ProfSteveKeen | Money Matters @ProfSteveKeen | Uploaded August 2024 | Updated October 2024, 10 hours ago.
Money is often dismissed as a mere tool.
People think it doesn’t matter in the grand scheme of things.
This belief is a dangerous fallacy.
Money creation by banks is the lifeblood of economic growth.
When banks lend money, they create new deposits.
This process fuels spending, investment, and ultimately, growth.
Ignoring private debt in economic models is like ignoring the engine in a car.
Without it, the vehicle won't move.
Mainstream economists, like Ben Bernanke, often overlook this crucial aspect.
They treat banks as mere intermediaries.
This is akin to saying a chef is just a waiter.
In reality, banks are the chefs of the economy.
They cook up money that drives activity.
When private debt is ignored, policies become flawed.
Imagine trying to fix a car without understanding how the engine works.
You’ll end up tightening the wrong bolts.
The practical reality is stark.
Flawed policies lead to economic instability.
This instability can manifest as recessions or financial crises.
The 2007 housing crisis is a prime example.
It was a result of ignoring the role of debt.
When people can’t pay their debts, the economy suffers.
This is not just theory; it’s a lived experience.
People lose jobs, homes, and stability.
Understanding the role of money and debt is essential.
It’s not just about numbers on a balance sheet.
It’s about real lives and real consequences.
So, let’s stop pretending money doesn’t matter.
Let’s acknowledge its critical role in our economy.
Only then can we build a more stable future.
Money is often dismissed as a mere tool.
People think it doesn’t matter in the grand scheme of things.
This belief is a dangerous fallacy.
Money creation by banks is the lifeblood of economic growth.
When banks lend money, they create new deposits.
This process fuels spending, investment, and ultimately, growth.
Ignoring private debt in economic models is like ignoring the engine in a car.
Without it, the vehicle won't move.
Mainstream economists, like Ben Bernanke, often overlook this crucial aspect.
They treat banks as mere intermediaries.
This is akin to saying a chef is just a waiter.
In reality, banks are the chefs of the economy.
They cook up money that drives activity.
When private debt is ignored, policies become flawed.
Imagine trying to fix a car without understanding how the engine works.
You’ll end up tightening the wrong bolts.
The practical reality is stark.
Flawed policies lead to economic instability.
This instability can manifest as recessions or financial crises.
The 2007 housing crisis is a prime example.
It was a result of ignoring the role of debt.
When people can’t pay their debts, the economy suffers.
This is not just theory; it’s a lived experience.
People lose jobs, homes, and stability.
Understanding the role of money and debt is essential.
It’s not just about numbers on a balance sheet.
It’s about real lives and real consequences.
So, let’s stop pretending money doesn’t matter.
Let’s acknowledge its critical role in our economy.
Only then can we build a more stable future.
