by Summary:
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 belief is that private debt doesn't matter. This is also wrong. High private debt levels stifle economic growth. When households are drowning in debt, they can't spend on goods and services. This reduces demand, leading to slower economic growth. Policies to reduce private debt levels are
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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 belief is that private debt doesn't matter. This is also wrong. High private debt levels stifle economic growth. When households are drowning in debt, they can't spend on goods and services. This reduces demand, leading to slower economic growth. Policies to reduce private debt levels are
Topics:
Steve Keen considers the following as important:
This could be interesting, too:
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| 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 belief is that private debt doesn't matter. This is also wrong. High private debt levels stifle economic growth. When households are drowning in debt, they can't spend on goods and services. This reduces demand, leading to slower economic growth. Policies to reduce private debt levels are crucial. Debt jubilees or targeted debt relief can free up household income for spending, boosting the economy. Mainstream economists often focus on asset price inflation as a sign of economic health. This is misguided. Rising stock and housing prices don't reflect real economic growth. They create wealth for a few while leaving the majority behind. We need to shift our focus to real economic growth. Investing in infrastructure, education, and technology can create jobs and improve living standards. This is the path to sustainable prosperity. Ignoring these steps risks repeating past mistakes. We've seen the consequences of unregulated lending and high private debt. We can't afford another financial crisis. It's time to learn from history and implement policies that promote real economic growth. The stakes are too high to ignore. |
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Invaluable and accurate macro info. Thanks Steve