Steve Keen And Chris Martenson Explain Why "It's All About The Debt"

Tyler Durden's picture

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Mr Lennon Hendrix's picture

I heard Steve Keen has a computer installed into his brain.

CitizenPete's picture

That's why his closest friends call him HAL

Sudden Debt's picture


the blue line is always bad


the red line is always bad?....


jimijon's picture

Do you live in Chicago?

RobotTrader's picture


Biggest % gainer today is one of those dogged Irish banks.

Sudden Debt's picture

a GB moment...

Government Bailout


Even with a 1000% dilution, it still goes up. Go figure.

rocker's picture

The worst part is Benrod through the IMF is bailing them out. We bail out all bankers. Ask Godman Shafts & Co.

THE DORK OF CORK's picture

Robottrader you need to take that computer out of your head , its obsolete and incapable of analysing the world outside of highly manipulated and politicalized graphs.

Although I do concede the corruption and wealth transfer scheme is so far advanced here that it might be a good idea to take a punt on Bank of Ireland.

Djirk's picture

or trade it and make 20% in one day if you are agile

putbuyer's picture

Palin to Bernanke: ‘Cease and Desist’

Before you go bashing Palin with dumbness comments, keep in mind we don't need leaders to know how to build a rocket, just be principled and have good sense. I think she has that. There I said it!

Mr Lennon Hendrix's picture

No I like my leaders on the frontline with me.

zaknick's picture

You forget she was the chosen one for the banksters behind McCain.

Dadburnitpa's picture

The enemy of my enemy is my friend. My enemy is Bernanke.

snowball777's picture

The enemy of your enemy may engage in what you'll falsely characterize as "friendly fire".

Adages are nice...logic is better.

cougar_w's picture

Chilling. It was like reading the history of this period, even as we live it.

We. Are. Screwed.

chet's picture

For real.  Have to say this is one of the best things I've read here, which is saying something.

TheMonetaryRed's picture

The Austrian School is a good starting place - but Steve Keen should be the next step in your evolution.

snowball777's picture

As if the best way to become a physicist is to devolve into a Copernican first.

Those two "steps" aren't in the same direction.

hugolp's picture

I think Steve Keen is a good complement for some insights he has. But he has no real base.

The austrian school is much more coherent and evolved. Some of Steve Keen insights are a good compliment to the Austrian school. Thats all.

DaveyJones's picture

Keen is one of the best. As Cougar said, too bad he scares the shit out of me.

SWCroaker's picture

Inflation is a monetary event.  Hyperinflation is a confidence event.   The author can be entirely correct in his call that the oodles of money being created are being lodged in ineffective hands, yet be completely wrong in his assumption that confidence in the existing currency will prevail...

Walter_Sobchak's picture

How can you discount inflation when prices are rising due to inflation expectations?

wake the roach's picture

How can you discount inflation when prices are rising due to inflation expectations?


I think you just answered your own question, the word "expectations" says it all.

Unless nominal consumer income is rising relative to increased nominal energy/commodity prices, real E/C values are rising or to put it another way, real consumer income is falling. Deflation.

Unless that freshly printed fed cash is reaching the pockets of those that actually consume the bulk of goods/services you will see now demand pull inflation. Only cost push inflation which is net deflation.

snowball777's picture

Well said...increased wheat prices mean decreased sales of Wheaties (and everything else), if people can't either make more or go further into debt.

What_Me_Worry's picture

He seemed to so bright until he tried to explain what causes hyperinflation.  Poor soul, seems to have so much talent but blinded by theory instead of following history's examples(NOT Japan).

Hyper-inflation is, and always has been, caused from a loss of confidence.

The REAL printing of money and the money multiplier generally occus only after there is a loss of confidence. 

He is just another blind follower of people like Mish.  It has been discussed to death.  Hypers and deflationists both agree on steps 1, 2 and 3.  Hypers merely assume the government will continue printing, and in greater numbers, as the deleveraging continues and see what happens after step 3.

We surely live in interesting times.

sandorgb's picture

I would wager that Keen is aware that hyperinflation results from a systemic loss of confidence, ie. a 'run' on the central bank. In the interview he was merely discussing whether or not the FED could create inflation by doing QE $6 trillion. His reasoning that hyperinflation is unlikely is primarily a political calculation. Now, he may be right or wrong. Perhaps the FED is secretly intent on hyperinflation and Congress will not intervene in time. But it is silly to think that Keen doesn't understand the dynamics of hyperinflation.

lookma's picture

Its painfully obvious Steve Keen has no idea what hyperinflation is, as he makes crystal clear in the above:

Steve: The hyper-inflationists basically argue that government money creation will cause hyper-inflation. In this I think they’re unwittingly relying on the “Money Multiplier” model of money creation: the government prints $10, a depositor puts this in a bank account, the bank hangs onto $1 and lends out the other $9, which is deposited in another bank, and so on. Over time you turn $1 of government money into $10 total, which drives up demand for goods and services and causes inflation.

He is clearly confusing credit inflation with hyperinflation.  Hyperinflation is what happens when credit growth stops in a credit/debt based currency, and is largely concurrent with massive debt deflation Keen describes.

Keen is unwittingly making the case for hyperinflation by demonstrating that its all about deleveraging and the collapse in debt.

LowProfile's picture

Amazing to me you got junked.

I like Keen, but in addition to what you bring up, after he mentions 'peak oil' (debatable) and global warming (assuming he means AGW, utter cadswallop) as the major issues facing humanity, I start to doubt his ability to look deeply into things.

Nels's picture

Amazing to me you got junked.

This site needs a un-junk button.



DavidRicardo's picture

But even if you're right, the latest BLS unemployment for those with a Bachelor's degree or higher was 4.7%.  Even if you think BLS is BLS, and triple the figure, that's still only 14.1%.  Remember, these are the people with all the money, all the assets, all the income, blah blah blah.  A 4.7% official rate says that a crisis of confidence is not on the horizon.  So if that is your trigger for hyperinflation, relax.


On the other hand, when BLS gets to 20%, then we'll get a revolution.  It's funny.  Doomsters will NEVER commit themselves to telling me in what month of what year BLS in this category will hit 20%.  Are they dishonest in their fulminations? have an agenda of their own in fulminating?


If not, when will it hit 20%?  Watch--I won't get ONE specific prediction in response to this.  Tells me no one actually BELIEVES we're in a depression.

What_Me_Worry's picture

I don't consider the employment rate of those with a BS to be the trigger on whether there will be hyperinflation(btw, hyperinflation is currently happening as we speak).  In fact, you could have zero percent BS unemployment, in theory, if the government hired half the BS unemployed to dig a hole and the other half to fill it back in(see government workers).  This would not cause more faith in the currency.

For the record, I never have talked once about unemployment rates causing hyperinflation.  I don't know why you pulled that talking point out of thin air.

Again, as I stated, confidence in the currency is the main cause of hyperinflation.

DavidRicardo's picture

As long as people are working--especially in this entitled class of our overpaid clerks--there will be no crisis of confidence.  Show me one instance where there was a crisis of confidence and this group had an unemployment rate of 4.7!!!  It's simply ridiculous. 


On the other hand, once this crew loses their jobs, all political hell will break loose. 


So believe me or don't believe me, but at least tell me when BS unemployment will reach an official BLS figure of 4.7.  (Watch, he won't tell me--they NEVER do.  He'll make up some excuse, like, it doesn't matter, or even, it will never reach that figure.)

LowProfile's picture

You are assuming wages keep pace with prices...

deKevelioc's picture

Monetizing debt is a pretty good beginning to a total loss of confidence in the US dollar.  It (monetizing debt) gets better next year, too! I'm looking forward to a collapse of the dollar so we can rebuild a monetary system that's more fair to ALL.


Thank you for your continued support.  Money for nothing and the chicks are free.

BigJim's picture

The relevant crisis in confidence (in this context) isn't domestic - it's whether foreign holders of US $ think holding on to those $ is a good idea.

There are more US $ outside the US than in it. It's if/when these start coming home that hyperinflation will take off.

Eternal Student's picture

Geez, dude. Where have you been? Everyone knows that the date is December 21, 2012.

DavidRicardo's picture

LOL!!  Thank you.  Finally, we have someone who will "man up" and put a month and year to it.  good for you!!

DavidRicardo's picture

Oh by the way, now run that date and number through any economic theory you please.  See?  All political hell breaks loose.

TraderTimm's picture

Thanks to the above article, I just visualized a good analogy to all this QE{insert number} business the Federal Reserve is engaged in.

Imagine the collective economy as the passenger in a small life raft.

The raft sits on the surface of a large pond of quicksand. (This represents the Deflationary  Death Spiral)

There is a motorized air pump controlled by some circuitry attached to the air inlet of the raft. (This represents the Federal Reserve's debt issuance mechanism)

The Fed, thinking that more air is better, injects more into the raft. It is to keep out of the quicksand, after all. Heck, the more air we put into this thing, it just might act like a balloon and lift us out of the quicksand!

The problem that arises of course, is the more air you put in, the more likely the raft will fail. Dooming our economy passenger to a horrible deflationary quicksand fate.

As a corollary - you can't turn a life raft into a fucking balloon. Stupid Federal Reserve.



cougar_w's picture

Not bad. Though you didn't mention that there are sharks (TBTF banks) swimming in the quicksand as well.


DavidRicardo's picture

Steve sounds much too stuck in his mathematical ways to change his orientation, but he should really avoid mediocrities like Schumpeter and read Sraffa.  Not because Sraffa is sound, but rather, because Sraffa is one of the school of early twentieth-century thinkers who "distilled" constructivist mathematics to the point where we could actually see what it was all about and why it is such garbage.  Of course, if you were historically minded, you would have known that Zeno's paradox is not a paradox and Aristotle's obsession with "avoiding paradox" (the chief concern of these wacky constructivists) was bogus. 


But you can't expect people to actually know anything.  Anyway,  Steve's mathematical orientation is obviously constructivist, and so it is equally obvious that he is unaware of that.  That's the problem with his models--au fond, they are simple-minded and wrong because he has an unthinking, uh hugh, commitment to constructvism.  Poor boy.


He should become much more aware of this intellectual tick, because research into constructivism is the only avant garde in the western world today.  Pathetic, isn't it?  When cleaning up our own garbage is the only contribution our generation is making?  But whatever.


He should go back back back.  Begin with Garciadiego's BERTRAND RUSSELL AND THE ORIGINS OF THE SET-THEORETIC 'PARADOXES,' which is the landmark study (don't forget to read the footnotes too!).  Then, if he can actually tolerate all the garbage of set theory, read Grattan-Guinness, THE SEARCH FOR MATHEMATICAL ROOTS.  One of the better historians used to be Jose Ferreiros, until he cracked under the notion that the "paradoxes" have no logical content and are mumbo jumbo.  He made a profession de foi that there HAD to be paradoxes, there just HAD to be.  Silly clown.  Now it appears he is just drooling in some corner.  But anyway, before that he did some interesting work, including a paper on the utterly logic-less "foundations" of George Cantor's nonsense.


Actually, Steve's whole mathematical approach is Cantorian.  Hi Steve: remember when Cantor said, "I see it, but I don't believe it."  Well, you shouldn't either.


By the way, where is the constructivist intervention in the Pythagorean theorem?


Have a nice day!

TheMonetaryRed's picture

Give my regards to Mr. LaRouche.

Yossarian's picture

I consider myself to be a somewhat intelligent person but I have absolutely no idea what you are saying in this post.  I am not saying you are wrong- you are probably right- but can you please explain for the non-mathmaticians among us...

DavidRicardo's picture

Well, I told you to start with Garciadiego.  Looks like you aren't going to do that.


OK, how about this?  Since he's into Marx, read Ian Steedman's MARX AFTER SRAFFA.  As Maria says, it's a very good place to start.

the rookie cynic's picture

We need to be acting NOW!

By the time I read all those books, my bank account could be worthless.

You seem an intelligent enough fellow, what are you doing right now to survive this?

snowball777's picture

"By the way, where is the constructivist intervention in the Pythagorean theorem?"

Ask Riemann.

As for paradoxes, read some Goedel: seeing or believing, chose one.

Budd Fox's picture

1) If you had read Steve Keen book, you would know that Piero Sraffa's is one of the works he references more often.

2) Very rarely I had the occasion to read such a bunch of crappie bullshit written purposely to appear somehow intelligent and cultured, but saying absolutely NOTHING. You really need a special training to be such an empty of content a-hole or odes it comes naturally to you???

zaknick's picture

This deliberate shift in the quality of the economy (like the man says, 40 years) is contemporaneous with these banksters' shenanigans:

Bartanist's picture

My nomination for the best article of the year award.

It makes so much common sense and yet is so unappealing to those in charge.