Debunking Economics - the podcast

There’s been a debate brewing post-pandemic about how much inflation has been elevated by companies increasing their margins. The evidence of that is the increased profits, not just in the tech sector, which has helped increase the share prices of these companies, evidenced by record levels across the US share market indices. This week Steve Keen says its clear that is happening. Even before the pandemic, when inflation was lower, companies were still increasing their margins more than the level of wages, so workers were increasingly worse off. Hence the pre-pandemic stagnation. But companies need to improve their efficiency to fend off competitors and provided the rising returns that investors are demanding. So, isn’t the constant drive for higher margins simply an acceptable and necessary function of capitalism? Hosted on Acast. See acast.com/privacy for more information.

The UK is heading to the polls on July 4th and the Conservative Party is heading for annihilation. Yet, when it comes to espousing sensible ideas from textbooks, Rishi Sunak had the making of a good Prime Minister. For example, tackling productivity by building the necessary infrastructure, investing in education and building cities and regions where businesses could cross pollinate their expertise, facilitated by strong communication and transport links. He presented all of these ideas three years ago and since then productivity has fallen. Why? Steve says these are all great ideas, but there was no money there to support them. You can’t facilitate growth whilst pulling money out of the economy through government spending cuts. Hence, Tory party economics has failed on delivery.  Hosted on Acast. See acast.com/privacy for more information.

Steve is on hols this week, so Phil takes a look back at a couple of Debunking Economics podcasts from just before Donald Trump took office. In many ways he stuck to his promises. He tried to cut immigration, he introduced protectionism with hefty tariffs on China and he cut taxes. Now he’s promising more of the same, although Biden might have beaten him to it when it comes to heftier taxes on China’s EV exports. The first time around Steve suggested some of Trump’s thinking was right, although perhaps for the wrong reasons. Tax cuts to boost spending seems like a good idea, but he directed it at high income earners in the false belief that they would use this money to invest in jobs to grow the economy. Instead, tax receipts fell and the new jobs didn’t materialise.He is also hell bent on making America self-sufficient for energy. America’s domestic oil production has been steadily increasing since 2016. Can we expect this to accelerate, given he has repeatedly declared climate change is a hoax, and the likely funding support he is receiving from the fossil fuel industry? Hosted on Acast. See acast.com/privacy for more information.

Should we tax wealth more? The UK’s Shadow Chancellor Rachel Reevs wouldn’t be drawn o the question at an FT forum recently. She said the UK is already a high taxing country. But around the world the wealthy are getting wealthier. Is that a bad thing? Some would say that if they are making money creating growth for the economy, then why would you want to stop them. Jeff Bezos, for example, makes a small fraction of the wealth of the economic benefit he has created for broader society.  But does it make sense that income from wealth – primarily capital gains – is taxed less than I come from work? No, says Steve Keen. It should be the other way round. Listen in for a discussion about taxing wealth, that’s a little more nuanced than just saying tax the rich. Hosted on Acast. See acast.com/privacy for more information.

UK Labour leader Keir Starmer has said if he wins the next general election, within 5 years he will have re-nationalised Britain’s railways. Phil asks Steve whether it naturally follows that this will lead to an improvement in services and lower fares? Steve reckons you any need to look at government run services elsewhere in Europe to answer that question – but Britain’s trains weren’t so great even in the days of British Rail, when they were in government hands. This time there’s a chance one of the key areas of investment will remain in private hands, negating the advantage of public ownership.Railways are also an easy choice. Many franchise operators have fallen by the wayside, forcing the government to step in. Renationalisation was starting t happen by default. Ut what about water?  Nd, more significantly, what about the power industry. How can an industry that relies on making more money from customers operate in an environment where climate change is demanding we use less?Phil and Steve discuss how Labour’s plans only seem to scratch the surface.  Th direction of travel is right, but they don’t seem to be heading very far down the line. Hosted on Acast. See acast.com/privacy for more information.

The new industry is struggling to survive, with far reaching consequences on public accountability and democracy. Steve says part of the problem could have been fixed with a suitable micropayments system, so readers could consume articles without subscribing to papers in full. Phil’s not so sure, pointing to the fact that an increasingly large proportion of the population is not consuming news at all and what they do read or watch is on their feeds in social media. News media is having to resort to click bate on low-rent stories that will drive traffic and help drive advertising revenue. There’s little or no scope for investigative journalism unless it is funded by the public purse – but governments and reticent to fund such activities if they fear they will be caught out by it. So how do we fix the journalism deficit? Hosted on Acast. See acast.com/privacy for more information.

There are two types of people who buy gold. Speculators who see it as a risk-adverse asset class to buy when other investments look a little shaky. There are also those who hold onto gold because they believe paper money has no intrinsic value and is therefore susceptible to collapse. Zimbabwe, who’s paper currency has been undergoing decades of increasing worthlessness, is now being replaced by a new form of blockchain currency – the ZiG, completely backed by gold and foreign currencies. Phil and Steve discuss whether it’s a smart move for Zimbabwe, before looking at the broader global preoccupation with the stuff.  Hosted on Acast. See acast.com/privacy for more information.

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

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. Hosted on Acast. See acast.com/privacy for more information.

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 Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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.  Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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?  Hosted on Acast. See acast.com/privacy for more information.

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?  Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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.  Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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 Steve analyse the speech and look for some bits of it that might actually be worthwhile. Whilst, of course, dismantling the rest of it. Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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/ Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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. Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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.  Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.

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? Hosted on Acast. See acast.com/privacy for more information.