Debunking Economics - the podcast

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 sec...

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...

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 pu...

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 f...

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 Pro...

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 s...

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 dam...

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 inte...

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 re...

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...

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 g...

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 t...

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 Fed...

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 al...

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 te...

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 a...

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 Ph...

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...

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 w...

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 fac...

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...

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 ma...

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, i...

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...

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 Kee...