Debunking Economics - the podcast

Feige’s automated transaction tax – the simple answer? Apr 10, 2024

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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Does immigration slow inflation? Apr 03, 2024

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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End of the Rising Sun Mar 27, 2024

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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The economics of babysitting Mar 20, 2024

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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Hunt’s Budget Fantasyland Mar 13, 2024

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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Selling bonds to punters shrinks the economy Mar 06, 2024

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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Steve Keen, the Musketeer Feb 28, 2024

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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Challenging American Exceptionalism Feb 21, 2024

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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Economic growth without more money? Feb 14, 2024

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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Banking on destruction Feb 07, 2024

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 on Technofeudalism Jan 31, 2024

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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Time to ditch entrenched lengthy, risky supply chains Jan 24, 2024

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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Does corporate debt kill opportunity? Jan 17, 2024

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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Private equity funds – capitalists or leeches? Jan 10, 2024

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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Coughing up for the young doctors Jan 03, 2024

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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Books for the Holidays Dec 27, 2023

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:

Gleeson-White, J. (2011). Double Entry. Sydney, Allen and Unwin. https://www.janegleesonwhite.com/double. A beautifully written exposition of the evolution of double-entry bookkeeping.
Bak, P. (1996). How nature works: the science of self-organized criticality. New York, Springer. https://link.springer.com/book/10.1007/978-1-4757-5426-1. An accessible explanation of a complex subject.
Minsky, H. P. (1982). Can "it" happen again? : essays on instability and finance. Armonk, N.Y., M.E. Sharpe. Can It Happen Again? | Essays on Instability and Finance | Hyman Minsk (taylorfrancis.com). About twenty very well written short essays by Minsky that explain his approach to economics. Much better than either of his books.
Lynas, M. (2020). Our Final Warning: Six Degrees of Climate Emergency. London, HarperCollins Publishers. https://www.amazon.co.uk/Our-Final-Warning-Degrees-Emergency-ebook/dp/B07YN9WSN8/. The best read on what climate change will actually mean.
Adams, D. (2003). The Hitchhiker's Guide to the Galaxy: The Original Radio Scripts. additional material by M. J. Simpson. (25th Anniversary ed.). London, Pan Books. https://www.amazon.co.uk/Original-Hitchhikers-Guide-Galaxy-Scripts/dp/1529034477. An antidote to reality.

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Should we fix central bank interest rates? Dec 20, 2023

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’s Thatcher love-in Dec 13, 2023

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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Does Argentina need a central bank? Dec 06, 2023

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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Too many people? Nov 29, 2023

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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The temerity of austerity Nov 22, 2023

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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Never too big to fail us Nov 15, 2023

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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AI – overhyped or capable of great things? Nov 08, 2023

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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Does Andreessen need a dose of techno realism? Nov 01, 2023

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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Corporate Bullsh*t and what it’s doing to us Oct 25, 2023

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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Why are some countries poor? Oct 18, 2023

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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Stand, but don’t deliver Oct 11, 2023

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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Does human behaviour render all economic models useless? Oct 04, 2023

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 Deciphered Sep 27, 2023

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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Better the dollar you know? Sep 20, 2023

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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A zero growth economy – how bad would it get? Sep 13, 2023

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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Should we all earn less? Sep 06, 2023

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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Trump’s Ring Around the Collar Aug 30, 2023

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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How the finance sector is underestimating the risk on climate Aug 23, 2023

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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BRICs wouldn’t be silly enough to develop a gold-backed currency would they? Aug 16, 2023

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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Did we experience a Pandemic-style People’s QE? Aug 09, 2023

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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Who wins from high house prices. Other than banks? Aug 02, 2023

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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Has Brexit stymied the UK recovery? Jul 26, 2023

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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Whatever happened to levelling up? Jul 19, 2023

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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Productivity gains in Britain – a vain hope? Jul 12, 2023

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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Another financial crisis that we all end up paying for Jul 05, 2023

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 Bank of England’s totally wrong response Jun 28, 2023

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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What can we learn from China? Jun 21, 2023

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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The generation game. Who wins? Jun 14, 2023

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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What if we paid a realistic price for energy? Jun 07, 2023

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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Planning for retirement, who pays? May 31, 2023

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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Positive Money’s Economic Plan May 24, 2023

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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Why do central banks want digital currencies? May 17, 2023

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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HANK or RANK – how monetary policy works, or doesn’t May 10, 2023

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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The Fast Road to Net Zero May 03, 2023

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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Rate rises and inequality Apr 26, 2023

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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Immigration. Good or bad? Apr 19, 2023

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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What will all this inflation do to us? Apr 12, 2023

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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QE and the bond bubble Apr 05, 2023

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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Chicago Plan – why it never went anywhere Mar 29, 2023

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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Who will win the money war between BRICS and the West? Mar 22, 2023

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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SVB collapse shows there’s no safety in government bonds Mar 15, 2023

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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Australian House Prices. That old Chestnut. Mar 08, 2023

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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Future Cities, Unequal Cities Mar 01, 2023

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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Are central banks heading for a fall? Feb 22, 2023

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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What’s the right wage? Feb 15, 2023

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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Return of the Cluster Truss Feb 08, 2023

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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How does liquidity impact the economy? Feb 01, 2023

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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An end to capitalism? Jan 25, 2023

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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Opportunity Cost and MMT Jan 18, 2023

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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2023 and all that Jan 11, 2023

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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Piero Sraffa and the non-existent supply curve Jan 02, 2023

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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Joseph Schumpeter and creative destruction Dec 28, 2022

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 & His Curve Dec 21, 2022

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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Richard Goodwin and non-linear thinking Dec 14, 2022

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 and Debt Deflation Dec 07, 2022

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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The Debt Myth Nov 30, 2022

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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What would Keynes do now? Nov 23, 2022

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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A long way from a Minsky moment Nov 16, 2022

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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Will more realistic pricing of energy and pollution save the planet? Nov 09, 2022

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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Private or public – getting the balance right Nov 02, 2022

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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Ready for Austerity 2.0? Oct 26, 2022

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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Can we get by without growth, growth, growth? Oct 19, 2022

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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Understanding the cost and value of money Oct 12, 2022

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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What's the right level of inflation? Oct 05, 2022

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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How much money is too much? Sep 26, 2022

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 – necessary or a force for evil? Sep 21, 2022

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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Energy, a free market failure Sep 14, 2022

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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Changing the role of central banks Sep 07, 2022

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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Is the European economy stuffed? Aug 31, 2022

Whilst the US might be struggling a bit with inflation, its nothing compared to what’s likely to happen in Europe. This week Russia shuts down its gas pipeline to Europe, supposedly for repairs, but there’s no guarantee it will open again. Even if it does, supplies are a fraction of what they were and Europe wants to stop its reliance on Russia anyway – pushing prices sky high, with rationing the only likely solution. Meanwhile, the Euro is weakening as the dollar goes from strength to strength, and that’s adding to Europe’s inflation pressures. And throw a drought on to of all of that, adding to the energy and supply problems. Plus a growing wealth divide. Is there any good news for Europe? Steve Keen reckons the only answer, sadly, is for Europe to give-in to Putin and make swathes of Ukraine the sacrificial lamb as the only way to avoid economic collapse. Even then, Europe has a number of inherent problems to overcome.

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Should we be bricking it over BRICS? Aug 24, 2022

It seems the whole approach to global trade is being redrawn. Donald Trump wanted to do less trade with China before the pandemic, and now with the Ukraine invasion the west wants to do less – preferably nothing - with Russia. Hardly surprising then that the BRICs nations (Brazil, Russia, India, China, South Africa) are developing their own ecosystem that could see them trade less with the west, including developing their own trading currency to remove the reliance on the US dollar. Phil Dobbie talks to Steve Keen about the impact this would have on the West.

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Is it time to revert to more state ownership? Aug 18, 2022

It’s a question being asked more and more. How many of the things that we privatised should be brought back under state control, as energy companies record massive profits, yet those on low incomes are struggling to heat their homes? In the UK privatisation was rampant in the eighties, but were mistakes made? Steve Keen has a simple test as to whether some things are best managed by the public sector or the private sector? But what about public-private partnerships? Are they potentially the worst outcome of all?

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Can the price mechanism fix everything? Aug 08, 2022

On the Why Curve podcast last week, Phil (and Roger Hearing) spoke to Daniel Gros, Director of the Centre for European Policy Studies, who argued that the gas crisis in Europe will be largely resolved by the pricing mechanism. High gas prices from Russia are making LNG imports feasible, because Europe will pay more than Asia for supplies. It won’t completely bridge the shortfall, he says, but if Europeans make a 15 percent cut in usage, then there will be no need to negotiate with Putin. This week on the Debunking Economics podcast Steve Keen argues that the pricing mechanism ignores the needs of the poor and has, for decades, favoured the rich. The fact that governments need to subsidise low-income households against rising fuel prices, whilst energy companies report record profits, demonstrates just how broken the pricing mechanism is.

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Can you calm inflation and keep jobs? Aug 03, 2022

Central banks are pushing up interest rates to slow down the rate of inflation. The principle is simple. Supplies are constrained and demand is high, so we’re being charged more for practically everything. If we can slow demand then the demand-supply divide will narrow. But can you do that without throwing the world into a recession in the process? The US Federal Reserve seems to think so. They put out a paper last week, by Chris Waller and Andrew Figura, called ‘What does the Beveridge curve tell us about the likelihood of a soft landing?’ Today Phil Dobbie talks to Steve Keen about the argument that a soft-landing can be secured if there are fewer jobs being offered, not a reduction in the number of people employed.

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Electric cars – tinkering at the edge of a climate crisis Jul 27, 2022

In the UK petrol cars emit 128g of CO2 per kilometre. In the US they drive bigger cars, for longer, so the carbon impact is that much greater. But cars, buses and motorcycles account for less than 10 percent of greenhouse gas emissions. Switching to electric could make a difference (unless of course the electricity is coal powered) but will it make a big enough difference, and are the objectives for Net Zero by 2050 really achievable? Phil Dobbie talks to Prof Steve Keen, and asks, are we lulling ourselves into a false sense of security when we think electric cars are a big part of the answer to climate change?

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Is the US dollar getting too big for its boots? Jul 20, 2022

As inflation grows around the world the US dollar enjoying multi-decade highs. To an extent, that’s helping mitigate the impact of inflation in the US by dampening the rising cost of imports. Most other places, though, are seeing the opposite happen. The rising dollar devalues local currencies making imports, including energy, more expensive, adding to inflation. This week Phil Dobbie talks to Prof Steve Keen about the impacts of exchange rates on international trade and how nations could be starting to challenge the US dominance in currency markets. As Pola, a Debunking Economics Podcast listener asks, what happens as BRICs nations (Brazil, Russia, India, China) move to payments in their own currencies instead of using the US dollar? Beyond that, what if they develop their own trading currency, similar to the Bancor proposed by Keynes back in the 1940s.

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How fast can a magic money tree grow? Jul 11, 2022

When British Prime Minister Theresa May said there was no magic money tree she was wrong. There is, but you still have to look after it. What happens if you take the money off the tree too quickly, and give it to the wrong people? Is that what’s happened over the last two years? This week Phil Dobbie asks Steve Keen if there’s an optimum level of expansion to the money supply (through government spending) and how do we claw back from it if we have overspent?

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How long before central banks realise they are making a big mistake? Jul 04, 2022

Inflation is rising everywhere as supply chains hit prices in the shops and at the fuel bowsers. Central banks are responding to this the only way they know how – by pushing up interest rates. Phil Dobbie asks Steve Keen what’s their rationale, when higher interest rates won’t fix the supply issues? Steve suggests there will be a rapid reversal in policy when the central banks realise the real damage they are doing to the economy. ‘There will be no soft landing’, he says. ‘There never is’. But what about taxation, asks Phil. Could demand be softened by taxing the high earners?

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Is globalisation a good thing, or a bad thing? Jun 28, 2022

When COVID has gone and the war is over, will we return to the patterns of international trade we were enjoying just a few years ago? Steve Keen says not, which puts him in the camp of anti-globalists that FT columnist Martin Wolf wrote about recently, in an article ‘The big mistakes of the anti-globalisers’. This week Phil puts some of Martin’s arguments to Steve, including the evidence that international trade has significantly boosted GDP globally and helped reduce extreme poverty. Won’t a more self-sufficient approach turn back the clock on both those achievements. Listen in for why Steve thinks times have changed for good, as we focus on sustainability over efficiency.

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Are there secret men running the world? Jun 20, 2022

Conspiracy theorists are out there claiming that unelected representatives are holding power, using technology to control our behaviour. China has tried a bit of this social engineering, but there are those who believe its far broader than that. They also reckon the drive for us to not use cash is part of the agenda, so ‘they’ can track our behaviour. That’s why central banks (who are unelected representatives who control our behaviour) want to move to a digital currency and are against cryptocurrencies that they can’t control. This week Phil Dobbie asks Prof Steve Keen if there is any potential for truth behind this fearmongering. Maybe we could all do with a bit of control!

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Coming off the QE cool aid Jun 13, 2022

Central banks the world over are busy lifting interest rates and, at the same time, engaging in quantitative tightening. In other words, all those bonds they bought up, will progressively be sold back to the commercial banks they were bought from. As those central bank balance sheets start to fall, what impact does it have on the economy? Does it mean we’ll see a shrinking of the money supply. That’s the commonly held belief, but, in reality the shift will have little impact, except for making banks slightly better off. The bigger concern is when they sell off corporate bonds, as Prof Steve keen explains to Phil Dobbie in this week’s podcast.

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The Tragedy of Misunderstanding the Commons Jun 07, 2022

The Tragedy of the Commons is a concept developed by William Forster Lloyd one hundred and fifty years ago. The argument is that if you allowed everybody to graze their cattle on common ground, with nobody in charge, the land would be overgrazed and the individual pursuits of many will result in destruction for all. So, do you put someone in charge, who imposes regulations on everyone. Or do you go the way of the free marketeers, who would argue that someone owns the land and rent sit out, with a vested interest in maintaining the long-term viability. Is there a definitive answer and how can we apply the Tragedy of the Commons to capitalism today? Phil Dobbie talks to Prof Steve Keen.

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Is the Phillips Curve dead? May 31, 2022

Central bankers and economists have often used the Phillips curve to determine the path of inflation. The problem is, they often get it wrong. No wonder then, that they question its validity when it doesn’t work the way it should. Call it operator error. On today’s podcast with Phil Dobbie, Steve Keen explains how most miss the dynamic aspects of Phillips’ observations – it’s the speed of change that counts, not a snapshot of employment levels at any particular time. Her also considered the changes in the price of inputs. On that basis, with unemployment rapidly falling and the price of imports rapidly rising, the Phillip’s curve has never been more relevant. So, does it tell us what happens next?

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Can we beat stagflation? May 23, 2022

Stagflation is that worrying combination of rises prices in a stagnant economy. Central banks believe the answer is to push up interest rates, to magically reduce inflation and miraculously demand returns to normal. There’s a debate as to whether that can be done without kickstarting a recession. Some argue that might be the poison pill we have to take – pointing to when Paul Volcker at the US Federal Reserve pushed interest rates as high as 21.5% , leading to recession, but ultimately seeing economic growth return. Steve Keen says this time, it’s different. And we can’t assume the inflation cycle is as transient as many politicians, economists and central bankers believe.

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Should oil companies pay a windfall tax? May 16, 2022

BP made $12.8 billion profit last year, $4.1 billion on that in the fourth quarter. In the first three months of this year Shell’s profits reached $9.1 billion. Meanwhile pensioners and low-income families are struggling to keep their houses warm, as high energy prices add to the inflation squeeze being felt with food and other household essentials. Phil Dobbie asks Prof Steve Keen whether this all points to the need for a windfall tax on energy companies who are enjoying massive profits through no-action on their part. And should it be a one-off initiative, or is this time to rethink how we tax these companies in a way that will engender investment in renewables?

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Can developed nations reindustrialize? May 07, 2022

The supply chain disruption from COVID, and the imperialist ambitions of Vladimir Putin have demonstrated, more than ever, the need for nations – or at least neighbouring groups of friendly nations – to be self sufficient in food and energy. Will we find the world returning to a spit between the West, autocracies and developing nations? Can each group survive without the others? Prof Steve Keen tells Phil Dobbie that we will still be reliant on autocratic regimes for mineral resources, and the world really needs to come together to tackle climate change. Even if that’s a pipedream we at last need a plan for how we manage the world’s resources and ensure we have a reliable source of food and energy, without kowtowing to despotic regimes.

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Just how sustainable are house prices? May 02, 2022

Property expert Russell Quirk maintains that housing will always be a good investment and prices will, in the long run, always go up. Perhaps this year inflation will rise faster, so in real terms prices may dip, but in the long run, he reckons, the direction will always be north. Prof Steve Keen on the other hand, maintains that, at some point, things will rapidly head south. Why? Because banks are offering loans through the creation of new money, which makes it easier for them to meet consumer demand, irrespective of how realistic house prices are. And they get locked into a feedback loop, where valuations are based on previous valuations. Your house is worth more because all the other houses around you are worth more. This, recons Steve, will come unstuck, possibly in a big way. He says we don’t accept it because it’s not happened in recent history. Just as we didn’t expect a pandemic because we hadn’t seen one like it for 100 years.

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What’s wrong with the rentiers? Apr 20, 2022

The UK the Chancellor’s wife Akshata Murty was in the news a couple of weeks ago when it was revealed that she was claiming non-domicile status in the UK, so most of her income from her shareholding in dad’s company in India could be taxed over there at a much lower rate. The issue for many was that she wasn’t paying her fair share of tax. But does her wealth present a bigger problem. This week Phil Dobbie asks Prof Steve Keen whether Akshata Murty is an example of the rentier class, who make money from having money. And does that necessarily mean the money is used less well than if it was in the hands of good old-fashioned capitalists? Or is it all just a bit of jealousy, because we don’t have wealthy parents?

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Feedback loops kill the equilibrium fantasy Apr 13, 2022

Economists like to think that there’s an equilibrium that the economy is either briefly moving away from or heading back to, and it’s all explained in those simple models we did at school. Those were mostly microeconomic models, of course, that are somehow magically interpreted at the mac level. Or there are more complex mathematical models that reflect only a tiny slice of the bigger picture. But didn’t Sonnenschein–Mantel–Debreu theorem debunk that? This week Prof Steve Keen tells Phil Dobbie that even their work ignored a fundamental feedback loop which clearly demonstrates that equilibrium is fantasy land.

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The inflation genie, can we bottle it? Apr 06, 2022

The inflation genie is out of the bottle. Can we get it back in there before it does too much damage? Central banks are trying to tackle it by racing each other to put up interest rates, possibly to levels we haven’t seen in years, despite the fact we’re all leveraged to the hilt with our mortgages. Can that be done without causing a recession? More to the point, does monetary policy actually do what central bankers think it will? On this week’s Debunking Economics podcast Steve Keen tells Phil Dobbie that its up to governments, not banks, to bring inflation down. Instead, it seems, everyone is doing exactly the wrong thing!

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Is it possible to avoid another fuel crisis? Mar 29, 2022

Energy prices are going through the roof. They were before Ukraine erupted, but with Russia the world’s second biggest producer of natural gas, and Iran in third place, it seems we are destined to get our gas from trouble spots, and pay for the price for it. But Steve Keen says we have to get used to the idea that resources are no longer plentiful and rising prices from scarcity are becoming a fact of life. Phil Dobbie asks if there is anything that can be done to prevent an energy crisis akin to what we experienced in the seventies. The difference then, of course, that the issue was relatively short term. Now, its part of a major transition, escalated by COVID and geopolitics.

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EU talks bonds. And this time it’s different Mar 21, 2022

The EU has talked about issuing new bonds to protect its eastern borders against Russia and to prepare Europe for a future without reliance on Russian oil and gas. Normally bonds are issued by individual countries. If the ECB felt the need to intervene it would buy up those bonds, normally proportional to the size of the member countries. Even during the pandemic, their pandemic emergency purchase program saw them buying up sovereign bonds from member countries. Could this time be different?

Is there a Europe wide need that could see the EU operating a centralised budget to, for example, fund a European army? Well, they have already started down that track with the issuance of green bonds this year. How does it work? How does it create a budget through debt issuance, and see that money move to suppliers in individual European nations? The answer is, its complicated but not insurmountable. The question is, is a centralised EU budget, supplementing each countries own budgets, a good thing or a bad thing?

Phil Dobbie talks to Prof Steve Keen about what could be a new direction for the EU, where it wields money for pan-European spending projects.

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Does Economic Isolationism Work? Mar 10, 2022

The war in Ukraine looks set to continue for a long time. A 90 minute high-level meeting between the two parties, mediated in Turkey, got nowhere today. Meanwhile, the west is imposing more and more sanctions on Russia. Putin spoke calmy at a press conference today about how they will manage these increasing constraints on trade and finance, making out it wasn’t really a big deal. So will they make their way through it, or will these sanctions be the nail in the coffin for Putin’s plan? Or will they just make him more resolute? Will he start to attract the support from his people that Hitler gathered between the two world wars? Phil Dobbie talks to Prof Steve Keen, asking whether we are taking the right approach on this. Whatever the outcome, Steve reckons we should prepare for more unrest in the future, as demand for minerals heightens and the world is split between those with them, and those without them. Could this resource split and an increasing sense of protectionism become a deadly combination?

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Crazy Taxes Mar 04, 2022

Most people agree that Rishi Sunak is crazy to introduce new taxes on the British public when inflation is compromising living standards and the Bank of England is lifting rates and pushing up the cost of mortgages. Now a war in Europe is pushing the cost of fuel ever higher. But the Chancellors argument is that the government has to pay back the money it borrowed during the pandemic. If it did, it would take decades. But, as Steve Keen explains in this week’s podcast, Modern Monetary Theory suggests the money doesn’t need to be paid back, and tax is really on a mechanism for controlling the money supply. Phil Dobbie looks at some of the crazy taxes that have been introduced, many to do with changing behaviour or distributing wealth. Both noble aims, but the execution might have left something to be desired.

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Fighting Putin’s grand plan Feb 26, 2022

It seems Putin will not be satisfied until he has a puppet leader installed in Ukraine to replace what he’s called their Nazi leader – he’s Jewish by the way. This week Phil Dobbie talks to Steve Keen about Russia’s motivations for the invasion. None of them justify the action, but a bit of history helps explain the animosity between the east and the west. Meanwhile, the approach of sanctions will hurt countries depend on Russian resources, and will they have any impact on the crazed Russian leader?

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Time for a monetary reset? Feb 21, 2022

A society riddled with debt is a society that is reluctant or unable to spend. A lot of that debt has now found its way into housing, with mortgages higher than ever. That’s money we’re using to pay off our home loan that we could be spending keeping the economy moving. In short, its slowing the speed at which money circulates. So, how do we fix it? The answer is get rid of the debt. And Steve Keen has a cunning plan. A monetary reset. How would it work? Phil Dobbie explores the idea in detail with Steve on today’s Debunking Economics podcast.

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Debt, loans and investments deciphered Feb 10, 2022

Last year Andrew Bailey, the Bank of England Governor, spoke optimistically about how the UK economy would bounce back because so many people had stashed away money in their savings accounts. But, at the same time, we also saw rising levels of debt. This week, Phil Dobbie asks Steve Keen how you can have rising savings and debt at the same time. If you have spare cash sitting in your bank account, wouldn’t you use it to pay off your debts. The fact that people are not doing that tells us something about the state of the economy. And where did all these extra savings come from anyway? And why did they never materialise into a massive spending splurge like the Governor had predicted?

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How to burst the housing bubble Feb 01, 2022

House prices in Australia continue to rise. According to Domain’s House Price Index, prices in Sydney have risen by a third in the last year, to a median value of $1.6 million. Housing affordability has never been a bigger issue, but how do you bring prices down when two thirds of the population are owner occupiers. That’s a question Phil Dobbie puts to Steve Keen, as he explains his two-pronged approach to containing house prices – first, limiting the value of loans to a multiple of the rental value of a property and, secondly, a big reset, which sees debt repaid and bonds issued to those who don’t currently own a property. Would it work, and could it be explained in a way that the voting population will understand?

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Who controls interest? Jan 24, 2022

Central banks control the interest rate through the decisions of their various monetary committees. Almost all of them are set to raise rates multiple times this year. But what do they basis this decision on? These days it is related to the rate of inflation, but to what extent is that driven by the amount of money in circulation. Can the central bank control both? And what about the velocity of money? All questions Phil Dobbie puts to Steve Keen in this week’s Debunking Economics podcast, along with the question, what if we didn’t change interest rates at all?

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What’s driving the Great Resignation? Jan 09, 2022

One of the surprises as we emerge from the worst of COVID (hopefully) is what’s being called the Great Resignation. Even though employment levels in most countries remain below pre-pandemic levels, that’s not stopping those who hung onto their jobs through the crisis from leaving in their droves. So, what’s driving this trend. Prof Steve Keen suggests it’s a “kick in the balls to the gig economy”. But what happens next? Already central banks are lifting interest rates, fearful of rising wages pushing inflation higher. How is that going to work out. Tune in to this free half-hour podcast as Phil Dobbie talks to Steve about what’s driving this dramatic shift in the labour market.

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The Perils of Government Subsidies Jan 04, 2022

Even the most ardent supporters of small government will agree there are times when governments need to offer subsidies to companies and industries. Paying for the furloughing of workers during the pandemic was one unavoidable example. But are their times when subsidies can distort the economy in unforeseen ways. The support for the food industry that promotes livestock over plant-based diets is a prime example. This week Phil Dobbie asks Prof Steve Keen whether there a better way of supporting industries without complex subsidies?

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Where’s all the money coming from? Dec 18, 2021

Around the world we have seen the size of the money supply increasing considerably over recent decades, but none more so than the last couple of years, as governments spend like crazy to support people during lockdowns and illness. In the UK the amount of money in circulation has increased by almost £200 billion. Phil Dobbie asks Steve Keen if there are consequences of growing the monetary base so quickly, and what’s the role of the central banks in controlling this supply?

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Not all contrarians are the same Dec 03, 2021

There are a lot of people questioning the direction of conventional economics, yet, even after the biggest spending splurges ever made by governments outside wartime, there is still a lot of talk about fiscal conservatism, paying back the debt and balancing the budget. But contrarian voices question whether that is the best way forward, whilst others are seeing an end to fiat money and are buying into alternatives, like Bitcoin. In this free half hour podcast Phil Dobbie and Steve Keen look at those questioning the way our economies run and the contrarians who believe there’s a better way; contrarians who don’t agree with each other.

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Surviving with a negative trade balance Nov 28, 2021

Is a negative trade balance such a bad thing? Some countries with a bit deficit seem to be doing okay, like American, even the UK to an extent, whereas others, like Japan have a trade surplus and a economy on the road to nowhere. This week Phil Dobbie and Steve Keen discuss how important is a trade balance for the overall good of an economy. And what about jobs? Donald Trump was concerned his trade deficit was giving away jobs to China. Was he right about that? And what about the strange suggestion from Modern Monetary Theorists that exports are bad, imports are good for an economy?

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Too much information Nov 20, 2021

Economics works so well because we al have perfect information about everything, all the time. Right? We choose products at the best price because we know all about all products and their prices, so we can make the best choice. That means we can all pursue our own self-interests to provide the most efficient outcome for any situation. Huh? This week Phil Dobbie talks to Steve Keen about the myth of perfect information and the equally as convoluted theories around asymmetric information. But are we getting closer to this supposed information utopia, thanks to the internet? Or is it the supplier who is gathering perfect information, about us?

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Accumulating someone else‘s wealth Nov 10, 2021

If capitalism is driving everyone to make a profit – and we all save a bit of that profit and therefore accumulate more wealth, does that mean everyone can be better off, if we all run profitable businesses? Does that mean Boris Johnson’s idea of levelling up is a good one? Or is there a constraint on how much wealth there is. Today on the Debunking Economics podcast Steve Keen explains to Phil Dobbie the difference between stocks and flows. Profits are flows, whereas accumulated wealth is a stock. He shows how everyone cold theoretically create a profit, but if you increase your wealth you are doing so at the expense of someone else. Once again, it’s easier to explain if you understand double entry bookkeeping.

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Boris misunderstood Pareto Nov 03, 2021

During his Tory Party conference speech, Boris Johnson said that he remembers something about Wilfredo Pareto, in the “cobwedded attic of (his) memories”. In his mind, Pareto was all about levelling up – that you can improve the lot of some of society without anyone else losing out. But Pareto is most famous for the 80:20 rule – at the time he observed that 80 percent of land in Italy was owned by 20 percent of the population. It’d be worse than that today. For example, in England half of all land is owned by less than one percent of the population. So, can you really expect to be able to improve the wealth of everyone? If the poor suddenly get rich, won’t they demand the swathes of land that is the domain of the uber-wealthy? Plus, doesn’t climate change place a ceiling on growth that puts paid to Jonson’s ambitions. Phil Dobbie talks to Prof Steve Keen, and asks whether levelling up is a vain hope, and whether Pareto ever argued the case in the first place.

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Currency Wars Oct 26, 2021

Donald Trump believed that China was manipulating its currency to get an unfair advantage against the US. This week Professor Steve Keen explains why manipulating currencies isn’t that easy – and the US will always be at a disadvantage when it comes to competing for international trade. He talks with Phil Dobbie about why countries moved to floating exchange rates, and how the system would have worked better if people had listened to Keynes. Meanwhile, it’s helped create an industry that transacts almost $2.5 quadrillion each year!

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The energy crunch Oct 18, 2021

The world’s leaders are getting together in the UK at the end of this month to discuss how to tackle climate change. Meanwhile, fuel prices are rising higher and higher, and increasing talk of inflation. Prices are rising because, quite simply, demand is rising but supply is still constrained. Gas supplies in Europe are dependent on Russia and renewable energy has been held back by low winds and other weather-related influences. Now, to meet demand, countries are stepping up their use of fossil fuels. Energy supplies “at any costs” has been the approach in China. Phil Dobbie asks Steve Keen whether we’ll ever reach renewable targets whilst the energy industry is in private hands. In the UK how much of the problem we now face is the result of Thatcher-era philosophies that believed competition would yield greater amounts of lower priced energy?

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Cashed up and nowhere to go Oct 08, 2021

Governments have been spending their way through the pandemic, so what happens to that money? Regular listeners will understand how this spending gets added to the money supply, but then what? Steve Keen looks at the impact of government spending on the private sector, and Phil Dobbie asks if this is a prime example of modern monetary theory in action? Could the COVID years be used as the case study of how MMT works? There’s also some discussion on whether government handouts, like furlough payments, were the best approach. Would tax cuts have had the same impact? And what’s the relationship between an increase in the supply of money and the velocity of that money? If the government is injecting cash but we’re not spending it, is it really having the impact governments had hoped for?

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Steve for the NSW Senate Oct 05, 2021

Steve Keen is a man of many surprises. His latest is that he is going to stand for the Senate in New South Wales. He’s packing his bags and heading back to Australia, for an election that will be held early next year. He’ll be one of six senate candidates in NSW for the New Liberals. So, is this a good move? From an academic to a politician, from developing and challenging theories to creating soundbites for TV? Phil Dobbie asks why he is making the move, what are his chances and what does the New Liberal party stand for. And could this spell the end of our weekly podcasts?

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Inflation, the next pandemic? Sep 26, 2021

COVID is causing supply disruptions the world over, evidenced by disruptions to supply chains and rising producer prices and consumer prices. Central banks are quick to suggest this is a temporary measure, and inflation will start to fall as quickly as it rose. And yet, they are also making noises about raising interest rates, as a way of controlling inflation. Last week the Bank of England was hinting that could happen sooner, rather than later, even as they implement quantitative easing. Phil Dobbie asks Prof Steve Keen whether there’s any merit in lifting rates in an economy struggling to recover. And what if inflation is here to stay? What policy can work for an economy where supply falls well short of demand and prices rise beyond the means of many lower paid workers?

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Has QE become MMT by another name? Sep 17, 2021

Central banks around the world are at different stages of how they supposedly deal with the COVId-19 crisis. Most are implementing some form of QE, but many are now reducing their purchases, and some are even lifting interest rates. How can they all have a different monetary approach to dealing with the same crisis? And can any claim to have been operating independently, buying up the increasing amount of debt issued by their respective governments? With the big four central banks (the BoE, the ECB, the Fed and the BoJ) having amassed $24.5 trillion in government bonds, does anybody really expect they will ever get their balance sheets back down to zero? If not, have they really embarked on MMT but are afraid to admit it? Phil Dobbie talks to Prof Steve Keen.

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Boris’ Healthcare Reform is Grossly Unjust and Economically Damaging Sep 11, 2021

Whilst the UK still lumbers under high COVID infection rates, and the economic recovery stalls, with GDP growth now at a trickle, the government wants to raise taxes. Even if you believed it was a fair tax, is next April – when the rise kicks in – the time to be taking spending money out of people’s pockets. But, as Phil Dobbie discusses with Prof Steve Keen, this is far from a fair tax. Those earning over £50,000 per year will pay disproportionately less than those on lower incomes. The money will help to fund the health care sector which is predominantly serviced by for-profit companies, some of whom are paying their senior staff very handsome salaries. We’re told we can expect more tax rises soon as the Tory government scrambles to reduce its debt burden. All of this ignores, of course, the ideas of Modern Monetary Theory (MMT) that suggests governments can overspend if the excess money is used to create jobs. Even if you ignored MMT, doesn’t the issue of caring for the elderly, raise the obvious question about inheritance tax. Isn’t it time to tackle Britain’s problem of hereditary wealth?

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What’s down the China road? Sep 05, 2021

There’s a lot happening with China right now. First, they are extending their social and commercial controls, which is adding uncertainty to foreign investors looking to get involved with Chinese firms. Maybe the Communist Party likes it that way. There’s also the risk that a more cocooned China could play a stronger military role in the Asia Pacific region. Then there’s the ever-expanding debt – private and government. Hilliard MacBeth, a Debunking Economics listener asks whether private sector debt, in particular, will create a problem.

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The economics of scarce resources Aug 29, 2021

Following on from a fortnight ago, what happens as resources start to become scarce? We’re already seeing the short-term impact of supply chain disruption because of COVID, but what when this becomes more common, and we have to get used to the idea of not always getting what we want? Prof Steve Keen suggests that rationing of goods might be the only way forward, but Phil Dobbie asks whether a shift to a more localised service-oriented economy might cut our demand for resources, particularly if the prices become prohibitively expensive.

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The economics of education Aug 19, 2021

More students than ever are off to university next month because of the A level grade inflation, accentuated by teacher assessments replacing exam results because of COVID. How useful is it to society to have more and more people studying at university? Is it adding to the GDP of the country? In today’s podcast Steve Keen suggests that we are devaluing a university education, which helps nobody. He explains why. And Phil Dobbie suggests, for those who don’t reach university standards – or who simply don’t want to go – could another two years of A levels be the answer?

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The mineral supply crisis that’s rarely talked about Aug 12, 2021

We’ve talked about the climate change crisis on the Debunking Economics podcast, but there’s a broader issue we all face, highlighted in the Club of Rome back in 1972. We are chewing up resources faster than they can be renewed or sourced. It’s not just oil, but iron ore for steel production and previous metals used in microprocessors. Simon Michaux, associate professor at the Geological Survey of Finland, joins Phil Dobbie and Steve Keen to talk through the scale of the issue and how it’s already impacting the economy.

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The economy after the pandemic Aug 05, 2021

Many governments have done an excellent job at propping up businesses during the pandemic. For example, paying companies to furlough workers will, in theory, enable those businesses to quickly bounce back, with a workforce ready to go. But what if the pandemic drags on for years to come? Already governments are talking about how they will claw back the massive increase in government spending. And, whilst large corporations might have the cash to survive, perhaps after a little restructuring, small businesses have the most to lose. They have also borrowed the most. So how does the global economy come back from this? Prof Steve Keen tells Phil Dobbie that it’s a shame this hasn’t been seen as an opportunity to embrace modern monetary theory. But it’s been shunned by governments and central banks who prefer the old way of doing things, which will be highly detrimental to all of us, but particularly those most in need.

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Why no Marxist revolution? Jul 30, 2021

Karl Marx never advocated violent revolution, but he did expect that the power balance between capitalists and workers would change. On today’s podcast Steve Keen tells Phil Dobbie that Marx wrongly expected that profits would ultimately shrink, so workers would be fighting for a slice of a shrinking pie. That’s not happened. Perhaps the main reason we’ve avoided a violent revolution is because the poor have become richer, just not as much as the very rich. It could be a different story soon though, if the pie starts shrinking.

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Economics and thermodynamics Jul 26, 2021

Steve Keen has often said, the problem with economics in, it ignores thermodynamics. That’s not always been the case. Georgescu-Roegen, a Romanian economist, wrote The Entropy Law and the Economic Process in 1971, which embraced the orle of energy and waste in economics. But we’ve taken backward steps since then. This week Phil Dobbie asks Steve Keen to explain what thermodynamics is and why it is critical to the forward direction for economics. Without it, can we really save the planet?

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Free markets through subsidy Jul 16, 2021

Even the most ardent free marketeer accepts that there is some degree of subsidy needed to support low income earners or necessary industries that are not commercially viable. This has particularly been the case through the pandemic. But what’s the best way of applying these subsidies? If you pay directly to companies will you be inhibiting efficiencies and competition. If you pay directly to consumers how do you know they will spend the as you intended? Should governments be offering payments to individuals that can only be spent in a particular way? And how do you avoid political motivation behind the issuing of subsidies. This week the government published the UK Subsidy Control Bill, which sets out the rules that apply to local authorities and national governments, but not the UK government. To no media scrutiny whatsoever.

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The economics of scarcity Jul 08, 2021

From day one economics students are taught that their discipline is all about the optimal allocation of resources. The concept of scarcity is at the very heart of how we are supposed to think. And yet, as Prof Steve Ken explains this week, that scarcity doesn’t really exist. There’s plenty of people available to do jobs, there’s masses of untapped energy potential from the sun. This challenges the idea of opportunity cost – why do A or B when you can do A and B? Ironically, the one recource which is scarce, the environment, is the one element that economics has traditionally blithely ignored. So, if its not to do with managing the allocation of scarce resources, what should be the real definition of economics? Phil Dobbie suggests one – perhaps you can do better.

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Dog Days and Hot Bonds Jul 01, 2021

Canada and the west coast of the US have been hit with extreme heat the last week. The town of Lytton in British Columbia reached 49.5C, the result of a heat dome caused by static high-pressure. It’s another reminder that the world has to act on climate change. This week the ECB’s Christine Lagarde talked about how the EU needs to see around €330 billion every year by 2030 to achieve Europe's climate and energy target. Couldn’t they just issue this as bonds, in the same way they have with the Pandemic Emergency Purchase Programme? And what about Rishi Sunak’s plan in the UK to issue green bonds for regular households to invest in? Will either of these proposals create new money, or simply redirect spending away from other non-green initiatives. Be prepared for another discussion between Phil Dobbie and Steve Keen on when money is actually created and whether some of the proposals could actually destroy money, hindering our efforts to tackle climate change.

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Power (back) to the People Jun 25, 2021

Businesses and politicians have worked tirelessly to reduce the power of workers and dissemble unions. Of course, nobody was better at it than Margaret Thatcher. But has she, and all those did their damnedest to reduce the power of unions, actually done the country a disservice? Do economies function better with strong unions? Are they the necessary counter to a system that allows companies and financiers to push wages down to the lowest possible level leading to slow economic growth? Questions Phil Dobbie puts to Steve Keen in this week’s Debunking Economics podcast.

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Has the UK come the raw prawn over free trade? Jun 17, 2021

Boris Johnson has enjoyed photo opportunities this week with Australian Prime Minister Scott Morrison with the announcement of an ‘in-principle’ free trade agreement between the two countries. It’s the first new one for the UK outside those that already existed through the EU. Great news for biscuit eaters, because Tim Tams are so much better than Penguins. But it’s seen as bad news by UK farmers who adhere to standards that don’t exist in the UK. Like hormone fed beef. So, is it a bad deal? And what about the idea for free trade generally. The argument since Ricardo’s day was that for agricultural it removes the constraint of land and, therefore, the law of diminishing marginal return. That should make goods cheaper, even those made here. Is the theory right?

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The problem with now Jun 10, 2021

The world is fixated with the present. We want to earn money quickly and spend it quickly. CEOs don’t care about much beyond their stock options, politicians only work to getting re-elected, consumers want instant gratification. It’s no wonder then that we’re not prepared to make compromises for long term consequences, like climate change, because the economic system we use has no way of managing our investment in the future. Is there a better way of managing the economy, in a way that ensures we look after the planet and provides for you in your old age?

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Relative Values Jun 03, 2021

Today on the podcast Phil Dobbie talks to Steve Keen about the value of things. Supposedly, price is a substitute for value, meaning if someone is prepared to pay more for something then they must value it more. But as they discuss, that only applies if everyone has the same amount of money. A poor household will place greater value, as a proportion of their wealth, on heating their home. A rich household will see extra use of that same resources as a discretionary item that they place little value on, particularly relative to their income. So, is the concept of value another broken element of a modern capitalist economy, and is there a way to allocate resources more effectively? We know, from the Soviet experience, that getting the state to do it creates even worse results.

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Inflation – transitory, then what? May 26, 2021

US inflation is now running at 4.2% on an annual basis, and producer prices the world over have been rising as input costs for product creep up. How much of this will be passed on to the consumer as companies struggle to absorb these costs – and what impact will these higher prices have on demand? Central banks are all toeing the same line, that rising inflation is only transitory, driven by supply chain disruption, so there’s n o need for them to respond by pushing up interest rates anytime soon. But will prices bounce back? In this week’s podcast Prof Steve Keen tells Phil Dobbie that the bigger concern, post-COVID, is going to be deflation. Listen in to find out why.

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Do central banks only help the rich? May 20, 2021

This pandemic has been massive amounts spent by governments, and a chunk of that government debt is being bought by central banks. But with central banks buying up government bonds, whilst maintaining low interest rates, who is really benefiting? The answer, of course, is the wealthy. This week Steve Keen explains why the current situation is widening inequality, with the central banks at the front and centre of tis change. But government policy is helping too, in the wrong direction. So, is there any way out of this. Or has COVID-19 simply amplified a trend that was already upon us?

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Navigating out of the COVID crisis May 10, 2021

There seems to be an assumption by many that the crisis we have experienced will quickly bounce back. Output will resume, demand will return, everyone will be back in work and the economy will rapidly expand back to where it was before COVID. Central banks appoint to supply chain disruption in the short term that might create transit inflation, but that’s the only obstacle to the road to recovery. Except, it’s not really working that way. There are forecasts for massive growth this year, but there’s not a lot of data to support these predictions. The US jobs recovery, for example, that was expected to see one million new jobs a month, has slowed right down. And yet the IMF expects the economy to grow by 6.4 percent this year, even though more than eight million Americans who had a job before the pandemic are still looking for work. So, what’s the best approach out of the crisis? What should Treasurers and policy makers the world over be focused on. A question Phil Dobbie puts to Steve Keen in this latest Debunking Economics podcast.

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A history of recessions, and why this is not so different May 02, 2021

There’s one clear difference between this recession and almost all those that have gone before. This time there was a pandemic involved, which hit demand and supply equally. So are there any similarities between this global recession and those that have gone before. Phil Dobbie puts the question to Steve Keen in this latest Debunking Economics podcast.

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Removing the green premium Apr 24, 2021

40 world leaders go together virtually this week, for a bit of an impromptu climate summit called by Joe Biden, before the next big climate conference (COP26) in Glasgow in November. In this edition of the Debunking Economics podcast, Phil Dobbie asks Steve Keen whether Bill Gatesd has the right approach. He advocates removing the green premium. His argument is, we don’t choose zero carbon emissions products because they are more expensive. If you remove this premium, then everyone will buy zero emission products and the problem will go away. Too simplistic?

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Yellen’s global tax is a non starter Apr 12, 2021

Janet Yellen has repeatedly called for countries to raise their corporate taxes, so they are in-line with the increases she has planned for the US. There’s also been a call for companies to be taxed where they earn their revenue, rather than declaring profits in countries where tax is lowest. Her reasoning is transparent, of course. She wants to raise corporate taxes in the US and doesn’t want countries to move overseas, or shift their profits out of America. Is it a good idea? Prof Steve Keen likes the idea of a coordinated approach to tax, but can’t see it happening in reality. And can you do it for corporate tax without considering other measures? Like income tax, for example. And the moment you look at a coordinated fiscal approach to that extent aren’t you are stepping dangerously close to world government?

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Central banks investigate digital money Apr 04, 2021

You might have thought that digital currencies were the domain of cryptocurrency evangelists, and were largely stores of wealth rather than money used for transactions. Now, it seems, central banks everywhere are investigating digital currencies as part of their modus operandi. Most money in central banks is digital, of course, so when they discuss digital money what exactly are they talking about? This week Phil Dobbier talks to Prof Steve Keen about why central banks are looking more closely at digital currencies, some of it good, some of it a little more sinister.

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The Fallacy of the Supply Curve Mar 28, 2021

Last week we looked at how economics text books that taught us the law of demand, and how fundamentally flawed it was. Today, equally as useless, the law of supply, with the supply curve representing the marginal cost of producing goods. Steve explains how its is flawed because of the assumption that as you produce more of something the cost of production rises. Phil asks, how does that relate to the idea of economies of scale? Is conventional economic theory arguing against itself?

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The fallacy of the demand curve Mar 19, 2021

Steve Keen believes the way we look at economics is wrong from the ground up. Take the demand curve, for example. It shows how, when prices fall demand goes up, and vice versa. Whilst it works at an individual level, but attempts by theoreticians to demonstrate that this works at the aggregate level have all failed. In this episode we look at the Sonnerschein-Mantel-Debreu theorem, which looks at how price changes of one good will impact your consumption of that good and all others. The big failing, says Steve, is that they ignore the relationship between workers, capitalist and bankers. In this podcast we explain how the income distribution effect makes the demand curve much more complicated than the neoclassical economists would let on., to the point where the theory at its simplest level is worthless.

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Global Britain, owned by the world Mar 12, 2021

Post Brexit we were promised a global Britain. It’s got off to a bad start with a massive fall in exports to the EU in the first month of this new utopia. Meanwhile, there seems to be a lot of talk about Britain accepting inward investment, in particular encouraging foreign firms to list on the London stock exchange. This week Phil Dobbie discusses the various types of foreign trade, from inward to outward FDIs, corporate takeovers and UK share listings by foreign firms. Will any of these benefit the UK, and does the government actually have a plan?

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Vaccination is a global pursuit Mar 05, 2021

The UK chose to respond to a global pandemic by reducing the amount of money given in foreign aid. Yet COVID-19 is attacking every country in the world. So is climate change. And there will be other viruses to come. For example, Ebola is reported to be out of control in West Africa right now. It is not as infectious as COVID-19, but its fatality rate is way higher (maybe as much as 50 percent). So, how does the west protect the developing world, and itself, through mass vaccinations. Can it fund the vaccines with money it creates. Could we adopt an approach where the pound, the dollar and the Euro fund local production facilities in developing nations, just as the Chinese Yuan is funding belt and road initiatives in many countries. Never before has there been a need for such global cooperation, but how do we fund it?

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Economies are too scarred to bounce back quickly Feb 23, 2021

The UK won’t see an end to lockdown measures until July, but after that the hope of many is that the economy will bounce back quickly. The Bank of England governor has called it a coiled spring. Many are comparing it to the roaring twenties. Part of the reason for this optimism is the argument that many people in the country have saved money during the lockdown, because they haven’t been able to spend on shopping or on overseas holidays. The household savings ratio increased significantly last year. But the figures are misleading, says Prof Steve Keen, on this week’s Debunking Economics podcast. National account figures ignore the servicing of debt, so the gap between income and consumption appears greater than it is in reality. If there was an increase in household savings you’d expect a decrease in the amount of household debt – but that’s not happening, says Steve. There’s a danger that the UK government will assume a rapid recovery, and pull back on stimulus measures that we’ll discover are needed further down the track. All because they ignored the impact of debt.

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Who pays for a free press? Feb 18, 2021

Australians can no longer turn to Facebook for news. From today they have banned Aussies from posting links to news sites on their platform, or for Facebook users anywhere linking to Australian news content. Australian treasurer Josh Frydenberg says these actions demonstrate that the big social media players wield too much power and control. Facebook has taken this stance because they don’t believe they should have to pay whenever anyone on Facebook chooses to link to an Australian news site. Who can blame them? So howshould new content be funded, and should we be concerned about the power of the major internet players? Phil Dobbie and Steve Keen don’t exactly see eye to eye on this.

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Has the last year shown us how to save the planet? Feb 09, 2021

In 2019 Greta Thunberg spoke to politicians at the UN Climate Week, saying they were promoting fairy tales of eternal economic growth. The next year we saw GDP in advanced economies fall by around five percent. Was this a win for the green movement? James Strain, a Debunking Economics Podcast listener, suggested we talked about the need for de-growth. He said, “It seems to me that this is imperative to our transition to a more sustainable society, but it breaks so many long-held fundamentals in mainstream economics that it's hard to see how we would begin to make the transition.” Most attempts to transition to a green economy have been fairly piecemeal, and don’t acknowledge the need for a move to less consumption. There is an answer, though. Steve Keen wasn’t a supporter of carbon trading at the business level, but he reminds Phil Dobbie of his suggestion that countries allocated carbon points to individuals. If you wanted to use more then you’d have to buy points from somebody else. They discuss how it could work in practice.

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Who were the bad guys in the Redditt Wall Street Rebellion? Feb 03, 2021

There was a bit of argy-bargy on the share markets in America last week, when a bunch of day traders set to take on Wall Street, particularly the hedge funds who were shorting stock on Gamestop, amongst others. Were the day traders the bad guys in this scenario? Did the retail traders know what they were getting themselves in for? In this episode Prof Steve Keen suggests maybe the Robin Hood retail platform should be considered the bad guys. A step in the direction would be to reduce speculation in the market not drawing more people into it, he says on this week’s podcast, not to mention the waste of brainpower that has been exerted on this while exercise!

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Is central bank independence a thing of the past? Jan 27, 2021

Remember a time when central banks pretended to be independent, insulated from day-to-day politics? That had all but disappeared before COVID, but the pandemic was the final nail in the coffin of central bank independence. Instead, they have been colluding with governments to provide the mechanism to issue more public sector debt. Monetarism can’t resolve this crisis, so central banks’ usual tools are worthless. This week Phil Dobbie asks Prof Steve Keen whether this new arrangement, where the central banks and the treasury collude, is here to stay? If the government can use money creation to develop policies to build jobs and control inflation, what’s left for the central banks?

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The value of pensioners in a COVID age Jan 21, 2021

Last weekend, Lord Sumption, was talking about why a lockdown harms everyone when the virus mainly ills people who are old or who have with debilitating conditions. He suggested we shouldn’t have lockdowns, because the lives lost were of less value than the rest of us. He isn’t the first to suggest that some lives are worth more than others. In fact, he argues we place a value on human life to determine the extent of healthcare intervention. It’s called the Value of Prevented Fatality (VPF). This week on the Debunking Economics podcast Phil Dobbie asks Prof Steve Keen whether we should consider the value of life in segments of society when developing policy on the pandemic. Some would see pensioners as a cost to society and, if you were being totally heartless, less of them would be a benefit to the economy. We look at just how flawed that thinking is.

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Can we Wörgl our way out of this? Jan 13, 2021

One big problem as we emerge out of the COVID crisis is, even if we have money we’ll be reluctant to spend it. So, how can the government get us to step up our spending? The answer, perhaps, lies in Austria in the 1930s, when the Mayor of Wörgl issued his town’s own currency, with built in demurrage. Could a new, parallel currency be the way to increase the velocity of money and help the economy bounce back. Could it also be the first big step towards a universal basic income? Prof Steve Keen talks through the benefits with Phil Dobbie.

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The Science of Trumpism Jan 08, 2021

If you follow the science of Cliodynamics, the events unfolded in the United States the last few years have been entirely predictable. This week Prof Steve Keen talks to Phil Dobbie about the work of Peter Turchin, who has built mathematical models to track changes in society based on economic, demographic and political changes. How much can it tell us about the rise in populism that brought Donald Trump to power? Can it tell us want happens next?

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Steve Keen’s Predictions for 2021 Dec 30, 2020

Earlier this year Phil Dobbie asked Steve keen for his predictions for 2020. Without a whiff of COVID-19 IN THE AIR, Steve talked of a capitalist economy on government life support. On that he was pretty much on the mark. So what of 2021. In this free edition of the Debunking Economics podcast he explains the reasoning behind his five predictions for the year ahead:

1. Recession in Europe and America as financial aftermath to the COVID crisis.

2. The housing bubble to continue in Australia., but maybe not in Canada.

3. Strong growth in China.

4. A rapid fall in coal mining

5. Severe weather crises in Europe and USA from collapse of Arctic winter sea ice

Phil tries hard to accentuate the positive in Steve’s predictions, but fails miserably. It’s all doom and gloom!

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Are we overstimulating the economy with the COVID-19 response? Dec 23, 2020

As the US government argues over whether to spend almost another $1 trillion to stimulate an economy ravaged by COVID-19, and the UK government likely to increase public sector borrowing by GBP215 billion this year, plus central banks lowering interest rates to often below zero, is there a chance our response to COVID-19 has been over the top? Some argue that the response, when the economy finally recovers, will be highly inflationary. Whilst others, Steve Keen included, believe deflation is going to be the issue, and it’ll be a long time before we see inflation rising. Phil Dobbie asks whether we’ll see governments use these inflation fears as an argument to curtail spending in 2021, even though the virus is still spreading and the job is far from done. And Merry Christmas to all our listeners. More next week!

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The best approach to foreign trade Dec 16, 2020

Would the UK be better off with tariffed trade with Europe? The public discourse seems to be focused on how to remove tariffs, but Prof Steve Keen argues that if they are sufficiently high they will encourage domestic production across a variety of industry sectors. The more complex the mix of industries the more self sufficient an economy becomes, which also increases the potential for developing a broader range of exports. The only limitation is scale – but with 65 million people, is Britain big enough to go it alone? Phil Dobbie points to countries with high GDP that have a hefty reliance on foreign trade.

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Are we doing foreign aid wrong? Dec 12, 2020

The UK has cut its foreign aid budget to help pay for the domestic costs of COVId-19. Is that a bit of a callous move? That’s a rhetorical question, but there’s a more meaningful question on today’s podcast – is there a better way of managing foreign aid. Steve Keen has worked with agencies dealing with foreign aid, and discusses the failings of the process with Phil Dobbie. Corruption is one issue with the recipient nations, whilst the donor countries often choose destinations that look after their own vested interests. But John Maynard Keynes had an idea that would have made foreign aid more of an automatic process. It’s just America won’t like it very much.

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Is it time for a debt jubilee? Dec 04, 2020

Steve Keen and Michael Hudson have both been arguing for a debt jubilee for some time. Now, as COVID-19 hits the poorest hardest, and leaves those with money better off than before, is this the right time to write off debt? Can the economy recover without it? After all, its stagnated since the 2008 global financial crisis. If you were to have a debt jubilee, how would you do it. Steve and Michael have different ideas about how it should be implemented. They explain their thinking to Phil Dobbie on this week’s edition of the Debunking Economics podcast.

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Ask Steve: Keynesian v Post Keynesian; Austrian v Chicago Schools Nov 26, 2020

It’s a first for the Debunking Economics podcast, but we think it’s not a bad idea – a bunch of listener questions to make sure we are all on the same page. Suneil Basu wrote to ask if we could cover off the differences between Keynesian and Post-Keynesian economics, and the different approaches of the Chicago and Austrian Schools. Also, how did neo-classical economists claim the centre ground? Listen in for Steve’s answers. Also a couple of questions on the EU versus the WTO, and whether Russia had a hand in the Brexit result. SAs we say on the podcast, it’s a grab-bag of questions – but that keeps it interesting (we hope).

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Taming Asset Prices Nov 20, 2020

The world economy has undergone massive transformation with COVID-19. There will be an even bigger upheaval as climate change takes hold. How do we prepare for the economic changes it will bring about. The way of coping with the virus emergency has been unprecedented levels of government intervention. Does that mean the only way to transition to a greener economy is through public funding, or can the private sector carry the can? And who manages the transition? Eric Rosengren from the Boston Fed admitted to the FT earlier this year that they don’t have the tools to “stop firms and households” from taking on “excessive leverage”, yet it’s the Fed policy that has created the problem. Phil Dobbie asks Steve Keen whether rising asset prices are a bad thing or not, and if its seen as a problem, what can be done about it?

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Transitioning an economy Nov 12, 2020

The world economy has undergone massive transformation with COVID-19. There will be an even bigger upheaval as climate change takes hold. How do we prepare for the economic changes it will bring about. The way of coping with the virus emergency has been unprecedented levels of government intervention. Does that mean the only way to transition to a greener economy is through public funding, or can the private sector carry the can? And who manages the transition? Phil Dobbie talks to Prof Steve Keen.

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Bad time for a Brexit Nov 06, 2020

Despite intensive talks Michel Barnier says there are still clear divisions between the EU and the UK over an agreement post-Brexit, which is less than two months away. This week Prof Steve Keen, a Brexit supporter, says the whole affair should be put on hold whilst the world copes with COVID-19. Phil Dobbie asks whether a deal will ever be reached anyway? Did the UK really think it would secure a tariff-free relationship if it didn’t adhere to rules on government subsidies. Rules that are surely being broken right now as cash handouts are rife to protect businesses that face closure because of the virus. And every free trade agreement always has a clause about opening up public procurement, the terms of which are complicated. Do we rally expect all this to be resolved by the end of next month?

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Monetary support in a crisis. Does it work? Oct 26, 2020

Governments spent up big at the start of the COVID crisis, but they are being a bit more canny with their money right now. Meanwhile, central banks are seeing the need to step in, with monetary policy being used to fill the gaps where fiscal stimulus isn’t forthcoming. But are they kidding themselves? Can the economic consequences of a pandemic really be filled by a central bank dropping interest rates and buying back a large number of government bonds? In short, the answer is no. In this week’s Debunking Economics podcast Prof Steve Keen discusses the limitations of monetary policy measures with Phil Dobbie. Plus, why QE isn’t creating money, its just moving it around a bit, to those people who need it the least.

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Who can create money to fight COVID? Oct 12, 2020

There’s a commonly held misconception that the Bank of England is creating extra money and pumping it into circulation through quantitative easing. In this week’s podcast Prof Steve Keen explains how QE amounts to nothing more than an asset swap – so no new money is created. The only way money can be created is through commercial banks issuing loans – something they are not doing much of – or governments running a deficit. Even the IMF is now suggesting that advanced economies should not be worried about public debt. Talking to Phil Dobbie, Steve explains the limited impact of QE and the need for something like the Bradbury Pound, when the government issued currency – interest free and deb free - without any involvement of private banks.

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A rebirth of localism Oct 06, 2020

Wealth in UK is very concentrated I the southeast of England. In other countries, the structure of administration and banking has seen a more diversified economy. So what could change to make income and productivity more equable throughout the UK. In this week’s Debunking Economics podcast Phil Dobbie talks to Prof Steve Keen about the devolution of Scotland, the role of local administrations, Germany’s regionalised public banking system and the role of local currencies, including the Worgl experiment in Austria during the great depression. With more people experiencing the benefits of working from home could this be the first step in a more decentralised UK economy.

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Introducing People’s Bonds, putting government debt to work Sep 30, 2020

Politicians, the media and most economists are obsessed with government debt – now more so than ever. But, as Modern Monetary Theory has shown, there is no issue with governments perpetually running budgets in the red, providing the extra money supply resulting from it is not inflationary. This week Phil Dobbie suggests some of the debt issued in the form of bonds could be given to the public as a form of universal income, which increases when government debt is highest – when the economy is in most trouble. So, what does Steve Keen think of this approach – and are there any downsides to the introduction of People’s Bonds?

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The practicality of a job guarantee Sep 27, 2020

Would a job guarantee resolve the battle between inflation and unemployment? Conventional economists argue that when the labour market is tight – and there are few jobs to go around – people ask for more money and that creates inflation. When there are very few jobs – like now – inflation is much lower. The counter argument, from Modern Monetary Theorists, is that a job guarantee would reduce this flux, whilst improving the lifestyles and wellbeing of the population. This week Phil Dobbie asks Steve Keen whether the MMT have got the logic right and, even if they have, can it be practically applied?

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The mythical world of NAIRU Sep 17, 2020

The US Federal reserve this week indicated that interest rates will remain close to zero through till 2023, at the earliest. Why because inflation is subdued and they don’t expect it to pick up until employment returns to normal. But what’s normal? Central banks work on the principle of NAIRU - the nonaccelerating inflation rate of unemployment – but they never seem to be able top in down exactly what that rate is. Before the pandemic US unemployment was down to 3.5 percent, with no sign of inflation lifting. Phil Dobbie asks Prof Steve Keen whether the idea of a fixed NAIRU rate just plain wrong?

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Nordhaus is the climate’s worst enemy Sep 09, 2020

There are the deniers who will argue that mankind has no influence on climate, but worse yet, there are economists who argue the impact will be so small the cost of trying to prevent it will be far greater than the consequences of living with it. That’s the line taken by joint Nobel prizewinner William Nordhaus. In this week’s edition of the Debunking Economics podcast Prof Steve Keen takes Phil Dobbie through some of the spurious arguments and assumptions used by Nordhaus to reach his spurious conclusions. Some of them defy logic. If you offered them in a high school science exam, you’d probably fail.

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Goodbye Shinzo, Farewell Abenomics? Sep 07, 2020

In Japan Shinzo Abe has announced he is stepping aside because of ill health. Will this mark the end of Abenomics, the term used to describe his three-pronged approach to fighting the country’s ailing growth rate and deflation? Some point to the continued slow growth as a sign that his approach hasn’t worked, but on today’s podcast Prof Steve Keen tells Phil Dobbie, things would have been much worse with a more conventional approach. Japan is an example of Modern Monetary Theory in action, and for those who believe pumping money into the system will create inflation like in Venezuela, why hasn’t this happened in Japan where deflation has been the biggest concern?

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Can MMT solve to the COVID-19 debt problem? Aug 27, 2020

Governments the world over are spending like crazy to try and steer their economies through the COVID-19 crisis. Whether it’s the fiscal policies of the government or the monetary policies of the central bank, it all still revolves around using money that wasn’t around a few months ago. So how much of what is happening is described by Modern Monetary Theory – and how much more could be done if we accepted that MMT is the way things should really work. And do central banks, or treasurers really understand it? Phil Dobbie asks Prof Steve Keen whether MMT can solve the COVID-19 debt problem?

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The Cost of COVID Cocooning Aug 18, 2020

We’re travelling less, staying away from the office, and spending more time at home. In the short term, it seems, those who still have money are spending a slug of it doing up their house, or moving to a bigger one, with outdoor space. House prices in the UK are growing much faster in Scotland, Wales and regional England than they are in London, for example. So, will escalating house prices be one of the consequences of COVID cocooning – and does that make the economic impact of the virus even worse than it is already? Questions Phil Dobbie puts to Prof Steve Keen in this week’s Debunking Economics podcast.

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Are we finally heading for a United States of Europe? Aug 14, 2020

The agreement by EU members to issue grants and loans to member states suffering the most from COVID-19 was a turning point for the union. Whilst US politics sees continued bickering on the size and form of a stimulus package, across the Atlantic a diverse range of countries have come together to agree a way forward. Is this a major turning point for the EU. Come we see fiscal and monetary union that could pave the way for the United States of Europe? It’s a question Phil Dobbie puts to Steve Keen in this week’s Debunking Economics podcast.

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Should we really close the door to labour mobility? Aug 06, 2020

The UK’s Home Secretary Priti Patel has revealed the government’s plan to curb migration to the UK, with a universal points system. It’s going to be hard for anyone to migrate to Britain without a job lined up that pays over £25k. Phil Dobbie asks Steve Keen whether it’s a good thing to set a minimum wage for migrants. After all, having we been exploiting workers, paying too little for jobs the locals aren’t prepared to do? Or do these low paid jobs impact the rate of pay for all workers, whatever they do for a living?

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Meanwhile, there’s still a climate crisis Jul 30, 2020

Remember climate change? Believe it or to, even with COVID-19 dominating our consciousness, the environment is still a thing. A new report by NGFS - a voluntary group of central bankers concerned about the environment – reckons the world’s global GDP could fall by 25 percent by 2100 if we do not do more to reduce greenhouse gas emissions. Whilst their intent might be right, Steve Keen is concerned that their modelling is wrong. Like most of the economics profession there is no application of systems thinking. Models are too simplistic, ignore tipping points and assume a closed system that doesn’t account for vital external variables. He says the worst of humanity is dragging us into a crisis, exploiting the worst of human behaviour – that we don’t think it will personally affect us.

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Good tax, bad tax Jul 21, 2020

Income tax, sales tax, council tax, car tax, capital gains tax, inheritance tax – there’s just so much tax! This week Phil Dobbie talks to Prof Steve Keen about the whole idea of taxation. For many it’s simply a form of revenue raising for governments, but once you accept that governments can create their own money in their own currency, the role of taxation changes. This week we look at the role tax plays in minimising income disparity, and the importance it should play in Boris Johnson’s quest to ‘level up’ the economy. And thanks to Ed Twohig for suggesting the topic.

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The China crisis: are we being hypocritical trading with China? Jul 16, 2020

The world has become dependent on trade with China, so much so that . We’ve become so we’ve been prepared to overlook human rights violations. But is that about to change? President Trump has managed to convince world leaders to ditch Huawei from their telecoms networks on fears that their equipment could be snooping on us. But, could it also be that Huawei makes twice as much money as the US’s Cisco, the world’s next biggest telecommunications equipment provider? In this week’s podcast Phil Dobbie asks Prof Steve Keen whether the world can do without China, and are hypocritical trading with them if we believe their behaviour is that bad?

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Levelling up - can Boris really bridge regional diversity? Jul 10, 2020

Boris Johnson has talked frequently about levelling up the UK economy – bringing the wealth of the more deprived areas so they are closer to the wealth of the more affluent areas, without the affluent folks having to pay for it. This week, Phil Dobbie asks Steve Keen whether that’s possible, or do you have to level down – take some of the wealth from the high earners to distribute to the more deprived regions? They discuss growth poles, carrot and stick measures and the importance of minimum wage and local council funding. The answer for Boris is in this podcast, let’s hope Dominic gives it a listen.

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Will money printing pay for the COVID-19 debt? Jun 29, 2020

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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Does protectionism kill growth? Jun 23, 2020

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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Who’s got the right idea on COVID-19 stimulus? Jun 18, 2020

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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Share Crazy Jun 10, 2020

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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Is the US all it’s cracked up to be? Jun 07, 2020

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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The economics of mental health May 31, 2020

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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Paying for a pandemic May 27, 2020

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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The hierarchy of inequality May 19, 2020

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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Inequality – are we stuck with it? May 13, 2020

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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A debt jubilee – the only real answer? May 07, 2020

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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After Corona, the new normal Apr 30, 2020

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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Understanding the real Adam Smith Apr 28, 2020

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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Corona bailouts – for main street or Wall Street? Apr 21, 2020

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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Private energy, shared planet Apr 17, 2020

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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Will COVID-19 kill the EU? Apr 07, 2020

The EU is debating whether funding to protect economies from the ravages of the Corona virus should come from centrally issued Corona Bonds, or from country-specific debt. In short, should Italy and Spain pay the price of their own misfortune and be landed with the bill to pay off for years to come, whilst totally sovereign nations, like the US, simply issue bonds which can be paid for by the central bank and for which the government has no intention of ever repaying. In this edition of Debunking Economics Phil Dobbie asks Prof Steve Keen whether the inflexibility of the Euro at a time like this will mean countries like Italy will no longer want to be part of it. Could this crisis expedite the demise of the Euro, and, perhaps, the EU itself? If so, is that a good thing?

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Who is handling this virus the best? Apr 01, 2020

Italy is getting swamped in corona virus cases, whilst China claims the only new infections now come from visitors from overseas. Donald Trump has gone from calling it a hoax to warning that 200 thousand Americans dying will be the best possible scenario. The UK has seen its death rate step up again today, whilst Germany has seen relatively few deaths and in Sweden folks are still eating out at restaurants. In this FREE edition of the Debunking Economics podcast, Phil Dobbie asks Prof Steve Keen which countries are handling the crisis the best, not just to contain the spread, but also to prepare their economy for the recovery.

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How did we get here? Mar 27, 2020

How did we allow the spread of the Caronavirus happen? Why were governments and health services so unprepared? In this week’s Debunking Economics podcast entrepreneur and venture capitalist Nick Hanauer joins Phil Dobbie and Steve Keen to look at the inevitability of this crisis. Nick says it’s all down to the preoccupation with small government. How do we solve it? Massive government spending and the creation of new money. What have we learnt? Steve hopes it’ll enable us to focus on the bigger issue, what we’re doing to the planet.

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Next, a repair based economy? Mar 21, 2020

One of the questions we might be left with after the virus has left us, will be have we become too reliant on international supply chains. Another might be, are we just too reliant on stuff? If we are to look after the planet do we need to lose our appetite for goods that we keep for a short while then throw away. Why not fix them? Is it time for a repair-based economy? And if so, how do you implement it? Phil Dobbie talks to Prof Steve Keen about the circular economy, hours before he fled Europe to escape the worst of the Corona virus.

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Do we need a Corona bond? Mar 12, 2020

Central banks have cut interest rates, some governments have introduced stimulus measures. But still the disease spreads and livelihoods are put at risk. In today’s extra (free) edition of the Debunking Economics podcast Prof Steve Keen argues that stimulus measures are nowhere near enough, and serious sums of helicopter money need to be added to everyone’s bank account. He has been arguing for some time that there’s a need for a debt jubilee to get the economy moving, and now might be the time to do it, starting with the issuance of zero interest debt jubilees and personal bank deposits to cover mortgages and other outstanding commitments.

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Is technology the only real driver of growth? Mar 11, 2020

We know what makes up the measure of gross domestic product – it is increases in private or government spending, increases in investment or an improvement in your balance of trade. But are those factors all driven by improvements in productivity driven by technology gains? This week on the Debunking Economics podcast Phil Dobbie asks Prof Steve Keen whether technology improvements are the only real driver of economic growth? Can the economy continually grow without it?

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We need to prepare the economy for a lock down Mar 03, 2020

The manufacturing numbers from China at the weekend showed how hard the sector was hit by the lockdown in Wuhan and neighbouring districts. In today’s Debunking Economics podcast Prof Steve Keen says the rest of the world needs to prepare for a similar strategy, that will see production dive as workers don’t show up and consumers don’t go shopping. It seems likely that central banks will cut interest rates, but that won’t stop businesses going bankrupt. So what is the correct policy response?

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Can US debt keep rising forever? Mar 02, 2020

The US government is now running a debt exceeding $23 trillion. When Donald Trump cam rot office it was already at $18.2 trillion. Regular Debunking Economics listeners will know the ability to rack up debt is a privilege for running the world’s reserve currency. There will always be demand for US dollar bonds. But why do so many countries seek US bonds, and how long can this imbalance continue for? Will there be a time when the US dependence on government debt will come back to bite it – or can we just sit and watch it grow? And what about China – can they grow debt ad-infinitum?

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The multiplier effect and who stops it working Feb 25, 2020

The multiplier is a basic concept of economics. If you come across some money and spend it, the person you spend it with then spends a proportion of it again, the recipient of which also spends some of it. In this week’s podcast Phil Dobbie talks to Prof Steve Keen about how savings and taxation influence the multiplier, including how different sectors influence the speed of the multiplier. Plus, the commonly held assumption that if money starts circulating too quickly then it’ll assume less value. And what about those who want to accumulate wealth – do they stop the multiplier working?

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Should Central Banks do all the work, or none of it? Feb 17, 2020

Central banks started life as clearing houses and have evolved into instruments to, supposedly, protect the economy. But with interest rates at all time lows, often in the negative, have they gone as far as they can go? And how can they control the economy when governments can implement a fiscal approach at odds with monetary policy. Is it time to consider that Central Banks have a fuller role in the management of the economy, leaving governments to consider ow best to spend the money allocated to them? Or is that a breach of democracy? Phil Dobbie discusses the idea with Prof Steve Keen.

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The impact of AI – good or bad for the economy? Feb 10, 2020

Artificial intelligence is everywhere it seems, except perhaps in parliament and in quite a few newspapers. But what does it mean for the future of work. Conventional economists would argue that people freed from their jobs will be able to pursue other productive outputs, helping to grow the economy still further. Phil Dobbie asks Prof Steve Keen whether that’s likely to happen Or are we facing the danger of structural change that will lead to widening income disparity. And what can we do about it, other than becoming laggards?

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Does fiscal stimulus work? What about Friedman’s argument of nominal value? Feb 03, 2020

Today Phil Dobbie talks to Prof Steve Keen about Milton Friedman’s concept of nominal value ,and how this runs counter to the argument that governments can create money to give the economy a sugar hit. The theory is, we’ll realise that the extra helicopter money has devalued the currency so, after an initial burst of growth, we’ll realise that we’re actually no better off. So where does this theory go wrong? Other than the fact that most money is created by commercial banks, not governments extending their debt.

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Davos does diddly-squat Jan 28, 2020

The world leaders met at Davos and discussed climate change. Greta Thunberg told them they weren’t doing enough, even though the President of the United States promised to plant some more trees and warned against the doomsayers with their predictions of the apocalypse. So, will there be an apocalypse. Phil Dobbie asks Prof Steve Keen, arguing that he could be seen as one of the lefty Marxists who is using the climate change agenda to unsettle capitalism. And if we are to avoid the apocalypse, and planting trees isn’t enough, what should we be doing. What should have been said at Davos?

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Is the share market killing innovation? Jan 20, 2020

US equities, in fact shares around the world, seem to be running away with themselves right now. Is this healthy? And who wins, other than the investors who sell before the price tops out? This week Phil Dobbie talks to Prof Steve Keen about the relationship between shareholder value and the growth and productivity of the company’s shareholders are buying in to. Is part of the problem that the system promotes the managerial class, rather than incentivises entrepreneurs?

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Does the UK economy need the royals? Jan 15, 2020

Who’d have thought it – Steve Keen and Phil Dobbie turn out to be a couple of royalists. As Harry and Megan prepare to chuff off to Canada, and royal-watchers have been decrying the whole thing as one massive constitutional crisis, we use it all as an opportunity to ask whether the royal family is worth keeping at all. The expectation was that one or other of our podcasters would have it in for the royals, but after looking at the numbers they both agree it’s better to stick with what we know. After all, they’re great for tourism and only cost us a quid a year each.

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Steve Keen’s Predictions for 2020 Jan 06, 2020

2019 was quite a year. We had the ongoing Brexit saga, the US China trade war, Europe close to recession and a big housing downturn in Australia. It was capped off with some of the worst bushfires ever seen. Phil Dobbie asks Prof Steve what this year has in store for us? if austerity has gone will we see a bright future for Britain, or will it be dragged down by Brexit? Is this the year that Donald Trump gets re-elected, or will the US economy take a turn for the worst and drag him down with it? And will housing in Australia bounce back and see their economy back on the upward trajectory? Or not? And climate change – is this the year we finally start to take notice?

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Five Big Myths of Classical Economics Dec 23, 2019

It’s taken us a few years to tackle the obvious topic for the Debunking Economics podcast, what are the biggest failings of neoclassical economics. Prof Steve Keen tells Phil Dobbie that it starts on page one of rudimentary economics textbooks, which the idea of the demand curve. Having debunked that, he moves on to the capital market line, used to determine investment decisions. Then it’s the models being used to determine the impact of climate change. Then the concept of diminishing marginal productivity. And finally, the process of simplifying assumptions. Having dismissed all the major tenants of economics Phil asks Steve if there any laws that apply to the ‘science’, in the same way that gravity applies to physics. Or is it all lost in the realm of unproven speculation?

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The Opportunity Cost Fallacy Dec 16, 2019

It’s one of the basic constructs of classical economics – the concept of the opportunity cost. Steve Keen admits it works at the individual level – you are listening to this podcast at the expense of doing something else, for example. But does the theory work when applied to broader economic thinking? No, says Steve – it’s a case of false equivalences, that renders it meaningless. Does that mean it’s useless as a tool for economists? And is there a way Phil Dobbie can use it as a way of getting out of mowing the lawn?

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Business cycles – what causes them? Dec 11, 2019

In this edition of the Debunking Economics Podcast Phil Dobbie and Steve Keen discuss business cycles. What causes them and how can we reduce their impact. As Steve explains, neo-classical economics teaches us that the turns in a cycle are caused by exogenous shocks when, in reality, it is the economies own internal cycle that is the root cause. Listen in to find out why business cycles really occur and what we can do to lessen their impact. Plus, Phil asks, why has the cycle stalled all of a sudden, and is it necessarily a bad thing?

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Economic Growth – it’s complicated Dec 03, 2019

Economists predict GDP growth by looking at business investment, government and consumer spending, plus the net level of exports. In the long term, of course, growth only comes from the products and services you sell and for that the Atlas of Economic Complexity, developed by Harvard University, is a powerful tool. It demonstrates how growth comes to countries with a highly complex mix of products for export – the less complex, the less the growth potential. As Prof Steve Keen says to Phil Dobbie in this week’s Debunking Economics podcast, it is the exact opposite of Ricardo’s argument of Comparative Advantage.

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Should we do more to price-in externalities? Nov 24, 2019

Economists love the concept of externalities - factors that cost you or benefit you, for which you made no contribution, or for which you bare no blame. In this week’s podcast Phil Dobbie describe show his new neighbour said he hopes he does his house up, because gentrification benefits everyone in the street because everyone’s house goes up in value. He asks Steve Keen whether, if that’s the case, he should charge his neighbour for some of the work, given he will benefit financially. Increasingly it’s possible to find ways that people can pay for the external benefits you receive – but, the fact that you can, does that mean that you should?

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Free broadband – Corbyn’s bad connection Nov 18, 2019

Jeremy Corbyn pledged over the weekend that, if he was to become Prime Minister, he would deliver free high-speed full-fibre broadband to everyone by 2030. To do it he would renationalise Open Reach, the network arm of BT. Is any of this a good idea? Phil Dobbie asks Steve Keen whether the government can deliver a solution any faster than the private sector. Surely subsidies are a better approach. And can’t something be learnt from the experience in Australia, where politicking has destroyed the country’s hope of having decent broadband anytime soon. Instead, they have something that’s slower and more expensive than what Britain already has. Even if the government was to manage the roll-out – does it really need to be free? And, if we pursued the principle of Modern Monetary Theory, isn’t there a danger that we’d see more schemes like this, without the fiscal rigour that you’d expect when access to funding is more restrictive?

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What can we do about pay gaps? Nov 12, 2019

For all the best efforts we have seen over recent years, the gender pay gap in most countries remains an issue. There are lots of other factors determining how much you get paid, of course – your age, your education, where you live. Can these gaps ever be resolved? Probably not, says Steve Keen, who says the issue is one of hierarchy. Society needs hierarchy to organise itself, so we will always see some getting paid more than others, even if, on the face of it, they don’t deserve it. The question is, how do people rise to the top of the hierarchy and what is the pay differential between the top and the bottom.

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Brexit - a good idea or not? Nov 03, 2019

Steve Keen and Phil Dobbie had very different ideas about Brexit a few years ago. Now they both agree it’s a vote that should never have happened? So, is it the impact of tariffs?? Is it the impact on foreign investment? Is it impacts on the supply chain? No, many of those things, Steve believes, will be overcome. It’s the one unsurmountable thing that was never discussed ahead of the vote – the one thing that is likely to kill the whole idea. Now they agree on one thing, Brexit will never happen.

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Making an MMT Green New Deal Global Oct 27, 2019

One of the constraints of MMT is that to create more government money you need to have a sovereign currency. That rules out countries in the Eurozone and developing nations heavily reliant on the US dollar. Yet the idea of a Green New Deal is to resolve the issue of climate change using MMT. How can you pursue a global issue with a protocol that only applies in certain parts of the world? And how do you apply it without going down the dangerous road of world government? Questions Phil Dobbie puts to Prof Steve Keen in this week’s Debunking Economics podcast.

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Can MMT pay for a Green New Deal? Oct 21, 2019

Larry Randall Wray has suggested Modern Monetary Theory should be applied to create a Green New Deal. This week and next, Phil Dobbie talks to Prof Steve Keen about the idea of creating government money to tackle the climate emergency. Would it work? Is there a danger that public sector spending will crowd out private investment in innovative approaches to renewable energy? And what can we learn from the original New Deal, from Roosevelt just after the Great Depression?

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Will Trump ever win his trade war? Oct 12, 2019

There’s a glimmer of hope that the US China trade war will ease a little. In other words, it won’t get worse. But even so, the tariffs and other conditions are being felt in both countries. Steve Keen, who is not a fan of global trade, admits this one is having a destructive effect on the global economy. So how will it end? Could Trump achieve his aim of drawing manufacturing back to the United States? If he does, how long will it take? And what happens in the meantime?

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Can We Afford McDonnell’s Four Day Week? Oct 07, 2019

At the Labour party conference recently, UK Shadow Chancellor outlined the policy aim of reducing the working week to 32 hours, with no loss in pay. It’s been lambasted by many, who see it as a way of reducing productivity and costing jobs as businesses fail against overseas competitors with a lower cost base. In this week’s podcast, Prof Steve Keen tells Phil Dobbie that the protagonists have got it wrong. The reason productivity has slowed is because companies are becoming too reliant on low cost labour. A rise in labour costs will encourage more investment in technology, which is what will increase productivity. It’s impossible to increase the productivity of low skilled labour because humans can’t improve their energy output without machines to help them.

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Can MMT work in countries with a trade deficit? Sep 30, 2019

Modern monetary theory tells us that we shouldn’t worry about government debt – that governments can create money to spend to projects that will create full employment. Even if that is the case, what happens when the money you need isn’t in your currency? It’s a question Phil Dobbie puts to Prof Steve Keen in this week’s Debunking Economics podcast. You can’t create foreign currency, but you might well need it to pay for your government expenditure. So how does Modern monetary theory work in practice, for small countries that need foreign currencies to buy the imports they need to grow their economy?

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The insignificance of gold Sep 23, 2019

There were times when men would leave their families to head for the hills and pan for gold. There were times when the value of currencies was tied to gold. These days, there aren’t so many discoveries and money is no long tied to the gold standard. Phil Dobbie asks Prof Steve Keen what is the use of gold today, and why do investors rush to it in times of uncertainty. And if it has nothing to do with monetary policy, why is most gold still locked up in the vaults of central banks?

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The false economies of private health Sep 16, 2019

According to the World Health Organisation, Antibiotic resistance is rising to dangerously high levels in all parts of the world. New resistance mechanisms are emerging and spreading globally, threatening our ability to treat common infectious diseases. Sadly, the ROI of antibiotic research is now too low for most pharmaceutical companies to consider. In this week’s free edition of the Debunking Economics podcast Phil Dobbie and Prof Steve Keen talk about the failings of the free-market system and health provision.

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Should we have tighter controls on money supply? Sep 09, 2019

Regular listeners will know that most money in circulation is created, bot by central banks, but by commercial banks when they issue loans. In this week’s podcast Phil Dobbie asks Steve Keen how fundamental this is to the slow growth, low interest economy the world has found itself in. Isn’t there a danger that banks will limit the supply when times are bad when, in fact, what the economy needs at those times is more money? Just how much influence do central banks have on the activities of commercial banks these days? Should there be more regulation to control how much money banks create? The answer is yes, but only for money created to fund certain times of loans.

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Preparing for an entrepreneurial Britain Sep 02, 2019

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Are we on the verge of a global recession? Aug 27, 2019

The markets are concerned that we are on the verge of a global recession. How do they know? Not from reading tea-leaves but by studying yield curves. An inverted yield curve has signalled every recession since the 1980s. So, Phil Dobbie asks Steve Keen, does that mean next year is going to be 2008 all over again. In short, no is the answer. 2008 was caused by a collapse in credit-based demand. We’re not seeing the same level of decline in that demand this time. So, the good news is, we might not be heading for a recession. The bad news is it more likely to be a sustained period of stagnation and central banks aren’t helping us out of it.

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What went wrong at Bretton Woods. Time for another meeting? Aug 19, 2019

A little over 75 years ago World powers signed the Bretton Woods agreement, that saw the US dollar as the planet’s reserve currency, tied to reserves of Gold. In this week’s podcast Phil Dobbie talks to Prof Steve Keen about how the agreement missed the opportunity to create a separate reserve currency, the approach preferred by John Maynard Keynes. They also discuss why the link to Gold reserves was eventually removed, the role of the IMF and World Bank, both born out of Bretton Woods, and whether now is the right time for another get together to sort out the world’s money system. With President Trump complaining a lot about currency manipulation lately, now seems as good a time as ever.

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An economic model that includes energy Aug 12, 2019

Economics is still built around the age-old factors of production – land, labour, capital and, perhaps, entrepreneurship. Yet, you can’t run machines without power and you can’t expect workers to function without food. So why isn’t energy implicitly included as one of the key functions of the economy? Clearly it should be. In today’s Debunking Economics podcast Professor Steve Keen explains how he is working with climatologist Tim Garrett and mathematician Matheus Grasselli to develop a new model, one that reflects the importance of energy in the functioning of an economy and the limits it places on global growth.

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Freeports – right for now or a spin on an outdated idea? Aug 05, 2019

Boris Johnson wants to introduce free ports in the UK. International trade secretary Liz Truss has said the 10 ports would create thousands of jobs. So, will these new tariff free zones, where goods can be imported and exported without the paperwork, help Britain grows its manufacturing base, or is it just a way to try and keep car plants onshore for a while longer as the UK heads to a no-deal Brexit? Phil Dobbie puts these questions to Prof Steve Keen, who has spent some time early in his career studying the impact of free ports in China – but there the proposition, and the opportunity, was radically different.

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Has Monetary Policy Had Its Day? Jul 31, 2019

As the US Federal Reserve prepares to cut rates today, and the European Central Bank grapples with the how to boost growth without pushing interest rates into negative territory, Phil Dobbie asks Prof Steve Keen whether we’ve reached the end of the line for monetary policy. Even central banks are admitting more needs to be done by governments to provide stimulus to flagging economies. Isn’t it time to question the extent of the influence of central banks and some of the fundamental theories they treasure when reaching policy decisions?

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The future’s solar, finance is the problem Jul 24, 2019

In a recent Debunking Economics podcast Steve Bannister explained his climate modelling and how existing energy technologies won’t scale enough to save the planet. Omar Cheema, managing director of Vivantive, disagrees. His company provides advice on clean energy projects for multinational corporations, governments and investors. He says solar power is already providing an efficient source of energy, the obstacles are geopolitical, vested interests and the resistance to provide the necessary capital for regions that could move quickly on solar.

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Good debt, bad debt Jul 15, 2019

Is debt good or bad? Or does it depend on the type of debt? One of our listeners, Roy Langston, wrote in to ask why Steve Keen is in favour of bank created debt. Shouldn’t investment be funded by other people’s savings? If debt is funded by money created by banks, pursuing income from the interest, doesn’t it create too much debt money, which Steve is calling to resolve through a debt jubilee? An interesting question that Phil Dobbie puts to Steve, as well as discussing when debt can be a good thing, even if the money was created by banks.

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Is there a better way of funding retirement? Jul 08, 2019

Just after WW2 the UK government’s spending on pensions in the UK amounted to about 2 percent of GDP – these days its nearer 8 percent. Despite this, over the years we’ve seen an increasing number of people funding their retirement through private schemes, rather than relying on state pensions. And yet, a recent YouGov poll shows that one third of the population reckon they won’t have enough to live off when they retire. In this edition of the Debunking Economics Podcast Phil Dobbie asks Prof Steve Keen how we got into this situation – spending more and more money but failing to meet the needs of people in their old age. Is there a better way of ensuring that we can survive gracefully in our latter years?

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Could a land tax replace income tax? Jul 03, 2019

As the UK Labour party grapples with ways to reduce the advantage of inherited wealth, so we all start life on an equal footing, Phil Dobbie talks to Prof Steve Keen about the idea of a land tax. Could it replace income tax as the major form of taxation? On the surface, it seems like it could counter a lot of economic problems, such as income diversity, housing affordability and the geographic concentration of capital. Unlike income tax, it’s also impossible to dodge. So what’s the downside?

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Facebook’s Libra Could Be Really Good News Jun 24, 2019

Most press coverage of Facebook’s announcement of a new global currency by 2020 has been negative. Facebook already knows so much about us, can we trust them with our money? But they seem to have missed the intent of the Libra Foundation, which is a not-for-profit, of which Facebook is one of many equal partners, trying to extend access to banking to the 1 billion or so who are currently outside the system. Phil Dobbie talks to Prof Steve Keen about the benefits of the Libra project, whilst considering the impact it could have on local economies.

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Is the EU anti-growth? Jun 17, 2019

The EU is struggling right now. The Bundesbank has downgraded its 21019 GDP forecast from 1.6% down to 0.6%. The Italian government is being threatened for breaching the EU’s spending rules. Yellow vests protestors have been out on the streets of Paris for 31 weeks now, fighting against inequality. This week the European Central Bank meets to determine how to boost the bloc’s economic growth. But, Phil Dobbie asks Prof Steve Keen, isn’t it time for a fundamental rethink of how the EU is structured and operates? With reforms to the EU, would Brexit have been necessary?

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Steve Bannister Pours Cold Fusion on Climate Deniers Jun 09, 2019

Steve Bannister, from the University of Utah, is special guest on this week’s Debunking Economics podcast. He talks to Phil Dobbie about his approach to climate change modelling, based on GDP growth, energy use and carbon emissions. Steve Keen talks about the weakness of other modelling, including Nordhaus’ DICE model. Steve Bannisters model predicts things will even out eventually, but will we be alive to see it? Nope. The answer seems to be, there’s a need for a new source of energy. Clearly, its where science needs to focus its efforts, but is the sense of urgency strong enough to see if through?

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US v China. How will it end? Jun 04, 2019

The trade war between the US and China is having massive ramifications on the world economy, but neither side seems to be in a hurry to back down. On today’s Debunking Economics Podcast Phil Dobbie asks Steve Keen, who is going to win? The US is a big export market for China, but they have the rest of the developing world to tap in to. But there are also signs that the approach is bringing US businesses back home. But, in the longer term, is there a danger that the US approach will make itself isolated and lose out of business from emerging economies?

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The not so caring sharing economy May 27, 2019

The emergence of the gig economy is one downside of the internet, although you could argue that it gives access to jobs that might otherwise be there. But what about collaboration? Phil Dobbie suggests that sharing things has to be a positive for the planet – why should two farmers have tractors, when they could share just one. What about using an empty room for visitors, rather than it lying unused. That sounds fine, until Steve Keen brings up the Jevons Paradox.

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The good news for Australian Labor voters May 19, 2019

Scott Morrison, or ScoMo as he is colloquially known, is staying on as Australian Prime minister for the next four years, or until his party oust him, which is becoming a bit of a tradition. But to many, the election result was a bit of a surprise and an immense disappointment. Phil Dobbie talks to Prof Steve Keen, who offers a therapy session for progressive voters. The message is clear – you didn’t want to win this time. Perhaps everyone, from both sides of politics, should be happy with this result. Listen to find out why. And look out for another blog post on this tomorrow.

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Will higher oil prices drive alternative energy investment? May 12, 2019

Oil prices are pushing back up to the US$80/barrel mark. If they stay above that level could it drive energy producers to more realistically pursue renewable sources with more vigour. In other words, as Phil Dobbie asks Prof Steve Keen, could we be reaching the point at which market pricing sees us moving to a more environmental future, without the need for any other intervention?

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Why are some countries rich and others poor? May 07, 2019

It’s a simple question. Why do some countries, rich is resources, still end up poor? Can we blame it all on dictatorships, corruption and war, or did those regimes occur because of poverty? Why is so much of Africa in the depths of poverty? Phil Dobbie asks Prof Steve Keen how we can fix the issue. Should we be spending more on building up the capital to establish successful economies, beyond the current focus on disaster relief. And is that possible in the current political climate?

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UBI and a Debt Jubilee – an economic solution or a reward for sloth? May 01, 2019

Is a debt jubilee really the best way of ridding the world of near stagnant growth? Would a reset revitalise the economies of the world? And how do we stop ourselves getting into this situation again? Is the wealth divide part of this and could we fix that with a universal basic income? Phil Dobbie talks to Prof Steve Keen about a possible roadmap for the future and asks whether it’s more a reward for those who don’t like to work?

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Does outsourcing create a problem for local economies? Apr 24, 2019

There’s an argument that outsourcing to cheaper countries overseas creates job losses and disadvantages the local economy. That’s part of the argument Donald Trump is using to negotiate a new trade deal with China. What does Prof Steve Keen think? Phil Dobbie asks him, ‘if that’s the problem, why are we seeing such low levels of unemployment right now?’

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Why Steve Keen is voting Liberal in the Aussie election Apr 15, 2019

Steve Keen believes the Australian economy is about to tank. If there's a Labor government in charge they will be blamed for the mismanagement of the economy. Better that label is stuck on the Liberals, he says. But, Phil Dobbie suggests we should always vote for who we believe will deliver the best outcome for the country.

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Fixing housing affordability Apr 11, 2019

House prices are crashing down in Australia, with forecasts for Sydney that they’ll have fallen by 20% from their peak by the end of this year, with the possibility that they will fall much further beyond that. So how did it get this bad and will this “correction” mean houses will become affordable again, or is more government involvement needed? Pieter Verhoeven, a Debunking Economics listener, asked, “rent control, a good idea?” Phil Dobbie puts the question to Steve Keen. Plus, Carl Gianarakis asked "How much harder is it for young Australian first home buyers today than it was for buyers who bought prior to the introduction of negative gearing?" Listen in for an update on the Aussie housing crisis and what we can learn from it.

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Getting out of the monopoly rut Apr 04, 2019

In a recent podcast Phil Dobbie suggested that Australia suffers for its relatively small population size, which restricted competition and meant people were paying higher prices. Peter Y, a listener, wrote in saying Phil needs to get out of his rut on thinking about competition – Steve Keen needs to explain to him how competition really works. He does, in this edition of the podcast, but Steve still agrees a lack of competition does mean Australians are still suffering from a lack of competition.

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Interest rates – have they anywhere to go? Mar 18, 2019

Interest rates have been low in most parts of the world for some time now – in many places they are actually negative. So, what do central banks do next time there’s a global economic downturn which, as we discussed last time, isn’t very far away now. Phil Dobbie asks Prof Steve Keen whether interest rates are now so low, with little opportunity for them to grow, that they are no longer a useful instrument for central banks.

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The next big recession – when, where and how Mar 11, 2019

It seems like we’re due another recession. If you include the dot-com bust then we’ve had significant downturns every 78-9 years since the 1970s. So, even though it feels like we haven’t recovered from the last one, we appear to be hurtling to another one soon. Phil Dobbie talks to Prof Steve Keen about what will be the trigger this time, how far it will spread and what, if anything, can Central Banks do to prevent it?

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Is Modern Monetary Theory too closed for open economies Mar 04, 2019

Modern Monetary Theory supports the idea that governments, rather than creating debt, can create as much money as they see fit to invest in the economy and create jobs. Thar works just fine in a closed economy, where the debt is all in your own currency. But, Phil Dobbie asks Prof Steve Keen, whether the idea falls apart once you introduce the pesky idea of a global economy with international trade and foreign currencies.

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Were Austrian economists wrong to have purpose? Feb 25, 2019

The Austrian School of Economics has been around since the 1870s but was given a new lease of life in the 1970s by Frederich Hayek. In this week’s podcast Phil Dobbie asks Prof Steve Keen about some of the fundamental principles of the Austrian school, including the theory of marginal utility, opportunity cost and the often-touted principle that humans always act with purpose. They are also big proponents of less government intervention. Steve accepts some of the principles of the Austrian School – Phil asks if he could take away two, what would they be?

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Nordaus’ Climate Model Debunked Feb 18, 2019

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Fact-checking Freidman Feb 11, 2019

Milton Friedman influenced a generation of politicians, turning them from Keynesian economics to a more free-market way of doing things. Margaret Thatcher described him an intellectual freedom fighter. In this edition of the Debunking Economics podcast Steve Keen debunks the Friedman approach to capitalism and Phil Dobbie suggests one politician who has abandoned the approach, because he has increased tariffs, something Milton would be very opposed to.

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What’s a country’s optimum population size? Feb 04, 2019

The world’s population is growing – and we seem to be feeling it a bit in almost every part of the world – some more than most. But could the population in some countries, like Australia for example, actually be too small … would the economy work better if there were more people in it. Phil Dobbie asks Prof Steve Keen if a small population hinders competition and economic efficiency? Notwithstanding the broader argument that the planet’s population cannot keep on growing at the same rate forever … or even very long.

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Were mum and dad right about saving? Jan 29, 2019

Did your mum and dad teach you to save money rather than borrow? It was better to have cash than be in debt. Yet the whole approach to money has turned on its head. We don’t save as much as we used to. In fact, we borrow to invest. It’s a generational change. In this week’s podcast Phil Dobbie asks Steve Keen whether it’s something we should worry about. And is it any surprise we don’t save, when we’re slugged with bank fees and offered a very low interest rate? More to the point, why would we save when it’s easier to borrow?

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Running knowledge economies using production-based theories Jan 21, 2019

Are we trying to apply theory developed for production-based economies, on economies driven by knowledge? It’s worse than that, Steve Keen tells Phil Dobbie. The theories around production were wrong in the first place, because of flawed assumptions on marginal productivity. It just gets messier when you’re dealing with digital products and a knowledge-based economy.

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Is the Euro to blame for European disunity? Jan 14, 2019

The European economy seems to have found itself in sharp reverse, possibly heading into a continent-wide recession. Italy is already there, Greece has witnessed thousands leaving the country to find jobs, and the yellow vest protests show happy unhappy the French are. Then there’s Brexit, of course. In this edition of the Debunking Economics podcast, Phil Dobbie asks Prof Steve Keen how much we can blame the Euro for the perilous state of the European economy.

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Capital gains tax – a failed experiment in growth Jan 07, 2019

There’s a theory, in many conventional government and economic circles, that lowering capital gains tax will increase investment. By taxing capital gains at less than income tax it encourages risk taking and entrepreneurship, which spurs economic growth. Phil Dobbie asks Prof Steve Keen whether that argument have any credibility or is it nothing more than a tax dodge?

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Productivity through growth – why it makes sense to run the economy hot Dec 31, 2018

Back in the forties Dutch economist Petrus Johannes Verdoorn argued that people became more productive when the economy was booming. Conversely, austerity hinders productivity. In this edition of the Debunking Economics Podcast Phil Dobbie asks Prof Steve Keen if there is any evidence to support Verdoorn’s assertion. They discuss the role of demand, fiscal stimulus and mechanisation in economic growth. And yes, growth does boost productivity. Listen to discover why.

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Where do you draw the line on migration? Dec 24, 2018

Theresa May has been busy setting rules on UK migration after Brexit. Freedom of movement was, of course, one of the contentious issues that led to Brexit in the first place. In this week’s Debunking Economics Podcast Phil Dobbie talks to Prof Steve Keen about the pros and cons of migration, where you draw the line and policies to manage it.

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The Future of Banks Dec 18, 2018

Fintech companies are all chomping at the bit to take market share away from banks. Right now they’re making inroads on services like currency transfers, but will they ever extend to offering full service banking, including lending. Unlikely, says Steve Keen, because banks use money creation to make profits. But, Phil Dobbie asks, if cryptocurrencies can be created from nothing, what's to stop other non-banks from developing new global currencies that negate the need for us to rely on traditional transactional banking?

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Will banks ever behave? Dec 18, 2018

Banks were bailed out during the financial crisis in 2008. In the US the Treasury bought billions in mortgage backed securities. In the UK half a trillion pounds was allocated to a bank rescue package. The government took a 58 percent stake in RBS and remains a significant shareholder to this day. The industry that paid fat cat salaries through dodgy loans was saved by taxpayers. So, as long as they know they are ‘too big to fail’, what’s to stop banks continuing to adopt risky practises in the race for short term financial gain? Phil Dobbie talks to Prof Steve Keen about how to moderate the behaviour of banks for the good of society.

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Who’s next for a debt crisis? Dec 05, 2018

House prices have started to fall in Australia. In Sydney they’ve fallen 10 percent in a year – Steve Keen isn’t alone in predicting they’ll fall as much again, at least. He tells Phil Dobbie that we’re already seeing the consequences of the fall, with Australian GDP falling. But will it lead to a recession. Could the consequences really be called a crisis, or will the economy absorb the shock? And, beyond Australia, which other countries are carrying unsustainable levels of household debt?

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Living in a post growth economy Nov 29, 2018

One for our listeners, Pieter Verhoeven, suggested we look at steady state economics and the post-growth economy.

Can society continue to prosper without the need, or ability, for economic growth. Since the late sixties the Club of Rome has been arguing that we will need to curb growth or deplete the world’s resources. How would we adapt. Phil points to changes made to use resources more effectively – but does that mean we just consume more as a result? What needs to change if we are to accept the findings in Limits to Growth and what would life be like in a zero growth economy?

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Can Central Banks Save Us from Climate Change? Nov 23, 2018

According to NASA ninety-seven percent of climate scientists believe that climate change is the result of human activities. Only one US President doesn’t agree, denying that climate change even exists. But a group of central bankers met recently to decide whether they had a role to play in fixing the mess we’re making of the planet. In today’s Debunking Economics podcast Phil Dobbie asks Prof Steve Keen whether central banks have contributed to the problem, and how far they’d have to shift their reasoning if they want to turn around and be helpful.

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How is privatisation working out for you? Nov 14, 2018

In the UK we’ve privatised the railways, coach companies, the banks, power, airports, Royal Mail, water, BNT, car companies – there’s not much left to sell. But how are these privatised companies working out for us? Phil Dobbie talks to Prof Steve Keen about the arguments for and against privatisation. Obviously, too much in state hands is also problematic – so where is the happy compromise?

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Taxing the multinationals Nov 09, 2018

Multinationals have an uncanny ability to avoid tax. In this edition, Phil Dobbie and Steve Keen talk about how big corporates use transfer pricing to pay the least tax possible, and attempts to try and get them to pay the right amount. But where should the tax be applied – where products are made or where they are consumed. At the moment, it’s often somewhere in central America. Perhaps moves like the governments Digital Services Tax are a step in the right direction – or should we look at how China approaches the problem?

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Will China survive the trade war? Oct 31, 2018

President Trump looks set to step up the tariff battle against China as he embarks on the fruitless task of eradicating their $380 billion trade deficit. With no peace talks on the horizon its very likely his administration will impose a 25% tariff on all Chinese imports. Meanwhile, we’ve seen the US dollar reach multi-year highs, the Renminbi falling to new lows and the Chinese stock exchange shedding foreign investors by the bucket load. So, can China survive this battle?

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Sharing in the spoils of your hard work Oct 28, 2018

John McDonnell has proposed that all companies over a certain size would be required to transfer equity into an inclusive ownership fund, which would issue shares to people working for that company. So, is this a good idea? Will it make companies more effective, or is it an example of extreme socialism. Steve Keen says its as socialist as Germany.

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Could the Euro be the world’s reserve currency? Oct 20, 2018

A few weeks back Jean Claude Juncker suggested that the Euro should be established as a reserve currency to challenge the reliance on the US dollar. In this podcast, Phil Dobbie asks Prof Steve Keen if there is a realistic chance of that ever happening, and why did the US dollar become the reserve currency in the first place? Given that Steve is not a supporter of the Euro, because its existence distorts the ability of sovereign states within the EU to control their own economies, is there a better alternative that Europe could provide if it wanted to challenge the dominance of the mighty US dollar?

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Announcing the Nobble Prize in Economics Oct 10, 2018

Today William D Nordhaus and Paul Romer were announced as joint winners of the Noble Prize for Economic Science. Yes, science! Neither would qualify for the profession's newest award, to be launched next year, simultaneous to the Noble award ceremony. In this podcast Professor Steve Keen talks to Phil Dobbie about the launch of the ‘Nobble Prize for Economics’ for those with barking mad assumptions that have (or will) pervert the course of economics for some time. Steve suggests Ben Bernanke would be a notable contender as well as, of course, Milton Friedman.

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The inefficiency of inequality Oct 05, 2018

It’s often argued, by politicians and business owners, that higher wages cut into company profits, which is bad for the economy. Yet, lower wages cuts spending, and that’s worse for the economy. In this podcast Phil Dobbie asks how much more productive the economy would be if we saw a smaller difference between low wage earners and the filthy rich.

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Labour mobility – do we need more or less? Sep 18, 2018

One of the reasons people voted for Brexit was to “take control of our borders”. Around the world, western leaders are echoing a similar message. It seems migrants are viewed more as a drain on resources than a boost to the economic output of a country. At the other end of the spectrum, there are some who argue that the world should have complete labour mobility and, if people could live where they wanted, then world GDP would double. Phil Dobbie asks Prof Steve Keen where this the optimum point on the spectrum. Is labour mobility a good thing or a bad thing?

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Are the Kiwis right to ban foreign home buyers? Sep 17, 2018

A new law in New Zealand prevents foreign buyers from acquiring homes in there. It’s a response to rising house prices which, the government claims, is being driven by New Zealanders being outbid by people from overseas. Home ownership in New Zealand is now at its lowest level since 1951. So, will the plan work? Phil Dobbie asks Prof Steve Keen.

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Does a flattening yield curve mean a US recession is on the way? Sep 11, 2018

The spread of yield between short and long term US Treasuries is narrowing. It could even invert, meaning the yield is higher on short term Treasuries than long dated ones. This is precisely what happened prior to every US recession – so does that mean another is on the way. A listener to the podcast wrote asking why yield curve inversion is such a reliable indicator of recession, if indeed it is? Phil Dobbie gives a quick explanation of what yield curves are, and Prof Steve Keen gives his reasoning on why it is flattening in the US right now. And does it mean a recession is on the way?

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The hypotheticals of Robinson Crusoenomics Aug 30, 2018

Robinson Crusoe lives on a desert island with Man Friday. There’s no need for money. But then Woman Saturday comes along, selling goods that both men want to acquire, and they devise the concept of money, which she quickly grabs the lions share of. Next, they discover a large village on the other side of the island. How does that change the value of their three-person economy when they introduce an island-wide currency? Then, when they find a neighbouring island with a very productive economy, what is their money worth now? Phil Dobbie takes Prof Steve Keen through a series of hypotheticals, to understand the role money plays, right from its origins.

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Trump – good or bad for America? Aug 23, 2018

He is running the only country in the G7 to see economic growth accelerate right now. His followers support him however much mud is slung his way. World leaders seem to be know towing to his demands for better trade deals, even though some would argue it smacks of protectionism. So, is Donald Trump doing a good job for America. In this edition of the Debunking Economics podcast Professor Steve Keen describes the US as a Mad Max economy – he tells Phil Dobbie the benefits will be short lived. Listen to find out why.

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Getting the balance right between government and private debt Aug 12, 2018

Governments have been using the terms ‘fiscal conservatism’ and ‘austerity’ to bring down government spending. Often it’s meant transferring government commitments (like on education) to private or individual spending (like student loans). Phil Dobbie asks Prof Steve Keen if this a sensible way to encourage growth. If we accept that more spending by government increases the availability of money for people to spend, where do you draw the line? Isn’t there a risk that the government does too much, crowding out the activities of the private sector?

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Are universities losing critical thinking? Aug 01, 2018

There was a time when universities embraced a diversity of thought – something that’s critical in a discipline as embryonic as economics. With so many neo-classic economists caught by surprise with the 2008 financial crisis, many would welcome alternatives to the models that served them so badly. Yet, in this podcast, Prof Steve Keen suggests to Phil Dobbie that the crisis seems to have made the university sector even more adamant to stick to mainstream theory and push aside anybody suggesting there might be a better way of looking at it all.

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The growth of credit is slowing money down Jul 26, 2018

In this podcast Prof Steve Keen and Phil Dobbie revisit the velocity of money, with a focus on how increasing credit is a major determinant in why the speed of money transfers has been slowing markedly since the eighties. But, it’s not just that. As Steve observes, its part of a complex system. Far more complex than Friedman’s MV=PY equation. We also include comments from listeners who listened to the first podcast on this topic.

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What’s the main driver of inflation? Jul 20, 2018

There’s the theory that the supply of money is a major contributor to the rate of inflation. Prof Steve Keen says the central banks have spent the last ten years unsuccessfully trying to demonstrate as much. The need for money to be issued to cover government debt has often been levelled as a cause of inflation and a reason for the austerity measures that have been so prevalent in the last decade. Nobody wants to end up like Zimbabwe, right? In this podcast Phil Dobbie asks Prof Steve Keen what’s the real cause of inflation, if it’s got little to do with the supply of money. Is it the cost-push argument? If so, why is inflation reluctant to rise back up to pre-financial crisis levels?

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Can Economics Save The Planet? Jul 11, 2018

We’re seeing an increase in the rate of ice loss in Antartica – another sign that global warming is worsening, whilst the world’s leader do little to mitigate the problem. In fact, one of those leaders has said it’s all a hoax. But if we had a unified impetus to do something about it could we device economic systems to change our behaviour and resolve the problem? That’s a question Phil Dobbie puts to a jaded Prof Steve Keen who believes we must undergo the shock before we take the problem seriously. So far, the shocks haven’t been pronounced enough. And, whichever way you look at it, the solution will involve compromising our living standards.

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Slow Money Jul 06, 2018

The speed of growth in an economy and the rate of inflation is driven by how much money is in circulation and how quickly its changing hands. Steve Keen says we need to add the change in debt to Milton Friedman’s formula. As he discusses with Phil Dobbie, that would explain why the velocity of money has decreased since the eighties, even though the supply has been up and down, along with economic growth and inflation. So how important is the velocity of money and why is it frequently ignored?

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Do we need cold hard cash? Jun 29, 2018

Sweden is quickly moving towards a cashless economy. According to their central bank cash payments are now less than 2 percent of GDP and less than 15 percent of retail transactions. Phil Dobbie asks Prof Steve Keen whether we could eventually go cashless? He’s very sceptical. His fear is that the people who would control the monetary system probably wouldn’t understand how money works. And what if the IT systems fail?

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A Tale of Two Economies Jun 19, 2018

They’re having the best of times. They’re having the worst of times. The US economy seems to be going gangbusters whilst Europe’s growth has stalled and, possibly, is starting to wane. So why the disparity between the two? Prof Steve Keen says it is al to do with the contrasting economic policies – the expansionary approach of President Trump versus the austerity measures of Europe. Phil Dobbie asks whether this means the growth will continue, or could it all come crashing down for the US?

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Do high mortgages slow growth? Jun 13, 2018

Ask a conventional economist about household debt and they’ll say it’s not an issue. The money you spend on repayments won’t be spent on shopping, but whoever gets that money will spend it and keep it circulating. Phil Dobbie asks Prof Steve Keen whether, in that case, debt matters. Listen in to hear Steve’s explanation on why it does matter, and why high mortgage debt slows down the economy.

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Growth – why it won’t last forever Jun 08, 2018

Western economies are struggling to see growth anywhere near the levels before the global financial crisis. Japan has been struggling with zero growth, or worse, for years. So, what’s the cause of the slowdown and will we ever see high growth ever again? More to the point, why the growth obsession. Are there better ways of measuring the health of an economy? And what’s the downside of being too focused on economic growth? Phil Dobbie puts all these questions to Prof Steve Keen in this edition of the Debunking Economics podcast.

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ECB fiddles whilst Rome burns May 30, 2018

A meltdown seems to be happening in the Italian economy. Steve Keen tells Phil Dobbie that it’s the failings of the Maastricht Treaty coming home to roost. Does this mean that Italy could be on the verge of pulling out of the Euro, if not the EU completely? Wouldn’t it make their country bankrupt? And what can the ECB do to try and resolve the situation. In this podcast we look through the potential outcomes in crisis evolving in Italy.

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Why government debt isn't a problem May 23, 2018

Joh Madden sent us a message saying he wants to understand, in simple terms, why the interest payments on public debt are not a problem. He points out how it is used to justify austerity because it intuitively makes sense to waste less money on paying interest. He wants to know why this interest is not a problem, and what if the money which the public owes keeps rising?

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Will more information drive purer economic outcomes? May 18, 2018

Economic theory is based on the blatantly false assumption that perfect competition can be achieved when everyone has access to perfect information. So, if we strive to get closer to that ideal can we assume that the economy will function better? That’s a question Phil Dobbie puts to Prof Steve Keen – and, without wishing to give away the entire answer – it would be correct if we were striving for a perfect view of the future. For that we need a time machine. Till then this basic concept of economics will forever be flawed.

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How Marx was wrong on revolution May 10, 2018

Karl Marx got a lot right, but he was wrong about the need to a revolution. In this podcast Prof Steve Keen explains how, if Marx had followed his own theories, he would have realised that there wasn’t a need for a shift to socialism. In this free 36 minute podcast Phil Dobbie talks with Steve about the basis of Marx’s theory, from the Labour Theory of Value through to Use Value and Exchange Value. The conclusion, says Steve, is that “the increasing organic composition of capital (as Marx called it) has no implications for the rate of surplus, has no implications for the rate of profit”. So, no need for a revolution after all.

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Monetary versus fiscal policy – which one works best? May 02, 2018

Central banks like to control inflation using monetary theory (managing the cost of borrowing) as their way to control inflation and unemployment and avoid recessions. Whereas Keynes argues that government spending is the way to avoid recessions – pump prime the economy and “she’ll be right mate”. In this week’s podcast Phil Dobbie asks Prof Steve Keen if monetary policies ever worked – and isn’t there a danger of fiscal policy racking up too much debt?

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Is it time to break up the Internet giants? Apr 25, 2018

With Mark Zuckerberg being probed by the US government recently, and similar hearings being held in the UK, there’s been a lot of discussion lately about whether the Internet giants wield too much power. In this edition of the Debunking Economics podcast Phil Dobbie asks Prof Steve Keen why we don’t treat them as monopolies, and force their break-up into smaller, competing operators. Steve doesn’t agree. He says the problem is, such a move would force prices up, rather than down. But it’s not just a question of price, surely?

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Challenging the distortionary impacts of land value Apr 17, 2018

Land, is of course, heavily constrained. In this podcast Phil Dobbie asks Professor Steve Keen whether enough value is placed on it and the influence it has on the broader economy. Housing speculation is an obvious example of how land values distort the economy. If it was left to pure market forces what are the damaging impacts on broader society and just how far should the government intervene?

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Why Russia supports their tough guy Apr 06, 2018

It’s hard to support everything Vladamir Putin does – he probably was involved in the attack in Salisbury. If not, there are lots of other violations of human rights we can point to. But he does have a lot support in Russia. To understand why, you need to understand the recent past, what Russia is trying to achieve and the role of foreign powers in distracting them from their path. Today on the Debunking Economics podcast, a quick history lesson of a country that has struggled through false theories and bad advice to arrive at a point where it could finally integrate with the rest of the world – that’s if someone doesn’t blow it up first.

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Is a trade deficit a bad thing? Apr 03, 2018

In this podcast series Prof Steve Keen has repeatedly argued the importance of keeping an economy in surplus. But, Alex Howlett, a regular listener and Patreon supporter, asks why this might be. He suggests a trade deficit is a good thing, because it suggests companies overseas are willing to accept your currency. The more currency you generate, the more you can buy. To a point. Phil Dobbie asks Steve, what’s wrong with Alex’s hypothesis?

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Is there a case for full reserve banking? Mar 27, 2018

One of our podcast listeners, Arjen, asks the question, “Why don't you recommend a full-reserve banking system instead of fractional reserve? There would be much less debt in such a system and a smaller role for the central banks.” Phil Dobbie puts the question to Prof Steve Keen, and struggles to understand why the text book explanation of fractional reserve banking is wrong, wrong, wrong.

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Is energy efficiency a race to the top? Mar 20, 2018

We’ve talked a lot on the Debunking Economics podcast about how energy is the only real driver of an economy, so the performance of an economy is driven by the availability of the resource and how efficiently it is captured. Phil Dobbie asks Professor Steve Keen if that means countries with the most energy resources should be the most effective producers of goods, with a healthy trade surplus. If that’s the case, why doesn’t Saudi Arabia make very much? And could nations embracing renewable energy efficiently become net exporters if their governments invested wisely?

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Will skilling up improve productivity? Mar 14, 2018

Britain’s productivity levels are 17 percent lower than the rest of the G7. A French worker could take Friday off and still beat the output of a British worker. So, does that mean we mean a more educated workforce? Could we improve the productivity of the UK if everyone was just that little bit smarter? Phil Dobbie puts that question to Professor Steve Keen in a discussion that goes full circle – from the need to focus more on vocational topics, to the potential benefits of studying topics that have no vocational leaning at all.

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Banks will be banks – can technology change that? Mar 04, 2018

Many people it seems have turned to cryptocurrencies as a way of side stepping banks – a technology that will challenge their dominance and democratise the supply of money. Others look to fintech as a means of cutting out the established finance sector, putting investors and borrowers together, cutting out the middleman. But are they kidding themselves? In this edition of the Debunking Economics podcast Phil Dobbie asks Prof Steve Keen whether they’ve ignored some of the key roles banks perform. And what about the regulator? Isn’t there still a need for regulation?

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Why booms and busts widen the rich poor gap Feb 24, 2018

We know there is growing discontent around the world about the distribution of wealth and, it seems, financial crises can make the problem worse. In this edition of the Debunking Economics podcast Phil Dobbie asks Prof. Steve Keen why the boom bust nature of capitalism accentuates the wealth divide and what can be done to remedy the problem.

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Can sovereignty survive? Feb 12, 2018

Just how much control does a country have over its own economy? We’ve seen wage growth stifled by international competition and the decimation of manufacturing in the West. Yet Trump and Brexit voters are pushing an agenda to take control of their economies – will they win? Phil Dobbie asks Steve Keen what actually has to happen if we are to have control of our economic destiny – and our regulations - at a time of increasing international trade and the continued growth of major corporations.

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Will supply cut house prices? Feb 07, 2018

We often hear the argument that house prices have risen so much because there’s a lack of supply. Politicians argue that if more land was released to developers more homes would be built and the affordability issue would be fixed. Prof Steve Keen, meanwhile, has argued that it is the willingness of banks to offer massive mortgages that has pushed prices to high. In this podcast Phil Dobbie asks whether supply is still an important factor in the equation. They also discuss how geography and land-use influences prices, who meets the external costs of housing and our appetite for bigger, better houses.

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Rebuilding Economic Theory The Old Way Jan 31, 2018

The Oxford Review of Economic Policy devoted its entire latest edition to rebuilding macroeconomic theory. That sounds like an acknowledgement that the theories that have guided the profession for decades might be flawed. Perhaps, you might think, it will explain why the global financial crisis happened, why growth has been so slow to pick up and why wages have stagnated. But, as Prof Steve Keen explains to Phil Dobbie, the papers do little other than tweak the edges of conventional theory. It’s far from a fundamental rethink, and some of the basic errors of economics – such as the assumption that the economy will always return to equilibrium – remain unchallenged.

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Government Debt and All That Jan 24, 2018

Boris Johnson has, once again, argued that money saved in fees to the EU can be used to fund better healthcare in Britain. His argument assumes the government is run like a household budget, ignoring the ability to create money. Yet we are familiar with the idea of money creation, with central banks injecting millions, or billions in the US, into the economy through bond purchases. Phil Dobbie explores the disconnect between quantitative easing and government austerity programs. He asks Prof Steve Keen, if a central bank creates money, why not simply inject it into the government’s coffers?

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Can you expect full employment when migration is so high? Jan 19, 2018

Migration is often blamed for unemployment. The fear that there are too many migrants stealing jobs has almost certainly helped with the rise of UKIP and the election of President Trump. But is there any value in this far right rhetoric, or is conventional economy theory right for once – that migrants create demand that facilitates more jobs and adds to the economy. And are we getting so lost in the migration and employment debate that we’re missing a far bigger concern – the number of people on the planet.

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Carillion, another public sector outsourcing disaster Jan 16, 2018

The collapse of Carillion is down to poor management but, as Phil Dobbie discusses with Prof Steve Keen, it’s also down to a company that took risks because it was raking in so much money from the public sector. In this discussion they look at where you draw the line between government insourcing and outsourcing. The problem is, says Steve, governments have lost the expertise to know what to outsource and when. It’s the blind buying from the greedy.

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Is GDP the best way to measure wealth? Jan 10, 2018

We rely on GDP to measure the wealth of a country and it’s rate of growth, but is it the most meaningful measure? Phil Dobbie asks Prof Steve Keen whether it’s an accurate measure of happiness, for example. And Steve suggests its an incomplete measure if it doesn’t consider the return on the energy invested to provide growth. So how should we really go about measuring the health of an economy.

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Should we listen to the Austrian School? Jan 03, 2018

The Austrian School of Economics has been around since the 1870s, when Carl Menger wrote the Principles of Economics. They were a response to the conventional economic thought that prevails today. Phil Dobbie asks Professor Steve Keen whether there are elements of the Austrian school that we should take seriously – surely anyone who challenges traditional economics is worth listening to.

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Corporate tax – do we need it? Dec 18, 2017

President Trump is convinced that the high corporate tax rate in the US is damaging the prospects for domestic business and encouraging companies to hold their profits offshore. So will his plan to reduce the tax rate create the results he expects? Phil Dobbie talks to Professor Steve Keen about the role of tax in general, the influence of corporate tax and whether we can afford to get rid of it.

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Foreign Ownership – good or bad? Dec 12, 2017

We often hear arguments that releasing land to foreign ownership is “selling the farm”. Similarly, foreign owned companies repatriate their profits rather than keeping profits within the local economy. Are these valid arguments? In this edition of the Debunking Economics podcast Phil Dobbie works through the pros and cons of foreign ownership with Professor Steve Keen.

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How practicable is a debt jubilee? Dec 04, 2017

Professor Steve Keen has often spoken of the need for a debt jubilee. If households can write off their ever expanding, mortgage driven, debt, then we reduce the risk of asset bubbles and consumer spending drying up leading to recession or depression. But, Phil Dobbie asks, how would it work in practice? Has it been tried anywhere and what are the possible side effects?

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What's causing the productivity slump? Nov 28, 2017

The UK government announced an industrial strategy this week to tackle the problem of weak productivity growth. Yet, as Prof Steve Keen discusses with Phil Dobbie, the issue isn’t one of investment, as much as who the beneficiaries are from money spent on equipment aimed at improving productivity.

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The Real Answer to the Affordable Housing Issue Nov 23, 2017

The UK’s Chancellor of the Exchequer has a plan to make housing in the UK more affordable. Sadly, it won’t work. His idea of cutting stamp duty for first home buyers on the first £300,000 of their half a million pound homes, will only make matters worse. So, what’s the real answer? As Professor Steve Keen explains to Phil Dobbie, it’s not to increase supply. Why not? And what should Philip Hammond have put in his budget if he really wanted to make a difference.

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Does Competition Hold Us Back? Nov 20, 2017

In her book ‘Capitalism’s Toxic Assumption’ Eve Poole suggests competition can other be more destructive rather than a positive contributor to the economy. In this edition of The Debunking Economics Podcast Phil Dobbie talks to Prof. Steve Keen about scenarios where competition is more of a hinderance than a help. Can the competition regulator sometimes get in the way of initiatives that would be for the public good? Is there a mindset change required on how companies operate and work together?

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The Unanswerable Irish Border Question Nov 13, 2017

Ever considered that the reason nobody has come up with an answer to how the EU border with Northern Ireland will work, is because there isn’t one. And that’s really bad news for the Republic of Ireland. In this podcast Phil Dobbie suggests that's the case. The choices of a frictionless border or North Ireland remaining within the EU are both unworkable. So what will happen if there’s a hard border? Phil discusses the issue with Prof Steve Keen, an ardent Brexiteer, who believes Britain’s exit will help towards the collapse of the EU and, in particular, the Euro. In the meantime, though, Ireland can expect to feel a lot of pain. Listen to find out why.

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What Makes a Currency Stable? Nov 10, 2017

Currencies fluctuate so much that there’s a lot of money being made betting on their movements. But isn’t that bad for an economy, creating uncertainty in prices for exports and imports? David, a Debunking Economics podcast listener, asks what is the critical factor for ensuring a stable currency. Phil Dobbie puts the question to Professor Steve Keen, but also has the answer first off – he must be learning for these podcasts!

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Capitalism without capital accumulation Nov 06, 2017

There are two drivers for capitalism – the desire to consume and the desire to accumulate. Whilst the first is as strong as ever, the rising price of assets is making it harder to accumulate. So does this influence how effective capitalism is – will we work as hard if we know we can’t afford to accumulate? Or if they can afford to accumulate do they do it at the cost of consuming? Phil Dobbie talks to Prof Steve Keen about how consumer behaviour is changing and the impact in the broader economy.

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Is the Bank of England nuts? Nov 02, 2017

Has the Bank of England lost the plot? They have lifted interest rates as though the economy was booming. Yet, just two weeks ago the Financial Conduct Authority reported that many would struggle to pay £50 more each month on our mortgage, and real wages haven’t budged for over a decade. In this edition of the Debunking Economics podcast Phil Dobbie asks Professor Steve Keen what the central bank thinks it’s doing!

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DSGE Models Debunked Oct 31, 2017

Dynamic, stochastic general equilibrium (DSGE) models are used by monetary policy analysts the world over. But, in this edition of the Debunking Economists podcasts, Prof. Steve Keen suggests to Phil Dobbie that the model is neither dynamic nor general that fail to recognise shocks and crises like the financial crisis or the great depression.

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Who controls the money supply? Oct 24, 2017

It seems common sense that we should keep a handle on the amount of money in circulation. Central banks, curiously, think they do. But, as Professor Steve Keen explains to Phil Dobbie in this edition of the Debunking Economics podcast there are lots of ways money is created. Unfortunately, all our not recognised by conventional economists, and until we realise where money is coming from we have no hope of controlling the supply of it, or ensuring its growth is applied in an equitable way.

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Would a United States of Europe work, economically speaking? Oct 19, 2017

Can centralised monetary policy work in federated states? The grand plan for the EU was to create a United States of Europe – a phrase coined by Sir Winston Churchill directly after the Second World War. In today’s podcast Phil Dobbie talks to Prof. Steve Keen about how central bank’s monetary policies might muddy Churchill’s vision. Is it possible to run a single policy across multiple countries – or federated states like in the US and Australia? Should monetary policy be centralised, even if it cuts across states and countries with their own economic policies and employment conditions?

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Will Corbynism lead to Venezuelan style socialism? Oct 10, 2017

At their party conference last week the Tories were united on one thing – a Corbyn government would lead to Venezuelan style socialism. Free market thinking is the right and proper way to prosper. In this edition of the Debunking Economics podcast we look at how socialism has become a swear word and there’s no acknowledgement of the middle ground from either side of politics. As Phil Dobbie discusses with Professor Steve Keen, both extremes fail. But where is the middle ground of politics?

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What should Trump do about China? Oct 03, 2017

Earlier this year President Trump was complaining that China was guilty of currency manipulation. Cheap prices were giving the Chinese a competitive advantage, evidenced by a trade balance between the two nations that, last year, was $347 billion in favour of China. So what’s the best way of dealing with the strength of the Chinese economy. Prof Steve Keen suggests that the President was right at the onset – reindustrialise and wait for China’s main advantage, cheap labour, to diminish in importance. Sadly, his plans have gone by the wayside, so they’re stuck with Chinese imports for a long while yet. But could other nations follow China’s lead?

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Inflation – is it making a comeback? Sep 26, 2017

UK inflation is now at 2.9% - the highest it’s been in five years – and well above the 2% target that the Bank of England has set for itself. It means we can expect an interest rate rise in the very near future. In the US the Federal Reserve is also looking to raise interest rates even though inflation has subsided lately. In this edition of The Debunking Economics podcast Phil Dobbie asks Prof Steve Keen if inflation is on the way back, how should central banks react and can we still have economic growth without it.

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Does QE help the poor as well as the rich? Sep 21, 2017

The US Federal Reserve is getting rid of it, the European Central Bank has talked about it and could go next. Quantitative Easing, it seems, is falling out of favour. But was it doing any good any way? In this podcast Phil Dobbie asks Professor Steve Keen whether QE helps the broader economy or just the financial elites? Vitor Constancio, the Vice President of the European Central Bank has said that QE reduces inequality because it creates jobs for low income workers. Is he right?

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The Crisis Ten Years On Sep 15, 2017

It’s 10 years since the start of the global financial crisis, when the UK saw a run on the Northern Rock Building Society. A year letter the contagion spread, with banks falling like flies on both sides of the Atlantic. So what went wrong and are we repeating the mistakes. Phil Dobbie talks to Professor Steve Keen, one of a handful of people who predicted the crisis the first-time round. In this podcast he suggests that, this time, we might not see banks collapsing, but the economic impact will be just as spectacular.

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Should We Care About Exec Pay? Sep 10, 2017

The UK Prime Minister has made noises about reining-in executive pay. Phil Dobbie asks Professor Steve Keen whether high executive salaries are really such a problem. If somebody can demand such a high salary shouldn’t we congratulate them and aspire to do the same ourselves. Isn’t it the politics of envy to think otherwise? Or are they distorting the economy – and perhaps the biggest influence on the value they add to the company doesn’t come from their expertise, but from elsewhere. These factors are all discussed in this half hour Debunking Economics podcast, that also examines ways of fixing the problem.

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Fixing the Retirement Crisis Sep 06, 2017

Funding retirement seems to be a global issue. Individual pensions often fall short of the required amount and governments struggle so much with the liability of future pension costs that they keep pushing back the age at which we can retire. Professor Steve Keen believes we have got the whole approach to retirement wrong in so many ways. For a start, by encouraging savings we are pulling money out of the economy. Secondly, pension funds are placing their money in the share market, pushing up the price of equities. In this podcast, with Phil Dobbie, he suggests we return to the idea of state pensions – or a universal basic income – with money created by the government. The problem is, we can’t use that money to buy imported goods to meet the demands of our ageing population. In short, we need to reindustrialise if we are to fix our retirement crisis.

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Bitcoin and the Future of Money Aug 30, 2017

Bitcoin was an interesting development in the history of money – a currency created from an algorithm. In this edition of the Debunking Economics podcast Professor Steve Keen explains to Phil Dobbie how Bitcoin works. They also discuss how other new currencies could be used to manage online transactions and the threat that could create for the banking sector.

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Will cheaper energy drive growth? Aug 17, 2017

In previous podcasts Professor Steve Keen has said the availability of energy is the key driver of growth. It fuelled the industrial revolution and inhibits growth in societies without sufficient access to it. In this podcast Phil Dobbie asks whether that justifies President Trump’s approach to energy policy – to make it cheaper, local and more readily available, with less controls on its production. Will lower cost fuel make America more productive?

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The Perils of Population Growth Aug 14, 2017

Do we need population growth to enjoy economic growth? Phil Dobbie puts the question to Professor Steve Keen, who argues it’s not necessary and it’s a misnomer that cannot be sustained. Yet many countries see immigration as the only way of sustaining growth, including Kevin Rudd’s pitch for a Big Australia back in 2010. As he saw, and recent politics demonstrates, high immigration is not a popular policy and most people don’t equate it with economic prosperity.

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Is Economics a Science? Really? Aug 08, 2017

There’s an argument that economics can never be science because it involves the behaviour of humans. You can’t apply empirical rules in the way you do with physical sciences. In this episode of the Debunking Economics podcast Phil Dobbie asks Professor Steve Keen whether this means economics should never be seen as a science. Steve says economics can be a science, if economists behaved like scientists – that means recognising anomalies and adjusting their theories accordingly. To date, this isn’t happening. The response to the global financial crisis being a significant case in point.

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Laissez Faire Go Mate Aug 01, 2017

Australians talk of giving everyone a fair go. But it has different meanings for different people. For some, it implies freeing up the ability for people to get on with making a dollar without government interference. For others, it means the government offers the opportunity for all, presumably through subsidies and access to education. In this edition of the Debunking Economics podcast Phil Dobbie asks Professor Steve Keen how seriously should we take the laissez fare approach in the twenty first century. The answer, it seems, is that maybe the big government approach has gone a little too far.

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So, what is Post Keynesian economics anyway? Jul 25, 2017

Most of us tend to have a vague notion of what Keynes stood for. Why, even neo-classic economists seem to be using his theories to rescue the economy from the ravages of the global financial crisis. So, what is post-Keynesian economics, and how does it differ from the theories espoused in The General Theory of Employment, Interest and Money. In this podcast, Professor Steve Keen explains to Phil Dobbie what post-Keynesian thinking is and how it differs from the thoughts of Lord Keynes himself.

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Have women made life more expensive? Jul 17, 2017

Okay, this is a deliberately provocative title, but it relates to how the increase in two income households hasn’t necessarily made us better off. Hasn’t it simply reduced real wages and increased asset prices, particularly houses? How much different would the world be if only one member of the household went to work – man or woman. Phil Dobbie talks to Professor Steve Keen about the negative impact of a growing workforce – not just dual incomes, but also the rising number of hours worked. And how do we redress the balance?

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Why we shouldn't worry (too much) about government debt Jul 11, 2017

Governments everywhere are preoccupied with keeping their spending under control. We are conditioned into thinking about the massive levels of interest being paid on the money that our governments owe. In this edition of the Debunking Economics podcast Professor Steve Keen explains to Phil Dobbie why we should quit worrying – governments can create money through their central banks. He explains the process in detail. The only concern is when money is owed in a foreign currency – again, Steve explains why. The upshot is, we should be less concerned about government debt and more worried about our trade deficit.

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Four ideas for the G20 Jul 07, 2017

The G20 is meeting in Berlin right now. With expectations of any constructive outcomes set to low, maybe there’s a better way forward. In this edition of the Debunking Economics podcast Phil Dobbie and Prof Steve Keen work through four ideas that could change the way the economy works – for the better. Phil suggests ideas related to climate change tariffs and a global minimum wage, whilst Steve looks at trade imbalances and a new reserve currency.

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We’ve got it all wrong on the role of tax Jul 04, 2017

In this edition Prof Steve Keen explains to Phil Dobbie how tax levels are really more to do with the government controlling the level of inflation in the economy and less to do with raising revenue to pay for their own expenses. Yet, few people see it that way. Once you do, it makes sense to see tax as an instrument that manages the strength of the economy, in unison with interest rates. Look at it like that and you see that tax should be low when economic growth is slow, not higher to cover the subsequent shortfall in government revenue.

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Central banks ignore credit at our peril Jun 30, 2017

The world’s Central Bankers have been meeting up in Portugal this week and seem to have colluded on the idea of raising interest rates sometime soon. It looks like the UK, Europe and Canada are in on it but, Professor Steve Keen reckons, they’ll soon be eating humble pie. Any rise in rates right now will quickly be reversed, because the bankers are ignoring the role of credit. Find out why that is so important in this free edition of the Debunking Economics Podcasts with Phil Dobbie and Steve Keen.

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Adjusting to the rise of the machines Jun 26, 2017

Automation, it seems, is taking its toll. For example, based on its turnover Amazon employs less than half the staff levels of the broader retail sector – and they are driving efficiency gains all the time. So, is the answer to tax robots – one of the ideas from failed French Presidency candidate Benoît Hamon. No, says Professor Steve Keen. He suggests to Phil Dobbie that the solution is a universal basic wage. But won’t that remove any incentive to work and innovate?

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A Greek Tragedy Brought To You By the EU Jun 20, 2017

The EU and IMF have just bailed out Greece again, so it can avoid defaulting on the interest payments for its 300 billion Euro debt. The lenders will receive their payments, whilst Greece continues to live through tough austerity measures in the vain hope of the economy recovering at some point. That seems unlikely – GDP per capita is sliding and the smarter folk are leaving the country. Phil Dobbie asks Professor Steve Keen how this particular Greek tragedy will end. Violently seems to the only logical conclusion.

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Would Corbyn Take Us Back to the Seventies Crisis? Jun 13, 2017

It’s the catch cry for those who like to spread fear – Corbyn in power would take Britain back to the 1970s, when Britain experienced runaway inflation, the three day week, class hatred and soviet style stagnation. Yet, as Prof Steve Keen explains to Phil Dobbie in this free edition of the Debunking Economics podcast, the downturn in the seventies was less to do with government policy and more to do with a turnaround in credit. Households that had been increasing their borrowing in the late sixties, started to pull back, taking money out of the economy. If you’re not convinced the seventies situation was the result of a Labour government and powerful unions, you have to ask, why was exactly the same thing happening in most of the western world?

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Why salaries are going nowhere Jun 06, 2017

In the UK salaries are now rising slower than inflation – which means living standards are going backwards. Around the world salaries seem to have stagnated, even though unemployment is low. Conventional economic theory suggests that more competition for employees should push wages higher. Phil Dobbie asks Professor Steve Keen why that’s not happening. The cause, Steve suggests, is to do with the demise of union power and the rise of the financier. The answer is more to do with reducing debt.

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Aussie House Prices Are Ready to Crash Jun 01, 2017

Professor Steve Keen has predicted a house price crash in Australia before, but this time he is more certain than ever. Even the Reserve Bank of Australia has been flagging concerns about the country’s rising household debt and inflated house prices. In this edition of the Debunking Economics podcast Phil Dobbie asks Steve why he is so certain this time, and what can be done about it.

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Is there any economic rationale in the UKIP Manifesto? May 26, 2017

UKIP released its manifesto this week. It’s a glossy production with a range of arguments designed to appeal to the disenfranchised UK worker. But do they stack up economically? In this podcast Phil Dobbie talks with Professor Steve Keen about some of their plans, including zero net migration, changes to VAT, getting rid of inheritance tax, redirecting foreign aid to the NHS and ways of helping small business. It’s fair to say they get a mixed report card from Steve, but some of their ideas are worth considering. Major parties, take note.

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The Irony of Interest Rates May 23, 2017

Conventional neoclassic economics assumes the economy will always arrive at an equilibrium, yet central banks spend an inordinate amount of time speculating on when they should next move interest rates, and in what direction. In this edition of the Debunking Economics podcast Phil Dobbie asks Professor Steve Keen what interest rate decisions are intended to achieve and if they have their desired effect. We talk about this as the US Federal reserve prepares itself for one, possibly two, more interest rate rises this year.

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Shadow Banks – are they a problem? May 17, 2017

A Debunking Economics listener asked for a podcast on the role of Shadow Banks. In particular, he wanted to know if shadow banks create money in the same way as conventional banks. The quick answer is, no, because they are not able to create deposits – but they do increase the ability for banks to extend more loans. Phil Dobbie talks to Prof Steve Keen about the role of shadow banks and asks, do they need to be curtailed? And, if so, how? It’s an issue that’s been flagged by Janet Yellen, Governor of the Federal Reserve in the US, who suggested that the influence of shadow banking on the financial system is hard to measure.

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Energy – the missing function of economics May 08, 2017

Economists have always seen wealth as a function of capital and labour. In effect, people and machines create things which makes them money. But Steve Keen believes there’s a far more important consideration – energy. In this free edition of the Debunking Economics podcast he points out how the industrial revolution was founded on the availability of energy and ongoing wealth creation is being driven by the more efficient use of energy.

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If shares had a use-by date. May 03, 2017

Imagine if shares had a use by date. If you pass the shares issued by a company on to a secondary market, the clock starts ticking. What would that do to the valuation of shares – and why do we need to worry about it? Phil Dobbie discusses the concept with Professor Steve Keen, investigating what the impact would be on share markets and the companies that trade on them.

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Should short selling be banned? Apr 24, 2017

A big chunk of the trades that happen in shares are sold short. In other words, the trader takes a punt that the price will go down. In effect you sell something that you don’t own yet – like shares in the company – and you sell it to some mug who buys it off you at today’s price. Then when the price has gone down, you buy it at the lower price and deliver on your promise. Phil Dobbie asks Steve Keen whether short selling is destructive, or is it a useful balance that keeps share trading in check?

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Regional wealth diversity – how economics ignores the dimension of space Apr 20, 2017

London and the southeast accounts for a third of the UK’s gross disposable household income. The rest of the country somehow scrapes by. But it’s clear to see why. The proximity to other businesses means investment in London creates a greater return than any other region. In this edition of the Debunking Economics podcast Phil Dobbie asks Professor Steve Keen whether the government should be involved more in regional investment, or will the laws of economics sort it out for itself.

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Does Modern Monetary Theory make sense? Apr 17, 2017

Modern Monetary Theory states that’s, because the government of a country is the monopoly supplier of money, it has an unlimited capacity to pay for things and provide funds for other sectors. If the theory is right, why not provide enough money to ensure there is full employment, so full use is made of available labour? Phil Dobbie asks Professor Steve Keen whether he is a supporter of MMT. It seems he is, in part, but departs from the ideology when it comes to the theory relating to exports and imports.

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Lies, damn lies and employment statistics Apr 13, 2017

Figures out in the US last week showed the unemployment rate had dropped to just 4.5 percent, a long way from the 10% rate back in 2009. Yet Donald Trump won an election, in part, because he was there to protect jobs for Americans. Phil Dobbie asks Prof Steve Keen What’s the problem when so many seem to be gainfully employed? The answer, it seems, is that you can do anything you want with statistics. Take a look at this graph to see his point: https://fred.stlouisfed.org/graph/?g=djl1

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Do minimum wages reduce inequality? Apr 10, 2017

Mark Perry, Professor of Economics and Finance at the University of Michigan, believes that raising the minimum wage will push costs up so high companies won’t be able to afford them. He wrote in his blog, “a $15 minimum wage maximizes the probability that an unskilled worker will be unemployed at $0.00 an hour instead of being gainfully employed”. So, is that the case? Prof Steve Keen argues he is making the mistake of many economists, applying a micro-economic argument to macro-economics. Find out how the Michigan professor got it so wrong.

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The rising impact of the gig economy Apr 06, 2017

Latest UK employment statistics show that more than half of the jobs added in the last year went to the self-employed. Part of this will be entrepreneurs forging their own path, but many will be people forced to establish themselves as sole traders and work for companies on a more casual basis. In this podcast Phil Dobbie talks to Prof Steve Keen about the benefits and problems with the gig economy. On issue, of course, is the amount of money people make. Could the gig economy force a universal basic income?

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Can you have a free market for public goods? Apr 03, 2017

It seems there’s a relentless desire to try and apply free market principles to public goods, like health, education, defence and research. Even though they usually operate in a monopolistic environment, bureaucrats are always finding ways to apply measures – fiscal or performance based – that distort the way these goods operate. So, in this podcast Phil Dobbie asks Prof Steve Keen if there are occasions when marketized principles can be applied to public goods, in the interests of improving performance.

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Do poor people make the rich richer? Mar 30, 2017

Karl Marx argued that the bourgeoisie got rich by creaming their wealth off the proletariat who did all the work. But in this podcast Prof Steve Keen tells Phil Dobbie that it’s not the capitalists who are getting rich from the workers – it’s the often ignored “third class” of citizen, who make up a large part of the wealthiest people on the planet. And they’ve been increasing their influence over recently decades.

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Does misinformation feed capitalism? Mar 27, 2017

Traders buy and sell based, often, on hearsay. Mum and dad investors can take a punt based on advice from ‘experts’ or from the lies they see in a company prospectus. Whatever the level of investor, you always base decisions on imperfect information. Like with anything, the person doing the selling knows more about the state of the product than the one doing the buying. So, what if we had more information? Phil Dobbie asks Professor Steve Keen what would happen if the information imbalance didn’t exist. Could we avoid market crashes, for example? Can financial markets survive without cashed up gamblers?

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Government debt, when does it become a problem? Mar 21, 2017

In the seventies US government debt was less than 40 percent of GDP. Now, it’s over 100 percent. And the US is still to pass a change to the debt ceiling, which inhibits the government’s ability to spend more money. In this edition of the Debunking Economics podcast, Phil Dobbie asks Professor Steve Keen when government debt becomes a significant issue. Conventional economics suggests too much spending can raise inflation, which reduces the attractiveness of government bonds, making it more difficult to raise money. And what about a reduction in a country’s credit rating? Steve suggests we think in too linear fashion on the issue. But there is a simple fix if the problem ever gets insurmountable.

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Which creates growth – supply or demand? Mar 17, 2017

Which comes first, demand or supply? If you want to grow an economy should you offer money or tax cuts to increase demand, or should you fund jobs to create supply and wages. Donald Trump, like many politicians before him, believes cutting taxes will make more spending power available to create more jobs. Is he right, when many classical economists have argued the opposite – that job creation is the key to spending power. It’s the timeless chicken and egg question except, in this case, Prof Steve Keen believes there’s a very clear answer.

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Is Trump right about currency manipulation? Mar 07, 2017

In this edition of the Debunking Economics podcast we test Donald Trump’s accusations that China, Japan and Germany are manipulating their currencies – something he hates, of course, because it makes it harder for him to achieve his aim, of returning the US to a positive balance of trade. It’s a big undertaking. Is he right that these countries have an unfair advantage over the US and, if so, will a tariff barrier really rectify the problem, or just start a trade war?

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Is Trump right about an import tariff? Mar 02, 2017

Donald Trump has talked about a 20 percent tax on exports from Mexico to help pay for the wall, but has also spoken about a broader tax on all imports. Many fear it’s a form of protectionism that could spark a trade war, but perhaps they are misunderstanding the intent of Trump’s plan. It’s possible he is following the thinking of Oxford professor Michael Devereux who argues that corporate tax should be applied where consumption happens, rather than where profit is generated. That would mean, irrespective of where goods are made, if they are consumed in America, companies would be taxed. Companies that tried to manufacture elsewhere and sell to the US could end up being taxed in both countries, so it heightens the incentive to produce locally.

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Where QE is failing – time for a people’s QE Feb 27, 2017

The Bank of England, like many central banks, has used Quantitative Easing as a tool to try and engender growth in the economy. It’s a tool they had to resort to when sustained low interest rates failed to achieve the desired outcome. In this podcast Phil Dobbie talks to Steve Keen about how QE is, why it’s failing and how to should be redesigned. Hopefully the Bank of England will listen, along with the Treasury. In fact, the UK’s Treasury Committee is running an inquiry into the Effectiveness and Impact of post-2008 UK Monetary Policy and we discuss Steve’s submission in the podcast.

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Is your money safe in the bank. Or is it time to buy gold? Feb 20, 2017

You’ve probably seen them – emails telling you now is the time to buy gold. When currencies collapse, gold is the safe-haven that speculators turn to. In this episode, Phil Dobbie explores the idea of stocking up with gold, with Professor Steve Keen. Is gold safer than keeping money in a bank? Is it premature to buy gold right now? What are the signs that an economic downturn and banking crisis is occurring? But buying gold isn’t the answer – reducing your level of debt is.

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Do Banks Really Work for Us? Feb 17, 2017

It’s very easy to look at the big salaries in the city and compare it to the average wage and assume bankers are taking us for a ride. But, for time immemorial we have needed money as a more effective means of trade than bartering. Who wants a chicken egg in exchange for today’s paper? So, banks emerged as the intermediary that enables trade. But, as Prof Steve Keen explains to Phil Dobbie, banks don’t just act as an intermediary, they also create money, and focus on encouraging us all to build up debt. So, can we regulate banks to ensure they work in ways which are best for the community? Part of the answer, says Steve, is to see them focus more on equity than loans.

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How does the government choose to spend? Feb 07, 2017

Phil Dobbie asks Professor Steve Keen about the role of public sector spending. We’ve learnt that the government can create money, through its central bank, and this is, in effect, pumping new money into the economy. The alternate approaches, tax increases or austerity, pull money out of the economy. So public sector spending is a good thing, particularly when the economy is experiencing hardship – but how do they determine what’s best to spend money on. Aren’t government’s notoriously bad at decided how and where to inject funds? Isn’t there a need to focus on productivity rather than pushing up wages?

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Fixing the Issue of Hereditary Wealth Jan 30, 2017

The rich poor gap in modern society isn’t just related to income. In fact, recent statistics in the UK point to a narrowing of the income gap since the financial crisis. The bigger issue is the inheritance of wealth, giving some a head start and inflating house prices beyond the reach of many. In this edition Phil Dobbie asks Prof. Steve Keen whether a heftier inheritance tax is the answer. There’s discussion of the problems with that approach, how land tax is similarly distortionary, and a suggestion of a better way of narrowing the gap – but we’d better do something about it, before civil unrest reaches fever pitch.

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Why Trump Will Fail, Then U-Turn Jan 22, 2017

Trump’s Presidency created optimism for many – those looking for work and investors who expect his infrastructure program will create untold wealth for the entire population. He reinforced that promise in his inaugural address, talking of new roads and highways and bridges, and the wall of course. Professor Steve Keen is a big supporter of this plan, but believes it’ll fail for one simple reason. The plan is accompanied by a determination to return the budget to surplus, pulling money out of the US economy and countering any benefits from his infrastructure plans.

He talks to Phil Dobbie about his change in attitude to Trump’s administration – and what he think will happen next, including a recession in 2018.

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May's Got the Wrong Plan For Brexit Jan 18, 2017

Journalist Phil Dobbie and economist Steve Keen agree on lots of things, but fall on either side of the Brexit camp. One believes Britain should have remained to fight EU bureaucracy from the inside, the other suggests the community is fundamentally flawed, along with the concept of free trade, and will collapse soon anyway.

In this FREE podcast Phil questions Steve on whether, irrespective of the ideology, Brexit will inflict a lot of short term hurt on many of those who voted for it. There’s also discussion on Theresa May’s 12 point plan, which both agree seems to ignore the opportunity and focuses on making the mistakes of the European partnership in other parts of the world. In other words, will Theresa May just make things worse?

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Will Trump Be Good for the US Economy? Jan 17, 2017

This week Donald Trump becomes the 45th President of the United States. In this free edition of the Debunking Economics podcast Phil Dobbie asks Professor Steve Keen whether he will be good news for his country, particularly those struggling to find jobs in the rust belt of Middle America. Trump is planning a spending spree to get the country back on track, but who will pay and will it be possible to target projects on those who need the work the most?

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Can We Stop Economic Cycles? Jan 16, 2017

The economy has always suffered the impacts of boom and bust cycles. Reserve banks and governments try desperately to remove them, hoping for the nirvana as a stable economy. But are they on a hiding to nothing? In this podcast Phil Dobbie asks whether it’s possible to, at the very least, reduce the size of the cycles and the subsequent hurt they inflict.

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Did Keynes have a better plan for exchange rates? Jan 10, 2017

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Growth. Do We Really Need It? Jan 03, 2017

In this edition of the Debunking Economics podcast Phil Dobbie asks Professor Steve Keen why the economy is dependent on growth. Is it psychological – that we like to think we are better off – or is there a mathematical reason that demands growth? Mainstream economists are hell-bent on growth and believe that innovation will always ensure we manage to do more with the resources available. But can that be achieved without ruining the planet, and how do we ensure there is an effective distribution of wealth and consumption?

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Steve Keen on the Year Ahead Dec 31, 2016

The start of the end of the Euro, the continued rise of the right, recession for Australia and a booming US economy thanks to Trump‘s spending program. That’s how Prof Steve Keen sees the year ahead looking in this free edition of the Debunking Economics podcast. For more insights for the year ahead, subscribe and enjoy further commentary and analysis throughout 2017.

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What Scrooge Could Learn From Keynesian Economics Dec 21, 2016

Charles Dickens wrote A Christmas Carol to heighten awareness of the rich poor gap in Victorian London. Professor Steve Keen suggests his lavish ways described in the last few pages of the book would almost certainly end in bankruptcy. Yet, his original penny-pinching lifestyle was destructive for the economy and almost certainly reduced his profit potential. In this Christmas special edition of The Debunking Economics podcast Phil Dobbie asks what the message should have been from the Ghost of Christmas Future.

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Bank Collapses, All Over Again. Dec 19, 2016

Italian banks are on the verge of collapse. Former PM Matteo Renzi failed in his bid to centralise power and, supposedly, tackle the country’s dire economic circumstances. In reality, though, what could he have done? In this edition of The Debunking Economics podcast we look at the state of banks around the world and economies teetering on the edge. If we are to face another global financial crisis, driven by bank collapses, how do the circumstances compare with 2007-8? And which countries will be hit the hardest?

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Is Productivity Really That Important? Dec 08, 2016

Obviously we want to ensure that we are doing the most with the resources we have, but are we placing too much importance on productivity as a key measure of how well an economy is performing. In this episode of The Debunking Economics podcast Prof. Steve Keen suggests that the figure is misleading, and hides the growing inequality in society. There are better measures, he believes.

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Why Debt is Like Sex With Accountants Dec 06, 2016

Prof Steve Keen explains to Phil Dobbie why economists have got their theories wrong because they have misunderstood the role of double entry book-keeping. That means, argues Steve, this episode will be particularly exciting for accountants – perhaps the most fun they’ll ever have. And we discover why government debt is generally a good thing, but too much private debt can be destructive.

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National debt and private debt – how one can help the other? Nov 30, 2016

The media, governments and mainstream economists are obsessed with concerns over government debt. Yet in the UK and most other developed nations private debt is a bigger issue. Why is it that we expect our governments to operate without borrowing, whilst many of us are mortgaged to the hilt? In this edition of The Debunking Economics podcast we examine the two types of debt and the consequences of each rising to high levels. Also, why does one tend to rise while the other falls? What can we learn from the 1920s? And why is the trade balance a related, but more important, issue.

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How Much is Free Trade Costing Us? Nov 26, 2016

Back in 1817, in his catchy titled book ‘On the principle of political economy and taxation’, David Ricardo gave the mathematical argument for free trade based on comparative advantage. The argument goes that we’d all be better off if countries focused on what they’re best at producing, even if someone else might do a better. In this episode Prof Steve Keen explains to Phil Dobbie why the theory doesn’t hold – we only need to look at the industrialisation of Japan as an example.

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Influencing the Speed of Money Nov 18, 2016

Milton Friedman had a theory that the wealth of a nation was determined by the amount of money and the velocity of that money. In other words, if we exchanged money more quickly we’d all be better off. Phil Dobbie asks Professor Steve Keen if Friedman’s theory is correct and, if so, why doesn’t government policy focus on speeding up money?

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Austerity is Chipmunk Thinking Nov 16, 2016

In this podcast Phil Dobbie talks with Steve Keen about the rationale behind government austerity measures, the thinking being that government debt is holding back the prospects for economic growth. Steve argues that this assumes the economy behaves like chipmunks, hording nuts for the winter. In effect, the approach takes money out of the economy, doing the opposite of helping the economy grow.

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Monopolies – a Necessary Evil? Nov 12, 2016

In this episode Steve Keen argues that monopolies commissions have got it wrong, believing the consumer wins when all firms in an industry are of similar size. He argues that the best outcomes occur when businesses form a "power law" structure. And control of monopolies, he reckons, should be handed over to evolutionary biologists. Find out why in this edition of The Debunking Economics podcast.

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Trump won because trickle-down economics doesn’t work Nov 11, 2016

Trump’s unexpected win reflects the dissatisfaction of huge swathes of disenfranchised voters across America. They are upset because they are not seeing their lifestyle improve, yet the rich elite seem to be accumulating the wealth with little or none of it trickling down to the rest of the population. In this episode of The Debunking Economics podcast Steve Keen says money needs to be forced to circulate rather than accumulate. But how do you do that? Phil Dobbie asks Steve whether higher taxes are part of the solution, which would be ironic given the US President elect has done a good job of evading them.

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Brexit is Needed to Bring Down the EU Nov 04, 2016

In this edition of the Debunking Economics podcast Steve Keen explains why he is an ardent supporter of Brexit. Phil Dobbie, who believes Britain should stay in as long as the EU exists, asks whether a more moderated approach to the original idea of a European Union would have been a better outcome. But it’s clear Steve’s thoughts are that the concept, as it stands, is so abhorrent that a Brexit is needed to encourage others to do the same and pull the whole thing apart.

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Interest rates - do they really control inflation? Nov 01, 2016

Reserve banks spend a lot of time discussing the interplay between inflation and interest rates. In this third episode of the Debunking Economics podcast we look at how the two are inter-related and whether the bond is as tight as Central Banks seem to believe. How does it relate to the interest rate your own bank charges for a mortgage? And why, when interest rates are so low, are we not seeing the expected level of inflation growth?

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The crazy (and not so crazy) ideas of Donald Trump Oct 25, 2016

Donald Trump has some weird ideas. Building a wall along the southern US border and getting Mexico to pay for it, for example. But, as Steve Keen explains, on other matters Trump’s intuition is right, he just loses the argument with some of the detail.

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Inflation. Is it a good or bad thing? Oct 21, 2016

This week the inflation rate in the UK hit one percent. It’s a long way from the high teens of the late seventies and early eighties. In this inaugural episode of The Debunking Economics Podcast, Phil Dobbie suggests that low inflation is a good thing. It means prices aren’t going up. But, Prof. Steve Keen suggests there’s one reason we should be welcoming higher inflation. He also discusses the role of inflation in monetary decisions made by Reserve Banks around the world.

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