Talk with Positive Money in Hackney
Steve Keen
March 15, 2018
Steve Keen's Debt Watch
This was a fairly “a la carte” presentation of why bank creation of money matters as part of a Positive Money talk at the Hackney Downs Studios on March 14 2018. I started with how mainstream economists like Paul Krugman ignored banks in macroeconomics, until the Bank of England came out and stated definitively that banks create money, and they’re not constrained by their Reserves or Reserve Ratios in doing so.
Now there’s a classic mainstream economics paper claiming that there’s no difference between the model they prefer, where banks are just intermediaries between savers and borrowers, and the real world, where banks originate money and debt, so long as you assume, and I quote, “no uncertainty and thus no bank default”.
This a mere decade after a crisis that mainstream economists defend their failure to anticipate it by claiming that “no one could have seen it coming” (so it was uncertain), and where numerous bank defaults did happen!
This is the nonsense they defend by claiming that “assumptions don’t matter”. When pressed they’ll give, as an instance of a “simplifying assumption”, something sensible about leaving out the actual shape of the London Underground when producing a map of how to use it to get around London. But what they will do in their papers is more akin to making the “simplifying assumption” that gravity doesn’t exist to encourage you to step out the window from the 50th floor of a skyscraper. |
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2018-03-15
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