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#131: Masters of Stonk (feat. Alexandra Scaggs) (Patreon)

Published:
2020-10-31 03:48:32
Edited:
2020-10-31 18:31:47
Imported:
2026-06
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  • 131 alexandra scaggs.mp3

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Content

The Curse be damned.  Finally, we have the thoroughly excellent Alexandra Scaggs (@alexandrascaggs) of Barron's, Financial Times, and elsewhere to unriddle the enigma of the Big (Hard, Strong, Cocaine-Fueled) Money – what the hell it is, how it got that way, how we might need to think of it differently, and what combination of leftist possibilities and horrific nightmares are floating around its short-term future.

P.S. I highly encourage everybody to read J P's comment below.  It addresses a couple things I meant to ask Alexandra about & forgot in the midst of the Curse – we had to restart a couple of times, hence the little "technical difficulties" interlude around 15 minutes – particularly the Volcker Shock aspect of the neoliberal turn.  Good shit, brother/sister/kinfolk.

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Comments

Gooch Immane

I've now listened to this intro ten times or so and I don't intend to stop. It's keeping me afloat.

Brook Hines

great way to start the weekend :)

deathcorner

I want to note that you're also allowed to call this episode "Renegades of Stonk"

Jg23

U love to see it

Madra na Móna

Listening from Ireland, and it's really odd to hear somebody on the outside talk about our ridiculous corporation tax. Thanks.

J P 3

Yanis Varoufakis has a great book "Global Minotaur" which picks up on the Harry Dexter White, Bretton Woods story in the 1970s. Well worth reading. Part of his thesis is that the Volcker Shock under Carter and Reagan is what actually caused the collapse of the Soviet Union (e.g. not necessarily a deliberate consequence, but a practical effect caused by making the cost of dollar denominated debt significantly more expensive (and lucrative) from 1978 to 1982). Part of the issue with Bretton Woods is that the U.S. started to run a trade deficit in the late 1960s During the boom years of the agreement, when we had trade surpluses, we used the surpluses to build up foreign markets. When the U.S. went into deficit at the same time that we had a big increase in public expenditures (a war, LBJ's Great Society, plus the legacy of Kennedy tax cuts), we were more vulnerable to a run on our gold reserves (something that the French actually did). Nixon was faced with either internal devaluation, which would have been political suicide as it would have meant a big increase in unemployment and de facto wage cuts, or going off the gold standard. He went off the gold standard. At the same time that this is happening there are significant inflationary pressures, which eroded profits and the value of investments (not a problem for a debtor, but a problem for the kind of people who have influence over domestic politics). Volcker, who was at Treasury under Nixon, and who had come up with an alternative model to Bretton Woods, came back under Carter and implemented his shock therapy, which effectively "closed the trade deficit loop" through a massive increase in interests rates. This had the effect of bringing global surpluses back into the U.S. through our financial markets. Instead of exporting consumer goods, we instead exported financial instruments. The foreign trade surpluses flowing into our financial markets transformed into cheap consumer debt, which fueled domestic consumption, which fueled trade deficits, which came back through our financial markets repeating the cycle. One consequence of this new model is that it gave the U.S. increased economic and political power, because global growth was much more closely tied to the U.S. dollar (e.g. if you want to sell to the U.S. market at some point you have to convert your local currency into dollars. For an export dependent economy, the power in that relationship is on the side of consumption, not in the production). The system worked for a few decades (in the sense that it was relatively stable) fueling our "twin deficits" (the largest trade and budget deficit in world history), but it started to break down in 2008. We are now living in the aftermath. At this point maybe China takes over and becomes the world's consumer market, or perhaps there is a different model entirely. Part of the story of Bretton Woods too is that Keynes model was not actually adopted. He wanted to have international trade managed in global currency (effectively denying any one nation sole hegomony). The U.S. opted to have the gold-backed dollar serve that function instead.

c. wrong mills

We do indeed love our beautiful stonks

Modokk

After finally getting power back on after Zeta's wrath, this was first thing to come up. Nice!

Vesna Radivojevic

This was entirely too much of you and not enough of Alexandra. And I say this as someone who listens to your solo podcasts more than once.

Vesna Radivojevic

Thank you, you are a doll. If you can, I’d love more on modern monetary theory.

frindle

Would you agree that money is a tool of enslavement?

bricks&bricks&bricks

Seems like any talk of a green new deal or remaking the US economy has to seriously contend with the fact that our economy and way of life is built off of ruthlessly exploitative imperialism. Any kind of left movement in this country has got to be internationalist and anti-imperialist. The ruling class is fine with a gnd and even mmt as long as it doesn't disrupt capitalist imperialism. This is basically what the bernie campaign was offering imo. We will offer you healthcare and a few more social services but foreign policy will remain unchanged.

Marc Schneider

I've never read anything by Alexandra Scaggs. Any recommendations on where to start with her work?

Julian Dax

Great episode! As a German who often gets told by southern Europeans how the evil Germans invented the Euro to keep them down I'd like to add a little known piece of information though: Germany never wanted the Euro. We had a strong currency and all main stream political parties feared that the Euro (or Ecu by then) would be weaker then the DM. Germany joining the European Economic and Monetary Union was a condition set by Mitterand for German reunification. There would not have been a two-plus-four treaty without Germany joining the - predominately French - project of the Euro.

Gustave Courbet

Excellent stuff! I’d recommend people check out economist Michael Hudson on MMT and also his fascinating analysis linking US imperialism and its financing through the sale of US debt (that is, the rest of the world pays for its own subjugation- neat trick). Also, not sure if this is the quote Michael was thinking of but I have this one in my files: “In my 30-year history in the Drug Enforcement Administration and related agencies, the major targets of my investigations almost invariably turned out to be working for the CIA.” -Dennis Dayle, former DEA officer (source: “Counter Intelligence,” part 1, Metanoia Films).

John

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