MUST SEE: STEVE KEEN – HOW DO WE PAY FOR ALL THIS?
18 November 2009 by TPC
9 Comments
A big thanks to Rolfe Winkler for this excellent speech by Steve Keen on the modern economy and the outlook. I have really hammered on a lot of these principles since I started TPC. Keen does a fantastic job of presenting them succinctly and eloquently. Sorry to double up on the videos this evening, but this is a must see:
Minsky explains how we frogs voluntarily boil to death. It seems communism and capitalism both tend toward totalitarian seizure and collapse.
James Reply:
November 18th, 2009 at 7:56 PM
How do you know where Capitalism ends? Capitalism isn’t being practiced.
TPC Reply:
November 18th, 2009 at 8:10 PM
Capitalism isn’t the problem. It’s the bankers that are the problem.
Doug Terpstra Reply:
November 19th, 2009 at 6:50 AM
So what do we have, uber-Libertarianism, social Darwinism? Doesn’t capital accumulation always necessarily tend toward a sclerotic plutocracy as Minsky seems to suggest? When and where does true capitalism with free- AND fair-trade really exist? Is the “social democracy” of Europe closer to real capitlism—a constitutional hybrid collaboration of social goals and efficient capital allocation? Is there such a thing as democratic capitalism?
Too many naive questions to answer, I know. Anyway, this site is much appreciated, and I look forward to absorbing enlightenment here over time. Non-economists like me, who would rather focus on contributing our core talents in real value, are waking up to a devastating realization that those running this current system are criminals and cannibals; that we need to find another way (new leaders/new country/new system); but how?
Thanks for that TPC. I am not an economist but I am appalled at what I have learned about the absurd assumptions and naive’ underpinnings of the predominant economic theory these days. I’m simply aghast that they largely ignore the effects of debt, which seem to be simply common sense to me.
It does help explain the cognitive dissonance that I’ve experienced when hearing economists rationalize the debt levels, private and public. That along with the political expediency that comes with ignoring it and spending more and more, damn the immoral implications of stealing from our grandchildren and theirs.
I would hope that by the time this whole thing is over that they will be soundly discredited and a more sound and viable economic theory and practice will replace it. But I’m afraid that the tendencies of humans towards greed and denial will endure. God help us.
Keen is simply describing credit cycle theory. Kindleberger and Minksy based their theories on the Austrian credit cycle theory of Mises, not Keynes.
They tried giving money to debtors for crying out loud! I received three checks from the government when Bush was president as part of stimulus plans! Look what happened: huge bubbles. This guy’s models ignore what actually happened. Arrogant arse. Next!
When I was little, around 6, and I wanted something, my mom used to say she didn’t have the money at the moment. So I told her to go to the bank and just get the money. She said she had to have money in there first. I didn’t understand, I thought banks just GAVE you money. So then I said she can just write a check. Again, she said she needs the money first. Maybe the U.S. Government needs this to be explained to them?
Anna Schwartz, the monetarist stated that the anglo- fractional reserve bank model favours debt and speculation over savings and investment.
Ludwig Von Mises refers to the crackup boom. Charles Carter Holt has a good book named “Organisation of debt into Currency and other papers (i.e. fiduciary media).
Steve Keen treats currency, debt and credit instruments as money when they are nothing of the sort. He jumps from one debt instrument to another. They are claims on money. They trade mimicking money. Only money can extinguish debts (Holt) or via debt foregiveness/debt jubilee as Michael Hudson proposes-a reset.
Steve does not mention where the original debt instruments which become leveraged are sourced from. The treasury/central bank nexus in the political economy which has sole control issuing currency in paper or electronic digits.
Finance does not create wealth it distributes it.Finance trades in leveraged debt instruments and it is very beneficial to these first recipients in the chain letter or ponzi scheme if you will.
I quite like Steve and his thoughts and have been reading them for years.
Here is a little Australian ponzi scheme that Steve should be aware of– Australian universities are sent cannon fodder (students)via a debt scheme-The government pays your fees and you pay back with interest. However, in Australia, we also have compulsory superannuation. 9% in the private sector, 12.5+% in the public state sector and 15.5% in the public federal sector. High level university administrators are on 16% to 17% superannuation p.a. Look at the gap between the private sector and university administrators!! Almost double!! So these people have leveraged up, annually at the expense of young peoples future earnings, courtesy of the government money tree. First class recipients of an inflationary ponzi scheme. Any one you know Steve? Ponzi administrators, ponzi lecturers, ponzi economic departments. No wonder why they didn’t see it coming, they are too busy with their own.
Debt is the slavery of the free. Publius Sirius.
TPC,
To be more precise it is the liberal political group that is the problem. They get a large amount of their money from the banksters, and that leads to their support of the bankers in front of us regular citizens. You are correct, this is not capitalism. It is highly regulated capitalism, in essence the regulation is so great that it has become a form of extreme socialism. Not as far to the left as Europe, but we are fast approaching that state.
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