do; we make fun of ideas. But then Stewart added: and obviously it’s
a stupid idea. Well, no, obviously it isn’t a stupid idea. And if Stewart knew more about
economics, he wouldn’t think it was a silly idea. But, you know, he is a humorist. JAY: But that being said, President Obama,
I think, has said he won’t do it. BLACK: Well, Obama has said he won’t do either
of these things that would remove the leverage of the Tea Party to extort America and threaten
to destroy our economy. So that’s really completely imprudent on Obama’s part. When you have somebody
like the Tea Party threatening the U.S. economy and you have the ready ability to defuse that
nuclear weapon, you should use that authority. And so this is at best an irresponsible action. JAY: Now, is this partly because Obama knows
that the corporate backers of the Tea Party, for example, the Koch brothers, don’t want
this to happen, in the sense they don’t want another paralyzed economy, they don’t want
the debt ceiling legislation not to be enacted, and so that Obama’s kind of calling their
bluff? BLACK: I wish that were true. I mean, you
can certainly see a much harder politician saying this is just going to hurt the Republican
brand, that they’re going to threaten to ruin the U.S. economy, and if they ever did it,
in fact it would cause such economic devastation that it might destroy the Republican Party.
So that, of course, is a possibility, that Obama is that, you know, strategic and trying
to bait the Republicans into doing their worst, with the idea that it will hurt the Republican
brand. Another possibility, though, of course, is
that he wants the excuse to give in. And remember, we just had him propose to make concessions
to the Republicans in which he was going to make very sharp cuts in social spending, and
sharp cuts in the safety net as well. And we were saved only by Harry Reid, who took
the Obama instrument of surrender and literally threw it in the fireplace and burned it up
rather than to make that proposal. And before that, in the broader discussions in the fiscal
cliff, Obama was very much in favor of an austerity package–back in July 2011 and November
2011, Obama was very much in terms of an austerity package. And even now, Obama is saying, once
we get past this extension of the debt limit, we’re open to doing the grand betrayal. So
I think all he’s saying is, I’m going to fight you on the debt extension, but then I’ll give
you the deal anyway. The Republicans, of course, are saying that they are going to demand austerity
as the price of doing anything on the debt limit. And so the column I just did today looked
at what were the–you know, how did we get here? How did this austerity idea that has
repeatedly caused recessions and depressions, where did it come from in recent times? And
it turns out it’s the Pete Peterson Institute. And Pete Peterson, of course, is the Republican
billionaire who’s said that he’s going to spend his fortune trying to unwind the safety
net in America, that he wants a combination of lower taxes and dramatically reduced social
spending, and then, you know, to really go after–his ultimately goal, he has said, is
to privatize Social Security. And, of course, this is the great dream of Wall Street in
terms of their fees. So I look back, and the Pete Peterson Institute
is the place–and it still employs the senior fellow, an economist named John Williamson,
a Brit, at least originally, who proposed the Washington consensus. So I went and looked
at the original document, which he published in 1990–it was a speech he actually gave
in 1989–in which he coined the phrase Washington consensus, ’cause, of course, there’d been
a lot of reinventing history in his writing since. The original piece is entirely in the
context of the Latin American debt crisis, and it starts out right at the first paragraph
and says, hey, here’s the deal: we’re going to give some delay in the South American debt,
Latin American debt, and in return we’re going to require them to agree to strong conditionality,
which is code for whatever we tell them to do, right? And the very first thing on his
list–and he called it central to the whole idea of the Washington consensus was austerity. So austerity, deregulation, privatization,
the whole neoliberal agenda–although he objects to that term–is there in the first document
as a way of forcing Latin American nations to agree to a completely new governance structure
imposed by Washington, D.C., for the benefit of American banks and the IMF to collect debts
from Latin America. Now, that of course was a terrible experience
in much of Latin America and accounts for why we have so many Latin American leaders
elected over the last ten years on a platform of rejecting the Washington consensus–in
other words, elect me ’cause I am going to fight against the Washington consensus. Go
forward in time and this is the same mindset that caused Europe to adopt austerity. And I have another recent column about, you
know, Germany has just announced that in the fourth quarter, growth went sharply negative,
probably by 0.5 percent, which is a lot. That would be, like, the equivalent, if you straight-lined
it out, of -2 percent growth for a year. And the Eurozone has been as a whole forced into
recession. This news on Germany means that that recession
is getting far worse in the Eurozone. And as I’ve stressed before, places like Spain,
Italy, and Greece have Great Depression levels of unemployment. And so we have an idea, a terrible idea, austerity,
that makes recessions worse, that creates Great Depression levels of unemployment in
many countries, that will not die, no matter how much damage it causes to the world. And,
of course, when really bad ideas refuse to die, even though they’re proven to be bad
ideas time after time, then you know you’re dealing with dogma, not with science. So that which is called neoliberal economics
is one of the only areas that I know of that purports to be a science in which we have
gone dramatically downhill in the science content over the last 50 years, such that
it isn’t a science at all anymore, it’s a weird religion of austerity that actually
takes pleasure in causing suffering in other nations. JAY: Alright. Thanks a lot for joining us,
Bill. BLACK: Thank you. JAY: And thank you for joining us on The Real
News Network.

71 comments

  1. The main problem is that normal people have no idea how the banks and money work. We don't get any of this in school. Not even at high school. All believe money is a token of exchange not of debt.

  2. Money is debt and credit (both sides of the same coin, excuse the pun) because money is not wealth, it is currency, a tool to facilitate in the exchange of wealth. The currency itself has zero intrinsic value, so the debt has zero intrinsic value, as it is only measured in itself.

  3. I would love to see Mr. Black discuss the issues put forward in the documentaries, "The Money Masters" , "The Crime of the Canadian Banking System, and/or "Canada: Our Bought and Sold Out Land" Many in the past have criticized the idea of giving private interests control of the money supply, I wonder what Black's opinion is on the subject..

  4. The anti-jew stuff isn't new, or unique, my best guess has been that there are people out there (who can't be regular RNN watchers!!!) who just search for stories, or youtube presents then with "similar" vids including RNN's, and they just see it as another place to post their crap on. I don't think they're people who even listen to the videos, because… well they'd be better informed, and not stuck in an early 1900s mentality

  5. NOT ALL ZIONISTS ARE JEWS.

    AND NOT ALL JEWS ARE ZIONISTS.

    THEYRE NOT THE SAME GODDAMN THING. BY GOD.

    Just look at America and see how fucking many Christian Zionists there are.

  6. Welcome to Youtube: Where apparently all of Stormfront goes trolling in their free time. You would think they have enough of their own forums to do this type of thing on…

  7. Somehow anything financial related attracts anti-Semites. Which to me doesn't make much sense. What difference does it make whether the banker is christian, jew or atheist, they have to be brought to justice as anyone else would.

  8. Anti-Jewish sentiment is a lot older. You could almost go back to Babylon for it's roots. However where it gets interesting is the Early-Middle ages. Christians were not allowed to handle money, they would've almost considered it a sin. Pretty much everyone was a Christian at that point, so it was easy for the Jewish people to pick up on this hole in the market and establish themselves as money handlers.
    People who handle money often get the blame when something goes wrong.

  9. Yes money is issued as debt, on which the debtor has to pay interest. Interest is not issued by the bank. This is how bankers control the money supply and get rich while doing it.

    This is why I don't buy the ongoing recessions, because it got a lot of countries into A LOT of debt. This is only good for banks, because they receive the interest on that debt. Interest which is payed from taxpayers money. At the same time when a bank goes bust, the taxpayer will also have to bail them out.

  10. There is an agenda.
    Compare a list of our so-called enemies pre-9/11, to a list of nations not yet online with the Rothschild's central banking system.
    Iraq, Afghanistan, Sudan, Lybia, Cuba, N.Korea, Iran.
    By 2003 Iraq and Afghanistan are online.
    By 2011 the Sudan and Lybia.
    By 2013-14?
    It's not about religion or resources, but the means in which they're traded.

  11. You're close, it's actually the lending of money with interest (usury) that is the sin (usurers have their own layer of hell 'n everything!) but for Jews, this only applies to other Jews (and there's no hell anyway, just loss of closeness to god) so if a Christian wanted to borrow money, he would go see a Jew, who would be sat behind a bench (root of word "bank"). So Jews were "shrewd" and disliked, but the "controlling the world" conspiracy stuff I think is a much newer slant

  12. I just pointed out, Jews were already disliked in the 5th century BC. Funny enough though Jews were heavily influenced by their exile in Babylon. They never acknowledged this, but a lot of Babylonian culture was taken back to Judea.

  13. It's interesting, because I have seen many different versions of such conspiracies. I could never quite figure out why Jews specifically would have any interest in controlling the world. To me their history in finance makes for a lot more plausible explanation as to why, even today, so many Jewish people are high ranking bankers.

    Funny fact, in my language(dutch) bank means bench as well as a (money)bank.

  14. Material conditions are worsening around the world due to the inherent contradictions of capitalism, so fascism is becoming more and more accepted. Fascism relies on an ethnic or national chauvinism and needs some kind of scapegoat to work, in this case the jews are easiest to use.

  15. I want deficit spending.

    The resulting inflation TAX is payed by EVERYONE! It unfortunatley hurts the poor and fixed income the most. With the poor getting poorer,because the dollars don't purchase as much (prices increasing), there is a great opportunity to buy assets at a reduced price from the poor and old. I get houses at discount. Jewlery, gold and silver at half off. Anything of value is on sale now!

    Krugman is right! Print baby print!!!! For Us with money…….life is good!!

  16. I want to know how big across a trillion dollar platinum coin would be. I'm imagining a GIANT coin, like the one from the old Batman Animated Series. XD

  17. So who is going to have to take the losses on all the government debt? I guess you would say nobody we live in an endless cornucopia of money do we?

  18. no you are a useful idiot. The imf admited austerity doesn't work. look it up. you support the agenda of people you don't understand. Brainwashing victim. The world IS upside down.

  19. indoctorinated sense BIRTH. Both neoclassical economics AND austrian economics are riddled with known-false assumptions that have been disproven thousands of times bur young econ students are taught them over and over and over.

  20. When are we going to learn, that banks are run by crooks, the politicians are their pawns and the rich are the beneficiary.

  21. Didn't you read? Everyone blames the Jew for everything. Real News Network comments brings them all here to say just how much they hate the Jews and in some cases what they want to do to the Jews.

  22. MIRTHFUL IRREVERENCE – the munition of triumph

    Take on the JesuitRothschilds and Rockefellers?

    "ATTENTION : BILDERBERGERS"

    { bit()ly/_Bildebergers-Denuded } ~ See Nov 2009 publishing date ¾ down page "The Reason You Have Lost Control of the Planet…"

    {{ bit()ly/ATTENTION-Bildebergers }}~ Time To Choose "Female old-story"

    {{{ bit()ly/Attention_BILDERBERGERS }}} (one post)

    ~~~~~~~~~~~~~~~~~~

    “Iraq War Will Untie Israel’s Hold On The World"

    bit()ly/Israels-Hold-GONE

  23. Serious question: If a one trillion dollar coin was minted, wouldn't that make the value of the US dollar worth less? As an under educated American, I need a bit more explanation.

  24. Just because someone has a PHD doesn't make him a God. Bill Black economic views are laughable and ridiculous and you don't need a PHD to figure that out. You just need to know basic economic knowledge and history.

  25. the minting of the coin doesn't authorize any additional spending. for the coin to cause inflation, the credits it earns to the treasury's "reserve account" (a checking account at the fed basically) would have to be spent into the hands of private individuals. this also presumes a low level of unemployment in resources and people, since increases in demand authorize would tend to increase the amount produced rather then the prices of what is produced.

  26. they say things and make it sound so simple but they are so far off base that is insane.the president does not have the right to force the debt to be raised.i do not hear them ever say that the president has steped so far out of the powers of his office that he could be literally be brought up on charges of treason.

  27. It's a matter of ad-hominem. He should be stating just b/c someone has a PhD does not mean everything they said in their field is correct.

    But use ad-rem, he should also give the statement Black said that he disagrees with and it's refutation.

  28. This is crazy. With the trillion dollar coin idea. That would be nearly instant inflation for everyone. It doesn't "fix" anything.

    b/c of inflation everything costs more (even for the gov). Which means there deficit simply goes higher, and average ppl are more screwed over.

    Keynes stopped considering stimulus assuming stagflation was impossible. We're getting into Mugabe economics here. It's utterly insane.

  29. This idea that we can print or coin whatever money we want as long as we don't spend it is also crazy.

    If that were the intent there's NO need to print the money. You can simply force debt forgiveness instead. Or you can give a credit that cannot be spent. Note neither is ever done.

    The ONLY reason to print money is to spend it. PERIOD.

  30. It would not be instantly inflationary. That could only be the case if the Govt instantly changes it's spending habits to an immense degree. And while I agree that debt forgiveness would probably be a better route, this would not be that different. Both would have an end result of debt free money.

  31. Why are the tax cuts for the rich (corps. especially!!) any less ridiculous than this platinum coin? It's all just hypotheses in an *UNBELIEVABLY* complex chaotic system that I still believe is utterly unpredictable. I like Jon Stewart alot but I think he's not very well informed on this one.. The stupid banking products sold to ill-informed consumers to create bubbles? How about we hate on that??

  32. Cut the war budget: there's more than enough to pay down debts AND provide everyone with healthcare/college education.

  33. End the Fed and the Private international Banks which they represent/are! We just need to tell the Bank of England and the Fed to kick rocks and go back to somewhat governmental issued currency before 1913 (creation of the Fed by the Rockefeller's, Rothschild's, Morgans, Warberg's, Carnegie's' and other private banking families; read the historical account in "The Creature from Jekyll Island" for more info).

  34. Debt forgiveness would be completely different. Nothing more is spent which would NOT dilute the money supply. Those who invested would be burned and likely to hold back or not invest making additional spending harder.

    If it's simply printed, the burden is diluted to populace (inflation), there's no signal for the poor investments to be held back. (Are the banks more careful after the bailouts?) And it approaches buildup even faster next time around.

  35. I guess I should be happy that there are Americans who are moronic enough to subscribe to the idea that we can print (or mint) our way to prosperity. The more of them there are, the richer I will be when the dollar collapses and I'm not holding any.

  36. Well crap why don't we just mint 1000 1T$ coins and buy the world? Because nobody wants a 1T$ coin for 1T$ of real assets. Lets just pretend the Emperor has the best clothes on the planet.

  37. Once a country's wealth was no longer tied to their gold wealth that is what happened – treasury prints money, creates wealth from……nothing.

  38. Inside information & cheap wages Make a trickle down Economy ! And the money Goes to the top Hucksters right from the peoples treasury & Wallets ! It's not Rocket science :

  39. Jon Stewart's brother , Larry Leibowitz, is the current COO of the parent company of the New York Stock Exchange. What a wild coincidence, right ?

  40. I did not know that. I hope you won't take it personally if I check? (I'm paranoid and distrustful of strangers, sorry!) It's really interesting if you're right though – it makes sense to me. Of course you would listen to what someone you love and trust tells you!!

  41. Actually, contrary to the guest, John Stewart pretty much nailed it when he said that the trillion dollar coin is "a stupid fucking idea." The idea that a trillion in new wealth can be created by minting 80 cents worth of platinum flies contrary to all logic, all common sense, and to sound economic reasoning. The trillion dollar coin is merely the tell-tale sign that mainstream macroeconomics is fundamentally bankrupt.

  42. Hmmm. US? Cooked up unemployment numbers, insane debt, and reliance on the petro-dollar as well as Chinese production for their consumer-economy to be worth a damn. Germany? Larger surpluses while than China while 1/2th the size and 5% unemployment… with a production based economy and making the deals by which the other economies grow.

    Greece? this Fall just started growing again. Austerity works. It's not a super-flashy consumer-based bubble like Keynesian economics…. but at least its VIABLE. Pumping stimulus Euros into Greece's worthless, over-valued lifestyle from a fraudulent past would just make it dependent on consumerism… which Greece itself can't sustain without outside help given it's low productivity and value for exchange.

    So… don't get too hopped up on the Krugman cocaine yet. If it wasn't for China, his pumping money thru the gov't to people buying Chinese goods wouldn't work out so well.

  43. this guy is an economist? if it was that easy to create a trillion dollars why not just mint on a week?

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