Very articulate and considered views by Steve Keen on where we are and where we are going based on his Debt Deflation theories. Interviewed by Max Keiser. [youtube]http://www.youtube.com/watch?v=f7iK4DHPr9E[/youtube]
So his models are based from Marxist ones? hmm, I wish he would pay more attention to the monetary role in all of this, as in sound money instead of fiat because that has got to be the biggest problem if not one of them
Keen has written about this on his website, so i reckon its a case of 1 battle at a time. Trying to teach the concept of sound money is too alien to the average joe. But the concept that you shouldn't borrow too much for a house and that it's OK for a Govt to go into deficit when they can create money from fresh air is something they can get through their thick, beer and football comotosed skulls.
Keen is having his cake and eats it. He blames the greedy banks and fails to recognise the greedy governments behind them. His solution is the government nationalizes the banks without realising that the government is mostly to blame and that if you are a bank who is offered a free lunch why refuse it ? The government support of dead banks confirms they are the same organism. He also proposes a jubilee to wipe out all debt. In otherwords we reward the reckless and punish the savers. I have heard his talks frequently and there is too much based on our old mate Dr Marx. I get the impression he runs with the hares and hunts with foxes - I dont think he is a gold bug !!! hahaha
Didn't the details of his proposal mean that everyone would effectively get the same handout? Debtors would have to pay down their debt; savers would get a nice little lump sum to add to their savings.
Keen can't chew gum and walk. Typical marxist economist off with the faries at the bottom of the garden Kind Regards non recourse
I think you are too harsh on him nonrecourse. At the very least his theories should be attacked directly. Just because part of his model happened to be derived from an old Marxist one, isn't enough to completely write him off (not with any credibility any way). I think at the very least him and his Boston buddies and more accurately the Austrians have the main problem creator right = debt. I give him credit also for attempting to use modern mathematics to plot the cycle. Something he believes he has done successfully. My understanding of the Austrians (if there is an expert out there please correct me) is that to try to do such a thing is a waste of time, as human behavior can't be graphed so accurately and just because you get it right this time, doesn't mean it will be right next time. At least with Keen's model, one should at least be able to see when the Macro economic situation is certainly in "bubble" territory. What I think the Austrians would say is to disregard the model on, when it tells us the bubble will pop because as you, me and the whole country has seen just because there is a big bubble doesn't mean it is ready to pop. For the same reasons the saying "Don't fight the Fed" exists. Steve Keen himself learnt this the hard way. I haven't put too much thought into his debt jubilee theory. I do seem to remember though, that he not so much as solves the "moral hazard" but at least compensates the saver for the inconvenience by offering them the same amount of money. I'll mull this over and give comment on it later.
The only function of economic forecasting is to make astrology look respectable. J.K. Galbraith http://en.wikipedia.org/wiki/J._K._Galbraith for some older thinking.
Have any of you actually spoken to Steve? He's actually a really nice bloke and knows his stuff. Unlike most public economic commentators, he is actually qualified to speak about what he knows. It also remains conveniently forgotten time and again, Steve is one of the very few global economists who actually predicted and warned of the GFC event and was laughed at for it. Much like Peter Schiff was back in the US. All other considerations aside, I think it's fair to say that Steve's ideology that a lot of the problems today stem from debt is pretty much on the mark. Some have gotten rich over the last decade and a half because they know how to use debt to their advantage. But the majority are financial morons who have just gotten themselves into a lot of trouble and like a leaf in a whirlpool, have dragged everyone else down with them. No point actually telling people this though. They tell you to stfu, mind your own business and get with the program. I gotta say it... we reap what we sow!
For those that have done the reading, you'll find Marx and the Austrians agreed that when the economy starts to tank, the powers that be prop it up with a credit bubble that eventually has to pop. The main difference is that the Austrians see it as a function of central banking. Marxism went deeper and said central banks to this because the natural tendency of capitalism is for the rate of profit to decline over time as a function of the competitive process. So in my book, Marxism on this point goes deeper into the causes of the fiat fraudulence. People have an allergic reaction to the name "Marx" due to the spectacular failure of the USSR and Eastern Bloc. However, the problems that Marx identified as characteristic of a capitalist economy have not gone away. In fact, since the fall of the USSR they have intensified.
I agree Earthjade, many who simply see the word Marx and immediately discredit anything said after that are being very closed minded. I have to disagree with them though, that we will have return to socialism because the capitalist model will burn itself out. The Austrians also believe that the business cycle is caused directly by over use or accelerating money expansion/debt. Without this inflate bust, inflate bust cycle, we should be able to achieve slow but stable growth through productivity gains over time. With mis-alocations of capital being minor and the corrections oh so less painful. Over the decade prior to the bust, profits continued to go through the roof while productivity declined. If thats not a clear sign of a bubble I don't know what is. I think Peter Schiff is the best spoken commentator on this subject above them all. As boring as it may sound I would love to be in a conversation with Schiff and Keen. Would make for some interesting talk seeing where they agreed and disagreed. I do know this though. I would much rather have someone like Keen as Australian Treasurer than that complete muppet Swan.
I don't think we will move into socialism, but capitalism will need to evolve into something more rational and sustainable. Marx showed us a lot of what is wrong with the capitalist business cycle. While the Austrians are hopeful that if you let interest rates be free and allow the market to invest accordingly the market will smooth out crisis, Marx would have none of that and would say crisis is built-in and you can never escape it as long as you have a capitalist system. If we take crisis as flushing out the weak, inefficient and imprudent in an economy before the cycle returns to growth, Marx would argue the longer capitalism develops, the more resistant the market gets to "flushing out". We can see that today with the concept of "too big to fail". But then Marx will go off rambling about Jesuits or Jews like that crazy uncle at the Christmas party and that's when you back away. In the end, we need a system that: 1) Has a free and transparent market (the supply-demand mechanism is one of the best self-regulating mechanisms there is) 2) Rewards merit over privilege 3) Is environmentally sustainable 4) Focuses on innovation and efficiency rather than growth But at the same time: 5) It needs to provide for all members of society 6) Rewards production over speculation 7) Nurtures civil, political and economic freedoms In the end, we will probably need to draw on the insights of many different thinkers. Maybe good old Hegel and his idea of synthesis is the right idea after all (but he wrote his books like an insufferable a-hole).
Well one would hope that humans were smart enough to learn from past mistakes and when ever a down turn comes there are less business vulnerable to needing a flush out. But to connect this with "too big to fail" and to in any way vindicate or qualify Marx for such things is completely inaccurate IMO. And when it comes to the financial sector this is a perfect example of why the Austrians all around the world are very angry with government intervention in markets. As you said: 1) Has a free and transparent market (the supply-demand mechanism is one of the best self-regulating mechanisms there is). This is exactly right, but markets have been hampered by governments for so long. Capitalism itself has been distorted and manipulated by big business corrupting government for so long that I am not sure we can call what we have now Capitalism at all. But your point 5) "It needs to provide for all members of society". But how far do we take that? and define "provide"? If by that you mean a system that is fair for everyone, to keep the same amount (%) of their pay that they earn themselves because it rewards Merit over privilege and innovation and efficiency then I have to agree with you. We are far far far from that now. And not just at the corporate/government corruption level but at the socialist level at the bottom.
He is an educated fool who lives in an academic na na land and would't recognise a cash flow if it hit him in his gini coefficient cranium. Focus on what you can control, being ano retentive about something you have no control over is a waste of valuable time you don't have. Kind Regards non recourse
I hope you never need the services of an oncologist .... this society has a fiscal cancer but i suppose that's "different" ...
Australian Governments sure interfere in the housing market...Negative gearing surely must go so we can have a free market. First home buyers grant...The government gives $14k and up go the home prices...All Australians have got their noses in the trough and thats the way the government wants it. No grants up to around 1960 and all the young couples still managed to buy their own home! Regards Errol 43
