by Summary:
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 even less spending. It's a vicious cycle. The golden age of American capitalism thrived on low private debt levels. In the 1950s and 60s, households had manageable debt. People could afford homes, cars, and education without mortgaging their future. The economy boomed. Contrast that with today.
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Steve Keen considers the following as important:
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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 even less spending. It's a vicious cycle. The golden age of American capitalism thrived on low private debt levels. In the 1950s and 60s, households had manageable debt. People could afford homes, cars, and education without mortgaging their future. The economy boomed. Contrast that with today.
Topics:
Steve Keen considers the following as important:
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| 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 even less spending. It's a vicious cycle. The golden age of American capitalism thrived on low private debt levels. In the 1950s and 60s, households had manageable debt. People could afford homes, cars, and education without mortgaging their future. The economy boomed. Contrast that with today. Households are buried under mountains of debt. Student loans, credit cards, mortgages. It's a financial quicksand. We must return to this model. The government should use its capability to create money, reduce household debt, and democratize share ownership. This isn't some radical idea. It's practical. The government can create money. It can buy up household debt and cancel it. Imagine waking up one day and your student loans are gone. Your credit card debt is wiped out. You'd have more money to spend. Businesses would see more customers. Jobs would be created. And democratizing share ownership? It's about giving everyone a stake in the economy. When people own shares, they benefit from economic growth. It's not just the wealthy getting wealthier. It's everyone. So, let's stop listening to the mainstream economic cult. Let's focus on reducing private debt. Let's create a fairer, more stable economy. Because the alternative is more financial crises, more inequality, and more hardship for ordinary people. |
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When was the golden age of capitalism?