Steve Keen's Debtwatch

Mike Shed­lock (“Mish” as he is known to all) has writ­ten an excel­lent piece on the defla­tion-infla­tion debate, focus­ing on the Achilles Heel of the latter–the fact that it is based on the belief that we live in a “frac­tion­al reserve bank­ing” mon­e­tary sys­tem. He offered to let me cross-post here, and I’ve repro­duced it in its entire­ty below (there’s only one point I’m not sure on–the com­ment that there are no reserve require­ments for sav­ings accounts. From my read­ing of the foot­notes to Table 12 in this Fed­er­al Reserve paper, that’s true of cor­po­rate accounts but not indi­vid­ual ones).

Max Keis­er inter­viewed me for his 4th Keis­er Report when I was in Paris ear­li­er in Decem­ber. I come in at about the 13 minute mark after Max’s ban­ter with Sta­cy:

It was a great interview–Max had about ten ques­tions pre­pared, but only asked about 3 of them because the con­ver­sa­tion flowed so well.

We also record­ed a pro­gram on what 2010 may bring for mar­kets and economies for BBC Radio 5 Live Break­fast; the pro­gram will go to air on New Year’s Eve at 10PM Lon­don time.

I gave the fol­low­ing pre­sen­ta­tion at the 4th Dijon Mon­ey con­fer­ence (Decem­ber 10–12 2009):

| Open Play­er in New Win­dow

Mike (“Mish”) Shed­lock­’s site MISH’S Glob­al Eco­nom­ic Trend Analy­sis pro­vides reg­u­lar, inci­sive and down to earth com­men­tary on the US and glob­al economies, and his site is one of my first ports of call when I want do take a more crit­i­cal look at any US data that appears to be more dis­sem­bling than inform­ing.

Mish has made a rare appear­ance on Yahoo’s Tech Tick­er–anoth­er reg­u­lar favourite of mine–to pull apart the most recent appar­ent­ly pos­i­tive devel­op­ments in the US uem­ploy­ment rate.

If you haven’t yet acquaint­ed your­self with Mish, then I sug­gest you watch this video (also embed­ded below) with Aaron Task from Tech Tick­er, and then check out Mish’s blog.

This is too good not to spread: Sen­a­tor Bun­ning berates Bernanke at his con­fir­ma­tion hear­ing. What Bun­ning lacks in ora­to­ry he more than com­pen­sates in forth­right­ness and integri­ty. One phrase alone is worth hear­ing: “We [should] pun­ish fail­ure not reward it”.

I first realised that the world faced a seri­ous finan­cial cri­sis in the very near future in Decem­ber 2005, as I pre­pared an Expert Wit­ness Report for the NSW Legal Aid Com­mis­sion on the sub­ject of preda­to­ry lend­ing.

My brief was to talk about the impact of such con­tracts on third par­ties, since one ground to over­turn a loan con­tract was that it had dele­te­ri­ous impacts on peo­ple who were not sig­na­to­ries to the con­tract itself. I was approached because the solic­i­tor in the case had heard of my aca­d­e­m­ic work on Hyman Min­sky’s “Finan­cial Insta­bil­i­ty Hypoth­e­sis”.

The Depart­ments of Polit­i­cal Sci­ence and of Eco­nom­ics at the Uni­ver­si­ty of Helsin­ki recent­ly held a sem­i­nar enti­tled “Eco­nom­ics: Chal­lenges for Polit­i­cal, Philo­soph­i­cal and His­tor­i­cal Research”. The moti­va­tion was a reor­gan­i­sa­tion of the Uni­ver­si­ty that will com­bine these two Depart­ments. The fly­er for the sem­i­nar adver­tised it in the fol­low­ing man­ner:

This sem­i­nar, orga­nized joint­ly by the Depart­ment of Polit­i­cal Sci­ence, Depart­ment of Eco­nom­ics and Cen­tre of Excel­lence on Glob­al Gov­er­nance Research, will start with reflec­tions on the role of eco­nom­ics and eco­nom­ic stud­ies.

• Can we com­bine eco­nom­ics and pol­i­tics through polit­i­cal econ­o­my?
• Have polit­i­cal and eco­nom­ic stud­ies neglect­ed his­to­ry?

Michael Hud­son was a recent and wel­come vis­i­tor to Aus­tralia, and I helped arrange a talk by him at Cus­toms House that many peo­ple on this blog sup­port­ed finan­cial­ly, and quite a few attend­ed. My own attempt to record the speech was unsuccessful–the sound qual­i­ty was just too low–but anoth­er record­ing of  the event (by Sean Reynolds from Pol­i­tics in the Pub) was more suc­cess­ful than mine. Here it is below. My apolo­gies for tak­ing so long to post it, but I’ve been even busier than usu­al recent­ly and I sim­ply did­n’t have the time to do so until now.

I haven’t yet had time to post Michael Hud­son’s talk at Cus­toms House–hopefully I’ll man­age that this weekend–but in the mean­time here is the talk I gave a cou­ple of days ear­li­er at Per Capi­ta’s Pol­i­cy Exchange 2009 Con­fer­ence in Can­ber­ra on Octo­ber 21st 2009. The good folk at SlowTV put this togeth­er, and this is the link to the video on their site.

So I’m walk­ing to Kosciusko–now that the ABS Estab­lished House Price Index has cracked its Sep­tem­ber 2008 peak of 131 to reach an all-time high of 134.4 (as of Sep­tem­ber one year lat­er). This renewed bub­ble reversed the trend of falling nom­i­nal house prices that had dropped the index to a low of 123.8 in March 2009.

This lev­el of price volatility–down 5.5% in 6 months, only to rise 8.5% in the sub­se­quent six months–almost match­es the stock mar­ket’s man­ic-depres­sive per­for­mance.