One theory, about why it hasn't happened is that money went into liquidity traps-However the national debt, If 'm right, is also summised almost entirely of lenders, who if repaid, would ...horde the money, creating a forgein liquidity trap. So you know that Hefty National debt we keep hearing about? Yeah, we could just nationalize the fed, create the 15 trillion, and pay it off. and there would be next to no inflation.
He basically said that becuase of a few different factors, deflation is not likely to occur or actually there will be "minor inflation". Then Steve goes onto say that people who expect "huge inflation" because of govenment money printing "shows they don't understand how money's created". WHERE IN THERE DOES HE SAY WHY HE BELIEVES THIS?!?! Is he just making a good case for minor inflation as opposed to major inflation (or hyperinflation)??
that's not what he said at all. he said that the long term trend is deflation (via debt collapse or de-leveraging) although in the short term there might be a confluence of factors (perfect storm) which moderates the deflationary spiral and may even create minor inflation e.g. climate change, supply shocks etc.
therefore what he is pointing out is that in such a scenario, the deflationary spiral that was supposed to occur has been temporarily negated but that unless the underlying debt is cancelled or repudiated, a deflationary spiral like the one japan has been experiencing for the past 2 decades, is most likely to take hold over the long term.
his final comment refers to the fact that people misunderstand an increase in M1 as inflationary, when there is no correlation or causal linkage.
Most money is in the form of bank credit. Money is essentially loaned into existence. Most bank credit is secured with assets like housing(unfortunately) and since they are debt saturated there isn't enough carrying capacity for new loans. Its like a hose trying to get a wet sponge to hold more water.
I agree with Keen that the situation now is very different to the 30's, and although QE and other fiscal stimulus will create inflation (as is natural with the debt system we have), I agree that hyperinflation is very unlikely. However like jetmanisme I am unconvinced by his arguments here. Do you have any more to this video? It looks like it was stopped halfway through.
Minor point: The reason the hyperinflation hasn't occurred is because QE1/2 merely resulted in a massive build up of excess reserves held by commercial banks. The intelligent question you could ask is what will happen when banks finally gain the confidence to start lending this money out and when will that happen.
Yes Schiff jumped the gun but mainstream economists also erred in failing to predict this build up in excess reserves.
That was my favourite video of all I made. I laugh so hard when I think of Pete's stupid face wincing as he watches himself looking like a moronic liar.
Steve's book sounds like a good read. I wonder if Pete will let him sell it on his show. Of course not. Pete can't stand being around people who are smarter than him. especially when his favourite argument (I predicted the crash!) won't work with them.
I loved Steve Keen's Debunking Economics. It's a great read and he does his best to make neoclassical economics understandable before he goes after it.
As for the post-Keynesians' (which is the label Steve Keen attaches to himself) argument concerning the endogeneity of the money supply, (which is why he says that hyperinflationists and the government don't understand how money is created), I'm not convince yet. I need to do more reading.
That's a bit of a non-sequitur. I agree with him that the hyperinflationists don't know what they're talking about; I'm just saying that I'm not sure that I agree with why he's saying it (money supply endogeneity).
@jetmanisme if I'm not mistaken, the MMTers echo your sentiment; however, Keen will be publishing a critique of MMT later this year, so perhaps we'll have something more to ponder then. From what tidbits of info he's given so far on his blog, he seems to be wary of the "static" nature of MMT's analysis, mainly. To be fair, though, Keen's main concern is with the Ponzi dynamics of the system (ala Minsky), not necessarily how money is created. As such, his work can be an adjunct to MMT, IMO.
It'd be interesting to hear Keens explain just how money is created...
tripzero0 6 days ago
One theory, about why it hasn't happened is that money went into liquidity traps-However the national debt, If 'm right, is also summised almost entirely of lenders, who if repaid, would ...horde the money, creating a forgein liquidity trap. So you know that Hefty National debt we keep hearing about? Yeah, we could just nationalize the fed, create the 15 trillion, and pay it off. and there would be next to no inflation.
Fireinthedawn 2 months ago
Thanks for uploading this. Love Steve's analysis.
BeholdZeus 3 months ago
love that ending....that was a great aesthetic choice to drive those points home even further. nice!
hottenma 3 months ago
Honestly I don't know what the fuck that guy just said, but I do know Schiff is crazy libertarian so this guy is probably right lol.
VolcanicPenguin 4 months ago
He basically said that becuase of a few different factors, deflation is not likely to occur or actually there will be "minor inflation". Then Steve goes onto say that people who expect "huge inflation" because of govenment money printing "shows they don't understand how money's created". WHERE IN THERE DOES HE SAY WHY HE BELIEVES THIS?!?! Is he just making a good case for minor inflation as opposed to major inflation (or hyperinflation)??
acithwote 6 months ago
@acithwote
that's not what he said at all. he said that the long term trend is deflation (via debt collapse or de-leveraging) although in the short term there might be a confluence of factors (perfect storm) which moderates the deflationary spiral and may even create minor inflation e.g. climate change, supply shocks etc.
SchittReport 6 months ago
@acithwote
therefore what he is pointing out is that in such a scenario, the deflationary spiral that was supposed to occur has been temporarily negated but that unless the underlying debt is cancelled or repudiated, a deflationary spiral like the one japan has been experiencing for the past 2 decades, is most likely to take hold over the long term.
his final comment refers to the fact that people misunderstand an increase in M1 as inflationary, when there is no correlation or causal linkage.
SchittReport 6 months ago
@acithwote
Most money is in the form of bank credit. Money is essentially loaned into existence. Most bank credit is secured with assets like housing(unfortunately) and since they are debt saturated there isn't enough carrying capacity for new loans. Its like a hose trying to get a wet sponge to hold more water.
gwynedd1 2 months ago
I agree with Keen that the situation now is very different to the 30's, and although QE and other fiscal stimulus will create inflation (as is natural with the debt system we have), I agree that hyperinflation is very unlikely. However like jetmanisme I am unconvinced by his arguments here. Do you have any more to this video? It looks like it was stopped halfway through.
Wulfyn 7 months ago
Minor point: The reason the hyperinflation hasn't occurred is because QE1/2 merely resulted in a massive build up of excess reserves held by commercial banks. The intelligent question you could ask is what will happen when banks finally gain the confidence to start lending this money out and when will that happen.
Yes Schiff jumped the gun but mainstream economists also erred in failing to predict this build up in excess reserves.
ffmarkm 7 months ago
That was my favourite video of all I made. I laugh so hard when I think of Pete's stupid face wincing as he watches himself looking like a moronic liar.
Steve's book sounds like a good read. I wonder if Pete will let him sell it on his show. Of course not. Pete can't stand being around people who are smarter than him. especially when his favourite argument (I predicted the crash!) won't work with them.
dsglop 7 months ago
@farhadekoohkan
Because it needs to be done since his rabid cult like listens are everywhere and believe anything he says.
AmericanNohbuddy 7 months ago
@AmericanNohbuddy
right on, my friend. consider this channel a public service :)
SchittReport 7 months ago
Cool
lianxiang 7 months ago
@farhadekoohkan
the real answer is: none of your business.
SchittReport 7 months ago
I loved Steve Keen's Debunking Economics. It's a great read and he does his best to make neoclassical economics understandable before he goes after it.
As for the post-Keynesians' (which is the label Steve Keen attaches to himself) argument concerning the endogeneity of the money supply, (which is why he says that hyperinflationists and the government don't understand how money is created), I'm not convince yet. I need to do more reading.
I'm interested in hearing some opinions on this.
jetmanisme 7 months ago
@jetmanisme
steve is specifically referring to the US, in which case his assertions are 100% correct, especially since US debt is almost all denominated in USD.
SchittReport 7 months ago
@SchittReport
That's a bit of a non-sequitur. I agree with him that the hyperinflationists don't know what they're talking about; I'm just saying that I'm not sure that I agree with why he's saying it (money supply endogeneity).
jetmanisme 7 months ago
@jetmanisme if I'm not mistaken, the MMTers echo your sentiment; however, Keen will be publishing a critique of MMT later this year, so perhaps we'll have something more to ponder then. From what tidbits of info he's given so far on his blog, he seems to be wary of the "static" nature of MMT's analysis, mainly. To be fair, though, Keen's main concern is with the Ponzi dynamics of the system (ala Minsky), not necessarily how money is created. As such, his work can be an adjunct to MMT, IMO.
heckler73 7 months ago
@jetmanisme
sorry i didn't read your posting correctly the first time around.
(dot)thomaspalley(dot)com/docs/articles/macro_theory/endogenous_money(dot)pdf
SchittReport 7 months ago
@SchittReport Thanks for the link. I'll be sure to check it out!
jetmanisme 7 months ago