Dec 162013
 December 16, 2013  Posted by at 1:39 pm Finance

Theodor Horydczak “Pies and paper pie plates” 1933

A great video interview from Dutch business TV channel RTL-Z with a very dear and close friend of The Automatic Earth, Steve Keen (who did several presentations together with Nicole), the only economist in the world who I take serious, and certainly not because we agree on everything; we don’t. But Steve is as close as one can get to taking economics to a scientfic level: see what the numbers say, not bend them to what you would like them to say. You do the grinding, and let the data do the talking.

Steve describes the European situation as being in a “Three Stooges recovery”, and I find that priceless. Just not sure Three is a large enough number to do the situation justice. Note: ignore that silly language, it switches to the Queen’s English fast enough. The interviewer and the rest of the staff find Steve’s version of a debt jubilee (give everyone a fixed amount of “free” money, and force those in debt to use it to pay that down first) very strange and highly controversial. Which is a little strange in itself, because you might expect an investors’ channel to do its homework, and Steve’s been promoting his idea for many years now.

Still, for some reason, giving money to banks has been made far more socially acceptable than giving it to people, an idea with far more potential to actually benefit the economy. As Steve says, it’s very simple to understand for the “ordinary man”, but he needs to explain it time and again to economists and policy makers.

By all means, do let us know what you think about his version of a debt jubilee.

This topic and many others are discussed in Nicole Foss’ new video presentation, Facing the Future, co-presented with Laurence Boomert and available from the Automatic Earth Store. Get your copy now, be much better prepared for 2014, and support The Automatic Earth in the process!

Home Forums Steve Keen: Europe’s in a Three Stooges Recovery

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    Theodor Horydczak “Pies and paper pie plates” 1933 A great video interview from Dutch business TV channel RTL-Z with a very dear and close friend of T
    [See the full post at: Steve Keen: Europe’s in a Three Stooges Recovery]



    Love Keen’s work, have enjoyed watching his interviews in the past, and hope to see him speak in person one day (I heard he was at University of Toronto awhile back for a visit, but not sure if he did any speaking and/or public events?).

    That being said, I’ve never completely understood/accepted his “Debt Jubilee”. If everyone was given “free money”, it sounds as if the big losers would be the lenders while those who shouldn’t have over-extended themselves with excessive debt in the first place. They get to keep their ill-gotten wealth (likely their homes and maybe a car or two, being our biggest purchases), while everyone else gets a whole bunch of money that will likely be used to chase either a) more financial products and/or assets, driving up prices to even more unsustainable levels, or b) real necessities/consumables like food, water, energy, etc. which will drive prices even higher, further deteriorating everyone’s standard of living.

    Maybe I’m too doom & gloom, but I think a crash is just what the doctor ordered. Anything less and people will fail to learn one of life’s greatest lessons – what goes up, must come down.




    Couldn’t open the video.


    Kenneth Barrows

    “giving money to banks has been made far more socially acceptable than giving it to people”

    I am confused about “giving” money to banks. Is the Fed underpaying for collateral or overpaying? I have read the Fed loans against valuable collateral.


    Nicole Foss

    I think this is the best interview I’ve ever seen him do, and I agree with him that this is the way we should deal with the debt crisis. Nothing is guaranteed to succeed, but what we do now is guaranteed to fail, so we have nothing to lose.

    I don’t see the outcome being a ‘balanced society’ though. There’s no such thing as a steady state economy that finds the happy medium and stays there. We always embark on positive feedback loops in one direction or the other, so the pendulum continually swings. Also, if we were able to buy our financial system some time (which I’m not convinced we could do anyway), we would hit non-negotiable resources limits instead. This is much more than just a financial crisis. There are limits to growth everywhere you look.


    Nicole Foss

    I don’t see a debt jublilee like this happening, but I do think it’s something that should be tried. I’m very cynical about governments in general and find they tend to make a bad situation worse as expensively (and stupidly) as possible. Perhaps some places will make an attempt do follow this route. It makes me wonder how long any heads of state who tried this would last in power though before having an accident of some kind. After all, the goal is to diminish the financial sector, but Big Capital writes the rules of the game and would not appreciate attempts to put them in their place. Those who benefit from the status quo can be expected to defend it, even at huge cost to everyone else (and ultimately to themselves as well, but that outcome lies beyond their greed horizon).



    “There are limits to growth everywhere you look”

    So fair to say we’re in a “no-win” solution?

    Even if we implement Keen’s debt jubilee and somewhat mitigate financial collapse, other limits will kick in and cause pain for those who make it past the first segment of the deflationary Gauntlet (i.e. financial)?

    I’m in a particularly sour/glum mood today, so I can’t help shake the thought that at some point something is going to have to happen to address limits to population growth – i.e. some people are going to have to leave the party we call “Life” before they might otherwise choose to…


    So fair to say we’re in a “no-win” solution?

    First item on the list: define “win”. You want to change things around here, might as well start off in the right direction.

    So: what do you mean when you say “win”? Same old same old and then some? And “no-win” is the opposite of that? Is it possible that the first step towards winning is to stop defining it in a way you never gave much thought to begin with?

    Nothing personal, don’t get me wrong, more like something everyone should stop and think about. Along the same lines as why we equate “successful” with making lots of money. Why do we do that? Where’s the success in it?



    Winning is generally understood to be determined by the rules of the game, along with the act of playing the game. So I continue to believe that the best option we have is to quit the game en masse, that is, the exchange game in which we use money. A debt jubilee is just a way to restart the game and so is temporary at best (and like others, I don’t expect to see it happening very widely).




    Not trying to keep things the way they are – I know they have to change and already have started to move in that direction.

    I guess the question was more around the thought of “should I basically be prepared to read about mass population die-off?” at some point, as nothing we’re doing seems to be able to mitigate either a) limits to growth, or b) the population growth rate, at this point. Or at least not within the broader context, the “silver-lining” exception being that people’s consumption rates sound to be starting to decline (though likely because people’s ability to take on additional debt has peaked?).

    It also makes me wonder what the value in conducting a debt jubilee is, given that it seems the only way most people are going to wake up to the reality of our situation is through pain/loss/suffering (all arguably self-inflicted, given that most people ignore reality and thus fail to manage their expectations of the future)? Maybe that’s a sour/gloomy outlook, but I don’t think I’ve ever been able to see the value in helping people in the short run if it causes them longer-term pain/lost/suffering.

    Lastly, on making money – “success” is not at all one of my considerations, and was not my intent to imply any such thing. However much The Automatic Earth as a website makes is not an indication of its success, but you must admit that funding is required to continue your efforts here.

    As a young person, I’m not privileged enough to own my own 50 acre compound, set up solar/wood based energy solutions, or invest large amounts of my time in learning to live in an energy-poor world despite *knowing* (or at least believing) this is the future I need to prepare for. Thus I’m forced to look for other solutions – namely, working to support myself and build up enough capital to invest in the future I perceive to be unavoidable. If I can make enough not to have to live in horrible, crushing poverty with no options whatsoever then I think that could be considered a “success” in some sense of the word.




    Well I finally got enough bandwidth from my satellite isp to watch the video and I agree that it is much clearer then the usual Steve Keen. Naked Capitalism also discusses Steve Keen vs Krugman today. I don’t see the financial system meekly allowing itself to be shrunken/dismantled. Don’t you agree? Do you then see this as a solution that could be chosen after collapse of the shadow banking system? If so, then I would suggest that it include support for measures that increase social cohesion and end wasteful practices. I would think that financial restructuring should be tied to economic activities that discourage re-growth of the industrial and consumer economy replacing it with a greener more distributed locally based or household based economy that is very low waste. If all you do is to allow industrial capitalism to pick itself up, dust itself off and start all over again what is the point?
    I ordered the DVD, btw.



    “If all you do is to allow industrial capitalism to pick itself up, dust itself off and start all over again what is the point?”

    I would think the point is that, had you prepared for a crash, you might be around to see the next bout of industrial capitalism, or whatever comes next anyway.

    Hopefully we won’t be as hell-bent on destroying ourselves by sacrificing long-term stability for short term comforts, but I don’t really have that much faith based on the past performance of our species…



    I think this is a fantastic idea. The finance sector doesn’t actually lose anything because they get paid back. Instead of just giving the money directly to the banks and the people close to the banks who benefit the most and have a hard time reinvesting this money into actual productive enterprise, we allow the folks who don’t currently have the money to buy goods or services to buy them. Those same folks may also be more inclined to invest the money into economically productive activity. That being said, hell would have to freeze over in the US before the majority of the citizens (even the ones who would benefit the most) would accept giving money to the undeserving poor. They would much rather give the money to the wealthy who at least earned it (at least that is the way one of my dear family explains why the wealthy are wealthy.) Perhaps some European countries would have an easier time with this. Of course I never have much optimism about great ideas actually being carried out, but the thank you so much for this video, it is certainly an idea that never crossed my mind.




    Curious why you think “giving” people more money will make anything better? Printing a whole bunch of money doesn’t grow more crops, put more precious metal in the Earth (or extract it), create any additional fossil fuels or other energy sources, etc. All it does is give more people money to chase consumables (e.g. food, water, energy) and drive up the prices, as well as devalue any of the debts they would pay off at the expense of the lender.

    And while I’m no friend of the banks, to be fair, the money isn’t being “given” – it’s being lent to them at outrageously low interest rates. There might not seem like much of a difference, but given Nicole’s discussions on debt vs. money in the past I think there’s a huge difference in so much as debt needs to be paid back (or defaulted on).

    As far as investing in more economically productive activities – what would those be? We’ve lived through a decades-long consumption glut, and if there were still economically good investments out there I’m pretty sure people would be making them (instead, they either gamble on the markets or shun the markets altogether – consider the number of investment and/or hedge funds closing up and returning their capital to their investors given that they can’t see any worthwhile investments in the economy anymore).

    Again, perhaps I’m being overly critical of Keen and his debt jubilee. I haven’t watched this video yet (will try to soon; holiday season is so busy!), but every other video I’ve watched where he’s proposed it as a solution has always seemed (to me) to be his biggest stumbling block. He speaks so knowledgeably about the problems we’re currently facing, but when discussing debt jubilee it always comes across as wishful thinking, as none of the concerns I’ve raised above tend to be discussed in any great detail.


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