The Debt Issue in Mainstream Economics

My presentation at the Rosa Luxembourg Foundation in Berlin today on how Neoclassical economics misunderstands the role of private debt in a capitalist economy. I show how to use my Minsky program to model both the Neoclassical "Loanable Funds" vision of lending and the empirically-informed Post Keynesian "Endogenous Money" model.

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[Wibinable]

Ah, as far as I can gather now, it's perhaps been recorded on mr. Keen's laptop. External mic it is then! ;)

[Wibinable]

I'd love it if mr. Keen took his own microphone with him and not relying on what ever might be handy at the place of recording, such as this case of overly aggressive noise cancellation. ;)

[Macno76]

Whenever I speak to bankers about what you claim, they respond they always have to "refinance" what they lend out. Could you adress this argumkent please? Thank you from Germany!

[Kourosh Shafi]

please have the sound quality improved. thanks

[heckler73]

ack.... cones.... Vector calculus and inertia tensors.... does the cone rotate or spin?

Your idea is a plausible "static" model, but can we derive some dynamics from it?

Is there only one, grand cone, or several smaller cones?

hmmmm... how about a conical helix? That would have a time parameter, then.

[heckler73]

My first reaction is to look for parallels in Nature.

Protons/Anti-Protons & electrons/positrons, perhaps? The only problem there is, upon meeting, they destroy each other in a burst of incredible energy.

Maybe that's a bad analogy ;-)

[DavidAKZ]

As a student of the GFC,I have my own model. If you assume we humans live in a 2D world,we see events like the fall of Lehman Bros, MF Global etc describing a circle on the x,y plane over time. But the world is actually 3D, so a better shape might be an inverted cone in x,y,z space. The third dimension is the outstanding liabilities due to Credit Default Swaps,Interest Rate Swaps etc. There is plenty of information on CDS/IRS but OTC is by definition dark !

[DavidAKZ]

This is the central (financial) paradox of our age. If you have a look at the CBA's balance sheet you will see a Credit Default/Interest Rate Swap can be an asset *and* a liability. How can something be worth $90 T and less than 0 at the same time ?

[jjcale1111]

I guess its better than nothing .... but just barely.

If the numbers are taken into account it would probably mean having to confront some potentially very scary realities that we dont have a lot of info on. No one (it is claimed) has a clue on the net position of the OTC derivaties or even who is holding what....

[DavidAKZ]

I asked that question, backing it up with references, a number of months ago. Prof Keen did reply saying he found the numbers 'staggering'. Some time later I did see a second order term of d/dt^2 (FIRE) or Finance, Insurance and Real Estate. Hardly satisfying but there you go.