Steve Keen

Highly recommend this article for a dose of reality (he also covers the theory of money creation) http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcred…

Adding to this, also check out the work of Steve Keen, of Debunking Economics fame. He has been expanding on Minsky for years, and posted quite a few great lectures on his Youtube channel: http://www.debtdeflation.com/blogs/research/ https://www.youtube.com/user/ProfSteveKeen

For those interested in this topic, I highly recommend: 1) Steve Keen's blog - http://debtdeflation.com/blogs/ 2) Debt: the first 5000 years - https://en.m.wikipedia.org/wiki/Debt:_The_First_5000_Years

MONIAC was the first i thought about as well. Note that it was created by the same guy that gave economics the Phillips curve. And frankly the hydraulic computer was his better work. Why it has gotten ignored is perhaps because it is inherently non-equilibrium and packed with feedback loops, both elements that are anathema to (neo-)classical economics. If someone wants to have a look at a modern replacement, i would recommend Minsky. http://www.debtdeflation.com/blogs/minsky/

I'm not sure Krugman's understanding of normal money is that great (or at least it is just developing): http://www.debtdeflation.com/blogs/2013/12/17/oh-my-paul-krugman-editi… That said I also don't see that there is any reason that the value couldn't drop to zero or near zero. Maybe the next crypto currency could be called BitTulip.

For those interested in an interesting take on how money really works, Steve Keen wrote this amazing article: http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcred…

I think the fact our housing bubble hasn't popped yet goes a long way to explaining why our banks look to be in such great shape. I'm not sure all the patting ourselves on the back is necessarily warranted. For example, the leverage of the Commonwealth Bank of Australia is about 19:1, where most of their assets are residential mortgages : http://www.intelligentinvestor.com.au/articles/Commonwealth-Bank-Of-Au… I find a little scary if charts of house prices such as the following are correct: http://www.debtdeflation.com/blogs/wp-content/uploads/2009/04/IMG0031_…

Nicely done. I'm looking forward to going through your code and design. It's a great addition to the set of games that help us get our head around these things. Simple models have existed for a while that show the horizontal circuit can be stable. Here's my correction of Steve Keen's initial horizontal circuit from 2010[0] What you'll find is that the unemployment buffer stock that is disciplining inflation, not the interest rate. You can see this by setting the interest rate to zero permanently. You don't need wonks in central banks - just very effective automatic stabilisers based around the labour buffer stock. To that end if you hire the unemployed at a fixed wage paid by the central bank at an orchard that is slightly less productive at producing apples and sells its output at a fixed markup price you'll find that you get more overall output because the less productive buffer stock ends up being smaller than a completely unproductive buffer stock for the same price anchoring effect. I explored that in my baseline economy model, a derivative of a mainstream model, which is still online.[1]. Code on Github [2]. What I also found is that when you introduce 'shops' rather than the mythical central auctioneer market, and people just go to the current cheapest shop near them things broke big time. [3] Tap me up on Discord or Github if any of this is of interest. [0]:…

A lot of people on the right (libertarians) seem to think that the government is somehow responsible for money creation, and therefore, one needs to go to gold standard or limit the government's ability to print money in some other way. These are pretty much exogenous theories of money creation. But I believe in endogenous theories of money creation (e.g. chartalism), which claim that money are created as IOUs, basically bonds that can be further traded. And conversely, any bond that can be further traded behaves, in effect, as money, and there is no "hard" definition of what money is. Which means money are really created by lots of different actors in the economic system, not necessarily just government, and to control money creation, you need to regulate the system in many different places (for example, you would have to limit what kind of deals can citizens make with each other, which goes against the libertarian ideology). In some sense, exogenous theories give their supporters an illusion of control, that the government somehow controls money creation, and so it can and should deal with the problem. But it probably does not, the Central Banks go at lengths to control it, but in lot of cases (like asset price inflation fueling itself) the system can effectively create money on its own and unbalance itself. (I really recommend great post from Steve Keen: https://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcre…

EDIT: Big Oops. This is Foreign Policy, Not Foreign Affairs (the CFR publication). :/ That explains why they would mention a debt jubilee. Foreign Policy is the main outlet for the Council on Foreign Relations (CFR), which is one of the main organizations of the establishment. It is useful to read to see what the establishment is thinking, although of course one should not expect too much honesty. This article is academically hysterical in tone and doesn't say very much, other than things are unprecedented and central banks are trying things on a scale never tried before. Of course the problems with globalization (which the CFR championed) will never be discussed. It does mention a Debt Jubilee, which is the best option we have right now, but doesn't drill down on it. It says something about how dire the situation is that they will even mention it without completely dismissing the idea. For those of you interested at home, Steve Keen is the economist who has done the most work on what a fair modern debt jubilee would look like: http://www.debtdeflation.com/blogs/manifesto/ It makes sense to call instead for a more active, more visionary government to lead the way out of the crisis. But the question, of course, is what form that will take and which political forces will control it. The CFR has consistently advocated for global government, and you can expect this to be their solution to this crisis.

The role of energy and technology in economics has been grossly misunderstood and/or misstated for decades -- it's largely a product of post-WWII economics, though there are of course older precursors. A contemporary economist who's demostrated the role of energy in economic production, and whose work would (and IMO should) revolutionise the study, is Steve Keen. His 25 minute presentation "The Role of Energy in Production" adds an additional term, energy, to the standard Cobb-Douglas function, and explains virtually all of the residual. https://invidio.us/watch?v=BAjN6bG7XzM Audio quality is poor, but I cannot recommend this video highly enough. For those who prefer text, much of the material is in this post: http://www.debtdeflation.com/blogs/2016/08/19/incorporating-energy-int… The idea that "technology" is responsible for "efficiency gains" comes from the work of Robert Solow, and is called the "Solow Residual". It is quite literally a mathematical (or statistical) artefact: if you study the behaviour of a dependent variable on the basis of one or more independent (or explanatory) variables, whatever change is not explained is the "residual", or residual variance. The residual is real. Its attribution to "technology" is wholly arbitrary. Solow's independent variables were Capital and Labour, using what's called the Cobb-Douglas production function. They collectively explain only about TK% of all increase in net productivity. Solow…

For those interested in new models, may I suggest the work of Steve Keen, one of the economists who did predict the financial crisis. I have been following Steve's work since the mid-2000s, and it is a more convincing framework for thinking about the economy than most other things I have read. Examples here [1] and here [2]. The intellectual bankruptcy on modern neoclassical economics is exposed in some of the battles Steve has had to fight over the years, such as criticism for using debt toGDP ratio [3]. If neoclassical economists cannot even describe how money is created in the modern economy, what meaningful contribution do they have to describing an economy? [4] [1] http://www.debtdeflation.com/blogs/ [2] https://www.youtube.com/user/ProfSteveKeen/videos [3] http://www.debtdeflation.com/blogs/2009/03/14/rory-robertson-designs-a… [4] http://www.businessspectator.com.au/article/2012/10/22/commodities/myt…

Here are the thoughts of Steve Keen (an economist) about Varoufakis[1] on BBC and this how the BBC, the economist and largely every other mainstream media outlet describes Varoufakis[2]. I saw since day-1 Varoufakis described as "self-acclaimed marxist left wing/radical finance minister". A description which in the western has more than a touch of negativity. On the other side you see e.g. Jeroen Dijsselbloem[3] being presented as "President of the Eurogroup" and/or "President of the ESM", while he could be easily be described in the same vein as a "Right-right wing, non-economist with a false degree[4]". Unfortunately that's the level of journalism we are up against. Greece apart, if one takes the time to listen Varoufakis talking, then he understands that he is an exceptionally knowledgeable man. He has a deep knowledge of his domain and he speaks his mind - which is rare for a politician and got him in to troubles with the media more than once - all to often and in a very loud and clear manner. I'm not sure if can pull out anything positive for Greece, because other than bailing Greece out, there is no way (for the Greeks at least) out of this spiral: Following the EUs terms is equally if not (much?) more catastrophic than leaving the common currency (even without leaving the EuroZone for military/geopolitical reasons). [1] http://www.debtdeflation.com/blogs/2015/02/05/talking-about-yanis-on-t… [2]…

"Economics" :-) Seriously, this is precisely the problem that economics tries to solve, and it is evolving into a mature discipline with a reasonable level of empirical validity, but the way psychology has evolved in the past few decades. There are several main policy-oriented disciplines: 1) sociology, which studies society as if economics didn't matter 2) economics, which studies society as if morality didn't matter 3) political science, which studies society as if neither economics nor morality matters I'm caricaturing, of course, but the differences between the fields are due more to historical accident than anything else, and if you're interested in focusing on the math then economics is the place to be. There is a lot of very interesting work being done in "heterodox" economics right now, particularly by people like Steve Keen, who is focused on relaxing the assumption that the economy is at all times in quasi-equilibrium, which is foundational to the neo-classical paradigm: http://www.debtdeflation.com/blogs/ Keen is interested in dynamical economic models, which necessarily require you include things like banks and money in the model (these drop out of equilibrium models, mostly.)

From one of the linked papers, by Mike Cole, the guy who seems to be cited the most: >> My argument is not that capitalism cannot in theory be made more democratic or humane. This is an incredibly revealing statement. I'm a big fan of Steve Keen, an Australian economist who won some award for predicting the GFC (http://www.debtdeflation.com/blogs/). He's a huge critic of mainstream neo-liberal economists, claiming they use bad mathematics to prove theorems that don't work in theory (once you correct the mathematical errors) or practice (if you look at the data). He also has a chapter in his book on why Marx was wrong, but I'm not up to it yet. While agree with some of the points of Transmodernism, it seems to be more of a destination than a way of travelling. The only concrete methodology seems to be a deep suspicion against The Man (or neo-liberal agenda, as it's called now). The IMF, World Bank, Federal Reserve, and so on aren't bad because they want to be. They are bad because they are following theoretically and empirically flawed theories. They aren't propped up by governments because doing so helps keep the elite in power, governments actually believe that there's no real alternative. The problem is, academic economists (and worse, government onces) like to be safe and conservative. Non-mainstream economists are simply frozen out of the dialogue, like positivists are in post-modern academic societies. Which is quite a problem, when economists are dealing with…

I mean reserves don't actually constrain lending: http://www.debtdeflation.com/blogs/2012/04/02/ptolemaic-economics-in-t… Edit, also: http://www.debtdeflation.com/blogs/2012/03/29/krugman-on-or-maybe-off-…

Actually, the GP's explanation is closer to true than yours is. I was taught the same explanation you gave, but it doesn't fit the facts on the ground. Banks don't base the loans they issue on deposits (the closest to this they come are the capital requirements regulators impose on them), they base them on models of the borrower's ability to repay and on models of the ability to resell the loan (aka 'securitization', though less so since that practice helped drive the financial crisis). If the models fit, the loan amount is credited to the seller, and debited to the buyer, essentially creating money 'out of thin air.' The economist Steve Keen is perhaps one of the more vocal advocates of this view (http://www.debtdeflation.com/blogs/).

Steve Keen is doing some interesting stuff incorporating energy into economics - here's some of his older stuff - http://www.debtdeflation.com/blogs/2016/08/19/incorporating-energy-int… - if you google a bit I think he's developed that further (probably some of his lectures which are available on YouTube are where the newer stuff would be - I'm not sure if he's published much of it yet)

Keene's suggestion is basically a flat universal payment, if you have debt it must be used to pay down debt first. http://www.debtdeflation.com/blogs/manifesto/ I don't really get how it's supposed to work though. What would ensure it increased consumption and productive investment, rather than just further fuelling asset price inflation.

Government debt, while large, is not the core issue. Private debt is the issue. Steve Keen has been hammering this for years: https://www.youtube.com/watch?v=CLplU4WdX9A https://www.youtube.com/watch?v=ocQWs8EteqI http://www.debtdeflation.com/blogs/

Yes! In fact, a small number of credible voices (e.g., economist Steve Keen) are in fact proposing something along those same lines: a modern Debt Jubilee not unlike those of ancient history. Here's Keen's argument: http://www.debtdeflation.com/blogs/2012/01/03/the-debtwatch-manifesto/

You got it: http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcred…

Check out his Economics blog at : http://www.debtdeflation.com/blogs/ The most interesting thing is that he diagnoses the problems in a very similar way to Peter Schiff, but comes up with almost opposite conclusions.

"... He _is_ taking 8 days to do it, so he's only got to walk ~30km (just under 20 miles) a day. ..." Hmm 20 miles a day for 8 days in hilly terrain in April is not to be underestimated. Altitude is one problem. The inland 606m is cold, 2228 is Alpine. The upper Kosciouscko areas is well known for snow to fall, melt then re-melt. I remember going to Kosciouscko as a kid in shorts :) First time I'd been to the snow ~ http://climbing.about.com/od/mountainclimbing/a/KosciuszkoFacts.htm And one other thing... "... in a nutshell I will be running about 15km every morning, and walking about the same distance every afternoon starting at about 2pm ..." ~ http://www.debtdeflation.com/blogs/2010/02/15/launching-www-keenwalk-c…

The authors include some very well known economists as described here: http://www.debtdeflation.com/blogs/2009/02/26/and-you-think-im-ornery-…

Letting the banks fail doesn't entail doing nothing and letting people suffer. Hank Paulson's bank bailout proposal got rammed through Congress by the Bush Administration without much consideration of any alternatives. Paulson's plan helped banks and bankers at the expense of everybody else. There were lots of other proposals that got ignored by the press. Here's three different approaches. While I personally favor the third approach, I think its very important to dispel the idea that we didn't have any choice but to bailout the banks, so I want to illustrate a variety of approaches: (1) Steve Keen suggested a debt Jubilee: "monetary injections by the Federal Reserve not into the reserve accounts of banks, but into the bank accounts of the public--but on condition that its first function must be to pay debts down. This would reduce debt directly, but not advantage debtors over savers, and would reduce the profitability of the financial sector while not affecting its solvency" quoted from http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-1000-words… (2) Mortgage assistance: put a moratorium on foreclosures; freeze rate hikes in adjustable rate mortgages; help homeowners refinance their mortgages; or replace home borrowing with renting. (3) Ron Paul proposed we abolish the Fed. While the Fed's profits belong to the federal government, the Fed itself is owned by the nationally chartered banks. Therefore, it's power to create money is used to benefit the…

The Federal reserve was created by senator Aldrich who's daughter was married to the banker Rockefeller. The Federal reserve is privately owned by the member banks themselves among others JP Morgan, City bank. 97% percent of the money in circulation is debt. 1971 Nixon decoupled the Dollar from the Gold standard, essentially creating a FIAT currency. During the 1990s Allan Greenspan chairman of the Federal reserve set the capital requirements for new loans to near zero in an effort to let the market regulate itself. With no Gold standard to limit the amount of debt it grows exponentially. https://en.wikipedia.org/wiki/History_of_the_Federal_Reserve_System https://en.wikipedia.org/wiki/Abby_Aldrich_Rockefeller You can see the decoupling here GDP vs median income http://lanekenworthy.net/2008/09/03/slow-income-growth-for-middle-amer… Graph showing the middle classes loosing to the debt system http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/ An Investment Manager's View on the Top 1% http://www2.ucsc.edu/whorulesamerica/power/investment_manager.html Hitting peak debt 2008 http://www.debtdeflation.com/blogs/wp-content/uploads/2014/01/010814_0…

"The variable delta between rent and purchase price/mortgage cost doesn't break the premise that purchasing a house is a hedge against future requirements." But it does break the premise "but so does the cost of shelter." There is an advantage to sell while it's a seller's market and rent, while doing the opposite while it's a buyer's market. That's leverage that breaks this premise. "You might do better renting but you don't have the future right to occupy that house at any cost." This thinking is one of the key reasons why it's possible to systematically make money off of real estate. It's pervasive crowd-think, at least in the more impacted markets. It seems sound and logical, but it's fear based and irrational. There is clearly an upwards trend in real estate, yes that is true. But there are peaks and valleys along that mean. "Steve Keen (http://www.debtdeflation.com/blogs/) describes investment in assets where the profit won't cover the interest as 'Ponzi' investment as you are hoping to pay it off from rising asset prices and points out that these are unsustainable in the long term, someone is going to get caught out. " Yes, that's speculative action at work - as I mentioned in my original post with actual examples toward the end with my theory of how to detect the switchover. It's fun to talk about and how to solve it but it doesn't change that it actually occurs. The recent housing bubble exacerbated it but it is a phenomena of active markets during…

This is always a contested subject because economics has so many competing branches, many of them with more or less overt ideological overtones. IMHO, you should listen to economists that (a) emphasize looking at the operational realities of what actually happens in the monetary system, and (b) tell you that banks matter for what happens in the economy. (If you find it hard to believe that a majority of economists ignore banks in their models of the economy, good for you and your common sense!) This means you should read what Steve Keen writes and listen to what he says (he blogs at http://www.debtdeflation.com/blogs/), and what the Modern Monetary Theory crowd write, as they explain such basic things as what role reserves and bonds play, from first principles (start here: http://neweconomicperspectives.org/p/modern-monetary-theory-primer.htm… More generally, "endogenous money" is an important keyword to look out for, because our monetary systems are endogenous in the sense that money is mostly created by banks, not by the government. If you venture into online economics resources, you will run into a lot of (economic) Austrians. I believe this is mostly because of the Mises institute, which is well funded by people with an ideological ax to grind. It's good to reflect on their messages occasionally, but they should be taken with a grain of salt. (And since they are hardcore gold bugs, they don't get endogenous money, which means that much of what they say simply…