Michael Hudson: US Economy Built on Ponzi Scheme, Private Credit Crisis Looms

Economist Michael Hudson warns the US economy is a Ponzi scheme dependent on speculative finance, not industrial production. In an interview with Ben Norton, Hudson argues that post-2009 zero-interest-rate policy (ZIRP) enabled banks to borrow at 0.1% from the Federal Reserve, fueling asset speculation and corporate stock buybacks rather than productive investment. He notes that 92-94% of corporate cash flow is spent on dividends or share repurchases. The $3 trillion unregulated private credit market is now showing rising defaults, with potential contagion to banking. Hudson compares the situation to the Great Depression, predicting deflationary collapse. He criticizes the Trump administration's August 2025 executive order 'Democratizing Access to Alternative Assets for 401(K) Investors' as a Wall Street scheme to dump toxic assets onto retail investors, likening it to pre-2008 CDO bundling. Hudson describes pension-fund capitalism as a mechanism to transfer losses to workers, citing examples like Thames Water and hospital bankruptcies. He warns of an 'Albanian-ization' of the US economy, where savers lose capital chasing high yields.