ProfSteveKeen | But the reality is far different. @ProfSteveKeen | Uploaded July 2024 | Updated October 2024, 3 hours ago.
Contrary to popular belief, financial crises are not unpredictable black swan events.
Mainstream economists love to paint them as rare and unforeseeable.
But the reality is far different.
Ignoring private debt and its bubbles leads to economic downturns.
Take the 2007 housing crisis.
It wasn't a bolt from the blue.
It was a ticking time bomb.
Private debt levels were skyrocketing, yet mainstream economists like Ben Bernanke were blissfully unaware.
They were busy admiring their models, which conveniently ignored private debt.
When the bubble burst, the economy collapsed.
People lost their homes, their jobs, their savings.
All because the so-called experts didn't see it coming.
Recognizing and addressing these debt levels can prevent future crises.
It's like ignoring a leaky roof.
You can pretend it's not there, but eventually, the ceiling will cave in.
By monitoring private debt, we can spot the bubbles before they burst.
We can take action to deflate them gently, rather than letting them explode.
This isn't rocket science.
It's common sense.
Yet, mainstream economics continues to ignore it.
They cling to their outdated models, while the real world suffers.
We need a new approach.
One that acknowledges the role of private debt.
One that can prevent the next crisis, rather than just reacting to it.
Because the stakes are too high.
People's lives are on the line.
And we can't afford to keep getting it wrong.
Contrary to popular belief, financial crises are not unpredictable black swan events.
Mainstream economists love to paint them as rare and unforeseeable.
But the reality is far different.
Ignoring private debt and its bubbles leads to economic downturns.
Take the 2007 housing crisis.
It wasn't a bolt from the blue.
It was a ticking time bomb.
Private debt levels were skyrocketing, yet mainstream economists like Ben Bernanke were blissfully unaware.
They were busy admiring their models, which conveniently ignored private debt.
When the bubble burst, the economy collapsed.
People lost their homes, their jobs, their savings.
All because the so-called experts didn't see it coming.
Recognizing and addressing these debt levels can prevent future crises.
It's like ignoring a leaky roof.
You can pretend it's not there, but eventually, the ceiling will cave in.
By monitoring private debt, we can spot the bubbles before they burst.
We can take action to deflate them gently, rather than letting them explode.
This isn't rocket science.
It's common sense.
Yet, mainstream economics continues to ignore it.
They cling to their outdated models, while the real world suffers.
We need a new approach.
One that acknowledges the role of private debt.
One that can prevent the next crisis, rather than just reacting to it.
Because the stakes are too high.
People's lives are on the line.
And we can't afford to keep getting it wrong.
