Steve Keen To Peter Schiff '(Hyperinflationists) Show They Don't Understand How Money Is Created'

Acclaimed economist Professor Steve Keen outlines his argument about debt-induced deflationary spirals and in his words '...a lot of the people who argue for huge inflation because of government money printing don't actually understand how money is created..."

I wonder who the brilliant professor is referring to? ***wink wink***

Woops, Professor Keen just popped Petey's idiotic hyperinflation scenarios with a big fat needle.

Special thanks again to dsglop for the 1st part of the clip.

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[acithwote]

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)??

[SchittReport]

@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]

@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.

[tripzero0]

It'd be interesting to hear Keens explain just how money is created...

[Fireinthedawn]

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.

[gwynedd1]

@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.

[BeholdZeus]

Thanks for uploading this. Love Steve's analysis.

[hottenma]

love that ending....that was a great aesthetic choice to drive those points home even further. nice!

[VolcanicPenguin]

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.

[Wulfyn]

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.