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PODCAST

Debunking Economics - the podcast

Steve Keen & Phil Dobbie

Economist Steve Keen talks to Phil Dobbie about the failings of the neoclassical economics and how it reflects on society. Hosted on Acast. See acast.com/privacy for more information.

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All Episodes

35:37

More on how money is created

Debunking Economics - the podcast ·

2025/02/05

Phil asked Steve a lot last week about how bank create money through the loans they issue.But he has been, it’s fair to say, a little less convinced about how government deficits create money. So prepare for a light bulb moment as Steve breaks down the process that sees the government spending more, with more money moved to the private sector, and people buying bonds, effectively with new money.They also answer a couple of listeners questions -one on the impact of Donald Trump’s tax cuts,another on

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45:50

Coinucopia’s thriving banking sector

Debunking Economics - the podcast ·

2025/01/29

Steve and Phil have described the island of Coinucopia in previous editions of the podcast. It started as a place where only coins were legal tender, and the supply of coins didn’t increase.They explained how that created deflation and inhibited growth, so the government started adding more coins. Then they let banks issue loans. Now, what happens when the island allows banks to issue electronic loans. Actually, life becomes much simpler. Much simpler than most conventional economists would have you

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37:03

Reeves off track on growth

Debunking Economics - the podcast ·

2025/01/22

Rachel Reeves, the UK Chancellor, has fallen into the debt-trap argument. She says she is focused on growth, but she is also determined to balance the budget. Cuts to government spending is part of the picture, but her biggest attack has been on business, increasing tax on employment. You could argue that if you are going to tax anywhere, taxing business is better than taxing personal income, but Steve argues that anything that drives money out of the real economy will slow growth, evidenced by the

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39:51

The population clock

Debunking Economics - the podcast ·

2025/01/15

There are, its estimated, 8.2 billion people on the planet.The UN projects that the world's population will reach 9.7 billion by 2050 and 11.2 billion by 2100. We won’t reach that, says Steve Keen. Even if we ignore climate change, we’ll exceed our capacity to support the population, and the as countries become richer their fertility rate will decline.The hope is that the natural decline happens before more extreme declines brought about by war, climate change and starvation. But, even intis best

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44:20

When Coincupia starts to allow loans and bank notes

Debunking Economics - the podcast ·

2025/01/08

Last week Phil introduced us to the island of Coinucopia, where only a limited supply of gold coins could be used to keep the economy functioning. But the island is suffering from very slow economic growth. Steve explains how any innovation, that sees new products come to market, will see the same money chasing more goods, so prices will necessarily come down. That’s until the island decides to allow bank loans. At first, they only allow banks to loan out coins that have been deposited with them,

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30:15

The cash only economy where economics works

Debunking Economics - the podcast ·

2025/01/01

This week Phil introduces Steve Keen to the fictional island of Cornucopia. It’s a simple place, where the only trade takes place with gold coins.Banks are not allowed to give loans, and the money supply remains constant, unless the Chancellor decides to mint new ones.In such circumstances, how many basic economic principles work? Most of them, it seems. Sadly, this is not the real world, and economists who practice double entry book-keeping are imprisoned. Until the Chancellor realises there’s no

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42:32

Is income disparity essential for growth?

Debunking Economics - the podcast ·

2024/12/25

Elon Musk has been moaning that he pays too much tax.He wants to keep more of the $14 billion or so that he earns each year. But has he got a point? Do we need to the opportunity to become incredibly wealthy to drive innovation. If we had more equal levels of income, would we actually suffer from lower growth, so everyone would end up worse off.? Phi puts the question to Steve Keen on this Christmas edition of the Debunking Economics podcast. Hosted on Acast. See acast.com/privacy for more

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39:00

What do central banks do?

Debunking Economics - the podcast ·

2024/12/18

When central banks declare a new interest rate, how does that magic into existence? Steve explains how they trade in bonds, to drive yields close to their target rate. If they are buying up bonds held by pension funds and the like, are they also adding to the money supply?Could that have more impact on the health of the economy than playing with interest rates? But the problem is, the money created is circulating in the financial sector. If the central bank really wanted to boost the economy, it

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45:14

Banks, reserves, lending and money supply

Debunking Economics - the podcast ·

2024/12/11

There’s a common myth around banks. That banks are the intermediaries who collect deposits from customers, keep a bit in reserve, then lend out the rest at a higher interest rate. That argument then extends to a multiplier effect, where the money loaned out is deposited in banks, freeing up more money for further loans.The multiplier is how textbooks argue that banks create new money for the economy. This week Steve argues that the multiplier doesn’t exist. Not in that way anyway. And banks create

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42:18

Government debt, bonds and money supply

Debunking Economics - the podcast ·

2024/12/04

Does government debt expand the supply of money?According to Modern Monetary theory, yes it does. It’s all down to simple double-entry book-keeping and an understanding of the role of financial equity.As Steve explains, in this step-by-step guide, for the private sector to experience positive equity, the government sector has to have negative equity. In other words, without the government sector spending more than it’s earning, there’s no new money being added to the private sector. As Stephanie

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40:07

Can Europe be Draghi-ed out of stagnation?

Debunking Economics - the podcast ·

2024/11/27

You’ll know the name Mario Draghi. He was the President of the European Central Bank and, for a short while, Prime Minister of Italy. Earlier this year he produced a report EU Competitiveness.It called on the need for more Europe-wide investment, particularly for innovation, emerging industries and the transition to green energy.Phil and Steve talk through the ideas and the challenges they present to the structure of the EU. Are the challenges insurmountable? Is that why Draghi’s plan already seems

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40:08

Tariffic Trump

Debunking Economics - the podcast ·

2024/11/20

At least half of America is elated with its new choice of President.Money is already flowing into the country, with early gains on the NYSE and the dollar shooting higher in value. Tariffs will be front and centre early in the new Presidency, with Trump describing Tariffs as “a beautiful word” recently. But will it have the intended effect. Could the strength in the dollar wipe out any of the benefits from domestic production? Will higher tariffs add to the cost and drive inflation? Does America

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39:07

Milking inheritance

Debunking Economics - the podcast ·

2024/11/13

The UK Labour party seems top have scored another own goal, with their inheritance tax on family farms. Previously farms were exe pt from inheritance, but that meant wealthy landowners, with massive stately homes set in sprawling estates could buy a few sheep and claim they were a farm. Hence, the government limited the exemption to properties worth less than £1 million, a threshold which Steve Keen suggests is well below a realistic level. Thresholds should only be there for th every rich, which is

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38:46

The economics of irresponsibility

Debunking Economics - the podcast ·

2024/11/06

The classical economic assumption, from the days of Adam Smith, is that we all have free will and this freedom ensures the best possible outcomes for the economy, provided those decisions are based on greed and self-interest. This week’s episode opens with a student questioning Milton Friedman about the freedom of a man who couldn’t afford to pay his electric bill, so the power company cut him off and he died. Friedman says the fault lies with friends and neighbours who didn’t step in to support

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45:31

Britain’s capex crisis and how to fix it

Debunking Economics - the podcast ·

2024/10/30

Ever wondered why Britain’s roads are riddled with potholes, why the trains keep breaking down and why there aren’t enough hospital beds? Simple. Britain is not making enough capital investments. Taking the public and private sector together, it amounts to about 6 percent of GDP, well below the 22% in the US- which has its owninfrastructure problems. China can spend as much as 40% of GDP on capex projects. Steve says there are two reasons why Berit5ian’s infrastructure is failing. First, not enough

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31:49

Co-ops change the game

Debunking Economics - the podcast ·

2024/10/23

Steve Keen says he builds his economic model based on the motivation of three types of actors. First, the worker, who wants to maximise his or her wage. Then there’s the capitalist who wants to maximise profits. And the financiers who wants to lend out as much money as possible with the best possible returns.How does Steve’s model change if most businesses became cooperatives. Workers would also become shareholders, also wanting to see strong profits. They might also have other considerations, such

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36:31

The cycles of the economy

Debunking Economics - the podcast ·

2024/10/16

What causes an economy to fall from a peak? Many economists will argue it’s exogenous shocks but, as Phil and Steve discuss, there’s not too many of those around. Maybe COVID was one, but even that came about because our economic system has drawn us closer to wildlife habitats. Or is it a lack of resources? We run out of capacity to produce more, whether it’s factories, people or natural resources, like fossil fuels. Does the shortage relative to demand force prices up and its inflation that

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36:58

The War Dividend

Debunking Economics - the podcast ·

2024/10/09

It’s a sad fact that war can pay. The US arms industry is one major beneficiary. The UK is a long way behind, but it also a big supplier of armaments to the world. If governments of the world upped their defence pending to 3 percent of GDP that would see a massive increase in demand for weaponry. In Britian’s case it could re-engage the manufacturing sector and maybe even lead Britain back to a trade surplus. Phil asks Steve why we seem happy to see government spending on defence, supporting growth

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36:26

Have marketers made Marx surplus to requirements?

Debunking Economics - the podcast ·

2024/10/02

Phil tells Steve that he’s always struggled with Karl Marx’s idea of surplus value. The idea that workers work for themselves, then a bit more to create the profit for a business. Phil says, that seems like a cost-plus approach, whereas in his marketing days, it was all about creating a brand that people would pay more for. The extra value was created by the goodwill associated with the brand. How do you apply Marx’s theory of surplus value to a $1,000 Gucci handbag, for example.Steve says it still

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35:53

Why is the US economy doing so much better than Europe?

Debunking Economics - the podcast ·

2024/09/25

Europe and the US are both recovering from the same problem – COVID and the inflation that followed. But last week the Fed in the US dropped interest rates by half a percent, with markets expecting a soft-landing for the US economy. Europe, meanwhile, is struggling, with Germany’s economy heading backwards for more than a year.So, when the big difference when both economies are coming from the same place? Steve Keen tells Phil Dobbie that the US would be struggling just as much if it restricted

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