Debunking Economics - the podcast

Last week Phil introduced us to the island of Coinucopia, where only a limited supply of gold coins could be used to keep the economy functioning. But the island is suffering from very slow economic growth. Steve explains how any innovation, that sees new products come to market, will see the same money chasing more goods, so prices will necessarily come down. That’s until the island decides to allow bank loans. At first, they only allow banks to loan out coins that have been deposited with them, but eventually they realise the potential of introducing bank notes. Now they have growth, but how do they curtail inflation? They’ve read Milton Friedman and believe an increase in money automatically creates inflation. But maybe he was wrong! Hosted on Acast. See acast.com/privacy for more information.

This week Phil introduces Steve Keen to the fictional island of Cornucopia. It’s a simple place, where the only trade takes place with gold coins. Banks are not allowed to give loans, and the money supply remains constant, unless the Chancellor decides to mint new ones. In such circumstances, how many basic economic principles work? Most of them, it seems. Sadly, this is not the real world, and economists who practice double entry book-keeping are imprisoned. Until the Chancellor realises there’s no growth and seeks help. To be continued. Hosted on Acast. See acast.com/privacy for more information.

Elon Musk has been moaning that he pays too much tax. He wants to keep more of the $14 billion or so that he earns each year. But has he got a point? Do we need to the opportunity to become incredibly wealthy to drive innovation. If we had more equal levels of income, would we actually suffer from lower growth, so everyone would end up worse off.? Phi puts the question to Steve Keen on this Christmas edition of the Debunking Economics podcast. Hosted on Acast. See acast.com/privacy for more information.

When central banks declare a new interest rate, how does that magic into existence? Steve explains how they trade in bonds, to drive yields close to their target rate. If they are buying up bonds held by pension funds and the like, are they also adding to the money supply? Could that have more impact on the health of the economy than playing with interest rates? But the problem is, the money created is circulating in the financial sector. If the central bank really wanted to boost the economy, it should find ways of pushing new money to those less well off. Hosted on Acast. See acast.com/privacy for more information.