Thursday, 26 April 2012

Steve Keen Versus the Neoclassical Economic Model

There are two myths in banking: that bank debt can't be repaid, and that banks don't have any significant impact on macroeconomics. The former is held by many in the public, the latter is believed by the the dominant deluded school of economics, Neoclassicism--as Paul Krugman confirmed recently in his blog brawl with me. This presentation debunks both myths, using logic, dynamic modelling, and empirical data.

For some insights into this talk check out the comments at the above link (at Max Keiser). From what I can understand this seems to make sense. He claims that it is not the interest based banking system itself that is the problem but malinvestment including ponzi (unaffordable) asset price rises that first make things unaffordable leading to a crash that sinks an economy.

Perhaps watch this twice since Keen flys through the presentation. It's easier going the second time around.

[Posted at the SpookyWeather blog, April 26th, 2012.]

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