[45] Steve Keen on private debt and Australia and BitCoin as an enduring platform

Steve Keen is a well-known economist who is considered one of the leading critics of mainstream economics’ treatment of debt and money. He considers himself a post-Keynesian in that he adheres to John Maynard Keynes’ idea that demand matters in the long as well as the short run. But his focus is debt , and specifically how Hyman Minsky’s “financial instability hypothesis” is reflected in highly indebted economies.

Right now, Dr. Keen is working on an ambitious mathematical model of financial instability called simply, ‘Minsky’.
Erin Ade spoke with Dr. Keen about debt generally and private debt specifically as well as the Australian economy.

Also, Erin Ade and Edward Harrison discuss how Bitcoin purchases at casino hotels will be processed through BitPay, a service that streamlines transactions using tablet and mobile interfaces. Could BitCoin itself crash and burn but the platform and application endure anyway?

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18 thoughts on “[45] Steve Keen on private debt and Australia and BitCoin as an enduring platform

  1. The Australian economy sounds like the Canadian economy, massive real
    estate bubble and wholly dependant on China.

  2. Relative to other shows, good. Presenting a bit clunky. Steve Keen:
    rationally impeccable in his assessment. Will the authorities take heed:
    when it’s too late. No harm, the Ozzies have been floating on a commodities
    and indeed arrogance bubble for years now. Chinese policy: enter stage
    left.
    However, what may save OZ, will be the precious metals sector. Lucky
    bast*rds.

  3. Say bye bye to the currency sa we know it. Silver to drop to $5 bucks, gold
    to $25. PMs are out, cryptos are in. Welcome to 21st century.

  4. Keen is right that private debt is a massive problem, but why? Because it’s
    guaranteed by public debt.

    Without a lender of last resort with the power to repay private debt with
    public debt / printed money, how far do you think the banks would be
    willing to extend themselves?

  5. 4:56 “The private sector stopped borrowing money and that PRECISELY what
    caused this crisis”
    Precisely?? How someone meant to borrow money for a mortgage whenever their
    wage rates don’t increase at the same rate as house pieces? What caused
    this crisis was cheap money, created out of thin air, chasing a bubble.

    Ie this crisis was caused by the “solution” to the last crisis. Lower
    interest rates and pump money into the economy. Then interest sensitive
    assets like houses have their nominal values increase. And the snowball
    affect continues on until house prices are completely disconnected with the
    rest of the economy. And THATS what caused this crisis!!!

  6. 8:00 “You will not consume no matter how low rates go”
    Steve is my favourite lefty but i don’t agree with him when he says stupid
    things like this. I wont even go into why its wrong

  7. I am not sure why Mr. Keen is so keen about money printing during a crisis.
    That has already been tried last time. Give Austrian economics one chance.
    Let the Invisible hand show its magic.

  8. Randazzo’s idea to ditch income tax or company tax in favour of a
    consumption tax is a regressive step that will further favour the rich at
    the expense of the poor.

  9. The Tesla is more hype than a next generation vehicle. The Tesla requires
    gov’t assistance to succeed, but this is a relatively minor problem. The
    oil & gas industry plus the environmental energy industry also require
    government assistance. Amongst various forms of government aid, the oil &
    gas industry depends on the US military installing puppet governments &
    proxy rebels in carbon-energy rich regions.

    The biggest problem with the Tesla is that it uses batteries. These
    batteries require toxic methods of extracting natural resources, using
    toxic factories to turn the natural resources into batteries, operating a
    vehicle containing at least one massive toxic battery, & the battery is
    probably recharged with power plants that burn carbon energy sources. In
    other words, you’re either going to burn carbon energy in your combustion
    engine vehicle, or burn carbon energy at a power plant that recharges your
    battery-powered vehicle.

    I know nuclear power & renewable energy exists, but they are NOT the norm
    in America. Nuclear power has its major drawbacks, as evidenced by the
    General Electric nuclear power-plants at Fukushima, Japan. Renewable energy
    is good, but also has its own limitations: (1) Wind mills have to be
    located in the right spot to generate enough electricity in a reliable
    manner & without killing too many birds. (2) Solar energy could only be
    consistently used in some locations. (3) Hydropower could only be used in
    areas with large bodies on water. (4) Geothermal power is typically an
    unreliable technology that could horrifically damage the Earth’s thermal
    interior.

    I think we need a diversified energy source until a single one proves
    itself to be capable of replacing carbon energy.

  10. LOL, they didn’t get to bitcoin until 22:30 yet the title states bitcoin
    prominently. It’s a deceptive title.
    – – Edit – –
    Yes bitcoin is starting to ease it’s way into the mainstream. Farmville
    from facebook is supposedly taking it, so is overstock.com. Soon we’ll see
    fast food joints taking it. I think in a year we’ll be looking with envy at
    how cheap bitcoins currently are. That said, this is high risk. Bitcoins
    could be 10 thousand by december or they could be zero if the system
    crashes somehow.
    Sure we’re seeing bubble behavior (or we did back in November) but the
    potential behind the system is no bubble! And comparing it to the tulip
    bubble is silly. Bitcoins don’t reproduce! Duh! They have to be
    manufactured using a massive amount of computer power, which is so
    expensive that you can’t really make a profit doing it. I suspect those
    doing the mining are mining for the future just as I’m buying bitcoins for
    the growth potential I see in the future.

  11. I totally disagree with Steve Keen and his skewed reasoning on the private
    debt causing the crisis for the following reaons:-

    Private debt as he says cannot be extinguished like public debt. That is
    not a reson why it is not as bad a problem but a reason why it is bad
    since the debt is simply passed on to the private sector by the money
    printing mecahanism.

    What happens is the government prints to extinguish it’s debt and those
    extra currency units depreciate the purchasing power of the non government
    (private) sector. This trnasfers debt from those who have incurred loans to
    those who have made savings or loans since the depreciated currency is a
    lot easier to pay back than higher value currency and also is worth less to
    the person who made the loans. In short it rewards those who are in debt.

    Added to this is the fact that government can print to extinguish debt
    discourages investors to loan since they get back depreciated currency if
    they do loan.

    Additionally the fact that government can print makes them less accountable
    and more reckless with getting into debt. It is no discouragement to
    making poorly thought out decisions as where to allocate money.

    In summary I would also like to point out the fact that private debt is
    most often debt attributable to a person and that person is likely to be
    accountable to the extent of losing all of their personal savngs.

    Public debt is passed on to private people who carry the burden who often
    must carry it for years.

    So which is more dangerous – An accountable person who might lose all OR a
    public institution the losses of which there is little no personal
    accountability? .

    But if he wants to argue against those points I invite him to do so. The
    reasons hav not been put so far!

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