STEVE KEEN: THE ECONOMIC CASE AGAINST BERNANKE
Steve Keen, the Australian economist, who accurately predicted the coming debt crisis, has joined the growing ranks of experts and investors who believe Ben Bernanke should not be reconfirmed. In this piece Keen lays out damaging economic proof against Bernanke. This is a must read for anyone who is on the fence and should be required reading for each and every member of Congress who is taking part in this important vote next week.
“Bernanke, as the neoclassical economist most responsible for burying Fisher’s accurate explanation of why the Great Depression occurred, is therefore an eminently suitable target for the political sacrifice that America today desperately needs. His extreme actions once the crisis hit have helped reduce the immediate impact of the crisis, but without the ignorance he helped spread about the real cause of the Great Depression, there would not have been a crisis in the first place.”
Source: Steve Keen’s Debt Watch
When are we going to realize that the stock market is not the economy? Of course the market won’t react positively to this news because Bernanke is the friendliest big bank banker of all-time. In the short-term, this would be bad news, but in the long-run it is the beginning of the road to real recovery – not just a recovery for the banks.
Another thing crossed my mind that is interesting with all of this. Obama is quick to blame Bush for “inheriting” this economic downturn, but he is now campaigning votes to keep Bush’s Fed Chairman on board? The hypocrisy in that is astounding. Obama will sink with Bernanke in 2012 when we’re still entangled in this deleveraging mess. He has the chance for real change and 3 years to produce a real recovery. He is wise to get started right now.
This is a good essay on Debt and GDP
It puts the onus on the FED for creating /allowing Debt instruments and then postulates the “Only” solution is to rid ourselves of “Bubbles” the “Debt Creator”
Right on the creating/allowing.
Wrong on the “Only” solution.
What about the Administrations policies? Have they created any debt?
What about Congress? Have they created any debt?
What about Wall Street?? No –Never
What about the Banks?? “Debt Creators R US”
What about Business?
What about you and me? Have we created any debt? c’mon–you know you have!
Who you going to blame? “Bubbles” the “Debt Creator”
It is a Flaw/Weekness of character to blame others when YOU can’t find a solution
As an Aussie reader of your blog, I just want to point out that Steve Keen is considered a bit of a loony toon in Oz. Not only did he embarass himself in the Aussie media with his prediction of -40% house prices which was completely off mark, but he also manages to rip off every indefensible excuse in the economist textbook to explain why his predictions “havent come true yet”.
I think your views are normally very well thought out and you have some great stuff on your blog, but don’t place too much reliance on stuff put out by Steve Keen!
Interesting to get a local’s perspective on Keen. To be honest, I don’t know much about him besides the few presentations and papers I have read by him. His research appears to be quite good. I don’t really expect economists to make great market calls so it’s not surprising to see Keen fail in that aspect.
Interesting nonetheless. Thanks.
TPC,
You are correct that Bernanke is the fav of the big banks and the market. Bernanke has thrown so much money away trying to keep the stock market doing well, that he has increased the size of the hole that we will have to dig out of by two or three times what it was. All so that his buddies in finance could continue to do well. Somewhere down the line someone in a position of leadership from the liberal side ( Democrats) is going to have to step up and explain that the party is over and now it is time to actually fix things. Since I know that liberals will never do that, then the job will have to be done by a conservative ( Republicans are about 75% conservatives). This time we damn well better support that person rather than allowing thw MSM to demagogue them as we have in the past. Or we can all end up like the Cubans if we don’t have the guts to stand up for real leaders.
Conservative republicans will do no such thing as “fix things”. All they know how to do is give tax cuts, double down on defense spending, and enable the financial sector by looking the other way while they continue their ponzi financial schemes.
I’ve been following Messrs. Steve Keen and Michael Hudson (along with many other economists) for quite a number of years, and while Mr. Keen might not be always on target — and there are always extenuating variables at work, unbeknownst to even the most knowledgeable among us — I have found them to be the most brilliant econ types around.
They both fully comprehend what is occurring today, although they might not have the detailed knowledge of those missing trillions at Bernanke’s private bank known as the Federal Reserve (which could muddy anyone’s predictions) — they are generally on the mark with their understanding.
In the end, IMHO, securitization is the artificial market driver. ‘Nuff said.