8 ms·

Because they don't take debt, in particular private debt, seriously, including Krugman and Delong. Steve Keen explains how wrong this is.

naravara 10y ago
Nobody thinks national debt doesn't matter. They think the long term costs of endemic poverty or economic stagnation outweigh the long term costs of carrying a deficit.
- akinalci 10y ago
  We have this big problem. We'll just patch over it with this other problem and call that a reasonable strategy.
  - Gibbon1 10y ago
    The elephant in the room is we don't have enough inflation to re-balance the ratio of income to debt. As a result the ratio of debt to income keeps growing.
  - tcbawo 10y ago
    I think what he's suggesting is that paying down debt through austerity can be more costly than growth, since austerity hurts growth. The trick is, where does growth come from?
    - gozur88 10y ago
      The mistake there is thinking printing money brings you growth. Where has this worked?
      - josephlord 10y ago
        Firstly there are two ways that money is printed. 1) Government/central bank spend more than they take in taxes. 2) Private banks make loans to private sector (biz or individuals). Money is destroyed by government running a surplus or by loans being repaid. Note also that for the government to run a surplus the private sector must run a deficit (decrease savings or increase borrowing) in most circumstances. The question is where money should be created and how it should be managed and controlled.
        gozur88 10y ago
        Yes, that's all true. I'm just balking at the idea that "austerity hurts growth". I think the alternative hurts growth even more.
        naravara 10y ago
        Firstly, empirical evidence suggests otherwise. Political instability and inequality, both consequences of austerity, significantly hamper long-term growth and innovation. No country ever went from poor to rich by neglecting to invest in its people and infrastructure. Lots of countries have gone from rich to poor that way though. Secondly, even if this were true what does it matter? Many people don't care about how fast the economy is growing overall if their personal fortunes are dwindling. That's just robbing Peter to pay Paul, except in this case Paul is already filthy rich.
        makosdv 10y ago
        Why does money need to be managed and controlled? Real money inherently has a limited supply, so there is no need for it to be managed or controlled; the market does that on its own. However, the fiat currencies that are used by central banks around the world are not real money. The arrogance of central banks thinking they can manage and control the economic interactions of millions of people in a country is what leads to these great depressions and recessions.
        matt4077 10y ago
        Economic crises today are nowhere near the disasters they were in the past. It's pretty obvious that the system's stability has increased–in the past, depression could mean starvation. > The arrogance of central banks thinking they can manage and control the economic interactions of millions of people in a country... The arrogance of physicians thinking they can manage and control the biological interactions of billions of cells... Just because something has a lot of moving parts doesn't make it intractable. "Complex" is just latin for "put together", and we can always try to take it apart, learn about individual parts, and work our way up. In any case, not doing anything is also a decision. It's a completely arbitrary idea–as if monetary policy were some sort of intrusion into the "natural law" of the economy.
      - thatfrenchguy 10y ago
        In all western societies, looking at the great lifestyle differences between the 1970s and now.
        gozur88 10y ago
        Is that growth, or does that fall under "eating the seed corn"? I agree the money supply has to expand when the economy expands, but that's not the same thing as printing a bunch of money and spending it during a recession.
        Gibbon1 10y ago
        In theory in a properly managed recovery from a recession bad debt is eliminated via loan restructuring and new more productive debt is created to replace it. And income insurance programs[1] are used to support demand. Austerity during a recession works poorly because instead of replacing unproductive debt with new more productive debt, austerity attempts to subsidize the owners of bad debt by taxing demand. [1] Unemployment insurance, welfare, state run retirement, pensions, etc.
      - seoguru 10y ago
        Where has deficit spending brought growth? WW2 would be a good example: http://neweconomicperspectives.org/2013/08/mobilization-and-money.html http://neweconomicperspectives.org/2013/08/mobilization-and-... And just imagine if we did the same thing, except instead of building weapons, we invested in healthcare, education, renewable energy, etc. Once you understand the money system, you understand that we are drastically under performing compared to our potential because our citizens and politicians have a backwards understanding of our money. reminds me of a great little clip by Alan Watts: https://www.youtube.com/watch?v=g-JMHiaYIiU https://www.youtube.com/watch?v=g-JMHiaYIiU
      - matt4077 10y ago
        The idea is that there are certain investments that give good returns. Governments can currently borrow at rates pretty close to 0%–even negative rates have popped up here and there. And you would actually have to subtract inflation from that as well. So if some investment, say a new airport or funding for the National Science Foundation increases future growth even just slightly, it's perfectly fine to finance it with debt.
- seoguru 10y ago
  Most people don't understand what the "national debt" is. It's the savings of the private sector. Randy Wray sets the record straight in 100 seconds: https://www.youtube.com/watch?v=c4sD-JDVwwQ https://www.youtube.com/watch?v=c4sD-JDVwwQ
VHRanger 10y ago
Nobody takes Steve Keen seriously. He doesn't even have a university job anymore.
- the_why_of_y 10y ago
  Are you sure about that? http://fass.kingston.ac.uk/faculty/staff/cv.php?staffnum=1043 http://fass.kingston.ac.uk/faculty/staff/cv.php?staffnum=104...
  - VHRanger 10y ago
    Check his patreon.
HeavenBanned 10y ago
If it's anyone who should be taken seriously it's Mark Blyth at Brown. A primer [1]. [1]https://www.youtube.com/watch?v=vSS4GCA__As https://www.youtube.com/watch?v=vSS4GCA__As

naravara 10y ago

Nobody thinks national debt doesn't matter. They think the long term costs of endemic poverty or economic stagnation outweigh the long term costs of carrying a deficit.

akinalci 10y ago
We have this big problem. We'll just patch over it with this other problem and call that a reasonable strategy.
- Gibbon1 10y ago
  The elephant in the room is we don't have enough inflation to re-balance the ratio of income to debt. As a result the ratio of debt to income keeps growing.
- tcbawo 10y ago
  I think what he's suggesting is that paying down debt through austerity can be more costly than growth, since austerity hurts growth. The trick is, where does growth come from?
  - gozur88 10y ago
    The mistake there is thinking printing money brings you growth. Where has this worked?
    - josephlord 10y ago
      Firstly there are two ways that money is printed. 1) Government/central bank spend more than they take in taxes. 2) Private banks make loans to private sector (biz or individuals). Money is destroyed by government running a surplus or by loans being repaid. Note also that for the government to run a surplus the private sector must run a deficit (decrease savings or increase borrowing) in most circumstances. The question is where money should be created and how it should be managed and controlled.
      - gozur88 10y ago
        Yes, that's all true. I'm just balking at the idea that "austerity hurts growth". I think the alternative hurts growth even more.
        naravara 10y ago
        Firstly, empirical evidence suggests otherwise. Political instability and inequality, both consequences of austerity, significantly hamper long-term growth and innovation. No country ever went from poor to rich by neglecting to invest in its people and infrastructure. Lots of countries have gone from rich to poor that way though. Secondly, even if this were true what does it matter? Many people don't care about how fast the economy is growing overall if their personal fortunes are dwindling. That's just robbing Peter to pay Paul, except in this case Paul is already filthy rich.
      - makosdv 10y ago
        Why does money need to be managed and controlled? Real money inherently has a limited supply, so there is no need for it to be managed or controlled; the market does that on its own. However, the fiat currencies that are used by central banks around the world are not real money. The arrogance of central banks thinking they can manage and control the economic interactions of millions of people in a country is what leads to these great depressions and recessions.
        matt4077 10y ago
        Economic crises today are nowhere near the disasters they were in the past. It's pretty obvious that the system's stability has increased–in the past, depression could mean starvation. > The arrogance of central banks thinking they can manage and control the economic interactions of millions of people in a country... The arrogance of physicians thinking they can manage and control the biological interactions of billions of cells... Just because something has a lot of moving parts doesn't make it intractable. "Complex" is just latin for "put together", and we can always try to take it apart, learn about individual parts, and work our way up. In any case, not doing anything is also a decision. It's a completely arbitrary idea–as if monetary policy were some sort of intrusion into the "natural law" of the economy.
    - thatfrenchguy 10y ago
      In all western societies, looking at the great lifestyle differences between the 1970s and now.
      - gozur88 10y ago
        Is that growth, or does that fall under "eating the seed corn"? I agree the money supply has to expand when the economy expands, but that's not the same thing as printing a bunch of money and spending it during a recession.
        Gibbon1 10y ago
        In theory in a properly managed recovery from a recession bad debt is eliminated via loan restructuring and new more productive debt is created to replace it. And income insurance programs[1] are used to support demand. Austerity during a recession works poorly because instead of replacing unproductive debt with new more productive debt, austerity attempts to subsidize the owners of bad debt by taxing demand. [1] Unemployment insurance, welfare, state run retirement, pensions, etc.
    - seoguru 10y ago
      Where has deficit spending brought growth? WW2 would be a good example: http://neweconomicperspectives.org/2013/08/mobilization-and-money.html http://neweconomicperspectives.org/2013/08/mobilization-and-... And just imagine if we did the same thing, except instead of building weapons, we invested in healthcare, education, renewable energy, etc. Once you understand the money system, you understand that we are drastically under performing compared to our potential because our citizens and politicians have a backwards understanding of our money. reminds me of a great little clip by Alan Watts: https://www.youtube.com/watch?v=g-JMHiaYIiU https://www.youtube.com/watch?v=g-JMHiaYIiU
    - matt4077 10y ago
      The idea is that there are certain investments that give good returns. Governments can currently borrow at rates pretty close to 0%–even negative rates have popped up here and there. And you would actually have to subtract inflation from that as well. So if some investment, say a new airport or funding for the National Science Foundation increases future growth even just slightly, it's perfectly fine to finance it with debt.
seoguru 10y ago
Most people don't understand what the "national debt" is. It's the savings of the private sector. Randy Wray sets the record straight in 100 seconds: https://www.youtube.com/watch?v=c4sD-JDVwwQ https://www.youtube.com/watch?v=c4sD-JDVwwQ

VHRanger 10y ago

Nobody takes Steve Keen seriously. He doesn't even have a university job anymore.

the_why_of_y 10y ago
Are you sure about that? http://fass.kingston.ac.uk/faculty/staff/cv.php?staffnum=1043 http://fass.kingston.ac.uk/faculty/staff/cv.php?staffnum=104...
- VHRanger 10y ago
  Check his patreon.

HeavenBanned 10y ago

If it's anyone who should be taken seriously it's Mark Blyth at Brown. A primer [1]. [1]https://www.youtube.com/watch?v=vSS4GCA__As https://www.youtube.com/watch?v=vSS4GCA__As