Steve Keen vs Chris Caton

[Trichter]

Here is an interview on ABC's PM with Steve Keen and Chris Caton. The transcript is included.

http://www.abc.net.au/worldtoday/content/2011/s3286793.htm

An excerpt:

MARK COLVIN: Alright, let me, we ought to wind up gradually.

Chris Caton, what do you think are the chances of avoiding stagflation and what should we do about it?

CHRIS CATON: Well there's no inflation to be stagflation. The

MARK COLVIN: In Australia, what about the world?

CHRIS CATON: Well the issue is avoiding

STEVE KEEN: Deflation, debt deflation.

CHRIS CATON: I would say we're 80 per cent likely to avoid a double-dip recession in, well either in Europe, or the US, or the world in general. It is clear this is a period that the world economy has lost a lot of momentum. My suspicion is that this is a temporary thing it's going through.

MARK COLVIN: Steve Keen?

STEVE KEEN: I think it's permanent until the debt levels are paid down. We're in a debt deflation where deleveraging by the private sector is going to reduce aggregate demand below aggregate supply and will slowly grind down.

MARK COLVIN: And the question of what we do about it?

STEVE KEEN: We have to abolish the debt. The debt should never have been issued in the first place and the financial institution that issued should go bankrupt.

 

[errol43]

I thought there would have been a bigger response to this post than none at all..Three hours on a Friday night ..Maybe SS members are too busy watching the roller coaster ride at the silver carnival..

Thanks for this post.. well worth a read!

Regards Errol 43

 

[kram]

Finished listening to it a little earlier

cracked up a bit when Steve buts in during this

CHRIS CATON: Can I just say that in the long run there's no magic constancy between debt and GDP. For a start what you're doing is dividing a stock

STEVE KEEN: Oh please Chris don't hit me with that one, that's a silly comment because the people did the same thing about government debt and nobody ever whinges about that. It's a blind spot neoclassical economists have about the level of private debt because they believe the private sector's always rational, they've been through the biggest irrational bubble in history.

MARK COLVIN: Let's Chris

CHRIS CATON: All I'm saying Steve is, you can make your same point if you like another way, but to me you really have to look at the level of debt and the level of assets.

STEVE KEEN: Level of assets have got three letters at the front ASS. I think we should take them importantly. Assets can collapse in value overnight, as we've seen today, you're liabilities remain there, and it's liabilities that are driving this debt crisis.

They've got totally out of hand, and you, mate there may not be a magical level of debt, but when you have it going from 45 per cent of GDP to 300 per cent that is a runaway exponential growth process that can't be sustained. And when it broke that's what caused the financial crisis.

And we're now in a permanent stage of deleveraging until we get back down to similar levels, about 100 per cent of GDP.

 

[Old Codger]

Chris Caton is much like all economic talking heads on TV.

Still has his head in a Year 12 text book.



OC

 

[Trichter]

Chris Caton is much like all economic talking heads on TV.

Still has his head in a Year 12 text book.



OC

In contrast, Steve Keen has honed his rhetoric significantly in the last couple of years and is laconic and precise. It's pretty rare to hear the whole mess summed up in such few words... and on national radio no less. $2.1 trillion in market value was wiped off the MSCI All Country World Index this week alone (much of it disappearing from banks) and there is no government that can counteract that. Neither the EU or America has a lazy few trillion to spend.