Dec20
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.
@Steve Keen,
I must remember to spell your name correctly.
@The USD Is Back 142,
“Our global domination has been challenged previously (e.g during the Cold War). Also the primary issue for America is to maintain and expand our sphere of influence across the globe.”
This is why foreigners call Americans naive. The horror that America has unleash on this world is already intolerable. We can now give due reward to America for bringing us the greatest economic crisis ever.
“America is and still remains a global leader today and will continue to do so in the future. Sure, we’ve had our problems in the past, but we have always survived and thrived.”
History would suggest that imperialistic powers have grown and waned through time. To truly lead, one must demonstrate a good example. Maybe unknown to Americans, the rest of the world has been exposed to ‘American Decadance’. This is a common term to hear among older Australians.
http://en.wikipedia.org/wiki/Decadence
“A luxurious self-indulgence”
“In a social context, the word ‘decadent’ is often used to describes corrosive decline due to a perceived erosion of moral traditions”
@The USD Is Back 144,
“And yes, we are suffering. We have suffered in the past, are suffering now and will suffer again in the future. That’s just life. But like I said to ak, as a country we will survive and thrive again.”
The United States has recovered before but this was when a trillion dollars was fantasy. Anyway during the great depression, 70 percent of families (not sourced) grew there own food. Now I read about cereal for dinner.
http://globaleconomicanalysis.blogspot.com/2009/12/cereal-its-whats-for-dinner.html
“The US current account deficit is falling as residents’ savings increase.”
The savings are fictional if you are referring to bank savings. A demand on these savings (cash) would force a bank holiday. If Mish is correct in saying that American banks have no capital, this is a very dire situation. The reason that the US current account deficit is falling is because American are cutting back on spending.
“Don’t worry. Other countries have and will continue to lend to us because it is in their vested interest to do so. In other words, if other countries attempt to screw America, they will be screwing themselves in the process.”
Has the world got another US$15 trillion dollar plus to lend to America over the next 10 years when many countries could become insolvent? Please consider the dilemma in China which has it own bubble in real estate and other investments.
“Patriotism is what has made America great. You’d be surprised what it can do.”
Are the Banksters patriots?
Patriotism: devoted love, support, and defense of one’s country; national loyalty.
You have great faith in outright fraud being sustainable.
Happy Xmas to one and all.
But also, this. Does anyone forsee any changes in Obama’s economic advisers in 2010? Bernanke and Geithner are staying. And I don’t see any significant changes in current overall policy.
Hi mfo,
Sometimes the spam filter will put stuff there because of hyperlinks–all your 4 attempts to post ended up there.
Everyone, if a post doesn’t appear straight away, don’t repost straight away–give me time to wake up and check the spam filter.
And I wasn’t misquoted–will explain in my next reply to Just!
Welcome into the discussion Just.
That was simply setting myself an easy target for a change. I think it would take a miracle–or another all-out dose of changed government policy–for prices not to fall by that much. And I’ve had enough of being ambushed on property prices.
My main focus is macroeconomics, and property is part of that because it’s been the Australian asset class that has allowed the Ponzi scheme our financial system is biased towards to run for so long. I’d rather get the focus back on macroeconomics, and there I am as bearish as ever–though tempered by the realisation of the scale of government response (a la Japanese) that will be undertaken to try to solve the problem without addressing its cause. You’ll see that in The Age’s bi-annual survey of economists, which is being published on January 2nd.
Very good point Peter_W: this is absolutely the role of deleveraging in a debt deflation: the change from debt adding to demand to debt substracting from it can occur in an instant and make a huge change to aggregate demand.
TITINT
I see the problem this way. We had the South American problem which nearly brought the system down,,and we left the same powers and bankers in place. Then we had the Enron collapse, and its associated cascade, which nearly brought the system down and we left the same powers in place. Now we have the GFC, which as we can all see, has nearly collapsed the entire world, and we are leaving the same powers in place. In fact each event has been used to enhance the powers of the people who caused the problems.
Sure, a gradualist approach would be great. However every time we kick the can down the road the gradualist approach becomes less and less likely and less and less possible.
If we are to take a gradualist approach, we should START….somewhere!!!! It’s the only way I have ever found of getting a difficult job done. Instead we are busy partying again, pretending the job is not there to be done and that it is not getting worse by the minute. Debts are growing by teh minute, Share prices are going up, house prices are headed for the stratosphere, we’ve all got more money and can buy more TV’s or pizza makers, or computer games, ipods etc etc etc. Imports are rising (forget the CAD it doesn’t matter!) Paper over all the losses, punish the prudent and reward the profligate a bit more, use the money and future welfare of good working people to keep the banks solvent, eliminate any pretence of truth in both the corporate sector AND Government, and in the process endanger our democracies and the freedoms we value so highly.
The evidence that we have learned nothing is, in my opinion and contrary to Steve’s, best illustrated by interest rates. Here we are, drowning in debt as a result of real negative after-tax interest rates for 50 years, and what is our TOTAL solution to the problem????? Even LOWER (higher degree of negative) interest rates for as far out into the future as we can see!!!
As I keep quoting Glen Stevens, paraphrased, because I don’t have the EXACT words. ‘Australia will recover because I think households have a capacity to take on more debt’
Just peachy!
Sorry I do get out on the end of my chain a bit on this stuff. I’ve fought this damned process in all sorts of public and private forums fo 50 years…and every damned year the problem has just got worse!!
We are ‘gradually’ heading to the cliff edge!
Angophera @ 150,
Whether you like it or not, investment is a form of betting.
Also the EU has several dysfuctional economies within its 16 member group. You know who they are. Think of the EU as a corporation with several poorly performing divisions.
And for me, I still rather bet on the future of America than bet on the future of 16 nations which start to squabble when things turn bad. Remember American output is roughly similar to the 16 EU countries combined. And if you own some Euro, I reckon you should sell it now.
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Alan Gresley @ 153,
Yes, the source of the problem is America for which I profusely apologise.
And if you really don’t like your so-called American decadence, perhaps you would prefer the Russian, Chinese or Iranian form should America not have been the global power that it is today.
America will survive and prosper in the future.
P.S Banksters are worldwide and have been around for time and memorial. Definately not unique to the US. Look at the Aussie property market!
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And for others, Aussie dollar spot price $0.8764. Coming down nicely due the USD rally.
But this is how the system works Outback Oracle, it’s a credit system isn’t it. Credit has to keep growing in this setting. It’s not that we edge closer to the cliff edge it is that the cliff edge gets higher and we walk along it and often have to keep from falling over the edge.
The cliff edge gets higher and higher, and our entropy seems to be to the bottom of the cliff while regulation is a fence which keeps us from suicide and we are constantly fixing holes and making regulation better. Enron and GFC are both direct consequences of lax regulation, I appreciate what most people in forum believe to be the indirect causes. Left to our own devices there may never have been a cliff in the first place but maybe we would not have achieved so much because if this system does one thing well is move private capital on a grand and global scale which has some good aspects.
I am starting to think about the real big picture, forget about this fictional concept of paper money, what are we really doing? What is humanity achieving? If you were an alien observing the earth what would you see? Money from this perspective is probably insignificant.
Dear American Friend,
“And if you really don’t like your so-called American decadence, perhaps you would prefer the Russian, Chinese or Iranian form should America not have been the global power that it is today.”
OK so please tell me what is America going to do about the following issue?
“Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: China wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful “deal” so western leaders would walk away carrying the blame.”
http://www.guardian.co.uk/environment/2009/dec/22/copenhagen-climate-change-mark-lynas
There was an attempt to negotiate the new world order. I don’t want to get sucked into the discussion on the merit of the climate change threat. There is at least an issue with limited oil resources. The Chinese simply said: “We don’t care about your new world order and your artificial and unjust limits on energy extraction. You have to keep buying our cheap stuff manufactured using ancient and inefficient technologies because this enriches your retail sector and fuels the consumption binge. You have no choice left.”
My point is that the US has no balls to stand up and do anything about it because the country has lost its sovereignty to bankers and various lobby groups. The US has no balls to stand up to China because of the mountain of debt created by the banking system to redistribute the income from the workers to the rich investors. Now not much is left to redistribute from these people who were supposed to work for the others. The jobs are gone – precisely to China.
In my opinion mishandling of globalisation resulted in the debt bubble and converting productive economy into a great Ponzi scheme. Debt can be inflated or forgiven but the deindustrialisation may be irreversable. You guys have not much time left to react.
In one case I agree with you – here in Australia we can only watch this great game and either follow the US in rebuilding the real economy or just keep supplying raw materials to Asia.
this is what an alien would see (I don’t believe in aliens by the way but who knows)
http://www.realfuture.org/wordpress/wp-content/uploads/2009/05/earth_at_night.jpg
http://www.everybodygoto.com/2007/10/12/what-people-eat-around-the-world/
http://gizmodo.com/5055160/24-hour-air-traffic-around-the-world-blows-minds-eyeballs
ak,
don’t know if you have noticed but supplying raw materials to Asia and greeting tourists is the real economy in Australia. Horses for courses…
Hi AK
I’m not a fan of climate change and I was quite frankly happy to see the Copenhagen talks implode. The current climate change policies are a scam designed to suck extra money out of the pockets of hard working ordinary people across the globe. And like you, I’m not interested in discussing this climateissue any further with anyone.
Also, ALL countries across the world have lost their sovereignty to bankers and the lobby groups. Nobody likes this, but this is the world we all live in.
And with regard to China, like I said before, when push come to shove, America WILL look after its security and national interests. We have the might and the resolve to do so. And China will keep buying our bonds into the future because it has no choice but to do so.
And you know something, if I could re-run my life again, I’d still want to be an American, despite the problems that exist in our country and the world today.
m my maths is getting as bad as the Australian treasury economists!!! 40 years of ranting and raving will do.
Hi TITINT
Your cliff edge analogy is not bad. However I think the cliff has always been there if we want to go near it. Maybe the debt is making the cliff higherm however, I can’t help but feel that what we have is a continuous build-up of pressure on the fence that is keeping us from going over, as more of us go into more and more debt.
The ‘credit’ system does not ‘grow’ anything worthwhile. It steals from the prudent! That is all, Credit does not create a single damned thing. It results in bubbles, mis-pricing of resources and over-use and over consumption.
I am looking at a 50 year time frame. I find it quite fascinating that all Economists think the world can get something for nothing just because some bankster somewhere, ‘prints’ up a whole oot of coloured paper and says we are all richer.
I have been accused off not understanding the modern credit system before. In fact I understand it very well and can find no fault with Steve’s ‘Cavaliers’. In fact that just reinforces my own take on the credit system.
I always relate it to the First Law of Thermodynamics. One form or another it is the basis of much of physics. Yet somehow Economists think we are the exception. We can ‘create’ wealth. Well sorry, in the long term, real wealth is not created by credit. Credit, if priced incorrectly by being in excess of savings, just inefficiently reallocates and over-uses.
So yes I agree with you, there are bigger issues than money but this endless creation of infinite credit is at the heart of our misuse of our world.
Re AK’s post (note AK I am in agreement)
“Research shows that a rising level of imports to the United States usually signals the creation of more jobs, not the loss of jobs. Imports benefit American producers as well, providing capital equipment to make workers more productive and lower-cost inputs, such as steel, electronic components, and raw materials, that make their products more price-competitive in world markets.”
“Research shows” over what time period I wonder. For the last 30 years (50 in Aus case) debt financed by foreigners has been regarded as costless. There is no negative side to it. There is no COST. You can import the goods and reborrow the money at virtually zero interest. So as long as you don’t place any negative value on increased debt levels, or on the fact that you are selling the assets of your country, you basically get imports for nothing. Therefore, say your research covers 20 years, of course it will show that imports benefit the importing country and ‘free’ workers for other industries. Give your research a 50 or 70 year time frame, where the real costs of increasing debt become apparent and of course one would get a different answer.
I’m not arguing against ALL trade, just the distorted economics of the last 50 years.
@ak 61
“There was an attempt to negotiate the new world order. I don’t want to get sucked into the discussion on the merit of the climate change threat. There is at least an issue with limited oil resources. The Chinese simply said: “We don’t care about your new world order and your artificial and unjust limits on energy extraction. You have to keep buying our cheap stuff manufactured using ancient and inefficient technologies because this enriches your retail sector and fuels the consumption binge. You have no choice left.””
It would be good if that is the truth of the matter. To see a rather strange spin on this, please listen to Christopher Monckton talk at the International Climate Conference (over 4 videos).
http://www.youtube.com/watch?v=32KOg4yB22Q
Now if there is now an “institutional framework,” well that is another challenge.
@The USD Is Back 159,
“Yes, the source of the problem is America for which I profusely apologise.”
Not all Americans. It the Government, the mainstream media and those hidden elite groups. Anyway, this is the Anglo-American and EU establishment using American military for full spectrum dominance.
http://www.youtube.com/watch?v=frw87_Fbc8g
Note Zbigniew Brzezinski.
http://en.wikipedia.org/wiki/Zbigniew_Brzezinski
“And if you really don’t like your so-called American decadence, perhaps you would prefer the Russian, Chinese or Iranian form should America not have been the global power that it is today.”
My father taught me this common phrase in Australia from the 1940s, “Oversexed, Overpaid And Over Here”. Many Australians share the same sentiment.
It not that I don’t like it. It’s something we have come to accept in this world. You yourself don’t have to defend America. Some aspect of what has emerged from America is good (The American Constitution and Bill of Rights, Computers and the Internet). What is the old adage, “you accept the good with the bad.” Really some world citizens would like to help the common American and in turn it would help us all.
“America will survive and prosper in the future.”
I agree if Americans can help themselves.
“And for others, Aussie dollar spot price $0.8764. Coming down nicely due the USD rally.”
And how would the Australian dollar perform if Oil and Gold was traded in Australian dollars and the Australian dollars was the reserve currency of the world? Could the world handle ‘Australian decadence’ even if was shaped like our national character?
Now can we please return to the thread in hand. Debt deflation, unsustainable capitalism and the GFC stage two.
This did have a link.
My father taught me this common phrase in Australia from the 1940s, “Oversexed, Overpaid And Over Here”. Many Australians share the same sentiment.
http://www.ww2australia.gov.au/allin/yanksdownunder.html
The REIV and their associated real estate agents are a spin doctoring marketing machine THEY ARE NOT a balanced source of the truth..
I know of several real estate agents with 1% vacancy rate hanging in the window… NOT TRUE… See #53
Also NOT TRUE… The REIV’s reported house prices… on the net… and paid for by the REIV in the mainstream newspapers each week…
http://www.heraldsun.com.au/news/victoria/victorian-home-prices-overstated/story-e6frf7kx-1225811878623
An interesting ‘distraction’ and it’s only a distraction, is the barrage of AUD ‘purchase power parity’ rationalisation by Australian bank economists… The ‘ipod index’ is one of them and the ‘Big Mac index’ is the other.
http://images.comsec.com.au/newsresearch/articles/global%20comparisons.pdf
It’s interesting that the AUD ‘intrinsic value’ should be compared by ‘Australian Bankers’ with trivial consumer items that at best would account for a few bilion of trade total.
I have never seen relative currency ‘value’ articles from ‘Australian Bankers’ comparing the $22 Trillion US housing vs $3.9 Trillion housing markets.
The ratio of aggregate gross housing stock to 100% population ipod ownership is….
(using $150 per ipod)
$45 billion / $22 trillion in the USA = 0.2%
$3.3 billion / $3.9 trillion in Australia = 0.08%
The comsec ‘ipod index’ seems to be telling me something about the ‘asset’ value ‘Comm-bank’ is using as security to lend consumers debt to purchase the ipod.
The ‘elephant in the room’ that Craig James conveniently omits to include in his ‘ipod – exchange rate analysis’ is the ~ $2 billion per week of external debt that Comm-Bank has to roll-over on the foreign exchange market each week.
Don’t let ANY of these facts obsure the direction of the AUD exchange rate that Craigs Comm-Bank needs ‘minions to believe’
Gold is trading under $1100 US an OZ
What now?
Max Keiser spoke to Steve Keen off air regarding deflation, At the moment hyperinflation,money printing and buy gold is what the media want to hear, no surprise to hear Steve Keen not mention deflation on air, sure signal that another meltdown on it’s way.
Max Kaiser is screaming again that England is going to have a social revolution.
Max England And USA was built on solid foundation “Freedom of the individual and the rule of law”
This has taken thousands of years to happen goes back to the Roman times,
Think that western society going to breakdown immediately with hyperinflation like Nazi Germany goes against the grain majority of decent people.
The gold bugs have underestimate the rule of law is still very strong “USD is back” understands this.
I have found most gold bugs are arrogant, very aggressive and waiting for society breakdown.
Well have bad news it will take a long time to destroy the rule of law in Western countries.
Gold bear market for 20 years from 1980 to 2000 money supply increase triple (3 times!) gold fell over 60% so gold bugs your money printing theory goes out the window.
So my gold bugs it’s all perception and you may be looking at another 20 year bear market if “We the people” decide that it’s time for strong fiat currency.
Steve, I am linked this interview and Mish’s expose you posted (I had read it on Mish’s site and found it here, which I think I am getting to where I read too much because I read stuff again too often after it is posted in another place)to a debate on the subject raised by Mish in his article. I got here when there were 2 or 3 comments on this post and fell asleep listing to it.
Most of the people I debate on the net are inflationists, who seem to think that all that is green is free money out of the fractional reserve system. I titled a post Money, Capital and Inflation. It seems that those that believe in Feda Claus tend to think that a bank can lend what it is already liable for again and it can’t. This is why Mish called it fictional reserves. The reserves are the portion of the asset base of a bank that exceed the assets minus the deposits. If a bank has 10% reserves and only 5% capital, they already owe half the reserves to the depositors and thus they aren’t reserves at all, but assets for payments of debt. Thus if a banks is down to 5% capital, then it is short reserves and any action of the Fed has no influence on that bank. Should that owe another bank that is full of capital, thus one depositor say write a $10 million check that is put in another bank, then the $10 million would come out of cash and deposit liabilities and the new bank might be able to multiply the cash. But, if the new bank is also loaned up, the $10 million is nothing but a counter entry to their deposit liability. They could take the $10 million and buy a t-bill, but they couldn’t create another liability in their own bank where it exceeded the loanable capital they had. This goes right by them.
What else goes by them is they believe in infinite fiat and don’t understand that savings and debt equal each other. There is more than the change in price levels that come with credit money. There is the investing of finished goods into the account at the bank. Thus if I borrow $10 million and buy your goods, your $10 million in goods is now in the bank. I also owe the $10 million plus interest, which means that I owe more than was created. At a low level, where there is plenty of hard money and goods, this is a highly inflationary situation, but in the loaned up times of today, the fact of the matter is the follow through lending that would complete the inflationary effect of this transaction isn’t there.
http://wallstreetbear.com/board/view.php?topic=64567&post=217388
interesting new years reso’s btb,
less blogging? your seriously suggesting we let the inner meglomenaic within us die.
i think steves blog is vital for global security, it stops some of us from wanting to take over a small or for that matter large country.
i personally like sticking to resolutions i find easy to keep,
you know,
be more judgemental,
be superior and condescending,
eat more lasagna and ice cream
interrupt people mid sentence,
shoot off my mouth before actually thinking things through,
all easy ones to keep
Steve and all,
I think you will find your interview on BBC5 is actually 8PM London time. Which puts it at 7am Sydney time tomorrow morning with a repeat at 3pm (4am London time).
The program synopsis is here:
http://www.bbc.co.uk/iplayer/console/fivelive/
A direct link to the broadcast is here;
http://www.bbc.co.uk/programmes/b00pgpkc
I will post this also on the 2009 Retrospect topic. Apologies to all if this has already been corrected.
Ref 176
Sorry — the links are ass about.
Isn’t the simple point being made here that money available to borrow is just like money in your pocket except that the “How_hard_to_get_out_of_pocket” attribute is at a different level [one you just reach in, the other you have to convince bank].
That is, it doesn’t matter how much money is around you have to be able to “get it out of your pocket”.
The inverse of the blog with regards money migt be with regards production.
That is, if you are in the desert all the money with the lowest “How_hard_to_get_out_of_pocket” attribute value wont get spent because there is nothing to spend it on.
Maybe?