Steve Keen has pointed out that I actually got one thing wrong in the video 🤦♂It was in fact Keen who came up with the Godley Tables, and he chose to name them after Wynne Godley because of how they were influenced by Godley's work. In the video I mistakenly attribute them to Godley. So many hours writing and checking the script, but still some things slip through!
I’d see that as an honest slip in source attribution, as empiricism holds up…😅 Keen is one of many (!) who more or less lays bare a solid epistemological and holistic understanding - that barely has a place in general education or the public narrative. I’d posit that history “rhymes” (thanks Chomsky, eh… I think…?). The period we’re in, has a parallel to the end of medieval times (Europe & colonies), where the dissonance between dogma and existential experience becomes its own dynamic. Or, a smaller parallel like pre the Great War - these are early days. Culturally, either modernity fades out - or it may be upheld through “life support”, meaning extreme use of power (energy, resources, imperative policy). Both paths are visible at this point, at least in my tiny and biased research. Looking back, such paradigm shifts have taken a century or more - the full four generation cycle. Scientifically, we don’t have that time, and the outcomes are global this time around. Ontologically, we’re slow as snails in a fast paced horror show. Or, slowly adapting to ever-ongoing changes (thanks, Hegel…). How brave are we - in the (overlooked) dialectic of individuals and community…? Thanks for sharing this, at least that’s bravery to me. _(After all my nonsense, least I can do is sub, and thank the almighty algo…😅)_
I think the long term rhythms and rhymes of history are fascinating. I'm always curious about different takes on these ebbs and flows. But I also think we should always choose to believe in the possibility of our individual and societal agency to shift things in a better direction. We should learn about the tides, but know that we have oars and a rudder too! Thanks for the comment 👍
Hahaha! What a complete IDIOT! Total brain death. Or a lousy criminal fraudster looking for a sekt to loot, if there exists anyone stupider than him. The worst economist since Karl Marx who claimed that the more something costs, the more is it worth. A question this clown can't answerr: Why not print $10 billion trillion and give a trillion to each human being, making everyone super rich!?
Except the politicians never commit to any theory at all. They pick and choose. They are like someone picking up a dozen diet plans and choosing to follow whatever advice from whatever diet that lets them eat what they want when they want. They are Keynesian’s only when there’s a downturn for example.
@@stumac869 in their mind if growth slows you lower the debt standards to increase the leverage. They forget to mention not everyone has access to a printing press. But the masses eat that debt up so it’s a two way street that locks logical buyers out of the market.
@@nathanDrake-nd if you can think of a sustainable way to separate public finance from governments so it couldn’t be bastardized in 5000 page bills you’d be on the right track. The existing models all fail due to that flaw.
@@Go-Meta Hahaha! Hello stupid guy, I was also LMAO! Like child watching a clown fail ridiculously with everything he tries. You could make a tour with this freak show.
My father recounts how the field of academic Engineering Control Theory was dominated by linear models until the mid 70s. This is when mini computers ( PDP8 etc ) became available in university departments and polynomial calculations, modelling,min / max and Monte Carlo simulation became realistically possible, and new more complex models could be posited. I wonder, how much economic theory faced the same, and arguable far more complex issue with the polynomial variables far greater in number, unpredictability and 'economic noise' You have just gained a subscriber, a fabulous first ( for me ) video and review.
The economy is intrinsically impossible to model. That's because, unlike engineered systems, the economy is composed of self-aware, rational actors who not only respond to their environment but also understand your attempts to model them as well as you do.
@@tj92834 Hence why you only model the macroeconomic aggregates and the perturbations from long-term movements. Don't confuse the neoclassical neurosis of seeking equilibrium with modelling macroeconomic states and flows in general. To disregard their statistical predictability borders on intellectual insincerity. Prof. Steve Keen's claim to fame is precisely in abandoning this neoclassical condition, producing instead a double-entry model of cash flows in the economy.
And Clive Granger got the Swdish government's central bank's prize in economics at the tax payers expense without any kind of connection at all to Alfred Nobel, in 2003. For simply pointing out that linear regression (a trivial highschool math equation that is the most advanced that macro idiot economists ever use) logically requires that the data is stationary, obviously. Something known since Gauss first formulated linear regression in the 1790s. Stationary as in "regressing towards the mean", that data varies stochastically at a certain level. Data that trends infinitely like GDP, export incomes, stock prices, consumer prices, wages and neigh everything that is called "economic data" in a hyperinflating fiat fraud "planned" economy, cannot be used for linear regression. It's like dividing by zero. It says nothing about any correlation between the time series. So it turns out that MOST macro iditoic fake "research" ever done is worthless garbage already for that reason! Because economists are too uneducated an untalanted to deal with highschool math.
@@tj92834 I recommend Ludwig von MIses' Human Action. It describes what an economy consists of (the title is very revealing). It's an axiomatic logic that explains the real economy out there among the humans. The only numbers you find in his book are the page numbers. He uses logic and understanding. The fraudulent always failing fraudulent "economists" since the Great Depression simply pick whatever numbers that are easy to find, such as stuff written down in bookkeeping. Then then calculate (wrongly most of the time) the average of ll the numbers they have found and procaim that this is "The Price" in the economy. Then they repeat with all numbers they by chance lazily find and calculate their average too. If they differ, they proclaim that "The Price" has inflated. As if there only existed one good with one price in an economy. A forest with a single tree. Rubbish in-garbage-out. Or why did you think that all central banks and other government dictated reculations and "stimulus" always fail so totally catastrophically with devastating consequences for all of society? Because their fake "theory" is a bad joke, and they are uneducated and very low-IQ. Seem incapable of ever understanding anything. Like Paul Krugman, hahaha! The single most important phenomena in an economy is VALUE. Have you ever heard a macro idiot economist use that word? Not "economic activity" that generates those irrelevant numbers in the bookkeeping, but VALUE CREATION. Value is subjective and impossible for anyone to measure outside oneself. Values are moral, that's why good things are called "goods". Only each individual can make valuations and thus choices of alternative actions to achieve the creation of that which is better instead of that which is worse. A government bureacrat with numbers and a flawed fake "theory" cannot make any such choices. This is immediately self-evident to any sentient being, the distinction between what is subjective and what is objective.
Thanks for highlighting Steve's fearless, tireless & comprehensive scientific refutation of neo classical economics & the "discipline" lol as a whole, by trying to keep them honesty to economic history, models & actual historic data - with his open source approach {Minsky software model}. He & a handful of others {Kate Raworth, Nate Hagens & Gary's Economics etc} -but more each yr are putting economics of a better foundation to deal with the coming & current meta crisis. Im studying his Rebel Economics Challenge course now & bloody glad i signed up- don't understand the maths yet, but that our models we make species wide economic decisions on should at least include the reality of energy & environment costs in the equations beggars belief that they haven't been for nearly 100yrs.
Glad you enjoyed the video👍 It is interesting that neoclassical economics has remained so dominant for so long, but I think this is partly because for a long time linear maths was our best way to understand many phenomena and it's not a terrible first approximation - but it is clearly not good enough. In contrast, dynamical systems thinking is much more correct, but much harder to work with so it's taking us a long time to upgrade the mainstream, dominant paradigm. But I have little doubt it will change, we just need to speed up the process 🙂
1:37 Neoclassical economics depends on honest info. If S and P, Moody's and Fitch all gave faked ratkngs, and weren't punished, is this really a failure of neoclassical economics, either positively or normatively, or a failure of the judicial system?
Arguably the failure here of the neoclassical perspective is to model things as if people are going to have the information, when we know that it is much more likely that they will not! 🙂
@@Go-Meta They would have had the info if too big to fail didn't mean too big to jail. We're being set up for another round of overinvestment in real estate, partly based on a repeat of all that, and the usual Schedule A tax deductions for Property taxes, interest on mortgage, and state and lical taxes, all of which is socialism for the rich in the name of the middle class and at the expense ofxthe middle class and poor. No wonder the working masses are voting for Trump and the parasites at the top of the food chain support Harris with brainwashed support by the lumpenproletariat.
Some economic pundits warned of consumer debt in the early 2000s; however, the bubble kept growing. In about 2005, I heard a radio ad for an interest-only mortgage that assumed housing prices would continue to rise, creating equity. While I tend to lean toward neoclassical economics, it does not account for the irrational gluttony of the consumer, and I am mystified by economists ignoring this behavior.
Yeah, looking back at what was going on it's amazing that alarm bells weren't going off much louder at the time. But the people selling the debt had every incentive to keep on doing it until the music stopped. I kind of think of neoclassical economics as a first approximation to what is going on. A kind of economics that feels intuitive to understand and that people could do with pens and paper, but now, with computers and decades more understanding of dynamical systems thinking there really is no excuse to stick with these oversimplifications. It may be that the hardest task for getting to the next level of modelling the economy is to come up with the analogies and explanations that feel just at intuitively correct as the familiar narratives of neoclassical economics.
I would say it was a rational gluttony of speculators. Interest rates under Greenspan allowed borrowing at real interest rates close to zero so who would be afraid to borrow and invest. Hundreds of thousands of new houses were bought and flipped by speculators who would never have to make a mortgage payment. The Federal Reserve should have had the duty to choke off that speculation by raising interest rates high enough.
You say irrational gluttony, I say human nature being biased towards believing more is automatically better than less in everything. Yet as hairless apes, we can be captured by unquestioned assumptions, leading to negative consequences. One big question mainstream economics fails to consider is the distribution of resources. And it is a multidimensional issue that should have been at the heart of the discipline, but instead the Protestant Work Ethic veiled issues of fairness and desert, and escaped deep analysis. We know this because the original name of the discipline was Political Economy, and questions of distribution was, and still is, central to this perspective. Instead, the drive for Economics to be accepted as a natural science, basically avoided questioning distribution as a key function of an economy.
It's not that "economists" ignore it. it's that keynesians ignore it. If you don't know what a Keynseian is just picture Soviet economic structure. Academia was taken over by Marxists so naturally Keynsians are the only "economists" you hear from in the media.
Thank you for the awesome review. I still don't believe that the Global Financial Crisis wasn't big enough for economists to predict, and by fact, no one held responsible for that. But humanity needs a way better economic model than Keynesian/MMT infinite money printing, and I'm glad that there are smart people who i looking for that.
You really don't understand the discussion at all. It's not about Kenysianism, MMT, or such labels. It's about how governments actually use the money they themselves create, and questioning what they do with it. MMT is not a prescriptive model. It's a descriptive one, and so is limited to describing how governments via central banks create money. That's it. What they do with that money, and should they being doing that with it, is a question MMT has never addressed. Conflating what is, with what ought to be is a logical error. So, forget about MMT. Rather ask yourself whether the State should be investing in its own economy, and then explain your answer. Then you can contribute something to the debate, instead of parroting someone else's undigested ideology.
@@CuriousCrow-mp4cx I bet you are right-I might not understand the discussion that deep. But the question you asked, I already asked myself. And I haven't come up with an answer better than yes, it should, but just because everyone else is doing the same thing. And in the case of refusing to do that, you are just falling off. Alexander Hamilton taught me well that it's protectionism, not a free market that drives the economy. And protectionism is impossible without the State's intervention.
What's the alternative because there's no doubt we're all much wealthier as a result and world poverty has decreased. In contrast where hard line socialism/communism has been imposed people have either starved to death and/or lived in absolute poverty.
@@stumac869I don't know, maybe return to the capitalism of the 1950s, before Reagan changed our economic policy to "billionaires p1ss on our heads and tell us it's raining (trickling down)"?
@@stumac869 Unfortunately I agree, I don't have an alternative other than a benevolent dictator but they are hard to find. It really comes down to some basics of humanity, greed, looking after no1, limited empathy and that a sizable percentage dont have the where with all to look after themselves and hence vote for the greater good.
Oooooo - stop it - I like it! You have left me wallowing in an ecstasy of confirmation bias. Really glad I stumbled on your channel. It is only since retirement that I have taken an interest in economics and after a lifetime of strongly suspecting that there was something rotten in the state of world economics - it turns out I was right. Accordingly I have provisionally reinstated my original intention of living forever and ruling the universe... Since WW2 the world has been burdened by an economic theocracy so much more malign than is commonly recognised. Magnificent theoretician's castles in the air have been constructed by Hayek, Friedman et al, entirely without foundation in the material world of finite resources, irrational actors, corruption/greed, remorseless externalities etc. etc. Neoliberal/free market/laissez faire/globalised capitalism and untrammelled consumerism may well be the primary cause of our civilisational collapse and, hilariously, this may prove the aphorism that 'the meek shall inherit the earth'. Those with the least will suffer the least and those who are so far up the civilisational pole that they have lost the knowledge and resourcefulness necessary for survival will succumb - you cannot eat, drink or breathe wealth. Perhaps MIT's 2040 prediction needs wider consideration.
Actually you’re totally wrong, we don’t have capitalism anywhere on earth, the closest place was Hong Kong. Everywhere has mixed economies and the freer it is the wealthier and better it works. The whole system is messed up because it’s based on keynsianism and the ability of politicians to print money ad infinitum. Without Austrian economics we are going down a road to destruction for sure, but luckily we have bitcoin…..
@@tommyrich3155 Terms like capitalism, communism and socialism do tend to be thrown about a little too freely. Austrian/Chicago school economics is the road to serfdom - QED. The current state of the world economy is unquestionably messed up after 50 years or so of Austrian/Chicago school economics - Keynes hasn't had a look in since the immediate post-war period. There is no one settled economic model for all times and circumstances and we do stand in great need of fresh thinking to handle our new circumstances. Bitcoin smells strongly of Tulip mania.
USA and WEST bubble popping, (fenced in by speniding on nowt with no real return) However...there's a real world out there that works for a livin and will continue to do so, with or without Kabuki Theatre Incorporated.
Money is a promise of labor/energy that is energy/labour blind. A tree can only grow while the sunlight is shining. The power is dependent upon latitude and season. 16:30 There is a finite/limited supply of free energy!
We are highly intelligent people. We need to exude very regularly. And the English language if used with enough eloquence makes it all happen like magic.
Thank you and Steve Keen for explaining the ultimate solution to the climate crisis. I could only sense that accelerating consumption was our problem and feared that productivity was unstoppable before reaching a hard limit. Understanding is a massive step forward.
When I was a humble student in Math, I earned some money helping Economy student to understand their Math, learning some Economic concepts and theories in the process. Little by little I understood that economy theorists were mining the Mathematics of the 19. Century but only the easy parts and became more and more skeptical about the current use of Mathematics in Economy.. Later on I specialized in Dynamik Systems, Chaos and Bifurcation Theory, Statistical Mechanics. These mathematical Branches are more appropriate when doing Economics.
That energy as a basis for economics is illustrated well by Frank Kapras 1956 movie " Our Mr Sun", which predicts when we run out of cheap fossil fuels we will return to the hard labour economy of the middle ages. Model that!
I just stumbled upon this channel and really enjoyed how different ideas are connected through a book review. I especially liked the references to thermodynamic free energy and complexity. Looking forward to watching more videos!
I remember the stir that Limits to Growth created and I've been watching five decades for world economies to hit the wall. As time has passed, however, it seemed to my untrained eye as though growth wasn't conforming to predictions and the concept was all but forgotten. There is, of course, an entire industry of pundits, forecasters, analysts and crystal-ball gazers whose careers are fueled by predicting market vicissitudes, and bulls are more popular than bears. But it's tough to argue against the physics you describe. Maybe I just gave up too soon.
Hi, I like the idea but my channel is trying to cover a broader scope of ideas, so it is more likely that I'll be doing a set of videos about general concepts in the economy (e.g. money, inflation, productivity, UBI, impacts of AI, etc) ... where I will then reference Steve Keen's work where appropriate as I really like his approach. But thanks for the suggestion. And, indeed, are there specific kinds of topics that you think would be most interesting to hear more about?
mainstream economists haven't been able to predict the 2008 recession because most of them are Keynesians. There are economists who predicted the crash in sense that they saw the perversion of incentives and knew something like that was going to happen. Nobody in the mainstream pays those people any attention except, maybe, to ridicule their small government ideas. I'm referring to the Austrian school of economics.
You obviously have no grounding in the history of economic thought. The vast number of economists working in financial institutions are not ideologues. They are econometrists, wedded to the needs of Finance, rather than social economics, or political economy. It's the lack of attention to those disciplines, that has ignored human nature. And we are paying the price of that. Market ideology was touted as a self organising system that could regulate it itself, without paying attention to the fact that markets are made up of people, who are tend to be more subjective than objective, and who can be captured by vice as well as virtue. Economic History is punctuated with conflicts between greed and wisdom. It is we who have not learned from the errors of our ancestors. Just because we have more tools, it does not remove the duty to use them wisely. And a short skip through economic thought just over the last hundred years illustrates that. Human folly never goes away. It must be constantly kept in the forefront of our minds, especially as the tool we use - capitalism - is double edged. It can kill as well as cure. And no-one in it is immune from folly. We all have our biases, but they are no substitute for thinking.
Type "mainstream economics" on google and search the wikipedia page. Read the first paragraph. Mainstream Economics *IS* Orthodox Economy by definition. That is literally the opposite of the Keynesians economy. The confusion you are doing here might be from the fact that we have now 16 years from the 2008 economics and perhaps you think that whatever happened in the last 16 years are the new mainstream?
@@danilolima9268 For how long must something be normal until it's considered mainstream? This keynessian crap has become normal for at least 16 years as you say or a lot longer, but transformed a bit during the 80s after the stagflation of the 70s. Definitions means nothing when they fail to describe reality.
I think Krugman is wrong about government debt. When you borrow, you borrow from future generations. Easy to see, who eventually pays. Krugman has an agenda. He wants to argue that debt is innocuous.
@@willnitschke of course, but krugman is referring to government debt, that's why he advocates deficit spending as far less harmful than argued by the neo-classical.
@@user-wr4yl7tx3w Government debt is closer to buying that Ferrari than constructive investment, though. If government debt was productive, GDP would be outpacing debt as productive investments are profitable. What we see in the real world, is the exact opposite. As for Krugman, he is usually wrong about everything, like how inflation wasn't going to be a problem ever again.
I'm going to buy it; I'll let you know. (I'm a fan of Keen, Kelton, Mosler, etc., in explaining the mechanics of money, though the theory of how and what to do with this new money is a whole other subject.)
The equity market maniacal view of perpetual growth (an alternative of "greater fool theory") are insane. Equity markets and share trading are based on insane logic.
The problem begins fundamentally with the lack of definition of money as a measure of value. This gives rise to the prectice of utter absurdities such as ineterest. Financial instability is a certainty under money's misrepresentation. Adopting sound systems science would be very helpful. Without a well defined unit of value, all exchange becomes utterly flawed. Mind you that the centimeter or the kilogram need not to be backed by power. They are precise.
Interest can exist without money, it's just not as precise. A well defined unit of value is still not a universal unit of value, as grams and meters are.
I haven't yet read the book but can predict that in it William Nordhaus' work will be absolutely excoriated. Keen appears to harbour an intense resentment towards Nordhaus, possibly motivated in part by the latter's undoubtedly undeserved Nobel Prize in economics. And I have much sympathy for Keen's disgust at this award: Nobel prizes in economics have generally been awarded, not to those whose work objectively enhances our understanding of money and trade, but rather to those whose work endorses existing economic orthodoxies.
I don't want to criticize Keen for he writes simply, and Oli explains simply as well. But most of it can be explained in simpler ways without complicated and boring tables, e.g. if people borrow to speculate on Nvidia and banks are willing to lend to earn more money, then the risk of default is high (it peaks at "Minsky moment") and a chain of defaults, staring with a few bank runs, leads to panic. Since you don't whether your bank will be next (i.e. imperfect info), you rush to withdraw your funds as well, and it spirals down. Most people (economists included) have given up on neoclassical economics over the last two decades; they only appear in useless textbooks and journals. Practical men are not slaves of defunct economists (as Keynes would have it); instead, it is the other way around. Neoclassical economics fails on many counts: equilibrium, cultural desert, lack of political considerations, and absence of institutions. Most developing countries are more keen on the alternative state-led East Asian model.
Yeah, I do get the sense that Keen (and therefore me in this video too!) is pushing at an open door in terms of critiquing neoclassical economics. But, it's interesting that it is still being taught, unless, of course, it is explicitly being taught as a historical, first approximation that is now superseded. I'm kind of starting to see it like Newton's laws compared to General Relativity (although neoclassical economics may well be more wrong than Newton's laws 🙂 ) The other problem is that politicians and influential capitalists will pick and promote the economics that suits them, rather than the economics that most in the field consider to be the most accurate. So, there is also a contest of narratives and analogies to capture the political minds of voters. And I do not think that economists have yet found the right ways to talk about the latest ideas in economics.
whoa, finally someone who talks about energy and economics . I have stated in other economic blogs that this simple posit - Resources + Energy = Utility which breaks down to waste, ie landfill and heat .* Arthur C Clark ( Sci Fi writer ) I beleive stated that heat is the final waste product that civilizations will have to deal with, its the fundametal limit to all work. * give your daughter $10 to buy some landfill from the shopping mall.
Hi, I think we have to be careful not to see prediction as an all or nothing concept. Most things we care about have some chaotic aspects, but just like with the weather, we get huge benefits from making reasonable predictions of what might happen, even if these predictions are really a range of scenarios with percentage probabilities. And, different timescales have different trends that dominate, so sometimes we can forecast likely long term trends (e.g. climate change) even when precise shorter term details are impossible to predict. I actually made a video about the rational limits to prediction: th-cam.com/video/3JCBugtM5Pk/w-d-xo.html Regarding predictions of economics, my understanding is that the key difference between the kind of view Keen takes and the more traditional view, is whether or not crises are seen to be triggered by external shocks to the system, or whether they are considered to be self-generating from internal dynamics (which is Keen's view).
The reason for the crash was not the amount of debt but the lending of money to people who could not service the interest AND the banks had created assets on a humongous scale which bundled these loans with other perfectly or reasonably perfectly good loans so no one knew what anything was really worth. The insolvency of Lehman brothers demonstrated that the value of any asset is determined by supply and demand. Lehman had to sell no one wanted to buy. Value negligible. In any market the value of an asset is determined by reference to what a similar asset is selling for. Result: huge quantities of debt on bank balance sheets now of negligible value and a credit contraction destroys the real economy. All explainable by classical economics and criminal psychology.
Or, nobody should talk up economics as a science, as in a reasonable description of objective truth. Obviously economics is a description of "ones" preferred power structure in a population. Hayek acolytes want rule by delightful techbro queen bees like Russian oligarchs. Keynesians prefers democratic oversight, rule of law etc.
What is so hard to understand concerning Adam Smith's hypothesis which is in a nutshell: an open market is the position when it can resist any monopolistic forces (government, corporations, trade associations, privately-owned businesses, unions or guilds) based on worker ownership of the entire means of production. Those concentrations of Power are the eternal human problem. The supply of money can only increase when payment for exports is made, the reverse for imports. The internal value of the currency may fluctuate, but it is mostly influenced by trade with off-shore markets. Banks become mere depositories, however depositors decide what proportion of their funds can be used for bank-organised financing. This is not rocket surgery. The quality of the workers decides the sophistication of the wares and therefore their value: so the main career trajectory is becoming good enough to be invited in as a part-owner and operator in a larger enterprise. Remaining as a mere worker for life very unusual. Wages are determined as a share of each sale, prices by the market. What boofhead Marx couldn't wrap his spoiled mind around.
Hi, my take on this is that the perspective on the economy that you've just outlined is a really good first approximation. But, it is not actually correct enough to capture what really happens in a 21st century political economy. We need to move to a more accurate, second approximation because otherwise the errors in the simpler, first approximation are leading us to oversimplify our models of the economy which leads on to us making some bad policy choices.
Hi @peterclark6290, I saw briefly your comment that you thought YT was blocking your reply. I don't know why that might be happening, but it certainly isn't me!!
@@Go-Meta No, I hadn't blamed you in the slightest. They've put me on some register so all my stuff gets processed. I've narrowed it down to any mention of my Twitter acct or my website on that topic. Cheers.
Lots of smart people in economics and finance predicted the housing crisis. Anyone who was paying attention and had a brain, actually. All the "no money down" and bad loan issuance by government proxies was not exactly hard to see. However, what has that got to do with neo-classical economics? The Fed is full of Keynesian's who never seem to be able predict anything and have a little to no understanding of inflation dynamics. However, it should also be understood that Keynesians are not there to predict what the economy will do next. They're there to rationalise government largess. To paraphrase the head of the Fed, "We are navigating by the stars on a cloudy night". Which is a poetic way of saying we have no clue what we're doing.
Yeah - the term "circular economy" really means "more cyclical use of resources in our economy", because, as you're saying, it clearly can't be about 'circular' use of energy in some kind of perpetual motion economy. But the term 'circular' should be understood in opposition to the 'linear' economy that we have at the moment where almost all resources used in production goes through a linear process: dig up resources -> make something in factory -> sell in shop -> use -> dispose -> bury or burn The goal of circular economy is to get as much as possible of the material resource going around in a cycle so that we don't need to dig up as much and we don't need to bury or burn so much. So, in some ways it's just a subtle update/re-branding of sustainability. But sure, just like the water cycle, or carbon cycle of the biosphere, a resource cycle for our economy will always require energy to do the work to make it happen - and it will never be a 100% closed cycle. Otherwise it would indeed break the Second Law of Thermodynamics! (also, minor detail, but I'm not sure if I've seen Steve Keen use the term, so that really was my personal wrap up of the context of the video rather than me saying that Keen uses that specific term)
@@someonenotnoone Money is accounting. Need either human or computing accounting techniques using math to legitimize and keep track. Thus money is Math. Good money is good math.
@@someonenotnoone youve heard the term "your money is no good here" right? To say money is a promise diminishes your true understanding of what money fundamentally is.
@@mrzack888 "youve heard the term "your money is no good here" right? " ... yeah that lines up *perfectly* with *your promises aren't worth anything.* You're calling money math. I think "a promise" is a *much* better description.
I don't know that book, but I've taken a look and added it to my (all too long!) list of books that I'd like to read. So, thanks for the tip! (obvs unsure if I'll actually have time to review it though 🙂)
What is the Net Domestic Product? What has happened to the Depreciation of durable consumer goods since Sputnik. How does planned obsolescence affect that Depreciation? How much have American consumers lost on the depreciation of automobiles since Sputnik?
I think the biggest loser of the disposable / obsolescence based consumer economy has been the environment. So much energy and material resource used to make things that don't last. Many of the consumers themselves maybe work in the factories or shops or marketing firms that keep the whole hamster wheel spinning in faster and larger circles. Maybe not the best use of human ingenuity!
@@Go-Meta What has Keen said about mandatory accounting in the schools. Adam Smith wrote "read, write and ACCOUNT" multiple times. He used the word 'education' Eighty Times. What would mandatory accounting in the schools since Sputnik have done to the economy by now?
Neoclassical economics has its shortcomings, no doubt about it. It is equally true that in some fields of neoclassical economic theory this seems to be caused by the adherence to old dogmas due to ideology and apologetics. But the method of neoclassical theory is sound. The still presented neocl. textbook theory of money and banking is actually crap though, right. The Bank of England was the first central bank to admit that. So is the theory of saving and investment. But most modern economists and the central banks adhere to some form of „consensus“ postkeynesian macroeconomics anyway. Keen‘s crusade against neoclassicism is a kind of overshooting. There is no raionale in condemning neoclassicism as a whole. Just ask him what his „neoricardian“ or neo-marxist theory of monopoly exactly looks like. Its futile. There is no. And that continuous in almost all branches of economic theory. If there would exist a sound alternative economic theory on Ricardian or Marxian lines it would be mainstream for decades, I think. But there is no. Economic theory for the time being i s Neoclassicism and Keynesianism. Only here and there and covering narrow parts of economics you have alternative approaches worth speaking of and Neoricardianism is one of them.
When a bank lends money it creates it temporarily, until the end of the day, when it has to borrow from somewhere to cover the debt. How is this bank creating money? The Reserve Bank of New Zealand operates a "EOD Square Off" policy - all banks in NZ must finish every business day at zero balance between assets and liabilities. They can borrow the difference from another bank, or as a final resort the RBNZ, which lends the bank money at a rate of interest called the Official Cash Rate.
Yeah, but I think you're missing one detail here: the new $1000 debt asset (in the example) means that the bank in my example would have zero "EOD Square Off" so would not need to borrow any money from the central bank as its assets do cover all of its liabilities. As far as I know, the EOD Square Off comes into play when banks move money between each other when they don't have enough liquid assets (e.g. central bank reserves) to be able to fulfil the interbank transfer completely on a given day. But, this is to do with liquidity, not solvency. The private bank in my example would stay solvent even if Jane transferred all of her money to another bank (or paid someone at another bank), because the bank would still have a good ratio between its overall assets and liabilities. But, to remain liquid it would maybe have to borrow money in the short term (e.g. from central bank) until it can sell its debt asset (which may take a little time - but would cover the borrowed money). In the real world, because transfers happen in both directions between banks, many of them will cancel out and the EOD requirement is (as far as I know), just a way to make sure that a stable point of accounting is taken at the end of each day that nets out who owes who and therefore helps the central bank keep track of who is at risk of being illiquid and, indeed, if any of the banks are at risk of being insolvent. ..... at least that is my understanding! ... and these details were too much to include in this video which was too long already. 🙂
@@Go-Meta OK makes sense, and you did include a proviso about technicalities around central banks. I appreciate your prompt reply. My other question which has nothing to do with what you put in your video is - what is the point of the gold reserves in the Bank of England, Fort Knox etc now we don't have a gold standard? If it's not backing a currency why not get rid of it?
@@curtisnixon5313 Along with bonds, works of art etc. Gold is an asset class that can be sold to effect an outcome on the money market- typically to buy back the country's own currency as a measure to support its exchange value. A true 'Gold Standard' implies convertibility on demand of currency into Gold at a pre-determined rate.
Classic ideas like supply and demand not actually working in economics is real, but it’s not that it doesn’t work. Just look at videos discussing the spoofing of gold. Some foreign central banks maybe does future contracts and then cancels at the last minute. Did you know the bank of international settlements I think have some gold component or may help manage gold. If central banks are privately owned and if the bank of international settlements is privately owned and actually had Englands monarch as a shareholder up to the year 2000 September 11 it’s like of course if you’re a billionaire and want to continue using fiat currency along with your government you may simply manage demand or supply. If you’re a central bank and can have off sheet liabilities like normal banks and it’s not reported and if you’re a central bank and you literally create new currency out of thin air what’s stopping them from buying or selling future options to manage price? Yes individuals or companies would go bankrupt doing that but if you’re a central bank you just keep creating new Monopoly money for your game or task. Also if the federal reserve is never audited no one will ever know,
'...real Sciences where such a significant empirical failure would hasten a paradigm shift as it would become untenable to ignore the gap between the dominant theory and reality." You mean like when cosmologists invented dark matter and dark energy because their calculations were way off the theoretical numbers?
This sounds like MMT, which is just the same insane Keynesian economics we’ve disastrously experienced for the last half century, but on crack….with a more overt appeal to authoritarians. (Update) yup, I was right…it’s just crackhead MMT.
@ likewise to you my friend. The difference is that I can explain Keynesianism to Keynesians and they agree I understand their position, but they can’t explain my position.
@@ariclocke4566 You didn't misunderstand anything. It's not clear to me given the contents of the above video if Keen is an MMT ideologist or not. The review definitely put me off bothering reading more of Keen's ideas. What is clear, is Keen has borrowed a lot of talking points from MMT.
Yes indeed! It's perfectly understandable that an earlier generation had to make progress by using linear models that were easier to understand and do the maths for. But that doesn't mean that those first approximations are correct or where we should stop our investigations. Clearly we need to go beyond these first approximations in so many different fields.
No-one serious is ever suggesting that money can be printed at will. Steve Keen doesn't say this (as far as I know), and Modern Monetary Theory (MMT) certainly doesn't say this. The point of theories like MMT is 'simply' that we need to correctly understand and model money if we want to understand its behaviour better. And, when we do that, it becomes clear that continual, reasonable levels of deficit spending are a net benefit to the economy as a whole. Too much printing of money will lead to inflationary pressures, but inflation is also a lot about expectations and trust in the government. So, Mugabe got a whole bunch of things wrong that led to hyperinflation, including stoking price rises through the changes made to their farming sector. If I recall Zimbabwe went from a net exporter of food to a net importer of food!! THAT is going go have a major inflationary effect. It wouldn't surprise me if the excessive printing of money followed rather than led the initial rise in inflation, but I do not know the stats.
Reagan and Thatcher didn’t actually depend on the math. They depended on the philosophy. The math is just an attempt to explain why supply and demand works which they believed through observation. That’s at the heart of their brand of conservatism. They’d have no problem with the math being improved. I believe the only real necessity is that there is no free lunch. That seems to be the problem with so much monetary theory. Some genius throws out a ton of math, says we can get a free lunch, and everyone agrees until the math is disproven or a “new” complication arrives. Well, you can all keep your math if you think it’s more important than reality. The math is meaningless without the words. Life is a word problem, and math is just a tool. If your tool says to over tax, over spend, and never save, your tool is out of whack. You are simply a navigator. Argue all you want, but your position is what it is. No calculations will actually make you go faster, they can only suggest changes in course that will have their effects.
People exist in nature, trading freely, without economics. Economics is the facade that a few men can be more fair than freedom by managing all resources. Which only results in grand theft, involuntary servitude, and environmental destruction: the fruits of greed.
@@willnitschke well, it is greed at the top, rooted in usury (money for nothing). When you're at the top, envy is not the driving force. The goal is more control+power+security to guard against any losses, and increase what one has .. because there is no other challenge left in life. When a king has conquered to the furthest shore, he wants whatever is on the other side of the ocean. Envy is probably at the level of idolatry, which are the ones utilizing usury to acquire what they cannot yet afford, which is greed. Envy is really just pre-greed, isn't it? Foreplay.
@@willnitschke maybe we could say envy is a motive to have what you see others with, and greed is the action of acquiring more than you reasonably require for healthy sustenance.
@@chadkline4268 *well, it is greed at the top, rooted in usury (money for nothing).* Nope, it's envy not greed. Usury means charging "excessively" for money, not giving it away for free. 😅 Let me explain it to you this way. A Steve Job's type character invents a better mouse trap and he ends up benefiting millions of people. People show their appreciation by purchasing from this guy. The guy becomes a billionaire. Which I'm personally OK with, because he did it fairly and squarely and he did help millions of people after all. However, a vast number of people will describe this guy as 'greedy' because he's so wealthy. The problem there is not greed, but envy.
@@willnitschke Ok, I take your smiley as a sign of humor 👍 but if you want to understand anything in this world, you always must start at the beginning with fundamentals. If you want to discuss calculus, first we must have essential understandings in basic math, then algebra, geometry, and trigonometry. Only then can we discuss calculus. And the Steve Jobs analogy is really jumping far off into realms that have broken foundations and lack in truth+freedom+integrity. Before I could discuss any of these topics, we would need agreement upon natural law, which as far as the USA is concerned, begins with John Locke and the Declaration of Independence. I mean, I can't whack a smartphone with a sledgehammer and then discuss why the calculator app won't work. If we really care to strive for meaning and honest + practical understanding, we must always begin at the root, and build upon it with integrity to see where things begin to go wrong. Most all things in this world, or material existence for that matter, have a pyramidal structure. Eg: /Electronics+Tech\ /Industry+Transport\ /Mining+Drilling\ / Agrarianism \ / Land + Water \ That's the general idea. We can't increase the top without increasing the bottom, and the bottom can't increase. But we'll die trying. And it applies to not only stages in technology, but also govt/corp structures, law, science, society, etc. In my view, so many things are broken beneath what we see superficially that there is no option left at this time except total global domination+enslavement of the entire planet by any and all means necessary. We can't fix anything properly. We are out on a plank, and it's cracking near the edge of the ship, so we can't walk backwards or forwards at this stage. If we walk backwards, we fall into sharks with a beam of wood, and if we walk forwards, we fall over the end of the plank into the sharks. There's revolution at one end, and enslavement at the other. But both end up with sharks trying to attack or feed off us. The powers are promising endless growth with supercities and meal worms, crickets and locusts for a food supply; and on the other end, I promote disconnecting from the Insanity with sustainable land, Hydrino power, and natural law. Take over the food supply. With the means of defending it. I will not agree that the current powers on earth are sane or a benefit to humanity or earth. Lone individual geniuses are responsible for most all advancements, but govt+financial powers take the credit. I may be delusional for having any hope. I don't see much intelligence with the necessary knowledge to favor any direction decidedly. I think I just have to settle with the view that this is a clown world, that it's impossible to benefit much of anything, and mankind has been too dull for too long, and his future will be under the total control and domination of a few men, within a very artificial environment, under total mind control, and no chance for spiritual knowledge or attainments. Just millennia of ever increasing servitude with maybe some slowly added dystopian activities for the pleasure of those in control. Maybe like the Logan's Run movie. Man will essentially be reduced to the life of farm animals and pets. Zero autonomy. Really, for anyone to discuss these things, they need heaps of knowledge in philosophy, law, chemistry, physics, history, spiritually, English grammar, engineering, various technologies, earth resources, waste, populations, factors of mental+physical health, .. all the essential ingredients that comprise life on earth and human society. And then even if many such people agreed upon a positive sustainable plan, few would understand the reasons for it, and powers would be too selfish to agree to it, and ?? The conclusion would be that you can only let dullness+evil run their course, and if able, understand the causes of this existence and ensure an alternate reality at death of the body. Because whatever conditions bound you here, will bind again if they remain. Not that you wanted to hear all this.
A BIG NATION (THE US/ EU/ CHINA) needs a vital internal service economy, beside HIGHLY COMPETITIVE INTERNATIONAL INDUSTRIES AND MARKETS. The US has developed strong iNTERNATIONALS, FEASTING ON THE WESTERN WORLD, but the national US economy is completely hollowed out. The EU nations have vital service economies, but has failed to realize industries competitive with the US INTERNATIONALS. China has a vital national service economy and its INTERNATIONAL INDUSTROES ARE HIGHLY COMPETITIVE, STRONGLY REDUCING PRICES ON WORLD SCALE. THE MONOPOLIST US INTERNATIONALS WILL COLLAPSE AND AS A CONSEQUENCE THE US DOLLAR/ DEBT LEVELS. THE DIVIDED EU CANNOT COMPETE, BUT WILL HAVE RELATIVE WEALTHY SERVICE ECONOMIES. SO, THE EU MUST NOT PUMP CAPITAL INTO PROTECTIONISM OR SUBSIDIZING INDUSTRY, BUT IN THE SOCIAL WELFARE SYSTEM.
I'm interested in reading the book. However, I am inclined, based on works I've read by Ludwig Von Mises, Milton Friedman, Thomas Sowell and having studied applied Mathematics and physics as my undergrad, to say that free market capitalism aligns with thermal physics and statistical mechanics. It sounds like Keen is putting a 'limit' on the amount of configurations we can get out of atoms (or perhaps it was the other author you mentioned), but the fact is, no one really knows how many configurations particles can be in. In fact, we're not even sure if this universe is a closed or open system. But by focusing humanity on single issues like climate change we limit the amount of configurations that can be at our disposal to fix the problem. Free markets open humanity's choices. And increasing optionality is increasing the odds of finding many solutions. Resources are only resources because humans have found them to be, they aren't intrinsically resources. This is clearly evident in the history of oil and even most renewable energy technologies
Really? Dig up up. Milton Friedman, and tell him that. He'd laugh in your face. Why? As a monetarist, Friedman was an ideologue, and unashamedly so. He thought the financiers were in no need of being regulated. And guess what? That idea was wrong. It was as wrong as Black and Scholes, who believed they had remove risk from investing. Both stupid ideas, because they ignored human nature, with its capacity for folly and greed. These two Masters of the Universe, created the folly that led to 2008, because nobody questioned what they said was true, because they wanted it to be true. There is a saying that one should hold one's ideas lightly, and that means you should not be wedded to them, or treat them as unassailable. You should be open to questioning them. We didn't question these experts, and we're paying the price. And really, Kenysianism?? Really? It wasn't Kenysianism that deindustrialised developed nations in order to grow their profit. It wasn't Kenysianism that created a global financial system reliant on unregulated offshore money markets to finance it. It wasn't Kenysianism that made people believe they had beaten risk. That was market ideology, which in practice did not have many countermeasures against the greed or folly of people. Indeed, it argued for them to be removed. That's not Kenysianism. That's a bunch of people high on there on supply. There will be always people who think rules don't or shouldn't apply to them. And the rest of us not hooked to them should be wary of them. And regulate where a need has been demonstrated for it. They cannot be trusted to do the right thing each and every time, because the negative incentives persist. If every country had been like Iceland, then I would be happier, as their response was not to let the greedy, lying thieves walk away with bonuses, and load up their taxpayers with debt. They jailed their greedy bankers, and stopped any profiteering. And that was not Kenysianism. That was commonsense.
@@CuriousCrow-mp4cx We've been living in a Keynesian world since the end of World War II. A world that believes you can borrow money to get yourself out of debt.
I have a theory I’ve been working on called Value Variance theory. It’s based on fundamental objective values found in human societies but also in nature, there are 3 fundamental values that are traded consistently for all living organisms. May not be the full picture but I believe it’s the missing piece connecting our economic models to true objectives underlying realities.
AND WHERE DOES ALL THE FINANCIAL SPECULATION YOU ALL CALL "STOCK MARKETS" FIT EXACTLY IN THIS BRILLIANT MODEL BASED ON WORK VALUE ? I CALL IT PARASITIC GROSS UNWORTHY APPROPRIATION OF ANOTHER ONE'S RIGHTFUL EARNINGS.
I'm guessing you are referring to which year the global financial crisis started. Even though the main impacts happened in 2008, I think quite a few people consider the 'start' to have happened in 2007: en.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis But, yeah, lots of people refer to it as the 2008 financial crisis.
Interesting video. Keep in mind that government has nothing that its doesn't first Take from the present or the future. Austrian school economics has many more answers to what we actually see in reality than Keynesian ever has.
Double entry accounting has no place in modern world. It’s an ancient system that worked for the ancient world only but we have held on to the ridiculous system because those that discovered how to game this also had the power therefore to continue their Ponzi scheme
Firstly no banks and no taxes. The only think of real value and not relative to anything else is Life in other words time. Using technology to calculate the price of everything based on the time input. The ability to trade your time from your account for what you can afford to . Your time spent on creating or services are transferred to your ledger to use and acquire goods and services. All resources are priced only insofar as the time expenditure of making it available. No other value added which will enable whom ever has the skills to do something useful with a resource to acquire it by only paying for the hours spent to make it available. Only time having value will make everything equitable and all that will make the output of time the product so to speak desirable and in demand is either need as in food water etc or because of the talents and skill applied that added desirability of beauty or pleasure or usefulness. Land is allocated according to it’s use. Only non productive land is used for building on not large cities on riverbanks that is obviously more suitable for agriculture. At birth you are allocated the amount of time as per the life expectancy in your location. Children learn from young age how to add time through service and labour, while their parents authorises payment on their behalf until the age of 18. Etc etc
@@vivianoosthuizen8990 That bizarre babbling has nothing to do with a replacement for double-entry bookkeeping, which BTW, is essential to the modern world, now, more than ever.
Ugh…just wasted 20 minutes listening to all this gobblygook.. Commodities are the only true currency and any time you deviant from them everything eventually turns to shit. Which is what’s happening to all fiat currencies right now.
Well, I totally understand the attraction to the "money = commodity" perspective, but I think the history of the last 100 years or so, plus developing economic theory gives very strong reasons to see this "money = commodity" view as just a useful first approximation that is actually not quite correct. Indeed, I think the so called 'marginal revolution' from a long time ago established the subjective nature of the value of things, including commodities, so there is no item that can be seen as having a 'hard' value upon which currencies could be based.
I think you are right about the design that they would have to use to implement lifetime learning on a robot that doesn't have the physical size or energy resources to run the on-going training compute. But remember that already our use of inference compute for tools like ChatGPT is via a link to a remote computer (for most people anyway!) So, the problem of moving to lifetime learning for millions of devices is not so much about where that compute is happening (it probably will happen remote from the device as you say), the real problem is the cost and energy consumption of this remote lifetime learning compute that will be more like the expensive training runs rather than the relatively cheap inference compute used for day-to-day use of, say, ChatGPT.
Take a look at the estimates for the current energy costs of mining and maintaining Bitcoin, and the projections for the future, as the "proof of work" cost of one Bitcoin escalates. Then think again.
Bitcoin is fascinating, but I don't think it is the answer. I'm hoping to do another video about Bitcoin soon, because it is so interesting. But, I've already done a video about why I think Bitcoin cannot be the long term (100+ years) solution: th-cam.com/video/c9wTNu5ToQU/w-d-xo.html
@@colin_e The mining is a free market and every miner puts in the work voluntarely. It doesn´t require all that energy to create a new bitcoin as the algorithm is self-correcting according to the amount of hash-rate they put out (as I understand it).
To sum this up, straw man economists as all "neo classical" (even though most of who work for government are Keynesians), babble some stupid about double-entry book keeping, as if this is some great insight. Pretend the economics community are confused by how fractional reserve banking works. Steal some stupid ideas from MMT and re-package them... Hopefully the book is not as dumb as you make it sound, but given your review, I'm not inclined to waste my time on it.
Steve Keen has pointed out that I actually got one thing wrong in the video 🤦♂It was in fact Keen who came up with the Godley Tables, and he chose to name them after Wynne Godley because of how they were influenced by Godley's work. In the video I mistakenly attribute them to Godley. So many hours writing and checking the script, but still some things slip through!
I’d see that as an honest slip in source attribution, as empiricism holds up…😅
Keen is one of many (!) who more or less lays bare a solid epistemological and holistic understanding - that barely has a place in general education or the public narrative.
I’d posit that history “rhymes” (thanks Chomsky, eh… I think…?). The period we’re in, has a parallel to the end of medieval times (Europe & colonies), where the dissonance between dogma and existential experience becomes its own dynamic.
Or, a smaller parallel like pre the Great War - these are early days.
Culturally, either modernity fades out - or it may be upheld through “life support”, meaning extreme use of power (energy, resources, imperative policy). Both paths are visible at this point, at least in my tiny and biased research.
Looking back, such paradigm shifts have taken a century or more - the full four generation cycle. Scientifically, we don’t have that time, and the outcomes are global this time around.
Ontologically, we’re slow as snails in a fast paced horror show. Or, slowly adapting to ever-ongoing changes (thanks, Hegel…).
How brave are we - in the (overlooked) dialectic of individuals and community…? Thanks for sharing this, at least that’s bravery to me.
_(After all my nonsense, least I can do is sub, and thank the almighty algo…😅)_
Preface Paradox
Paper isn't money. It's fraud.
I think the long term rhythms and rhymes of history are fascinating. I'm always curious about different takes on these ebbs and flows. But I also think we should always choose to believe in the possibility of our individual and societal agency to shift things in a better direction. We should learn about the tides, but know that we have oars and a rudder too!
Thanks for the comment 👍
Hahaha! What a complete IDIOT! Total brain death. Or a lousy criminal fraudster looking for a sekt to loot, if there exists anyone stupider than him. The worst economist since Karl Marx who claimed that the more something costs, the more is it worth. A question this clown can't answerr: Why not print $10 billion trillion and give a trillion to each human being, making everyone super rich!?
Economics is Philosophy masquerading as Science while giving Politicians an excuse for bad behavior.
Except the politicians never commit to any theory at all. They pick and choose. They are like someone picking up a dozen diet plans and choosing to follow whatever advice from whatever diet that lets them eat what they want when they want.
They are Keynesian’s only when there’s a downturn for example.
Climate Science is even worse.
Depends on which economics you're pointing to.
Economics is mathematics
@@bullet4707 Math is math. Economics is philosophy which we can examine using math.
It doesn’t matter which economic model you choose if they can be corrupted from within.
Which is exactly what caused the 2008 liquidity crisis.
So model the corruption too?
@@stumac869 in their mind if growth slows you lower the debt standards to increase the leverage. They forget to mention not everyone has access to a printing press. But the masses eat that debt up so it’s a two way street that locks logical buyers out of the market.
@@nathanDrake-nd if you can think of a sustainable way to separate public finance from governments so it couldn’t be bastardized in 5000 page bills you’d be on the right track. The existing models all fail due to that flaw.
I am astonished how entertained I was by a video about economic theory
Wow, thanks, that's lovely to hear 🙏
@@Go-Meta Hahaha! Hello stupid guy, I was also LMAO! Like child watching a clown fail ridiculously with everything he tries. You could make a tour with this freak show.
My father recounts how the field of academic Engineering Control Theory was dominated by linear models until the mid 70s. This is when mini computers ( PDP8 etc ) became available in university departments and polynomial calculations, modelling,min / max and Monte Carlo simulation became realistically possible, and new more complex models could be posited.
I wonder, how much economic theory faced the same, and arguable far more complex issue with the polynomial variables far greater in number, unpredictability and 'economic noise'
You have just gained a subscriber, a fabulous first ( for me ) video and review.
The economy is intrinsically impossible to model. That's because, unlike engineered systems, the economy is composed of self-aware, rational actors who not only respond to their environment but also understand your attempts to model them as well as you do.
@@tj92834 Hence why you only model the macroeconomic aggregates and the perturbations from long-term movements. Don't confuse the neoclassical neurosis of seeking equilibrium with modelling macroeconomic states and flows in general. To disregard their statistical predictability borders on intellectual insincerity. Prof. Steve Keen's claim to fame is precisely in abandoning this neoclassical condition, producing instead a double-entry model of cash flows in the economy.
And Clive Granger got the Swdish government's central bank's prize in economics at the tax payers expense without any kind of connection at all to Alfred Nobel, in 2003. For simply pointing out that linear regression (a trivial highschool math equation that is the most advanced that macro idiot economists ever use) logically requires that the data is stationary, obviously. Something known since Gauss first formulated linear regression in the 1790s.
Stationary as in "regressing towards the mean", that data varies stochastically at a certain level. Data that trends infinitely like GDP, export incomes, stock prices, consumer prices, wages and neigh everything that is called "economic data" in a hyperinflating fiat fraud "planned" economy, cannot be used for linear regression. It's like dividing by zero. It says nothing about any correlation between the time series. So it turns out that MOST macro iditoic fake "research" ever done is worthless garbage already for that reason! Because economists are too uneducated an untalanted to deal with highschool math.
@@tj92834 I recommend Ludwig von MIses' Human Action. It describes what an economy consists of (the title is very revealing). It's an axiomatic logic that explains the real economy out there among the humans. The only numbers you find in his book are the page numbers. He uses logic and understanding.
The fraudulent always failing fraudulent "economists" since the Great Depression simply pick whatever numbers that are easy to find, such as stuff written down in bookkeeping. Then then calculate (wrongly most of the time) the average of ll the numbers they have found and procaim that this is "The Price" in the economy. Then they repeat with all numbers they by chance lazily find and calculate their average too. If they differ, they proclaim that "The Price" has inflated. As if there only existed one good with one price in an economy. A forest with a single tree. Rubbish in-garbage-out. Or why did you think that all central banks and other government dictated reculations and "stimulus" always fail so totally catastrophically with devastating consequences for all of society? Because their fake "theory" is a bad joke, and they are uneducated and very low-IQ. Seem incapable of ever understanding anything. Like Paul Krugman, hahaha!
The single most important phenomena in an economy is VALUE. Have you ever heard a macro idiot economist use that word? Not "economic activity" that generates those irrelevant numbers in the bookkeeping, but VALUE CREATION. Value is subjective and impossible for anyone to measure outside oneself. Values are moral, that's why good things are called "goods". Only each individual can make valuations and thus choices of alternative actions to achieve the creation of that which is better instead of that which is worse. A government bureacrat with numbers and a flawed fake "theory" cannot make any such choices. This is immediately self-evident to any sentient being, the distinction between what is subjective and what is objective.
Economic theory can predict the past with accuracy but rarely the future.
astonishing!
Then your naive if you think anyone can predict the future. Only God knows the future. as murray rothbard used to say
Thanks for highlighting Steve's fearless, tireless & comprehensive scientific refutation of neo classical economics & the "discipline" lol as a whole, by trying to keep them honesty to economic history, models & actual historic data - with his open source approach {Minsky software model}. He & a handful of others {Kate Raworth, Nate Hagens & Gary's Economics etc} -but more each yr are putting economics of a better foundation to deal with the coming & current meta crisis.
Im studying his Rebel Economics Challenge course now & bloody glad i signed up- don't understand the maths yet, but that our models we make species wide economic decisions on should at least include the reality of energy & environment costs in the equations beggars belief that they haven't been for nearly 100yrs.
Glad you enjoyed the video👍
It is interesting that neoclassical economics has remained so dominant for so long, but I think this is partly because for a long time linear maths was our best way to understand many phenomena and it's not a terrible first approximation - but it is clearly not good enough. In contrast, dynamical systems thinking is much more correct, but much harder to work with so it's taking us a long time to upgrade the mainstream, dominant paradigm. But I have little doubt it will change, we just need to speed up the process 🙂
1:37 Neoclassical economics depends on honest info. If S and P, Moody's and Fitch all gave faked ratkngs, and weren't punished, is this really a failure of neoclassical economics, either positively or normatively, or a failure of the judicial system?
Arguably the failure here of the neoclassical perspective is to model things as if people are going to have the information, when we know that it is much more likely that they will not! 🙂
@@Go-Meta They would have had the info if too big to fail didn't mean too big to jail. We're being set up for another round of overinvestment in real estate, partly based on a repeat of all that, and the usual Schedule A tax deductions for Property taxes, interest on mortgage, and state and lical taxes, all of which is socialism for the rich in the name of the middle class and at the expense ofxthe middle class and poor. No wonder the working masses are voting for Trump and the parasites at the top of the food chain support Harris with brainwashed support by the lumpenproletariat.
@@Go-Metayeah sure, but how are you going to model this case?
Some economic pundits warned of consumer debt in the early 2000s; however, the bubble kept growing. In about 2005, I heard a radio ad for an interest-only mortgage that assumed housing prices would continue to rise, creating equity. While I tend to lean toward neoclassical economics, it does not account for the irrational gluttony of the consumer, and I am mystified by economists ignoring this behavior.
Yeah, looking back at what was going on it's amazing that alarm bells weren't going off much louder at the time. But the people selling the debt had every incentive to keep on doing it until the music stopped.
I kind of think of neoclassical economics as a first approximation to what is going on. A kind of economics that feels intuitive to understand and that people could do with pens and paper, but now, with computers and decades more understanding of dynamical systems thinking there really is no excuse to stick with these oversimplifications.
It may be that the hardest task for getting to the next level of modelling the economy is to come up with the analogies and explanations that feel just at intuitively correct as the familiar narratives of neoclassical economics.
I would say it was a rational gluttony of speculators. Interest rates under Greenspan allowed borrowing at real interest rates close to zero so who would be afraid to borrow and invest. Hundreds of thousands of new houses were bought and flipped by speculators who would never have to make a mortgage payment. The Federal Reserve should have had the duty to choke off that speculation by raising interest rates high enough.
You say irrational gluttony, I say human nature being biased towards believing more is automatically better than less in everything. Yet as hairless apes, we can be captured by unquestioned assumptions, leading to negative consequences. One big question mainstream economics fails to consider is the distribution of resources. And it is a multidimensional issue that should have been at the heart of the discipline, but instead the Protestant Work Ethic veiled issues of fairness and desert, and escaped deep analysis. We know this because the original name of the discipline was Political Economy, and questions of distribution was, and still is, central to this perspective. Instead, the drive for Economics to be accepted as a natural science, basically avoided questioning distribution as a key function of an economy.
It's not that "economists" ignore it. it's that keynesians ignore it.
If you don't know what a Keynseian is just picture Soviet economic structure.
Academia was taken over by Marxists so naturally Keynsians are the only "economists" you hear from in the media.
Hah! “irrational gluttony” = “American dream”
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Interesting!
Thank you for the awesome review. I still don't believe that the Global Financial Crisis wasn't big enough for economists to predict, and by fact, no one held responsible for that. But humanity needs a way better economic model than Keynesian/MMT infinite money printing, and I'm glad that there are smart people who i looking for that.
You really don't understand the discussion at all. It's not about Kenysianism, MMT, or such labels. It's about how governments actually use the money they themselves create, and questioning what they do with it. MMT is not a prescriptive model. It's a descriptive one, and so is limited to describing how governments via central banks create money. That's it. What they do with that money, and should they being doing that with it, is a question MMT has never addressed. Conflating what is, with what ought to be is a logical error. So, forget about MMT. Rather ask yourself whether the State should be investing in its own economy, and then explain your answer. Then you can contribute something to the debate, instead of parroting someone else's undigested ideology.
@@CuriousCrow-mp4cx oh...put a cork in it. MMT is "Magic Money Tree"
@@CuriousCrow-mp4cx I bet you are right-I might not understand the discussion that deep. But the question you asked, I already asked myself. And I haven't come up with an answer better than yes, it should, but just because everyone else is doing the same thing. And in the case of refusing to do that, you are just falling off.
Alexander Hamilton taught me well that it's protectionism, not a free market that drives the economy. And protectionism is impossible without the State's intervention.
I'm glad I studied Economics, I have studied and learnt so much about the world and yes, we need a better system
Yep the trickle down effect works really well and the idea of continuous growth is so obvious as to be an axiom in mathematical terms
What's the alternative because there's no doubt we're all much wealthier as a result and world poverty has decreased. In contrast where hard line socialism/communism has been imposed people have either starved to death and/or lived in absolute poverty.
I often said only oligarch piss trickles down.
@@stumac869I don't know, maybe return to the capitalism of the 1950s, before Reagan changed our economic policy to "billionaires p1ss on our heads and tell us it's raining (trickling down)"?
/s
@@stumac869 Unfortunately I agree, I don't have an alternative other than a benevolent dictator but they are hard to find. It really comes down to some basics of humanity, greed, looking after no1, limited empathy and that a sizable percentage dont have the where with all to look after themselves and hence vote for the greater good.
Oooooo - stop it - I like it!
You have left me wallowing in an ecstasy of confirmation bias. Really glad I stumbled on your channel. It is only since retirement that I have taken an interest in economics and after a lifetime of strongly suspecting that there was something rotten in the state of world economics - it turns out I was right. Accordingly I have provisionally reinstated my original intention of living forever and ruling the universe...
Since WW2 the world has been burdened by an economic theocracy so much more malign than is commonly recognised. Magnificent theoretician's castles in the air have been constructed by Hayek, Friedman et al, entirely without foundation in the material world of finite resources, irrational actors, corruption/greed, remorseless externalities etc. etc.
Neoliberal/free market/laissez faire/globalised capitalism and untrammelled consumerism may well be the primary cause of our civilisational collapse and, hilariously, this may prove the aphorism that 'the meek shall inherit the earth'. Those with the least will suffer the least and those who are so far up the civilisational pole that they have lost the knowledge and resourcefulness necessary for survival will succumb - you cannot eat, drink or breathe wealth.
Perhaps MIT's 2040 prediction needs wider consideration.
Actually you’re totally wrong, we don’t have capitalism anywhere on earth, the closest place was Hong Kong. Everywhere has mixed economies and the freer it is the wealthier and better it works. The whole system is messed up because it’s based on keynsianism and the ability of politicians to print money ad infinitum. Without Austrian economics we are going down a road to destruction for sure, but luckily we have bitcoin…..
@@tommyrich3155 Terms like capitalism, communism and socialism do tend to be thrown about a little too freely. Austrian/Chicago school economics is the road to serfdom - QED. The current state of the world economy is unquestionably messed up after 50 years or so of Austrian/Chicago school economics - Keynes hasn't had a look in since the immediate post-war period. There is no one settled economic model for all times and circumstances and we do stand in great need of fresh thinking to handle our new circumstances. Bitcoin smells strongly of Tulip mania.
USA and WEST bubble popping, (fenced in by speniding on nowt with no real return) However...there's a real world out there that works for a livin and will continue to do so, with or without Kabuki Theatre Incorporated.
Money is a promise of labor/energy that is energy/labour blind. A tree can only grow while the sunlight is shining. The power is dependent upon latitude and season. 16:30 There is a finite/limited supply of free energy!
The consumers value the dopamine of consumption.
That's an excellent summary. Thanks.
Thank you!
Definitely have to pick this book up. Thanks for the excellent overview.
We are highly intelligent people. We need to exude very regularly. And the English language if used with enough eloquence makes it all happen like magic.
Thank you and Steve Keen for explaining the ultimate solution to the climate crisis. I could only sense that accelerating consumption was our problem and feared that productivity was unstoppable before reaching a hard limit. Understanding is a massive step forward.
When I was a humble student in Math, I earned some money helping Economy student to understand their Math, learning some Economic concepts and theories in the process.
Little by little I understood that economy theorists were mining the Mathematics of the 19. Century but only the easy parts and became more and more skeptical about the current use of Mathematics in Economy..
Later on I specialized in Dynamik Systems, Chaos and Bifurcation Theory, Statistical Mechanics. These mathematical Branches are more appropriate when doing Economics.
That energy as a basis for economics is illustrated well by Frank Kapras 1956 movie " Our Mr Sun", which predicts when we run out of cheap fossil fuels we will return to the hard labour economy of the middle ages. Model that!
I just stumbled upon this channel and really enjoyed how different ideas are connected through a book review. I especially liked the references to thermodynamic free energy and complexity. Looking forward to watching more videos!
Well done.
I remember the stir that Limits to Growth created and I've been watching five decades for world economies to hit the wall. As time has passed, however, it seemed to my untrained eye as though growth wasn't conforming to predictions and the concept was all but forgotten. There is, of course, an entire industry of pundits, forecasters, analysts and crystal-ball gazers whose careers are fueled by predicting market vicissitudes, and bulls are more popular than bears. But it's tough to argue against the physics you describe. Maybe I just gave up too soon.
Can you please do a series on the Economics of Steve Keen. I would be very interested. I hope others will be too.
Steve Keen is on youtube himself if you're interested. You'll find a trove of great information there (@ProfSteveKeen)
Hi, I like the idea but my channel is trying to cover a broader scope of ideas, so it is more likely that I'll be doing a set of videos about general concepts in the economy (e.g. money, inflation, productivity, UBI, impacts of AI, etc) ... where I will then reference Steve Keen's work where appropriate as I really like his approach.
But thanks for the suggestion. And, indeed, are there specific kinds of topics that you think would be most interesting to hear more about?
@@Go-Meta Mainly Dynamic Systems approach for Economics and non classical / mainstream view points on the subject.
@@Go-Meta Another area is that is the potential role of the Government and Government Intervention.
@@Go-Meta Also what capitalist 2.0 or even post capitalist societies should be organised.
Brilliant overview,
Thank you
excellent, thank you
mainstream economists haven't been able to predict the 2008 recession because most of them are Keynesians. There are economists who predicted the crash in sense that they saw the perversion of incentives and knew something like that was going to happen. Nobody in the mainstream pays those people any attention except, maybe, to ridicule their small government ideas. I'm referring to the Austrian school of economics.
Totally agree, but this thinking is changing SLOWLY, bitcoiners know keynsianism is junk and there are a growing number of bitcoiners
You obviously have no grounding in the history of economic thought. The vast number of economists working in financial institutions are not ideologues. They are econometrists, wedded to the needs of Finance, rather than social economics, or political economy. It's the lack of attention to those disciplines, that has ignored human nature. And we are paying the price of that. Market ideology was touted as a self organising system that could regulate it itself, without paying attention to the fact that markets are made up of people, who are tend to be more subjective than objective, and who can be captured by vice as well as virtue. Economic History is punctuated with conflicts between greed and wisdom. It is we who have not learned from the errors of our ancestors. Just because we have more tools, it does not remove the duty to use them wisely. And a short skip through economic thought just over the last hundred years illustrates that. Human folly never goes away. It must be constantly kept in the forefront of our minds, especially as the tool we use - capitalism - is double edged. It can kill as well as cure. And no-one in it is immune from folly. We all have our biases, but they are no substitute for thinking.
@@CuriousCrow-mp4cxYou're literally arguing for Austrian economics.
Type "mainstream economics" on google and search the wikipedia page. Read the first paragraph.
Mainstream Economics *IS* Orthodox Economy by definition. That is literally the opposite of the Keynesians economy. The confusion you are doing here might be from the fact that we have now 16 years from the 2008 economics and perhaps you think that whatever happened in the last 16 years are the new mainstream?
@@danilolima9268 For how long must something be normal until it's considered mainstream? This keynessian crap has become normal for at least 16 years as you say or a lot longer, but transformed a bit during the 80s after the stagflation of the 70s. Definitions means nothing when they fail to describe reality.
I think Krugman is wrong about government debt. When you borrow, you borrow from future generations. Easy to see, who eventually pays. Krugman has an agenda. He wants to argue that debt is innocuous.
Depends on what type of debt. Going into debt on a good investment is not the same as going into debt to buy a Ferrari.
@@willnitschke of course, but krugman is referring to government debt, that's why he advocates deficit spending as far less harmful than argued by the neo-classical.
@@user-wr4yl7tx3w Government debt is closer to buying that Ferrari than constructive investment, though. If government debt was productive, GDP would be outpacing debt as productive investments are profitable. What we see in the real world, is the exact opposite. As for Krugman, he is usually wrong about everything, like how inflation wasn't going to be a problem ever again.
I'm going to buy it; I'll let you know. (I'm a fan of Keen, Kelton, Mosler, etc., in explaining the mechanics of money, though the theory of how and what to do with this new money is a whole other subject.)
Detective of money politics is following this very informative content cheers from VK3GFS and 73s from Frank from Melbourne Australia ❤
The equity market maniacal view of perpetual growth (an alternative of "greater fool theory") are insane. Equity markets and share trading are based on insane logic.
great book report, thanks
The problem begins fundamentally with the lack of definition of money as a measure of value. This gives rise to the prectice of utter absurdities such as ineterest. Financial instability is a certainty under money's misrepresentation. Adopting sound systems science would be very helpful. Without a well defined unit of value, all exchange becomes utterly flawed. Mind you that the centimeter or the kilogram need not to be backed by power. They are precise.
Interest can exist without money, it's just not as precise. A well defined unit of value is still not a universal unit of value, as grams and meters are.
well explained
Thank you!
Great video! Please do more in-depth videos please!
I haven't yet read the book but can predict that in it William Nordhaus' work will be absolutely excoriated. Keen appears to harbour an intense resentment towards Nordhaus, possibly motivated in part by the latter's undoubtedly undeserved Nobel Prize in economics. And I have much sympathy for Keen's disgust at this award: Nobel prizes in economics have generally been awarded, not to those whose work objectively enhances our understanding of money and trade, but rather to those whose work endorses existing economic orthodoxies.
Models. Garbage in. Garbage out. Just like the climate models
I don't want to criticize Keen for he writes simply, and Oli explains simply as well. But most of it can be explained in simpler ways without complicated and boring tables, e.g. if people borrow to speculate on Nvidia and banks are willing to lend to earn more money, then the risk of default is high (it peaks at "Minsky moment") and a chain of defaults, staring with a few bank runs, leads to panic. Since you don't whether your bank will be next (i.e. imperfect info), you rush to withdraw your funds as well, and it spirals down. Most people (economists included) have given up on neoclassical economics over the last two decades; they only appear in useless textbooks and journals. Practical men are not slaves of defunct economists (as Keynes would have it); instead, it is the other way around. Neoclassical economics fails on many counts: equilibrium, cultural desert, lack of political considerations, and absence of institutions. Most developing countries are more keen on the alternative state-led East Asian model.
Yeah, I do get the sense that Keen (and therefore me in this video too!) is pushing at an open door in terms of critiquing neoclassical economics. But, it's interesting that it is still being taught, unless, of course, it is explicitly being taught as a historical, first approximation that is now superseded. I'm kind of starting to see it like Newton's laws compared to General Relativity (although neoclassical economics may well be more wrong than Newton's laws 🙂 )
The other problem is that politicians and influential capitalists will pick and promote the economics that suits them, rather than the economics that most in the field consider to be the most accurate. So, there is also a contest of narratives and analogies to capture the political minds of voters. And I do not think that economists have yet found the right ways to talk about the latest ideas in economics.
whoa, finally someone who talks about energy and economics . I have stated in other economic blogs that this simple posit - Resources + Energy = Utility which breaks down to waste, ie landfill and heat .*
Arthur C Clark ( Sci Fi writer ) I beleive stated that heat is the final waste product that civilizations will have to deal with, its the fundametal limit to all work.
* give your daughter $10 to buy some landfill from the shopping mall.
WHOA...try the SUN's CYCLES and MAG field reduction and you may be getting WARMER. Put that literally in your pipe and smoke it.
Thank You.
Goood video!
I really enjoyed this. Wonderful review and summary with a wonderful presentation. Rene Geunon may be an author that interests you.
Hi, thanks!
Is there a particular book that you would suggest of Rene Geunon? (preferably one that's not too long 😃)
@@Go-Meta The Crisis of the Modern World is a short read. Guenon was a 20th century metaphysician.
The solution is always more freedom -moral freedom.
Probably best to read Keen as well as Keynes.
If economics is indeed sufficiently chaotic, we may as well stop predicting anything except the immediate short term future.
Hi, I think we have to be careful not to see prediction as an all or nothing concept. Most things we care about have some chaotic aspects, but just like with the weather, we get huge benefits from making reasonable predictions of what might happen, even if these predictions are really a range of scenarios with percentage probabilities. And, different timescales have different trends that dominate, so sometimes we can forecast likely long term trends (e.g. climate change) even when precise shorter term details are impossible to predict.
I actually made a video about the rational limits to prediction: th-cam.com/video/3JCBugtM5Pk/w-d-xo.html
Regarding predictions of economics, my understanding is that the key difference between the kind of view Keen takes and the more traditional view, is whether or not crises are seen to be triggered by external shocks to the system, or whether they are considered to be self-generating from internal dynamics (which is Keen's view).
Steve Keen knows!
Excellent 👌
Thank you!
The reason for the crash was not the amount of debt but the lending of money to people who could not service the interest AND the banks had created assets on a humongous scale which bundled these loans with other perfectly or reasonably perfectly good loans so no one knew what anything was really worth. The insolvency of Lehman brothers demonstrated that the value of any asset is determined by supply and demand. Lehman had to sell no one wanted to buy. Value negligible. In any market the value of an asset is determined by reference to what a similar asset is selling for. Result: huge quantities of debt on bank balance sheets now of negligible value and a credit contraction destroys the real economy. All explainable by classical economics and criminal psychology.
Or, nobody should talk up economics as a science, as in a reasonable description of objective truth.
Obviously economics is a description of "ones" preferred power structure in a population. Hayek acolytes want rule by delightful techbro queen bees like Russian oligarchs. Keynesians prefers democratic oversight, rule of law etc.
It's so crystal clear that economics is not a science.
What is so hard to understand concerning Adam Smith's hypothesis which is in a nutshell: an open market is the position when it can resist any monopolistic forces (government, corporations, trade associations, privately-owned businesses, unions or guilds) based on worker ownership of the entire means of production. Those concentrations of Power are the eternal human problem. The supply of money can only increase when payment for exports is made, the reverse for imports. The internal value of the currency may fluctuate, but it is mostly influenced by trade with off-shore markets. Banks become mere depositories, however depositors decide what proportion of their funds can be used for bank-organised financing. This is not rocket surgery.
The quality of the workers decides the sophistication of the wares and therefore their value: so the main career trajectory is becoming good enough to be invited in as a part-owner and operator in a larger enterprise. Remaining as a mere worker for life very unusual. Wages are determined as a share of each sale, prices by the market. What boofhead Marx couldn't wrap his spoiled mind around.
Hi, my take on this is that the perspective on the economy that you've just outlined is a really good first approximation. But, it is not actually correct enough to capture what really happens in a 21st century political economy. We need to move to a more accurate, second approximation because otherwise the errors in the simpler, first approximation are leading us to oversimplify our models of the economy which leads on to us making some bad policy choices.
@@Go-Meta Hi to you, in case my actual reply to your comment is blocked.
Hi @peterclark6290, I saw briefly your comment that you thought YT was blocking your reply. I don't know why that might be happening, but it certainly isn't me!!
@@Go-Meta No, I hadn't blamed you in the slightest. They've put me on some register so all my stuff gets processed. I've narrowed it down to any mention of my Twitter acct or my website on that topic. Cheers.
Lots of smart people in economics and finance predicted the housing crisis. Anyone who was paying attention and had a brain, actually. All the "no money down" and bad loan issuance by government proxies was not exactly hard to see. However, what has that got to do with neo-classical economics? The Fed is full of Keynesian's who never seem to be able predict anything and have a little to no understanding of inflation dynamics. However, it should also be understood that Keynesians are not there to predict what the economy will do next. They're there to rationalise government largess.
To paraphrase the head of the Fed, "We are navigating by the stars on a cloudy night". Which is a poetic way of saying we have no clue what we're doing.
When you see “Neo” in front of anything. It is the exact opposite of the suffix.
Care to take on John Boyd Destruction and Creation? Or his Discourse on Winning and Losing?
Interesting, thanks for the suggestion. I'll take a look, but my schedule for video ideas is pretty full up for a while.
addendum: There cannot be a circular economy - fundamentally it breaks the laws of thermodynamics . (edit)
Yeah - the term "circular economy" really means "more cyclical use of resources in our economy", because, as you're saying, it clearly can't be about 'circular' use of energy in some kind of perpetual motion economy. But the term 'circular' should be understood in opposition to the 'linear' economy that we have at the moment where almost all resources used in production goes through a linear process:
dig up resources -> make something in factory -> sell in shop -> use -> dispose -> bury or burn
The goal of circular economy is to get as much as possible of the material resource going around in a cycle so that we don't need to dig up as much and we don't need to bury or burn so much. So, in some ways it's just a subtle update/re-branding of sustainability.
But sure, just like the water cycle, or carbon cycle of the biosphere, a resource cycle for our economy will always require energy to do the work to make it happen - and it will never be a 100% closed cycle. Otherwise it would indeed break the Second Law of Thermodynamics!
(also, minor detail, but I'm not sure if I've seen Steve Keen use the term, so that really was my personal wrap up of the context of the video rather than me saying that Keen uses that specific term)
What on earth have thermodynamics got to do with economics?
@@alecdurbaville6355 In my veiw energy is the bedrock on which all manifestations of economics are built and therefore thermodynamics apply.
"Pro-misery" note
MMT Chartalism and endogenous money theory have proven modern economics to be bunk.
Money is a promise. If it wasn't a promise it would just be an asset.
@@someonenotnoone Money is accounting. Need either human or computing accounting techniques using math to legitimize and keep track. Thus money is Math. Good money is good math.
@@mrzack888 None of what you said means money isn't a promise.
@@someonenotnoone youve heard the term "your money is no good here" right? To say money is a promise diminishes your true understanding of what money fundamentally is.
@@mrzack888 "youve heard the term "your money is no good here" right? "
... yeah that lines up *perfectly* with *your promises aren't worth anything.*
You're calling money math. I think "a promise" is a *much* better description.
Will you be reviewing Markets in the Name of Socialism by Johanna Bockman?
I don't know that book, but I've taken a look and added it to my (all too long!) list of books that I'd like to read. So, thanks for the tip! (obvs unsure if I'll actually have time to review it though 🙂)
What is the Net Domestic Product? What has happened to the Depreciation of durable consumer goods since Sputnik. How does planned obsolescence affect that Depreciation?
How much have American consumers lost on the depreciation of automobiles since Sputnik?
I think the biggest loser of the disposable / obsolescence based consumer economy has been the environment. So much energy and material resource used to make things that don't last. Many of the consumers themselves maybe work in the factories or shops or marketing firms that keep the whole hamster wheel spinning in faster and larger circles. Maybe not the best use of human ingenuity!
@@Go-Meta
What has Keen said about mandatory accounting in the schools. Adam Smith wrote "read, write and ACCOUNT" multiple times. He used the word 'education' Eighty Times.
What would mandatory accounting in the schools since Sputnik have done to the economy by now?
Planned obsolescence was a concept invented by FDR's brain trust.
@@rutessian
Horseshit!
There is a book by Bernard London. It is free on the internet. And it started with light bulbs in the 1920s.
@@rutessian
Rubbish!
There was planned obsolescence in the light bulb industry in the 1920s.
.
Money is the credit of people (not bank credit). Banks steal that credit.
Neoclassical economics has its shortcomings, no doubt about it. It is equally true that in some fields of neoclassical economic theory this seems to be caused by the adherence to old dogmas due to ideology and apologetics. But the method of neoclassical theory is sound.
The still presented neocl. textbook theory of money and banking is actually
crap though, right. The Bank of England was the first central bank to admit that. So is the theory of saving and investment.
But most modern economists and the central banks adhere to some form of „consensus“ postkeynesian macroeconomics anyway.
Keen‘s crusade against neoclassicism is a kind of overshooting. There is no raionale in condemning neoclassicism as a whole. Just ask him what his „neoricardian“ or neo-marxist theory of monopoly exactly looks like. Its futile. There is no.
And that continuous in almost all branches of economic theory. If there would exist a sound alternative economic theory on Ricardian or Marxian lines it would be mainstream for decades, I think. But there is no.
Economic theory for the time being i s Neoclassicism and Keynesianism. Only here and there and covering narrow parts of economics you have alternative approaches worth speaking of and Neoricardianism is one of them.
Any critiques? While it seems to be an interesting line of work, are there any critiques from classical, or historical economists?
I thought he was going to say something substantial. He talked in a pompous manner for 21 minutes without saying anything at all.
😂agreed
Just because you didn't understand anything, doesn't mean he didn't say anything substantial
When a bank lends money it creates it temporarily, until the end of the day, when it has to borrow from somewhere to cover the debt. How is this bank creating money?
The Reserve Bank of New Zealand operates a "EOD Square Off" policy - all banks in NZ must finish every business day at zero balance between assets and liabilities. They can borrow the difference from another bank, or as a final resort the RBNZ, which lends the bank money at a rate of interest called the Official Cash Rate.
Yeah, but I think you're missing one detail here: the new $1000 debt asset (in the example) means that the bank in my example would have zero "EOD Square Off" so would not need to borrow any money from the central bank as its assets do cover all of its liabilities.
As far as I know, the EOD Square Off comes into play when banks move money between each other when they don't have enough liquid assets (e.g. central bank reserves) to be able to fulfil the interbank transfer completely on a given day. But, this is to do with liquidity, not solvency. The private bank in my example would stay solvent even if Jane transferred all of her money to another bank (or paid someone at another bank), because the bank would still have a good ratio between its overall assets and liabilities. But, to remain liquid it would maybe have to borrow money in the short term (e.g. from central bank) until it can sell its debt asset (which may take a little time - but would cover the borrowed money).
In the real world, because transfers happen in both directions between banks, many of them will cancel out and the EOD requirement is (as far as I know), just a way to make sure that a stable point of accounting is taken at the end of each day that nets out who owes who and therefore helps the central bank keep track of who is at risk of being illiquid and, indeed, if any of the banks are at risk of being insolvent. ..... at least that is my understanding! ... and these details were too much to include in this video which was too long already. 🙂
@@Go-Meta OK makes sense, and you did include a proviso about technicalities around central banks. I appreciate your prompt reply. My other question which has nothing to do with what you put in your video is - what is the point of the gold reserves in the Bank of England, Fort Knox etc now we don't have a gold standard? If it's not backing a currency why not get rid of it?
@@curtisnixon5313 Along with bonds, works of art etc. Gold is an asset class that can be sold to effect an outcome on the money market- typically to buy back the country's own currency as a measure to support its exchange value. A true 'Gold Standard' implies convertibility on demand of currency into Gold at a pre-determined rate.
Classic ideas like supply and demand not actually working in economics is real, but it’s not that it doesn’t work. Just look at videos discussing the spoofing of gold. Some foreign central banks maybe does future contracts and then cancels at the last minute. Did you know the bank of international settlements I think have some gold component or may help manage gold. If central banks are privately owned and if the bank of international settlements is privately owned and actually had Englands monarch as a shareholder up to the year 2000 September 11 it’s like of course if you’re a billionaire and want to continue using fiat currency along with your government you may simply manage demand or supply.
If you’re a central bank and can have off sheet liabilities like normal banks and it’s not reported and if you’re a central bank and you literally create new currency out of thin air what’s stopping them from buying or selling future options to manage price? Yes individuals or companies would go bankrupt doing that but if you’re a central bank you just keep creating new Monopoly money for your game or task. Also if the federal reserve is never audited no one will ever know,
'...real Sciences where such a significant empirical failure would hasten a paradigm shift as it would become untenable to ignore the gap between the dominant theory and reality." You mean like when cosmologists invented dark matter and dark energy because their calculations were way off the theoretical numbers?
Anyone who criticizes neoclassical economics, I immediately ignore, since the US economy is more complicated than such a simple definition covers.
This sounds like MMT, which is just the same insane Keynesian economics we’ve disastrously experienced for the last half century, but on crack….with a more overt appeal to authoritarians.
(Update) yup, I was right…it’s just crackhead MMT.
If this is the conclusion you have concocted, than arguing with you isn't worth the effort. You are in your own world now, make yourself comfortable.
@ likewise to you my friend. The difference is that I can explain Keynesianism to Keynesians and they agree I understand their position, but they can’t explain my position.
@ wait a minute…the guy literally says in the video that there’s a lot of overlap with MMT. So what exactly did I misunderstand?
@@ariclocke4566 You didn't misunderstand anything. It's not clear to me given the contents of the above video if Keen is an MMT ideologist or not. The review definitely put me off bothering reading more of Keen's ideas. What is clear, is Keen has borrowed a lot of talking points from MMT.
Most ofWestern GDP is leveraged speculation in stocks and real estate. Industtial output and resource exports are undervalued.
GDP is actual production of goods and services. You're confusing it with financial market pricing. 😂
12:45 Kelton is purveying nonsense.
Same goes for most of Science, in particular Physics. All based on layers of completely false models… 😅
Yes indeed! It's perfectly understandable that an earlier generation had to make progress by using linear models that were easier to understand and do the maths for. But that doesn't mean that those first approximations are correct or where we should stop our investigations. Clearly we need to go beyond these first approximations in so many different fields.
If money is so misunderstood and can be printed at will by the central bank, then explain Zimbabwe's hyperinflation under its dictator, Robert Mugabe.
No-one serious is ever suggesting that money can be printed at will. Steve Keen doesn't say this (as far as I know), and Modern Monetary Theory (MMT) certainly doesn't say this. The point of theories like MMT is 'simply' that we need to correctly understand and model money if we want to understand its behaviour better. And, when we do that, it becomes clear that continual, reasonable levels of deficit spending are a net benefit to the economy as a whole.
Too much printing of money will lead to inflationary pressures, but inflation is also a lot about expectations and trust in the government. So, Mugabe got a whole bunch of things wrong that led to hyperinflation, including stoking price rises through the changes made to their farming sector. If I recall Zimbabwe went from a net exporter of food to a net importer of food!! THAT is going go have a major inflationary effect. It wouldn't surprise me if the excessive printing of money followed rather than led the initial rise in inflation, but I do not know the stats.
Reagan and Thatcher didn’t actually depend on the math. They depended on the philosophy. The math is just an attempt to explain why supply and demand works which they believed through observation. That’s at the heart of their brand of conservatism. They’d have no problem with the math being improved.
I believe the only real necessity is that there is no free lunch. That seems to be the problem with so much monetary theory. Some genius throws out a ton of math, says we can get a free lunch, and everyone agrees until the math is disproven or a “new” complication arrives.
Well, you can all keep your math if you think it’s more important than reality. The math is meaningless without the words. Life is a word problem, and math is just a tool. If your tool says to over tax, over spend, and never save, your tool is out of whack. You are simply a navigator. Argue all you want, but your position is what it is. No calculations will actually make you go faster, they can only suggest changes in course that will have their effects.
People exist in nature, trading freely, without economics. Economics is the facade that a few men can be more fair than freedom by managing all resources. Which only results in grand theft, involuntary servitude, and environmental destruction: the fruits of greed.
The world is not driven by greed, so much as envy. Which is likely where you're coming from.
@@willnitschke well, it is greed at the top, rooted in usury (money for nothing). When you're at the top, envy is not the driving force. The goal is more control+power+security to guard against any losses, and increase what one has .. because there is no other challenge left in life. When a king has conquered to the furthest shore, he wants whatever is on the other side of the ocean. Envy is probably at the level of idolatry, which are the ones utilizing usury to acquire what they cannot yet afford, which is greed. Envy is really just pre-greed, isn't it? Foreplay.
@@willnitschke maybe we could say envy is a motive to have what you see others with, and greed is the action of acquiring more than you reasonably require for healthy sustenance.
@@chadkline4268 *well, it is greed at the top, rooted in usury (money for nothing).*
Nope, it's envy not greed. Usury means charging "excessively" for money, not giving it away for free. 😅
Let me explain it to you this way. A Steve Job's type character invents a better mouse trap and he ends up benefiting millions of people. People show their appreciation by purchasing from this guy. The guy becomes a billionaire. Which I'm personally OK with, because he did it fairly and squarely and he did help millions of people after all.
However, a vast number of people will describe this guy as 'greedy' because he's so wealthy. The problem there is not greed, but envy.
@@willnitschke
Ok, I take your smiley as a sign of humor 👍 but if you want to understand anything in this world, you always must start at the beginning with fundamentals. If you want to discuss calculus, first we must have essential understandings in basic math, then algebra, geometry, and trigonometry. Only then can we discuss calculus. And the Steve Jobs analogy is really jumping far off into realms that have broken foundations and lack in truth+freedom+integrity. Before I could discuss any of these topics, we would need agreement upon natural law, which as far as the USA is concerned, begins with John Locke and the Declaration of Independence. I mean, I can't whack a smartphone with a sledgehammer and then discuss why the calculator app won't work. If we really care to strive for meaning and honest + practical understanding, we must always begin at the root, and build upon it with integrity to see where things begin to go wrong. Most all things in this world, or material existence for that matter, have a pyramidal structure. Eg:
/Electronics+Tech\
/Industry+Transport\
/Mining+Drilling\
/ Agrarianism \
/ Land + Water \
That's the general idea. We can't increase the top without increasing the bottom, and the bottom can't increase. But we'll die trying. And it applies to not only stages in technology, but also govt/corp structures, law, science, society, etc. In my view, so many things are broken beneath what we see superficially that there is no option left at this time except total global domination+enslavement of the entire planet by any and all means necessary. We can't fix anything properly. We are out on a plank, and it's cracking near the edge of the ship, so we can't walk backwards or forwards at this stage. If we walk backwards, we fall into sharks with a beam of wood, and if we walk forwards, we fall over the end of the plank into the sharks. There's revolution at one end, and enslavement at the other. But both end up with sharks trying to attack or feed off us.
The powers are promising endless growth with supercities and meal worms, crickets and locusts for a food supply; and on the other end, I promote disconnecting from the Insanity with sustainable land, Hydrino power, and natural law. Take over the food supply. With the means of defending it. I will not agree that the current powers on earth are sane or a benefit to humanity or earth. Lone individual geniuses are responsible for most all advancements, but govt+financial powers take the credit. I may be delusional for having any hope. I don't see much intelligence with the necessary knowledge to favor any direction decidedly. I think I just have to settle with the view that this is a clown world, that it's impossible to benefit much of anything, and mankind has been too dull for too long, and his future will be under the total control and domination of a few men, within a very artificial environment, under total mind control, and no chance for spiritual knowledge or attainments. Just millennia of ever increasing servitude with maybe some slowly added dystopian activities for the pleasure of those in control. Maybe like the Logan's Run movie. Man will essentially be reduced to the life of farm animals and pets. Zero autonomy.
Really, for anyone to discuss these things, they need heaps of knowledge in philosophy, law, chemistry, physics, history, spiritually, English grammar, engineering, various technologies, earth resources, waste, populations, factors of mental+physical health, .. all the essential ingredients that comprise life on earth and human society. And then even if many such people agreed upon a positive sustainable plan, few would understand the reasons for it, and powers would be too selfish to agree to it, and ?? The conclusion would be that you can only let dullness+evil run their course, and if able, understand the causes of this existence and ensure an alternate reality at death of the body. Because whatever conditions bound you here, will bind again if they remain. Not that you wanted to hear all this.
A BIG NATION (THE US/ EU/ CHINA) needs a vital internal service economy, beside HIGHLY COMPETITIVE INTERNATIONAL INDUSTRIES AND MARKETS. The US has developed strong iNTERNATIONALS, FEASTING ON THE WESTERN WORLD, but the national US economy is completely hollowed out. The EU nations have vital service economies, but has failed to realize industries competitive with the US INTERNATIONALS. China has a vital national service economy and its INTERNATIONAL INDUSTROES ARE HIGHLY COMPETITIVE, STRONGLY REDUCING PRICES ON WORLD SCALE. THE MONOPOLIST US INTERNATIONALS WILL COLLAPSE AND AS A CONSEQUENCE THE US DOLLAR/ DEBT LEVELS. THE DIVIDED EU CANNOT COMPETE, BUT WILL HAVE RELATIVE WEALTHY SERVICE ECONOMIES. SO, THE EU MUST NOT PUMP CAPITAL INTO PROTECTIONISM OR SUBSIDIZING INDUSTRY, BUT IN THE SOCIAL WELFARE SYSTEM.
I'm interested in reading the book. However, I am inclined, based on works I've read by Ludwig Von Mises, Milton Friedman, Thomas Sowell and having studied applied Mathematics and physics as my undergrad, to say that free market capitalism aligns with thermal physics and statistical mechanics. It sounds like Keen is putting a 'limit' on the amount of configurations we can get out of atoms (or perhaps it was the other author you mentioned), but the fact is, no one really knows how many configurations particles can be in. In fact, we're not even sure if this universe is a closed or open system. But by focusing humanity on single issues like climate change we limit the amount of configurations that can be at our disposal to fix the problem. Free markets open humanity's choices. And increasing optionality is increasing the odds of finding many solutions. Resources are only resources because humans have found them to be, they aren't intrinsically resources. This is clearly evident in the history of oil and even most renewable energy technologies
Neoclassical economics isn't a thing. We have Keynesianism. Which has failed miserably lol
Really? Dig up up. Milton Friedman, and tell him that. He'd laugh in your face. Why? As a monetarist, Friedman was an ideologue, and unashamedly so. He thought the financiers were in no need of being regulated. And guess what? That idea was wrong. It was as wrong as Black and Scholes, who believed they had remove risk from investing. Both stupid ideas, because they ignored human nature, with its capacity for folly and greed. These two Masters of the Universe, created the folly that led to 2008, because nobody questioned what they said was true, because they wanted it to be true. There is a saying that one should hold one's ideas lightly, and that means you should not be wedded to them, or treat them as unassailable. You should be open to questioning them. We didn't question these experts, and we're paying the price. And really, Kenysianism?? Really? It wasn't Kenysianism that deindustrialised developed nations in order to grow their profit. It wasn't Kenysianism that created a global financial system reliant on unregulated offshore money markets to finance it. It wasn't Kenysianism that made people believe they had beaten risk. That was market ideology, which in practice did not have many countermeasures against the greed or folly of people. Indeed, it argued for them to be removed. That's not Kenysianism. That's a bunch of people high on there on supply. There will be always people who think rules don't or shouldn't apply to them. And the rest of us not hooked to them should be wary of them. And regulate where a need has been demonstrated for it. They cannot be trusted to do the right thing each and every time, because the negative incentives persist. If every country had been like Iceland, then I would be happier, as their response was not to let the greedy, lying thieves walk away with bonuses, and load up their taxpayers with debt. They jailed their greedy bankers, and stopped any profiteering. And that was not Kenysianism. That was commonsense.
@@CuriousCrow-mp4cx We've been living in a Keynesian world since the end of World War II. A world that believes you can borrow money to get yourself out of debt.
I have a theory I’ve been working on called Value Variance theory. It’s based on fundamental objective values found in human societies but also in nature, there are 3 fundamental values that are traded consistently for all living organisms. May not be the full picture but I believe it’s the missing piece connecting our economic models to true objectives underlying realities.
"fundamental objective values" I have no idea what you could possibly mean by this. Sounds like robots, not people.
Unfortunately there is aa great deal of false science in health care too!
AND WHERE DOES
ALL THE FINANCIAL SPECULATION YOU ALL CALL "STOCK MARKETS" FIT EXACTLY IN THIS BRILLIANT MODEL BASED ON WORK VALUE ?
I CALL IT PARASITIC GROSS UNWORTHY APPROPRIATION OF ANOTHER ONE'S RIGHTFUL EARNINGS.
A closed break-front full of books arranged by size, your background, does not qualify as a bookcase.
Urmm ... they're DVDs 😂
Edit 2008
I'm guessing you are referring to which year the global financial crisis started. Even though the main impacts happened in 2008, I think quite a few people consider the 'start' to have happened in 2007:
en.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis
But, yeah, lots of people refer to it as the 2008 financial crisis.
Interesting video. Keep in mind that government has nothing that its doesn't first Take from the present or the future. Austrian school economics has many more answers to what we actually see in reality than Keynesian ever has.
Just a branch of nonsense starting from the statement that somebody should to predict a crisis
Steve Keen is more focused on profiting from a small fan base than actually doing something useful.
Paul Krugman?!?!?
Are you bleeping serious?
What a joke😂
Lol, what has this guy been smoking - we haven't even tested neoclassical economics, we've been living in a Keynesian nightmare for decades!
I think when he tosses around the snear "neo classical economics" he means "all the economic ideas that I don't like".
Double entry accounting has no place in modern world. It’s an ancient system that worked for the ancient world only but we have held on to the ridiculous system because those that discovered how to game this also had the power therefore to continue their Ponzi scheme
So, what do you suggest we replace it with?
Firstly no banks and no taxes. The only think of real value and not relative to anything else is Life in other words time. Using technology to calculate the price of everything based on the time input. The ability to trade your time from your account for what you can afford to . Your time spent on creating or services are transferred to your ledger to use and acquire goods and services. All resources are priced only insofar as the time expenditure of making it available. No other value added which will enable whom ever has the skills to do something useful with a resource to acquire it by only paying for the hours spent to make it available. Only time having value will make everything equitable and all that will make the output of time the product so to speak desirable and in demand is either need as in food water etc or because of the talents and skill applied that added desirability of beauty or pleasure or usefulness. Land is allocated according to it’s use. Only non productive land is used for building on not large cities on riverbanks that is obviously more suitable for agriculture. At birth you are allocated the amount of time as per the life expectancy in your location. Children learn from young age how to add time through service and labour, while their parents authorises payment on their behalf until the age of 18. Etc etc
@@vivianoosthuizen8990 That bizarre babbling has nothing to do with a replacement for double-entry bookkeeping, which BTW, is essential to the modern world, now, more than ever.
You’re obviously a disciple and not a leader
@@vivianoosthuizen8990 If there is such a thing as "the leader of the confused" you're their guy. 😅
if this is going to be another one about oh you can spend spend spend out of any problem because debt is just an ethereal concept, I am out
Sounds like he just wants to increase my taxes again when I can't survive on the current robbery.
Ugh…just wasted 20 minutes listening to all this gobblygook..
Commodities are the only true currency and any time you deviant from them everything eventually turns to shit. Which is what’s happening to all fiat currencies right now.
Well, I totally understand the attraction to the "money = commodity" perspective, but I think the history of the last 100 years or so, plus developing economic theory gives very strong reasons to see this "money = commodity" view as just a useful first approximation that is actually not quite correct.
Indeed, I think the so called 'marginal revolution' from a long time ago established the subjective nature of the value of things, including commodities, so there is no item that can be seen as having a 'hard' value upon which currencies could be based.
This is complete crap
I think you are right about the design that they would have to use to implement lifetime learning on a robot that doesn't have the physical size or energy resources to run the on-going training compute. But remember that already our use of inference compute for tools like ChatGPT is via a link to a remote computer (for most people anyway!)
So, the problem of moving to lifetime learning for millions of devices is not so much about where that compute is happening (it probably will happen remote from the device as you say), the real problem is the cost and energy consumption of this remote lifetime learning compute that will be more like the expensive training runs rather than the relatively cheap inference compute used for day-to-day use of, say, ChatGPT.
The revolution you´re looking for is Bitcoin!
Take a look at the estimates for the current energy costs of mining and maintaining Bitcoin, and the projections for the future, as the "proof of work" cost of one Bitcoin escalates. Then think again.
Bitcoin is fascinating, but I don't think it is the answer. I'm hoping to do another video about Bitcoin soon, because it is so interesting. But, I've already done a video about why I think Bitcoin cannot be the long term (100+ years) solution: th-cam.com/video/c9wTNu5ToQU/w-d-xo.html
@@colin_e The mining is a free market and every miner puts in the work voluntarely. It doesn´t require all that energy to create a new bitcoin as the algorithm is self-correcting according to the amount of hash-rate they put out (as I understand it).
@@Go-Meta Thank you, I will definitely check that out!
To sum this up, straw man economists as all "neo classical" (even though most of who work for government are Keynesians), babble some stupid about double-entry book keeping, as if this is some great insight. Pretend the economics community are confused by how fractional reserve banking works. Steal some stupid ideas from MMT and re-package them...
Hopefully the book is not as dumb as you make it sound, but given your review, I'm not inclined to waste my time on it.