How a $13 Trillion Cover Story was Written

Financial crashes were well understood for a hundred years after they became a normal financial phenomenon in the mid-19th century. Much like the buildup of plaque deposits in human veins and arteries, an accumulation of debt gained momentum exponentially until the economy crashed, wiping out bad debts -- along with savings on the other side of the balance sheet. Physical property remained intact, although much was transferred from debtors to creditors. But clearing away the debt overhead from the economy's circulatory system freed it to resume its upswing. That was the positive role of crashes: They minimized the cost of debt service, bringing prices and income back in line with actual "real" costs of production.

A decent rant by Hudson, but he (as with many left-progressive critics of the response to the financial crisis) isn't quite honest when he suggests that we could merely "print $13 trillion" to fix Social Security and Medicare. Actually, the whole point of all the printed money in the bank bailouts that happened was that the elites knew most of that money would never "hit the streets". If it did, it would cause massive inflation (much worse than the already uncomfortable "incipient" inflation we are experiencing today).

In fact a lot of the inflation we are experiencing today (and wage deflation) is a direct result of the retirement and medical systems being continually "bailed out". These areas don't quite retain printed money as well as esoteric "toxic waste" varieties of bonds, or bank shares.

To solve our entitlements and public infrastructure funding problems, we will need deep reforms to the cost and management structures, not helicopter-drops of money.