BBC Hardtalk: Steve Keen talking huge amounts of sense … depression

I dont think anyone should be given aid.

Yeah. Down with aid. I’m alright Jack.

A successful business will only remain successful while it’s customers have sufficient money to buy the goods and services provided.
By refusing to sort out the debts, you may not be successful for much longer as your customers disappear because they’re too poor to spend!

interesting diagnosis of the problem and a possible solution to be worked upon
the problem with the financial institutions and their leveraged speculation needs to be tackled but its obvious the likes of obama, romney, cameron etc etc are in the pockets of the banks. … manifesto/

I like that Steve Keen interview - he takes an interesting position.

Jaysus, I love this guy. Give everyone money! Brilliant. How do I vote for this?

Seriously though, it’s a really admirable piece of lateral thinking: instead of giving the money to the creditors, give it to the private citizens, debtors and savers alike. Fixes the private debt problem, gets the banks back on an even keel and all the while not punishing the prudent.

That said, there is still the problem of disproportionate transfers across the Euro area. Paddy and Stavros being given more money than Heidi and Pierre. That’s still a political problem. And, of course, a practical one.

Interesting interview, but he fudged the ‘moral hazard’ question.

When given the analogy of two businessness, one prudent the other reckless, he states ‘everyone gets a boost’. (see 14 mins on)
But this is false.

If the prudent business has no debt, then they receive no benefit whatsoever.
The reckless business on the otherhand, gets rewarded with debt forgiveness.

He tries to say that the prudent business will benefit because of the overall strategy, but that’s a bitter pill to swallow for those that made the right decisions.

He makes a lot of valid points though, much of which has been debated on this site.

Maybe I misunderstood, but I thought he was saying that everyone would get money…the endebted would be forced to pay down their debt with it, the rest would keep their money.

You know, I wasn’t sure wheather that was his overall message or not.

He started by talking about giving money to debtors (to be used solely for the repayment of their debt), but then also mentioned that those not in debt would also benefit.

Was this benefit from getting the same cheque as the debtors (but to be spent any which way they choose) or was the benefit to occur by the spin-offs from the overall lower level of debt in the economy ?

Does he not imply both businesses (and both types of individuals) get the benefit? Those with debts must use the benefit to pay down debt. Those without debts can do with it as they wish, I guess either creating a demand stimulas or additional savings.

It was that everyone got the same cheque. The indebted use it to pay back debts, the non-indebted use it to finance expansion.

What I don’t see is how to avoid it leading to asset bubbles in the same way that bank-created money does. If every household got 100 grand in cash, would the price of houses not just go up by that amount?

Interesting what he was saying about Minsky towards the end. Surely Minsky should be given alot more credit at this stage as he seems to have it pretty bang on from what I can see. He was saying that only 10% are post Keynesian and circa 90% are neo Classical. Even from my limited knowledge of economics any form of the EMH sounds very suspect. I must be missing something!

Interesting talk to Occupy Sydney by Steve Keen

Steve on V Browne … -18-04-12/

Keen has seemed to me for a while to be the economist du jour and little else.
His message is more palatable for certain sectors than those American Econo-geddon pair (whos names escape me at present) and thats about it.

He makes a bit of an arse of himself on that VB clip by proposing a solution that was emailed to him that morning.
When questioned on it he backs away saying ‘its not my idea’.
Thats a worry; are these global/media/disaster economists making up policy or taking positions on the hoof?
If so we’re far more fucked that even I thought.

Okay, this thread has been merged and my earlier answer has come to the fore.

Funnily enough my views seem consistent, for once.

Keen suggested ‘aid’ for everyone in debt in the first interview and suggested that those not in debt be given funds too.
This he follows up in the second interview too, even if he is winging it with someone elses idea, hes largely consistent too.

But help me out here…

Lets imagine everyone in the Eu is given a million Euros.
Most people would be able to settle their debts.
Those who do not settle their debts are a million Euro to the good and therefore benefit too.
That seems to be the idea.

This raises two massive problems
1 - this only works within the EU area.
Those outside the EU area who are owed dents in euros get shafted.
It a beggar-my-neighbour policy.

2 - it preserves the status quo.
Those responsible for running up massive debts they couldnt service are left in situ with their assets intact.
Those who have no assets because they were prudent, still have no assets and have a devalued currency to buy assets in future.
The currency is obviously devalued and rates rise so savers benefit and borrowers benefit because they have paid their debts off and dont suffer the higher rates.

This does not reboot or reset the system, all this does is rewind things back to before the beginning of the crisis.

How is this a solution to anything?

And then you have the problem of inflation.