Debunking Economics - the podcast

Sadly for Donald Trump, America seems to have been doing quite well in his absence. It has weathered the pandemic and inflation better than most. GDP pr capita is rising faster than most places and consumer spending is on the up. In fact, the main reason the Federal Reserve isn’t cutting rates is because the economy is doing so well they don’t see the need for a sudden change. But there are lots of warts in the US too. Industrial production plateaued decades ago, crime is rampant, despite the high predisposition for putting people in prison, the rich-poor gap is as wide as ever and, even though America spends more than anyone on health, they have a comparatively low life expectancy. Has America lost its way, with China beating it on EVs and, possibly AI, with Boeing outstripping Boeing because their planes are less prone to falling apart? This week Phil and Steve talk about what needs to change, and what happens if more of the world decides not to conduct international trade in US dollars.

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For a while now Dr Edgar Feige has been a proponent of an automated transactional tax. The idea is that we get rid of all taxes – income tax, sales tax, corporate tax, excise, capital gains, import and export duties, inheritance – and replace it all with a tax on all transactions Every transaction, which can be easily identified through bank accounts, has a very small tax on it. Phil and Steve discuss the pros and cons this week. It’s certain broad in its reach, but is there a danger that it could penalise those on lower incomes. There’s certainly a question mark on how it addresses the hoarding of money or long-term investment in asset classes that show strong capital gains. Perhaps it needs to work in conjunction with some means of taxing wealth – but that means, already, the simplicity of a transaction-only tax disappears.

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There’s been a lot of speculation lately about the role of immigration and its impact on inflation. Does a flood of foreign workers push down wages, which contains cost and keeps prices down? Conversely, did the low immigration levels post-COVID add to the wage pressures because, combined with sickness from COVID, there were a lot less people for every job vacancy. It sounds sensible, but Steve believes it’s only a small part of the issue. And if did have the potential to increase labour supply governments are often negating the benefits by failing to invest money into the economy, putting pressure on services and creating another inflation dynamic.

We also hear from Ben, who has a few words to say on the recent Elon Musk episode and all the talk of emigrating to Mars. Apparently we ignored the sex angle. Ad Ben set the task for next week’s podcast. Feel free to add your own contribution by clicking on the mic logo at debunkingeconomics.com

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The Bank of Japan has just lifted interest rates for the first time in 17 tears. The central bank has kept rates in negative territory in the mistaken belief that it would encourage banks to lend an people to borrow, helping to boost their flagging economy. Steve Keen says it’s based on the mistaken belief that banks lend money from their reserve accounts. They believed that by charging to hold onto the money banks will prefer to lend it out. If that was the case, the policy has been a dismal failure, with bank lending falling over the years the policy has been in place. So what next for a country with a shrinking, ageing population and massive private debt.

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One analogy that economists like to use is that of the Capitol Hill Babysitting cooperative in Washington DC in the 1970s. Government workers set-up a babysitting group, where they to it in turns to babysit each other’s children, so they could enjoy nights out without paying for childcare. There were quite a few on the group, so payment was formalised through the issuance of scrip. Economists like it because it mirrors a monetary system and suffers some of the pitfalls and problems faced in the economy at large. For example, the system quickly stopped functioning because some members would horde scrips, leaving others with none, and unable to go out for the night. The short-term fix was to issue more scrip, to get over this liquidity problem. Steve is concerned about drawing too many conclusions from such a microcosm, but it does seem curious how government workers are okay with issuing more Scrip for babysitters, but don’t see the need to expand the money supply in the broader economy.

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The UK Chancellor Jeremy Hunt delivered what is almost certainly his last budget, promising the usual stuff – more investment, more jobs, better public services and lower taxes. And, miraculously, all of this will be achieved by lowering government spending. Despite the rubbery figures, Steve Keen argues that the budget ignores the key principle, that you can’t increase GDP if the government is cutting back on money creation by trying to reduce its “deficit”. A get-out clause on that would be if the country was to see a sudden increase in the export/import ratio. That is in the budget figures, without any explanation as to how that’ll happen. So, what does a Steve Keen UK budget look like?

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The UK Debt Office has started selling bonds to retail investors through the primary market Previously the only way you could buy government bonds was through financial institutions, through ETFs, for example. The reason giving for opening it up to consumers is that it will allow them to “contribute more significantly to meeting the overall financing requirement”. Hat makes it sound like they are concerned that there won’t be sufficient demand from institutional investors, including the banks. Steve Keen says what they probably don’t understand is this move will actually shrink the amount of money in circulation. That’s probably a bad move in a stagnant economy. To make matters worse, they ar ehell bent on selling off the government’s shareholding of the Nat West group, which will have a similar impact. Listen in to find out how and why.

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Elon Musk has his fingers in many pies. Social media, space travel, internet access, AI. Even tunnel drilling. He’s grown from developing a modest series of online city guides, to being one of the richest men on the planet. Is he a genius, or simply a Trumpesque style wheeler and dealer? This week phil – not a big fan – asks Steve – massive fan – whether Elon Musk is actually good for humanity. It’s a chance for Steve to expound his theory that whatever else he is doing he is preparing the way for mankind to leave the planet and live on Mars. Disturbing news for Phil, who quite like it here, mostly.

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The concept of American Exceptionalism has been talked about for decades, mainly by Americans. Now the term is back in vogue because the US has shown the fastest recovery from the pandemic and subsequent inflation. It’s also a period of intense speculation in US shares, driven by phenomenal rises in the value of big tech stocks. Is this something the rest of the world should be worried about. Is American Exceptionalism real? To put things back in perspective Steve Keen reminds us that the share market is nothing more than a Ponzi scheme, and whilst the US might account for 70% of the market cap of global equities, it still only represents 11% of world trade. So it might just be exceptional at the wrong things.

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Rishi Sunak, like most politicians, is adamant that he can grow the economy by getting businesses to be more productive. But can businesses really grow the economy by themselves, if the government just gets out the way? You might think that by employing more people, or creating more widgets, you are helping the economy. But there’s one big constraint, which is how much money you have to spend. Without taking out a loan you can’t spend more money than you have in your own personal bank account. So, businesses that produce more will find there’s no market for any extra products, unless the supply of money increases. There are caveats, which are basically covered in the formula for GDP – but, by and large, Rishi Sunak is trying to encourage more spending by limiting the amount of cash we have by reducing government borrowing. 

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Have central banks waited too long before dropping interest rates. Over the last week or so we’ve had Jerome Powell, the Governor of the Fed, saying inflation is coming down but they want to see more data before they’re convinced enough to drop rates. The Bank of England’s Andrew bailey said pretty much the same thing. And the ECB. But, as Phil and Steve observe this week, whilst we wait bank loans to corporations are falling rapidly, and in the US corporate bound issuance is also well down. Delaying rate cuts is hurting businesses who can’t grow and increase supplies to help reduce inflation. In fact, it is arguably making inflation worse. Steve argues this week that the main cause of inflation this time round has been margin profiteering by corporations, because demand is high and supply constrained. If companies can’t borrow to extend production, to retain profits all they can do is keep pushing prices higher and enjoy greater margins. It’s a long way from the monetarist philosophy which has been driving interest rates higher.

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Yanis Varoufakis joins Steve nd Phil this week to talk about the thinking behind his new book technofeudalism. The ‘cloudists, as he calls them, aren’t operating in the market, they have replaced the market. They learn from us tell us what we want to buy and then sell it to us. Their capital is the algorithm they have developed, but also the information we provide in the records of our behaviour and the posts that we make. The result is a massive accumulation of wealth. But how sustainable is a model that sees so much money being made by so few people? Yanis says it’s not at all sustainable, and suggests a couple of ways that the governments of the world can respond, so that we benefit from the technology without destroying our respective economies.

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If Trump has one sensible policy its his drive to reindustrialise America. Since he left the Oval Office we’ve had global supply chains challenged by the pandemic, wars and a downturn in economies we used to rely on for cheap goods. The financial advantage of outsourcing to Asia is losing some of its gloss, and the uncertainty of supply has to be a real concern. Add climate change to the equation, with haulage vessels mass emitters of pollution, there are even more reasons to produce more at home. But how realistic is it for a country like Britain to reindustrialise. Shouldn’t it be a priority? Or are we still wedded to the Ricardian theory of comparative advantage? 

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Is it right that the growth opportunities of businesses are determined by the vagaries of the finance markets. Companies wanting to raise debt through bonds or bank loans face higher costs right now because of the rise in interest rates. Someone with a great idea could be held back because of the cost of borrowing. Whether its borrowing or issuance of equity businesses will find an increasing chunk of their earnings are being fed to the finance sector. Increasingly, a sector that minimises risks by only lending to companies supported by assets. Phil and Steve discuss whether there a role for the government to be more involved in developing a higher-risk, lower cost approach to loans. And when it comes to smaller businesses managing cash-flow could a more amenable tax office be part of the solution? 

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As you’ll hear at the start of this week’s podcast Warren Buffet isn’t a big fan of private equity firms. He says they lie, so they are not a good choice for investors, like pension funds, for example. But they are even worse for the companies being acquired by private equity funds. Morrisons is an example. A successful supermarket chain with a long, distinguished history, acquired by a US private equity fund, who bought out shareholders. Then, in true private equity fashion, employers are told that there will have to be savings made to cover the debt – the debt that was created by paying out shareholders for the acquisition. How is that fair on anybody, except the executives of the equity fund who benefit from the increasing equity in their portfolio, which they can enjoy at lower tax rates than a business out to make a profit. Is that how capitalism is supposed to work?

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The UK government has been refusing the pay demands of young doctors in the UK who held a series of strikes in 2023. Their argument is that pay has been declining in real-terms since 2008. Unless pay catches-up there will continue to be a drain of new recruits, which will impact patient safety and put undue pressure on those left working in the NHS. Steve Keen says the government’s argument – that there just isn’t the money – ignores the ability for sovereign nations to create new money. There’s an argument that if you create too much it will create inflation, but that applies more to the generation of excess demand for goods and services. Nobody chooses to go to hospital. So, is the government’s end-game to destabilise the NHS and force more private health provision, so less of the cost appears on their balance sheet?

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Our podcast listeners often ask which economics books they should read to get up to speed on some of the discussions we have, and to understand more about the way the economy really works. This week, for those with a wad of book tokens gifted to them at Christmas, we look at a selection that are worth getting stuck into over the holiday period including:

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Central banks assume there is a natural rate of interest – a point of equilibrium at which the demand for loans matches the supply of loans. They believe if interest rates have been too low, they risk over-heating the economy, risking inflation. But does it work? Steve suggests that interest rates should be fixed, with control of the economy managed through government fiscal policy. But Phil asks, won’t interest rates always move? If somebody wanted to borrow money off you, and you knew there was few other places they could get a loan from, surely you’ll charge them more. Or if you fear inflation will rise, won’t you want to charge higher interest to compensate for the effective reduction in the money returned to you at the end of the loan?

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Keir Starmer will be the UK’s next Prime Minister. Few things in life are more certain. So why did he see the need to write an opinion piece for the Telegraph extolling the virtues of Margaret Thatcher. He said she had freed up Britain’s entrepreneurial spirit. Really? She also created massive private debt, driven by a tax-incentivised housing bubble that together with market liberalisation, led to the growth of highly paid jobs in the finance sector in the south, whilst her industrial policy and attacks on unions saw northern towns laid to waste. Hardly a period of history you’d imagine a left-wing leader to look back on in a favourable light. Unless, of course, Keir Starmer isn’t really a Labour leader. Phil and Steve look back at the good and bad of Margaret Thatcher’s decade in power and the lasting effects it had on the UK economy.

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In his election pledges President-Elect Javier Milei promised the people of Argentina two things. First, he would do dollarize the economy. He’d ditch the Peso and replace it with the, already widely used, UD dollar. Secondly, he would abandon the central bank, who he blames for the rampant inflation, which is one part of many fronts of destruction against the Argentinian economy. But can a country really do without a central bank, even if it is reliant on the currency of another country? This week Phil and Steve talk about the roles of central banks – everything from controlling inflation, to maintaining the stability of the banking sector. Could it all be managed by governments internally? Some of the work is deeply technical and people in governments don’t tend to be very good at anything that requires working with numbers. 

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Last year net migration in the UK reached 745,000 people. A new record, which amount to more than 1% growth in the population. It’s an unsustainable population growth but Steve Keen argues growth on the planet as a whole is unsustainable. He worries that as climate change destroys food production migrants and UK locals alike will be queuing for relief flights to Rwanda. Climate aside, what is the impact of migration on the economy. It’s helping recipient economies by boosting GDP, often through lower page jobs for the migrant workers. Meanwhile the origin nations are losing workers and expertise, inhibiting their ability to develop. Is part of the solution more control on wages, so local workers are more willing to take on jobs left to migrants? That could slow the migration, encourage foreign workers to build their domestic economies and control the population growth in developed nations. Is that the logical way forward?

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George Osbourne was the UK Chancellor wedded to austerity. “More cuts, more difficult decisions” he said at the start of 2014, as he struggled to get the British budget back into surplus. But regular listeners to this podcast know that a government budget in surplus is sucking money out of the economy. Steve Keen reminds us of the logic that shows austerity does nothing except cause damage. Phil talks through some of that damage, including cuts to public services, a shortage of UK life expectancy, even an increase in hate crime. But, weirdly, the country is still facing austerity. Not through a lack of government spending, but through a high level of taxation. People are still struggling, and the economy is on a fast road to nowhere, whilst other countries follow suit.

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Last Wednesday Optus phone, mobile and internet users in Australia went without and sort of service for a full working day, starting from about 4 in the morning. At he same time, Thames Water in Surrey were slowly connecting back customers who had not had water supplies since the previous Saturday morning. Why are things we have always assumed we can rely on, suddenly starting to break? A spokesperson for Thames Water says the outage was because of a rare storm that only occurs every ten years. So are we now specifying infrastructure is good enough, even if it can’t cope with a one-in-ten year event? How did we get here? Is it the privatisation of these services, is it the political culture, is it ravages of uncontrolled competition or is a lack of engineering focus. Phil and Steve are joined this week by Matt Tett, who runs Ennex Test Labs, a Melbourne based company that runs performance checks on key bits of infrastructure, including equipment within telecommunication networks. What does he think we can take out from the Optus failure?

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Everyone is talking about AI right now. Rishi Sunak’s new best friend is Elon Musk, who has been over in Britain to talk about it and the danger it presents. ‘Civilization destruction’ is how he described it. But, whilst that might be a long-term concern, isn’t the short-term danger of more concern. Liker deep fakes. Or the rising use of energy by data centres and processing power. Or a reliance on an intelligence that just be plain wrong about things – there are some examples in the podcast. Even the wins, like fighting cyber-crime, could they be negated by cyber-criminals using AI to fight AI? And how much of what we are going through was predicted in EM Forster’s 1909 short story, The Machine Stops?

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Marc Andreessen is the brains behind the Mosaic web browser, that paved the way for the web interfaces that made the Internet useable. He’s, quite rightly, a billionaire. You could even say he has delivered a social surplus, in that we have all benefited from his invention to a value many more times than we was rewarded with personal income. Well done to him. But his belief that technology is unbounded is way off the mark. In a recent blog post – The Manifesto on Techno Optimism – he argues that technology has solved all of mankind’s problems so far, and it will continue to. Once we have resolved the constraints of energy, with fusion for example, we will be able to increase consumption a thousand times over, thanks to the unbridled benefits of technological development. Phil wonders whether we want so much more than we already have, whilst Steve says his manifesto is a fast track to destroying the planet. Maybe that’s why we are planning space flights to Mars.

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Entrepreneur Nick Hanauer says he is one of the richest 0.1% of people, but he’s a defender of the people. That’s why he’s exposed the lies we are fed in his latest book ‘Corporate bullshit - exposing the lies and half-truths that protect profit, power and wealth in America’. Once you realise it’s not about facts, it’s about power, it changes how you engage with the information fed from these companies. But, not only do these companies have power, they also have the influence that can convince thousands of others to do their bidding for them. Often playing on people’s self-interest. Nick’s hope is that his new book will alert more people to the techniques used by corporations to convince us that their self-interest is for the good of everyone. Even if they die of cancer I the process. Or the planet is ravaged by the impact of climate change. Nick joins Phil and Steve to talk about the book and what he hopes to achieve through it.

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A simple challenge on the podcast this week – how do you fix world poverty? When he was President of the World Bank Jim Yong Kim set a target of ending world poverty by 2030. In 2019 just 8.4 percent f the global population were living in extreme poverty. Sadly, the pandemic added another 70 million people live below the extreme poverty line, lifting it to 9.3 percent of the global population. World leaders seem more intent on fixing the short-term issue of illegal migration rather than fixing the core issue of why people are escaping to the west. This week Phil and Steve discuss why some countries are poor and what we can do about it.

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Rishi Sunak is seemingly proud to have cancelled the only real nation building project Britain has had for decades. Instead, the money will be spent on sticking-plaster solutions to existing infrastructure, without any business case or overarching strategy. The reason? It all got too expensive. The other reason, Mr Sunak obviously thinks it’s a vote winner and he is well behind in the polls. This week Phil asks what’s happened to the £25 billion that has already been spent. The answer, of course, is that it has been pumped into the broader economy, aiding economic growth well before anyone enjoys the benefits of the completed project. There’s discussion about why public sector investment doesn’t need to undergo the rigorous cost-benefit analyses of private projects and why the UK is so bad at delivering large scale engineering projects. Will we see any visionary engineering feats again in our lifetime?

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Economists like to believe human behaviour is predictable. Otherwise, they probably wouldn’t have a job. Steve Keen argue that we do tend to behave like the rest of the herd, but how many herds are there? Phil asks if economists need to develop the sort of demographic segmentation modellers that marketers use? It’s certainly a long way from the basic assumption that we all act the same – as one representative agent, driven by fear and greed. But if we develop a more sophisticated approach, predicting behaviour for a number of segments of society, wouldn’t we arrive at a model so complicated, so full of assumptions, that it renders the model useless? In other words, can we ever really understand the psychology of human behaviour?

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Liz Truss is back. She kept a fairly low profile after very short tenure as the UK Prime Minister, but popped up again for a speech at the Institute for Government, arguing that she was right about supply side economics and the need to fight against 25 years of economic consensus. She seems to think if everyone had read Milton Friedman the world would be a better place. There’s no surprise that Steve Keen disagrees with almost every point Truss made, but the law of averages suggests she must be right on some things. Phil and Stebe analyse the speech and look for some bits of it that might actually be worthwhile. Whilst, of course, dismantling the rest of it.

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The US dollar is creating real problems right now. Speculators are buying it up as US Treasuries (bonds) offer higher yields at lower prices than other forms of sovereign debt. US shares are also proving popular as talk of a US soft landing intensifies, suggesting they’ll be more scope for company growth in the US than just about anywhere else. All of that is adding to the strength in the US dollar, which is weakening the value of other currencies. That means other countries pay more for importing goods, adding to the inflation that central banks are trying to bring down. It’s a scenario that wasn’t foreseen by Friedman when he advocated for floating exchange rates. He believed floating exchange rates would balance out terms of trade, but clearly that’s not happening. So, Phil asks Steve this week, is there a case for some form of capital controls, or other restraints on the flow and value of currencies?

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There’s a vain hope in investment circles, and amongst politicians, that we can still enjoy economic growth on the road to NetZero. There are those who believe that we can decouple our economic growth from our consumption of fossil fuels. In other words, we can continue to enjoy growth driven capitalism whilst avoiding the impacts of catastrophic climate change. Steve Keen is less convinced. He fits into the zero-growth camp, where the only way to reduce our impact on the planet is to stop increasing our consumption. So, what would that look like? For many people it might not be too different to life now, with vast segments of the population seeing their wages falling and living standards reduced. But the top echelons of society would feel the difference. Also, how do companies innovate if they lose the profit motive. And isn’t it all part of some global conspiracy for a new world order controlled by the elite, led by Bill Gates, who is merely a puppet for shape shifting reptilians working to destroy humanity?

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Are we earning too much? Many of us are now spending less than we earn on day-to-day consumption items We’re putting our excess income into our future earnings, through our pension funds, who use a chunk of that the money to buy non-productive assets, liking investing in shares on the secondary market, to no-benefit of the companies we invest in. Phil talks to Steve about why we have this imbalance between earnings and spending when, at an aggregate level, our income should equal our productive outputs. The difference is, of course, that we borrow a great deal, particularly to buy a house. It’s this reliance on borrowing which is increasing our consumption beyond the outputs we provide to the economy. And we borrow more than we can afford on the assumption that house prices will rise. So the question isn’t whether we should earn less, but whether we should borrow less.

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If he managed to stay out of gaol and makes it to the White House, Donald Trump has proposed a flat 10% tariff on all goods coming into America. He’s called it the Ring Around the Collar of America – which has led some to suggest the policy is a nasty stain that will be difficult to get out. But as phil Dobbie discovers, Trump has one supporter in the shape of Steve Keen. Steve talks from Hungary, where he is currently on assignment, suggesting this form of protectionism will be good for America. But will it come at the expense of GATT (the General Agreement on Trade and Tariffs). Could we be entering an era when all nations are imposing trade barriers and the prospect of free trade disappears. “I won’t be shedding any crocodile tears over that,” says Steve. Listen in to see why Steve is a Trump supporter on this particular issue.

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Recently Steve was commissioned to write a report for Carbon Tracker, an independent think tank offering in-depth analysis of the impact of climate change and energy transition on the finance industry. Inside “Loading the DICE Against Pensions” he looks at the reasons why pension funds have vastly underestimated the impact of climate change on investments. He talks through the issues with Phil, who asks, even if we know how bad the situation is, how will it change where we put our money?

You can download the full report here: https://carbontracker.org/reports/loading-the-dice-against-pensions/

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There has been lots of speculation about BRICs countries working to develop a new trading currency, to enable trade without the reliance on the US dollar. There’s also talk that maybe this new currency will be backed by gold? Many suggest this will be a challenge to western fiat money. There’s a suggestion that such currencies will lose value against such a strong currency, backed by a physical commodity. This week Phil talks to Steve about this commodity obsession and why this idea wouldn’t work unless, of course, you aren’t interesting in growing the size of the economy.

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QE was big news before the pandemic. Then, as governments issued bailouts to keep us at home, central banks went into overdrive, buying up the mushrooming bond issuance from government. In some ways, it was a sort of People’s QE, because the money was finding its way directly into people’s bank accounts. So, how does that compare to the QE before we all got ill? And is the pandemic-style QE at all responsible for the rise in inflation we’ve experienced since? Phil asks Steve if there are lessons to be learned about People’s QE and inflation.

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Phil and Steve return to the well-worn path of talking about house prices. Why? Because, despite the downturn during the pandemic, followed by sharp rises in interest rates by central banks around the world, house prices are again edging up. Clearly, nothing can stop the march higher, even though an increasing proportion of the population simply can’t afford to enter the property market. So, we know who the losers are. Ut who is winning? And what can government policy do to build a more affordable stock of housing?

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The UK is recovering slower than just about anyone from the pandemic. The UK’s GDP is flat compared to where it was four years ago, whereas most countries have recovered from the pandemic, and then some. Inflation rose faster than most comparable economies and is taking longer to come down. So why is the UK struggling so much. This week Phil asks Steve the obvious question, has Brexit got something to do with it? And what role does a growing trade deficit play in the tardiness of Britain’s recovery?

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One of the biggest problems Britain faces is that so much of the wealth is concentrated in the southeast. And it only seems to be getting worse. The country has shifted from a Prime Minister who promised to level-up the economy, to a fiscal conservative who wants to cut government spending and reduce real wages, meaning there is less spending power outside London. Phil asks Steve if there is an easy solution to the economic destruction London is rendering on the rest of the UK?

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The UK Chancellor and the Bank of England Governor have called for increases in productivity as a way of helping to brig down inflation. So, not only should workers expect wages to fall in real terms, people should also be doing more per hour worked. Are they dreaming? This week, Steve Keen says you can’t increase output without increasing investment in technology and machinery, something the Chancellor is less keen to do. So long as the UK is investment starved, you’ll never see a rise in productivity. 

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We last had a financial crisis in 2008 (ignoring the pandemic years), and if we’re not in another crisis now, we’re well on the way to it, with mortgages rising, taxes increasing and the price of everything continuing to rise. Your spending power is being hit in three directions. But, isn’t that what central banks want? So we spend less and inflation comes down, theoretically. Yet the banks, who might not be to blame this time, are now feeling the hurt. In fact, they stand to gain from rising interest rates because they can raise their borrowing costs. This week Phil asks Steve, will the banks always win, come what may?

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The UK economy is ready for a major downturn. In part it’s down to supply chain difficulties, thanks to COVID, the war, the great resignation, sickness and, let’s not forget, Brexit. Originally central banks recognised this and said the inflation was transitory and we just needed to ride it out. Since then, they’ve gone back to their conventional thinking that inflation can only be fought with interest rates. The higher the better it seems. But Prof Steve Keen tells Phil Dobbie that it is the worst response possible, causing unnecessary suffering and cutting back on the kind of investment that could fix the supply chain difficulties. So why are they doing what they are doing?

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If we ignore the flagrant human rights abuses, there’s a lot to admire about China. There economy has grown at an incredibly rate whilst the West has been stagnating. So, what’s their secret? Phil quotes Mervyn King, former BoE governor, who spoke to a Chinese central banker and asked that very question. Here what he said, and what Steve Keen thinks is behind China’s growth, in this week’s podcast. 

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Older Brits will be familiar with Bruce Forsythe’s Generation. Today everyone is playing the Generation Game, but the young are the one’s losing out. They are steeped in debt and faced with the prospect of progressively unaffordable housing. Many of the over 60s meanwhile, have accrued healthy amounts of assets. As Phil Dobbie discusses with Steve Keen much of this we4alth will be passed on, but not everyone will benefit. So intergenerational wealth is adding to the rich-poor gap. 

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We know we don’t pay a fair price for energy. Energy companies are making a mint because they extract the energy without worrying about most of the externalities – like the impact they are having on the ecology of our planet. But what if they did pay a fair price? Could the economy survive? Phil Dobbie asks Steve Keen if we can fix our problems with the pricing mechanism if there was a way to accurately cost energy.

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There is about £2.5 - 3 trillion of assets in UK private pension schemes. Through the tax system we are heavily incentivised to put money into our pension plans. So, what’s wrong with that? That money is supposedly used to invest in businesses, so it helps the economy grow. If only. This week Steve Keen talks to Phil Dobbie about the orle pensions have had in the financialisaton of the economy. He believes a better state funded system would be a healthier approach, but don’t count on it happening anytime soon.

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Part of the problem with the global economy is that nobody has a plan, except perhaps the Chinese Communist Party. Elsewhere politicians lurch from one crisis to another, and any long-term planning is simply about how they can win the next election, and that often means kowtowing to the powerful, who well might be funding their election campaign. This week Steve talks through the work of Positive Money, who do have a plan about how to transform the economy, ignoring vested interests, throwing away trickle-down theory and building an economy dominated by a banking sector reliant on rising house prices. So they have a plan, but what do we do with it?

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Central banks seem to be in a rush to offer digital currencies, but why? Conspiracy theories point to China, and visions of private bank accounts monitored by the state to counter the hidden transactions of cryptocurrencies. But the proposition for crypto is very different. Central banks aren’t offering a new investment opportunity, they are talking about a transactional currency. But how does that differ to our sovereign currencies for which most money is stored in a digital form. The case for consumers is far from compelling, but Phil and Steve hit upon what could be the real motivation. You have to wait to the end of the podcast to get there.

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New Keynesian economists have accepted that their HANK model, which models the behaviour of one representative agent, doesn’t explain the outcomes on different income groups. As we know, the latest rate rises are having a more profound impact on income variation. Steve says their models don’t work because they don’t realise the distribution of income. The answer , according to the new Keynsians, is to assume a HANK model, which allows for heterogeneity, with different consumer groups behaving in different way, dependent on their income and wealth. Is this a step forward, or a band aid on a flawed concept?

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Reaching net zero – is it doable, or is it just a pipe dream? In podcasts recently Steve Keen has expressed thoughts that we are already too late to avoid catastrophic climate change. But this week, Harald Desing, a scientist at Empa, the Swiss Federal Laboratories for Materials Science and Technology, gives a more positive spin on the outlook. He reckons, if we focused on the task, accepted there would have to be an increased usage in fossil fuels in the short term, we should be able to get to net zero in 5 to 10 years. Of course, anyone who has watched “Don’t Look Up” knows that scientists might have the answer, but it’s the politicians and media commentators who will stop it happening. And the economists, let’s not forget them.

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Nobody wins when rates rise. Central banks might argue that everybody wins, because they are using these rises as the blunt instrument to knock down inflation. But the wealthy lose out because asset prices take a hammering, and the working poor become of the unworking even-poorer as the economic slowdown leads to rising unemployment. But it’s clear those on lower incomes suffer the most. This week Phil asks Steve if there’s a way for central banks to reduce the inequality as they seek to tame inflation?

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There is nothing or contentious that immigration, it seems. In the UK there’s a swathe of the population that don’t like foreigners very much, unless they are serving than fish and chips in Torremolinos. Others will deny being xenophobic but argue that Britain is full and there’s no room for anybody else. A more rationale argument might be that too much immigration happening too quickly can have societal and economic impacts – but what is too much and too quickly? This week Phil Dobbie and Steve Keen wade into the immigration debate.

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Not so long ago the world was worried about deflation, supposedly driven by low-cost imports from China, but also a stagnating economy driven by high levels of private debt. Now central banks are trying their hardest to bring down inflation, fearing without their expertise it will spiral out of control. So, will it? What caused it? And can we live with it? This week Phil and Steve look at the pros and cons of inflation and discuss whether it is here to stay.

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Silicon Valley Bank collapsed last month because there was a run on the bank and they didn’t have the assets to cover their customers deposits. They were trading insolvent, in other words, even though they had switched the money deposited into US Treasuries, supposedly the safest investment on earth. But they bought before the price of Treasuries came crashing down, as bond yields went up. This week Phil asks Steve if bonds now behave just like shares, and how much of the recent volatility is the result of QE by central banks?

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After the Great Depression a bunch of economists got together to hatch a plan to stop future runs on banks. The plan called for banks to only accept demand deposits “subject to a 100% reserve requirement in in lawful money and/or deposits with the Reserve Banks”. Some read that as an end to fractional reserve banking but, as Steve Keen explains this week, fractional reserve banking doesn’t really exist because banks don’t lend out deposits. And whilst some good came out of the Chicago Plan, he reckons restricting a banks ability to create money would be bad news for the economy. And wouldn’t stop a bank run – as evidenced by the recent collapse of SVB in the US. 

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If the west decouples itself from China and other autocratic regimes, just as we have done, to an extent with Russia, what does that mean for international trade? What does it mean for international investment if we exclude money from countries that are growing faster than we are? This week’s discussion follows a question from Pola, a listener, who asked, “Any chance you could talk about foreign debts and how this works? Also what impacts are likely to occur as BRICS etc move to payments in their own currencies instead of US dollars”. Or, perhaps, more poignantly, what would be the impact of a BRICs wide trading currency to challenge the dollar. 

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The collapse of Silicon Valley Bank last week can be put down to two things – first a management team that clearly ignored the falling value of the assets they held, and second the fact that the Fed was doing its best to make those assets fall even more\. The end result is hardly a surprise when you look at the numbers. In fact Frances Coppola predicted as much after the collapse of Silvergate Capital. This week Phil and Steve look at what went wrong and ask whether it could happen to other banks.

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At the end of this week’s mega-long episode of the Debunking Economics Podcast Steve Keen admits he longer sees Australian house prices as the most important issue on the planet. But it, along with private schools, continues to occupy dinner party conversations in many Australian households. So, with prices now falling, will they spiral down further as the RBA continues to lift interest rates. Or will they, as often seems to happen will they slow for a while than pick back up as inflation slows? This week Phil and Steve examine the growing wealth divide in Australia, driven by those who bought property early enough, and those who missed out and can’t get on the ladder. 

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This week on Debunking Economics Phil and Steve are joined by Richard McGahey, author of a new book “Unequal Cities: Overcoming anti-urban bias to reduce inequality in the United States”. One of the problems the US faces is that cities, by and large, are self-funded, with little in the way of federal or state support, beyond minimal welfare programmes. And cities compete with each other to survive. As Steve points out, being self-sufficient within an organism is not how organisms function properly. But that’s how the American economy is structured. And Richard suggests that the US is losing out, because properly funded cities are the most productive aspects of an economy, provided the ills of city living, such as pollution, congestion and social inequality, are funded and managed.

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They are pushing up interest rates thew world over because monetary theory dictates that this is the way to bring down inflation. But not so long ago those same banks were arguing that inflation was only transitory and there was no need to lift rates. So, what changed? And why isn’t it working. Inflation is coming down very slowly and the wage pressures they seek to ease, by making people lose their jobs, isn’t working. The labour market is as tight as ever. This week Phil asks Steve what central banks are playing at, and, if they fail, will governments and the public start to lose faith in them and the policies these unelected representatives foist on us?

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The UK is gripped by strikes right now, but they are not the only ones. All over the world public and private sector workers are taking action as their salaries fail to keep up with inflation. Central banks are urging caution, fearing a wage spiral could push prices higher. This week Phil Dobbie and Steve Keen discuss the theory behind wage setting – a principle that someone sees chief executives earning a ridiculous multiple of the take-home pay of their workers. So, how are wages arrived at? One theory suggests it is the contribution they make to the profitability of a company, but Steve says its more to do with entrenched hierarchy.

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Over the weekend Liz Truss was singing her own praises, with a front-page article in the UK’s Sunday Telegraph. She is known, of course, for being the UK’s shortest-term Prime Minister after her plans for tax cuts (mainly for the wealthy) sent finance markets into a spin. In particular, bond prices collapsed and saw pension funds running low on collateral, forcing the Bank of England to step in. But was she wrong? Former Chancellor George Osborne said she made the mistake of cutting taxes without cutting spending. Does that make her the poster child of MMT supporters? She’d be horrified at the description, no doubt. This week Phil and Steve talk about what was good (if anything) and bad about Liz Truss’ economic plan.

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For most of us liquidity is an easy concept to understand. Have we got enough cash to pay our bills? For small businesses it is a simple case of managing your cashflow and ensuring your cash on hand exceeds your current liabilities. For banks it’s a mix of ensuring you have the capital to meet demands from depositors, as well as the reserves to meet interbank transfers. To ensure we have liquidity we ensure there is a buffer, to keep us out of trouble. But does that buffer keep us using money productively. Even though Paul Krugman is Steve Keen’s Professor Moriarty, can his babysitting voucher analogy help us to understand the impact of low levels of liquidity on a functioning economy where productivity capacity isn’t being fully utilised.

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It would be a bold prediction to say that capitalism is on the way out. Nor should it be. It has provided growth and innovation for the global economy, but has it become too laissez faire? Phil asks Steve whether we need to return to the mixed-economy many of us grew up with – when governments controlled large essential sectors, such as transport and utilities, and imposed tighter regulations on those sectors open to private sector involvement. Are we seeing how unfettered capitalism creates more problems, even before we consider the impact it is having on the consumption of the planet’s resources?  

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Conventional economics is built around the idea of opportunity cost. If there is a limited resource a decision has to be made about how best to use it. How is that principle applied when you look at Modern Monetary Theory, when governments can create money without limits until you have reached a point of full employment. There is no need to look at one choice over another. Perhaps you can do both? So, what determines how money is spent? Are those spending decisions left in the hands of politicians? Steve Keen says, to start with, the theory of opportunity cost should be ditched because it only applies at a personal level. He explains why that is, but agrees with Phil that politics is the big stumbling block when it comes to the practical application of MMT. 

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After a disastrous couple of years, can things get any worse in 2023? Steve Keen and Phil Dobbie look ahead and actually find some positive take-outs from the precarious situation we find ourselves in. Inflation will fall, that’s taken as read. Politics will shift to the left, that’s already happening. But our future is still left in the hands of politicians who have no idea how to steer us to a more positive future.

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Most people think economics can be summarised in just two words – supply and demand. Where they cross that determines price and as they move the price moves. But what if the supply curve is wrong, or meaningless. One of the first economists to question that was Piero Sraffa, an Italian economist who had grave misgivings about the law of diminishing returns. Steve Keen talks through Sraffa’s life and theories on this week’s Debunking Economics podcast.

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This week, another economist that has influenced Steve Keen’s thinking; the Austrian born economist Joseph Schumpeter. His economic thinking veers a long way from the traditional Austrian school. As Steve explains this week, Schumpeter argued that if an economy was always moving to or from a point of equilibrium, then it follows that the profit of companies will always be zero. Only through innovation will those businesses get ahead, with means money invested in older technologies will no longer be rewarded. This was Schumpeter’s argument for Creative Destruction, an idea so basic you wonder why nobody had made the observation before him.

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Bill Phillips, rightly or wrongly, has a lot to answer for, because his work is drawn on by central banks when trying to determine the likely rate of inflation. But are they misinterpreting his theories? This week Steve Keen explains why there’s more to the Phillips curve than most people understand. There’s also a lot behind the man, from life on a farm in New Zealand, to engineering a radio in secret in a Japanese Prisoner of War camp. Listen in to hear the story of the man behind the infamous Phillips curve.

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We continue our series looking at economists who influenced Steve Keens thinking. This week it’s American economists Richard Goodwin, who Steve says is the chief proponent of non-linear thinking in economics. He wrote Theories of Surplus Value, which was about business cycles happening without any exogenous shocks, from overaccumulation and overproduction His biggest weakness was that he didn’t accept the role of banks in money creation, as he highlighted in a letter to Steve in the 1990s.

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Irving Fisher was an American economist whose book The Purchasing Power of Money looked at the relationship between money supply and price levels. In fact, to many he is seen as the father of monetarism, but on this week’s podcast Steve Keen explains how Fisher’s struggles with debt led him to develop his thinking on debt deflation as the cause of major economic downturns. He’s the first of a series of economists who have influenced Steve’s thinking, that we’ll be looking at over the next five weeks or so.

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How widespread is the idea that one person's debt is another person's credit and therefore has no impact on the economy. What are the implications of this thinking and what changes when the realisation that the banking sector is also involved and so is is the relative velocity of money in different hands. If we accepted that debt and credit don't always can cancel each other out how would that change the approach of governments and the monetary policy of Central Banks? 

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His answer to Great depression was that we should spend our way out. But now we have rampant inflation because people are spending too much. What would Keynes do now if he was presented with the challenge of trying to prevent the world from going into a global recession whilst also getting inflation under control? Steve and Phil look at the ideas of Keynes and ask would any of them help us in the situation we now find ourselves in.

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During the last big financial crisis there was a lot of talk about the work of Hyman Minsky. Even Janet Yellen, at the time the chair of the San Francisco Fed, said there were a lot of lessons in his work for central bankers. What did she mean? Or, as Steve Keen asks, has she actually read any of his work? This week Phil asks Steve what was the thinking behind Minsky’s Financial Instability Hypothesis. And what was a Minsky moment, and why are we so far from one right now?

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In a recent podcast Steve Keen claimed that the law of thermodynamics dictates that we can no longer extend economic growth whilst looking for efficiencies in our use of energy. This week Phil questions Steve more on this. After all, so much of the growth we have seen over the last 100 years has come from the way we harness energy and use it to better effect. Can’t we just keep doing that? And could we use economics to fix the problems it has created, by more accurtaelyt pricing the real cost of energy and pollution? Even if we could – and Steve says we are already consuming too much of the earth’s resources - the International Energy Agency reckons if we are to reach net zero by 2050, then energy efficiency needs to improve by 4% per year. We’re a long way from achieving that, so is it time for a reality check?

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Last week on the Debunking Economics podcast Phil and Steve talked about the likely imposition of Austerity 2.0 around the world, in particular in the UK. Steve said there’s really no need for it. This week he explains more about how cuts in the government deficit starves the private sector of cash, which will guarantee a recession, or worse. Listen in for an easy-to-follow explanation of how a government deficit increases money in circulation and how reducing that deficit shrinks the money supply. They talk about Wynne Godley’s explanation of sectoral balances, and how the interplay between government spending and private sector money is how the economy works now. The complicating factor, is foreign spending. What happens when government money finds itself overseas?

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With big-spending Boris gone, Britain’s new Prime Minister will almost certainly promote austerity 2.0, under the guise of fiscal conservatism. He won’t be alone in that, with governments the world over trying to reduce the deficit they incurred during the pandemic. But is austerity the way to help the economy back onto its feet? And do governments need to balance their books?

In August the UK government spent £10 billion than its income. Listen in to find out why you should be thinking of that as new money added to the UK’s £2.2 trillion economy, rather than an expense that has to be repaid. Slower spending by governments and fiscal tightening by central banks will shrink the money supply at a time when people are already struggling through lower real wages, higher inflation and cuts to public services. Are governments ready to hasten the downward spiral?

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Before her plans were ripped up, the UK’s newest Prime Minister was promising growth, growth, growth in an economy that has avoided it for a long time. And she was going to do it through that tried and tested method of trickle-down economics! Cut taxes for the rich and watch the economy grow. Sadly, we’ll never know whether it worked or not because the plans have been ditched and its back to higher taxes and less government spending. More austerity and low growth. But, Phil asks Steve, isn’t low growth what we need? If we want to save the planet surely we have to abandon the idea that each year we consume that little bit more? But how do you do that when entrepreneurs need the growth imperative to come up with those innovative ideas that improve our lives. Without the incentive for companies to grow wouldn’t we end up with a Soviet-style centrally planned economy, producing lots of stuff that nobody wants.

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We all know money has a value, but if you are borrowing it, it also has a cost. But aside from buying houses and a few other big items, we generally are more concerned with the value of the money we earn rather than the cost of the money we borrow. Today we look at the relationship between the cost and value of money, and ask whether the instability in interest rates is hindering our ability to plan for our future. What would happen if interest rates were fixed? And what about the rising cost of money, when governments need to spend more money to support us when times are tough – like now, for example?

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The world is living in fear of rising inflation. Central banks are trying to combat it by pushing up interest rates, which means people also now fear how much their mortgage is going to cost. So, are they making matters better or just adding to the problem? This week Phil Dobbie asks Steve Keen if inflation is as big a problem as central banks make out, and whether hiking interest rates will fix the problem this time round. And why a 2% inflation target. It’s the aim of most central banks to get inflation down to that level, but it sounds like it had a rather haphazard, unscientific origin. If they changed the target to, say, 4 percent, what would happen? More to the point, what would happen if these banks did nothing at all?

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Last week Kwasi Kwarteng, the new UK Chancellor, announced a cut in taxes at the same time that the government was stepping in to subsidise rising energy costs for homes and businesses. The cost of all this dwarfs the money spent on the furlough scheme. That means there’s a heap of government money being pushed into the public sector. Conventional economists, of the Friedman mould, would argue that we’re already seeing inflation driven by too much money, so what abut this next blast of government spending? Could it make inflation worse? And what about the repercussions on income disparity – from the budget and its unforeseen consequences. Hopefully someone in the Treasury is listening.

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Shadow Banks can take the blame for the 2007-8 financial crisis, packaging up mortgages and selling them as securities to investors. It seems like there’s no lack of imagination when it comes to how these companies find new ways of making money. This week Phil asks Steve if shadow banks are all bad, or is there some good? Do they, for example, create competition for established banks? Or are they simply a mechanism for operators to work outside banking regulations. Is there a need for more regulation of the shadow banking sector? And what is a shadow bank anyway?

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It’s clear, when energy becomes short in supply, free market forces can’t look after all of society. Just the wealthy. That’s why governments are having to step in, propping up an industry that is raking in massive profits. But could free market forces drive a more efficient delivery of energy, by making lower cost renewable energy able to compete on a more level playing field. Whilst there’s no doubt pricing is distorted in favour of fossil fuel provides, Steve tells Phil there’s still no option but to nationalise the provision of energy, something we know will never happen.

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Liz Truss, the UK’s latest Prime Minister, has vowed to review the mandate of the Bank of England (BoE). It’s unclear what outcome she wants, although Kwasi Kwarteng, who is likely to be the new Chancellor of the Exchequer, has suggested the BoE didn’t move fast enough to lift interest rates. Does that mean she wants more influence over the bank’s decision making? On this week’s podcast Phil Dobbie and Prof Steve Keen look at the approach taken by central banks this time round to reduce inflation and Phil asks Steve, if you were to change the function of central banks, what would you do?

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Inevitably, as governments spend more and more money to help their economies navigate through the COVID-19 crisis, the questions inevitably being asked is, how will all this be paid for? The assumption is, either governments will have to cut back on spending, or taxes will have to be increased. Few economists or politicians suggest that the debt is never repaid. In this edition of the Debunking Economics podcast Phil Dobie talks with Prof Steve Keen about how central banks, like the Bank of England, are creating money to cover this extra spending. Isn’t there a danger that if it gets out of hand we’ll end up like Zimbabwe, or Germany after the first world war? Once a central bank has created money to cover government debt, can it ever really be wound back?

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Donald Trump is pushing ahead with his protectionist agenda, and possibly with good reason. There were over 17 million manufacturing jobs in the US in 2000, in the 10 years that followed, China joined the WTO and the US lost about a third of those jobs. In this edition of the Debunking Economics podcast Phil Dobbie asks Steve Keen whether protectionism is valid in this day and age. What of the conventional philosophy that trying to do everything locally avoids economies of scale and pushes prices up for everyone? Steve’s argument, you need a complex economy to produce efficiency and innovation. It’s the lack of protectionism that has stymied growth in many economies. But there are exceptions, especially for an Elon Musk fan boy like Steve!

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Furloughed workers, self-employed grant schemes, increased unemployment benefits, low interest loans, quantitative easing – governments and central banks are pulling out all the stops to try and offset the economic consequences of COVID-19. So who is doing it well? Phil Dobbie asks Prof Steve Keen to evaluate some of the programs implemented around the world – which ones are effective, which help the finance sector but do little for the broader population, and is there enough of it given the size of the impact? Governments are now trying to pull back on stimulus programs, even though infections continue and unemployment is in danger of rising still higher? Will we have learnt anything at the end of this experience about how the economy really works?

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The world is facing the greatest economic downturn of our time. In the US at least 15 million more people are unemployed than just a few months ago. There are fears of a second wave and, even if it is contained and a cure is found, the chief scientist at the World Health Organisation is now saying it could take up to five years to get the virus under control. Meanwhile, as governments inject trillions of dollars of stimulus into the economy, share prices are reaching all-time highs. How can that be? How can the markets behave as though we were in the midst of the best of times? Phil Dobbie talks to Prof Steve Keen about what’s really driving share prices ever upwards.

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The US might not be in a great place right now, with the riots, a narcissistic president and the COVID-19 virus taking a long time to slow down, yet, for generations it has been the country the world looks to for opportunity and innovation. Look at almost all the world’s newest big companies – Microsoft, Apple, Google, Twitter, Tesla – and they all hail from America. It claims a huge proportion of the world’s inventions and innovations. On that basis, shouldn’t we still be looking up to America? What is it they are doing that the rest of us are not?

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Mental health is an issue that impacts a growing number of people, not helped by the COVID 19 lockdown. Divya Dhami, an undergraduate student from the University of British Columbia, says the economy is paying for it in terms of reduced productivity. Money investied in fixing the problem would be recovered through increased GDP. But isn’t GDP part of the problem? Phil Dobbie asks whether the wellbeing index is a better measure of government success? Steve Keen suggests debt is a significant part of the problem – in the good old days students went to university to learn and it was a relaxing experience. But there are behavioural issues too – like addiction. Just how far do we want the state to intervene?

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Governments everywhere have been pledging billions of dollars – in some cases, trillions – to help their economies navigate through the COVID-19 pandemic. Much of it has been spent supporting businesses and helping to sustain people’s income. But what happens when we come out the other side. Quantitative easing is now widespread, but there’s still an expectation those central ban purchases will be wound back. So what does that mean for the post-pandemic economy? A question Phil Dobbie puts to Prof Steve Keen in this edition of the Debunking Economics podcast. And are there countries who can’t run up debts? Or companies or industries that can’t operate effectively with the potential debt they have been forced to build up. Just how long will we be paying for the last few months?

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There are all sorts of theories on why there is such a huge discrepancy in income in society, and why it differs from one country to the next. For example, why does the USA have a far worse Gini index (41.4) than Japan (32.9)? Whilst there’s been lots of debate around education, ability, inheritance and opportunity, Blair Fix at York University in Toronto, has concluded that society’s hierarchy is really the overarching influence. If he’s right, that means regulation is the only way to stop income becoming so divided. Listen in to catch up on Blair’s work, in this three-way discussion with Phil in the UK, Steve Keen in Thailand and Blair in Canada.

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Economists tend to see income as related to the value labour adds to a product or service. By that rationale, during this crisis, nurses helping save lives contribute only a fraction of the CEOs who are watching their companies fall apart. Or is something else driving inequality? It’s largely the growth of the rentier class, says Steve Keen. Phil Dobbie asks whether technology could also be making thinks worse, not better. Is a skilled carpenter forced to charge less because of the availability of mass produced pre-packed furniture? And how can lots of office jobs, which create nothing, pay more than jobs that add directly to the value of something? Even if we fully understand the causes of inequality, will we ever rid ourselves of it?

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Companies and governments are racking up massive debts to cope with the impact of COVID-19. Apart from grants for a month or two of partial salaries, the approach has largely been to extend easy short-term credit to those people and businesses struggling to survive. We can expect, once an initial amnesty on repayments has passed, many of these companies will go to the wall, adding to the massive peak in unemployment. How can economies grow when individuals are piled high in debt and governments are forced to use austerity to repay their massive spending programs. Steve Keen has argued that debt needs to be written-off, even before the Corona crisis. Now seems like the right time for society to discuss the benefits of a debt jubilee. The only downside seems to be a significant reduction in the size of the finance sector. Can we live with that? Or, perhaps they can shift their emphasis to more productive investments.

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In some parts of the world politicians, investors, business leaders and economists are behaving as though the Corona virus is almost eradicated. There are talks of easing up on restrictions, even though it’s only through the lockdown that infection rates have been held back. If, instead, we believe epidemiologists, who tell us this thing is with us for some time, what will life be like on the other side. Phil Dobbie asks Prof Steve Keen for his views on how our lifestyle and ways of business will change. Steve says it’s the beginning of a fundamental change in the way we interact with our planet.

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He has been called the ‘Father of Economics’, but how much of what he talked about and wrote about has stood the test of time? Have we fully understood his ideas of free trade and the invisible hand? And why is a man, who cared so much about the plight of the poor, now seen as the poster boy for the right and those with money to protect? Phil Dobbie talks to Prof Steve Keen about the work of Adam Smith – the good and bad – on this episode of the Debunking Economics Podcast.

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Billions of dollars are being pumped into economies the world over to protect economies from COVID-19. Much of it comes in the form of government fiscal stimulus, funded through bond issuance. Some of it involves businesses taking up further debt themselves, through low interest loans. Nobody seems to be pursuing helicopter money and while there’s some dabbling on the idea of universal basic income in the US, the money is peanuts compared to average expenditure. In this special free podcast, Phil Dobbie asks Steve Keen whether enough is being done to facilitate a rapid economic recovery, and who will be the beneficiaries – the business sector or the finance sector?

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Putting the Corona virus aside for a moment, on this week’s Debunking Economics podcast Phil Dobbie talks to Steve Keen about our use of energy. He raises the dilemma of energy prices – if they are too low, usage goes up, expanding our ecological footprint. If you try to counter that by artificially inflating prices, it’s the poor who suffer – as evidenced by the riots in Paris. So, how do we limit our appetite for energy, and can we do it without destroying the world economy? And, importantly, can we do it when power creation and distribution is largely in the hands of private companies?

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