What exactly is that $4 trillion that the Federal Reserve has? Is this some kind of slush fund, or how does it work?
(11:52)
MICHAEL HUDSON: No, the Federal Reserve was given special powers to create 10 times as many loans or swaps as others. So the Federal Reserve says we're in the Federal Reserve represents the
commercial banks and the commercial investors.
Now here's the problem: a lot of companies were issuing junk bonds. They were going way down in price, especially junk bonds for the fracking industry. The Federal Reserve says, "We're going to be backed up by the Treasury. We can just create as you know, Modern Monetary Theory we can just create money on a computer, and swap. So we will, say, 'Give us your poor.' It's like the Statue of Liberty: 'Give us your poor, your oppressed,' or Aladdin's old lamps for new: Give us all your junk bonds, and we will give you a bona fide Federal Reserve deposit."
So the Federal Reserve has been pumping trillions and trillions of dollars into the stock market. That's what's been pushing up the stock market, the Federal Reserve. The bailout has gone to the stock market. As if the stock market got coronavirus! Stocks don't get coronavirus! They don't get sick on the virus! And yet it's the stock market that's going up through the Federal Reserve.
There's also another $2 trillion dollars, $2 to $4 trillion that the US government has, over and above the $2 trillion that's going to the people. So most of the calculations that have been published cite it as a $10 trillion bailout. Of which the newspapers, to avoid embarrassing Mr. Trump, only refer to the money given to the the wage earners. And they're sort of embarrassed that the vast majority are given to the financial sector that doesn't need a bailout, but that doesn't want to lose a single penny from the virus.
So when you see the stock market recovered almost to what it was before the virus, while the economy is going down, you realize, wait a minute they're saving the 1 percent, or the 10 percent of the population that own 85 percent of the stocks and bonds. They're saving the banks. They're not saving the people, and they're not saving the economy; they're not saving industry; and they're not saving small businesses.
So it's an amazing hypocrisy that the mainstream press is not discussing, which is why your show is so important.
(14:29)
MAX BLUMENTHAL: Yeah and here in Washington, DC, we got I think $500 million from the, I guess what you accurately describe as the stock market bailout. And that's a lot less than a number of red states that are less populous than Washington, DC got. So there's a massive shafting here.
And then the city has only been able to provide for certain parts of the economy. Undocumented immigrants, who do a lot of work here, got nothing from the city. Vendors, which are a big part of the informal economy in DC, even though they have to be regulated, got nothing.
And then you mention all of these sectors of the economy young people, college-educated young people who are deep in debt, and therefore less inclined to spend are getting shafted here.
So you have called for a solution well I guess, knowing so many of those people, they contribute so little to the economy because they can't; they're just putting all their money into debt. So you have called for a debt jubilee.
You say that debts that can't be paid won't be, and this is the best way out.
Maybe you can explain to our viewers and listeners what that is and why it would be the best remedy?
(15:42)
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