Debunking Economics - the podcast

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

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

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

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

Britain gave us the steam engine and so many other inventions. But what has it done lately. Not a lot. Is it because we have beenhamstrung by Brussels, and we'll be free to goback to those halycon days after Brexit. We need entrepreneurship and innovation, says Steve - but a lot of that has to come from the government sector. Hosted on Acast. See acast.com/privacy for more information.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Nobel prize winning economist William Nordhaus has modelled how climate change will impact the economy. Steve reckons its part of the reason we don't take climate change seriously. It vastly underestimates the impact. Hosted on Acast. See acast.com/privacy for more information.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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