Michael Hudson (economist)
Encyclopedia
Michael Hudson is research professor of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 at University of Missouri, Kansas City (UMKC) and a research associate at the Levy Economics Institute
Levy Economics Institute
The Levy Economics Institute of Bard College is located on the campus of Bard College, in Annandale-on-Hudson, New York. The Institute is housed in Blithewood, a mansion originally designed by an alumnus of the architectural firm of McKim, Mead and White for Andrew Zabriskie in 1899...

 of Bard College
Bard College
Bard College, founded in 1860 as "St. Stephen's College", is a small four-year liberal arts college located in Annandale-on-Hudson, New York.-Location:...

. He is also a Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...

 analyst
Financial analyst
A financial analyst, securities analyst, research analyst, equity analyst, or investment analyst is a person who performs financial analysis for external or internal clients as a core part of the job.-Job:...

 and consultant as well as president of The Institute for the Study of Long-term Economic Trends (ISLET) and a founding member of International Scholars Conference on Ancient Near Eastern Economies (ISCANEE).

Background

Professor Hudson received his Ph.D. in economics from New York University
New York University
New York University is a private, nonsectarian research university based in New York City. NYU's main campus is situated in the Greenwich Village section of Manhattan...

 in 1968. His dissertation was on American economic and technological thought in the nineteenth century. He received his M.A. also from New York University in 1963 in economics, with a thesis on the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...

's philosophy of development, with special reference to lending policies in the agricultural sector. He was a philology
Philology
Philology is the study of language in written historical sources; it is a combination of literary studies, history and linguistics.Classical philology is the philology of Greek and Classical Latin...

 major with a minor in history
History
History is the discovery, collection, organization, and presentation of information about past events. History can also mean the period of time after writing was invented. Scholars who write about history are called historians...

 at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...

, where he received his B.A.
Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...

 in 1959. He attended the University of Chicago's Laboratory School
University of Chicago Laboratory Schools
The University of Chicago Laboratory Schools is a private, co-educational day school in Chicago, Illinois. It is affiliated with the University of Chicago...

 for high school and grade school.

Career

Hudson previously taught at The New School
The New School
The New School is a university in New York City, located mostly in Greenwich Village. From its founding in 1919 by progressive New York academics, and for most of its history, the university was known as the New School for Social Research. Between 1997 and 2005 it was known as New School University...

 in New York City, and he is currently a research professor at the University of Missouri at Kansas City. He also lectures and publishes in association with UMKC at The Berlin School of Economics
Berlin School of Economics
The Berlin School of Economics and Law is an elite institution founded on 1 April 2009 through the merger of the Berlin School of Economics and the FHVR Berlin, a university of applied sciences for administration and law. The BSEL portfolio provides a wide range of professional qualifications...

.

Hudson served as Chief Economic Advisor for Dennis Kucinich
Dennis Kucinich
Dennis John Kucinich is the U.S. Representative for , serving since 1997. He was furthermore a candidate for the Democratic nomination for President of the United States in the 2004 and 2008 presidential elections....

’s 2008 presidential campaign and holds the same position in Kucinich’s Congressional campaign. He has been economic advisor to the U.S., Canadian, Mexican, and Latvian governments, to the United Nations Institute for Training and Research
United Nations Institute for Training and Research
The United Nations Institute for Training and Research was established in 1965 following a "for the training of personnel, particularly from developing Member States, for administrative and operational assignments with the United Nations and the specialized agencies, both at Headquarters and in...

 (UNITAR), and he is president of the Institute for the Study of Long-term Economic Trends (ISLET).

Hudson is a former balance-of-payments economist for Chase Manhattan Bank
Chase Manhattan Bank
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...

 and Arthur Andersen
Arthur Andersen
Arthur Andersen LLP, based in Chicago, was once one of the "Big Five" accounting firms among PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG, providing auditing, tax, and consulting services to large corporations...

, and economic futurist for the Hudson Institute
Hudson Institute
The Hudson Institute is an American think tank founded in 1961, in Croton-on-Hudson, New York, by futurist, military strategist, and systems theorist Herman Kahn and his colleagues at the RAND Corporation...

 (no relation). For Scudder, Stevens & Clark in 1990, he established the world’s first Third World sovereign debt
Developing countries' debt
The debt of developing countries is external debt incurred by governments of developing countries, generally in quantities beyond the governments' political ability to repay...

 fund, which became the second best performing international fund in 1991 (an Australian real estate fund was number one ).

Influential writings

Hudson has written cover stories for Harper's Magazine
Harper's Magazine
Harper's Magazine is a monthly magazine of literature, politics, culture, finance, and the arts, with a generally left-wing perspective. It is the second-oldest continuously published monthly magazine in the U.S. . The current editor is Ellen Rosenbush, who replaced Roger Hodge in January 2010...

and is on the editorial board of Lapham's Quarterly
Lapham's Quarterly
Lapham's Quarterly is a literary magazine founded in 2007 by former Harper's Magazine editor Lewis H. Lapham. Each issue examines a theme using primary source material from history. The inaugural issue "States of War" contained dozens of essays, speeches, and excerpts from historical authors...

. He is a regular on
American Public Media
American Public Media
American Public Media is the second largest producer of public radio programs in the United States of America after NPR. Its non-profit parent, American Public Media Group, also owns and operates radio stations in Minnesota, California, and Florida. Its station brands are Minnesota Public Radio,...

's Marketplace
Marketplace (radio program)
Marketplace is a radio program that focuses on business, the economy, and events that influence them. Hosted by Kai Ryssdal, the show is produced and distributed by American Public Media, in association with the University of Southern California...

, Bloomberg Radio, has been on numerous Pacifica Radio
Pacifica Radio
Pacifica Radio is the oldest public radio network in the United States. It is a group of five independently operated, non-commercial, listener-supported radio stations that is known for its progressive/liberal political orientation. It is also a program service supplying over 100 affiliated...

 interview programs, and is a regular contributor to CounterPunch
Counterpunch
Counterpunch can refer to:* Counterpunch , a punch in boxing* CounterPunch, a bi-weekly political newsletter* Counterpunch , a type of punch used in traditional typography* Punch-Counterpunch, a Transformers character...

(http://counterpunch.com/). He has written for the Journal of International Affairs
Journal of International Affairs
The Journal of International Affairs is a foreign affairs academic journal published bi-yearly by the students at the School of International and Public Affairs...

, Commonweal
Commonweal
Commonweal is a American journal of opinion edited and managed by lay Catholics. It is headquartered in The Interchurch Center in New York City.-History:...

, Bible Review
Bible Review
Bible Review was a publication that sought to connect the academic study of the Bible to a broad general audience. Covering both the Old and New Testaments, Bible Review presented critical and historical interpretations of biblical texts, and “reader-friendly Biblical scholarship” from 1985 to...

, International Economy, The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...

op-eds, Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....

opinion, and has often contributed editorials in leading Latvian, Polish, and Arabic business papers. His trade books are translated into Japanese, Chinese, Spanish and Russian.

Hudson's April 2006 Harper's cover story, “The $4.7 Trillion Pyramid: Why Social Security Won’t Be Enough to Save Wall Street,” helped defeat the Bush administration’s attempt to privatize Social Security
Social Security debate (United States)
This article concerns proposals to change the Social Security system in the United States. Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance" , in reference to its three components. It is primarily funded through a dedicated payroll tax...

 by showing its aim of steering wage withholding into the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...

 to reflate stock market prices for the benefit of insider
Insider
An insider is a member of any group of people of limited number and generally restricted access. The term is used in the context of secret, privileged, hidden or otherwise esoteric information or knowledge: an insider is a "member of the gang" and as such knows things only people in the gang...

s and speculators – and to sell to the pension funds. His May 2006 Harper's cover story, “The New Road to Serfdom: An illustrated guide to the coming real estate collapse,” was the first major national article forecasting - in precise chart form - the bursting of the real estate bubble
Real estate bubble
A real estate bubble or property bubble is a type of economic bubble that occurs periodically in local or global real estate markets...

 and its consequences for homeowners and state and local government solvency
Solvency
Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term...

. The November 2008 “How to Save Capitalism” issue of Harper's includes an article by Hudson on the inevitability of a large write-off
Write-off
The term write-off describes a reduction in recognized value. In accounting terminology, it refers to recognition of the reduced or zero value of an asset. In income tax statements, it refers to a reduction of taxable income as recognition of certain expenses required to produce the income...

 of debts and the savings they back.

On parasitic financing

Hudson states finance has been key to guiding politics into reducing the productive capacity of the U.S. and Europe, even as the U.S. and Europe benefit from finance methods using similar and expanded techniques to harm Chile, Russia, Latvia, and Hungary. He states parasitic finance looks at industry and labor to determine how much wealth it can extract by fees, interest, and tax breaks, rather than providing needed capital to increase production and efficiency. He states the "magic of compounding interest" results in increasing debt that eventually extracts more wealth than production and labor are able to pay. Rather than extracting taxes from the "rentiers" to reduce the cost of labor and assets and use the tax revenue to improve infrastructure to increase production efficiency, he states the U.S. tax system, bank bailouts, and quantitative easing sacrifice labor and industry for the benefit of the finance sector.

He states the Washington Consensus has encouraged the IMF and world bank to impose austerity that the U.S. itself is not exposed to (thanks to dollar dominance) which leads to 1) subjecting other countries to unfair trade that depletes natural resources and 2) privatizing infrastructure that is sold at distressed prices that uses parasitic finance techniques (including western-style tax breaks) to extract the maximum amount of the country's surplus rather than providing a price-competitive service.

On the banking crisis

Hudson states that the mortgage crisis was caused by parasitic finance that used law and outright fraud, and that the government backing of toxic debt and quantitative easing are ways to keep real estate inflated while the banks shift the real losses to U.S. labor, taxpayers, and the international community. Hudson states "quantitative easing" and "restoring stability" are euphemisms for the U.S. finance sector using the Federal Reserve and dollar dominance to engage in financial aggression to a degree that previously required military conquest. He points out Joseph Stiglitz has similar views. He states banks should have been allowed to fail with the government stepping in to protect savings and continue with qualified loans towards real productive capacity rather than financial loans that merely inflate asset prices. He states the Federal Reserve needs to understand inflating asset prices with low interest rates does not increase the long term productive capacity of the economy.

On dollar dominance

Dr. Hudson views dollar hegemony
Dollar hegemony
Dollar hegemony is the hypothesized monetary hegemony of the US dollar in the global economy. Henry C.K. Liu popularized the term in the article "Dollar Hegemony has to go" in Asia Times, April 11, 2002...

 as grossly unfair and gives various opinions as to why countries tolerate it: desire to prevent their currency from appreciating, limited options in purchasing alternative U.S. assets, fear of the U.S. military, wanting to be part of the U.S. "orbit", and "lack of imagination". He states the dominance protects the U.S. from austerity that it has subjected other countries to through the IMF and World Bank. He states the U.S. treasury debt is limited only by the net productive surplus of the world as measured by the balance of payments. He states it will end only when countries decide to take political action in their own best interests and break dollar dependence.

He states that world is dividing into two currency blocs as countries, led by China, try to get away from dollar dependence by creating non-dollar trade between the BRIC countries as well as most of Asia, Iran, Nigeria, and Turkey. He says it's happening now because "the United States is trying to rescue the real estate market from all the junk mortgages, all the crooked loans, all of the financial fraud, instead of just letting the fraud go and throwing the guys in jail like other economists have suggested."

Hudson views foreign central banks buying treasuries as a legitimate effort to stabilize exchange rates rather than a currency "manipulation". Foreign central banks could sell the excess dollars on the exchange market which would appreciate their currency, but he calls this a dilemma because it decreases their ability to continue a trade surplus, even though it would also increase their purchasing power. He believes "keyboard credit" and treasury outflows in exchange for foreign assets without a future means for the U.S. to repay the treasuries and a decreasing value of the dollar is akin to military conquest. He believes balance of payments "surplus" countries have the right to stabilize exchange rates and expect repayment of the resulting loans even as industry shifts from the U.S. to creditor nations.

Hudson states that a balance of payments "deficit" is mostly the result of military spending and capital outflows rather than the trade deficit. It "forces" foreign central banks to buy U.S. treasuries that are used to finance the federal deficit and thereby a large U.S. military. The balance of payments deficit is also caused by quantitative easing that encourages purchases of foreign currencies and assets that results in even more treasury purchases. In exchange for providing a net surplus of assets, commodities, debt financing, goods, and services, foreign countries are "forced" to hold an equal dollar amount of U.S. treasuries. It drives U.S. interest rates down which enables a currency trade that causes a feedback process that exacerbates the problem, as long as foreign countries insist on off-loading the dollars by buying U.S. treasuries despite the risks of a dollar devaluation.

Books

Professor Hudson is the author of several books.
  • Super Imperialism: The Economic Strategy of American Empire, was the first book to describe the global free ride for America after it went off the gold standard in 1971, putting the world onto a paper U.S. Treasury-bill standard. Obliging foreign central banks to keep their monetary reserves in Treasury bonds forced them to finance U.S. military spending abroad, which was responsible for the U.S. balance-of-payments deficit at that time. See exorbitant privilege
    Exorbitant privilege
    The exorbitant privilege is a term coined in the 1960s by Valéry Giscard d'Estaing, then the French Minister of Finance.This quote is generally misattributed to Charles de Gaulle, who is said to have had somewhat similar views....

     for more discussion of reserve currency
    Reserve currency
    A reserve currency, or anchor currency, is a currency that is held in significant quantities by many governments and institutions as part of their foreign exchange reserves...

     status, and super-imperialism
    Super-imperialism
    Super-imperialism is a Marxist term with two possible meanings. It refers either to the hegemony of an imperialist great power over its weaker rivals, who then are called sub-imperialisms, or to a comprehensive supra-structure above a set of equal-righted imperialist states...

     for history and use of the term.

  • Global Fracture: The New International Economic order, a sequel to Super Imperialism, forecast the division of the world into regional trade and currency blocs.

  • Super Imperialism - New Edition: The Origin and Fundamentals of U.S. World Dominance, a new and completely revised edition of "Super Imperialism", describes the genesis of America's political and financial domination.

  • Global Fracture: The New International Economic order, Second Edition, a new and updated edition that explores how and why the US came to achieve world economic hegemony.


His forthcoming book, The Fictitious Economy, tries to explain to general readers how a corrosive bubble economy is replacing industrial capitalism via debt-financed, asset price inflation
Asset price inflation
Asset price inflation is an economic phenomenon denoting a rise in price of assets, as opposed to ordinary goods and services. Typical assets are financial instruments such as bonds, shares, and their derivatives, as well as real estate and other capital goods.-Price inflation and assets...

 with the main purpose of increasing balance-sheet
Balance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...

 net worth
Net worth
In business, net worth is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders' preference and may be referred to as book value. Net worth is stated as at a particular year in time...

, benefiting a select few while spreading risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...

 among the general population.

ISCANEE

In 1984, Hudson joined Harvard’s archaeology
Archaeology
Archaeology, or archeology , is the study of human society, primarily through the recovery and analysis of the material culture and environmental data that they have left behind, which includes artifacts, architecture, biofacts and cultural landscapes...

 faculty at the Peabody Museum
Peabody Museum
The Peabody Museum of Natural History at Yale University is among the oldest, largest, and most prolific university natural history museums in the world. It was founded by the philanthropist George Peabody in 1866 at the behest of his nephew Othniel Charles Marsh, the early paleontologist...

 as a research fellow in Babylon
Babylon
Babylon was an Akkadian city-state of ancient Mesopotamia, the remains of which are found in present-day Al Hillah, Babil Province, Iraq, about 85 kilometers south of Baghdad...

ian economics. A decade later, he was a founding member of ISCANEE (International Scholars Conference on Ancient Near Eastern Economies), an international group of Assyriologists and archaeologists that has published a series of colloquia analyzing the economic origins of civilization. This group has become the successor to Karl Polanyi
Karl Polanyi
Karl Paul Polanyi was a Hungarian philosopher, political economist and economic anthropologist known for his opposition to traditional economic thought and his book The Great Transformation...

’s anthropological and historical group of a half-century ago. Four volumes co-edited by Hudson have appeared so far, dealing with privatization, urbanization and land use, the origins of money, accounting, debt, and clean slates in the Ancient Near East (a fifth volume, on the evolution of free labor, is in progress). This new direction in research is now known as the New Economic Archaeology.

External links

  • Michael Hudson's official website
  • Michael Hudson's bibliography and brief bio
  • On the Edge interview with Max Keiser
    Max Keiser
    Timothy Maxwell "Max" Keiser is an American broadcaster, film-maker, and former equities broker. Keiser is the host of On the Edge, a program of news and analysis hosted by Iran's Press TV. He also hosts Keiser Report, a financial program broadcast on RT - formerly Russia Today...

    , 29 May 2009, BBC World
    BBC World
    BBC World News is the BBC's international news and current affairs television channel. It has the largest audience of any BBC channel in the world...

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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