Debt Relief. Radical thinking by Steve Keen. Solution – write off ALL our debts


Comment at end

Or –

26th November, 2011

At 2:05am this morning, just as I was thinking of nodding off, the BBC World Service’s HARDTalk caught my ear. Especially so since I recall suggesting something similar recently (within the bounds of my admitted economic ignorance!) I was informed that it is unworkable to generate cash in order to give the people £1,000,000 each to sort out their own messes (where applicable) and as a consequence that of our economy(ies) by business-building and simply by buying again.

It may well be unworkable.  The devil is always in the detail. However, in Keen’s suggestion there certainly seems to be some unacceptable uniform “socialist” (communist) inferences which would not go down well with those against increased state power, i.e. most “liberals”.

I thought the BBC’s Sarah Montague asked some useful questions, by the way.  All in all, a very good interview.

Australian Steve Keen, the ‘Merchant of Gloom’ gives his take on avoiding the economic depression

His blog is here with comments on his HARDTalk interview – some for, some not.

I’ve taken some excerpts from HARDTalk programme –

“We’re already in a depression … best we can hope for is a lost two decades … lost generation only has one outlet – that’s frustration and violence … Hitler rose to prominence due to despair over last Great Depression … Occupy Wall Street broad-based … heartening because they’ve had their trust in society betrayed, not socialists … I’m opposed to capitalism parasiting itself … politicians are reactive individuals, not leaders, most of them … too interconnected to do it in the old-fashioned way of a jubilee … negative when we borrow money to gamble on assets … caused a bubble in house prices … [Asked – “write off mortgages of even people who can afford to pay? “]…  Yes [more or less!?]  … fundamentally households did not make the bad decisions. The bad decisions were made by the banks to lend in the first place … a systemic process by which we reduce the level of debt-financed money in the economy and increase the amount of government created money … give money to debtors rather than the creditors … bizarre, ineffective [as given  to banks thus far] … system has failed, not the individuals in it … everybody gets a boost … trying to eliminate a 40-year mistake, the debts build-up to simply unsustainable scales … won’t be repaid so … have to work out how we DON’T repay them [debts]… banks make money by creating debt … the meaning of ‘mortgage’ is ‘death contract’, in Latin … only reason we take on more debt than we need is because we get persuaded that we can make a gain out of it by leverage speculation … you have to prevent the possibility of asset bubbles being financed by leverage, again … back to a private debt bubble … economists have a mythical view of how money is created … that basically sees banking as being an intermediary between people who are patient and therefore save money and people who are impatient and therefore want to spend money and all you’re doing is transferring spending power from the patient to the impatient so you can forget about the aggregate level of debt … unfortunately I can’t see anybody [a politician] on the horizon right now [to implement this].”

My observation on Steve Keen’s last remarks, for what it’s worth –

– mainly because it would need a worldwide agreement? There is no One World Government, despite some telling us there is, and that it is run by the banks.

Hmmm. Back to the drawing board?

Another observation. Agree with him or not we certainly cannot accuse Mr Keen of tinkering around the edges of this worldwide economic problem.  Nor of simplistically and WRONGLY accusing the country’s (and world’s) debts of being all the doing of the previous (British) government.

Grown-up economics, at last. The present Conservative/Liberal Democrat government – do take note.

Listen here

Synopsis of programme

Another Great Depression is all but inevitable’ – that’s the view of Steve Keen. No wonder he’s been called the ‘Merchant of Gloom’.

But then Keen is one of the few economists to have predicted the global financial crisis.

And while he used to be a lone voice challenging the economic consensus, more and more people are now listening to him.

His way of avoiding depression? Write off the debt, bankrupt the banks, nationalize the financial system, and start all over again.

Listen to Hard Talk (for next 7 days)


Larry Elliott blog on Keen on HARDTalk


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4 Responses to “Debt Relief. Radical thinking by Steve Keen. Solution – write off ALL our debts”

  1. appalled Says:

    Steve Keen has it right.

    Sorry Blair but you and your’s just delivered the entire Western Civilization to the bankers who are not bringing about its sunset.

    The greatest height of human endeavour. Democratically, socially, economically, educationally, brought down by free markets, neoclassical economic clap trap and nonsense, and cowardly “new left” movements who failed to stand up and speak truths no one wanted to hear.

    You gave away the very question being begged and the answer is another Great Depression of which they spoke “never again”.

    Say goodbye Mr Humanitarianism to a height of humanitarianism never known to have been achieved in any large scale society before. You’ve flushed it away with the rest of this once great and rising marvel “the modern western world”, or sold it on the open and free market for efficiency’s sake if you prefer.

    • keeptonyblairforpm Says:

      Sorry appalled,

      The free market is not the bainchild of Tony BLair. Some of us spotted future issues in the 1970/80s when Thatcher with presumably the best intentions used MIRAS – Mortgage Interest Relief At Source as an accelerator to motor her widespread home ownership dream.

      On the other hand Thatcher realised even then that Britain had a declining idustrial base – Japan competed with Britain then, with India, China later. Some might say her Toies encouraged it even worked towards our declining industrial base. How better to re-balance the economy and inject some oomph than to increase the value and quality of the nation’s housing and to let it find its (then) level and help people borrow against those (rising) values? They would then become a nation of small businesses er- shopkeepers?) and start a homegrown New Britain from within – all based on the value of their own bricks ‘n’ mortar.

      So say goodbye to your damning of “Mr Humanitarianism”. It is puerile and misses the historical significance of the real free marketeers in Britain, the Conservative party.

      Btw, your primary bias against Tony Blair does not escape anyone. Instead it shines through the use of your “humanitarian” jibe.

      Globally, in every way but phusically, the world has shrunk as its ties have become intertwined.

      There would have been no logging out of the free market in 1997 when Blair came to power as banks were already inextricably tied one to the other. Blair may have de-regulated financial services more than some would have preferred (but far less than the Tories wanted) but it was that very de-regulation which made London the world centre for finance for the last 15 years or so. From that home-owners benefited until recent years. Oh how easily and willingly we forget.

      The free market did not start with Tony Blair and it will not end with David Cameron. IMHO.

  2. peter holden Says:

    Neither am I an economist, but plain thinking outside the box is the right of any semi-intelligent human, so here goes:

    A new group on Facebook: Two years to a global debt solution–Radical Debt Forgiveness points to a way out from this burgeoning debt crisis, which, if left unchecked will pull the global economy into a tail spin. It’s not too late, it simply requires the will of the people, globally speaking. Check it out:

    • keeptonyblairforpm Says:

      Not that long ago I suggested something similar. Something no doubt simplistic, but perhaps workable. Giving every adult on the voting register £1,000,000 to sort themselves out – invest, buy property(!) start businesses and above all pay off personal and busines debt. Of course I was told in no uncertain terms that it is unworkable, mainly because the quantitative easing governments are providing in OUR name to banks (which few of us ever see or can touch) is not REAL money!

      There is clearly something I’m missing here!

      But good luck to you in your endeavours.

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