Conventional economics is built around the idea of opportunity cost. If there is a limited resource a decision has to be made about how best to use it. How is that principle applied when you look at Modern Monetary Theory, when governments can create money without limits until you have reached a point of full employment. There is no need to look at one choice over another. Perhaps you can do both? So, what determines how money is spent? Are those spending decisions left in the hands of politicia...
Jan 18, 2023•41 min•Season 1Ep. 334
After a disastrous couple of years, can things get any worse in 2023? Steve Keen and Phil Dobbie look ahead and actually find some positive take-outs from the precarious situation we find ourselves in. Inflation will fall, that’s taken as read. Politics will shift to the left, that’s already happening. But our future is still left in the hands of politicians who have no idea how to steer us to a more positive future. Hosted on Acast. See acast.com/privacy for more information....
Jan 11, 2023•40 min•Season 1Ep. 333
Most people think economics can be summarised in just two words – supply and demand. Where they cross that determines price and as they move the price moves. But what if the supply curve is wrong, or meaningless. One of the first economists to question that was Piero Sraffa, an Italian economist who had grave misgivings about the law of diminishing returns. Steve Keen talks through Sraffa’s life and theories on this week’s Debunking Economics podcast. Hosted on Acast. See acast.com/privacy for m...
Jan 02, 2023•41 min•Season 1Ep. 332
This week, another economist that has influenced Steve Keen’s thinking; the Austrian born economist Joseph Schumpeter. His economic thinking veers a long way from the traditional Austrian school. As Steve explains this week, Schumpeter argued that if an economy was always moving to or from a point of equilibrium, then it follows that the profit of companies will always be zero. Only through innovation will those businesses get ahead, with means money invested in older technologies will no longer...
Dec 28, 2022•35 min•Season 1Ep. 331
Bill Phillips, rightly or wrongly, has a lot to answer for, because his work is drawn on by central banks when trying to determine the likely rate of inflation. But are they misinterpreting his theories? This week Steve Keen explains why there’s more to the Phillips curve than most people understand. There’s also a lot behind the man, from life on a farm in New Zealand, to engineering a radio in secret in a Japanese Prisoner of War camp. Listen in to hear the story of the man behind the infamous...
Dec 21, 2022•30 min•Season 1Ep. 330
We continue our series looking at economists who influenced Steve Keens thinking. This week it’s American economists Richard Goodwin, who Steve says is the chief proponent of non-linear thinking in economics. He wrote Theories of Surplus Value, which was about business cycles happening without any exogenous shocks, from overaccumulation and overproduction His biggest weakness was that he didn’t accept the role of banks in money creation, as he highlighted in a letter to Steve in the 1990s. Hoste...
Dec 14, 2022•41 min•Season 1Ep. 329
Irving Fisher was an American economist whose book The Purchasing Power of Money looked at the relationship between money supply and price levels. In fact, to many he is seen as the father of monetarism, but on this week’s podcast Steve Keen explains how Fisher’s struggles with debt led him to develop his thinking on debt deflation as the cause of major economic downturns. He’s the first of a series of economists who have influenced Steve’s thinking, that we’ll be looking at over the next five w...
Dec 07, 2022•42 min•Season 1Ep. 328
How widespread is the idea that one person's debt is another person's credit and therefore has no impact on the economy. What are the implications of this thinking and what changes when the realisation that the banking sector is also involved and so is is the relative velocity of money in different hands. If we accepted that debt and credit don't always can cancel each other out how would that change the approach of governments and the monetary policy of Central Banks? Hosted on Acast. See acast...
Nov 30, 2022•39 min•Season 1Ep. 327
His answer to Great depression was that we should spend our way out. But now we have rampant inflation because people are spending too much. What would Keynes do now if he was presented with the challenge of trying to prevent the world from going into a global recession whilst also getting inflation under control? Steve and Phil look at the ideas of Keynes and ask would any of them help us in the situation we now find ourselves in. Hosted on Acast. See acast.com/privacy for more information....
Nov 23, 2022•37 min•Season 1Ep. 326
During the last big financial crisis there was a lot of talk about the work of Hyman Minsky. Even Janet Yellen, at the time the chair of the San Francisco Fed, said there were a lot of lessons in his work for central bankers. What did she mean? Or, as Steve Keen asks, has she actually read any of his work? This week Phil asks Steve what was the thinking behind Minsky’s Financial Instability Hypothesis. And what was a Minsky moment, and why are we so far from one right now? Hosted on Acast. See a...
Nov 16, 2022•40 min•Season 1Ep. 325
In a recent podcast Steve Keen claimed that the law of thermodynamics dictates that we can no longer extend economic growth whilst looking for efficiencies in our use of energy. This week Phil questions Steve more on this. After all, so much of the growth we have seen over the last 100 years has come from the way we harness energy and use it to better effect. Can’t we just keep doing that? And could we use economics to fix the problems it has created, by more accurtaelyt pricing the real cost of...
Nov 09, 2022•41 min•Season 1Ep. 324
Last week on the Debunking Economics podcast Phil and Steve talked about the likely imposition of Austerity 2.0 around the world, in particular in the UK. Steve said there’s really no need for it. This week he explains more about how cuts in the government deficit starves the private sector of cash, which will guarantee a recession, or worse. Listen in for an easy-to-follow explanation of how a government deficit increases money in circulation and how reducing that deficit shrinks the money supp...
Nov 02, 2022•39 min•Season 1Ep. 323
With big-spending Boris gone, Britain’s new Prime Minister will almost certainly promote austerity 2.0, under the guise of fiscal conservatism. He won’t be alone in that, with governments the world over trying to reduce the deficit they incurred during the pandemic. But is austerity the way to help the economy back onto its feet? And do governments need to balance their books? In August the UK government spent £10 billion than its income. Listen in to find out why you should be thinking of that ...
Oct 26, 2022•41 min•Season 1Ep. 322
Before her plans were ripped up, the UK’s newest Prime Minister was promising growth, growth, growth in an economy that has avoided it for a long time. And she was going to do it through that tried and tested method of trickle-down economics! Cut taxes for the rich and watch the economy grow. Sadly, we’ll never know whether it worked or not because the plans have been ditched and its back to higher taxes and less government spending. More austerity and low growth. But, Phil asks Steve, isn’t low...
Oct 19, 2022•39 min•Season 1Ep. 321
We all know money has a value, but if you are borrowing it, it also has a cost. But aside from buying houses and a few other big items, we generally are more concerned with the value of the money we earn rather than the cost of the money we borrow. Today we look at the relationship between the cost and value of money, and ask whether the instability in interest rates is hindering our ability to plan for our future. What would happen if interest rates were fixed? And what about the rising cost of...
Oct 12, 2022•41 min•Season 1Ep. 320
The world is living in fear of rising inflation. Central banks are trying to combat it by pushing up interest rates, which means people also now fear how much their mortgage is going to cost. So, are they making matters better or just adding to the problem? This week Phil Dobbie asks Steve Keen if inflation is as big a problem as central banks make out, and whether hiking interest rates will fix the problem this time round. And why a 2% inflation target. It’s the aim of most central banks to get...
Oct 05, 2022•40 min•Season 1Ep. 319
Last week Kwasi Kwarteng, the new UK Chancellor, announced a cut in taxes at the same time that the government was stepping in to subsidise rising energy costs for homes and businesses. The cost of all this dwarfs the money spent on the furlough scheme. That means there’s a heap of government money being pushed into the public sector. Conventional economists, of the Friedman mould, would argue that we’re already seeing inflation driven by too much money, so what abut this next blast of governmen...
Sep 26, 2022•43 min•Season 1Ep. 318
Shadow Banks can take the blame for the 2007-8 financial crisis, packaging up mortgages and selling them as securities to investors. It seems like there’s no lack of imagination when it comes to how these companies find new ways of making money. This week Phil asks Steve if shadow banks are all bad, or is there some good? Do they, for example, create competition for established banks? Or are they simply a mechanism for operators to work outside banking regulations. Is there a need for more regul...
Sep 21, 2022•38 min•Season 1Ep. 317
It’s clear, when energy becomes short in supply, free market forces can’t look after all of society. Just the wealthy. That’s why governments are having to step in, propping up an industry that is raking in massive profits. But could free market forces drive a more efficient delivery of energy, by making lower cost renewable energy able to compete on a more level playing field. Whilst there’s no doubt pricing is distorted in favour of fossil fuel provides, Steve tells Phil there’s still no optio...
Sep 14, 2022•38 min•Season 1Ep. 316
Liz Truss, the UK’s latest Prime Minister, has vowed to review the mandate of the Bank of England (BoE). It’s unclear what outcome she wants, although Kwasi Kwarteng, who is likely to be the new Chancellor of the Exchequer, has suggested the BoE didn’t move fast enough to lift interest rates. Does that mean she wants more influence over the bank’s decision making? On this week’s podcast Phil Dobbie and Prof Steve Keen look at the approach taken by central banks this time round to reduce inflatio...
Sep 07, 2022•38 min•Season 1Ep. 315
Whilst the US might be struggling a bit with inflation, its nothing compared to what’s likely to happen in Europe. This week Russia shuts down its gas pipeline to Europe, supposedly for repairs, but there’s no guarantee it will open again. Even if it does, supplies are a fraction of what they were and Europe wants to stop its reliance on Russia anyway – pushing prices sky high, with rationing the only likely solution. Meanwhile, the Euro is weakening as the dollar goes from strength to strength,...
Aug 31, 2022•37 min•Season 1Ep. 314
It seems the whole approach to global trade is being redrawn. Donald Trump wanted to do less trade with China before the pandemic, and now with the Ukraine invasion the west wants to do less – preferably nothing - with Russia. Hardly surprising then that the BRICs nations (Brazil, Russia, India, China, South Africa) are developing their own ecosystem that could see them trade less with the west, including developing their own trading currency to remove the reliance on the US dollar. Phil Dobbie ...
Aug 24, 2022•34 min•Season 1Ep. 313
It’s a question being asked more and more. How many of the things that we privatised should be brought back under state control, as energy companies record massive profits, yet those on low incomes are struggling to heat their homes? In the UK privatisation was rampant in the eighties, but were mistakes made? Steve Keen has a simple test as to whether some things are best managed by the public sector or the private sector? But what about public-private partnerships? Are they potentially the wors...
Aug 18, 2022•41 min•Season 1Ep. 312
On the Why Curve podcast last week , Phil (and Roger Hearing) spoke to Daniel Gros, Director of the Centre for European Policy Studies, who argued that the gas crisis in Europe will be largely resolved by the pricing mechanism. High gas prices from Russia are making LNG imports feasible, because Europe will pay more than Asia for supplies. It won’t completely bridge the shortfall, he says, but if Europeans make a 15 percent cut in usage, then there will be no need to negotiate with Putin. This w...
Aug 08, 2022•34 min•Season 1Ep. 311
Central banks are pushing up interest rates to slow down the rate of inflation. The principle is simple. Supplies are constrained and demand is high, so we’re being charged more for practically everything. If we can slow demand then the demand-supply divide will narrow. But can you do that without throwing the world into a recession in the process? The US Federal Reserve seems to think so. They put out a paper last week, by Chris Waller and Andrew Figura, called ‘What does the Beveridge curve te...
Aug 03, 2022•36 min•Season 1Ep. 310
In the UK petrol cars emit 128g of CO2 per kilometre. In the US they drive bigger cars, for longer, so the carbon impact is that much greater. But cars, buses and motorcycles account for less than 10 percent of greenhouse gas emissions. Switching to electric could make a difference (unless of course the electricity is coal powered) but will it make a big enough difference, and are the objectives for Net Zero by 2050 really achievable? Phil Dobbie talks to Prof Steve Keen, and asks, are we lullin...
Jul 27, 2022•30 min•Season 1Ep. 309
As inflation grows around the world the US dollar enjoying multi-decade highs. To an extent, that’s helping mitigate the impact of inflation in the US by dampening the rising cost of imports. Most other places, though, are seeing the opposite happen. The rising dollar devalues local currencies making imports, including energy, more expensive, adding to inflation. This week Phil Dobbie talks to Prof Steve Keen about the impacts of exchange rates on international trade and how nations could be sta...
Jul 20, 2022•36 min•Season 1Ep. 308
When British Prime Minister Theresa May said there was no magic money tree she was wrong. There is, but you still have to look after it. What happens if you take the money off the tree too quickly, and give it to the wrong people? Is that what’s happened over the last two years? This week Phil Dobbie asks Steve Keen if there’s an optimum level of expansion to the money supply (through government spending) and how do we claw back from it if we have overspent? Hosted on Acast. See acast.com/privac...
Jul 11, 2022•38 min•Season 1Ep. 307
Inflation is rising everywhere as supply chains hit prices in the shops and at the fuel bowsers. Central banks are responding to this the only way they know how – by pushing up interest rates. Phil Dobbie asks Steve Keen what’s their rationale, when higher interest rates won’t fix the supply issues? Steve suggests there will be a rapid reversal in policy when the central banks realise the real damage they are doing to the economy. ‘There will be no soft landing’, he says. ‘There never is’. But w...
Jul 04, 2022•35 min•Season 1Ep. 306
When COVID has gone and the war is over, will we return to the patterns of international trade we were enjoying just a few years ago? Steve Keen says not, which puts him in the camp of anti-globalists that FT columnist Martin Wolf wrote about recently, in an article ‘The big mistakes of the anti-globalisers’. This week Phil puts some of Martin’s arguments to Steve, including the evidence that international trade has significantly boosted GDP globally and helped reduce extreme poverty. Won’t a mo...
Jun 28, 2022•35 min•Season 1Ep. 305
