by Summary:
If you enjoyed this video, you might also like my most popular video, "Don't Study Economics, Study THIS Instead." https://www.youtube.com/watch?v=oO7iCv_NsPE I expect my editors will post a second half soon. So keep an eye out for the finale of the story I start to tell here. And if you're curious about Ravel, go to https://patreon.com/ravelation (This video was recorded in Fall 2024). -- Who is Dr. Steve Keen? Dr. Steve Keen is an influential economist who has dedicated over 50 years to challenging mainstream economic theories. Since his days as a university student, he has been engaged in a David vs. Goliath battle against conventional economic models. Holding a Ph.D. in economics, Dr. Keen is well-known for his critical analysis and advocacy for more realistic economic
Topics:
Steve Keen considers the following as important:
This could be interesting, too:
If you enjoyed this video, you might also like my most popular video, "Don't Study Economics, Study THIS Instead." https://www.youtube.com/watch?v=oO7iCv_NsPE I expect my editors will post a second half soon. So keep an eye out for the finale of the story I start to tell here. And if you're curious about Ravel, go to https://patreon.com/ravelation (This video was recorded in Fall 2024). -- Who is Dr. Steve Keen? Dr. Steve Keen is an influential economist who has dedicated over 50 years to challenging mainstream economic theories. Since his days as a university student, he has been engaged in a David vs. Goliath battle against conventional economic models. Holding a Ph.D. in economics, Dr. Keen is well-known for his critical analysis and advocacy for more realistic economic
Topics:
Steve Keen considers the following as important:
This could be interesting, too:
Robert Vienneau writes Austrian Capital Theory And Triple-Switching In The Corn-Tractor Model
Mike Norman writes The Accursed Tariffs — NeilW
Mike Norman writes IRS has agreed to share migrants’ tax information with ICE
Mike Norman writes Trump’s “Liberation Day”: Another PR Gag, or Global Reorientation Turning Point? — Simplicius
| If you enjoyed this video, you might also like my most popular video, "Don't Study Economics, Study THIS Instead." https://www.youtube.com/watch?v=oO7iCv_NsPE I expect my editors will post a second half soon. So keep an eye out for the finale of the story I start to tell here. And if you're curious about Ravel, go to https://patreon.com/ravelation (This video was recorded in Fall 2024). -- Who is Dr. Steve Keen? Dr. Steve Keen is an influential economist who has dedicated over 50 years to challenging mainstream economic theories. Since his days as a university student, he has been engaged in a David vs. Goliath battle against conventional economic models. Holding a Ph.D. in economics, Dr. Keen is well-known for his critical analysis and advocacy for more realistic economic approaches. His work emphasizes the importance of accounting for financial instability and incorporates elements of complex systems theory. Engineers, finance professionals, and IT experts will appreciate his methodical breakdown of economic phenomena and his development of the Minsky software, which models financial crises. Dr. Keen's contributions are crucial for anyone seeking a deeper understanding of how economic systems can impact technological and financial environments. His teachings offer valuable insights into the economic forces shaping our world. By following his analysis, professionals can gain a better grasp of economic dynamics that influence their fields. |
Engineers, Finance, IT Pros, and Economic Enthusiasts:
Learn 50+ years of Real Economics in only 7 Weeks. Weekly with me. Learn more: https://apply.stevekeenfree.com
HEY STEVE – When are you doing podcasts again.
I have new information on ENERGY to discuss.
1) Australia's cost of living crisis like many others is being driven by energy prices either in part or as at least a major driver.
My simple explanation is like one of Gary Stevenson's "look at the cash flow" explanations.
– If households are paying more for energy then they have less money to spend on goods & services or to put into savings or investments.
– That is also happening when all those goods and services are becoming more expensive because all the companies supplying those goods and services are also paying more for energy and those costs get passed onto consumers.
– So if energy prices go up households get hit from both sides. They pay more for energy and have less money to buy things as those things become more expensive. I call this the double energy choke because its like 2 nooses around you neck pulling in different directions.
– This means ordinary people have less potential to save or invest and grow wealth which is one of Gary's main points.
2) Australia's renewable system like many others is being mismanaged by the energy regulator who is a gaggle of economists. There are no engineers in the system at all. The whole show is driven by economists. I also heard that Britain has the same sorts of issues. There's a YT channel Economics Help and he did a video titled "The Uncomfortable Truth Why UK Energy Prices are so High" and he's mostly right but not 100%. He's definitely RIGHT on the management and contracts side because he might as well be describing Australia.
3) You NOT buddy Bjorn Lomborg did a video for the Alliance for Responsible Citizens (yeah that's BS) and blamed the energy crisis on green energy policies. Its here on YouTube.
Why don't you do some teaser shorts back to these longer videos as your contribution to economics is vital
@@goodstuff-c6d He does actually.
Dear Prof Keen,
Despite often agreeing with your posts, my reading of what Reeves has been thinking and doing is different from yours in this case, and to my mind it’s far more to do with psychology than anything else.
“Balancing the books” has, since Thatcher’s time, been political shorthand for a government wanting to be seen as financially/fiscally and economically prudent. It’s a relatively easy way to get people who know absolutely nothing about (macro)economics to relate, on a personal level, to the rationale behind government spending cuts. This does *not*, however, mean that she literally believes this to be the reality herself.
It seems to me she’s been using this particular mantra more as a shibboleth aimed at various fiscally “conservative” groups on which this particular Labour government relies for support: (centre-)right voters who were sick of the Tories and wanted them out more than particularly wanting a red-blooded Labour government in; and the financial/bond markets, which got really, and very damagingly, spooked when Truss tried to write that – effectively – “uncovered cheque” in the “mini fiscal event” in the autumn of 2023.
It’s literally inconceivable to me that someone like Reeves, who spent several of her formative years working at the Bank of England, and was mentored by Alastair Darling – who to my mind, together with Gordon Brown, did an admirable job at the time of the global credit crunch – should seriously believe that any government spending needs to be pre-covered by tax income. However, the serious warning imparted by the financial markets on Truss, has not been lost on Reeves, and I feel she’s consequently been particularly careful about signalling that she means to find fiscal and/or economic growth cover for any additional borrowing that she may be planning to do.
She has also spoken (in her Mais lecture of – iirc – about a year ago), of using government investment to help “crowd in” the generally more risk-averse private sector money into socially valuable economic development. Obviously, any returns on investment for private parties, from developments for which part of their business model is a non-financially quantifiable “social value”, would need to feel sufficiently guaranteed by government financial backing for them to feel it was a competitive venture in a very crowded (global) market. This means that government finances must feel robust enough for these private parties to feel comfortable about “crowding in”.
The way I see her current policy course is that her cuts to – theoretically, though as it turns out, unfortunately not always practically – “unnecessary” public spending (eg the WFA, which was supposed to only have been cut for those who could afford it and cost money that could be better spent elsewhere) are intended to signal to conservative stakeholders that this government is looking after the pennies, and will not rashly overspend.
Also, the huge chunk of “unproductive” government expenditure related to an ageing population (pensions and health and social care) is rather a financial millstone around the government’s neck even without any unnecessary outgoings.
On top of this, I feel it’s not so much the debt-to-GDP ratio that appears to be worrying her (that’s been worse in the past, though admittedly it’s far from rosy now). It’s the sums needed to maintain the debt, effectively flying unproductively out the window, that bother her. The more money goes on that, the less there is to spend on productive and/or necessary government spending. Being seen to be borrowing “rashly”, the way Truss did, will cause a real risk of the country’s borrowing terms becoming (even) less favourable, leading to an increase in this unproductive chunk of spending.
And yes, there is still also a “Brexit hangover hole” of several tens of billions annually in government income that would’ve come in handy, which for political reasons – partly, I believe, to prevent any Remainers affected by spending cuts blaming Leave voters for their misery and deciding to take it out on them – Labour is loath to call by name, but which definitely cramps the government’s spending style compared to the counterfactual model in which the country is still in the EU’s Single Market.
So, in all, I feel that by taking what she says, entirely literally, this may put more economically literate people on the wrong track about what she’s doing and what her intentions are.
Kind regards from a former UK resident now living in The Netherlands.
@@alldeeplearning949 First of he doesn't claim to know things nobody else knows.
Steve claims that MAIN STREAM don't know and don't understand a number of fundamentals about how economies actually work BECAUSE THEY ARE NOT TAUGHT THEM.
I'm an engineer and I can tell you that MAIN STREAM economists know nothing about engineering and especially the major supply systems of energy and water as well as infrastructure. Yet they are constantly trying to manage these things with market solutions WHICH DO NOT WORK.
If you ever want your power bills to come down then start listening.
A slight recommendation to consider. Is it necessary to make the video "choppy". I realize that approach to video editing might be fashionable . . . I prefer to not be distracted by choppy video editing. I prefer to focus on the content.
Hi, I know you Prof Keen from watching the Decouple Media channel, Dr Chris Keefer. I saw your interview, obvs. But that was a while ago. Thank the YT algo!
I wish you would show simple alternative forecasts (results) of future debt, interest expense and GDP based on (1) old/current economic models and (2) your new model. Your normal presentations are too complicated (TMI – too much information)
You're assuming the current "Labour Party" is a social democratic party. It isn't. It was when Jeremy Corbyn was the leader of the party but since the coup by Starmer and his Zionist backers it has been turned into a Tory Lite Party.
The government has to be careful of bond repayment costs. E.g. in the USA it is overtaking military spending. South-Africa spends 22% on debt repayment, UK is at 10% (of government budget). In countries that cannot print currency (e.g. EU), this may spiral out of control effectively consuming a large part of the budget and depressing government spending. In countries that can print currency, it usually results in inflation. Essentially the espoused theory only holds for a limited range. Essentially akin to having linearised a non-linear function and then using the linearised function over the whole domain of the original function, which is a terrible idea.
The disastrous way things are going, we don’t seem to have any one with a single correct, viable idea. ?
Constructive and well meant criticism: Your audio is completely f#*ked. People forgive bad video, not bad audio. bad audio kills views and credibility. Imagine if Jesus farted through the sermon on the mount. Your message matters, I hope you get it fixed.
I've since had a professional makeover of my office and now use a high quality Shure mic, and a prompter. You'll see the improvement in more recent videos.
Britain has to reevaluate how and what it can make and sell to other countries. While the pound recirculates itself inland it’ll lose value abroad until no one wants it this so simple to understand it’s unbelievable that economic professors don’t!
Council tax wont be paid by the slaves too there pay masters, then the government will crumble
Cut out that dreadful background music; it is horribly distracting , adds nothing and impairs concentration on what is being presented.
Agreed. The marketing team that puts these together has gotten the message.
Why, even after she's exposed as a liar, is she still in that role???
Talk too fast does not clarify or inform. Just irritates.
The double entry bookkeeping line "Government Sells Bonds" debited to "Households" is a much greater catastrophe but only for the depositors not waged or salaried with the borrowing of the bond amounts since they also have to repay it in taxes to the lenders to government. It's an unlawful credit for those paid with the bond sales, which requires the banks to first credit it to their depositors not employed by government before it can be spent, saved, or borrowed with by those paid by government. It is also I think “firms”, foreign investors and banks mostly that now buy bonds.
Part of the 'bonds' should also be debited to firms and to the banks since they also have to pay their share of taxes to enable the bond holders to be repaid and since government borrows the money from the depositors not paid by it, “firms” and foreign investors, it should not be credited to it at all on that line and if that's how the double entry bookkeeping figures for banks are audited as lawful it conceals an enormous and criminal fraud on those depositors not employed or outsourced to by government.
Title:
British government spending cuts will probably increase the fiscal deficit and make the ‘non negotiable’ fiscal rules impossible to achieve.
March 6th 2025.
The British press are reporting that the Government there is planning further spending cuts of the order of billions of pounds because the economic environment has changed and the current fiscal trajectory is threatening their self-imposed fiscal rules thresholds. We already heard last week how the Government is significantly cutting Overseas Aid as it ramps up military expenditure. Now, it is reported that billions will be cut from the welfare area and the justification being used is that there is widespread rorting of that system by welfare cheats. There are several points to make. First, getting rid of rorting is desirable. But I have seen no credible research that suggests such skiving is of a scale sufficient to justify cutting billions out of welfare outlays. Second, quite apart from that question, the micro attack on the welfare outlays have macroeconomic consequences. The British Office of Budget Responsibility estimates that the output gap is close to zero which means it is claiming there is full employment. Even if that is true, that state is underpinned by the current level of government spending (whether it is on cheats or not). If the spending cuts that are targetting rorting are not replaced by spending elsewhere then a recession will occur and the Government will surely fail to achieve its ‘non negotiable’ fiscal rule targets. It is a mess of their own making.
William Mitchell – Modern Monetary Theory
Macroeconomic research, teaching and advocacy.
The rest of this blog can be viewed on line for free for the general public.
If people don't start listening to Professors like Steve Keen and William Mitchell about how our modern monatery system actually works, sadly, economies will continue to deteriorate.
Title:
How to discuss MMT without discussing it – BIS style.
December 30th 2019.
'It is clear that the BIS authors have not the slightest grasp of what MMT is about.
When they say MMT is “seignorage without limits” they are trying to reduce and absorb our work back into the flawed mainstream framework.
The concept of seignorage goes back to medieval times and is often tied in with the so-called “Great Debasement”, which referred to the period after the ascension of Henry VIII in 1509 when the silver metal content of the currency (coins) was steadily reduced over the next 50 years to create metal ‘wealth’ for the monarch.
The debasement strategy was also deployed by French monarchs.
The way it worked was outlined in the 1997 paper from the Federal Reserve Bank of Minneapolis – The Debasement Puzzle: An Essay on Medieval Monetary History.
Essentially, valuable metals (silver and gold) were brought to the mints, which were “under direct control of the sovereign” but “run as businesses by private entrepreneurs”, by sellers, and “the mint retained a fraction of the metal – a charge known as seignorage.”
By increasing the so-called “minting volumes”, the sovereign could increase the revenue they personally enjoyed from creating the gap between the cost of producing the coins and their legal tender value.
This process thus describes a situation where “the difference between the value of money and the cost to produce and distribute it” (Source).
The concept of “monetary seigniorage” stems from these early insights applicable to commodity currencies.
The 1992 paper from the Federal Reserve Bank of St. Louis – Seigniorage in the United States: How Much Does the U.S. Government Make from Money Production? – explains how mainstream economists attempt to extend the medieval concept to apply to a fiat monetary economy.
They say:
… the revenue from money creation is called “seigniorage.” Unfortunately, this term has been subject to a variety of interpretations in the literature.
The reason mainstream monetary economists wish to continue using the concept is because it is central to their claims that government deficits are inflationary, especially if there are no bonds issued.
The idea reflects the flawed view that somehow the government is financially constrained in its spending and must impose an ‘inflation tax’ on the non-government sector if it chooses to deficit spend without raising funds from bond sales to the non-government sector.
The ‘tax’ arises because of the alleged link between expansion of the monetary base and the acceleration of prices, all linked causally via the monetary multiplier.
None of the mechanisms that are invoked to support the causal ideation are applicable to a fiat-currency issuing government.
I have written many blog posts that untangle each of the alleged causal steps.
Please go to the blog posts under the category – Debriefing 101 – for more detail.
MMT does not claim that there are limitless opportunities for a currency-issuing government to transfer ‘real’ value (embedded in the goods and services it buys) from the non-government sector to the government sector.
Everytime the government credits a bank account in the non-government sector as part of a procurement contract or a direct employment arrangement it is transferring ‘real’ value.
If the spending pushes up the price of the goods and services being sought for public use then the real value per dollar spent declines.
That is no different to a household buying goods and services as it seeks to transfer ‘real’ value from a shop owner to the household. It can also create a decline in ‘real’ value.
That is the point about there being inflation risk in all spending.
There is a ‘real’ limit to spending. That is core MMT.
The BIS has clearly not understood that and is thus content to produce a gross misrepresentation of what our work is about.
Which is scandalous really given its status as a major public institution funded by national central banks.
The BIS claim that “MMT poses significant problems” follows their reading of two Op Ed articles (Summers and Krugman).
All the alleged problems are related to the erroneous claim that government deficits are inflationary. That is the only card they think they have to play in these situations.
William Mitchell Modern Monetary Theory Macroeconomic research, teaching and advocacy.
The rest of this blog can be viewed on line free to the general public.
Shocking disgraceful should be sacked no experience tea girl from accountants
Economics is a purely theoretical subject and as a rule economists live in a fantasy land which bears no resemblance to ordinary citizens reality. So we can ignore this claptrap.
There is renewed debate in Britain at present on the use and design of the new government’s fiscal rules, which many people are now saying will force expenditure cuts which will “damage the ‘foundations of the economy”, according to the Financial Times article (September 16, 2024) –
Titled :UK spending cuts would damage 'foundations of the economy' Reeves told.
Those reported ‘telling’ Reeves include British economists, who were instrumental in the design of the rules that the new Chancellor has taken on and deemed necessary to rigidly control government spending. The economists claim that if Reeves continues to operate according to the fiscal rule “inherited by the Labour government” it will cut public investment expenditure significantly and undermine prosperity. I agree that the application of the ‘Fiscal Rules’ will be damaging but I find it amusing that some of the ‘Letter Writing Economists’ were prominent in advocating such rules in the past as the way ahead for British Labour are now criticising those rules.
The overall fiscal framework invoked by Reeves is poorly conceived and not as some of those Letter-writing economists previously claimed were justified by economic theory.
They might have been justified by the mainstream macroeconomic theory but that body of work has categorically failed to stand up to the scrutiny of the real world.
Think GFC as an example.
But the Labour rules have no justification once we realise that the goal of fiscal policy is not to achieve some financial outcomes (debt to GDP ratio, primary balance, whatever).
Rather it is to underpin prosperity in a world where the private economy is inherently unstable.
In that sense, the rules work against prosperity, which is, in part, the basis of the claims made in the Financial Times letter.
The UK has always punished the poorest in order to pay off debts run up by the rich, regardless of the party in charge. At least after WWI and WWII, the welfare state and NHS were instituted in order to soften the blow. Now they're being pared back.
If currency – issuing governments are so free of financial constraints, then why do they continue to tax and issue debt would be a good question.
While there are legitimate reasons for governments to raise taxes and issue debt (which are, however, different from the ones claimed by mainstream economists and policymakers.
The simple answer is that most currency issuing governments such as the UK continue to impose voluntary constraints on themselves that resemble the spending constraints that existed under the gold standard.
These ideological motivated fiscal rules are designed to limit the capacity of government to run deficits and/or borrow from the central bank and non government sector.
The two main voluntary, operational rules which are typical of many countries are:
1, the treasury must have sufficient deposits in its account at the central bank before it can spend.
2, if the treasury does not have sufficient deposits to cover mandated spending, it must issue bonds to 'finance' the deficit.
It cannot sell the newly issued bonds to the central bank on the primary market, it must sell them to private banks or investors.
However, the central bank can buy these bonds on the secondary markets.
In various countries, this goes hand in hand with 'debt ceilings' of various kinds, legislative limits on the amount of national debt that can be issued.
From a financing perspective, none of these complex accounting structures are necessary.
However, governments continue to employ them to obfuscate the way government spending actually works and thus to rationalise the imposition of neoliberal fiscal policies.
Politicians know that raising public debt can be politically manipulated and demonised in order to get citizens and workers to accept, demand even, policies that are not in their class interests.