Steve Keen’s Debt Watch

Reducing private debt is crucial for economic stability. Yet, mainstream economists like Paul Krugman and Ben Bernanke seem to think otherwise. They argue that debt doesn't matter because one person's debt is another person's asset. This belief is fundamentally flawed. Why? Because it ignores the reality of debt dynamics. When households are drowning in debt, they cut back on spending. Less spending means less income for businesses. Less income for businesses means layoffs. Layoffs mean...

Quantitative easing has amplified inequality. It drives up share prices, benefiting those who own the majority of shares—the wealthy. Meanwhile, the vast majority of Americans, who own a trivial amount, see no benefit. This policy has deepened the divide, not bridged it. Let's break this down. Mainstream economists often tout quantitative easing as a magic bullet for economic woes. They claim it stimulates the economy by increasing liquidity. But here's the catch: it...

401(k)s are a joke for the working class. The common belief is that 401(k)s are a solid retirement plan for everyone. But that's a myth. A trivial amount is owned by the working class, while the rich hold the majority. According to the Economic Policy Institute, the top 10% of earners own 84% of all stocks. So, when share prices increase, it's the wealthy who benefit, not the average worker. This isn't just a minor issue. It's a systemic problem. America remains a capitalist...

The Federal Reserve's misunderstanding of the 2007 crisis has only worsened inequality. They pushed quantitative easing, thinking it would save the economy. Instead, it inflated asset prices. Who benefits? The wealthy. Most people own minimal shares. They gain nothing. It's like giving a starving man a cookbook. Looks helpful, but doesn't fill his stomach. The Fed's actions have tightened the inequality rubber band. It's stretched to its limit. Ready to snap. When it does, the...

The mainstream belief is that deregulated markets lead to economic prosperity. This is wrong. The 2007 housing crisis is a glaring example. Unregulated mortgage lending led to excessive debt, causing a financial meltdown. Instead, we need to regulate mortgage lending to prevent such excesses. When banks lend irresponsibly, they inflate housing bubbles. These bubbles burst, leaving ordinary people in financial ruin. Regulation can curb this destructive cycle. Another common...

Mainstream economics ignores three crucial elements: banks, debt, and money. This omission is like trying to understand bird flight without considering wings. Imagine trying to explain how a car works but ignoring the engine. That's what mainstream economists do when they leave out banks, debt, and money. They assume these elements are irrelevant or will naturally balance out. But that's not how the real world operates. Banks create money through lending, which fuels economic...

This obsession with government surpluses is misguided. Why? Because it overlooks the ticking time bomb of private debt. When private debt balloons, it sets the stage for economic crises. Take the 2007 housing crisis. Governments were patting themselves on the back for their fiscal discipline. Meanwhile, private debt was skyrocketing. The result? A catastrophic financial meltdown. Reducing government debt while private debt soars is like fixing a leaky faucet while your house is...

It's true that MMTers rarely discuss how the private banking system creates money. But it's easy to show both credit and fiat money creation in Ravel

Central Bank direct purchases of Treasury Bonds are banned by law in most countries. But they're not banned by the accounting. If they did happen, guess who would suffer the most?

Legislative laws--rather than the laws of double-entry bookkeeping--require Central Banks to buy Treasury Bonds from the private banks in Open Market Operations, rather than directly from the Treasury. This video explains this process.