Michael Hudson and Radhika Desai: Did Big Banks Take Over the Treasury?

US Treasury

Image by Kurtis Garbutt via Flickr

by Michael Hudson
Writer, Dandelion Salad
April 1, 2023

Geopolitical Economy Report on Mar 25, 2023

Economists Radhika Desai and Michael Hudson discuss the US banking crisis in this episode of their program Geopolitical Economy Hour.



Radhika Desai: So we’re going to talk about how this crisis is no isolated crisis but really another chapter in the long unraveling of the US financial system — an unraveling in which the really public character of banking — that is to say, the fact that banking is always meant to be a public utility becomes manifest under the pretense that it can be maintained as a private system.

So the crisis has by now been declared as over by some, and the markets seem to be calm, but nevertheless they have been extremely rocky.

So basically she’s saying, “Banking crisis? What banking crisis?”

Michael Hudson: Well what she said were words that you never want to hear from a regulator — that everything is sound. That means things are falling apart.

And her next words — the rest of that sentence — were that “Americans can feel confident that their deposits will be there when they need them.”

In other words, what Yellen said was that she actually acknowledged that the United States banking system is insolvent. She said, “Forget the promises that we’re going to limit deposit guarantees only to $250,000. We are now guaranteeing all depositors in the system.”

The banking system is now a branch of the US Treasury with the whole value of the US Treasuries behind the banking deposit — there’s no more risk essentially.

It would appear at first glance that she’d nationalized the banks.

But really what happened was that — it wasn’t reported in the newspaper, [but it’s almost as if she’d] just taken a mid-level job at Wells Fargo — maybe it was at Citibank — saying the Treasury is now a subgroup of Wells Fargo, Chase Manhattan, and the large banks, [pledging all its credit so that uninsured depositors will not take a loss.]

The banking system has cannibalized the Treasury and mobilized the whole of Treasury for its banking.

Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of A Philosophy for a Fair Society (2022), The Destiny of Civilization (2022), …and forgive them their debts (2018), J is for Junk Economics (2017), Killing the Host (2015), The Bubble and Beyond (2012), Super Imperialism: The Economic Strategy of American Empire (1968 & 2003 & 3rd Edition 2021), Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy (1992 & 2009) and The Myth of Aid (1971), amongst many others. He can be reached via his website Michael Hudson, mh@michael-hudson.com. Originally published Feb. 27, 2023.

From the archives:

Ralph Nader: Spank the Banks + Reimagining Universities

Michael Hudson and Dennis Kucinich: The Anatomy of Bank Failures, the Financialized Economy and Collapse

Reckless Capitalist Banks Rescued by Government Socialism – Again! by Ralph Nader

Society’s Collapse Has Already Begun, by Rainer Shea

Michael Hudson: Why 3 US Banks Collapsed in 1 Week + Why the Banking System is Breaking Up + The Mechanics of a Bond Market and its Impact on the Banking Crisis

Michael Hudson and Radhika Desai: The Rise and Failure of the US Dollar Imperialism

Michael Hudson and Radhika Desai: Since Money is Political

Michael Hudson and Ralph Nader: The Federal Reserve, Quantitative Easing, and Who Runs the US Treasury

One thought on “Michael Hudson and Radhika Desai: Did Big Banks Take Over the Treasury?

  1. Pingback: Ralph Nader and Nomi Prins: Permanent Distortion: How Financial Markets Abandoned the Real Economy Forever – Dandelion Salad

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