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A debt Jubilee for America? M Hudson & PCR, from Peter Meyers

(1) A debt Jubilee for America?(2) Millennials describe life on the brink(3) Technology is Deflationary, forcing Wages down(1) A debt Jubilee for America? by Michael  Hudson, Monday, May 6, 2019America Needs A Debt Jubileeby Paul Craig RobertsMay 6, 2019As school children my friends and I were very interested in archaeology and ancient civilizations. We read all the available books. My best friend intended to become an archaeologist and to explore ancient ruins about which we imagined more than we actually knew.As far as I can discern these days no one in the general population has any thoughts of Sumer, Babylonia, Assyria, Ur. For the American young the 1940s, not 2,500 BC, is the ancient past.A time so long ago that it predates the Old Testament by 2,000 years is probably imagined as a brutal and politically incorrect time of inhumanity and human sacrifice. In short, a script for a horror fantasy movie or a video game.In actual fact, these civilizations were more advanced and more humanitarian than our own. They were more advanced because the rulers were focused on ensuring the society’s longevity by maintaining a livable balance between debtors and creditors. It has all been downhill ever since.The rulers maintained social balance and, thereby, the life of the society by periodically cancelling debts. The rulers understood that compound interest resulted in debt growing faster than the economy. The consequence would be foreclosures on agricultural land, which would shift riches and power into a small oligarchy of creditors. The ruler and the society would be deprived of a self-supporting population on the land which provided tax revenues, soldiers for the military, and corvee labor to maintain public infrastructure. Disaster would follow. A grasping oligarchy could overthrow the ruler or the dispossessed population could flee to a potential invader offering their military services in exchange for debt forgiveness.To protect their societies from dissolution by unpayable debts, rulers periodically cancelled agrarian debts owed by the citizenry at large, but not mercantile debts among businessmen.The reason for debt forgiveness was stability, not egalitarianism.We know this fascinating story of the Bronze Age’s successful economic policy because Michael Hudson spent 30 years as a research fellow at Harvard University’s Peabody Museum working with scholars of the ancient word. The study resulted in the organization of five colloquia over a decade and in the recent publication of Hudson’s book, ". . . and forgive them their debts."In America today the population is drowning in unpayable debts—student loan debt, credit card debt, home mortgage debt, state and local government debt, and business debt—but policymakers have reserved forgiveness only for the debt associated with the bad and irresponsible investments of the big banks and financial institutions. The Federal Reserve printed $4 trillion to buy up the banks’ bad debt while permitting ten million homeowners to be foreclosed. Student loan debt prevents university graduates from forming independent households. Mortgage and credit card debt prevents households from having discretionary income with which to drive retail sales. But modern day economics has no prescription for preventing our society from failing from debt overload.America long ago lost its independent farmers to debt overload. All it took was a drought, or a dustbowl, or the Fed driving up interest rates on loans, and farmers were foreclosed and the farm properties passed to corporate farming. Today the same thing is happening to dairy producers. Canada’s response to Trump’s tariffs is to place tariffs on US dairy products. The earnings drop leaves American dairy farmers overburdened with debt service. This business, too, seems destined to be concentrated in a few hands. Economic independence is being driven out of American society.The problems of monopoly, monopsony, oligopoly are real. Especially so when indebted Americans have their high productivity, high value-added jobs offshored and then face robotics displacing the lower paid domestic service jobs that are their current employment. The profit maximizing activities of corporations reduce Americans’ incomes but not their debts. Thus, debt service becomes more difficult.In the US today we have a situation in which the New York banks control Federal Reserve policy and financial legislation—the deregulation of the banking system and its subsequent bailout, for example. We have a situation in which monopolies, monopsonies, and oligopolies are stronger than the central government, which is unable to rein them in or act against them in any way. Corporations dispossess citizens of their jobs by offshoring the jobs. Creditor demands prevent university graduates from forming households. Debt service preempts retail demand except by further debt expansion.This is an economy headed down, not up. Clearly, Hammurabi did far better for the Babylonians than Washington can do for Americans.Buy ...and forgive them their debtsby Professor Michael Hudson: Millennials describe life on the brink"It feels like your whole life is a constant crisis"US millennials describe life on the brinkBy Genevieve Leigh27 May 2019The following article is the second part of a two-part series examining the conditions facing working class youth born into the millennial generation (1981-1996) in the US. Part two contains fuller versions of the interviews previewed in Part one.Emma, a 30-year-old from Massachusetts, is a college graduate who works as a singer and performer."I chose to be a performer. I knew that there would be a certain level of insecurity with that decision, but the fact of the matter is that these conditions now exist for most everyone I know. I could choose to do something that I hate and be unstable, stressed out, broke and miserable. Or I could choose to do something I love and be unstable, stressed out, broke but at least proud of my work."I have held so many jobs it is hard to keep track. Once I worked on a decommissioned battleship that was turned into a museum (in the food court). I was a hostess at Hurleys, a counter clerk at an oatmeal restaurant, a ticket salesman for shows, a theme park performer, and a cruise ship performer. I’ve done gigs with bands, been a waitress and other side jobs.""Working on cruise ships is alright. You are able to save up a little money sometimes because you don’t have to pay for housing. But you are still forced to live contract to contract. None of the employees are ‘full time.’ I know three people who have been with the same cruise ship companies for 10 plus years. They work all the time, but they are still considered part-time employees. Legally, the standard shift can’t be over 14 hours a day with a six-hour break, but I have no doubt that culturally there are things that happen on ships where people are working far more than that. I have seen some terrible sights: suicides, employees just jump off the ship. There is a lot of desperation."Emma explained that not having consistent work means that her health is a major concern."When something hurts or I am sick, I wait a while and see if it will go away because I am scared to spend a bunch of money to go see a doctor and have him tell me: ‘drink more fluids.’ But two summers ago, I got pretty sick, and after a few days it became clear I had something that was not going to go away. I needed antibiotics. I ended up going to the doctor and spending $1,200 to treat what turned out to be strep throat. At the time I was between two contracts with the same company. If I had been in their facilities, I would have been able to go to a doctor as an employee. But on the break in between, I am no longer something they need to worry about.""Once I had a job with a children's theater, a union job, which paid $425 a week and a $15 per diem for food. For jobs with my union I get health insurance, but they make it quite difficult to use. The health insurance is like a barter system. You don’t get health insurance when you start the job because you need to accrue weeks. And not every week counts as a full week of health insurance. For this show they counted 9 performances as one ‘health week.’ But you can only trade it in for health insurance once you've worked 11 weeks. And to top it all off, they expire after a year.""I think for working class millennials, it feels like your whole life is a constant crisis. The idea of owning a house or buying a new car seems so far away. You might as well be suggesting I buy my own private island."Luis is 26 years old, born in 1992, and lives in Southern California. His parents are both from Mexico. His father is a truck driver and his mom works in customer service."My first job as a kid was doing tile work, mixing cement, when I was 15. I’ve had a job ever since, and I am 26 now. I’ve worked for electrical engineering companies, Sea World, at Vans shoe store, in warehouses, at restaurants as a busser and a waiter, in landscaping, construction, selling motocross parts, as a service salesman, in shipping and receiving, making aluminum cast molds for bombshells, and in catering."I have held countless jobs, and none of them pay enough to live. I couldn’t see myself doing any of them for the rest of my life. Some were miserable, or there was no room to move up with the company, or they just did not pay enough to cover my bills."For people my age, we have to find a job at least over $16 or $17 just get by. Most jobs start you off at maybe $11 or so, if that."It is pretty difficult to make it on your own. I was out living on my own for about two years renting with a roommate. But then my roommate came up short on rent two months in a row. I felt bad—I know how it goes—so I covered him. But it set me back. With the money we make and the jobs we have, it's just not enough to deal with any minor emergency or unexpected bill that comes up. I kept having to switch jobs and keep moving apartments, trying to get by."I finally landed my most recent job, which is underground construction, about two years ago. It is a city job—a prevailing wage job. I was finally making pretty good money. On a low day I would get $28 to $29 an hour. I thought ‘finally after all these jobs and all these years trying to figure out what I was going to do, I can start making a life.’ My plan was to get my own place, get a new car, and save some money finally."But then just two or three months in I got hurt, because of my boss. He was in a moving vehicle which had poles hanging out. The poles had cables in them, and they can weigh a couple hundred pounds each. I got hit by the cables so hard they knocked me down."At first they sent me to Urgent Care. But my shoulder kept hurting, something was wrong. Again and again, they kept sending me back to Urgent Care. I finally told them I need to be seen properly, by a doctor in the ER, to get an x-ray. Finally, a month later I got the x-ray, and it turns out I have a torn labrum in my shoulder. I think it’s completely messed up how they handled the injury. When someone gets hurt like that they should go straight to the ER."Since then, my hours have been cut drastically. It’s just getting worse and worse. I am in pain every day. I just got off my dad’s insurance, but now my job won’t allow me to get on the company insurance even though they offered it to me when I started. They say it’s because I am only making 30 hours a week. But they won’t give me more hours because I am injured. And I can’t fix my shoulder until I get insurance."From my point of view, I am in a rut. If I quit, I’ll have to fix my shoulder on my own, and I don’t have that kind of money. It is crazy. They injured me, and they won’t help me out."Everything I saved I’ve now spent because of the injury. And it took me years to try to save anything. Now my only focus is just getting fixed and going from there. I didn’t get an attorney for any extra money or anything. I just want my surgery covered so I can get better and work."We workers all strive to find that decent job so that we can just make enough to live comfortably. We are working Friday to Friday for a paycheck, slaving away. I think most people don’t even like what they do, they just do it for the check. They are trapped, just trying to survive."And it’s not just my generation. I have family friends and relatives who are older than me, and they can’t hardly make it either. And they have kids too, I can’t even imagine."My financial situation affects every part of my life. My friends and I were just talking the other day about our parents and how they all had kids at our age. I’d love to travel and do things—things people my age are supposed to do. But instead I am worried: Am I going to have enough money for next week? Am I going to be able to pay for just the basics?"I am not a really political person. But I think everything that has to do with any type of law is all made up by people who have never been on the other side. The people in office never have to figure out what they are going to eat that night and if they are going to pay their bills. It is pretty messed up. I don’t think it can just keep going like this."John is 27 from Detroit, Michigan, born 1991. His mom worked for an insurance agency and his father at a print shop. John graduated from college in 2015 with a degree in Communications."Just like everyone in my generation, I’ve had tons of jobs. I was a DJ, and a radio host for a local station, and I actually made a fair amount of money that way. But the royalties ran out, and I had to sell my music equipment because I couldn’t afford my bills. I worked at Subway for a couple of months, as a janitor for a paint company, and some other things."It’s crazy because my mom had the same job for thirty years, which paid decently. But jobs aren’t really like that anymore. I’ve never had a job longer than a year or so. Anything can happen. Everyone is expendable. They can get rid of you for anything."In communications it is difficult to get a job, especially if you have anything important to say politically. There is a narrow window of political opinions that are allowed to be aired. I have sort of given up on my major. I realized that most of the people in my graduating class and in my major gave up on the field because they couldn’t find jobs. My experience looking is that it was never about what you know, it was about who you know."And now I am going to be paying anywhere from $280 or so a month [to pay off debt] for an education I am not using, plus food and other bills. The student loans take up most of my costs. The last couple months have been hard. I had to get a wisdom tooth pulled, but I basically couldn’t afford it. It was ‘impacted’ so it cost more than usual. I had to choose to take care of it or to pay other bills. I have to decide each month how much I am willing to spend on the necessities."I don’t think I’ll get married or have kids anytime soon. I can barely afford to support myself. I can’t afford to go out even like I used to. I don’t really get a chance to meet a lot of new people because all my time is working or looking for work."I know there are tons of people in my generation who suffer from depression and anxiety. It’s not surprising. What makes it even worse is when you go see a doctor, they make it so individualized. They make it out like it’s only you, or there is something wrong with you and not with the world. ‘Take these pills’ and it’ll be fine or whatever, but this is a social issue. They make you turn inward, to think ‘maybe it’s just me, maybe it’s my problem.’"I feel like that this generation really feels that life can’t go on like this much longer. We look at the politicians who say, ‘everything is great, everything is going to be fine.’ And we look at our conditions— unemployment, massive poverty, and there is a real dissatisfaction. So many kids that are just angry, and rightfully so. If that anger is politically mobilized, then it’s game over for the ruling class."Andréa is a 25-year-old nonprofit worker from California who graduated from a university in 2016."I didn’t go to Columbia or Harvard. I got a basic education. I was responsible and stayed local to pay in-state tuition. Now, tens of thousands of dollars in debt, the lowest my monthly bill can possibly be is $200 a month."My student debt has an impact on every decision I make. Any extra bill matters. I can’t think about buying a car or getting sick. In the winter, I had to go to the emergency room. I spent no more than an hour in the ER. Two months later I got a bill in the mail saying they were charging me $9,000. I had to spend countless hours on the phone trying to get it lowered. My friends and family had to send in letters. I had to apply for all these waivers and such. It was a nightmare."Nowadays your money is split so many ways. I feel like all my life decisions are made in the shadow of my debt. It affects decisions about starting a family, where and how to live. I honestly feel that there is not really even room to dream of things like owning a home."(3) Technology is Deflationary, forcing Wages downTechnology Is Not Just Disruptive, It's Disastrously DeflationaryDeflation eats credit-dependent, mass-consumption economies alive from the inside.Authored by Charles Hugh Smith via OfTwoMinds blog,TUESDAY, MAY 21, 2019While AI (artificial intelligence) garners the headlines, the next wave of disruptive technologies extend far beyond AI: as the chart of technologies rapidly being adopted shows, this wave includes new materials and processes as well as the "usual suspects" of machine learning, natural language processing, data mining and so on. While many voices seek to assure us these technologies won't displace human workers, the reality is cutting labor inputs is the core driver. What few pundits seem to understand (perhaps because they've never experienced a truly competitive market?) is that the rush to incorporate these technologies into existing enterprises is deflationary not just to prices but to profits.Reducing labor inputs and improving productivity of capital and the remaining labor force is not going to generate profits if competitors can access the same tools and processes. The race isn't to maximize profits, it's to survive the inevitable deflationary spiral in prices as competitors are forced to pass along cost savings to customers to retain market share.Pundits glorying in tech profits only consider monopolies or quasi-monopolies like Apple, Facebook and Google or monopolies / cartels enforced by government regulations and policies. Markets open to competition do not enable pricing power beyond a temporary advantage for one or two product cycles. (Please see Two Intertwined Dynamics Are Transforming the Economy: Technology and Financialization)As the race to improve technologies speeds up, "good enough" open source software and cheap previous-generation hardware is good enough for most applications. (We can surmise that the Pareto Distribution is active: technology that is 20% of the cost of the newest product can do 80% of what the new product can do, and tech that costs a mere 4% of the latest tech can do 64% of what the latest product can do.)Everyone counting on trillions in tech profits is overlooking the inconvenient reality of the S-Curve for cheap credit, cheap energy and cheap labor--the three drivers of global expansion. Once credit dries up or becomes more expensive, once cheap energy is only a memory (or future fantasy) and once employment sags under the pressure to reduce labor inputs, the ranks of those with the earnings or credit to buy, buy, buy will be thinned.Stagnant wages can only be supplemented with borrowed money until the costs of servicing the debt (interest) eats the borrower's budget. At that point, lenders will have to face the unpalatable truth that any additional loan will end in default, a process that will also collapse the entire unsustainable mountain of debt the household is struggling to service.As many others have pointed out, energy can be abundant but it only drives expansion if it's affordable to low-wage workers. If it's only affordable to the top 20%, every economy based on mass consumption implodes.One of the factors in the U.S.-China trade dispute that few seem to notice is labor costs are spiraling higher in China, reducing its competitiveness at a critical juncture as global trade, demographics, energy costs and the risk of credit bubbles bursting all form a self-reinforcing confluence of negative dynamics.China still needs the jobs while its customers (including but not limited to the U.S.) are seeking lower-cost alternatives to Made in China. Even Chinese companies are looking to establish lower-labor cost manufacturing hubs overseas.Strip away the happy talk about technology creating jobs and we're left with real-world enterprises desperate to lower cost inputs in any way they can: and the go-to "solution" to reducing cost inputs is reducing labor inputs by reducing wages via global wage arbitrage (a.k.a. offshoring jobs) and/or replacing human labor with software and robotics.Sure, there will be jobs for those installing and maintaining the software and robots, but remember: enterprises don't have profits, they only have costs, and the pressure to eliminate entire layers of managerial costs as well as production costs will only increase. Who will be willing and able to pay a premium for any technology, product or service if cheaper alternatives are available? As debt service costs rise and wages continue to stagnate, the "solution" of borrowing more reaches an endgame of credit contraction and soaring defaults.That leaves government-enforced monopolies as the only dependably profitable corporations, and the citizenry will soon tire of enriching tech oligarchs who bought political cover and regulatory moats. Deflation eats credit-dependent, mass-consumption economies alive from the inside.Adapt or die boils down to strip out costs or die.