Steve Keen on private money creation and the myth of fractional reserve lending

November 20, 2012 08:30
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Welcome to Capital Account. Just 30 percent of S&P 500 companies beat top-line expectations, while about 65 percent beat earnings expectations in the third quarter, according to Bloomberg. Also, half of the nation's 40 largest publicly traded corporate spenders have announced plans to reduce capital expenditures this year or next, according to a Wall Street Journal review of securities filings and conference calls. The report also found that US companies are scaling back on plans to invest at the fastest pace since the Great Recession. Since companies are cutting costs and spending, what impact will this have on a US recovery? We talk to Steven Keen, author of ‘Debunking Economics,’ about the indicators of a sustainable economic recovery.

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Comments (2)

REMant (unregistered) 22.11.2012 01:00

Keen agrees with the Austrians about most everything but the remedy, which he believes should be a gigantic redistribution he calls a debt jubilee. This is justified since the debts were incurred at inflated prices, cannot be reflated, or repaid, and especially not if deflated. I am not sure that's justified in every case, would be good for investment, nor healthy for morality, tho there's no question but that ppl need to be able to afford what they make, and that monetary policy has been the main reason why they cannot.  And he's certainly right that the Kennedy stimulus and LBJ's spending busted the system, causing the inflation registered in the oil shocks. The term "Neoclassical economics" tho is something of a misnomer, because these ppl are essentially classical Banking School mercantilists like Keynes, Minsky and Keen, himself, if not as charitable. And 100% fractional reserve, of course, makes no sense if it doesn't extend to the central bank. In a nutshell the Austrians want real money and the Keynesians want regulation.

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BK (unregistered) 20.11.2012 17:31

 In elementary school years ago, Twinkies were at the apex of barter value and I suspect they would retain some value today after an economic collapse, along with cigarettes, toilet paper, liquor, and ammunition. I haven't had a Twinkie in over 40 years but they seem to now be smaller than I remembered them.  Of course, in the new world we have now, products are reduced in size while the price stays the same.  Then Ben Bernanke and the liars who concoct the CPI say there is no inflation.   

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