On the 22nd March Bournemouth Labour Party hosted their members’ meeting with world renowned economist, Professor Steve Keen, one of the few economists to predict the 2008 financial crisis.
Professor Steve Keen lecturing is worth every minute of your time, expose is delivered one cannot expect any better or easier to understand, may respect professor
I don’t think you can just completely discount government debt. In fact, I think total debt would give you a more accurate picture. When the gov tightens, be it social programs, any spending, it will impact gdp.
You are brilliant steve, prob deserve a nobel, once it all goes pear shaped they will all come looking for your advice, come back to oz to sort out the mess please, big fan in adelaide
If savings on a macro level is bad, then I guess borrowing and spending is good. So borrow, spend, consume. Party on - we are at least one more generation away from making this earth a wasteland.
How we divide the money and how we organize how the money circulates is one thing! What is left out of the equations is how we 'generate economic growth! Systems were 'borrowing' easy is the standard, does not create real economic growth but fake economic growth and creates bubble after bubble, not to mention the rentier mentality! I think a lot of people experience economy today like this: one step forward with the valie my house, 2 steps backward with my income and daily cost!
add savings into the variables and then add another line for zero sum, and use a base case of 10% savings included in the model, then you can move the savings rates up and down for each subset as savings is a natural phenomenon for each category in the aggregate
The table is missing the money printing machine to offset the savings of the poor, adding it to the columns of the rich in order to arrive at the correct GDP number.
I think economic cycles regularly (or inevitably ) come full circles because producers and consumers alike depend less on savings and more on borrowings (a.k.a. debts) to invest in housing, education, stocks, bonds, etc in the hope of making money. Please correct me if I am wrong.
is average 2.4 % overspend for taxes received the reason that they are chasing 2-3% inflation therefore may mean they don't have to print additional currency at the rate of 2.4% per year?
If Australia restores budget deficit, then by the time people stop borrowing as much due to raising interest rates, then instead of the government using debt as expansionary fiscal policy couldn't they lower individual tax rates to offset that $60 billion dollar fall (you illustrated) in GDP. Wouldn't this offset that loss of consumption spending?
If poor people save, where do they put their savings? If they put under a mattress or bury it in the ground, than what Professor Keen says about savings is true, but if they put in a bank, the bank can create more money through fractional reserve banking and it increases the money supply. So putting savings in the bank should grow our economy not shrink it as the Professor Keen tries to explain.
You need to watch a video of him debunking fractional reserve banking. It's a myth and doesn't actually happen. Banks never have to worry about rations like you think.
Banks don't operate through fractional reserve banking. They literally create the money they lend at the push of a button - it is just digits on a computer. So they can lend as much as they want, regardless of savers making deposits. Savers deposits therefore make no difference to lending, and no difference to growth. If banks lend so much that they need to top up their reserves at the central bank to meet their reserve ratios, they just borrow that money from the central bank!
Steve keen could i ask you wether bitcoin has any place in a progressive economic model. There seems to be a a few people claiming this but are they just over excited because they have made money. I can't see the purpose of this limited decentralised bitcoin mining which is actually money creation. If the creation of bitcoin is limited it may preserve value but how can that possibly work for a country as a whole . I can't help thinking some of the bitcoin libertarians, critism of the bankers is actually quite fake.
This man knows much more than usual follower economists & central bankers. . The chance of another fiscal crisis is 100 percent. Modern cycles (since 1800) are of 18 years duration, and the next crisis will be in 2025 - this downturn will last 4 years. This reset is guaranteed & is clearly necessary.
Keen appears to set up his argument that the world is a zero sum game i.e. that for someone to win, therefore, someone must lose. Fair enough analysis in a static system (which, in Keen's defence, is not what he is suggesting) I'd suggest, but government and central bank interventions with Quantitative Easing and the like suggests things quite apart from a static system, indeed some outside variables have certainly been added. Also, issues such as interest seem to similarly be arbitrary, especially if one considers the Libor debacle. As someone who lives in Australia and long aware of Keen's predictions, and a keen (no pun intended) observer of the currently finishing Royal Commission investigation into mainly the banking and housing finance industry, it will be critically interesting to see what our Government does to either thwart or enable the Commission's findings. So far, I am unable to see any genuine intent from the incumbent band of obfuscaters...not that the alternative opposition have been significantly better in enabling our nation's sense of a fair go, let alone our once alleged bastion of being an egalitarian nation.
I like Steve Keen and have seen his videos and like them - he a little radical and i do think he is a little "socialist" in his thinking and maybe individualism (liberal, conservative) frightens him (not sure) haha and they prefer everyone combining their money and working for the common good .hmm- i prefer to be individual and make my own decisions and dont require committees and all that nonsense to make a decision months later!. The one thing i learnt from the GFC crash in the US, is the only companies that survived were the ones that had CASH. All the properties (wealth?) crashed so the biggest companies were wiped out. Now lets deal with what Mr Keen is saying that saving for individuals is not/not always a good thing. The movement of give and take makes sense BUT, if a working class person has saved some cash it less likely he will require the dole which means less loss at the govt/rich level that he illustrates as losing -5.. so it balances out haha. ALSO anytime someone saves, they LEARN and tend to be more responsive on gambling ect that loses large sums of money and puts a load on the welfare services/police that cost that -5 so much. YES the jobs in the "fun" world of drugs, drinking, gambling will drop off but is that a bad thing. Japan seems to get on very well with such "discipline" people and those lazy people will be more likely to get a job and now more tax dollars helping to relieve that -5 . OMO and i recommend people overly exposed to the housing market now JUL2018 to really think of what will happen to them IF a crash/downturn occurs as the time of looking at the positives have now passed and Steve Keen warns strongly of this and he is a professor so you better take his warning very seriously and all other qualified/smart people as well as they all warning now massive problems/losses ect...
He's not saying the working person should not save. He's saying wherever there is saving, there must be a reduction in earnings somewhere else, and eventually (in the big picture) that reduction in earnings will reach you, the saver. The only way round it is if someone else goes into debt, or the government goes into debt. That's how money works. Irrespective of how individual you like to be, everyone's money effects everyone else's - it's a closed system.
You need to look at the macro. Not at people induvidually. And saving is a good thing, but somebody has to pay for the savings the population has in their bank accounts in order to keep gdp at the same level. And the only one able to take that hit is the treasury.
iggy fugazi Trump will continue to print more money, give more tax breaks to the rich, cut welfare and other Government spending, except for the military budget which will be further increased. More and more Americans will descend into poverty. The US is already an oligarchy. Should Trump be re-elected or the necessary reforms to your Constitution not take place ( abolition of the Electoral College, reducing the powers of the Senate) things will get worse still. Corporate greed and their lackey politicians will be the cause of this tragedy for a once great nation.
This is too simplistic for Keen's level. He can do better. For example when he simulated that a fiat money system can be stable and what turns it haywire. That was awesome. This explanation leaves out the price level, the ratio of money to goods. It leaves out foreign investment and forex trades. This isn't a sufficient explanation why a government can or should run a deficit. That a growing economy would require a growing money supply is in no way self-evident. Sorry.
Growing economy translates to production of more physical assets and energy inputs available. For a future transaction to occur to meet additional production of physical assets, capital and energy, additional money is required to accommodate transfer from firm to a household, organization or individual.
the fool chips in with the usual nonsense. what steve says follows directly from a clutch of definitions such as the answer to "what is credit?", and (very) simple arithmetic. It may be too hard for _you_ to think through, but it cannot be wrong.
The more i watch and read steve keen's work, the more I think of him as an awful economist. This lecture on savings is just wrong on so many levels and its hard to explain where to start. The guy has done some good work on private debt, but i find that he is severely wrong when it comes to the prescription. His suggestion to issue a "debt jubilee" is just atrocious. Anyway, in regards to savings, Austrian business cycle theory explains it far more elegantly than Steve has done: voluntary savings allows for investment in production stages further from consumption. As production stages lengthen, capital goods are able to produce more product at a lower price, which leads to an increase in real income, even if wages remain nominally flat.
Kevin Scott the purpose of savings is not to "save for a rainy day." Only a Keynesian would ever start from that sort of pessimistic perspective. The purpose of savings is to create investment in productive stages that leads to efficiency in the final production of consumer goods. Real wages increase as a result even if nominal wages remain flat. We pretty much have the entire first century of American history to show that this works and produces the greatest societal wealth.
The purpose of savings actually is to save for a rainy day that is the reason the majority saves. Especially middle class consumers. You are assuming people save because they understand economics but most people don't save because of anything other than having money set aside. This is true for businesses as well. When businesses invest in their company it is often immediately or through loans and they aren't actually saving for an investment opportunity. To your point that saving causes products to produced at lower prices this is sort of true but simply because there Is less money in circulation causing a recession type fall in demand. This is what causes the prices to fall and at the same time leaving the few people that still have jobs feeling like their income has increased. Same as anyone that is still working during a recession. Roads are clear less traffic, houses become cheaper, gas becomes cheaper. Yes there are a few things that seem great during recessions but I doubt that anyone would really think that is a good thing for all.
Kevin Scott except how did the recession occur in the first place? An increase in credit expansion due to a lack of reserves matching loan creation. The deflationary crash is the market correction taking place and prices must become affordable again. Disregard "money in circulation." This makes no difference as money is just an agreed upon commodity used for barter.
Several contributing factors, but two of the most obvious are Consumer credit/debt was at an all time high at the same time there is strong evidence that corporate savings was also at an all time high. The large corporations were sitting on huge amounts of money but nowhere to put it effectively.
