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A Sobering Dose of Reality from Economist Steve Keen

inoculatedinvestor's picture





 

Tired of the same old US-based bears such as Nouriel Roubini, Peter Schiff and Doug Kass? Sick of hearing the US is in deep trouble argument from Marc Faber and ex-pat Jim Rogers? Then, for those of you who are not familiar with the most outspoken Australian Nostradamus, let me introduce you to economist Steve Keen. Keen is one person who can legitimately contend that he saw the crisis coming and even warned about the potential impacts extensively on his website. Keen’s writings serve as another example of how nonsensical the claim is that “no one could have seen this coming;” a refrain that you hear from politicians around the world who want to remain blameless for the current economic calamity. Keen is a straight shooter who pulls no punches in his criticisms of other economists, political leaders, and central bankers all over the globe.  The reason it is important to listen to him now is that he is still pounding the table about the debt overhang that is plaguing the Anglo-Saxon world. Unlike the bubble-perpetuating pundits you see on CNBC, Keen does not believe economies can recover from the implosion of a debt bubble by printing money or through just the passage of time. As such, he happens to believe that both the US and Australia are on an unsustainable path that may lead to an even larger crash.

I have embedded a video below of a must watch presentation from Keen. Here is a preview of some of the topics covered and associated commentary:

·         Amusing and condescending explanation of the fact that Milton Friedman was not a Keynesian economist (as some professor named Joshua Gans had stated the day before)

o    In fact, according to Keen calling Friedman a Keynesian is like calling the devil one of God’s angels

§  Calling Friedman a Keynesian is an insult to real Keynesians such as Minsky

·         Discussion of the delusional theories espoused by Friedman and the other neo-classical economists who completely missed the crisis and whose ideas do not share anything in common with reality

o    Neo-classical models cannot endogenously produce a financial crisis

§  Need a meteor strike or something

o    Inability of the neo-classical models to reflect actual market conditions

·         Commentary on the prescience of Minsky and how his theories on instability, banking, and crises are essential to understanding what the global economy is facing

o    Minsky’s idea of the euphoric economy that leads to instability

o    Ponzi financiers failure when the bubble bursts

§  Darlings of the stock market one day and in jail the next

·         Reminder of the fact that there were in fact 2 bubbles in the US, a stock market and a housing bubble, both of which were driven by excess debt

o    US Debt to GDP before the Great Depression: 170%

o    Current US debt to GDP: 300%

§  Same dynamics that existed before the Great Depression are exaggerated now

o    Failure to attack the underlying problem (too much debt) and only focusing on the symptoms (limited liquidity) by printing money and enacting stimulus will only prolong the day of reckoning

§  Can’t just paper over the debt overhang that is nothing like we have seen in history

·         France is the only country that did not have a debt crisis and that is why it has shown growth

·         Foolishness of the Kangaroo Theory of Economics that believes that Australia is different and  is not facing a crisis

o    But if there is any correlation between excess debt and impending crises the situation in Australia is not as stable as people assume

o    Just because Australia’s debt to GDP is less than that of the US does not mean the country is out of the woods

·         Helicopter Ben Bernanke’s ignoring of Minsky’s ideas in favor of the idea of the rational investor in his writings

o    How scary is that a man who believes that human beings act rationally under uncertainty is the one trying to navigate the US out of this mess?

o    Bernanke’s lack of understanding of the credit system and money creation

·         Step by step explanation of how money is created by banks

o    Suggestion that is better to give money to debtors than banks that just hold money as reserves

·         Need for deleveraging in the Australia and in the US

o    In Australia, 8% debt reduction occurred in the 1930s

§  Took a world war to get debt levels down

§  Would cause a 12% reduction in GDP if that rate were reached again

§  4% debt reduction occurred in the 1890s during that depression

·         Would take 30 years to get back to 1980 levels at this rate

o    America’s problem is even worse due to larger debt load

§  Unemployment is being driven by deleveraging

·         $2.5 trillion rate of deleveraging in US this year

o    In 2006 the US was adding $4.5 trillion dollars in private debt

o    Total demand was $18.5 trillion ($14 trillion in GDP+ $4.5 trillion in debt) so US demand was close to 25% debt driven

 


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Thu, 12/09/2010 - 00:04 | Link to Comment athenal
athenal's picture

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Tue, 11/17/2009 - 21:17 | Link to Comment JR
JR's picture

IMO, the Keynesian philosphers who call themselve economists, are driving our economy to ruin. As states’ economies fall like dominoes – Michigan, Nevada, Rhode Island, California, South Carolina, Oregon, Florida, New Jersey…the Keynesians march in unison: Two steps forward, two steps back.

One of the year’s outstanding Keynesian voices belongs to Professor Nouriel Roubini.  He’s a dramatic showman, whose startling forecasts raised the hair on the back of your neck but his prognostications are not nearly as frightening has his solutions.  Case in point:  His weekend horror forecast for 11 percent unemployment lasting two years or more, and "increasing the risk of a double dip recession," is driving down all the hopes that the Fed gang is espousing.  So hammering the nails in the economy’s coffin with the spreading liquidity that only looks like tightening, what is the Professor’s solution? Let’s get more hammers and nails:

“There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation…

“This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries…

“As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.

“The damage will be extensive and severe unless bold policy action is undertaken now.”

Ah, more central planning. Maybe this time we’ll get lucky!

http://www.rgemonitor.com/blog/roubini/

Tue, 11/17/2009 - 19:47 | Link to Comment JR
JR's picture

Keynesian economist Paul Krugman in his recent book The Return of DEPRESSION ECONOMICS  and the Crisis of 2008 says: “Depression economics…is the study of situations where there is a free lunch, if we can only figure out how to get our hands on it…”

But Vin Suprynowicz’s review of the works of Henry Hazlitt in a recent article, And They Call it ‘Change,’ refutes Krugman and his analysis of Keynes and the Great Depression.  Hazlitt, of course, was not some obscure gadfly.  Says Suprynowicz, “He was arguably the nation’s best-known and best-respected financial writer and commentator, regularly holding forth in the mainstream – even left-of-center – The New York Times and (from 1946 to 1966) every week in Newsweek.”

Here’s an excerpt from Suprynowicz:

[W]riting in the Christian Science Monitor, Ludwig von Mises himself said of Henry Hazlitt’s The Failure of the New Economics, 1959, reprinted 1973,  “Hazlitt has entirely demolished the Keynesian misconceptions…”

The book does precisely what they say it does.

In brief, Keynesianism – as set forth by John Maynard Keynes 73 years ago in his General Theory of Employment, Interest and Money– holds that the twin answers to unemployment and economic downturns are massive government deficit spending and “cheap money” – the artificial driving down of interest rates to “free up more credit.”

This is relevant because this precisely describes the massive and inherently inflationary market interventions that have been brewed up in Washington... sponsored as enthusiastically by Republicrats as Demopublicans – despite the fact that Mr. Hazlitt, way back in 1959, demonstrated not only that these Keynesian remedies did not work, but that they often had precisely the OPPOSITE effect of that intended!

To “remedy” high unemployment, business failures and other symptoms of economic maladjustment, Keynes prescribed massive government deficit spending designed to keep wages and prices high, and the propping up of enterprises that would otherwise collapse in a heap of dust.

It’s never worked…

[W]e cite here just the most succinct of Mr. Hazlitt’s conclusions:

"In Keynesian policy, unemployment is never to be corrected by any reduction of money-wage-rates,” Mr. Hazlitt summarizes. “Keynes recommends two main remedies. One is deficit spending (sometimes euphemistically called government ‘investment’). How good is this remedy? It was tried in the United States (partly because of Keynes’ recommendations) for a full decade. What were the results? Here are the deficit in the Federal budget, the numbers of unemployed, and the percentage of unemployed to the total labor force, year by year in that decade. All the figures are from official sources:” (Chart follows.) …

“The central and decisive fact is that heavy deficits were accompanied by mass unemployment…

“The other main Keynesian remedy for unemployment is low interest rates, artificially produced by ‘the Monetary Authority.’ Keynes incidentally admits … that such artificially low interest rates can only be produced by printing more money, i.e. by deliberate inflation… The question immediately before us is: Did low interest rates prevent mass unemployment? …” (Another chart, measuring the commercial paper rate against the unemployment rate for the years 1920 through 1940, follows.)

“In sum, over this period of a dozen years low interest rates did NOT eliminate unemployment. On the contrary, unemployment actually INCREASED as interest rates went down. In the seven-year period from 1934 to 1940, when the cheap money policy was pushed to an average infra-low rate below 1 percent (.77 of 1 per cent) an average of more than 17 in every 100 persons in the labor force were unemployed.”

Hazlitt proceeds to demonstrate that from 1949 to 1958, when the same policy of artificially pushing down interest rates was tried, “the relationship of unemployment to interest rates is almost the exact opposite of that suggested by Keynesian theory.”

How could Keynes have gotten it so wrong?

Easy. Hazlitt shows again and again that Keynes pronounced his theories ex cathedra, without substantial statistics to back them up. Then, if actual statistics were produced that seemed to show results opposite to what his theories had predicted, he simply challenged the statistics! (all emphases mine)

Suprynowicz is assistant editorial page editor of the daily Las Vegas Review-Journal and author of The Black Arrow.

Tue, 11/17/2009 - 17:25 | Link to Comment Pat Hand
Pat Hand's picture

G Marx, have you read Posner's article?

http://www.tnr.com/print/article/how-i-became-keynesian

Keynes is important.  The postwar so-called Keynesians diverge significantly from the Keynes->Minsky->Keen version

 

To say that "Keynes has been discredited" says more about your parochial viewpoint than it does about Keynes.

Tue, 11/17/2009 - 17:00 | Link to Comment Anonymous
Tue, 11/17/2009 - 18:23 | Link to Comment Anonymous
Tue, 11/17/2009 - 18:10 | Link to Comment Anonymous
Tue, 11/17/2009 - 23:58 | Link to Comment Anonymous
Tue, 11/17/2009 - 20:59 | Link to Comment Renfield
Renfield's picture

PS: The rate HAS risen. (Or did you mean 'rate'?) It's just a bit disguised when the Aus government conveniently counts one hour in a week as 'employed' and DOESN'T count anyone unemployed for more than a year (errr, 'discouraged'). Unemployment is actually closer to 7.5% and, factoring in 'underemployment', our rate would be more like 15%.

See this (the Billy Blog):

http://bilbo.economicoutlook.net/blog/?p=5813&cpage=1

this (Henry Thornton blog):

http://www.henrythornton.com/blog.asp?blog_id=1626&page_number=6

this (Community Net):

http://www.cnet.ngo.net.au/content/view/44947/279/

these (2 mainstream news articles):

http://www.theaustralian.com.au/business/markets/job-joy-disguises-under-employment/story-e6frg91f-1225771712579

http://www.businessspectator.com.au/bs.nsf/Article/Unemplyment-rose-in-October-survey-pd20091102-XE7AJ?OpenDocument&src=tnb

and especially this (Roy Morgan Research):

http://www.roymorgan.com/news/polls/2009/4430

to debunk the Government 'official' propaganda. 

Tue, 11/17/2009 - 20:03 | Link to Comment Renfield
Renfield's picture

Damn straight.

Tue, 11/17/2009 - 16:47 | Link to Comment Anonymous
Tue, 11/17/2009 - 20:02 | Link to Comment Renfield
Renfield's picture

Right, b/c if he'd gone to Harvard, THEN he would have had some credibility.

Oh, wait...

Wed, 11/18/2009 - 00:00 | Link to Comment Anonymous
Tue, 11/17/2009 - 16:39 | Link to Comment Anonymous
Tue, 11/17/2009 - 16:38 | Link to Comment Anonymous
Tue, 11/17/2009 - 16:32 | Link to Comment Anonymous
Tue, 11/17/2009 - 21:02 | Link to Comment Renfield
Renfield's picture

Right, but always examine the reasons...and the outcomes.

Keen expected a deflation event that WAS BEGINNING TO HAPPEN, had it not been that the GOVERNMENT stepped in to prop up asset prices. Wayne Swan has already confessed that were it not for government spending, Aus would not have this economic 'growth' now.

If you or anyone considers government spending 'growth', then there's no point criticising Obambi and Bermonkey, is there?

The result of this stupidity, which Rudd himself railed against in his campaign then turned around and did, is that Aus household debt-to-income ratio is among the highest in the world: $1.60 of debt for $1.00 of income (thanx, Who Crashed the Economy blog).

We are a country of peasants consigned a lifetime of going to work to pay debt, on houses that our banks own. Inflation is taking off now, on food petrol and pretty much everything we need...no deflation in sight except on cheap consumer discretionary goods and of course wages. Our future is fucking bleak if the markets don't fall soon. We will be working for Chinese wages, renting from the banks. Thanks heaps, Rudd. If Americans and the English have quit 'buying' big-ass mortgages, then we and the Canadians are in a contest for the stupidest citizenry in the world.

Thank God for the RBA raising rates. I'm afraid to hope that they will stick to their guns and continue to do this.

And speaking of the banks, check out their derivative exposure, second-tier toxic 'assets' and shaky balance sheets on ozrisk.net...it is only a matter of time for them. They are filled to the gills with bad debts to a population transparently unable to service them.

Keen was wrong in the short-term, but I believe he suffered from right-but-early syndrome.

I'm sure as hell not stupid enough to 'buy' a house...sorry, buy a mortgage...here at the top of a government-propped market. Sorry about that, Westpac, NAB, ANZ, CBA, and fat fugly Macpiggie (whose appropriate logo is a bland white zero).

Wed, 11/18/2009 - 00:08 | Link to Comment Anonymous
Tue, 11/17/2009 - 22:14 | Link to Comment lookma
lookma's picture

Hi,

This "Keen expected a deflation event that WAS BEGINNING TO HAPPEN, had it not been that the GOVERNMENT stepped in to prop up asset prices." is not an excuse or defense of Keen, it is exhibit A of why he is dead wrong.

He's a broken record like Mish about credit collapse, largely ignoring currency considerations.  He, like Mish, thinks for some reason fiat currency can't be printed sufficiently to offset this.  He is a broken record of OMG credit collapse.

Itulip implicitly pwned him in an interview from 2008 - lolaments at Steve Keen:

J: That’s a very interesting point. It’s long been the iTulip hypothesis – we came up with theory called the Ka-Poom Theory which presumes the US government will eventually have to inflate fiscal and household debt away, that is, both the private sector and public sector debt, and the mechanism of this would be depreciating the currency which would be self reinforcing with respect to the response of US creditors.

K:
I’m not so certain they’ll do that. That’s a policy guess.

J: Yes. That’s a policy guess, of course. But doesn’t it appear that is exactly what they are doing?

K: I definitely agree with the idea of the “Greenspan Put” and that’s obviously been a deliberate policy throughout the past 20 years, that whenever the financial system, the Wall Street system, gets itself in dire trouble the Fed will come in and effectively negate the mistakes it’s made at whatever cost that might involve. But it also simultaneously been on top of consumer price inflation; when they come in and validate what Wall Street’s doing, they’re validating asset price inflation and in fact as a result, they’ve driven the gap between asset prices and consumer prices to historically unprecedented levels and that, from a Minskian point of view, means that realignment of those prices is going to also be historically unprecedented in scale.

http://www.itulip.com/forums/showthread.php?p=31714

 

 

 

 

Tue, 11/17/2009 - 22:41 | Link to Comment Renfield
Renfield's picture

Comparing him to Mish is about right.

Having said that (and I personally believe that we are in an inflationary global currency collapse, which will end with a 'reset' to asset backing), I 100% agree with Keen (and Mish) that our governments/corporates are relying on exponentially-expanding debt that CANNOT be serviced by income stream or by any realistic projection.

And yes a deflationary outcome would have a cleansing effect on the economy.

That this is unlikely to happen, is where I believe Mish & Keen are in error.

We are much more likely to get an inflationary outcome. Australia in particular seems hellbent on raising the prices of everything to catch up to housing, rather than allowing housing to drop to a level with everything else, gladly sacrificing its peasantry for a handful of banks with NO popular opposition whatsoever. This will result in an even worse result than in the US, since wages here are stagnant to dropping. I'm sure I don't need to draw a picture of what rampant price inflation coupled with low wages will do (and has done) here. This country has become almost unlivable.

I read blogs skeptically for certain reasons, not b/c they corner 'the whole' truth. Keen does a brilliant job of exposing the REALITY of private debt levels in Australia.

I give him credit for that, as our corporate-owned media propaganda has near-universal popular credibility here (and, apparently, with foreign observers who somehow lose all skepticism when it comes to Aus government figures and 'lucky country' rhetoric). Hardly anyone in this country has heard of Keen, NOR do most people here have any idea of how private debt is literally destroying this country. Believe it or not, people here tend to be horribly uninformed and STILL BELIEVE that house prices rise forever and our banks are 'well capitalised'.

IF our economy survives, it will be b/c either the bond market or a high interest rate burden on a poverty-stricken population, forces our government to stop propping asset prices. Why do you think the RBA is raising rates? To keep foreign idiots buying our bonds, no doubt. At some point these private debt levels will meet these rising interest rates, and then Keen may well be proved right, although I doubt it. But as to the specifics of the problem itself, he's dead-on.

Tue, 11/17/2009 - 16:30 | Link to Comment Anonymous
Tue, 11/17/2009 - 15:53 | Link to Comment NorthenSoul
NorthenSoul's picture

France is the only country that did not have a debt crisis and that is why it has shown growth

France? You mean THAT France? This hexagonal-shaped country so cursed and villified by the US reichwing nut jobs?

And they have the nerve to show GROWTH? Stealing OUR credo?

Man! That has gotta hurt!

 

Tue, 11/17/2009 - 14:42 | Link to Comment JacksWastedLife
JacksWastedLife's picture

Time to reread The Grapes Of The Wrath and The Black Obelisk by Erich Maria Remarque.

Tue, 11/17/2009 - 14:31 | Link to Comment Anonymous
Tue, 11/17/2009 - 14:08 | Link to Comment Rainman
Rainman's picture

It took him a half hour of evidence to pronounce his bearishness....and did it with great Aussie style. It was time well spent watching his presentation.

I still can't shake the nightmare that worldwide deleaveraging may become the catalyst for WW III, which would require that the free world turn to an unencumbered France for protection.

 

Tue, 11/17/2009 - 16:51 | Link to Comment Marley
Marley's picture
I don't want to talk to you no more, you empty headed animal food trough whopper! I fart in your general direction! You mother was a hamster and your father smelt of eldeberries.
Tue, 11/17/2009 - 19:48 | Link to Comment Renfield
Renfield's picture

hehehe

Here's hoping Rainman is a Python fan... ;-) Nice to see Keen getting some respect, but

He's not the Messiah! He's a very naughty boy!

Tue, 11/17/2009 - 14:07 | Link to Comment Anonymous
Tue, 11/17/2009 - 12:45 | Link to Comment Anonymous
Tue, 11/17/2009 - 17:41 | Link to Comment cougar_w
cougar_w's picture

Very nicely said. An instant classic.

Tue, 11/17/2009 - 12:40 | Link to Comment Anonymous
Tue, 11/17/2009 - 12:32 | Link to Comment Anonymous
Tue, 11/17/2009 - 12:26 | Link to Comment Anonymous
Tue, 11/17/2009 - 12:20 | Link to Comment Anonymous
Tue, 11/17/2009 - 11:57 | Link to Comment trav777
trav777's picture

Blah Blah BLAH BLAH economics IS NOT A SCIENCE.

It's bullshit!

Energy is the cause, the thing that maketh.

Watch these economists struggle like fish on the floor to figure it out.  They're not in the fishbowl anymore!

Debt is borrowed consumption owed back in the future PLUS interest.  This is a GROWTH mandate!

The problem is that we cannot GROW anymore.  This is really very simple shit that morons who call themselves economists cannot seem to grasp. 

There isn't enough energy supply to power the more trucks to take to the more WalMarts needing construction on the more roads needing pavement to service the more customers driving more cars more miles to buy the more shit that all the more chinese factories are sitting there idle waiting to build!  I don't give a fuck what Keynes said, you cannot FUDGE real shit with bamboozling figures on paper.

Tue, 11/17/2009 - 17:00 | Link to Comment cougar_w
cougar_w's picture

A lot of what we call "the modern economy" was born and weened in a period of plentiful (and virtually free) energy. The wealth created by using anything that is free is stupendous (that's why press-labor remains so popular) and free energy is the greatest wealth creator ever. By including coal you can go back 300 years before you run into a solar-based economy, and anyone who isn't familiar with classical solar-based economies should study the Middle Ages.

And now the free energy gambit is very nearly over.

Yes, the world's coal reserves are staggering. So are the environmental damages from extracting them, and that doesn't even get you into climate change. And coal won't move your FedEx truck or the tractor in the field or your food delivery to the grocery store, so going back just 150 years to a period we would recognize before oil was discovered would be lethal to life-as-we-know-it.

Economics as we have come to know it will not survive the end of oil. Civilization as we know it will not survive climate change. Things will certainly go on regarding both, but not as we have known them for 300 years. If I can figure that out, so can everyone else. TPTB are just playing it out as long as they can just because they don't have any other plan and cannot conceive of one. When you get to the end of the rope, you tie a knot and hold on as long as you can. It isn't smart, and takes no guts whatever, it's just all the average Joe can think to do. The alternative -- throwing off the blinders and grappling with your reality two-fisted -- would never cross the average Joe's mind. And our leadership institutions are jam-packed with average Joe's.

cougar

Tue, 11/17/2009 - 19:46 | Link to Comment Renfield
Renfield's picture

"Economics as we have come to know it will not survive the end of oil. Civilization as we know it will not survive climate change. Things will certainly go on regarding both, but not as we have known them for 300 years. If I can figure that out, so can everyone else. TPTB are just playing it out as long as they can just because they don't have any other plan and cannot conceive of one. When you get to the end of the rope, you tie a knot and hold on as long as you can. It isn't smart, and takes no guts whatever, it's just all the average Joe can think to do. The alternative -- throwing off the blinders and grappling with your reality two-fisted -- would never cross the average Joe's mind. And our leadership institutions are jam-packed with average Joes."

I pasted it b/c it bears repeating. What a perfect summary of the big picture.

Christ I love this blog.

Tue, 11/17/2009 - 15:34 | Link to Comment crosey
crosey's picture

Good point T7.  We may be at a global consumption brick wall.  I used to think that it was just I who had come to the conclusion that he had purchased all the trinkets he could ever need, or rationalize.  Then I look at my 20+ kids, and they're not buying a ton of stuff either.

It may be over.

Nanotechnology....where are we going to get the money for that?

Tue, 11/17/2009 - 13:56 | Link to Comment vk9141
vk9141's picture

Indeed, there is too much useless shit in the world to want to keep growing and growing, and adding to the pile.

Tue, 11/17/2009 - 11:45 | Link to Comment AnonymousMonetarist
AnonymousMonetarist's picture

http://anonymousmonetarist.blogspot.com/2009/09/it-is-consumer-in-debt-stupid.html

Such magicians they are with models they built that show no chance of fail when the money is easy and free. It is merely a matter of scale not design. These models rate the probability as 100% that our blessed leaders can manufacture the economic consent of consumers by getting them to add more debt because same consumer will believe that prices will be higher in the future.

These models and the besotted following are both trading without respect to fundamentals.

Inflation expectations were well anchored in the Great Depression.

They also were well anchored in Japan which is presumably the Federales highest probablity target ... flat beer for everyone.

 

Tue, 11/17/2009 - 11:35 | Link to Comment Anonymous
Tue, 11/17/2009 - 17:22 | Link to Comment Anonymous
Tue, 11/17/2009 - 14:22 | Link to Comment Greyzone
Greyzone's picture

Your position assumes that there is anyone out there in power who wants to "solve" the credit crisis, who wants a stronger dollar, and who wants an unencumbered (or less encumbered) middle class.

I suggest that you re-evaluate that assumption.

Tue, 11/17/2009 - 21:52 | Link to Comment Papasmurf
Papasmurf's picture

Greyzone,

 

Bingo!

 

Nothing that happened was accidental.

Tue, 11/17/2009 - 16:38 | Link to Comment Anonymous
Tue, 11/17/2009 - 13:23 | Link to Comment Anonymous
Tue, 11/17/2009 - 16:50 | Link to Comment Anonymous
Tue, 11/17/2009 - 11:25 | Link to Comment Anonymous
Tue, 11/17/2009 - 14:18 | Link to Comment Dantzler
Dantzler's picture

That link didn't work for me, but Yves has a post discussing the article here:

http://www.nakedcapitalism.com/2009/02/steve-keen-roving-cavaliers-of-cr...

Tue, 11/17/2009 - 11:24 | Link to Comment G. Marx
G. Marx's picture

Steve seems to forget that from WWII until the late seventies, the Keynesians had their way in determining and controlling the economic and monetary policies in the developed world, and they failed miserably. To imply the Keynesian school is the realm of angels, is to to put on public display the old adage concerning "how quickly they forget." As a devotee of the Austrian school, when it comes to monetary theories and policies, the Keynesians and monetarist have more in common than Steve thinks they do. Both have their own ideological commitment to fiat currency and construct all sorts of self-rationalizing equations which are nothing more than exercises in confirmation bias; which are meant to justify a ruling political elite having say over the money supply for their own political ends. How can some not see how disastrous that has been?

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